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IOC wants athletes’ dialogue as protest calls grow louder

ATHENS — Athletes will discuss and decide on how best to support the core Olympic values “in a dignified way,” the International Olympic Committee (IOC) said on Wednesday, as calls to change rules restricting protests at Games grow louder.

Several major sports have moved to allow protests following George Floyd’s death in US police custody on May 25, including world soccer’s ruling body FIFA and the National Football League (NFL).

Rule 50 of the Olympic Charter, however, bans any form of political protest during the Games.

“No kind of demonstration or political, religious or racial propaganda is permitted in any Olympic sites, venues or other areas,” the rule states.

IOC President Thomas Bach said consultations between athletes’ groups around the world were under way.

“The IOC Executive Board supports the initiative of the IOC athletes’ commission to explore different ways for athletes to express support for the principles enshrined in the Olympic charter in a dignified way,” Bach told a virtual news conference.

After reading a resolution of the IOC Executive board condemning racism, Bach was repeatedly asked whether athletes at next year’s Tokyo Games could go down on one knee, as many have done in recent weeks, to show their support for the Floyd protests.

“I will not preempt in any way these consultations with many athletes representatives,” Bach said. “It would not be fair if now I make a statement giving directions or instructions.”

“The framework has been set and now let the athlete commission and athletes discuss among themselves and come up with relevant proposals.”

Athletes who breach Rule 50 are subject to discipline on a case-by-case basis and the IOC issued guidelines in January clarifying that banned protests include taking a knee and other gestures. — Reuters

Fit-again Koepka gunning for world number one spot

BROOKS Koepka said he feels “like a new person” after using the PGA Tour’s three-month break to get his left knee healthy and he now has his sights set on taking the world number one spot back from Rory McIlroy.

The 30-year-old American struggled in the first five events he played this year before the coronavirus pandemic forced the tour to suspend its season.

“I got lucky. It was definitely beneficial for me,” Koepka told reporters on the eve of the first round of the Charles Schwab Challenge at Colonial Country Club.

“I was able to kind of reassess where I was at and get the knee stronger,” he said of the injury, which forced him to withdraw from last year’s Presidents Cup.

“The knee is back. It’s a lot better … I’m excited to see what happens here.”

World number three Koepka will be paired alongside McIlroy and world number two Jon Rahm on Thursday.

“I’ve got eyes on Rory,” Koepka said.

“The goal is to get back to number one in the world. The whole point of playing is to be the best,” said the four-time major champion.

The event at Colonial will be played without fans in attendance to stem the spread of the virus.

It will also include a moment of silence at 8:46 a.m. each day in tribute to George Floyd, the black man who died last month in Minneapolis after a white police officer knelt on his neck for eight minutes and 46 seconds.

“8:46, it’s going to be special …. There needs to be change, and I want to be part of the solution,” Koepka said. — Reuters

Welcome sight

Make no mistake. The 2020 Charles Schwab Challenge is a big deal. It isn’t normally one of the prime stops on the United States Professional Golfers Association Tour, but its status as the first tournament to be held since the sport shut down in mid-March has compelled players to dust off their clubs and show up at the Colonial Country Club in Fort Worth, Texas. Save for reigning Masters champion Tiger Woods, just about all the marquee names are on tap, never mind the stringent measures set up to ensure an acceptable measure of safety in the face of the global pandemic.

Indeed, such notables as Rory McIlroy, Jon Rahm, Brooks Koepka, Justin Thomas, and Dustin Johnson — World Numbers One to Five — have seen fit to subject themselves to rigorous protocols just to be able to return to active competition. And the good news is that they, along with nearly 500 other players, caddies, and support staff deemed essential to the holding of the event, have tested negative for the novel coronavirus. The bad news is that all and sundry are still getting used to the regulations, and, even with a clear intent to follow, have, on occasion, succumbed to old habits violative of health initiatives.

Under the circumstances, it was probably just as well that the Tour prohibited the presence of spectators for the Charles Schwab Challenge, as well as for the next three tournaments on the modified schedule. Considering how the best-laid plans seemed to have fallen by the wayside in the run-up to the first round, having more warm bodies on the course would have led to unacceptable breakdowns in established physical distancing arrangements. As things stood, the players asked for understanding from watchful eyes bent on seeing them as models of decorum.

All the same, there can be no underestimating the value of the Charles Schwab Challenge. For all the seeming missteps, it figures to serve as a template for golfing spectacles moving forward. The lessons imparted and learned will be critical to establishing failsafes. Meanwhile, there is also the action to behold. Everybody needs to de-stress. And, certainly, those forced to stay home for their own good need the distraction most of all. In the face of all the uncertainty, the familiar swings of McIloy, Rahm, Koepka, Thomas, and Johnson cannot but be welcome sights.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Pandemic economics and hindsight 2020

While COVID-19’s full impact on economic thinking and policy cannot be gleaned from a quick survey of current economic literature, there is still useful information.

For instance, the IMF’s Policy Tracker summarizes 196 member governments’ fiscal, monetary, macro-financial, exchange rate and balance of payments policies responding to the pandemic. The countries’ responses are similar, with modifications depending on the expected depth and duration of the pandemic crisis. The report has dedicated sections on how each country will reopen their economies with discussions on public spending priorities.

As the pandemic evolves, and is fluid, there is much uncertainty despite earnest efforts to understand its effects. This is to be expected and reminds me of how the 2008 Global Financial Crisis (GFC) rocked and disrupted monetary policy making.

Before the 2008 GFC, monetary policy was neat and straightforward.

The long Great Moderation was rather intoxicating. There was a morphing of the “Jackson Hole Consensus” into what Neil Irwin (The Alchemists, 2013) referred to as a recipe for sustaining it. Central bankers and monetary economists agreed that monetary policy was the best means of macroeconomic stabilization. Messy politics rendered fiscal policy unfit to dealing with economic moods and cycles. Monetary operations are capable of calibrating the necessary adjustments. In addition, central bank independence was required to promote the long-run goals of public policy. Price stability was the prescribed goal of monetary policy. Because there could be unavoidable episodes of irrational exuberance, it was suggested that it would be best to “clean up” after the fact given that bubbles are hard to predict. There was then much knowledge about managing previous financial crises in the 1980s and 1990s. Financial crises can be put behind us.

In hindsight, we are wiser to know that the impact of the 2008 GFC was deep-seated, forcing central banking and monetary policy to go through more than a facelift. There was a Great Awakening in economics — as a profession, in the academe, and in central banks.

How is COVID-19 changing the dynamics of public policy? Should central banks consider goals other than price and financial stability? Is there scope to consider policies other than macro-financial policies? Should parameters like “low disease transmission” around pandemic moments now become relevant variables to predict and sustain quick economic recovery?

In an article dated June 4, the IMF’s Sweden team detailed Sweden’s health strategy. The strategy was premised more on recommendations to civil society and on social responsibility than on issuance of public obligations.

Based on cell phone data, mobility in Sweden was lower than in other Nordic countries. The number of workers reporting for work was lower than predicted despite less restrictive containment policies. Even though there was no prohibition or closure orders, restaurants, malls and other commercial places were less frequented. Nonetheless, it is not certain if herd immunity has been achieved in Sweden. It is also still an open question if its mitigation approach is sustainable in the long run.

Does the Swedish experience evidence voluntary changes in behavior regardless of regulations? What factors other than mobility affect economic activity?

In a June 5 Forbes article, John Koetsier quoted the recent results of Deep Knowledge Group, part of a Hong Kong investment firm. Based on 130 quantitative parameters and over 11,400 data points in categories like quarantine efficiency, monitoring and detection, health readiness and government efficiency, the top five post-COVID-19 safest countries in the world are Switzerland, Germany, Israel, Singapore, Japan, and Austria. The US was only 58th while the Philippines ranked 55th and India, 56th .

In the beginning, countries that ranked highest were those that reacted quickly to the crisis, and exhibited high levels of emergency preparedness. Over time, the more resilient economies started to score higher. For instance, Switzerland and Germany rankings are attributable to their economic resiliency.

Indeed, political economy will play a relevant role when analyzing this pandemic, even 10 years from now. Quarantine decisions can be driven by a leadership that puts a premium on science and evidence. Or they may not. The nature of these decisions, and on how they are made, will have consequences that will be felt for years. Monitoring and detection efforts and a reliable public health infrastructure are keys to economic bounce back. Government efficiency is nothing complex if governance is good and the rules of the game are early on spelled out and any departure therefrom is fairly dealt with, with or without mañanita.

Hindsight is 2020. Clarity comes with time and distance from a crisis. But we cannot afford to be caught flat-footed. The decisions made today will have consequences that will unravel in the years to come. Again, this column reiterates the danger of guesswork. Even the 2008 GFC had its warnings.

As early as 2005, during the Jackson Hole conference, then IMF economic counsellor Raghuram Rajan delivered a paper highlighting the likelihood of a crisis. Rajan stressed that risk-taking was making the global economy more dangerous. He said that fantastic executive compensation incentivized risk-taking.

Hyun Song Shin, then at LSE and now BIS economic adviser and head of research, also foretold of the 2008 GFC. He began with the story of London’s Millennium Bridge, celebrating the year 2000. When it was being inaugurated in June, everyone was on the bridge. It suddenly lurched to one side. To avoid a fall, people adjusted their footing in exactly the same direction at the same time. In doing so, a synchronized oscillation took place. Shin observed that — “the wobble of the bridge (fed) on itself.” Shin indicated that the probability of people adjusting their positions at the same time is almost zero, but it could — as the bridge incident showed — happen anytime.

Analogous to this, global financial markets comprised the Millennium Bridge. When signs of unsustainable finance became more obvious, market players adjusted their stance in the same direction and at the same time — away from weak assets, away from emerging markets — and everyone refused to lend. There was almost complete chaos. The markets wobbled and the global economy was condemned to several years of desolation and risk-off sentiments.

There were warning signs as there are now. The challenge is to heed them. Hindsight is 2020. Our perspective cannot be inferior.

 

Diwa C. Guinigundo is the former Deputy Governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was Alternate Executive Director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

Independence Day 2020

With no hint of irony did Foreign Affairs Secretary Teodoro Locsin, Jr. declare on June 3, or a scant nine days before this year’s anniversary of Philippine independence, that the regime he’s been so faithfully serving has decided to suspend the termination of the country’s Visiting Forces Agreement (VFA) with the United States. He said this decision by President Rodrigo Duterte was due to the COVID-19 pandemic and “heightened superpower tensions.”

By the word “superpower,” Locsin was apparently referring to both China and the US, although only the latter as yet qualifies, with China aspiring for that status but still to reach it. Nevertheless, the tensions he was referring to do exist, due to China’s campaign to control the West Philippine Sea as part of its global campaign to replace the US as the world’s hegemon, and the latter’s determination to retain its “full spectrum dominance” on land, sea, air, and space.

But Locsin did not explain what the connection was between the coronavirus public health crisis and the VFA. Does the Philippines need US troops, whose presence in the country the VFA allows despite the Constitutional ban on foreign military personnel, to effectively address it? Is there something the government can learn from the way the US is responding to the COVID-19 threat? Or is the Duterte regime anticipating the possibility that the US will develop an anti-virus vaccine it is unlikely to share with this country unless it continues to honor the agreement?

Or is it its change of heart over ending the VFA due to the US’ having donated nearly $15.5 million, or some P780 million, to help improve the country’s health care system so it can better address the pandemic ?

The first is an unlikely reason, and so is the second. The US currently leads the world in the number of COVID-19 cases, with nearly two million infected, and a hundred thousand-plus dead. The contagion has revealed not only the vast inadequacies of the profit-driven American health system; it has also exposed how the current Republican Party leadership headed by President Donald Trump has failed to stop or at least minimize the transmission of the disease. As for the third possibility, President Rodrigo Duterte declared only a few weeks ago that his favorite country, China, is most likely to have developed a vaccine by September this year. Apparently he doesn’t think the US will be the first to do so.

These leave the fourth as the most likely connection between the pandemic and suspending the termination of the VFA, which, however, Locsin did not go into. Additionally, however, one might well ask if Locsin was indirectly saying that addressing the pandemic and its consequences is the government’s first priority, as it indeed should be. If the answer is “yes,” it provokes another question, and that is, why the same government has made shutting down TV and radio network ABS-CBN and passing a problematic anti-terrorism bill seem so urgent despite the imperative of addressing the economic and social problems generated by the 75-day shutdown of the economy.

In any event, while the country awaits Locsin’s enlightening it on the VFA-coronavirus connection — if at all he has that intention — it is left with his attempt at an elaborate geopolitical explanation, which focused on the VFA’s helping assure the Philippines’ safety, and his declaration that the country “look[s] forward to continuing [its] strong military partnership with the United States…”

And yet only last February, when he announced that the government had served notice to the US that it will terminate the VFA by August this year, Locsin was all fired-up about the termination’s being essential to Philippine military self-reliance, independence and sovereignty, although, as nearly everyone was aware at the time, it wasn’t this noble intention but the US’ denial of a visa for former police chief Ronald de la Rosa that had prompted Mr. Duterte to order the termination of the VFA.

It seems, however, that Locsin has all along been opposed to the termination of the VFA despite Mr. Duterte’s decision to put an end to it. In a speech before the Senate last February, before he sent the US the Philippine notice of termination, Locsin claimed that the VFA was deterring further Chinese aggression in the West Philippine Sea, providing disaster mitigation and anti-terrorism assistance to the Philippines, and helping modernize the Armed Forces of the Philippines (AFP).

The latter process of “modernization” has been ongoing since the term of former President Fidel Ramos. But despite the billions of pesos already spent on it, that goal is apparently still to be achieved. The country’s military capacity compared to that of its neighbors, and certainly to that of China’s, can only be described as pathetic, and therefore limits the country’s capacity to defend itself from external threats. Hence the argument that the VFA, the 2014 Enhanced Defense Cooperation Agreement (EDCA) , and the 1951 Mutual Defense Treaty (MDT) are still necessary.

Some may find it difficult to contest that claim, given China’s imperial designs in the West Philippine Sea and continuing assaults on Philippine sovereignty. But the reality is that the MDT, the VFA and EDCA, by putting the primary responsibility of protecting the Philippines in the hands of a foreign power, are themselves threats to Philippine independence and sovereignty. Because of the false assumption, often expressed by President Duterte, that the country has to either bow to Chinese aggression or risk war with it, what the current regime is giving the country is a choice between two masters— and even worse, the option of surrendering to both.

These far from ideal conditions are the inevitable consequences of the failure of the administrations that one after another took over Philippine governance upon the US’ “grant” of “independence” on July 4, 1946 to look beyond their personal, familial, and class concerns as well as those of the US. During its formal occupation of the Philippines, it was, after all, that country that trained them so well in “self-government” so they may better defend and enhance its economic and strategic interests in the post-colonial period.

Every one of the US clients and surrogates that have alternately ruled the country made the use of the military as a means of quelling social unrest a priority over that of defending the country from external threats. They left that task to their American mentors through the military treaties and agreements to which, as late as Mr. Duterte’s predecessor’s term (that of Benigno Aquino III) they were committing the Philippines. As urgent as it was, the decision to modernize the Philippine military came too late. Its realization has at the same time been constrained by alleged corruption as well as by its own generals’ and every Philippine regime’s inability to imagine an alternative role for the armed services as other than the internal pacification forces the US designed them to be some 120 years ago.

The Duterte administration had earlier seemed an exception to the rule established by its predecessors. But it has since proven itself powerless, unwilling, or both, to pursue the self-reliant course that the realization of Philippine independence demands. Pandemic or no pandemic, it is focused instead on quelling social unrest, silencing critics, and enhancing its powers over a citizenry that sees hardly any truth, meaning, relevance, or virtue in the much-abused but beguiling claim that the Philippines is an independent country in this 21st century — a full 122 years after June 12, 1898.

 

Luis V. Teodoro is on Facebook and Twitter (@luisteodoro).

www.luisteodoro.com

The ugly side of Germany’s $1.5-trillion stimulus

By Andreas Kluth

EVERY NOW AND THEN during this extraordinary year, it’s good to pause and behold with awe how much has already changed, and how fast. Take Germany. For the past decade, most of the world, including me, has been berating those German tightwads to get over their balanced-budget fetish and spend, spend, spend. Then a pandemic comes along, and suddenly they do just what we’ve been asking for.

And how. Including the latest top-up and ancillary liquidity measures such as guarantees, Germany’s stimulus package to mitigate the economic hit from COVID-19 totals more than 1.3 trillion euros ($1.47 trillion). That’s by far the largest in Europe and even tops America’s, relative to gross domestic product. Kudos to Chancellor Angela Merkel.

There’s no question that this “bazooka,” as Germany’s finance minister calls it, is necessary and good. Nor are the Germans entirely wrong to gloat that their newfound munificence is only possible thanks to their previous thrift, for which they got so much grief. Despite its current largess, Germany expects to exit the crisis with debt amounting to “only” 80% of GDP, up from about 60%.

But wherever medication is given in huge and sudden doses, there’s a risk of unpleasant side effects. In Germany, and Europe generally, one of these may be a lasting shift in governing philosophy from market-friendly policies to state interventionism. That needn’t end in central planning. But even going part of the way would mean buying relief today at the price of misery tomorrow.

The zeitgeist began changing before COVID-19. More than a year ago, Merkel’s economics minister, Peter Altmaier, drafted a “National Industrial Strategy 2030.” In it, he proposed to intervene massively in the economy to coddle national corporate “champions” — with laxer antitrust laws, government equity stakes, and so forth. As justification, Altmaier cited a mercantilist and economically rapacious China. For intellectual and political support, he leaned on France.

Altmaier’s idea, it seemed at first, was dead on arrival. His brand of dirigisme may be exactly what you’d expect from the French. But it’s completely alien to Germany’s postwar tradition of laissez-faire ordoliberalism. Business lobbies balked, as did the Mittelstand of medium-sized, family-owned companies, which often excel in their niches but wouldn’t be crowned as champions. One think tank even warned of “the return of economic nationalism in Germany.” Last fall, Altmaier discreetly softened his plans, then shelved them.

But in March, as part of their coronavirus stimulus, Altmaier and Merkel just as discreetly pulled the plans out again. There it all was, in the fine print: a fund of 100 billion euros to buy stakes in companies and rules to block some foreign takeovers. State aid here, a leg up there. The biggest bailout, at 9 billion euros, is that of Deutsche Lufthansa AG, but the list of others is long and growing. Presumably, these are all now Germany’s “champions.”

To be sure, there’s much to be commended in the way Merkel has intervened so far. Her recovery package is probably the world’s greenest. Money will flow to electric vehicles and renewable energy. In contrast to the stimulus of 2008, this one isn’t giving people “cash for clunkers” with combustion engines. And the Germans seem ready to fund anything with the word “digital” in it.

But there’s a difference between praising Merkel for making the best of an unhappy situation and endorsing the underlying logic of letting the Leviathan allocate capital. The arguments against state capitalism haven’t changed since I listed them in the distant pre-modern era — that is, this January.

First, governments tend to confuse a company’s size with strength. Second, they’re usually worse than private investors at spotting winners, and always worse at pulling money out of losers. Third, they turn the economy into a big lobbying competition for businesses, which eventually hurts taxpayers and consumers.

Because the current paradigm shift from market to state is pan-European, moreover, there are also new problems with industrial policy that will increase tension within the European Union. One premise of the EU’s single market was that aid by member states to “their” firms generally isn’t allowed, because it would skew competition. That’s changed.

These days, owing to the pandemic, the European Commission waves through state aid, usually within hours. But not all member states have similarly sized wallets or credit lines. Spain, for example, suffered more from the epidemic than Germany did, and yet it can’t afford to prop up its companies nearly as much. So about half of all state aid in the EU in the crisis goes to just one country: Germany. As one think tank notes with understatement, this will lead not only to even greater divergence but also “to clashes within the EU.”

None of this is meant to deny the need for decisive fiscal stimulus to save the life of the patient, which in this case is the German and European economy. But like any wise doctor, Europe’s leaders, and above all Merkel, must ensure that emergency-room treatment doesn’t turn into chronic therapy. Stimulus, in that sense, is like opioids: Necessary for relief in an emergency, addictive and ruinous if it continues any longer.

BLOOMBERG OPINION

Black Lives Matter is winning

By Farhad Manjoo, The New York Times

IT’S WONDROUS, isn’t it, how the people just keep coming out? Day after day, night after night, in dozens of cities, braving a deadly virus and brutal retaliation, they continue to pack the streets in uncountable numbers, demanding equality and justice — and, finally, prompting what feels like real change.

How did this happen? How did Black Lives Matter, a hashtag-powered movement that has been building for years, bring America to what looks like a turning point?

I have a theory: The protests exploded in scale and intensity because the police seemed to go out of their way to illustrate exactly the arguments that Black Lives Matter has been raising online since 2013.

For the last two weeks, the police reaction to the movement has been so unhinged, and so well documented, that it couldn’t help but feed support for the protests. American public opinion may have tipped in favor of Black Lives Matter for good.

By “the police,” I mean not just state and municipal police across the country, but also the federal officers from various agencies that cracked down on protesters in front of the White House, as well as their supporters and political patrons, from police chiefs to mayors to the attorney general and the president himself.

Black Lives Matter aims to highlight the depth of brutality, injustice and unaccountability that American society, especially law enforcement, harbors toward black people. Many protesters set out to call attention to the unchecked power of the police, their military weaponry and their capricious use of it. They wanted to show that the problem of policing in America is more than that of individual bad officers; the problem is a culture that protects wrongdoers, tolerates mendacity, rewards blind loyalty and is fiercely resistant to change. More deeply, it is a law enforcement culture that does not regard black lives as worthy of protection.

And what did the cops do? They responded with a display of organized, unchecked power — on camera, in a way that many Americans might never be able to unsee.

To understand why this moment may prompt structural change, it is worth putting the latest protests into a larger context. To me, the past two weeks have felt like an echo of that heady moment late in 2017, after The New York Times and The New Yorker exposed Harvey Weinstein’s history of sexual assault. At the time, #MeToo, as an online rallying cry against sexual abuse and harassment, was more than a decade old. The Weinstein story didn’t create that movement, just as the videos of George Floyd’s death at the hands of the Minneapolis police didn’t create Black Lives Matter.

Instead, the Weinstein news broke the dam. Since then, #MeToo activism has gone on to upend society in a way that felt revolutionary.

It feels like the dam is breaking again.

The movement behind Black Lives Matter has taken to the streets before — but nothing on this scale, with this intensity. And not with these results. The National Football League was once a powerful and bitter rival; now it has embraced the movement, though it still has not apologized to or signed Colin Kaepernick, the player who first knelt in protest against police brutality.

Politicians at every level are professing newfound support, and, right before our eyes, the Overton window of acceptable public discourse about police reform has shifted to include terms like “demilitarize,” “defund” and “abolish.”

It’s not clear how far the politics will go, but the shifts so far are significant. “Never before in the history of modern polling has the country expressed such widespread agreement on racism’s pervasiveness in policing, and in society at large,” The Times reported last week.

More important, we are no longer just talking about imposing new limits on how the police can operate. We’re finally asking more substantive political questions: What roles should be reserved for the police in our cities, and what roles would better be served by hiring more teachers, social workers, or mental health experts?

In Los Angeles, where leaders on the left and the right have long showered resources on the police, the mayor has now proposed spending $250 million more on social services and $150 million less on policing. Last week, New York’s mayor, Bill de Blasio, resisted cutting the $6 billion police budget; on Sunday, he promised future cuts. And in Minneapolis, a veto-proof majority of City Council members pledged to dismantle the city’s police department.

The proximate cause of the latest protests was the horror of George Floyd’s death. But we’ve seen videos of cops killing black men before and they have rarely led to criminal prosecution, let alone broad societal upheaval.

What’s happening now is about more than that video. Just as, after the Weinstein story broke, when women came forward with stories too numerous to ignore or dismiss, what we’ve seen in the last two weeks are episodes of excessive force too blatant and numerous to conclude that the problem is one of a few isolated cases.

The evidence of police brutality has become too widespread even for elected officials to ignore. They can no longer easily coddle police unions in exchange for political support; now ignoring police misconduct will become a political liability, and perhaps something will change.

Alex Vitale, a sociologist and the author of The End of Policing, which argues for a wholesale dismantling of American policing, told me that he has high hopes for structural change because organizers had laid the groundwork for it. “My reason for optimism is that before Minneapolis happened, there were already dozens of campaigns to divert police funding,” he said. “So that’s why that demand emerged so quickly — people were already doing that work.”

Vitale also suggested that the movement can take hold permanently, that what’s happening now has cracked “the ‘ideological armor’” of policing in America.

I think he’s right. — Farhad Manjoo ©2020 The New York Times Company

Facebook says no proof fake Philippine accounts are coordinated

Facebook Inc. said there’s no evidence yet that the proliferation of fake accounts in the Philippines over the weekend was coordinated.

The company said in a statement Thursday it hasn’t seen proof of “reported accounts engaging in coordinated or malicious activity focused on creating fake accounts.”

“We will continue to validate the authenticity of these accounts and prioritize the removal of those that violate our policies,” Facebook said. — Bloomberg

‘Fifty drivers fight for one order’: Southeast Asia gig economy slammed by virus

Drivers for ride-hailing apps like Gojek and Grab are struggling, with their income slashed by more than half as the pandemic batters Southeast Asia. — REUTERS

SINGAPORE/JAKARTA — Indonesian motorcycle taxi driver Aji chain-smokes and checks his smartphone constantly while waiting for orders by the roadside in downtown Jakarta on a hot June morning, but is staring at the prospect of another fruitless day.

Before the coronavirus outbreak hit, the 35-year-old father of four would ferry at least 20 passengers for a daily income of between $13 and $20 as a driver for homegrown ride-hailing app Gojek.

But when transportation services halted under a city lockdown, Aji considered it a good day if he got more than two food delivery orders, which pay him $0.70 each time. On some days, he has had none. Even with restrictions eased this week, he is struggling to feed his family.

“The situation is that there are many drivers but orders are few,” he said, asking to be identified only by his first name.

Eleven drivers for Gojek and Grab, which is backed by SoftBank Group, in Indonesia, Vietnam and Thailand told Reuters they’ve similarly struggled, with income slashed by more than half as the pandemic batters Southeast Asia.

And, disappointingly, for both drivers and the companies, an increase in food deliveries — forecast as a major growth area for both firms — has come nowhere near compensating for the losses in transport.

Even in Vietnam, seen as a recovery success story, drivers are reeling.

“The pandemic may cost me and many colleagues our vehicles, which we had bought using borrowed money,” said Grab car driver Tung in Hanoi, fearing that lenders may repossess the vehicles.

Unions representing Gojek and larger Singaporean rival Grab, Southeast Asia’s most highly valued startup at $14 billion, say thousands of drivers are in the same situation, especially in Indonesia, both firms’ largest market.

CORE PROMISE
Their plight threatens a core promise of both companies: that they can improve the lives of tens of millions of people across Southeast Asia even as they provide big paydays for their blue-chip corporate and financial investors.

Southeast Asian governments have warned millions could end up jobless as a result of the outbreak.

The two firms told Reuters they are supporting drivers with measures ranging from food packages and vouchers to low-interest bank loans and car rental rebates. But the crisis has also led them to cut the subsidies that have fueled their growth.

Doubts have also crept up about the ride-hailing model globally and on whether investors will continue pumping in massive funds into the startups.

Even before the pandemic, Grab and Gojek — like Uber and Lyft in the United States and other ride-hailing firms around the world — were operating at a steep loss.

Grab co-founder Tan Hooi Ling has warned the company may potentially face a “long winter.”

Both companies still have plenty of cash. One source with knowledge of the matter said Grab has $3 billion in reserves. Sources familiar with Gojek’s finances said it was finalising an over $3 billion investment round at a $10 billion valuation; Facebook and Paypal announced investments in Gojek’s fintech arm just last week, and it also counts Google and Tencent among its backers.

Each has avoided major layoffs so far, though Grab is implementing voluntary unpaid leave for staff and Gojek is reviewing its services. In the United States, Uber, whose Southeast Asia business was bought by Grab, said it would cut 23% of its workforce. “Transport has fallen off a cliff, food has held steady, while logistics went through the roof and online payments are high… so having a portfolio of products helps,” said Gojek Chief Operating Officer Hans Patuwo. “If we were only a transport company, I’d be quite bowled over.”

Executives and investors at both firms point to the resurgence of orders at Chinese ride-hailing company Didi Chuxing as cause for optimism.

“The rate of recovery will be mostly dependent on when government lockdowns end,” said Grab Operations Managing Director Russell Cohen, noting Grab’s transport business had previously been profitable in several markets.

The crisis has revived speculation among investors about a merger of the two firms, which sources say has been discussed in early 2020, but not led to serious talks.

Gojek said any reports of a merger are inaccurate. A Grab spokesman declined to comment.

FOOD DELIVERY
Grab and Gojek have long touted the fast-growing food delivery industry as a big opportunity. But with platforms taking only a 20%–30% commission that is shared with drivers, margins are slim. And growth did not materialize in every market during the lockdowns.

A restaurant chain CEO in Jakarta said food delivery had not picked up in Southeast Asia’s largest economy due to people cooking more at home and as most orders traditionally consisted of lunches for office workers, who are now at home.

Aji described food delivery in Indonesia for Gojek as a “fight,” with “sometimes 50 drivers for one order,” with Grab Vietnam drivers recounting similar experiences.

Even in Thailand, where orders jumped for both Grab and Gojek, profitability remains distant.

According to an April interview with local media by then Grab Thailand chief Tarin Thaniyavarn, food delivery was fast-growing but loss-making during the pandemic, with costs mounting and competition steep.

Tarin said Grab Thailand lost more than $22 million in 2018, while rapid growth led to losses nearly doubling in 2019.

“Imagine last year’s loss-making business growing rapidly in a short period of time, while the business that used to make profits for us is nearly gone,” he said. — Reuters

The contract that could: How service contracting can improve public transportation and help Filipinos

What can be done to help address the transportation woes of a city that loses P3.5 million per day due to traffic congestion? In a Q&A livestream—titled “A Better Normal” and organized by podcast platform PumaPodcast and Asia Society—urban planner Benjie de la Peña proposes a new way jeeps and buses can ply Metro Manila’s roads more efficiently: have the government rent them.

He’s referring to service contracting, an “agreement whereby a contractor supplies time, effort, and/or expertise instead of a good”. In this case, the contractor is the transport operator, offering a transport service defined by an agreed number of kilometers and trips per day. The government, their client, will pay the operators a fixed amount and collect the fares from passengers themselves, possibly through an automated system.

Currently, many jeepneys operate on a boundary system, where the driver’s profit is whatever’s left after gas expense and vehicle “rent” to the operator. This puts pressure on the driver to take on as many passengers as possible per trip, in as many trips as they can make for the day. This incentivizes poor road behavior, like stopping to load passengers at non-designated areas, adding to our traffic problems.

Compounding this issue is the general community quarantine (GCQ), these jeepneys are still not allowed, creating unrest among drivers as they struggle to feed their families. This also makes commuting more challenging for the public, with some lining up at rail stations as early as 4:00 A.M. to ensure that they get to work on time.

By employing service contracting, drivers are assured a fixed salary. And since the number of passengers per trip is no longer a concern, this makes the current general community quarantine (GCQ) period a good transitional phase for service contracting until it becomes, potentially, a permanent arrangement.

“[The driver’s] job is to pick up the passengers but most importantly, [their] second job is to fulfill performance requirements: is it clean, is it safe. And in the time of COVID, [they] can say, ‘I can only take on half the amount of passengers,’” said de la Peña.

While several groups welcomed the proposal, some suggested that it wouldn’t come without its own bumps in the road. Atty. Zona Tamayo of the Land Transportation Franchising and Regulatory Board (LTFRB) mentioned the apprehension of some drivers to transition to a new system. “We can’t blame them naman po… because they’ve been doing this for, let’s say, the past 30 years. Some even inherited the operation or driving of the jeep,” she said.

ASec. Tony Lambino of the Department of Finance cited a huge number of competing requests for the government’s stimulus package, a barrier considering the proposal’s P32 billion price tag for a three-month run. “Our deficit is already higher than 8% of GDP, and the bills that we’ve seen in terms of economic stimulus plan, let’s just say that they blow up the deficit,” he said.

But for de la Peña, it could be a measure well worth the price.

“Competitiveness is not just about our tax levels, because we can have the lowest taxes in the world, but if our workers are exhausted and there’s a high cost to business not because of the taxes but because of the transportation in doing business, then we’re not competitive,” he said.

PHL external trade plunges in April

THE country’s trade deficit narrowed to its lowest in over five years in April. — BW FILE PHOTO

PHILIPPINE international trade performance further shrank in April as the coronavirus disease 2019 (COVID-19) pandemic and the global lockdown restrictions constricted trade activity, the Philippine Statistics Authority (PSA) reported on Wednesday.

Preliminary data by the PSA showed merchandise exports in April contracted by 50.8% to $2.78 billion compared to a revised 24.7% decline in March and a 3.1% uptick recorded in April 2019.

Merchandise imports also plummeted 65.3% to $3.28 billion in April, worsening from a 26.2% decline in March and a 2.9% growth posted in the same month last year.

The April figures marked the biggest year-on-year declines in exports and imports based on available PSA data, surpassing the previous lows of 40.6% for exports in January 2009 and 37.1% for imports in April 2009.

Moreover, the trade figures in April marked the lowest levels since the $2.51 billion worth of exports in February 2009 and $3.06 billion of imports in April 2009.

Philippine trade year-on-year performance (April 2020)

The trade deficit in April stood at $499.21 million, significantly lower than the $3.80-billion shortfall in the same month last year. The April deficit was the narrowest in more than five years, or since the $257.18-million trade gap in March 2015 and the $64.95-million trade surplus in May 2015.

The country’s total external trade in goods — the sum of export and import goods — was $6.07 billion in April, 59.8% less than the $15.10-billion total in the same month last year. So far, total trade amounted to $45.06 billion, 23.1% less than $58.59 billion in January-April 2019.

For the four months to April, exports were down 16.7% to $18.52 billion, well below the four-percent drop expected this year by the Development Budget Coordination Committee (DBCC), an interagency body that sets macroeconomic and fiscal assumptions of the government.

Meanwhile, the import bill slid by 27% to $26.54 billion on a cumulative basis against the DBCC’s target of a 5.5% contraction for the year.

Year to date, trade balance amounted to an $8.03-billion deficit, narrower than the $14.14-billion trade gap in 2019’s comparable four months.

Export of manufactured goods, which account for around 74% of the total exports that month, declined 55.9% year on year to $2.05 billion from $4.66 billion last year. Total agro-based products were also down 36.4% to $302.91 million in April from $476.22 million previously.

Electronic products, which made up more than half of the total April export sales, plunged by 48.6% to $1.6 billion. Semiconductors, which account for more than four-fifths of electronic products, slumped 41.9% to $1.33 billion.

Exports of forest and mineral products likewise fell by 67.2% and 10.5%, respectively to $7.87 million and $317.73 million. On the other hand, exports of petroleum products amounted to $56.2 million, more than 18 times the $3.03 million in April 2019.

On the import side, raw materials and intermediate goods, which contributed 44.7% to the goods imports bill in April, shrank 58% to $1.47 billion from $3.49 billion in the same month last year.

Capital and consumer goods also went down 58.2% ($1.23 billion) and 76.1% ($387.33 million) in April, respectively. Imports of fuels, lubricant and related materials likewise dropped 87.4% to $163.74 million.

April’s decline, according to the National Economic and Development Authority (NEDA), was due to production supply chain bottlenecks and reduced external demand amid the pandemic and the subsequent lockdown in Luzon.

“For faster trade growth recovery, the government needs to intensify its efforts by prioritizing structural and logistics reforms that will serve as the backbone of ongoing efforts to improve the business environment and create development opportunities,” acting Socioeconomic Planning Secretary and NEDA Director-General Karl Kendrick T. Chua said in a statement.

“The Philippines… experienced a much sharper decline in exports and imports in April [compared to March]… as the world’s biggest economies such as the US, Europe, and other Asian countries (including the Philippines’ biggest export markets and sources of imports)… entered into lockdowns as well, thereby fundamentally cutting exports and imports of the Philippines as aggravated by disruptions in logistics and supply chains locally and globally,” said Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in an e-mail.

Mr. Ricafort said the sharp drop in global oil prices in April that “reflects the dramatic decline in demand for oil at the height of the lockdowns may have also helped narrow the country’s trade deficit.”

In a separate e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the steep declines to “non-pharmaceutical interventions” (NPI) that were implemented in April to control the spread of COVID-19.

“Aside from the fact that a lot of our major trading partners were also implementing NPIs, China, a significant global trading, was only then starting to lift up economic restrictions, including trade-related ones,” Mr. Asuncion said.

“For the succeeding months, it is expected that trade will cautiously recover as NPIs are lifted across countries in Asia, including our significant trading partners. However, trade environment and demand will continue to be sluggish as the economies continue to deal with COVID-19 and subsequent trade-weakening restrictions,” he added.

Mr. Asuncion said the narrowing of the trade balance, and thus the overall view on trade “will not be able to translate to more economic activity.”

“A clear recovery of trade demand and a better global trading environment is definitely needed,” he said.

In a note to reporters, ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said the demand for imports would likely resume in the next few months, but the same could not be said for the country’s exports.

“The government has pointed to the resumption of its ‘Build, Build, Build’ infrastructure program as a means to combat the fallout from the COVID-19 pandemic and we expect import growth to return in the coming months. Inbound shipments for construction materials, fuel and capital machinery used for construction will likely bloat the import bill at a time where export prospects look bleak given projected recessions in major trading partners like the US, Japan and China,” Mr. Mapa said.

Hong Kong was the top market for Philippine goods in April, accounting for 20.9% with $582.07 million. It was followed by China with a 13.8% share or $385.28 million, and Japan’s 13.1% share or $363.40 million.

On the other hand, China was the biggest source of foreign goods purchased in April, accounting for 22.3% at $732.47 million. Other major import trading partners were Japan and South Korea, which contributed 10.9% ($357.55 million) and 9.1% ($299.54 million), respectively. — Lourdes O. Pilar

Philippine trade year-on-year performance (April 2020)

PHILIPPINE international trade performance further shrank in April as the coronavirus disease 2019 (COVID-19) pandemic and the global lockdown restrictions constricted trade activity, the Philippine Statistics Authority (PSA) reported on Wednesday. Read the full story.

Philippine trade year-on-year performance (April 2020)