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Central Azucarera de Tarlac posts P62.11-M net loss

LISTED sugar miller Central Azucarera de Tarlac, Inc. incurred a P62.11-million net loss in the July to September period, the first quarter of its fiscal year, despite posting higher revenues during these months.

In a disclosure to the stock exchange, the sugar company said its loss in the first quarter is slightly lower than the P62.41-million net loss it posted in the same period a year ago.

“The first quarter of fiscal year 2020-2021 was focused on managing resources while faced with challenges on all fronts. The first quarter was aimed at cash generation by converting inventory,” the disclosure said.

Central Azucarera de Tarlac said its revenues during the period rose by 57% to P219.03 million from P139.51 million last year.

The sugar company added that it capitalized on its alcohol sales as its sugar inventory has yet to increase as the milling season starts in the second quarter.

“The company has no beginning sugar inventory to sell compared to last year’s roughly 30,000 sugar bags or P46.5 million sales. This reduction was off-set by the alcohol and molasses revenues, both posting favorable price and quantity variances,” the disclosure said.

Revenues of the company’s alcohol and molasses products during the period reached P190.21 million and P17.50 million, respectively.

Meanwhile, Central Azucarera de Tarlac’s operating expenses increased by 1.2% to P24.75 million against P24.45 million last year.

The company said its depreciation and amortization expenses rose to P2.2 million, compared to P1 million a year ago, due to capital expenditures in non-factory facilities over the past years.

“Professional fees increased to P5.4 million from P4.9 million due to one-time engagements of various professionals in the last reporting period,” the disclosure said.

“The ill effects of the coronavirus disease 2019 (COVID-19) pandemic pushed the company forward in solidifying its commitment to strengthen its operations by exploring diversity and upholding sustainability and in all its business models,” it added. — Revin Mikhael D. Ochave

Japan-inspired condominium to rise in Manila

LISTED VISTA LAND & Lifescapes, Inc. is continuing its joint venture with Mitsubishi Estate Co. Ltd. to build a Japanese-inspired condominium in Taft, Manila.

In a recent statement, the Villar-led property developer said its condominium arm Vista Residences, Inc. will work with the Japanese firm on a 42-storey condominium tower.

The development will have more than a thousand units and a retail space, and will target university students and young professionals in the Taft area.

“Vista Land is excited to present our very first Japanese-inspired condominium property in Manila… We want our homebuyers to be able to balance their purpose and passion while enjoying the convenience of city living,” Vista Land President and CEO Manuel Paolo Villar said in the statement.

The project will offer studio and one-bedroom units and will feature larger common areas and outdoor spaces as it aims to appeal to a premium market.

It will be located close to De La Salle University, College of St. Benilde and St. Scholastica’s College, and will be a few minutes away from Makati City, Taguig City and the Bay Area.

“We are grateful for our partnership with Vista Land that will enable us to take on another challenge to share our expertise and passion in real estate development, and we hope to explore more opportunities with Vista Land,” Mitsubishi Estate Senior Executive Officer Yutaro Yotsuzuka said in the statement.

“We look forward to our collaboration in terms of concept, architecture and technology that will differentiate this project from the rest of the condominium properties in Manila,” he added.

The two companies first announced their 60-40 joint venture for a condominium project in Taft last year. — Denise A. Valdez

Entertainment News (12/01/20)

Itchyworms release 2 Christmas songs

THE ITCHYWORMS keeps the holiday cheer going with the simultaneous release of two Christmas songs: “Have A Merry Christmas” and “Maligayang Pasko.” Honoring the tradition of writing Yuletide-themed originals, the pop-rock quartet is keen on uplifting people’s spirits during the pandemic. Lead vocalist Jugs Jugueta said that “Have A Merry Christmas” was inspired by a meme featuring Jose Mari Chan which he said was funny the first time it came out, but lost its charm with repetition year after year. So he posted a challenge on Facebook: instead of posting about Jose Mari Chan, write your own Christmas song. “Have A Merry Christmas” was his reaction to his own challenge. Intricately arranged with Beatlesque pop harmonies, string arrangements, and catchy, sing-along moments, “Have A Merry Christmas” has a message of joy and positivity. Meanwhile, “Maligayang Pasko” takes listeners back to the 1970s and early ‘80s. It is a laid-back, groovy tune that winks toward Manila Sound and city pop. The two songs are now available on all streaming platforms worldwide via Sony Music.

Bianca remakes Rivermaya classic

ACOUSTIC pop newcomer Bianca has released a stripped-down version of Rivermaya’s classic song “Hinahanap-hanap Kita” via Sony Music Philippines. Arranged with acoustic guitars, lush strings, and subtle electronic beats, Bianca’s rendition of the 1997 alt-rock staple infuses a more poignant take than the original.  “Hinahanap-hanap Kita” is co-produced by 6cyclemind’s Rye Sarmiento who gave the finishing touches to Bianca’s first single, “Biglaan,” which has racked up a million streams so far on Spotify. “Hinahanap-hanap Kita,” a part of her upcoming EP, is now available on all streaming platforms worldwide.

PhilPop releases final batch of songs

THE NATIONWIDE songwriting competition PhilPop has released the final batch of songs from the South Luzon cluster. Carefully selected from thousands of submissions, the entries from this particular group reflect truths about romantic relationships, disappointments, and heartaches. Distributed by Warner Music and produced by PhilPop, the homegrown tracks are now available on all digital and streaming platforms worldwide. The entries are “Para Kay Catriona,” composed by Kulas Basilonia and interpreted by I Belong to the Zoo; “Bitaw,” composed by Keen and interpreted by Zsaris; and “Lunod,” composed by Chochay Magno and interpreted by Shaira Opsimar.

R&B artist Gareth T. drops new song

HONG KONG-based R&B producer/artist Gareth.T has dropped a soulful jam called “2 More Weeks” via international indie label, Umami Records. Infused with a Mac Ayres-inspired vibe and lo-fi beats, “2 More Weeks” tells the story of someone wanting to go home to see their loved ones. This R&B bop features hip-hop verses coasting through breezy melodic lines and a slinky pop edge. Currently based in Boston while studying at Berklee College of Music, the prolific producer has been dropping a new track every four weeks, and has no plans to slow down. Listen to “2 More Weeks” at this link: https://www.umamirecords.sg/2-more-weeks/.

Miley Cyrus drops album Plastic Hearts

MILEY Cyrus returns to the music scene with the release of her highly anticipated new album, Plastic Hearts, out now via RCA Records. Cyrus’ seventh studio album features collaborations with Billy Idol, Joan Jett and Dua Lipa. Built around retro-inspired bangers and thumping stadium anthems, Cyrus’ new sound gives listeners a renewed sense of appreciation for music made in the 1970s and ‘80s, as seen in her cover art, which was photographed by iconic rock & roll photographer Mick Rock. Cyrus had already released two singles from the album: “Prisoner” featuring Dua Lipa, which was accompanied by a campy rock video featuring the duo, plus Cyrus’ summer hit, “Midnight Sky.” Plastic Hearts is now available on all digital platforms worldwide.

Quasi-lenders’ loan portfolio drops in 1st half

THE LENDING portfolio of nonbank financial institutions with quasi-banking functions (NBQBs) dropped in the first half of the year as players merged or gave up their licenses, an official from the Bangko Sentral ng Pilipinas (BSP) said.

“As of end-June 2020, the NBQBs’ total loan portfolio (TLP) dropped by 33.6% year on year to P133.4 billion following merger and/or surrender of QB license of certain entities resulting from a review of strategic direction and business operations,” BSP Managing Director for Policy and Specialized Supervision Lyn I. Javier said in an e-mail.

Quasi-banks include financing companies and investment houses.

This also affected total operating income of NBQBs, which plummeted 70.8% to P3.9 billion.

“The decline is also partly influenced by the drop in non-interest income, particularly trading income,” Ms. Javier said.

Like their bank counterparts, quasi-lenders also saw a higher nonperforming loan (NPL) ratio amid the impact of the pandemic. The industry’s NPL ratio picked up to 5.8% as of end-June from 4.4% a year ago.

“The current NPL ratio is higher than the Philippine banking system’s estimated NPL ratio of 4.6% by end-December 2020.  Nevertheless, we expect that the NBQB’s NPL ratio will remain manageable in the next two years,” Ms. Javier said.

The Philippine banking system’s bad loan ratio stood at 3.4% as of end-September, already the highest since the 3.42% NPL ratio logged in May 2013.

The BSP will remain watchful of the NPL ratio of quasi-lenders amid the current crisis, said Ms. Javier.

“The NBQB industry is expected to remain stable as most of the financing companies and investment houses with QB license are linked with universal and commercial banks hence, governed by the same set of risk management standards,” she said. — L.W.T. Noble

Stocks may move sideways on bargain hunting

By Denise A. Valdez, Senior Reporter

LOCAL SHARES are expected to move sideways this week as some investors may start bargain hunting after last week’s four-day decline.

The benchmark Philippine Stock Exchange index (PSEi) closed Friday’s session at 6,791.46, down by 136.29 points or 1.96% against the previous day.

On a weekly basis, the index was lower by 378.33 points or 5.28%, reversing the uptrend it recorded for three consecutive weeks.

Value turnover grew 58% to an average of P16.42 billion, while net foreign selling expanded 162% to an average of P1.56 billion.

“Profit taking dominated following consecutive sessions of strength. The PSEi failed to hold the 7,000 level, plunging 378 points to 6,791,” online brokerage 2TradeAsia.com said in a market note.

The market has been on an uptrend since the start of November due to improved third-quarter corporate earnings and a string of positive news on the coronavirus disease 2019 (COVID-19) vaccine.

However, strong selling pressure pushed the PSEi to correct last week, which led the market to break below its 10-day exponential moving average, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said.

“(This) trading week, we may see sideways movement from the market. Investors may hunt for bargains from last week’s sell off,” Mr. Tantiangco said in a text message.

Aside from bargain hunting, investors may also turn bullish if there will be positive developments on coronavirus vaccine candidates. Another catalyst is the upcoming November manufacturing data, which is expected to come out this week.

“Improvement in our manufacturing data could provide boost to market sentiment,” Mr. Tantiangco said.

Investors may also react to the passage of the corporate tax reform bill, Senate Bill No. 1357 or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

“The CREATE bill… will be a primary point of discussion for 2021, especially for the next earnings reporting seasons,” 2TradeAsia.com said.

Among the bill’s salient points, based on the brokerage’s analysis, are the reduced corporate income tax, as this will help pad earnings recovery, and the net operating loss carry-over extension, which will assist small and medium enterprises.

“Truly, there is no such thing as free lunch, but the CREATE bill, in general, will put the Philippines on par with ASEAN economies in taxation — a plus in the long run,” 2TradeAsia.com said.

Other developments that will help improve sentiment are the passage of the P4.25-trillion national budget for next year and news that the government is preparing for COVID-19 vaccinations by as early as the second half of 2021.

The brokerage set the immediate support for the PSEi at 6,650 and resistance at 7,000, while Mr. Tantiangco put support at 6,600 and resistance at 7,150.

DPWH, not House revamp, blamed for realigned budget

THE Department of Public Works Highways (DPWH) was responsible for redistributing infrastructure spending items in the proposed 2021 national budget, a senior legislator said, rejecting claims that budget cuts targeted Representatives associated with the former House leadership.

“It was the DPWH that made the realignments and we just adopted the amendments given to us by the department,” ACT-CIS Party-list Rep. Eric G. Yap told ABS-CBN News Channel, after a senator claimed that allies of House Speaker Lord Allan Q. Velasco received increased budgets.

While there were “noticeable” increases in the budgets of congressmen allied with the current House leader, allocations for infrastructure projects in districts represented by those allied with ousted Speaker and Taguig Rep. Alan Peter S. Cayetano were “slashed,” Senator Panfilo M. Lacson said.

Camarines Sur Rep. Luis Raymund F. Villafuerte, Jr., a former deputy Speaker, said P368 million was slashed from his district’s budget.

Mr. Yap, however, said the budget cuts cited by Mr. Villafuerte were not intended for the projects specifically for the second district of Camarines Sur. “The P386-million cut was for Build, Build, Build, projects,” he said.

The funds were reallocated by the DPWH to other projects that “can be finished by 2021,” he added.

Mr. Yap said other realignments were made in response to the needs of some areas hit by the November typhoons.

He said Mr. Velasco “did not meddle” in budget amendments.

“I think Speaker Velasco recognized my independence, that I’m not clinging to the left or clinging to the right. I just do my job.”

The bicameral conference committee on the proposed P4.5-trillion national budget for next year convenes this week.

“I can assure you that this is free of pork barrel. All I can see are projects that will benefit the Filipino people,” he said. — Kyle Aristophere T. Atienza

Philippine consumer confidence lags region; WFH-enabled workers report more optimism

CONSUMER CONFIDENCE in an economic recovery is lower in the Philippines compared with elsewhere in Asia, McKinsey & Co. said, citing the results of a study.

Only 42% of Filipinos considered themselves optimistic, while 9% were pessimistic and 49% unsure.

McKinsey & Co. Philippine Managing Partner Kristine A. Romano said at the BusinessWorld Economic Forum last week that “40-60% strongly agree that their jobs, their livelihood, (on a personal level) they’ve been very affected by the pandemic.”

“Since the lockdown started, there really has been a decline in consumer optimism (in the Philippines) in contrast to China.”

Philippine optimism in March was at 57%, then dropped to 42% in April and October. In contrast, optimism in China was at 48% in March, increasing to 56% in April then 58% in September.

In India, 58% are optimistic, while 53% of Indonesians are the same. Optimism in Japan is much lower, with 62% saying that they are unsure and 7% remaining optimistic.

“In India or in Indonesia, where arguably the level of health outcomes are somewhat similar, they’re much more optimistic than we are,” she said.

Ms. Romano said that she is closely tracking the fourth quarter data for the impact of the holiday season on Philippine consumer optimism.

She said consumer behavior in the Philippines is changing, with more people using mobile and contactless payments.

“The lower income segments are actually less optimistic, while the higher income segments have become more optimistic over time,” she said, adding that jobs could be more stable for white collar workers as they do more remote work.

Lower consumer confidence, she said, translates to postponed spending even if the workforce is earning.

She said interventions are needed to improve consumer confidence.

“On one hand, you could give away money, which, yes, works. But at the end of the day, what brings confidence is also how we communicate and how we create lighthouses of success,” she said.

“For example, is there a way that we can bring in significant FDI (foreign direct investment) into the country? Can we bring tens or hundreds of millions of FDI, rationalize whatever benefits we need to, make ourselves more competitive not just during the pandemic but during the long term, announce that, create jobs — and that’s the type of thing that will improve consumer confidence over the long term.”

Asked what she would advise companies, she said safety and localization drive consumption. This means that consumers buy from places that have safety protocols in place and are closer to them.

“If you’re not able to be nearby, can you shift online so that you can have the same convenience? I think there’s something to be said around the safety and convenience that you have to offer.”

Companies can also consider product lines that focus on value-driven consumers who either splurge to reward themselves or prefer to spend on value-for-money goods like smaller bite-sized foods.

She added that enabling digital interaction with consumers also helps.

“For example with malls, people now assume nobody is going to the malls. But in fact, people first now go to the website or Facebook page of the mall,” she said, to look at opening hours and other information.

She said that consumers no longer go to malls for leisure, but are instead “on a mission” to buy certain goods. Access to information, she added, gives them the confidence to go outside and make purchases.

The more quickly organizations are able to learn and adapt to different economic scenarios will determine whether they will succeed post-pandemic, she said.

Ms. Romano said that the pandemic is accelerating trends in ASEAN, including advancing manufacturing hubs, investing in green infrastructure, building high-value food industries, company digitalization, and reskilling workers. — Jenina P. Ibañez

PHL recovery to be hindered by Nov. typhoons

THE economy’s recovery will be hindered by the series of typhoons that hit during the fourth quarter, with fiscal and monetary measures necessary to provide support, S&P Global Ratings said.

“The economy is gradually improving, but the disruption of a recent typhoon will delay the recovery,” S&P said in a note on Monday.

Crop damage from typhoons Rolly and Ulysses (international names: Goni and Vamco) were tallied at P5.79 billion and P6.72 billion, respectively, by the Department of Agriculture.

S&P Global Ratings maintained its gross domestic product (GDP) estimate of minus 9.5% and 9.6% for 2020 and 2021, respectively, issued in September. This compares to the minus 4.5% to minus 6.6% forecast range given by the government for this year and a growth estimate of 6.5% to 7.5% for 2021.

S&P’s 2020 GDP forecast for the Philippines is the worst among the economies it tracks in the Asia Pacific. Its estimate for Thailand is minus 6.4%, Singapore minus 6.1%, and Hong Kong minus 5.8%.

“As before, the base-effect-driven high growth rates for the upcoming years mask the fact that the level of GDP will remain far below the pre-COVID trend even by the end of our forecast horizon,” S&P said.

The economy contracted by 11.5% in the three months to September, following the record 16.9% decline in the three months to June period. The third quarter was the third straight GDP contraction.

S&P expects inflation this year to average 2.8%, higher than the 2.4% forecast of the central bank. Year-to-date, the consumer price index rose 2.5% as of the end of October.

“Inflation remains high relative to how much domestic activity has fallen, in part due to the supply-side disruptions from recent typhoons,” it said.

“But with growth so low, we continue to pencil in one last rate cut from the Bangko Sentral ng Pilipinas (BSP) after [last] month’s [November] move, before a long pause,” it added.

The overnight reverse repurchase, lending, and deposit facility are currently at record lows of 2%, 2.5%, and 1.5%, respectively, after a 25 basis points (bps) cut in November. The central bank has slashed 200 bps from benchmark rates so far this year to provide support to the economy and has assured that it will remain accommodative if the need arises.

Meanwhile, S&P said the Philippines’ fiscal response to the crisis remains small.

“We expect a boost from fiscal impulse in the second half of next year if key infrastructure projects start to ramp up again,” it added.

The 2021 budget worth P4.5 trillion remains pending in Congress and legislators have committed to passing it by Dec. 16, in time for signing before the year ends. — Luz Wendy T. Noble

Pandemic impact felt disproportionately by poor

THE PANDEMIC has hit poorer households in the Philippines harder than the rest of the population, affecting their income and food security disproportionately, according to the World Bank.

According to a study conducted by the bank in early August, 47% of heads of household who are still working reported declining income while 65% of those running businesses reported a fall in profits. The study took in more than 9,500 households.

“Over 40% of heads of household across all the income levels reported reduced incomes, with losses being more prevalent among the poorest households,” the World Bank said in a brief on the study findings released last week.

It said across all income groups, 15% of those at the bottom reported zero earnings while only 5% in the richest income groups recorded zero income.

Nearly half of those relying on remittances sent by relatives working abroad received reduced remittances during the period, while 11% received nothing.

One in four heads of household said they were no longer reporting for work. Job losses were the highest in Luzon — where the lockdown was particularly drawn out — while many of them worked in vulnerable industries like construction, accommodations, food services and trade.

The jobless rate, however, was higher among high-income families because the poor were more likely to be engaged in agriculture, which was less affected by the pandemic.

The World Bank reported that 40% of households said they cannot afford to buy essentials like food, with 54% of the poor saying so. Only 26% of the richest households reported the same.

Around 37% of the poorest families said they experienced hunger while 18% experienced an entire day without eating.

“Lack of money and mobility restrictions were among the main reasons constraining households’ capacity to buy food. About three in four households worry about not having enough food and one in three experienced hunger,” it said.

Some 46% of households across all income groups said they did not have enough money to attend to medical needs, while 28% were afraid to contract COVID-19.

Education was also severely disrupted, with only 20% of those who had children in school before the pandemic able to continue doing so during community quarantine. About 80% said they will send their children back to school once they reopen.

The survey was conducted in partnership with the Finance department and the National Economic and Development Authority. It was the first of a series of quarterly surveys conducted by the World Bank to monitor the impact of COVID-19 on Philippine households, with the other rounds scheduled for rollout next year. — Beatrice M. Laforga

DENR orders bamboo planting along Cagayan River

ENVIRONMENT Secretary Roy A. Cimatu has ordered the planting of bamboo along the banks of the Cagayan River as an anti-flooding measure to prevent the recurrence of the floods that hit Cagayan and Isabela provinces during Typhoon Ulysses (international name: Vamco).

Following a meeting with the Build Back Better Task Force (BBBTF), Mr. Cimatu ordered the regional offices of the Department of Environment and Natural Resources (DENR) in Cagayan Valley, Central Luzon, and Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) to ensure that bamboo planting materials are available.

He also directed these regional offices to start identifying areas along the river banks suitable for bamboo planting, to be funded by the DENR’s national greening program.

Mr. Cimatu said bamboo was selected because it is hardy and fast-growing.

“It is ideal for stabilizing riverbanks,” Mr. Cimatu said.

“It can also be a potential sustainable source of livelihood for the people of Cagayan Valley while protecting the integrity of the Cagayan River,” he added.

In the same BBBTF meeting, Trade Undersecretary Blesilda A. Lantayona said the DENR’s decision to plant bamboo along the Cagayan River offers an opportunity to examine the crop’s economic potential.

Ms. Lantayona said the government has been developing a supply of engineered bamboo, but is unable to operate at full capacity due to lack of supply.

“Mr. Cimatu’s push to mainstream engineered bamboo as a major alternative to timber will finally enable the full implementation of Executive Order (EO) 879,” Ms. Lantayona said.

Under EO 879, at least 25% of the annual requirement of school desks and chairs in public elementary and secondary schools across the country need to be built with bamboo.

The EO also directs the DENR to use bamboo as a planting material for at least 20% of its targeted annual reforestation and rehabilitation projects.

“This should be done especially in provinces and towns which are engaged in or have the potential to engage in bamboo-based industries or where trees are difficult to grow because of poor site quality, susceptibility to erosion or adverse and steep gradients,” the DENR said. — Revin Mikhael D. Ochave

CREATE Bill: An early Christmas gift?

With Christmas just a few weeks away, most of us are preparing decorations and buying presents despite the quarantine. This year’s holiday season will be much different from the past celebrations. Most businesses, particularly the micro, small and medium enterprises, which used to get their fair share of consumer spending, were forced to temporarily close and retrench employees due to the pandemic.

Despite this, the government is still trying to improve the situation. One example of this effort was the passage of Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II), which provides tax breaks for corporate issuers, lenders and borrowers and businesses with operating losses.

On Nov. 26, the Senate also approved on third and final reading Senate Bill No. 1357 or the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). According to the Department of Finance, the bill is the first-ever revenue-negative tax reform package and the largest fiscal stimulus program for enterprises.

The CREATE Bill provides for the following major reform measures:

I. CORPORATE INCOME TAX (CIT)
The bill proposes a flat rate of 25%, from the current 30%, retroactive to July 1, 2020. This new rate is applicable to both domestic and foreign corporations. However, domestic corporations with total assets not exceeding P100 million and total net taxable income not exceeding P5 million, may end up paying as little as 20% CIT.

II. MINIMUM CORPORATE INCOME TAX (MCIT)
Effective also July 1, 2020, the MCIT drops to 1% from 2%. However, the rate will revert to 2% after June 30, 2023.

III. IMPOSITION OF IMPROPERLY ACCUMULATED EARNINGS TAX
Under the bill, the imposition of the 10% tax on the improperly accumulated earnings of corporations is repealed.

IV. DEDUCTIBLE INTEREST EXPENSE
The allowable deduction for interest expense is to be reduced by 20% (from 33%) of the interest income subjected to final tax.

V. PERCENTAGE TAX
As with the MCIT, the rate will also be reduced to 1% from 3% effective July 1, 2020. However, the rate will also revert to 3% after three years.

VI. PROPRIETARY EDUCATION INSTITUTIONS AND NON-PROFIT HOSPITALS
The bill proposes to reduce the income tax rate on proprietary educational institutions and non-profit hospitals to 1% (from 10%) effective July 1, 2020. After three years, the rate will increase to 3%.

VII. VAT EXEMPTION
a. Housing — The threshold for the VAT exemption of residential lots is set at P2.5 million (from P1.5 million). Any below that value will be exempt from VAT. For detached houses and other residential dwellings, the threshold is set at P4.2 million (from P2.5 million) and below.

b. E-Books — The sale, import, printing or publication of books, and any newspaper, magazine, journal, review bulletin on digital or electronic format is also be exempt from VAT.

c. Medicine — The sale or import of medicine for cancer, mental illness, tuberculosis, and kidney diseases will be exempted from VAT beginning 2021 instead of 2023.

d. Personal Protective Equipment (PPE) — The sale and importation of the following shall be VAT exempt:

i. Capital equipment, its spare parts and raw materials, necessary for the production of PPEs

ii. All drugs, vaccines, and medical devices specifically prescribed and directly used for the treatment of COVID-19

iii. Drugs for the treatment of COVID-19 approved by the Food and Drug Administration for use in clinical trials

VIII. APPROVAL OF INCENTIVES
Under the CREATE Bill, the role of Fiscal Incentives Review Board (FIRB) is to approve or disapprove the grant of tax incentives to the extent of the registered project or activity upon the recommendation of the Investment Promotion Agencies (IPA). However, the bill proposes to delegate the authority to the IPA for those projects or activities with investment capital of P1 billion and below.

In addition, the bill also proposes the following provisions for both export and domestic enterprises:

a. Income tax holiday (ITH) of 4 to 7 years

b. Special corporate income tax of 5% based on the gross income earned (GIE) for exporters and domestic enterprises classified as critical industries

c. Enhanced deductions duration of 10 years

d. Incentive duration, including expansion projects, of 14 to 17 years

e. Extension period of 10 years

f. Transition period — For enterprises currently in ITH, the enterprise can still avail of the ITH until its expiration. On the other hand, enterprises under the 5% GIE, can still avail of the said incentive until 10 years.

The reduction of the tax rates, additional exemptions and expansion of incentives will certainly help businesses recover and will also improve the country’s capability to attract investment after the pandemic. Considering that the bill was certified as urgent by the President, most investors and business owners are eagerly waiting for the passage of the bill. Such may be considered an early Christmas gift. Nonetheless, I hope that our legislators ensure that the benefits of the tax incentives will be given directly to the economy, workers, and businesses.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Anthony Joseph A. Cometa is a manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

25M people may get vaccinated next year

By Gillian M. Cortez and Vann Marlo M. Villegas, Reporters

THE DEPARTMENT of Health (DoH) plans to vaccinate as many as 25 million people against the coronavirus next year, the agency’s chief said on Monday.

It also expects a large portion of the Philippines’ more than 100 million population to become immune to the virus by 2023 based on herd immunity, Health Secretary Francisco T. Duque III told an online news briefing.

The vaccine doesn’t have to be given to all Filipinos based on herd immunity, when a large portion of the population becomes immune to the disease, making its spread unlikely.

“We might roll out the partial vaccination plan by 2021 and we are targeting to vaccinate 20 to 25 million people based on our prioritization list,” Mr. Duque said in Filipino.

At least 60 million Filipinos are expected to get vaccinated by as late as 2023, he added.

In the past, as many as 70% of the population had to be immunized to protect the entire population from a virus, DoH said.

The government’s mass vaccination program could start as early as June 2021, Jaime C. Montoya, executive director of the Philippine Council for Health Research and Development, told the same briefing.

An ethics committee from the Science and Technology department is reviewing applications for clinical trials from Sinovac Biotech Ltd. and Clover Biopharmaceuticals. The agency’s expert panel earlier approved the applications.

Once approved, clinical trials for their vaccines could start by December or January, Mr. Montoya said.

Three other drug makers have applied for clinical trials — Russia’s Gamaleya Research Institute of Epidemiology and Microbiology, Janssen Pharmaceutical Companies of Johnson & Johnson and AstraZeneca Plc.

FDA Director-General Rolando Enrique D. Domingo earlier said drug makers don’t have to conduct clinical trials here. They just have to register for product approval by the FDA.

Moderna, Inc. had informed Science and Technology officials that it does not plan to hold clinical trials here for a coronavirus vaccine it was developing. The company claims the drug is 94.5% effective. Pfizer, which claims its vaccine is 95% effective, also does not plan to conduct clinical trials in the Philippines.

VIRUS TALLY
DoH reported 1,773 coronavirus infections on Monday, bringing the total to 431,630.

The death toll rose to 8,392 after 19 more patients died, while recoveries increased by 44 to 398,658, it said in a bulletin.

There were 24,580 active cases, 83.5% of which were mild, 7.5% did not show symptoms, 5.7% were critical, 3% were severe and 0.31% were moderate.

Rizal reported the highest number of new cases at 104, followed by Cavite at 99, Negros Occidental at 88, Davao City at 79 and Laguna at 72.

DoH said seven duplicates had been removed from the tally, while six recoveries were reclassified as deaths. Eleven laboratories failed to submit their data on Nov. 29, it added.

The coronavirus has sickened about 63.1 million and killed 1.5 million people worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization.

Also on Monday, health experts urged the public to hold activities outdoors during the holidays for better air circulation and limit interactions to avoid coronavirus infections.

Antonio Dans, convenor of the Health Professionals Alliance Against COVID-19 (coronavirus disease 2019), told an online news briefing people should limit celebrations within the household.

If they can’t avoid going out, activities should be held outdoors where there is enough ventilation, he said. People should also eat at restaurants with tables outside the building.

People should observe physical distancing and wear face masks and shields, Mr. Dans said. Human interactions should be limited to less than 30 minutes, he added. “The shorter the time, the better.”

The presidential palace has said President Rodrigo R. Duterte would allow the emergency use of coronavirus vaccines, which would cut the approval process for drugs approved in countries where these were developed.

The President would issue an executive order for the emergency vaccine use, which allows local use after 21 days, shorter than the usual six months required for verification.

Mr. Duterte had also approved advanced orders for COVID-19 vaccines to ensure there is supply for the Philippines, vaccine czar Carlito G. Galvez, Jr. said.

Mr. Duterte last month said the government had funds to buy coronavirus vaccines, but it needs more so the entire population of more than 100 million could be inoculated.

He said he would look for more funds so all Filipinos could be vaccinated. The President said he was okay with vaccines developed either by Russia or China.

Mr. Duterte said he had spoken with outgoing Russian Ambassador Igor A. Khovaev and was told that Russia intends to set up a pharmaceutical company in the Philippines that will make the vaccines available here. He said soldiers and the police will be among the first ones to be vaccinated, along with poor Filipinos.

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