Online automotive retail booms during community quarantine, says AutoDeal

July 10, 2020 | 1:00 pm

Online car-buying platform AutoDeal.com.ph has seen an astonishing increase of 72% in the number of dealerships utilizing its platform since the beginning of the enhanced community quarantine. Many new brand partnerships at the OEM-level have joined the AutoDeal ranks. Such household or soon-to-be household names like Kia, Maxus, Chery, Suzuki, Mitsubishi, and Isuzu are all taking the initiative to drive their sales online and to further enhance their presence.

All of these brands are in addition to AutoDeal’s roster of already-existing partners which now account for more than 468 car dealerships, a figure that represents approximately 75% of all new car dealerships in the country.

As the number one online automotive marketplace in the Philippines, AutoDeal contributes to more than 30,000 vehicle sales per annum through its industry-leading volume of partner dealerships nationwide. The company expects more sales to be driven from online services and attributes this to the growth of ‘on-demand’ consumerism, which has been rapidly accelerated as a result of the recent pandemic.

“We’ve been driving a high volume of vehicle sales even before the quarantine. The rise of on-demand services has shown that consumers don’t want to wait, fall-in-line, or perform unnecessary travel to acquire services and information that can be readily provided online. The community quarantines have accelerated this requirement for consumers while at the same time forcing dealers to reflect on their digital strategies with more urgency than ever before,” stated AutoDeal co-founder Christopher L. Franks.

AutoDeal.com.ph’s platform allows consumers to do research, find promos, and connect with dealerships online. These site features equip the individual with a wide range of car-buying tools that allow for the best prices along with the best and most convenient route to car ownership. Prospective clients can also find dealerships that are most convenient for them to transact with or the one that gives them the best possible deal and experience.

Following these core features is the new ‘Buy Online’ feature that unlocks another aspect of the car-buying experience, which is reserving a unit especially for the customer. This new ‘button’ adds to the list of innovations and provides anyone with the means to make an online reservation without having to leave the comforts of their own home to physically go to a dealership to just browse.

Consumers will find that browsing the AutoDeal website yields pertinent information to the consumer with transparent and up-front facts meant to help them along with their purchase. A comprehensive online ecosystem ensures that customers get high-quality responses from partner dealerships. Thanks to the lead-management system that is pioneered by the company, dealers can easily manage their inquiries from prospective clients. The combination of consumer and dealer-facing technology is what enables AutoDeal to be successful in generating regular vehicle transactions across its platform.

With all that being said, with more partners and more brands brought into the fold, AutoDeal assures a stronger and more comprehensive user experience for its website. Dealership visits will only be needed to either see the unit in person or to pick up the released vehicle, thus limiting the amount of social contact and exposure that an individual might have when purchasing a brand new automobile. Social distancing and other factors that serve as hurdles to complete a transaction will not be much of a problem with these online services.

External trade continues to plunge in May

July 10, 2020 | 12:20 pm

THE COUNTRY’S exports and imports continued to decline in May by double digits, the Philippine Statistics Authority (PSA) reported this morning.

Preliminary PSA trade data showed merchandise exports shrank by 35.6% year on year to $3.99 billion compared to a 49.9% decline in April and a 1.8% growth in May 2019.

Likewise, merchandise imports plummeted 40.6% to $5.85 billion versus the declines of 65.3% in April and 1.2% in May last year.

The May figures marked the 13th and third straight month of decline for imports and exports, respectively.

Exports of goods from January to May figured in at $22.56 billion, down by 20.7% compared to the $28.43 billion in 2019’s comparable five months. This was way below the revised four percent contraction expected this year by the Development Budget Coordination Committee (DBCC).

Likewise, merchandise imports dropped 29.9% to $32.4 billion on a cumulative basis against the DBCC’s target of a 5.5% contraction for the year.

The trade deficit in May was recorded at $1.87 billion, narrower than the $3.65-billion shortfall a year ago. On a cumulative basis, the trade balance logged in a $9.84-billion deficit, smaller than the $17.79-billion deficit in the same five months last year. – Marissa Mae M. Ramos

Take an active role in shaping ‘better normal’ — JAZA

July 10, 2020 | 12:16 pm

by Patricia B. Mirasol

Healthcare, education, and financial services are industries experiencing mass disruption due to COVID-19 (coronavirus disease 2019), said Ayala Corp. (AC) Chair and Chief Executive Officer Jaime Augusto Zobel de Ayala, who advised taking an active role in shaping the new normal to make it better and more resilient.

“Our lives aren’t merely about anticipating and adjusting,” he said, on the second day of the National Academy of Science and Technology’s 42nd Annual Scientific Meeting. “Let’s take a more active role in shaping the new normal. Let’s not just play defensively.”

MASS DISRUPTIONS

Mr. Zobel discussed how COVID-19 has surfaced both gaps and opportunities in specific industries. Below are excerpts from his talk.

On healthcare

According to Mr. Zobel, there was an increase in the interest and usage of telemedicine during the quarantine period. HealthNow, a free web-based teleconsultation platform under AC’s healthcare unit, registered 11,000 patient consultation requests during its pilot phase between April to June. “The shift to alternative healthcare delivery models will persist even after the pandemic has ended,” Mr. Zobel said.

On education

Mr. Zobel observed that teachers and students are pivoting to distance learning “with varied levels of success.” Online education, he added, has several desirable features: convenience and flexibility; access to rich content micro-credentials; and learning analytics and customized instruction. “Admittedly, there are growing pains and infrastructure challenges; these will be steadily overcome,” he said.

On financial services

The Bangko Sentral ng Pilipinas has been encouraging fintechs and traditional banks to innovate. “Digital finance has immense potential to improve the reach and speed of financial services,” said Mr. Zobel, who added that that digital finance can drive financial inclusion, particularly for the 66% of Filipinos who remain unbanked.

BETTER NORMAL

The new normal is a unique opportunity to solve even greater challenges, said Mr. Zobel, who added that “building a better and more resilient normal” requires two critical components: a deeper and more holistic understanding of stakeholders, and tighter science-industry-government partnerships.

“Generating deep stakeholder insight requires an integrative approach to understanding their pain points,” he said. “This crisis has created a new environment. I say embrace it. Strengthen the link to science-industry-government partnerships and use science to create a new set of paradigms for doing things.”

The continuing scourge of public transport was given as an example in the talk for how the country could come together in reimagining mobility and using technology to create a safe, convenient, and affordable riding experience.

According to the Ayala Corp. Chair, a crisis always exacerbates existing problems and surfaces new challenges—and innovation always emerges after every crisis. “We can do more than just forecast and adapt,” Mr. Zobel said. “We all have a role to play.”

Four steps you need to take before launching your startup

July 10, 2020 | 10:53 am

by Mariel Alison L. Aguinaldo

Laying the foundation for a startup is just as important as the actual process of building it.

Cherry Murillon, founder of CAWIL.AI, an industry-agnostic artificial intelligence (AI) platform with extensive experience in machine learning projects, shared four steps to take before launching your startup in a recent webinar organized by IdeaSpace Foundation, an incubator and accelerator program that supports technological entrepreneurship in the Philippines.

1. Clarify your reason for being.

A lot of great businesses are built on the desire to fulfill a specific purpose or effectively solve a problem. If you’re able to define yours, then you’re establishing a clear mission for your startup.

Ms. Murillon started CAWIL.AI because she saw the demand for computer vision-based AI. “When I was in Singapore last year, I saw that it had a lot of applications. So I said, ‘It’s worth the risk. I need to move now or else I miss the chance of really creating a company that will solve this problem,’” she shared at a recent webinar titled “Grit & Grind – Building Your Team: How to Find the Right Co-Founder and Employees.”

In the process of defining your purpose or problem, don’t base it on earning a certain status or valuation. Focus instead on creating business value, advised Dr. Donald Lim, CEO of Dentsu Aegis Network Philippines, in a separate forum.

2. Assess your vision and skills as a founder.

As the startup founder, you are the proverbial captain steering the ship. And just like any good captain, you need to be equipped with the right navigational tools—in this case, your vision for the startup—to set you on the right course.

Begin by asking yourself the following questions:

• What targets do I want to accomplish with the company? Do I want to scale it up immediately? Or do I want to build it at a slower pace?
• Am I part of growing the company? Or will I sell it at some point?
• What are my financial goals? At what amount of profit will I be satisfied?
• What’s my implementation timeline? Around what point do I plan to exit?

You must also take the time to assess your skills. Identify your strengths and weaknesses and figure out your limitations. Ms. Murillon, for example, realized that she was good at business development and marketing but not at computer vision-based AI itself (it’s a field that trains computers to interpret and understand the visual world)

3. Find a co-founder that will complement you.

While it’s possible for founders to run a company on their own, there are several reasons finding a co-founder will be beneficial to both you and your startup. If you do decide to get one, make sure that it’s someone who has complementary skills.

Since Ms. Murillon identified that she wasn’t good with the technological side of the business, she decided to get a co-founder who would be the chief technology officer. “I operate like a lean startup. So, for me I am just satisfying that we can be operational for the next five years with this setup.”

However, the need to complement goes beyond the skills level. Think of the following aspects:

• Do they have passion for ideas? Are they someone I can rely on while brainstorming and validating?
• Do they have the same work ethic that I do?
• Will they work for the same salary that I’m getting paid?

4. Draft a founders’ agreement.

So you’ve found a co-founder that you can work well with. It’s time to seal the deal, literally, through a founders’ agreement.

According to the University of Pennsylvania Carey Law School, a founders’ agreement is the “product of conversations that should take place among a company’s founders at the early stages of formation.” These conversations should include the attitudes, fears, and aspirations of the founders in order to “minimize the likelihood of debilitating surprises” during the startup’s growth.

For Ms. Murillon, this is necessary no matter how close you may be to your co-founder. “Regardless that you’ve been friends for twenty years… the agreement needs to be clear,” she said.

These are some questions that you and co-founder should ask each other while drafting your agreement:

• What type of company culture do you want to build? How do you value your people?
• How much cash are you putting into the company? Do you need to take cash out?
• How long of a runway do you have until you need to go get a paycheck?
• How passionate are you about the startup? How long do you plan on staying?
• Who’s leaving their day job?

Innovation: The next big steps for businesses

July 10, 2020 | 10:40 am

2nd leg of BusinessWorld Insights SparkUp Entrep Series highlights value of innovation as economy moves forward

The coronavirus disease 2019 (COVID-19) pandemic has pushed the startup community to pivot into serving the immediate needs of consumers as well as to reinvent themselves. As the economy slowly reopens, startups and businesses in general look should not only take the opportunities to bounce back but also go further towards innovation, as the panel in the second leg of BusinessWorld Insights SparkUp Entrep Series shared.

Moderated by Carlo Calimon, director of StartUp Village, the online forum held last June 30 gathered insights and personal experiences during the pandemic from thought leaders from corporate, investing, and startup fields.

Empowering MSMEs

Mitch Locsin, first vice president and sales head of PLDT Enterprise, noted the shifts micro, small, and medium enterprises (MSMEs) did amid the heavy impact brought by the pandemic.

“From a brighter perspective, the global pandemic has made us realize how flexible and agile we can be in terms of doing business. Many MSMEs have found ways to reinvent themselves during the pandemic, by adopting new business models or shifting their platforms to online and digital,” Mr. Locsin added.

MSMEs are also shifting to e-commerce platforms and are adopting contactless payment systems since the past few months of the crisis, he added.

Out of working closely with customers from various sectors, the company’s core functional teams (CFTs) found out that a strong and reliable connectivity solution is indeed the foundation of digital transformation; yet the solutions must go beyond connectivity and so must be relevant and budget-friendly for MSMEs.

Aside from noting activity in the MSME sector, Mr. Locsin also observed a spur in the startup industry, with many of them finding new solutions in the new normal. He cited as an example the Project Green Grass, an Internet of Things-enabled end-to-end smart city solution which provides a free online community map of real-time screen activity using closed-circuit television (CCTV) networks.

“It allows the community or the LGU to have a view of the crowded city, whether it’s per barangay or in a certain area. This really helps LGUs manage their operations in their respective locations efficiently,” he added.

Mr. Locsin also noted the uptrend in telemedicine applications, saying that their company started working with startup companies in assessing the apps, which basically include appointment setting, video conferencing, e-prescriptions, and e-payment features.

Surviving and thriving

The biggest challenge for innovative startups and entrepreneurs today is making sure their businesses revive, Bit Santos, portfolio director at corporate venture capital firm Kickstart Ventures, pointed out.

Among the many things the crisis has turned around, the most critical change he noted is concerning the goals of startups. “Whereas previously, the purpose of a startup is really to grow rapidly. In these times, it’s not a time for growth but it is a time for survival,” he said. “We simply need to survive while the world is changing and put ourselves into a position to get back on track.”

Moreover, Mr. Santos said that for businesses to survive and thrive, proactive leadership is very important.

“Across all verticals and business models, that is one thing that we’ve seen common in startups who are doing well, given the challenges,” he stressed. “They have been proactive in identifying how these changes in environment affect their businesses and how must they adapt.”

He also advises young founders and entrepreneurs, who apparently encounter their first economic downturn, to lean on their advisers, investors, and mentors who may have experiences that will complement theirs.

Mr. Santos also has this to say for founders who are much stressed over the current situation and feel accountable for their business and for their people: “If you need time to take care of yourself first, take the time that you need to step back and take care of yourself, so that you can make sure that you can take care of your people, your business, and your customers.”

The portfolio director also noted that as the firm has recently seen many pitches from entrepreneurs and founders, they are looking for those that intend to solve these problems in a sustainable and scalable manner.

“I think it’s a good sign that we’re seeing all of these entrepreneurs identifying these opportunities. But it’s also just as important that the demand for these kinds of solutions is also there,” he said.

‘Prime time’ for startups

Sharing his numerous experiences as he joined the startup community in shifting gears and helping the government during the pandemic, Winston Damarillo, chief executive officer of Talino Venture Labs and executive chairman of Amihan Global Strategies, finds that it is “the best time to be a startup all over again”.

Talino Venture Labs, he shared, pivoted three existing ventures it built. Saffron, an insurance company focused primarily on providing cyberinsurance, pivoted to health and business insurance while leveraging its insuretech products. Asenso, an end-to-end MSME business accelerator, moved to provide small business loans. Unawa, meanwhile, moved from building startups to facilitate digital transactions.

The firm also built three new startups, Mr. Damarillo added. These are: a platform that addresses contact tracing, another that will take advantage of contactless and cashless payments in restaurants, and an MSME bank.

In addition, IT developer organization Devcon—which Mr. Damarillo founded and current heads—was able to raise about 1,000 developer volunteers that helped the government create a digital infrastructure for pandemic response in the country.

Moreover, Devcon was able to provide the Inter-Agency Task Force on Emerging Infectious Diseases a solution that will help with quarantine management—a nationally-deployable product that can handle about a million QR code passes in 180 checkpoints. Following this is ReliefAgad, designed to streamline speed up the distribution of financial aid in the country.

“We played offense instead of defense, and I think every startup should have that mindset,” he added.

Moreover, Mr. Damarillo underscored the importance of government in rebooting startups.

“I think we have seen in the pandemic that there’s a lot more infrastructure that the government needs… I think there’s a lot of what I would call digital ‘Build, Build, Build’. That’s a great opportunity to work with the government, and the government has been really open to doing that now with startups,” he said.

Solutions during pandemic

Eunice Braga, external relations manager of IdeaSpace, finds that there are huge opportunities for startups to take as the pandemic is expected to accelerate digital transformation in the Philippines.

“I think it will also power greater corporate startup engagement,” she added, “and we’re also going to see even more activity in terms of the creation, adoption, and mainstreaming of govtech products and services.

She also finds that there is an opportunity in creating or developing solutions to address new essentials, such as on-demand cleaning services, small-scale farming, urban gardening, digital insurance, and digital experiences, among others.

Regarding solutions that startups can offer at present, Ms. Braga observed that there are a couple of startups that are likely ahead of the digital transformation, citing as examples tax filing platform Taxumo and education solution FrontLearners.

“[FrontLearners have] managed to create a solution that is both online and offline, which I think will be critical as both public and private schools use blended learning platforms,” she shared. “And they have battle-tested it as well. They’ve piloted their solution in community schools post-typhoon and post-Marawi siege. They’re one of the startups which are definitely prepared for this moment.”

She also noted hyperlocal service Pandalivery, whose agility has been observed during the pandemic. “I remember seeing in the first two weeks of the quarantine that they jumped right on the opportunity to work with tricycle drivers that may have been misplaced because of the pandemic and bring them on board as delivery support,” she shared.

Looking for opportunities

For James Lette, executive director of the Manila Angel Investors Network, while there are significant challenges, the opportunities during the current situation are massive and manifold if one can look for them and take advantage of them.

The opportunities also depend on what industry the company falls into, Mr. Lette added. “We know that some industries are thriving; we know that many are challenging. This could be a time when the unicorns (a tech startup company that reaches a $1 billion market value) of tomorrow are being founded, and I’m looking forward to finding out if that happens,” he said.

With such opportunities, however, a challenge remains. “The key challenge [and] concern is that there needs to be a startup ecosystem that survives this crisis, so that it can grow and scale and take advantage of these opportunities,” Mr. Lette pointed out.

With the budding of new ideas at present, Mr. Lette also pointed out how implementing an idea is as much important as the idea itself. “For instance, we’re a big backer of edutech, and a quarter of our portfolio is there… [U]nfortunately, the implementation of online learning for some students has antagonized a lot of parents globally. So there’ll be some pushback against online learning once we get to the new normal,” he finds.

As he looks forward to meeting new startups in the near future, he intends to invest in those that have a strong argument as to how they will adapt through COVID-19 and how their product market fits in what will be the new normal.

“There’s going to be some ideas and some innovations out there that are going to change our lives, and I’m looking forward to seeing how they can come about,” he added. “The Manila Angel Investors Network [is here] to find them and support people [in achieving] their dreams.”

Need to support startups

The startup community is facing a big reset, Katrina Chan, director of QBO Innovation Hub, noted. Nevertheless, this reset creates an opportunity for them to build and create solutions that will approach reopening their businesses as well as thriving and potentially growing post-pandemic.

These circumstances have also seen some shifts in potential business partners and investors, Ms. Chan added. “I think businesses are more potentially open-minded right now to be willing to set aside some of their old practices and embrace new norms,” she said.

Ms. Chan also finds that there are startups that have taken the opportunity to deal with the immediate impacts of the pandemic as well as the opportunity to rebuild their businesses and inspire confidence as they reopen. She observed as well startups taking advantage of trends that arose from the lockdown, like e-commerce and remote services.

Citing a recent PricewaterhouseCoopers (PwC) survey on startups, where QBO collaborated, Ms. Chan noted that 21% of startups experienced an upsized surge in demand for their services and products and so face a whole set of challenges in terms of how will meet such demand, while the remaining felt that their demand dropped overnight.

“For that group, the challenge is now how do we pivot or retool ourselves and how do we think of solutions that can stick, not just to adapt to what’s going on for today, but how [should it] be sustained in the future,” she added.

Not only do startups face challenges, but a challenge is also set for the government and the public. For Ms. Chan, that is to support startups and patronize their products.

“The best way to help startups right now is to help them get traction [as this] helps them raise money,” she said.

New WHO guidance calls for more evidence on airborne transmission

July 10, 2020 | 9:16 am

The World Health Organization on Thursday released new guidelines on the transmission of the novel coronavirus that acknowledge some reports of airborne transmission of the virus that causes COVID-19, but stopped short of confirming that the virus spreads through the air.

In its latest transmission guidance, the WHO acknowledged that some outbreak reports related to indoor crowded spaces have suggested the possibility of aerosol transmission, such as during choir practice, in restaurants or in fitness classes.(https://bit.ly/2Ck7QBo)

But the WHO said more research is “urgently needed to investigate such instances and assess their significance for transmission of COVID-19.”

The report follows an open letter from scientists who specialize in the spread of disease in the air – so-called aerobiologists – that urged the global body to update its guidance on how the respiratory disease spreads to include aerosol transmission.

Based on its review of the evidence, the WHO said the coronavirus that causes COVID-19 spreads through contact with contaminated surfaces or close contact with infected people who spread the virus through saliva, respiratory secretions or droplets released when an infected person coughs, sneezes, speaks or sings.

The new guidelines do, however, suggest people should avoid crowds and ensure good ventilation in buildings, in addition to social distancing, and encourage masks when physical distancing is not possible.

“This is a move in the right direction, albeit a small one. It is becoming clear that the pandemic is driven by super-spreading events, and that the best explanation for many of those events is aerosol transmission,” said Jose Jimenez, a chemist at the University of Colorado who signed the letter, which was published on Monday in the journal Clinical Infectious Diseases.

In a press briefing on Thursday, Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, said there is not a lot of solid evidence yet on airborne transmission of SARS-CoV-2, but added: “I think it’s a reasonable assumption that it does occur.”

Although incomplete, Fauci said the evidence so far is “the fundamental basis for why we are now so intent on getting people – particularly people without symptoms – to wear masks. To be able to see if we can mitigate against that,” he said.

Only a very small number of diseases are believed to be spread via aerosols, or tiny floating particles. These include measles and tuberculosis – two highly contagious pathogens that can linger in the air for hours and require extreme precautions to prevent exposure.

Prior WHO guidance only acknowledged airborne transmission of the novel coronavirus during specific medical procedures. Linsey Marr, an aerosol expert at Virginia Tech who contributed to the WHO letter, said in an email that she is encouraged the agency is now acknowledging that airborne transmission may occur.

But she said the WHO is using an “outdated definition of droplets and aerosols” and is too focused on the size of the droplets and the distance they travel.

WHO defines aerosols as being under 5 microns because only particles that small could float in the air long enough to be inhaled. However, Jimenez and Marr said a much larger range of particle size has been shown to contribute to infection.

Rather than size, they said the differences between droplets and aerosols should be based on how the infection occurs: If a person inhales the virus and becomes infected, it’s an aerosol. If the infection occurs by contact, they are droplets.

Although WHO has been focused on airborne transmission at long distances, Marr said breathing in aerosols “is of greater concern at close contact and when people are in the same room.” – Reuters

Airport upgrade faces uncertainty

July 10, 2020 | 12:34 am

By Arjay L. Balinbin, Reporter

THE government has revoked the original proponent status given to the consortium seeking to rehabilitate the Ninoy Aquino International Airport (NAIA), after rejecting the latter’s move to revise the project’s terms in light of the pandemic’s effect on the travel industry.

The consortium claimed it will have difficulty obtaining financing for the P102.12-billion NAIA rehabilitation project under the current approved terms and conditions, the Department of Transportation (DoTr) and the Manila International Airport Authority (MIAA) said in a statement late Wednesday, citing the group’s July 6 letter submitted to the National Economic and Development Authority (NEDA).

The DoTr and MIAA said the consortium expressed it could only proceed with the NAIA project if “such terms and conditions are revised in accordance with its proposal as contained in the letter.”

“In view of this, and upon the recommendation of the NAIA Government Negotiating Panel, the MIAA, on 7 July 2020, has terminated negotiations with the NAIA consortium and withdraws/revokes its original proponent status (OPS),” they said.

In a statement issued on July 7, the consortium said “far-reaching and long-lasting consequences of the coronavirus pandemic on airline travel, airline operations and airport passenger traffic necessitated a review of the assumptions and plans to ensure that the NAIA project will be viable in the new normal.”

The proposed changes to the project’s framework would ensure its bankability, the consortium said.

The NAIA consortium is composed of Aboitiz InfraCapital, Inc; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; and JG Summit Holdings, Inc.

Antonio A. Ligon, law and business professor at De La Salle University, said the government should be willing to renegotiate the terms of the deal, considering how the pandemic wreaked havoc on the global tourism industry.

“The compelling reason must justify the discontinuance of the negotiations, because it will not be good for the image of the government,” Mr. Ligon said in a phone interview.

“Both parties should consider what’s going on right now. Negotiations should consider the challenges that the world is facing now. It should not be one-sided. The supervening event is global, so it should be easy for both parties to consider based on this supervening event.”

Despite the collapse of talks with the NAIA consortium, the government appears unfazed.

Finance Secretary Carlos G. Dominguez III on Wednesday said there are two other proponents interested in the project at the terms the government has indicated.

“We’re not worried about it… We have two other proponents who are very willing to step into the shoes of the consortium,” he said in a virtual briefing.

In September 2018, the NAIA consortium obtained the original proponent status from the DoTr to rehabilitate, upgrade, expand, operate and maintain the country’s main gateway for 15 years.

The original proposal submitted in February 2018 cost P350 billion and included the construction of an additional runway over a 35-year concession period, but this was reduced eventually per the DoTr’s request.

Metro Pacific Investments Corp. was originally part of the consortium, but withdrew from the project due in part to the unresolved issue of tax payments.

The rehabilitation of the NAIA, whose main terminal opened in 1981, is expected to increase its capacity to 47 million passengers a year in the first two years and further expand this to 65 million passengers after four years.

The NAIA, which has four terminals, has been operating beyond its 30.5 million annual passenger capacity. It recorded 45.3 million passengers in 2018.

BIR exempts imported diabetes drugs from VAT

July 10, 2020 | 12:33 am

THE Bureau of Internal Revenue (BIR) is exempting imports of prescription drugs to treat diabetes, high cholesterol and hypertension from value-added tax (VAT).

Revenue Regulations (RR) No. 18-2020, which was signed on June 30 but published on July 9, stated that the sale or importation of prescription drugs and medicines for diabetes, high cholesterol and hypertension are exempted from the 12% VAT starting Jan. 1, 2020.

VAT collected from these drugs from Jan. 27, 2020 until the effectivity of the new rules will be refunded, “provided that the input tax on the imported items have not been reported and claimed as input tax credit in the monthly and/or quarterly VAT returns,” the BIR said.

Department of Health Food and Drug Administration (DOH-FDA) approved on Jan. 27 a list medicines eligible for tax privileges under Republic Act (RA) No. 11467.

At the same time, drugs and medicines for cancer, mental illness, tuberculosis and kidney diseases will also be VAT-exempt beginning Jan. 1, 2023.

“The exemption from VAT under this subsection shall only apply to the sale or importation by the manufacturers, distributors, wholesalers and retailer of drugs and medicines included in the ‘list of approved drugs and medicines’ issued by the DoH for this purpose,” the regulation stated.

The latest directive amends the RR 25-2018 issued in December 2018 when the BIR laid out the rules on the VAT-exempt status of drugs for the treatment of selected cardiovascular and related diseases that did not include imported drugs.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, drugs for diabetes, high cholesterol, and hypertension were VAT-exempt starting Jan. 1, 2019.

NEW TAX RATES FOR TOBACCO
The BIR also released the new tax rates for tobacco, heated tobacco, vapor, and nicotine-based products.

Revenue Memorandum Order (RMO) No. 20-2020 outlined the new excise tax rates on cigarettes packed by machines to P45 per pack starting this year, increasing it to P50 in 2021, P55 in 2022 and P60 in 2023.

An excise tax of P10 was imposed on a pack of heated tobacco on Jan. 1, 2020, which was raised to P25 on Jan. 27. This will go further to P27.50 per pack beginning 2021, P30 in 2022 and P32.50 in 2023.

Salt nicotine-based vapor products were slapped with a P37 per milliliter (ml) specific tax on Jan. 27 this year, which will increase to P42 in 2021, P47 in 2022 and P52 in 2023.

Meanwhile, vapor products with conventional nicotine were charged P45 per 10 ml on Jan. 27, and will be raised to P50 starting 2021, P55 in 2022 and P60 in 2023.

BIR has also set an inspection fee worth 10 centavos per 1,000 units of heated tobacco products and a fee of one centavo per ml of vapor products.

This is set to increase by P5 annually until it reaches P60 in 2023. All these rates will be increased by 5% every year effective Jan. 1, 2024.

Finance Secretary Carlos G. Dominguez III had said the new rates will be applied retroactively.

The guidelines also laid out the new rates as mandated under RA 11346 signed into law in July 2019 imposing higher rates for tobacco products, as well as RA 10351 that restructured the excise tax on alcohol and tobacco products passed in 2012.

Meanwhile, specific tax for cigars rose to P6.57 each starting Jan. 1, and will increase to P6.83 next year, P7.10 in 2022 and P7.38 in 2023. The ad valorem tax was kept unchanged at 20% of the net retail price per cigar.

Cigarettes packed by hand were also slapped with a higher rate of P45 per pack at the start of 2020, before increasing to P50 in 2021, P55 in 2022 and P60 in 2023.

The new rates for chewing tobacco that are unsuitable for use in any other manner were hiked to P1.97 per kilogram this year. This will be raised to P2.05 next year, P2.13 in 2022 and P2.22 in 2023. — Beatrice M. Laforga

Philippines improves in global real estate transparency index

July 10, 2020 | 12:32 am

The Philippines rose one spot to 44^th spot on this year’s Global Real Estate Transparency Index. — *BW FILE PHOTO*

THE emergence of sustainable property development and digitization helped lift real estate transparency in Southeast Asia, including the Philippines, according to a report by property consultant JLL (Jones Lang LaSalle) and investment manager LaSalle Investment Management.

The latest Global Real Estate Transparency Index report, which is released every two years, showed the Philippines as among the top 10 biggest improvers globally for 2020.

Described as an “essential guide for companies operating in foreign markets,” the index measures investment performance, market fundamentals, governance of listed vehicles, regulatory and legal frameworks, transaction processes and sustainability.

The Philippines inched up to the 44^th spot on this year’s index, from 45^th in 2018. Other Asia-Pacific markets posted the biggest improvement on the index are: China (32^nd), Thailand (33^rd), India (34^th), Indonesia (40^th) and Vietnam (56^th).

This year’s list covered 99 countries and 163 city regions. The United Kingdom topped the index, followed by the United States, Australia, France, Canada, New Zealand, Netherlands, Ireland, Sweden and Germany.

Singapore (14^th) had the highest ranking among Asian countries, followed by Hong Kong (15^th) and Japan (16^th).

The Philippines remained at the “semi-transparent” tier, the third out of five classifications, which the report defined as the spot for countries with steady improvements but still need to address corporate governance and regulatory enforcement issues.

In a statement, JLL said the turnout for the Philippines and Asia-Pacific this year is attributable to the improvements made in sustainable development and property technology.

“Sustainability, including a rise in the number of green-certified buildings, contributed to the Philippines’ improvement,” JLL Philippines Capital Markets Head P. Ryan Isip was quoted as saying.

“The Philippines has also undertaken an initiative to digitize the land registry, leading to better quality records and easier access,” he added.

The report mentioned the Energy Efficiency and Conservation Act of 2019 and the green bond issuance of a local developer in early 2020 as among the drivers that helped improve real estate transparency in the Philippines.

These trends towards sustainability and digitization are similar with what was observed in the rest of the region, where sustainability commitments have become the biggest single driver of real estate transparency, JLL said.

The increased use of digital tools due to the coronavirus pandemic also led to the global rise in real estate transparency.

“As the adoption of (property technology) and sustainability commitments continue to garner steam, greater transparency gains will be driven by both an evolving regulatory landscape and the collective actions by national real estate industries,” JLL Southeast Asia Chief Executive Officer Chris Fossick said in the statement.

“With the outbreak of COVID-19, it will become even more crucial for the real estate industry to work collaboratively with local governments to achieve greater transparency and meet the changing expectations of investors,” he added. — Denise A. Valdez

How ‘transparent’ is the Philippine real estate market compared with those in other areas?

July 10, 2020 | 12:32 am

ERC directs erring power utilities to refund customers

July 10, 2020 | 12:31 am

POWER UTILITIES were directed to refund the feed-in tariff allowance (FiT-All) and environmental charge to customers, after failing to comply with the Energy Regulatory Commission’s (ERC) earlier directive to suspend collection of these charges at the height of the lockdown.

The ERC said it is currently resolving more than 47,000 consumer complaints regarding electricity bills covering the lockdown period that started in mid-March.

In an advisory dated July 7, the ERC said erring power utilities must refund the FiT-All, the collection of which was suspended in March and April, as well as the collected universal charge — environmental charge since May.

They must also refund customers who overpaid their bills during the quarantine months, which were based on estimated consumption. Electricity users should only pay their bills based on their actual consumption in those months.

Moreover, utilities that have not introduced the ERC-ordered installment scheme in bills payments must return the fully paid arrears to customers.

“For consumers who already paid in full their monthly billings that fell due during the Enhanced Community Quarantine or Modified Enhanced Community Quarantine that is covered by the mandated installment arrangement, they shall also have the option to seek a refund and avail of the mandated installment payment,” the advisory read.

Manila Electric Co. (Meralco), the country’s biggest distribution utility, already promised to refund customers who have paid their bills during the lockdown period but who intend to pay them on an installment basis.

Customers who are entitled to a refund due to overpayments have an option for the amount to be credited in their next monthly bill.

The ERC also asked the power utilities to submit a report on their overbilling and refund scheme by mid-August.

Meanwhile, utilities in Cebu City, which remain under a strict lockdown, were told not to implement any power disconnection until September for customers who have yet to pay their arrears.

Responding to the advisory, the Philippine Rural Electric Cooperatives Association (Philreca) said before the order on suspending the collection of the FiT-All was released on April 15, rural utilities have already printed and distributed their customers’ bills.

“Most if not all statements reflected the collection of the FiT-All,” it added.

Philreca further said electric cooperatives were able to comply with the May suspension notice for the collection of the environmental charge starting in the June billing month.

“The timing of the release of the advisories makes it impossible to implement the order on the billing period being asked for by the Commission. This only adds to the confusion of our member-consumer-owners,” Philreca claimed.

The FiT-All component is stored in a fund administered by the government-owned National Transmission Corp. (TransCo), which remits the amount to FiT-eligible renewables developer, while environmental charges go to the watershed rehabilitation and management activities of the state-led National Power Corp. (Napocor).

“ERC should order the concerned agencies to refund the collected charges and make appropriate arrangement[s] with the distribution utilities on how to refund the same to the consumers,” Philreca said.

The group urged the ERC to engage stakeholders first before implementing such orders in the future.

The latest advisory came after the Senate Energy Committee prodded the regulator on Monday to probe distribution utilities and electric cooperatives that have not complied with the collection suspension order on some bill components.

“Marami pong nag-violate dito. At ’yan ang basis namin ng pag-issue ng show-cause orders sa [mga] distribution utilities at electric cooperatives (Many have violated these directives, and this is our basis for issuing show-cause orders to them),” ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said during the hearing. — Adam J. Ang

GMA Network’s Affordabox gets ‘overwhelming’ public response

July 10, 2020 | 12:09 am

GMA Network expects to exceed sales estimates for the year for its two-week-old digital terrestrial television (DTT) receiver, called the Affordabox, after the public’s “overwhelming” response, said a network executive.

“We originally projected [to sell] 600,000 for this year but reception to the product has been overwhelming. We will definitely do more than our original projections,” Regie C. Bautista, GMA Network chief risk officer and first vice-president for corporate strategic planning, and concurrent head for program support, told BusinessWorld in an e-mail interview on July 6.

The Affordabox is the third DTT to launch in the country after ABS-CBN’s TV Plus in 2015 and Solar Digital Media Holdings Inc.’s short-lived Easy TV in 2018 which was discontinued in 2019.

In February this year, ABS-CBN reported that it had sold over 9 million of its digital boxes. But despite these numbers, GMA’s Ms. Bautista noted that many Filipino homes still haven’t switched to digital channels because of “restrictive pricing of existing branded digital receivers available in the market.”

Data analytics company Dataxis said that in 2019, 18.7 million Filipino households had televisions, a number expected to increase to 20.7 million by 2024.

When it was launched, ABS-CBN’s TV Plus was priced at P2,500 — the price was reduced to P1,499 by 2020. GMA’s Affordabox is priced at P888.

“Since we believe that every Filipino home should be able to enjoy digital viewing, we endeavored to come up with a quality product that is accessible to the majority of TV viewing homes,” Ms. Bautista said, before adding that the price and the box’s added features (it is also a multimedia player and personal video recorder) are what GMA thinks will set it apart from the competition.

Currently, the Affordabox has introduced one new channel — the Asian-centric Heart of Asia that features Korean, Chinese, and Thai dramas alongside GMA-produced titles like Amaya. It also has all the free to air channels such as PTV4 and TV5.

Ms. Bautista said the network plans to introduce “at least one to two more [channels]” within the year.

Before being ordered to shut down by the National Telecommunications Commission on July 1 because of the network’s expired franchise, TV Plus operated 10 channels aside from the main ABS-CBN channel: family-oriented Jeepney TV, Asian TV-centric Asianovela channel, O Shopping Network, English movie channel Movie Central, the all-day kids’ channel Yey!, Filipino movie channel Cinemo!, educational channel Knowledge Channel, the sports channel S+A, and DZMM TeleRadyo. It currently can only offer the free to air channels from GMA (including Heart of Asia), TV5, PTV4, etc. — Zsarlene B. Chua

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