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Initial phase of energy labeling rules to cover fridges, ACs

REFRIGERATORS and room air conditioners will be among the first batch of appliances to be subject to the new energy-consumption labelling rules, according to guidelines drafted by the Department of Energy (DoE).

In the guidelines issued to appliance manufacturers and importers, the DoE said the initial product categories covered by mandatory labelling also include televisions and lighting products.

The label must appear on or be included in product packaging and outline the appliance’s energy-consumption rating, as required by Republic Act No. 11285, or the Energy Efficiency and Conservation (EEC) Act.

The guidelines advise appliance makers and importers how to comply with the Philippine Energy Labeling Program (PELP), which helps encourage energy conservation by informing buyers how efficient their appliances are.

The DoE regulates the information contained in an energy label. They include the DoE logo and the product’s energy performance ratings, and will contain control numbers issued by the DoE’s Energy Efficiency and Conservation Performance Regulation and Enforcement Division.

Retailers have been ordered to ensure that such products display energy labels.

“As applicable, they shall also exhibit the energy labels in all their publications including advertisements in newspapers, TVs or leaflets and in all online trading activities. At the minimum, the energy efficiency class of the product, as applicable, needs to be mentioned,” it added.

The list of products covered may be expanded upon the recommendation of the DoE’s Energy Utilization Management Bureau (EUMB).

The DoE also outlined in a separate draft circular its guidelines for minimum energy performance for products (MEPP).

Minimum energy performance, as defined in the implementing rules and regulations of the EEC Act, is a standard performance level for energy-consuming products that “must be met or exceeded before they can be offered for sale or used for residential, commercial, transport, and industrial purposes.”

A PELP technical working group convened by the department’s Alternative Fuels and Energy Technology Division will review the MEPP within five years.

The DoE is currently seeking comment on these two draft circulars, along with its draft rules for the accreditation of energy service companies (ESCOs), until April 30. The EUMB will later finalize these guidelines during a public consultation via Skype on May 12. — Adam J. Ang

Is your business COVID-19 resilient?

The World Health Organization (WHO) has declared COVID-19 a public health emergency of international scale, impacting governments and businesses alike with unprecedented disruption and risks. Companies continue to feel the business and financial shocks caused by the pandemic. COVID-19 has become a black swan event, unpredictable and with potentially severe consequences.

As companies navigate the COVID-19 crisis, there are a number of key issues corporate leaders should be thinking about, as well as steps they can take to reshape their business and plan for recovery.

Global companies have to be predictive and proactive in their decision-making to preserve continuity and build resilience. As global companies grapple with an ongoing and evolving situation, we have identified five priorities for them to consider.

PRIORITIZE PEOPLE SAFETY AND CONTINUOUS ENGAGEMENT
Ensuring the safety and well-being of employees in the workplace is essential. People look to their employer, community and government leaders for guidance. Addressing their concerns in an open and transparent manner will go a long way towards engaging them and reassuring them of business continuity.

One of the adjustments companies have to make is to initiate or expand flexible work arrangements and other policies that allow people to work remotely and safely. Depending on the sector, companies will want to reorganize teams and reallocate resources. Additionally, companies will want to produce regular communications that align with current government and health authorities’ policies to help employees remain engaged as they and the organization navigate through the crisis. Finding ways to reimagine a business-as-usual environment that minimizes disruptions for the organization requires a fine balance.

Where telecommuting or flexible work arrangements aren’t possible and companies must have workers on site or in direct contact with customers, it is important to provide measures to protect against infection.

RESHAPE STRATEGY FOR BUSINESS CONTINUITY
As mentioned, almost all businesses are likely to experience significant disruption to their business-as-usual operations and will experience underperformance throughout the duration of the COVID-19 crisis. This is especially true for companies that either operate in or are exposed to countries with significant outbreaks of the coronavirus. These companies will experience disruption to their supply chain and production commitments. To help address these challenges, companies must:

Evaluate short-term liquidity. Companies have to instill short-term cash flow monitoring discipline that allows them to predict cash flow pressures and intervene in a timely manner. They will need to maintain strict discipline on working capital, particularly around collecting receivables and managing inventory build-up. Additionally, it will be important to be creative and proactively intervene to lighten the working capital cycle.

Assess financial and operational risks and respond quickly. Companies will need to monitor direct cost escalations and their impact on overall product margins, intervening and renegotiating new terms where necessary. Just as companies need to monitor their in-house vulnerabilities, they also will need to monitor the pressures that may be impacting some of their customers, suppliers, contractors or alliance partners. Finally, they need to be aware of covenant breaches with banking facilities and other financial institutions relating to impairment risks in asset values, which may impact the health of the overall balance sheet.

Consider alternative supply chain options. Companies that source parts or materials from suppliers in areas significantly impacted by COVID-19 must look for alternatives. Such quick moves will create the temporary capacity to meet customer obligations. Companies that have arrangements with agile manufacturing facilities to make spot buying decisions — or have loose contractual arrangements with various service providers and logistics providers — should consider the initial disruption as well as post-crisis scenarios given the potential for demand spikes.

Determine how the COVID-19 crisis affects budgets and business plans. Companies will want to stress-test financial plans for multiple scenarios to understand the potential impact on financial performance and assess how long the impact may continue. Based on the outcome of the assessment, companies may need to look at near-term capital raising, debt refinancing or additional credit support from banks or investors, or policy supports from the government. At the same time, companies will need to review overall operating costs and consider either slowing down or curtailing all non-essential expenses.

COMMUNICATE WITH RELEVANT STAKEHOLDERS
Clear, transparent and timely communications are necessary when creating a platform to reshape the business and secure ongoing support from customers, employees, suppliers, creditors, investors and regulatory authorities.

• Customers. Keep customers apprised of the impact on product or service delivery. If contractual obligations cannot be met as a result of supplier or production disruption, it is important to maintain open lines of communication to revisit timelines or invoke “force majeure” or “act of God” clauses. Such proactive action will help to mitigate punitive damages or liabilities associated with disrupted customer obligations.

• Employees. Find the balance between cautioning your people and maintaining a business-as-usual mindset when communicating with employees.

• Suppliers. Maintain regular contact with suppliers regarding their ability to deliver goods and services and their own recovery plans. This helps enable the company to consider alternative supply chain options in a timely manner.

• Creditors and investors. Review terms and conditions on loan contracts to identify and avoid vital technical debt breaches. These reviews will have the added benefit of giving companies a chance to proactively manage the dialogue and communications with creditors regarding any necessary amendments to existing terms or refinancing arrangements.

• Government and regulators. Consult with legal and risk management teams for advice on potential exposures.

MAXIMIZE THE USE OF GOVERNMENT SUPPORT POLICIES
Companies should monitor government and organizational opportunities for support and how they may best serve the individual circumstances of their organization. For instance, the Department of Labor and Employment (DoLE) has said that a P1.3-billion financial assistance program will be given for workers affected by the enhanced community quarantine in Luzon. Under the COVID-19 Adjustment Measures Program, each worker will receive P5,000 in cash to be processed through the companies’ payroll system. Companies should monitor the availability of these kinds of programs and use them to mitigate the risks they face.

BUILD RESILIENCE IN PREPARATION FOR THE NEW NORMAL
Once companies have solidified strategies based on stress tests and communicated any new directions with relevant stakeholders, they will need to execute revised plans while monitoring what continues to be a fluid situation. Senior management should report any material deviation from the plan in a timely manner so that their companies can take additional action to avoid further negative impact. Once the COVID-19 pandemic is controlled, companies will want to review and assess business continuity plans. If there are deficiencies, identify root causes, whether it’s timeliness of action, a lack of infrastructure, labor shortages, or external environment issues. Companies will then want to consider putting new internal guidelines in place based on lessons learned, as well as solid contingency plans to build resilience and better respond to future crises.

WHAT COMES NEXT?
As a black swan event, the COVID-19 crisis is impossible to predict. However, there are many lessons companies can learn and carry forward once the crisis has passed and a chance is provided to analyze their response. In the meantime, companies should be making decisions and taking action during this crisis with recovery in mind. When the crisis is over, it will be clear which companies have the resilience and agility to reshape their business strategy to thrive in the future.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Editha Viray-Estacio is a Partner from the Transaction Advisory Services of SGV & Co.

27 more female inmates infected with coronavirus

By Vann Marlo M. Villegas
Reporter

TWENTY-SEVEN more inmates at the Correctional Institution for Women have been infected with the coronavirus disease 2019, prison officials said at the weekend, adding to worries about contagion risks in the country’s overcrowded prisons.

There are now 48 prisoners at the Mandaluyong City prison who have tested positive for COVID-19, the Bureau of Corrections (BuCor) said in a social media post.

Forty-seven female inmates were brought to the quarantine area of the national penitentiary in Muntinlupa City, the bureau said.

The prisoners were well and did not show any symptoms, BuCor said, adding that they would be monitored in case any of them develop severe symptoms.

The Department of Health reported 285 new infections yesterday, bringing the total to 7,579

Seven more patients died, raising the death toll to 501, it said in a bulletin. Seventy more patients have gotten well, bringing the total recoveries to 862, it added.

With 215,000 prisoners nationwide, Philippine jails are overfilled five times their official capacity, making it the most overcrowded incarceration system in the world, according to the World Prison Brief.

New York-based Human Rights Watch has urged the government of President Rodrigo R. Duterte to act fast and release some detainees to prevent a major health catastrophe.

“Everyone acknowledges that jails in the Philippines are obscenely overcrowded, with people living right on top of each other, and recognizes that COVID-19 is an incredibly contagious disease that can spread like wildfire through crowds,” Phil Robertson, deputy Asia director at HRW, said in an e-mailed reply to questions.

“So it is astonishing that the government is being so obtuse and refusing to reduce prison populations by releasing those inmates held for nonviolent, relatively minor offenses,” he said.

“Without quick action to significantly reduce overcrowding, the Bureau of Corrections could find itself facing thousands of seriously sick prisoners and no way to quarantine or care for them,” he added.

The 27 prisoners were part of the second batch of 51 inmates tested for the COVID-19 virus.

A 72-year-old inmate confined at the Sta. Ana Hospital was the first to test positive for the disease.

Meanwhile, the first confirmed COVID-19 prisoner at the national penitentiary who was admitted at the Research Institute for Tropical Medicine in Muntinlupa City died on April 23.

The Bureau of Jail Management and Penology in Region VII said there were now 210 COVID-19-positive inmates at the Cebu City Jail Male Dormitory, with 63 new confirmed cases.

The city’s Public Information Office said it was coordinating with the BJMP to address the spike in infections at the city jail.

“Contact tracing and testing at the jail facility are ongoing,” it said in a social media post in the Visayan language.

Several groups have asked the Supreme Court to allow the release of inmates who are vulnerable to the disease. At least 22 political prisoners who are elderly and have underlying medical conditions sought their release through bail on humanitarian grounds.

The Department of Justice earlier approved an order by the Board of Pardon and Parole easing the requirements for parole and executive clemency.

The Office of the Court Administrator has also ordered trial judges to enforce a six-year-old rule allowing the release of prisoners who have served the minimum penalty for their sentences.

1,300 Filipinos from overseas arrived at weekend, DFA says

MORE than 1,300 Filipino workers overseas have come home amid a coronavirus pandemic that has sickened 2.9 million and killed more than 203,000 people worldwide, the Department of Foreign Affairs (DFA) said.

A total of 38 Filipino missionaries stranded in Ghana and Sierra Leone arrived in Manila late Saturday evening, DFA said in a social media post on Sunday.

The agency worked with honorary consuls and the Filipino communities in both countries because the Philippines does not have an embassy or consulate there, Foreign Affairs Undersecretary Brigido D. Dulay said.

This brings the total number of repatriates to more than 21,000 since the DFA started bringing home Filipinos on Feb. 25.

This followed 610 seafarers of MV Queen Mary 2 in the United Kingdom, 337 crewmen of Costa Cruises in Italy and 13 from MSC Magnifica in Spain, who arrived in separate batches at the weekend.

The repatriation was facilitated by the Philippine embassies in London, Milan and Madrid as well as local manning agencies Singa Ship Management Philippines, Inc., Career Philippines Ship Management Inc., Magsaysay Maritime Corp. and Philippine Transmarine Carriers, Inc.

All the Filipinos underwent medical checkup upon arrival and will undergo a 14-day mandatory quarantine, DFA said.

It said 336 other Filipino workers from Maldives came home on Saturday evening and were taken to the World Trade Center quarantine facility.

The DFA noted that as of April 25, 1,337 Filipinos overseas have been infected with the coronavirus disease 2019. A total of 825 were being treated, 328 have recovered, while 184 have died, it said. — Charmaine A. Tadalan

Nine of 10 Filipinos trust Duterte — poll

NINE of 10 Filipinos have high trust in President Rodrigo R. Duterte and the government amid the coronavirus disease 2019 pandemic, according to a poll by consultancy firm EON Group and research firm Tangere.

Mr. Duterte got a 94.03% trust rating, according to the poll.

Overall trust was also high for Pasig Mayor Victor María Regis “Vico” N.Sotto — the only local government official mentioned in the report — with 96.61%.

House Speaker Alan Peter S. Cayetano got 66.19%, while Senate President Vicente C. Sotto III got 56.17%.

Vice President Maria Leonor G. Robredo had less than half of the respondents’ overall trust, with 40.09%.

Government agencies on the frontline of battling the COVID-19 pandemic also got high trust marks.

The Department of Health got 84.79%, the Department of Interior and Local Government received 82.19% and the Department of Social Welfare and Development got 74.89%, according to the poll.

“Cooperation and compliance with government mandates hinges on public trust, especially in a time of unprecedented crisis when collective anxiety and uncertainty are high,” according to the report.

The report said people’s trust in the government and its institutions especially during the COVID-19 crisis are influenced by the government’s action and engagement with the people.

The participants were 5,425 users of the Tangere app across the country who finished the poll.

EON did not say when the poll was conducted or what its error margin was. — Gillian M. Cortez

#COVID-19 Regional Updates

Local governments take cautious transition to ‘new normal’

LOCAL leaders whose areas have been declared under low or moderate threat of the coronavirus disease 2019 (COVID-19) feel the pressure of ensuring stricter implementation of guidelines as they prepare to relax restrictions under the “new normal” by May 1.

Governor Manuel N. Mamba of Cagayan, where there have been no new COVID-19 cases for the past three weeks and the 14 confirmed patients have already recovered, said they will need to be stricter at checkpoints, the observance of physical distancing, and wearing of face mask.

In a statement over the weekend, Mr. Mamba said the capital Tuguegarao City, which is also the regional center of Cagayan Valley, is particularly crucial.

“Anything could happen in Tuguegarao. Let us treat Tuguegarao City differently in this time of crisis,” he said.

The governor met with the city’s officials Saturday to discuss how they can protect the province against a potential new wave of COVID-19 cases alongside the partial reopening of businesses and government offices.

Cagayan Valley recorded three new COVID-19 patients on April 25, one from Nueva Vizcaya, and two in Santiago City, Isabela.

The region is aiming to improve its testing capacity with the accreditation of the Cagayan Valley Medical Center, located in Tuguegarao, and the Southern Isabela Medical Center as COVID-19 subnational laboratories.

The facilities were checked by representatives from the World Health Organization, Research Institute for Tropical Medicine, and Department of Health last week and are awaiting assessment results.

LONG-TERM
In Bohol, which has maintained a COVID-free status after one Chinese tourist tested positive in January and has since recovered and left, Governor Arthur C. Yap reminded residents that the threat of the virus will be long-term.

“We must live with the rules of the ‘new norm’… we must accept that COVID-19 will be with us for years and that we must learn to ‘live’ with it, and not to ‘die’ with it,” he said in a press briefing Friday after the national government announced that the island province will be among those that can ease rules by May 1.

One of the main concerns that the province will need to strengthen is rapid testing and strict quarantine rules for the “thousands” of Boholanos who want to return home, especially displaced workers from other parts of the country and overseas, Mr. Yap said.

The governor also met last week with the business sector to map out an economic plan that will “no longer be dependent on tourism alone.”

“Agriculture and small businesses offer a more inclusive economy,” he said.

Mayor Jerry P. Treñas of Iloilo City, which was already preparing to ease restrictions before the national government’s decision Friday to place it among high-risk areas and must remain under strict quarantine protocols, said they are ready either way.

“We are ready whatever the recommendation of IATF (inter-agency task force) is. If they will extend the ECQ (enhanced community quarantine), we are okay with it, and if not, we are ready,” he said on Friday.

TESTING
In Caraga, the region with the lowest COVID-19 patients at three, including one who already recovered, preparations are underway for a more massive rapid testing for a more immediate isolation efforts.

Mayor Ronnie Vicente C. Lagnada of Butuan City, the regional center and where all the COVID-19 patients come from, said the top item on their wish list is the acquisition of a polymerase chain reaction or PCR machine for an accredited laboratory in the region so they can immediately confirm the results of the rapid test.

Agusan del Norte Governor Dale B. Corvera, chair of the region’s One Caraga Shield against COVID-19, said the national task force has expressed support for the establishment of laboratories at the region’s two referral hospitals.

On the economy, Mr. Lagnada said the regional body met last week on measures for the reopening of industries that have shut down.

Caraga’s economy is mainly driven by agro-forestry, mining, and agricultural production along with high-value crop processing for export.

Mr. Lagnada said, “We are doing the planning now, we have proposals from the different sectors… on the rules, like social distancing, regular testing… This will be a new normal.” — Marifi S. Jara and Emme Rose S. Santiagudo

Nationwide round-up

Senate leaders see no need for COVID-19 supplemental budget

THE passage of a supplemental budget as additional fund source in addressing the crisis brought by the coronavirus disease 2019 (COVID-19) is not needed, Senate President Vicente C. Sotto III said on Sunday. Mr. Sotto said the “Bayanihan to Heal as One Act” or Republic Act 11469 already allows President Rodrigo R. Duterte to realign items in the 2019 and 2020 Executive department budget, including those of government-owned and -controlled corporations. “Kung tutuusin… nandoon lahat ang binigay naming power doon sa RA 11469, hindi na kailangan ng (If you look at it, it’s all there in RA 11469, no need for a) supplemental budget,” he said over DzRH radio. “Alam namin na kailangan mas malaki ang (We know that there is a need for a wider) elbow room, napakalaki ng binigay na special power sa Pangulo, sa Executive department para magawa ‘yan (we have given an extensive special power to the President, the Executive department, to do that.” The law is intended to fund the P5,000–8,000 monthly emergency subsidy to low income households, among other budgetary requirements in addressing the impact of the COVID-19 pandemic. Senator Panfilo M. Lacson, vice chairman of the Finance committee, sought clarification on why the government is asking additional funding, noting that an estimated P600 billion were left unused from the 2019 budget. Senator Juan Edgardo M. Angara, who chairs the Finance committee, said last week the committee is open to hearing the proposal when sessions resume on May 4.

TRANSPARENCY
At the House of Representatives, Speaker Alan Peter S. Cayetano said with all items in the 2020 national budget open for use to support the government’s COVID-19 response, they want better transparency in the disbursements. He said reports should be more specific as to what projects will be scrapped or postponed. “(We) want it to be done openly… Ang sinasabi lang namin (What we are saying is), DBM (Department of Budget of Management) is doing it in a very untransparent way,” Mr. Cayetano said. The Speaker’s remark came after the DBM issued National Budget Circular No. 580 on Wednesday stating that 35% of identified funding under the 2020 budget will no longer be released starting April 1 for all state departments, agencies, state universities and colleges, GOCCs and other state offices. The DBM also said at least 10% of the total released allotments to national government agencies for maintenance and other operating expenses (MOOE) and capital outlays that are not related to the COVID-19 response efforts shall no longer be available. Mr. Cayetano called on the DBM to report back to Congress regarding the funds needed for the COVID-19 response. — Charmaine A. Tadalan and Genshen L. Espedido

OECD flags PHL’s limited COVID-19 testing capacity

THE Organisation for Economic Co-operation and Development (OECD) has flagged the limitations in the Philippine’s healthcare system, particularly its coronavirus disease 2019 (COVID-19) testing capacity, which could mean there are far more cases than being reported. In its study titled COVID-19 Crisis Response in ASEAN( Association of Southeast Asian Nations) Member States dated April 21, the 36-nation OECD said Philippine “health officials acknowledge limited testing for the Covid-19,” which “means that, like Indonesia, its already overstretched health system could be phasing far more infections that the numbers indicate.” The Philippines had 7,579 confirmed cases as of April 26, majority of which are in the National Capital Region (NCR), according to the Department of Health (DoH). As of April 24, the DoH said it has so far tested 81,292 people. The country currently has a capacity of at least 8,000 tests daily with 17 accredited laboratories. The government is aiming to hit a 20,000 daily capacity by the end of the month with the accreditation of more testing centers. The Philippines has a population of over 100 million with about 13 million in NCR as of the last census in 2015. — Gillian M. Cortez

Freelancers, self-employed told to organize for easier assistance

FREELANCERS, independent contractors, and those who are self-employed should organize themselves so it would be “easier” for the government to assist them, House Speaker Alan Peter S. Cayetano said on Sunday. “With an organized group, it would be much easier for self-employed workers to voice out their sentiments to the government, and how we can help their sector,” he said in a statement. While there are already government programs to provide assistance to workers and low-income families affected by the enhanced community quarantine, Mr. Cayetano said there is difficulty in identifying some target beneficiaries due to lack of an updated database on informal workers, including those who are self-employed. “While most of them pay taxes, many are not members of the SSS (Social Security System). This will make it difficult for them to receive assistance because they are not part of the database,” he said. Under the proposed economic stimulus measure that is currently being discussed in the Defeat COVID-19 Committee of the House of Representatives, freelancers, self-employed workers, independent contractors, and repatriated overseas Filipino workers will be included in the list of workers that can benefit from the wage subsidies. — Genshen L. Espedido

Workers group seeks P10K monthly subsidy

A LABOR group has recommended a P10,000 monthly subsidy or the current minimum wage, whichever is higher, for workers affected by the disruptions brought about by the coronavirus disease 2019 (COVID-19) crisis. The Federation of Free Workers (FFW) on Sunday said the government should “provide universal support, like an income guarantee, equivalent to the prevailing minimum wage or P10,000 a month whichever is higher to avoid the bureaucratic bottleneck.” The government first offered the COVID-19 Adjustment Measures Program (CAMP) for workers affected by the lockdown imposed to mitigate the COVID-19 spread, but the fund allocated was not enough to accommodate all applications. The CAMP is a one-time P5,000 assistance program per worker. Another program launched, the Small Business Wage Subsidy (SBWS), will provide between P5,000 to P8,000 per month for two months. FFW, however, said the SBWS has “more stringent requirements” that will be difficult for workers to meet during the lockdown period. — Gillian M. Cortez

BI readies deportation of 44 Chinese in illegal offshore gaming operations

THE Bureau of Immigration is identifying the 44 Chinese arrested Friday in Parañaque City in a raid on an illegal Philippine Offshore Gaming Operator (POGO) in preparation for their deportation. BI Dana Krizia M. Sandoval said they are coordinating with the police to verify the identities of the foreign nationals found operating a POGO, which is not among the exempted sectors under the current quarantine policy. “We will be verifying their individual records to be able to file the appropriate deportation cases against them,” she said in a mobile-phone message Sunday. She added that they are gathering more information with the police on whether the suspects have cohorts or similar establishments are operating in the area. “We will not take this lightly. Foreign nationals that are in the country must abide by our laws lest face criminal and immigration sanctions,” she said. The Chinese were arrested along with nine Filipinos. — Vann Marlo M. Villegas

Exit from Lockdown: Lessons from The Swedish Challenge

As of the fourth week of April 2020, most countries, the Philippines included, are preoccupied with crafting a phased exit from mandated lockdown. The consensus seems to be that a prolonged induced coma can precipitate an economic collapse leading to a tsunami of fatalities only remotely connected to COVID-19. Already, food banks are running low and protests against the lockdown are growing in some states of the USA. Most countries that is, except Sweden and Taiwan.

Sweden from the start rejected a mandated lockdown in favor of an admonitional program that relies on citizen responsibility to follow softer anti-COVID-19 protocols — stay and work at home as much as possible, open restaurants, groceries, bars, and public transportation provided light social distancing is observed, schools open for students under 16 years old, avoid gatherings of 50 people or more, targeted isolation for high-risk groups only, etc. The idea is to let the less vulnerable groups acquire some immunity through exposure while shielding the vulnerable ones and keeping economic train going, albeit at a much reduced pace. Taiwan too imposed no internal lockdown because, having caught the pandemic at birth, Taiwan’s fully loaded armory was able to smother it.

Sweden’s strategy is a true gamble; it risks a higher infection rate and thus a higher mortality rate especially at the start and at mid-cycle in the hope of evening the score at full cycle. The Swedish medical authority and the Swedes, we think, know the stakes and consider the gamble worthwhile. Will the Swedish authority withstand the call for reversal when the report on the cost (higher deaths mid-cycle) start to come in before the report on the benefits (at full cycle) do?

Sweden attacks the COVID-19 spread through a hybrid program combining soft social distancing to reduce Ro and controlled exposure to raise H. Among epidemiological modelers, the role of herd immunity is summarized by the relation Re = Ro (1 – H) where Re is the effective reproduction rate, Ro is the natural reproduction rate, and H is the proportion of the population having immunity from the virus. When Re < 1, the epidemic dies naturally.

A high enough H produces Re < 1. If Ro = 2 (one infected in turn infects two), a herd immunity of H > 0.50 (say, 51% of the population) renders Re < 1 and the epidemic is damped down. The higher the Ro, the higher is the required H for a damp down. The logic of hard lockdown and strong social distancing is to directly hammer down Ro to less than one. The view is that lockdowns, to be effective, have two components: universal coverage, meaning all socio-economic interactions, and tough sanctions.

Sweden’s maverick approach has been the target of withering attacks from other countries under lockdown since, like them, Sweden is a late responder. Many well-meaning observers view the lockdown as a sine qua non for late responders to avoid visiting Armageddon upon their populations. Trump attacked the Swedish program and claimed that bad outcomes were forcing the Swedes to join the lockdown fold (fact-checked as false); even some Swedish doctors and scientists have admonished harder measures. But the Swedish authority of specialist and scientists (not politicians) is holding fast — it maintains that the Swedish way is more sustainable; it craters the economy much less; and, anyway, the right question on lockdowns is not whether but when it be lifted thus risking an infection resurge upon exit and a possibly more deadly second wave. Has the Swedish gamble produced the doomsayers’ Armageddon?

As of April 19, Sweden had 13,440 confirmed cases of COVID-19 infection compared to the following locked-down countries: Ireland has 14,758 confirmed cases; Norway has 7,069 confirmed cases; and Denmark has confirmed 7,242 cases. But these countries have each only half of Sweden’s population so if Sweden’s cases is corrected for population size just for this group, it actually has fewer confirmed cases (13,440/2 = 6,720) than comparator locked-down countries. But the number of confirmed cases is problematic due to testing deficiency. Fatality rate per capita is better. This is where the gamble would have become politically unbearable for other countries.

By April 23, Sweden had a higher number of confirmed COVID-19 deaths at 1,937 with a death rate per capita of 0.019%; locked-down Ireland had 769 deaths or a per capita rate of 0.015%, Denmark has 384 deaths or 0.0054% per capita; and Norway with 187 deaths or 0.0038% per capita; the USA has about 0.0015%. When the death rate spiked in early April, the call for a reversal of the Swedish model reached its loudest. Sweden did not buckle under. The death rate has now slowed easing the pressure.

Clearly, the Swedish experience to date does not reveal an Armageddon that doomsayers predicted. The death rate is higher but not outside reasonable expectation. Within the logic of exponential expansion of pandemics, one month is more than enough time to reveal an awful catastrophe. We know now that the Swedish economy is wounded but not to the lockdown extent. Not to be overlooked: lockdown countries have to worry about infection resurge upon exit and second waves. Lest we forget, the second wave of the Spanish flu infection in November 1918 was more lethal and killed 185,000 in the USA that one month alone!

It is too early to say whether Sweden’s gamble is a winner or a loser relative to lockdowns. Only at full cycle will a proper accounting be possible. Even then the answer will differ depending upon one’s ethical posture. And Swedes by and large still support the gamble.

How did the Swedish hybrid model dodge to date the doomsday scenario? Two sub-questions: how much did H actually rise and how much did Ro fall due to admonitional social distancing? We can only guess at the moment. Perhaps the Swedes’ widely acclaimed social coherence that celebrates personal responsibility over hard government mandates resulted in reduced Ro if not as much as hard lockdowns did. And there is growing evidence that voluntary compliance sometimes trumps compliance under the gun.

As countries decide when and how to exit lockdowns, Sweden’s program — if current trends hold — deserves a second look. It is, after all, already out. Exit need not be so threatening. Since Sweden’s vaunted social coherence is non-exportable, the Swedish model may have to be hybridized further: in the phased exit from lockdown, a more robust surveillance and enforcement of protocols should be pursued to reduce the likelihood of resurgence especially since these countries are missing the Swedish population’s acquired immunity. Beyond that, we owe it to ourselves as a nation to begin to import-substitute a Swedish-standard social coherence and self-regulation. It will help us in all our future endeavors.

 

Raul V. Fabella is an Honorary Professor of the Asian Institute of Management (AIM), a member of the National Academy of Science and Technology (NAST) and a retired professor of the University of the Philippines. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.

The social impact of COVID-19

Our world will never be the same again after this terrible coronavirus experience, we say to each other in feverish exchange of breaking news, web links, quotes from the Bible and from whoever it was, and even in the nervous laughter from “joke time” in Viber and other sharing apps. “Do not panic,” some unseen Big Brother continually buzzes in our ears, but the isolation of quarantine cannot but make us anxious for our vulnerability, which precisely the “stay home” orders insinuate. A vaccine has not yet been found that will give full confidence to end the quarantine and social distancing. Medical researchers estimate it will be a year before the testing and certification of the vaccine will be done. Then there are the uncertainties of the changed environment we will step out into, after the “war” with COVID 19 will have been won. Definitely, the postbellum effect will be that people will be more careful, and risk-averse in decisions and actions.

The quarantine has brought families together. Families now have the time to talk to each other and know each other more deeply, than in the rushed comings and goings of tight work and study schedules. In this confinement, erstwhile too-busy parents have subliminally reinforced their ascendancy and acknowledged their primary roles and responsibilities to constantly teach and guide their children of whatever age to be morally upright, harmonious and cooperatively productive in society. Siblings have found exclusive time to bond with one another, if only temporarily reversing in favor of family, the usual more time spent with friends and acquaintances. The Expanded Community Quarantine (ECQ) started on March 17 and will end as extended, on May 15 in the National Capital Region (NCR) including Metro Manila and other selected regions.

Will the psychological conditioning from the quarantine stay in the personal and collective consciousness, a psychologist-friend was asked. Some social behavior and preferences changed in time of the coronavirus, and hopefully there will be more permanent positive changes in mindset and our way of living, reinforced by the scare that COVID 19 gave us, she said. But then again, there will be an end sometime to this isolation and distancing. Will we backslide to the before-crisis easy-going inclinations of the common Filipino — the love of “happy-happy” groupie behavior that keeps working parents longer away from home and the children past regular working hours? Why, in Manila during the quarantine, groups playing pretend-sabong (cockfight) and gambling-card games outside their homes were caught by the policemen, along with others in other places carousing and drinking. It was reported on TV news that there was blatant sharing of quarantine passes, fighting about food rations, and refusal to observe social distancing in some barangays. “Pasaway”, hard-headed and defiant — the coronavirus has not changed them.

And in this time of the pandemic, we think of the over 2.3 million Overseas Filipino Workers (OFWs) repatriated or will be repatriated by their host countries, in the scare of counter-infection and in the lockdown in those countries. Perhaps they are the group most affected psychologically and materially in this crisis. In 2019, OFWs sent back $32.2 billion to the Philippines (The Philippine Daily Inquirer Feb. 16, 2019). In 2017, OFW remittances contributed 10% to Gross Domestic Product (GDP), according to the BusinessMirror of February 14, 2018. The OFWs have sacrificed family for the higher income abroad, and the better life for the children and later for themselves in retirement. There are no jobs to their needs and wants here in home country. Having been raised to at least the lower middle class status by working abroad, can they stay home to tend to family, and downgrade to lower income, in the double jeopardy of losing their overseas jobs and exposing to the virus?

And so we must talk of the middle class in this time of the coronavirus. They are probably the most affected, psychologically and financially because of the loss of mobility and suspended income. The biggest concentration of the middle class is in Luzon, especially in Metro Manila (which has a fourth of them), and neighboring CALABARZON and Central Luzon. In total, these three regions have more than half of the middle class. Likewise, the viral contagion is highest in these places, and thus the quarantine has been extended and some really contaminated areas placed under total lockdown, like Sampaloc, Manila. The congestion in these regions has been blamed in the contact-tracing for the rapid infection spread and deaths. No, the disciplines of the quarantine can hardly teach the middle class patience and forbearance, as they feel like the neglected middle child in the family who must compete for attention and survival.

The poor will always have priority, in the subsidies set up by the government to alleviate the hardships in the quarantine. Food baskets and cash have been distributed regularly by the barangays to the registered poor in their community. The informal settlers (squatters) in Metro Manila are prone to infection because of the cramped space where some lie five-abreast in a makeshift room no bigger than a parking slot of 12 square meters, as a TV clip showed. Perhaps the government should take this opportunity of the quarantine and the lack of jobs to relocate the informal settlers out of Metro Manila and do the food subsidies there while government think-tanks quickly develop small livelihood and backyard-garden income generation.

On Friday, Finance Secretary Carlos Dominguez announced that P352.7 billion for the P4.1 trillion budget has already been used for the COVID response. Cash from savings is available, but proper authority is needed to take from what is budgeted, and what remains of the budget will have to stay earmarked for the infrastructure projects under the Build, Build, Build program. Staying with the plans and strategies made before the COVID crisis will create jobs and business opportunities which fall into place with the post-COVID economic recovery strategy, newly-installed National Economic and Development Authority (NEDA) Secretary Karl Chua explained on national television.

Of course our leaders are worried about the impact of the quarantine on business and industry, on labor and employment, and on the financial wherewithal of managing the crisis. Of course the government is focused on economics, because that will determine society’s well-being and the common good.

But perhaps it would do well to seriously address social complications from the pandemic, of the following rising concerns:

The repatriation of the OFWs and the waning remittances will affect GDP growth as the GDPs of host countries and the whole world economy suffers from the coronavirus. How do we harness the potentials of some two million OFWs for other productive activities? At least provide alternative opportunities here for them.

Can we lessen dependence on consumer-spending driven economic growth, in this time when the middle class, the majority consumers are threatened by their own survival and maintenance of standards in the recession? Perhaps personal loans and credit card usage could be tempered with more formidable (higher) interest and default rates. There has to be personal savings, in a healthy economy.

Manufacturing and Agriculture are sectors neglected in the ready-money earned from services and tourism. But we have seen that services and tourism are the first to flounder for low demand in economic downturns. Perhaps the NEDA could draft a revised medium term plan, in the after-COVID scenario, that will focus on the manufacturing and agriculture sectors.

Finally, the proposal of Senator Bong Go to offer incentives for persons and businesses to relocate to the provinces is timely, as highlighted by the more virulent COVID in the NCR/Metro Manila and neighbor regions. This relocation to the provinces has already been thought of in almost all past administrations, but never implemented.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

What constitutes ‘the new normal’?

Everyone is talking about “the new normal.” But what exactly is the new normal?

Instituto de Empresa (IE) — Madrid is the 8th best business school, according to QS University global ranking. IE is where Enrique Dans is a fellow. For those unfamiliar with Mr. Dans, the Spanish doctor of management is the global authority in technology adoption, innovation and future trends. He was named the world’s foremost influencer in 2019 by Forbes Magazine.

I had the privilege to attend Mr. Dan’s briefing via a by-invitation-only webinar sponsored by the Spanish Chamber of Commerce. Mr. Dan’s spoke of five imminent post-lockdown trends that will constitute the new normal.

Two months in home isolation has permanently changed our values and the way we live and work, asserted Mr. Dans. Consequently, it will have an impact on consumer behavior, government policies and international trade. Among the more notable changes in the world order will be the following:

Actions to mitigate climate change will heighten. The lockdown in key cities has made people realize that the environment heals quickly and that rapid response to global warming is possible. Mitigating climate change is no longer just a concept to the common man but a goal he can strive for — one that yields immediate and quantifiable results.

As we move forward, advocates will pressure governments, with increasing intensity, to adopt the same drastic actions to mitigate climate change as they did to curb the COVID-19 pandemic. Governments will accede to the pressure and legislate laws to curtail carbon emissions.

Hence, industries that relate to climate change mitigation will realize a renewed spike in demand. Renewable energy solutions like wind and geothermal power will receive more government subsidies and social acceptance. Further, carbon footprint reduction solutions like ride sharing, electric vehicles and the like will gain momentum. Conservationism and the use of eco-friendly materials will dictate buying habits.

Governments will nationalize oil companies. Demand for fossil fuel will plummet in step with the imminent economic slowdown resulting from the COVID-19 crisis. This will consign oil companies to financial ruin such that only government bailouts will save them. This will lead to the nationalization of privately owned oil corporations.

With oil companies under state control, production will be calibrated to make fossil fuel more expensive than renewable sources of energy. This will add further impetus to the shift towards renewables. Within 30 years, the world will be released from its dependence on fossil fuel.

Countries who depend on the oil industry such as Saudi Arabia, Venezuela, Kuwait, Iraq, and Algeria will experience an economic depression like no other unless they diversify their economies today.

Corporate recruitment and education will have no national boundaries. Our time in home confinement has taught us that working from home can be just as effective as working in the office. This is especially true for results-based jobs like auditors, accountants, legal assistants, consultants, etc.

The work from home model allows companies to be more efficient with time (with travel time eliminated) and allows them to minimize office space. It is also more environmentally friendly while offering better quality of life to employees. It’s a win-win solution.

Working from home will permit companies to hire specialists from the global community who offer unique talents and/or a more affordable hourly rates. Working from home, in effect, will globalize the job market.

The same thing is true for education. Virtual classes will make education more accessible to foreign students. It will also democratize tuition costs.

The shift to online instruction will allow universities to engage the best professors from around the world since physical presence will no longer be a requirement. The educational system will be more dynamic as a result.

E-Commerce will hit the mainstream. Early adaptors to e-commerce have been the millennial and Generation-Z demographic what with their easy understanding of digital navigation. With the lockdown, consumers belonging to Generation-X, the Baby Boomers, and even the Silent Generation have began utilizing e-commerce out of sheer necessity. They discovered that it works and that it is far more efficient that physical shopping.

The generation barrier has been broken and e-commerce will find its way in our daily life. Consequently, there will be an explosion of e-stores, each specializing in a particular niche.

This is an important step forward towards realizing a cashless society.

A compelling case towards protectionism and socialism. Neo-capitalism (trade liberalization and a laissez-faire economy) has lead to income inequality where the rich get richer and the poor get poorer. In the last decade, economies have began to question the benefits of neo-capitalism, some by way of violent social revolts, as we have seen in Chile, and others by electing leaders who espouse protectionism and a homeland-first approach to trade and foreign policy, as we have seen in Mexico, Brazil, and the United States.

The COVID-19 crisis further underlined the evils of income inequality. While the minority rich were insulated from infections in their comfortable homes with ample provisions, the majority poor were left vulnerable and subject to bankruptcy, homelessness, and hunger.

Post lockdown, government will be under pressure to narrow the income gap by adopting socialist policies. This would mean higher tax rates for all in exchange for subsidies in healthcare, shelter, and even in livelihood. The economic model of the Nordic countries (Sweden, Denmark, Finland, Norway) will be the new gold standard of public governance.

The COVID-19 crisis will bring about more sweeping changes than World War 2 did. The good thing is that humanity has learned important lessons in the last 70 years. As we move forward, we can expect a world that is more environmentally responsible, inclusive, and socially equitable.

 

Andrew J. Masigan is an economist.

Comparing the Philippine economic package to fight COVID-19 to the response of other countries

The COVID-19 pandemic has crippled economies all over the world, with the International Monetary Fund (IMF) predicting the worst economic crisis since the Great Depression nearly a century ago. Governments are now scrambling to come up with policies and programs to mitigate the damage caused by the sudden downturn. Specifically, countries have been forced to set up stimulus packages to support areas and groups that have been hit hardest by the halt in economic activity.

What has the Philippines done? The Rodrigo Duterte administration launched a P1.17 trillion four-pillar socioeconomic strategy to fight the COVID-19 pandemic, and eventually recover from it.

The first pillar of the stimulus package provides emergency support to vulnerable groups, amounting to P305 billion. Majority of the fund (P205 billion) is allocated to provide subsidies to 18 million low-income households in the country for two months. Wage subsidies will also be distributed to employees of small businesses that closed down during the enhanced community quarantine (ECQ), and cash assistance will be given to displaced workers and overseas Filipino workers (OFWs).

The government has also pooled funds to assist the agriculture sector. A budget amounting to P16.5 billion is allocated to increase the productivity of the rice sector and boost the buffer stock of rice. Farmers and fisherfolk severely affected by the crisis may also avail themselves of zero-interest loans of up to P25,000 under the Department of Agriculture’s Survival and Recovery Assistance Program.

The Department of the Interior and Local Government also announced that a P30 billion pool will be made available for local government units (LGUs) as additional funding to provide assistance to vulnerable sectors in their areas. Furthermore, the Land Bank of the Philippines has set up a P10 billion loan fund that LGUs can tap.

Secondly, a budget of P35.72 billion is allotted to augment healthcare spending in the country. PhilHealth will use a significant portion of this fund to cover the medical expenses of COVID-19 patients and frontline health workers. This pillar also aims to address the shortage of personal protective equipment (PPE) and medical supplies in the country, as well as procure and produce more COVID-19 testing kits.

The largest chunk of the stimulus package, amounting to around P830.47 billion, is earmarked for fiscal and monetary actions to keep the economy afloat. The World Bank and the Asian Development Bank have contributed a total of P310 billion, while the Bangko Sentral ng Pilipinas (BSP) has allocated P300 billion to purchase government securities.

Regulatory relief has also been provided to BSP-supervised financial institutions by lowering the interest rate by 50 basis points, reducing the reserve requirement ratio by 200 basis points, and lifting any penalties for the next six months. This is expected to provide additional liquidity to the economy of P220 billion.

According to the Department of Finance (DoF), this P830.47 billion fund will be used to fund the fourth pillar: an economic recovery plan to create jobs and sustain growth. Specifically, the government intends to craft a bounce-back program to aid micro-, small-, and medium-enterprises (MSMEs) and other industries. In order to facilitate specific interventions per industry, the government will roll-out a nationwide survey to assess the damage the pandemic has done to MSMEs and other industries. Lastly, investment in social and infrastructure programs will also be covered under this fund as a means to revive the economy.

How does the Philippine package compare to the fiscal and monetary responses of other countries?

TOTAL PACKAGE AS A PERCENTAGE OF GDP
In its entirety, the stimulus package set up by the Duterte administration is worth around 6.3% of the country’s GDP, with 1.6% going to social amelioration measures, 0.2% to healthcare spending, and 4.5% to finance emergency initiatives and economic recovery.

Research shows that the stimulus package as a percentage of GDP varies widely among countries. The 6.3% figure is greater than that of other lower-middle income ASEAN countries. For example, Indonesia’s stimulus package amounts to 1.1% of its GDP, while Vietnam’s package is estimated to be worth 3.3% of its GDP. Meanwhile, the stimulus packages of higher- income ASEAN countries are worth a greater percentage of their GDP. For instance, Singapore’s package is approximately 11% of its GDP, while Malaysia’s package is estimated at 17% of its GDP.

The wide spending variation is also the case in OECD countries. Both France and Italy have set up packages amounting to 1.5-2% of GDP, while others such as the UK, Australia, and Spain have launched stimulus packages worth 15-20% of GDP.

A stimulus package worth a higher percentage of GDP does not necessarily mean that a government is more equipped to control the spread of COVID-19. Or it could be that bigger spending is necessary for countries that face a worse health crises. As of April 25, the United States, which has a package estimated at 10% of GDP, has reported close to 930,000 confirmed cases of COVID-19, with thousands dying each day. Furthermore, Spain has reported around 230,000 confirmed COVID-19 cases despite launching a stimulus package amounting to 20% of GDP.

On the other hand, Vietnam, with a package worth 3.3% of its GDP, has only 268 confirmed cases, with no reported deaths. The country has also reported no new COVID-19 cases in the past week, and has since eased its lockdown.

HEALTHCARE SPENDING
In the Philippines, approximately 62% of the budget for healthcare is earmarked to cover the medical expenses of COVID-19 patients and health workers. Thailand has adopted a similar approach, stating that the government will pay for the medical expenses of COVID-19 patients.

The rest of the health budget from the stimulus package is allocated to procure and produce medical equipment, PPE, and testing kits. Specifically, government has P1.8 billion to procure one million pieces of PPE and P53.2 million to produce testing kits manufactured by the UP National Institute of Health.

Furthermore, different countries have liberalized the entry of medical equipment to fight COVID-19. The Philippines, Laos, Sri Lanka, and Vietnam, among other Asian countries, have implemented tax and duty exemptions for medical equipment.

The Philippines has also allocated funds to locally produce PPE, which is a welcome move given the worldwide shortage. On April 23, the Department of Trade and Industry, in partnership with the Confederation of Wearable Exporters of the Philippines (CONWEP), turned over the first 10,000 locally produced PPE to the Philippine General Hospital. In total, CONWEP is expected to produce 300,000 PPEs.

All in all, the healthcare spending package set up by the government is worth 0.2% of GDP. This may not be sufficient to finance the country’s healthcare needs if the duration of the pandemic is prolonged. To beat this pandemic, we need a strong and well-capacitated healthcare system, which will require sustained funding.

SOCIAL PROTECTION
Where the countries have converged is with regard to establishing job support measures and protection for MSMEs and displaced workers. The Department of Labor and Employment in the Philippines has set up a P2 billion cash assistance program for displaced workers. France and Italy have also set up a similar program, while Thailand is distributing cash handouts for workers outside of their social security system. Many countries are providing aid to self-employed workers.

Many countries have established loans to provide assistance to MSMEs. These countries include the Philippines, Indonesia, Malaysia, Australia, Canada, France, Germany, Spain, the UK, and the US.

CONCLUSION
The Philippines has followed a similar economic strategy that other countries have adopted in fighting the COVID-19 pandemic, which focuses on social protection, healthcare spending, and economic recovery. For such financing, having fiscal space is an advantage. In this regard, the passage of recent tax reform laws has helped the Philippines. The tax reforms have provided us with a broader fiscal space to be able to borrow. That said, the government must spend the resources prudently, efficiently, and equitably. Deficit borrowing does not mean spending thoughtlessly.

 

Carlos Jacinto is a researcher of Action for Economic Reforms. The author also thanks Jestine Mendoza of the Asia Foundation for doing a matrix that summarizes the global economic stimulus packages of The Philippine Economic Package to Fight COVID-19 countries in view of the COVID-19 pandemic. The matrix can be accessed here: https://docs.google.com/document/d/16EERgpdcUeFNvNgoNAFih1jER03sid5Zkn6EThxyp-Q/edit

COVID-19 CASES IN ASEAN AS OF APRIL 23

COVID-19 CASES IN ASEAN AS OF APRIL 23

As of April 23, ASEAN member-countries have a total of 34,622 confirmed COVID-19 cases. Singapore has the highest number of cases at 11,178, followed by Indonesia at 7,418, and Philippines at 6,981. A total of 8,877 have recovered. There are 1,258 reported deaths.

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