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MSMEs running out of working capital during lockdown

A SECOND lockdown would devastate the micro, small and medium enterprise (MSME) sector because their working capital has been depleted with the shutdown of most businesses as banks grow more reluctant to lend because of the heightened bad-loan risk, Presidential Adviser for Entrepreneurship Jose Maria A. Concepcion III said.

“We have to make sure this lockdown succeeds. Because if it fails then the country cannot afford a second lockdown. If we continue with the lockdown of course mas malaking problema para sa mga MSMEs natin kasi ‘yung working capital nila ubos na (It will be a bigger problem for MSMEs because their working capital has been wiped out) in this first round and then ‘yung funding galing sa mga bangko ay wala pa diyan kasi nahirapan din ang bangko na mag-lend kasi baka lumaki ‘yung exposure nila (bank funding will dry up because of the heightened exposure to bad loans),” he said in a radio interview Thursday.

Mr. Concepcion added that the main problem of MSMEs during the COVID-19 outbreak is that they cannot obtain additional funding from banks.

Ang bangko kasi, once confidence starts to (weaken), baka may mag-collapse din na bangko (Banks are worried about a loss of confidence which could collapse the system) so that’s what we don’t want to happen. So (the banks), because of fear, (are) pulling back. They’re not lending and they’re doing selective lending so talagang matatamaan itong mga MSMEs (the MSMEs are really going to take a hit),” he said.

Mr. Concepcion noted that employees are afraid to work because of the fear of contracting the virus.

“Many are not sure if they can be tested. Fear is really moving around very strong as they see the cases moving higher, mas lalo silang natatakot (the more the fear spreads),” he said.

“They may have one to two months’ leave and support from the government pero pagkatapos nu’n, wala na silang maipambibili para sa pagkain (when that runs out, they won’t have anything left to buy food),” he added.

Mr. Concepcion said the Republic Act 11469 or the Bayanihan to Heal As One Act will help the Executive Department define priorities for stimulus.

“What would happen here is that the Secretary of Finance can now work on the current budget and reallocate and prioritize what is more pressing which is ‘yung mga nawala sa trabaho, itong mga contractual employees natin. (the lost jobs, particularly among contractuals) So the program of this administration right now is to focus really on the supply of food. They are looking at expanding the cash transfers. Those are what’s considered urgent (right now),” he said.

The second phase of the government’s efforts will be to revive businesses, Mr. Concepcion added.

“That stimulus package is going to be important to revive, to reenergize the business community,” adding that MSMEs are critical because ”they connect all the way down to the poor,” he said.

Mr. Concepcion said it was important that the current “lockdown” succeeds.

“So within this one month, you will know who is sick and who is not sick. We have to prevent a second lockdown from happening (because) by this Sunday it will be the end of two weeks so makikita natin siguro maraming cases lalabas ‘yan (so we will see a lot of cases emerging). But before four weeks end, (maybe) things should be stabilized,” he said.

Once the lockdown ends, Mr. Concepcion said that the government should focus on reviving the manufacturing sector.

“Once we are over this lockdown, the most important thing is we have to go back to manufacturing. We have to run our plants because this is what will give the people jobs. We cannot lock down again because then nobody will have jobs, the government cannot continue giving money, giving food because we will run out of that,” Mr. Concepcion said. — Genshen L. Espedido

Harvest means rice inventory ample until June — Agriculture dep’t

AGRICULTURE Secretary William D. Dar said the dry-season rice harvest will make inventories of the staple sufficient to meet demand until June.

According to the Philippine Statistics Authority (PSA), rice stocks are estimated at 2.661 million metric tons (MT) by the end of the first quarter, equivalent to a 75-day supply.

Average daily consumption was 35,369 MT per day, for a monthly consumption rate of around 1.2 million MT.

“With the harvest already coming in, along with the steady arrival of imported rice, we expect no shortage of the staple during the duration of the enhanced community quarantine and beyond,” Mr. Dar said.

By the end of June, the rice inventory is projected at 2.38 million MT, sufficient for 67 days.

The Department of Agriculture (DA) is studying early planting in Regions 2 and 3 to boost production during the third quarter of the current year.

In addition, the DA is expanding areas covered by the Rice Competitiveness Enhancement Fund (RCEF) and is promoting the use of hybrid seed for increased yield.

Meanwhile, Vietnam has suspended new rice export contracts until March 28, as Hanoi assesses whether its domestic supply is sufficient for the COVID-19 pandemic.

The third-largest rice exporter exported 6.37 million tonnes of rice in 2019, up 4.2%.

Asked whether the Philippines is affected by Vietnam’s decision, Mr. Dar said there are other rice exporters within ASEAN like Myanmar and Thailand, as well as other countries like India and Pakistan.

Agricultural groups said rice stocks are ample with no threat of a rice shortage for now.

In an interview with BusinessWorld, Samahang Industriya ng Agrikultura (SINAG) Chair Rosendo O. So said the industry is still working through excess imports from last year, but said the main problem is keeping farmers working.

“There is enough rice supply for 90 days, plus the rice that will still be harvested. It’s just that farmers should not be prevented from going to their farms due to quarantine checkpoints,” Mr. So said.

In a text message, Federation of Free Farmers Chairman Leonardo Q. Montemayor said the critical period remains the lean months of July to September.

“It is a big problem if Vietnam stops rice exports and/or the private sector finds rice imports to be too expensive, plus if shipping and freight charges rise,” Mr. Montemayor said.

SINAG said self-sufficiency is the only way to feed the public, adding that eventually all rice exporting countries will stop exporting to prioritize local supply.

“The global market is erratic, unreliable, and expensive. We must only rely on our own capacity and capability to put food on our dining tables,” Mr. So said.

According to initial estimates from the Bureau of Plant Industry, the Philippines imported some 1.813 million MT of rice from Vietnam in 2019. — Revin Mikhael D. Ochave

Tighter overseas lending seen as main risk to PHL economy

A WIDER COVID-19 quarantine and more restrictive lending conditions worldwide pose the main risks to the Philippine economy, threatening to bring growth to their lowest levels since 2011, Fitch Solutions Macro Research said.

Fitch Solutions reduced its growth outlook for the Philippines to 4% earlier this week from the already-downgraded 6% estimate issued in February.

The estimate points to a further slowdown from the below-target 5.9% performance in 2019, and a failure to meet the government’s original growth target of 6.5-7.5%. Officials have flagged possible revisions to the target in the wake of the enhanced community quarantine (ECQ) in Luzon, which accounts for 70% of Philippine gross domestic product (GDP).

“While we do not expect a shock to the magnitude of the global financial crisis (GFC), the outbreak is likely to drag on the Philippine economy into Q420-Q121 and as such, we now see growth coming in at its slowest pace since 2011,” Fitch Solutions said in a note Thursday.

GDP growth in 2011 was 3.7% largely due to government underspending on infrastructure and also due to external economic problems.

Fitch Solutions noted that the Luzon ECQ, which started on March 15 and is set to end on April 12, was intended to arrest the spread of the virus, but will have the side effect of suppressing economic activity.

“(A)s data from China has shown, such restrictions result in a sharp contraction in domestic activity, with household consumption and investment activity collapsing,” Fitch Solutions said.

Although lower oil prices could somehow offsetting lower growth, Fitch Solutions said consumption will also be dented by weaker remittance flows, which helps power household consumption.

Cash remittances from overseas Filipino workers rose 6.6% in January to $2.649 billion, according to data from the central bank. However, analysts have warned that the next months could see a strain in inflows due to the pandemic.

“With remittance flows likely to slow more aggressively as the outbreak spreads to the US, which accounts for around 40% of remittances, a valuable driver of household consumption will shrink,” Fitch Solutions said.

Fitch Solutions also expects reduced income for self-employed workers, who make up 25% of the labor force, as well as a rise in unemployment due to the pandemic’s impact on tourism and cash flow difficulties for small and medium enterprises during the lockdown.

Economic recessions in the coming months will spil lover into exports and fund flows from overseas, Fitch Solutions said.

“Such a widespread drop in global growth will feed through to a sharp drop-off in foreign direct investment (FDI) inflows and a weakening of remittances, which combined account for around 10% of GDP,” Fitch Solutions noted.

FDI inflows fell 23.1% to $7.647 in 2019, dampened by global uncertainty and weak investor sentiment due to uncertainty over the future shape of Philippine tax reforms.

Fitch Solutions said that the Philippine’ twin current account and fiscal deficits points to a shortage of domestic savings and reliance on foreign funding as a growth booster.

“However, with FDI inflows likely to stall and remittances to be hurt as unemployment rises globally, we expect the Philippines to face harsher funding conditions,” Fitch Solutions said.

The current account was in deficit by $464 million in 2019.

Meanwhile, the budget deficit widened to P660.2 billion from P558.3 billion a year earlier, as the government spent aggressively on infrastructure projects.

Fitch Solutions said the peso is among the best performers among emerging market currencies on the back of ample reserve buffers that safeguard it against sell-offs.

The peso ended trading at P51.07 on Thursday against the P51.14 close on Wednesday, according to the Bankers’ Association of the Philippines. — Luz Wendy T. Noble

Quorum during quarantine

Undeniably, the effects of the COVID-19 outbreak have spread globally. In the Philippines, Luzon has been placed under Enhanced Community Quarantine, along with other areas across the nation. People were advised to stay home, most businesses are closed except for those serving the public, and social distancing is imperative where possible.

To respond to the crisis, immediate action is required. Since holding physical meetings is discouraged, remote meetings have become a must, if not the best option available.

In the case of corporations, which act through a board of directors, board meetings are necessary to approve emergency measures. A corporation intending to utilize remote communication for its meetings should refer to the relevant provisions of the Revised Corporation Code (RCC) and Securities and Exchange Commission (SEC) Memorandum Circular 6-2020 (MC 6-2020).

Section 52 of the RCC allows directors or trustees who cannot physically attend or vote at board meetings to participate and vote through remote communication such as videoconferencing, teleconferencing or other alternative modes of communication that will allow them to participate. Since being a director is a fiduciary duty, attendance by proxy is still not allowed for board meetings.

When so authorized in the by-laws, Section 50 of the same Code allows stockholders or members to exercise the right to vote, whether directly or through a proxy, via remote communication or in absentia.

Just before the quarantine, the SEC issued MC 6-2020 on March 12 to guide corporations in formulating their internal procedures and bylaws which will allow their directors/trustees, stockholders/members and other persons to participate and vote in meetings in absentia or through remote modes of communication.

Remote communication is defined as the transfer of data between two or more devices not located at the same site. Teleconferencing refers to holding of a conference among people using telecommunication devices such as telephones or computers. Videoconferencing is the holding of a conference among people in remote locations by means of transmitted audio and video signals. Computer and audio conferencing mean teleconferencing supported by one or more computers and telephone/internet connections, respectively.

Below are the guidelines that must be observed in case a director/trustee or stockholder/member, will participate remotely:

• The Corporate Secretary must send the notice of the meeting. It is now allowed to be sent by electronic mail, messaging services or such other manner allowed under the by-laws or board resolution. The notice should indicate that remote participation is allowed, including instructions for its conduct.

• The director/trustee or stockholder/member should notify the Presiding Officer and the Corporate Secretary that he or she will attend remotely.

• Attendees via remote communication are counted as present in determining quorum.

• In terms of votes, the following rules should be followed:

a. Director/Trustee: vote can be cast through electronic mail, messaging service or such other manner as may be provided in the internal procedures, to be sent to the Presiding Officer and Corporate Secretary.

b. Stockholder/Member: votes may be exercised by a) remote communication or b) in absentia, when authorized by a resolution of the majority of the board of directors, provided that the resolution shall only be valid for a particular meeting.

For corporations vested with public interest, votes during elections of directors, trustees and officers may be by remote communication or in absentia, even if it is not provided for in the bylaws.

• The Corporate Secretary has the duty to ensure that during remote meetings, there are suitable equipment and facilities available such as a stable Internet connection, that attendees can hear and see each other clearly, that audio and visual recordings are secure, and that the meetings are continuous and interruptions will be managed. Upon conclusion of the meeting, the Corporate Secretary should safe-keep and perpetuate the visual and audio recordings in an updated data storage equipment or facility, and facilitate the signing of the minutes whenever practicable within a reasonable time after the meeting.

• As to the place of meetings, directors or trustees’ meetings can be held anywhere within or outside the Philippines; but as for stockholders, pursuant to Section 50 of the RCC, as a general rule, it should be called by the presiding officer at the principal office of the corporation as provided in the articles of incorporation, or, if not practicable, in the city or municipality where the principal office of the corporation is located.

Corporations are allowed to issue their own internal procedures taking into consideration the number and location of stockholders/members, the importance of the matters to be discussed and voted upon in the meeting, promotion of minority rights and other factors consistent with the protection and promotion of stockholders’/member’s rights.

With the objective of immediately putting these guidelines into use, the MC 6-2020’s transitory provision allows the conduct of remote meetings for the board/trustees and stockholders/members for the limited purpose of approving the provisions in their bylaws or internal procedures which will govern participation in meetings by means of remote communication or other alternative modes of communication.

In coming up with their internal protocols, one area that corporations may need further clarification on would be the venue of the stockholders’/members’ meeting. If it’s a purely remote meeting, how will the SEC view where it is actually held? Is it dictated by the location of the presiding officer, or perhaps the server which hosts the meeting? Does this mean that even if remote attendance is allowed for others, the presiding officer still has to be physically present at the principal place of business, or be in the same city? If physical presence is still necessary, this may be complicated by the quarantine if the office is located in a city that is currently under lockdown, and the presiding officer’s residence is not in the same city.

These complications aside, the guidance in the MC is definitely a good place to start. Moreover, perhaps it is not too much to hope that the SEC will grant corporations even more flexibility in case certain conditions under the guidelines cannot be complied with during this time of quarantine.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Aimee Rose DG dela Cruz is a senior manager with the Tax Services Group of Isla Lipana & Co., the Philippine member firm of the PwC network.

(02) 8 845-27 28

aimee.rose.d.dela.cruz@pwc.com

Locking-down our priorities

COVID-19 PH4, Carlo L. Navarro, a 48-year-old tax lawyer, visited Japan in February with his wife, Evie and only daughter, Gia. Throughout their trip, they wore protective masks, gloves, and incessantly used alcohol on their hands. Seven days after returning home, Mr. Navarro showed mild signs of COVID-19. A responsible citizen and father, he immediately insisted on being tested for the virus at a private hospital. His infection was confirmed within two days. He was the first Filipino to be found positive in the country. He was quickly confined to prevent its spread. His family, household members, and contacts have all tested negative.

Mr. Navarro was in hell for eight days at the Research Institute for Tropical Medicine (RITM) and for another week at a private hospital. He was discharged after a CT Scan showed that his hospital-acquired pneumonia did not consolidate.

He was allowed home quarantine without the benefit of two confirmatory negative tests for the virus. RITM has been flooded by requests for COVID-19 testing from Persons Under Investigation (PUIs) and from prioritized asymptomatic “very important persons,” to whom the Health Secretary has decided to accord “courtesy.”

According to the Department of Health tracker, as of this writing, the Philippines has 636 confirmed cases with 84 new cases, 38 deaths, and 26 recoveries.

The prognosis is very grim. With a very weak healthcare system and late lockdown, the scoreboard is expected to continue bleeding red. It is only recently that the Philippines received a good number of test kits mostly from other countries. Those under the radar would be flushed out, and the statistics of infected Filipinos is likely to surge. There is hope in Mr. Navarro’s message put out by the South China Morning Post, that getting COVID-19 “is not a death sentence.” It can be controlled.

Until the passage of the “Bayanihan to Heal as One Act” last Tuesday, for weeks there was little coherence in the public response to the virus. We experimented in incrementalism: from simple monitoring to “community quarantine,” to “enhanced community quarantine,” to “extreme enhanced community quarantine,” to lockdown. The experiment in incrementalism has failed.

Hospital facilities including the medical complement cannot cope. Heroes are falling from their ranks. The lack of PPEs (Personal protective equipment) and masks are being addressed by private donations or do-it-yourself-taped-up garbage bags and acetate shields, while a Senator calls out the medical-supply scarcity as “fake news.” Some local government units have decided to establish makeshift tent cities with flimsy partitions to accommodate potential COVID-19 patients.

Incrementalism is sensible only when one advocates good governance and expects meaningful changes in public policy. But during a health crisis like the COVID-19 pandemic, the perspective of competent health practitioners should guide public policy decisions and subsequent implementation. We urgently need decisive leadership with the best interest of the general public foremost in their hearts.

What do we expect from the Bayanihan Act?

Constitutional and legal issues aside, the Bayanihan Act compensates health workers infected with COVID-19 or those who perish upholding their Hippocratic Oath. PhilHealth is mandated to shoulder the medical expenses of public and private health workers in case of virus exposure or any work-related injury or disease. It allows the Executive to engage temporary health workers to support the regular force. Good.

The Act however, does not rectify the previous reduction of the Health Budget, and those of RITM, PGH (the Philippine General Hospital) and other public hospitals. We hope this is addressed by leveraging on Section 3 of the Bayanihan Act. It ensures “sufficient, adequate and readily available funding to undertake… measures that will prevent the overburdening of the healthcare system.”

We highlight the healthcare system because the virus piggybacked on it to propagate itself.

Because it is weak, our healthcare system has failed to readily test cases; establish contact tracing; and undertake mitigation to those affected. A half-hearted lockdown aggravated the tragedy. Both public and private healthcare systems are bursting at the seams. Sufficient funding is absolutely needed to avoid unbridled spread of the virus.

Some epidemiologists hope that “the virus mutates and dies out.” Be that as it may, there is no substitute for funded vigilance. The virus can be proactively controlled. This is displayed by policy actions with good results in Singapore, Taiwan, South Korea, and Hong Kong.

The social and economic costs cannot be dismissed. In the Philippines, as in other jurisdictions, the virus has prevented daily wage earners and ambulant vendors from sustaining their lives through their modest earnings. The Bayanihan Act addresses this issue by providing subsidies ranging from P5,000 to P8,000 a month to some 18 million low-income households. This is admittedly inadequate by any standard. It is good the Executive is also authorized to implement an expanded and enhanced conditional cash transfer program.

To secure the welfare of both individuals and businesses, the Act rightly protects the general public from “hoarding, profiteering, injurious speculations, manipulation of prices, product deceptions, and cartels, monopolies or other combinations in restraint of trade, or other pernicious practices” affecting the supply, distribution and movement of products and services.

What about the economy?

The Act is silent as to any assistance to businesses at this time. We agree: first things first. Since we are just catching up with COVID-19’s deadly spread, focus on the healthcare system and insurance for social protection are the imperatives.

What of Government’s initiatives prior to the pandemic? The Build, Build, Build program must be sustained subject to normalization of business. If a project is too ambitious to be completed within the year, it would be prudent to freeze it. Meanwhile, the budget can be realigned to augment public healthcare.

In this, Finance Secretary Sonny Dominguez assured that the Government is “willing to do as much as it takes.” He acknowledges the need to prioritize. After a good stocktaking of economic damage, further stimulus programs can be considered. Previous fiscal and monetary measures have been announced by the National Government and the Bangko Sentral ng Pilipinas.

So far, the public has broadly adhered to the quarantine.

But what about the quarantine call endorsed by a Senator of the Republic, a call strongly decried by Makati Medical Center as “merely rhetoric,” which “he himself violated,” virtually assaulting the hospital, its frontliners, and in the process, the integrity of the whole healthcare system?

 

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

Defying the virus

MEMBERS of the QCPD Batasan police station rounded up 135 residents, including 15 minors, for violating the public safety hours of 8 p.m. to 5 a.m. of the enhanced community quarantine at Barangay Batasan in Quezon City on March 23. — PHILIPPINE STAR/MIGUEL DE GUZMAN

With over 500 cases in the Philippines, the COVID-19 threat is already serious enough to concern everyone. But its unwanted presence has also further exposed Filipinos to the authoritarian virus that to this day has survived the 1896 Revolution, World Wars I and II, the EDSA civilian-military mutiny of 1986, and the untiring efforts of human rights defenders, independent journalists, committed artists and academics, civil society organizations, and social and political activists to combat it.

Although resident as well among the citizenry, the contagion is most visibly lodged in the flesh, blood and bone of the government bureaucracy. Its symptoms have several times been manifest during the present crisis. But so has growing resistance to it.

President Rodrigo Duterte declared earlier in March the lockdown of metro Manila to stop the spread of COVID-19. But instead of health personnel, he made it a point to have police and military officials prominently behind him. Not a few citizens concluded that it was to remind everyone that Mr. Duterte and his cohorts now control the coercive powers of the State and that he is prepared to use them. Human rights defenders went on to alert the public to the possibility of his using the present crisis to place the country under martial law and of the imperative of opposing it.

The Presidential Communications Operations Office (PCOO) immediately required journalists covering, or who intend to cover, the lockdown and events related to the COVID-19 emergency to obtain accreditation cards before they go about their job of providing the public the information it needs in this hour of national peril.

Journalists already carry press ID cards issued by their media organizations. That fact makes the requirement superfluous, unless the purpose is to limit reporting what’s happening only to those journalists and media organizations the PCOO approves of. Hence the protest of, among others, the National Union of Journalists of the Philippines (NUJP).

This is the same PCOO whose trolls, hacks and accomplices in social media, print, and broadcasting have accused independent journalists and their organizations of irresponsible reporting, and advocated their licensing by government. This is also the same agency that has been using public funds to tour Europe in “press freedom caravans” to convince various countries there that press freedom and free expression are alive and well in Mr. Duterte’s Philippines.

After President Duterte locked down the whole of Luzon, he announced on March 18 that he would address the nation, which many sectors thought would be on such urgent concerns as how the workers who’ve lost their daily wages can feed themselves and their families.

He instead used the occasion to warn local government executives not to do anything contrary to national government directives — as vague, as contradictory and as unsuitable to local conditions as those may be — at the risk of facing administrative charges.

The warning was apparently addressed to Pasig City Mayor Vico Sotto, who has taken exception to the ban on tricycles on the argument that not only do their drivers need the work to survive; they’re also needed to transport health and other frontline workers in the fight against COVID-19 as well as the sick to hospitals, clinics, and dialysis centers.

Mr. Duterte is supposedly an advocate of federalism because it would enable local executives to more meaningfully address local concerns. But he has apparently become the champion of the presidential form of government he now commands but of which he was once so critical. Some lawyers, however, were quick to point out that his claim that the national government has control over local governments has no legal basis.

Several municipalities including Manila have declared a curfew. In the aftermath, the threat of arresting anyone caught outside their homes during curfew hours has fallen frequently from the lips of the all-powerful police and their military partners.

Missing is any mention of exactly what crime the putative offenders will be charged with. However, as the experience of activists who have been accused of committing common crimes from murder to child trafficking to illegal possession of firearms and explosives to kidnapping has time and again demonstrated, these experts in planting evidence can always manufacture something.

Both the Philippine National Police (PNP) and the National Bureau of Investigation (NBI) also warned purveyors of disinformation (“fake news”) that charges will be filed against them under “existing laws.” Several bills have indeed been filed in Congress to penalize the generation and dissemination of “fake news,” but none have passed, among other reasons because of protests that such a law would lead to the abridgment of free expression and press freedom. Crisis or no crisis, the threat of penalizing people for offenses no law covers is evidently still first in the PNP and NBI’s list of scare tactics and priorities.

Using the same tactics, barangay officials in Sta. Cruz, Laguna crammed several young men into a dog cage for being outside their homes during curfew hours, and were rightly condemned for that brazen display of abuse of power and gross stupidity. The curfew being intended to prevent the transmission of the COVID-19 virus, crowding the young men into the cage defeated that purpose. But that was obviously the farthest thing in what passes for their minds, their focus being on demonstrating their power over the lowly.

In another display of petty power, policemen threatened to arrest a woman in Manila when she took photos of them out of curiosity over their unusual presence in her neighborhood unless she deleted the shots from her phone. She was outraged enough to post the alleged incident on her social media page. It’s more than likely that she was telling the truth. Policemen have become as camera-shy as criminals, because cameras have more than once caught their fellows in the act of breaking the laws they’re supposed to implement, as in the 2017 killing during a supposedly anti-illegal drugs operation of teenage schoolboy Kian de Los Santos, whose murder by policemen was caught on CCTV.

The name of the regime game isn’t public health and safety; and neither is it law and order. It is instead intimidation and control, not only over everyone’s mobility, livelihood, access to information, and free expression, but even more importantly over their very lives and fortunes by those who call themselves the authorities, whether president, Cabinet member, barangay official, soldier or policeman. But while the authoritarian malignancy has prevailed over the last three years, it may not survive the present crisis, so rapidly has resistance to it in various forms been growing during the COVID-19 emergency.

The defiance is there not only in some local executives’ insisting that they know best what’s happening in their jurisdictions and they are who can better address their problems and needs. It is also there in tricycle drivers’ plying their trade despite the threat of arrest, and in the determination of workers and the poor to feed themselves and their families.

But even more crucially is it there as well in the citizenry’s mounting anger. The streets may be empty for now, and silent. But the lessons this crisis is imparting, once the threat of the COVID-19 contagion is over, are unlikely to be so soon forgotten by the millions to whom the arbitrariness of power has so clearly demonstrated the imperative of political engagement, protest and resistance in the defense of their communities, their lives, and those of their families.

 

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

www.luisteodoro.com

Spring thoughts

Spring officially began on March 21st . In our tropical country, it is also the start of the long, hot summer season.

We are having a surreal experience. The series of consecutive disasters around the world seemed to be a prologue of the overwhelming, devastating pandemic nightmare. Time seems to fly. There is nothing to look forward to — at least until it is over.

How shall we survive?

By being good citizens and following all the important, difficult instructions. By praying and being grateful for the blessings. By simplifying our lives and reinforcing the traditional values. By relearning the basic lessons. By sharing and helping others.

On the practical side, people are coping by doing the mundane chores of spring cleaning. It is the external organization of one’s files — personal and professional. It is deciding what to keep, what to give away or discard. It is the act of downsizing, rearranging furnishings to make space. For something new or just having empty breathing space. In a house or a tiny studio, one tends to accumulate clutter over the years.

One has to let go of the voluminous folders, papers, books, piles of sentimental stuff, little and big.

Change is essential.

The act of organizing symbolizes an internal distillation process.

Introspection triggers mixed feelings — the unloading of emotional baggage, hurt feelings, imagined wrongs, repressed anger, envy and pain. Thoughts that have repressed come to the surface.

One of the most precious things in life is the gift of friendship. Its elements are mutual loyalty, love, compassion, understanding, humility and a sense of selflessness.

A genuine friendship is nurtured. It endures, strengthened by mutual experiences — the roller coaster twists and turns, ups and downs. Some childhood friends will eventually grow up to become best buddies, wedding sponsors, godparents for their kids, work colleagues. They will survive the petty quarrels and transcend many differences — in career choices, religious and political beliefs and other issues.

One passes important milestones, hurdles obstacles and survives the crises with a steadfast mate.

Upon reaching the crossroads, a true friend is there to hold one’s hand, through thick and thin, feast and famine. In fair and foul weather.

Inevitably, like the moon and the tides, there are natural cycles — the ebb and flow, the waxing and waning of a long-standing friendship.

A sudden rupture, personal or professional, may separate former confidantes. A minor spat can easily be repaired — like a tiny tear or a scratch. However, a severe misunderstanding can be a devastating wound. It festers and deteriorates.

Communication ceases as defensive walls sprout. Worse than geographical distance is the surge of false pride. The inability to admit a mistake, to be contrite, to act with humility and sincerity.

In Greek classical drama, hubris is “overweening pride that leads to disaster… the refusal to accept the authority of the gods.” This character flaw can drown the individual in emotional quicksand.

A treasured heirloom figurine, once shattered can be patched and restored painstakingly. However the delicate pieces would have missing chips and hairline cracks. From a distance, it may resemble the original. Despite expert gluing and mending, the fine flaws appear. There is no perfect finish. People observe that the imperfect patina with scars can give the object character.

Like the fragile figurine, a patched friendship may appear normal on the surface. A glaze of social niceties can camouflage the profound inner damage. Underneath the cool exterior, the fissure would still be vulnerable to the slightest tremor.

To heal a wound completely, it is necessary for the protagonists to seek forgiveness and forgive. Nothing less than a mutual reaching out and reconciliation. Cracks and scars notwithstanding, a friendship that goes through the test of fire will endure. The gruff, begrudging attitude of an arrogant person is not acceptable. GK Chesterton once wrote, “A stiff apology is a second insult.”

To illustrate, here is an anecdote on apology Baron Beaverbrook ran into young British MP Edward Heath in his London club’s washroom soon after printing an insulting editorial in his newspaper. Beaverbrook said contritely, “I’ve been thinking it over, and I was wrong.” MP Heath replied, “Very well. Next time, please insult me in the washroom and apologize in your newspaper.”

For those people who have been hurt beyond endurance and apology, it is useless to go down to the level of the enemy. Hold your head high. Keep your dignity and move on.

There is karma. Sometimes, you might be lucky enough to see it happen.

The British poet and clergyman George Herbert (1593-1633) wrote, “Living well is the best revenge.” This will pass. One looks forward to the healing light after the confusing darkness.

 

Maria Victoria Rufino is an artist, writer and businesswoman. She is president and executive producer of Maverick Productions.

mavrufino@gmail.com

China coronavirus killed federalism

If anything, this China coronavirus-induced crisis spectacularly revealed the unworkability and shortcomings of a federal form of government for the Philippines. When push came to shove, the instincts of even the most ardent federalism supporters almost immediately were for the National Government to take control of the situation.

One sees this in the request (later withdrawn) by the Administration for additional or emergency powers. Or even more revealingly, in President Duterte’s obviously peeved admonition to certain local government executives: the National Government “calls the shots” and that local governments should just “comply.”

Interestingly, that declaration would be unheard of in a federal form of government. There, even in times of crisis, it’s the local governments that take the lead.

Thus, as Michael Levenson points out (“Local and State Officials Unlock Sweeping Powers to Fight Coronavirus,” March 14): “It might seem there is no more awesome power available to the government than a national emergency declaration… But the governors, county executives and mayors across the country who have declared states of emergency in their own areas have actually unlocked even more sweeping powers.”

Berkeley’s John Yoo concurs: Under the US “federal system, Washington, D.C., has only limited powers to respond to a pandemic. The Constitution grants the national government a limited set of enumerated powers.” Instead, “under our constitutional system, the primary authority to fight the pandemic rests in the hands of our state governors” (“Pandemic Federalism,” March 20).

The Heritage Foundation’s David B. Rivkin, Jr. is even more succinct: National government “leadership is crucial, but there are measures only states have the authority to take” (with Charles Stimson, “A Constitutional Guide to Emergency Powers,” March 19).

There’s this persistent misconception about federalism being merely a division of governmental functions: essentially one layer but of two levels. This is not true. That’s what we have right now with the present Constitution and the Local Government Code. It can be mostly top-down or bottom-up depending on how Congress formulates implementing legislation.

Federalism actually creates two competing layers of government. Or to be precise: two parallel authorities each equally exercising sovereign power over the citizenry.

Each “State” or LGU (i.e., province or region) is left to its own devices to generate domestic revenue and develop export markets, and is responsible for providing basic governmental services. It has the capacity to make its own laws, as well as judicial and law enforcement.

As their entire earnings remain with the LGU, the national government is not legally obliged to help destitute regions/provinces, or even in calamities or states of emergency. In short, the States or LGUs can be left to fend, sink or swim for themselves.

Under federalism, the consequent competition between “States” or LGUs allows citizens to freely leave poorly managed States and transfer to those providing a better way of life: lower taxes, less government regulation, better property protection, as well as developed healthcare and education.

Going back to the Philippines, the approach taken was not federalism but a unified central government. The reason is necessity: particularly during war, or in times of national calamity or emergency. This was Apolinario Mabini’s rationale for a strong national government and this was mirrored by Alexander Hamilton (see Federalist No. 6-7).

Nevertheless, the Constitution declares that the government work under the concept of “subsidiarity” encouraging smaller political units and civil society (LGU’s, churches, the family) to take greater responsibility in governance matters.

Thus, as constitutionalist Michael Yusingco posits: “we already have a quasi- federal set-up under the current charter.”

Subsidiarity is reflected greatly in Article X, declaring that local governments enjoy local autonomy, with the president exercising only “general supervision” over LGUs, and each LGU allowed to raise its own revenue.

Specifically, in relation to the present pandemic, governors and mayors have the power to procure without public bidding (Secs. 366 and 368, Local Government Code), to carry out emergency measures (Secs. 444 and 465), and to promote general welfare and health (Sec. 16).

Hence why it’s emphasized here again that the aims of federalism can be achieved by simply amending the Local Government Code (and without changing the Constitution).

The Local Government Code can be amended to give greater powers to the LGU’s, with greater share or even 100% of their earnings retained by the LGU’s (particularly taking into account the Supreme Court’s ruling in Mandanas vs. Executive Secretary, GR 199802). The power to make investment, trade, and customs regulations, and providing education, welfare, and health services can be devolved to, with primary responsibility in the hands of, the provinces.

The national Departments for Trade, Education, Welfare, and Health can be relegated to mere coordinating agencies, with the National Government focusing on national security, and law and order.

So, as the country recovers from this crisis (and it will), it’s time to bury federalism and move on. The present constitutional system may have its moments but it’s proven to serve us well.

 

Jemy Gatdula is a Senior Fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.

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Why our leaders fail to learn pandemic lessons

By Clara Ferreira Marques

IT’S THE WORST EPIDEMIC of our times, a health emergency that has now left more than 420,000 infected, 18,800 dead and paralyzed the global economy. The scale has been clear for weeks. All the more baffling, therefore, to watch poor decisions being repeated, over and over again.

From Italy to the US and Britain, each government first believes its country to be less exposed than it is, overestimates its ability to control the situation, ignores the real-time experience of others and ultimately scrambles to take measures.

Prime Minister Boris Johnson has now closed schools and imposed a lockdown to limit the lethality of the coronavirus in Britain. It’s a sharp course correction for a man who, less than a month ago, said he was shaking hands in a hospital and spoke of business as usual, while Italy was pulling down the shutters.

He’s not alone. With populism in the ascendant, leaders from US President Donald Trump to Indonesia’s Joko Widodo have worried about immediate political concerns first, rather than the impending pandemic. Countries that have successfully learned from others and from past experience, say, Taiwan, are far outnumbered by those apparently incapable of taking lessons even from near-neighbors.

It’s not as simple as poor governance. The shortcuts that humans use to make decisions in a crisis underlie how hard it is to adapt policy to fast-changing circumstances.

At the most basic level, the explanation is simple: We make decisions based on past experience and recognized patterns. Countries that have done best at containing the virus so far have the experience of dealing with previous outbreaks. That includes Hong Kong and Singapore in the case of severe acute respiratory syndrome, or SARS; and South Korea with Middle East respiratory syndrome, or MERS.

For governments outside Asia, the same error of decision-making, or cognitive bias, has been less helpful. For them, SARS was a disease that they could see was devastating but also less contagious, confined to a different region and over within months. They also think of flu. That’s easily transmitted, but much less lethal. Their experiences suggested drastic early action was unnecessary.

Compounding this is that superficial differences blind us to the fact that an experience elsewhere could be useful for policy at home, points out Nick Chater, professor of behavioral science at Warwick Business School. In the current outbreak, China was seen as too dissimilar — politically, socially, even ethnically — for the virus to be quickly considered a coming problem that might merit a response.

Italy, the first Western country to be floored by the illness, initially resisted wide-ranging closures. In late February, as town-level lockdowns were beginning, one party leader urged people to go out for drinks, coffee, or pizza: “Let’s not lose our customs.” He later contracted the virus.

This held even as the situation worsened across Europe. France was edging toward a Paris lockdown, eventually announced March 16, but across the channel, Britain still held horse races and music concerts, sticking to a policy of so-called herd immunity that requires the majority of people to get infected and recover. It took an Imperial College report, laying bare the human cost, to change minds at the top. The scramble to prepare backup plans for UK schools and other services suggests it was never considered a real possibility — until it was.

The failure of empathy doesn’t happen at just cabinet level. When I spoke from my home in Hong Kong to relatives in Europe a few weeks ago, they struggled to comprehend that what was hitting us in Asia could reach them and change their daily lives. It did. Writ large, that has dramatic consequences, not least the waste of months when tests and protective equipment could have been prepared. Entire policy options are off the table because the epidemic has spread too far.

Narratives that build on national exceptionalism don’t help, clouding the response of even Southeast Asian countries to the experiences of neighbors. Populist tendencies that encourage confirmation bias and our preference for omission discourages decisions that may have painful outcomes today — even if not doing anything produces a worse result. Populists, after all, don’t want to be unpopular. That partly explains the tendency of Trump, President Jair Bolsonaro of Brazil and others to downplay the threat. Bolsonaro continues to compare the virus to “a little cold.”

It makes little sense to worry about a temporary downturn when the worst-case could involve permanently wiping out a significant portion of your population. That makes basic distancing measures, in the words of St. Louis Federal Reserve President James Bullard, an investment in survival. But it’s tough to act out of proportion with what people see in front of them compared to what they might be dealing with tomorrow.

There’s another unhelpful proclivity, explains Donald Low, professor of practice in public policy at Hong Kong University of Science and Technology: an optimism bias that leads to myopia in times of crisis. This is especially true for the usually successful governments of wealthy nations, rarely presented with debacles on this scale. Often, there is an illusion of control.

Humans don’t like to change their minds. Consider the rabbit-duck illusion, used by psychologist Joseph Jastrow and cited by Chater in a recent article. Once I see a duck in the image, I can’t see a rabbit, and I won’t see both. In a pandemic, this can be very bad news, especially if supranational organizations that should foster wider thinking are largely absent.

There are glimmers of hope. Local authorities and companies have been nimble in places like Brazil and the US, apparently able to switch from rabbit to duck. More policy makers will need to set in place the defenses, with better advice and transparency, to ensure they do the same.

BLOOMBERG OPINION

Adjustments set for PHL Olympic push after Games postponement

By Michael Angelo S. Murillo
Senior Reporter

PREPARATIONS of the Philippines for the Tokyo Games will continue albeit set for adjustments after the quadrennial sporting spectacle was officially pushed back by a year this week as the world continues to grapple with combating the coronavirus disease 2019 (COVID-19) pandemic.

Originally set for July 24 to Aug. 9 this year, the Olympics is now targeted to take place no later than the summer of 2021 as agreed upon in a conference call between International Olympic Committee (IOC) president Thomas Bach and Japanese Prime Minister Shinzo Abe on Tuesday.

The agreement was arrived at after carefully considering the cloud of uncertainty brought about by COVID-19, which has infected more than 400,000 people worldwide to date and forced the sporting world to a standstill, coupled with mounting pressure from stakeholders not to push through with the event.

It was a decision that Philippine sports officials support and in favor of, underscoring the safety and health of everyone in sports is primary at this point.

With the postponement, local sports executives said adjustments are due in the country’s Olympic push but the mission of sending as many capable athletes as possible remains.

For Mariano Araneta, Philippine chef de mission to the Tokyo Games and president of the Philippine Football Federation, among those on deck for them on the heels of the Olympic postponement is making a thorough assessment of where the country’s push is at right now.

“With the postponement, we will wait for the NSAs’ (National Sports Associations) direction on how they will prepare their athletes for qualifiers on the case of those that have not qualified yet [and see what still can be done]. For those that have qualified, we will also ask for their new training preparations. Meantime, we ask the athletes to stay safe and healthy,” said Mr. Araneta in a text message.

At the time the 2020 Olympics was postponed, four Filipino athletes had already qualified, namely EJ Obiena (athletics/pole vault), Carlos Yulo (gymnastics), Eumir Marcial and Irish Magno (boxing).

More athletes were expected to join the four from sports like boxing, canoe-kayak, golf, skateboarding, judo, wrestling, archery, cycling, weightlifting, table tennis, athletics, and wrestling as they were in the mix in their respective qualifiers which were also put on hold because of COVID-19.

In the lead-up, confidence was high that 2020 could be the year that the Philippines finally win its first-ever gold medal in the Olympics, owing to having better-prepared athletes and jacked-up support given to them.

FAVORABLE
While a regretful turn of events, a postponement was far better than having the event cancelled altogether and the Philippines actually could use it in its favor, said Philippine Olympic Committee (POC) president Abraham Tolentino.

“It’s better to postpone the Tokyo 2020 Olympics rather than cancelation so as not to lose our chance for our first gold medal — or even more golds. [With the postponement] More Filipinos have a chance to qualify,” said Mr. Tolentino.

“A postponement would mean more time to train for those who have already qualified and for those who are still trying to qualify. A 2021 schedule is ideal enough,” he added.

Budget in the training and preparation of the athletes, too, will have to be addressed, something officials said they are ready to do, with Philippine Sports Commission chairman William Ramirez saying “Implications on the budget will remain manageable.”

Filipino athletes, for their part, expressed sadness with the Olympic Games being pushed back but respect the decision and believe it is the right direction to take. They also vow to continue their push.

“God’s time! Road to whenever it will be #tokyo2020 #tokyo2021,” Mr. Obiena wrote on a Facebook post when he heard of news of the Games postponement.

Mr. Obiena, 24, is making his Olympic debut in Tokyo.

The Alliance of Boxing Associations of the Philippines (ABAP) also expressed its readiness to adjust and prepare its athletes for the Olympics, hoping more boxers would join Mr. Marcial and Ms. Magno.

Team Lakay fighter Lito Adiwang rising above adversities

HAD HIS FAIR SHARE of adversities while growing up, ONE Championship fighter Lito “Thunder Kid” Adiwang said it only made him a better individual and something he is now taking cue from as he builds a solid career in mixed martial arts.

Growing up in Baguio City, 26-year-old Adiwang said life was not easy for him.

But instead of having hardships consume him, he chose to use it as motivation to improve his lot and make something out of his life.

“I was born the youngest in a family of seven children. Life was tough and we had to get through a lot of trials. My parents used to plant crops in an open lot so we would have food to eat, but it wasn’t enough,” Mr. Adiwang said.

“It really taught me a lot about overcoming adversity in life. I wanted to help my family, but I felt powerless. Then I lost my fourth sibling in a mining accident. My parents separated when I was a teenager. I just felt hopeless,” he added.

To help him take on the challenge that life had thrown at him head-on, Mr. Adiwang said he drew inspiration from other people who started with nothing but steadily improved their lives through good old hard work and determination.

One such person is Filipino boxing legend and now-Senator Manny “Pacman” Pacquiao.

“Growing up watching the rise of Manny Pacquiao, I was motivated to become a boxer just like him. I wanted to represent my country and make my people proud, too. I wanted to help bring my family out of hardship and poverty,” said Mr. Adiwang.

“There used to be an old church on the streets where I grew up, where I initially started to learn how to box. I was 12 years old at the time. I would shadowbox and imagine I was Manny Pacquiao, fighting against legends like Erik Morales and Marco Antonio Barrera. I loved his relentless style. His opponents couldn’t handle him,” he furthered.

The grit and determination he got from watching Mr. Pacquiao are serving as a motor for Mr. Adiwang as he makes a name for himself in the strawweight division of ONE Championship.

Following his winning at the ONE Warrior Series last year which earned for him a contract in the main draw of the promotion, Mr. Adiwang has steadily climbed the ranks, winning his first two matches with the “big boys” of ONE.

He first defeated Japanese veteran Senzo Ikeda by TKO in October last year before winning by submission over Thai Ponsiri Mitsatit in January.

With the twin wins, Mr. Adiwang improved his MMA record to 11-2.

The Filipino fighter said he is just scratching the surface and he is ready to deal with the challenges that lie ahead in his career to reach the position where he wants to be.

“Right now I’m just focused on being the best that I can be. I really want to prove myself against the best opponents, and I feel I am ready.”

ONE Championship is currently at a pause like many sporting events in the world as the coronavirus disease pandemic rages on.

It hopes to begin staging live events behind closed doors in April and with audience late in May here in Manila. — Michael Angelo S. Murillo

IOC working with sports bodies for rescheduled Tokyo Olympics

TOKYO — The International Olympic Committee (IOC) is working with sports bodies to arrange a July–August window for the postponed Tokyo Olympics in 2021 and hopes to confirm the schedule within a month, Japan’s Yomiuri newspaper reported on Thursday.

John Coates, the IOC’s Coordination Commission chief for Tokyo, told the Yomiuri the Games would have to be held between the tennis Grand Slams of Wimbledon, slated to end in mid-July, and the US Open, which starts in late August.

“We want to more or less finalize the dates in four weeks’ time,” the paper quoted Coates as saying.

Mr. Coates, who is also president of the Australian Olympic Committee (AOC), said the summer scheduling would be dependent on avoiding clashes with the world championships for swimming (July 16–Aug. 1) and athletics (Aug. 6–15).

World Athletics boss Sebastian Coe has said the world athletics championships in Eugene, Oregon, could be moved back to 2022 if necessary.

Mr. Coates told the newspaper the hope was to follow the same arrangements next year that had been planned for 2020, including holding the marathon in the northern city of Sapporo instead of Tokyo to escape the heat.

The AOC confirmed the Yomiuri report’s veracity and also told Reuters in a statement that Mr. Coates had “proffered a view but confirms a range of options are on the table for the IOC.”

The IOC and Japanese government succumbed to intense pressure from athletes and sporting bodies around the world on Tuesday, agreeing to push back the Games by as much as a year because of the coronavirus pandemic.

IOC President Thomas Bach said on Wednesday that “all options” were on the table for rescheduling, including holding the Games before the Japanese summer.  — Reuters