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Silver says NBA participation at Tokyo Olympics may be limited

NBA participation at the Tokyo Olympics may be limited as the league’s next season, which has been pushed back due to the COVID-19 outbreak, would likely be ongoing at the time of the Games, Commissioner Adam Silver told CNN on Tuesday.

Normal NBA seasons start in late October and finish in mid-June.

Yet with the league hoping to launch a standard 82-game campaign in January followed by playoffs, then barring a condensed schedule, it would still be running when the Olympics open on July 23.

“There are a lot of great US players, and we may be up against a scenario where the top 15 NBA players aren’t competing in the Olympics, but other great American players are competing,” said Silver.

“Obviously, there are many NBA players who participate in the Olympics from other countries. That’s something we’re going to have to work through.”

“These are highly unique and unusual circumstances. I think, just as it is for the Olympic movement, it is for us as well. We’re just going to have to sort of find a way to meld and mesh those two competing considerations.”

The Tokyo Olympics were postponed by a year because of the coronavirus outbreak. NBA players have participated in every Summer Olympics since the 1992 Barcelona Games.

The National Basketball Association (NBA), which halted its 2019-20 season in March, resumed play on July 30 in a bubble-like campus at Disney World in Florida without spectators and the championship series will conclude in mid-October if it goes the distance.

“It is a factor in our planning,” Silver said of the Olympics. “It would be tough for us to make a decision in January based on the Olympics happening on schedule when that’s so unclear.”

Silver said his “best guess” is the next season will not tip off until some point in 2021.

“The more I am learning… I continue to believe that we are going to be better off getting into January,” said Silver. “And further, the goal would be to play games in home arenas in front of fans.” — Reuters

Marketing and advertising budgets for 2021: ‘crystal ball stuff’ — experts

By Mariel Alison L. Aguinaldo

The incoming year will be marked with uncertainty for marketing and advertising, according to experts in the field. 

“People are trying to budget for the upcoming year, and they want to know how much they should allow for. This year, it really is crystal ball stuff,” said Leela Nair, managing director for Southeast Asia at Ebiquity, a media and marketing consultancy firm, during All That Matters 2020, an online convention on Asia’s music, sports, gaming, media, and entertainment sectors.

Ms. Nair added that she has never seen a year where there is a wider range of opinions on what has happened in terms of inflation and deflation.

According to a report by ECI Media Management, a media auditing company, the pandemic caused huge swings in price across different media types. Traditional media, such as television and print, contracted by up to 17% from January to June, with the main pressure points occurring in March and April. 

Digital media, meanwhile, experienced minimal inflation of up to 1.3% during the same time frame. However, these prices are expected to change depending on what pandemic phase a market finds itself in.

These volatile conditions have caused an industry-wide hyper-focus on data collection and analysis. “While nothing is inherently wrong with that, [the industry] did see at times that we were… trying to find too many specific facts that would support decisions being made and sometimes, frankly, missing opportunities,” said Silas Lewis-Meilus, senior director, head of media APAC (Asia Pacific region) for pharmaceutical company GlaxoSmithKline.

Mr. Lewis-Meilus said that these opportunities bank heavily on changes in consumer behavior, such as pivots in product categorization. Instead of the usual classifications like food and toiletries, consumers started identifying and ranking products by their necessity to everyday life.

“Rather than using that annual planning and annual commitment as your default position, I think that’s now really a starting point of indicating where we hope things will go. But it requires some tough conversations with those partners and vendors to ensure that they’re coming along the ride with us and they’re pivoting at the right time for our clients,” said Stephen Li, chief executive officer of marketing firm OMD Asia Pacific.

US airlines make urgent call for new bailout ahead of Oct. 1 job cuts

WASHINGTON/CHICAGO — Major US airlines launched a last-ditch bid to persuade Congress to grant them a new $25 billion bailout to help avert tens of thousands of employee furloughs set to begin Oct. 1.

The chief executives of American Airlines, United Airlines, and JetBlue Airways and major aviation unions held a news conference on Capitol Hill on Tuesday afternoon calling for a six-month extension of a payroll support program that consisted primarily of grants in exchange for keeping workers on the payroll.

“We’re not going to give up,” American Airlines CEO Doug Parker said, affirming that the airline would furlough some 19,000 on Oct. 1 without fresh aid.

He reiterated, however, that the company itself is not at risk without assistance. “American Airlines is going to be fine,” Mr. Parker said.

On Monday, two key Republican senators introduced legislation that would authorize another $25.5 billion in payroll assistance for passenger airlines, but congressional aides said it was unlikely to win passage given aid requests from many other struggling industries.

And with lawmakers shifting their focus to a looming battle over the vacant Supreme Court seat following the death of Justice Ruth Bader Ginsburg, the likelihood of Congress passing a broad coronavirus relief package before Oct. 1 is slim.

However, the White House could find a way to provide some assistance to airlines without congressional action.

The first $25 billion in payroll assistance to airlines was included under the $2.3 trillion CARES Act aid package in March, which also set aside another $25 billion in government loans for airlines.

American was the first US airline to say it would tap its portion of the loans, something United Airlines CEO Scott Kirby said on Tuesday his company would also do.

American plans to halt flights to 15 smaller airports starting Oct. 1 without new assistance, while Mr. Kirby said United does not plan any immediate flight cuts.

The loans carry restrictions on share buybacks and executive compensation.

Delta Air Lines and Southwest Airlines, which have stronger balance sheets than their peers, have said they will not use the loans, while JetBlue Airways CEO Robin Hayes said on Tuesday a decision will be made in the near future.

International President of Flight Attendants-CWA President Sara Nelson said the funding was critical. “This is a jobs program,” Ms. Nelson said, recounting how numerous airline workers are on the brink of losing their jobs.

Representative Jim Himes, a Democrat, proposed at a hearing Tuesday that taxpayers should be fairly compensated for the use of government funds to support private business.

On a call with airline and union leaders, Mr. Himes said the industry message feels like a “hostage situation” for workers, describing the sentiment as “Give me the money for free or we (won’t) take it and we will fire people.’” — Reuters

Tesla’s value drops $50 billion as Musk’s promised cheaper battery three years away

Investors slashed $50 billion from Tesla Inc.’s market value on Tuesday despite CEO Elon Musk’s promise to cut electric vehicle costs so radically that a $25,000 car that drives itself will be possible, but not for at least three years.

Tesla’s market cap dropped $20 billion in just two hours after trading closed Tuesday, as Mr. Musk and other Tesla executives presented their new battery and manufacturing strategies. Shares closed down 5.6% and dropped another 6.9% after hours.

“Nothing Musk discussed about batteries is a done deal,” said Roth Capital Partners analyst Craig Irwin. “There was nothing tangible.”

Investors had expected two significant announcements at Mr. Musk’s oft-touted “Battery Day”: The development of a “million mile” battery good for 10 years or more, and a specific cost reduction target—expressed in dollars per kilowatt-hour—that would finally drop the price of an electric vehicle below that of a gasoline car.

Mr. Musk offered neither. Instead, he promised over the next several years to slash battery costs in half with new technology and processes and deliver an “affordable” electric car.

“In three years … we can do a $25,000 car that will be basically on par (with), maybe slightly better than, a comparable gasoline car,” Mr. Musk said.

Mr. Musk acknowledged that Tesla does not have its ambitious new vehicle and battery designs and manufacturing processes fully complete. Tesla has frequently missed production targets set by Mr. Musk.

Tesla expects to eventually be able to build as many as 20 million electric vehicles a year. This year, the entire auto industry expects to deliver 80 million cars globally.

Building an affordable electric car “has always been our dream from the beginning of the company,” Mr. Musk told an online audience of more than 270,000.

Tesla on Tuesday also introduced a new Model S Plaid, a 520-mile range sedan that can reach top speeds of up to 200 miles per hour (320 km per hour), with deliveries starting in 2021. The Plaid was listed on Tesla’s website on Tuesday at a price of nearly $140,000.

RECYCLING BATTERIES
At the opening of the event, Mr. Musk walked on stage in a black t-shirt and jeans as about 240 shareholders—each sitting in a Tesla Model 3 in the company parking lot—honked their car horns in approval.

To help drive down vehicle cost, Mr. Musk described a new generation of batteries that will be more powerful, longer lasting and half as expensive than the company’s current cells.

Tesla’s new larger cylindrical cells will provide five times more energy, six times more power, and far greater driving range, Mr. Musk said, adding that full production is about three years away.

To help reduce cost, Mr. Musk said Tesla planned to recycle battery cells at its Nevada “Gigafactory,” while reducing cobalt—one of the most expensive battery materials—to virtually zero. It also plans to manufacture its own battery cells at several highly automated factories around the world.

Shares in two battery suppliers to Tesla, South Korea’s LG Chem, and Japan’s Panasonic Corp., fell after the announcement.

Tesla will produce the new battery cells initially on a new assembly line near its vehicle plant in Fremont, California, with planned output reaching 10 gigawatt-hours a year by the end of 2021. Tesla and partner Panasonic Corp. now have production capacity of around 35 gWh at the Nevada battery Gigafactory.

Tesla aims to rapidly ramp up battery production over the next years, to 3 terawatt-hours a year, or 3,000 gigawatt-hours—roughly 85 times greater than the capacity of the Nevada plant. Mr. Musk said Tesla could supply batteries to other companies.

As automakers shift from horsepower to kilowatts to comply with stricter environmental regulations, investors are looking for evidence that Tesla can increase its lead in electrification technology over legacy automakers who generate most of their sales and profits from combustion-engine vehicles.

While average electric vehicle prices have decreased in recent years thanks to changes in battery composition, they are still more expensive than conventional cars, with the battery estimated to make up a quarter to a third of an electric vehicle’s cost.

Some researchers estimate that price parity, or the point at which electric vehicles are equal in value to internal combustion cars, is reached when battery packs cost $100 per kilowatt-hour (kWh).

Tesla’s battery packs cost $156 per kWh in 2019, according to electric vehicle consulting firm Cairn Energy Research Advisors. — Reuters

Asian business confidence rebounds sharply, pandemic casts shadow — Thomson Reuters/INSEAD

BENGALURU, India — Business sentiment among Asian firms rebounded in the third quarter as easing coronavirus restrictions lifted sales but lingering uncertainty over the pandemic thwarted a return to business-as-usual, a Thomson Reuters/INSEAD survey showed.

Asian firms’ outlook for the next six months tracked by the Thomson Reuters/INSEAD Asian Business Sentiment Index jumped to 53 in the third quarter from an 11-year low of 35 in the second, according to the survey of 103 companies across 11 Asia-Pacific countries.

It was also higher than the 50-point mark, which indicates a positive outlook.

The survey comes as the easing of coronavirus restrictions across Asia has reduced pressure on hard-hit economies, though the experience has varied across the region, with some still in recession and others, like China, seeing a steady recovery.

More than two-thirds of the companies polled said they saw the pandemic, or a fresh spike in COVID-19 cases, as a top risk. About 14% said a global recession was their biggest concern, while the rest flagged uncertainty over the upcoming US election in November and other risks.

“We’re recovering with a large dose of uncertainty,” said Antonio Fatas, an economics professor at global business school INSEAD in Singapore.

“If it was just because of Asia, I think the numbers would be more positive but the reality is the world is not just Asia,” he said, pointing to greater uncertainty in Europe and the United States.

The United States has reported the greatest number of COVID-19 fatalities, while rising numbers in Europe are now threatening to shut down parts of the continent again.

Some 28% of companies in the third quarter were positive about their outlook, the survey showed, up sharply from 7.6% in the second quarter. About 60% of the firms polled said they did not hire or lay off people this quarter, in contrast to the second quarter’s survey in which 63% said they had cut jobs.

Companies polled included Australia-listed Oil Search, Indian motorcycle maker Hero MotoCorp., and Japanese car maker Suzuki Motor Corp.

The survey was conducted between Aug. 31 and Sept. 14.

CHINA OPTIMISM
While countries in Asia have had mixed success in containing the coronavirus and its fallout on their economies, the Asian Development Bank expects output in the region to shrink for the first time in nearly six decades this year.

China, where the coronavirus was first detected, has largely managed to contain its spread and South Korea and Japan have kept case numbers relatively low by global standards despite all three countries seeing a second wave of infections.

But elsewhere in the region the outbreak is worsening. India, for instance, has reported the second-highest number of cases globally.

Indeed, some investors are shunning Asia’s riskier, high-yielding markets, despite the ample liquidity pumped into the financial system by central banks globally this year.

Satish Shankar, the Asia-Pacific managing partner of business consultancy Bain & Company, said many companies in the region would “need to fundamentally transform their business models” to survive.

But he added that Asia’s economic rebound would be “strongly linked” to the recovery in the Chinese economy.

China expanded 3.2% in the second quarter, and looks set to grow this year.

Some China-based firms in the survey said the upcoming US election was their primary worry alongside COVID-19.

The US government is threatening to delist Chinese companies that do not meet US accounting standards while Washington has cracked down on Chinese tech firms amid worsening relations between the world’s two largest economies.

Grant Pan, chief financial officer of Chinese wealth manager Noah Holdings, which is listed in the United States, said the firm was looking at “possible alternatives as a safety net, including the Hong Kong and Chinese capital market.” Noah Holdings was among the companies surveyed.

Note: Companies surveyed can change from quarter to quarter. — Reuters

Crypto is beating gold as 2020’s top asset so far

Crypto markets have done well during the COVID-19 crisis partly because Bitcoin becomes a “refuge,” like gold, when risks multiply, according to Marc Fleury, chief executive officer of crypto asset management and financial technology firm Two Prime.

A cryptocurrency mania known as decentralized finance has helped to turn digital currencies into this year’s best-performing asset by far.

The Bloomberg Galaxy Crypto Index of digital coins is up about 66% in 2020, exceeding gold’s jump of more than 20% as well as returns from global stocks, bonds, and commodities. A key reason for the move higher is a surge in Ethereum, which accounts for more than a third of the crypto gauge’s weight.

Increased adoption of decentralized finance, or DeFi, has driven the climb in Ethereum, which “appears to be maintaining its platform leadership status” in the sector, said Mike McGlone, a strategist at Bloomberg Intelligence.

DeFi ports financial functions onto digital ledgers called blockchains, allowing people to do things like lend or borrow funds and earn interest in a savings-like account without the need for traditional intermediaries such as banks. Its growing popularity is part of a wider trend of increased blockchain usage. Many DeFi applications are run on the Ethereum blockchain.

DeFi collateral levels have reached $9 billion from less than $700 million at the start of the year, according to Fasset, which operates a blockchain-based marketplace for infrastructure investment.

Aside from DeFi, proponents of digital currencies such as Bitcoin argue they offer a store of value amid concern that huge stimulus injections to counter the pandemic will stoke inflation and weaken the dollar.

Crypto markets have done well during the COVID-19 crisis partly because Bitcoin becomes a “refuge,” like gold, when risks multiply, according to Marc Fleury, chief executive officer of crypto asset management and financial technology firm Two Prime.

“A purely ethereal instrument performs well when the real economy is on pause,” he said.

WILD SWINGS
Skeptics are unconvinced, arguing crypto markets have a history of wild swings and are merely riding a tide of liquidity. Cracks are also appearing in the hype around DeFi, suggesting it isn’t as decentralized as touted.

The Bloomberg Galaxy Crypto Index tumbled more than 8% in the three sessions through Tuesday as the pandemic hurt sentiment across a number of assets, highlighting the risk of sharp moves. The gauge has retreated over 20% from an August high.

Overall, investor interest in cryptocurrencies is broadening as derivatives markets for Bitcoin and Ethereum expand.

DeFi led to a surge of interest in Ethereum contracts, said Aziz Zainuddin, chief product officer of Fasset, adding “retail cryptocurrency users have increasingly turned to derivatives to maximize their returns.” — Bloomberg

Duterte gets tough on China, leaning back to old ally America

After years of shifting the Philippines closer to China, President Rodrigo R. Duterte appears to be leaning back toward the US.

The 75-year-old leader on Tuesday gave his most forceful defense yet of a 2016 arbitration ruling in favor of the Philippines that said Beijing’s expansive territorial claims in the South China Sea breached international law. Addressing the United Nations General Assembly, Mr. Duterte said the decision “is now part of international law, beyond compromise and beyond the reach of passing governments to dilute, diminish or abandon.”

“We firmly reject attempts to undermine it,” Mr. Duterte said, without naming China. “We welcome the increasing number of states that have come in support of the award and what it stands for—the triumph of reason over rashness, of law over disorder, of amity over ambition.”

Mr. Duterte had resisted raising the tribunal ruling after he took power in 2016, embracing closer ties with China while announcing a “separation” from the US—his country’s biggest military ally for decades. But in recent months his government has started to shift back toward America, which remains widely popular among Filipinos, as Beijing has increased assertiveness in the South China Sea and the Philippine economy suffers due to the COVID-19 pandemic.

There’s now “more space for those critical of China to be heard and to have influence,” said Malcolm Cook, visiting senior fellow at the ISEAS-Yusof Ishak Institute and coordinator of its Philippines project, adding that officials known to be more hawkish on China have stepped to the fore while Mr. Duterte has dialed back on anti-US rhetoric. “The weights on the balance of Philippine foreign policy for good relations with the US and good relations with China have shifted this year in favor of the US.”

In June, the Philippines suspended its decision to end a 22-year-old agreement that facilitates joint military exercises with the US while starting to increase criticism of China’s moves in disputed waters. Mr. Duterte this month pardoned a US marine found guilty in 2015 of killing a transgender Filipina.

This week the Philippines welcomed the US and other nations to play a role in maintaining security in the South China Sea, following a similar statement from Vietnam earlier this month. China has accused the US of intervening in territorial disputes and called it “the biggest driver of militarization of the South China Sea.”

“I can swear to you, Western powers will be in the South China Sea,” Foreign Secretary Teodoro Locsin told lawmakers in a hearing in Manila on Monday. “We believe in the balance of power, that the freedom of the Filipino people depends on the balance of power in the South China Sea.”

Philippine officials have framed the recent moves as a reflection of the country’s independent foreign policy more than siding with one particular camp. The US alliance with the Philippines is its oldest in the region, with a mutual defense treaty signed in 1951 stipulating that either nation will respond militarily in the event of an attack on the other.

Mr. Duterte “upholds the Philippine national interest and no other country’s interest,” presidential spokesperson Harry L. Roque, Jr.,  said in a text message. Earlier this month, Mr. Roque told reporters that Mr. Duterte may have pardoned the US marine to curry favor in an effort to gain access to coronavirus vaccines.

The quest to secure a vaccine shows that Mr. Duterte isn’t abandoning Beijing: He said this month he would prioritize China and Russia in sourcing a COVID-19 vaccine over Western drugmakers, which require cash advances in exchange for supplies. The Philippines has been hit with the most infections in Southeast Asia with more than 291,000 known cases, and its economy is projected to fall by as much as 6.6% this year.

DRAWN TO CHINA

Mr. Duterte is “hedging his bets more at a time when he wants to keep several options open for access to vaccine and the Philippines is coming under more pressure from China in the South China Sea,” said Peter Mumford, Southeast & South Asia practice head at risk consultancy Eurasia Group. “Duterte is ideologically more drawn to China than he is the US, but his foreign policy is also driven by political and economic pragmatism.”

Given China’s recent posturing in the disputed sea, it remains a difficult task for Mr. Duterte to convince stakeholders it doesn’t pose a national security threat to the Philippines, said Rommel Ong, retired rear admiral in the Philippine Navy and professor at Ateneo de Manila University’s school of government.

In recent months, the Philippines has accused Beijing of surveying waters claimed by both countries, using its coast guard to seize fishing equipment near a disputed shoal, announcing new coral reef research facilities, and pointing a laser gun at a Philippine Navy ship. What’s more, China’s promise of billions of dollars promised by China for infrastructure hasn’t materialized.

“If China had fulfilled its investment promises and taken less aggressive in its actions in the South China Sea, the president would be in a better position to convince the various domestic stakeholders to align with his pro-China stance,” Mr. Ong said. — Bloomberg

Bosch, Philips launch social distancing solution for public spaces

Bosch and Philips, two multinational technology companies, launched PeopleCount, a social distancing solution for public and commercial spaces. Globaltronics, a local digital signage advertising company, serves as the sole distributor of the product in the country.

PeopleCount uses Bosch’s intelligent cameras to autonomously track and analyze the movements of people going in and out of a premises. The results are flashed on a Philips display, advising queuers when they can enter through a traffic light system. This full setup can then be managed on an application that serves as its main control.

The solution accommodates single or multiple cameras and monitors, which can be situated in different locations within the premises. There is no prerequisite hardware or software prior to installation. PeopleCount also does not need an Internet connection to operate.

“As more businesses reopen, maintaining safe distancing, especially in public areas, is the utmost concern for any premise owner. PeopleCount is a solution that helps business owners implement safe distancing measures without having to change their current systems,” said Rowena Bonifacio, country sales director of Bosch Philippines, in a statement.

Three packages inclusive of a Bosch professional surveillance camera, a Philips signage screen, and installation services are being offered at introductory prices until October 15.

Package A costs P72,000, originally P85,000, and comes with a 10-inch screen and wall bracket. Package B costs P93,000, originally P110,000, and carries a 24-inch screen and wall bracket. Package C costs P177,000, originally P210,000, and comes with a 50-inch screen and stand. — Mariel Alison L. Aguinaldo

Facebook removes Chinese accounts active in Philippines and US politics

Facebook Inc. said Tuesday it had removed a network of inauthentic Chinese accounts that were interfering in Asian and American politics, including some that posted material supporting and opposing US President Donald J. Trump.

The social networking company said it suspended 155 accounts on its main platform along with six Instagram accounts. The most widely followed accounts and pages were in the Philippines, where they shared content supporting China’s actions in the contested South China Sea and President Rodrigo R. Duterte.

The US accounts had fewer followers and posted content fueling both sides of the American election that will be held on Nov. 3, the company said.

Facebook cybersecurity policy chief Nathaniel Gleicher said that the takedown was the company’s first of Chinese-based accounts on foreign-interference grounds with any engagement in US politics. But he said the American accounts and groups seemed aimed mainly at building an audience.

“The volume of content is so low, it’s very hard to assess what their goal is,” Mr. Gleicher said.

Mr. Trump and his intelligence officials have said China was favoring Democratic challenger Joe Biden, while Democrats in Congress have said Russia is being more aggressive.

The Chinese embassy in Washington did not respond immediately to an e-mail seeking comment.

The network of accounts, pages, and groups used virtual private networks and other tools to make it appear they were operated from somewhere other than China, Facebook said.

Fewer than 3,000 people followed the fake American pages, while more than 100,000 accounts tracked those in Philippines.

The operation’s US assets, added between May and August, included a group called Biden Harris 2020 that had around 1,400 members and one called Trump KAG 2020 that said it supported Trump’s re-election and had just three members, according to analysis firm Graphika, which studied material from Facebook.

In the Philippines, accounts supported both Mr. Duterte and his daughter, who might run to succeed him in 2022. They also criticized Rappler, an independent media group that is a frequent target of the Duterte government. — Reuters

Nationwide round-up

Duterte likely to approve cap on COVID-19 testing fee

PRESIDENT RODRIGO R. Duterte will likely approve the health department’s recommendation of setting a price cap on RT-PCR testing for the coronavirus disease 2019 (COVID-19).

“Ang Presidente po ay nag-issue ng (The President issued an) executive order imposing price caps sa medicines so I don’t think it is impossible for him to issue this executive order (on testing fee),” Palace Spokesperson Harry L. Roque said in a briefing on Tuesday.

The Department of Health (DoH) made the recommendation on standardizing the coronavirus disease 2019 (COVID-19) testing fee using RT-PCR (Reverse transcription polymerase chain reaction) following reports of varied rates, with some laboratories and hospitals charging as much as P10,000.

Mr. Roque noted that the private-sector led Project ARK is offering cheaper RT-PCR testing at P1,750 to P2,000.

In another development, Mr. Roque said the government is unsure if the Philippines will be prioritized by the United States in terms of vaccine procurement without paying an Advance Market Commitment (AMC)

“We don’t know if any company in the United States will in fact give us without payment of AMC, but he’s (Mr. Duterte) sure that if it comes from Russia, if it comes from China, we can,” Mr. Roque said.

Mr. Duterte earlier this month criticized Western companies for requiring fees for vaccines that are still being developed.

Despite the criticism, the Palace said the Philippines will continue its cooperation with the Gavi COVAX alliance, which will allow easier access of members to COVID-19 vaccines. — Gillian M. Cortez

DSWD eyes P10-B emergency fund balance for livelihood assistance

THE DEPARTMENT of Social Welfare and Development (DSWD) is planning to tap P10 billion of the remaining emergency subsidy fund to distribute livelihood assistance to over 664,000 households.

DSWD on Tuesday reported that it has P10 billion savings from its budget for the social amelioration program, where low-income households affected by the coronavirus pandemic were given P5,000-8,000 each.

“We have a remaining of P10 billion still in our funds,” DSWD Secretary Rolando J. Bautista told senators.

He said its use will depend on the “instruction from the DBM (Department of Budget and Management), whether to return or realign.”

Mr. Bautista said the DSWD already has a proposal to use the fund for a livelihood program that will grant P15,000 each to 664,726 households.

“We actually intend to use that for part of the recovery, for the livelihood assistance grant. We already have the proposal, but as we had mentioned earlier, this should be approved by the OP (Office of the President).”

The DSWD has disbursed P99.9 billion for the first tranche of subsidy, benefitting P17.9 million households, and P83.1 billion for 13.9 million families for the second tranche, as provided under the first Bayanihan law.

For the second tranche, the department reduced the targeted beneficiaries to almost 14 million after learning from the local government units that some households were also recipients of subsidies from the labor and agriculture departments.

“During the validation and process, we were able to find out that there are lots of family beneficiaries who received more than one subsidy,” Mr. Bautista said.

“So, what we did was those who we have identified as double compensation, we did not include them in the second tranche.”

Senator Ralph G. Recto questioned the reduction in the number of beneficiaries, as opposed to the 18 million provided in the law.

The Finance sub-committee was tackling the P169.2 billion budget of DSWD for 2021, slightly higher than the P164 billion appropriated last year. The panel moved to endorse the budget for plenary deliberation.

Under the National Expenditure Program, P113 million will be allocated to the conditional cash transfer grant called Pantawid Pamilyang Pilipino Program and P23 million social pension for senior citizens among others. — Charmaine A. Tadalan

Interior secretary says crime rate dropped by nearly 50%

CRIME RATE in the Philippines dropped by nearly 50% during the six months starting mid-March, according to the Department of Interior and Local Government (DILG).

In a televised meeting on Monday, DILG Secretary Eduardo M. Año said only 16,789 crime incidents were reported from the start of the quarantine on March 17, a 47% reduction from the preceding six-month period.

“(F)rom 172 cases a day noon pong bago mag (before the) lockdown, naging (it went down to) 92 cases per day,” he said.

The number covers “eight focus crimes,” including robbery, car theft, and rape.

In a separate statement released Tuesday, Mr. Año said the data refutes the allegations by Human Rights Watch (HRW) and other critics of the administration that crimes, especially killings related to illegal drugs, increased during the quarantine period.

“These are nothing but baseless and bloated allegations of the leftist groups and their cohorts claiming an increase on extra-judicial killings just to mislead the public and demonize the administration,” he said.

“The entire PNP (Philippine National Police) was mobilized for COVID response, the crime rate nationwide dropped significantly, our people mostly stayed at home, curfew was implemented, the streets are relatively quiet, and now they will claim that extra-judicial killings increased?” he added. — Gillian M. Cortez and Emmanuel Tupas/PHILSTAR

DFA raises alert level in Mali, asks Filipinos there to be ready for evacuation

THE DEPARTMENT of Foreign Affairs (DFA) has raised the alert level in the West African country of Mali as it transitions to a new government following a military coup last month.

Alert Level 2 was raised on Sept. 18 “due to the current political and security situation in that country,” the DFA said in a statement on Tuesday.

Such a level, also billed as “Restriction Phase,” is raised when there are threats to life, security, and property of Filipinos arising from internal disturbances, instability, or external threat.

“During Alert Level 2, Filipinos are instructed to restrict non-essential movements, avoid public places, and prepare for evacuation,” the DFA said.

Filipino migrants in Mali have been asked to coordinate with the Philippine Embassy in Rabat, Morocco for assistance.

In a separate development, the department said it has repatriated 31-year old Rose Policarpio, an overseas Filipino worker who was in death row for alleged murder in the Kingdom of Saudi Arabia.

“Ms. Policarpio’s eventual acquittal is an example of the government’s commitment in protecting and promoting the rights of our OFWs (overseas Filipino workers),” Foreign Affairs Undersecretary Sarah Lou Y. Arriola said in a statement.

“This is a vindication of Ms. Policarpio and a clear declaration of her innocence.”

It took six years to settle the case of Ms. Policarpio over the death of her lady employer. — Charmaine A. Tadalan

Ombudsman defends restricted access to SALNs; stops lifestyle checks on gov’t officials

OMBUDSMAN SAMUEL R. Martires on Tuesday said the conduct of lifestyle checks does not prove that a public official is corrupt, and at the same time defended his recent order restricting public access to officials’ Statements of Assets, Liabilities, and Net Worth (SALN)

During the House hearing on the proposed 2021 budget of the Office of the Ombudsman, Mr. Martires said his office has stopped conducting lifestyle checks on government officials, adding that he was about to propose an amendment to Republic Act 6713, a law that establishes the code of conduct and ethical standards for public servants.

“When I assumed office, I ordered the stoppage of lifestyle checks. For a long time, I have doubts on the provision of the law regarding lifestyle checks. The pandemic just came in, but I was about to propose to Congress to amend (RA) 6713 because its provisions there are vague, illogical,” he said in mixed English and Filipino.

RA 6173 provides that “Public officials and employees and their families shall lead modest lives appropriate to their positions and income” and that “they should not indulge in extravagant or ostentatious display of wealth in any form.”

“Who are we to judge these people, on why someone bought a BMW (vehicle) despite having a small house and lacking parking space? Who are we to say that? Should we meddle in the life of someone if he’s not a plunderer,” he said in Filipino.

“This law has victimized so many people.”

During the hearing, ACT Teachers Party-list Rep. France L. Castro raised concerns on the Ombudsman’s Memorandum Circular No. 1 Series of 2020, which restricts the public, including the media, from getting copies of SALNs.

The order covers the 2019 SALNs of government officials and employees filed on August 30 this year.

Under Mr. Martires’ order, government agencies also cannot easily access the SALNs of public servants even for the purpose of a lifestyle check.

“What is it (SALN) for? The SALN is only being used to demonize government officials,” he said in Filipino.

Mr. Martires said SALNs cannot prove the guilt of an official accused of plunder.

In December 2019, former Presidential spokesman Salvador S. Panelo said President Rodrigo R. Duterte does not need to release his 2018 SALN.

Mr. Panelo said the responsibility to make public the President’s SALN, if it’s for the purpose of scrutiny, lies on the Ombudsman.

A copy of the document has yet to be made public.

The President appointed Mr. Martires in 2018. — Kyle Aristophere T. Atienza

NBI official arrested for bribery

AN OFFICIAL of the National Bureau of Investigation (NBI) has been arrested for accepting bribes from those involved in the money-making scheme of facilitating the illegal entry of foreign nationals.

NBI Deputy Director Ferdinand M. Lavin confirmed in a text message that NBI’s Legal Assistance Section chief Joshua Paul Capiral was arrested on Monday, but did not give details yet on the case.

In a Senate hearing, NBI Anti-Trafficking Division chief Janet Francisco also confirmed the arrest of Mr. Capiral in an entrapment operation.

The NBI early this month filed a corruption complaint against 19 Bureau of Immigration (BI) officials and employees found involved in the scheme.

An owner of a travel agency who pays the immigration officers for the entry of its Chinese passengers without the necessary documents was also recommended to be charged with corruption.

The BI welcomed the arrest of the NBI official.

“We will continue to pursue our campaign against BI personnel engaged in corrupt activities in coordination with NBI and other law enforcement agencies in support of President Duterte’s desire to cleanse the agency,” Immigration Commissioner Jaime H. Morente said in a statement.   

Mr. Morente said they also support the recommendations of the Senate committee for the reorganization and suspension of those involved. — Vann Marlo M. Villegas

DBCC flags banks’ concentration risk

THE Development Budget Coordination Committee (DBCC) said there is a need to monitor concentration risks arising from banks’ investments in government securities as well as recent efforts to boost domestic liquidity amid the pandemic.

In its Fiscal Risks Statement for 2021, the DBCC said banks hold P2.2 trillion of outstanding National Government (NG) securities or 42.9% of the total. The bulk (86.8%) are government bonds at P1.9 trillion, while the Treasury bills are at P300 billion.

“At the onset of the COVID-19 global pandemic, the Bangko Sentral ng Pilipinas (BSP) complemented the government’s liquidity management program through some extraordinary measures, such as the P300 billion repurchase agreement with the NG. The BSP also opened the window for purchases of government securities in the secondary market. Given the substantial investment of banks in government securities and recent government initiatives to boost domestic liquidity and address the extraordinary liquidity requirements of the economy, careful monitoring of concentration risk is deemed necessary,” the report said.

Concentration risk refers to the level of risk in a bank’s portfolio arising from concentration in a single counterparty, sector or country.

These risks may become an issue when the need for liquidity arises for banks, said National Treasurer Rosalia V. de Leon.

“If there is herd behavior due to need for liquidity by banks because of high NPLs (nonperforming loans), banks may trigger [a] sell-off of government securities, So as in anything, [there is] need to diversify,” Ms. De Leon said in a text message to BusinessWorld.

A sell-off would mean lower prices and higher yields at which the government will have to pay its debt through government securities, she said.

Ms. De Leon said this is why they want to have more buy-side institutional investors for securities with long maturities.

The banking industry’s NPL ratio stood at 2.67% as of end-July, up from the 2.53% seen in June and the highest in six years or since the 2.74% logged in August 2014, based on data from the BSP. Gross bad loans — or those left unpaid for at least 30 days after the due date — jumped by nearly a third to P290.1 billion from P219.6 billion in July 2019.

The BSP projects the industry’s NPL ratio to reach 4.6% by end-December.

The central bank has assured there remains ample liquidity in the financial system. In July, M3 — which is considered to be the broadest measure of money supply — rose by 14.5% year on year to about P13.6 trillion, slightly slower than the 14.9% expansion in the prior month.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the DBCC rightly took note of the “relatively high” concentration of holders of outstanding NG securities.

“Having a high concentration of types of owners could lead to a situation wherein market players would act in a similar fashion when faced with a turn in market sentiment,” Mr. Mapa said via e-mail.

“The DBCC may also be wary that a potential sell down in the bond market could lead to substantial losses for bond holders, majority of which are banks, who would then in turn face challenges to carry out their function as financial intermediaries should their cash flows and balance sheets come under pressure.”

The DBCC’s statement is only cautionary given government securities are among the safest investments, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“As a matter of prudence, credit risk needs to be diversified to address concentration risk in one or a few issuers or simply not putting all eggs in one basket,” he said in a text message.

“One alternative is to also encourage further diversification of investors in government securities to include more investors locally (i.e. from the investing public) and from overseas (i.e. more foreign investors), as part of capital market development, thereby also reducing reliance on banks as the biggest investors of government securities,” he added. — Luz Wendy T. Noble with inputs from Beatrice M. Laforga

BoC finds some undervalued rice shipments

By Beatrice M. Laforga, Reporter

SEVERAL TRADERS have undervalued rice shipments with provisional goods declaration, resulting in P1.4 billion in lost revenues, the Bureau of Customs (BoC) said.

A Finance department statement quoted Customs Commissioner Rey Leonardo B. Guerrero as saying they found the valuation of rice shipments with provisional goods declaration were “quite low compared with the prevailing market prices.”

“But those are subject to post-modification and post-audit. And in the meantime, we are still conducting the post-modification and verifying the payments of rice because some of them are clearly undervalued. So we will catch up in the post modification and post-audit,” Mr. Guerrero was quoted as saying during an Executive Committee meeting at the DoF.

The Bureau of Customs (BoC) accepts a provisional goods declaration if the private traders do not have regulatory permit, clearance or license present during the lodgement. The provisional declaration can be accepted if the duty and tax treatment of the goods would not be different from goods with complete declaration. The rules were outlined under Customs Memorandum Order (CMO) 07-2020 issued in March this year.

The widespread undervaluation of rice imports appear to have been substantiated after BoC concluded an audit of rice traders. Out of the 245 traders that imported rice from March 5 to June 20, 2019, the BoC audited 60 entities with the most number of incidents and highest percentage discrepancies between their declared transaction values and the published reference rates.

Vincent Philip C. Maronilla, Customs assistant commissioner heading the Post Clearance Audit Group, told BusinessWorld the audited rice importers were found to have owed the government more than P1.417 billion in deficiencies of customs duties, penalties, surcharges, and interest.

“In terms of level of compliance, the audit findings show a low level of compliance among the audited importers, as 47 out of 55 auditees, or 85.45%, were found to have committed violations of Customs laws and regulations in more than one of the issues discussed in the preceding section, and only 8 auditees were found to be compliant with their obligation to ensure the truthfulness and accuracy of the goods declaration,” Mr. Maronilla, who is also the agency’s spokesperson, said in a Viber message Tuesday.

The BoC launched the inquiry in August 2019 after the Federation of Free Farmers (FFF) warned the government may not meet its target collections since imported rice were being undervalued by traders to evade tariffs.

“The audit of import transactions, resolution of undervaluation cases, and actual collection of the correct tariffs, is long overdue. We reported this to DoF last August 2019 and followed it up again this year when we saw that the degree of undervaluation appeared to have worsened,” FFF National Manager Raul Q. Montemayor said in a Viber message Tuesday.

Data on the volume of rice imports that had been subjected to audit was not available as of press time.

“There were also imports from India and Pakistan were assessed the ASEAN rate of 35% tariff instead of 50%; there is no need to investigate this and BoC should have immediately collected the tariff differential. Part of the problem also arises from the wrong tariff code classification of various types of imports which we thought BoC would immediately address but which we can see from their weekly price memoranda they have not done so yet up to this time,” he added.

The rate of tariffs slapped on imported rice was increased to 35% of the declared value under Republic Act 11203 or the Rice Tariffication Law after the quantitative restrictions were lifted.

Rice tariff collections hit P11.036 billion in the seven months to July, up 4% from a year ago and higher than the BoC’s annual P10 billion target for the Rice Competitiveness Enhancement Fund (RCEF). RCEF supports farm mechanization and other measures to allow farmers to better compete against imports.

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