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When science and experts go wrong

Thirteen Days, a film about the Cuban missile crisis, is quite instructional regarding decision-making in government. Faced with the possibility of mass human extermination by a possible World War III, US President John Kennedy had to carefully weigh options as presented by the various experts.

And, as you guessed it, the experts were also the problem.

The thing with any expert is that their high training in their field, the focus that made them reach the level of “expert” in the first place, also serves as their limitation. When asked by Kennedy for answers, human nature kicked in and every expert’s proffering was practically exclusively within the confines of his specialty: a general urged unilateral attack, diplomats pleaded diplomacy, and the lawyers naturally suggested legal action.

But as with the high-stakes game of foreign relations, a government faced with this pandemic’s demand for life or death decision-making is courting a fool’s choice if it goes exclusively by way of the experts.

People, especially those of the liberal progressive bent, with an aversion to religion, tend to raise science to an undeserved pedestal. Thus, their mantra: “go with science.” Which is their way of saying that anything un-empirical, anything “un-sciencey,” is (like religion) mere superstition and thus to be ignored.

Such people, Schopenhauer would say, are indulging in “shallow-pated rationalism.”

Obviously there’s a lot to be said for science. But people oftentimes rely on it selectively. Scientific facts about the fetus being human, that children are better off with their biological father and mother together, as well as de-substantiating calls for alarmism at so-called “climate change,” have all been snubbed for not falling in line with liberal narratives.

And if it is truth that one is really after, then this needs to be acknowledged: science and religion are both built on faith. And like anything involving faith, it requires a leap into the unknown.

People say: “rely on data.” But doing so requires having “faith” (etymology: fides, trust) in an unknown number of factors. Faith that the data, collected by persons you don’t know or haven’t met, is correct. And setting aside the fact that not everything can be captured by numbers, data needs to be analyzed through the lens of scientific “theories” or “laws” made by people you don’t know personally, whose studies you’ve likely never read completely, and quite likely won’t be able to review. The studies themselves are built on a chain of studies, that readers are trusting was researched impeccably and reviewed stringently.

And it doesn’t end there: even assuming everything checks out, data and experiments accurate and done correctly, science can’t still get us an actual truth we can continuously rely on 100% tomorrow, the next day, or days ahead.

Our current experience with scientific models demonstrates that.

And because science rests on human knowledge, which, as is clear to anyone who has bothered to think, is limited and will always be so, science will be bound by the same constraints.

Here, Karl Popper has this to say (at least as summarized by Bryan Magee in Confessions of a Philosopher): “We are never able to establish for certain the truth of any unrestrictedly general statement about the world, and therefore of any scientific law or any scientific theory.”

Thus, we “never can in the traditional sense of the word ‘know,’ know the truth of any of our science, all our scientific knowledge is, and will always remain, fallible and corrigible.”

Or, to paraphrase Kant: our knowledge is limited to make room for faith.

This doesn’t mean we disregard science but only to be conscious of its limitations. Should we base policy decisions on science? Indeed. But as Magee cautions, with this caveat: “The rational way to behave is to base our choices and decisions on ‘the best of our knowledge’ while at the same time seeking its replacement by something better; so if we want to make progress we should not fight to the death for existing theories but welcome criticism of them and let our theories die in our stead.”

The key phrase is “the best of our knowledge” because that’s all we’ll ever have. We ultimately — for better or worse — have to rely, not on fallible experts, but on the prudential judgment of our elected leaders (as discussed in “Duterte and prudential judgment,” BusinessWorld, April 2).

Remember that every piece of information moves not within a single realm but inevitably touches upon other areas of human relationships. Hence the need for a holistic and multi-disciplinary viewpoint detached from the deep, albeit narrow, confines of expertise.

The point here is not to bash experts or downplay the value of academic credentials or specialist training. Such provides us with an utterly invaluable forward baseline or starting point, far superior than proceeding from ignorance, upon which to build various options for our eventual decision.

But, clearly, that starting point can not be where we should end up.

 

Jemy Gatdula is a Senior Fellow of the Philippine Council for ForeignRelations and a PhilippineJudicial Academylaw lecturer for constitutionalphilosophy and jurisprudence.

https://www.facebook.com/jigatdula/

Twitter @jemygatdula

The morning after

By Tony Samson

IN THE 2008 financial crisis on subprime loans, and collateralized debt obligations (CDO) which allowed bad loans to be acquired by a further chain of investors as assets in their portfolios, the domino effect of defaults closed down many banks and bankrupted investment funds. The survivors (given hefty bailout funds from governments) were required to undertake “stress tests” to determine their chances of survival with their exposure to risky assets.

The lessons from that time of a financial pandemic (that one, coming from the USA) can serve as preparation for what everybody is calling the “new normal.” Not that there was ever an old normal, as norms keep changing every day. Just think of the effect of the digital revolution on changing mores where you can send messages to unwilling recipients without any filters — she is not available at this time. Still, the face mask as part of office attire for non-robbers is admittedly something new.

As part of good governance and compliance, banks routinely undergo stress tests. Just to put this in context, the last stress test before this involved the impact of the Taal Volcano eruption (remember that one in January?). What if there is an even bigger eruption, where the whole lake goes up in flames and ashes affecting a radius to include Metro Manila? The banks evaluated their exposure to borrowers from Cavite and Batangas, the impact on tourism and the property market in Tagaytay, the agricultural fallout on coffee production and beef. How many branches do the banks have in the “calabar” zone?

I know that stress test seems so trivial now. But not at that time, just four months ago. Will we feel the same sense of shrugging off about this virus by December (yes, this year)? Probably not.

The stress test is a paradigm borrowed from medicine. Part of a general physical check-up on the state of your health requires a stress test. This one involves getting on a treadmill wearing shorts and some attachments on the chest to monitor the heart and pulse rates, and heavy breathing. The speed and inclination angle of the treadmill is increased to check how much stress your body (and mind) can still take. The elderly, as always, are checked every five seconds, with running conversations to check if they are still capable of speech and logic, through heavy breathing. (And did you really invent the Internet, Sir?) The whole procedure tracks the soundness of your health and the absorptive capacity of the face towel you brought.

Ordinary businesses should also be undergoing stress tests. They already know the immediate stress of a closed shop with payroll obligations. Moving forward, they are dealing with scenarios of empty tables for a restaurant or echoing corridors for malls. Even the macroeconomic managers of the economy, like the secretary of finance, are looking at a “best case”scenario of zero GDP growth up to minus 1%. Okay, that’s one input.

Scenarios are based on guesses, usually assumptions on how the future will look like. They are not necessarily whimsical musings but using existing numbers projected to the rest of the year and beyond. How quickly will consumers eat out again and buy cosmetics, this time without panic? What’s their disposable income going to look like? Will the infrastructure “Build, Build, Build” program, already delayed, be resumed at the budgeted levels, given the emergency spending? Will there be a vaccine in the next few months?

All scenarios at this time tend to be gloomy. Working from home has allowed the imagination to roam free, aided by a barrage of death counts, contagion spread, and things you did not think were dangerous, like shoes worn outside and now spreading their stealth missiles while you’re sleeping in another room.

Optimists, and I count myself as one, tend to be brushed off as disconnected and out of the news loop — haven’t you had your daily dose of the prophets of doom? This too shall pass, and most of us will be there to celebrate, until the next crisis.

There is a morning after even after the worst hangover. You may forget where you are or who you were with the night before. But it’s time to wake up, check your slippers, and get back… to the new normal.

 

Tony Samson is Chairman and CEO, TOUCH xda.

ar.samson@yahoo.com

The importance of understanding yourself

By Alexis Calla

WHAT WE HAVE experienced over the past two months is unprecedented. The COVID-19 global pandemic and the resulting physical lockdowns will deliver a massive blow to the global economy. France’s statistical office estimates the current lockdown will cost the French economy 35% of daily GDP as long as it continues. That means a one-month lockdown would shave almost 3% off the 2020 GDP.

Meanwhile, there is huge uncertainty surrounding how long the lockdowns will go on for, how many companies will go bankrupt because of cash flow challenges and how many jobs will be lost. Policymakers have been quick to respond with sharp interest rate cuts, massive liquidity injections, and huge fiscal spending.

We are all left trying to make sense of it all. What are the chances that I will contract the virus? Will I recover if I do? What about my family, friends and colleagues? What actions can I take to protect myself and those around me?

Oh, and, as an aside, what should I do with my investments that have just declined sharply in value? The US equity market took less than a month to fall from a new all-time high to a bear market (i.e. over 20% decline). And then just to add to the confusion, the market rebounded 20% in just four days!

Rather than focusing solely on what could happen in the future, we believe we would all benefit more by analyzing what we have learned about ourselves as an investor in the past few weeks. Given hindsight, what actions would I change if I could go back in time — either in the heat of the moment, or over the past five years? Did I take on excessive risk or leverage? Did I panic sell? Of course, we cannot time-travel, but we can commit to acting differently going forward.

What we might struggle with is identifying a framework to apply to ourselves so that we can assess our traits and see how this might influence the investment decisions we make.

In partnership with Oxford Risk — a specialist in the world of behavioral finance — we identified nine personality traits (risk tolerance, speculation, composure, confidence, financial comfort, desire for guidance, impulsivity, desire for legacy, internal locus of control) that best describe and explain investor behavior. If you measure these traits with high, medium, or low rankings, this gives us just under 20,000 potentially different individual profiles. However, based on a survey of our clients in Hong Kong, Singapore, and Taiwan, we found there are three main clusters of behavioral profiles, which we label as Conservative, Comfortable, and Enthusiastic.

The Conservative Investor is generally comfortable in his own financial skin, does not really want much guidance and is less likely to be speculative or impulsive. This type of investor is likely to experience lower drawdowns in times of market volatility. One potential thing for Conservative investors to think about is whether their investment allocations are too conservative and consistent with their long-term goals. Periods of market volatility, such as we are seeing at the moment, can be a good time to think about gradually adding risk to their investment allocations.

The Comfortable Investor is similar to the Conservative Investor, but ranks higher on composure and confidence. This investor tends to have more investment experience, is likely to be calm in a crisis and will likely try to evaluate the situation as rationally as possible. One potential weakness is a tendency to be overconfident. It is very important for this type of investor to try to find views from different perspectives and try to find out why his perspective could be wrong. This will help ensure that the investor remains diversified, while continuing to factor in alternative scenarios.

The Enthusiastic Investor is largely the opposite of the Conservative Investor and is high on speculation, impulsivity, and looks for guidance from those around them. Investors with this profile can be whipsawed in times of market turmoil, exacerbated by the fact that this profile tends to have the least investment experience. This investor would benefit from pre-committing to a disciplined investment approach. This should include a core diversified allocation that is held through periods of volatility. It could also include a separate allocation that can be implemented through more thematic ideas (which would also satisfy their need for action).

Of course, we are all individuals and are likely to have traits from different profiles. However, we hope this framework will help you identify the potential strengths and weaknesses of your own profile. Increased self-awareness is the first step in developing an investment approach that is consistent with both your behavioral biases and also your long-term objectives.

 

Alexis Calla is Chief Investment Officer at Standard Chartered Private Bank.

Need to increase supply of medical workers and build telemedicine infrastructure to prepare for future public health crises

By Geoffrey Ducanes and Sarah Lynne Daway-Ducanes

THE COVID-19 pandemic covering most of the world has put a spotlight on medical workers, and has rekindled an appreciation for their importance and even heroism during times of public health crises.

In the Philippines, more than 252 healthcare workers — 152 doctors and 63 nurses — have been infected by the virus that results in COVID-19 as of April 8, according to the Department of Health (DoH), while the Private Hospitals Association of the Philippines reported the disease has already killed 21 doctors as of April 7. And despite an absence of an official count of nurse deaths due to COVID-19, sporadic reports suggest it is also on the rise.

Although losing any life to COVID-19 is tragic, losing medical workers is doubly tragic because of their role in saving lives during this pandemic, and because they are already in scarce supply in the country.

MEDICAL WORKER SHORTAGE
Even before the current pandemic, the Philippines was already facing a serious shortage of medical workers. Based on the most recent data from the DoH, there were 40,775 medical doctors (in the health sector) in the country in 2017, which translates to a medical doctor-to-population ratio of 0.4:1,000. The generally accepted standard is one doctor for every 1,000 population, which means the country was 63,710 doctors short, given its 2017 population of 104 million.

According to the DoH, the Philippines had 90,308 practicing nurses and 43,044 practicing midwives in public and private health facilities in 2017, equivalent to a nurses and midwives-to-population ratio of 1.3:1,000. There is no clear recommended standard for the number of nurses and midwives, but the average for low middle income countries, to which the Philippines belongs, is 1.7:1,000, according to the World Health Organization (WHO). Even by this modest standard, the country was short by 44,273 nurses and midwives in 2017.

SHORTAGE MORE SEVERE OUTSIDE METRO MANILA
It is extremely important that the country’s COVID-19 infection be contained within Metro Manila and Luzon as the shortage in medical workers is generally more severe in the Visayas and Mindanao.

In fact, Metro Manila, the location of more than 70% of the country’s COVID-19 cases as of April 14, had a healthy 1.1 medical doctors per 1,000 population ratio. The rest of Luzon, meanwhile, only had 0.32 doctor per 1,000, and Visayas and Mindanao, had even less at 0.30 and 0.24 doctor per 1,000, respectively. ARMM only had 0.1 doctor per 1,000 population. The picture for nurses and midwives is similar: Metro Manila had 1.6 per 1,000, the Visayas had 1.3 per 1,000, and other Luzon and Visayas both had 1.2 per 1,000.

These numbers, combined with the generally inferior medical facilities and equipment in the rural areas, suggest the spread of COVID-19 in the Visayas and Mindanao could be potentially catastrophic.

OUTLOOK ON MEDICAL WORKER SUPPLY
The country’s medical worker shortage is not expected to be filled anytime soon, especially the shortage in medical doctors. A 2019 study by the University of the Philippines (UP) Center for Integrative Studies (UP Center for Integrative Studies Discussion Paper 2019-02 ‘Eliminating the deficit in medical doctors Strategies and costs’ authored by Clarissa David, Geoffrey Ducanes, Jose Luis Vargas Bacigalupo, Shaira Melissa Tengco, and Karol Mark Yee. https://cids.up.edu.ph/publications/discussion-papers/2019-series/2019-02/) estimated that more than 16,000 students should enter medical school every year (of whom 90% should graduate, 68% pass the board exam, and all passers practice in the country) for the next five years if the country is to achieve the one doctor per 1,000 population ratio in 10 years’ time. But this enrollment figure is four-times the current level of annual entry in medical schools. Even if the doctor-deficit is to be filled in 15 years’ time, new enrollment every year should total about 7,000 a year for the next 10 years, which is still much higher than the current level.

These scenarios do not even account for the expected radical decline in medical school enrollment in school-years 2020-2021 and 2021-2022 due to the K to 12 transition. It is also still a question as to whether this pandemic will inspire young people to take up medicine (or nursing), or scare them from doing so.

At the same time, it is expected that demand for Filipino medical workers abroad will surge as other countries move to bolster their health systems to prepare for future pandemics. Already, in the US alone, as of 2015, there were about 10,000 doctors and more than 140,000 nurses who were originally from the Philippines, according to the Migration Policy Institute in Washington D.C., which used the 2015 US Census data.

TWO-PRONGED STRATEGY
Solving the medical worker shortage likely requires a two-pronged strategy: 1.) increasing the supply of medical workers, especially doctors; and 2.) investing heavily in telemedicine to dampen the demand for medical workers.

INCREASING THE SUPPLY OF MEDICAL DOCTORS
As of 2018, there were 44 recognized medical schools in the country, of which 14 are in Metro Manila, 13 in other parts of Luzon, 12 in the Visayas, and five in Mindanao. Of the 44 medical schools, nine are public and 35 are private schools. From school-years 2012-2013 to 2015-2016, enrollment for all year levels averaged 18,300, although the trend was increasing. In the school-year 2015-2016, 92% of the enrollees and 86% of medical school graduates came from private schools.

Increasing the supply of medical workers would involve the strategic expansion of medical schools, both public and private, and a large-scale government scholarship program with a return service requirement. Although there is in place a scholarship program for medical students in state universities and colleges (Commission on Higher Education and Department of Budget and Management Joint Memorandum Circular No. 2018-1), which covers only tuition, this should be expanded to also include private schools, and should prioritize students from rural areas with more severe doctor shortages. The financial barriers to poor but capable students should also be lowered by including a reasonable living allowance and non-tuition medical school expenses, such as for textbooks and uniforms, and should extend until the board examinations.

INVESTING HEAVILY IN TELEMEDICINE
Telemedicine is the provision of medical services without physical interaction between health care professionals — and in some warranted instances, artificial intelligence (AI) — and patients. Telemedicine provides a more timely and less costly access to medical care for patients, who are unable to physically go to a healthcare facility, but require either routine and non-urgent or even urgent medical care. In the long run, investing heavily in telemedicine technology could help address the shortage of healthcare professionals in the Philippines and the under-provision of even basic health care services in far-flung areas.

The current pandemic presents an unprecedented opportunity for the rapid adoption of telemedicine technology. Indeed, other countries affected by COVID-19, notably, the US, European Union countries, and other countries in Asia, have relaxed laws and regulations to allow the faster adoption of telemedicine. In the Philippines, the Department of Health and the National Privacy Commission have jointly developed a framework that would boost the use of telemedicine to help combat COVID-19, also providing free telemedicine hotlines to “decongest our hospitals and minimize risks posed by unnecessary patient traffic.”(https://www.doh.gov.ph/doh-press-release/DOH-BOOST-TELEMEDICINE-SERVICES-FOR-NCR-SERVICE-TO-EXPAND-TO-OTHER-REGIONS-SOON) The University of the Philippines (UP) and Department of Science and Technology-developed RxBox, a portable multi-component telemedicine device, now also plays a big role in enabling telehealth services — especially in the now heavily embattled UP Philippine General Hospital — amidst the COVID-19 outbreak. (https://rxbox.chits.ph/what_is_rxbox/; http://www.pchrd.dost.gov.ph/index.php/news/6527-pgh-to-use-dost-s-rxbox-for-covid-19-in-patient-monitoring)

Developing telemedicine in the Philippines would involve investing in both fixed and human capital. Fixed capital investments involve the procurement and production of more telemedicine-related devices, ensuring stable and accessible internet connection, and developing and/or adopting telemedicine software, and even AI. (https://blog.evisit.com/what-are-the-basic-technical-requirements-for-telehealth. See, for instance, https://aip.scitation.org/doi/pdf/10.1063/1.5023979 on the viability of using AI in providing telemedicine services.) Human capital investments, in turn, involve the training of health care professionals and the mass education of the population. Moving forward even further, making provisions for investments in telesurgery (i.e., surgical procedure done remotely with robotic technology over wireless networking) infrastructure would also help address the relative shortage of surgeons in remote areas.(https://assets.cureus.com/uploads/review_article/pdf/12751/1550698319-20190220-655-3jlaza.pdf) These are some considerations that prospective bills on creating an eHealth system in the Philippines will also have to weigh up. (https://www.philstar.com/headlines/2020/01/13/1984345/house-vows-improve-universal-health-care; https://newsinfo.inquirer.net/1255555/angara-to-file-bill-creating-ph-ehealth-system-for-telemedicine)

Increasing the supply of medical workers and investing in the telemedicine infrastructure are costly but necessary undertakings to improve public health and better-prepare the country for the next public health crisis.

 

Geoffrey Ducanes is with the Ateneo de Manila University Department of Economics and Sarah Lynne Daway-Ducanes is with the University of the Philippines School of Economics

Fighting COVID-19 is a battle for human rights

By Eamon Gilmore

THE COVID-19 crisis is a human rights issue, one of the most global and urgent we have ever seen. This is a struggle by all of humanity, for the right to life, and for the right to health of every person.

“The inherent dignity and the equal and inalienable rights of all members of the human family” are among the opening words of the Universal Declaration of human rights, adopted just over 70 years ago. These are now the principles that drive the efforts of governments, international bodies, communities, families and individuals all around the world. Most of all, they motivate the work of health-care and frontline staff, who are putting themselves at risk, every day, to save the rest of us.

Never before has the entire population of the world shared such a need to work together in the common interest of all. Our dependence on each other as a human family has never been so clear. Rarely, if ever, has international cooperation and solidarity been so important. International cooperation is no longer what governments and official bodies should do; it now belongs to the people. We are all now joined in a common enterprise, beyond borders and across continents, because this deadly virus respects no boundaries or distinctions. Our best chance for survival and recovery is to fight the coronavirus together.

Protecting and preserving life is the primary purpose of this struggle. Without the right to life, it is impossible to exercise other rights. To protect life, we must vindicate the right to health. The right to health, in turn depends not only on access to health care, but on rights to safe drinking water and sanitation, on adequate nutrition and on a safe and healthy environment. It also requires access to information, so that people are empowered to protect their own health and those of others. And in this health crisis, which requires a collective response, and the cooperation of people everywhere, respect for civil society is more important than ever. All human rights are interdependent and indivisible and must inform our response to the crisis. Human rights are at the core of the battle against COVID-19.

That is why the European Union (EU) is working closely with the United Nations, with other international organizations and with countries throughout the world, in the great global effort to overcome the virus and its consequences. On April 8, the EU announced a robust and targeted global response of more than €20 billion from existing external action resources to support partner countries’ efforts in tackling the pandemic. This “Team Europe” package combines resources from the EU, its Member States and financial institutions, in particular the European Investment Bank and the European Bank for Reconstruction and Development. The current pandemic is a grave and immense threat to the health and life of humanity. The health of the whole world is only as strong as the weakest health system.

We recognise that there are many people for whom this crisis, and sometimes the measures taken to address it, will add even greater risks to their already fragile existence: refugees; the displaced; the homeless; minorities who are already victims of discrimination; children who are being abused or maltreated; women subjected to sexual or domestic violence; marginalized indigenous peoples; persons with disabilities, older people and the poor who are at greatest risk from the economic consequences. No one should be left behind, and no human right ignored.

The EU has expressed support for, and taken action on the UN High Commissioner Michelle Bachelet’s call for special measures regarding prisoners and others in places of detention and closed facilities. We strongly support the UN Secretary General’s call for a ceasefire by all armed actors in the world today and for a coordinated humanitarian response. We will continue to play our part in the global effort.

We recognise that many governments have already taken steps, and introduced emergency measures, in response to the crisis. We believe that these measures should apply for this crisis only, be time-bound and be proportionate to what is absolutely necessary. This crisis should not become an excuse for the power-hungry to increase repressive measures, to weaken democratic checks and balances, or to dilute the rule of law. Neither should fears over COVID-19 be exploited to spread disinformation or racist and xenophobic reactions.

This is a time for solidarity and for human rights to be at the center of our endeavours. Since this crisis began we have seen millions of small acts of kindness, and stirring solidarity across the world. The indomitable spirit of humanity is displaying its great generosity. Our global human family will come through these frightful days. The changed world to which we will emerge, will be all the better for the care and compassion we show each other now. Let us not squander that future, give in to fear or our lowest inclinations. Let us not forget that human rights define our very humanity.

 

Eamon Gilmore is the European Union Special Representative for Human Rights

Filipinos are investing in companies they rely on in quarantine — eToro

Global multi-asset investment platform eToro recently released figures revealing the top long stocks being invested in the last month by retail investors. Broken down into data from different regions from around the world, the figures reveal that computer giant Microsoft received the most long-term investment in the Philippines and from many other parts of the world in March 2020.

The data comes amidst the ongoing COVID-19 pandemic ravaging the world and shows that despite the challenges currently posed by the virus to the stock market, investors are still quite active.

Rounding out the list of the other top long stocks in the Philippines are companies providing popular services Filipinos enjoy like Amazon, Apple, Netflix, Google, Disney, and Facebook. Also making an appearance was Elon Musk’s Tesla, semiconductor manufacturer Advanced Microdevice, and financial services company Charles Schwab. For the most part, the same names also appeared in the top 10 globally.

In fact, the data also shows that despite the recent challenges posed to the market by the ongoing pandemic, certain companies have emerged as significantly more popular with retail investors in March than the month prior. Charles Schwab, for example, received a whopping 404% month-on-month increase in investment.

Other companies to experience an increase include Disney, moving up from 11th place in February to 10th; Amazon, being the second most invested stock in March from 3rd in February; Netflix went from 9th from 6th; and Advanced Microdevices from 7th to 5th.

One possible explanation for why some companies enjoyed a bump is that the bulk of these companies offer products and services that are immediately visible to Filipino consumers, especially during this unique lockdown period. Both Netflix and Disney (after Disney+ announced it would be landing in the Philippines at a low price) are regularly streamed in the country. Amazon has also partnered up with Western Union to allow Filipinos to pay in peso for international purchases.

Though American tech giants tend to dominate long stocks around the world, there’s also been the noticeable presence of Chinese players such as technology conglomerate Alibaba and Shanghai-based car manufacturer NIO in people’s portfolios. Though these predictably performed also quite well in China (NIO in 7th place and Alibaba in 10th), Alibaba managed to break the top five in neighboring Malaysia.

It’s possible then that the Philippines will follow suit in the future, especially seeing how Alibaba co-founder Jack Ma has stated his intention to expand the company’s presence in the Philippines. Though whether Filipino investors will see it as a long-term investment vehicle remains to be seen, the coming months may give us an answer sooner rather than later.

Of course, eToro Head of Southeast Asia Paul Familiaran feels it’s apt that many of the most popular stocks are also seeing a surge in usage due to the enhanced community quarantine in Manila.

“It’s only fitting that many of these stocks are companies who make products that are now thriving due to the lockdown, such as Netflix, Facebook, and Google,” he said. “It also shows that retail investors all around the world more or less follow a similar pattern. This data gives people an idea of global sentiment on global companies.”

Certified Laboratories for COVID-19 Testing in the Philippines

In this infographic are the locations of the 16 laboratories certified by the Department of Health to conduct Real-Time RT-PCR testing for COVID-19.

 

BoP position reverts to surplus in Feb.

THE Philippines posted an $839-million surplus in its balance of payments (BoP) position in February, as import demand slowed due to the uncertainty over the coronavirus outbreak.

Analysts said that the BoP surplus could further widen in the near term, as they expect import demand to continue to weaken amid the pandemic.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the February BoP position swung to a $839-million surplus from a $1.355-billion deficit in January, and is bigger than the $467-million surplus a year ago.

“The BoP surplus in February 2020 reflected mainly the inflows arising from the national government’s foreign currency deposits with the BSP, and BSP’s foreign exchange operations as well as income from its investments abroad,” the BSP said in a statement on Wednesday.

However, the inflows were offset by the national government’s payments in servicing foreign currency debt obligations during the month.

At this level, the BSP said that the BoP position also reflects a final gross international reserves (GIR) of $88.19 billion, which is enough liquidity buffer that can cover 7.8 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.1 times of the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.

Meanwhile, the BoP position in the first two months of the year swung to a deficit of $516 million, a reversal from the $3.17 billion surplus seen in the January-February 2019 period.

The BoP is a gauge to show the country’s economic transactions with the rest of the world at a given time. A surplus shows more money flowed into the country while a deficit means more funds exited the economy than what went in.

In projections made last November, the central bank expects the BoP position at a surplus of $3 billion and the GIR to be at $86 billion by end-2020.

Economists attributed the surplus in February to lower imports, a stronger peso, and firm dollar reserve levels.

“Growing uncertainty about the then mysterious virus may have stopped import demand, which was also lower in dollar terms after crude oil retreated,” ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mailed reply.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the surplus to the continued resilience of the peso.

“In February, the peso’s relative strength was key, as COVID-19 wreaked havoc in China. Its strength was obvious even as the country was dealing with its own COVID-19 outbreak in March and now even in April,” he said. “The BoP has benefitted largely on the peso’s resilience in the past months.”

Stable gross international reserves as well as inflows from remittance and business process outsourcing also contributed to the February BoP surplus, according to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“The wider BoP surplus may also reflect and consistent with the record high GIR levels recently,” he said in an e-mail. “Furthermore, the country’s structural dollar inflows continued to grow such as OFW remittances and BPO revenues.”

Analysts said the BoP may edge towards a wider surplus in the next few months.

“For the coming months, BoP surplus could still be posted in view of the further sharp decline in global oil prices to new 18-year lows starting March 2020 that could further lead to lower oil imports and further narrowing of the trade deficit or net imports,” Mr. Ricafort said.

ING’s Mr. Mapa said the COVID-19 will take its toll on the country’s current account (CA) and financial account.

“CA deficit to be driven by weaker remittance flows and BPO receipts likely impaired by COVID-19 while import demand to resume after ECQ (enhanced community quarantine) to fuel the governments sustained ‘Build, Build, Build’ agenda,” Mr. Mapa said. — L.W.T.Noble

Impact of COVID-19 on key Philippine economic sectors

THE Philippine economy may lose between P276.3 billion and P2.5 trillion, depending on how the coronavirus pandemic develops in the next few months, according to a state-run think tank. Read the full story.

Impact of COVID-19 on key Philippine economic sectors

Coronavirus may cost PHL up to P2.5 trillion in economic output

THE Philippine economy may lose between P276.3 billion and P2.5 trillion, depending on how the coronavirus pandemic develops in the next few months, according to a state-run think tank.

A discussion paper by the Philippine Institute for Development Studies (PIDS) titled “Projected Disease Transmission, Health System Requirements, and Macroeconomic Impacts of the Coronavirus Disease 2019 (COVID-19) in the Philippines” estimated the trajectory and magnitude of the outbreak in the Philippines under various scenarios.

The country’s economic losses are estimated to reach P2.5 trillion under a “worse case” scenario, where it is assumed that the pandemic is not contained around the world and that the global economy would fall into a recession.

Meanwhile, losses are projected to total P1.6 trillion under a “moderate case,” wherein it is assumed the pandemic is “effectively contained around the world” by the end of the third quarter this year.

For the “best case” scenario, where the pandemic is assumed to be contained globally by the end of the second quarter, economic losses amount to P276.3 billion.

PIDS said the transport, storage, and communication sector is expected to “suffer substantial losses” between P11.7 billion and P124.3 billion due to expected declines in tourism. This is equivalent to around 1.1%-11.3% of the sector’s share of gross value added to the economy.

Other sectors’ projected losses include manufacturing (P82.1 billion-P855.2 billion); wholesale and retail trade (P93.2 billion-P724.8 billion); “other services” (P41.5 billion-P356.9 billion); financial intermediation (P18.5 billion-P141.3 billion); agriculture, forestry, and fishing (P9.4 billion-P110.3 billion); real estate, rental, and business activities (P10.7 billion-P79.7 billion); electricity, gas and water (P5.7 billion-P44.3 billion); mining and quarrying (P1.7 billion-P26.9 billion); and construction (P1.7 billion-P19.3 billion).

Impact of COVID-19 on key Philippine economic sectors

“Extending the ECQ (enhanced community quarantine) by one more month may potentially cost the Philippine economy at least P150 billion due to possible declines in household consumption as workers remain unemployed for longer periods,” the think tank said.

The Luzon-wide lockdown was supposed to end on April 12, but President Rodrigo R. Duterte extended it by two more weeks until April 30.

HEALTH PROJECTIONS
The PIDS paper also noted that in the aftermath of the ECQ, “aggressive efforts” to isolate at least 70% of infectious cases through improved contract tracing, reduced delays in caring for symptomatic cases, and proper observation of social distancing and individual or household isolation “are necessary to suppress the outbreak.”

“Otherwise, lifting the ECQ but maintaining current conditions of delayed time to seek care for symptomatic cases merely delays the progression of the outbreak but still results in around 8% of the population infected,” PIDS said.

Various scenarios were also provided by PIDS, ranging from no intervention to interventions that require “additional aggressive post-ECQ strategies” such as earlier isolation of as much as 70% of symptomatic individuals on the day of symptom onset as opposed to the day they seek care at a health facility. Across these scenarios, coronavirus infections could range between 904,000 and 18.9 million, with COVID-19-related deaths estimated at around 399,000 to 1.66 million.

With no intervention, the pandemic is expected to peak in the country around August this year, with around 18% of the population (18.9 million) infected with the virus.

On the other hand, a scenario wherein the country is able to isolate 70% of symptomatic cases even with the partial lifting of ECQ, can “drastically” reduce the number of cases on the peak day to 900,000 cases. In this scenario, the peak is predicted to occur in May or June 2021.

In scenarios that do not isolate at least 70% of these cases, the demand for health care resources used in treating COVID-19 at the peak of the outbreak would “far exceed” the available supply.

“[A]ssuming no further improvements in the ability to isolate symptomatic cases post-ECQ, the country’s health system would require 1.51 million beds, 456,000 ICU (intensive care unit) beds, 246,000 ventilators, 727,000 doctors, a million nurses, 91,000 medical specialists, and 36 million PPE (personal protective equipment) sets on the peak day of the outbreak in August 2020,” PIDS said.

The think tank noted that the ECQ in itself is not sufficient to contain the outbreak, as a new wave of infections could rise months following the lifting of the ECQ in the absence of “more aggressive public health interventions.”

“The post-ECQ strategy must be designed to maintain a low level of virus transmission, but economically sustainable. We therefore recommend a gradual and calibrated transition to a risk-based strategy that combines relaxation of economic restriction while controlling the spread of the virus,” the paper read.

“As the economy reopens, the government should continuously expand its capacity to perform the following: detect and isolate individual cases, and identify close contacts; protect high-risk population groups, including health care workers; continuously implement public health measures, such as physical distancing and handwashing; and treat many patients as possible, particularly severe and critical cases.”

To do so, PIDS provided specific recommendations that include increasing testing capacity to reduce turnaround times for laboratory results; increasing contact tracing capabilities; decongesting of health facilities by expanding isolation and quarantine facilities outside hospitals for mild cases or suspected cases with mild symptoms; providing a more humane approach for enforcing quarantine and isolation for suspected and confirmed cases; providing a wide range of support and protection to health care workers; and removing all possible bottlenecks on the production and importation of PPEs.

The PIDS said the general strategy should not be “hospital-centric” and that efforts to control the outbreak should start in local communities, with hospitals serving as the last line of defense.

“The goal of the government should not be solely confined to ‘flattening’ the epidemic curve, but also to limit prolonged disruptions in the economy. A key step towards this direction, of course, is to control the spread of the epidemic. Even during epidemics, the government should ensure that critical goods and services remain available, affordable, and accessible,” it said.

COVID-19 has sickened close to 2 million and killed around 126,000 people worldwide, according to Worldometers website, citing various sources including data from the World Health Organization.

For the Philippines, confirmed cases numbered 5,453 while deaths are tallied at 349, according to the latest data on Wednesday by the Department of Health. — C.A.V. Olano

Lockdowns slow banana production amid robust export demand

By Carmelito Q. Francisco
Correspondent

DAVAO CITY — Quarantine protocols imposed by some local governments in Mindanao in line with the coronavirus disease 2019 (COVID-19) crisis have affected the production of some banana export firms in the midst of strong demand for the fresh fruit, a top industry executive said.

Stephen A. Antig, executive director of the Pilipino Banana Growers and Exporters Association, Inc. (PBGEA), said companies are seeing lower output as the movement of people is restricted by lockdowns and curfews.

The demand is high, but movement of the workers is our main concern, said Mr. Antig in a text message to BusinessWorld on Monday.

In Bukidnon, banana farms are not included in the list of“essential businesses that are allowed to continue operating during the quarantine period from April 13 to 26.

Under the guidelines issued by Gov. Jose Maria R. Zubiri, Jr., non-exempt businesses shall be closed during the effectivity of the order.”

In Davao del Norte, the top banana-producing province in the country accounting for about 37% of total exports, Gov. Edwin I. Jubahib ordered the reduction of the number of agricultural workers and directed them to observe two-meter distancing.

The order is in effect from April 5 to 20.

Provincial lockdowns have also been preventing workers from crossing borders if their residence is not within the same locality as the farms.

The farms could have maximized productivity now that the market has improved, but these orders have become a big challenge (to meet), said Mr. Antig.

He added that the initial problem on cargo movement has been resolved and shipments are now operating smoothly again.

February 2020 export data released earlier this month by the Philippine Statistics Authority (PSA) showed fresh bananas were among the bright spots with a 29.6% growth rate.

In 2019, the value of exported Cavendish bananas stood at $1.93 billion, 40% higher than the 2018’s $1.38 billion. Bananas accounted for 38.77% of the agro-based exports last year, and 2.75% of total exports.

PBGEA President Victor S. Mercado, in a press briefing in February, noted that while the export value has increased, production actually fell to 195 million metric tons (MT) in 2019 from 207 million MT in 2018 due mainly to a mild drought, which is expected to continue this year.

The Federation of Cooperatives in Mindanao (FEDCO), which is composed of small banana growers, is looking for funding to irrigate more farms in M’lang, North Cotabato to maintain production despite the dry spell.

“There had been no rain in North Cotabato since January this year, FEDCO founder and Chief Executive Officer Ireneo D. Dalayon said in a text message.

He said they have already set up irrigation systems in at least 20 hectares of banana farms since last year and they need to source capital to cover another 20 hectares.

Mr. Dalayon said an investment of about P500,000 is needed to irrigate one hectare, including the procurement of water pumps. — with Maya M. Padillo

BIR extends ITR filing deadline to May 30

Bureau of Internal Revenue (BIR) logo

THE Bureau of Internal Revenue (BIR) has moved to May 30 the deadline for the filing of 2019 income tax returns (ITR), after the government extended the enhanced community quarantine (ECQ) in Luzon until end-April.

Signed on April 14, the BIR issued Revenue Regulations (RR) No. 10-2020 which extended anew the deadline for the filing and payment of ITRs, which was originally scheduled on April 15 and then extended to May 15 due to the ECQ.

“In consideration of the extension of the ECQ period until April 30, 2020, these regulations are hereby promulgated to amend certain provisions of RR No. 7-2020, particularly on the extension of deadlines to submit, file, and/or pay the necessary documents and/or taxes required under the Tax Code, as amended as well as in the existing revenue regulations,” the regulation read.

BIR said taxpayers who are able to file “can amend their tax returns at any time” before the new due date. Amendments that will result in additional tax payment will not incur penalties, including surcharge, interest and compromise penalties if it will be paid within the extended deadline, it added.

For the fiscal year ending Jan. 31, filing and payment of annual ITR can be done until June 15, extended from the original schedule of May 15.

Likewise, application for value-added tax (VAT) refund claims covering the quarter ending March 31, 2018 and April 30, 2018 can be done until May 15 and May 30, respectively, or 30 days after the lockdown is scheduled to be lifted.

Payments for donor’s and estate tax returns can be done 30 days from the date when the ECQ is lifted, BIR said.

The regulation also set new deadlines for other returns and documents, including the monthly and quarterly VAT declarations; monthly remittance of percentage tax on winnings and prizes withheld by racetrack operators.

For instance, filing of monthly VAT declarations for February and March could be filed from May 6-10 and May 21-25, respectively, while filing of quarterly VAT returns for quarter e nding Feb. 29 March 31 was extended until May 10 and May 25, respectively.

Deadline for submission of tax amnesty on delinquencies returns was also extended further to June 8 from the previous extended schedule of May 23 from April 23, originally.

Submission deadlines for various documents such as a summary list of sales and sworn statements were also moved to May 10 for the fiscal quarter ending Feb. 29, and May 25 for the quarter ending March 31.

The BIR also extended anew the deadline of submission for other returns, including the following:

• certification of compensation payment (new deadline: May 15);

• documentary stamp tax declaration (May 20);

• financial statements for the year 2019 (May 15);

• inventory lists (May 15 for quarter ending Feb. 29 and May 30 for quarter ending March 31);

• monthly e-Sales reports (May 23-25);

• withholding tax remittance return for national government agencies (May 25)

• excise tax return for mineral products (May 25);

• application for tax credits or refunds covering the period of March 17, 2018 to April 30, 2018 (May 31).

“If the ECQ period will be extended further, the filing of the returns and payment of the corresponding taxes due thereon, and submission of reports and attachments falling within the enhanced extended period shall be extended for 30 calendar days from the lifting of the ECQ,” it added. — Beatrice M. Laforga