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Muslim beneficiaries, frontliners need halal kitchens

This week marks the fourth week since President Rodrigo R. Duterte announced the Enhanced Community Quarantine (ECQ) in light of the coronavirus disease 2019 (COVID-19) outbreak. For the past few weeks, the nation has seen numerous acts of charity and empathy to numerous Filipinos affected by the ECQ.

The virus doesn’t discriminate. No matter the age, race, economic background, and religion, anyone can get infected. Time and time again, the spirit of bayanihan has been proven stronger than any calamity and has brought people together despite their differences.

NOT FORGETTING THE MUSLIM BROTHERS AND SISTERS

There are more than 10 million Muslim Filipinos in the country, and in order to facilitate their nutritional needs while respecting their religious beliefs, several groups are now seeking halal kitchens to accommodate them.

Halal is the Arabic word for “permitted” or “lawful.” In Islamic practices, a food product becomes halal-certified when it is in full compliance with the Shari’ah Law, principles and standards, and if it adheres to the practices of preparing food or meat as defined in the Quran. This same standard also applies to kitchens.

This means that the presence of pork or pork by-products is not allowed in the kitchen and in the meals prepared. Giving or using alcohol or any intoxicant content in the meal preparation is also prohibited. The same goes with animal blood or najis (ritually impure things).

The ECQ has forced many food establishments to close, limiting the food options. And if the bayanihan spirit has taught us anything over the years, it is that helping others does not stop because of one’s race, religion or beliefs.

TAKING CARE OF FRONTLINERS

Since the start of the ECQ, Frontline Feeders PH has been sending hot meals to medical frontliners. It is an organized group of individuals composed of doctors, restaurant owners, non-government organizations (NGOs) and volunteers that has been mobilizing and distributing prepared meals to different hospitals in Metro Manila and neighboring cities.

From catering one hospital, the organization has now serviced 41 hospitals in 17 cities, delivering more than 50,000 meals so far. The effort was accomplished through careful planning with generous donors, kitchen owners and coordinators.

For inquiries, visit www.frontlinefeedersph.com or Frontline Feeders PH’s social media pages.

For more #COVID19WATCH contents, visit www.bworldonline.com/covid19watch.

– ALIYYA SAWADJAAN

 

Figuring out the ‘new normal’ for PHL through NEDA surveys

By Adrian Paul B. Conoza
Special Features Writer, BusinessWorld

The crisis caused by the coronavirus disease 2019 (COVID-19) has drastically altered economic activity both globally and locally that the country’s economic planning office expect things to go back to a “new normal”.

As the National Economic and Development Authority (NEDA) braces for the long-term impacts brought about by COVID-19, it is now exerting its efforts to help the country respond to this public health crisis, rebuild confidence, and redefine the “new normal” the economy will resume in.

NEDA’s report on the impact of the pandemic published last March 19 assessed that the Philippine economy could contract by as much as 0.6% this year. It estimates that the month-long enhanced community quarantine (ECQ) could cost between P428.7 billion to P1.355.6 trillion in foregone gross value added (GVA), with significant losses in transport and tourism, household consumption, exports, and remittances.

In response to these projected outcomes, NEDA plans to implement measures based on three phases. The first one involves clinical/medical response, public health response, and short-term augmentation of the health system. The next phase focuses on rebuilding consumer and business confidence. The third phase involves redefining and resuming a “new normal state of economic activity that is more prepared for a possible pandemic”.

Chaired by NEDA, the Technical Working Group for Anticipatory and Forward Planning (TWG-AFP) of the Inter-agency Task Force for Management of Emerging Infectious Diseases is taking the lead in identifying policies to help the country’s economy adjust to this “new normal”.

“As this pandemic affects various sectors, it is important for us to be able to characterize what this new normal would mean to each and every segment of the population. We are currently crowdsourcing for inputs on how the whole of government can address the challenges the country is facing,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.

Part of the group’s crowdsourcing efforts is conducting online surveys for different sectors such as consumers, business owners, agriculture and fisheries. The public and other concerned citizens are encouraged to answer the surveys which can be accessed either at www.neda.gov.ph or at NEDA’s Facebook page.

The Online Public Consultation on Defining and Preparing for the “New Normal” and Consumer Rapid Assessment surveys are targeted at consumers.

The Online Public Consultation asks respondents on their perception of the new normal after the pandemic as well as suggestions for the next steps the government should take (i.e., policies, strategies, laws). Interested participants are encouraged to answer before 12:00 noon on April 7, Tuesday.

The Consumer Rapid Assessment, meanwhile, asks participants about their personal situation as well as that of their families before and during the ECQ in terms of accessing goods and services as well as coping with meeting such needs, among other factors.

Both surveys are available in English and Filipino.

The TWG-AFP is also conducting a separate survey for micro, small, and medium enterprises (MSMEs) in order to understand the experiences and needs of business owners under ECQ. It asks business owners about the status and financial situation of their businesses, as well as the impact of the pandemic on their company’s sales and employment, among others.

“Your inputs to this survey will enable us to recommend appropriate policies and programs to mitigate loss and help the Philippine economy recover,” the online survey assured.

This survey for MSMEs is available in English, Tagalog, and Bisaya; and can be answered as well until April 7, Tuesday, at 12:00 noon.

In order to assess the impact of COVID-19 and the ECQ on farmers and fisherfolk, an online business rapid assessment for the agriculture and fisheries sector seeks to get responses which will guide the development of appropriate policy measures and support programs that will help citizens under the sector cope with the impacts of ECQ and continue their activities and livelihood. The survey have English and Filipino versions.

NEDA assures the public that in accordance with the Data Privacy Act of 2012, responses from participants of these surveys will be treated with utmost confidentiality.

PSEi climbs as virus cases abroad peak

THE MAIN INDEX continued its climb on Monday as investors hope for some stability in the coronavirus disease 2019 (COVID-19) pandemic.

The benchmark Philippine Stock Exchange index (PSEi) rose 223.84 points or 4.18% to end at 5,570.81. The broader all shares index added 101.09 points or 3.10% to close at 3,360.75.

“With the…coronavirus death toll appearing to be peaking in the hardest hit nations such as New York and Italy, most of the regional markets including the Philippines rebounded,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message yesterday.

Italy and France started seeing fewer deaths due to COVID-19 in the previous week: France recorded 357 deaths marking its lowest daily increase in a week, and Italy had 525 deaths marking its lowest in more than two weeks, Al Jazeera reported yesterday.

“Local shares climbed as the Eurozone epicenter cases declined, signaling the possibility of some stability in the spread of the disease,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said via Viber.

Spain has become the country with most COVID-19 cases in Europe with more than 131,600 as of yesterday. It is now second in the world next to the United States which has more than 337,600 cases.

COVID-19 has sickened about 1.28 million across the globe and has killed more than 69,000 as of Monday afternoon.
In the Philippines, the COVID-19 tally has reached 3,246 cases, 152 deaths and 64 recoveries as of Sunday night.

“The market went up especially during the last minute of trading as investors rushed to hunt for bargain issues,” Timson Securities, Inc. Trader Darren T. Pangan said in a text message.

All sectoral indices closed higher: industrials by 432.36 points or 6.72% to 6,866.33; services by 72.52 points or 6.10% to 1,261.42; holding firms by 215.76 points or 4.09% to 5,481.28; property by 73.70 points or 2.61% to 2,897.86; financials by 20.53 points or 1.73% to 1,204.31; and mining and oil by 36.36 points or 0.85% to 4,298.23.

Value turnover climbed to P4.86 billion with 757 million issues switching hands from Friday’s P4.03 billion with 293.3 million issues.

Advancers beat decliners, 119 against 76, while 41 names ended unchanged.
Net foreign selling stood at P470.75 million, down from Friday’s P570.32 million. — Denise A. Valdez

PHL office sector to benefit when BPOs bounce back after virus

By Denise A. Valdez, Reporter

THE office space sector is seen to show some resilience amid the coronavirus disease 2019 (COVID-19) pandemic, as the business process outsourcing (BPO) industry is expected to grow once more after the crisis ends.

Real estate service provider Santos Knight Frank, Inc. sees the Philippines benefiting when foreign companies turn to outsourcing to reduce costs post-COVID-19.

“Global companies will be outsourcing more as a way of cutting down on costs. This will spur demand for the BPO industry in the Philippines, which continues to be attractive because of the country’s competitive costs and young talent,” Santos Knight Frank Chairman and Chief Executive Officer Rick M. Santos said in an online media briefing on Monday.

He noted it is difficult to rely on Philippine Offshore Gaming Operators (POGOs) to drive up demand in the office segment for now, as the POGO sector, which is largely powered by Chinese workers, takes a hit from the suspension of flights between the Philippines and China.

Santos Knight Frank expects new office buildings in Metro Manila to fall to 810,00 square meters (sq.m.) this year from its initial projection of 1.18 million sq.m. Vacancy is also seen to rise to 10% from 5% in 2019.

Once the situation normalizes, the firm said tenants will start “value-hunting,” or searching for attractive lease terms across the Philippines.

“We saw examples of that with call centers from India post-Global Financial Crisis… So we do expect to see that, and we do forecast that there will be an adequate amount of office space either currently on the market or under construction now,” said Morgan McGilvray, Santos Knight Frank senior director for Occupier Services & Commercial Agency.

“As we all know, for the BPO sector, the lower the cost, the better for this market. So if rents are going down, if operating costs are going down, that’s actually an opportunity to have bigger, better presences in the Philippines as opposed to other BPO sectors around the world,” he added.

Aside from the office segment, the industrial and logistics sectors are also seen to be resilient both during and after the virus outbreak, as the production and delivery of goods are continue during the lockdown period.

The growth of e-commerce, as heightened by the lockdown period, is also expected to drive up the need for industrial and logistics spaces to support an increase in demand from online customers.

Health care-related properties are likewise seen to attract new investors once the crisis is over, as people all over the world are expected to be more health-conscious after the COVID-19 pandemic.

And overall, property owners across all real estate segments are expected to provide higher importance to property and facility management given the increased expectations from buyers and tenants.

“Landlords and developers should implement sustainable and wellness-oriented developments and international best practices as tenants become more conscious of the impact of real estate on the health of their employees,” Mr. Santos said.

Razon-led Prime BMD to turn stadium into COVID-19 facility

RAZON-led Prime Metro BMD Corp. (Prime BMD) is working with the government to transform the Ninoy Aquino Stadium at the Rizal Memorial Sports Complex into a facility for coronavirus disease 2019 (COVID-19) patients.

In a statement Monday, the infrastructure firm said it is building a Level 2 COVID-19 emergency facility at the sporting arena located in Malate, Manila. Funding for phases 1 and 2 of the project is supported by the foundation arm of Razon-led Bloomberry Resorts Corp., the operator of Solaire Resort & Casino.

Retrofitting works for phase 1 started on April 1 and is so far 75% complete. This covers the construction of 116 patients’ cubicles, two nurses’ stations and drywall partition wall, installation of temporary furniture, and conversion of facility common areas.

Phase 2 will begin on Tuesday which involves building 108 patients’ cubicles.

“We feel it our duty to provide as much support as possible to the interagency task force and to the Filipinos to respond to this crisis,” Prime BMD Chairman Enrique K. Razon, Jr. was quoted as saying in the statement.

“The combined resources of Solaire’s social responsibility arm and our construction company, Prime BMD, puts us in an ideal position to continue working hand in hand with the government agencies to deliver much needed facilities,” he added. — Denise A. Valdez

Villar Group sets up disinfection tents in hospitals

THE Villar Group on Monday said it will install disinfection tents in several hospitals in the frontlines of battling the coronavirus disease in Metro Manila.

In a statement, the Villar Group said the disinfecting apparatus has been installed at the Rizal Medical Center in Pasig City. This can be used by health workers, staff and hospital visitors.

“The disinfecting apparatus has a sensor prompting to automatically spray disinfecting mists when people enter the tunnel,” the group said.

Similar disinfecting apparatus will be installed in the Lung Center of the Philippines, Philippine Heart Center, and Quirino Medical Center in Quezon City, as well as the Research Institute for Tropical Medicine (RITM) in Muntinlupa City and Las Piñas General Hospital in Las Piñas City.

Disinfection tents will also be donated and put up in San Lazaro Hospital and Sta. Ana Hospital in Manila, and Don Jose N. Rodriguez Memorial in Caloocan City.

Property companies under the Villar Group, led by tycoon Manuel B. Villar, include Vista Land & Lifescapes, Inc., Starmalls, Inc., and Golden Bria Holdings, Inc.

Fiscal balance swings back to deficit in February

THE national government’s fiscal balance swung back to a deficit in February, with the gap seen to further widen in the coming months as revenue collections are expected to fall and state spending to ramp up amid the coronavirus disease 2019 (COVID-19) pandemic.

Data from the Bureau of the Treasury (BTr) released on Monday showed the budget deficit stood at P37.6 billion in February, narrower than the P76.4 billion seen in the same month in 2019 and a turnaround from P23-billion budget surplus in January.

February revenues rose 2.35% to P206.8 billion, with tax collections rising 4% to P189.8 billion and non-tax revenues fell 13.03% to P17 billion.

Broken down, the Bureau of Internal Revenue (BIR) saw a 4.79% increase in collections to P142.2 billion in February from P135.7 billion a year ago.

The Customs bureau collected P44.8 billion, up 1.33% year on year, largely due to a slowdown in imports from China due to the coronavirus outbreak.

For non-tax revenues, the BTr saw a 36.25% decline to P5.9 billion “due to lower dividend remittance for the period compared to 2019.”

In February, government spending fell by 12.22% to P244.4 billion from P278.5 billion in the same month last year, which the BTr attributed to base effect since the Internal Revenue Allotment (IRA) of local governments was only released that month instead of January.

Of which, primary spending or expenditures net of interest payments dropped 9.51% to P229.1 billion.

The BTr also attributed the lower spending total to smaller interest payments in February which contracted by 39.32% to P15.4 billion “resulting from maturities and the premium on reissued Treasury bonds.”

Year-to-date, the budget deficit slumped by 54% to P14.6 billion.

Revenues for the January to February period jumped 9.29% to P501.5 billion, of which the BIR collected P337.1 billion (up 5.08%) and BoC collected P100.7 billion (up 8.74%).

Overall state spending rose 5.17% to P516 billion in the first two months of the year, as primary expenditures grew 4.72% to P439.3 billion and interest payments went up 7.79% to P76.8 billion.

“In the coming months, we expect the budget deficit to widen substantially (up to 5% of GDP, gross domestic product) as the Philippines contends with fading tax revenues given the economic impact of COVID-19 and the enhanced community quarantine (ECQ),” Nicholas Antonio T. Mapa, senior economist at ING Bank Philippines, said in an e-mail on Monday.

He expects tax collections to contract in the coming months as “incomes will be curtailed severely and excise tax collections hit” due to the ECQ.

In addition, the government is expected to ramp up spending drastically to shield the economy from the fallout from the coronavirus.

For instance, the government has rolled out the first tranche worth P100 billion of its P200-billion cash aid assistance to low-income families and those in the informal sector. The national government and its local units also implemented relief good operations to feed families stuck at home during the month-long ECQ.

“The formula of stronger spending to offset the loss from consumption and investment activity, coupled with falling revenues will push the deficit to widen but this is the task the government has before them,” Mr. Mapa said.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the country should brace for a larger budget deficit in the coming months as the figures in February report “still do not account fully the effect of the lockdown from the pandemic.”

The government placed Luzon under a month-long ECQ until April 12 to contain the spread of COVID-19.

“With most businesses and with it consumption on lockdown, expect lower revenue in the months to come with lower collections. On the other hand, expenditure will be higher as the government institutes aid packages and other stimulus programs to aid affected sectors, hence a larger negative budget balance,” Mr. Roces said in an e-mail.

“They will have to take it on the chin to keep the economy afloat until our brave frontliners can beat back the virus and then eventually business and consumer sentiment returns,” Mr. Mapa said.

So far, the official budget cap is still at 3.2% of GDP but economic managers projected this could reach 3.6% of GDP before the lockdown was implemented.

However, the National Economic and Development Authority’s (NEDA) estimates showed fiscal gap could widen to 4.4%-5.4% of GDP this year.

According to the Department of Finance, the government could suffer a P318.9-billion drop in revenues if 2020 GDP will contract by one percent and a P286.4-billion decline if the economy will post flat growth, on top of an estimated P14-billion decline in collections due to falling global oil prices.

The government targets to collect P3.49 trillion this year to fund its P4.1-trillion spending plan, with the remaining funds to be sourced from its borrowing activities. The BIR is tasked to collect P2.576 trillion or 78% of the P3.3-trillion target set for the two biggest tax collection agencies, while the Customs bureau is expected to collect P731.235 billion.” — BML

Landlords cannot evict tenants amid coronavirus crisis — DTI

LANDLORDS and lessors are not allowed to evict their tenants, particularly small businesses, who are unable to pay either residential or commercial rent within a 30-day grace period after the lifting of the enhanced community quarantine (ECQ), the Trade department said.

The Department of Trade and Industry issued Memorandum Circular 20-12 dated April 4, which sets the guidelines for the concessions for residential rent, and commercial rent for micro, small, and medium-sized enterprises (MSMEs) that have temporarily ceased operations during the ECQ.

The grace period covers 30 calendar days from the rent due date within the ECQ. As of Monday, the government is considering an extension of the ECQ, which is scheduled to end on April 12.

The cumulative rent due within the ECQ will be amortized in the six months after the lifting of the lockdown, and will be added to rent charges in the following months without interest or penalties.

“No eviction for failure to pay the residential or commercial rent due may be enforced within the thirty (30)-day period after the lifting of the ECQ,” the memorandum said.

Trade Secretary Ramon M. Lopez in a statement on Monday said no Filipinos should lose their residence during the ECQ period.

“Moreover, the importance of MSMEs in jumpstarting our economy once the ECQ has been lifted cannot be understated,” he said. “Through these measures, we ensure that our fellow Filipinos have a future after the ECQ with homes that they can live in and through jobs and employment provided by our MSMEs.”

Several business groups last week said MSMEs must be given assistance including financial support and tax breaks, especially after the lifting of the ECQ.

DTI said that lessors do not have to refund residential and commercial rent already paid during the ECQ, but must grant at least a 30-day grace period from the next rent due date without interest or penalties.

The department also encouraged commercial rent lessors “with greater generosity” to totally or partially waive MSMEs’ rent due within the ECQ, grant a reprieve or provide discounts, or renegotiate lease term agreements.

Lessors can consider MSMEs’ liquidity and capability to pay rent in negotiating possible assistance. MSMEs in turn can present as evidence financial statements, cash flow projections, among others.

“MSMEs shall signify to their respective lessors their request for assistance by providing supporting documents, such as, but not limited to, financial statements as proof of enterprise size, and/or lease contracts as proof of tenancy.”

Micro enterprises include those that have a total asset value of P3 million, while small enterprises’ asset value can reach up to P15 million. Medium enterprises’ asset value can hit up to P100 million.

Existing rental payment waivers recognizing the closure of businesses during the ECQ will continue to be honored.

Lessors who do not enforce the 30-day grace period will be penalized with imprisonment of at least two months and/or fined at least P10,000.

Violators may be reported to the DTI, which can issue a notice of violation. The lessor must submit a written reply within five days after receiving a notice.

DTI in mid-March asked mall operators and commercial landlords to waive rent during the ECQ.

The country’s biggest mall operators, SM Group, Ayala Malls, Megaworld Corp., Robinsons Land Corp. and Ortigas & Co., earlier announced they will waive rent for all tenants in its shopping malls that are not able to operate until April 14.

“The total package will be worth around P1.4 billion in rent condonation to provide the merchants of these malls financial relief so they can in turn provide the much-needed financial support for their employees during this period,” Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala earlier said.

“We share our tenants partners’ concerns at the unfortunate situation and will waive rental charges for those affected and unable to operate during this period,” SM Supermalls President Steven Tan also said in an earlier statement. — Jenina P. Ibañez

COVID-19 to push PHL into ‘mild recession’

THE Philippine economy is seen to enter a “mild recession” and post a less than 0.5% contraction for the full year, as the coronavirus disease 2019 (COVID-19) and the ongoing Luzon-wide lockdown brought most economic activities to a halt, GlobalSource Partners said.

Romeo L. Bernardo, GlobalSource country analyst for the Philippines, said gross domestic product (GDP) for 2020 could contract by “less than 0.5%” this year but quickly recover next year if governments around the world will contain the COVID-19 pandemic by the end of June, without a substantial rise in cases that will require lockdowns.

“Given this, we think the domestic economy will suffer a mild recession, less than 0.5% GDP contraction, that it can quickly grow out of by 2021. But the next two quarters will be difficult for everyone, worst in 2Q as infections and deaths rise and as uncertainties about containing COVID-19 and preserving firms’ balance sheets intensify,” Mr. Bernardo said in a brief e-mailed to journalists on Monday.

However, despite the base case recession outlook, he said the Philippines may eke out a 1-2% GDP growth, albeit lower than its previous 5.7% outlook.

“Despite our grim base case recession outlook for this year, we think the economy has the upside potential of generating 1-2% growth for this year if government is able to manage well the economy’s transition out of the ECQ and provide swift and ample on- and/or off-budget support to the general public and affected firms, especially small businesses,” he said.

The forecast compares to the three-percent growth projection by the World Bank and two-percent estimate by the Asian Development Bank.

“The main source of GDP growth this time around is government, which has a spending envelope of about 20% of GDP this year plus the recently introduced rescue package worth 1.2% of GDP. Nevertheless, we think these are not enough to offset the downturn in private activity,” he said.

The government initially rolled out a P27.1-billion funding package to assist affected sectors and another P200 billion worth of cash aid to low-income families.

This will likely soften the drastic decline in public consumption, equivalent to 70% of GDP, due to the ECQ.

According to Mr. Bernardo, consumers cannot rely on remittances for spending as some overseas Filipino workers are laid off amid the global downturn.

“Nevertheless, we think these (rescue packages) are not enough to offset the downturn in private activity. We are awaiting the features of a third fiscal package that we hear is being crafted primarily to help MSMEs (micro, small and medium enterprises) and which may keep more people in their jobs and thus hasten post-quarantine recovery,” he added.

Mr. Bernardo said the economic fallout from COVID-19 will likely linger beyond the lockdown period whether the quarantine is lifted as planned, modified or extended.

He warned that lifting the ECQ “too early” could cause confirmed cases to surge again, resulting in further damage.

On the other hand, not lifting it “soon enough” may force businesses into insolvency, which would mean more job losses, he added.

NORMALCY BEFORE LATE Q3 UNLIKELY

Mr. Bernardo said returning to a state of “normalcy” before late third quarter “is unlikely” if the ECQ will be extended for another two weeks from the initial schedule of April 12.

“Even if government is able to get ahead of the virus and restore confidence by the time the quarantine is lifted, we think a return to some degree of normalcy before late 3Q is unlikely, especially given uncoordinated handling of the pandemic globally that weakens prospects for a swifter global recovery,” he said.

While the government allocated a P200-billion rescue package for low-income households, he said many businesses, especially MSMEs, are trying to keep employees paid despite low sales and supply chain disruptions.

Further, Mr. Bernardo noted that the government has relied heavily on aggressive monetary easing by the central bank. He urged banks to boost lending, after a 75-basis point (bp) cut on benchmark interest rates and the 400 bps reduction on banks’ reserve requirement so far this year.

“We think that on its own, monetary accommodation is unlikely to overcome banks’ risk-aversion in a time of crisis, especially with credit raters issuing negative outlook warnings on bank credits. Hence, we think the fiscal package being crafted for MSMEs is critical to give lenders more comfort,” he said. — Beatrice M. Laforga

Keeping the ‘Bayanihan’ spirit alive

By Bjorn Biel M. Beltran
Special Features Writer, BusinessWorld

We cannot win this pandemic alone.

The more time passes, the clearer it gets that for the country to win over the deadly coronavirus, it needs to work together and focus its efforts into containing it and helping those most affected by it.

Towards this, the private sector has taken it upon itself to keep the ‘Bayanihan’ spirit alive, working with the government to alleviate some of the challenges brought about by the pandemic. For instance, to aid with the impact to farmers and ensure healthy food for all, the Philippine Chamber of Agriculture and Food, Inc. (PCAFI) has proposed for “emergency” trading centers to be put up in barangays.

The organization pointed out the urgency of such emergency testing centers as vegetables from provinces like Benguet are wasting away as many roads in barangays have been blocked due to the Luzon lockdown. Food producers should also be allowed to take the lead in this supply system to widen participation in the distribution of needed goods — ensuring food security.

“Emergency trading centers in barangays and subdivisions nearest to consumers will give people access to the food they need while enhanced community quarantine is in effect. Mobile and rolling stores should be immediately dispatched. The agribusiness sector, unhampered, must take the lead,” said PCAFI president Danilo V. Fausto.

The trading centers will supply more nutrients to Filipino consumers than just what is available in canned goods which are what is being distributed by barangays, he added.

Meanwhile, to help bring immediate aid to healthcare workers and hospitals in fighting the spread of the coronavirus disease 2019 (COVID-19) pandemic, a group comprising of the Philippine Disaster Resilience Foundation (PDRF), Zuellig Pharma, ABS-CBN, Metro Drug and Go Negosyo, has launched a fundraising campaign for frontliners.

The group started the Kaagapay: Protect our Healthcare Heroes project, a fundraising initiative that aims to raise over P100 million to provide much needed medical items such as personal protective equipment (PPE) and ventilators for hospitals across Metro Manila.

“Franklin Roosevelt said that ‘courage is not the absence of fear but the assessment that there is something more important than fear.’ Our medical frontliners demonstrate this every day they are at work saving lives while putting their own at risk. Let us support these heroes in any way we can,” said PLDT/Smart Communications chairman Manuel V. Pangilinan.

“Just as the business community has banded together to feed the economically-vulnerable, we are also working in concert to support our healthcare frontliners with PPEs, test kits and medical supplies through this project,” said Ayala Corp. chairman and CEO Jaime Augusto Zobel de Ayala.

Responsible capitalism in times of crisis

As the government and the Philippine healthcare system are pushed to its limits, the role of private firms in easing challenges cannot be understated. Not only can private companies help enact change through similar donations and community initiatives, they also have the responsibility of protecting employees and redeploying their unique capabilities to meet society’s immediate needs.

This is easier said than done, especially as the current Luzon-wide lockdown has placed an indefinite hold on operations– and hence, revenues– for many companies. An article published in the World Economic Forum website put it best, “Responsible capitalism, which seeks to move corporate culture beyond shareholder primacy, now faces its biggest test yet. Today’s CEOs are knee-deep in invidious choices as they attempt to absorb losses, steady cashflow and balance the competing needs of their investors, customers, staff and suppliers.”

Yet, there is still opportunity. Consumers have shown that they appreciate and reward businesses that use their powers for good. With many Filipinos turning to social media to express their grievances regarding the COVID-19 pandemic, consumers will be quick to criticize false virtuousness from corporations trying to cash in on empty moral statements. Businesses who back their words with concrete plans and action, however, will stand out.

“Firstly, some businesses can redeploy their unique capabilities to meet society’s immediate needs. These acts will not be forgotten by their recipients and will build good will among the wider public for a long time to come,” Paul Polman, chair of the International Chamber of Commerce and former CEO of Unilever, wrote in the article.

“Secondly, responsible firms will do everything possible to protect their people, meaning employees, customers and supply chains. Promoting health and safety is priority number one; next is trying to mitigate the financial impact, especially for staff on precarious contracts.”

Mr. Polman added that while it is tempting to keep shareholders at the top of the priority list, critical action to help communities will see immense benefits down the road.

“None of this is revolutionary. The last decade has seen a growing movement towards longer-term, multistakeholder business models. And it’s obvious that most businesses can’t thrive in faltering economies. But don’t underestimate the siege mentality that will be gripping many boardrooms and the powerful instinct to protect profits, even if compassion and humanity are the cost,” he wrote.

“The greatest business leaders will, by contrast, play a longer game to serve the societies which host them in this moment of great need, offering people security and stability as an antidote to panic and fear. Employees above all will expect this. This extraordinary and overwhelming crisis demands more of our top executives as they help lead our response. The best will advance the interests of others knowing that it makes us all better off.”

For more #COVID19WATCH contents, visit www.bworldonline.com/covid19watch.

Gov’t makes full award of Treasury bills

THE GOVERNMENT made a full award of the Treasury bills (T-bills) offered on Monday despite higher rates as investors flocked to safe-haven assets amid increased liquidity.

The Bureau of the Treasury (BTr) awarded P20 billion as planned in T-bills on Monday out of total tenders worth P37.6 billion, snapping four consecutive auctions of full rejections amid soaring yields.

It fully awarded P10 billion in 91-day papers out of total tenders of P15.95 billion at an average rate of 3.413%, up 38.9 basis points (bps) from the 3.024% quoted at the last successful auction on March 16.

The BTr also accepted P5 billion as programmed via 182-day T-bills, with the tenor attracting bids worth P10.915 billion. The six-month papers fetched an average rate of 3.553%, higher by 15.5 bps from 3.398% previously.

For the 364-day papers, the government also raised P5 billion as planned from P10.81 billion in bids. The average rate for the one-year securities rose 28.8 bps to 3.845% from 3.557% previously. 

National Treasurer Rosalia V. de Leon said they decided to make a full award on Monday as rates fell within their estimates, with investors having “liquidity that needs to be put to work.”

“Rates within internal estimates and secondary levels. Market continues to remain cautious as the duration of the lockdown is uncertain. But at the same time, we have to deploy liquidity from the RRR (reserve requirement ratio) cut,” Ms. De Leon told reporters in a Viber message on Monday.

A bond trader said the BTr could not afford to keep rejecting bids as the government plans to boost spending to contain the coronavirus disease 2019 (COVID-19) outbreak while keeping the economy afloat.

However, the trader said rates “are not that bad either because they are getting one-year rates near Bangko Sentral ng Pilipinas’ (BSP) overnight rate.”

“Rates are already higher, but if compared to last week when they rejected, this week’s levels are better. Also, this issuance is timely as they have maturity this week of RTB (Retail Treasury Bonds) 3-8 amounting to P121 billion,” the trader said in a Viber message. 

Ms. De Leon said there will also be a redemption of P16 billion in debt, which will add to market liquidity. 

The full award to end the series of rejections may be a signal of a “stabilizing” market, the trader said, as banks with too much cash and limited lending opportunities are likely to choose safer assets.

Around P180 billion to P200 billion in fresh cash was infused into the financial system after the 200-bp cut in universal and commercial banks’ RRR which took effect on Friday, which brought it down to 12%.

BSP Governor Benjamin E. Diokno has been authorized by the Monetary Board to cut banks’ RRR by a total of 400 bps this year. The central bank had said reductions to the reserve ratios of other banks and nonbank financial institutions are also being studied. 

The Treasury has set a P190-billion local borrowing program for April, broken down into P130 billion in T-bills and P60 billion in Treasury bonds. — Beatrice M. Laforga

PHL banks to see slower loan growth, higher bad loans amid COVID-19 outbreak — S&P

THE BANKING INDUSTRY may see slower loan growth and an uptick in bad loans amid the economic impact of the coronavirus disease 2019 (COVID-19), with their credit ratings also likely to take a hit along with other banks in the region, according to S&P Global Ratings.

In a note sent to reporters on Monday, S&P noted banks’ exposure to the most vulnerable sectors that will be hit by COVID-19.

“We expect trade, tourism, private-sector investment and consumption in the Philippines to be affected. This will drag on banks’ lending,” S&P said.

Local lenders will not be spared from the COVID-19 risks that will affect Asia’s banks, according to the global debt watcher. Across the region, S&P estimates that nonperforming assets and credit losses will hit $600 billion and $300 billion, respectively, due to the pandemic, paired with oil price shocks and market volatility.

“Region-wide disruptions to the electronics sector and factory closures in China affecting supply chains will also slow growth in Philippine manufacturing (10% of banking sector’s loans),” it said.

“While many Asia-Pacific banks will exhibit resilience, negative rating momentum is inevitable,” it said.

Moody’s Investors Service and Fitch Ratings last week downgraded their outlook on the Philippine banking sector to “negative” from “stable,” saying the Luzon lockdown will hit banks’ assets and profitability.

In the report, S&P noted the regulatory relief extended by the Bangko Sentral ng Pilipinas (BSP) to lenders as the government imposed a lockdown in Luzon, which has caused business disruptions.

“We believe these measures will alleviate pressure on the banks but also delay the true recognition of bad loans,” S&P said.

Among the relief measures available to banks are the staggered booking of allowance for credit losses, non-imposition of penalties on legal reserve deficiencies, non-recognition of certain defaulted accounts as past due, a higher single borrower’s limit of 30% (from 25%) and the removal of penalties for reserve deficiencies, among others.

S&P said they see banks’ bad loans and credit costs rising by about 50 basis points (bps) to 2.7% and 1%, respectively, this year.

This will be fueled by more soured debt from industries such as hotel and catering, wholesale and retail and transport, where the banking sector’s exposures amount to two percent, 12% and three percent, respectively.

“We note that moratoriums and regulatory forbearances should stabilize borrowers’ creditworthiness and prevent some defaults,” S&P said.

Despite the possibility of higher bad loans and credit costs, S&P said local lenders have enough buffers to withstand risks from the pandemic.

“Philippine banks have good capital buffers, with an average Tier 1 capital adequacy ratio of about 14%, and this will help them manage the rising risks,“ it said.

The report also noted that the BSP could ease key rates further following the 75 bps in cuts it implemented in the first quarter.

After a 25-bp rate cut in February as a preemptive measure amid risks from the COVID-19 outbreak, the BSP slashed policy rates by 50 bps in March as the country saw more infections, which caused the government to place Luzon under a month-long lockdown, which is seen as a major risk to growth prospects.

This brought the overnight reverse repurchase, lending and deposit rates to 3.25%, 3.75%, and 2.75%, respectively.

“This will support borrowers’ credit quality. However, the pressure on net interest margins will weigh on banks’ profitability, as will higher credit costs,” S&P said. — L.W.T. Noble

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