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Regional Updates (07/29/20)

New bird flu case detected in Pampanga

ANOTHER case of bird flu, involving the highly pathogenic avian influenza A (H5N6), was detected in an egg-producing farm in San Luis, Pampanga, the Bureau of Animal Industry (BAI) confirmed on Wednesday. BAI Director Ronnie D. Domingo, in a report to Agriculture Secretary William D. Dar, said 38,701 heads were depopulated and disposed of in accordance with protocols under the government’s Avian Influenza Protection Program. Mr. Domingo said initial field investigation showed the presence of migratory birds in the area, which has been associated with bird flu outbreaks worldwide. “The Department of Environment and Natural Resources has identified 117 important bird areas in the country, and about 150,000 migratory birds nest and breed annually in Central Luzon,” he said. The BAI official assured the consuming public that the bird flu strain was not reported and detected among broiler chickens, which are the primary source of poultry meat. “Early reporting, detection and strong multi-agency collaboration paved the way for the rapid and effective response in the management of the H5N6 incidence,” Mr. Domingo said. Last week, the Department of Agriculture announced the successful containment of the bird flu case in the town of Jaen, Nueva Ecija detected on March 13. — Revin Mikhael D. Ochave

Masbate going into lockdown Aug. 5–20

AS EARLY as February this year, health safety protocols such as body temperature check for arriving passengers were already being implemented at the Masbate City port.

MASBATE PROVINCE is imposing a lockdown on August 5 to 20 to give the local government and health authorities time to fully manage the increasing number of coronavirus disease 2019 (COVID-19) cases, particularly among returning residents. In an executive order released July 29, Governor Antonio T. Kho said the reopening of its borders on June 1 for locally stranded persons, overseas workers, and other returning residents “transformed” Masbate “from being a COVID-free Province into one with the second highest number of COVID-19 confirmed cases in the Bicol Region.” As of July 28, the region recorded 401 confirmed cases, with 230 active and nine deaths. Masbate accounts for 57 of the total cases with 50 active. Department of Health (DoH) Bicol Director Ernie V. Vera said there are no recorded community transmission in the region. “As of today, there is no declaration of local or community transmission in Bicol by the Epidemiology Bureau. However, it has been reported by the DoH Central Office that there are certain clustering in some barangays in the region. Clustering means there are two or more COVID-19 cases in the identified barangays,” Mr. Vera said in a statement posted Tuesday evening. Mr. Kho, in his order, said the temporary lockdown next month will allow authorities to complete contact tracing activities, avoid aggravating the “congested conditions of quarantine facilities,” prevent COVID-related deaths, and bring Masbate back again to a zero-COVID status. During the lockdown, no one will be allowed to enter or exit the province, except people transporting essential goods who will be subjected to medical assessment at the ports. Travel is allowed between towns and the capital Masbate City, including inter-island with permit from the barangay head. Bicol has two accredited testing laboratories, 39 intensive care unit beds, 268 isolation beds, 145 COVID ward beds, and 29 mechanical ventilators. All the different beds have a utilization rate of about 20% while ventilators are at 3%.

DENR closes down Calamba sanitary landfill

A 6.6-HECTARE sanitary landfill in Calamba City, Laguna was shut down for violations under its environmental compliance certificate (ECC). In a statement, the Department of Environment and Natural Resources-Environmental Management Bureau (DENR-EMB) said it served a cease and desist order on July 24 to the landfill operated by S.B. Hain Enterprises and General Services Inc. at Barangay Kay-Anlog. “We cannot allow the landfill and its operator to continuously harm the environment. The Calamba sanitary landfill will remain closed until violations are corrected,” DENR Undersecretary Benny D. Antiporda said. On July 13, an EMB team inspected the facility and found nine violations under the 26 conditions in its ECC. The operators also failed to install a working drainage and leachate treatment facility. — Revin Mikhael D. Ochave

Immigration, MWSS offices temporarily closed

THE WATER Regulatory Office in Quezon City has been temporarily closed starting July 29 until further notice after one of its employees tested positive for the coronavirus disease 2019 (COVID-19). In an announcement on Wednesday, the Metropolitan Waterworks and Sewerage System (MWSS) said it will adopt a work-from-home scheme for all employees while the office undergoes thorough disinfection. The COVID-positive worker is already under quarantine and other employees will undergo swab testing. “We advise our stakeholders to course all inquiries, concerns, and other communication through our official email account,” the MWSS said. “Rest assured that we will fulfill our mandate and service obligations through our current work arrangement and deliver vital and timely information through our official social media pages and website,” the agency added. Meanwhile, the Bureau of Immigration main office in Manila will be closed until Thursday to allow all its employees to undergo rapid antibody tests for coronavirus infection. Commissioner Jaime H. Morente, in a statement, said only about half of nearly 700 employees at the main office have so far been tested. The General Services Section also requested for more time to complete the disinfection, he added. Office operations were closed on Monday and Tuesday for disinfection after three employees tested positive for the disease through swab test. Satellite and extension offices in other parts of Metro Manila are open. “Those who have registered with our online appointment system will be notified or may inquire about their new schedule by contacting our hotlines that can be viewed at immigration.gov.ph,” he said. — Revin Mikhael D. Ochave and Vann Marlo M. Villegas

Mindanao conferences lined up for agriculture, business recovery

SEVERAL CONFERENCES are lined up in the third quarter this year to tackle programs and concerns of Mindanao’s agriculture and business sectors, and firm up plans for recovery from the impact of the coronavirus crisis. On August 27, the first stakeholders summit will be held for the Mindanao Aqua-Fisheries Development Program in Mati City, Davao Oriental. The summit is organized by the Davao Oriental provincial government with support from the Mindanao Development Authority (MinDA). The aqua-fisheries program, developed by MinDA, is one of the priority projects proposed for inclusion in the P2.1-B Rise Mindanao Grant Fund from the European Union. Aside from Davao Oriental, other coastal areas in the southern islands are being considered for funding, including those in the island provinces of Basilan, Sulu, Tawi-Tawi, Camiguin, and Dinagat. In September, the annual Mindanao Business Conference will be held virtually on the 10th-11th, with the Davao City business chamber as host. On Sept. 22–26, the Davao City chamber is also holding the 22nd Davao Agri Trade Expo (DATE) to sustain and establish new business opportunities in crops, livestock, and aquaculture. — Maya M. Padillo

Nationwide round-up

Court suspends transfer of inmates to BuCor facilities

THE OFFICE of the Court Administrator has directed courts to suspend the transfer of convicted inmates to facilities managed by the Bureau of Corrections (BuCor). The order was issued following a request from BuCor Director General Gerald Q. Bantag to prevent the spread of coronavirus infections. “(T)he issuance by the courts of commitment orders from BJMP (Bureau of Jail Management and Penology) jail units to the BuCor is hereby suspended, effective today until 31 August 2020,” the circular signed by Court Administrator Jose Midas P. Marquez read. The Department of Justice said more than 300 prisoners and employees have tested positive for the coronavirus disease 2019, with 21 deaths among prisoners, including nine high-profile inmates. The court administrator had also previously issued an order temporarily stopping the transfer of newly arrested individuals from local police units to jail units under BJMP, following the request of Interior Secretary Eduardo M. Año. BuCor handles the New Bilibid Prison, Correctional Institution for Women, the Leyte Regional Prison, and the penal farms in Davao, Iwahig, San Ramon and Sablayan. — Vann Marlo M. Villegas

Labor dep’t anticipates funding for informal sector, barangay employment programs

DoLE
PHILSTAR

THE LABOR department is expecting more funding for its assistance programs with the Senate’s approval of the second law covering the government’s response measures for the coronavirus crisis. In a briefing on Wednesday, Labor Undersecretary Joji V. Aragon said the overall P140-billion fund under the second Bayanihan to Heal As One Act will allow the Department of Labor and Employment (DoLE) to extend more help to workers who lost their jobs or livelihood due to the ongoing crisis. “Under Bayanihan 2, nakikita namin na baka at malaki ang posibilidad na maaprubahan po ang aming mga programa  (we see that it could and there is a big possibility that our programs will be approved),” she said. She said this includes funding for workers in the informal sector and the barangay-based emergency employment program. The Senate on Tuesday approved the proposed law, which includes a P17 billion fund for DoLE.

OFWs
Meanwhile, another 354 distressed overseas Filipino workers (OFWs) from Saudi Arabia arrived in Manila on Wednesday. “Unfortunately, some of our OFWs have been greatly impacted by the pandemic and we hope that our repatriation efforts would bring them comfort as they will soon join their families and loved ones,” Labor Secretary Silvestre H. Bello III said. DoLE has so far repatriated over 104,000 OFWs displaced by the global pandemic. — Gillian M. Cortez

Momentum building for 3rd round of social amelioration payouts

A THIRD ROUND of emergency subsidies for vulnerable households is needed because of the number of families who received no aid earlier, as well as the swelling in the jobless numbers since the completion of the first two rounds, a senior legislator said.

Representative Jose Ma. Clemente S. Salceda, who chairs the House committee on Ways and Means, estimated that another 1.7 million workers are expected to be displaced by the end of September due to the pandemic.

The government distributed two tranches of subsidies worth P5,000-8,000 to low-income households affected by the lockdowns, as provided under the Bayanihan law.

Mr. Salceda said some 2.2 million jobs affected by the lockdown were not accounted for when the registry for the social amelioration program (SAP) was completed in April. He noted that the total will likely increase to 3.6 million by the end of July.

He said some 3.3 million households have lost at least one income earner since the distributions were made.

“We estimate that by the third quarter, or end of September, another 1.7 million workers… will lose their part of, or their entire employment once the impacts of the subsidies and the wage protection programs wear off,” he said in a report.

“In other words, with an economic stimulus package, we may have to provide subsidies to 3.3 million households. Without stimulus, the number could swell to 4.2 million.”

Mr. Salceda projected that P21.4 billion would be needed to provide a one-month subsidy to 3.3 million households, or P27.3 billion for 4.2 million.

He said the government should start discussing the possibility of another round of emergency subsidies.

“I will defer to the Executive agencies on their final figures for how many non-SAP households have lost their income since SAP distribution began… what I will stick with is if the need exists,” he also said.

“We may come up with cash-for-work schemes or other forms of income replacement in lieu of an outright SAP.”

The Bayanihan 2 bill, which has just been approved by the Senate on final reading, provides for another tranche of emergency subsidy for low-income households in areas under enhanced community quarantine. — Charmaine A. Tadalan

Gov’t ‘studying’ rescue options after meeting with airline industry

THE GOVERNMENT has met with airlines and is “studying various alternatives” for reviving the industry, Finance Secretary Carlos G. Dominguez III said.

He did not elaborate about the options for the industry, which was among the hardest hit during the pandemic because of the idling of their fleets due to international and domestic travel restrictions, as well as a general reluctance to travel on the part of consumers.   

Mr. Dominguez said the exact content of the bailout remains fluid pending Congressional approval of economic recovery measures.

“We are studying the transportation industry and the conditions of the companies, (as) well as various alternative approaches, so as to be ready if, and when the law is passed and the IRR (implementing rules and regulations) prepared,” Mr. Dominguez said via Viber.

Officials of Philippine Airlines (PAL), Cebu Air, Inc. (Cebu Pacific), and Philippines AirAsia, Inc. said in early July that they were hoping for the prompt passage of the P1.3-trillion stimulus package, known as ARISE (Accelerated Recovery and Investments Stimulus for the Economy).

The proposed measure sets aside about P70 billion to aid the transportation sector this year.

The bill was approved by the House of Representatives last month but its counterpart measure is still awaiting committee-level approval at the Senate.

A separate piece of legislation, the P140-billion Bayanihan to Recover as One Act (Bayanihan II) bill, provides for a P17 billion rescue package for the transportation sector. The measure cleared the Senate on third and final reading Tuesday.

Bayanihan II was among the priority bills that President Rodrigo R. Duterte identified during his State of the Nation Address Monday.

In May, the Air Carriers Association of the Philippines (ACAP) appealed to Congress that the aviation industry might need around P8.6 billion per month to help them surive the crisis.

Their proposal involves P1.3 billion in wage subsidies, P500 million in foregone fees due to the government, and P6.8 billion in working capital.

Airlines have started to lay off employees, with PAL cutting 300 jobs in February after reporting losses in 2019. AirAsia Group was expected to reduce its workforce in the Philippines by 12%, while Cebu Pacific is looking at 800 jobs cut next month. — Beatrice M. Laforga

Palace orders property tax relief for some IPPs

PRESIDENT Rodrigo R. Duterte ordered the reduction of real property taxes charged against independent power producers (IPP) which participated in partnerships with the government in 2019.

The Palace released Executive Order (EO) No. 117 Wednesday calling for the reduction and condonation of real property taxes, interest, and penalties due from IPPs holding Build-Operate-Transfer (BoT) contracts with government-owned or controlled corporations (GOCCs) in 2019.

Mr. Duterte said in the EO signed on July 24 that IPPs generate tax revenue while providing around 3,100 megawatts worth of power.

“Their closure or non-operation will entail substantial losses to the government and force resort to more costly electric power source alternatives or the implementation of rotating power outages,” he said.

The EO said liabilities involving real property tax on property, machinery, and equipment used by the IPPs in 2019 under a BoT or similar arrangement with GOCCs will be “reduced to an amount equivalent to the tax due if computed based on an assessment level of fifteen percent (15%) of the fair market value of said property, machinery and equipment depreciated at the rate of two percent (2%) per annum, less any amounts already paid by the IPPs.”

The EO added that IPPs are exempt from paying interest and penalties on such  liabilities. — Gillian M. Cortez

North Luzon, Mindanao businesses retain optimistic outlook — PCCI

BUSINESSES in Mindanao and North Luzon are optimistic about recovery due to continued operations in the agriculture, outsourcing, and mining industries in their areas, the Philippine Chamber of Commerce and Industry (PCCI) said.

The Philippines’ largest business organization announced the findings of its meetings with chapter organizations. It also found that half of the member companies are not operating due to the lockdown, while employment among those partially operating is down 25-30%.

The chamber has said that extended lockdowns would force many companies to permanently close.

Mindanao businesses are welcoming new investment in health supplies ventures, including those making disinfecting materials like rubbing alcohol. Meanwhile, the North Luzon outsourcing industry continues to operate, PCCI President Benedicto V. Yujuico said in an online forum.

“Agriculture carries on despite logistics issues. There are potential investments for businesses (in Mindanao),” he said.

Mr. Yujuico added that the mining industry is growing, with ore exports continuing.

Meanwhile, businesses in the Visayas and South Luzon are suffering because 60% of their workers are in the tourism industry and related services, while industrial enterprises continue to be hampered by quarantines.

“The industrial and ecozones in South Luzon cannot fully operate because of the community measures still in place,” Mr. Yujuico said.

The PCCI said businesses are currently unable to make long-term plans because of uncertainty over when the pandemic will be contained.

Businesses have also been affected by spotty internet connection, cash flow and liquidity issues, transaction delays, lack of healthcare facilities, and problems with transportation and logistics.

“Financial support from the government is not enough or not being filtered down to the grassroots. Small enterprises are also wary of taking out loans, because it could lead to bigger loans, which could lead to bigger problems for them later on,” Mr. Yujuico said.

The Trade department’s interest-free small business loan program is overwhelmed with applications worth three times available funding.

The chamber said that it has been rolling out partnerships for loan guarantees, participating in a campaign promoting local consumption, and addressing red tape. — Jenina P. Ibañez

German chamber seeks more details on recovery plan

THE German-Philippine Chamber of Commerce and Industry (GPCCI) urged the government to release a detailed recovery plan and improve infrastructure to help businesses re-emerge from lockdown disruptions.

The chamber was looking forward to more details of the post-pandemic recovery plan during President Rodrigo R. Duterte’s State of the Nation Address, GPCCI President Stefan Schmitz said in a television interview Wednesday.

“What we were expecting more was more details to the recovery plan, like how do we get out of this crisis?”

Some businesses, he said, were operating with capacities as low as 50% during the lockdown as the companies took time to arrange staff housing and other requirements.

“Many have adjusted to the new normal. Manufacturing is up. Many people work from home. But again it is connected with additional costs,” he said, referring to transportation, testing, and safety protocols.

Mr. Schmitz, who is also the Managing Director of Antrak Logistics Philippines, said the company is working with a lack of infrastructure.

“We know that we rank high in logistics costs, and that is mainly because of congestion — be it in the ports, on the roads. Better infrastructure is really needed.”

The chamber supports the reduction of red tape and the government’s commitment to improve infrastructure.

Inefficiency and red tape, he said, continue to deter new investors.

The chamber in June called for the resumption of negotiations for a free trade agreement between the Philippines and the European Union.

“I think it could be a very important stimulator. We hear more and more the call from all sectors for stimulus packages from the government to get the economy running again and this could be a cornerstone of one of those things to level also the playing field,” Mr. Schmitz said. — Jenina P. Ibañez

Duterte signs EO authorizing nuclear energy study

PRESIDENT Rodrigo R. Duterte signed an executive order (EO) authorizing a feasibility study to evaluate the introduction of nuclear energy into the energy mix.

The Palace on Wednesday released Executive Order No. 116 which ordered the adoption of a national position on nuclear energy and establishing a committee to study the possibility of nuclear energy adoption.

“The government shall conduct a study for the adoption of a national position on a Nuclear Energy Program (NEP) in accordance with pertinent IAEA (International Atomic Energy Agency) guidelines and relevant laws, rules, and regulations,” Mr. Duterte said in the EO, signed on July 24.

The Department of Energy (DoE), assisted by the IAEA, has started the nuclear power issue via energy planning studies.

The EO constitutes the Nuclear Energy program Inter-Agency Committee to be chaired by the DoE. The committee is tasked to conduct a study to evaluate and assess the adoption of nuclear energy and consider the economic, security, and environmental implications.

Mr. Duterte said, “(T)he experience of a number of countries has shown that nuclear power can be a reliable, cost-competitive and environment friendly energy source.” — Gillian M. Cortez

DoE to expedite national renewables plan update

THE Department of Energy (DoE) said it is working to complete the “long-overdue” update to the national renewable energy plan (NREP).

Energy Secretary Alfonso G. Cusi ordered the department’s Renewable Energy Management Bureau to prioritize the update. The government targets the installation of at least 20 gigawatts of clean energy over the next two decades.

“There is a need to fast-track the NREP to help the country achieve the goals set forth in the Renewable Energy Act of 2008,” the Energy chief said.

The department introduced the goals of the updated renewables plan for 2020-2040 in its accomplishment report for President Rodrigo R. Duterte’s fifth State of the Nation Address.

It said the plan involves a “paradigm shift” in favor of renewable energy systems, including utilization by the agriculture, fisheries, health, and education sectors.

Aside from large-scale renewable energy projects, it will seek more investment in net metering, a billing mechanism that credits owners of solar energy systems for any surplus energy they inject into the grid.

It is also expecting the compliance of the energy industry with the department’s various renewable energy policies, such as the Renewable Portfolio Standards, the Green Energy Auction Policy, Renewable Energy Market Rules, the Green Energy Option Program, and the Smart Grid Policy.

The DoE hopes to bring renewables to 35% of the country’s generation mix over the next decades. Last year, the energy source accounted for 21% of the mix, down from over 25% in 2014, according to the National Renewable Energy Board. — Adam J. Ang

Creating solutions through ‘traditioned innovation’

Heraclitus, a Greek philosopher once said, “πάντα ῥεῖ (panta rhei) — everything flows.” In modern-day English, this translates to the age-old adage “the only constant in life is change.” Everything is in a constant state of flux, whether that’s the things or people around us, or even ourselves. Change is a universal fact of life and because of this, we can say that innovation is inevitable. It will happen, whether we want it or not. The only question is when.

The field of sustainability is steeped in traditioned innovation.

In recent years, we’ve seen numerous developments in the field of sustainability. These were primarily driven by an increasingly vocal group of scientists, world leaders, and members of civil society who saw the importance of urgently pushing the sustainability agenda today, rather than later, in order to safeguard the future of humanity. In the past decade alone, this resulted in the adoption of major initiatives such as the United Nations Sustainable Development Goals (UN SDGs) and the Paris Climate Agreement.

These “innovations” in sustainability had organizations actively looking into how to change their business model in the next few years to promote more sustainable practices. These may entail going back to the R&D drawing board and redesigning products to consume fewer resources and materials, expanding the utility of existing products by identifying an alternative use for them, as well as expanding into providing supporting services such as repairs & maintenance. At present, there’s even a fair number of companies that are in the process of executing their plans.

In this regard, it’s also quite worthwhile to note how “tradition” serves as a foundation for these innovations. Going back to the two global initiatives I mentioned, those are in fact revamped sustainability campaigns that were built upon earlier versions, the UN Millennium Development Goals and the Kyoto Protocol respectively, as a response to the demands of the changing times.

Another popular sustainability topic nowadays is the concept of the circular economy, which the Ellen MacArthur Foundation explains as being based upon the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. Personally, I find traditioned innovation to be an underlying theme of the circular economy. This is because the circular economy is all about getting the maximum possible value out of an existing product (tradition) by going beyond and revisiting how it can be used alternatively (innovation) once it’s no longer appropriate for its originally intended purpose.

To me, these are but a few instances that showcase why tradition and innovation are both needed together in creating solutions that respond to actual needs.

MODERN PROBLEMS REQUIRE MODERN SOLUTIONS
We need to innovate because we need to be flexible and adaptable to change. With new information coming in every second, the key to a successful organization in modern society is being agile in finding the right solutions to get things done. At times, this means thinking out of the box to find creative solutions like how business models have changed their service delivery models in response to the COVID-19 pandemic. Other times require us to break barriers and take in different perspectives. This is why it’s important to empower those who may not be heard.

TRADITION IS SIMPLY OLD INNOVATION
This is why looking back is important in creating new solutions. Fresh ideas are, more often than not, ultimately good; however, they can be unwelcome without the proper context. The reason why the greatest scientists in our history were often labelled heretics (such as Galileo) is that they ran contrary to what was held to be conventional wisdom. It took a group of likeminded people, a society, to mutually agree that these theories were true before they were taken to be fact.

To gain support for innovation, we first need to have a good grasp of how things came to be. We also need a common purpose, shared values that bring people together. To do things faster and better, we need to look to history, learn and build upon it and get people on board to help. Most of the countries that are heralded as examples of what a good COVID-19 response should look like learned from prior outbreaks and made preparations to respond to new pandemics.

THE KEY TO TRADITIONED INNOVATION IS DESIGN THINKING
The first step is to empathize. As a management consultant, I’ve seen instances of successful and failed change projects at companies. The key difference was that successful innovation teams had been able to truly understand what was at stake. They did the necessary research and took the time to gather insights from the people around them. This is also a great time to gather allies to support you on the change to be implemented.

Next, try to find a logical structure to the data and define the problem. This is extremely crucial to design thinking as this would determine what solutions the innovation team would come up with. In the process of creating the ideal solution, it is important to remember that oftentimes, there are multiple ways to go about developing it. In fact, it may even be worthwhile to develop multiple prototypes just so that the team would have options to pick from in case the first one doesn’t work out during testing.

Most importantly, we must remember that design thinking and traditioned innovation is a continuous cycle. As change continues to happen, so must the process of inventing and reinventing solutions.

In conclusion — why traditioned innovation? Because it’s a winning formula that creates the best solution in the shortest time.

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

 

Rochelle Dichaves, CPA, GRCP, GRCA, is a manager with the Management & Risk Consulting practice of PricewaterhouseCoopers Consulting Services Philippines Co. Ltd., a Philippine member firm of the PwC network.

+63 (2) 8845-2728

rochelle.dichaves@pwc.com

More water and investments, less political whims

During President Rodrigo Duterte’s State of the Nation Address (SONA) 2020 last Monday, he lashed out again at the Lopezes and other conglomerates and companies:

1.) Telecom: “… if you are not ready to improve …I might just as well close all of you and we revert back to the line telephone at kukunin ko ‘yan, i-expropriate ko sa gobyerno (and I will get them, I will expropriate that for the government).”

2.) Innovator pharma: “…Executive Order No. 104, which imposed ceilings on the retail prices of at least 133 drugs and medicines…”

3.) Water concessionaires: “… I would insist that you pay the billions and billions that you collected. For example, water treatment. O, nandiyan sa kontrata (It is in the contract). It’s in the billing, they are being collected since 1997. Ilang bilyon na nga wala ni isa (How many billion and there is not even one), not even a faucet was built for a water treatment facility.”

4.) Electricity: “This is the oligarchy that controls the Philippines by… taking control of the water and the electricity and power.”

These four sectors alone would involve tens of billions of dollars of private investments, local and foreign, to put up and maintain. By threatening them with government expropriation and imposing price controls, the President is sending a message to the international investment community that he can arbitrarily change rules midway at anytime and penalize certain businesses.

Two pieces of investment data here. Foreign direct investments (FDI) inward stocks to reflect yearly inflows minus outflows over time, data from the UN Conference on Trade and Development (UNCTAD) World Investment Report (WIR). And stock market capitalization, data from the World Federation of Exchanges (WFE). Until today, the Philippines is the least attractive to FDIs and portfolio investments among major economies in the Asia-Pacific (see the table).


On a per capita basis, the Philippines has the lowest in FDI inward stock and third lowest in stock market capitalization. This is not something to brag about and the President should be aware of the implications of his whimsical pronouncements.

The Maynilad and Manila Water concessions in particular — the President has demonized them since December 2019 and arbitrarily canceled the contract extension from 2022 to 2037. The privatization of Metropolitan Waterworks and Sewerage System (MWSS) in 1997 into two areas was due to an admission by the government that it did not have the financial and technical resources to significantly improve water supply delivery to the people of Metro Manila and nearby cities.

Of the estimated eight million customers in 1997, only 26% had 24-hours water supply, and non-revenue water (NRW) due to leaks and theft was 62%. By 2019, water customers had doubled to 16.5 million and 96% of them have 24-hours water supply, NRW has declined to only 19%, meaning higher water pressure for consumers. Plus 100% sanitation coverage and over 50 new wastewater treatment plants which brought waste water coverage from almost zero to 30% of the metropolis. The capital expenditures (capex) to make these drastic improvements should be at least P300 billion.

And more investments will be needed because of two big challenges: rising urbanization and customer base, and stricter environmental regulations. The new Department of Environment and Natural Resources standards for biological nutrient removal are more stringent than the European Community standards. The estimated costs to comply with these new standards is around 30% on both capex and operating expenses.

And why should the contract extension to 2037 proceed, and not be arbitrarily canceled and abrogated?

Because in the last rate rebasing exercise by the MWSS Regulatory Office, the required combined capex of both concessionaires to complete the targeted water and sewerage systems by 2037 would amount to over P465 billion. The Clean Water Act plus the Supreme Court Mandamus have jointly raised the requirement from 50% to 100% sewerage coverage.

Government is now borrowing left and right to re-stimulate the economy. It is not prudent to borrow even more if it will re-nationalize the water sector in the metropolis and do the huge capex. And why should taxpayers from northern and southern Luzon, Visayas, and Mindanao, pay for the continued water supply improvement of people in Metro Manila?

President Duterte should respect the rule of law, respect the sanctity of contracts even by the previous administrations because future administrations are also obliged to honor and respect the contracts that his administration has entered into during its term.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers

minimalgovernment@gmail.com

Adapting to change

It is never easy to adapt to change. We are creatures of habit, and tend to get comfortable with “what is” over time. We rarely welcome disruptions. Occasional change can offer us some relief, but nothing more than to break monotony or to keep us relatively dynamic, or to fend off stagnation. However, little change over a long time can also mean little growth.

COVID-19 is the biggest game-changer I have so far seen in my half a century. I have witnessed and lived through a few political and economic disruptions, but nothing as significant and as fluid — and as deadly — as the latest coronavirus. For many of us, this is our first global pandemic. And its negative impact on the global economy and society in general has truly been catastrophic.

But this does not mean that we cannot survive it. However, I am also sure that it will leave us forever changed as well, especially now that COVID-19 seems to be here for the long haul. No vaccine can offer 100% immunity or protection. At some point, we had practically eradicated polio, but now it is back. We have had to restart a new round of polio vaccinations for children.

We had gotten rid of smallpox and yellow fever decades ago, and we continue to vaccinate our young against mumps and chickenpox, among other diseases. But year in year out, we still have children — and some adults — getting sick of them. Flu shots and pneumonia vaccines are also now widely available, but people still die from pneumonia.

We need to accept the fact that we have to co-exist with COVID-19 — or any other virus, for that matter — because that is just the way things are. It was Spanish Flu in 1918, it is COVID-19 in 2020, and it can be some other virus next year or maybe 10 years down the road. We need to adapt to change, and accept that change, whatever it may be, may be permanent.

I usually work from home, like many other people now. But I have been doing so since 2011, so this particular change has not been very disruptive for me. But I can just imagine how big a change it has been for millions of workers worldwide who for years have been used to reporting for work at the office daily from 8 a.m. to 5 p.m.

Google has just announced a decision to keep a big chunk of its workforce at home until mid-2021. Earlier, it said the work-from-home (WFH) arrangement will last until the end of 2020. We can only assume that recent developments regarding COVID-19 particularly in the United States prompted the decision to sustain WFH for a longer period of time. A consideration is the uncertainty of school opening and how this affects parents among the employees.

My decision in 2011 to work from home was prompted mainly by the birth of my son the year before. And realizing that the kind of work I do does not require a physical office outside the home, I opted for WFH so I can spend more time with him during his growing up years. I adapted to the change, thinking it was to be a “temporary” thing until he started elementary school.

But while I was doing WFH then, I still attended a lot of business meetings outside. Business lunches were fairly common. I still did interviews face to face, and occasionally via phone calls or e-mails. I never did video calls. Also, like many others, I was out most weekends, for out of town trips or to attend lunches and dinners with family.

And while I have been doing online shopping since 2011, this was limited to maybe twice a year on Amazon for items that can be shipped directly to the Philippines. I was in the supermarket or in the mall at least three times a week to get stuff. We went to the movies and ate out, and would travel locally or abroad at least once every year.

However, all that changed four months ago. I have rarely been out of my city of residence since mid-March. I go out of the house only to get supplies. I have also learned to buy more things online, and have more items or food delivered to the house. Going to the movies and eating out is now a thing of the past. We have not visited relatives since mid-March as well.

Nine years since I started WFH, I am still doing WFH. And I am back where I started in 2011, practically. School has been disrupted, so my son is also now at home again, doing online/distance learning. Even my wife now works from home every other week. And looking at how things are going with COVID, what I used to think was a “temporary” WFH and school-from-home (SFH) arrangement for the family is obviously here to stay until the next “disruption.”

In the last few months, I have had to go beyond Viber and regular text messaging and phone calls and learn to use Zoom, Google Meet, Messenger video call, and Webex. I have had to do interviews on Zoom and Viber, aside from receiving most work-related documents and utility bills via e-mail. Most of my banking is also done electronically as well. Even food take-out counters and deliveries are paid via electronic channels. I hold and use cash sparingly nowadays.

I have accepted the fact that this will be the business norm from now on, at least for me. And it doesn’t seem like there will be any going back from this. Pre-COVID days are done, as far as I am concerned. The work and home environments are evolving and will continue to evolve just as technology and tools also evolve. And change is affecting not only how we do business but how we do every day things in general. It is not a welcome disruption, but change never is. But I have to learn to live with it. For with or without COVID, life will have to go on.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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