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Economy may shrink by 3.9% due to negative consumer sentiment — HSBC

THE economy could shrink by 3.9% this year due to continued negative consumer sentiment and a fragile and volatile recovery from the pandemic, according to the Hongkong and Shanghai Banking Corp.’s (HSBC) private banking unit.

“This is a confidence crisis as well for the consumer… The consumer will play a very important role in the shape of the recovery,” said Willem Sels, Global Chief Market Strategist at HSBC Private Banking in an online briefing Tuesday.

The private bank’s forecast is grimmer than the 2-3.4% projection issued by the government. It had an initial growth outlook of 6.4% made in January.

It projected growth at 7% in 2021, upgrading the 6.5% forecast issued earlier this year.

“The world is now showing increasing concerns about the potential expected next waves of COVID-19 (coronavirus disease 2019) and in fact, there are still many countries in the first wave of outbreaks in Asia,” Fan Cheuk Wan, chief market strategist for Asia at HSBC Private Banking said.

She noted that having effective containment measures related to the spread of the virus will facilitate faster economic reopenings, citing the return to activity in China, South Korea, Japan, Taiwan, and Hong Kong.

Ms. Fan also said that many Asian economies will prioritize technology infrastructure, learning from the COVID-19 experience, when online consumption became the rule.

She added that the central bank will continue to be dovish this year to support the weak economy.

“We expect another 25 bps (basis points) policy rate cut to 2.00% and 200 bps of RRR (reserve requirement ratio) cuts to 10% by the end of this year,” Ms. Fan said.

The Bangko Sentral ng Pilipinas has reduced rates by 175 bps this year, with the latest 50 bps reduction coming in June. This brought reverse repurchase, lending, and deposit rates to record lows of 2.25%, 2.75%, and 1.75%, respectively.

Meanwhile, the RRR of big banks was reduced by 200 bps in April to 12% while those of rural and thrift lenders were kept at 4% and 3%, respectively. The Monetary Board is authorized to slash the RRR by up to 400 bps this year. — Luz Wendy T. Noble

ERC to order lockdown refund from Meralco

THE Energy Regulatory Commission (ERC) said Tuesday it will soon issue an order to issue refunds to customers who overpaid on their electricity bills, after the Manila Electric Co. (Meralco) agreed to return excess collections made during the enhanced community quarantine (ECQ).

In a Laging Handa briefing Tuesday, ERC Chair Agnes VST Devanadera said “Hanggang bukas maglalabas na namin ng order. Kahapon nag-commit na ang Meralco by no less than its President ang pangako nilang magre-refund (By tomorrow we will release an order. Yesterday, Meralco’s president made a commitment).”

Earlier this week, Meralco said it will refund excess payments made by consumers during the ECQ. Confusion over power bills started when June bills asked consumers to settle their bills from March, April and May, even though the government allowed payments for the lockdown months to be settled in installments.

The June bill is no longer covered by the installment plan and was due on June 30.

Ms. Devanadera said the ERC will also look into distribution utilities that violated ERC billing guidelines.

Ms. Denavedera said “’Yung distribution utilities… sinabi natin na ang universal charge, ang environmental charge huwag singilin… naniningil pa. Itong mga ito ay violations sa mga pinag-uutos ng ERC (Some distribution utilities collected the May universal charge and the environmental charge even though we ordered them not to). These are violations of the orders of the ERC).”

In a Senate hearing on Monday, the ERC said it received 47,000 complaints from consumers regarding their electric bills. Ms. Devanadera said that the ERC is doing its best to address these concerns despite being understaffed. — Gillian M. Cortez

No rate increase from modified renewable tariffs, regulator says

THE Energy Regulatory Commission (ERC) said a component of electricity bills for renewables development will not be affected by its recently-approved adjustment to the feed-in-tariff (FiT) for 2016 to 2020.

In a resolution, the regulator adopted the adjusted tariff, affirming the use of the 2014 consumer price index and foreign exchange rate in determining its rate, which was previously computed using the 2009 base year.

Using the latter base year would have a “significant impact” on consumers’ electricity bills, it said.

The 2020 FiT for the first batch of eligible solar developers computed using the 2009 base year is P11.4210 per kilowatt-hour (kWh), while the rate using the 2014 base year is P11.2758/kWh.

For the first batch of wind developers, the 2020 FiT using the old base year is P10.2036/kWh, while the adjusted rate now is P9.8976/kWh.

Consumer group Laban Konsyumer had claimed that the latest adjustment would lead to higher power charges.

Victor A. Dimagiba, the group’s president, said this year’s FiT going to Solar Batch 1 rose from P9.68/kWh, the rate in 2015, while the rate for Wind Batch 1 also saw an increase from P8.53/kwh over five years ago.

“These are significant increases, any way you look at them. And this will definitely have an impact on the final rates that consumers have to pay because it will surely be passed on to our detriment,” Mr. Dimagiba said in a statement Tuesday.

But the ERC said the tariff adjustment will not alter the current FiT-allowance (FiT-All), a portion of electricity bills paid for by consumers.

“The implementation of the FiT adjustment will have no impact on the current FiT-All as the current working capital allowance is enough to fund it,” ERC Spokesperson Floresinda B. Digal told BusinessWorld.

She added that the arrears for the adjustment in the past four years will be recovered in the next five years.

The regulator is mandated to adjust the FiT each year for the entire period of its applicability to allow the pass-through of local inflation and foreign exchange variations.

FiT-All was adopted following the implementation of the Renewable Energy Act of 2008 which aims to boost the development and utilization of renewable energy sources. Currently, the rate is P0.0495/kWh, lower than the previous P0.2226/kWh rate.

The National Transmission Corp. administers the collection of this charge. — Adam J. Ang

Most livestock categories posted gains in output during first quarter — PSA

LIVESTOCK output rose in the first quarter, with producers of chicken, chicken egg, pork, duck and duck egg posting gains while carabao and cattle production declined, according to the Philippine Statistics Authority (PSA).

The PSA said chicken production on a live-weight basis rose 3.3% year on year to 474,010 metric tons (MT) in the first quarter.

Central Luzon was the top chicken producer, accounting for 36.5% or 173,160 MT, followed by Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) at 17.1% or 81,257 MT, and Northern Mindanao at 8.8% or 41,881 MT.

As of April 1, the chicken inventory rose 0.4% year on year to 185.58 million birds.

Native and improved chicken accounted for much of the population at 44.3% or 82.23 million birds, followed by broiler chicken at 33.4% or 61.96 million birds, and layer chicken at 22.3% or 41.38 million birds.

The average farmgate price of broiler chicken in commercial farms rose 5.7% year on year to P77.03 per kilogram.

Chicken egg production rose 5.8% year on year to 150,285 MT.

Calabarzon was the top chicken egg producer, accounting for 30% or 45,086 MT, followed by Central Luzon at 19.8% or 29,789 MT, and Central Visayas at 9% or 13,561 MT.

The average farmgate price of chicken egg rose 20.9% year on year to P5.62 each.

Pork production on a live-weight basis rose 0.7% year on year to 571,259 MT.

Central Luzon was the top pork producing region, accounting for 20% or 114,106 MT, followed by Calabarzonzon at 15.8% or 90,331 MT, and Northern Mindanao at 9.1% or 52,233 MT.

As of April 1, the hog inventory fell 0.2% to 12.71 million head.

Backyard raisers accounted for 62.3% or 7.92 million head while commercial growers had 37.7% or 4.79 million head.

The average hog farmgate price rose 0.9% to P111.53 per kilogram.

Duck production by live weight rose 0.8% year on year to 9,691 MT.

Central Luzon was the top duck producer, accounting for 43.5% or 4,218 MT, followed by Soccsksargen (South Cotabato, Cotabato City, Sultan Kudarat, Sarangani, and General Santos City) at 12.3% or 1,188 MT, and Western Visayas at 7.7% or 751 MT.

As of Jan. 1, the duck inventory rose 1.9% to 11.79 million birds.

Backyard-raised ducks accounted for 65.9% or 7.77 million birds while commercially-grown ducks were at 34.1% or 4.02 million birds.

The average farmgate price of duck rose 27.3% to P74.87 per kilogram.

Duck egg production rose 3.6% year on year to 11,568 MT.

Central Luzon was the top duck egg producer, accounting for 42.2% or 4,878 MT, followed by Northern Mindanao at 10.3% or 1,196 MT, and Western Visayas at 9.6% or 1,108 MT.

The average farmgate price of duck egg rose 8.7% to P7.22 each.

Cattle production by live weight fell 0.5% year on year to 61,024 MT.

Northern Mindanao accounted for 16.1% or 9,803 MT, followed by Ilocos Region at 11.8% or 7,177 MT, and Central Visayas at 10.1% or 6,171 MT.

The cattle inventory rose 0.3% year on year to 2.54 million head.

The average farmgate price of cattle rose 9% year on year to P119.17 per kilogram.

Carabao production by live weight, fell 1.9% year on year to 29,812 MT.

Western Visayas accounted for 18.1% or 5,402 MT, followed by Ilocos Region at 8.7% or 2,590 MT, and Bicol Region at 8.3% or 2,467 MT.

The carabao population fell 0.3% year on year to 2.87 million head.

The average farmgate price of carabao rose 0.1% year on year to P97.46 per kilogram.

The PSA estimated in May that the output of livestock sector overall in the first quarter rose 0.5% and accounted for 17.9% of total agricultural production.

It said poultry output rose 3.9% or 14.3% of overall agricultural output. — Revin Mikhael D. Ochave

Senate to consider bill soon granting WFH tax deduction

A BILL due to be filed in the Senate will seek tax deductions for employees working from home (WFH), to compensate them for having to pay more for electricity.

Senator Francis N. Tolentino said he has drafted a bill that will amend the National Internal Revenue Code to include an additional deduction against taxable income.

“Tumaas ang kuryente mo dahil work from home kayo, tumaas ‘yun dahil nagko–konsumo kayo ng aircon, electric fan, kuryente computer ninyo,” he said in a virtual briefing. (Power bills increased because people worked from home. Consumption increased because of the usage of air conditioners, fans and computers.)

“‘Yung itinaas na porsyento ng electric bill ay pwedeng i-bawas… at bigyan ng kaukulang tax deduction dahil hindi naman niya kagustuhan magtrabaho sa bahay.” (The percentage by which power bills increased will be deductible… because workers had to work from home.)

The Luzon-wide lockdown in force since mid-March suspended classes, office work, and public transportation. It also forced some businesses to adopt alternative work arrangements such as working from home.

Mr. Tolentino said the proposal includes requiring the employee or the employer to apply for a P1,000 deduction when filing the income tax return. Another option is for the employer to grant workers P1,000 every month.

“If you’re working from home, each employee should be entitled to a P1,000 tax deduction for every month worked from home,” he said.

Mr. Tolentino said he will be filing the measure with Senator Sherwin T. Gatchalian, who is also chairman of the Energy committee. — Charmaine A. Tadalan

Gov’t lifts ban on leisure travel, with conditions

THE PHILIPPINES has lifted the ban on nonessential overseas travel as part of a plan to reboot the economy by relaxing lockdowns meant to contain a coronavirus pandemic, according to the presidential palace.

“All outbound travel restrictions for Filipinos have been lifted,” Presidential Spokesman Harry L. Roque said at an online news briefing on Tuesday.

Filipinos with a tourist visa may now travel abroad as long as they adhere to certain requirements, including adequate travel health insurance, he said. Travelers must also sign a declaration acknowledging the risks.

There should also be no ban on Filipino tourists in the destination country, Mr. Roque said.

Returning Filipinos must undergo a 14-day quarantine and coronavirus swab test, he added.

The travel ban was lifted as the Department of Health (BoP) reported 1,540 new coronavirus infections on Tuesday, bringing the total to 47,873.

The death toll rose to 1,309 after six more patients died, while recoveries rose by 201 to 12,386, it said in a bulletin.

Health Undersecretary Maria Rosario S. Vergeire traced the surge to increased testing, community transmissions and lax enforcement of minimum health standards.

The increase has been gradual and the healthcare system can cope, she told an online news briefing. It now takes 7.9 days for cases to double she added.

“This means that it takes more than a week for the number of cases to double and we have enough resources to address the current needs,” Ms. Vergeire said.

Hospitals have assumed that the virus could be airborne, with health workers in N95 masks using aerosol-generating procedures, she said.

More than 200 experts in 32 countries had told the World Health Organization that the virus could be airborne.

SALONS
Meanwhile, Mr. Roque said the Trade department has issued a memo allowing hair salons and barbershops to increase operations in areas under a general and modified community quarantine.

Under the rules, barbershops and salons in areas under general lockdown may now offer haircuts and hair treatment services. They still must operate at 30% capacity, but can expand to 50% starting July 16.

They may offer more personal care services such as nail care, basic facial and makeup, eyebrow threading, eyelash extension, facial massage, waxing, threading, shaving, foot and hand spa in areas under a modified general lockdown.

Salons and barbershops in these areas may operate at 50% capacity and may expand to 75% starting July 16.

Strict hygiene and health protocols must be followed by both customers and employees. Customers are barred from bringing companions unless needed.

President Rodrigo R. Duterte locked down the entire island of Luzon in mid-March, suspending work, classes and public transportation to contain a coronavirus pandemic. People should stay home except to buy food and other basic goods, he said.

Mr. Duterte extended the strict lockdown twice for the island and thrice for Manila, the capital and nearby cities.

The lockdown in most areas have been eased, but mass gatherings remained banned.

Meanwhile, about 800,000 people have been tested for the coronavirus, almost four months since lockdowns of varying degrees were imposed to prevent the virus from spreading, Ms. Vergeire told the ABS-CBN News Channel.

The Philippines has 75 licensed laboratories that can run an average of 17,500 tests daily, she said. Tests peaked at 19,000 last week, she added.

The government aims to screen a million people or about 1% of its population by the end of the month.

The Health department on Tuesday confirmed a record jump in fresh cases or those whose results were released in the past 3 days.

An expert from the University of the Philippines earlier said cases may hit 100,000 by the end of August.

Infections have increased by at least 1,000 daily and unaffected areas before the lockdown have become hotspots, said UP mathematics professor Guido David.

The government should tighten border controls, increase virus screening and isolate people who have tested positive instead of allowing them to go on home quarantine, he said.

The government should also study public transportation rules after a coronavirus outbreak at the Metro Rail Transit System Line 3 (MRT-3), he said.

The rail was shut down for five days starting on Tuesday amid a coronavirus outbreak among staff members, the Transportation department said on Monday.

The rail system will be closed from July 7 to July 11, and will resume limited operations when enough workers test negative for the COVID-19 virus, it said.

The shutdown period may be shortened or extended depending on the pace and results of the tests.

Six station workers — four ticket sellers, a nurse and a train driver — have bee infected with the virus as of July 5, the Transportation department said. It added that 166 depot workers have tested positive for the virus. — Gillian M. Cortez and Vann Marlo M. Villegas

DoH says sorry for wrong statement on coronavirus hotspots

THE DEPARTMENT of Health (DoH) on Tuesday apologized for mistakenly identifying some cities in Metro Manila as emerging hotspots for coronavirus infections.

In a statement on Monday night, the agency said Health Undersecretary Maria Rosario S. Vergeire had erred when she used June data in saying that cases have increased in the cities of Marikina, Muntinlupa, Makati and Quezon.

As of July 5, COVID-19 infections in most of the cities have declined, DoH said. Cases by 68% in Marikina, by 10% in Muntinlupa and by 4% in Makati, it added.

The agency is monitoring Quezon City, which posted a 34% increase.

“We apologize for the confusion,” DoH said. “This is our up to date record. We will redouble our efforts to keep our reports as current as possible.”

Mr. Vergeire told a news briefing on Monday cases had been rising in the past two weeks.

She said Marikina had 51 more cases and a 43.47% increase, while Muntinlupa City had 30 new cases or a 35.16% increase. Quezon City had 406 new cases or a 34.5% increase, while Makati had 135 new cases or a 30.18% increase.

Ms. Vergeire also said cases in the Visayas region have been falling, but a “clustering of cases” has been observed in 64 towns in Cebu province and 314 towns in Metro Manila. — Vann Marlo M. Villegas

BPO sector says it’s enforcing health rules among workers

THE OUTSOURCING industry on Tuesday denied allegations of lax protocols at the workplace amid a coronavirus pandemic.

“Our industry is far from being business as usual,” Rey C. Untal, president and chief executive officer of the Information Technology and Business Process Association of the Philippines (IBPAP), told a virtual congressional hearing on Tuesday.

He said BPO companies were taking “extraordinary measures” to balance workers’ welfare and their ability to operate. “There is no advantage on the part of employers to disregard the welfare of employees because ultimately the business will suffer.”

Mr. Untal said they have removed biometric scanners, closed recreational facilities and restricted movement in common areas while observing social distancing to prevent a virus spread.

Companies also immediately report any positive tests to local governments, he said.

Work-from-home setups in the Philippines have recently been put in the spotlight after some companies including those in the outsourcing sector were accused of unfair labor practices such as cutting wages due to slow Internet connection of their workers.

Lawmakers in both houses of Congress have sought a probe of employers who were also shifting the costs of electricity and connectivity to their employees by failing to provide them with allowances and subsidies.

Four of five work-from-home employees have been paying for their Internet, Party-List Rep. Arlene D. Brosas said this month, citing a poll by the Business Process Outsourcing (BPO) Industry Employees Network.

Meanwhile, an inter-agency task force made up of Cabinet secretaries has ordered the Labor and Trade departments to ensure compliance with government health measures.

“Monitoring has already started in many industries, including the BPOs,” Labor Assistant Secretary Ma. Teresita S. Cucueco told congressmen.

The outsourcing sector is the second-largest net foreign exchange earner after overseas Filipino workers and the fastest growing industry in the Philippines.

The Labor department earlier said it would review an advisory it issued allowing companies to adopt alternative work arrangements during the lockdown meant to contain the pandemic.

Senator Imee R. Marcos had said some BPO workers were placed in a floating status for six months after the agency issued an advisory on May 16 allowing companies to retain workers for six months. Workers can’t claim separation and other benefits during the period, she said.

The advisory allowed employers to adopt a work-from-home or telecommuting arrangement even after the lockdown in many parts of the country was eased.

Employers were also allowed to adjust the wages and benefits for six months.

Employees working from home face challenges such as lack of logistical assistance such as equipment delivery and longer working hours to compensate for low productivity.

The BPO sector, which employs about 1.3 million Filipinos, was among the industries forced to adopt work-from-home arrangements, according to IBPAP.

Ms. Marcos sought the Senate probe after receiving complaints that some companies had been withholding wages.

As much as 15% of the country’s workers or about four million were expected to lose their jobs. It would have been bigger without the resurgence of workers in the BPO and construction industries, Labor Secretary Silvestre S. Bello III earlier told senators. — Patricia S. Gajitos

Court orders gov’t to answer anti-terror lawsuit

THE SUPREME COURT has given the government 10 days to comment on four lawsuits seeking to stop it from enforcing an expanded law against terrorism that critics said allows the state to stifle dissent.

The high court had also consolidated the suits, court spokesman Brian Keith F. Hosaka told reporters in a Viber message on Tuesday.

Lawyers’ groups and opposition lawmakers asked the tribunal on Monday to void clauses of the law after President Rodrigo R. Duterte signed it on July 3.

Lawyers led by Howard M. Calleja submitted a printed copy of the petition they submitted electronically at the weekend. Albay Rep. Edcel C. Lagman filed the second pleading followed by a third suit from university law professors. A bloc of opposition congressmen also filed a separate lawsuit.

The FEU professors cited the vague and “overly broad” definition of the crime under the Anti-Terrorism Act, adding that it violates a person’s basic rights because it allows warantless arrests based on suspicion.

The law considers attacks that cause death or serious injury, extensive damage to property and manufacture, possession, acquisition, transport and supply of weapons or explosives as terrorist acts.

It also creates an Anti-Terror Council made up of Cabinet officials who can perform acts reserved for courts, such as ordering the arrest of suspected terrorists.

The law also allows the government to keep a suspect in jail without an arrest warrant for 14 days from three days now. — Vann Marlo M. Villegas

Nationwide round-up

P500M worth of fake goods seized after Louis Vuitton complaint

ABOUT P500 million worth of fake luxury goods were confiscated from a warehouse in Manila on July 6 following a complaint filed by the Philippine representative of Louis Vuitton. The Bureau of Customs, in a statement on Tuesday, said the raid was conducted based on “information and complaint from MANLED Legal Consultancy Services, the authorized representative of a luxury retail company globally known as Louis Vuitton.” Apart from products bearing the company’s logo and designs, other goods found had the brands of Lacoste, Gucci, Balenciaga, Kate Spade, Tory Burch, Hermes, Coach, Burberry, Givenchy, Prada, and Calvin Klein, and Marc Jacobs. “Representative samples of the items found are being forwarded to its respective brand owners to verify its authenticity,” the agency said. An inventory of the goods are ongoing to determine the appropriate cases to be filed in relation to the Customs Modernization and Tariff Act and the Intellectual Property Code of the Philippines.”

Pregnant Filipino worker is Macau’s first COVID case since April

A PREGNANT Filipino worker who returned to Macau is the first coronavirus case in the Chinese special administrative region since April, the Department of Foreign Affairs (DFA) reported. “Macau PCG (Philippine Consulate General) reports this is the only active COVID (coronavirus disease 2019) case in Macau at present,” Foreign Affairs Undersecretary Brigido D. Dulay said in a social media post on Tuesday. The worker returned from a vacation in the Philippines. Based on the Worldometer site, the case is Macau’s 46th. Meanwhile, the DFA said in separate statement Tuesday that a total of 190 stranded Filipinos in Hong Kong have come home in separate flights on June 27 and 29. Majority of whom were household service workers whose contracts were ended or terminated. It also included several pregnant women, medical cases, and one with an expired visa. As of July 4, more than 68,400 Filipinos have come home amid the pandemic that has afflicted 11.7 million and killed over 540,000 people worldwide. The DFA has also monitored 8,600 Filipino COVID-19 patients, with 2,900 active cases, 5,200 recoveries, and 577 deaths. — Charmaine A. Tadalan

Probe on for killing of Manila prosecutor

JUSTICE SECRETARY Menardo I. Guevarra has directed state agents to investigate the killing of a prosecutor in Manila on Tuesday. “We are shocked by the audacity of this attack. It highlights once again the grave peril that our prosecutors face each day in the discharge of their duties,” he told reporters via Viber. “I have ordered the NBI (National Bureau of Investigation) to immediately step in and investigate this horrible murder,” he added. The victim, Jovencio Senados, chief inquest officer of Manila, was gunned down in his car along Quirino Highway corner Anakbayan in Paco, Manila around 11 a.m. The police report said the suspects were on board a black special utility vehicle. The National Union of Peoples’ Lawyers denounced the killing of Mr. Senados saying that whatever the motives and whoever the suspects are, the act “is absolutely unacceptable in a supposed civilized and democratic society.” The group added, “The claims to ‘peace and order’ and purported ‘rule of law’ once again fly in the prevailing culture of violence and climate of impunity engendered by official hate speech and penchant for vindictiveness.” — Vann Marlo M. Villegas

Embracing digital transformation in the time of COVID-19

The virulence and lethality of the novel coronavirus is expected to have a profound impact on the world. With global production grinding to a halt and supply chains disrupted, the World Trade Organization (WTO) sees global trade to fall between 13% to 23%. While for its part, the International Labor Organization (ILO) estimates that COVID-19 will result in a loss of 195 million jobs worldwide.

In the Philippines, COVID-19 has triggered massive lockdowns and work stoppages to mitigate the spread of the virus. Unfortunately, these extreme measures are expected to further dampen economic growth. In fact, the Philippine Institute for Development Studies (PIDS) estimates the damage to the economy will amount to P1 trillion to P2.5 trillion. Moreover, the Department of Labor and Employment (DoLE) expects a loss of around 5 million jobs with 45,000 Overseas Filipino Workers expected to return to the country due to the global slowdown.

Although there is much gloom and doom in the air nowadays, the current pandemic is also fast tracking the adoption of digital transformation (Dx) strategies resulting in new and innovative practices. Globally, we are witnessing unprecedented changes of the IT industry to better support these emerging business models. Notable examples of these new practices are the ubiquity of digital payments, new work from home arrangements, and the widespread use of online learning applications.

As a strategy, Dx entails the need to rethink and transform an organization’s strategic perspective, business processes and culture. Usually viewed as the movement from organization-based IT systems to multiple cloud-based environments, Dx-inspired practices also include connected workers, integrated ICT platforms, advanced analytics, and remote operations. Furthermore, the adoption of Dx strategies underscores the need for a robust digital infrastructure that facilitates major changes in organizations through the following: a.) creating new business models; b.) streamlining of operations, thus decreasing cost; c.) improving access to products and services; and, d.) enhancing the customer experience.

Overall, success in a Dx-enabled business environment will be defined by an organization’s agility through its ability to respond to emerging trends and consumer demand as well as its capacity to achieve integration with suppliers, thus ensuring rapid time-to-value product development.

In the public sector, Dx can also be viewed as a strategy to further eliminate the country’s digital divide and support good governance. The government’s Philippine Digital Transformation Strategy (2017-2022) encapsulates the overall plan to attain the country’s Dx goals. However, given the adverse impact of COVID-19, there is a new sense of urgency that demands for its recalibration and immediate implementation.

Moreover, there is a need to go beyond the “business as usual” mentality and not settle for a strategy that is simply an amalgamation of existing e-government and other legacy plans. Rather, there is an urgent need to develop a new roadmap that identifies its key milestones and targets. It also needs to designate the critical areas in our society where Dx can foster growth and innovation.

For instance, micro-, small-, and medium-scale enterprises (MSMEs) will benefit from this roadmap through the creation of digital markets that integrates suppliers and customers into a single marketplace.

While local governments can create their customized service portals to integrate citizen, business, and property registries as well as use data analytics to aid local decision making, these service portals also provide a venue to promote transparency and openness as well as encourage citizen participation in governance.

Another area of opportunity is education. The shift to an online learning regimen will now require the creation of digital content, the use of new learning management systems and the development of new skills. If done correctly, Dx in education can transcend the limitations of physical learning and create new opportunities for access to education in underserved areas of the country.

Of course, all of these will not be possible without improving our country’s current digital infrastructure. We need scalable, cost efficient and secure technologies that can guarantee the much-needed access and bandwidth requirements. However, for this to happen, the national government must invest in last-mile access and work with industry to expand digital infrastructure and increase access in areas that need it most. Key to this is identifying policy and bureaucratic roadblocks at both the national and local government levels that are slowing the expansion of digital infrastructure

As the pandemic is fast tracking the adoption of Dx strategies, the government should simultaneously fast track the country’s digital infrastructure strategies and development, as well.

Lastly, it is also important for policy makers to foresee the need to harmonize our existing laws and programs. Our laws on ease of doing business, innovation, and the national ID system are excellent baseline policies that can be used for the country’s Dx initiatives. However, it is also imperative to reexamine these policies to ensure that common goals are defined, and persistent problems are addressed.

 

Dr. Sherwin E. Ona is an Associate Professor in the Political Science Department, De La Salle University, and a Non-Resident Fellow at the Stratbase ADR Institute.

Arctic oil infrastructure faces climate karma

By Julian Lee

BEACHES, clear blue seas, scorching temperatures and long days. Forget the Caribbean, your next summer beach holiday could be on the shores of Russia’s Arctic Ocean.

Temperatures at Nizhnyaya Pesha, some 840 miles (1,352 kilometers) northeast of Moscow and just 12 miles from the Arctic Ocean coast, reached 86 degrees Fahrenheit (24 degrees Celsius) in early June — a disaster for anyone worried about the planet’s future. Further to the east and further inland, things got even hotter. Russia’s state weather authority confirmed that the temperature at the small town of Verkhoyansk — which sits about 70 miles north of the Arctic Circle and boasts the Pole of Cold District Museum of Local Lore as its only tourist attraction listed on Tripadvisor — hit 100.4 degrees Fahrenheit (38 degrees C) on June 20.

Most alarming, though, is not the temperature itself, but the fact that this wasn’t an isolated incident. Rather, it is part of a heatwave that has persisted since the end of last year. On average, temperatures in western Siberia have been 10 degrees Fahrenheit above normal since December, according to the European Center for Medium-Range Weather Forecasts.

Uncontrolled fires are already sweeping across the forests of Russia, and have been for months. On Friday, the Russian Ministry of Natural Resources reported that efforts were being made to extinguish 272 forest fires covering an area 12 times the size of the District of Columbia, including 10 on specially protected natural territories extending over an area bigger than Manhattan.

Rising Arctic temperatures strike at the heart of the Russian economy, which is largely built upon the extraction of oil and gas. Rising temperatures are melting the permafrost and impairing its ability to support structures built on it. The changes threaten the “structural stability and functional capacities” of oil industry infrastructure, according to the “Ocean and Cryosphere in a Changing Climate” report adopted in September by the Intergovernmental Panel on Climate Change (IPCC).

We’re already seeing the impact. As my colleague Clara Ferreira Marques wrote, a devastating Arctic fuel spill on May 29 appears to have been caused by melting permafrost. More than 20,000 tons of diesel fuel (or about 150,000 barrels) leaked from a storage tank owned by MMC Norilsk Nickel PJSC, polluting rivers and lakes that drain into the Arctic Ocean’s Kara Sea. The company blamed the “sudden subsidence of supports which served for more than 30 years without problems” for the damage that allowed the fuel to escape from the tank.

Russia’s Prosecutor General’s office ordered thorough checks to be carried out on particularly dangerous installations built on territories exposed to permafrost melting. For the oil and gas sector, that’s likely to cover pipelines and processing plants, as well as storage tanks. It’s going to be a massive undertaking. Some “45% of the oil and natural gas production fields in the Russian Arctic are located in the highest hazard zone,” according to the IPCC report.

While many of the country’s newest oil and gas fields are situated far to the north, in areas of continuous permafrost, many of the older ones, which form the bedrock of the industry, are in the discontinuous permafrost zone. That area is also crossed by the major pipelines that carry hydrocarbons to customers and export terminals.

The heatwave experienced so far this year in Siberia reflects temperature changes that weren’t generally forecast to occur until the end of the century. The rapid changes that are happening to the climate of the world’s northern regions means that even the infrastructure built on areas of continuous permafrost may soon be at risk, too. And that mitigation measures deemed appropriate now may soon be viewed as inadequate.

And what’s true in the Arctic north of Russia may also hold in the Arctic north of the Americas. Most of Alaska is underlain by permafrost — continuous across the North Slope (the borough that covers the northern third of the state and is home to its oil production), discontinuous over most of the rest of the state. The risks that bedevil oil and gas infrastructure are no less severe here.

The US Bureau of Land Management plans to open an Indiana-sized region of the National Petroleum Reserve-Alaska to new oil and gas development. Doing so is meant to be a boon to US oil independence and Alaska’s state budget, capable of delivering 500,000 barrels of oil a day, according to BLM estimates.

It could also be a curse. The bureau warns in its environmental impact statement that the new development could be responsible for greenhouse gas emissions equivalent to about 1% of the US total in 2018. Increased industrial activity in the area, on top of the already altered landscape thanks to global warming, creates a host of risks to wildlife from polar bears to eagles and could lead to deadly walrus stampedes. Environmental groups vow to fight the move, which is expected to be finalized by the end of July.

Whether oil companies will rush to pour their dollars into frontier exploration in a region that will expose them to unflinching scrutiny and, very likely, unwanted social media campaigns, is questionable — particularly at a time when those investment dollars have become scarce and companies are increasingly focused on the quick returns from investing in the shale deposits of Texas, New Mexico, and other, more climatically benign, states.

If the northern latitudes continue warming as they are, the implications will be grave for all of us.

BLOOMBERG OPINION

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