Retail sector growth tied to FDI by Congressional study

June 21, 2020 | 8:16 pm

THE House of Representatives Congressional Policy and Budget Research Department (CPBRD) said in a report that increased foreign direct investment (FDI) is required in order to sustain the growth of the retail sector.

“Increasing investment especially foreign direct investment (FDI) is key to sustain the growth of the retail sector. However, data has shown that the Philippines has failed to capture the significant increases in investments into the retail sector in the ASEAN region,” thethink tank said in its report, Increasing Competition in the Retail Trade Sector.

Citing government data, the CPBRD said that in 2014 to 2018, the Philippines took in about 0.63% of the FDI that went into the ASEAN wholesale and retail sector.

The report said that the dismal performance of retail FDI was due to the restrictions on foreign retailers.

The Philippines imposes a limit on stakes taken in establshed retailers; requires a public offering of a 30% stake in the foreign retailer if foreign ownership exceeds 80%; a minimum parent-company net worth of $50 million to $200 million; a track record based on years in operation and number of branches; and reciprocity to Philippine rtailers in the home country of the foreign retailer.

The study also found that that given the need for accessibility, convenience and a no-touch customer experience in the post-pandemic period, demand for technology-based retail services such as teleshopping and electronic retailing “could substantially gain ground.”

“Based on the 2017 ASPBI (Annual Survey of Philippine Business and Industry), even as their total gross sales had been increasing by almost 20% on average annually since 2013, there were less than 500 establishments engaged in retailing outside of stores, stalls or markets with sales contributing only 2.8% of total. More players are therefore needed in this type of retail activity,” it said.

The House of Representatives passed on third and final reading House Bill 59 in March. The bill seeks to amend the Retail Trade Liberalization Act (RTLA) of 2000 to further open up the sector to foreign companies. Its counterpart measures in the Senate remains at the committee level. — Genshen L Espedido

CREATE: Tax reform response to COVID-19

June 21, 2020 | 8:00 pm

(First of two parts)

To recover from economic recession and to advance towards corporate healing, the Department of Finance (DoF) fine-tuned several provisions of the Tax Reform Package 2 bill. The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) is the latest incarnation of the TRABAHO and CITIRA bills and is now part of the COVID-19 stimulus package put together by the government’s economic team.

The DoF calls CREATE the largest tax stimulus program and the first ever revenue-eroding package in the country’s history. According to the DoF, CREATE is expected to free up almost P42 billion in capital over the second half of 2020 and P625 billion in the next five years, with the government assuming that businesses reinvest their tax savings to create sustainable economic opportunities.

In a nutshell, the CREATE bill proposes to (1) accelerate Corporate Income Tax (CIT) rate reduction; (2) extend the Net Operating Loss Carry Over (NOLCO) period; and, (3) rationalize fiscal incentives to adopt to the changing business needs brought about by the pandemic.

ACCELERATED CIT RATE REDUCTION
The CREATE proposes an outright CIT rate reduction from 30% to 25%, then a gradual 1 percentage point reduction every year starting from 2023 until it hits 20% by 2027.

The acceleration of the CIT reduction timetable will help restore confidence, especially among micro, small and medium enterprises (MSMEs) that have been battered by the effects of COVID-19. The tax savings can then be used for additional working capital and sustain a massive employment drive for displaced workers.

This will also attract potential multinational investors seeking to diversify their supply chains here. By 2027, our CIT rate will be comparable to Thailand and Vietnam, which are both currently at 20%. It will then be just a matter of time before our country matches the ASEAN average of 23%.

EXTENDED NOLCO PERIOD
Non-large taxpayers will be allowed to carry over net operating losses incurred in 2020 over a period of five years from the current three years. This is a practical incentive to help MSMEs and enterprises rebuild their business operations.

However, CREATE has not yet given details on whether the extended NOLCO may be claimed by an enterprise eventually classified as a large taxpayer by the BIR within the five-year period for losses incurred back in 2020. It also appears that qualified taxpayers will have to keep operating post-pandemic to fully maximize the benefit of NOLCO.

RATIONALIZATION OF FISCAL INCENTIVES
Instead of keeping several sets of incentives currently offered by various investment promotion agencies (IPAs), CREATE proposes to rationalize and tailor-fit fiscal incentives to qualified investments.

IPAs will continue to process applications for registration but these shall be placed under the oversight of the Fiscal Incentives Review Board (FIRB). The latter will determine the target performance metrics as conditions for availing tax incentives, and unless delegated to the President or a respective IPA in certain cases, shall grant or deny the incentives recommended by the IPAs. Together with IPAs, it will formulate a Strategic Investment Priority Plan (SIPP) itemizing the priority projects and industry-location tiers, among others.

Careful reading of this proposal reveals that the FIRB will technically absorb several key functions of the IPAs. Nevertheless, streamlining the fiscal incentives can definitely change the way investors perceive our investment programs as we compete internationally for high-value projects. Investors can no longer cherry-pick from the incentives menu and go forum-shopping among the 13 current IPAs.

OTHER SALIENT FEATURES
Other proposed features in CREATE worth noting are:

1. The tax exemption on income derived from foreign currency transactions by offshore banking units and the related 10% final tax on interest income from foreign currency loans will be removed.

2. Regional Operating Headquarters (ROHQs) will be subject to CIT after two years from the effectivity of the Act.

3. Branch profit remittance tax exemption of Philippine Economic Zone Authority (PEZA)-registered entities is retained, which the CITIRA initially proposed to be eliminated.

4. The final tax rate on capital gains from the sale of shares not listed and traded on the stock exchange by foreign (resident and non-resident) corporations, as well as on interest income from FCDUs by resident foreign corporations is increased to 15%.

5. The interest arbitrage rate will be lowered until it is completely removed once the CIT rate drops to 20%.

6. The optional standard deduction for individuals and corporations, which CITIRA initially proposed to restrict, will be retained.

PENDING SENATE DELIBERATION
Unfortunately, the first regular session of the 18^th Congress ran out of time to take up the bill under the Senate’s deliberations before the session adjourned on June 5. Congress, however, can convene in a special session to tackle the bill even during the break if called on by the President.

Otherwise, this will be taken up in the second regular session of the 18^th Congress, with the Senate to resume on July 27. Even with the tight schedule, hopes are high that CREATE will be passed and implemented by the second half of the year. After all, CREATE was certified by the President as urgent and it is supported by various organizations and industry leaders.

CREATE BILL AS A RESPONSE TO THE COVID-19 CRISIS
Nearly all countries have moved to cushion their respective economies against the impact of COVID-19. Wage subsidies, stimulus checks, payment concessions and various financial bailouts to enterprises, among others, were implemented at varying speeds, approaches and levels of effectiveness.

No country in the world has been spared from the sharp decline and contractions of economic growth.

Two years after the TRAIN Package 1 and several bill versions since, CREATE has been repurposed as a pandemic-responsive tax reform as well as a government’s intervention to stimulate recovery and avoid long-term economic damage. The US-China Trade War has also forced ASEAN countries into a race to cut taxes and offer more incentives to investors who are either shifting their supply chains from China or are planning to diversify within Asia.

The time is now ripe for legislators to pass a responsive tax reform at this critical period. However, caution must still be in place and pace should not be equated with haste. It behooves not just the legislators but also ourselves as taxpayers to understand the important duty of dissecting the proposed measures and their finer details to arrive at a truly effective tax reform that is adaptive to the challenging needs of our time.

In the second part of this article, we will discuss in detail the rationalization of fiscal incentives through a calibrated income tax holiday, special corporate income tax, enhanced deductions and other available incentives to existing registered entities under the transitory period, as well as strategies to capitalize the fiscal incentives under the CREATE bill.

Donna Frances G. Ylade-Torres is a Senior Manager from Private Client Services, a Tax Sub-Service Line of SGV & Co.

300 modern jeepneys to resume operations on Monday, says regulator

June 21, 2020 | 7:12 pm

MORE than 300 modern jeepneys have been allowed to serve 15 routes in Manila and nearby cities starting June 22, as the country eases a lockdown meant to contain a coronavirus pandemic, according to the transport regulator.

The decision is part of the government’s “calibrated response to restore mass transportation in the metro and in the adjacent provinces as we transition into new normal,” the Land Transportation Franchising and Regulatory Board (LTFRB) said in a statement on Sunday.

The routes are Novaliches to Malinta via Paso de Blas; Bagumbayan Taguig to Pasig via San Joaquin; Fort Bonifacio Gate 3 to Guadalupe-Market Market-ABC loop service; Pandacan to Leon Guinto; and Quezon Avenue to LRT 5^th Avenue station. Also included are Cubao (Diamond) to Roces Super Palengke; EDSA Buendia to Mandaluyong City Hall via Jupiter, Rockwell; Divisoria to Gasak via H. Lopez; Punta to Quiapo via Sta. Ana; Boni Pinatubo to Stop and Shop; Boni Robinson’s Complex to Kalentong/JRC; Nichols to Vito Cruz; Filinvest City Loop; Alabang Town Center to Ayala Alabang Village; and Vito Cruz Taft Avenue to PITX loop service.

The LTFRB will add nine more routes on June 24 to serve other parts of Metro Manila adjacent to provinces, it said.

These are Bagong Silang to SM Fairview; Malanday to Divisoria via M.H. del Pilar; Parang, Marikina to Cubao; Eastwood, Libis to Capitol Commons; Gasak to Recto via Dagat-dagatan; PITX to Lawton; Alabang to Zapote; PITX to Nichols; and PITX to SM Southmall.

Modern jeepneys will serve 10 more routes on June 26 such as Quirino Highway to UP Town Center; SM Fairview to Commonwealth via Regalado Avenue; QMC Loop; Tikling to Binangonan; Antipolo to Pasig via East Bank Road; Rosario to Pinagbuhatan Pasig; West Aveune to P. Noval via Del Monte; Biñan to Balibago via Manila South Road; Tramo to Sucat; and San Isidro to Congressional Junction Dasmariñas.

Non-aircon modern jeepneys will collect a minimum fare of P11 for the first four kilometers and P1.50 for each succeeding kilometer, the LTFRB said.

Air-conditioned modern jeepneys will collect P11 for the first four kilometers and P1.80 for each succeeding kilometer, it added.

Meanwhile, the regulator said it was still studying the rules for the resumption of UV Express operations within the month.

“We are exhausting all efforts to balance our mandate in transportation with our responsibility of helping prevent the spread of the coronavirus disease 2019,” LTFRB Chairman Martin B. Delgra III said in the statement.

“That is why we are observing a gradual and calculated approach for the resumption of public transportation particularly in areas under the general community quarantine,” he added.

The LTFRB said jeepney drivers, conductors and passengers must wear face masks and observe physical distancing.

“The passenger load of each jeepney must not exceed 50% of its seating capacity, excluding the driver and conductor,” it said. — Arjay L. Balinbin

Lawmaker seeks pooled testing for coronavirus

June 21, 2020 | 7:12 pm

A CONGRESSMAN wants the government to pool people for coronavirus testing at work and in schools.

Iloilo Rep. and former Health Secretary Jannette L. Garin said people may be pooled into five, 10 or 20 groups for testing which is used now during blood testing.

“Pooled testing is no longer new if we want to know the prevalence of the virus in a place,” she told ABS-CBN Teleradyo on Sunday.

Under this method, swab samples of several people are placed in a single polymerase chain reaction or PCR test.

People will be assessed further if a positive result comes from a single batch. If the swab test of comes back negative, individual tests need not be performed, resulting in savings, Ms. Garin said.

The Philippine Society of Pathologists, Inc. and Philippine Center for Entrepreneurship will conduct a study on pooled testing, she said. “We won’t have a hard time ween we return to the new normal,” she said.

The research seeks to cut the PCR testing fee to as low as P300, the congresswoman said.

Ms. Garin said the country reached its target of 30,000 daily coronavirus testing a few weeks ago, but daily tests are fewer because of costs.

“Some laboratories have a capacity of as many as 5,000 daily but only 700 tests are done because it’s not affordable,” she said. — Genshen L. Espedido

Senator wants shipping fees waived during calamities

June 21, 2020 | 7:08 pm

A SENATOR has filed a bill that seeks to waive shipping fees for relief goods transported to areas under a state of calamity.

Under Senate BIll 1560 filed by Senator Ramon B. Revilla, government agencies and freight companies can provide free freight services to relief organizations.

“The archipelagic nature of the country contributes to the difficulty entailed in transporting relief goods,” he said in the bill’s explanatory note. “More often than not, the transport of these goods entails huge cost.”

Freight companies can waive fees from the delivery of relief goods and services in areas where they operate.

In inaccessible areas, goods will be sent to the nearest local governments and then consigned to the local chief executive.

Meanwhile, shipping auxiliary costs such as pilotage and other port charges will be shouldered by the company and port authority.

The local disaster agency must ensure the security of the goods being delivered and their speedy delivery.

A similar measure is pending at the Senate committee level. A counterpart bill at the House of Representatives was approved on third and final reading in December 2019. — Charmaine A. Tadalan

Regional Updates (06/21/20)

June 21, 2020 | 7:05 pm

Customs bureau gets rid of uncertified medicines, food to free up storage space

UNCERTIFIED medicines, chemicals and food products confiscated by the Bureau of Customs (BoC) at the country’s main airport have been destroyed to free up space in storage facilities. In a statement on Sunday, BoC said the latest batch that underwent condemnation on June 20, the 5^th this year, consisted of 11.2 tons of products without clearance from the Food and Drug Administration, thus considered unfit for human consumption. The BoC office at the Ninoy Aquino International Airport in Metro Manila has so far destroyed this year 28.1 tons of “unsafe goods imported without clearances and permits from the regulating agencies.”

Partial opening of Davao Coastal Road set August

A SEGMENT of the new Davao Coastal Road, with bicycle and jogging lanes, is expected to be opened by August, according to the Department of Public Works and Highways (DPWH) Davao Region office. DPWH Regional Information Officer Dean I. Ortiz said the 2.7-kilometer (km) section from Bago Aplaya to Talomo was originally planned for completion last May, but the finishing work was delayed with the construction ban during the COVID-19 lockdown. “All project will be minus two months accomplishment. This is the reason why we are planning to open the Bago Aplaya-Talomo section in late August,” he said in a phone interview. The entire 18-km coastal road, which will span from Bago Aplaya to R. Castillo Street, is seen to be completed by 2023. “Hope the project will not be paralyzed by another pandemic. We are looking forward with no more delays,” Mr. Ortiz said. The new highway, with a total project cost of almost P20 billion, will also have an esplanade intended as a leisure and tourism area. “The feature of the coastal road is not only as access to any traffic, but also as tourism convergence area as there will be an esplanade or a park,” he said. — Maya M. Padillo

Nationwide round-up

June 21, 2020 | 7:04 pm

DoTr reviewing use of plastic divider in motorcycle taxis

THE Department of Transportation (DoTr) is studying the possibility of using a plastic divider in motorcycle taxis as a health safety protocol against the coronavirus disease 2019 (COVID-19). In a briefing on Sunday, DoTr road sector consultant Alberto Suansing said the proposal is being taken up by the national Inter-Agency Task Force (IATF) handling the COVID-19 response after calls by the public and several local governments to allow back-riding in motorcycles, which is prohibited across all quarantine categories. “Ina-analayze ‘yan sa IATF and tinatanong sa amin sa DoTr (It is being analyzed by the IATF and that is also being asked from the DoTr),” he said. Hard plastic dividers between the driver and passenger are already being used in other Asian countries. Iloilo Governor Arthur R. Defensor, Jr., among the local officials pushing for a lifting of the ban on back-riding as motorcycles are an integral means of transport for many areas, presented earlier this month a sample divider he himself designed. Motorcycle ride-hailing firm Angkas also demonstrated over the weekend a sample divider that they intend to use. The IATF has prohibited back-riding, including among married couples or people within the same household, citing physical distancing concerns. — Gillian M. Cortez

Bus firms told: Pay separation benefit to retrenched workers

BUS COMPANIES have been reminded of their legal duty to pay separation benefits to retrenched drivers and conductors following a mass layoff in one of the biggest operators in Luzon. In a briefing on Sunday, Department of Transportation (DoTr) road sector consultant Alberto Suansing said bus operators are mandated to provide a separation package to workers affected by downsizing due to the coronavirus disease 2019 (COVID-19) crisis. “Dapat may separation pay… empleyado nila ‘yan (There should be a separation pay because those are their employees,” Mr. Suansing said. Over the weekend, provincial bus operator Victory Liner, Inc. laid off 400 workers, including 300 drivers and conductors who were still under probationary status. Alan A. Tanjusay, spokesperson of the Associated Labor Unions-Trade Union Congress of the Philippines who was in the same briefing, said the Supreme Court has previously ruled that even workers on probation are entitled to separation wages and benefits. He said, “May ruling Supreme Court na ang bus company at bus driver at conductor, meron silang (There is a Supreme Court ruling that the bus company and the bus driver and conductors have an) employer-employee relationship.” — Gillian M. Cortez

Over 1,700 OFWs to arrive this week

MORE THAN 1,700 overseas Filipino workers (OFWs), some with their dependents, from North Africa, the Middle East, and Macau are scheduled to arrive this week through special flights arranged by the government for those displaced by the global coronavirus crisis. On Monday, 277 Filipinos from Libya, Tunisia and Algeria will be home, according to the Department of Labor and Employment (DoLE). “The arriving workers were employed in the oil industry and medical establishments, with some who finished their contracts while mostly were displaced due to the temporary shutdown of companies due to the COVID-19 (coronavirus disease 2019) pandemic,” DoLE said in a statement on Sunday. The Department of Foreign Affairs (DFA), in a separate statement, also announced that four flights carrying 1,464 OFWs from Lebanon, United Arab Emirates, Saudi Arabia, and Macau are expected this week. As of June 20, DFA said it has repatriated a total of 51,113 OFWs since February. — Gillian M. Cortez

What did Rizal die for?

June 21, 2020 | 6:25 pm

‘Mi Último Adiós’
(My Last Farewell)
by José Rizal
(English translation by Nick Joaquin)

Land that l love — farewell! O Land the Sun loves!
Pearl in the sea of the Orient: Eden lost to your brood!
Gaily go I to present you this hapless hopeless life;
were it more brilliant, had it more freshness, more bloom:
still for you would l give it — would give it for your good.
ln barricades embattled, fighting with delirium,
others offer you their lives without doubts, without gloom,
The site doesn’t matter: cypress, laurel or lily;
gibbet or open field, combat or cruel martyrdom,
are equal if demanded by country and home.
l am to die when I see the heavens go vivid,
announcing the day at last behind the dead night.
If you need color, color to stain that dawn with,
let spill my blood, scatter it in good hour,
and drench in its gold one beam of the newborn light.

Dr. José Rizal was executed by firing squad by the Spanish colonial government for the crime of rebellion, on Dec. 30, 1896, at Bagumbayan Field in Manila. His 14-stanza poem in Spanish, hitherto only known by its opening verse, “Adios Patria Adorada” (“Farewell Beloved Country”) later titled “Mi último adiós” (“Last Farewell”) was hidden in his gas lamp in his prison cell, and transferred among his personal belongings to his family after his death. He wrote to his best friend and confidant, professor Ferdinand Blumentritt, “Tomorrow at seven, I shall be shot; but I am innocent of the crime of rebellion. I am going to die with a tranquil conscience” (from Teodoro Kalaw, Epistolario Rizalino).

Not for active rebellion, for Rizal was not actually aligned with the Katipunan of Andres Bonifacio and Emilio Aguinaldo in those days of the Revolution. He was one of the leaders of the reform movement of Filipino students in Spain, where he was a prolific contributor to the Spanish newspaper La Solidaridad in Barcelona (under changing pen names of “Dimasalang,” “Laong Laan,” and “May Pagasa”). His writings focused on liberal and progressive ideas of individual rights and freedom, specifically, rights for the Filipino people. His two best known novels were Noli Me Tangere (Touch me not, 1887) that criticized the Spanish political governance and the clergy, and El Filibusterismo (The Reign of Greed, 1891) that described the “social cancer” that colonization wrought.

The local Spanish authorities thought his writings incendiary, and Rizal was banished to Dapitan in Zamboanga on house arrest upon his return to the country in 1892. When outright rebellion broke out in 1896 (not with his complicity), Rizal was incarcerated in Fort Santiago in October, and executed on Dec. 30, 1896. His remains were dumped in an unmarked grave at the Paco Cemetery until he was transferred to the iconic Rizal monument in Luneta Park (former Bagumbayan Field) in 1898, under American rule.

Some historians say that the martyred José Rizal was picked by the Americans as an example of how bad the Spanish were at handling the nascent patriotism in the Filipino literati who did not really press for independence, but for fair representation and participation in the governance of the colony.

But Rizal is much more than an accidental hero. “There can be no tyrants where there are no slaves,” he bravely said. José Rizal was the first writer who died for the country fighting for the basic human rights of life, liberty and pursuit of happiness, claiming freedom of thought and expression.

His birthday, June 19 (also commemorated like his death anniversary on Dec. 30), was marked last week, as it is remembered at every anniversary, in his hometown, Calamba, Laguna and at the Luneta Park. And in this dismal, numbingly fearful time of the now-more than three months’ quarantine under the heartless tyranny of the COVID-19 coronavirus pandemic, Filipinos might have been hardly moved by remembrance of the martyrdom of José Rizal.

Yet it might be so forcefully ironic that our country, Rizal’s “Patria Adorada,” seems confronted with an inner struggle now, like it was in Rizal’s heart, about threats, imagined or real, to the basic human rights and freedoms won in hard-earned political independence. Since July 4, 1946 when the US officially recognized and released the Philippines as an independent sovereign state, the threats to human rights and freedoms have pathetically come not from foreign colonizers but from within the democratic ecosystem — as so graphically demonstrated in the 14-year Marcos dictatorship in the Martial Law of 1972-1986.

For example, would Rizal be branded a “terrorist” under today’s definition in the controversial “Anti-Terrorism Act” (ATA), passed by Congress (and now awaiting President Rodrigo Duterte’s signature or automatically passing into law) as the country was celebrating Rizal month? By the Spanish authorities who sentenced Rizal to execution at Bagumbayan, he was a terrorist who incited the Katipunan radicals to rebellion. According to the Human Rights Watch (HRW), under the ATA “an individual, as well as a group, commits terrorism when he or she ‘engages in acts intended to cause death or serious bodily injury to any person, or endangers a person’s life,’ or ‘causes extensive damage to public property,’ in order to ‘create an atmosphere or spread a message of fear’…the law also makes it a criminal offense to ‘incite others’ to commit terrorism ‘by means of speeches, proclamations, writings, emblems, banners or other representations tending to the same end’” (HRW, June 5).

The law, which does not define “incitement,” poses a danger to freedom of the media and freedom of expression by providing an open-ended basis for prosecuting speech, the HRW wrote. And then there is the closure of the country’s biggest network, ABS-CBN in May, with actual and virtual House Committee hearings on the renewal of franchise diverging into issues of banned foreign ownership of media and unpaid taxes and payments. “President Rodrigo Duterte is not to blame for the shutdown of ABS-CBN Corp, his legal counsel Salvador Panelo said on May 6 (as quoted by ABS-CBN News), adding that the closure is not the same as the network’s shutdown when the late dictator Ferdinand Marcos declared martial law in 1972.”

And then the Manila Regional Trial Court (RTC) Branch 46 convicted Rappler CEO and executive editor Maria Ressa and former Rappler researcher-writer Reynaldo Santos, Jr. over cyber-libel charges in a high-profile verdict handed down last week, Monday (Rappler, June 15). The court sentenced Ressa and Santos to a minimum of six months and one day to a maximum of six years in jail over charges filed by businessman Wilfredo Keng in a case that tested the eight-year-old Philippine cybercrime law, Rappler said.

Hundreds of Filipinos have taken to the streets against a widely opposed anti-terrorism bill, TV news reported. “Mass gatherings remain prohibited, even though the government has eased lockdown restrictions, but protest leaders said they were forced to come out to stop the country from crossing a dangerous red line threatening freedom of expression,” cbsnews.com reported. Students of UP-Cebu were arrested in the peaceful rally in the Visayas.

José Rizal was there, protesting.

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

War and co-existence

June 21, 2020 | 6:25 pm

That we are fighting a global war is often used as a way to describe the fight against COVID-19.

One cannot tackle the death and devastation caused by the pandemic devoid of emotion. The latest data (as of June 21): 463,000 have died out of 8.75 million confirmed cases worldwide.

The US alone has accounted for 121,000 deaths so far. This is equivalent to about a fourth of global deaths. This number is more than double the American deaths in the decade-long Vietnam War (1964-1975): 58,220. In fact, the American deaths from COVID-19 have surpassed the total number of American fatalities from the wars in the period after World War II. The Korean War, Vietnam War, War in Iraq, War in Afghanistan, plus the 9/11 terrorist attacks accounted for 104,647 deaths all in all (source of information: Nina Strochlic, “US coronavirus deaths now surpass fatalities in the Vietnam War,” National Geographic, April 28).

However, the number of confirmed COVID-19 deaths still undercounts the total fatalities during the pandemic. We also have to consider the additional deaths that are indirectly caused by COVID-19. Said differently, these non-COVID-19 fatalities occur because of the pandemic conditions. The factors that explain the non-COVID-19 deaths during the pandemic include the reluctance of sick people to seek hospitalization because of their fear of getting infected, the incapacity of overwhelmed healthcare facilities to attend to all critically ill people, and the inability of the weakened system to simultaneously respond to different diseases.

The information on non-COVID-19 fatalities during the pandemic can be drawn from the metric called “excess mortality.” The World Health Organization defines it as “mortality above what would be expected based on the non-crisis mortality rate” or “mortality that is attributable to the crisis conditions” However, the data for excess mortality are scant.

The pandemic has likewise caused extreme economic hardship, resulting in incalculable losses in terms of jobs, food security, and incomes. It is said that the economic crisis brought about by COVID-19 is the worst since the Great Depression in the 1930s. But if we use health as our primary indicator, the current global crisis is worse than the Great Depression. One study for example shows that “many of the changes the deaths from the different causes during the Great Depression were unrelated to economic shocks.” More to the point, all-cause mortalities declined between 1929 and 1937. (See David Stuckler, Christopher Meissner et al., “Banking crises and mortality during the Great Depression: evidence from US urban populations, 1929-1937,” Journal of Epidemiology & Community Health, 2012.) This could be explained by the New Deal, which improved health outcomes.

Our consolation is that COVID-19 is, so far, not as extreme as the 1918-1919 influenza pandemic that killed 50 million people worldwide. Without sounding deterministic, we can exude confidence that we will beat COVID-19, thanks to the rapid advances in science and technology in general and therapeutics in particular.

The optimistic scenario is that a vaccine can be introduced within two years. Even here, we face challenges. Having a vaccine does not automatically mean that it will be made available to everyone. And even given the access to the vaccine, the logistics and resources to vaccinate everyone are formidable.

In this light, a petition letter, initiated by global leaders and influencers, is calling for a “people’s vaccine” against COVID-19. Recognizing that making the vaccine available to all is a political challenge, the signatories want COVID-19 licenses on knowledge, data, and technologies be freely available to all countries and vaccines and treatments be provided free of charge to all.

Even before reaching that point of rolling out the vaccine, we face immediate obstacles. For countries that have initially flattened the pandemic curve (China, Singapore, Korea, Japan, New Zealand, among others), fresh cases have emerged. For countries like the Philippines that are struggling hard to tame the first wave, they have likewise been hit by new outbreaks.

In the Philippines, the latest basic reproduction number is >1 (in the National Capital Region, the number is 1.2; in Cebu, it is 2). Any reproduction number that is >1 means that COVID-19 continues to spread, and a higher value (like in Cebu) suggests that containment is more difficult.

To rely solely on a prolonged lockdown to contain the virus entails huge economic costs. It likewise causes severe physical and mental stress to the populace. Hence, government has to step up in implementing effective interventions like targeted testing, systematic contact tracing, requiring people to wear masks, and having the sick go through self-isolation. These are the standard weapons to fight COVID-19.

But having weapons does not make a solid strategy. Even if we are armed with these weapons, the enemy that is the virus lives with us.

Here, we can reflect on the Japanese strategy of seeing the forest for the trees. A Japanese doctor and professor of virology, Oshitani Hitsohi, explains this strategy in an interview with the Japan Foreign Policy Forum (June 5):

“The core of Japan’s strategy was not to overlook large sources of transmission. By accurately identifying what we call ‘clusters,’ which are sources that have a potential to become a major outbreak, we were able to take measures for the surroundings of the clusters. By tolerating some degree of small transmissions, we avoided overexertion and nipped [in] the bud… large transmissions. Behind this strategy is the fact that, for this specific virus, most people do not infect others, so even if we tolerate some cases [to] go undetected, as long as we can prevent clusters where one infects many, most chains of transmissions will be dying out.”

Note that the strategy allows some degree of toleration of transmission. The war that Japan has conducted is not a war of attrition. It is not about “completely annihilating the evil.”

It is a strategy that recognizes co-existence. And combined with the tools or weapons that are at their disposal, they learn to adapt.

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph

Entitled politicians are saboteurs

June 21, 2020 | 6:24 pm

I was happy and rather optimistic when the Department of Transportation (DoTr) announced that it had rationalized bus routes and would establish dedicated bus lanes along the interior of EDSA.

Studies have proven that dedicated bus lanes are more effective if they take the inner lanes rather than the outer lanes. Not only does it prevent the indiscriminate loading/unloading of passengers, it leaves bus drivers no opportunity to swerve across lanes to jockey for passengers. Best of all, it provides commuters with faster travel times between stops.

This program is a collaboration between the DoTr and the MMDA. The former is the proponent of the program while the latter is responsible for implementing the new traffic system on EDSA.

Efficient cities like London, Vancouver and Seoul use the interior lanes of their highways as dedicated bus lanes while cities less-organized like Lagos, Matapu, and Lahore use the exterior. With DoTr’s plan, Manila is taking the steps towards the right direction.

The first phase of the program started three weeks ago with only point-to-point (P2P) buses plying EDSA’s inner lanes. Regular buses are due to follow this week.

Unfortunately, even at this early stage, the program is already failing. No surprise, it is the errant (or shall I say, pasaway) ways of government officials that is consigning the project to failure. Since the inner lanes of EDSA have been made free and clear of private vehicles, senators, congressmen, and members of the cabinet have begun using it as their private expressway. Escorted by a highway patrol cop, no less, these politicians bulldoze their way through the dedicated bus lane with no regard for the new rules. And since a precedent has been set, even police and military vehicles have started using the lanes too. It has become the expressway for anyone associated with the government. Meanwhile, the MMDA sits idly allowing the violation to happen.

This scenario is wrong on many levels.

On the part of the political elite, it shows that beneath their rhetoric of being public servants, they are abusive opportunists whose sense of entitlement is sickening. They bully their way through our roads with their sirens and police caravans demanding that private citizens clear the way for their unobstructed passage. They are shameless and bullies, this way. It is as if their trip is more important than ours. They forget that it is us, the private citizens, who make this economy tick. Our taxes that pay for their salaries and every privilege they enjoy.

It must also be said that these political elite, their mistresses and children, have no right to use the highway patrol as their personal escorts. The salaries of these cops and the motorcycles they ride on are paid for by the people’s taxes and as such, are public assets. To use them for personal convenience is an abuse of privilege. Sadly, Director of the High Patrol, Brigadier General Eliseo Cruz allows it. Apparently he is one who panders to politicians. How disappointing. Just because this has been the practice since time immemorial does not make it right.

Entitled politicians hide behind heavily tinted windows for fear of being discovered. I say, if they have the audacity to bulldoze regular motorists on the roads, then they should also have the courage to plaster their names on their vehicle or at least show their faces. Fair is fair. You cannot be abusive and be anonymous at the same time. To hide behind tinted windows is being a coward.

On the part of the MMDA, the fact that it condones the traffic violations of government officials proves that it enforces the law selectively. It considers the political elite as its true bosses, not the tax paying public whom it swore to serve. Its proclivity to make exceptions to rules is why many of its traffic mitigation programs are failures.

All these are a reflection of the culture of privilege this administration perpetuates. In this government, it is perfectly acceptable for colleagues, friends, and allies to break the law — but woe to Juan de la Cruz if he happens to commit a legal offense. On him shall befall the full brunt of punitive consequences.

This government’s penchant for patronage has been displayed too many times that it can no longer be denied. Fresh in our memories is how political allies Koko Pimentel and Major General Debold Sinas were “pardoned” by Malacañang after violating quarantine rules. Evidently, not all Filipinos are equal in the eyes of Malacañang.

The reason why I take this issue seriously is because for the first time, we have a viable program to finally solve our public transportation conundrum.

Many may not be aware that the dedicated bus lanes in the interior of EDSA is a potential first step in a three-phase plan that will allow us to break free from the PUV franchise system and evolve into a performance contract system. The latter is the same system adopted by Seoul and London to great success.

Assuming the dedicated bus lanes program succeeds, the government can graduate to phase two. In this phase, the government can venture to lease all 8,000 buses in Metro Manila from their operators at a rate equivalent to their daily boundaries. With buses under government control, the state can regulate their capacities, safety protocols, routes, fares and emission levels. It can calibrate routes and schedules with greater predictability and reliability. It can control the road worthiness (safety) of the vehicles and their cleanliness. All revenues derived from PUV operators go to the government. As such, it can hire the drivers directly and provide them with fixed salaries and benefits, not commissions.

Phase three involves migrating to a performance contract system. This is a system wherein the government awards only a handful of transport operators the right to operate certain routes. They are vetted, through public bidding, based on their ability to deliver the most efficient transport services at the highest standards and the lowest price. Government receives all the revenues for public transport and is the one that pays the transport operators a predetermined fee. Transport contracts are renewed every two years so if a particular operator has a bad on-time or safety record, that operator can immediately be replaced.

As you can tell, there is a lot riding on this dedicated bus lane program. This is why we cannot allow entitled politicians to sabotage this project. I can only hope that the strong, moral hand of Secretary Tugade can put his colleagues in government in place.

Andrew J. Masigan is an economist.

There’s nothing exceptional about any country

June 21, 2020 | 6:23 pm

By Andreas Kluth

PUNDITS have recently proclaimed “the end” — or exposed “the myth” — of British exceptionalism. It’s hard for Brits to keep seeing themselves as uniquely heroic while bungling their response to a pandemic, fumbling through Brexit and literally boxing up statues of national idols to save them from being defaced.

Other observers have similarly announced the end of Swedish exceptionalism, because of an unorthodox epidemiological approach to COVID-19 that basically failed. But Sweden’s belief in its own special status apparently became untenable even earlier, and for many other reasons.

For every commentator declaring the end of a given national exceptionalism, others pop up reasserting it. This seems to be an iron law of history: Every nation at one point or another claims to be superior to others or endowed with a special mission. Exceptionalism, ironically, is universal.

Notabale examples include my own two countries (I’m a dual US-German citizen). When John Winthrop, governor of the Massachusetts Bay Colony spoke of a “city on a hill” in 1630, he was thinking of a smallish group of Puritans. By the time President Ronald Reagan in 1980 turned that phrase into a “shining city upon a hill,” Americans got the point. Their country was not only a superpower but also the most virtuous nation in the world, morally superior to others and endowed with a special historical role.

This ideology transcended party politics. In 2016, Hillary Clinton also embraced American exceptionalism, in part as a way of attacking her opponent, Donald Trump, whom she considered strange for not believing in it. She was right to point out that he wasn’t convinced: Told that Russian President Vladimir Putin is “a killer,” Trump, by then president, merely shrugged: “Well, you think our country is so innocent?”

My other country got into the game earlier. Two centuries ago, long before there even was a nation state called Germany, romantic philosophers such as Johann Gottfried Herder and Johann Gottlieb Fichte espied German exceptionalism in the unique spirit or soul of the “Volk” — the people or tribe. These ideas led to the rise of nationalism in Europe.

During the 19^th century, this exceptionalism turned into a conviction that German “culture,” presumed to be very deep, was superior to Anglo-French “civilization,” a term used by German writers to connote shallowness. The “land of poets and thinkers” was self-evidently different: equidistant between East and West and on a “Sonderweg” (special path) that would lead to something superior to monarchy, aristocracy or democracy. After World War I this mutated into racist exceptionalism — that is, Nazism — and World War II.

Of the many exceptionalisms around today, one in particular resembles the 19^th-century German variety. Russia has long seen itself as a “Third Rome,” following the empires of the Caesars and the Orthodox Byzantines, whose role “Holy Rus” tried to take over. Like the Germans of yore, Russians are sure their culture and soul is deeper than the West’s. As expressed in the thought of scholars such as Aleksandr Dugin, this exceptionalism implies a manifest destiny to rule over an anti-Western “Eurasia.” Putin is said to subscribe to much of this worldview.

Japan also felt exceptional once, until its defeat in World War II. It arguably still does, for instance in the intellectual tradition of Nihonjinron, which is based on Japanese uniqueness. Next door, China’s “middle kingdom” has always felt special and currently calls this “the China Way.” From India’s Hindutva (“Hindu-ness”) to South Africa’s regional superiority complex and Poland’s narrative of being victim and redeemer (a “Christ among nations”), everybody seems to be at it.

The problem is that exceptionalism leads to bad things. The first is hypocrisy. How, for instance, could the US or UK ever have claimed to be morally superior when the first English ship carrying African slaves to America arrived in 1619, a year before that other English ship, the Mayflower, brought the Pilgrims to their city upon a hill? And what would either country say if the anti-racism riots of recent weeks — late blowback for that earlier legacy — had taken place in, say, China or Iran? Exceptionalism requires editing a country’s past, and indeed lying.

It also leads to double standards. In the American case, it often becomes “exemptionalism,” when the US doesn’t feel bound by international treaties or courts, even as it criticizes other countries for falling foul of them. Such arrogance provokes resentment and conflict.

In the worst cases, such as Germany’s or Japan’s during the past century, exceptionalism mutates into a brutish ethnocentrism that leads to atrocities, tragedy and ruin. That’s why the word “Sonderweg” has acquired an entirely negative connotation among historians in postwar Germany, as a delusion that culminated in the Holocaust.

“It is extremely dangerous to encourage people to see themselves as exceptional,” a world leader wrote in the New York Times in 2013, enraged about the sense of special purpose in the foreign policy of Barack Obama, America’s then president. That leader was Putin, the Russian exceptionalist who soon after invaded Crimea and Ukraine. Here it is in a nutshell: If we all claim to be exceptional, there will be trouble.

Nations are more like individuals. In some respects they’re similar, in others different, but never exceptional, and they’re certainly wiser not to pretend to be. Exceptionalism is an infantile and destructive idea. The sooner we drop it, the better.

BLOOMBERG OPINION

China’s man in Washington, named Trump

June 21, 2020 | 6:23 pm

By Nicholas Kristof, The New York Times

“NOBODY has been tougher on China than me,” President Donald Trump has declared repeatedly, and he is trying to exploit anti-China feelings for his re-election. He portrays Joe Biden as soft on China, and his backers have run ads denouncing “Beijing Biden.”

All that is preposterous, for it is Trump who has been China’s stooge, a sycophantic flatterer and enabler of President Xi Jinping. If that wasn’t already evident, John Bolton’s new book, The Room Where It Happened, portrays Trump as practically kowtowing to Xi.

The kowtow meant prostrating oneself before the emperor or a patriarch and knocking one’s head on the ground. Today it takes the form of a fawning American president publicly declaring, “President Xi loves the people of China” and hailing Xi’s “very capable” handling of the coronavirus.

I’ve been gasping as I read an advance copy of Bolton’s book, particularly his chapter on relations with China, because China policy perfectly captures Trump’s soaring hypocrisy wrapped in venal incompetence.

The passage in the book that got the most attention concerns a telephone conversation between Trump and Xi last year.

“He [Trump] then, stunningly, turned the conversation to the coming US presidential election, alluding to China’s economic capability to affect the ongoing campaigns, pleading with Xi to ensure he’d win,” Bolton writes.

The government clearance process redacted Trump’s exact words, but Vanity Fair says he told Xi, “Make sure I win.”

Yet perhaps what troubles me even more is Trump’s kowtowing to China’s human rights abuses to win favor with Xi.

“On June 4, the 30^th anniversary of the Tiananmen Square massacre, Trump refused to issue a White House statement,” Bolton writes, quoting Trump as saying, “Who cares about it?”

Xi has imprisoned some 1 million Muslims in modern concentration camps in the Xinjiang region, in what may be the largest internment of people based on religious categories since the Holocaust.

“Xi explained to Trump why he was basically building concentration camps in Xinjiang,” Bolton writes. “According to our interpreter, Trump said that Xi should go ahead with building the camps, which he thought was exactly the right thing to do.”

Trump has also largely abandoned two Canadian citizens whom China has imprisoned as hostages to try to prevent Canada from extraditing a prominent businesswoman, Meng Wanzhou, to the United States. The United States should stand with Canada to end such hostage-taking; instead, Trump has validated it by suggesting that he can interfere with the legal process to solve problems.

Trump has denied making some of these comments, but then again Trump has made more than 19,000 false or misleading statements since assuming the presidency, by the count of The Washington Post. Moreover, the White House’s main objection to Bolton’s book is that it publishes classified information — and statements are considered classified only if they are true. The White House thus provides backdoor confirmation of the book’s general truthfulness.

It has always been ludicrous for the Trump campaign to denounce “Beijing Biden,” when Trump publicly lavishes more affection on Xi than on Melania. “President Xi is extremely capable,” is “strong, sharp and powerfully focused,” is “doing a very good job” and is “a man who truly loves his country,” Trump has said on various occasions this year alone.

My own view as a China-watcher who lived for years in Beijing is that we should stand up to Xi where we need to — while also negotiating on trade and seeking ways to cooperate on climate change, pandemics and more. Trump does the opposite: He bungles trade and achieves nothing there, fails to cooperate on climate or health, damages America’s alliances and ignores Xi’s worst abuses, all while flattering Xi in apparent hopes of getting re-election help.

A joke in China suggests that Trump’s Chinese name is Chuan Jianguo, or “Build-the-Country Trump.” That’s because Build-the-Country is a common revolutionary name among Communist patriots, and it’s mockingly suggested that Trump’s misrule of the United States is actually bolstering Xi’s regime.

In other words, Trump seems to be doing his utmost to make a country great again. It’s just not America.

More proof that I have the best readers.

In April I used my column to announce an effort to raise funds for five great organizations working at home and abroad to respond to the coronavirus, and my readers have now donated a total of $5.8 million to the effort.

Here’s how the 10,200 donors have allocated the money: $1.67 million to Catalyst Kitchens, which provides meals for the hungry in the United States; $1.38 million to the Center for American Indian Health at Johns Hopkins University, which supports the virus response in Native American communities in the United States; $1.1 million to Water for People, which installs water systems at schools and clinics abroad so people can wash their hands; $826,000 to the International Rescue Committee, supporting displaced people around the world; and $788,000 to Save the Children, helping out-of-school kids here in the United States.

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