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On hold: Quarantined tax assessments

(Part II)

Last week, I discussed the Revenue Memorandum Circular (RMC) which extended the deadlines for taxpayers to submit responses or protests to assessment notices, including documents to support requests for reinvestigation. In this article, let’s discuss another guideline released by the BIR concerning tax assessments.

On March 30, RMC 34-2020 suspended the running of the statute of limitations for tax assessments from March 16 until 60 days from the lifting of the state of national emergency. This was echoed by Revenue Regulation Nos. (RR) 7-2020 and 10-2020 and amended by RR 11-2020.

What is the statute of limitations? Under the law, the Bureau of Internal Revenue (BIR) has three years to assess deficiency taxes by issuing a Formal Assessment Notice (FAN). The three years are counted from the last day prescribed by the law to file the returns, or the day the returns were actually filed (including any amendments filed), whichever comes later. Thus, any deficiency tax assessment arising from a FAN that is issued beyond this three-year prescriptive period is considered void.

For income tax assessments, the prescriptive period is applied on an annual basis (i.e., from the filing of the annual income tax return). On the other hand, the prescriptive period for VAT shall be reckoned quarterly, counted from the date of filing of the quarterly VAT returns which is due every 25th of the month following the close of a taxable quarter. For withholding taxes, prescription shall be reckoned from the monthly filing deadlines of the returns.

There are, however, exceptions to the three-year prescriptive period. One is when the taxpayer and the BIR have agreed to extend the period through the execution of a waiver of the defense of the statute of limitations. Executing a waiver to extend the prescription of assessment of taxes is mutually beneficial to the parties. For the taxpayer, the extension provides the taxpayer time to retrieve or prepare the documents to support the tax treatment of its transactions. It also affords the BIR revenue examiners ample chance to evaluate the taxpayer’s records and documents and reduce/cancel assessments before the issuance of the FAN.

Another exception to the three-year period of prescription is the intentional filing of a false or fraudulent return, or failure to file the required return. In these cases, the prescriptive period can be extended from three years to 10 years from the time the falsity, fraud and/or omission is discovered.

Now, let’s discuss the implications of RMC 34-2020 and related RRs on prescribing tax assessments.

Based on the RMC, the World Health Organization’s declaration of the coronavirus disease 2019 (COVID-19) as a pandemic, and the government’s proclamation of a state of national emergency under Republic Act No. 11469, together with Presidential Proclamation Nos. 922 and 929, are circumstances warranting the suspension of the statute of limitations, effectively prohibiting the BIR from issuing tax assessments and collecting deficiency taxes. Under Section 223 of the Tax Code, the running of the statute of limitations can be suspended for the period during which the Commissioner of Internal Revenue (CIR) is prohibited from making the assessment and 60 days after.

Consequently, under RMC 34-2020, RRs. 7-2020 and 10-2020, the statute of limitations was suspended starting March 16, when Luzon was placed under enhanced community quarantine (ECQ), until 60 days from the lifting of the state of emergency. By way of amendment, RR 11-2020 provides that the suspension shall be until “60 days from the lifting of the quarantine.” The term “quarantine” includes, but is not limited to, “community quarantine,” “ECQ,” “modified community quarantine,” and “general community quarantine (GCQ).”

Based on these issuances, if the quarantine runs only until May 31 without further extensions, the statute of limitations shall be suspended up until the 60th day after the lifting of the quarantine, or on July 30. This is a total of 136 days counting from March 16.

The suspension of the statute of limitations under the RMC and RRs may prevent taxpayers from raising the defense of prescription on prescribed tax assessments. However, such a move by the government is understandable. With taxpayers confined at home and many business operations suspended, submission of documents required for tax audits have been put on hold. Taxpayers were given consideration and extended tax filing deadlines because of the limitations imposed by the ECQ. Why shouldn’t the BIR be given the same consideration? After all, BIR examiners also face challenges in continuing tax audits given their limited mobility while under quarantine.

That said, some may argue that taxpayers and the BIR are, in fact, not given the same consideration. While the extension is a welcome relief for taxpayers with ongoing tax investigations, it appears that the BIR examiners may have some advantage in terms of the extension granted.

As I mentioned in last week’s article, taxpayers with ongoing tax audits are given an extension of 30 days from the lifting of the quarantine to submit their protests and additional documents. On the other hand, the BIR is given 60 days from the lifting of the quarantine to validly issue their tax assessments. In fact, since some areas have already transitioned from ECQ to modified ECQ and GCQ, some BIR examiners can now resume working on their tax audit cases even though the 60-day extension period has yet to commence.

To be fair to taxpayers, the BIR might consider giving taxpayers with requests for reinvestigation an additional 30 days (for a total of 60 days) from the lifting of the quarantine to submit supporting documents, consistent with their extension to issue tax assessments. This would ensure that the 60-day period granted to such taxpayers to submit supporting documents is protected regardless of when their due dates fall within the quarantine period.

After all, as a former US Supreme Court Associate Justice put it, fairness is what justice really is.

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

 

Kathrine Joy Capales is a manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

kathrine.joy.capales@pwc.com

Peso rises on lower oil prices

THE PESO strengthened versus the greenback on Wednesday after oil prices slipped anew and with positive market sentiment due to dovish remarks from US officials.

The local unit finished trading at P50.65 per dollar yesterday, appreciating by five centavos from its P50.70 close on Tuesday, according to data from the Bankers Association of the Philippines.

The peso opened the session at P50.70 versus the dollar. Its weakest showing was at P50.75 while its intraday best was at P50.615 against the greenback.

Dollars traded increased to $919.2 million from the $567.8 million traced on Tuesday.

The peso’s gains came after a fresh decline in oil prices, said Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp.

“The peso closed stronger for the second straight day after a downward correction in global crude oil prices,” Mr. Ricafort said in a text message.

Reuters reported that oil prices slipped on Wednesday on market concerns regarding the lasting economic fallout of the coronavirus disease 2019 (COVID-19). This outweighed signs of recovering demand and production cuts already imposed by major producers.

Brent crude futures for July delivery traded at $34.54 per barrel, down by 11 centavos or 0.3% as of 0031 GMT. US West Texas Intermediate crude futures for July also slipped by 13 centavos, or 0.4% to $31.83 a barrel.

The July contract became the front month after WTI futures for June expired on Tuesday, avoiding the chaos of last month’s May expiry when prices slid into negative territory.

Meanwhile, a trader attributed the peso’s stronger close after dovish signals from key US officials.

“The peso appreciated after [US] Fed[eral Reserve] Chairman Jerome Powell and [US Treasury] Secretary Steven Mnuchin remained dovish in their remarks before the US Senate Banking Committee,” the trader said in an e-mail.

On Tuesday, Mr. Powell said new Treasury-backed Fed lending programs meant for midsize companies and municipal bond markets would be up and running by the beginning of June. He added that the Fed is looking to extend access to credit facilities to additional borrowers, including to states with smaller populations.

Both Mr. Powell and Mr. Mnuchin said the nearly $3 trillion in federal rescue programs unveiled over the past two months were working to support an economy devastated by the novel coronavirus. The officials faced tough questions over whether the government’s plan to quickly reopen the economy could be detrimental for low-wage workers with little protection against the virus.

For today, Mr. Ricafort sees the peso moving around the P50.50 to P50.75 levels while the trader expects the local unit to trade at a range of P50.50 to P50.70. — L.W.T. Noble with Reuters

Shares rise as stimulus hopes spur bargain hunting

THE MAIN INDEX sustained its uptrend at the close of trading on Wednesday on last-minute bargain hunting amid expectations of further stimulus from the US government.

The benchmark Philippine Stock Exchange index (PSEi) increased 26.11 points or 0.47% to close at 5,581.96 yesterday. The broader all shares index likewise gained 11.65 points or 0.34% to 3,371.47.

“Philippines equities ended higher on last-minute bargain hunting as more talk of stimulus became a catalyst for the market,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile phone message.

“(US Treasury Secretary) Steven Mnuchin plans to use all $500 billion the Treasury was allocated to help the economy, and is willing to take on more risk to do so,” he added.

This resulted in last-minute optimism that lifted the local bourse from trading lower at the start, which brought the PSEi as low as 5,518.52 for the day.

“Prior to the climb, the market has been in the negative territory for the most part of the trading day amid tempered hopes on Moderna’s experimental coronavirus vaccine,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said via text.

A report by health-focused media Stat raised questions on Moderna’s supposed success in testing its anti-coronavirus disease 2019 (COVID-19) drug, citing vaccine experts that the company failed to produce critical data for scientific assessment.

The report also noted the silence of the National Institute for Allergy and Infectious Diseases on Moderna’s test, causing further speculation that the company’s announcement is unreliable.

Mr. Tantiangco said while the market ended Wednesday with gains, its climb may be unsustainable.“Looking at the overall market breadth, decliners still outnumbered advancers 88 to 84. Zooming into the index, losers still had the lead over gainers, 16 to 10, while 4 index members were unchanged.”

“Given that we only had a few selected stocks carrying the market compared to the number of losers, today’s climb could be unsustainable,” he said on Wednesday.

The top three gainers among PSEi members yesterday were Bank of the Philippine Islands (+3.15%), Globe Telecom, Inc. (+2.89%) and Metropolitan Bank & Trust Co. (+2.80%). Pulling the index down were Robinsons Retail Holdings, Inc. (-2.62%), Alliance Global Group, Inc. (-2.42%) and Universal Robina Corp. (-2.25%).

Of the sectoral indices, mining and oil climbed 51.91 points or 1.15% to 4,541.82; financials added 12.91 points or 1.15% to 1,134.48; holding firms picked up 58.52 points or 1.07% to 5,517.65; and property increased 10.11 points or 0.35% to 2,845.34.

On the other hand, industrials lost 94.13 points or 1.27% to 7,299.29; and services trimmed 3.63 points or 0.27% to 1,324.72.

Value turnover on Wednesday slid to P3.30 billion from P4.05 billion the previous day. Some 316.58 million issues switched hands. Net foreign selling dropped to P109.98 million from P417.76 million the previous day. — Denise A. Valdez

Gov’t warns of another lockdown if there’s spike in COVID-19 cases

PRESIDENT Rodrigo R. Duterte has threatened to reimpose a lockdown if coronavirus cases spike, as his Health chief said the pandemic entered a “second wave” in the Philippines as early as March.

“We’ll have to just go back to the original program,” the President, who relaxed quarantine rules for some areas outside Metro Manila starting May 16, said in a taped address on Tuesday night.

He said the government would monitor cases in regions where the lockdown had been eased.

Health Secretary Francisco T. Duque III on Wednesday said the country entered a second wave of COVID-19 infections in March, when the Department of Health reported a spike in cases.

“We’re now on the second wave and we’re doing everything to flatten the curve,” he told senators at a hearing.

Mr. Duque said the first wave started in January when local Health authorities confirmed the infection of three Chinese travelers from China’s Wuhan City, where the virus was first detected.

Meanwhile, he said Chinese pharmaceutical company Sinopharm Group Co. Ltd. had offered to include the Philippines in the clinical trial of a newly developed vaccine.

Mr. Duterte locked down the entire Luzon island in mid-March, suspending work, classes and public transportation to contain the pandemic.

People should stay home except to buy food and other basic goods, he said. The President extended the so-called enhanced community quarantine twice for the island and thrice for the capital region where novel coronavirus infections are concentrated.

Metro Manila and key cities and regions were kept under a modified lockdown from May 16 to 30, while some businesses were allowed to reopen with a skeletal workforce.

The Department of Health (DoH) reported 279 new infections yesterday, bringing the total to 13,221.

The death toll rose to 842 after five more patients died, it said in a bulletin. Eighty-nine more patients have gotten well, bringing the total recoveries to 2,932, it added.

Of the 279 new cases, 150 came from Metro Manila, 14 from Central Visayas and 115 from the other regions, DoH said.

Carlito G. Galvez. Jr., chief enforcer of the government’s anti-coronavirus disease 2019 efforts, said the national action plan could be localized.

“Villages with cases will be locked down to preserve our economy,” he said at the same televised address on Tuesday.

Mr. Duterte said that the virus remains a threat in the absence of a vaccine. He said he would raise enough money so the government could buy vaccines once one is developed by next year.

Also yesterday, John Wong, a professor at the Ateneo de Manila University’s School of Medicine and Public Health, said the “wave” in cases refers to the rise and fall in the number of infections.

The first wave happened in January even if there were few coronavirus cases, he said at a news briefing. The second wave, he added, started in the first week of March.

Mr. Wong earlier this month cited “flattening of the curve” after coronavirus infections slowed, which means fewer people need to seek treatment.

Countries worldwide including the Philippine have imposed lockdowns and asked people to observe social distancing to slow the virus spread.

The curve researchers are talking about refers to the projected number of people who will get infected over time.

“A curve that is flattened means instead of going straight up it, plateaus,” Mr. Wong said “The important thing is it never reaches or exceeds the capacity of the health system.” — Gillian M. Cortez, Charmaine A. Tadalan and Vann Marlo M. Villegas

Duterte to keep NCR police chief

PRESIDENT Rodrigo R. Duterte won’t sack his National Capital Region police chief even after he was caught violating lockdown rules amid a coronavirus pandemic.

In a taped address aired on Tuesday night, the President said Metro Manila police chief Debold M. Sinas is a “good and honest man” and should not be fired because people threw him a birthday celebration.

“He is a good officer, he’s an honest one, and it’s not his fault someone serenaded him on his birthday,” Mr. Duterte said.

Police filed criminal charges against the Metro Manila police chief last week after he and about 50 policemen were seen breaking quarantine rules during his birthday celebration.

Mass gatherings are prohibited and physical distancing must be observed during the pandemic.

Presidential spokesman Harry L. Roque on Tuesday said the palace would wait for the results of an internal police probe before deciding on the fate of Mr. Sinas and his well-wishers.

Interior and Local Government Secretary Eduardo M. Año had called the birthday event “uncalled for,” adding that government officials should have delicadeza.

Mr. Sinas has denied violating lockdown rules, adding that packed food was served at the event.

Justice Secretary Menardo I. Guevarra last week said the National Bureau of Investigation would probe the incident, adding that state agents must “enforce the laws fairly.” — Gillian M. Cortez

Jinggoy says he did not violate lockdown

A SON of former President Joseph E. Estrada yesterday denied violating lockdown rules when he gave away fish in his father’s hometown in Manila this month.

In a letter to the National Bureau of Investigation, former Senator Jose “Jinggoy” P. Estrada said he had followed quarantine protocols while distributing milkfish in San Juan City, where he and his father used to be mayors.

Mr. Estrada said he had a quarantine pass and was wearing a mask and personal protective equipment when he did the rounds. “Social distancing procedure was also observed,” he said.

The former senator, who is out on bail for a corruption case that accused him of stealing pork barrel funds in 2013, said he did not mean to violate lockdown rules.

“I do not think that helping feed the starving and poor is a violation of law,” he said in his letter.

Mr. Estrada was arrested on May 3 for breaching quarantine protocols in San Juan City. Government agents sent him a letter on May 15 asking him to explain.

Mr. Estrada, who like his father was an actor before becoming a politician, said he gave away excess fish that his mother had given him. Instead of letting the fish spoil, he gave them away to his constituents to “ease their hunger.” — Vann Marlo M. Villegas

Time to fish?

MACROVECTOR / FREEPIK

Some common folks theorize that fishing can still be good after a storm. This works on assumptions that: 1.) storms do not necessarily bother deep-sea fish, so bottom fishing is an option; and, 2.) fish don’t get to feed much during a storm and are thus hungry after. So, even if waters are still murky or cloudy after a storm, it can be easy to get fish to bite as long as you get their attention with the right bait.

I am inclined to think that this fishing “sense” can work just as well in business, especially in turbulent times. But, as I noted in my column last week, even the best fishing pole and line and bait will be useless if the fish will simply not bite where you are. Or, there are just no fish to catch there. For it all starts with knowing where to fish.

The same goes for business, of course. It all starts with some idea, based either on a hunch or on data, of a possible market and what that market wants. After all, with a population of over 100 million and with it a consumer base of, say, 30 million, selling any product at a profit of even just 10 centavos to all those consumers every week, then that’s a net of P3 million a week or P12 million a month.

The coronavirus disease 2019 (COVID-19) storm is now still raging and the fish are not biting. But eventually, the storm will end, and we will be left with turbid and murky waters. However, we will also be left with a lot of hungry fish looking to feed. Now is the time to decide and prepare for what fish to catch and where to catch them; with what bait and how to catch them and when. New oceans of opportunity are emerging.

“We expect e-commerce online penetration (in ASEAN) to grow three to four times to anywhere between $90 billion to $120 billion in the next five years,” said resource person Olivier Gergele during a recent webinar with the Philippine Retailers Association. A BusinessWorld report quoted him as saying that e-commerce growth would accelerate after the weakening of traditional retail channels due to the COVID-19 outbreak.

Gergele, a partner at Ernst & Young (EY) Singapore, was also quoted as saying that Indonesia’s e-commerce industry was expected to grow to around $42 billion to $56 billion by 2025 from $13.3 billion in 2019, while Thailand’s industry was expected to grow to to around $16 billion to $21 billion from $5 billion. “Moving forward, as players are able to overcome and practically anticipate the exponential growth, the exponential demand, we can really expect online penetration to see a significant boost,” he added.

As for Philippine retailers, perhaps going online now is not a matter of choice but of necessity. The numbers have been bad since February. And only a few can continue to weather the situation if it persists until the end of the year. Offline retailers, Gergele said, already saw a 20% to 40% decline in foot traffic in February and March. And, I reckon the percentages to be even higher in the months of April to June.

As Gergele noted, “In the Philippines, some retailers have been grappling with early losses of up to 80% in the past month [March]. The sector really requires significant intervention… to survive.”

Gergele added that he expected the roll out of alternative business models to accelerate across Southeast Asia, including “dark kitchens” or food prepared for takeout rather than for restaurant dining, as well as digital community platforms. He also said that the online ecosystem in ASEAN was expected to be profitable in two to three years, shortening the timeline for e-commerce companies, which was usually four to 10 years.

So, the question now is where do we go from here. Some data available indicate a few trends that may be worth monitoring. In the US, for instance, data analytics firm Earnest Research tracked credit card and debit card purchases for nearly six million Americans for the week ending April 1, 2020, and their data showed some interesting results.

As quoted in “Working Paper 2020-59” by the Becker Friedman Institute at the University of Chicago, the Earnest Research data showed that US spending on airlines, hotels, rental cars, taxis, ride sharing, and movie theaters was down 75-95% year on year. Spending on fast food, auto parts, and autos was down 35%, and spending on apparel was down 70%.

At the same time, spending on home improvement, video streaming, gaming, food delivery, meal kits, and online grocers had “boomed.” The “Working Paper,” by Jose Maria Barrero, Nick Bloom, and Steven J. Davis, also noted that “the bulk of these spending cuts and shifts will reverse when the pandemic recedes and the lockdown ends, but some aspects of the shift are likely to persist.”

In the Philippines, BusinessWorld quoted National ICT Confederation of the Philippines (NICP) President Michael Tiu Lim as saying that the pandemic was a “double-edged sword.” While there has been growth in some ICT companies such as food delivery apps, service-oriented apps related to tourism and restaurant reservations have been hard hit. “There are certain sectors in the ICT industry that are doing well, [but] the others will not be doing well. In the overall balance, I think companies that don’t do well outweigh the companies that do well, unfortunately.”

And this, to me, is where our focus should be now. At this point, it appears that creation lags destruction. That COVID-19 is destroying more systems and structures faster than we can create new ones. That COVID-19 is decimating more capital than we can generate to restart the economy and to sustain growth. But there will be a turning point, for sure.

There is no doubt in my mind that more businesses will need to find their way into the ICT space if they wish to survive. But success in that space will also depend a lot on the readiness and the ability, particularly of smaller firms, to do work from home, and to do business online, as well as the availability of reliable technology and connectivity to do business.

At least in the aspect of digital finance, we seem to be moving forward. The value of digital transactions was reported to have almost doubled to P417.68 billion for the months of March and April compared to the year-ago level of P212.61 billion as more Filipinos opted to tap electronic channels amid the Luzon-wide enhanced community quarantine.

In a report, the Philippine Star quoted Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno as saying that more consumers have been shifting to e-payments because of the limitations on people’s movement and activities as a result of the COVID-19 pandemic. He noted that more people now use PESONet and InstaPay, the automated clearing houses for electronic fund transfers under the National Retail Payment System (NRPS) of the BSP.

BSP data show the number of PESONet and InstaPay transactions reached 17.3 million for the months of March and April, or 3.4 times last year’s 5.07 million. In March, PESONet transactions surged 61% year on year to P148.55 billion. In April, the value jumped 88% to P176.26 billion. For InstaPay, transactions surged by 237% to P43.36 billion in March, and by 260% to P49.5 billion in April.

This, to me, is a step in the right direction. As consumers become more comfortable with digital payments and digital financial transactions, they can also be eased into becoming more comfortable with digital or online retail and online services. But crucial now, as professional services firm Accenture noted in a report on COVID-19, is the ability of organizations to adapt to new conditions “to meet the immediate needs of their marketplaces.”

It noted, “…those who have viewed digital commerce as a secondary channel now need to reorient every aspect of their business towards a digital commerce mindset. There exists an opportunity to double-down on digital commerce, augmenting existing offerings and creating new lines of service. While this represents an opportunity to grow revenue, attract new customers and drive channel shift, it depends on digital channels and capabilities having appropriate scale and stability to handle the crush.”

 

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

matort@yahoo.com

Growth lockdown and low carbon economy

The hard lockdown countries experienced deep economic contraction in their GDP in first quarter (Q1) of 2020: France -5.4%, Italy -4.8%, Spain -4.1%, Belgium -2.8%, Germany -2.3%, and UK -1.6%. In Asia, the hard lockdowners and their contractions are: Hong Kong -8.9%, China -6.8%, Singapore -2.2%, Thailand -1.8%, and the Philippines -0.2%.

Japan is not a hard lockdown country but it still experienced a contraction of -2% because it was already contracting in the previous quarter with -0.7%. Japan is now technically in an economic recession.

The most adversely affected countries in Asia are China and the Philippines. From high growth of 6%+ in Q4 2019, they just went negative the next quarter.

The Department of Finance (DoF) showed sensitivity to the plight of many losing businesses. It has tweaked the CITIRA (Corporate Income Tax and Incentives Reform Act) bill, changed it to CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) bill with the following tax adjustments, among others: corporate income tax (CIT) cut from 30% to 25% by July this year; applicability of net operating loss carry over (NOLCO) extended from the current three years to five years; the 5% gross income earned (GIE) transition has been prolonged from two to seven years to four to nine years.

These are perhaps the deepest tax cuts the Philippines ever experienced. Bravo, DoF.

Now some sectors want to push very parochial interests and want to penalize Philippine businesses with more expensive energy which will be passed on to consumers.

HB 2184 or the “Low carbon economy bill,” authored by Deputy Speaker and Antique Representative Loren Legarda, plans to penalize fossil fuel energy and establish the emission Cap-and-Trade System in the industry and commercial sectors to reduce greenhouse gas emissions. The bill was discussed in a public hearing by the House Committee on Climate Change on Feb. 26.

A quick survey of GDP size and coal consumption would show that this bill is very parochial and anti-business. The Philippines’s coal use in 2018 was only 16.3 million tons oil equivalent (mtoe), among the lowest in Asia. The world’s four biggest economies are also among the world’s biggest consumers of coal energy (see the table).

According to the Department of Energy (DoE) Power Statistics 2019, the country’s total installed power capacity was 25.5 gigawatts (GW). Of this: coal was 10.4 GW (40.8%), oil-based 4.3 (16.9%), natural gas 3.4 (13.5%), hydro 3.8 (14.9%), geothermal 1.9 (7.4%), and solar+wind+biomass 1.7 (6.7%).

The actual electricity generation is not really reflective of this. Out of 106.0 terawatt hours (TWH), total generation from coal was 57.9 TWH (54.6%), natural gas 22.4 (21.1%), geothermal 10.7 (10.1%), hydro 8.0 (7.5%), oil-based 3.7 (3.5%), and solar+wind+biomass 3.3 (3.1%).

So the power source demonized by the low-carbon, cap-and-trade advocates, coal power, constituted only 41% of total capacity but actually produced 55% of total electricity consumption in the country. In contrast, the favored and pampered variable renewables solar+wind+biomass constituted 7% of power capacity but produced only 3% of total electricity consumption.

So this low carbon bill would want even more expensive electricity, a more unstable power supply, and more potential blackouts because it will restrict the already small fossil fuel capacity in the country. The lobbyists want more subsidies and mandates, direct and indirect, to variable renewables that by nature are intermittent and weather dependent. Adding batteries to solve intermittency problems would add extra costs to power. And even so, there are days and weeks that are cloudy and non-windy so there is little or no solar and wind power produced to store in batteries.

Congress, the DoE and the public should ignore parochial and self-serving interests to further penalize the Philippine economy, instead of jump starting it after the downturn caused by the COVID-19 pandemic. Expensive energy to “save the planet” — from whom and from what? From Al Gore and the UN, from less rain and more rain, less floods and more floods, less storms and more storms?

Let the people, let the market, decide the kind of energy that will give them the least cost.

 

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

minimalgovernment@gmail.com

Crop damage from Typhoon Vongfong hits P1.56B

Crop damage caused by Typhoon Vongfong has reached P1.56 billion, affecting 45,430 farmers and fisherfolk, the Department of Agriculture (DA) said on Wednesday.

In a bulletin, the agency said production losses from the storm, locally named Ambo, had reached 69,935 metric tons (MT), covering 28,476 hectares of agricultural areas across six regions.

Among the affected regions were Central Luzon, Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon), Mimaropa (Mindoro, Marinduque, Romblon and Palawan), Bicol, Eastern Visayas and the Cordillera Administrative Region, it said.

High-value crops such as bananas, papayas, vegetables and other fruits were the hardest hit, accounting for 73% of total losses worth P1.13 billion.

Also damaged were rice, which accounted for 15% at P238.77 million, followed by corn at 8% (P126.03 million).

Damages in the fishery sector reached P41.06 million, while livestock losses hit P23.44 million. — Revin Mikhael D. Ochave

Can we still make plans?

By Tony Samson

EVEN a simple thing such as having a haircut after three months of hirsute abandon can be like checking an itinerary for Sagada. There are many variables to consider. When will the barber shops open? Those in the malls may wait for the partial opening of the whole complex. What about social distancing? How many chairs are available? Can you just walk in as before? Is an appointment necessary so there’s no waiting around (and spreading the virus) for the next available barber? Okay, you can skip the hot towel and the perfunctory patting down of the shoulders and neck and the scalp clawing to wake up nerve endings in a version of the complimentary massage.

The uncertainty even of the end date of the quarantine and the form it will take when it’s lifted in full is still hanging. Will there be checkpoints, temperature checks, and swabs (open your nostrils please), how much time does one allocate for the commute or getting from one point to another?

In the new normal, which many see as already here as the “now normal,” is it still possible to make plans? Is the usual structure of planning with its objective, key result areas, resources needed, and a timeline with accountabilities assigned… a thing of the past? Even previously routine plans and agreements get complicated.

Making appointments is an example. A run-of-the-mill lunch date poses problems, even for willing, even eager, participants. The choice of venue takes into account whether dine-in options are already available and what the seating arrangement will look like — can paired diners sit at one table together, facing each other or side by side? When can you take off the face mask? Only when biting into the burger? Where are we going for dessert?

Even scheduling business meetings, yes virtual ones, involves not just availability of a common time but also reliability of gadgets and transmission. (Turn off your video so we can hear you more clearly.) Since these meetings are for now mostly home based, the quality of the home space (kitchen or garage) figures into the equation. What about ambient noises? Let’s meet after the dog gets its snack. Otherwise, she can be a bitch… pardon the French.

Longer term plans like a two-week stay with relatives abroad or visiting an archaeological site are simply put off indefinitely. Travel restrictions here and the new normal on the other end need to be figured out. Too complicated. Let’s wait for the vaccine.

The chief feature of the new normal is social distancing. Try not to meet people face to face. This mantra mandates the use of technology to communicate without being in the same place at the same time or needing to be within smelling distance of each other. This approach is characterized as “low touch” (which must be differentiated from “touch low”). Physical proximity is not encouraged. An unintended benefit here is the lower incidence of sexual harassment in the workplace. Even the “double entendre” loses its bite in a chat group virtual meeting. What’s that you’re wearing, Dear?

With office workers spread out geographically in their homes, the informal and unplanned (or uncalendered) chance meeting for coffee to discuss the latest idea on direct selling is no longer possible. Aren’t great ideas hatched without an agenda around the water cooler in the snack room — yeah, why don’t you work out the numbers on that and let’s meet again over Zoom?

The new normal is not just about technology and a willingness to adapt to mobile apps, even for purchases and bill payments. The shift is a cultural one. The low-touch paradigm is associated with robots and artificial intelligence. It is combined with high tech. The algorithm knows your name and what kind of books you buy. The low touch/high tech is a butler that does not smirk when you book a room. It remembers your birthday but not how you plan to celebrate it.

Ours is a high-touch culture. We invent occasions and excuses to meet and have a drink or lunch. We need silences and jokes with each other to discuss lapsed franchises, the fate of second-hand cars, and who’s seeing whom. What’s the use of gossip when you can’t share it in a virtual meet? (Do we have a quorum, madame secretary?)

Can we still make plans for small talk?

 

Tony Samson is Chairman and CEO, TOUCH xda

ar.samson@yahoo.com

#COVID-19 Regional Updates (05/20/20)

BI told to track down foreigner patients of illegal makeshift COVID-19 hospital inside Clark

CDC

JUSTICE Secretary Menardo I. Guevarra directed the Bureau of Immigration to coordinate with the police and Pampanga provincial government to track down foreigners who were treated in an unathorized medical facility inside the Clark Freeport Zone. Mr. Guevarra, in a text message, said the patients suspected to have coronavirus disease 2019 (COVID-19), including Chinese and other nationals, “could still be dangerously roaming around.” He added, “If found, they will be brought to legitimate hospitals or quarantine facilities for proper treatment, without prejudice to charging those responsible for this illegal operation.” Freeport manager Clark Development Corp. (CDC), in a statement, said a joint team from the police’s Criminal Investigation and Detection Group, Food and Drug Administration, and CDC raided on Tuesday a villa at the Fontana Leisure Park that was turned into a makeshift medical facility for Chinese patients. Clark officials have ordered the closure and lockdown of Fontana. “This illegal activity not only violates the law, but also poses danger to individuals who potentially need medical treatment for the deadly disease. CDC does not and will never tolerate this inside the Clark Freeport,” it said. Arrested during the raid were Ling Hu, 45, the alleged owner, and Seung-Hyun Lee, the alleged pharmacist. CDC said it will also hold accountable the management of Fontana “for allowing this to happen within their property.” — Vann Marlo M. Villegas

Religious gatherings still banned in Bangsamoro

RELIGIOUS gatherings in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) are still banned, the local task force against coronavirus disease 2019 (COVID-19) announced on Tuesday. On the same day, President Rodrigo R. Duterte declared May 25 a national holiday for the observance of Eid’l Fitr, the festival marking the end of the month-long Ramadan. “Religious gatherings in the BARMM are temporarily suspended until further notice,” the Bangsamoro Inter-Agency Task Force on COVID-19 said in the updated guidelines for the relaxed quarantine rules for the region. “The Bangsamoro Mufti, thru the Regional Darul Ifta, and other religious authorities shall, from time to time, issue guidelines on the conduct of religious practices and ceremonies, particularly those involving mass gatherings and close contacts,” the task force said.

SMALL GATHERINGS
Small gatherings of not more than 10 people, however, are allowed with the observance of health safety protocols such as physical distancing and wearing of face masks. The national guidelines for areas under the less restricted general community quarantine (GCQ) policy discourages communal religious activities, but allows gatherings of up to 10 people. The holiday declaration for the Eid’l Fitr also provides a reminder on public health measures. “The entire Filipino nation should have the full opportunity to join their Muslim brothers and sisters in peace and harmony in the observance and celebration of Eid’l Fitr, subject to existing community quarantine and social distancing measures,” Presidential Proclamation No. 944 reads. In the neighboring region of Zamboanga Peninsula, the Ulama Council of Zamboanga Peninsula and Sabiel Al Muhtadeen Foundation also called for maintaining the suspension of religious gatherings in all mosques in Zamboanga City in consideration of the continued COVID-19 threat. In a joint statement released May 17, the groups said, “In additional the upcoming mass prayer for Salatul Eid will also be cancelled whether it be conducted in the masjid (mosque) or in an open field.” — MSJ

COVID or not, strong brands will survive says post-ECQ consumer sentiment

By Karen V. De Asis

SOCIAL MEDIA and Viber groups are awash with business scenarios triggered by paranoia and propagated by opinion makers, futurists, and trend watchers working mostly on historical data surrounding previous pandemics, among them the Spanish flu, cholera, the bubonic plague, etc.

The post-COVID-19 predictions are nearly homogenous, raising a battle cry of a new normal. The new world order is almost purely reliant on the internet of things and artificial intelligence, technology-enabled supply chains and delivery at your doorstep, work from home, online banking, a national identity card, and digital currency.

Deluged by all these, not to mention counsel from celebrated and cult leader-like opinion makers, many businessmen are in a frenzy, seeking stimulus and ready for blood-letting, forgetting that this pandemic, like any other crisis faced by a long time businessman, will pass because there is the Consumer, the ultimate reason why businesses survive or die.

Do not forget, in the Philippines the percentage of private consumption to GDP is 73.8%, way beyond the global average of 63.64%. Filipinos have always been known to be bullish consumer spenders globally.

A study by MKS Marketing Consulting, a brand and media consulting agency, describes the shopping and buying sentiment of Filipinos in a post-ECQ (enhanced community quarantine) scenario. MKS, a long time member of MORES, a premier association of professional market researchers, harvested data from a random-sample survey between April 10 to 30 among 336 respondents belonging to multiple generations and economic classes in the NCR, Central and South Luzon. The data sample has a minimal 5% margin of error and 95% confidence. Following are some of the insights.

Filipino consumers during lockdown have resorted to online streaming and video access, watching the news, doing household chores, praying and attending online mass, as well as watching regular TV or cable.

Topping the Filipino consumers’ activities while locked down are: online TV/streaming and online video access — i.e. Netflix, YouTube, KissAsian, Viu, iflix (78.5%), followed by use of broadcast media to listen and watch the news (73.90%); doing household chores like cleaning and washing dishes (72.70%); praying, meditating, and listening to online mass (67%); and watching regular television or cable (66.7%). Other activities include working from home (59.70%), posting on social media and Viber (59.10%), exercising at home (56.70%), cooking or baking (50%), eating multiple times a day (47.60%), doing out-of-home shopping (45.50%), listening to Spotify (39.70%), and, hanging out with friends online (38.70%). Trailing behind is online shopping and food delivery (35.80%), feeding and taking care of pets (30%), sleeping extensively for more than eight hours (27.30%), online education (23.90%), engaging in casual mobile gaming (20.90%), listening to radio music (19.40%), reading extensively including online press (18.50%), doing gardening (15.5%), doing arts and crafts (14.5%), jogging or walking out of the home (11.80%), engaging in multiplayer online gaming (7.9%),; and nursing a relative at home (2.4%).

Going to church tops the activity most Filipino consumers will engage in once the lockdown is lifted.

Church and faith services (80%), going to work (71.20%), eating at a favorite restaurant (63.60%), going to a hair salon (61.20%), paying bills (58.20%), going to the mall (56.10%), and going to a bank (50%) are among the activities Filipino consumers will actively engage in within the first two weeks from lifting of the ECQ.

Consumers will most likely return to their normal activities one day to two weeks after the ECQ is lifted.

Nearly 30% of Filipino consumers are likely to go back to their normal activities a day after the ECQ is lifted while 28% should resume their activities one week after. Another 18% are taking things more slowly and should resume normal activities two weeks later. Still some are more cautious and will resume normal activities only after three months, as soon as a vaccine has been developed, or when public transport is more regular and normal.

Among the categories likely to be consumed/indulged in within two weeks after the lifting of the lockdown are spas, healthy food, appliances, and eyewear/eye care essentials.

Basic necessities, and personal hygiene and pharmaceutical products remain the top three categories that will be heavily consumed even after the lifting of the ECQ.

However, two weeks after its lifting, spa and massage services come up on top, along with organic and healthy food, fitness supplements, hair care essentials, home appliances, petroleum, travel, eye care essentials, and cosmetics. Automobiles are far down the list of categories to be patronized, along with pest and infection control services, cigarettes, and nutraceuticals.

Products and services that invested in branding in pre-COVID-19 days are actually the same brands that will be remembered during post-quarantine days.

Products and services that made investments in branding through the years will be the most recalled in their categories and likely to be patronized post-ECQ. Among these are Green Cross rubbing alcohol (rubbing alcohol and disinfectant); EO-Executive Optical (optical store); Nescafe and Kopiko (instant coffee); Monterey (fresh meat); Mac and Maybelline (cosmetics); Samsung, LG, Sony, Panasonic, Carrier, Everest (major home appliances); and Skyflakes (biscuit), among others.

Why do brands that were strong pre-COVID-19 come out stronger post-ECQ and are more resilient?

Post-ECQ, consumers will be willing to pay a premium for their top-of-mind brand. Strong brands are stamped with the guarantee of their familiar memorable name, brand equity message, and product quality.

Business owners must not forget that businesses and their products and services exist for consumers. A product or service must have strong brand equity to remain in the memory of consumers post-ECQ.

Ironically, a strong brand must have already been built during the pre-COVID-19 period. In a post-ECQ world, simple name recall or a pure media flooding noisy strategy, or celebrity endorsements may likely not work. Only 10% of potential viewers are expected to be receptive to celebrity endorsement themes post-COVID-19.

Consumers, more than ever, will resort to brands they have tried, have tested, and are engaged in because of economic pressure, tightened money belts, and, for some, a desire to feel like they are in a good mental state after a personal disruption and crisis. When there is a limited source of income and money, consumers are likely to keep money close to their chests and will not experiment on untried and new non-essential products and services. So with wealthier buyers who desire to feel good and may opt to buy higher-priced options across the product range of their favored brand.

E-commerce and the digital economy, powered by logistics and a good supply chain, will become a stronger distribution option in the post-ECQ world as new and existing consumers would have become savvier in its usage during the lockdown. However, consumers will resort to this option for familiar, regularly used brands, and mainly essential and commodity items like fresh meat and produce, commodity pantry supplies, etc. When using a website or social media, there must be familiarity with the brand or, in its absence, good customer reviews.

Post-ECQ, experimenting with new products and services will decrease as money becomes tight, consumers are more cautious, and there remains an air of uncertainty.

Pre-COVID-19 or post-pandemic, the correct way of branding products and services remains an important business strategy and must be sustained.

Pulling in consumers to fuel business and branding, pandemic or not, almost always needs strong leadership, often by the owners themselves, behind brands. These leaders do not cave in when faced with competition, and economic, pandemic and other sorts of threats. They rise above challenges, are quick to make decisions, and recognize opportunities everywhere.

Business owners must realize that the survival of their brand and business is dependent on the Consumer alone.

 

Karen V. De Asis is the Chief Brand Strategist of MKS Marketing Consulting and is an alumna of Oxford University’s SAID Graduate School of Business Strategic Leadership Executive Education and the Stanford Graduate School of Business Strategic Marketing Executive Education. De Asis is also an alumna of the Ateneo Graduate School of Business and is a Ph.D graduate of the De La Salle Graduate School, Taft Campus. She is also a member of the Global Strategic Consulting Network

karendeasis42@yahoo.com

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