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Global race against time

By Argie C. Aguja
Senior Features Writer, The Philippine STAR

Coronavirus pandemic drives worldwide scramble for elusive cure

As billions of lives hang in a balance amid the coronavirus disease 2019 (COVID-19) pandemic, pharmaceutical companies, research organizations and major biotech industry players are all racing against time to develop a vaccine. The World Health Organization (WHO) spearheaded the Solidarity Trial, a multinational study comparing the safety and effectiveness of four different drugs or drug combinations against COVID-19.

According to Live Science magazine, various COVID-19 treatments or vaccines are being probed in more than 200 clinical trials worldwide, each study carefully analyzing if any of the drugs could slow disease progression, improve survival, or kill the virus outright. These new drugs range from flu medicines to repurposed Ebola drugs, even malaria cures. Below are some treatments that doctors hope will finally cure COVID-19.

TWIN ANTI-MALARIA DRUGS

Chloroquine and Hydroxychloroquine was initially approved by the US Food and Drug Administration (FDA) as treatment for malaria, lupus and rheumatoid arthritis. However, preliminary research revealed that both drugs can disrupt the ability of coronavirus to enter and replicate in human cells. While doctors in China, South Korea, France and the U.S. are now giving the drug to some patients with COVID-19, results have been inconclusive at best. In France, a small number of patients with COVID-19 received either Hydroxychloroquine alone or Hydroxychloroquine in combination with an antibiotic called azithromycin, resulting in noticeable reduction of viral particles in recipients compared to untreated individuals. 

Anti-malaria drug Hydroxychloroquine (photo from techstartups.com)

FLU MEDICINE FROM JAPAN

Japanese pharma company Fujifilm Toyama Chemical has shown progress in its own antiviral drug called Favipiravir (Avigan). Originally intended to treat influenza, it has shown promising results in treating mild to moderate COVID-19 cases. In a test involving 340 patients in Wuhan and Shenzen, the drug managed to shorten the duration of the virus as well as improve lung conditions (as seen in X-rays) in tested patients. However, further tests and studies need to be carried out to conclusive evidence of Avigan’s supposed benefits.

Japanese anti-flu drug Favipiravir or Avigan (photo from newsweek.com)

REPURPOSED EBOLA TREATMENT

Originally developed by Gilead Sciences as a treatment for Ebola virus disease (EVD), the drug Remdesivir is now being repurposed to see if it can effectively treat COVID-19. In lab studies, the drug has shown initial effectivity in inhibiting the growth of severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS), both coronaviruses closely related to COVID-19. When 53 severe COVID-19 patients received Remdesivir, more than two-thirds of the patients showed significant improvement. Yet reported side effects that could potentially be tied to the drug include rectal bleeding, elevated liver enzymes, vomiting, and nausea.

Remdesivir (photo from europeanpharmaceuticalreview.com)

PROMISING ORAL ANTIVIRAL

In a report published by Science Translational Medicine, an oral drug called EIDD-2801  showed efficiency in blocking the novel coronavirus during test-tube experiments with human lung and airway cells. EIDD-2801 introduces genetic mutations into the virus’ RNA, rendering it unable to infect healthy cells. This drug could be swallowed as a pill. Florida-based Ridgeback Biotherapeutics has licensed the drug and was just granted permission by the US FDA to start human trials of the drug over the next few months. 

HIV DRUG COMBO

HIV antiviral drug Kaletra — a combination of Lopinavir and Ritonavir — was an early candidate as COVID-19 cure. But hopes were tempered after a clinical trial produced less than stellar results. Around 199 patients participated in the trial, with half receiving Kaletra and half with placebo. Yet researchers were unable to determine a proven benefit that can be directly attributed to Kaletra. More studies are still scheduled.

BLOOD PRESSURE DRUG

The University of Minnesota is in the middle of two clinical trials of the generic blood-pressure medication Losartan, particularly its probability of becoming a treatment to prevent multi-organ failure in patients with severe COVID-19 pneumonia. Losartan works by blocking certain receptors linked to rising blood pressures. And since COVID-19 binds to the angiotensin-converting enzyme 2 (ACE2) receptor, it is hoped that Losartan might block those receptors and prevent the coronavirus from infecting cells. 

NEXT BEST THING: PLASMA THERAPY

The blood of COVID-19 survivors is a prized commodity because it contains plasma oozing with special antibodies capable of targeting coronavirus and preventing it from infecting healthy cells. In a process named convalescent plasma (CP) therapy, plasma from COVID-19 survivors are extracted and transfused to save severely ill patients. A donor who can deliver around 400 ml of blood plasma can save at least two critically ill patients. At the Philippine General Hospital, three COVID-19 survivors – one seafarer and two nurses – were the first donors to come forward and participate in the therapy. PGH invites recovered patients to donate their life-saving blood plasma by calling 0917-805-3207 for inquiries and other arrangements.

As the number of new infections and deaths from COVID-19 continue to climb, the international community pools its manpower and resources in a mad scramble for an antidote. For a world locked-down by the pandemic, only a proven cure can pave the path to freedom — however elusive that dream may be.

Life in the Time of Corona

Life in the Time of Corona Part 1

Life in the Time of Corona Part 2

In this latest Dentsu Philippines Media Bulletin entitled “Life in the Time of Corona”, a primer on issues surrounding coronavirus disease 2019 (COVID-19), it discussed the impact of the coronavirus pandemic in how the Philippines see the future; how we live and consume media; how advertisers spend; and what should be done now to adapt to changes.

Duterte okays massive rapid testing to restart economy

In an April 13 meeting held at the Malacanañg Palace, Presidential Adviser for Entrepreneurship and Go Negosyo founder Joey Concepcion highlighted key steps for reviving the Philippine economy in a safe, secure, and sustainable manner. One of these is the private sector-led initiative of massive rapid testing in Metro Manila and other provinces.

This initiative includes the massive screening of employees, at the company’s own expense, as well as testing of the residents of nearby barangays where they operate. The screening of residents will be done on a voluntary basis.

“What is more important: Life or money?” said Concepcion during the meeting. “There is no doubt that life is more important. However, without money, how will people eat? How will people buy medicines? How will MSMEs recover? How do we bring back the economy in a sustainable way and still make it safe?”

President Rodrigo Duterte recently approved the immediate procurement of much needed test kits from trusted suppliers. These are the antibody tests and the rt-PCR kits which will be used by the government for public use.

The antibody tests will be used to detect the presence of IgG and IgM antibodies, which can help identify those who have built an immunity to the virus after recovering from it. The presence of the IgM immunoglobulin is indicative of active disease, while the presence of the IgG immunoglobulin is indicative of recovery and immunity.

For the initial order, two million IgM IgG antibody kits will be purchased at a cost that has yet to be determined. A budget of P3.2 billion will be used for 40,000 rt-PCR kits, good for 900,000 confirmatory tests.

Another recommendation put forth by Joey Concepcion was for the government to set up a system for returning overseas Filipino workers and balikbayans (or Filipinos visiting or returning to the Philippines after a period of living in another country). They are recommended to undergo proper testing and screening upon arrival.

As of today, the conglomerates, businesses, and major business organizations that have attended the meetings convened by the Office of the Presidential Adviser for Entrepreneurship have confirmed to take part in this initiative.

ZEN Rooms offers free lodging to frontliners during COVID-19 crisis

Despite the Luzon-wide lockdown that put tourism at a standstill, the spirit of hospitality continues among the industry’s more innovative players. Numerous businesses have stepped up to show their support to the medical frontliners who have had to bear the brunt of the pandemic. ZEN Rooms, the leading mid-range hotel franchise in the region, has likewise been supporting this fight by providing safe and convenient accommodation for medical frontliners.

ZEN reached out to the Philippine General Hospital (PGH), one of the designated COVID-19 referral centers, soon after the lockdown to offer their hotel in Quiapo as free lodging for medical frontliners. The property is located 10 minutes away from the hospital, and has accommodated doctors and nurses from its Emergency Department.

“ZEN understands the pressure and stress these medical frontliners feel as they battle against COVID-19,” said ZEN co-founder Nathan Boublil. “We want to be of service to them by giving them comfortable and safe accommodation where they can rest and recover, or isolate from their families.”

This partnership between ZEN and PGH is set to last until the end of the month, and may be extended depending on the situation in the coming weeks. Since the start of the crisis, ZEN has been in touch with the government, non-profit organizations, and hospitals to help accommodate frontliners and those in need of temporary rooms across Luzon. ZEN is currently expanding this initiative to other parts of Metro Manila.

A life-saving collaboration

ZEN is also collaborating with the Philippine Red Cross, the premier humanitarian organization in the country, and its payment partner, GCash.

Launched last April 1, the Red Cross Donation Drive was initiated to provide aid for Red Cross volunteers and frontliners who have gone out of their way to help those in need despite the dangers of the present situation. The funds gathered from this donation drive will be allocated towards hygiene promotion sessions, providing water and handwashing facilities to hospitals and other areas, giving food and financial support to the less fortunate, and offering psychological aid to those who need it.

The donation process can be found on ZEN’s website, and all funds collected will go directly into the Red Cross GCash e-wallet. ZEN will furthermore be providing free accommodation for Red Cross volunteers who are working to supply food, distribute personal hygiene items, and give medical assistance to communities across the capital.

Mediatech startup Kumu raises $5-M in Series A

Kumu Holdings Pte. Ltd., the firm that owns the technology behind Philippine live streaming app Kumu, has announced that it has raised approximately $5-M in a Series A funding round to roll out new features and scale up its operations.

The funding round comes at a time when quarantines and social distancing measures are keeping people at home at an unprecedented scale, driving increased usage of apps in the media and entertainment categories. In the past month, Kumu has rolled out new initiatives to help groups such as churches and industry associations move their events online, and organized some of the Philippines’ top celebrities to raise funds for families affected by the coronavirus pandemic.

The Series A was led by Openspace Ventures, one of the largest venture capital (VC) firms in Singapore known for leading the Series A round of Indonesian unicorn Go-Jek in 2015. This marks Openspace’s second portfolio company from the Philippines after it invested in fashion e-commerce platform BeautyMNL.

“As the rise of global interactive platforms such as TikTok and live streaming apps gain acceptance with the younger generation, there remains a significant gap for local content and hyper-local networks,” said Co-Founder and Partner at Openspace Ventures Hian Goh. “The Philippine [market], with 103 million citizens and a young, internet-savvy population, has found Kumu to be a compelling addition to the media landscape, and the Filipino leadership of Roland and his co-founders have created a unique network which we think will dominate the media landscape in the country in the coming years.”

Scaling up

Kumu, which recently reached three million registered users as the fastest growing social app in the country, will be using the new capital to scale up its current operations, which has enjoyed unprecedented growth in recent months.

Currently, Kumu houses a selection of over 25,000 livestream broadcasts each day, commanding almost one hour of average daily usage for a mostly Gen Z and Millennial audience. The startup is also experiencing massive growth in revenue. The Kumu app was listed as the #1 top grossing social app in the Philippines Google Play Store, #10 in Canada, and has ranked among the 50 top grossing social apps in twelve other countries including the United States. Moreover, over 100 Kumu livestreamers now earn at least P20,000 each month from streaming original content, as it irons out the establishment of its own content creator school to encourage more users to build sustainable livelihoods on the platform.

“We are betting on the exponential growth of the Philippines’ digital GDP while optimizing a user experience that is razor-sharp focused on Gen Z’s and millennials’ attention spans. Gamifying authentic connections has been one of the most enjoyable developments on the app,” said Kumu co-founder Roland Ros.

In addition to scaling up operations, Kumu will also be using the freshly raised capital to roll out new features for its app. Among these features is a hybrid AI/community-driven live commerce platform, the first of its kind for a Filipino company. This will allow fans to purchase products while watching their favorite livestreamers, giving content creators more opportunities to earn from their streams.

“Our livestream e-commerce pilot generated almost 300 product purchases in a 10-minute period,” said Ros. “We’re excited to see how our Kumu Livestreamers use this platform to better engage with their followers. The more we empower our creators to drive the digital influence of e-commerce in the Philippines, the more we empower consumers, fintech players, and logistics companies to participate in the digital marketplace of our motherland.”

Since its inception, Kumu has also strengthened its partnerships with other startup trailblazers and established brands including Angkas, Shopback, GCash, Piattos, and FoodPanda. These partners have likewise enjoyed advertising opportunities with their respective tie-ups with the rising app as well as better digital visibility in Kumu’s creative and unique campaigns.

Strategic investors

Other participants in the funding round included Kickstart Ventures, the corporate VC firm of Globe Telecom also responsible for the Ayala Group’s tech investments, and ABS-CBN, the country’s largest media and entertainment company. They were also joined by Gobi Core Philippine Fund, a local partnership with Gobi Partners, an international investment firm which also manages the Alibaba Hong Kong Entrepreneurs Fund.

“Filipinos are spending more and more time online to consume content and to find and connect with like-minded people, and Kumu has created a path for Pinoys to do these things in a way that uniquely captures the Pinoy spirit of community,” said Kickstart Ventures’ VP for Investments Joan Cybil Yao. “With a focus on positivity, safety, and acceptance, Kumu enables its users, content creators, and businesses to interact with one another in authentic and engaging ways.”

ABS-CBN Corporation’s Head of Business Development Luis Paolo M. Pineda likewise expressed his elation regarding Kumu’s Series A round completion. “We at ABS-CBN have witnessed the progressive evolution of the media industry, and are impressed with the innovations that Kumu has pioneered. With this app, we envision a new era for our shows, game shows, and ABS-CBN talents, wherein fresh ideas and live interaction can serve our audience best.”

Pineda further expressed his optimism on how Kumu can help push a new generation of content creators who can monetize their works and establish direct relationships with their audiences. “Working with Roland, Rexy and the entire Kumu team has been very exciting and we believe it will continue to even be more exciting in the future.”

Meanwhile, Gokongwei family-owned Summit Media and Philippine-based VC Foxmont Capital Partners followed on from a previous $1.2-M seed round of funding. Summit president and CEO Lisa Gokongwei-Cheng shared bright prospects with her company’s partnership with Kumu which has been established since 2018. “As a media company, it is our purpose to be on the pulse of what technologies will revolutionise our landscape. Our investments from print to digital and now mobile apps, gives us an opportunity for our brands to deliver unique content through live-streaming, as well as discover new content creators beginning their careers,” she said while hinting at more potential opportunities for Summit in turn. “With Kumu, we foresee a new way for brands to also interact with our platforms in a dynamic, conversational environment.”

IMF growth projections scaled down as pandemic woes continue

THE International Monetary Fund (IMF) has downgraded its growth forecast for the Philippines this year to 0.6% as the coronavirus disease 2019 (COVID-19) pandemic wreaks havoc on the global economy. Read the full story.

IMF growth projections scaled down as pandemic woes continue

IMF slashes PHL growth forecast

THE International Monetary Fund (IMF) has downgraded its growth forecast for the Philippines this year to 0.6% as the global economy is likely to experience “the worst recession since the Great Depression” due to the coronavirus disease 2019 (COVID-19) pandemic.

IMF growth projections scaled down as pandemic woes continue

The new forecast published Tuesday in its World Economic Outlook report titled “Chapter 1: The Great Lockdown” is significantly lower than its estimate of 6.3% given last year, long before the COVID-19 outbreak.

Yongzheng Yang, IMF resident representative to the Philippines, cited supply disruptions as well as weaker demand from the country’s major trading partners due to the outbreak as reasons for the lower forecast.

“Tighter global financial conditions, weaker public confidence, and lower remittances are also expected to weigh on private consumption and investment,” Mr. Yang said in an e-mail.

“The negative impacts of COVID-19 are expected to be partially offset by policy support. The virus outbreak is assumed to peak in the second quarter of 2020, leading to a gradual recovery in the second half of the year,” he said.

IMF’s latest forecast compares with the 6.5-7.5% gross domestic product (GDP) growth target of the government for the year as well as the 5.9% expansion logged in 2019.

This is, however, better than the flat growth or 1% contraction expected by Finance Secretary Carlos G. Dominguez III. Meanwhile, the National Economic and Development Authority last month gave a -0.6% to 4.3% GDP growth forecast for this year.

This also follows the downgraded 3% growth outlook (from 6.1%) of the World Bank and the 2% (from 6.2%) estimate of the Asian Development Bank, as well as the 4.5% (from 6.2%) forecast by the ASEAN-3 Macroeconomic Research Office.

The 0.6% GDP growth forecast for the country is better than the IMF’s projections for Thailand (-6.7%), Malaysia (-1.7%) and Indonesia (0.5%) but lower than the 2.7% growth expected in Vietnam this year.

Together, the five ASEAN economies are expected to shrink by 0.6% in 2020.

“The output loss associated with this health emergency and related containment measures likely dwarfs the losses that triggered the global financial crisis,” IMF Chief Economist Gita Gopinath said in the report.

REBOUND IN 2021
Meanwhile, the IMF sees Philippine economic growth rebounding to 7.6% in 2021 after “a low 2020 base,” Mr. Yang said.

“Stemming the spread of COVID-19 is of utmost importance. Policies at the moment should focus on both protecting public health and putting people back to work. Getting the virus under control is, if anything, a prerequisite to saving livelihoods,” he said.

“By acting forcefully now with strong actions to stop the spread of infections, complemented by strong economic policy actions to support people and businesses, the crisis can be ended sooner with less human and economic cost,” Mr. Yang added.

Due to “prudent macroeconomic management,” he said the country has enough policy buffers that will allow it to respond to the economic impact of the virus outbreak.

Mr. Yang noted the government has been putting its policy space to good use via its fiscal and monetary responses to the COVID-19’s impact.

“The country has ample room for additional policy stimulus, if needed, given the relatively low level of public debt and well anchored inflation expectations,” he said.

The Bangko Sentral ng Pilipinas (BSP) has announced several stimulus measures to support the economy amid an expected slowdown due to the virus.

Among these measures is a 50-basis-point (bp) cut in key interest rates in March and a 200-bp reduction in big banks’ reserve requirement ratio earlier this month to help boost economic activity.

BSP Governor Benjamin E. Diokno on Sunday also signaled a “deeper cut” in benchmark interest rates to support the economy amid an expected slowdown due to the COVID-19 pandemic and ensure a “soft landing” once the crisis passes.

The policy-setting Monetary Board has cut rates by a total of 150 bps since 2019, almost completely unwinding the 175 bps in hikes it implemented in 2018 amid multi-year high inflation.

The BSP Monetary Board will meet to review its policy settings on May 21.

On the fiscal side, economic managers have identified P1.71 trillion in social amelioration measures to help mitigate the impact of the pandemic and support the economy’s gradual recovery. This is equivalent to about 6.3% of GDP.

Luzon has been under enhanced community quarantine since mid-March, causing major business disruptions and hitting about 70% of the country’s GDP. The lockdown, originally scheduled to end on April 12, has been extended until April 30 with the government noting the outbreak has yet to peak.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the virus already took a toll on the economy even before the Luzon-wide quarantine started.

“Even before the lockdown, tourism, travel, transportation, and other related industries already suffered reduction in business/economic activities amid the COVID-19 outbreak and also amid travel advisories and suffered more during the lockdown that could also drag GDP growth,” he said in an e-mail. — L.W.T. Noble

Over 3 million workers to get wage subsidy from gov’t

THE government is allocating P51 billion for a wage subsidy program that would benefit 3.4 million Filipinos employed by small businesses affected by the lockdown in Luzon and other parts of the country.

President Rodrigo R. Duterte on Monday evening approved the Small Business Wage Subsidy (SBWS) program wherein each eligible worker will receive P5,000 to P8,000, according to Cabinet Secretary Karlo Alexei B. Nograles.

Finance Undersecretary Karl Kendrick Chua said in a televised briefing on Monday evening the SBWS program will prioritize 2.6 million whose employers have complied with Bureau of Internal Revenue (BIR) and Social Security System (SSS) regulations as they can easily be tracked and the claims automatically processed.

Mr. Chua said about 800,000 who work for noncompliant firms will also receive wage subsidies.

Of the 1.6 million small businesses in the country, 436,0000 have halted operations since the enhanced community quarantine (ECQ) was implemented in mid-March, while one million establishments continued to operate with a skeletal force, Mr. Chua said.

About 117,000 businesses, such as food service, supermarkets and logistics, were allowed to operate during the ECQ, which has been extended to end-April.

Small businesses are defined as those not belonging to the top 2,745 large taxpayers of the BIR.

“Apart from the P205 billion that the government is giving to the informal sector, or those with low-income, we are giving P51 billion to the employees of small businesses. We will improve upon the social amelioration program because this plan to give the subsidy is automated, not manual, so (it will be) faster,” Mr. Chua said.

The wage subsidy will cover two months, with the first tranche to be distributed from May 1-15 and the second tranche will be given from May 16-31.

Mr. Nograles said payouts will be given through the SSS Unified Multi-purpose ID card enrolled as an ATM account; bank accounts; quick cards, e-wallet system such as Paymaya and remittance transfers.

To avail himself of the program, Mr. Nograles said the worker should have been employed by the company as of March 1, and has not received a salary for the month. All eligible workers will be covered except those that were on leave and those that already availed themselves of the unemployment benefits from the SSS.

In addition, he said employees should not have been retrenched or resigned.

“We want to retain the employment status of the employee,” Mr. Nograles said.

Beneficiaries of the COVID-19 Adjustment Measures Program (CAMP) of the Labor department who have received P5,000 will only be eligible for a one-month wage subsidy.

Other details, mechanics and eligibility criteria under the SBWS program will be announced this week, according to the Department of Finance (DoF).

The DoF is also considering a proposal to grant small businesses affected by the pandemic a credit guarantee “to provide them easier access to bank financing.”

STIMULUS STRATEGY
Meanwhile, Albay Rep. and House and Ways and Means committee chairman Jose Maria Clemente S. Salceda proposed a Philippine National Stimulus Strategy, which he described as a “structural adjustment plan to rescue critically needed industries and keep others operating” amid the pandemic.

The strategy, which he presented during a House committee virtual hearing on Tuesday, involves a negative interest loans (NIL) plan; credit refinancing and mediation service (CRMS) for micro, small and medium enterprises; creation of the National Emergency Investment Corp.; and enhancement of the “Build, Build, Build” program.

The NIL plan is a P350-billion loan package that will grant loans at negative interest, in exchange for worker retention.

Mr. Salceda proposed that the maximum loanable amount will be 50% of the company’s direct labor costs, payable for three to five years, with the corresponding interest rates as follows: -9% for three years, -7% for four years, and -5% for five years.

To ensure that eligible MSMEs will have access to negative interest loans, Mr. Salceda suggested that the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) open an SME Safeguard Facility dedicated exclusively to these enterprises.

Meanwhile, the CRMS seeks to ensure that MSMEs can fulfill obligations under more favorable terms of credit.

“With CRMS, the Small Business Corporation can provide an MSME Credit Mediation and Restructuring Service to assist MSMEs in negotiating more favorable credit terms with banks, lending institutions, and financial intermediaries, provide technical advice and assistance with credit mediation and offer loan guarantees and direct loans with favorable terms for refinancing the obligations of MSMEs,” Mr. Salceda said.

Mr. Salceda also proposed to create the NEIC, similar to the Power Sector Assets and Liabilities Management Corp. and the Central Bank – Board of Liquidators (CB-BOL) to act as a consolidator of private sector debts, pay these debts in exchange for equity, and yield returns for the government.

He also proposed an “enhanced” “Build, Build, Build” program by granting special powers to expedite its implementation.

Meanwhile, Marikina Rep. Stella Luz A. Quimbo said during the virtual hearing that the government needs to spend a total of P700 billion to address the potential loss in the country’s gross domestic product (GDP) due to the coronavirus. — Beatrice M. Laforga and Genshen L. Epedido

PHL to continue paying debt despite crisis

THE Philippines will not consider suspending interest payments on its debt obligations despite the rising costs of keeping the economy afloat amid the coronavirus disease 2019 (COVID-19) pandemic, Finance Secretary Carlos G. Dominguez III said on Tuesday.

“Debt moratorium has not crossed our mind. It was never entertained or will ever be a part of our crisis response measures,” Mr. Dominguez said in a statement.

“[The country] cannot wish away our obligations at this critical time when the reliability of our word secures our economy’s capacity to bounce back once the COVID-19 pandemic is over.”

He said the country still has “more favorable” options to fund its emergency response against COVID-19 and recovery programs, turning down a senator’s suggestion that the country should impose a moratorium on its debt obligations and instead, use the allotted funds for the virus response.

Senator Maria Imelda Josefa R. Marcos earlier said the government should consider suspending its debt interest payments, and use the P451 billion allocation as additional cash aid.

Under the 2020 national budget, the government has a total debt service bill of P1.033 trillion. This includes P582.088 billion for principal amortization and P450.964 billion for interest payments.

The government has so far mobilized P1.17 trillion worth of fiscal and monetary measures to fight the pandemic and provide relief to the hardest hit sectors of society. This includes a P205-billion emergency subsidy program for 18 million low-income households suffering amid the Luzon-wide lockdown. — B.M.Laforga

PEZA expects drop in investments amid pandemic

By Jenina P. Ibañez
Reporter

THE Philippine Economic Zone Authority (PEZA) expects investments to drop this year due to the coronavirus pandemic.

“Definitely our investment projections will fall,” PEZA Director-General Charito B. Plaza said in a mobile message.

Ms. Plaza said PEZA is still recalculating its projections, but added that exporters have become vulnerable as the pandemic affects production capability, supply chain and worker availability.

PEZA earlier projected a 5-10% growth in foreign investment pledges in 2020. In 2019, it recorded a 16% decline to P117.54 billion as domestic and foreign investors face tax reform uncertainties. Of the full-year total, investments registered by foreigners slumped 28% to P49.25 billion.

A “rapid deterioration” in global investment flows is anticipated this year, the United Nations Conference on Trade and Development (UNCTAD) said in a report released late March amid the pandemic.

UNCTAD said foreign direct investment (FDI) flows are projected to decline by 30-40% this year, from the earlier forecast of a 5-15% drop. It said the earlier assessment was based on February data, and on expectations that the primary impact would be on East Asia, with some effect on other regions through global supply networks.

“Now, the rapid worldwide spread of the pandemic and the implementation of mitigation and lockdown measures across much of the world have made a far larger demand shock and supply distribution inevitable and the consensus is that most if not all major economies will experience a deep recession,” UNCTAD said.

It said multinational enterprises have warned of pandemic-caused global demand shocks in addition to earlier concerns on supply chain disruptions.

The top 5,000 multinational enterprises, which account for a significant share of global FDI, reported 2020 earnings revisions of 30%, with the energy and basic materials, airlines, automotive industries seeing the biggest impact.

Economists are now uncertain if the Philippines would see some redirected FDI flows from other countries that have been more badly affected by the coronavirus disease 2019 (COVID-19).

“The Philippines enjoying increasing trade redirections may be difficult to say at this point. Trade flows lately have been highly restricted around the region, and this is highly dependent on when the pandemic and infections eventually wind down,” UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

He said FDI inflows will take a “significant” hit in 2020.

FDI net inflows to the Philippines fell 23% to $7.647 billion last year. The central bank initially set an $8.8-billion target this year.

ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa in an e-mail said foreign investors will be shying away from investments anywhere, including the Philippines, given the “impending economic gloom due to COVID-19.”

But he also said the Philippines would likely be least affected by the crisis as other economies are expected to fall into deep recessions.

“However, the Philippines has generally lagged our peers in FDI flows mainly due to lower infrastructure development. So we’ll possibly see an early surge in FDI to the Philippines but we’ll have to improve our infrastructure in the very near term to keep them coming,” Mr. Mapa said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said global FDI flows will decline in response to slower demand and less business activity due to the lockdowns, but FDI redirection to the country is still possible.

“Diversification of FDIs to different countries in ASEAN/Asia, such as the Philippines, which has a relatively large consumer market…by some global/multinational companies to better hedge their global supply chains and distribution channels could still continue as part of contingency and business continuity plans,” he said in an e-mail.

The continuity plans, he said, are responses to better deal with the lingering effects of the US-China trade war, the adverse effects of the COVID-19 outbreak, as well as other potential geopolitical, disaster, and other unforeseen risks in the future.

Mr. Ricafort said sharp reduction in interest rates, cuts in reserve requirement ratios, infusion of liquidity by central banks, and lower borrowing costs present opportunities for multinationals to invest in different parts of the world.

“Borrowing and other costs are relatively lower, as encouraged by the aggressive monetary easing and even substantial quantitative easing by many central banks around the world, as part of the initiatives by governments and central banks, on top of fiscal stimulus measures to forestall/prevent the recession risks,” he said.

Mr. Asuncion said that there are still investment opportunities in terms of domestic demand for essential goods and health products.

“Of course, if and when the COVID-19 pandemic is eventually controlled globally, there are various other opportunities to recover global trade.”

AirAsia execs take unpaid leave to cut costs

PHILIPPINES AirAsia used to operate more than 500 weekly domestic and international flights — VICTOR V. SAULON

By Arjay L. Balinbin, Reporter

LOW-COST carrier Philippines AirAsia, Inc.’s management and senior-level employees have taken voluntary unpaid leaves of absence to reduce costs because of the coronavirus disease 2019 (COVID-19) crisis.

“Those taking voluntary unpaid leaves include managers, heads of departments, pilots, among others,” Philippines AirAsia’s Head of Communications David F. de Castro told BusinessWorld in a phone message on Tuesday.

AirAsia Group Berhad Chief Executive Officer Anthony Francis “Tony” Fernandes announced on Friday last week that “AllStars” or all employees of the group have “accepted temporary pay reductions of anywhere between 15-75%, depending on seniority.”

AirAsia operates in Malaysia, Indonesia, Thailand, the Philippines, India and Japan. Its services include hotels, holidays, activities and online shopping, as well as integrated logistics and digital financial services.

As for the Philippines AirAsia, which has around 2,000 employees, Mr. de Castro said: “Not all will be getting a salary reduction (via voluntary unpaid leave). Those in the junior positions will continue to get their salaries in full.”

“To minimize the impact on junior posts is the company’s objective,” he added.

Mr. Fernandes said he and the chairman of the group, Kamarudin Meranun, “will not be taking a salary during this period.”

“There’s no denying that our industry has been hit hard, and we are no exception. This is possibly the biggest challenge we have ever had to face. We have no revenue coming in; 96% of our fleet is grounded and we still have significant ongoing financial commitments such as fuel suppliers and leasing agents,” he said.

Mr. Fernandes said the group is doing all it can to cut costs during the crisis, as it strives to “come back fighting as fast as possible and continue to be the world’s best low-cost carrier.”

Philippines AirAsia used to operate more than 500 weekly domestic and international flights from its hubs in Manila, Clark, Cebu and Kalibo.

Philippine Airlines, Cebu Air, Inc. (Cebu Pacific), Philippines AirAsia, Air Philippines Corp. (PAL Express), and Cebgo, Inc. have temporarily shut down their passenger operations after Luzon was placed under an enhanced community quarantine.

Over 30,000 flights were canceled, affecting nearly five million passengers, according to the Air Carriers Association of the Philippines.

In January, AirAsia Group reported that its Philippine unit grew the most by 4 percentage points (ppts) to 23% in the fourth quarter of 2019 in terms of market dominance, driven by a strong 21% growth in passengers carried.

According to Philippines AirAsia Chief Executive Officer Ricardo P. Isla, the Philippine unit’s net income for 2019 grew “almost like P1.5 billion.”

To recall, the budget carrier swung to a net operating loss of P2.11 billion in 2018 from a profit of P710 million in 2017 as it was hit by the rise in the price of jet fuel and the weakening of the Philippine peso against the US dollar.

SEC flags five more unlicensed groups duping investors

By Denise A. Valdez, Reporter

THE Securities and Exchange Commission (SEC) has found five more illegal investment groups luring the public into investment scams.

In separate advisories on the SEC website, the country’s corporate regulator warned the public against engaging with Sakto Online Advertising; Lao Razon Trading/Lao Razon Marketing; Cryptec by Point Place, Ltd.; V2R Trades; and Cryptopeso.

All these groups, it said, do not have licenses from the SEC to authorize them to sell securities. It noted each of their offers are equivalent to selling securities as they involve selling investment contracts.

In the case of Sakto Online Advertising, whose main office is located in the Isabela province, the group invites people to invest as low as P198 in exchange for P300 worth of detergent powders. Investors may earn more by signing up as retailers or referring more investors, and by earning points to warrant them incentive bonuses such as watches, cellphones, laptops or cars.

Lao Razon Trading/Lao Razon Marketing operates through rice trading. It invites the public to invest at least P500 and up to P5 million in exchange of 30-500% compounding income in one to six months. Referral commissions and material incentives also apply if members get to invite more investors.

Cryptec was identified by the SEC as a non-licensed offshore crypto-currency broker from the Commonwealth of Dominica. It operates by selling accounts on its web-based trading platform which promises 50-150% trading bonus or income.

Dumaguete-based V2R Trades also engages in online investments, offering packages of as low as P5,700 and as high as P285,000 in exchange of daily rewards of P50-5,000. It also offers referral and bonus rewards based on the entry package availed by an investor.

Cryptopeso also engages in mobile token wallets through a mobile application launched with the PHP Staking Program. It was identified as being operated by Blockxperts, Inc., which was founded by the chief innovative officer of a certain Indigen. It asks for a minimum investment of P2,000 and an activation fee of P500, which will be converted into profit shares that will be locked in the program for three, six, 12 or 24 months.

As all these groups did not get licenses to sell securities from the regulator, the SEC said people operating behind them may be fined up to P5 million, imprisoned for up to 21 years, or both.

It also noted violators must be careful of the Bayanihan to Heal as One Act, which punishes people engaged in cyber activities that exploit the coronavirus disease 2019 (COVID-19) crisis through scams, phishing, fraudulent e-mails, or other similar acts.

“The public must be mindful that such unregulated entities are completely unaccountable for the way they handle their businesses, and often, these entities tend to disappear after quite some time to the prejudice of their investors,” the SEC said.

“Thus, the public is encouraged to make conscious effort before making or placing their investments in any investment scheme offered by said entities especially during these difficult times,” it added.

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