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Games from Aeroflot

Aeroflot Open
Moscow, Russia
Feb. 19–27, 2020

Final Top Standings

1–4. IM Aydin Suleymanli AZE 2474, GM Rinat Jumabayev KAZ 2646, GM Rauf Mamedov AZE 2643, GM Aravindh Chithambaran (IND 2630, 6.5/9

5–10. GM Aleksej Aleksandrov BLR 2592, GM Vugar Asadli AZE 2538, GM Adhiban Baskaran IND 2654, GM Manuel Petrosyan ARM 2590, GM Mustafa Yilmaz TUR 2607, GM David Paravyan RUS 2629, 6.0/9

Total Participants: 97 players

Time Control: 100 minutes for the first 40 moves, then 50 minutes for the next 20 moves, followed by 15 minutes play-to-finish with 30 seconds added to your clock after every move starting move 1

The Aeroflot Open was a huge gathering of very strong players and naturally a lot of beautiful chess was played. Here is my favorite game from the event.

Puranik, Abhimanyu (2597) — Sjugirov, Sanan (2674) [A07]
18th Aeroflot Open-A 2020 Moscow (5.7), 23.02.2020

The 20–year-old GM from Maharashtra, India, Abhimanyu Puranik, is known for his tactical radar which allows him to find his way through even the most chaotic positions. In the following game though he gets outplayed by the pride of Kalmykia Sanan Sjugirov.

Ten years ago Sjugirov was creating waves and became one of the youngest ever to qualify for the Russian SuperFinals at the age of 16 (this was in 2009). He has lost a bit of momentum since then but still remains a tough customer. Take a look at what he did to Puranik.

1.Nf3 d5 2.g3 g6 3.Bg2 Bg7 4.0–0 e5 5.d3 Ne7 6.e4 0–0 7.exd5 Nxd5 8.Re1 Nc6 9.Nc3 Nde7 10.Rb1

The usual move here is 10.a4. This move, planning b2–b4, was considered bizarre when it was first used around 2015. However, Magnus Carlsen started using it too in 2017 and now it is considered main line theory.

10…a5

Right away Black prevents b2–b4.

11.b3 Nf5 12.Nb5 Re8 13.Bb2 a4 14.bxa4

A bit of a strange move. Interesting is 14.b4 with the follow-up to be a2–a3. Black cannot take the pawn because of 14…Nxb4 15.Bxe5! Bxe5 16.Rxb4 Black’s position is awkward. For example the bishop cannot even retreat to g7 due to 16…Bg7 17.Rxe8+ Qxe8 18.Nxc7 White has won material.

14…Rxa4 15.a3 Ra8 16.c4 Nd6

Planning …e5–e4 to target the c4–pawn.

17.Qb3 Bf5 18.Rbd1 Qd7 19.a4 Rad8 20.c5 Be6!

This is the start of some mind-bending tactics.

21.Qa3 Nc4! 22.dxc4

White doesn’t have the luxury of declining the sacrifice. 22.Qb3 Nxb2 23.Qxb2 e4 Black is clearly winning due to the discovered attack against the queen.

22…Qxd1! 23.Nxc7!

Taking the queen is taboo: 23.Rxd1? Rxd1+ 24.Bf1 Bh3 Is White about to be mated? No, for he can still defend with 25.Nd2 Rd8! (25…Rxd2?? 26.Bxh3 of course leaves White ahead on material) 26.Nd6! cxd6 27.Qb3 (the only defense, attacking the rook on d1) 27…Re1 (…Bh6 is coming) 28.f3 Bxf1 29.Nxf1 dxc5 30.Kf2 Rdd1 31.Ne3 Rb1 32.Qc3 Nb4 it looks like additional material losses cannot be prevented.

23…e4!

Opening up the long diagonal severely strains White’s defenses.

24.Nxe8

Let’s take a look at the alternatives:

24.Rxd1? Rxd1+ 25.Bf1 Bh3 26.Nd2 Rd8 27.Nd5 Rxd2 28.Bxh3 (28.Bxg7 Rd1 29.Ne3 Rxf1+ 30.Nxf1 Rd1 31.Qa1 Rxf1+ 32.Qxf1 Bxf1 33.Bc3 Bxc4 with an easily won endgame) 28…Rxb2 with Bd4 and Ne5 coming up;

On the other hand 24.Bxg7 exf3 25.Qc3 Re7 seems to hold for White.

24…exf3 25.Bc3?

[25.Rxd1 Rxd1+ 26.Bf1 Bxc4 (whether this bishop goes to c4 or h3 White’s reply will be the same) 27.Qa1! and now both sides will have to settle for a draw after 27…Rxa1 28.Bxa1 Bxf1 29.Bxg7 Ba6]

25…Rd3?

An inexactitude. Much stronger is 25…Nd4! (with the idea of Ne2+) 26.Bf1 (26.Rxd1? loses quickly: 26…Ne2+ 27.Kf1 Rxd1+ 28.Be1 Bxc4 the end) 26…Nc2 27.Rxd1 Rxd1 28.Qb2 Bh3 finishes off White.

26.Rxd1 Rxd1+ 27.Bf1 Bxc3

[27…Bh3 28.Qa1! holds]

28.Qb3?

He cannot take the bishop — 28.Qxc3? Nd4! forces White to give up his queen for the knight as otherwise …Ne2+ leads to mate.

However, even at this late stage White still has a defense. 28.h3! Nd4 29.Nf6+ Kg7 30.Ne8+ Kg8 (30…Kh6 is scarier but also leads to perpetual check 31.c6! Ne2+ 32.Kh2 Rxf1 33.Qf8+ Kh5 (33…Kg5? 34.Qc5+ Kh6 35.Qe3+ g5 36.h4! the tables are turned and it is now White who wins) 34.Qc5+ g5 35.h4 h6 36.Qe3 Bg4 37.cxb7 Rg1 followed by checking on g2 and g1) 31.Nf6+ Kg7 32.Ne8+ Kg8 draw.

POSITION AFTER 28.QB3

Now we get to see Sjugirov’s idea.

28…Rxf1+! 0–1

The Chessbase website <www.chessbase.com> has a facility where all the games are automatically analyzed by their chess engine. Anyway, after 28…Rxf1+! it indicated that White lost with the comment “lost on time?” The question mark means that it does not understand why White lost.

If it had thought a bit longer though then perhaps it would have noticed that Black has a beautiful forced mate in 7 here: 29.Kxf1 Bh3+ 30.Kg1 Nd4! 31.Qxc3 (31.Nf6+ Kh8 32.Qd1 Ne2+) 31…Ne2+ 32.Kh1 Bg2#

The list of the youngest chess grandmasters in history is frequently changing. When the World Chess Federation (FIDE) was reorganized after World War II it set up rules for the granting of international titles and, in 1950, came awarded the Grandmaster title to 27 players. The youngest in that list was David Bronstein who was 26 years of age. Bobby Fischer held the distinction of “youngest GM in history” when he became a GM in 1958 at the age of 15 years, 6 months, 1 day. It was 33 years later, in 1991, that Judit Polgar broke his record by a month. Three years later it was broken again by another Hungarian prodigy, Peter Leko and 3 years later the Frenchman Etienne Bacrot lowered the record to 14 years and 2 months. Then came Ruslan Ponomariov, then Bu Xiangzhi and finally in 2002 Sergey Karjakin set the bar at 12 years and 7 months, and his record still stands up to today.

Currently the five youngest GMs in history are:

Sergey Karjakin (Ukraine/Russia), 12 years seven months,

Dommaraju Gukesh (India), 12 years, seven months, 17 days

Javokhir Sindarov (Uzbekistan), 12 years, 10 months, five days

Praggnanandhaa Rameshbabu (India), 12 years, 10 months, 13 days

Nodirbek Abdusattorov (Uzbekistan), 13 years, 1 month, 11 days

Never heard of Sindarov? Early in 2018 people were just starting to mention a great new talent in Uzbekistan when he suddenly achieved all of the required three norms within a 4-month span. Two years later in the 2020 Aeroflot Open he is still very young, all of 14 years old, and he took down his compatriot GM Rinat Jumabayev.

Sindarov, Javokhir (2537) — Jumabayev, Rinat (2646) [B88]
18th Aeroflot Open-A 2020 Moscow (1.8), 19.02.2020

1.e4 c5 2.Nc3 d6 3.Nge2 Nf6 4.d4 cxd4 5.Nxd4 a6

We have transposed to the Sicilian Najdorf.

6.a3!?

Ever since players like Magnus Carlsen, Sergey Karjakin and Vishy Anand started playing 6.a3 against the Najdorf it is quickly gathering steam. It is basically a waiting move and in some cases it provides the a2–square for the light-squared bishop.

6…e6 7.Bc4 Nc6 8.0–0 Be7 9.Ba2 0–0 10.Be3 Nxd4 11.Bxd4 b5 12.f4 Bb7 13.Qd3 Rc8 14.Rae1 Qc7 15.f5 e5 16.Bf2 d5 17.exd5 Rfd8 18.Bg3 Nxd5 19.Bxd5

Not so good is 19.Bxe5?! Qb6+ 20.Bd4 (20.Kh1? Nf4 discovering an attack on the white queen as well as on g2) 20…Bc5

21.Ne2? Ne3! 22.Qxe3 Rxd4 23.Kh1 Rg4 Black is clearly winning;

21.Bxc5 Qxc5+ 22.Rf2 Nf6 23.Qg3 Re8 the initiative is worth more than the pawn given up;

21.Nxd5 Bxd4+ 22.Kh1 Rxd5 (22…Bxd5? 23.Bxd5 Rxd5 24.c3 white wins back the piece) 23.Bxd5 Bxd5 24.c3 Qc6! 25.Qxd4 Bxg2+ 26.Kg1 Bxf1 27.Rxf1 Re8 Black’s better pawns give him the superior game.

19…Bxd5 20.Bxe5

[20.Nxd5 makes it easy for Black. After the exchanges 20…Qc5+ 21.Bf2 Qxd5 22.Qxd5 Rxd5 23.Re2 f6 Black has control of the d-file]

20…Bc5+?

Correct was 20…Qc5+! 21.Rf2 (21.Bd4 Bc4! 22.Bxc5 Bxc5+ 23.Kh1 Bxd3 24.cxd3 Bxa3) 21…Bh4! 22.Bg3 Bf6 with Black clearly superior. However, Jumabayev had latched on to a tactical idea which had a flaw. We will see later how it went.

21.Kh1 Bxg2+

Black continues with his idea.

22.Kxg2 Rxd3 23.Bxc7 Rd2+ 24.Kh1 Rxc7?

Jumabayev’s idea. He already has a rook on the second rank and there is no back rank threat because he can defend it with …Bf8. Sadly, there was a hole …

25.Re8+ Bf8 26.Ne4! 1–0

Alas! After 26.Ne4 Rdxc2 there follows 27.Nf6+ gxf6 28.Rg1+ Kh8 29.Rxf8#

Don’t feel too bad for Jumabayev, as he just shrugged off this loss and scored five wins and three draws from the remaining eight rounds to tie for first.

 

Bobby Ang is a founding member of the National Chess Federation of the Philippines (NCFP) and its first Executive Director. A Certified Public Accountant (CPA), he taught accounting in the University of Santo Tomas (UST) for 25 years and is currently Chief Audit Executive of the Equicom Group of Companies.

bobby@cpamd.net

Nation at a Glance — (03/10/20)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Nation at a Glance — (03/10/20)

Lakers vs best of rest

The Lakers knew they had their work cut out for them heading into the extended weekend. On their plates were a pair of matches deemed to define their last-quarter blitz through the 2019–20 season. Considering their status as tops in Western Conference standings, and with a relatively healthy lead over the best of the rest, the outcomes of the set-tos didn’t appear nominally critical. On the other hand, more than simple bragging rights were at stake for them. The Bucks and Clippers just so happened to be the biggest stumbling blocks to their championship hopes, and not for nothing had they been a combined zero and three against the powerhouses.

The Lakers would go on to pass the tests, and with aplomb. With reason, they have refused to publicly concede the significance of their victories beyond the here and now; there remains a lot of hoops to be played, and the depth of the competition extends no guarantees of success in the postseason. Yet, there can be no discounting the value of their immediate past body of work against the Bucks and Clippers. They didn’t simply win. They did so emphatically, and in a manner that speaks to their strengths versus pundits’ favorites.

Needless to say, the Lakers turned to their resident marquee names to carve the triumphs. Against the Bucks, Most Valuable Player candidate LeBron James proved superior. And he wasn’t just engaged on offense per usual; he stayed locked in at the other end of the court as well, holding down otherwise-unstoppable Giannis Antetokounmpo’s numbers to substantial effect. Meanwhile, fellow All-Star Anthony Davis put up a solid line to backstop the effort. Parenthetically, yesterday unveiled more of the same, with the two delivering in the crunch to claim their 11th win in 12 outings.

If there’s anything the Lakers showed over the weekend, it’s that they possess unparalleled versatility, not to mention the chops to use it efficiently. They went big against the Bucks, giving traditional centers JaVale McGee and Dwight Howard a combined 31 minutes to help contain Antetokounmpo’s length. And then they went small versus the Clippers, with the two logging a mere 19 minutes on aggregate. Yesterday, Davis spent a not inconsiderable amount of time at the five spot, clearly in an effort to keep the defense tight while allowing for constant switching.

The Lakers may or may not win the title in June. There’s still three months’ worth of battles to negotiate before the reckoning comes. Nonetheless, they answered any and all queries on their readiness to take the measure of the National Basketball Association’s acknowledged finest. They’ve long proven ready and willing. Over the weekend, they also showed they’re able. And when the hardware will truly be on the line, they have James — and, of course, Davis — to lean on while committing to be all of the above, and more.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Colorful Holi Festival canceled due to virus fears

THE Asia Society announced that Holi Festival 2020 has been canceled due to the government’s declaration of a public health emergency over COVID-19.

“It is with a heavy heart that we announce the cancellation of Holi Festival 2020. This is in consideration of the risks and concerns surrounding COVID-19, and the public health emergency declared by the Philippine government,” the Asia Society Philippines said in a statement.

Holi, also known as The Festival of Colors, is a traditional and colorful Hindu festival best known for the vivid rainbow of powder clouds thrown into the air and at festival-goers.

The festival was to have been held on March 29 at SM by the Bay.

Asia Society Philippines has celebrated Holi in Manila for the last seven years alongside its partners —the Embassy of India, the Indian Cultural Association of the Philippines, and members of the Indian community.

“Notwithstanding the cancellation of Holi Festival 2020, Holi remains a season of hope and renewal. Let us continue to celebrate it with our loved ones and with our larger community, in good health and hopeful spirit,” the statement said.

Details on ticket refunds will be announced shortly.

Art in the Park postponed on virus fears

ART IN THE PARK, the “affordable art fair” which attracts throngs of art lovers and artists of all stripes, has been postponed because of the coronavirus.

“Mindful of our collective responsibility to help contain the spread of COVID-19, the organizers of Art in the Park and the Museum Foundation of the Philippines have decided to postpone the event scheduled for Sunday, March 15,” says a statement released on Monday by the organizer, Philippine Art Events, Inc.

“[I]n consideration of the recent advisories by both the World Health Organization and the Department of Health, we feel that pushing through with the event would be irresponsible,” it continued.

The organizers hope to reschedule the popular one-day art fair later this year.

Art in the Park has been held annually at the Jaime Velasquez Park in Salcedo Village, Makati since 2006. The fair offers visitors a range of paintings, prints, photographs, sculpture, and new media at prices P50,000 and below.

This year’s fair was going to have 56 exhibitors, ranging from established galleries like Finale Art File and Avellana Art Gallery, to school groups like the Siliman University Fine Art Department and the UP College of Arts, to art collectives like The Thursday Group, Kulay Art Group, and Ang I.N.K. This year’s featured artists included Richard Quebral, Dex Fernandez, and Jackie Lozano, who was going to hold a live portrait session at the park.

A portion of all sales at Art in the Park is donated to the Museum Foundation of the Philippines.

Live-streaming platform KUMU joins fight against human trafficking

Modern slavery, technically defined as human trafficking, remains to be one of the biggest problems facing the world, with powerful entities playing key roles in cross-border trafficking rings. In the Philippines, a source country for such activities, social media has become the new frontlines, with digital traffickers exploiting young victims online.

Joining the fight against exploitation, live-streaming platform KUMU joins the fray with their new partnership with NGO Voice of the Free.

Internet-mediated sex tourism

According to the American Journal of Psychiatry, social media has “amplified age-old pressures for teenage girls to conform to certain sexualized narratives.”

Locally, the sex tourism trade has widely become internet-mediated, with social media sites being the preferred avenue for prostitution transactions preying on women and minors. In 2018 alone, the number of victims rose to 784,000, placing the Philippines in 12th place in the list of countries with the highest incidences of modern-day slavery.

The KUMU team recently visited the Voice of the Free shelter to formalize a partnership that aims to keep livestreaming spaces safe, as well as cement the app as a wholesome and exploitation-free platform.

“KUMU’s partnership with Voice of the Free, an anti-human trafficking institution that we truly believe in, allows us to disseminate useful information to our Kumunities about the dangers of human trafficking,” says the app’s Chief of Staff and Head of Community James Rumohr. “By sharing Voice of the Free’s Sundance short films on the platform, we can raise awareness and engage both local and international users in relevant discussions on this sensitive subject and teach them how they can spot red flags when they go online.”

KUMU is taking the next steps to push the fight to the country’s colleges and universities by livestreaming Voice of the Free’s iFight events on the app. They hope to draw support and encourage volunteerism among users for their forthcoming sustainable programs for rescued victims. “We believe that social media should be an avenue that promotes camaraderie, creativity, and community instead of exploitation,” says Rumohr.

Voice of the Free has been in the fight against human trafficking since 1991. It continues to empower women and children in the country by opening up income-generating opportunities and lobbying laws that put an end to child labor and further strengthen the resolve against human trade. “We are so glad and grateful to be partnering with Kumu Philippines in the fight against human trafficking and modern slavery,” says Voice of the Free Executive Director Sherryl Loseno. “Today, slavery has mutated completely and has penetrated the internet. Everyone is vulnerable, especially the youth and the present generation.”

EDC bags top honors at 55th Anvil Awards

Towards growth and progress for all

By Bjorn Biel M. Beltran

One of the most biting criticisms of capitalism is the resulting inequality of urbanization and globalization. Typically, rural provinces receive limited growth opportunities compared to those of urban cities. In worst cases, rural communities even bear the brunt of urban development, losing out on valuable land and natural resources to monied corporations. So it is a reassuring thing when corporations strive to give back to those communities.

Recently, Lopez-led geothermal leader Energy Development Corporation (EDC) was awarded the Grand Anvil top prize at the 55th Anvil Awards of the Public Relations Society of the Philippines (PRSP), along with 12 other trophies for communication excellence in its PR, marketing, stakeholder engagement, and sustainability programs.

EDC’s entry “Baslay Coffee: Brewing a Better Life for Kaingeros” received a Gold Anvil and was subsequently deemed the most outstanding among all other recipients, earning it the highest Grand Anvil distinction.

As a corporate social responsibility (CSR) initiative of EDC’s team in Negros Island, the 30-year old Baslay coffee program aimed to educate and transform slash-and-burn farmers in the mountains of Baslay in Dauin, Negros Oriental into forest stewards by providing them alternative and lucrative coffee farming methods, effectively turning them away from their former environmentally destructive practices.

As a leader in sustainable energy, EDC entered Negros Island with a vision of environmental protection. Through a thorough process of community organizing, social education, financial management training, and the transfer of agroforestry technology, the company collaborated with the community to enact on its principle of social forestry as a sustainable watershed management tool.

Seeing the growth opportunity in the coffee industry, EDC organized the Baslay Farmers Association (BFA), which communally owns a 220-hectare organic coffee forest mostly planted with Robusta (80%) and Arabica (20%). This allowed the community to transition from their previous environmentally-destructive farming practices and narrow the gap between demand and supply of coffee in the area, contributing to the resilience of farmers to price fluctuations, and enhancing the farmers’ capacity for environmental sustainability.

The Baslay Farmers’ Association‘s female members delicately pick the coffee cherries, a crucial step in producing one of the country’s best coffee.

Moreover, working with the local government units (LGUs), academe, and other regional and provincial agencies were also established, the BFA became recognized as the first farmers’ association in Negros Oriental to produce premium and quality organic coffee. BFA has since opened their coffee shop in 2018 near the Baslay Hot Springs, in close consultation with EDC where foreign backpackers frequent.

Formerly ‘kaingeros’, the Baslay farmers are now masters of a growing coffee business and stewards of a forest that is now refuge to 113 species of local birds.

“Ours was a long journey towards becoming forest stewards with sustainable livelihood and we have EDC to thank for our transformation and better life,” said Ruel Perez, BFA’s community leader.

EDC also won various other Gold and Silver Anvils in both PR program and PR tool categories for its projects advocating for clean and sustainable energy. As a leader in renewable energy in the Philippines, the company has a diversified renewable energy portfolio through investments in hydropower, solar power and wind energy projects in the country.

Such campaigns include the Positive Energy Negros Facebook page, the #MaketheShift geothermal energy advocacy, BINHI national greening legacy program, GeoSkwela youth dialogue on sustainability, OMGeo eco-tourism vlog series, and CSR initiatives under the Mt. Apo Foundation Inc. (MAFI) as well as the organization’s 25th anniversary coffee table book.

Held annually by the Philippine public relations industry, the Anvil Awards seeks to recognize exemplary, effective and innovative PR and communications programs and tools by companies, organizations, and agencies, as decided by select PR professionals and a distinguished multi-sectoral jury.

“We believe that just as important as the implementation and positive impact of our various CSR and stakeholder relations programs is the way they are communicated,” said EDC CSR — PR head Atty. Allan Barcena. “We proudly share the awards we garnered with our partner organizations and the people who have made our work successful and those who continuously help us attain our vision of a clean energy future for the country.”

EDC is a pioneer in the geothermal energy industry and the world’s largest vertically integrated geothermal developer, generating 1,457.8 megawatts of clean, stable, and truly sustainable energy for the country.

Geothermal energy, produced by the natural heat of the earth, is among the cleanest sources of energy available. Geothermal plants generate power by separating the steam from the brine that is extracted from 3 kilometers deep. The steam then turns the turbines and converts it to electricity that is transmitted to the electric consumers or cooperatives through the grid. To make this cycle more clean and renewable, the water or brine that was separated from the steam is injected back to the ground.

With over 40 years of expertly and sustainably generating geothermal energy, EDC aims to deliver the benefits of sustainable geothermal development to communities around the world as it ventures into Latin America and Indonesia.

Asia to take major FDI hit from global coronavirus outbreak

THE OUTBREAK of coronavirus, formally known as Covid-19 is expected to dampen foreign direct investment (FDI) activity, with significant effects largely concentrated in China, East Asia and Southeast Asia.

According to a study from the United Nations Conference on Trade and Development (UNCTAD) released Friday, the global downside impact on FDI will be between 5% to 15% relative to earlier forecasts.

“The impact on FDI will be concentrated in those countries that are most severely hit by the epidemic, although negative demand shocks and the economic impact of supply chain disruptions will affect investment prospects in other countries,” the report said.

The 2019 world investment report had earlier predicted a 5% increase in global FDI flows in 2020-2021.

The Covid-19 impact on investments is expected to be concentrated in countries that have needed to take significant measures to contain the virus. The outbreak, the report said, will slow capital expenditure by multinationals and their foreign affiliates.

“Production locations that are closed or that operate at lower capacity will temporarily halt new investment in physical assets and delay expansions.”

Rizal Commercial Banking Corp. economist Michael L. Ricafort said in a mobile message Sunday that FDI flows are likely to slow in Asian countries, as the coronavirus adds to existing adverse effects of the US-China trade tensions.

“However, there could be further redistribution of FDI flows to other ASEAN/Asian countries such as the Philippines, in a more positive context, as part of the process to further and better hedge the supply chains of some global/multinational companies.”

He said that the companies may redirect FDI to avoid disruptions to global supply chains in the future, as concentration in a few Asian countries leads to more vulnerability.

The report said greenfield investment projects will also be affected, but the immediate impact on existing investments will more likely be limited.

New greenfield investment and mergers and acquisition activity could see delays.

Covid-19 is expected to affect market-, efficiency-, and resource-seeking investments. The immediate market demand effect is in China, with the report citing a 70% drop in Toyota sales in China in February.

FDI projects in extractive industries could also see delays globally, alongside impacts on tourism and retail.

In terms of efficiency-seeking investment, the initial effects will show up in China and East and Southeast Asia production facilities . But the report said this could rapidly spread outside the continent through the global value chain.

Lower profits by foreign affiliates of multinational enterprises (MNE) will also translate to lower reinvested earnings.

Top MNEs have reported earnings downgrades caused by Covid-19, with the biggest impact seen in automobiles and auto parts (44% average earnings revision), as well as airlines (42%).

“The most significant negative revisions in the automotive industry come from parts producers based in the most affected areas in South East Asia.”

Basic materials and energy companies also have issued average earnings revisions of 13%.

Mr. Ricafort said that the passage of the tax reform bill lowering corporate income tax and rationalizing fiscal incentives, as well as moves to ease foreign ownership limits, will help make the Philippines more attractive to FDI.

The UNCTAD report said that the negative impact on FDI will be driven by delayed investment after the initial global demand shock, with significant impact also seen on industries dependent on the global value chain.

“As such, the Covid-19 outbreak will potentially accelerate existing trends of decoupling… and reshoring driven by the desire on the part of MNEs to make supply chains more resilient.”

Union Bank of the Philippines chief economist Ruben Carlo Asuncion said in a mobile message Sunday that the Philippines should be ready to receive redirected FDI.

“Reforms should continue to help the Philippines to be ready. FDI will move where they think they will have (an) advantage. Covid-19 is an opportunity as companies realize their over-concentration in China,” he said.

“Government should continue to initiate and get our act together during these extraordinary times.” — Jenina P. Ibañez

Banks may face risks from virus

BANKS with large exposure to industries such as tourism may face risks amid the prolonged spread of the coronavirus disease 2019 (COVID-19), according to an official of the Bangko Sentral ng Pilipinas (BSP).

“The BSP recognizes that it can potentially impact banks, particularly those with significant exposures to certain industries such as, for instance, tourism,” Lyn I. Javier, BSP managing director for policy and specialized supervision, said in an e-mailed response to BusinessWorld on Friday.

“Banks may also face operational risks due to potential disruption in operations resulting from quarantine procedures for employees, temporary closure of certain offices with affected personnel, or possible supply shortages,” she said.

The BSP official said the assessment of the risks of the COVID-19 outbreak for banks is still in progress.

Ms. Javier noted that the central bank is closely monitoring developments related to the spread of COVID-19 in the country and how these can affect the banking industry. “BSP is also coordinating with the industry on measures that may be implemented,” she added.

The Department of Health on Saturday announced the first case of transmission of COVID-19 in the country, a 62-year-old Filipino who has not traveled abroad. His wife has also contracted the disease. This brought confirmed cases in the Philippines to six.

The National Economic and Development Authority estimated foregone revenues worth P22.7 billion per month in the tourism sector amid the COVID-19 outbreak.

Socioeconomic Planning Secretary Ernesto M. Pernia last week said the economy could take an even bigger hit if the outbreak persists until yearend, estimating a one-percentage point reduction in 2020 gross domestic product (GDP) growth.

The NEDA chief said the assessments were made based on a scenario where there won’t be inbound Chinese tourists and foreign tourist arrivals will be reduced by 10%, while trade will be “drastically reduced” and there could be indirect effects on other industries.

The government is targeting 6.5-7.5% GDP growth this year.

Ms. Javier said banks have sufficient safeguards against unforeseen events that may disrupt their business.

“The BSP has earlier required banks to have a sound business continuity plan and to provide sufficient financial and human resources associated with business continuity initiatives,” Ms. Javier said.

“In this light, we believe that banks have adopted measures in preparation for cases that may potentially disrupt their operations,” she said.

Ms. Javier added that the central bank has already granted regulatory relief packages to banks and quasi-banks affected by the COVID-19 and the African Swine Fever outbreak, even though this assistance was previously only available to those hit by calamities.

These relief packages come in the form of staggered booking of allowance for credit losses, non-imposition of penalties on legal reserve deficiencies, and non-recognition of certain defaulted accounts as past due, among others. The BSP said it will evaluate banks applying for the measures on a case-by-case basis.

BAD LOANS MAY RISE
Sought for comment, credit raters said banks’ nonperforming loans could see an uptick due to the spread, with some sectors expected to be worse off than others.

“We expect bad loans to rise but the quantum of the impact will depend on the duration of the outbreak,” Tamma Febrian, associate director of the Financial Institution Group of Fitch Ratings, said in an e-mail.

“Should the outbreak be contained within the next few months, we believe that the direct impact on the banks would be manageable as hospitality/tourism sector accounts for less than 2% of the banks’ loan portfolios,” Mr. Febrian said.

Mr. Febrian also said other sectors “vulnerable” to the virus outbreak are the manufacturing and transportation industries.

“The real estate sector could also be impacted as Philippine Offshore Gaming Operators (POGOs), which are largely fueled by Chinese operators and customers, have been a key driver of demand in the sector,” he said.

Tengfu Li, an analyst at the Financial Institutions Group of Moody’s Investors Service, also said bad loans may rise if the outbreak persists. He, however, noted that banks’ larger exposure to local conglomerates can offset the effects of the virus.

“A prolonged outbreak will lead to a rise in bad loans but at this stage, we expect the impact on banks to be muted because the banks are largely exposed to the domestic conglomerates that are able to withstand short-term negative pressure on revenues,” Mr. Li said in an e-mail.

Likewise, Mr. Li pointed out that local banks are more equipped in terms of loan-loss buffers compared with their regional counterparts.

“The strong buffers are driven by the implementation of PFRS 9 (Philippine Financial Reporting Standards 9) — which leads to higher loan-loss coverage — and regulatory capital requirements that are higher than international norms,” he said.

Last month, the central bank implemented tighter capital requirements for smaller standalone rural and thrift banks in a move to strengthen their guard against possible losses.

Under the new rules approved by the policy-making Monetary Board, standalone thrift, rural and cooperative banks must provide for minimum capital ratios including a common equity Tier 1 ratio of 6%, a Tier 1 ratio of 7.5% and a capital conservation buffer of 2.5%, which used to be only applied to universal and commercial banks.

Such requirements are aside from the minimum capital adequacy ratio of 10%. The local bank rules are at par with international standards under Basel 3. — Luz Wendy T. Noble

Supply chain disruption likely to cause price spikes — DoF

THE PRICES of goods may spike, amid the disruption of global supply chains due to the continued spread of the coronavirus disease 2019 (COVID-19), the Finance department (DoF) said on Sunday.

“The disruption of global supply chains will tend to push prices up. Domestic producers will need to look for alternative supply sources to avoid production cuts,” the DoF said in its economic bulletin on Sunday.

Citing initial data from the Customs bureau, the DoF said imports from China dropped by 34.7% in terms of volume in February. China is the country’s biggest trading partner.

Inflation eased at a slower-than-expected 2.6% in February on softer price increases of food, transport and utilities, from 2.9% in January. This brought year-to-date inflation to 2.8%, well within the central bank’s 2-4% target for the whole year.

However, the DoF said “benign global oil prices will pull down inflation going forward.”

Oil prices have plunged to multi-year lows as demand was hit by economic fallout from the coronavirus. Virus fears, travel bans and other precautionary measures have dampened global economic activity.

For inflation rate to settle within the 2-4% target range, the DoF said the “month-on-month price change should be at most 0.3% per month.”

ASSESSING THE IMPACT
President Rodrigo R. Duterte is set to declare on Monday a public health emergency to help contain the spread of COVID-19, after the country recorded its first case of local transmission. There are six confirmed COVID-19 cases in the country as of Sunday.

Government economic managers are set to meet on Tuesday to further assess the virus outbreak’s impact on the economy following a rise in the number of confirmed cases in the country.

“Right now, what we see on the impact of COVID-19 is essentially on tourism and that’s very clear. What is not so clear is the impact on the productive capacity of our trading partners and the supply chain, and also the demand for our products — that’s quite unclear at the moment,” Finance Secretary Carlos G. Dominguez III told reporters on Friday.

Meanwhile, government officials said public infrastructure projects are not facing delays due to a shortage in raw materials and equipment, mainly from China.

“Right now we’re not seeing any effects yet, but we have to closely monitor that and then see the effects… on China, which supplies all of these construction materials, heavy equipment, for the entire world will be affected by this,” Vivencio B. Dizon, presidential adviser for flagship programs, said a press conference on Friday.

Mr. Dominguez said any slowdown will not be immediately seen as businesses typically have two or three months worth of inventory.

“You won’t see an immediate effect if there’s a slowdown because there’s inventory here. Let’s say they keep three months’ inventory, the slowdown started in, let’s say mid-February… It’s only in May that you’ll see the slowdown, if there is a slowdown at all,” Mr. Dominguez said. — Beatrice M. Laforga

Credit cards face adversity in country where cash is king

By Beatrice M. Laforga
Reporter

MA. VICTORIA M. DIOQUINO, 33, switched to using electronic wallets a year ago to pay her electricity and phone bills.

“Mobile payments are much more convenient and user-friendly than credit cards,” the bank employee from Parañaque City said in an interview.

The space for credit card growth in the Philippines is rapidly shrinking with the rise of mobile payments.

In the early days of online shopping, credit cards offered a convenient way to shop, but new mobile technologies and apps now offer a more seamless shopping experience with faster checkouts and the option of in-app payments.

The World Bank said 5% of Filipino borrowers surveyed had electronic wallets in 2017, slightly higher than the 4% global average.

Aside from electronic wallets, the credit card industry also has had to contend with fraud.

People still need to be educated about the risks and benefits of credit, Alex G. Ilagan, executive director of the Credit Card Association of the Philippines, said in an interview.

About 10 million credit cards have been issued in the Philippines, and the regular cardholder probably uses two credit cards, he said. That’s a big jump from just 200,000 cards two decades ago.

“In terms of spending, the total amount of credit card billings in the first nine months of 2019 was P866.9 billion,” Mr. Ilagan said. “That is equivalent to an average amount of about P87,000 per card, or close to P10,000 a month per card.”

World Bank data put credit card ownership in the Philippines lower at 2% in 2017, behind its peers in East Asia and the Pacific region where ownership was 22%.

The credit card industry has been doubling efforts to educate the market about data security, managing debt and maximizing credit.

“Financial discipline and awareness of security including fraud are very important,” Mr. Ilagan said.

One such victim was 22-year-old Neil Aronn S. Diamzon, a first-time credit card user.

Not so long ago, he received what he thought was just another sales call from a bank. He gave away personal information to the caller, who promised perks such as double credit limit and waived annual fees for a lifetime.

“It was too good to be true, but I was naive and took their offer anyway,” Mr. Diamzon, a software engineer, said in an interview.

A few minutes later, he received another call from his bank informing him of an online purchase worth P20,000 he knew he never made.

Banks are the most conservative when it comes to ensuring that transactions are secure, so they tend to invest in the latest technology, Mr. Ilagan said.

Banks are also working with regulators such as the National Privacy Commission and Bangko Sentral ng Pilipinas (BSP) to ensure their data remained secure.

The central bank advises consumers on its website to sign their credit cards as soon as they receive them, avoid giving out personal and financial information requested via e-mail, and transact only with secure websites.

Credit card companies have also been using integrated circuit card technology to prevent counterfeiting. It’s much harder to steal the information from chip credit cards or to clone them.

Mr. Ilagan said cardholders in the Philippines tend not to maximize their use of credit and CCAP is trying to change that.

“You can use credit to your benefit as long as you don’t abuse it,” he pointed out.

Thea Sy Bautista, who hosts a YouTube channel about financial management, said she has received a number of requests to upload videos on budgeting, credit cards, savings and investment.

“I am most comfortable talking about credit cards because of my overall experience working for a bank and managing my credit cards,” she said in an interview. “I wanted to use my platform to help more people.”

A credit card holder herself, the YouTube blogger said it’s important to “swipe only if I can fully pay the total charges, not just the minimum amount, before they become due to avoid bank charges.”

Despite the small penetration rate, Mr. Ilagan said the credit card industry’s delinquency rate had gone down to 4% from 8% five years ago.

He said the credit card industry needs to work harder to gain more believers.

Aside from e-wallets and fraud, the fact remains that cash is still king in most parts of the world, including the Philippines.

World Bank data showed that 53% of Filipinos paid their utility bills in the past year with cash, compared with the global average of 57%.

Mr. Diamzon has not been deterred by credit card fraud. His experience taught him to become aware of the risks and be more responsible about personal data, he said.

“Weeks later, I received a new credit card and since then, I have been very cautious about anonymous calls and credit card transactions,” he said.

Where the world’s wealthy live

THE PRICES of goods may spike, amid the disruption of global supply chains due to the continued spread of the coronavirus disease 2019 (COVID-19), the Finance department (DoF) said on Sunday. Read the full story.

Where the world’s wealthy live

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