By the numbers: the economic impact of outbreaks like Covid-19

March 5, 2020 | 9:48 am

Despite the growing clamor around Covid-19, the world is no stranger to outbreaks. In fact, over the last 30 years, the number of infectious disease outbreaks has increased with trade and travel. According to World Bank estimates, the annual global cost of moderately severe to severe pandemics is approximately $570 billion, or 0.7% of the global income.

This latest coronavirus brings to mind the other two that have caused global upheavals this century: SARS (Severe Acute Respiratory Syndrome) and MERS (Middle East Respiratory Syndrome). All affected the travel, tourism, and leisure industries significantly. Fear of catching the infectious diseases discouraged people from visiting places with high foot traffic. Schedules, plans, and decisions were postponed, invariably hurting cruise liners, airlines, event facilities, hotels, and tour operators.

This mass panic also caused more damage than the zoonotic viruses themselves. An October 2019 paper by the Asian Development Bank mentions the economic losses due to SARS to be “driven by public avoidance, which contributed to a disproportionate aggregate disease prevention cost.” The World Economic Forum (WEF) echoes this view in an article on global health threats: “Remarkably, estimates suggest that only 39% of the economic losses from outbreaks are associated with direct effects on infected individuals. Rather, the bulk of the costs results from healthy people’s change of behavior as they seek to avoid infection.”

Here’s a more comprehensive breakdown:

Comparisons	SARS (Severe Acute Respiratory Syndrome)	MERS (Middle East Respiratory Syndrome)	Covid-19 (also known as SARS-CoV-2 and 2019-nCoV; formerly known as nCoV or novel coronavirus)
Period of outbreak	2002-2003	2012-2015	2019-present
Source and transmission	The primary way that SARS appears to spread is by close person-to-person contact. It is caused by a coronavirus that made a species jump from bats to humans through the intermediate host of farmed civet cats bred for human consumption in China.	Most human cases have been attributed to human-to-human infections in healthcare settings, but current scientific evidence suggests that dromedary camels are a major reservoir host for MERS-CoV and an animal source of MERS infection in humans.	Like the other two coronaviruses, it originated in animals and then migrated to humans. Many of the initial cases frequented the Huanan seafood wholesale market, which also sold live and newly slaughtered animals. China’s national health commission has confirmed human-to-human virus transmission.
Symptoms	Symptoms include high fever, chills, headache, a general feeling of discomfort, and body aches. Some people also experience mild respiratory symptoms, diarrhea. Most develop pneumonia. Up to 20% require mechanical ventilation.	Symptoms include fever, cough, and shortness of breath. Pneumonia is common, but not always present. Gastrointestinal symptoms like diarrhoea have been reported. Some laboratory-confirmed cases are reported as asymptomatic.	Symptoms include fever, cough, and shortness of breath. Reported illnesses have ranged from mild symptoms to severe illness and death.
Vaccine and treatment	There is currently no cure for SARS, but research to find a vaccine is ongoing. Treatment is mainly supportive.	No vaccine or specific treatment is currently available; however, several vaccines and treatments are in development. Treatment is supportive and based on the patient’s clinical condition.	There is currently no vaccine to prevent Covid-19. Treatment is mainly supportive. For severe cases, treatment includes care to support vital organ functions.
Countries affected	From China, it quickly spread to other Asian countries. There were also a small number of cases in several other countries, including 4 in the UK, plus a significant outbreak in Toronto, Canada.	27 countries have reported cases of MERS-CoV. The largest outbreaks were seen in Saudi Arabia, United Arab Emirates, and the Republic of Korea.	28 international locations have confirmed cases of the infection. The 10 most affected places include mainland China, Japan, South Korea, Italy, Iran, and Singapore.
Infections	8098 people	2 494 people	90899 people as of March 03, 2020, 12:15 p.m. Philippine time
Deaths	774	858	3116 as of March 03, 2020, 12:15 p.m. Philippine time

Here’s how different industries were affected by these outbreaks:

Industry	SARS (Severe Acute Respiratory Syndrome)	MERS (Middle East Respiratory Syndrome)	Covid-19 (also known as SARS-CoV-2 and 2019-nCoV; formerly known as nCoV or novel coronavirus)
Sports		The Republic of Korea’s Ministry of Education and the Ministry of Health and Welfare recommended students to refrain from school activities such as field trips and sports events.	Covid-19 has cut a swathe through the 2020 Asian sporting calendar, with high-profile postponements including the Formula One Chinese Grand Prix and the Hong Kong Sevens rugby tournament. South Korea’s K-league has also postponed the start of the new football season.
Travel	Daily arrivals in Hong Kong plummeted from an average of around 27,500 passengers to roughly 5,000 passengers per day at the end of April 2003. Airlines such as Cathay Pacific canceled over 45% of their scheduled flights during the same month, and ticketing revenues plunged from HK$120 million ($15.3 million) to HK$4 million ($510,000) in the first two weeks of April.		Philippine authorities are considering the possibility of a travel ban to and from South Korea. The Department of Health is urging Filipinos to postpone their travel to some parts of South Korea that have seen a spike in the number of people with coronavirus infection.
Tourism	The irrecoverable losses to the tourism sector in Beijing were estimated to amount to around $1.4 billion, or 300 times the direct cost of medical treatment for SARS cases in the city.	South Korea saw a 41% reduction in the number of tourist visits to the country, which caused the Bank of Korea to cut its benchmark interest rate to a record low.	The US State Department on February 24 advised cruise ship travelers to or within Asia to reconsider their trips. Moreover, the department warned that repatriation flights organized by the US government “should not be relied upon as an option for US citizens under the potential risk of quarantine by local authorities.” This statement came in the heels of the hundreds of passengers (including at least 14 Americans) who were infected with Covid-19 in the cruise ship Diamond Princess. The virus caused the cancellation of the last two days of the Venice Carnival in Italy. Milan’s Salone del Mobile, the world’s largest and most important furniture fair, has likewise been postponed to June 16-21.
Hospitality	25 restaurants in Hong Kong closed within the first two weeks of April and over 1,600 restaurant staff became unemployed. As many as 16,000 staff were forced to take leave or pay cuts. The SARS outbreak in Canada caused $4.3 billion in losses to its accommodation and food service sector.	Estimated losses in the accommodation, food and beverage service, and transportation sectors in South Korea associated with the decrease of non-citizen visitors were US$542 million, US$359 million, and US$106 million, respectively.
Construction and manufacturing	The 2002-2003 SARS outbreak was centered in key electronics production tracts in China, where investors from several countries – including Japan, Korea, and Taiwan – have financed factories. Meanwhile, Singapore’s government quarantined 305 employees of a local Motorola plant at their homes when an assembly-line worker was found to be infected with SARS. As a precaution, Motorola asked more than 500 night-shift employees not to report to work.		Singapore’s construction firms are seeking legal advice to use the coronavirus outbreak as cause for not fulfilling their contracts, as the government turns away or quarantines Chinese workers. Hong Kong’s construction is also expected to slow due to delays in receiving building materials from the mainland. This disruption to manufacturing and logistics extends to Australia, where Chinese direct and indirect products account for up to 20% of materials used in building sites. More supply chain shortage situations: Fiat Chrysler Automobiles NV announcing on February 14 that “it is temporarily halting production at a car factory in Serbia because it can’t get parts from China.” Hyundai made a similar statement and said it “decided to suspend its production lines from operating at its plants in Korea … due to disruptions in the supply of parts resulting from the coronavirus outbreak in China.”

Sources: WHO, CDC, World Economic Forum, AFP, ScienceDirect, Reuters, Nikkei Asian Review, ADB, QuayCo, CNN, Liebert, Inc., Time, Dezeen, The Channel Company, HBR

Silver linings

Some sectors typically stand to benefit from disease outbreaks, although the picture is not black and white, notes The EIU in its coronavirus outbreak webinar last February 12. Here are the industries that may experience positive economic outlooks under such a scenario:

Pharmaceuticals and medical devices – demand for medications, vaccines, personal protective equipment, and other related supplies will strengthen
E-commerce – will experience an increase in sales as consumers shun brick-and-mortar stores to avoid infection
Online services – expenditure in online entertainment, education, and other services such as telecommuting software will spike
Insurance – will bring about long-term awareness as people become more interested in health and business risk insurance packages

Mitigating disruptions

Public health emergencies can cause significant economic losses in multiple industries. They can impact even companies without direct operations in affected areas. There is a need to identify the sectors with the most potential for economic losses to encourage the development of preparedness plans and prioritize emergency funding during an outbreak.

WEF makes the case for the private sector playing a bigger role in the traditionally public sector-led disaster response. Many companies may be compelled to act out of a sense of corporate social responsibility, but it is also good business to intervene and protect operations and markets against these biosecurity threats. The WEF’s Managing Risk Epidemics report presents five key principles for integrating public-private cooperation in order to mitigate the social, economic, and business disruptions associated with disease outbreaks:

Preparedness – address known challenges and set up mechanisms for collaboration before a crisis strikes to facilitate a rapid, well-coordinated response
Value – build collaborations at the intersections of private-sector business interests and public-sector needs
Trust – create trust-based relationships in advance of an emergency to enable better ways of working during an outbreak
Agility – keep organizational processes and structures flexible for quick action in an emergency
Innovation – encourage the ongoing development of innovative ideas and solutions to improve emergency preparation, response, and recovery efforts

Building collaborations and networks through public-private cooperation is critical to enable a more effective response to public health emergencies.

Overall impacts

Overall, the largest economic impact of SARS was related to overall GDP and investment, says Brown and Smith in their paper The economic impact of SARS: How does the reality match the predictions? (2008). It also put a dent on the hotel restaurant and tourism sectors. The vast majority of losses were experienced in mainland China and Hong Kong, with more minor effects in Canada and Singapore.

“The said losses, however, rarely affected more than one quarter’s data and often only adversely affected the economy for one month. Additionally, in many cases the losses were succeeded by often equivalent gains in the following month, quarter, or year, such that over a year the effect was marginal at most,” they add. The impact from SARS was thus short-term in the places where it occurred.

MERS, on the other hand, had a considerable impact on South Korea’s economy – even though nearly 90% of infections originated in the Kingdom of Saudi Arabia. In his paper Costly Lessons From the 2015 Middle East Respiratory Syndrome Coronavirus Outbreak in Korea, Sang-il Lee attributes this partly due to a failure in risk communication by the Korea Centers for Disease Control and Prevention (2015).

This resulted in the public’s overreaction to the outbreak and a loss of US$10 billion, which cut into their gross domestic product growth rate in 2015. The enormous socioeconomic cost highlights how crucial risk communication is during infectious disease outbreaks.

As for Covid-19, the global economic effects are likely to be larger than in 2002-2003 – even if this latest virus turns out to be comparable to SARS, shares Hayat, et al, in their January 2020 Rabobank article.

China has larger and tighter linkages with the global economy nowadays, and represents close to 20% of the world’s GDP. China-dependent industries such as consumer electronics, pharmaceuticals, and automotive will struggle to find alternative suppliers.

Economies today are more interconnected than they were 17 years ago. If the coronavirus outbreak persists, the domino effects will be felt through global growth, trade, and value chains as well as in specific sectors like transport and tourism. The Economist Intelligence Unit’s baseline scenario is that the public health emergency within China will be under control by the end of March. It is planning to cut their real GDP forecast for China this year to 5.4% from the current 5.9%.

DoT maps counter-virus measures

March 5, 2020 | 12:33 am

THE Department of Tourism (DoT) is allocating P6 billion to help the domestic tourism industry weather the fallout from the coronavirus disease 2019 (COVID-19) outbreak.

This as international tourist arrivals to the country slumped by 42% in February, Tourism Secretary Bernadette Romulo-Puyat said on Wednesday.

At a press conference, she said the government is rolling out several initiatives to promote domestic tourism to make up for the loss of foreign travelers.

“To strengthen this public-private partnership initiative, we have the tourism resiliency program. The DoT will be allocating P6 billion that will span international and domestic promotions, infrastructure, and regional tourism development,” Ms. Romulo-Puyat said.

Of the P6 billion, P2.2 billion will be used for infrastructure development in top tourist spots, including Coron and Puerto Galera, while P1.6 billion will go to upgrading secondary airports to be able to handle night flights.

The DoT is allocating P725 million for tactical programs, international events, and market development initiatives; P467 million for content creation targeting emerging countries not affected by COVID-19; P421 million will be for a new domestic travel campaign; and P400 million to aid the local government in developing tourism master plans.

The government will spend P85 million for training and disaster preparedness for COVID-19, and P11.2 million for the participation fees of the private sector for international trade fairs up to at least June.

Ms. Romulo-Puyat said the Philippines saw a 41.4% drop in international tourist arrivals to 418,126 in February from 713,394 a year earlier. In January, international arrivals rose 9.8% to 787,307 from 716,716 in the same month last year.

DoT data showed Philippine international tourism revenues in February dropped by 41% to P26.73 billion from P45.6 billion in the same month last year.

The Philippines has imposed a travel ban to and from China, Hong Kong and Macau. It lifted the barely week-long travel ban to South Korea, except for North Gyeongsang Province, on March 2.

South Korea and China are two of the Philippines’ biggest sources of tourist arrivals. Of the 8.26 million visitor arrivals last year, South Korean tourists accounted for 1.98 million, followed by Chinese tourists (1.74 million) and American tourists (1.06 million).

As fears over the COVID-19 outbreak persist, hotel occupancy rates in popular tourist spots have plunged. In February, hotel occupancy rates in Boracay slumped by around 40%, while Cebu occupancy fell by 27% and Bohol occupancy slid by 40%.

“It has not spared any of us in the industry, whether you’re a small company or one of the bigger tour operators,” Tourism Congress of the Philippines (TCP) President Jose C. Clemente III said.

“We’re bleeding already,” he added, saying that the domestic market will not make up for losses in the international market even as the industry cuts prices.

Mr. Clemente said Western market demand, which was previously stable despite the outbreak, is now declining as even travelers from the United States cancel plans.

“We are now experiencing some cancellations and some foregone business from that market,” he said.

The DoT is targeting its promotion efforts to markets in Western Europe, Russia, the Middle East, and neighboring Southeast Asian countries like Indonesia.

Meanwhile, Health Secretary Francisco T. Duque III said the department has enough funds for its efforts to prevent the spread of COVID-19 in the country.

“Yes, we have enough budget. I just received a guidance from the DBM (Department of Budget and Management) during our Cabinet meeting last Monday. He has pointed out to us that we have about close to P530 million available budget of the DoH that we can use in the meantime that we are awaiting the P2 billion plus approved by President (Rodrigo R.) Duterte but which will need Congressional nod. So we’re awaiting that,” Mr. Duque said in a press conference.

He said that the additional budget will also be used in procurement of materials such as personal protective equipment for medical personnel, among others.

The World Health Organization said there are now more than 90,000 cases of COVID-19 globally and more than 3,000 fatalities, most of which are from China where the disease was first detected. The WHO said the death rate is 3.4%. — Jenina P. Ibañez and Vann Marlo M. Villegas

DoF mulls availing of WB loan to fund efforts vs coronavirus

March 5, 2020 | 12:32 am

THE government is considering availing a loan package from multilateral lenders to fund efforts to contain the spread of coronavirus disease 2019 (COVID-19) within the country.

This, after the World Bank Group announced on Wednesday an initial $12 billion in immediate financial support for developing countries battling the disease.

”We are currently in discussions with the DoH (Department of Health) on a loan package with multilateral agencies and this announcement of the World Bank is certainly welcomed,” Finance (DoF) Secretary Carlos G. Dominguez III told reporters in a Viber message on Wednesday.

Mr. Dominguez said the loan packages being considered will fund the Health department’s capacity to immediately respond to the COVID-19 crisis and other similar situations.

“[The loan is specific] to the DoH with emphasis on quick reactions to COVID-19 and similar events,” he said.

The Finance chief did not disclose the amount they want to borrow.

Mr. Dominguez, however, assured that the government is “closely monitoring the effects of the contagion on tourism and the supply chain of our industries and preparing the appropriate fiscal responses.”

On the monetary side, he said the Bangko Sentral ng Pilipinas’ policy-setting body will also be “ready with measures to counter” the economic fallout from the COVID-19 outbreak.

In a statement released Wednesday, the World Bank said the $12 billion worth of fast-track grants, loans and low-interest loans will help countries coping with COVID-19 outbreak improve their health systems, provide wider access to health services, strengthen disease monitoring, and boost public health interventions, among others.

According to the multilateral lender, the package will also include advice on policy formulation as well as technical assistance both on global and local levels of expertise.

Of the $12-billion package, $8 billion consists of new financing. The total package is made up of new financing from the International Bank for Reconstruction and Development (IBRD) worth up to $2.7 billion, $1.3 billion from the International Development Association (IDA), $2 billion from the reprioritization of the World Bank’s existing portfolio, and $6 billion in financing from International Finance Corp. (IFC), which includes $2 billion from existing trade facilities.

“We are working to provide a fast, flexible response based on developing country needs in dealing with the spread of COVID-19,” World Bank President David Malpass was quoted as saying in the statement.

The WB said the support will prioritize the “poorest countries and those at high risk with low capacity.”

Currently, the Philippines is classified by the World Bank as a lower-middle income country, with a gross national income per capita of $3,830 in 2018.

“The point is to move fast; speed is needed to save lives,” Mr. Malpass was quoted by Reuters as saying during a teleconference with reporters. “There are scenarios where much more resources may be required. We’ll adapt our approach and resources as needed.”

Poor countries with weak health systems were the most vulnerable in such outbreaks, Mr. Malpass said, but past experience with Ebola and other outbreaks showed that taking the right measures quickly could lessen transmission of the disease and save lives.

He also cautioned countries against taking measures that would further limit trade.

Some countries had already requested aid, Mr. Malpass said, but declined to name them.

On Feb. 26, the Asian Development Bank approved another $2 million worth of funding to help its member countries deal with the COVID-19 outbreak, after it launched an initial $2-million assistance earlier last month to help selected countries respond to the fast-spreading disease. — Beatrice M. Laforga with Reuters

‘Total fail’: How communication breakdown broke Ballet Philippines’ leg

March 5, 2020 | 12:31 am

By Sam L. Marcelo
Associate Editor

IF the Ballet Philippines (BP) controversy was used as a case study in change management, a professor at the Ateneo de Manila University in Quezon City would have given its board an F.

“A total fail,” said Manolet M. Siojo, a part-time faculty member at the university’s John Gokongwei School of Management.

The latest chapter in the imbroglio was a one-night concert titled Alice & Friends, held on Feb. 21 at the Main Theater of the Cultural Center of the Philippines (CCP). Supported by the cultural community, National Artist Alice Reyes, BP’s outgoing artistic director and founder, mounted the show in a matter of days after the BP Board, chaired by Antonio O. Cojuangco, announced that it was canceling the entire run of Itim Asu & Other Dances, the originally scheduled production, as a precautionary health measure against COVID-19.

Using the coronavirus as a reason was deemed spurious by insiders since other productions — among them Batang Mujahideen by Tanghalang Pilipino (another CCP company also chaired by Mr. Cojuangco) — continued their runs, albeit with fewer shows.

Coronavirus or no, Alice & Friends pushed through. To perform and pay tribute to Ms. Reyes, dancers had to go on leave since the show was produced outside the auspices of BP. (Alice & Friends was given a venue and production grant by CCP.) Eric Cruz and his CCP production design team worked overtime to create new sets and costumes after the existing ones — those to be used in the canceled Itim Asu production — were whisked to a warehouse and made unavailable for Ms. Reyes’s use.

Albeit hastily put together amid much drama, the resulting show filled the Main Theater’s 1,800 seats, with about 300 more people watching on a screen set up in the lobby. People who flew in from New York, London, and Paris expecting to see Itim Asu & Other Dances were treated to a program that featured all the numbers in the canceled production — along with three more.

BP alumni dressed in red turned out in full force and were joined by bold-faced names such as National Artist for Visual Arts Benedicto “BenCab” Cabrera; visual artist Jaime De Guzman, who designed the original sets for Itim Asu; and playwright Virginia Moreno, whose play, The Onyx Wolf, was the basis of Ms. Reyes’s choreography.

It should be noted that Feb. 21 is a significant date: it is exactly 50 years to the day that Alice Reyes & Dance Company in a Modern Dance Concert closed its groundbreaking run at the CCP Main Theater and laid the foundation for Ballet Philippines, a company now being sundered by conflict (Related story: “The Russians are coming, the Russians are coming: How a piece of paper tacked to a bulletin board fueled a rumor mill,” https://www.bworldonline.com/the-russians-are-coming-the-russians-are-coming/).

More than a week has passed since Alice & Friends. The curtain has fallen. The standing ovations have receded into recent memory. The adrenaline has worn off. Dancers are deep into rehearsals for Rama Hari, which closes BP’s 50^th season. And come end-March, they will have to decide whether to renew their contracts with BP. What was once a formality is now a life-changing decision.

“The anticipation between now and that point is making people anxious. People don’t know how to decide. People don’t know what to do. People are lost. People are confused,” said dancer Sarah Alejandro in a Feb. 19 interview, two days prior to the Alice & Friends concert.

Ms. Alejandro and the rest of the BP dancers are weathering an emotional maelstrom triggered by the shock announcement of Mikhail Martynyuk, a Russian dancer steeped in the Vaganova tradition, as Ms. Reyes’s successor after the BP founder steps down this month.

This bombshell was followed by a two-hour meeting on Feb. 11 with BP board member Marianne “Maan” B. Hontiveros, which did nothing to reassure the dancers who were repeatedly told it was the board’s prerogative to select Ms. Reyes’s successor. The next bombshell: the cancelation — later worded as “postponement” — of Itim Asu. “What they did broke us,” said Ms. Alejandro of the board’s actions.

Prior to the controversy, BP was on an upswing. Ms. Reyes returned in 2017 as artistic director, after membership dwindled to nine dancers because of internal issues. Today, the company is at a healthy 25 members; subscriptions are up thanks to the Board’s efforts, led by BP President Kathleen “Maymay” Lior-Liechtenstein; BP is more viable than it’s ever been; the curtain goes up on schedule; and Ms. Reyes’s seasons have all been produced below budget.

Numbers provided by the accounting office show that the 48^th season had a budget of about P9.7 million; the 49^th, P11.9 million; and the 50th, P13.9 million. Savings, meanwhile, were tallied at P2.2 million; P800,000; and P5.7 million, respectively, with one last show remaining in the 50^th season.

“Everything was so smooth. The company became so much stronger,” said Ms. Alejandro. “There is no problem in terms of how everything is running. Why is there a need to fix anything? That’s one question that bothers us.”

Ms. Reyes, the dancer continued, is a motherly figure who will be missed when she leaves. “She guides us. She’s like our mama. We know that her door is always open and we know that we can always talk to her,” Ms. Alejandro said. “Whenever we have a problem, personal issues, no matter how small, we go to the artistic director. We look to them for guidance and strength. That’s why this means a lot.”

‘SO DID STEVE JOBS AND HE WAS FIRED’
While Ms. Reyes’s relationship with the dancers is, by their accounts, a nurturing one, her relationship with the Board — at least a very important faction of it — has soured.

“I respect her for founding the company. But to run the company? I don’t think she’s capable of running a company. Why should she choose her successor?,” said Mr. Cojuangco, BP Board chair, on the sidelines of an event in Okada Manila on Feb. 13. “She founded the company — so did Steve Jobs and he was fired. … You know what I’ve learned in my life? Nobody is indispensable. Even me.”

The selection of Mr. Martynyuk, he continued, is a chance to improve the technique of BP. “We’re not the best in ballet. We may be good but we’re not the best. You go to a country which is superior to you in level of performance and you get techniques from them. You have to bring in somebody who’s exposed to that level of dance to explain to you how it’s done. And that’s what we’re trying to do.”

In the two-hour conversation with Ms. Hontiveros that took place after Mr. Martynyuk’s appointment, dancers voiced their opinion, saying that the Vaganova technique — which is highly selective when it comes to anatomy (it favors open hips and perfect turnout) — will tax their bodies to the point of breakage.

Mr. Cojuangco, who has been issuing statements to address the accusations leveled at the Board, characterized Ms. Reyes as “malicious.” “I don’t care how this plays out,” he said. “Alice can jump up and down for all I care. She can do her pirouettes. I’ve been with Ballet Philippines for 27 years either as president or chairman and I have never encountered a situation like this. Never.”

‘A TOTAL FAIL’
This hullabaloo could have been avoided if only the Board communicated with the dancers and prepared the organization for the arrival of its new artistic director.

“Right now, it’s blown up because the leadership did not do what they had to do to prepare for everyone,” said Mr. Siojo, who has been a consultant on organizational behavior and human resources for 20 years (aside from being a part-time faculty member at the Leadership and Strategy Department of the John Gokongwei School of Management at Ateneo de Manila University in Quezon City).

“It’s not a complicated problem. If I were to look at it from the corporate side, [what happened] was a total fail. You initiated a radical change but you did it from just one side. How do you expect to get support from your stakeholders? Your big stakeholders are your dancers.”

Based on reports and facts available to him on Feb. 22, Mr. Siojo — who has no interest in ballet and therefore has no dog in this fight — identified communication (or the lack thereof) as the villain in the story. The dancers, despite not being the decision makers, should have been consulted much earlier in the search for a new artistic director.

“Communication is your most critical skill in any organization. Communication is about knowing about the other, knowing how they think, knowing how they feel, knowing where they come from,” he said. “I don’t think that was done here. I don’t think they [the Board] did their homework. If this was an academic exercise, I would have given them an F: You failed in communication, which is the foundation of a change management process.”

Mr. Martynyuk represents culture change, Mr. Siojo continued, and culture change is the most difficult kind of change to manage especially when it involves an organization like BP, which is proud of its 50-year legacy and its unique identity.

“They could have had a little more heart,” Mr. Siojo said of the Board. “A little heart could have done a lot in making the change less painful. It’s the same for any human situation.”

A FANTASTIC COMPANY
Ms. Reyes, who turns 78 this year, didn’t expect that the company she founded would celebrate its golden anniversary embroiled in controversy, its fate in question. Although she is not on social media, she is aware of the discussion (which has devolved into rude ad hominem attacks in some corners of Facebook).

“What is sad is that the dancers see it the way I see it, and it seems the rest of the community sees it the way we see it. And what they cannot understand is why our Board sees it differently. That’s the question, why? If we were on the same page and people on the outside were not — that would make a little more sense, even if we were on the wrong page together. At least we’d be together,” she said.

“I want to stop all the rumors because I want the dancers to concentrate on the work. I have been trying to calm everybody down. I think that it’s very sad that as far as the Board members have been told, I am the bad person. And that’s really sad to have that kind of portrait of me being painted. That’s okay. I accept it. It doesn’t bother me,” she said. “I go down to the rehearsal hall and I get inspired by the dancers. It’s a fantastic company.”

They may not see eye to eye anymore but on the last point, Ms. Reyes and Mr. Cojuangco agree.

Rice prices expected to fall further

March 5, 2020 | 12:30 am

THE Duterte administration expects the price of rice to decline further on the second year of the law lifting import restrictions that brought prices to a seven-year low.

During a Palace briefing on Wednesday, Socioeconomic Undersecretary Mercedita A. Sombilla said the price of rice could fall to around P34 to P35 per kilo this year, from the current price of around P36 per kilo — the lowest since 2013.

She said prices are seen to drop with the implementation of the Rice Tarriffication Law (RTL) and measures to boost production of rice farmers, particularly through the Rice Competitiveness Enhancement Fund (RCEF).

“Ngayon pumalo na tayo at P36…The lowest one that we saw was in 2013 which was P33.70 and ito ngayon ang pinakamababa after six years, seven years. Hopefully, talagang bababa pa rin tayo with the intercession of the RCEF that will increase production of rice… We are hoping that the retail price will go down,” Ms. Sombilla said.

“It depends on how all of these will work out, but we are hoping it could still go down to P34 or P35 this year. There are so many factors, including how the world market will be evolving in the coming months.”

Agriculture Secretary William D. Dar said during the same briefing that P2.3 billion for the RCEF has already been approved by President Rodrigo R. Duterte and is expected to be released soon in order to assist farmer beneficiaries under the RTL.

“P2.3 billion is awaiting to be fully accessed and through the program’s steering committee of the rice competitiveness enhancement fund, We are going to request the allocation of P1.3 billion for crop diversification and P1 billion for crop insurance….Again, for the very purpose of helping rice farmers increased their levels of productivity, competitiveness and profitability,” Mr. Dar said.

The Agriculture secretary assured that the rice inventory is currently good for 80 days, and no shortage in rice is expected. — Gillian M. Cortez

Philippine REIT market may soon rival Thailand, Malaysia

March 5, 2020 | 12:10 am

By Denise A. Valdez, Reporter

THE introduction of real estate investment trust (REIT) in the Philippines is seen to attract both existing and first-time investors, potentially making the market a rival of Thailand and Malaysia in the next few years.

In a briefing in Makati City yesterday, Ayala-led Bank of the Philippine Islands (BPI) said the country has the potential to reach a market capitalization of $7-11 billion for REITs.

“There’s a lot of potential. Interesting proxies for this potential in the Philippine REIT market are Malaysia and Thailand, which have been growing their REIT markets for the past five to seven years,” BPI Head of Corporate Banking Strategy, Products and Solutions Reginaldo B. Cariaso said.

“These two countries have about $7 billion and $11 billion, respectively, of market capitalizations of REITs, which I think the Philippines is also capable of achieving,” he added.

Noting that the Philippines took a little more time for REITs to be launched compared to the more mature markets of Singapore and Hong Kong, Mr. Cariaso said the country can instead rely on its large population and fast-growing gross domestic product (GDP) to keep pace with other REIT-facilitating countries like Malaysia and Thailand.

“There is significant potential for office, retail, and commercial growth, as well as industrial, logistics, and infrastructure, if we execute successfully,” he said.

The Securities and Exchange Commission (SEC) released earlier this year the revised guidelines for REIT applications, reducing the minimum public float to 33% and the paid-up capital requirement to P300 million.

Since then, it has attracted the country’s first REIT application from Ayala Land, Inc. subsidiary AREIT, Inc., which is seen to raise up to P1.36 billion in net proceeds.

Mr. Cariaso said that as the stock market sees volatility due to the coronavirus disease 2019 (COVID-19) outbreak, REITs can become an attractive new asset class for investors looking to diversify.

“I think equity investors will definitely be there,” he said, referring to potential REIT investors. He noted these individuals may be losing so much money in the stock market lately and would want something less volatile — which is what REIT offers as this is a “more conservative instrument.”

Unlike other stocks, Mr. Cariaso said REITs offer high dividend payouts and competitive yields and is more stable and inflation-hedged with attractive total returns.

“If you had exposure to something, obviously you’d rather be in something less volatile than pure stocks right now. I think REITs would be something nice to have,” Mr. Cariaso said.

He added property is a generally attractive long-term investment segment for many investors, particularly those in the middle class. But because real estate companies are dependent on ability to buy landbank, develop property and sell, REIT is a viable alternative as it allows investors to put their money in already income-generating assets.

“It makes it relatively affordable to get exposure to real estate assets until you eventually want to buy your property,” Mr. Cariaso said. “Will investors in the provinces be attracted to that? I don’t see why not.”

The Ayalas’ REIT application is currently being reviewed by the SEC. Other companies that have also previously expressed interest in launching REITs are DoubleDragon Properties Corp., Megaworld Corp., Robinsons Land Corp., SM Prime Holdings, Inc. and Century Properties Group, Inc.

Senators adopt resolution extending expiring franchises

March 5, 2020 | 12:09 am

SENATORS on Wednesday adopted a resolution extending the validity of the franchises that will expire this year in a move that could result in the continued operation of ABS-CBN Corp., Sky Cable Corp. and AMCARA Broadcasting Network, Inc.

The chamber consolidated two concurrent resolutions and two simple resolution, authored separately by a total of 17 Senators. It will allow the National Telecommunications Commission (NTC) to issue a provisional authority for the companies to continue operating while their franchise renewal is pending in Congress.

These were signed by Senators Franklin M. Drilon, Juan Edgardo M. Angara, Ralph G. Recto, Grace S. Poe-Llamanzares, Maria Lourdes Nancy S. Binay, Sherwin T. Gatchalian, Emmanuel Joel J. Villanueva, Manuel M. Lapid, Pia S. Cayetano, Ronald M. dela Rosa, Christopher Lawrence T. Go, Imee R. Marcos, Ramon B. Revilla, Jr. Francis N. Tolentino, and Cynthia A. Villar.

Senate Resolution No. 6 and Concurrent Resolution No. 7 covered only ABS-CBN, while Concurrent Resolution No. 8 included Sky Cable. Senate Resolution No. 344 covers the two franchises and AMCARA.

Mr. Drilon said on Wednesday’s session the resolution gives “a degree of legal stability” for the continuation of the networks’ operations. Senate President Vicente C. Sotto III earlier questioned the resolution, arguing that previous cases did not require it.

The applications for renewal of ABS CBN, its subsidiary ABS-CBN Convergence, Inc. and Sky Cable, whose franchises will expire in May, and AMCARA, in July, all remain at the committee level in the House of Representatives.

The ABS-CBN’s franchise extension has been pending in the chamber as early as 2014.

It was re-filed in the 17^th Congress, but failed to secure committee approval until it closed in June 2019.

To date, there are 11 pending bills awaiting deliberation of the House Committee on Legislative Franchises, led by Rep. Franz E. Alvarez.

Speaker Alan Peter S. Cayetano said on Wednesday Mr. Alvarez had given notice that his committee would tackle the ABS-CBN franchise on March 10.

The committee had met on Feb. 24, the same day the Senate opened an inquiry on allegations against the network. During the meeting, the committee asked for the position papers of stakeholders.

In a briefing on Wednesday, Mr. Cayetano requested those for or against the franchise renewal to submit their position paper before the legislators convene in May since the committee chairman, aside from ABS-CBN, will decide on the issues.

He noted the focus of the March 10 hearing is to ensure the NTC permits ABS-CBN operation beyond the May 4 franchise expiration. — Charmaine A. Tadalan

WalterMart targets more provincial stores

March 5, 2020 | 12:08 am

WALTERMART Supermarket will open at least four stores in 2020 to reach more customers in the provinces.

WalterMart General Manager Rosemarie D. Caalam told reporters on Monday that the company is set to add four to six stores to the existing 35 Luzon-based stores by the end of the year.

“We have so much opportunity here so we’d like to capture the opportunity first in Luzon,” she said, adding that there are “pocket areas” in Luzon provinces the company would like to reach.

“It’s a growing opportunity in terms of network expansion.”

She said that the company is the number one market player in areas it had entered first, especially in the provinces.

Meanwhile, the company has been responding to increased demand for products such as rubbing alcohol amid the COVID-19 outbreak.

“We are able to plan with our merchandising team and with the supply chain. I think that one is anticipation,” Ms. Caalam said.

She said the frequency of transactions had increased since the epidemic broke out late last year.

The company’s growth, which Ms. Caalam described as “very healthy” and in double digits, can be attributed to the company rebranding and the increased assortment of products.

The WalterMart Group of Companies is under a joint venture deal with SM Investments Corp.

SM Investments Corp. saw a 20% increase in net income last year to P44.6 billion. Its food group, which includes WalterMart, SM Supermarket, SM Hypermarket, Savemore, and Alfamart, opened 248 stores in 2019.

WalterMart expansions to Visayas and Mindanao, Ms. Caalam said, are not yet being considered by the company. — Jenina P. Ibañez

No Filipino employed in three POGOs with thousands of workers

March 5, 2020 | 12:07 am

THREE service providers of Philippine offshore gaming operators (POGOs) employed nearly 10,000 foreign workers, but no job opportunity was given to a single Filipino, data from the state gaming agency showed.

Senator Emmanuel Joel J. Villanueva presented the data from the Philippine Amusement Gaming Corp. (Pagcor), which identified the three as Big Emperor Technology Corp., Jindingyuan Business Support, Inc., and Great Empire Gaming and Amusement Corp. Respectively, they hired 3,483, 3,226 and 3,086 foreign nationals.

“We have been saying that we are not against foreign workers in the country. Kapag may foreign workers dito sa ating bansa, ibig sabihin may Filipino na hindi capable to do that job (When foreign workers are employed in the country, it means Filipinos are not capable of doing the job),” he said in a briefing.

Mr. Villanueva said the nature of the job has to be highly technical before alien workers are preferred over Filipinos. But he said if the issue is language, local language skills institute, including the Technical Education and Skills Development Authority, could provide training for locals to learn to speak Chinese.

On top of this and other crimes related to POGOs, such as kidnapping, prostitution, and failure to pay tax dues, Senator Richard J. Gordon found a multi-million money laundering activity linked to POGOs.

“I can connect POGO to the money, to the real estate aspect, to the investment aspect of cleaning the money. But it can stand independently,” Mr. Gordon said in a separate briefing.

He also said that the Philippine government’s “soft” stance on China paved the way for the growth of the POGO industry and ultimately to the said irregularities.

“This would never happen if the administration were not too soft on China. ‘Yun ang isang rason bakit sila nandito (That’s one reason why they are here),” he said. — Charmaine A. Tadalan

Saving the planet, one dish at a time

March 5, 2020 | 12:07 am

By Joseph L. Garcia, Reporter

How sure are you that your choices when you’re dining out are healthy for the planet?

A Life Cycle Assessment (LCA) study commissioned by WWF-Philippines (World Wild Fund for Nature) from the Philippine Center for Environmental Protection and Sustainable Development Inc. (PCEPSDI) found five popular dishes that might be contributing to a larger carbon footprint. The dishes come from the partner restaurants of WWF’s Sustainable Diner project, which are scattered through three partner cities: Quezon City, Tagaytay, and Cebu. The data used for the study came from the restaurants themselves.

The dishes were analyzed for their carbon footprint via their inputs in procurement, transportation from source, their operations, food service and operational support, packaging, and waste management. The dishes studied included three unspecified salads, crispy dinuguan (blood stew), noodle soup, caldereta (goat meat stew), an unspecified fish dish, kare-kare (a stew with peanut sauce), bulalo (beef and bone marrow soup), crispy fried chicken, crispy pata (deep fried pig knuckles), sisig (sizzling chopped pig’s face and ears), and sinigang (sour soup).

Of these, measured in carbon equivalent units, crispy pata rated the highest at 5.98 units, followed by bulalo at 3.34 units, then crispy fried chicken at 3.12 units. Pork sisig at 2.95 units, and pork sinigang at 2.89 units round out the top five list.

Overall, the salads rated the lowest at 2.09, 2.06, and 2.04 units each.

“You can prepare a salad which will give you the most optimal CO2 equivalent emissions,” said Dr. Alvin B. Culaba, a university fellow and full professor 10 of Mechanical Engineering at De La Salle University (DLSU), trustee of the PCEPSDI, and a former Executive Vice-President of DLSU, who presented the study. According to Dr. Culaba’s presentation, “Casual restaurants are encouraged to shift to serving vegetable dishes and create awareness campaigns to encourage diners to consume higher portions of vegetables than meat.”

From the same study, he noted that food service operations (storage, preparation, service, and support) proved to have the highest environmental impacts (due perhaps to the high use of energy such as in refrigeration and cooking).

“It is recommended for restaurants to practice energy management. This can be done through effective energy use planning, proper maintenance of devices and equipment, and the use of energy-efficient devices and equipment,” said a summary of the study given to guests during WWF’s Sustainable Diner Summit at Quezon City this week.

Packaging also proved to be an issue as “the production and materials used for the packaging… require use of non-renewable energy and extraction of natural resources.”

Agreeing with Dr. Culaba’s statement, Melody Melo-Rijk, Project Manager for the Sustainable Diner, said, “I think we have to be clear on the advocacy of the project, and that is consuming more plant-based dishes, and reducing meat consumption.” The livestock industry, after all, “contributes 7.1 gigatons of carbon equivalent units per year, representing 14.5% of all anthropogenic greenhouse emissions,” according to data from the Food and Agriculture Organization of the United Nations.

The partner restaurants of The Sustainable Diner project include Kandle Café, Manam, Bells and Whistles, Concha’s Garden Café, Circa 1900, Soru Izakaya, Anzani, Zubuchon, Sugbo Mercado, Earth Kitchen, Gourmet Gypsy, Siglo, Go Salads, Kanin Club, Green Pastures, and Cravings.

“There are varying levels of participation, but they are the ones who signed up for the conditions of partnership,” Ms. Melo-Rijk noted. “We offered to help them transform their business operations to more sustainable ones.”

As a lone consumer, one can feel almost powerless to fight the phenomenon of climate change. But as Ms. Melo-Rijk points out, “It’s really important that we inculcate environmental sensitivity in our choices. It’s not just a fad. It’s becoming a norm to be more selective on the products and services that are more sustainable.”

She adds, “When you support local businesses, you are also supporting them to provide more sustainable services and products. In turn, when it’s demand-driven, that will translate to other businesses going in the same direction.”

Dishes with the biggest carbon footprints

1. Crispy pata with 5.98 carbon equivalent units

2. Bulalo at 3.34 carbon equivalent units

3. Crispy fried chicken at 3.12 carbon equivalent units

4. Pork sisig at 2.95 carbon equivalent units

5. Pork sinigang at 2.89 carbon equivalent units

Liquidity, lending growth pick up

March 5, 2020 | 12:06 am

MONEY SUPPLY growth quickened in January following the central bank’s easing stance in the previous year.

Domestic liquidity or M3, the broadest measure of money supply, expanded by 11.9% year on year to P12.8 trillion in January, slightly quicker than the downwardly revised 11.3% print in December, according to preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday.

Money supply has been growing at a faster pace for four straight months or since September last year.

Month on month, M3 inched up by 1.3%.

In a statement, the central bank said demand for credit was the “principal driver of money supply growth.”

Analysts attributed the quicker money supply growth to the easing stance by the BSP last year as it implemented several rate cuts and reductions to lenders’ reserve requirement ratios (RRR).

“This is the direct impact of expansionary monetary policy as the BSP, back in 2019, continued to cut RRP (reverse repurchase rate) and even RRR,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

“We saw that RRP (reverse repurchase) and RRR cuts working in tandem in 2019 proved optimal,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail.

In 2019, the BSP cut key policy rates by a total of 75 basis points (bps).

“We expect the Monetary Board to cut RRP by 25 bps in the March 19 meeting following the US Fed’s surprise 50 bps cut,” Mr. Roces said.

On Tuesday, Reuters reported that the US Federal Reserve cut rates by 50 bps as an emergency move to shield the world’s biggest economy from impact due to the coronavirus outbreak.

After pausing in the later part of 2019, the Monetary Board slashed benchmark rates by another 25 bps on Feb. 6 as a preemptive move to cushion the country from the impact of the coronavirus disease 2019 (COVID-19).

This means the BSP has already unwound 100 bps from the 175 bps worth of rate hikes done in 2018 to quell multi-year high inflation.

BSP Governor Benjamin E. Diokno said earlier this week another 25-bp cut is on the table this year, adding that they will assess anew the impact of the virus on the economy during the Monetary Board’s policy-setting meeting on March 19. Last week, he also said the central bank is not ruling out cuts worth 50 to 75 bps this year and may likewise reduce banks’ reserve requirements further.

The rates on the BSP’s overnight reverse repurchase, overnight lending and deposit facilities stand at 3.75%, 4.25% and 3.25%, respectively.

The RRR of big banks currently stands at 14%, while those for thrift and rural lenders are at four percent and three percent, respectively, after 400 bps worth of cuts in 2019.

Mr. Diokno has vowed to reduce RRR of big banks to the single digit level by the end of his term in mid-2023.

BSP data showed net claims on the central government climbed by more than a third (31.9%) in January, faster than the downwardly revised 23.8% logged in December.

For domestic claims, which were supported mainly by claims on the private sector, growth was at a pace of 11.7%, also quicker than the upward revised 10.6% seen in December.

“Loans for production activities continued to be driven by lending to key sectors such as real estate activities; financial and insurance activities; electricity, gas, steam and airconditioning supply; information and communication; and construction,” the central bank said.

Data from the central bank also showed net foreign assets (NFAs) in peso terms inched up by 8.7% in January, easing from the upwardly revised 8.9% in the preceding month.

On the other hand, NFAs held by banks also grew by 77%, much quicker than the upwardly revised 23.3% seen in December.

“The sustained expansion in banks’ foreign assets can be attributed to the recent strength of the peso,” UnionBank’s Mr. Asuncion said.

“Historically, December and even January, personal remittance inflows are at its height greatly affecting the local currency,” he added.

LENDING GROWTH PICKS UP
Meanwhile, bank lending growth also picked up for the third consecutive month in January.

BSP data showed outstanding loans disbursed by universal and commercial banks rose by 11.6% in January, picking up from the 10.9% pace seen in the previous month.

Inclusive of reverse repurchase agreements, bank lending grew by 11.2%, quicker than the downwardly revised 10.8% recorded in December.

Lending growth was mainly supported by production loans, which comprised 86.3% of total loans. Lending to this segment grew 8.8% in January, easing from the 9.1% growth in December.

Growth in production loans came mainly on the back of growth in lending to sectors such as real estate activities (20.5%); information and communication (18.6%); financial and insurance activities (16.2%); construction (15.5%), and electricity, gas, steam and air-conditioning supply (8.2%).

“Bank lending to other sectors also increased during the month, except those to manufacturing (-2.9%), mining and quarrying (-11.6%), and other community, social and personal activities (-34.8 %), the BSP said.

Likewise, BSP data showed loans for household consumption grew 40.1% in January from 27.5% the prior month, supported by faster growth in credit card and motor vehicle loans during the month.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the faster loan growth in January could be on the back of higher government spending.

“Faster loan growth may already reflect the sharp increase in government spending especially in infrastructure, thereby increasing the business and the required financing activities of various suppliers involved, which also have positive effects to other businesses on the broader local economy,” Mr. Ricafort said in an e-mail.

Data from the Bureau of the Treasury showed the government’s budget deficit widened to a record P660.2 billion in 2019, with government spending hitting nearly P500 billion in December alone to support its infrastructure and social protection programs, among others.

Government expenditures in 2019 hit P3.797 trillion, growing by 11.42% year on year and surpassing the 10% rise in revenues to P3.137 billion.

Meanwhile, ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa pointed out the sharp pickup in loans disbursed for consumption.

“Going forward, Mr. De la Cruz (Filipinos) will continue to help shore up lost capital formation momentum and in return play a part in 2020’s recovery, coronavirus notwithstanding,” Mr. Mapa said in a note sent to reporters.

“Falling capital formation was one of the main culprits to the 2019 GDP (gross domestic product) growth disappointment and the steady improvement in bank lending and stable liquidity conditions points to better economic performance for the year, ahead of the COVID impact,” he said.

RCBC’s Mr. Ricafort said central banks have been opting to reduce rates amid the possible slowdown that could be caused by the virus, which could in turn cause a rise in borrowings. — L.W.T. Noble

Megawide increases share buyback plan to P5B

March 5, 2020 | 12:06 am

MEGAWIDE Construction Corp. is increasing the value of its share buyback program to P5 billion and is switching the duration for the execution to be open-ended.

In a disclosure to the stock exchange Wednesday, the diversified engineering company said its board of directors approved earlier this week adding P3 billion to its share buyback program.

The period within which to execute the buying of shares has also been removed to make it open-ended.

Megawide did not explain the reason for increasing the size of the program, but it said in 2018 that it was doing the buyback because its shares are “grossly undervalued.”

The company started buying back P2 billion worth of its shares from the stock market in October 2018, originally scheduled to be executed within a two-year period.

Edgar B. Saavedra, chairman and chief executive officer of Megawide, said at the time that the program is proof of the company’s confidence in its long-term growth prospects. The buying back of shares was seen as a means to enhance shareholder value.

On Wednesday, shares in Megawide dropped 36 centavos or 2.88% to P12.14 apiece. It has been trading between P12.02 and P15.48 over the past 30 days.

Aside from Megawide, Metro Pacific Investments Corp. (MPIC) and Ayala Land, Inc. (ALI) announced last month that their board of directors also approved doing share buyback programs.

For MPIC, the approval was for the conduct of a three-month share buyback program of up to P5 billion until May 26. Like Megawide, it said the program would “enhance and improve shareholder value and to manifest confidence in the company’s value and prospects through the repurchase of its common shares.”

In the case of ALI, its board approved adding P25 billion to its current share buyback program, effectively increasing its available balance to P26.1 billion. The shares will be bought through open market purchases at the stock exchange.

The buying of a company’s own shares from the stock market is commonly done to preserve its share price when it thinks its shares are undervalued.

Shares in MPIC shed 14 centavos or 4.24% to P3.44 each on Wednesday, while shares in ALI added P1.15 or 2.90% to P40.75 each. — Denise A. Valdez

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