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Chelsea clarifies gov’t guarantee on new loans

DENNIS A. Uy’s Chelsea Logistics and Infrastructure Holdings Corp. on Monday clarified a newspaper report published last week that the Davao-based businessman was seeking government guarantee for his firm’s new loans.

In a disclosure to the stock exchange, Chelsea Logistics said that it was working with the Philippine Guarantee Corp. (PGC) because the group might reach the single borrowers’ limit with one of its financing bank, which it described as “one of the main banks in the country which supports the shipping industry.”

It said it was hoping to clarify the “insinuations” in the report, adding that the state guarantee it obtained is only “limited to the loan of approximately P700 million.”

“The Group requires a guarantee to be provided by PGC in order to secure said loan obligation,” it said.

It said the loan amount will be used to fund a single vessel, and not for any other loan obligations of the Chelsea group. It said it was capable of covering all its loan obligations supported by its strong earnings before interest, taxes, depreciation and amortization, or EBITDA. — Arjay L. Balinbin

How PSEi member stocks performed — February 17, 2020

Here’s a quick glance at how PSEi stocks fared on Monday, February 17, 2020.

 

Power co-ops advised on shortages in April, May

By Victor V. Saulon
Sub-Editor

THE National Electrification Administration (NEA) told electric cooperatives (ECs) to prepare for possible rotational brownouts in April and May when the power supply deficiency is projected to reach up to 821 megawatts (MW) in Luzon.

“DoE (Department of Energy) estimates that red alerts may be issued from April 18 to 21 and May 20 to 22, and that an additional capacity of 256 MW to 821 MW is needed in the Luzon power grid to avoid the yellow or red alert in the region,” said NEA Administrator Edgardo R. Masongsong in a briefing on Monday at the agency’s head office in Quezon City.

The projected power supply deficiency is a result of increased demand during the hot months when hydro-electric power plants are also producing at lower capacity because water elevation declines, he said.

“In light of this, the NEA has advised all electric cooperatives in Luzon and the Visayas to prepare their respective contingency plans to mitigate the impact of potential power supply deficits in their respective areas,” Mr. Masongsong said.

Grid operator National Grid Corp. of the Philippines issues a yellow alert notice when power supply is low but may not lead to power outages. It issues a red alert notice when supply is insufficient and may result in rotational brownouts.

“Apart from this, the NEA has also recommended various measures that ECs may adopt to help them address this potential problem. These include adopting demand-side management programs and maximizing embedded power plants to reduce, if not eliminate, rotating brownouts during peak hours,” Mr. Masongsong said.

Embedded power generating units are indirectly connected to the grid through the distribution system that supplies power to the power plants’ host distribution utility.

Five electric cooperatives in Luzon have embedded power plants with a combined capacity of 11.696 MW. In the Visayas, three ECs have embedded mini-hydro power plants with a total capacity of 10.42 MW.

Mr. Masongsong said the agency had advised electric cooperatives that do not have embedded power plants or generators to work with big electricity consumers for them to reduce their usage when demand is high or when an alert notice is issued.

“Affected ECs are also directed to encourage large establishments with stand-by generating capacities to participate in the interruptible load program, or ILP. Under this program, big consumers will be asked to run their embedded stand-by generating sets during peak hours instead of obtaining their supply from power distribution utilities,” he said.

Mr. Masongsong also called on ECs to develop their own embedded power plants even with small capacities, up to a maximum of 1 MW, using renewable energy sources such as hydroelectric or solar to help mitigate power shortages.

NEA is mandated to pursue total electrification through the 121 electric cooperatives under its supervision.

After the briefing, Mr. Masongsong gave his side on the move from the National Association of Electricity Consumers for Reforms, Inc. (Nasecore) asking Energy Secretary Alfonso G. Cusi in a letter dated Feb. 10 to recommend the NEA administrator’s removal from office for alleged grave abuse of authority.

Nasecore claims that his issuances were without prior authorization from the NEA board of administrators as required by law. One issuance raised the salaries of EC general managers allegedly to gain their support for the electoral campaign of four party-list representatives in Congress.

Mr. Masongsong said Nasecore must first prove that he had abused his authority as NEA administrator. He added that all the issuance of NEA, especially on policy issues, had been approved by the agency’s board of administrators, which is chaired by Mr. Cusi.

“I’ll prepare an answer kahit hindi pa ako pinapasagot ni (even if I haven’t been asked to reply by) Secretary Cusi. I’ll prepare an answer addressed to Sec. Cusi,” he told reporters.

Flagship project costing upgraded to P4.4 trillion

COST estimates for the government’s flagship infrastructure projects have been upgraded to P4.4 trillion from P4.2 trillion previously, with more works being considered for inclusion in the list of about 100 projects.

“There have been adjustments… this figure is now up to about P4.4 trillion,” Vivencio B. Dizon, the presidential adviser for flagship infrastructure projects, told a House of Representatives committee Monday.

Mr. Dizon said the additional P200 billion arose from revised costings for some projects, with the biggest portion coming from adjusted estimates for the Panay-Guimaras-Negros Island Bridges project, as approved by the National Economic and Development Authority’s (NEDA).

According to Mr. Dizon, several projects are also being reviewed for inclusion in the “evolving” flagship list. A copy of the updated list with revised costing has yet to be made available to the media.

“NEDA and the implementing agencies are ready with projects that we can start and significantly progress in the remainder of the President’s term. There will be projects that may be added to this list and there are several that are already in the pipeline currently being reviewed by the NEDA for inclusion in the list,” he said.

Of the flagship projects, 34 are ongoing, with contracts awarded; 44 will start construction in six to eight months; 15 are in the advanced stages of government approval and seven are in the advanced stages of feasibility study.

NEDA Secretary Ernesto M. Pernia remains confident that the government can sustain its infrastructure momentum as it enters various stages of project implementation while ensuring these big-ticket projects’ technical, financial, economic and social merits before endorsement for final approval.

“Since the start of the current administration, the NEDA Board has approved projects at a quicker pace. The economic and infrastructure team continues to process projects through careful analysis and thorough review,” Mr. Pernia was quoted as saying in a statement Monday.

The International Monetary Fund (IMF) has said that the country’s push to develop its infrastructure will be crucial in becoming an upper-middle income economy as well as in reducing poverty.

“When completed, these projects are expected to bring important benefits to the Philippine economy and to the lives of ordinary citizens,” the IMF said in a Feb. 6 report.

The IMF said considering the Philippines’ vulnerability to natural disasters, climate-resilient infrastructure, efficient irrigation systems and better water management could reduce the impact of calamities, boost agriculture and eventually “lift many people out of poverty.”

It noted that the government will have to “ensure its spending is well managed” as the Philippines still recorded a 23% efficiency gap compared with “best practices in translating public investment into infrastructure.”

“Closing this gap will require improving project appraisals, by identifying risk reduction measures early on and greater involvement of the public-for example, by publishing appraisal analyses for public comment. Moreover, more private-sector participation could help in executing the infrastructure investment push as long as financial risks to the government are well managed. Moreover, developing domestic capital markets could broaden the funding of the push,” the IMF said. — Beatrice M. Laforga

DoST plan to improve innovation ranking focused on agriculture, water

THE Department of Science and Technology (DoST) said its plan to further improve the Philippines’ global innovation ranking involves research in key agricultural sectors like coconut and livestock, as well as improving the environment for water resources.

Science and Technology Secretary Fortunato T. dela Peña said at a news conference Monday that the Philippines should focus on fields of research like “alternatives to pork meat and… chicken research.”

The Philippines rose 19 places in the 2019 Global Innovation Index to 54.

He said research resources should also be devoted to biomedical devices, mass transportation systems, machinery design, and energy storage and conservation.

“This is the reason why we have modified our monitoring and evaluation system… because we would like to invest in those that will give the best returns,” he said.

In addition to the output of university, industry, and research centers, DoST is also looking at the research of senior high school students, drawing in research from experts who have traditionally not received grants before.

He also cited the need to pay more attention to the work of small businesses, including start-ups.

“Start-ups… come up with innovations, even without R&D support,” he said, noting that the DoST is eager to provide research support at the prototype development stage via business incubators.

The Philippines performed well in indicators related to innovation linkages, high-tech imports, and research talent in the global innovation index.

Other bright spots were categories like firms offering formal training, productivity growth, ICT services exports, and creative goods exports.

The identified weaknesses were in ease of starting a business, ease of getting credit, expenditure on education, the presence of global R&D companies, the volume of scientific and technical articles and new businesses. — Jenina P. Ibañez

Philippines growth forecast steady amid global downgrades — Fitch Solutions

FITCH SOLUTIONS Macro Research maintained its 2020 growth outlook for the Philippines even as it cut the overall global growth forecast due to the impact of the coronavirus disease 2019 (Covid-19) outbreak.

In a note Monday, Fitch Solutions said that it maintained its growth forecast for the Philippines at 6.3% first issued in January.

This level of growth is higher than the 5.8% increase in gross domestic product (GDP) in 2019 but below the 6.5% to 7.5% target range set by the government for the year.

Fitch Solutions’ projections for the Philippines in 2021 and 2022 are 6% and 6.2%, respectively.

However, the research firm said that it revised its global growth forecast to 2.6% from 2.7%, with the growth outlook for China reduced to 5.6% from 5.9%.

“The extent of the slowdown in China and the wider region will depend on how long it takes for authorities to contain the spread of the virus, and as such the longer it takes, the larger the downside risks to growth will be,” Fitch Solutions said.s

Fitch Solutions said more revisions could be coming up given the impact on trade and investment linkages across Asia and the negative growth spillovers of the virus on commodity and tourism channels as China is one of the biggest consumer of commodities and tourism market for many countries.

“The overall impact on growth, however, is still unknown as it will largely depend on how long the Chinese authorities will take to bring the coronavirus outbreak under control,” the report said.

In the Philippines, the National Economic Development Authority (NEDA) said tourism revenue could be dented by about P22.7 billion per month due to the outbreak.

Tourism Secretary Bernadette Fatima T. Romulo-Puyat said her department’s estimate is foregone revenue of about P42.9 billion between February and April due to flight cancellations and event postponements.

“The APAC (Asia-Pacific) region is most at risk given the deep trade, investment and tourism links between the wider region and China,” Fitch Solutions said.

It added that it might cut growth forecasts further for emerging markets amid dampened growth in key trade and commodity-dependent economies with strong linkages to China.

Meanwhile, S&P Global Ratings said that sovereigns in the Asia Pacific are still growing at a healthy pace despite risks arising from the outbreak.

In a note issued Monday, S&P said that pressures that may be building up from the outbreak will likely be “mild and temporary.”

“Growth performances in Asia-Pacific countries are still relatively healthy by global standards. We also have no reason to believe now that the economic damage from the virus will be persistent,” S&P said, adding that the outbreak “does not appear to have materially affected international financial flows.”

Last year, S&P upgraded its credit rating for the Philippines to “BBB+,” citing above-average growth and a strong external and fiscal position.

On Feb. 7, Japan’s Rating and Investment Information, Inc. (R&I) also upgraded the Philippines’ rating to “BBB+,” which is a step away from the “A” rating targeted by the government.

Fitch Ratings last week upgraded its rating outlook on the Philippines to “positive” from “stable,” indicating that its rating could be potentially upgraded. It maintained the Philippines’ rating at “BBB.” — Luz Wendy T. Noble

Marikina River project could include basin to store excess floodwater — World Bank

THE PROPOSED $700-million Pasig-Marikina River Basin Flood Management Project for Metro Manila’s flood control system could feature a retention basin to boost its climate resilience, the World Bank said, citing preliminary design studies.

The World Bank, which will partially finance the project, said completion of the design is targeted for the end of June, along with other feasibility studies for the flood control project such as a flood forecasting and early warning system for Metro Manila and its surrounding areas, as well as the design of the institutional arrangements for sustainable flood management.

It said the retention basin with a capacity to impound about 12 million cubic meters of floodwater will “boost climate resilience” as the proposed Marikina Dam alone is deemed insufficient to rule out flooding in the event of a 100-year rainfall event.

It said the proposed Marikina Dam to be constructed across the Marikina River will be an 81-meter high concrete gravity dam with a 350-meter crest and a 90 million cubic-meter gross storage capacity.

“The primary function of the proposed dam should be flood management, which is a public good, and public resources should be used for this. The dam is designed to reduce the maximum river discharge of a 100-year rainfall event in the catchment by about 85% from an inflow of 3,460 cubic meters per second to an outflow of about 600 cubic meters per second by temporarily storing flood waters for regulated discharge after the storm event. This will require the reservoir to be almost empty during the rainy season to capture floods,” the bank said.

The proposed Pasig-Marikina River Basin Flood Management Project will be implemented by the Department of Public Works and Highways.

The World Bank will provide $400 million of the total project cost of $700 million by next year, while the $35 million will come from other sources, leaving a funding gap of $265 million.

“Although Metro Manila constantly has issues related to urban flooding, it also began to experience water scarcity since March 2019. Inadequate and intermittent water supply affects customers in many parts of Metro Manila. Delays in developing additional water sources and increasing demand for water due to population growth have contributed to the water supply crisis, which needs to be addressed along with flood reduction measures,” it said. — Beatrice M. Laforga

House panel, BoC form TWG to address import valuation

THE HOUSE COMMITTEE on Ways and Means and the Bureau of Customs (BoC) have formed a technical working group (TWG) to address concerns relating to the National Value Verification System (NVVS).

“Committee and BoC form NVVS TWG to thresh out issues,” Rep. Jose Ma. Clemente S. Salceda of Albay’s second district, who chairs the panel, told reporters in a phone message Monday.

The Committee earlier flagged the NVVS implementation as illegal, considering it allowed the imposition of unequal levies on similar goods.

The NVVS is not authorized by the Customs Modernization and Tariff Act.

Rep. Jericho Jonas B. Nograles, a Ways and Means Committee member and PBA party-list legislator, said Sunday that Customs Commissioner Rey Leonardo B. Guerrero could be liable for graft and corruption if he continues to implement the System.

The Bureau has twice been asked by the Committee to stop implementing NVVS.

Mr. Guerrero had asked the Committee to reconsider its proposal to suspend the system, while the Bureau is in the process of putting in place measures that will improve the system.

“These measures are included in the Customs Modernization Project sponsored by the World Bank, which is already subject to approval of the National Economic Development Authority (NEDA),” Mr. Guerrero said in a Feb. 12, 2020 letter to the Committee.

He said the Committee that the continuation of the NVVS operation will “not be used to violate the law and our international commitments to customs valuation,” he added. — Charmaine A. Tadalan

Second chance at tax amnesty on delinquency

If you failed to qualify for the tax amnesty on delinquencies, there may be a second chance for you.

On Valentine’s Day last year, the President signed the Tax Amnesty Act (Republic Act No. 11213) which included the Tax Amnesty on Delinquencies (TAD). The Bureau of Internal Revenue (BIR) then issued the Implementing Rules on TAD (Revenue Regulations No. 4-2019) on April 8, 2019, which became effective on April 24. Although it is not as generous as the vetoed general tax amnesty, it was still a welcome development. As the saying goes, beggars can’t be choosers and, after all, tax amnesty is a privilege and not a right.

Unlike the more forgiving general tax amnesty that could have been availed of by most taxpayers with unpaid taxes and penalties, TAD covers only taxpayers with delinquent accounts as of April 24, 2019. Taxes covered include all internal revenue taxes for the taxable year 2017 and prior years.

A delinquent account, as defined in the implementing rules, pertains to tax due arising from a BIR audit that has been issued Assessment Notices [final assessment notice (FAN)/ final letter of demand (FLD)] that have become final and executory due to the following instances: (a) failure to pay the tax due on the prescribed due date provided in the FAN/FLD and for which no valid protest, whether a request for reconsideration or reinvestigation, has been filed within 30 days from receipt thereof; (b) failure to file an appeal to the Court of Tax Appeals (CTA) or an administrative appeal before the Commission of Internal Revenue (CIR) within 30 days from receipt of the decision denying the request for reinvestigation or reconsideration; or (c) failure to file an appeal to the CTA within 30 days from receipt of the decision of the CIR denying the taxpayer’s administrative appeal to the Final Decision on Disputed Assessment (FDDA).

Based on the discussion above, taxpayers who would have wanted to avail of the amnesty, but protested the assessment within the time allowed by law as of April 24, 2019 would have missed their chance.

The TAD implementing rules triggered many questions from interested taxpayers, which is why on May 22, 2019, a few months after the issuance of RR No. 4-2019, the BIR issued Revenue Memorandum Circular (RMC) No. 57-2019, clarifying the frequently asked questions of taxpayers on TAD. Interestingly, one of the clarifications under RMC No. 57-2019 provided that tax liabilities covered by a FAN that was timely protested, yet the protest was withdrawn on or before April 24, 2019, shall be considered a delinquent account qualified for tax amnesty. It was as if there was no protest filed, provided that the delinquent accounts pertain to taxable year 2017 and prior years and that the period to protest lapsed on or before April 24, 2019.

However, the clarification was issued on May 22, 2019 — way past the April 24 deadline. Hence, many taxpayers were unable to avail of the opportunity to withdraw their protest.

Fortunately, there is a second chance.

On Feb. 6, 2020, the BIR issued RMC No. 11-2020, amending the clarification to extend the withdrawal of the protest until April 23, 2020 to qualify their assessments as delinquent accounts. RMC No. 11-2020 provided that, if the protest or appeal was withdrawn on or before April 23, 2020 and the FAN/FLD or FDDA was received on or before March 25, 2019, the effect is as if no protest or appeal was filed. Therefore, the assessment will have become final and executory as of April 24, 2019, because then the 30-day period counted from the receipt of the FAN, within which the taxpayer is allowed to file a protest or appeal, would have already lapsed. This gives taxpayers a second chance at withdrawing their protest.

In addition to an opportunity to withdraw the protest, RMC No. 11-2020 also reminded taxpayers that the protest may actually be invalid in the first place, and consequently qualifying the assessment notice as final and executory and the assessment, therefore, delinquent. RMC No. 11-2020 provided the following instances when a protest is invalid: (1) the protest to FAN/FLD was filed beyond 30 days from receipt of the FAN/FLD; (2) the appeal to the FDDA was filed beyond 30 days from receipt of the FDDA; (3) the protest to FAN/FLD was not fled with the duly authorized representative of the CIR who signed the FAN/FLD; (4) the appeal to the FDDA (i.e., motion for reconsideration) was not filed with the office of CIR; (5) the protest/appeal failed to state the applicable law, rules and regulations, or jurisprudence on which it is based; and (6) the request for reinvestigation did not specify the newly discovered or additional evidence that the taxpayer intends to present, as required in a valid protest.

If the protest filed by the taxpayer is invalid, the taxpayer will qualify for tax amnesty after the lapse of the 30-day period provided by law to protest the assessment. This means that the FAN/FLD/FDDA should have been received by the taxpayer on or before March 25, 2019 so that the assessment will become final and executory on or before April 24, 2019.

RMC No. 11-2020 also provided an extended period of 30 days to submit the complete documentary requirements to fully comply with the availment of the tax amnesty, provided that the taxpayers have already secured the Certificate of Tax Delinquencies (CTD)/Tax Liabilities and endorsement of the Acceptance Payment Form (APF) and paid the amnesty tax due on or before April 23, 2020, the last day of the availment period.

A word of caution, however, for those who plan to withdraw their protest: taxpayers should consider the costs and benefits of withdrawing the protest to avail of the tax amnesty, because this is a ‘touch-move’ decision. The taxpayer should try to assess which would result in more cost savings, because there is a possibility that the amnesty could actually be higher than what the taxpayer could have settled if the assessment was closed through the usual assessment process. This is true especially if the assessment is significantly higher and far from the true deficiency of the taxpayer. For instance, the basic tax assessed is P50 million, but the actual deficiency is only P2 million, as supported by legal grounds and documents presented by the taxpayer. The 40% amnesty tax amounting to P20 million may be too much. Furthermore, for taxpayers who have partially settled the assessment, the amount paid cannot be credited against the tax amnesty, as computed. The basis for computing the tax amnesty rate is the basic tax assessed less the amount already paid.

Another thing taxpayers need to watch out for is the timeline for availing of tax amnesty. Taxpayers should ensure that they allot ample time to process the withdrawal of protest, file the Tax Amnesty Return, secure the Certificate of Tax Delinquencies/Liabilities and the approved Acceptance Payment Form, and settle the tax amnesty due on or before April 23, 2020. Even if the taxpayer withdraws the protest on April 23, 2020, it would already be too late for the application. With only a few months away from the deadline, seeking professional advice before making a critical decision may be a good investment.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Juvy H. de Jesus is a manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Peso inches lower on virus fears

THE PESO traded sideways against the greenback on Monday with the United States on holiday and as the market looked out for developments related to the coronavirus disease 2019 (COVID-19) outbreak.

The local unit ended trading at P50.57 versus the dollar on Monday, weakening by a centavo from its Friday finish of P50.56.

The peso opened the session at P50.58 per dollar. Its weakest showing for the day was at P50.61, while its strongest was at P50.52 against the greenback.

Dollars traded rose to $971.5 million from $831.5 million on Friday.

“US is on a holiday today so not much data today… It was headline trading that followed COVID 2019 developments,” a trader said in a phone call on Monday.

“Due to additional cases reported since this morning, nag-weaken on emerging markets (emerging markets weakened),” the trader added.

US markets were closed in observance of Presidents’ Day.

Meanwhile, Reuters yesterday cited data from China’s National Health Commission which reported that the death toll in the mainland grew by 105 to hit 1,770 as of end-Sunday.

Confirmed infections in the country also increased by 2,048 to 70,548 cases, of which 10,844 people have already been treated and released from the hospital.

More than 94% of the new cases on Sunday were in the central province of Hubei, where the outbreak was born. The province also saw 100 deaths on Feb. 16.

Meanwhile, another trader said the slightly weaker local unit came on the back of recent dovish signals from the central bank.

“The peso slightly weakened amid dovish signals from BSP (Bangko Sentral ng Pilipinas) Governor [Benjamin E.] Diokno and as participants remained cautious amid lingering coronavirus concerns,” the second trader said in an e-mail.

On Friday, Mr. Diokno said the BSP may cut rates by another 25 basis points (bps) as early as the second quarter following the 25-bp reduction it announced on Feb. 6.

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

The first trader said the peso-dollar market will continue to track headlines related to COVID-19 on Tuesday.

“The local currency might weaken on market positioning ahead of likely less dovish cues from the Federal Reserve policy meeting minutes due to be released later this week,” the second trader said.

For today, the first trader expects the peso to play around the P50.50-P50.80 band, while the second trader gave a forecast range of P50.50-P50.70. — L.W.T. Noble with Reuters

PSE index ends higher as worries over virus ease

By Denise A. Valdez, Reporter

THE MAIN INDEX closed higher on Monday as investor worries over the coronavirus disease 2019 (COVID-19) started to wane and bargain hunters flocked the market in anticipation of corporate earnings.

The benchmark Philippine Stock Exchange index (PSEi) added 44.85 points or 0.61% to end at 7,326.85 yesterday, while the broader all shares index increased 19.59 points or 0.45% to 4,338.70.

“Local shares notched a gain to start the week, as COVID-19 new cases declined sharply…,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message Monday.

Reuters reported over the weekend that the number of confirmed cases of COVID-19 cases in China dropped 21.6% on Saturday, citing the country’s health commission, which said it is a result of its efforts to stop the spread of the virus. Mr. Limlingan said this helped temper worries of investors over the economic impact of the epidemic.

But for Christopher John Mangun, research head at AAA Southeast Equities, Inc., the general sentiment of investors is still “extremely cautious despite the lack of panic selling.”

“Minor gains in several blue chips allowed the PSEi the end slightly higher despite average trading volumes and more foreign outflows… Most investors are on the sidelines waiting for a better environment,” he said in an e-mail.

Some PSEi members that gained yesterday were Metro Pacific Investments Corp. (3.58%), SM Investments Corp. (2.32%) and Aboitiz Equity Ventures, Inc. (2.13%).

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said bargain hunters also helped lift the market yesterday. “Investors took opportunities from Friday’s dip in anticipation for the upcoming 2019 full year earnings reports (of listed firms),” he said in a text message.

He added the expected rate cut from the central bank in the second quarter also helped improve market sentiment yesterday.

Sectoral indices were mixed at the close of trading. Holding firms improved 95.26 points or 1.35% to 7,147.23; industrials advanced 54.66 points or 0.61% to 8,991.30; and financials added 5.66 points or 0.32% to 1,744.61.

On the other hand, mining and oil lost 28.56 points or 0.40% to 7,030.08; services dropped 4.36 points or 0.30% to 1,435.94; and property slipped 1.77 points or 0.04% to 3,926.88.

Value turnover stood at P7.84 billion with 782.60 million issues changing hands, up from the previous session’s P6.45-billion worth of 888.41 million issues.

Advancers beat decliners, 107 against 77, while 49 names closed unchanged.

Net foreign selling declined to P336.82 million yesterday from Friday’s P864.82 million.

COVID-19: Not just a global public health emergency

The World Health Organization (WHO) declared the 2019 novel coronavirus (2019-nCoV) disease outbreak as Public Health Emergency of International Concern (PHEIC) on Jan. 30. The WHO International Health Regulations (IHR, 2005), 3rd edition defines PHEIC “as an extraordinary event which is determined, as provided in these Regulations (i) to constitute a public health risk to other States through the international spread of disease and (ii) to potentially require a coordinated international response.” Public health risk is defined as “a likelihood of an event that may affect adversely the health of human populations, with an emphasis on one which may spread internationally or may present a serious and direct danger.” WHO Director-General Dr. Tedros Adhanom Ghebreyesus explained during a news conference at WHO’s Geneva headquarters that the declaration of 2019-nCov outbreak as PHEIC was made because of “the potential for the virus to spread to countries with weaker health systems, and which are ill-prepared to deal with the disease outbreak.” At the time of the declaration, the WHO recorded 7,834 confirmed cases, including 7,736 in China, and 98 cases in 18 countries outside China, plus eight cases of human-to-human transmission in four countries: Germany, Japan, Vietnam, and the United States of America. WHO also recorded 170 deaths all in China due to the outbreak.

The 2019-nCov was first reported from Wuhan, China on Dec. 31, 2019. Almost six weeks later, on Feb. 11, the WHO announced an official name for the disease. The disease caused by 2019-nCov was officially named COVID-19, where “CO” stands for “corona,” “VI” for “virus,” and “D” for “disease” while “19” was for the year the outbreak was first identified in December 2019.

Ghebreyesus explained that under agreed guidelines between WHO, the World Organisation for Animal Health, and the Food and Agriculture Organization of the United Nations, there was a need “to find a name that did not refer to a geographical location, an animal, an individual or group of people and which is also pronounceable and related to the disease.” Based on “WHO Best Practices for the Naming of New Human Infectious Diseases” document dated May 2015, the aim is “to minimize unnecessary negative impact of disease names on trade, travel, tourism or animal welfare, and avoid causing offence to any cultural, social, national, regional, professional or ethnic groups.”

Almost two weeks after being declared as PHEIC, COVID-19 has already infected 42,708 people in China and 393 people in 24 countries worldwide. There have been 1,017 deaths in China, mostly in Wuhan in Hubei province, while one death of a Chinese national outside China was reported in the Philippines. A second death due to COVID-19 was reported in Hong Kong.

During the news conference wherein the coronavirus outbreak was declared as PHEIC, Ghebreyesus congratulated China “for the extraordinary measures it has taken to contain the outbreak despite the severe social and economic impact those measures are having on the Chinese people.” But has China succeeded in containing the outbreak? And didn’t WHO’s declaration of the disease outbreak as PHEIC and renaming of the disease come a little too late?

The numbers of confirmed cases and deaths keep on increasing despite global and national responses to COVID-19. As of Feb. 160, the “WHO Coronavirus disease 2019 (COVID-19) Situation Report — 27” recorded 51,857 laboratory-confirmed cases (1,278 new) globally; 51,174 laboratory-confirmed cases (1,121 new), and 1,666 deaths (142 new) in China; and 683 laboratory-confirmed cases (157 new) in 25 countries and three deaths (one new) outside of China.

Various international news services have documented how China’s lockdown of a number of its cities has caused misery among its own people and caused a flared up of old anti-government sentiments. Outside China, the effects of COVID-19 are quite alarming.

In what seemed like an outbreak of anti-China and anti-Chinese hatred and revulsion, anti-China and anti-Chinese posts, messages, and tweets flooded cyberspace in almost every part of the world. Since the outbreak, international and national news reports were never empty of anti-Chinese incidents and confrontations in public places, including in institutions of higher learning.

While containing the COVID-19 outbreak remains high on the global and national agenda, COVID-19 has created or is creating another outbreak, inciting “moral panic” across the globe resulting in increased feelings of fear and anxiety exacerbated by feelings of lack of protection and certainty.

Who is manipulating the COVID-19 outbreak to cause moral panic across the globe? What is there to gain for these manipulators of moral panic or these moral entrepreneurs?

In his 1972 book Folk Devils and Moral Panics, known moral panic theorist Stanley Cohen defined moral panics in the following manner:

“Societies appear to be subject, every now and then, to periods of moral panic. A condition, episode, person or group of persons emerges to become defined as a threat to societal values and interests; its nature is presented in a stylized and stereotypical fashion by the mass media; the moral barricades are manned by editors, bishops, politicians and other right-thinking people; socially accredited experts pronounce their diagnoses and solutions; ways of coping are evolved or (more often) resorted to; the condition then disappears, submerges or deteriorates and becomes more visible. Sometimes the object of the panic is quite novel and at other times it is something which has been in existence long enough but suddenly appears in the limelight” (p.9).

Is there a justified cause for moral panic among us?

At the State level, the COVID-19 outbreak revealed not only the increased vulnerabilities of States, particularly those with weak public health infrastructures, it also intensified citizens and media’s increased demand for transparency and accountability from their governments in spite of governments’ increased call for tolerance and calm from their citizens and media.

At the global level, COVID-19 re-opened debates on the question, “Is the world better prepared?” In terms of a global public health response, COVID-19 resurrects debates about the weaknesses or limitations of the existing global health security regime. But have we created a global security regime? Empirical evidence shows that the answer is a “No.”

First, the WHO is considered as the supranational health authority. Despite its tremendous success in new Health Emergencies Programs and revised International Health Regulations (IHR 2005), all aimed at enabling a faster, more effective response to outbreaks and emergencies, the organization faces financial capacity limitations that affect the effectiveness of its organization and operations.

Second, the IHR (2005) requires all countries to develop, strengthen, and maintain eight core public health capacities, namely: 1.) national legislation, policy and financing; 2.) coordination and national focal point communications; 3.) surveillance; 4.) response; 5.) preparedness; 6.) risk communication; 7.) human resources; and, 8.) laboratory. However, the document “Lessons learnt from implementation of the International Health Regulations: a systematic review,” submitted to the WHO in 2017, revealed that “[g]iven varying levels of health and socioeconomic development across countries, there have been challenges in implementing these requirements… [b]y the original deadline of June 2012, only 42 (22%) of the 192 WHO Member States had met the core capacity requirements” (p. 110).

Third, issues of State sovereignty clash with the WHO’s mandate and its global legislation in the form of the IHR. The IHR 2005 has strengthened WHO’s position as a central global force with authority and accountability in the field of international health. But WHO’s position is constrained when States assert their national sovereignty.

The challenges are real as captured by former WHO Director-General Dr. Margaret Chan in her report, titled, “Ten years in public health 2007 — 2017” (2017) — “the factors that govern global health security extend well beyond the mandate of WHO and its capacity to respond… [m]uch responsibility falls to countries… affected countries need to report unusual disease events promptly and openly… [and] countries move out of the sanctuary of national sovereignty in the interest of common good” (p.26).

If not WHO, who will lead the charge of reforming the existing global health security regime? If the concept of WHO as a supranational health authority is evolving, then is the global health security regime still in the making? How many more disease outbreaks and how many more lives must be lost to disease outbreaks to attain a global health security regime? Finally, is the world better prepared to face COVID-19? Or is this article contributing to moral panic around the world?

 

Diana J. Mendoza, PhD, is Chair of the Department of Political Science at the Ateneo de Manila University.

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