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Architect Palafox on urban planning advice for pandemic survival

by Philippine Resources - June 02, 2020

(L-R) Urban planner and Architect Felino “Jun” A. Palafox, Jr., Mr Joey Nelson R. Ayson (President, Philippine Mining and Exploration Association), Marcelle P. Villegas (Journalist, Philippine Resources Journal) (Photo by Matthew Brimble, Philippine Resources Journal)

By: Marcelle P. Villegas

“Livable cities have forward planning.” (Architect Jun Palafox, Jr., on ANC’s “Market Edge”)

Architect Felino “Jun” A. Palafox, Jr. is a multi-awarded urban planner and founder of Palafox Associates. Some of his well-known designs include the City of Manila Comprehensive Land Use Plan and Zoning, Rockwell Center and Makati Streetscapes, Manila Polo Club redevelopment in Makati City, Ortigas Streetscapes, La Mesa Ecopark in Quezon City, Santa Elena Golf Course Community in Bulacan, Manila Southwoods in Cavite, First Industrial Park in Batangas, Qatar Embassy in Paranaque, and more.

During his T.V. interview last April 13th at ANC’s “Market Edge” by Ms Cathy Yang, he gave his professional insights and analysis on how other countries survived pandemics in the past, the flaws in the city design and systems in the Philippines that make it prone to more problems during a pandemic, and his advice on how we can improve in addressing the COVID-19 crisis properly and in preparation for future pandemics.

He was asked by Ms Cathy Yang on “Market Edge”, “Nobody has been spared from the COVID-19 pandemic, not even countries with top-notch healthcare systems. Why do you think that is?”

“I think they were not prepared. The whole world was not prepared for this pandemic. And although there were already warnings in the year 2000 - 2005 and some investments internationally had already been prepared for the next pandemic, but it seems they only planned it when the epidemic started and not before. So everybody was caught unaware of it. We have a disaster preparedness plan but not for this pandemic,” replied Mr Palafox. [1]

When asked how he thinks countries can cope to increase resiliency from where we are now, he said, “Now we are doing the observation and what's going on in this situation and everybody is addressing this problem. We should now have a plan for the transition into the new world order... If you've seen our planning, we have a very weak urban planning system here. We should now include healthcare systems as part of the planning and disaster preparedness for this pandemic.”

Mr Palafox added that there are a lot of lessons to learn from history on how to successfully deal with a pandemic. He mentioned in his weekly newspaper column at The Manila Times that various studies and historical evidence support the connection between climate change and environmental changes with the occurrence of diseases. [2]

“...it has been proven that climate change is making the world more hospitable for viruses, bacteria and pathogens to thrive. Moreover, health experts believe that by pushing into the last wild spaces of the planet, humans come in contact with wildlife populations that carry new kinds of diseases.” [2]

“But history teaches us that much can be done through proper design and urban planning to battle health emergencies and even prevent it. In the mid-1800s, urban planner Frederick Law Olmstead was able to integrate urban planning and public health by promoting the concept that community design is key in enhancing physical and mental health. As a result, he designed hundreds of green spaces, including New York’s Central Park. In the mid-19th century, the city of London was experiencing recurring cholera outbreaks. This pushed parliament to pass legislation enabling the Metropolitan Board of Works to develop a sanitation system and begin street improvements. Joseph Bazalgette, the board’s chief engineer, designed an efficient sewage system that intercepted and diverted wastewater from old sewers and underground rivers to treatment facilities. Years later, most of the city was already connected to the new sewer network.”[2]

Moreover, he stated that in the 19th and early 20th centuries, the correlation between urban planning and public health became more evident in the following: 1) prevention of diseases through community infrastructure like drinking water and sewage systems; 2) development of green spaces to encourage physical activity and promote better mental health; and 3) establishment of land use and zoning ordinances to protect people from hazardous risks. [2]

Mr Palafox also mentioned during his interview in “Market Edge”, "I've been saying that Metro Manila, with the way it is, can no longer be sustainable.” He pointed out that we do not have enough parks and open spaces, and social distancing is hard in our transportation system.

He suggested that in EDSA, “Walking and bicycle should be the first mode of transportation. Our planning has always been automobile centric and bias for the automobile. Our national development is to the primacy of Metro Manila. It is Metro Manila centric, so if Metro Manila is paralyzed, the rest of our country is paralysed. There had been so many proposals before to develop the regions and make other cities in the country more attractive so people don’t have to migrate to Metro Manila.”

He also wrote in his weekly column in The Manila Times, “Sadly, there will be more future pandemics. According to the World Health Organization, the next pandemic is a matter of ‘when’, not ‘if’. The coronavirus disease 2019 (COVID-19) is not the last major outbreak we will experience. This will be the result of our choices and how we humans have been negligent in inhabiting the planet.” [2]

“In urban planning, guidelines are laid out to determine how many hospitals and other medical facilities are necessary for municipalities and cities to cope with health emergencies and other disasters. According to the Department of Health, the components of urban health system development comprises programs and strategies for Healthy Cities Initiative, citywide investment planning for health, and urban health equity assessment and response, among others.” [2]

He mentioned how other countries are dealing with the coronavirus pandemic and what we can learn from them. “Hong Kong, Singapore and Taiwan received praise from health experts because they were able to prepare for the coronavirus before it reached them, and they were able to immediately and aggressively act on it when it arrived. Hence, these territories have only less than 300 confirmed Covid-19 patients even though the virus reached them way before it reached Italy, France and Spain, which now have thousands of cases. Hong Kong was able to quickly develop diagnostic tests and promptly deploy these to major hospitals in the city. Social distancing was extensively implemented at once, and many locations were readily repurposed to serve as quarantine facilities.”

“Singapore’s prime minister, and health and foreign ministers issued clear messages and were very transparent to the public and the rest of the world. The government learned from its experiences dealing with SARS, or the severe acute respiratory syndrome, and H1N1, also known as swine flu, and was able to establish a sound system for tracking and containing epidemics. The country immediately developed tests for COVID-19, intensified production of the materials needed to carry out the tests, and offered free healthcare services related to the disease. Taiwan enforced 124 safety protocols that reflect comprehensive and well-designed policies and strategies. Taiwan was able to restrain the rise of confirmed cases by maximizing public health infrastructure and data analytics, affordable healthcare, swift action from the national government, and wide-ranging educational outreach.”

He then concluded, “Seeing what has been happening to our country recently, we could definitely learn a lot from the overall response of Hong Kong, Singapore and Taiwan. What we are witnessing in the news reflects that our strategies and protocols to mitigate the spread of the coronavirus need further study and enhancements. If worse comes to the worst, our healthcare system will not be able to cope with only 89,000 hospital beds and 1,000 ICU or intensive care unit beds. Clearly, we are simply not as prepared as we want to be. We lack investments in our healthcare system, and we are missing well-planned systems and policies for health emergencies.”

Last April, his own family experienced a great loss when his niece passed away. UP-PGH Head Nurse Faye Marie Palafox was a frontliner and a safety officer-in-charge with an important role of assuring her team has complete PPEs before facing patients with COVID-19.

Mr Palafox wrote on his newspaper column, “In keeping with our belief in philanthropic and patriotic architecture in times of crisis, we at Palafox Associates and Palafox Architecture Group are donating the full design manual of the Ligtas Covid Centers. We prepared this with hospital managers, health systems professionals, emergency and disasters experts, and graduate students from the Asian Institute of Management Masters in Innovation and Business (AIM MSIB). Using infection prevention and control principles, the design manual can convert basketball courts into isolation units for suspect and probable COVID-19 patients. We hope our architectural design for the COVID centers will help decongest hospitals and help our nation in the fight against this pandemic.” [3]

Palafox Associates is the first Filipino architectural firm listed in the World’s Top 500 Architectural Firms of the World Architecture Magazine. His company ranked 94th in the list and has a distinction of being the only Southeast Asian company in this list. By 2012, Palafox Associates was Top 8 in the Leisure Market sector. Mr Palafox was included in the “People of the Year” list by People Asia Magazine in 2010. He received the Gusi Peace Prize Award in 2011. In 2017, he was awarded the Outstanding Filipino (TOFIL) Awards for Architectural and Urban Planning Honoree.

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Acknowledgement: Thank you to Ms Cathy Yang and the team of “Market Edge” on ANC.

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References:

[1] Yang, Cathy (13 April 2020). “How can countries better prepare for pandemics?” Interview of Mr Felino Palafox, Jr. on ANC’s TV show “Market Edge”. Retrieved from ttps://youtu.be/Va5I1fXYK-w

[2] Palafox, Felino A. Jr. (19 March 2020). “Silver lining: Lessons to learn”. The Manila Times.

https://www.manilatimes.net/2020/03/19/opinion/columnists/silver-lining-lessons-to-learn/704158/

[3] Palafox, Felino A. Jr. (23 April 2020). “Frontliners”. The Manila Times. Retrieved from https://www.manilatimes.net/2020/04/23/opinion/columnists/frontliners-2/717480/



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Commentary

Philippine Resources - December 01, 2020

Infrastructure Investments to Return Philippine Economy to Growth

By: Fernando PenarroyoThe Philippine economy grew on average by 6.3 percent annually over the last decade due to the country’s sound macroeconomic policies and structural economic reforms under President Rodrigo Duterte and his predecessor Benigno Aquino III. Before the COVID-19 pandemic, the Philippine economy ranked among the best performers in Asia. A December 2019 survey showed that most Filipinos deemed that the Duterte administration was building infrastructure “better” than previous administrations through the “Build Build Build” (BBB) program. The Philippines is among the most vulnerable countries in the world susceptible to risks from climate change, and volcanic, and tectonic activities. Hazard-resilient infrastructure will help lessen the impact of natural disasters.Regulators have markedly scaled-up public infrastructure investment, from an average of 3% of gross domestic product (GDP) during 2011–2016 to 5.1% in 2018. They plan to boost investment further to over 6% of GDP by 2022.The Duterte administration is banking on its infrastructure development program to be the main driver of the country’s economic recovery as the Philippines is currently in economic recession caused by the COVID-19 pandemic. The Philippines has suffered from one of the region's worst COVID outbreaks and among the top 25 countries with infections and fatalities, and with the longest government-imposed lockdown. To the credit of the government, a number of infrastructure projects has seen completion despite the quarantine measures in the past months. The two most anticipated infrastructure projects - the Metro Manila Skyway and the Metro Manila Subway, are expected to decongest the worsening transportation situation in the National Capital Region. To address capital's notoriously gridlocked roads particularly along the main artery traversing the city, the Metro Manila Skyway System (Skyway) is a 40-km long elevated expressway that cuts through greater Metro Manila. The Skyway, will connect the South Luzon Expressway with the North Luzon Expressway passing through the major cities of the National Capital Region including, Makati, Manila, Muntinlupa, Paranaque, Taguig, Quezon City, Caloocan, Pasay City and San Juan. With the completion of the Skyway Stage 3, the elevated expressway will also help cut the travel time between Metro Manila and Clark International Airport in Pampanga.On the other hand, the Metro Manila Subway (Subway) is the most expensive transportation project undertaken by the Duterte administration. The Subway, an underground rapid transit line currently under construction, spans a 36-kilometer line, which will run north–south between Quezon City, Pasig, Makati, Taguig, and Pasay consisting of 17 stations. It will become the country's second direct airport rail link after the North–South Commuter Railway, with a branch line to Ninoy Aquino International Airport Terminal 3. It is scheduled to be partially operational in 2022 and fully operational by 2025.In addition, construction of six railway projects is also underway. Once all the railway projects are completed, the number of stations across all railway systems will increase to 169 from 59, the number of trains to 1,425 from 221, and daily ridership to 3.26 million from 1.02 million.Following the COVID-19 pandemic however, the “BBB” program encountered setbacks with the realignment of part of its budget to finance the government’s response to the health and socio-economic crises. In the first semester of 2020, the government’s spending on infrastructure fell by 4.3% year on year to P297.9 billion. The 2020 budgets of the implementing agencies of the BBB program were also cut to fund dole-outs and medical response costing around PHP 121.9 billion (US$2.5 billion).The Department of Public Works and Highways (DPWH) was left with a much-lowered infrastructure program spending budget for 2020 at around PHP 458.9 billion (US$9.4 billion) down from PHP 580.9 billion (US$11.9 billion) while the Department of Transportation suffered a budget cut of around PHP 8.8 billion (US$181.2 million) from its original budget of around PHP147 billion (US$3.02 billion). Despite budget cuts in public spending on infrastructure projects, the government has revised the list of flagship projects and reprioritized its infrastructure program. The National Economic and Development Authority Board approved a revised list of 104 projects worth P4.1 trillion under the “BBB” program. In response to the country’s post-pandemic needs, the government came out with a new list that included the national broadband program, an irrigation project, transportation infrastructure projects, health care systems, and the construction of the Virology Science and Technology Institute of the Philippines with an estimated total value of around PHP 4.1 trillion (US$84.4 billion) Under the proposed P4.5-trillion national budget for 2021, the government increased the budget for infrastructure development by 41% to P1.107 trillion from the reduced P785.5-billion budget this year, with the biggest allocation of P157.5 billion going to the DPWH.Reverting to PPPsPublic-Private Partnership (PPP) will play an increasingly important role in the “BBB” infrastructure plan to tap on private capital as the government’s ambitious infrastructure plans face fiscal challenges. This marks a shift back to the investment policy previously adopted by the Aquino administration and will offer more opportunities for private sector participation. However, the present administration has tighten provisions employed by the Aquino government which present regulators deem to be ‘detrimental’ to public interest, including automatic rate increases, commitments of non-interference, and non-compete clauses.Since the start of 2020, PPP projects have reportedly raised Php1 trillion ($20.62 billion) worth of investments as approved by the Interagency Investment Coordination Committee-Cabinet Committee. These include the $15-billion second airport for Manila signed in September 2020. San Miguel Corp. entered into a $15-billion contract with the government to build Manila’s second aviation gateway in Bulacan province, 30 minutes north of the capital. The build-operate-transfer project, covered by a 50-year concession deal, calls for a new airport designed to accommodate up to 200 million passengers annually aim at decongesting the overcrowded Ninoy Aquino International Airport.On the power side, ongoing projects include the LNG Import Facility in Batangas at the cost of $2 billion. The Department of Energy recently issued an order calling for a moratorium on the endorsements of the construction of future coal-fired power plants. Also, the DOE has finally confirmed that foreign-owned companies can engage in geothermal exploration, development, and utilization. This is provided under the Renewable Energy Law of 2008 which defined geothermal as mineral resources. The Philippine Constitution allows foreign ownership of large-scale petroleum, minerals, and mineral oils projects. These two developments are expected to benefit the incipient imported LNG and renewable energy industries.According to the “Procuring Infrastructure PPP” component of Fitch Solutions Country Risk & Industry Research’s Project Risk Index (Fitch PRI), the Philippines has a relatively well-structured PPP framework compared to other major South-East Asian emerging markets,. Its well-developed PPP program is mainly driven by the Philippine PPP Center, an administrative body tasked with providing technical assistance to various stakeholders involved in the PPP transaction and advocating policy reforms to improve the PPP framework. There currently exists three pieces of legislature - Republic Act Nos. 9184, 6957 and 7718, which provides the legal framework in the implementation of PPP projects.Challenges and RisksWhile the PPP business environment for infrastructure has a supportive institutional framework for private sector participation, the World Economic Forum’s global competitiveness report places the Philippines among the lowest in ASEAN in key infrastructure services and substantially lower than the ASEAN average in overall infrastructure. Given the prospects of a high demand for infrastructure from economic and demographic growth, there is a need for a significant upgrade.According to Fitch PRI, the Philippines rank lowly in both indicators of construction timeliness (Bureaucratic Environment and Construction Permit), pointing to a heightened risk of completion delays. In addition to project risk, there exists high operational risk, mainly attributable to crime and security risks, as the country suffers from high levels of crime and is vulnerable to terrorist attacks. In the 2018 Corruption Perception Index, the Philippines was ranked 99 out of 180 countries, indicating a high level of corruption which undermines the effectiveness of laws and regulations in place.Electricity generation capacity per capita is among the lowest in ASEAN while power transmission and distribution loss is at the ASEAN average. The government must address the need to enhance capacity with the expected continuous high economic growth. Also, with the impending depletion of the Malampaya natural gas field, there is a need to replace this energy source. The Malampaya gas-to-power facility comprises 21% of the total generation mix in the country and fuels five power plants with a total generating capacity of 3,211 megawatts.Internet speed in the Philippines is among the slowest and most expensive in the world, no thanks to under-investment, poor government policy and the country’s archipelagic nature. In a 2018 test measuring the average download speed of a 5GB file, the Philippines ranked 97th in the world (at 1hr 52min) compared to 8 min in Taiwan, 9 min in its ASEAN neighbor Singapore, and Thailand at 37 minutes. Slow internet speed puts the country at a great disadvantage. Industry consolidation in the last 30 years has resulted to the virtual duopoly of Globe Telecom and Smart Telecom. The Duterte government recently gave the third franchise to a new operator, Dito Telecom, which promised to use the latest 5G technology, install 10,000 cell sites and roll out services by March 2021.Investors continues to face a high degree of risks as the infrastructure program is undermined by a number of major impediments, particularly the four Cs - inadequate cost recovery, corruption, insufficient competition, and low credibility of institutions. Despite having one of the most comprehensive PPP frameworks in the region, the government must institute reforms to tackle these impediments.Improving Infrastructure Investments ManagementEnsuring that the government properly manages its infrastructure spending will be a challenge. Enhancing public investment management would contribute to timely and cost-effective planning and execution of infrastructure projects. A recent IMF Public Investment Management Assessment ranks the Philippines similarly to its regional peers, but observes an efficiency gap of about 23% compared with best practices in translating public investment into infrastructure. As recommended in the report, project appraisals can be enhanced by requiring upfront identification of risk mitigation measures and publishing appraisal analyses to elicit comments from the public. An adequate identification and management of risks will complement public sector efforts in infrastructure promotion. Regulators can also embark on an update of the legal framework to include encouraging new forms of PPPs and developing domestic capital markets that will entice more private-sector participation, as long as financial risks to the government are well managed.Measures to promote competition and trade would reinforce the benefits of other reforms. Recent reforms have focused on reducing the costs of doing business through increased administrative and regulatory efficiency with the establishment of the Anti-Red Tape Authority, promoting one-stop shops, e-platforms, standardization of licensing procedures, and regulatory transparency. Implementation of the ease-of-doing-business law will complement efforts to cut red tape as well by increasing transparency and accountability of regulatory agencies.Greater competition will help in managing costs and reducing risks of corruption. Although an institutional framework is in place for transparent and competitive public procurement process, reforms are still needed to ensure that the process is made more competitive. Competition is still not sufficiently effective in practice with many tenders resulting in bid rigging. Competition can also be promoted by imposing stricter sanctions on anti-competitive practices, such as larger financial penalties and longer exclusion from future tendering. Making procurement information more easily accessible and ensuring that bidders are technically and financially qualified will increase transparency. Authorities should also be insulated from short-term political pressures so as not to undermine regulatory credibility. Upgrades in public information technology infrastructure, such as e-invoicing and digital national identification cards, will also promote efficiency and transparency.Despite recent progress, high barriers to foreign direct investment remain in the Philippines. Lowering obstacles to foreign investment, currently pegged at 40%, will stimulate private investment, ease domestic capacity constraints, and facilitate absorption of frontier technologies. Finally, tax reform can help sustain the infrastructure push while safeguarding fiscal sustainability. The government’s recent tax reforms have led to a significant increase in revenue collection but it is imperative to pass the remaining packages of reforms for further improvements in the tax system once the country is out of the pandemic crisis. These reforms will support sustainable investment in infrastructure and human capital.ConclusionThe infrastructure industry remains an important engine of growth for the Philippine economy but despite recent progress, there still are relatively high barriers and procedural hurdles that hampers the development of its full potential. Strengthening the public procurement process with greater competition and transparency, and allowing greater foreign participation in domestic projects would help in managing costs and reducing risks. Private investment is projected to increase over time with the government’s infrastructure push and ongoing economic policy reform efforts, which will lead to higher economic growth and subsequent investments in education, health care, digital technologies, climate change and natural disasters mitigation.Fernando “Ronnie” S. Penarroyo specializes in Energy and Resources Law, Project Finance and Business Development. He may be contacted at fspenarroyo@gmail.com for any matters or inquiries in relation to the Philippine resources industry. Atty. Penarroyo’s commentaries are also archived at his professional blogsite at www.penarroyo.comReferencesHilotin, Jay, Philippines: $85 Billion Infrastructure Spending in 104 Projects, Gulf News, 01 October 2020, https://gulfnews.com/business/philippines-85-billion-infrastructure-spending-in-104-projects-1.1601554247671Malindog-Uy, Anna, “Build Build Build” Program Amid a Pandemic, The ASEAN, 13 September 2020, https://theaseanpost.com/article/build-build-build-program-amid-pandemicNoble, Luz Wendy T., Infrastructure Push to Aid Recovery, BusinessWorld, 14 September 2020, https://www.bworldonline.com/infrastructure-push-to-aid-recovery/Philippines IMF Country Report 20/36, 06 February 2020, https://www.imf.org/en/Publications/CR/Issues/2020/02/05/Philippines-2019-Article-IV-Consultation-Press-Release-and-Staff-Report-49021Philippine Infrastructure To Rely More On Private Capital, Infrastructure & Project Finance / Philippines, Fitch Solutions Country Risk & Industry Research, 12 November 2019, https://www.fitchsolutions.com/infrastructure-project-finance/philippine-infrastructure-rely-more-private-capital-12-11-2019Takuji, Komatsuzaki, Improving Public Infrastructure in the Philippines, Asian Development Review, vol. 36, no. 2, pp. 159–184, 2019, https://www.imf.org/external/pubs/ft/wp/2016/wp1639.pdfThe Philippines: A Good Time to Expand the Infrastructure Push, IMF Country Focus, 06 February 2020, https://www.imf.org/en/News/Articles/2020/02/06/na020620the-philippines-a-good-time-to-expand-the-infrastructure-push

Commentary

Philippine Resources - June 08, 2020

Responding to COVID-19 in the Mining Industry

By Patricia A. O. BunyeOn 08 March 2020, the Philippine Government declared a State of Public Health Emergency throughout the entire archipelago in light of confirmation of the local transmission of COVID-19. All government agencies and local government units were tasked to assist, cooperate and mobilize resources to undertake critical, urgent and appropriate responses to address the exigencies of the situation. Since then, government agencies have been releasing the appropriate issuances to implement measures to combat the spread of COVID-19 and adapt to the crisis.The Mines and Geosciences Bureau (“MGB”), the government agency responsible for the conservation, management, development and use of the country’s mineral resources, likewise issued several memoranda instituting various measures to respond to the COVID-19 crisis, including realignment of funds, extension of deadlines, adoption of alternative work arrangements and implementation of safety protocols for operations in the mining sector. Realignment of Social Development and Management Program BudgetIn a Memorandum dated 27 March 2020, the MGB authorized mining companies to re-align unutilized funds from their Social Development and Management Program (“SDMP”) to assist host and neighboring communities around mining projects, as well as the non-impact barangays in their respective localities, until the threat of COVID-19 has abated. The principal objective of the re-alignment is to make use of the unutilized SDMP funds for the social amelioration of communities around the mining projects through the provision of health or hygiene kits and food packs in order to efficiently and timely respond to the needs of the communities to combat COVID-19. As of 27 May 2020, approximately Php297 million of the SDMP budget has been utilized to aid the concerned frontliners and households. Extension of DeadlinesAside from food and medical provisions, the MGB also provided legal relief by relaxing the rules on submission of documents and payment of fees, taking into consideration the logistical, social and economic difficulties encountered as a result of quarantine measures. In this regard, the MGB issued a notice allowing the extension of deadlines of the submission of reportorial requirements and proof of payment of occupation and other regulatory fees as prescribed under the Mining Permit/Contract up to 30 June 2020, or up to the immediate submission date when the pertinent quarantine is lifted. Protocols for the Resumption of Mining and Mineral Processing Operations under General Community Quarantine (“GCQ”)Following the recommendation of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (“IATF-MEID”), the Philippine Government announced on 28 May 2020 that Metro Manila, along with other regions classified as low-risk and high-to-moderate risk areas for coronavirus transmission, would transition from a strict lockdown under the Enhanced Community Quarantine (“ECQ”) to a less stringent GCQ beginning 01 June 2020. While movement and transportation is limited under both quarantine protocols to avoid the further spread of COVID-19, the transition from the stringent measures of ECQ to the relaxed measures of GCQ is expected to benefit the economy and the workforce as it allows for the reopening of several industries previously ordered closed under ECQ for not being essential industries. With the easing of quarantine measures in most parts of the Philippines to support the economy, the mining sector and other select industries are now allowed to operate at limited or full capacity. However, since the threat of COVID-19 transmission is still present as cases continue to rise every day, operations of industries are allowed but remain subject to the condition that they follow strict safety protocols. In line with this, the MGB has released guidelines for the resumption of mining and mineral processing operations under GCQ under Memorandum Order No. 2020-004. Workforce and Working ArrangementsUnder the guidelines, a workforce anywhere between 50% up to full operational capacity at the mine/plant site shall be allowed, without prejudice to work from home and other alternative work arrangements. In order to determine who will be required to report for work, mining contractors or permit holders are mandated to conduct personnel profiling in accordance with the IATF-MEID guidelines. Employees not allowed to report for work or those who are prescribed to be on self-quarantine shall be subject to special work arrangements, such as work from home. Responsibilities of Mining EmployersAside from personnel profiling, mining contractors or permit holders are also required to provide for the necessary medical equipment and supplies, such as thermal scanners, masks, gloves, and hand sanitizers, as well as transportation to and from mine and plant sites and accommodation for employees residing five (5) kilometers away from the mine or plant site in order to reduce exposure to the virus and protect the workers from infection. To further ensure the safety and health of the mining workforce, mining contractors or permit holders are also enjoined to observe strict sanitation and physical distancing measures. Guidelines for shipment of minerals and mineral products In cases of shipment of minerals or mineral products, supplies and materials, the guidelines require that cargo vessels shall undergo a 14-day quarantine beginning from the time of its departure at the last port of call.No vessel crew may be allowed to disembark from the vessel and only personnel authorized by the Philippine Ports Authority and cleared by the Quarantine Medical Officer may board the vessel subject to observation of a “no contact” policy within the vessel. Additionally, miners are enjoined to follow measures to contain the spread of the disease, such as (a) submitting a Shipment Report containing the information on the crew list, the port of origin and the COVID-19 test results of the crew; and (b) passing through holding/disinfection areas for persons who shall board and disembark from the vessel.The guidelines, as well as the other measures implemented by the MGB, address the immediate impacts of COVID 19. In the longer term, mining companies need to consider the opportunities and risks arising from this crisis. While for some commodities, the short-term market demand may be low, other commodities like gold typically benefit in times of high uncertainty. Another so-called silver lining for the industry is the lower cost of energy, which usually constitutes 20-25% of operating costs.During this period, companies are also like to respond by rationalizing or streamlining their operations and their workforces, including automating more functions and processes. They will also be called upon to provide services, particularly in health care, to the host and neighboring communities ‘above and beyond compliance’ as these communities are often already underserved by the government.More than simply adapting to the crisis, mining companies are challenged to respond with resilience, particularly in navigating new or increased legal or financial risks. It is a brave new unprecedented world for us all, where only those who can embrace change will survive.Patricia A. O. Bunye is a Senior Partner at Cruz Marcelo & Tenefrancia where she heads its Mining & Natural Resources Department and Energy practice group. She is also the Founding President of Diwata-Women in Resource Development, Inc., a non-government organization advocating the responsible development of the Philippines’ wealth in resources, principally, through industries such as mining, oil and gas, quarrying, and other mineral resources from the earth for processing.

Commentary

Philippine Resources - December 01, 2020

Zooming (and more) in the Pandemic

By: Patricia A. O. BunyeI have always wondered how the founder of Zoom, Eric Yuan, feels about making over USD12 billion since March 2020, when the pandemic began and practically everyone on the planet has been ‘Zoom-ing’ for work or play. With its simple features, Zoom has left competitors like Skype in the dust.Yuan is now ranked No. 85 on Bloomberg's list of the 500 richest people in the world. Before 2020, he wasn't even on the list. He is also number 43 in the Forbes 400, the magazine's annual ranking of the 400 wealthiest people in America, for the first time in 2020. He also made it to Time’s 100 Most Influential this year.It is not a fortune built overnight or by taking advantage of Covid 19, as some may wrongly assume. Yuan says he got the idea for Zoom while trying to find a way to connect with his long-distance girlfriend (now his wife) as a student. He was one of the original hires of WebEx, a videoconferencing startup, when he first moved to the US. When WebEx was acquired by Cisco Systems, Yuan pitched a new smartphone-friendly video conferencing system to Cisco management, but it was rejected. Cisco apparently preferred to concentrate on enterprise systems which was not the direction Yuan wanted to take, so Yuan left to establish his own company, Zoom Video Communications.It is not widely known that Yuan has a connection to the mining industry: his parents are mining engineers and Yuan himself has a master’s degree in geology engineering from the China University of Mining and Technology in Beijing.Thanks to Zoom, there a semblance of normalcy in our lives as it enables us to hold meetings, teleconferences, classes, negotiations, and lectures. I have attended masses, Holy Week services, a wedding, a wake, and reunions. This Christmas, I will likely see friends and family online there as well. Not a day has passed since the declaration of the lockdown in March that I have not connected with others via Zoom.The silver lining of the pandemic, if you could call it that, is that it has opened many opportunities for online learning. Students are not the only ones who have classes to attend online. There is a wide array of webinars pertaining to my areas of practice available at the click of a mouse, as well as many other topics such as politics (starting with the US elections), economics and finance, as well as a number of my (nerdy) pursuits. In fact, it has developed in me FOMO: a fear of missing out on the sheer variety of offerings.The Financial Times, for example, ran “The Commodities Mining Summit” online in October with the theme “A New Narrative for Mining”. With the 17 sessions featuring the CEOs of BHP, Anglo American, Glencore and Vale, among others, still available on demand, it is an unparalleled resource.In his opening keynote, BHP’s CEO Mike Henry underscored that mining remains an essential industry, something that we know too well, but the larger population still fails to appreciate. He says that Covid 19 has given the industry an opportunity to demonstrate its capabilities: how quickly it can mobilize, particularly in safeguarding the health of the companies’ workforces, to support the communities and business partners. According to him, the value created is not just for direct stakeholders, but the resources produced, the ability to generate employment, taxes, royalties, and dividends in a time of crisis is a “positive differentiator” relative to other industries, which produces economic development and an improvement in living standards throughout the world. He further stressed that there is little choice as to whether mining happens or not, but the choice is as to how it happens and who does it.In this regard, Mike Henry highlighted the role that commodities play in “rebuilding a better world”, particularly in addressing climate change and de-carbonization. He also emphasized the “build back better” (BBB) approach in relation to recovering after Covid 19, i.e., continuing to ensure sustainability as the mining industry bounces back.That commodities are essential was seconded by Glencore’s Ivan Glasenberg in a succeeding panel. He said that “new generation companies” like Tesla all depend on mining for the commodities that they require for batteries, solar panels, windmills and like. Unfortunately, he said, mining companies “get it wrong” by building new mines and underestimating the cost.Mark Cutifani of Anglo American, for his part, said that it is time for mining companies to stop thinking in terms of B2B (business to business) and start thinking in terms of B2C (business to consumer) so that the dialogue around mining shifts, i.e., when people talk about the provenance of products, they will become more comfortable with the idea that when they drive a car, build a house, use electrical power, or even drink water, the mining industry is involved in everything.Apart from this outstanding series of the FT, I have enjoyed the Wall Street Journal’s Women in the Workplace Forum where Facebook’s Sheryl Sandberg was one of the many speakers. It was also an occasion to launch “Women in the Workplace 2020” LeanIn.org’s comprehensive study on women in corporate America in collaboration with McKinsey & Co. What struck me in the study was that, notwithstanding the many gains made by women, Covid 19 has presented more challenges or demands on them in terms of additional child care or home schooling responsibilties, the health/illnesses of family members, mental issues/burnout, and other unique issues brought by the pandemic. One of the best online engagements I’ve had so far was a networking evening where the participants received cocktail making kits at home prior to the event and a bartender demonstrated how to mix drinks via Zoom.Next May, a conference that I attend annually may possibly be held 24/7 by Zoom to enable its members worldwide to participate from different timezones in 6 hour shifts. A radical idea, but with the world turned upside down by Covid 19, anything is possible these days.Patricia A. O. Bunye is a Senior Partner at Cruz Marcelo & Tenefrancia where she heads its Mining & Natural Resources Department and Energy practice group. She is also the Founding President of Diwata-Women in Resource Development, Inc., a non-government organization advocating the responsible development of the Philippines’ wealth in resources, principally, through industries such as mining, oil and gas, quarrying, and other mineral resources from the earth for processing.

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Construction

Philippine Resources - May 07, 2021

DOTr Expresses Excitement Over Airport Developments

After leading the opening of the latest PHP222-million taxiway at the country's second-busiest air hub, Department of Transportation (DOTr) Secretary Arthur Tugade voiced excitement about existing developments at the Mactan-Cebu International Airport (MCIA). “The new taxiway will increase the capacity of MCIA to accommodate more aircraft, from 35 to 50 movements per hour, including wide-bodied aircraft,” Tugade said during the inauguration at the MCIA in Lapu-Lapu City. The taxiway, he said, would be a "huge help" in improving the airport's operations as the parallel runway is being built, giving MCIA an advantage to become "world-class and competitive." The extended taxiway, according to Tugade, is expected to increase passenger traffic and aircraft movement in the country's second-busiest air hub's general aviation sector. In readiness for potential expansions, this would also fit wide-body aircraft. Around 60 jobs were available during the building of the taxiway, and “more employment opportunities are expected as a result of the expected increase in the number of aircraft using the new taxiway,” he said. Aside from the taxiway, the DOTr chief also presided over the opening of the Civil Aviation Authority of the Philippines (CAAPnew )'s administration office, which is situated inside the airport complex. Tugade said that the building, which houses the agency's numerous facilities, would enable staff to offer more effective service and comfort to its stakeholders. Secretary Michael Lloyd Dino, the Presidential Assistant for the Visayas, who was among the other government officials present at the ceremony, stressed MCIA's significant position in the country's travel and transportation system, which has an economic effect, with "Cebu's stature as a major tourist and investment destination." “In fact, before the Covid-19 pandemic hit the country that resulted in travel restrictions and quarantine protocols, Cebu was bustling with foreign and domestic tourists, driving the economic growth substantially,” he said. In 2019, an estimated 4.3 million visitors visited Cebu, producing hundreds of thousands of jobs and investments for Cebuanos, particularly those in the countryside. Dino noted that the pandemic has had a significant impact on Cebu's economy, as well as the rest of the region. “But together with our national and local leaders, we are now looking towards recovery and the gradual reopening of the province to more tourists,” he said, mentioning the efforts of Governor Gwendolyn Garcia, who has led the economic reopening of the island. The economy of Central Visayas is dominated by Cebu. When the improved population quarantine was implemented in the second quarter of 2020, the city had a high unemployment rate of 16.7%. In the first quarter of 2021, the unemployment rate fell significantly to just 7%. In addition, when enterprises resumed operations in the third and fourth quarters of 2020, industrial power and petroleum demand increased. According to Dino, respondents to a business expectation survey conducted in Central Visayas this year showed upbeat business optimism. “Moving forward, we are expecting more domestic and international flights to come to Cebu once we’ve overcome this health crisis. Thus, the timely completion of the parallel taxiway would boost the efforts of making the MCIA a major regional hub. It will prove useful in optimizing the arrival and departure of aircraft which we expect to increase over time,” he noted. According to him, the Duterte administration's "Build, Build, Build" policy has improved the country's airport infrastructure. DOTr and CAAP have completed 121 airport projects under Tugade's leadership, including the award-winning MCIA and the Bohol-Panglao International Airport, the country's first eco-friendly airport.

Company

Philippine Resources - May 07, 2021

Metro Pacific Investments Corp Net Income up 272% in Q1

Due to the sale of its shares in a power producer and a toll road company in Thailand, as well as the newly signed tax benefits bill, Metro Pacific Investments Corp. (MPIC) posted a 272.06 per cent growth in its first-quarter attributable net profits. According to a filing to the stock exchange, MPIC's attributable net profits for the first quarter was P7.03 billion, up from P1.89 billion in the same span last year. The selling of Global Business Power Corp. and Thailand's Don Muang Tollway Public Co. Ltd. helped the group, according to the company. “These recent asset sales underscores MPIC’s commitment to optimizing its portfolio and realizing value for its stakeholders,” it said. However, the company's core net profits dropped 26% to P2.5 billion in the first quarter, blaming the drop on the economic recession brought on by the public health crisis. According to MPIC, the pandemic has culminated in “reduced toll road traffic, light rail networks, and commercial and industrial water and electricity demand.” The company's success in the first quarter was aided by the newly signed Republic Act No. 11534, or the Corporate Recovery and Tax Incentives (CREATE) bill, which reduced income tax rates from 30% to 25%. “This law eases the company’s future tax liabilities and consequently allows reallocation of resources to further improve operational efficiencies,” it added. MPIC Chief Financial Officer and Chief Sustainability Officer June Cheryl A. Cabal-Revilla said at an online briefing: “In the first quarter, we actually recognized some positive impact, with the tax rates lowered from 30% to 25%, and that’s about P500 million for the group.” The company's operating sales fell 7.16 per cent in the first quarter to P10.63 billion, down from P11.45 billion the previous year. MPIC's power sector accounted for P2.5 billion, or 66% of the overall contribution from operations, thanks to contributions from Manila Electric Co. (Meralco) and Global Business Power. Meralco's core net profits dropped 11% to P5.1 billion in the first quarter. Lower oil sales, lower interest income on cash deposits, and higher operating expenses, according to MPIC, caused the drop. Because of the CREATE rule, Global Business Power's core net profits rose 19 per cent to P522 million. The core net profits of MPIC's toll road company fell 15% to P788 million. This was due to the “decreased traffic rates, higher interest cost and amortization from increased capital spending projects in the building of new highways, and a reduction in contribution from foreign toll roads owing to the divestment of Don Muang Tollways in Thailand in February 2021,” according to the study. “This was partly offset by the positive impact of the CREATE law,” MPIC added. Toll roads contributed P800 million, or 21% of the overall contribution from activities, according to MPIC. The water segment contributed P500 million, or 14% of the total, with contributions from Maynilad Water Services, Inc. and Metropac Water Investments Corp. Maynilad's core net profits fell by 24% to P1.2 billion in the first year. “Amortization and depreciation expenses increased due to substantial investments in the Putatan Water Treatment Plant 2, in the Pasay and Parañaque sewage treatment plants, and continuing upgrades to facilities, partly offset by lower income tax resulting from the CREATE law,” MPIC noted. The company's light rail division, Light Rail Manila Corp., posted a core net loss of P104 million, owing to capacity and average daily ridership declines. The consolidated core net profits of MPIC's hospitals under Metro Pacific Hospital Holdings, Inc. increased by 6% to P285 million. The increase was “driven by the growth in revenues, further augmented by the positive impact of the tax reduction from CREATE law,” MPIC said. According to Cabal-Revilla, MPIC is “poised to hit P12 billion in core income” at the yearend. REIT AS FUNDING OPTION MPIC is now looking at the possibilities of creating the first infrastructure-focused real estate investment trust (REIT). “We have been approached by several banks to consider REITs, especially for the hospital business. But we are now the minority shareholder in the hospitals, so it’s really up to the majority shareholders to decide,” MPIC President and Chief Executive Officer Jose Ma. K. Lim said. Augusto P. Palisoc, Jr., President and Chief Executive Officer of Metro Pacific Hospital Holdings, called the situation a "possibility." “I think the REIT is a possibility for the hospital group, but we will have to study it very carefully. At the moment, we are very busy with the COVID surge and the vaccination programs that are coming our way,” he said. For her part, Cabal-Revilla said, “I think our toll roads group has also been approached to do REITs, but I think they are looking at this from a timing perspective.” “We’ve been approached… One of our objectives is also to do a public listing eventually. But right now, our portfolio is not yet balanced,” Metro Pacific Tollways Corp. President and Chief Executive Officer Rodrigo E. Franco noted. REITs enable a firm to have a recurring income portfolio into which investors can invest by purchasing public stock. The Securities and Exchange Commission's latest rules mandate REITs to have a minimum public float of 33% and a paid-up capital of P300 million. On Wednesday, MPIC shares fell 2.44 per cent to P4 per share. MPIC is one of First Pacific's three major Philippine subsidiaries, the others being Philex Mining Corp. and PLDT, Inc. Via the Philippine Star Group, which it manages, Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund affiliate MediaQuest Holdings, Inc.272

Construction

Philippine Resources - May 04, 2021

NLEX Continues to Work on Large Projects

Despite quarantine constraints, NLEX Corporation continues to work on large development ventures such as the 8-kilometer NLEX Connector and the upgrade of the 5-kilometre Candaba Viaduct. “We are following our timelines and have contingencies in place to be able to accomplish our projects amid the community quarantine,” NLEX Corporation President and General Manager J. Luigi L. Bautista stressed in a statement. “By accelerating these projects, we are doing our part to help keep the economy going,” he pointed out. The first 5-kilometre segment of the NLEX Connector, also known as the Caloocan-Espana section, is still under construction, with a 32 per cent completion rate. Between the Caloocan Interchange along C3 Road/5th Ave. and Espana Blvd. in Sampaloc, Manila, this new Metro Manila elevated expressway is being constructed over the current right-of-way (ROW) of the Philippine National Railways (PNR). The portion, which is expected to be finished by the end of the year, will have on and off-ramps in Espana and will make NLEX accessible from the University Belt area. The next 3-kilometre segment, also inside the PNR ROW, will begin construction in the second quarter of this year between Espana Blvd. and the Polytechnic University of the Philippines in Sta. Mesa, Manila. This new road is expected to support about 35,000 vehicles a day. The project is also being considered as a feasible 24/7 freight truck alternate route between north and south Metro Manila, as well as a way to finance business operations in Central Luzon and Calabarzon. NLEX Corp. also continues to upgrade the Candaba Viaduct in order to ensure its long-term serviceability. The repair of the link slabs on the Manila-bound portion of the bridge is part of the latest renovation, which is expected to be completed this month. To date, 23 of the 25 connection slabs have been removed, bringing the project to 92 per cent completion. The NLEX and SCTEX pavement maintenance programs, as well as safety upgrades on established expressway bridges, are underway. In Bulacan, NLEX has begun rehabilitation work on the Meycauayan and Bigaa bridges to improve their structures. Both buildings were constructed in the 1960s. The 45-meter Meycauayan bridge will be completed in September, and the 64-meter Bigaa bridge in Balagtas will be completed in August. To ensure that traffic flows as smoothly as possible, the project is being implemented in phases, beginning with the southbound section. When the testing is being done, cars will be able to use three lanes. The southbound works on the Meycauayan bridge will take place from April to July, and the northbound works will take place from July to September. The southbound maintenance on the Bigaa bridge will take place in April and May, while the northbound repairs will take place in May and July. Despite operating at maximum capacity, the tollway corporation and its contractors adhere to IATF safety standards, as well as those of the Department of Public Works and Highways (DPWH) and other government departments. As a result, it adheres to stringent protection and hygiene standards, such as the use of personal protective equipment and temperature monitoring; routine disinfection of equipment and work areas; physical separation; availability of washing facilities at strategic locations; and worker inspection. “We are not just building roads, we are helping build a more resilient economy,” Bautista underscored. “We are helping our country bounce back from the global health crisis.”

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