Smartly

A consensus appears to be building at the IATF and the wide network of experts it dialogues with to relax after May 15 the “enhanced community quarantine” enforced since mid-March.

The “enhanced” quarantine was a necessary move to prevent our health system from being overwhelmed by the virus. It was a sledgehammer approach dictated by necessity. 

It did succeed in stopping a murderous spike in infections such as we saw in the US and as we see in Russia today. But it is an unsustainable strategy. Government simply does not have the bottomless barrel of funds to support subsidies to the vulnerable sectors.

An across-the-board quarantine was needed when we did not have the testing capacity at the onset of the epidemic. Now we have a large number of testing kits, including rapid testing methods scanning for the presence of antigens. We have ramped up laboratory capacity for processing samples and built large isolation facilities to host infected persons.

The City of Manila locked down the entire district of Sampaloc last week and Tondo this week. Those were successful experiments that enabled extensive testing in areas with high infection rates. 

Most important, the quarantines were largely supported by the population even as they required huge sacrifices. Unlike the US, where seriously ignorant protesters assembled to demand lifting of restrictions, some local governments here have actually requested extension of quarantine measures to ensure public safety.

Now the IATF needs to arrive at a more sustainable, smarter strategy to deal with a virus that will likely continue to haunt us for years. Under any strategy, there will continue to be infections. All we have to ensure is that the volume of infections remains comfortably below the ability of our health system to manage a lingering epidemic.

The main element of a smart strategy is to make quarantines as local as possible. This will ensure the rest of the economy could function as close to normal as could safely be.

Metro Manila, with its population density, remains the epicenter of infections. But even within the Metro, there are wide variances in the attack rate (AR), the number of infected persons per thousand.

As of the last week of April, the northern part of the Metro (Malabon, Caloocan, Navotas and Valenzuela) had the lowest ARs. Malabon, with an AR of 8.18, appears to be the safest place to be in the Metro. 

The most infections are recorded in Quezon City (AR: 34.48), but only because it has a far larger population. San Juan remains the most dangerous place with an AR of 157.25, followed by Mandaluyong with an AR of 78.74. 

If we are able to further localize restrictions, the northern half of the Metro could open for business sooner.

Revenues

No doubt, our public debt will rise as we borrow heavily to fund the anti-Covid effort. The most responsible thing for government is to try and maintain fiscal discipline so that we can ensure easier recovery in the future.

Pound-for-pound, the POGOs are a generous source of revenues for government. But these online gambling operations catering to the Chinese market are also the easiest to vilify, especially for the anti-China political groups.

POGOs have been allowed to operate in areas where quarantine restrictions have been relaxed. The Pagcor issued strict guidelines for those resuming operations.

Among these guidelines are: 1) updating and settlement of all their tax liabilities as certified by the BIR; 2) updating of their payments for any regulatory fee, license fee, performance bond or penalties due Pagcor; 3) remittance of regulatory fees for the month of April; and, 4) readiness to implement the safety protocols issued. 

Among the safety measures detailed are: 1) only 30 percent of the workforce per shift in the authorized operating sites; 2) provision of shuttle services for employees; 3) temperature checks upon entry at the office premises; and, 4) practice of social distancing, proper sanitation and disinfection in addition to the wearing of masks at all times. 

Pagcor chair Andrea Domingo explained: “Even with the partial resumption of POGO operations, we will put a premium on the safety of their employees, and the gaming industry as a whole. While we recognize their huge contributions to nation-building, and their great viability as a funding source in these difficult times, we still have to practice extra precaution in striking a balance between health and economic benefits.”

Government is taking a pragmatic attitude toward the POGOs. Income from these operations, after all, is crucial to funding our Universal Health Care System. 

Apart from the usual corporate and individual taxes collected, the Pagcor imposes a 2 percent regulatory fee on gross gaming revenues. Apart from the direct hires, POGO operations also sustain a large number of service industries and pay rentals for a million square meters of office space. POGO employees also pay rent for their residential space requirements. 

Pagcor estimates local hires at 31,556 Filipinos who will swell the ranks of the unemployed if operations do not resume. The local real estate industry has earned approximately P25 billion on leaseholds and rentals alone.

Although some of the POGOs will be allowed to resume, it is certain the boom days are not about to return. The authorized operations will resume at a vastly diminished capacity.  The China market, operating under the terms of the new normal, will likely be diminished as well.

Although government revenues from this “industry” will be diminished, they nevertheless constitute an important flow to public coffers in this difficult time.