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Typhoon Shanshan brings torrential rains, travel turmoil across Japan

By MODIS imagery from NASA's Aqua Satellite - EOSDIS Worldview, Public Domain, https://commons.wikimedia.org/w/index.php?curid=151897495
By MODIS imagery from NASA’s Aqua Satellite – EOSDIS Worldview, Public Domain, https://commons.wikimedia.org/w/index.php?curid=151897495

 – Typhoon Shanshan deluged large parts of Japan with torrential rain on Friday, prompting warnings for flooding and landslides hundreds of miles from the storm’s center, halting travel services and shutting production at major factories.

In the southwestern region of Kyushu, where what authorities say could be one of the strongest storms ever to hit the region made landfall on Thursday, residents in Fukuoka city were hunkering down, with streets quiet and shops shuttered.

Sheltering at the entrance of a rain-lashed, deserted shopping mall near the city’s train station, university student Kokoro Osoegawa, 21, was struggling to get home.

“There are no trains because of the typhoon so my parents are coming to pick me up. I stayed at a friend’s house, and then came here. I thought there would be some trains but there are none,” she said.

“I’ve never experienced all the trains stopping before.”

At least three people have been killed and 78 injured in storm-related incidents in recent days, according to the disaster management agency.

Bringing gusts of up to 50 meters per second (180 km per hour/112 mph), strong enough to blow over moving trucks, the typhoon was near the coastal city of Kunisaki in Oita Prefecture at 8:45 a.m. (2345 GMT) and moving northeast, according to authorities.

Around 125,000 households in seven prefectures were without power in Kyushu, according to Kyushu Electric Power Co.

But the warm and moist air flowing around the typhoon have also brought heavy rains in areas far from the main body, which authorities say is concerning given its slower than expected movement across the country.

Notices advising residents to be ready to evacuate have been issued to more than 4 million people across the country, mainly in the hard-hit Kyushu area but as far away as the capital Tokyo and nearby Yokohama. Authorities in Yokohama said there were risks of landslides in some areas due to heavy rain.

But, as of Thursday, only some 30,000 had been evacuated, mainly in Kyushu, disaster management minister Yoshifumi Matsumura said.

After moving from Kyushu, the storm was expected to approach the central and eastern regions, which includes Tokyo, around the weekend, the weather agency said.

Toyota suspended operations in all of its domestic plants due to the storm, while other automakers Nissan and Honda, semiconductor firms Renesas and Tokyo Electron, and electronics giant Sony also temporarily halted production at some factories.

Airlines, including ANA Holdings 9202.T and Japan Airlines, have announced cancellations of hundreds of domestic and some international flights. Many ferry and rail services, including the bullet train between Tokyo and the central city of Nagoya, were suspended on Friday morning.

Lin Yue-Hua, a 60-year-old tourist from Taiwan, had her flight from Fukuoka back home cancelled on Thursday. She was told to book another flight but did not know when she could return.

“We were very worried and upset because we didn’t know what to do,” she said.

“We stayed one more day in Japan. Then we saw it in the news that our flight from Taiwan couldn’t land in Japan after flying around the area for about 40 minutes and it flew back to Taiwan. So we have been busy trying to find our way home.”

Typhoon Shanshan is the latest harsh weather system to hit Japan, following Typhoon Ampil, which also led to blackouts and evacuations, earlier this month. – Reuters

Elon Musk’s X braces for shutdown in Brazil as spat with judge intensifies

TWITTER.COM/ELONMUSK

 – Social media giant X said on Thursday it expects Brazil’s top court to order it to shut down, as a pitched legal battle plays out over compliance with local laws and owner Elon Musk’s insistence the platform is being punished for resisting censorship.

said it expected Supreme Court Judge Alexandre de Moraes to order the shutdown “soon,” after a court-imposed deadline for the company to identify a legal representative in Brazil passed on Thursday evening.

Just before midnight, X was still working normally in the country.

Earlier on Thursday, the Supreme Court blocked the local bank accounts of billionaire Musk’s Starlink satellite internet firm, while the underlying feud over X put it on the brink of being shuttered in one of its top markets.

The two firms are part of Mr. Musk’s sprawling business empire which also includes rocket company SpaceX and electric car giant Tesla. The billionaire owns X and 40% of SpaceX, and is the CEO of Tesla.

In a series of Thursday night comments on X, Mr. Musk lashed out at Mr. Moraes, labeling the judge an “evil dictator” in a newly pinned post. He also decried the ruling to block Starlink as illegal, and claimed the action “improperly” punishes other shareholders as well as ordinary Brazilians.

Mr. Musk also announced that Starlink-parent SpaceX will provide free internet service to Brazilian users “until this matter is resolved.”

 

LIES AND CENSORSHIP

Signed by Moraes, the court’s decision to sanction Starlink is a response to the lack of legal representatives in Brazil for X, a Supreme Court source told Reuters.

The decision to freeze Starlink’s bank accounts also stems from a separate dispute over unpaid fines that X was ordered to pay due to its failure to turn over some documents. Local newspaper Folha has reported the fines total at least 20 million reais ($3.6 million), but Reuters was not able to confirm the amount.

The Supreme Court had set a deadline for X to name its legal representative in Brazil by shortly after 8:00 p.m. (2300 GMT) on Thursday.

Brazilian law requires all internet companies to have a legal representative in the country who can receive judicial orders and otherwise be legally responsible for the business.

At issue in the intensifying dispute is whether Mr. Moraes can order X to block certain accounts accused of spreading lies and distortions, a request Musk has denounced as censorship.

Most of the accounts ordered blocked are run by backers of far-right former President Jair Bolsonaro, some of which deny he lost his 2022 reelection bid.

In a previous post, Mr. Musk complained that Mr. Moraes “is an outright criminal of the worst kind, masquerading as a judge.”

Starlink, in its own post, accused the judge of secretly issuing the order without due process.

 

JUDGE V. BILLIONAIRE

The cumulative digital and legal disputes could cause X to lose one of its largest and most coveted markets, at a time when Musk has struggled with advertising revenue for the platform.

Earlier this month, X announced it would close operations and fire its staff in Latin America’s largest economy due to what it called “censorship orders” from Mr. Moraes, while keeping its service available for Brazilian users.

At the time, X claimed Mr. Moraes secretly threatened one of the company’s legal representatives in Brazil with arrest if it did not comply with legal orders to take down some content.

In his own swipe at X, Brazil’s President Luiz Inacio Lula da Silva pinned a post on the platform late on Thursday, listing six other social media accounts along with links to them.

Mr. Moraes has stressed that companies that do not respect local laws or the confidentiality of private information could have their activities temporarily suspended.

Earlier this year, the judge ordered X to block certain accounts implicated in investigations of so-called digital militias accused of spreading distortions and hate during Bolsonaro’s term in office.

After Mr. Musk challenged that decision and said he would reactivate accounts on X that the judge had ordered blocked, Mr. Moraes opened an April inquiry into Mr. Musk’s businesses.

X representatives eventually reversed course and told the Supreme Court it would obey the rulings. In April, however, Mr. Moraes asked X to explain why it had not fully complied.

In response, X lawyers cited “operational faults” that had allowed users ordered blocked to stay active on the platform.

Amid the high-stakes showdown, many Brazilians took to X to make light of the saga, including thousands who posted creative “memes” spotlighting the hard-charging judge and the controversial billionaire.

Some X users criticized the ruling signed by Mr. Moraes, arguing he was undermining freedom of speech, while others sided with Mr. Moraes, insisting that Mr. Musk must comply with Brazilian law.

X, formerly known as Twitter, is widely used in Brazil, and is an important means of communication in particular for politicians. – Reuters

Stretched US Navy eyes risky new waters in South China Sea

C7F.NAVY.MIL

By Peter Apps, Reuters Columnist

 – As two US aircraft carrier battle groups patrolled the Indian Ocean this week in an explicit effort to deter Iran from striking Israel and sparking a major regional conflict, a very different military messaging effort was underway in a luxury conference center in Manila.

The 35th annual Military Law and Operations Conference organized by the US Indo-Pacific Command – running from Aug. 27-30 – is held every year in a different country in the region – but its presence in the capital of the Philippines this week was likely far from a coincidence.

Since late 2023, supply ships from the Philippines have had to run a gauntlet of Chinese patrol boats trying to block them from accessing the disputed Second Thomas Shoal, home to grounded Filipino landing craft the BRP Sierra Madre.

In June, a Filipino marine lost his thumb during a collision with a Chinese vessel in a violent face-off involving Chinese military personnel waving clubs and spears.

More recently, a second and perhaps equally dangerous confrontation has erupted over the nearby Sabina Shoal, where the largest ship in the Philippine Coast Guard, the BRP Teresa Magbauna, has been anchored since April.

The last month has seen at least two collisions between Chinese patrol ships and Philippine vessels resupplying the Teresa Magbauna, while the Philippines has also accused Chinese aircraft of flying dangerously close to maritime patrol planes.

As the conference opened on Tuesday, the commander of the US Indo-Pacific Command, Admiral Samuel Paparo, said the US was now considering accompanying vessels from the Philippines to resupply both disputed shoals – a move that Beijing would almost certainly see as a major escalation.

“Escort of one vessel to the other is an entirely reasonable option within our Mutual Defence Treaty, among this close alliance between the two of us,” Mr. Paparo told a joint press conference with Philippines General Romeo Brawner, referring to a 1951 treaty that commits Washington to supporting Manila in the event of an armed attack on its forces.

Beijing’s intent, officials in Washington and the Philippines both suspect, is to drive Philippines forces permanently – ideally this year – from both Second Thomas and Sabina Shoals by making it impossible for them to mount resupply missions.

Both Manila and Washington appear united in their determination that the Philippines should not be forced to abandon either shoal.

Previous eras might have seen an aircraft carrier pulled from its station on the far side of the world to show the flag in the South China Sea.

In these more contested times, the US effort might be rather smaller: perhaps a frigate or destroyer sailing alongside their Filipino counterparts, or even just using US helicopters to take supplies to the two beleaguered Filipino vessels.

According to the independent US Naval Institute, the US amphibious assault ships Boxer and America are currently conducting exercises and operations off Japan and the Philippines respectively.

Currently, however, the US Navy does not have a single aircraft carrier anywhere in Asia, the first time that has been the case since 2001.

US officials say that is just a short-term situation – the previously Japan-based Nimitz-class USS Ronald Reagan is now being swapped for her sister ship George Washington, while aside from the two carriers in the Middle East, the others are engaged in refits or training on the US Atlantic or Pacific coasts.

 

SETTING PRECEDENT, PERCEPTION

The Biden administration has gone out of its way to give the impression that it would respond militarily to any attack on Taiwan. However, Beijing would likely see a ready surrender of the two Filipino outposts in the South China Sea as a wider signal of weak US resolve.

Most recently, the Philippines Coast Guard was forced to abandon a resupply run to Sabina Shoal on Monday after its vessels were intercepted aggressively by Chinese counterparts.

Over the last decade, successive Manila governments have periodically announced deals with Beijing over access to Second Thomas Shoal, only for confrontations to resume shortly after.

“We can’t afford to ignore this sort of thing, because eventually it sets precedent and shapes perception,” said Samuel Byers, a former Pentagon official and now senior adviser at the Center for Maritime Strategy in Washington DC. “That kind of sets the mindset of both allies and adversaries.”

US officials say they believe Chinese President Xi Jinping is still considering whether or not to use military force to invade Taiwan but has ordered his military to be prepared to do so by 2027.

The problem, Mr. Byers said, is that simultaneous crises elsewhere in the world – currently particularly the Middle East – are leaving US forces looking overstretched.

US Defense Secretary Lloyd Austin this week ordered the two US carriers already in the Middle East to extend their deployments further, described by a Pentagon spokesman as a “clear signal” the U.S. stands behind the defense of Israel.

That show of force seems to have been effective – on Wednesday, the chairman of the US Joint Chiefs of Staff, Air Force General Charles Brown, told Reuters both Iran and Israel appeared to have found “off ramps” from a face-off, which intensified sharply following the assassination of Hamas political leader Ismail Haniyeh in Tehran on July 31.

In a measure of the need to make tough choices, however, Washington has scaled back forces it had kept in the Red Sea since late 2023, when the USS Eisenhower carrier battle group spent months knocking down drones and rockets fired from Yemen by Iran-backed Houthi militants. In the process, the battle group used up more Tomahawk land attack missiles than the US military purchased in the whole of 2023.

The Houthi attacks, however, have continued, with U.S. warships now no longer nearby but instead in positions from which they can strike Iran directly in the event of any wider war.

A smaller force of European warships remains to assist commercial vessels in the Red Sea, one of which – the Greek tanker MV Sounion – was this week reported ablaze and leaking oil, with salvage efforts complicated by threats of further attacks.

 

LONG TIME COMING

With much merchant shipping now avoiding the Red Sea, the idea that the world’s pre-eminent naval force, the US Navy, might largely abandon its campaign there would once have been unthinkable.

The fact it has done so points not just to the level of priority being given to deterring Iran from doing something rash, but also the feeling that the United States now faces a very different era.

One obvious likely casualty is US support to Europe – in 2022 and 2023, U.S. aircraft carriers joined exercises with NATO forces, but none has done so in the current year. U.S. officials have become increasingly blunt that European nations should defend their own backyard, while Washington shifts its focus to the Pacific.

What is most important, US officials say, is the growing “latticework” of alliances Washington has built in Asia, particularly tying Japan, South Korea, the Philippines and Australia.

For most of those countries, the confrontation with China has been a long time coming.

Over the last two decades, China has built its own outposts on several disputed islands including a major military base on the Philippine-claimed Mischief Reef.

Meanwhile, the fishing and patrol boats of its “maritime militia” now routinely stop vessels from the Philippines and other foreign craft reaching the disputed Scarborough Shoal.

A 2016 ruling by the United Nations maritime court in The Hague described much of the oil and energy-rich Spratly islands including Scarborough, Second Thomas and Sabina shoals as part of the Philippines Exclusive Economic Zone.

That ruling was angrily rejected by China, which says it holds jurisdiction over most of the South China Sea inside its “nine dash line”, which it says have long been historic Chinese waters despite being claimed by several other nations.

Since November 2023, Philippine warships have conducted at least 10 bilateral and multilateral joint patrols with the United States, Canada, Australia and Japan, and with talk they might do the same with France.

But while such patrols have sometimes operated in contested areas, physically escorting Filipino ships into the teeth of a Chinese-enforced blockade would be a very different matter.

Whether the Philippines truly wants such a step is another question. Its military chief, General Brawner, has suggested joint patrols in the past, but appeared to pull back from that stance this week.

“The attitude of the armed forces of the Philippines…is for us to first rely on ourselves,” he said. “We are going to try all options, all avenues that are available to us in order for us to achieve the mission…, in this case, the resupply rotation of our troops. We will then seek other options when we are…constrained from doing it ourselves.” – Reuters

Mpox Virus: Things to know

AN ILLUSTRATION of mpox virus particles. — FRED HUTCH CANCER CENTER/HANDOUT VIA REUTERS

Preventive measures against mpox have been shared by experts from the Philippine College of Physicians (PCP), urging the public to protect themselves amid the ongoing global health emergency. 

For starters, mpox is a viral illness caused by the monkeypox virus, which can cause similar symptoms to smallpox, according to the World Health Organization (WHO).  

The incubation period for mpox, or the time between exposure and the appearance of symptoms, typically ranges from 5 to 13 days. 

The first common symptoms are fever, tiredness, headaches, muscle aches, back pain, low energy, and swollen lymph nodes, according to PCP.  

Then a rash appears shortly after the first symptoms persist.  

“One of the most noticeable features of the rash is its distinct, deep-set appearance with a dimpled center, and it can be quite painful,” Rontgene M. Solante, an infectious disease expert, said during his discussion at the PCP health forum on mpox. 

There are two types of mpox: Clade I, which is associated with more severe illness and deaths and has a higher case fatality rate of 10%, according to WHO. 

Meanwhile, the five active mpox cases in the Philippines, reported on Wednesday, are all Clade II, the mpox type associated with the global outbreak since 2022. 

Clade II is considered less severe and has a 99.99% survival rate.  

In the current global outbreak, mpox transmission appears to occur primarily through close physical contact, including sexual contact, according to PCP.  

“Virus can enter through broken skin, mucosal surfaces: oral, pharyngeal, ocular, and genital, or via the respiratory tract,” Mr. Solante said.  

Mpox can also be transmitted from infected animals, as well as from mother to child during pregnancy or at birth. 

Transmission through respiratory droplets has also been reported, but it typically involves short-range small airborne particles, or aerosols, and prolonged close contact. 

“There have been reports of exposure to respiratory secretions and fomites—contaminated inanimate objects such as towels and linens—as routes or portals of transmission for mpox,” Arthur Dessi E. Roman, infectious disease expert said in his discussion.  

The PCP advised being mindful of activities that might spread mpox, and to observe hand hygiene by washing hands with soap and water and disinfecting them with alcohol. 

Experts also recommended avoiding contact with any visible rashes on others and considering minimizing skin-to-skin contact. 

This is especially important in “high-risk” areas like enclosed spaces—back rooms, saunas, massage parlors, and sex clubs—where intimate contact is frequent.  

Cleaning and disinfecting objects and surfaces suspected of being contaminated with the mpox virus is also advised.

 

Steps to take if mpox is suspected 

The Department of Health (DOH) has issued a public health advisory outlining the necessary steps for individuals who suspect they may have contracted mpox.  

Individuals who have had skin-to-skin contact in the past 30 days and have traveled outside the country, while currently asymptomatic, are advised by the DoH to temporarily abstain from social gatherings and to keep a vigilant watch on their health conditions.

Those who have not had any skin-to-skin contact in the preceding 30 days and do not have a travel history, but are showing symptoms of mpox, should consult a healthcare provider or dermatologist. They are also encouraged to reach out to the hotline at 1555 for additional support.

Finally, the health department recommends that individuals showing symptoms and who have had skin-to-skin contact in the past 30 days, along with recent international travel, should isolate themselves. This precaution is necessary to avoid spreading the infection to others, and they are encouraged to contact testing centers to evaluate their health status. – Edg Adrian A. Eva

Japan, Thailand, and South Korea rank as Filipinos’ most revisited countries

FREEPIK

Japan, Thailand, and South Korea are the ‘ultimate hotspots’ for returning Filipino visitors, a digital travel platform said. 

According to Mike Hwang, Agoda Country Director for the Philippines, the top three countries are more than just a destination for Filipinos. 

“They are experiences that travelers crave to relive,” he said. 

For 50% of Filipino travelers, ease of travel is the primary reason they chose to revisit Japan, Thailand, and South Korea, according to the Return Visitor Ranking survey conducted by Agoda. 

Local cuisine also contributes 47% to these visitor returns. Convenience of location followed at 34%, and safety and cleanliness at 33%. Lastly, 30% are rooted in positive experiences from the past.  

Based on the data involving over 4,000 participants from 10 different Asian markets, 70% of Filipino tourists revisit their favorite country. 

The study also revealed that 55% of tourists have reexplored their favorite places between one to three times in the past decade, and 10% have returned ten times or more.  

“Where some make it a habit to globetrot, others find pleasure in revisiting their favorite destinations,” Mr. Hwang added. 

Adventures and celebrations were the other key reasons declared by Filipinos who recently booked a trip back to their favorite travel spots. – Almira Louise S. Martinez

Basic Energy Corp. to hold Annual Stockholders’ Meeting on Sept. 18 via remote communication

 

 


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Gov’t raises $2.5B from global bonds

A US dollar note is seen in this June 22, 2017 illustration photo. — REUTERS

THE GOVERNMENT has raised $2.5 billion from its sale of triple-tranche US dollar-denominated global bonds, its second foray into the international debt market this year.

“We are very pleased to see the overwhelming investor interest in our new $2.5-billion triple-tranche global bonds,” Finance Secretary Ralph G. Recto said in a statement. “In fact, compared with our regional peers, the Philippines’ issuance achieved among the best pricing in all of our tranches this year. This is a resounding vote of confidence in our country’s solid credit profile.”

The total amount raised was in line with Mr. Recto’s earlier target of $2 billion to $2.5 billion.

The Bureau of the Treasury (BTr) said the 5.5-year bonds, maturing on March 5, 2030, have a yield of 4.375%. This was priced 35 basis points (bps) tighter than the initial guidance.

The new 10.5-year bonds, maturing on March 5, 2035, were priced at 4.75%, 30 bps tighter than the initial guidance.

The new 25-year sustainability bonds, which will mature on Sept. 5, 2049, have a yield of 5.175%. This was 32.5 bps tighter than the earlier guidance.

The BTr said it issued the bonds as benchmark yields were moderating due to the dovish US Federal Reserve stance, supporting market expectations of a rate cut in September.

“The 5.5-year spread is the tightest among all US dollar 5/5.5-year issuances by the (Philippines) since June 2021, while the all-in yield for the 10.5- and 25-year is the tightest among all US dollar 10/10.5-year and 25-year issuances by the (Philippines) since March 2022,” the BTr said.

National Treasurer Sharon P. Almanza said the tight pricing of the global bonds reflects “continued confidence in the country’s creditworthiness and robust economic performance.”

“The exceptionally tight pricing across all offerings enables the government to conserve on interest payments, thereby allowing more fiscal space to flow into transformative investments,” she said in a statement.

IFR reported that the government raised $500 million from 5.5-year bonds; $1.1 billion from 10.5-year notes; and $900 million from sustainability bonds.

Total bids reached $4.86 billion, IFR said. The 5.5-year notes fetched bids worth $860 million from 65 accounts.

For the 10.5-year bonds, bids reached over $2.2 billion from 121 accounts. Books for the 25-year bonds reached over $1.8 billion from 103 accounts.

BNP Paribas, Citigroup, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Standard Chartered and UBS were tapped as joint lead managers and bookrunners. HSBC, Standard Chartered and UBS were joint sustainability structuring banks.

The government plans to borrow $5 billion this year, of which $2 billion was raised from the issuance of global bonds in May. The $2.5 billion raised from the latest dollar bond issuance, leaves $500 million that has yet to be raised.

In a text message, Mr. Recto said the remaining amount in the government’s offshore borrowing plan would come form either euro bonds or Samurai bonds.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message the rates awarded were at narrow spreads compared with the benchmark US Treasury yields.

“Spreads below 100 basis points are considered unusually low/cheap for the National Government,” he said.

“Thus, the government saved on borrowing/financing costs with yields among the lowest in more than seven months and spreads among the tightest.”

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message the awarded yields were attractive to investors as rates are expected to continue declining as the US Federal Reserve begins its easing cycle.

“These are attractive yields and have investors very interested. As an investor, you’re locked in before US Fed rate cuts happen and yields start to dwindle further,” he said.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. in a Viber message said the government had timed the issuance well as benchmark rates could move higher in the coming weeks, which would have cost the government more.

“The issuances are timed pretty well resulting in relatively tight ranges across the announced tenors versus their global benchmarks. Benchmark rates could move higher in the coming weeks, which could cost the BTr a lot more,” he said.

Fitch Ratings assigned a “BBB” rating to the bonds, while Moody’s Ratings gave it “Baa2” and S&P Global Ratings assigned it “BBB+.” These mirror the Philippines’ issuer ratings.

The bonds were drawn from the Philippine government’s existing shelf program, which includes tranches maturing in 2030, 2035 and 2049. — Aaron Michael C. Sy with inputs from Beatriz Marie D. Cruz

Salceda says House won’t adopt Senate’s CREATE MORE bill

PHILIPPINE STAR/WALTER BOLLOZOS

By Justine Irish D. Tabile, Reporter

THE HOUSE of Representatives would not adopt the Senate’s version of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill because it is “too flawed,” Ways and Means Committee Chairman and Albay Rep. Jose Maria Clemente “Joey” S. Salceda said.

“The House contingent will seek to resolve differences in principle between the Senate and House versions of the CREATE MORE bill in a Bicameral Conference Committee,” Mr. Salceda told BusinessWorld in a Viber message.

This comes after Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) chief Frederick D. Go said that he hopes the House would adopt or at least be amendable to the Senate version of CREATE MORE.

The Senate is expected to approve the CREATE MORE bill on second and third reading next week.

“I will closely work with Malacañang, as we have in the past. We always treat comments from the OSAPIEA with the highest consideration and priority. But, on these key issues, the House contingent will be steadfast,” Mr. Salceda said.

The CREATE MORE bill is among the priority legislative measures identified by the Legislative-Executive Development Advisory Council for passage before the 19th Congress ends in June 2025.

Mr. Go said the Senate has so far approved five bills since Congress opened its third and final regular session in July.

“They are actually working very hard to give us our priority bills. And so, the next bill to come out of the Senate, I hope, is the CREATE MORE bill,” he said.

“I can assure you that I’ve been working with them up to late nights for the last many days to try to pass this. They say they will try to pass it on Tuesday next week,” he added.

If the Senate approves the bill by Tuesday, the bicameral conference committee could begin discussions as early as Wednesday, Mr. Go said.

“We are hoping that the House will adopt it or will at least be agreeable to it if they go into a bicameral conference committee,” he said on the sidelines of the National Retail Conference and Expo on Thursday.

However, Mr. Salceda said one of the reasons the House would not adopt the Senate version is it does not resolve issues on the cross-border doctrine.

“Initially, the Senate aimed to do away with separate Customs territories altogether, repealing them from the special ecozone laws that established them and deleting the House’s definition of separate Customs territories,” he said.

“However, the Senate eventually just removed the repeal of such special laws without adopting the House position of setting a primary and overarching doctrine on the question. If we adopt the Senate version as is, we’re back to the confusing status quo,” he added.

Mr. Salceda said the House also objects to the Senate version, which allows tariff- and value-added tax-free importation of petroleum for international carriers.

“We vehemently object to this. Such products will not be fuel-marked when imported, so the Senate proposal will confuse law enforcement as to the provenance of unmarked fuel,” he said.

Lastly, he said the manufacturing sector has asked for the bill to clarify the registered business enterprise (RBE) local tax.

“Specifically, they wish for current rates already set by local government units to apply, in case they are lower than the proposed 2% in CREATE MORE,” he said.

“We see the merit in this, since the RBE local tax aims to streamline tax collection, not increase rates. Manufacturing tends to be sensitive to taxes based on gross receipts because they have very low, single-digit margins,” he added.

Apart from the three reasons, he said the House would also study other inconsistencies or ambiguities in the bill that cannot be left to the implementing rules and regulations.

“Usually, when we pass tax reforms, they tend to be towards December of the year. Hence, there is pressure to complete the reform before the new fiscal year starts,” Mr. Salceda said.

“We still have a full month of session, not to mention, four months before this fiscal year ends. CREATE MORE is supposed to remedy ambiguities in CREATE. The cure will not be rushed,” he added.

New digital bank applicants must hurdle ‘stricter’ criteria — BSP

FREEPIK

By Luisa Maria Jacinta C. Jocson, Reporter

NEW DIGITAL BANKS applying for a license must adhere to tighter standards on financial inclusion, a Bangko Sentral ng Pilipinas (BSP) official said, adding that there is a possibility that not all four new licenses would be granted immediately.

“Since digital bank applicants will be assessed against stricter criteria and parameters against our financial inclusion goals, it is possible that the number of digital bank players in the financial system will not reach the maximum limit of 10,” BSP Deputy Governor Chuchi G. Fonacier told BusinessWorld.

“We are optimistic that the new players are going to offer financial products and services that have not been widely offered to the market,” she added.

Earlier this month, the Monetary Board approved the lifting of the moratorium on new digital banking licenses starting Jan. 1, 2025. It will allow four more digital banks to operate in the country, which would bring the maximum number to 10. These can either be new applicants or banks that seek to convert their existing license to a digital one.

“There are some entities that have shown interest, but we have yet to really see the bigger picture when the application window opens in January 2025,” Ms. Fonacier said.

“With our continuous market surveillance, we are also looking at a limited number of players who might be interested in converting their license to a digital banking license.”

Ms. Fonacier said limiting the number of digital lenders to 10 allows the central bank to “strike a balance between being open to seeing the potential of new players yet remaining cautious and sensitive to the possible risks that the new digital bank licensees may bring.”

Earlier this year, the BSP said only two of the six digital banks were profitable.

Ms. Fonacier also noted that most jurisdictions with licensed digital banks have kept their industry players to a “handful” or even fewer than 10.

“Since we are still currently further understanding this bank category, we want to be cautious. Hence, keeping the additional players few is more prudent compared with opening up to a bigger or unlimited number, which may potentially expose the financial system to a wider set of unknown and novel risks,” she added.

In 2021, the BSP capped the number of digital banking licenses at six as it sought to boost regulatory capacity and supervision of the sector.

The six online lenders in the country are Tonik Digital Bank, Inc.; GoTyme Bank of the Gokongwei group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; Overseas Filipino Bank, a subsidiary of Land Bank of the Philippines; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital Bank of Union Bank of the Philippines, Inc. (UnionBank).

BSP Governor Eli M. Remolona, Jr. earlier said applicants must “bring something new to the table.”

“We want to see digital banks offer innovative products that will reach the undertapped and unserved markets to contribute to greater financial inclusion,” Ms. Fonacier said.

Applicants must also have potential to reach untapped or underserved markets.

“For example, they must show that they have access to a large pool of data/ecosystem that will support the delivery of innovative and game-changing financial products and services, specifically lending solutions,” she added.

The central bank is also eyeing applicants that can offer credit products to more Filipinos.

“As we push for greater credit inclusion, we are hoping for the players to be able to grant credit facilities to those customers who have not been granted such loans by incumbent financial institutions due to lack of formal documentation,” she said.

“Now, we see that alternative data points are being utilized to generate credit scores for individuals, and we want to see digital banks maximize the capabilities of these technologies, of course, within appropriate safeguards/safety nets,” she added.

The BSP wants to onboard at least 70% of adult Filipinos into the formal financial system.

The central bank earlier said applicants would also undergo a “rigorous” licensing process that will evaluate their value proposition, business models and resource capabilities. Applicants must also be compliant with the standard licensing criteria, which cover capital adequacy and corporate governance and risk management, among others.

DA won’t recommend hike on rice tariffs yet

A worker unloads a sack of rice from a truck in Manila, May 30, 2024. — PHILIPPINE STAR/RYAN BALDEMOR

By Adrian H. Halili, Reporter

THE DEPARTMENT of Agriculture said that it would not yet recommend raising tariffs on imported rice since retail prices have not gone down.

“Before 400,000 metric tons (MT) were shipped per month, since June, July, and August, almost 150,000 MT of rice have entered… So, it’s not enough stock for us to recommend the raising of tariffs,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. told reporters on the sidelines of a poultry and livestock event on Wednesday.

Between the months of June and August, rice imports at a 15% tariff averaged to about 150,000 MT per month, he said.

As of Aug. 22, Philippine rice imports amounted to 2.72 million MT, data from the Bureau of Plant Industry showed.

“The price of rice in the market has not yet decreased. Besides, the problem is, konti pa lang ang pumasok na bigas at 15% (few shipments came in at 15%),” Mr. Tiu Laurel said.

President Ferdinand R. Marcos, Jr. signed Executive Order No. (EO) 62, which reduced tariffs on imported rice to 15% from 35% until 2028, in an effort to lower the price of the staple.

EO 62, which took effect in July, mandated a review of the tariff policy every four months to reflect changes in global prices and supply. A review will be conducted by November.

Earlier, Mr. Tiu Laurel said the DA would propose to raise rice import tariffs once local prices fall to about P42-P45 per kilo.

Imported well-milled rice in Metro Manila markets was sold at P45-P55 per kilo, while local well-milled rice was sold at P48-P50 per kilo, according to DA’s price monitor as of Aug. 28

On the other hand, imported regular milled rice was sold at P46-P50 per kilo, while local rice was sold at P45-P50.

“I’ve always said that once you lower tariffs… it does not mean that the price will drop immediately because from January to June, a lot of rice was imported, almost 450,000 MT a month,” he added.

Mr. Tiu Laurel said that in the first half of the year, imports were in excess of the country’s 320,000 MT monthly requirement for rice.

“So, may excess talaga na nabili at nabayaran ng buwis nang mahal... Aabot ng mga mid-October or end of October para maubos ’yung old stocks (So, there is indeed an excess supply of rice that was purchased and taxed at higher prices. The old stocks could only be depleted by the middle or end of October),” he added.

The Agriculture chief said world rice prices remain elevated amid the ban on rice exports by the Indian government.

India last year banned on non-basmati white rice exports, citing the need to safeguard domestic supply.

“Plus, Indonesia and Malaysia are again buying rice for their buffer stocks, that is why international prices are not declining,” he added.

The Philippines remains to be the world’s top importer for rice, according to the US Department of Agriculture (USDA).

Asked to comment, Roehlano M. Briones, a senior research fellow at the Philippine Institute for Development Studies said traders are hesitant to import rice as various agricultural groups filed a petition asking the Supreme Court to nullify EO 62.

“There is no guarantee that the tariff valid on the date of making a purchase order will be the same tariff upon unloading at Customs,” he said in a Viber message.

Earlier, industry and farmer groups have questioned the validity of the EO 62, claiming lack of public consultation and the threat it poses to local rice producers.

“In the market, they are saying that the price of rice will drop by P6 to P7 a kilo, but that would not happen because the traders have already imported the rice at a higher tariff,” Teodoro C. Mendoza, an agronomist and a retired professor at the University of the Philippines Los Baños, said in a phone call.

Foundation for Economic Freedom (FEF) President Calixto V. Chikiamco said the government should permanently lower rice import tariffs to 15% or adopt a variable tariff rate.

“(There should be) lower tariffs during lean season and higher tariffs during harvest season,” Mr. Chikiamco said in a Viber message.

Strengthening business success through corporate governance

Pixabay / Mohamed_hassan

Trust, accountability, and leadership — these principles are essential foundations that can make or break a company. A well-governed company is not only profitable but also responsible and transparent to all its stakeholders.

Corporate governance is essential for aligning the interests of a company’s management with those of its shareholders and other stakeholders. It ensures that decisions are made to promote transparency, fairness, and accountability, thereby fostering trust and confidence among investors, employees, customers, and the public.

According to the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance, corporate governance involves a set of relationships between a company’s management, its board, its shareholders, and other stakeholders. Corporate governance also provides the “structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.”

According to McKinsey & Company, 84% of global institutional investors are willing to pay a premium for companies with robust corporate governance practices. Similarly, the Harvard Law School Forum on Corporate Governance found that 64% of investors consider corporate governance a critical factor in their investment decisions. These figures indicate that well-governed companies are more likely to attract investment, reduce the cost of capital, and enhance overall corporate performance, which is crucial for long-term sustainability and strategic growth.

Adopting ESG and boosting CSR in businesses

Environmental, social, and governance (ESG) criteria have become integral to corporate governance practices. Companies are increasingly evaluated on their ESG performance, influencing investment decisions and corporate strategies. This additional factor mirrors a broader understanding that a company’s success is not solely determined by financial performance but also by its impact on society and the environment.

According to a report by ESG Reporting Hub, businesses are now actively incorporating ESG goals into the company’s purpose, ensuring that these considerations are not treated as separate initiatives but are integrated into the core business model.

A study published in the peer-reviewed journal Environment, Development, and Sustainability stated that businesses that integrate ESG factors into their operations often experience improved value creation and sustainability, which can lead to better financial outcomes over time. In fact, firms with robust governance structures also tend to perform better, with good governance practices correlating with increased shareholder value and reduced risks.

On the other hand, consumers are increasingly choosing to spend their money on products and services with ESG-related claims. According to a report by McKinsey, products with ESG-related claims had a 1.7 percentage-point advantage over those without.

Meanwhile, corporate social responsibility (CSR) and sustainability have become increasingly intertwined with effective corporate governance as these strategies require considering the interests of all stakeholders, including shareholders, employees, customers, suppliers, and the community, in decision-making processes. For instance, a report by the Corporate Finance Institute found that CSR can add value to firms by establishing and maintaining a good corporate reputation, reducing operational costs through efficiency improvements, and attracting and retaining committed employees.

Going beyond profit

According to Institute of Business Ethics, many businesses today are not viewed as highly trustworthy, which emphasizes the need for ethical governance practices that are rooted in integrity, honesty, and openness.

Central to the corporate governance framework is the concept of ethics, which refers to the moral principles guiding the decision-making processes within an organization. Ethical corporate governance ensures that companies not only comply with the law but also adhere to a higher standard of integrity and responsibility toward all stakeholders.

Meanwhile, businesses are now creating a more productive, engaged, and innovative workforce by promoting equality, diversity, and inclusion in the workplace. Fair employment practices secure that all employees are treated equitably, regardless of gender, race, age, disability, or other characteristics. This strategy not only fosters a positive work environment but also mitigates the risks associated with discriminatory practices.

In addition, a study on the diversity and effectiveness in FTSE 350 companies, commissioned by the United Kingdom’s Financial Reporting Council (FRC) and conducted by research firm SQW in collaboration with the London Business School Leadership Institute in 2021, revealed that boards with well-managed gender diversity tend to have higher stock returns and are less prone to experiencing shareholder dissent.

However, Gartner’s 2021 ReimagineHR Employee Survey revealed only 18% of survey respondents indicated that they work in a highly fair environment. These findings have significant implications for employers, as perceptions of a fair employee experience can improve employee performance by up to 26% and increase employee retention by up to 27%.

In the Philippines, women face notable challenges in the labor market as labor force participation rate (LFPR) for women is significantly lower than that of men.

The Education Development Center, Inc. reported that women are often engaged in lower-paying, informal jobs, which limits their economic empowerment. They are often overrepresented in sectors like education and health, while underrepresented in higher-paying fields such as technology and engineering.

Global variability in corporate governance

Corporate governance practices vary widely across different regions, influenced by cultural, legal, and economic factors. While some convergence towards a more globalized approach has occurred, alternative models are still observable, especially in Europe and Asia.

According to Investopedia, the Anglo-US model, prevalent in the United States and United Kingdom, is oriented towards the stock market and is characterized by a dispersed ownership structure.

The German model, also known as the continental or European model, features a two-tier board structure with a supervisory council and an executive board.

On the other hand, corporate governance in Asia and the Pacific region is influenced by factors such as family ownership, business groups, and state ownership. Many Asian countries have a high prevalence of state-owned enterprises (SOEs), which account for a significant portion of their economies. Challenges in the region include improving board structure and diversity, enhancing transparency, and dealing with corporate scandals.

In the Philippines, the Securities and Exchange Commission (SEC) required all publicly listed companies (PLCs) to issue an annual corporate governance report consolidating their governance policies and practices since 2013. This report is mandatory and due by June of every fiscal year.

The country also introduced the Philippine Corporate Governance Blueprint, spearheaded by the SEC in 2015. The blueprint encouraged PLCs to adopt best practices in governance, which included the timely disclosure of significant information, the right of shareholders to nominate board candidates, and the requirement for a formal board nomination process. These practices were aligned with the ASEAN Corporate Governance Scorecard (ACGS) to facilitate performance assessment across the region.

Currently, the Philippines has kept the 11th ranking among 12 Asia-Pacific countries in terms of their performance in corporate governance (CG) and environmental, social, and corporate governance (ESG). However, the country came out with a score of 49.3 in the 2023 CLSA CG ranking, lower than the 50.5 score in 2020.

This year, PricewaterhouseCoopers (PwC) predicted that Filipino companies will become more exposed to global capital markets, and shareholder activism will likely increase. Investors, particularly foreign institutional investors, are expected to place greater emphasis on corporate governance and are more willing to challenge management decisions that they perceive as detrimental to shareholder value. — Mhicole A. Moral

Six firms eye Meralco’s 400-MW contract

BW FILE PHOTO

THE SUBSIDIARIES of First Gen Corp., San Miguel Global Power Holdings Corp. (SMGP), Aboitiz Power Corp. (AboitizPower), and Filinvest Development Corp. have expressed interest in competing for Manila Electric Co.’s (Meralco) 400-megawatt (MW) power supply contract, the power distributor said on Thursday.

“Following the success of our recent CSP (competitive selection process) for 600 MW of baseload supply where Meralco received very competitive offers, we welcome the continued interest of the country’s major energy players to join this CSP round that will help us ensure availability of least-cost supply for our customers starting next year,” Meralco Bids and Awards Committee Chairman Lawrence S. Fernandez said in a statement.

Six companies participated in the pre-bid conference for the power supply contract on Thursday, according to Meralco.

The participants include First Gas Power Corp. and First Natgas Power Corp., both subsidiaries of Lopez-led First Gen Corp. Masinloc Power Co. Ltd. and Sual Power, Inc., part of SMGP, the power arm of San Miguel Corp., also took part.

GNPower Dinginin Ltd. Co., representing a private limited partnership that includes AboitizPower’s Therma Power, Inc., AC Energy & Infrastructure Corp., and Power Partners Ltd. Co., joined the conference. Additionally, FDC Misamis Power Corp., a subsidiary of FDC Utilities, Inc., which is under Filinvest Development, also participated.

“We look forward to the participation of these prospective bidders during the bid submission deadline and bid opening scheduled on Oct. 1,” Mr. Fernandez said.

The resulting 15-year power supply agreements for Meralco’s 400-MW mid-merit requirement are targeted to commence by Aug. 26, 2025. These agreements will undergo the review and approval process of the Energy Regulatory Commission (ERC) before implementation.

The power distributor recently announced that it had secured the lowest offers for its 600-MW supply requirement from power generation companies under SMGP and AboitizPower.

“We are happy that the main objective of the CSP, which is to secure the least cost supply for our customers, has been achieved. We hope that there will be no further delays as we work towards immediate signing of the PSAs resulting from the 600-MW CSP,”  Meralco Senior Vice-President and Head of Regulatory Management Jose Ronald V. Valles said.

“We trust that ERC evaluation and approval will also be swift so customers can enjoy these very low rates upon scheduled delivery date in August 2025,” he added.

Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera