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Indonesia’s Prabowo briefs potential ministers on economy, geopolitics

A view shows the Light Rail Transit (LRT) train in Jakarta, Indonesia, Aug. 23, 2023. -- REUTERS/Willy Kurniawan

JAKARTA – Indonesia’s incoming leader Prabowo Subianto was briefing his would-be ministers on Wednesday on economy and geopolitical issues ahead of his Sunday inauguration, his spokesperson said, as his cabinet assessments continue.

Mr. Prabowo this week summoned dozens of people who said they had been asked to join the next government, including current finance minister Sri Mulyani Indrawati. His cabinet has not been officially unveiled.

Dahnil Anzar Simanjuntak, Prabowo’s spokesperson, said on news channel Kompas TV that the briefing was intended for “the ministers to build a mutual understanding with Prabowo.”

Mr. Dahnil said the topics of the briefing revolved around anti-corruption measures and the economy.

Prabowo’s agenda includes accelerating economic growth to 8% from the current 5% while ending poverty and malnutrition in the nation of 275 million people. He is also pushing a multi-billion-dollar program giving free meals to 20 million students.

“Prabowo wants to ensure there is awareness from all ministers, from all his subordinates…to reach the 8% economic growth,” Mr. Dahnil said.

Mr. Dahnil also said the briefing would touch on geopolitical issues, without providing details.

Mr. Prabowo has said that he will keep his foreign policy non-aligned to any major power, be it China or the United States.

Local media reported several ministers arrived for the briefing at Prabowo’s residence in the south of the capital Jakarta, including Sri Mulyani and current chief economic minister Airlangga Hartarto.

Mr. Prabowo, an ex-general who won the presidential election in a landslide in February, will be sworn in on Sunday. His vice president is Gibran Rakabuming Raka, the eldest son of outgoing President Joko Widodo. – Reuters

‘Age of electricity’ to follow looming fossil fuel peak, IEA says

PCH.VECTOR-FREEPIK

LONDON – The world is on the brink of a new age of electricity with fossil fuel demand set to peak by the end of the decade, meaning surplus oil and gas supplies could drive investment into green energy, the International Energy Agency said on Wednesday.

But it also flagged a high level of uncertainty as conflicts embroil the oil and gas-producing Middle East and Russia and as countries representing half of global energy demand have elections in 2024.

“In the second half of this decade, the prospect of more ample – or even surplus – supplies of oil and natural gas, depending on how geopolitical tensions evolve, would move us into a very different energy world,” IEA Executive Director Fatih Birol said in a release alongside its annual report.

Surplus fossil fuel supplies would likely lead to lower prices and could enable countries to dedicate more resources to clean energy, moving the world into an “age of electricity,” Birol said.

In the nearer term, there is also the possibility of reduced supplies should the Middle East conflict disrupt oil flows.

The IEA said such conflicts highlighted the strain on the energy system and the need for investment to speed up the transition to “cleaner and more secure technologies”.

A record high level of clean energy came online globally last year, the IEA said, including more than 560 gigawatts (GW) of renewable power capacity. Around $2 trillion is expected to be invested in clean energy in 2024, almost double the amount invested in fossil fuels.

In its scenario based on current government policies, global oil demand peaks before 2030 at just less than 102 million barrels/day (mb/d), and then falls back to 2023 levels of 99 mb/d by 2035, largely because of lower demand from the transport sector as electric vehicle use increases.

The report also lays out the likely impact on future oil prices if stricter environmental policies are implemented globally to combat climate change.

In the IEA’s current policies scenario, oil prices LCOc1 decline to $75 per barrel in 2050 from $82 per barrel in 2023.

That compares to $25 per barrel in 2050 should government actions fall in line with the goal of cutting energy sector emissions to net zero by then.

Although the report forecasts an increase in demand for liquefied natural gas (LNG) of 145 billion cubic meters (bcm) between 2023 and 2030, it said this would be outpaced by an increase in export capacity of around 270 bcm over the same period.

“The overhang in LNG capacity looks set to create a very competitive market at least until this is worked off, with prices in key importing regions averaging $6.5-8 per million British thermal units (mmBtu) to 2035,” the report said.

Asian LNG prices, regarded as an international benchmark are currently around $13 mmBtu. – Reuters

Hong Kong leader focuses on livelihood issues, positioning HK as global hub

CITYSCAPE view of the Victoria Harbour region in Hong Kong. —MANSON YIM-UNSPLASH

HONG KONG – Hong Kong’s leader kicked off his annual policy address on Wednesday with pledges to reform shortcomings including reducing wait times for public housing as authorities focus on livelihood issues and introduced a string of measures to boost the economy.

John Lee, in his third policy address as leader, said officials will streamline procedures for companies seeking to list in Hong Kong and strive for more international company listings on its stock exchange.

The government said it will create a commodity trading ecosystem, establish a fuel bunkering center, seeking to tap opportunities in green shipping and aviation.

Hong Kong’s small and open economy has felt the ripple effects of a slowdown in the Chinese economy. It grew by 3.3% in the second quarter from a year earlier, and is forecast to grow 2.5%-3.5% for the year.

Although tourism numbers have rebounded since COVID, with 46 million visitors expected this year, consumption and retail spending remain sluggish, while stock listings have dried up and capital flight remains a challenge.

The duty on liquor will be cut to 10% from 100% above HK$200 ($26), Mr. Lee said. It will only be applicable to liquor with an alcoholic strength of more than 30%.

The move will help Hong Kong, which has some of the highest duties on liquor globally, “promote liquor trade and boost development of high value added industries including logistics and storage, tourism as well as high end food and beverage consumption,” he said.

It may aid the city into turning into a spirits trading hub in the way that it became an Asian wine trading hub after wine duties were abolished in 2008.

The move may also benefit local bars and restaurants that have struggled since COVID, with many local residents now opting to travel across the northern border to the Chinese city of Shenzhen to dine more cheaply.

Retail sales were down 7.7% for the first eight months of 2024 compared with the same period a year before.

New government committees will also be set up to explore the development of new tourism areas, a low altitude economy with services like delivery drones and businesses and services catered at the elderly, Mr. Lee said. – Reuters

North Korea says 1.4 million young people apply to join army

Military personnel take part in a parade to mark the 90th anniversary of the founding of the Korean People’s Revolutionary Army in Pyongyang, North Korea, in this undated photo released by North Korea’s Korean Central News Agency on April 26, 2022. — KCNA VIA REUTERS

SEOUL – North Korean state media said on Wednesday around 1.4 million young people had applied to join or return to the army this week, accusing Seoul of a provocative drone incursion that had brought the “tense situation to the brink of war”.

The young people, including students and youth league officials who had signed petitions to join the army, were determined to fight in a “sacred war of destroying the enemy with the arms of the revolution,” the KCNA report said.

Photographs published by KCNA showed what it said were young people signing petitions at an undisclosed location.

North Korea’s claim of having more than one million young people volunteering to enlist in the country’s Korean People’s Army in just two days comes at a time when tensions on the Korean peninsula are running high.

North Korea has made similar claims in the past when there have been heightened tensions in the region.

Last year, state media reported on 800,000 of its citizens volunteering to join the North’s military to fight against the United States.

In 2017, nearly 3.5 million workers, party members and soldiers volunteered to join or rejoin its army, the reclusive state’s state media said at that time.

It is very difficult to verify the North’s claims.

According to data from the International Institute for Strategic Studies (IISS), North Korea has 1.28 million active soldiers and about 600,000 reservists.

The IISS also said it had 5.7 million Worker/Peasant Red Guard reservists with many units unarmed.

In the latest sign of the growing tensions, North Korea blew up sections of inter-Korean roads and rail lines on its side of the heavily fortified border between the two Koreas on Tuesday, prompting South Korea’s military to fire warning shots.

Pyongyang had said last week it would cut off the inter-Korean roads and railways entirely and further fortify the areas on its side of the border as part of its push for a “two-state” system, scrapping its longstanding goal of unification.

The two Koreas are still technically at war after their 1950-53 war ended in an armistice, not a peace treaty.

North Korea has also accused Seoul of sending drones over its capital and the two Koreas have clashed over balloons of trash floated since May from North Korea. Pyongyang has said the launches are a response to balloons sent by anti-regime activists in the South. South Korea’s government has declined to say whether its military or civilians had flown the alleged drones over Pyongyang.

“If a war breaks out, the ROK will be wiped off the map. As it wants a war, we are willing to put an end to its existence,” the KCNA report said, referring to the South’s official name the Republic of Korea.

South Korea’s defense ministry warned on Sunday “if North Korea inflicts harm on the safety of our people, that day will be the end of the North Korean regime,” Yonhap news agency reported. – Reuters

Xi says China willing to be a partner, friend with the US

REUTERS

BEIJING – Chinese President Xi Jinping said a successful partnership between China and the United States is an opportunity for the two countries to be enablers for each other’s development rather than an obstacle, according to state media on Wednesday.

“China is willing to be a partner and friend with the United States. This will benefit not only the two countries, but the world,” Xi said in remarks from a letter to the 2024 annual awards dinner of the National Committee on U.S.-China Relations, according to a CCTV news report.

Mr. Xi pointed out that China-U.S. relations are among the most important bilateral relations in the world, which have a bearing on the future and destiny of mankind, according to the letter.

The two countries have been at odds over national security concerns, ongoing trade spats as well as China’s actions in the South China Sea and intensified military drills around Taiwan.

Trade relations soured over the past year and have centered around issues including restrictions on electric vehicles and advanced semiconductors.

“China has always handled China-U.S. relations in accordance with the principles of mutual respect, peaceful coexistence and win-win cooperation, and has always believed that the success of China and the United States is an opportunity for each other,” Mr. Xi said. – Reuters

Australia to invest billions of dollars in nuclear submarine shipyard

STOCK PHOTO | Image by 12019 from Pixabay

SYDNEY – Australia said on Wednesday it would invest billions of dollars over the next two decades to expand a shipyard in Western Australia that would become the maintenance hub for its nuclear-powered AUKUS submarine fleet.

The government will make an initial investment of A$127 million ($85 million) over three years to upgrade facilities at the Henderson shipyard near Perth, Defense Minister Richard Marles said in a statement.

“The Defense Precinct at Henderson will optimize Australia’s shipbuilding and sustainment industry while supporting continuous naval shipbuilding in Western Australia and Australia’s nuclear-powered submarine pathway,” Mr. Marles said.

The facility will also build the new landing craft for the Australian army and the new general-purpose frigates for the navy, he said.

The shipyard “will underpin tens of billions of dollars of investment in defense capabilities” over the next 20 years and create about 10,000 local jobs, Mr. Marles said.

The AUKUS defense pact signed in 2021 between Australia, Britain and the U.S. will see Australia buy up to five nuclear-powered submarines from Washington in the early 2030s before jointly building and operating a new class, SSN-AUKUS, with Britain, roughly a decade later.

AUKUS will be the first time Washington has shared nuclear-propulsion technology since it did so with Britain in the 1950s though the submarines would not be nuclear armed. The deal is expected to cost Australia up to about A$368 billion ($245.8 billion) by 2055, according to government estimates. – Reuters

India says no auction of satellite spectrum after Musk decries move

STOCK PHOTO | Image by Arek Socha from Pixabay

NEW DELHI – India’s government on Tuesday said it will allot spectrum for satellite broadband administratively and not via auction, hours after Elon Musk criticized the auction route being sought by rival billionaire Mukesh Ambani as “unprecedented”.

In what is seen as a battle between billionaires, the methodology of awarding spectrum for satellite services in India – a market set to grow 36% a year to reach $1.9 billion by 2030 – has been a contentious issue since last year.

Musk’s Starlink argues administrative allotment of licenses is in line with a global trend, while India’s Reliance, led by billionaire Mukesh Ambani, says an auction is needed to ensure a level playing field and as there are no provisions in Indian law on how individuals can be provided satellite broadband services.

Telecoms Minister Jyotiraditya Scindia said during a New Delhi event that the spectrum will be allocated administratively in line with Indian laws, and its pricing worked out by the telecom watchdog.

“If you do decide to auction it, then you will be doing something which is different from the rest of the world,” he said.

Musk was appreciative of the government’s decision, and said on social media platform X, “We will do our best to serve the people of India with Starlink”.

On Sunday, Reuters was first to report that Reliance had challenged the Indian telecom regulator’s consultation process that signals home satellite broadband spectrum should be allocated, not auctioned, calling for it to start again.

The minister’s comment will come as a shot in the arm for Musk, who following the Reuters story, wrote on X late on Monday that any decision to auction “would be unprecedented”.

“This spectrum was long designated by the ITU as shared spectrum for satellites,” Mr. Musk said, referring to the International Telecommunication Union, a U.N. agency for digital technology.

India is a member of the ITU and signatory to its treaty that regulates satellite spectrum and advocates that allocation must be done “rationally, efficiently and economically” as it is a “limited natural resource”.

Sunil Mittal, co-chair of global satellite group Eutelsat, which has partnered with India’s telecom operator Bharti Airtel, voiced support for the auction route on Tuesday.

“Satellite companies who have ambitions to come into urban areas, serving elite retail customers, just need to take the telecom licenses like everybody else… they need to buy the spectrum as telecom companies buy,” Mittal, who is also the chair of Airtel, said at the New Delhi event.

Earlier in 2023, both Eutelsat unit OneWeb and Airtel had voiced concerns about auctioning the spectrum in their submissions to the Indian government.

Mr. Musk’s Starlink and some global peers like Amazon’s Project Kuiper back an administrative allocation, saying spectrum is a natural resource that should be shared by companies. – Reuters

Forest Lake ‘Paliwanag’ set to light up our view on memorial parks

With its innovative, personalized, and customer-centric approach, Forest Lake seeks to continue making memorial care more convenient and stress-free for its clients.

There are few topics that are regarded by Filipinos with more unease and discomfort than the process of death and dying. End-of-life concerns are often glossed over in a culture that appears more engaged in rituals that celebrate life and longevity.

With this in mind, Forest Lake, a foremost name in memorial park services, proposes that one of the best ways to discuss the inevitability of death is through humor. In its latest digital advertisement called “Paliwanag,” Forest Lake deals with the concept of death with both levity and cultural relevance.

“Paliwanag” is a clever, modern take on the old catchphrase of the Pinoy pulis who’d call out recalcitrant offenders with “magpaliwanag ka sa presinto.” In the ad, a man who is apprehended by law enforcers for some infraction is told the exact same line as he’s brought to the police station. However, the man takes “magpaliwanag ka” quite literally and starts to ‘glow,’ stunning everyone present in the presinto.

With its innovative, personalized, and customer-centric approach, Forest Lake seeks to continue making memorial care more convenient and stress-free for its clients.

The play on words is an unexpected twist, illustrating how, like death, we never really know what’s ahead of us. The video humorously addresses how death is something that may catch us off guard, but stresses on how preparing for it can ease the burden imposed on loved ones when the time comes. Similarly, when we are faced with death, many of us end up like the suspect in the video, unsure of how to explain ourselves and express how we feel. These two main messages reflect the core lesson of the video: that yes, death is inevitable, but it doesn’t need to be burdensome. With the right preparation, such as availing of the services offered by Forest Lake, the difficulties that lie ahead can be more manageable and less confusing for families left behind.

The man takes “magpaliwanag ka” quite literally and starts to ‘glow,’ stunning everyone present in the presinto.

For Alfred Xerez-Burgos III, President and CEO of Forest Lake Development, Inc., the video sends a message about how we must treat the concept of death. For Mr. Xerex-Burgos, it is indeed something worth discussing, and because of its unpredictability, something worth preparing for.

“Death is something we all face, but it doesn’t have to be something we must all fear,” said Mr. Xerez-Burgos. “At Forest Lake, we help families prepare so they can focus on what really matters — celebrating life and preserving memories. With wit and humor, we hope to remind Filipinos that confronting the issue of death isn’t an encumbrance; it’s an act of care for our loved ones. Thus, our ‘Paliwanag‘ video strives to shine a light on how important preparation is.”

Forest Lake hopes that the conversations generated by the ad will spur Filipinos to start taking memorial services seriously no matter how early.

Forest Lake also hopes that the conversations generated by the ad will spur Filipinos to start taking memorial services seriously no matter how early. To those who relish their peace of mind, Forest Lake offers a multitude of services that will help make end-of-life planning less stressful and ensure their dearly departed’s transition to a life beyond. Among these are Forest Lake’s ‘Libing Anywhere’ option, which offers the flexibility to use memorial lots in any Forest Lake park across the nation, and ‘Libre Burol,’ which provides free funeral services with internment.

With its innovative, personalized, and customer-centric approach, Forest Lake seeks to continue making memorial care more convenient and stress-free for its clients.

With its innovative, personalized, and customer-centric approach, Forest Lake seeks to continue making memorial care more convenient and stress-free for its clients, who will never be caught off guard when the moment comes.

For more information, interested customers may view Forest Lake’s official Facebook page at fb.com/forestlakememorialparks, and Instagram @forestlakememorialparks. Check out the viral video on Facebook, Instagram, and Tiktok.

 

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‘WagMagpaloko!’ financing companies remind the public

By Aian Guanzon

Scammers and scam incidents are on the rise, especially in recent months, said Global Dominion Customer Service Head Sarah Tabing. The observed increase in reported online lending scams was seconded by other financing companies like SAFC, Global Cebuana, Cycle Financing, and Cebuana Cycle.

The common malicious scheme starts with someone pretending to be a representative of a lending or financing company and encouraging financial consumers to process a loan application online with his help. This is then followed by a collection of an application fee, or in some cases, multiple application fees, which scammers claim to be for the ‘evaluation of their applications.’ This is where financial consumers get negatively impacted, since money is collected from them, after starting their online lending journey to get access to credit for various purposes.

Dragonpay believes that the absence of a formal payment gateway and/or platform in some online lending companies, combined with the public’s lack of awareness of various malicious schemes online, contribute to the increasing number of scam cases.

“We believe that an inter-organizational or industry-wide approach is necessary to fight these scammers,” shared Global Dominion COO Melai Felicidario, who later helped form a gathering of companies from the lending and financing industry through the #WagMagpaloko campaign. Its core members include the vehicle mortgage loan and financing providers SAFC and Global Dominion, motorcycle mortgage loan provider Cycle Financing, OFW loan provider Global Cebuana, motorcycle financing provider Cebuana Cycle, and payment gateway provider Dragonpay. These companies met to sign a memorandum of understanding (MoU) to share best practices when it comes to handling scams and continue to help in improving the awareness of the public about various online and offline scamming schemes.

In the photo (from left to right) are Mayjara Lamarca, Joy Pacheco, and Desiree Delacruz from Global Cebuana Finance; Jethro Penamante and Manny Duculan from Cycle Financing; Melai Felicidario and Sarah Tabing from Global Dominion Financing; Caezar Ian Monzon and Russel Co from Dragonpay; Seve Linis from SAFC; and Edizon Austria, Rossel De Vera, and Branderson Bedruz from Cebuana Cycle Financing.

Jerwayne Corsino, COO of SAFC, reminds the public to be more vigilant when dealing with people online, especially when they demand money before any formal transactions are completed. “It’s important to research any financial product or service thoroughly and make sure you’re dealing with an official employee or representative of a legitimate company before making any payments, if required,” Mr. Corsino advises. He adds, “In SAFC’s case, we don’t collect application fees just for a customer to begin their loan application journey.” This serves as a reminder that legitimate companies won’t ask for upfront fees without delivering real services in return.

“Our platform helps both lending companies and financial consumers better manage scam-related risks by ensuring we have proper screening of organizations,” Dragonpay Head of Operations Caezar Ian Monzon said during a side interview at the group’s MoU signing.

Online-related scams may be reported to the official communication channels of the finance companies, or to the Cybercrime Investigation and Coordination Center (CICC) under the Department of Information and Communications Technology (DICT). Complex cases, especially those involving financial fraud may be reported to the National Bureau of Investigation’s (NBI) Cybercrime Division.

The pioneers of the #WagMagpaloko campaign hope to enjoin more finance companies to the fight against scammers. “It is in joining campaigns like this [#WagMagpaloko] that I think players in the industry help each other better,” said SAFC Head of Digital and Process Innovation Seve Linis.

 

Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

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OFW remittances up by 3.2% in August

A trader shows US dollar notes at a currency exchange booth in this file photo. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

CASH REMITTANCES from overseas Filipino workers (OFW) rose by an annual 3.2% in August, the Bangko Sentral ng Pilipinas (BSP) said.

Data from the central bank showed that cash remittances grew by 3.2% to $2.89 billion from $2.8 billion a year ago.

“The growth in cash remittances in August 2024 was due to the growth in receipts from land- and sea-based workers,” the BSP said in a statement.

Overseas Filipinos’ Cash RemittancesRemittances from land-based workers increased by 3.9% year on year to $2.28 billion, while money sent by sea-based workers inched up by 0.7% to $603.216 million.

Month on month, cash remittances slipped from $3.08 billion posted in July.

Personal remittances, which include inflows in kind, increased by 3.3% to $3.2 billion in August from $3.1 billion a year earlier.

“The expansion in personal remittances in August 2024 was due to higher remittances from land-based workers with work contracts of one year or more and sea- and land-based workers with work contracts of less than one year,” the central bank said.

Remittances from workers with contracts of one year or more went up by 3.7% to $2.47 billion, while money sent home by workers with contracts of less than a year edged higher by 1.4% to $670 million.

EIGHT-MONTH PERIOD
In the January-August period, cash remittances expanded by 2.9% to $22.22 billion from $21.58 billion a year earlier.

“The growth in cash remittances from the United States, Saudi Arabia, United Arab Emirates and Singapore contributed mainly to the increase in remittances in January-August 2024,” the BSP said.

The United States accounted for nearly half or 41.3% of overall remittances in the first eight months. It was followed by Singapore (7%), Saudi Arabia (6.1%), the United Kingdom (4.9%) and Japan (4.8%).

Other sources of remittances were the United Arab Emirates (4.2%), Canada (3.5%), Qatar (2.9%), Taiwan (2.7%) and South Korea (2.6%).

Meanwhile, personal remittances increased by 3% to $24.74 billion as of end-August from $24.01 billion a year ago.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the steady growth in remittances is a “good signal” for the economy.

“Philippine remittances from overseas workers have consistently been the fourth largest in the world after India, Mexico and China, amounting to more than $40 billion per year — a sign of resilience — and has always been a bright spot for the Philippine economy for many years,” he said in a Viber message.

Mr. Ricafort noted that the stronger peso in August also contributed to the lower remittances on a month-on-month basis.

“For the month of August, the US dollar-peso exchange rate declined, mostly at P56-57 levels, versus the P58 levels in July 2024 that somewhat reduced the peso equivalent of OFW remittances and effectively partly increased the year-on-year growth in OFW remittances in recent months.”

The peso strengthened to P56.111 a dollar on Aug. 30 from its close of P58.365 on July 31.

Mr. Ricafort said he expects continued single-digit growth in remittances in the coming months amid the “normalization of spending by households for both essentials and nonessentials.”

The upcoming holiday season is also seen to drive remittance growth.

“Remittances are expected to increase during the holiday season after increased deployment of workers contributed [to the August growth],” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

The central bank expects cash remittances to grow by 3% this year.

Oil price shocks could fuel inflation anew

Fuel retailers on Tuesday implemented big-time price hikes. Gasoline prices rose by P2.65 per liter, diesel by P2.70 per liter, and kerosene by P2.60 per liter. — PHILIPPINE STAR/EDD GUMBAN

FURTHER VOLATILITY in oil prices and potential price adjustments could threaten the inflation downtrend and derail the Bangko Sentral ng Pilipinas’ (BSP) easing cycle, analysts said.

“If the latest fuel price volatility continues to depend on what is happening in Gaza and the rest of the Middle East, we might be looking at some potentially disruptive oil price adjustments,” GlobalSource Research Country Analyst Diwa C. Guinigundo said in a Viber message.

Oil prices shot up after Iran launched a missile attack on Israel in early October. Prices have since slid after Israel signaled it was not planning to attack Iranian nuclear or oil targets.

Pump prices on Tuesday jumped for a fourth straight week for gasoline, and a third straight week for diesel and kerosene as global crude oil prices continued to rise amid heightened tensions in the Middle East. Fuel retailers raised gasoline prices by P2.65 per liter, diesel by P2.70 per liter and kerosene by P2.60 per liter.

“I believe the BSP’s (inflation) forecasts are anchored on a global fuel price of at least $100 per barrel of oil,” Mr. Guinigundo, a former BSP deputy governor, said.

“If this critical level is tipped, and tipped long, there is a likelihood higher global oil prices could affect the supply side, dislodge inflation expectations and risk breaching the inflation target for the next four months,” he added.

The central bank sees inflation averaging 3.4% this year and 3.1% in 2025.

Mr. Guinigundo said the oil price spikes would not necessarily stoke inflation but warned that prolonged or larger adjustments could be inflationary.

“It’s one of those regular adjustments of fuel prices to reflect global prices, among others. If not sustained over a longer period, and at significant measure, higher fuel price adjustments will not significantly affect inflation and its path.”

The latest Development Budget Coordination Committee (DBCC) assumptions show that Dubai crude oil will likely range from $70 to $85 per barrel this year.

The BSP in its latest Monetary Policy Report predicted a scenario where inflation could breach the 2-4% target if Dubai crude prices breach $90 per barrel in 2025 and above $100 per barrel in 2026.

Leonardo A. Lanzona, Jr., an economics professor at the Ateneo de Manila University, also flagged a possible inflation spike with the hefty oil price adjustment.

“The oil price hike will certainly impact inflation. The surprising decrease in inflation in the last few weeks has nothing to do with any reforms the government purportedly implemented,” he said in an e-mail.

Mr. Lanzona said the country might be “vulnerable to the inflation resurgence and greater geopolitical tensions expected in the coming weeks.”

Headline inflation slowed to 1.9% in September from 3.3% in August. This was the slowest since 1.6% in May 2020.

This brought nine-month inflation to 3.4%, matching the central bank’s full-year forecast.

BSP Governor Eli M. Remolona, Jr. earlier said inflation remains on a “target-consistent path.”

Mr. Guinigundo said the central bank might need to be cautious about aggressively reducing rates.

“This, plus the possible weakening of the peso on account of general monetary easing in the region, could make monetary authorities think twice before easing by an amount greater than 25 basis points (bps),” he said.

The Monetary Board is set to meet on Oct. 16 for its policy review.

A BusinessWorld poll conducted last week showed that 16 of 19 analysts expect the Monetary Board to reduce rates by 25 bps, which would bring the target reverse repurchase rate to 6% from 6.25%.

“Again, the future decision of the BSP will remain data-dependent—what the actual inflation is telling us, and the prognosis in the next two years,” he added.

Mr. Remolona earlier said the central bank would likely opt for 25-bp rate cuts over 50 bps. — Luisa Maria Jacinta C. Jocson

Social services, food security to get P292-B boost in 2025 budget

The House of Representatives — PHILIPPINE STAR/RYAN BALDEMOR

By Chloe Mari A. Hufana, Reporter

A SMALL COMMITTEE tasked by the House of Representatives to propose changes to the 2025 General Appropriations bill has increased funding for social services, food security and social safety nets by P292.23 billion, in the face of weak economic growth that could go below the government’s target through next year.

In a statement on Tuesday, House Appropriations Committee Chairman and Ako Bicol Party-list Rep. Elizaldy S. Co said the additional allocation is on top of the P591.8 billion already set aside for cash assistance to poor families.

“The additional funding is crucial for supporting those in need,” he said.

The House last month approved the P6.352-trillion national budget for 2025. The Senate is conducting hearings on the proposed budget.

Mr. Co said the small committee had approved an additional P39.8 billion for Assistance to Individuals in Crisis Situations (AICS), and another P39.8 billion for the Ayuda sa Kapos ang Kita Program (AKAP). Next year’s budget for AKAP, which provides cash assistance to people earning P21,000 or less monthly, has surged 206% from the P13 billion allocated for 2024.

The committee also set aside P3.4 billion for the state’s sustainable livelihood program for low-income families.

Appropriations Committee Senior Vice-Chairman and Marikina Rep. Stella Luz A. Quimbo said the Labor department would receive an extra P20.28-billion funding for the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers and the Government Internship Program.

The committee also allocated an additional P30.01 billion to provide scholarships for underprivileged students pursuing higher education. The funds will be evenly distributed between the Commission on Higher Education’s Tertiary Education Subsidy and Tulong Dunong programs.

The House panel approved an additional P7 billion for the Department of Education to build new school facilities and repair existing ones.

Meanwhile, the Armed Forces of the Philippines (AFP) will get an additional P8.44 billion to boost the subsistence allowances of military personnel. Upon approval, the daily subsistence for soldiers will rise by 67% to P250.

Amid increasing tensions in the South China Sea, the panel allotted P3.2 billion for the AFP to finalize the airport expansion on Pag-asa Island and to develop a shelter port in Lawak, Palawan.

To bolster food security, the committee has realigned P30 billion for the Department of Agriculture’s initiatives, including the Philippine Irrigation Network Piping System, solar-powered irrigation systems and cold storage projects.

The National Irrigation Administration will also receive an extra P44 billion to establish pump irrigation and solar-driven pump irrigation projects.

The House committee also allotted an additional P56.87 billion for the Department of Health’s programs such as health facility enhancement, medical assistance for indigent patients and improvement of specialty and legacy hospitals.

An additional P1 billion has been allocated for the upgrade of the University of the Philippines-Philippine General Hospital.

The remaining P8.43 billion, according to Mr. Co’s office, will be distributed across several sectors, such as to university service centers, vehicle acquisition for local governments, skill development programs and for tourism market development.

Additional funds will also support intelligence, marine research and security programs of the Department of Transportation, and the rehabilitation of the Cultural Center of the Philippines main building.

IMPLEMENTATION ISSUES
University of the Philippines School of Labor and Industrial Relations Assistant Professor Benjamin B. Velasco said the issue is about the implementation of social safety nets.

“It is coursed through politicians and thus becomes entangled in the patronage systems of local and dynastic politics,” he said in a Facebook Messenger chat, adding that incumbent politicians could distribute these AKAP and AICS funds to their constituents.

“We should find a way to disburse aid without the beneficiaries being identified by politicians,” he added, noting that one way to do this is through a national database of indigents, informal workers and migrant families as the pool of legitimate beneficiaries.

Mr. Velasco said increasing social programs could also boost the economy because the money will end up in the hands of consumers.

Federation of Free Workers President Jose Sonny G. Matula also called for an evaluation of those social assistance programs.

“While these programs may provide short-term relief, we need to focus on strengthening and expanding unemployment insurance under the Social Security System and Government Service Insurance System and enhancing training and reskilling programs for displaced or jobless workers to ensure long-term, sustainable support,” he said in a Viber message.

However, Leonardo A. Lanzona, Jr., an economics professor at the Ateneo de Manila University, said the move to increase the budget allocation for social services could stoke inflation.

“It can actually just increase inflation since these are not related to production. Just like in a carnival, when owners know that people have money, they will just raise prices,” he said in a Facebook Messenger chat.

“In the end, people just remain dependent on these dole-outs, thus enhancing the dynasty,” he added.

Economic managers are targeting 6-7% growth this year, and 6.5-7.5% growth in 2025.

The Philippine economy grew by 6% in the first half, as high inflation and elevated interest rates dampened consumption. 

To meet the lower end of the target, GDP expansion should average 6% for the remainder of the year.

Third-quarter economic data will be released on Nov. 7.

Meanwhile, Teodoro C. Mendoza  a retired agronomy professor at the University of the Philippines Los Baños, said instead of investing in production, the government should just buy the products of farmers.

“Buy the farmers’ rice at P25 per kilogram, and they will be happy. They will be motivated to produce more rice,” he said in a telephone call, noting the solar irrigation systems he saw in the past years were not entirely successful.

The House of Representatives might have violated a Philippine Constitution provision disallowing amendments on bills passed on final reading, analysts earlier told BusinessWorld. This could open the House to potential lawsuits that could derail the government’s spending plan next year.

Congressmen approved House Bill (HB) No. 10800, the General Appropriations bill, on final reading last month. The House adopted committee amendments to the spending plan during plenary deliberations while deferring proposed individual reallocations to a later date to meet its self-imposed September deadline.

“No amendment… shall be allowed” after a measure’s last reading, according to Sec. 26 of the 1987 Charter.

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