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Fed’s Kugler says rising tariffs could touch off more prolonged inflation

REUTERS

WASHINGTON — Rising tariffs in the US could feed into more prolonged inflation than might be expected, Fed Governor Adriana Kugler said on Wednesday, pushing back on views that prices would only rise on imported goods.

“There may be reasons why tariffs have more prolonged effects” than simply causing a one-time jump in the price of imported goods, Ms. Kugler said.

New tariffs already imposed by President Donald J. Trump, for example, target intermediate goods like aluminum and steel.

“This will affect all sectors through supply chain networks…It may take longer for that to filter through the economy,” Kugler said at an event at Princeton University.

The risk of retaliation by other countries and the possible shift in US inflation expectations could add to the impact, she said, as could the risk that tariffs distort prices so much it shifts capital towards the production of goods “in which maybe we don’t have a comparative advantage.”

“That will mean we’re paying higher prices for things that could have been produced more cheaply somewhere else,” Ms. Kugler said.

Ms. Kugler spoke as Mr. Trump was rolling out a sweeping set of new levies across much of the world, with new taxes as high as 46% on some countries, historic allies like the European Union hit with 20% levies, and 25% tariffs now slated to go into effect on Mexico and Canada.

Mr. Trump’s actions have raised concern among some Fed officials that coming months could see growth slow even as prices rise, a difficult dilemma for a central bank charged with keeping prices stable and employment high.

“We are already seeing some upside risks to inflation… We may be seeing down the road a little bit of a slowdown as well,” Ms. Kugler said.

Right now she said she felt higher-than-anticipated inflation was the bigger risk, particularly given that consumers seemed to be frontrunning tariffs with auto purchases, for example, that may add to growth in the near term.

She said in remarks prepared for the event that she supported keeping the Fed’s current interest rate steady “for as long as these upside risks to inflation continue,” given ongoing economic growth and stable employment.

The Fed held interest rates steady at its March 18-19 meeting, and central bank officials have said they want more clarity on the impact of Mr. Trump’s policies. Fed policy makers’ projections for the year, however, showed they expect higher inflation and slower growth than they did in December before the sweep of Trump’s tariff plans became clearer. — Reuters

Air Canada starts Manila-Vancouver service, eyes Clark and Cebu

AIRCANADA.COM

CANADA’S FLAG CARRIER, Air Canada, is expanding its presence in Southeast Asia with the launch of direct and nonstop flights between Vancouver and Manila.

On Thursday, Air Canada launched its inaugural Vancouver-Manila flight, making it the only Canadian carrier flying to the Philippines.

Air Canada will operate the Vancouver-Manila flight three times weekly, on Mondays, Wednesdays, and Fridays, while the Manila-Vancouver flight will operate on Tuesdays, Thursdays, and Saturdays.

The Philippines will be Air Canada’s third destination in Southeast Asia, following Singapore and Thailand.

“Hopefully, if we see demand growing, we’ll review our schedule and see what we can do to increase frequency,” Air Canada Managing Director for International Sales Rocky Lo said during a briefing on Thursday.

Starting May 1, Air Canada will increase its flight frequency to four times a week. The Canadian flag carrier will operate the Vancouver-Manila flight every Tuesday, Thursday, Friday, and Sunday, while the Manila-Vancouver flight will be offered on Mondays, Wednesdays, Fridays, and Saturdays.

On a one-stop basis, the Vancouver-Canada flight usually takes up to 21 hours, Mr. Lo said.

“It depends on how long the connection is and which interline partner is used from here to one of the Asia hubs. Now, with the nonstop flight, we’ve reduced the flying time to 13.5 hours,” he said.

Aside from increasing its flight frequencies, Air Canada is also planning to launch flights to Canada from other hubs in the Philippines, such as Clark and Cebu.

“Air Canada is new to the Philippines. So, first, we want to ensure that we have a very successful route launch between Manila and Vancouver. Then we’ll continue to evaluate demand, the opportunity, and make other strategic decisions,” Mr. Lo said. — Ashley Erika O. Jose

Stuff to Do (04/04/25)


Visit Araneta City’s Autism Day exhibit

IN PARTNERSHIP with the Philippine Association for Citizens with Developmental and Learning Disabilities, Inc., Araneta City has been holding events that celebrate the talents and contributions of individuals with autism. At Gateway Mall 2, visitors can journey through the history of autism with an informative exhibit at Spectrum Fest: Celebrating Autism Through History and Fun. It is open from 10 a.m. to 5 p.m. until April 4. There are also interactive displays, inflatables, and kiddie activities designed to foster understanding and joy.


Watch thriller Alice, Darling

THE directorial debut of Mary Nighy, titled Alice, Darling, portrays domestic violence and the subtle manipulations and coercive behaviors that take away an individual’s independence. Starring Anna Kendrick, the psychological thriller follows her as the titular Alice, who is suffocated by her controlling boyfriend, Simon (played by Charlie Carrick). Alice, Darling is out on Lionsgate Play starting April 4.


Go to All Of The Noise music fair

TAIWAN-BASED indie pop trio The Chairs is headlining this year’s edition of All Of The Noise (AOTN), a two-day music and culture event taking place at Astbury Makati on April 4 and 5. It will be the band’s second time bringing their brand of 1960s and ’70s-inspired psych pop to the Philippines. They will be among other international acts like Thai alt-pop band KIKI, Singaporean hip-hop artist San The Wordsmith, and Indonesian experimental electronic act Logic Lost, as well as many local musicians who are taking part. Tickets are available via https://bit.ly/aotn2025 for P800 for one day, and  P1,400 for both days.


Visit The Peninsula Manila’s wedding fair

THE Weddings at The Peninsula and More event is back, courtesy of Christine Ong-Te Events and Michael Leyva, from April 5 to 6. Visitors will be able to arrange exclusive deals from partners and participating exhibitors, with the goal to help make dream weddings a reality. For more details, visit The Peninsula Manila’s social media pages.


Run to raise funds for children with cancer

THE running event “Run to Share 2025” will be held on April 6 at Ayala Triangle, Makati City. Organized by the I Want To Share Foundation, its proceeds will be used to support pediatric cancer patients. Participants can choose between the 3K run (P1,000) or the 5K run (P1,200). The charity will channel the funds into the UP-Philippine General Hospital’s Pedia Hema-Onco Division. Those interested can sign up via the link: raceroster.com/events/2025/102316/run-to-share-2025. Children under the age of five and pets can run as well for free.


Listen to YARA’s R&B-hip-hop single

FILIPINO girl group YARA has released a new single that mixes Y2K nostalgia with modern hip-hop and R&B flavor. Titled “Sabi Ko Na,” the track is composed by JRoa and produced by Yung Bawal. Characterized by lush melodies, hook-laden beats, and Darkchild-style atmospherics, the song marks a new direction for the group. “Sabi Ko Na” is out now on all digital music streaming platforms.


Listen to Carish’s 3rd single of the year

RISING rap star Carish has dropped his third single this year, “Tanong PT 2,” which is a collection of questions left unanswered, clinging to the hope of rekindling a broken relationship. Released under Universal Records, it continues his journey of carving a space in the Filipino Kalye hip-hop music scene. “Tanong PT 2” is out now on all digital music streaming platforms.


Watch Korean medical thriller Hyper Knife

SHOWING ON Disney+, the Korean medical thriller Hyper Knife has become the most-viewed Korean premiere globally this year. It follows Seok (played by Park Eunbin), a visionary neurosurgeon with unparalleled skill with a scalpel, and Choi Deokhe (Sul Kyunggu) as her equally skilled former mentor. The final two episodes will be out on April 9. The entire series can be streamed on Disney+.


Listen to Kai Buizon’s romantic new track

RISING Filipino singer-songwriter Kai Buizon has released a new single titled “Milagro,” out now via Sony Music Entertainment. Co-written by Buizon and her mother, Felichi Pangilinan-Buizon, the bossa nova-inspired track explores an unforeseen love. Raki Natividad performs the guitar solo for the track. “Milagro” is out now on all digital music streaming platforms.


Listen to NOVOCRANE’s new single

THE indie rock project of Kylene Sevillano, NOVOCRANE, is back with “Safe and Sound,” an introspective anthem that wrestles with the paradox of emotional isolation, where solitude can feel like both a sanctuary and a prison. Built on fuzzy guitars, washed-out melodies, and an unfiltered edge, NOVOCRANE blends nostalgia and noise rooted in the grit of 1990s indie rock, shoegaze, and dream pop. “Safe and Sound” is out now on all digital music streaming platforms.

BSP, other Project Nexus partners set up entity to manage multilateral cross-border payments scheme

THE BANGKO SENTRAL ng Pilipinas (BSP) and the four other central banks in the region that are the “first movers” in an instant cross-border payments initiative have set up an entity to run the scheme, bringing it closer to live implementation.

The BSP, Reserve Bank of India, Bank Negara Malaysia, the Monetary Authority of Singapore (MAS), and Bank of Thailand, the first-mover central bank partners in Project Nexus, have incorporated Nexus Global Payments (NGP) in Singapore to operationalize and manage the multilateral instant cross-border payments scheme.

The company, which is a nonprofit organization, will run the scheme to enable safe and instant cross-border payments at scale, it said in a statement.

“Its incorporation by the five central bank partners in Project Nexus … marks the transition of the Nexus initiative from a Bank for International Settlements’ (BIS) project to real-world implementation,” it said.

In March 2023, the five central banks said they will connect their domestic instant payment systems (IPS) through Project Nexus, which began as an experimental project by the BIS Innovation Hub in 2021.

The project was designed to standardize domestic IPS connection. “Rather than an IPS operator building custom connections for every new country to which it connects, the IPS operator needs to make only one connection to Nexus, which will allow the IPS to reach all other jurisdictions in the network.”

The comprehensive blueprint for connecting domestic IPS globally was completed in July last year.

The five central bank partners will contribute the initial capital required to build and establish the Nexus platform for its live operation, NGP said.

“They aim to expand membership and participation to other interested jurisdictions over time as part of the shared vision of making Nexus a scalable multilateral model for connecting IPS globally,” it said.

NGP has started an open procurement process for the selection of a Nexus Technical Operator, an external service provider that will be responsible for the technical build and the day-to-day operations of the Nexus scheme.

“The European Central Bank and Bank Indonesia, which took part in previous phases of Nexus, will continue to serve as special observers throughout this operationalization phase. The BIS is not an owner of NGP. As part of the handover, it will facilitate knowledge transfer and provide support until the first live Nexus transaction,” it added. — AMCS

Artificial intelligence and public policy

VECTORJUICE/FREEPIK

Henry Kissinger, once described as elder statesmen’s elder statesman, had been consistently prescient until he expired at the age of 100 in November 2023. He was virtually prophetic about the geopolitical shifts following the proliferation of nuclear weapons that accompanied the Cold War between the United States and the then Soviet Union and their respective allies. Following his thesis in favor of limited nuclear war, both the US and the Soviet Union literally pursued his point and raced against each other in developing their nuclear weaponry.

What is most amazing is that Kissinger’s biographer, Niall Ferguson, wrote in his foreword to the last book of the former US Secretary of State and National Security Adviser, Genesis: Artificial Intelligence, Hope and the Human Spirit (2024), with technology visionaries Microsoft’s Craig Mundie and Google’s Eric Schmidt, that as early as 1968, Kissinger was already thinking about computerization. To him, this could assist US authorities process a huge volume of information for formulating optimal public policy. Ferguson quoted his obscure January 1968 paper, submitted to no less than Nelson Rockefeller, then Governor of New York, to avoid data overload. Kissinger was gunning for a set of action-options available to the authorities. To achieve this, Ferguson documented that Kissinger proposed to make major investments in programming, storage, retrieval, and graphics.

True to form, Kissinger attempted to acquire such technology in his first year in the White House as then US President Richard Nixon’s National Security Adviser. But the Central Intelligence Agency (CIA), for understandable reasons, declined his request. Ferguson was not speculating when he wrote that “Kissinger without a computer was as much as the intelligence community could handle.”

After that 1968 paper, Ferguson referred to Kissinger’s June 2018 essay, “How the Enlightenment Ends,” published in The Atlantic for his view on technology and artificial intelligence (AI). In that essay, he argued that the phenomenal revolution in technology now in progress was actually, in some account, “transforming human knowledge into an act of mechanical accumulation, a gigantic database.”

In brief, Genesis envisions several scenarios, including the loss of control of an existential race between multiple actors trapped in what it calls security dilemma; the potential dominance by the winner of such race without checks and balances; multiple centers of superior intelligence in the global community; winning outfits could develop a generalized political, social, economic, and military control; greatest relevance of AI in religious structures; and untrammeled, open-source access to new technology could likely result in smaller groups with substandard but still significant AI capacity.

While Mundie and Schmidt must have been behind the book’s excellent grasp of AI, its new forms and their consequences, it must be Kissinger’s insights that connected the dots between AI and human responses to it affecting human relationships, exploration of knowledge, conduct of diplomacy, and the international system.

AI is raising a question of human survival.

“AI’s future faculties, operating at inhuman speeds, will render traditional regulations useless.” Some forms of controls will be unquestionably needed. The world is challenged by having to find technical metrics for establishing safeguards in every AI system. Nations and international organizations by consensus must design new political modes for monitoring, enforcement, and crisis response.

What is most relevant to us is Genesis’ proposition about economic prosperity. Abstracting from various epic stories of “machines of bounties throughout the world” contained in the Mahabharata, the Irish myth of the god Dagda, and one piece of  Japanese lore, AI developers also contemplate machines or programs that would lead to “fully stocked granary, this magic mill, this cornucopia overflowing with flowers, fruit and corn.”

The book clarified, as the mythologies warned, that creation — or in today’s economese, production — will not be enough. Optimizing AI by development and deployment requires suitable institutional changes and wise policy design. This means AI should be used to liberate people from the bonds of servitude, a modality that would get rid of human exploitation and oppression, a future characterized by less poverty and inequality.

No doubt, if the economic pie enlarges, and the actual amount for redistribution actually goes up, the human standard of living is bound to rise. This sounds easier said than done.

But AI in this context actually makes it possible to displace labor and substitute it with machines. AI will also enable economic agents to research and develop increasingly cheaper and more abundant sources of raw materials. In manufacturing, AI could reduce the amount of capital needed to produce a certain scale of output. In services, AI could complement human labor with greater efficiency and creativity. It is also possible by this time that AI could be deployed to generate synthetic substitutes through appropriate computing architecture. AI itself could redesign factories that make its own constituent components!

With this breakthrough, AI could then usher in a new era of abundance, a time when all humanity’s basic needs are accessible to all, a time when hope, especially among the underprivileged, is at its highest. This could signal what the book termed as relaxing the grip of the paradigm of scarcity on our psychology. Equally important, an age of abundance could lift up that sense of pessimism “induced by our obligation to work as a means of survival.”

Kissinger and his co-authors also cited Sam Altman of OpenAI who concluded that while capitalism is a powerful engine of economic growth, the price of progress is inequality. Those who invested in knowledge-based assets are making a killing period after period.

Genesis therefore proposes, as Altman proposed, to tax the “two assets that will make up most of the value in the world.” These are: 1. companies which develop, maintain, and use AI; and, 2., land which remains fixed. If indeed there is substitution of labor by machine, and labor is not entirely responsible for the value created, there is a case that such value can be shared. Governments can serve as redistributive agents with AI companies as the target of taxation.

True, this fiscal measure could trigger potential social tension but this is how to mitigate the cost of capitalism and prosperity.

Genesis also envisions other possibilities for establishing equity in the age of AI. A stock market-like mechanism can be developed to enforce the automatic global assignation of divisible units of wealth associated with the increasing profits of AI models. The authors also suggest that ownership of the means of production can be glossed over in favor of the actual distribution of AI’s ultimate benefits. The issue here is logistics. It would demand huge investment in a monitoring system to achieve equitable redistribution based on some robust standard. The other option is to allow exclusive ownership of AI invention and its returns to incentivize constant innovation but only for a limited period. Beyond that, it would be put out for common use and gain.

No one can dispute the caveats, also borrowed from Altman, and one of these is that “future decision-makers must take care not to entrench once again the sorts of social and economic inequalities that spread outward from the Industrial Revolution before beginning to be corrected, much too slowly, through more human-directed structures of control.”

Beyond the world of abundance, there would remain issues of reconciling people on the basis of faith, race, family lineage, education, or any other category. Human stupidity cannot be underestimated with respect to predicting the long-term effects of technology. Kissinger, Mundie, and Schmidt were humble enough to acknowledge that their “optimism may be unjustified and our apprehensions misplaced.”

IN THE PHILIPPINES
In the Philippines, one can argue that there is some degree of recognition of the innovative uses of AI and the urgency of managing the associated risks. The Department of Trade and Industry actually launched, in May 2021, the country’s AI roadmap consisting of digitization infrastructure, research and development, workforce development, and regulation. The country, in the same year, joined other countries in adopting the UNESCO recommendation on AI ethics that upholds the centrality of human rights in regulatory frameworks and legislation on the development and use of AI.

Two years later, in 2023, the Philippines also became a party to the Bletchly Declaration which recognizes the importance of protecting human rights and the principles of transparency, fairness, and safety, among others, in recognition of AI’s “capability to manipulate content or generate deceptive content.”

Various laws have also been passed by Congress including the Philippine Digital Workforce Competitiveness Act, Second Congressional Commission on Education Act II on digital transformation, the Tatak Pinoy Act on strategic investment priorities plan to address any technology skills mismatch. In fact, the Philippines seems to be doing the right things on digital transformation because we rose in the latest Government AI Readiness Index of 2024, published by Oxford Insights, based on some 40 indicators involving 188 countries. From 65th, the Philippines climbed to 56th. Of the three core pillars of government, technology, data and infrastructure, the Philippines scored high in government but scored low in technology.

It’s quite clear that the Philippines has just begun its AI journey. Genesis should be able to provide the useful markers in charting the country’s AI roadmap. It’s good to be more forward-looking in terms of the regulatory framework, but it’s more elementary to first invest in and nurture a culture of discovery and excellence in digital transformation to pole vault this nation to the challenging world of generative AI. It’s not enough that we are aided by chatbots in doing some research and preparing some speeches or essays on public policy.

What we need is a large ecosystem of AI-enabled systems and applications to advance material sciences and maximize digital connections to permit us to abandon that world of scarcity in favor of abundance. That would signal the day when working becomes a matter of choice. With good “systems for distribution, connection, participation and education, humans — empowered and inspired by AI — may continue working not for pay but for pleasure and pride.”

That would be the day…

 

Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

PAL increases Cebu flights by 10%

REUTERS

FLAG CARRIER Philippine Airlines (PAL) is expanding its Cebu hub by increasing flight frequencies and seat capacity in anticipation of a surge in travel demand.

Starting this month, Philippine Airlines will operate 287 weekly round-trip domestic flights between Mactan-Cebu International Airport (MCIA) and 18 destinations across the country, the airline said in a statement on Thursday.

This will increase PAL’s flight frequency by 10%.

“These additional flights and greater seat capacity reflect our flag carrier’s commitment to increasing connectivity, boosting the economy, and helping drive tourism across our interisland network from Cebu,” PAL Express President Rabbi Vincent L. Ang said.

The flag carrier is also set to increase its seat capacity by deploying larger aircraft on several routes.

These additional flights and aircraft upgrades are expected to raise its weekly seat capacity to and from Cebu by 39,000 seats, representing a 17% increase.

PAL’s flights from Cebu to Boracay will increase to 21 from the current 14 per week, while its Cebu-Siargao flights will rise to 26 from 18 weekly.

Other Cebu hub services will also see a flight increase, with Cebu-Palawan receiving a boost to 14 weekly flights from seven, and flights between Cebu and Coron (Busuanga) increasing from 14 to 17 weekly.

Further, its Cebu-Tacloban-Cebu services will also increase to 14 per week, while its Cebu-Davao-Cebu services will rise to 29 flights weekly.

PAL is also expanding its international flight services from the Cebu hub.

Last year, the flag carrier launched Cebu-Osaka flights.

The flag carrier also operates flights to Tokyo (Narita) and Seoul (Incheon) from Cebu.

By May, PAL will offer direct flights from Cebu to Ho Chi Minh City (Saigon), Vietnam, operating three times a week.

“The expanded Cebu hub reflects PAL’s ongoing efforts to strengthen connectivity, bolster tourism, and stimulate local economies,” PAL said.

Currently, PAL operates nonstop flights out of hubs in Manila, Cebu, Clark, and Davao to 31 destinations in the Philippines and 37 destinations across Asia, North America, Australia, and the Middle East. — Ashley Erika O. Jose

The Simpsons, Family Guy renewed for 4 seasons at Fox

LOS ANGELES — Animated television sitcoms The Simpsons, Family Guy, and Bob’s Burgers have been renewed for four more seasons on Fox, Fox Entertainment said on Wednesday.

American Dad will return to Fox, where it debuted in 2005, also scoring a four-season renewal. It has been showing on TBS since 2014.

The contract extends the status of The Simpsons as the longest-running scripted primetime series in television history with its 37th through 40th seasons.

“This new deal celebrates the eternal popularity of these iconic comedies, as well as the enduring, prolific relationship we continue to enjoy with our friends at 20th Television Animation,” said Michael Thorn, president of Fox Television Network, referring to its production company behind the shows.

Disney+ and Hulu will remain the exclusive global streaming platforms for all four of the animated series. — Reuters

Labor reforms pushed to sustain poverty fight

PHILSTAR FILE PHOTO

By Chloe Mari A. Hufana, Reporter

LABOR REFORMS are needed to sustain the momentum of receding poverty and to ensure the economy’s benefits reach rural areas, analysts said.

Such measures need to address job insecurity, wage stagnation, and rural underdevelopment, which continue to be reflected in the poverty statistics, they said.

The Philippine Statistics Authority (PSA) recently reported that poverty incidence declined 2.6% in 2023 from 2021, with Indigenous Peoples remaining the most vulnerable group after 32.4% were classified as poor.

Poverty incidence among fisherfolk was 27.4%, farmers 27%, children 23.4%, and self-employed and unpaid family workers 16.1%.

Senior citizens, formal labor, and migrant workers, and individuals residing in urban areas were found to have the lowest poverty incidence at 7.8%, 8.3%, and 10.3%, respectively, the PSA added.

Analysts cautioned that these indicators may not reflect a genuine reduction in poverty, as they rely on government-defined thresholds that have been criticized for being too low.

Assistant Professor Benjamin B. Velasco of the University of the Philippines Diliman School of Labor and Industrial Relations noted the need for policies promoting decent, stable employment instead of short-term aid programs.

“The path to poverty reduction is inclusive growth, and for that, decent jobs must be created — jobs that pay enough, are secure in employment, and come with rights and social protections. But our policies do not enable this,” he told BusinessWorld via Messenger chat. “Wages are depressed, many jobs are contractual, and informal workers remain excluded from labor protections.”

The decline in poverty incidence may simply be explained by an inappropriate definition of who is poor, he added.

“The decline in poverty cannot be explained by wage adjustments since minimum wages fall below poverty thresholds in all regions (using the average work month of 22 days),” he said.

He noted that there were no changes in the rules on contractualization — the practice of denying workers a pathway to permanent employment status, which is known as “endo” — or outsourcing and subcontracting.

“If at all, there have been more gig workers who are denied regular employment, and thus their status is self-employed,” he added.

Federation of Free Workers President Jose Sonny G. Matula called for urgent policy changes to address regional disparities, particularly in Mindanao and other rural areas that continue to experience high poverty rates despite economic growth in urban centers.

“Economic growth remains concentrated in the National Capital Region and other urban areas, while rural regions — especially in Mindanao — suffer from underdevelopment, poor infrastructure, and a lack of economic opportunities. Without targeted investments in these areas, poverty will remain entrenched,” he told BusinessWorld via Viber.

His proposals to create a more inclusive economy include a national wage hike to ensure fair compensation for workers across all regions; a P100 billion-rural stimulus fund to generate employment and support agricultural modernization; and stronger protections for informal and contractual workers to transition them into stable, formal employment.

Marie Annette Galvez-Dacul, executive director of the University of Asia and the Pacific Center for Food and Agri Business, cited the urgent need for comprehensive policies to address rural poverty, particularly among farmers and fisherfolk.

Ethics and the Good Samaritan parable

The Parable of the Good Samaritan tells a lesson people often take at face value: the imperative to ensure that ethical conduct goes beyond biases. Several psychological experiments, however, have tested real-world applications of the principle, examining how people respond to those in distress. Considered in the wider context of the Philippine political milieu, the lessons highlight the importance of building strong institutions and systems so that leaders behave ethically and responsibly.

The parable tells the story of a man who is attacked by robbers and left for dead on the road. A priest and a Levite, both respected religious figures, pass by without helping. However, a Samaritan — an outsider from a group typically despised by the Jews — stops, provides medical care, and ensures the injured man’s safety. Jesus uses this parable to illustrate that true righteousness is about compassion and action rather than status or religious identity.

The Samaritan helps despite cultural and religious enmity, highlighting that ethical conduct should go beyond biases. This underscores that compassion transcends social divisions. The priest and Levite, expected to be moral, fail the ethical test, while the Samaritan, an outsider, does what is right. The Samaritan takes risks, spends money, and interrupts his journey to help someone in need.

The “Good Samaritan Study” (Darley & Batson, 1973) conducted at Princeton Theological Seminary replicated this scenario. Researchers John Darley and Daniel Batson set up an experiment where seminary students were asked to deliver a talk — either on the Parable of the Good Samaritan or another topic — across the campus. However, along the way, each student encountered a person slumped in distress. The key manipulation was time pressure: some students were told they were late (high urgency), others had moderate urgency, and some had ample time.

The topic of the speech did not significantly influence behavior — even those who had just studied the Good Samaritan parable were not more likely to help. Time pressure was the strongest predictor — only 10% of those in a hurry helped, while 63% of those with ample time did. Situational factors, not personal morality, were the main determinant of whether someone stopped to help.

While moral values are widely taught, ethical behavior is often difficult to practice due to personal, social, and systemic challenges. Human behavior is shaped by context, pressures, and social norms rather than just personal moral beliefs. As shown in the Princeton study, being in a hurry reduces prosocial behavior because individuals become more focused on their immediate tasks than ethical considerations.

The bystander effect (Latane & Darley, 1968) suggests that people are less likely to help in a group because they assume others will act. The Milgram Experiment (1963) showed that individuals obey authority figures even when doing so conflicts with their ethical beliefs. Similarly, corporate or institutional cultures can pressure individuals to act unethically. Finally, people are less likely to act ethically if it involves personal sacrifice, such as financial loss, physical danger, or social repercussions.

Studies show that people’s willingness to help is strongly influenced by their environment. Situational pressures often dictate ethical behavior more than personal morals. This presents challenges but also opportunities. By structuring environments that encourage ethical behavior (like reducing stress, fostering responsibility, and rewarding moral actions), societies can cultivate greater compassion and responsibility.

These lessons are quite powerful in the sociopolitical sphere. No less than Singapore’s founding father Lee Kuan Yew once warned that Filipinos are too tolerant of corruption and have short political memories, allowing unethical politicians to remain in power. He says Filipinos working overseas are the best, but they don’t seem to be as productive in their own land.

Unlike Singapore, which built strong, independent institutions, the Philippines suffers from patronage-driven governance, where institutions serve personal or political interests rather than national progress. Lee Kuan Yew observed that corrupt leaders are repeatedly re-elected despite scandals, indicating a lack of long-term political accountability. The judiciary is slow and politicized, allowing powerful figures to evade justice. Political dynasties dominate elections, preventing fresh and competent leaders from rising.

We have to believe that many of those who run for office at the start are ethically inclined but if the environment is such that pressures abound to tempt corruption or ungainly behaviors, then the “good” people will get swamped. The solution is developing institutions that work and building a system of accountability.

Major reforms in systems and processes are needed. It is about time the 1987 constitutional mandate that prohibits political dynasties find concrete and lawful enactment. Monopoly is a bad thing in governance, no matter what the good intentions are, because protecting the dynasty takes precedence above everything else.

Campaign finance laws need to be addressed to prevent politicians from buying votes and manipulating media narratives. Filipinos must be educated to vote based on competence, integrity and policies, not just personality or entertainment value. Schools and universities should integrate critical thinking, governance, and history lessons to counter disinformation.

We have to encourage economic independence and veer away from a system where people rely on politicians for financial aid, jobs, or basic services. Economic opportunities and social services must be handled by strong institutions. The environment must encourage ethical behavior.

The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX.

 

Benel Dela Paz Lagua was previously EVP and chief development officer at the Development Bank of the Philippines. He is an active FINEX member and an advocate of risk-based lending for SMEs. Today, he is independent director in progressive banks and in some NGOs.

Congress puts DoF in a bind and having to dip into PhilHealth and GOCCs: The case of PDIC

(Part 2)

What is the basis for taking P107 billion from the Philippine Deposit Insurance Corp. (PDIC)?

As in the PhilHealth (Philippine Health Insurance Corp.) matter, the justification for getting the funds from PDIC is reportedly the legal opinion issued by Office of Government Corporate Counsel (OGCC). This column calls for PDIC to release to the public the content of the OGCC legal opinion. It should clarify whether the amount is taken as “dividends,” or as a temporary borrowing (in which case the National Government should issue the equivalent promissory note to the PDIC).

With all due respect to whatever the OGCC legal opinion contains, this writer takes the position that — based on a reading of the PDIC charter provision on dividends — the basis for taking the PDIC funds is weak. Should the matter be taken to the Supreme Court similar to the PhilHealth case, it would be interesting to see the same arguments play out. This writer expects the Government Corporate Counsel (GCC) and the Solicitor General to be placed in the same very uncomfortable spot of defending the government position from the incisive and probing questions of Supreme Court Justices Amy Lazaro-Javier and Antonio Kho, Jr.

Under RA 7656, the PDIC, as a government-owned and -controlled corporation (GOCC), is required to declare at least 50% of its net income as dividends. However, the PDIC charter RA 10846 (May 23, 2015, amending RA 3591) specifically excludes premiums or “assessment collections” received from banks from the definition of income that can be declared as dividends. RA 10846 Sec 31 inserts a new Section 18 into RA 3591 which reads:

“DIVIDEND DECLARATION. Consistent with the policy of the state …. The Corporation shall build up and maintain the DIF (Deposit Insurance Fund) at the target level set by the PDIC Board of Directors. Such target level shall be subject to periodic review and may be adjusted as necessary.

“The Corporation (PDIC) is exempt from RA 7656; instead [PDIC] shall remit dividends to the National Government only if the target DIF level for the applicable year has been reached. For purposes of computing the amount of dividends to be declared and remitted to the National Government, all assessment collections shall not be considered as income. The dividend rate shall be at least fifty percent (50%) of the income from other sources only.”

Key Point: If the premiums or assessment collections that built up the DIF were exempt from the computation of dividends to the National Government, how much more the cumulative DIF itself? Common sense dictates that the DIF itself — the accumulated total of all these premiums over the years — will be equally, if not even more, protected/exempt from any dividend computation.

While the DIF cannot be touched, no such restriction applies on the National Government taking steps to reduce, or even zero out, the retained earnings (see Column D of the table). This reduction has actually happened in the past, with the retained earnings reduced from a high of P32.1 billion in 2016 to P15.4 billion in 2020 but recovered to P27.8 billion in 2023.

WHOSE MONEY?
Granting that there was a surplus, whose money is it anyway?

A former PDIC senior officer aptly put it, “PDIC is penalized for being efficient while PhilHealth was penalized for being inefficient.”

The two key arguments that the government has the right to take the PDIC’s “excess funds” are:

1. For private insurance companies, the premiums paid by the insuring public (such as for fire insurance for houses or for damage or theft of vehicles) form part of the income of the insurance company. The moment the insured party makes the payment, it is no longer his money. The company’s stockholders are entitled to get part of it as dividends from the company, since such income become part of retained earnings.

2. The government is the ultimate guarantor of the PDIC and  in the event of a real major crisis, it has to “bail out” the PDIC by way of direct assistance or by recapitalizing it. Case in point is the substantial amount infused to cover the United Coconut Planters Bank (UCPB) rescue. Note that the Land Bank of the Philippines’ absorption of UCPB involved it buying the UCPB shares “owned” by PDIC. Therefore, “National Government giveth, National Government taketh away.”

However, the same International Association of Deposit Insurers (IADI) report* showed that giving back money to the government is a very low priority item, with the top “policy responses to address a surplus” (IADI 2018, Fig 11, page 28) are:

1. Reduction of premium rates 45% (20)

2. Suspension of premium collections 36% (16)

3. Refund/rebates to member banks 5% (2)

4. Pay back government seed funding 2% (1)

The top responses are consistent with the view that the money in the DIF belongs to the banks and the depositors. In the insurance industry, clients with a good payment history and good record of no-claims are given rebates or granted premium holidays.

On Feb. 28 the PDIC announced an increase in the insurance coverage for deposits from P500,000 to P1 million effective March 15. The indication that this increase in deposit coverage is a belated rear-guard action:

1. This P1 million maximum coverage amount is actually less than the P500,000 limit in 2009 when adjusted for average inflation of 4.5%, which should be P1,150,000. RA 9302, signed by President Gloria Macapagal Arroyo, increased the coverage from P100,000 to P250,000 in 2004. It was increased further to P500,000 in 2009.

2. It took 16 years for the PDIC to increase the deposit coverage and only AFTER it received criticism about the drastic reduction in the Deposit Insurance Fund, despite its mandate to review the adequacy of the DIF every three years, and there had been no indication in its prior annual reports that PDIC DIF was already in excess.

The past several annual reports had cited the need to support the national government’s need to fund important national priority projects as the reason for rising dividends — using the same phraseology used in justifying taking P89 billion from PhilHealth. The wholesale withdrawal of P107 billion was done with the same justification.

THE REAL REASON FOR THE TRANSFER OF FUNDS
Public finance specialist Zy-za Nadine Suzara, who has been monitoring the budget process for years, summed it up best during her appearance as amicus curia in the Supreme Court oral arguments session (Day 1, February 2025).

“In conclusion, the controversial transfer of PhilHealth to the Treasury operationalized through DoF (Department of Finance) Circular 003-2024 is a consequence of a larger and more serious problem. The new scheme of funding pork barrel, despite the Supreme Court declaring PDAF (Priority Development Assistance Fund) as unconstitutional. Circumventing this earlier ruling, legislators have been deliberately defunding development programs and projects in the programmed appropriations and transferring them to the unprogrammed appropriations resulting in an excessive level of stand-by appropriations. This way of massively funding patronage-driven projects distorts the integrity of the budget and the budget process itself. My analysis of the 2022 to 2024 budget reveals that pork barrel now constitutes nearly 20% of the total national budget.”

In short, Congress defunded the development projects (as indicated in the National Expenditures Program or NEP) so much to fund what can only be considered “pork barrel.” The DoF had to scrounge for resources to fill the gap — hence, P89 billion from PhilHealth, P107 billion from PDIC.

In the oral arguments before the Supreme Court, Solicitor General Menardo Guevara could only reply to the SC Justices on why the reallocation happened thus, “We can only defer to the wisdom of Congress.” This writer would really love to hear a representative of Congress, especially members of the bicameral committee, defend the wisdom of their moves.

(Read Part 1 here: https://tinyurl.com/26a5s9bq )

*“Deposit Insurance Fund Target Ratio,” a research paper by the International Association of Deposit Insurers, published in July 2018.

 

Alexander C. Escucha is the president of the Institute for Development and Econometric Analysis, Inc., and chairman of the UP Visayas Foundation, Inc. He is a fellow of the Foundation for Economic Freedom and a past president of the Philippine Economic Society. He is an international resource director of The Asian Banker (Singapore).

alex.escucha@gmail.com

ALI eyes growth in Palawan with new direct flights from Clark to El Nido

SEDA LIO PALAWAN — SEDAHOTELS.COM

AYALA LAND, Inc. (ALI) said the launch of direct flights from Clark International Airport to El Nido Airport in Palawan via boutique airline AirSWIFT Transport, Inc. on March 30 will provide a growth boost to its properties in Palawan.

“This new flight route is a game-changer for El Nido,” Ayala Land Leisure Estates Head Cris M. Zuluaga said in an e-mail statement on Thursday.

“With these new flights, we look forward to welcoming travelers who seek immersive, nature-focused experiences that will help drive local economic growth while ensuring that El Nido remains preserved for generations to come,” she added.

Some of ALI’s properties in El Nido include the Seda Lio resort hotel and Huni Lio resort.

To accommodate the surge in visitors, ALI said there are ongoing initiatives to increase the capacity of El Nido Airport.

“Visitors staying at ALI’s resorts and Lio Estate will especially benefit from the improved accessibility,” the real estate developer said.

In October last year, the Gokongwei-led budget carrier Cebu Pacific acquired AirSWIFT Transport, Inc. from ALI for P1.75 billion.

Even with the recently launched Clark-to-El Nido route, AirSWIFT continues to operate flights from Manila.

ALI shares fell by 0.63% or 15 centavos to P23.75 per share on Thursday. — Revin Mikhael D. Ochave

Cinema group pushes for movies to stay in theaters longer

SAMUEL REGAN ASANTE-UNSPLASH

LAS VEGAS — Movie theater owners are making a new push to keep films in cinemas for a longer period before they are available for audiences to watch at home.

Cinema United, a trade organization formerly known as the National Association of Theater Owners, called on Tuesday for a minimum 45-day window of exclusivity for all films to help boost box offices still hovering below pre-pandemic levels.

“Shorter windows reduce the number of people that head to the theater in the opening weeks of a release,” Michael O’Leary, president and chief executive officer (CEO) of Cinema United, said at the industry’s annual CinemaCon convention in Las Vegas.

“It hits the bottom line, and in many cases, undermines the ability of medium- or smaller-budget movies to build an audience or even get off the ground,” he added.

The issue has caused friction between theater owners and media companies in the past.

It used to be standard practice that movies played only in theaters for 90 days or more.

The rise of streaming and the pandemic led media conglomerates to reduce that period. Today, a film can become available to stream at home — for a fee — as soon as 17 days. The time period varies for each title.

In 2024, US and Canadian box office receipts totaled $8.6 billion, 25% below the pre-pandemic heights of $11.4 billion in 2019.

Theater operators said their business would benefit from a consistent timeline, and they want studios to stop advertising the date a movie will be accessible at home while it is on the big screen.

“One of the most important things is to not announce the streaming date while we’re still playing the movie,” said Bob Bagby, president and CEO of the B&B Theatres chain. “That confuses consumers.”

Hollywood studios have shortened theatrical windows to make money with at-home streaming rentals. They argue that many films have collected most of their box office dollars within a few weeks. Streaming service Netflix puts only a small number of its films in theaters for a short period.

On Monday, Sony film executive Tom Rothman told the CinemaCon crowd that “Sony will work with you” on setting windows and on pricing flexibility, though he offered no specifics.

“If theaters and studios manage for the long term and do the right thing, the future will be grand,” said Mr. Rothman, the chairman and CEO of Sony Pictures Entertainment’s Motion Picture Group. — Reuters