US lawmakers urge probe of WiFi router maker TP-Link over fears of Chinese cyber attacks

August 16, 2024 | 12:03 pm

modem-5436144_1280 — STOCK PHOTO | Image by Simon from Pixabay

WASHINGTON – Two US lawmakers want the Biden administration to probe China’s TP-Link Technology Co and its affiliates for potential national security risks from their widely used WiFi routers over fears they could be used in cyber attacks against the US

Republican Representative John Moolenaar and Democratic Representative Raja Krishnamoorthi, who lead the House Select Committee on China, requested a Commerce Department probe in a Tuesday letter seen by Reuters.

According to research firm IDC, TP-Link, which focuses on the consumer market, is the top seller of WiFi routers internationally by unit volume.

In calling for an investigation, the U.S. legislators cited known vulnerabilities in TP-Link firmware and instances of its routers being exploited to target government officials in European countries.

“…We request that Commerce verify the threat posed by (China-affiliated small office/home office) routers —particularly those offered by the world’s largest manufacturer, TP-Link,” according to the letter to Commerce Secretary Gina Raimondo.

They called it a “glaring national security issue.”

The Commerce Department said it would respond to the letter through appropriate channels. The Chinese Embassy said it hopes authorities will “have enough evidence when identifying cyber-related incidents, rather than make groundless speculations and allegations.”

TP-Link, founded in China in 1996 by two brothers and based in Shenzhen, said in a statement that the company does not sell any router products in the United States and that its routers do not have cybersecurity vulnerabilities.

The letter is a sign of mounting concerns that Beijing could exploit Chinese-origin routers and other equipment in cyber attacks on American governments and businesses.

The US, its allies and Microsoft last year disclosed a Chinese government-linked hacking campaign dubbed Volt Typhoon. By taking control of privately owned routers, the attackers sought to hide subsequent attacks on American critical infrastructure.

The vast majority of affected routers, however, appeared to be from Cisco and NetGear, the Justice Department said in January.

Last year, the US Cybersecurity and Infrastructure Agency said TP-Link routers had a vulnerability that could be exploited to execute remote code.

Around the same time, US security company Check Point reported that hackers linked to a Chinese state-sponsored group used a malicious firmware implant for TP-Link to target European foreign affairs officials.

The Commerce Department has broad powers to ban or restrict transactions between US firms and internet, telecom and tech companies from “foreign adversary” nations like China, Russia, Cuba, Iran, North Korea and Venezuela if their products pose a national security risk. – Reuters

US solar group seeks retroactive duties on surge of panel imports from Vietnam, Thailand

August 16, 2024 | 11:45 am

hard hat-solar panels — EVGENIY ALYOSHIN-UNSPLASH

A group of US solar panel makers asked the Commerce Department on Thursday to consider imposing duties retroactively on Vietnam and Thailand due to a surge in imports, as those countries face probes for alleged unfair practices in the multi-billion-dollar trade.

In May, the Commerce Department started investigations over silicon solar cells and panels made in Vietnam, Thailand, Malaysia and Cambodia. A group of domestic manufacturers alleges the products were sold in the U.S. at excessively low prices and benefited from subsidies from China, home to many manufacturers with factories in the region.

The four Southeast Asian countries accounted for nearly 80% of US imports last year in dollar terms, according to U.S. trade data reviewed by Reuters.

US President Joe Biden has pledged to revitalize American manufacturing by providing incentives for domestic production of goods to help fight climate change, including solar panels and electric-vehicle batteries that are mainly made in China. Some in the small US solar-manufacturing sector say the industry is struggling to compete with low-priced imports.

As speculation about the trade probes began circulating this year, exports from Vietnam and Thailand surged, the American Alliance for Solar Manufacturing Trade Committee said in a complaint filed with Commerce, which followed its earlier petition in April to start the trade investigations. The group represents domestic producers including Hanwha Qcells and First Solar.

That investigation could lead to high tariffs from as early as July, if US federal officials confirm unfair trading practices in preliminary determinations scheduled in early October, and uphold retroactive duties applicable 90 days before their decisions.

The trade ministries of Vietnam and Thailand did not reply to requests for comment.

The new tariffs could be particularly harmful to Vietnam, which risks the highest duties as it is deemed by the United States a non-market economy. That status usually leads to harsher sanctions because domestic pricing is not considered reliable, according to trade experts.

Vietnam’s estimated gap between domestic and export prices, known as dumping margins, were estimated by the US at over 270% using Indonesia as benchmark, more than three times higher than Thailand’s. Larger margins are likely to result in higher tariffs, if approved, experts said.

In their latest complaint, the US manufacturers said the volume of solar imports from Vietnam and Thailand rose 39% and 17% respectively in the second quarter compared with the first quarter, as the two countries allegedly increased shipments to the United States ahead of potential duties.

Such moves could be considered “critical circumstances,” US producers said. Both the Commerce Department and the International Trade Commission must find that critical circumstances exist for duties to be imposed retroactively.

In dollar terms, sales from Vietnam to the US surged in recent months.

US trade data shows that in April, imports rose to a record high of more than $680 million – over half the total for that month – and remained far above monthly averages in May and June. At the same time, exports in dollar terms from Thailand, Malaysia and Cambodia have slowed, the data showed.

In the first six months of the year, Vietnam supplied the US with solar panels and modules worth $3.3 billion, equal to 45% of all US imports, up from less than 30% last year when full-year Vietnamese exports to the US amounted to $4 billion. – Reuters

TikTok disputes US claims on China ties in court appeal

August 16, 2024 | 11:39 am

REUTERS

TikTok told a federal appeals court on Thursday that the US Department of Justice has misstated the social media app’s ties to China, urging the court to overturn a law requiring China-based ByteDance to sell TikTok’s US assets or face a ban.

TikTok, which has sued to overturn the law, said the Justice Department has made factual errors in the case. The department’s lawyers said last month that the app poses a national security risk by allowing the Chinese government to collect the data of Americans and covertly manipulate what content they see.

TikTok said on Thursday it is undisputed that the app’s content recommendation engine and user data are stored in the US on cloud servers operated by Oracle and that content moderation decisions that affect US users are made in the US

Signed by President Joe Biden on April 24, the law gives ByteDance until Jan. 19 to sell TikTok or face a ban. The White House says it wants to see Chinese-based ownership ended on national security grounds, but not a ban on TikTok.

The appeals court will hold oral arguments on the legal challenge on Sept. 16, putting the issue of TikTok’s fate into the final weeks of the Nov. 5 presidential election.

Republican presidential candidate Donald Trump has joined TikTok and said in June he would never support a TikTok ban.

Vice President Kamala Harris, the Democratic presidential candidate, joined TikTok in July and leaned in to social media as part of her campaign strategy.

TikTok argued on Thursday that the law would strip the company of its free-speech rights, arguing against the Justice Department’s claim that the short video app’s content curation decisions are “the speech of a foreigner” and not protected by the U.S. Constitution.

“By the government’s logic, a US newspaper that republishes the content of a foreign publication – Reuters, for example – would lack constitutional protection,” the company said.

The law prohibits app stores like Apple, and Alphabet’s Google, from offering TikTok and bars internet hosting services from supporting TikTok unless it is divested by ByteDance.

Driven by worries among US lawmakers that China could access data on Americans or spy on them with the app, Congress overwhelmingly passed the measure just weeks after it was introduced. – Reuters

Two doctors among five people charged in ‘Friends’ star Matthew Perry’s death

August 16, 2024 | 11:37 am

Matthew_Perry_ONDCP_White_House_-_Frame_Grab_-_Smile_(cropped) — By Office of National Drug Control Policy - https://en.wikipedia.org/wiki/File:Matthew_Perry_Office_of_National_Drug_Control_Policy_The_White_House.theora.ogv, Public Domain, https://commons.wikimedia.org/w/index.php?curid=139762070

By Office of National Drug Control Policy – https://en.wikipedia.org/wiki/File:Matthew_Perry_Office_of_National_Drug_Control_Policy_The_White_House.theora.ogv, Public Domain, https://commons.wikimedia.org/w/index.php?curid=139762070

LOS ANGELES – Two doctors and three others including a personal assistant to Matthew Perry have been charged with supplying the “Friends” star with ketamine, the powerful sedative that caused his overdose death nearly a year ago, authorities said on Thursday.

The defendants, including a woman known as the “Ketamine Queen,” were part of a criminal network that distributed the drug to Perry and others, US Attorney Martin Estrada said.

“These defendants took advantage of Mr. Perry’s addiction issues to enrich themselves,” Estrada said at a news conference.

Each defendant played a role in falsely prescribing, selling or injecting the ketamine that led to the actor’s death in October 2023, Anne Milgram, administrator of the U.S. Drug Enforcement Administration, said.

Two of the defendants – Jasveen Sangha, 41, and Dr. Salvador Plasencia, 42 – pleaded not guilty in US District Court in downtown Los Angeles on Thursday.

According to authorities, Sangha was known as the “Ketamine Queen” and sold the doses that killed Mr. Perry from her “stash house” in North Hollywood.

Ketamine is a short-acting anesthetic with hallucinogenic properties, sometimes prescribed to treat depression and anxiety but also abused by recreational users.

Mr. Plasencia was accused of distributing ketamine to Perry and to his personal assistant, 59-year-old Kenneth Iwamasa, without a legitimate medical purpose on at least seven occasions.

Mr. Iwamasa, who lived with Mr. Perry, admitted to repeatedly injecting the actor with ketamine including multiple times on the day he died, according to court documents. He has pleaded guilty to one criminal count.

Mr. Plasencia taught Mr. Iwamasa how to administer ketamine, authorities said, adding that the doctor also personally injected Perry with the drug without proper safety equipment, including once inside a parked car.

Attorney Stefan Sacks, speaking to reporters outside the Los Angeles courthouse, said Mr. Plasencia had prescribed ketamine to Perry appropriately and had properly supervised the treatment.

“While the US attorney may disagree with Dr. Plasencia’s medical judgment, there was nothing criminal,” Sacks said, adding that the drug that killed Perry was not supplied by his client.

Authorities said Mr. Plasencia obtained ketamine from Dr. Mark Chavez, 54. In text messages to Mr. Chavez, Mr. Plasencia discussed how much to charge Perry for the drug, stating, “I wonder how much this moron will pay.”

An investigation found that the defendants distributed roughly 20 vials of ketamine to Perry for $55,000 in cash between September and October 2023.

Mr. Chavez admitted to selling ketamine to Plasencia and has agreed to plead guilty to one charge, according to court documents.

The fifth person charged was Eric Fleming, 54, who admitted to obtaining ketamine from Sangha and to distributing 50 vials to Mr. Iwamasa. He has pleaded guilty to two criminal counts.

Mr. Perry died at age 54 from “acute effects” of ketamine and other factors that caused him to lose consciousness and drown in his hot tub, a December 2023 autopsy report said.

Toxicology tests found Perry’s body contained ketamine at dangerously high levels typically found in general anesthesia patients being monitored by professionals during surgery, the report said.

Other contributing factors were drowning, coronary artery disease and the effects of the opioid-addiction medicine buprenorphine.

Mr. Perry had publicly acknowledged decades of drug and alcohol abuse, including during the years he starred as Chandler Bing on the hit 1990s television sitcom “Friends.”

Witness interviews in the autopsy report said he had been undergoing ketamine infusion therapy for depression and anxiety. But his last known treatment was a week and a half before his death, so the ketamine found in his system by medical examiners would have been introduced since that infusion, the autopsy said.

At sentencing, Mr. Iwamasa faces up to 15 years in federal prison and Mr. Fleming faces up to 25 years. Mr. Chavez could be sentenced to up to 10 years.

If convicted on all charges, Mr. Sangha would face between 10 years to life in federal prison. Mr. Plasencia would face up to 10 years for each ketamine-related count and up to 20 years for each records falsification count. – Reuters

Trump tackles Harris’ economic record at rambling press conference

August 16, 2024 | 11:30 am

BEDMINSTER, New Jersey – Republican US presidential candidate Donald Trump sought to tie his Democratic rival Kamala Harris to the Biden administration’s economic record on Thursday during a meandering, 80-minute press conference at his New Jersey golf club, his latest effort to blunt her momentum.

Flanked by tables stacked with assorted grocery items, Mr. Trump blamed Ms. Harris, the US vice president, for the inflation that has caused the price of everyday goods to rise during President Joe Biden’s term in office.

“Harris has just declared that tackling inflation will be a day one priority for her,” he said. “But day one for Kamala was 3-1/2 years ago. Where has she been?”

The event was aimed at drawing a contrast with Ms. Harris, who has rarely answered questions from reporters since replacing Biden at the top of the Democratic ticket in late July.

But the press conference quickly became reminiscent of a Trump rally, with the former president leveling many of the same false claims he typically unleashes on the campaign trail and speaking for 45 minutes before taking his first question.

He insulted Ms. Harris repeatedly, saying she is “not smart.” When a reporter noted that some Republicans have urged him to focus on policy, rather than personal attacks, he said, “I think I’m entitled to personal attacks.”

“She certainly attacks me personally,” Mr. Trump said.

Mr. Trump noted that Ms. Harris has called him and his running mate JD Vance “weird,” a criticism made viral by Democratic vice presidential candidate Tim Walz.

He also dismissed the suggestion that he alter his approach, telling reporters, “I have to do it my way.”

Ms. Harris’ entry into the race has galvanized Democrats, and polls show she has erased the lead Mr. Trump had enjoyed over Mr. Biden.

The Harris campaign sent out a mock “media advisory” ahead of Mr. Trump’s press conference with the headline, “Donald Trump to Ramble Incoherently and Spread Dangerous Lies in Public, but at Different Home,” a reference to his Bedminster estate.

Ms. Harris is scheduled to deliver a speech on economic policy on Friday in North Carolina.

The grocery staples Mr. Trump used as props included household brands like Wonder Bread, Oreo cookies, Folgers coffee and Campbell’s soup.

Bread and coffee prices have actually fallen over the last year, according to the Bureau of Labor Statistics’ monthly Consumer Price Index. Food costs more broadly are now experiencing an inflation rate comparable with when Trump was president – between zero and 2% a year.

Their substantial price rises in 2022 and 2023, however, have pushed them about 20% to 30% above their levels when Trump left office.

TRUMP ALLIES RETURN TO CAMPAIGN

Earlier on Thursday, the Trump campaign announced five hires, including Corey Lewandowski, who served as Mr. Trump’s first campaign manager during his successful 2016 campaign. Mr. Lewandowski voiced his excitement, posting on X: “Let Trump, Be Trump!”

A campaign official, who requested anonymity to discuss internal personnel matters, said the campaign needed more “soldiers” in the race’s closing months and that the hires were not indicative of any broader shakeup.

Other than Mr. Lewandowski, who will be part of the senior leadership team, the hires will largely work in communications and rapid response, according to another person familiar with campaign operations. The person added the campaign had been severely understaffed in that area.

Mr. Lewandowski was forced out of Mr. Trump’s 2016 bid in the months before the election, though Trump later said he regretted it. Mr. Lewandowski was later forced out of a pro-Trump super PAC in 2021 after a donor’s wife accused him of unwanted sexual advances.

At the press conference, Mr. Trump said the new hires did not signify a shift in strategy and praised his co-campaign managers, Chris LaCivita and Susie Wiles.

“It’s a sign that we want to close it out,” he said. – Reuters

Gaza ceasefire negotiations extend another day as death toll exceeds 40,000

August 16, 2024 | 11:27 am

ISRAEL-PALESTINIANS-GAZA — A view shows houses and buildings destroyed by Israeli strikes in Gaza City, Oct. 10, 2023. — REUTERS

DOHA/CAIRO – Negotiators were to meet in the Qatari capital Doha again on Friday in an effort to hammer out a Gaza ceasefire agreement as Israel continued to slam targets in the Palestinian enclave.

Gaza health officials reported separately on Thursday that the death toll there had surpassed 40,000 people after more than 10 months of fighting.

This round of negotiations opened on Thursday, and the talks would resume on Friday for a second day, Qatari and US officials said.

A US official briefed on the discussions in Doha, who declined to be identified told Reuters, said that Thursday’s talks were “constructive.”

“This is vital work. The remaining obstacles can be overcome, and we must bring this process to a close,” US national security spokesperson John Kirby told reporters at the White House.

Israel, meanwhile, pressed its assault on Gaza. Gaza health officials said at least six Palestinians were killed on Thursday night in an Israeli air strike on a house in Jabalia in northern Gaza Strip.

Israeli troops earlier hit targets in the southern cities of Rafah and Khan Younis.

In a statement issued late Thursday on Telegram, Hamas politburo member Hossam Badran said Israel’s continuing operations were an obstacle to progress on a ceasefire.

He said the talks must move toward implementation of a framework agreement accepted previously and achieve a complete ceasefire, withdrawal of Israeli forces, return of displaced Palestinians and a hostage exchange deal.

“Hamas looks at the ongoing negotiations in Doha regarding a ceasefire and a hostage exchange from a strategic perspective with the goal of ending the aggression on Gaza,” Mr. Badran added.

Hamas officials did not join Thursday’s talks. Mediators planned to consult with Hamas’ Doha-based negotiating team after the meeting, the official told Reuters.

The Israeli delegation includes spy chief David Barnea, head of the domestic security service Ronen Bar and the military’s hostages chief Nitzan Alon, defense officials said.

The White House sent CIA Director Bill Burns and US Middle East envoy Brett McGurk. Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani and Egypt’s intelligence chief Abbas Kamel also took part.

The negotiations, an effort to end bloodshed in Gaza and bring 115 Israeli and foreign hostages home, were put together as Iran appeared poised to retaliate against Israel after the assassination of Hamas leader Ismail Haniyeh in Tehran on July 31.

With US warships, submarines and warplanes dispatched to the region to defend Israel and deter potential attackers, Washington hopes a ceasefire agreement in Gaza can defuse the risk of a full-out wider regional war.

Israel and Hamas have each blamed the other for failure to reach a deal yet neither side has ruled out an agreement.

On Wednesday, a source in the Israeli negotiating team said Prime Minister Benjamin Netanyahu has allowed significant leeway on a few of the substantial disputes.

Gaps include the presence of Israeli troops in Gaza, the sequencing of a hostage release and restrictions on the free movement of civilians from southern to northern Gaza.

UN human rights chief Volker Turk said the Gaza death toll of more than 40,000 reported by the enclave’s health ministry was a “grim milestone for the world”.

“This unimaginable situation is overwhelmingly due to recurring failures by the Israeli Defense Forces to comply with the rules of war,” he said in a statement from Geneva on Thursday.

Separately, Israel’s military said it had “eliminated” more than 17,000 Palestinian militants in its Gaza campaign.

In shattered Gaza where the war has driven almost all of its 2.3 million population from their homes, there was a desperate desire for an end to the fighting.

“We are hopeful this time. Either it’s this time or never I am afraid,” Aya, 30, sheltering with her family in Deir Al-Balah in the central part of the Gaza Strip, told Reuters via a chat app.

The war started after a Hamas raid on southern Israel on Oct. 7 in which Israel says the militants killed some 1,200 people, prompting Israel to attack Gaza in retaliation. – Reuters

Political uncertainty may prod BOJ to pause, but not end, rate hike path

August 16, 2024 | 11:25 am

TOKYO – The political uncertainty left by Prime Minister Fumio Kishida’s decision to step down will likely lead to a pause, rather than a full stop, to the Bank of Japan’s plan to raise interest rates steadily from near-zero levels.

How long that pause could be will depend not just on how the ruling party leadership race plays out, but how market moves affect the political debate on the preferred pace of rate hikes, analysts say.

Mr. Kishida, who hand-picked Kazuo Ueda as BOJ governor last year, said on Wednesday he will not stand in his ruling Liberal Democratic Party’s (LDP) leadership race in September.

The BOJ worked closely with Kishida’s administration in preaching the benefits of higher wages. Days before the BOJ’s rate hike in July, Mr. Kishida said the central bank’s policy normalization would support Japan’s transition to a growth-driven economy in a sign of his backing towards exiting ultra-low interest rates.

Mr. Kishida’s departure leaves a political vacuum that heightens uncertainty on economic policy, and complicates the BOJ’s efforts to steer a smooth exit from easy monetary conditions in coordination with the government.

Those seen as leading candidates have mostly endorsed gradual increases in Japan’s current ultra-low interest rates, partly as a means to keep sharp yen falls at bay.

Shigeru Ishiba, seen as a frontrunner to succeed Kishida as next LDP leader and thus premier, told Reuters that the BOJ was “on the right policy track” in hiking rates gradually.

Other leading candidates, such as party heavyweights Toshimitsu Motegi and Taro Kono, have also called on the need for higher interest rates and hawkish communication by the BOJ.

The only advocate of aggressive easing is dark horse candidate Sanae Takaichi, who belongs to a party group that supported former premier Shinzo Abe’s stimulus policies.

“Takaichi might be an exception, but most candidates don’t seem to be against the BOJ’s policy normalization. If so, there won’t be much disruption to the bank’s long-term rate hike path,” said veteran BOJ watcher Mari Iwashita.

POLITICS-BOJ TENSION

The BOJ by law is granted independence from government interference in setting monetary policy. But it has historically come under political pressure to use its monetary easing tools to reflate the economy.

That policy tension is in part driven by the government’s power to appoint BOJ board members including the governor, which then needs parliament approval to take effect.

With the weak yen intensifying the strain on households through rising living costs, many politicians will likely nod to gradual rate hikes for now, analysts say.

That means the BOJ will likely stay the course and keep raising rates – albeit at a slower pace than initially thought.

A survey taken by think tank Japan Center for Economic Research on July 30-Aug. 6 showed many economists projecting another rate hike by year-end.

“The weak yen has been enemy No. 1 for many lawmakers, which means there is less political pushback against rate hikes than in the past,” said a source familiar with the BOJ’s thinking.

MOMENT FOR PAUSE

Data showing the economy rebounded in the second quarter on robust consumption helps justify further rate hikes, analysts say.

The BOJ has too much to lose by ditching a carefully crafted plan to roll back a decade-long radical stimulus program, which put an end to negative rates in March and led to an increase in short-term rates to 0.25% from 0-0.1% in July.

The BOJ remains a global outlier on monetary policy. The central bank kept rates ultra-low even as its US and European counterparts hiked aggressively since 2022 to combat red-hot inflation. Now, the BOJ is raising rates while its peers have begun easing and yet it’s some way off from normalizing policy.

Governor Ueda has said further rate hikes are necessary adjustments of excessive monetary support, rather than a full-fledged tightening – a stance he is likely to maintain.

But the BOJ also has good reason to ride out the storm by standing pat at the next policy meeting on Sept. 19-20, which will likely be close to the date of the LDP leadership race.

The US presidential election may also heighten market volatility and keep the BOJ from acting at a subsequent rate review on Oct. 30-31, analysts say.

“The BOJ will hold off on rate hikes at least until December, when Japanese and U.S. political events run their course,” said Toru Suehiro, chief economist at Daiwa Securities.

The BOJ would also need time to build trust with the new prime minister, who may have to wait until November to be approved by parliament.

An academic turned governor, Ueda has few associates in political circles, which heightens challenges in communicating smoothly with the new administration, some analysts say.

There is no guarantee politicians will keep favoring rate hikes, if the yen’s downtrend reverses course.

A spike in the yen, caused in part by the BOJ’s July rate hike, led to a plunge in stock prices that forced the central bank to back-track on its hawkish communication.

“If the weak-yen tide reverses, some politicians may begin to question whether the BOJ needs to hike rates further,” said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities. – Reuters

Higher tax on SSBs to offset inflation, fund “First 1000 Days Grant” – AER

August 16, 2024 | 11:05 am

soft-drink-4280835_1280 — STOCK PHOTO | Image by Ernesto Rodriguez from Pixabay

The government should consider a higher tax on sugar-sweetened beverages (SSBs) to offset the impact of inflation on the fixed tax rate, and to fund the “First 1000 Days Grant,” which supports the nutritional needs of Pantawid Pamilyang Pilipino Program (4Ps) members, including lactating mothers and children under age of two, according to one of the co-founders of Action for Economic Reforms (AER).

“The inflation rate has been quite high in the past few years but the tax rate for the sweetened beverage tax is fixed, P6 per volume a liter. So, the real value of the six pesos since the imposition of the tax has gone down,” Filomeno S. Sta. Ana III, coordinator of AER said in an interview during the 2nd day of the Department of Health (DOH) media conference in Baguio City on Wednesday.

The bill of Party-list Representative Reyes on increasing sweetened beverage tax can ensure the effectiveness of tax rates and increase revenue, according to Mr. Sta. Ana.

“So, a rate of higher than P9, perhaps even P12 will be good, a tax structure that will include the feature that will automatically index the tax to inflation is also most welcome, that’s very similar to the design of the tax on tobacco and alcohol,” he said.

“We need new revenues in light of the narrow fiscal space we have, in light of the need to finance nutrition.”

The revenue from a higher SSB tax could be the ideal funding source for the “First 1000 Days Grant” model, Mr. Sta. Ana said, which requires a budget of P2.6 billion to P2.7 billion as it rolls out in 2025, according to the Department of Social Welfare and Development (DSWD).

“Where do we get the resources (funds), and it is most sensible that such new resources be obtained from a tax like the sweetened beverage tax, (as it) is related somehow to the issue of nutrition,” Mr. Sta. Ana said.

He also emphasized that the government should not hesitate to impose pro-health taxes, such as an increased tax on sugar-sweetened beverages (SSBs), as these have been proven to reduce obesity concerns and generate revenue for health initiatives and economic growth.

“Let’s do it, let’s push for the sweetened beverage tax, let’s push for good taxes… not all tax will be harmful to the economy at this time, increasing revenues at this time will be contributing to GDP growth, will be contributing to expansions of investment and growth,” Mr. Sta. Ana said. – Edg Adrian A. Eva

Chinabank marks 104 years of dedication to consumers

August 16, 2024 | 11:00 am

China Banking Corp., more known to many as Chinabank or CBC, celebrates its 104th anniversary this year by reiterating its commitment to stand by its customers “through every endeavor, challenge, and trimuph.”

Now the country’s 4th largest private universal bank, CBC stays true to its core values and heritage while modernizing its image with a new brand and its first brand ambassador.

Learn more about CBC’s recent strides, as well as its tailored products and services, in their recent publication on The Philippine STAR. Click the images below to view the pages.

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.

Join us on Viber at https://bit.ly/3hv6bLA to get more updates and subscribe to BusinessWorld’s titles and get exclusive content through www.bworld-x.com.

Philippine central bank sees room for one more rate cut this year

August 16, 2024 | 10:54 am

MANILA – The Philippine central bank sees room for one more interest rate cut this year, its governor said on Friday.

“We will always be assessing the situation, but given our current assessment, I think we have room for one more cut this year,” Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said in an interview with CNBC.

Mr. Remolona also said the monetary authority does not worry too much about the peso’s depreciation.

The peso slipped against the dollar on Thursday after the central bank cut its benchmark borrowing rate by 25 basis points to 6.25%, its first rate cut since November 2020. The peso further slipped to 57.15 pesos against the dollar when markets opened on Friday.

Prior to the rate cut on Thursday, BSP had held its policy settings steady for six straight meetings since November. Previously, it had raised rates by a total 450 basis points between May 2022 and October 2023 to rein in inflation.

Thursday’s rate cut followed data last week showing the economy grew 6.3% in the second quarter from a year earlier, boosted by government spending and investments growth. – Reuters

BSP cuts rate for 1^st time since 2020

August 16, 2024 | 12:33 am

Divisoria-shoppers-wc — The Bangko Sentral ng Pilipinas (BSP) cut interest rates by 25 basis points, after second-quarter economic data showed a slowdown in private consumption. — PHILIPPINE STAR/RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) on Thursday cut policy rates for the first time in nearly four years amid an improving inflation outlook.

The Monetary Board on Thursday reduced the target reverse repurchase (RRP) rate by 25 basis points (bps) to 6.25% from the over 17-year high of 6.5%. This was in line with the expectations of nine out of 16 analysts surveyed in a BusinessWorld poll last week.

Rates on the overnight deposit and lending facilities were also lowered to 5.75% and 6.75%, respectively.

This was the first time that the BSP reduced rates in close to four years or since November 2020, when it last delivered a 25-bp cut amid the coronavirus disease 2019 (COVID-19) pandemic.

“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” BSP Governor Eli M. Remolona, Jr. said at a briefing.

He said the BSP remains “mindful of lingering upside risks to prices.”

“The balance of risks to the inflation outlook continues to lean toward the downside for 2024 and 2025 with a modest tilt to the upside for 2026,” Mr. Remolona said.

The BSP adjusted its baseline forecasts to 3.4% for 2024 (from 3.3% previously), 3.1% for 2025 (from 3.2% previously), and 3.2% for 2026 (from 3.3% previously).

It also revised its risk-adjusted inflation forecasts for 2024 to 3.3% (from 3.1% previously), and 2.9% for 2025 (from 3.1%). The risk-adjusted forecast for 2026 was set at 3.3%.

Despite inflation accelerating to 4.4% in July, Mr. Remolona said inflation is expected to trend downward to within the government’s 2-4% target range.

“The downside risks are linked mainly to lower import tariffs on rice, while upside risks could come from higher electricity rates and external factors,” he added.

In June, President Ferdinand R. Marcos, Jr. ordered that tariff on rice imports be lowered to 15% until 2028 from 35% previously.

Rice inflation, which accounts for nearly half of overall inflation, eased to 20.9% in July from 22.5% a month prior. This marks the fourth straight month of slower rice inflation.

Mr. Remolona also noted the impact of the latest economic growth figures on the decision to begin easing rates. The economy expanded by 6.3% in the second quarter, faster than 5.8% in the previous quarter and 4.3% a year ago.

“We’re somewhat more confident in the inflation numbers coming down than in the gross domestic product (GDP) numbers going up,” he said.

“Consumption was relatively weak. So, it doesn’t look like something that could easily be sustained. And so we went for a cut, partly because of that.”

Household consumption, which accounts for about three-fourths of the economy, slowed to 4.6% in the second quarter from 5.5% a year ago.

“Despite tight financial conditions, second-quarter GDP growth has been solid, and the unemployment rate has declined. Public investment alongside easing price pressures and robust employment conditions are expected to support economic activity,” Mr. Remolona added.

OUTLOOK
Meanwhile, the BSP chief signaled another 25-bp cut for the remainder of the year.

“My views have been consistent with a 25-bp cut today and another 25 bps sometime during the year, either in October or December. And we’ll see what happens in 2025,” Mr. Remolona said.

“By the way, the most relevant policy horizon for us is actually 2025 when looking at inflation, because there are long lags in the transmission mechanism of monetary policy. The decision we made today (Thursday) will mainly affect 2025,” he added.

The Monetary Board’s remaining policy-setting meetings this year are on Oct. 17 and Dec. 19.

Mr. Remolona said he also expects the US Federal Reserve to begin cutting rates next month.

“Possibly, 50 bps in September and then 100 bps until the end of 2024. And then maybe another 125 bps in 2025,” he said.

Mr. Remolona noted the impact of the interest rate differential once the Fed begins cutting rates.

“That would mean a wider differential. You know, the (US) policy rate is below our policy rate. But if they cut by more than we do, then the differential will be even wider. That may exert pressure on the peso a little bit. But given that the peso has been appreciating already, it’s not a big deal.”

Mild US inflation readings this week have cemented hopes that the Federal Reserve will lower borrowing costs in September for the first time in four and a half years, Reuters reported.

Mr. Remolona said the central bank is trying to avoid any off-cycle moves. “Off-cycle decisions are either you think you fell behind the curve or you think you’re facing a hard landing. Otherwise, we avoid off-cycle decisions.”

BIGGER CUTS?
Meanwhile, Gareth Leather, senior Asia economist at Capital Economics, said he expects 25-bp cuts each at the Monetary Board’s last two meetings for the year.

“With inflation set to drop back further and growth likely to struggle, we expect another 50 bps of cuts before the end of the year,” he said in a note.

Easing price pressures will help reinforce the BSP’s decision to reduce rates further, Mr. Leather said.

“We expect inflation to drop back to target in August on the back of beneficial base effects and remain low throughout the rest of the year. If we are right, this should give the central bank the confidence it needs to loosen policy further over the coming months,” he said.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said that with the Fed expected to also begin its easing cycle, this may give the BSP room to deliver bigger rate cuts.

“We now see the Board cutting by a further 25 bps each in October and December, though the chances of much larger 50-bp moves, particularly in December, likely will rise if we’re right about the Fed pursuing more aggressive easing in the fourth quarter,” he said in a note.

The BSP can also continue cutting rates through next year, he added.

“All told, the BSP will have much more room for more rate cuts next year; our inflation forecasts see the annual average dropping further to 2.5% in 2025 from an estimated 3.5% this year, down from 6% in 2023,” Mr. Chanco said.

“The urgency and onus on the BSP to start providing the economy with some support is clear, especially with fiscal policy still constrained by the lagging consolidation efforts from the pandemic-era budget blowout.”

Approved foreign investments surge in Q2

August 16, 2024 | 12:32 am

PHL Flag — A Philippine flag is seen along Aguinaldo Highway in Imus City, May 28, 2024. — PHILIPPINE STAR/EDD GUMBAN

By Lourdes O. Pilar, Researcher

APPROVED foreign investment pledges surged in the second quarter, driven by improved investor confidence, preliminary data from the Philippine Statistics Authority (PSA) showed on Thursday.

Foreign investment commitments jumped by 220.7% year on year to P189.5 billion in the April-to-June period, a turnaround from the revised 64% contraction in the first quarter.

It was the fastest year-on-year increase since the 4,445.6% surge seen in the first quarter of 2023.

The amount of foreign investment pledges in the second quarter was the biggest since the P394.46 billion approved in the fourth quarter of 2023.

“The quarter-on-quarter expansion of the Philippine economy was apparently taken as indication of market growth, at least in the short and medium term, prompting an increase in investment pledges and approved investments,” University of Asia and the Pacific Senior Economist Cid L. Terosa said in an e-mail interview.

The Philippine economy grew by 6.3% year on year in the second quarter, faster than the revised 5.8% in the first quarter and 4.3% in the April-to-June period in 2023.

In the second quarter, Switzerland was the top source of foreign investment pledges with P172.04 billion. This accounted for 90.8% of the total.

The PSA compiles the investment pledges from the government’s six investment promotion agencies: Board of Investments (BoI), BoI-Bangsamoro Autonomous Region in Muslim Mindanao (BoI-BARMM), Clark Development Corp. (CDC), Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), and Zamboanga City Special Economic Zone Authority (ZCSEZA).

The BoI approved P175.08 billion in foreign investment pledges, accounting for 92.4% of this quarter’s total.

PEZA came in second with P14.03 billion in foreign investment pledges which accounted for 7.4% of the total. This was followed by SBMA with P124.09 million, BoI-BARMM with P110.06 million, CDC with P107.81 million and ZCSEZA with P49.65 million.

Negros Island Region cornered nearly half (45.6%) of the foreign investment commitments with P86.46 billion. This was followed by Calabarzon and Central Visayas with P6.93 billion and P4.35 billion, respectively.

Meanwhile, investment pledges from Filipino nationals rose annually by 103.6% to P525.51 billion in the second quarter. It accounted for 73.5% of the combined pledges worth P715.01 billion.

Foreign and local investments pledged during the second quarter are expected to generate 26,915 jobs once the projects are realized.

Electricity, gas, steam, and air-conditioning supply industry received the largest amount of approved commitments at P172.74 billion or 91.2% of the total. This was followed by manufacturing with P12.39 billion and administrative and support service activities with P2.84 billion.

“Pledges are pledges. Until we see the approved and actual investment happening, we will have to wait-and-see. This is not to rain on the parade of the great investment pledges performance so far, particularly this [second quarter]. But reality has to set in and approved and actual investments are still the best thing,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in an e-mail interview.

Mr. Asuncion said the higher investment pledges are a direct result of President Ferdinand R. Marcos, Jr.’s foreign trips, where he promoted the country as an investment destination.

“Hopefully, this bump in investment pledges will be sustained,” he said.

Mr. Terosa said the weaker peso in the second quarter made investments in certain sectors in the Philippines more attractive.

For the rest of the year, he said a possible recession in some developed countries, the continued weakness of China’s economy and geopolitical tensions may affect investment flows in developing countries like the Philippines.

“I expect investments to be restrained by these conditions in the second half of the year,” Mr. Terosa said.

Foreign investment pledges, which may materialize in the future, differ from the actual foreign direct investments data tracked by the Bangko Sentral ng Pilipinas (BSP). Aside from the projects, the BSP’s monitoring includes other items such as reinvested earnings and lending to Philippine units via their debt instruments.