THE BANGKO SENTRAL ng Pilipinas (BSP) may cut rates for the first time in nearly four years at its policy-setting meeting this week, according to a majority of analysts polled by BusinessWorld. Read the full story.
THE PESO may be range-bound against the dollar this week as the market awaits the Philippine central bank’s policy meeting.
The local unit closed at P57.28 per dollar on Friday, strengthening by 3.6 centavos from its P57.316 finish on Thursday, Bankers Association of the Philippines data showed.
This was the peso’s best finish in more than three months or since its P57.221-a-dollar close on May 7.
Week on week, the peso surged by 80 centavos from its P58.08 close on Aug. 2.
The peso continued to strengthen against the dollar on Friday following stronger-than-expected gross domestic product (GDP) growth in the second quarter, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Rallies continued to attract good selling interest post-GDP release,” Security Bank Corp. Chief Economist Robert Dan J. Roces likewise said in a Viber message.
Philippine GDP expanded by 6.3% in the second quarter, the government reported on Thursday. This was faster than the revised 5.8% growth in the first quarter and the 4.3% clip a year ago.
This was also above the 6% median estimate in a BusinessWorld poll of 19 economists.
In the first semester, economic growth averaged 6%. The government is targeting 6-7% GDP growth this year.
For this week, peso-dollar trading will largely depend on the Bangko Sentral ng Pilipinas’ (BSP) policy review on Aug. 15 (Thursday), Mr. Ricafort said.
Analysts are divided on the Monetary Board’s rate decision this week as faster headline inflation in July caused BSP Governor Eli M. Remolona, Jr. to take a less dovish policy stance.
A BusinessWorld poll conducted last week showed that nine out of 16 analysts surveyed expect the central bank to deliver a 25-basis-point (bp) rate cut at Thursday’s review.
This would bring the target reverse repurchase rate to 6.25% and would be the first reduction in benchmark borrowing costs since November 2020, or during the coronavirus pandemic.
The BSP has kept its policy rate at an over 17-year high of 6.5% since October 2023 following increases worth 450 bps.
The Monetary Board is now “a little bit less likely” to cut rates at this week’s policy meeting following the elevated July inflation print, Mr. Remolona said last week.
Headline inflation picked up to a nine-month high of 4.4% in July from 3.7% in June, the Philippine Statistics Authority reported last week. This was slower than the 4.7% print in the same month a year ago and was within the BSP’s 4%-4.8% forecast for the month.
However, this was the fastest print in nine months or since the 4.9% clip in October 2023. It also marked the first time since November that inflation exceeded the central bank’s 2-4% annual target.
Mr. Ricafort sees the peso moving between P57 and P57.50 per dollar this week. — A.M.C. Sy
PHILIPPINE STOCKS may move sideways this week as the market awaits the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday, with a rate cut seen to boost sentiment.
On Friday, the bellwether Philippine Stock Exchange index (PSEi) increased by 1.5% or 98.53 points to end at 6,647.80, while the broader all shares index rose by 1.01% or 36.10 points to finish at 3,608.24.
Week on week, the PSEi went up by 0.64% or 42.5 points from its 6,605.30 finish on Aug. 2.
“The local bourse recovered after an early week slump as attention moves to the BSP’s meeting,” online brokerage firm 2TradeAsia.com said in a market note.
“The local market bounced back last week after hitting its 6,400 support level, eventually ending the week with a 0.64% gain… However, trading has remained anemic, as seen in the thin value turnovers,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
For this week, the Philippine central bank’s rate-setting meeting on Aug. 15 (Thursday) will take the spotlight, Mr. Tantiangco said.
“A policy rate cut is expected to sustain the local market’s upward momentum, while an unchanged policy rate might lead to a market decline,” he added.
Analysts are divided on the Monetary Board’s rate decision this week as faster headline inflation in July caused BSP Governor Eli M. Remolona, Jr. to take a less dovish policy stance.
A BusinessWorld poll showed that nine out of 16 analysts surveyed expect the Monetary Board to deliver a 25-basis-point (bp) rate cut at Thursday’s review.
This would bring the target reverse repurchase rate to 6.25% and would be the first reduction in benchmark borrowing costs since November 2020, or during the coronavirus pandemic.
The BSP has kept its policy rate at an over 17-year high of 6.5% since October 2023 following cumulative hikes worth 450 bps.
Headline inflation accelerated to a nine-month high of 4.4% in July from 3.7% in June, the Philippine Statistics Authority reported last week. This was slower than the 4.7% print in the same month a year ago and was within the BSP’s 4%-4.8% forecast.
However, this was the fastest in nine months or since the 4.9% clip in October 2023 and also marked the first time since November that inflation exceeded the BSP’s 2-4% annual target.
The Monetary Board is now “a little bit less likely” to cut rates at this week’s policy meeting following the worse-than-expected July inflation print, Mr. Remolona said after the data release.
“Investors are also expected to monitor the developments at Wall Street. A further easing of recession concerns is seen to help in lifting market sentiment while a worsening of the said concerns is expected to weigh on the market,” Mr. Tantiangco added.
He put the PSEi’s support at 6,400 and resistance at 6,700.
Meanwhile, 2TradeAsia.com placed the market’s immediate support at 6,400-6,500 and resistance at 6,800. — R.M.D. Ochave
THE government’s decision to import sugar during the milling offseason is intended to keep supply stable after El Niño damaged the sugarcane crop, sugar producers said.
United Sugar Producers Federation of the Philippines President Manuel R. Lamata said dry conditions during El Niño inflicted significant damage to the cane.
The Sugar Regulatory Administration (SRA) said the most affected producing areas were Batangas, Southern Negros, and Mindanao.
During the second quarter sugar cane production dropped 42.3% year on year to 1.63 million metric tons (MMT), according to the Philippine Statistics Authority, making sugar the most affected single crop during the period.
Last week, the SRA approved imports of 240,000 metric tons (MT) of refined sugar via Sugar Order (SO) No. 5.
“Despite the relatively stable supply and prices of sugar as of end of June, the finite supply of sugar and the effect of El Niño on sugar farming necessitates pre-emptive and decisive action on the part of the government in order to ensure a reasonable and stable supply and price,” the regulator said.
As of July 21, the refined sugar inventory was 396,339 MT, down 18% from a year earlier, according to the SRA.
The volume of the proposed imports “seems right to tide us over coming harvest season this Sept. 15,” Mr. Lamata said via Viber.
SO 5 is open to importers who participated in SOs 2 and 3 who are Licensed SRA International Sugar Traders in good standing.
Mr. Lamata has said that the sugarcane harvest during the upcoming crop year will likely be delayed due to El Niño.
The government weather service, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration), declared the start of El Niño weather event in June 2023, bringing below-normal rainfall conditions, dry spells and droughts.
El Niño ended in early June 2024, according to PAGASA, but dry conditions are expected to continue.
The US Department of Agriculture projected that Philippine raw sugar production will be flat this year at 1.85 million MT due to the effects of El Niño. — Adrian H. Halili
By Justine Irish D. Tabile, Reporter
THE PHILIPPINES is deemed a potential growth market for logistics companies looking to expand in response to growth in international trade, US supply chain services company C.H. Robinson said.
C.H. Robinson Vice-President for Southeast Asia Stephen Ly told BusinessWorld that the Philippines remains a vibrant growth market for companies in the industry.
“The increased demand for freight and logistics services continues to escalate due to higher levels of international trade and exports, with the Philippine logistics industry expected to reach a market size of P1.16 trillion by 2027,” Mr. Ly said via e-mail.
“This presents a valuable opportunity for logistics companies, such as C.H. Robinson, looking to expand its operations,” he added.
C.H. Robinson recently opened a Philippine office focused on serving the Southeast Asian trade.
“C.H. Robinson has also selected the Philippines for its strategic location in Southeast Asia, which allows it to serve a wider customer base and enhance its global supply chain connectivity,” Mr. Ly said.
“With seamless connections with key trading partners like the US, Singapore, South Korea, and China, the Philippines is an ideal hub for regional and international trade,” he added.
Aside from increased trade, Mr. Ly noted that traditional trade routes are now being diverted to focus on Southeast Asia, putting the Philippines in prime position to capture growth.
“With recent geopolitical tensions across the world as well as spillover effects from the COVID-19 pandemic, companies are increasingly diversifying their production bases to Southeast Asian countries,” he said.
“This diversification strengthens the region’s role in global supply chains but also enhances its attractiveness as a manufacturing hub. As a result, these countries, including the Philippines, are experiencing a surge in foreign direct investment,” he added.
However, Mr. Ly said that the logistics industry still faces challenges such as infrastructure limitations, regulatory hurdles, and fluctuating shipping costs.
“These challenges can impact the efficiency and cost-effectiveness of logistics operations, thereby affecting the overall economy,” he said.
He described Philippine ports as inadequate, the road network congested, and inter-island connectivity limited, leading to delays and increased costs.
“These limitations not only hinder the efficient movement of goods within the country but also impact its competitiveness in the global market,” he added.
On the topic of regulatory hurdles and bureaucratic processes, he said complex customs procedures, the absence of harmonized local regulations, and tedious documentation requirements can delay cargo clearance and increase operating costs.
“These inefficiencies can deter potential investors and limit the growth of the logistics sector, ultimately affecting the country’s economic development and its ability to fully participate in regional and global supply chains,” he said.
He also noted volatile shipping costs, the result of global disruptions, as among the hurdles for logistics companies.
“With the suspension of shipping routes through the Red Sea, for instance, shipping fees are 15% more expensive for the Philippines, inflating the overall cost of goods and services in the country,” he said.
TWELVE core infrastructure projects that will develop the Luzon Economic Corridor are expected to cost P2.13 trillion, the National Economic and Development Authority (NEDA) said.
“NEDA presented 21 infrastructure projects for consideration during the meeting for the Luzon Economic Corridor in May. Of the 21, 12 have a combined cost estimate of P2.126 trillion,” NEDA Undersecretary Joseph J. Capuno said via Viber.
The 12 projects are the Subic-Clark-Manila-Batangas Railway, the Bataan-Cavite Interlink Bridge, the Subic Bay (Redondo-Ilanin) bridge, the Central Luzon Link Expressway Phase II, North Luzon East Expressway, the Laguna Lakeshore Road Network Development Phase I;
The Central Luzon Bus Rapid Transit, the Manila Bay-Pasig River-Laguna Lake Ferry System, the Kalaanan Irrigation Project, the North-South Commuter Railway, the New Clark City Extension of the railway, and the Southern Batangas Airport.
The cost of the other 9 projects has yet to be determined, Mr. Capuno said.
These include the Calamba-Batangas Railway, the Clark International Airport Infrastructure Expansion Phases I and II, the Clark Urban Transport System, the Luzon Bypass Infrastructure Project, the ICT Infrastructure of New Clark City, the New Clark City Industrial Estates, the National Food Storage Terminal, and the Poro Point Seaport Modernization.
The Luzon Economic Corridor is being undertaken via a trilateral agreement among the Philippines, US and Japan. It is part of a broader collaboration supported by the G7 Partnership for Global Infrastructure and Investment.
It aims to strengthen connectivity in key Luzon sites such as Metro Manila, Batangas, Subic and Clark.
Infrastructure linked to the proposed corridor will help bolster growth in the various locations along the corridor, NEDA Secretary Arsenio M. Balisacan said.
“There will be economies of scope (and) economies of scale in one place especially if these are supported with adequate infrastructure,” he told a briefing last week.
The government is also planning to expand the corridor further south in Luzon, Mr. Balisacan added.
“Because it’s becoming an industrial corridor, we want to connect this railway all the way to Batangas (with a) spur going to Bicol… so that the industries there are interconnected with the rest of Luzon.”
The cost of setting up railways along the proposed corridor is estimated at $7 billion, Special Assistant to the President for Investment Frederick D. Go said last month.
The steering committee for the Luzon Economic Corridor is expected to meet this month to finalize the priority projects, Mr. Capuno said. — Beatriz Marie D. Cruz
THE Energy Regulatory Commission (ERC) is hoping to complete the draft pricing mechanism for the Green Energy Auction (GEA) this month, to stay on track for the third GEA round this year.
“We’re working on the draft for posting for public consultation within the month so that we can then contribute that to the auction process of DoE (Department of Energy),” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta told BusinessWorld after a House of Representatives hearing last week.
The price determination methodology (PDM) set by the ERC that will be adopted by bidders participating in the GEA.
Ms. Dimalanta said that PDM for GEA-4 is targeted for release by the fourth quarter.
The Department of Energy (DoE) will conduct GEA-3 before the end of the year. It will involve non-feed-in-tariff (Non-FIT) eligible renewable energy technologies such as geothermal, impounding hydro, and pumped-storage hydro.
GEA-3 also covers run-of-river hydro, a FIT-eligible renewable energy technology.
The DoE will also conduct GEA-4 this year which is designed to cover integrated renewable energy and energy storage systems. It is also considering the inclusion of liquefied natural gas capacities.
“We’re still discussing with DoE because they were initially thinking they’ll just use the old price. But since it will now be integrated with energy storage, you can’t use the same price. So, we need to come out with a new pricing for GEA-4,” she said.
The GEA program aims to promote renewable energy as a primary source of energy through competitive selection.
GEA was first conducted in 2022 and attracted a total of 1,996.93 megawatts (MW) worth of renewables proposals, while GEA-2 was held in 2023, with 3,440.756 MW awarded. — Sheldeen Joy Talavera
THE Philippine Amusement and Gaming Corp. (PAGCOR) said gross gaming revenue (GGR) in the second quarter rose 32.32% to P89.23 billion due to the strong performance of electronic games (e-Games).
In a statement, PAGCOR said GGR also grew 9.21% from the first quarter.
The e-Games segment’s revenue rose 525% to P30.85 billion, PAGCOR said.
“This sector continues to surpass targets and should help cover up for any shortfall resulting from the President’s order banning offshore gaming operations or POGOs by the end of the year,” PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco was quoted as saying.
President Ferdinand R. Marcos, Jr. last month ordered a ban on all POGOs after the industry was associated with illegal activities such as money laundering and human trafficking.
Policy reforms implemented by PAGCOR last year also helped improve e-Games revenue, Mr. Tengco added.
Licensed casinos were the second-biggest contributor to GGR in the second quarter at P49.48 billion. The segment’s output was down 4.3% year on year.
Quarter on quarter, revenue from licensed casinos declined 0.4% from P49.68 billion in the three months to March.
Revenue from PAGCOR-operated casinos under the Casino Filipino brand declined 14.8% year on year to P4.20 billion. Revenue fell 10.41% from the previous quarter.
PAGCOR also noted a 19.83% year-on-year decline in revenue from bingo operations to P4.69 billion. The bingo segment was down 2.49% from a quarter earlier.
PAGCOR net income rose 121.48% to P6.56 billion in the first half.
In April, the Department of Finance raised the mandatory dividend remittance level for government-owned or -controlled corporations to the National Government to 75% of net earnings. — Beatriz Marie D. Cruz
FORTY-FIVE projects funded by official development assistance (ODA) have been identified as “Actual Problem Projects” since last year due to delays, the National Economic and Development Authority (NEDA) said.
“This represents an overwhelming majority of the ongoing ODA-funded projects in the 2023 portfolio,” NEDA said in its latest ODA Portfolio Review.
Of the 45, 22 had been “Actual Problem” status since 2021 due to issues related to right of way, procurement, and compliance with regulatory requirements.
“The situation for these ODA-funded projects was further complicated by the government’s limited fiscal space, as resources were reprioritized to address the pandemic,” according to the report.
Project delays were also attributed to inadequate appropriations for loan proceeds and insufficient government funding, it added.
Within the problem category, 30 projects amounting to P1.3 trillion were flagged as Actual Problem Projects under Alert Level II or the “critical stage,” as of the end of 2023.
The NEDA-Monitoring and Evaluation Staff (MES) also identified 15 Actual Problem Projects costing P743.41 billion which were classified under Alert Level I, known as the “early warning stage.”
“Problematic” projects are given “early warning” based on physical and financial status, cost overruns, and stages of implementation, MES officer-in-charge and assistant director Paul Andrew M. Tatlonghari told reporters on the sidelines of a briefing last week.
If no improvement is seen from the unit’s quarterly assessments, its alert level will be raised to “critical stage” status.
Agencies with Actual Problem Projects are also asked to send their catch-up plans to NEDA.
NEDA then identifies whether the project should return for reapproval to the NEDA-Investment Coordination Committee (ICC), which evaluates the fiscal, monetary and balance of payments implications to key national projects.
Problematic projects in the government’s list of Infrastructure Flagship Projects are also raised to the NEDA Board, which is headed by President Ferdinand R. Marcos, Jr.
The MES also noted 10 “Potential Problem Projects” valued at P488.91 billion and three “No Problem Projects” worth P57.65 billion.
“Delayed ODA-funded projects result in less ODA that we can expect to receive from our ODA sources and will thus mean smaller assistance that can be used for national development,” Nigel Paul C. Villarete, senior adviser on public-private partnership at Libra Konsult, Inc., said via Viber.
Last year, the ICC approved 27 out of 39 requests to restructure ODA-funded projects. Most of these came from the Department of Transportation (DoTr) with eight projects, Department of Health with five, and the Department of Public Works and Highways (DPWH) with seven.
A total of 12 requests for restructuring are currently being processed as of December, it said.
Around 26 projects are expected for restructuring this year, mostly due to implementation period or loan/grant validity extensions or changes in cost, according to NEDA.
The bulk of these projects will be constructed by the DPWH and the DoTr, with nine each. — Beatriz Marie D. Cruz
By John Victor D. Ordoñez, Reporter
THE GOVERNMENT must work on improving the tourist experience at the country’s airports and immigration counters to develop the tourism industry, economists said, as the Senate debates a value-added tax (VAT) refund mechanism for visitors.
Foundation for Economic Freedom President Calixto V. Chikiamco said developing health facilities in tourist spots and doing away with cumbersome immigration processes will likely help the tourism industry grow more than tax rebates, since many visitors don’t come here to shop.
“Government would be better off focusing on improving tourism infrastructure and access,” he said via Viber.
“Improving tourists’ experience with our airports and immigration, making sure that there are health facilities in tourist spots, and visa waivers for certain nationalities would do more to improve tourism than giving tourists tax rebates on their purchases,” he said.
Senators have started floor debate on Senate Bill No. 2415, which aims provide non-resident tourists VAT refunds for purchases worth at least P3,000, to encourage more visitor spending.
The House of Representatives approved its version of the measure on third and final reading on March 6, 2023.
The Department of Tourism (DoT) is targeting 7.7 million international tourist arrivals this year.
As of Aug. 7, the Philippines has received 3.62 million inbound visitors, with 92% of them foreigners, the DoT said in statement on Aug. 8.
“It is important to align with the best practices of other neighboring countries or other countries around the world on the effective implementation of tax refunds or tax-free purchases for foreign tourists,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via Viber.
Under the bill, the Secretary of Finance upon the recommendation of the Internal Revenue commissioner and the Tourism secretary, is authorized to adjust the P3,000 threshold based on inflation, administrative costs, and other market conditions.
Maria Eleanor L. Roque, tax principal of P&A Grant Thornton, said that if the bill is passed, the government must ensure only tourists avail of the refund and ensure the strict inspection of products bought.
“The VAT refund mechanism will encourage tourists to buy goods here in the Philippines because it can be cheaper to buy here compared to other countries with no refund mechanism,” she said via Viber message.
Roehlano M. Briones, a senior research fellow at the Philippine Institute for Development Studies, said the measure is unlikely to boost VAT collections.
“It will marginally boost tourist spending but not VAT collections,” he said via Viber.
Visitor spending was estimated at P323.68 billion in the first seven months, according to the DoT, exceeding the year-earlier total of P285.99 billion.
South Korea topped the list of visitor source countries with 960,809 arrivals, followed by the US with 590, 891.
IN BRIEF:
• Despite headwinds, 55% of APAC CEOs feel optimistic about their company’s revenue growth and 61% remain confident in profitability.
• The green imperative has moved from mere lip service to priority, with nearly half (49%) of CEOs now seeing it as more critical than a year ago.
• More than half (54%) of Asia-Pacific CEOs target mergers and acquisitions, far surpassing their counterparts in the Americas (36%) and Europe (40%).
The convergence of market dynamics, policy changes, and geopolitical tensions is forging a wave of cautious optimism among Asia-Pacific businesses. Following a period of spiraling costs of business and a significant drop in mergers and acquisitions (M&A) to multiyear lows in the region, the persistent challenges in the economy and of geopolitical uncertainties have dampened earlier expectations of faster recovery. Initially brimming with bullishness in early 2024, CEOs and investors are now recalibrating their forecasts to consider a more conservative view.
Reflecting the region’s more measured outlook, the Philippines earlier revised its own GDP growth forecast to a more conservative 6-7%, down from the previous 6.5-7.5% projection. The National Economic and Development Authority (NEDA) also raised the budget deficit ceilings until 2028 to provide greater flexibility in funding government infrastructure programs.
Despite these headwinds, 55% of CEOs feel optimistic about their company’s revenue growth, and 61% remain confident in their profitability, as revealed by the latest 2024 EY CEO Outlook Pulse survey.
The report surveyed 340 CEOs and 100 institutional investors across Asia-Pacific and found that CEOs are reworking their strategic playbooks. From mere business expansion goals a year ago, businesses in the region are now zeroing in on strategic investments in innovation and sustainability to achieve long-term resilience and better prepare for the future.
However, while investors are keen to support genuine sustainability efforts, they also demand strategies that deliver long-term financial value. Achieving both the desired sustainability impact and positive financial benefits remains crucial to both CEOs and investors.
Here are the key findings from the survey, providing salient insights for Philippine businesses.
COMPETITIVE EDGE THROUGH TECHNOLOGY AND SUSTAINABILITY
With AI’s potential to boost productivity and provide a competitive edge, over a third (39%) of Asia-Pacific CEOs are prioritizing advanced technology, including AI, in their strategies for the next 12 months.
To navigate the complexities of the digital landscape and ensure they reap the full benefits of advanced technology, 35% of CEOs are also focusing investments in data management and robust cybersecurity. Over two-thirds of CEOs (68%) and investors (70%) believe that technology and AI can seamlessly bridge short-term financial goals with long-term sustainability.
Meanwhile, over the next three years, CEOs are focusing their agenda on sustainability, with 49% of CEOs now seeing it as even more critical than a year ago.
This shift to prioritize the green imperative rather than pay mere lip service is fueled by rising consumer demand for sustainable practices that extend beyond the point of sale. While consumers may balk at a “green premium,” they still expect companies to implement comprehensive sustainability strategies across their supply chains.
STRONGER PUSH FOR GREATER GOVERNMENT ACTION
Asia-Pacific CEOs and investors stress the need for governments to take coordinated and consistent action to combat climate change, calling for greater infrastructure investment to spur regional growth and support the energy transition.
A key barrier they emphasized is the region’s lack of sophisticated public-private partnerships and innovative funding models.
While many Asia-Pacific CEOs are pleased with current government infrastructure efforts, a vocal minority calls for more robust actions. They see subsidies, tax incentives, and direct investments as crucial for regional growth and energy transition, whereas mandatory reporting standards and financial penalties are less favored.
Moreover, Asia-Pacific CEOs show willingness to accept tighter profit margins and higher costs to protect domestic manufacturing, though their commitment to such sacrifices is more cautious compared to leaders in other regions.
M&AS TO ACCELERATE TRANSFORMATION
Asia-Pacific CEOs are seizing new opportunities through mergers, acquisitions, divestitures, and strategic alliances to advance their transformation agendas.
Nearly all (99%) are planning or considering transactions this year, with 54% targeting mergers and acquisitions, far surpassing their counterparts in the Americas (36%) and Europe (40%).
To ensure that sustainability is not just a box to tick but a core component of their strategic growth plans, companies are embedding sustainability considerations into their M&A framework. This forward-thinking approach aligns with the triple bottom line principle, balancing people, planet, and profit for long-term success.
THREE STRATEGIC ACTIONS
The following are strategic actions CEOs can take to balance immediate productivity and profitability goals with long-term imperatives to ensure sustainable business growth and climate action alignment:
Strength in numbers. By working together, e.g., by way of partnerships or strategic collaboration — particularly given the continuing challenges in the market — companies can have better access to the necessary funding and support from investors and governments to accelerate their transition toward more sustainable operations.
Pursue public-private partnerships. When governments are deciding sustainability policy, CEOs, as key stakeholders, must actively engage with them. They are well-informed and ideally placed to advise on the most effective mechanisms to support policy objectives while minimizing economic downsides.
Tell a better story. Investors are broadly positive about the outlook for dealmaking. However, they emphasize the need for companies to articulate why acquisition returns will surpass organic investments. They also want to see how integrated sustainability initiatives drive long-term value.
Given the need for APAC CEOs to balance short-term productivity and profitability with longer-term imperatives, close collaboration and dialogue between companies, investors and governments will be key to sustaining economic growth while also addressing climate risk concerns.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Noel P. Rabaja is the strategy and transactions leader of SGV & Co.
PHILIPPINE President Ferdinand R. Marcos, Jr. on Sunday condemned the Chinese Air Force’s “illegal and reckless” attacks on a Philippine military plane patrolling over a traditional fishing ground in the South China Sea that is within Manila’s exclusive economic zone (EEZ).
The Philippine Air Force (PAF) aircraft was undertaking a routine maritime security operation in “Philippine sovereign airspace,” the Philippine president palace said in a statement after the military reported that Chinese fighter jets had fired flares into the path of its plane patrolling over Scarborough Shoal.
“The actions of the People’s Liberation Army-Air Force aircraft were unjustified, illegal and reckless,” the palace said. Mr. Marcos “stands by our brave men and women of the Armed Forces of the Philippines, especially the PAF.”
“We have hardly started to calm the waters, and it is already worrying that there could be instability in our airspace,” it said. “The Philippines will always remain committed to proper diplomacy and peaceful means of resolving disputes.”
It urged China to “demonstrate that it is fully capable of responsible action, both in the seas and in the skies.”
The Philippine military on Saturday said China’s air force conducted “dangerous and provocative actions” on Thursday against one of its planes patrolling over Scarborough, a traditional fishing ground in the South China Sea that China has controlled since 2012.
Military chief Romeo S. Brawner, Jr. said Chinese fighter jets, which fired flares into the path of the PAF plane, “endangered the lives of our personnel undertaking maritime security operations.”
The Chinese fighter jets “interfered” with lawful flight operations and “contravened” international rules on navigation safety, he said in a statement.
The Philippine Air Force pilot and crew were unharmed and safely returned to an air base in northern Philippines.
Philippine Senate President Pro-Tempore Jose “Jinggoy” P. Estrada, Jr. said the Chinese Air Force acts violated international law, calling it “reckless and provocative.”
“This recent incident is a blatant violation of international aviation safety standards and the rights of all nations to carry out lawful maritime operations,” he said in a statement.
“We will not be intimidated,” Mr. Estrada said. “We will continue to defend our sovereignty with resolve and determination while remaining committed to upholding the rule of law and promoting peace in the region.”
He urged the Chinese government to stop its aggression in the waterway, saying Beijing should follow international law.
The Chinese side on Saturday said it “organized naval and air forces to lawfully” drive away the Philippine plane after “repeated warnings,” describing its operations as “professional, standard, legitimate and legal.”
“We warn the Philippine side to immediately stop its infringement, provocation, distortion and hype,” the Chinese People’s Liberation Army’s Southern Theater Command said in a statement, accusing the Philippine military of “disturbing” its activities in the area.
Confrontations between the two nations in the South China Sea have mostly involved their navy and coast guard vessels.
The Philippine military said it had reported the incident to the Department of Foreign Affairs and other agencies.
“We reaffirm our commitment to exercise our rights in accordance with international law, particularly UNCLOS (United Nations Convention on the Law of the Sea) and the Chicago convention.”
China has controlled Scarborough, which falls within the Philippines’ exclusive economic zone but is also claimed by several other countries, in 2012 after maintaining constant coast guard presence there, according to the Asia Maritime Transparency Initiative.
It is 240 kilometers west of the main Philippine island of Luzon and nearly 900 kilometers from Hainan, the nearest major Chinese landmass.
China claims almost the entire South China Sea, including parts claimed by the Philippines, Brunei, Malaysia, Taiwan and Vietnam.
‘SAFETY OF NAVIGATION’
The Chinese Air Force’s acts happened a day after Beijing conducted a combat patrol near Scarborough Shoal to test its troops’ “strike capabilities.”
Mr. Marcos has pursued closer security ties with the United States and other Indo-Pacific powers amid China’s increasing expansionism.
The naval and air force units of the Philippines, US, Canada and Australia held war games within the Philippines’ EEZ on Aug. 7 and 8, which the countries said were in line with international law and the “safety of navigation and the rights and interests of other states.”
The four nations reaffirmed a 2016 arbitral award that voided China’s expansive claims in the South China Sea as a “final and legally binding decision,” and cited their commitment to uphold a “rules-based” order.
The drills came days after the Philippine military said at least 122 Chinese ships including a research vessel and the world’s largest coast guard ship had been operating in Philippine waters from July 30 to Aug. 4, up from 104 a week earlier.
The country recently held two separate bilateral joint sails with the US and Japan. The three countries along with Australia held similar sails last year.
In June, Canada joined a maritime cooperative activity with the Philippines, the US and Japan, which sealed a reciprocal access agreement with Manila in July. The Philippine Senate has yet to approve the deal.
Canada, which has given the Philippines access to its dark vessel detection technology, is also eyeing a military deal with Manila.
Philippine Navy spokesman for the West Philippine Sea Roy Vincent T. Trinidad on Aug. 6 said China has reclaimed 3,000 hectares within the Philippine EEZ. He said Beijing has transformed Subi, Mischief and Johnson reefs into major military bases.
The Philippine fishery has inspected China-occupied Subi Reef aerially, detecting several high-rise buildings and an airstrip.
Subi, which is just 12 nautical miles from the Philippine-occupied Thitu Island, is one of the three largest man-made islands built by China within the Philippine EEZ. The others are Fiery Cross Reef and Mischief Reef. — Kyle Aristophere T. Atienza and John Victor D. Ordoñez
