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Japan PM Kishida to step down as scandals prove too much

JAPAN’s Prime Minister Fumio Kishida stands next to Japan’s national flag at a news conference in Tokyo, Japan, March 3, 2022. — REUTERS

TOKYO — Japanese Prime Minister  (PM) Fumio Kishida said he will step down in September, ending a three-year term marred by political scandals and paving the way for a new premier to address the impact of rising prices.

“Politics cannot function without public trust,” Mr. Kishida said in a press conference on Wednesday to announce his decision not to seek re-election as the Liberal Democratic Party (LDP) leader.

“I will now focus on supporting the newly elected LDP leader as a rank-and-file member of the party,” he said.

His decision to quit triggers a contest to replace him as president of the party, and by extension as the leader of the world’s fourth-biggest economy.

Mr. Kishida’s public support has been sliding amid revelations about the LDP’s ties to the controversial Unification Church and political donations made at party fundraising events that went unrecorded.

But he also faced public discontent over the failure of wages to keep track with the rising cost of living as the country finally shook off years of deflationary pressure.

“An LDP incumbent prime minister cannot run in the presidential race unless he’s assured of a victory. It’s like the grand champion yokozunas of sumo. You don’t just win, but you need to win with grace,” said Koichi Nakano, political science professor at Sophia University.

Who ever succeeds Mr. Kishida as the head of the LDP will have to unite a fractious ruling group and tackle the rising cost of living, escalating geopolitical tensions with China, and the potential return of Donald Trump as US president next year.

COVID TO INFLATION
As the country’s eighth-longest serving post-war leader, Mr. Kishida led Japan out of the COVID pandemic with massive stimulus spending. He also appointed Kazuo Ueda as head of the Bank of Japan (BoJ), an academic tasked with ending his predecessor’s radical monetary stimulus.

The BoJ in July unexpectedly raised interest rates as inflation took hold, contributing to stock market instability and sending the yen JPY — sharply lower.

Mr. Kishida’s departure could mean tighter fiscal and monetary conditions depending on the candidate, according to Shoki Omori, chief Japan desk strategist at Mizuho Securities in Tokyo.

“In short, risk-assets, particularly equities, will likely be hit the most,” he said.

In another break from the past, Mr. Kishida also eschewed corporate profit-driven trickle-down economics in favor of policies aimed at boosting household incomes, including wage hikes and promoting share ownership.

DEFENSE SPENDING
Despite that departure on the economy, he stuck with the hawkish security policies of predecessor Shinzo Abe, who was assassinated in 2022.

He unveiled Japan’s biggest military buildup since World War   II with a commitment to double defense spending aimed at deterring neighboring China from pursuing its territorial ambitions in East Asia through military force.

With prodding from Washington, Mr. Kishida also mended Japan’s strained relations with South Korea, enabling the two countries and their mutual ally, the U.S., to pursue deeper security cooperation to counter the threat posed by North Korea’s missile and nuclear weapons programs.

“Under Prime Minister Kishida’s steadfast leadership, Japan and the United States have ushered in a new era of relations for the Alliance,” US Ambassador Rahm Emanuel said in a post on X, formerly known as Twitter. — Reuters

Canadian official says temporary foreign worker program needs reform

A PERSON stands in front of a Canadian flag in Montreal, Quebec, Canada, Sept. 20, 2022. — REUTERS

TORONTO — Canada’s temporary foreign worker program is not fatally flawed but is “in need of reform,” the country’s immigration minister told Reuters on Tuesday, following a damning United Nations (UN) report that dubbed the program a breeding ground for modern slavery.

The program brings non-Canadians to the country to work on a temporary basis. Ostensibly meant to fill labor shortages, it has grown dramatically and has come under fire for suppressing wages and leaving workers vulnerable to abuse.

The low-wage temporary foreign worker stream, especially, “is one that we need to take a more careful look at,” Immigration Minister Marc Miller said.

Its ranks have grown dramatically — from 15,817 in 2016 to 83,654 in 2023, thanks in large part to expansions in 2022.

Among other things, these expansions increased the share of employers’ workforces that could be low-wage temporary foreign workers, and the change waived a rule precluding the hiring of temporary foreign workers in certain low-wage occupations in regions with unemployment rates of 6% or higher.

Labor Minister Randy Boissonnault is considering “a refusal to process in the low wage stream if the abuse and misuse does not improve,” said labor ministry spokesperson Mathis Denis.

But “even when the program is working as intended and there’s no abuse, the low-wage stream absolutely suppresses wages. It’s kind of designed to,” said economist Mike Moffatt, senior director at the Smart Prosperity Institute.

If it were up to him, he said, he would end the low-wage stream entirely. “I don’t think employers have some constitutional right to low-wage workers.”

The United Nations Special Rapporteur on contemporary forms of slavery said in a report last week that Canada’s “Temporary Foreign Worker Program serves as a breeding ground for contemporary forms of slavery.”

Problems cited included underpayment and wage theft and physical, emotional and verbal abuse. The report also noted that workers struggle to access healthcare.

Reducing the number of temporary residents, as Canada plans to do, will not address problems making these migrants vulnerable, the special rapporteur found.

“The structural precarity for temporary foreign workers would be mitigated by systematically providing workers with a pathway to permanent residence,” the report said.

Mr. Miller called the slavery characterization “inflammatory.”

“It’s not to deny the allegations in some of the cases that are occurring and abuses that are occurring in Canada … It’s not right when there are abuses, and there are abuses.”

But “I think it’s unfair to employers that employ people and treat them well to call them the equivalent of slave owners.” — Reuters

FBI told Harris campaign it was target of ‘foreign actor influence operation,’ official says

UNITED STATES VICE PRESIDENT Kamala Harris speaks at her Presidential Campaign headquarters in Wilmington, Delaware, US, July 22, 2024. — ERIN SCHAFF/POOL VIA REUTERS

WASHINGTON — Vice President Kamala Harris’ presidential campaign said it was notified by the Federal Bureau of Investigation (FBI) last month that it was “targeted by a foreign actor influence operation,” a campaign official said on Tuesday.

“We have robust cybersecurity measures in place, and are not aware of any security breaches of our systems resulting from those efforts,” the official said, adding that the campaign remains in communication with authorities.

The FBI did not immediately respond to a request for comment.

The bureau said on Monday that it was investigating after Republican rival Donald Trump’s presidential campaign said that it had been hacked.

The Trump campaign blamed Iran and pointed to a Friday report from Microsoft  researchers that indicated that Iranian government-tied hackers tried breaking into the account of a “high-ranking official” on a US presidential campaign in June.

The Iranian government has denied hacking the Trump campaign. — Reuters

McDonald’s France jokes about scrapping curry sauce after loss to Team USA

INSTAGRAM.COM/MCDONALDSFRANCE

PARIS — McDonald’s France said it is considering taking curry sauce off its menus until the next Olympics in a joke protest over US basketball team captain Stephen Curry, whose last-gasp heroics denied France gold at the Paris Games.

“For obvious reasons, we are thinking about withdrawing this sauce,” the fast-food chain said on Instagram, over a picture of a mini-pot of “classic curry” sauce and a headline saying “for at least four years.”

Keeping up the online banter, the global X account of the US fast food giant replied: “Oui’ll take the curry sauce if u don’t want it @McDonaldsFrance,” in a play on the French word for “yes,” which sounds like “we.”

“It’s a joke and a wink in reference to Stephen Curry’s extraordinary game last Saturday against France,” a McDonald’s France spokesman said. — Reuters

EXPLAINER | Cybersecurity 101: What are white hat hackers?

What are white hats, and how can they strengthen the country’s cybersecurity posture?

Learn more about ethical hacking in this Explainer with Renne N. Barcelona, IBM Consulting’s country leader for cybersecurity services in the Philippines.

Interview by Patricia Mirasol
Editing by Jayson John D Marinas

Get Ready for Jollibee’s Chickenjoyest: Best-Tasting na, Biggest pa

Jollibee, the Philippines’ most beloved fast-food chain, is thrilled to announce that the best-tasting Chickenjoy is now at its biggest! Still priced at only P82, the iconic Chickenjoy delivers the ultimate fried chicken experience by combining the classic Jollibee superior taste with large size for unbeatable value. Ito ang Chickenjoyest!

The Chickenjoyest Experience: Best-Tasting na, Our Biggest Pa!

Jollibee Chickenjoy remains to be the best-tasting fried chicken, with every piece cooked to ensure it is crispy on the outside and juicy on the inside. The classic taste and texture of Jollibee Chickenjoy has always been the top choice for fried chicken lovers, and it’s now even more irresistible with its bigger size.

“We are incredibly excited to celebrate this moment with our loyal Chickenjoyers,” said Luis Berba, Jollibee Philippines Marketing Director for Masterbrand, Chickenjoy and Beverages. “The best-tasting Chickenjoy is now at its biggest, crafted to deliver even more joy with every bite. This is our way of showing our continued commitment to providing the best Jollibee experience, and it’s all for you — our beloved and valued customers who have made Chickenjoy a staple in their homes. Ito ang Chickenjoyest!”

Celebrate with Us: The Chickenjoyest Celebration with Anne Curtis, Joshua Garcia, and Belle Mariano

To mark this exciting launch, Jollibee is kicking off the Chickenjoyest celebration with a new ad featuring Anne Curtis, Joshua Garcia and Belle Mariano. Click on the link below to witness the joy and excitement of enjoying the Chickenjoyest celebration.

Join the Celebration and Get Your Chickenjoyest Today!  

Don’t miss out on the Chickenjoyest experience. Visit your nearest Jollibee store to join the celebration and enjoy the best-tasting and now the biggest Chickenjoy ever. You can also have it safely delivered to you via the Jollibee Delivery App, JollibeeDelivery.com, #87000, GrabFood, and foodpanda. Also available in Drive-Thru and Take Out.

For more information and updates on Jollibee products, like Jollibee on Facebook, subscribe to Jollibee Philippines on YouTube, and follow @jollibee on Instagram, and TikTok.

 


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Japan must promote wage, investment growth, says PM Kishida

 – Japanese Prime Minister Fumio Kishida said on Wednesday the government must continue to promote growth in wages and investment for the economy to make a full exit from deflation.

Mr. Kishida said one of his administration’s achievements had been to lay the groundwork for pulling Japan fully out of deflation.

“In order to fully emerge from a deflation-prone economy, we must accelerate wage and investment growth, and ensure we achieve our goal to expand Japan’s gross domestic product to 600 trillion yen ($4.10 trillion),” Mr. Kishida told a news conference.

Mr. Kishida made the remark at a news conference where he said he would step down as ruling party leader and not run in the party’s leadership race expected in September. – Reuters

UAW accuses Trump, Musk of trying to intimidate workers in labor complaints

By The logo is from the following website: uaw.org PDF file (archive URL: https://web.archive.org/web/20220620182049/https://region9a.uaw.org/system/files/winter_2020_uaw.pdf), Fair use, https://en.wikipedia.org/w/index.php?curid=71085736

 – The United Auto Workers Union said on Tuesday it has filed complaints with the National Labor Relations Board against Donald Trump and Tesla CEO Elon Musk over attempts to threaten and intimidate workers.

It is unclear whether the NLRB would take action against Mr. Trump for his comments on Monday during a two-hour conversation with Mr. Musk that was broadcast on social media platform X.

The UAW seized upon Mr. Trump’s remarks as the union rallies behind Democratic presidential candidate and Vice President Kamala Harris and encourages its nearly 400,000 workers to vote for her over Mr. Trump. The issue is especially pertinent in battleground states like Michigan which could determine who wins the White House in November. The UAW endorsed Ms. Harris at the end of July.

“You’re the greatest cutter,” Mr. Trump said to Mr. Musk during Monday’s conversation, complimenting the CEO’s ability to cut costs by saying he would not tolerate workers going on strike. “I mean, I look at what you do. You walk in, you just say: ‘You want to quit?’ They go on strike – I won’t mention the name of the company – but they go on strike. And you say: ‘That’s okay, you’re all gone.'”

Mr. Musk chuckled but did not respond to Trump’s comments, making it harder for the NLRB to find him liable for making illegal threats to workers at his companies, said Wilma Liebman, chair of the NLRB under former President Barack Obama.

Under federal law, workers cannot be fired for going on strike, and threatening to do so is illegal under the National Labor Relations Act, the UAW said in a statement.

After the union’s action on Tuesday, Musk criticized UAW President Shawn Fain in a social media post, alluding to two past union presidents who went to prison for bribery and corruption. “Based on recent news, it looks like this guy will join them!” Mr. Musk said.

A court-appointed monitor of the UAW is investigating several union executives, including allegations that Mr. Fain retaliated against a member of his board when the person did not take actions that would have benefitted Fain’s domestic partner and her sister. The UAW could not immediately be reached to comment on Musk’s response.

Mr. Trump campaign officials said his pledged 100% tariff on Chinese imports would strengthen the industry, while Harris’ EV policies are hurting American manufacturing.

“This frivolous lawsuit is a shameless political stunt intended to erode President Trump’s overwhelming support among America’s workers,” Mr. Trump campaign senior adviser Brian Hughes said in a statement.

The Harris campaign did not immediately respond to requests for comment after the UAW’s action.

Mr. Fain and Mr. Trump have exchanged barbs in the past.

“Both Trump and Musk want working class people to sit down and shut up, and they laugh about it openly. It’s disgusting, illegal, and totally predictable from these two clowns,” Mr. Fain said in a statement on Tuesday.

Mr. Trump has called for the union leader to be fired, saying he is responsible for US auto manufacturing becoming weaker.

UAW members in Michigan tend to side with Democrats, but pro-Trump workers have organized their own rallies in recent weeks.

In the 2020 presidential race, 62% of Michigan households with a union member voted for President Joe Biden, helping him win the state, according to Edison Research. By contrast, union households split 53% to 40% for Hillary Clinton in 2016, when she narrowly lost the state and the national race.

Sean O’Brien, president of the Teamsters, another key labor group, said of Trump’s comments, “Firing workers for organizing, striking, and exercising their rights as Americans is economic terrorism.”

The Teamsters have traditionally endorsed a candidate after party conventions. O’Brien spoke at the Republican National Convention in Milwaukee in July.

The union had also requested a speaking opportunity at the upcoming Democratic National Convention but it had not heard back, spokesperson Kara Deniz said. It had also invited Harris to a roundtable but had not heard back.

 

SENDING A MESSAGE

The NLRB has limited power to punish unlawful labor practices and the process often lasts years. In cases involving illegal threats, the board can order employers to cease and desist from such conduct and to post notices in the workplace informing workers of their rights. Unions can also use favorable rulings from the NLRB to engage workers they are trying to organize.

“Everyone knows the NLRB remedies are toothless to start with, but it’s not so much for the remedy as for sending both a political message and an organizing message,” former NLRB head Liebman said, referring to the UAW’s action on Tuesday.

Mr. Fain filed separate complaints with the NLRB against the Mr. Trump campaign and Tesla citing Mr. Trump and Mr. Musk as the employers’ representatives, claiming both men had made statements suggesting they “would fire employees engaged in protected concerted activity, including striking.” The complaints did not provide further detail.

The NLRB has jurisdiction over the Trump campaign as an employer, but not Mr. Trump himself.

The UAW led a six-week strike against Detroit’s Big Three automakers last autumn, before winning record contracts.

 

MUSK AND THE NLRB

Mr. Musk, who has endorsed Trump for president, has had numerous run-ins with the labor board. His rocket company SpaceX is currently challenging the entire structure of the agency in a pair of pending lawsuits. Those cases stemmed from NLRB complaints accusing SpaceX of firing engineers who were critical of Musk and forcing employees to sign severance agreements with unlawful terms.

In March, a US appeals court upheld an NLRB decision that said Mr. Musk illegally threatened Tesla employees by tweeting in 2018: “Nothing stopping Tesla team at our car plant from voting union … But why pay union dues & give up stock options for nothing?”

Tesla is separately facing allegations from the board that it illegally discouraged unionizing at a Buffalo, New York, plant. – Reuters

Sustainable investments for a sustainable future

SM Prime Holdings and SM Development Corp. Lead Executive for Design, Innovation and Strategy Jessica Bianca ‘Jica’ Sy discusses the role of sustainable investments towards a sustainable future, as one of the esteemed speakers during the Philippine Institute of Certified Public Accountants (PICPA) forum.

The SM Group emphasized the importance of sustainable investments in fostering a greener future at a recent forum organized by the Philippine Institute of Certified Public Accountants (PICPA).

“At SM, we believe that securing a better future for generations to come hinges on our commitment to innovative solutions and projects that embody sustainability principles. Sustainable investments play a crucial role in this endeavor,” remarked Jessica Bianca ‘Jica’ T. Sy, Lead Executive for Design, Innovation and Strategy of SM Prime Holdings, Inc. and SM Development Corp. (SMDC).

As the group aligns its investments with the Sustainable Development Goals (SDGs), Ms. Sy highlighted that investment decisions at SM prioritize Environmental, Social, and Governance (ESG) factors, focusing on pursuing investments that conserve nature.

SM’s initiatives address key environmental issues including climate change, pollution, deforestation, energy efficiency, and waste management.

Environmental Stewardship

SM is committed to reducing its environmental footprint while fostering economic growth. The group has adopted renewable energy solutions, sourcing 25% of its electricity from renewable sources and recycling 14.2 million cubic meters of water in 2023. SM Prime Holdings, Inc., the property arm of SM, managed 165.7 million tons of waste last year, with 92.7 million tons properly disposed of, 13% recycled, and 5% composted.

Through SM Cares, a division of SM Foundation, Inc., the company engaged over 17,000 volunteers in the International Coastal Clean-up 2023, removing 100,432 kilos of trash from 15 malls nationwide. This effort reinforces SM’s dedication to a greener future and a culture of volunteerism.

In an effort to further protect flora and fauna, SM, through Hamilo Coast, its premier resort development, declared three of its 13 coves — namely Santelmo, Etayo, and Pico De Loro are recognized as marine protected areas (MPAs).

These coves form part of the Coral Triangle, where 75% of the world’s coral species are found. The Coral Triangle houses 600 different coral species, over 2,000 different types of reef fish and over 120 million people, which includes the waters of Indonesia, Malaysia, Papua New Guinea, the Philippines, Solomon Islands, and Timor Leste.

ESG+R Principles

SM Prime Holdings and SM Development Corp. Lead Executive for Design, Innovation and Strategy Jessica Bianca ‘Jica’ Sy shares her insights on the topic “Corporate Finance as Catalyst for Social Impact and Environmental Sustainability.”

SM Prime integrates rigorous ESG+R (Environmental, Social, Governance + Resiliency) principles into its sustainable initiatives. “While ESG principles are well-known, ‘R’ stands for resiliency, guiding our investments to address climate risks and enhance disaster preparedness,” Ms. Sy explained. Currently, at least 10% of SM Prime’s capital expenditure is allocated to sustainable and resilient designs, including science-based solutions to mitigate natural disaster impacts on properties. 

SM City Marikina is a prime example of disaster resilience, having withstood Tropical Storm Ondoy in 2009. The mall is elevated 20 meters beyond standard regulations and supported by 246 stilts.

SM manages 23 malls with water catchment facilities that keep nearby communities safe from flooding and prevent overloading of current infrastructure systems. The malls also serve as a refuge during calamities.

SMDC, SM Prime’s residential arm, also prioritizes climate resilience. Vine Residences in Novaliches, elevated three meters above ground level, is designed to protect against flooding while preserving local vegetation.

“At SMDC, we prioritize climate resilience in home development. For nearly three decades, we’ve made home ownership accessible with our goal, A Home for Every Filipino,” Ms. Sy affirmed. In 2022, SMDC achieved at least 50% renewable energy usage, with 12.67 megawatts of solar panels installed in homes.

“Community building is central to our values, guiding all our projects towards a resilient future,” she added.

 


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Harris to target price gouging in first policy speech in North Carolina

KAMALA HARRIS — GAGE SKIDMORE/WIKIMEDIA.ORG

 – US Vice President Kamala Harris will make her first policy-centered speech as Democratic presidential candidate on Fridaytaking aim at price gouging, in a sign her whirlwind campaign could rattle big companies and corporate executives.

Ms. Harris will travel to Raleigh, in North Carolina, a state Democrats hope to flip this election, to outline her plan “to lower costs for middle-class families and take on corporate price-gouging,” her campaign said on Tuesday.

Ms. Harris canceled an event in North Carolina last week because of Tropical Storm DebbyFocusing her first major policy speech on the economy, and locating it in North Carolina shows how her campaign has revived Democrats’ hopes of flipping a state they have only won twice in the last half-century.

With less than three months before the Nov. 5 election when she takes on Republican Donald Trump, Ms. Harris has drawn new enthusiasm and dollars to the ticket after President Joe Biden stepped aside, and seen polls swing in her favor in some states.

Her campaign sees states like Pennsylvania as a must-win, but North Carolina is more of a reach. Mr. Biden lost the state to Mr. Trump by a 1.3% margin – just 74,000 votes, but his prospects there were dim before he stepped down on July 21.

 

TARGETING CORPORATE GREED

Ms. Harris’ speech will be closely watched to see how her style or substance differs from Mr. Biden, whose economic policies received low marks from voters angry about the cost of housing, medicine, groceries and gasoline.

On Saturday, Ms. Harris announced her support for eliminating taxes on tips, a position similar to Mr. Trump’s. Ms. Harris will hold a White House event with Mr. Biden on Thursday that is expected to focus on healthcare costs.

Mr. Biden has blamed corporate greed for still-elevated prices, accusing companies of boosting profits by shrinking portion sizes and by failing to pass on falling costs to consumers.

Big consumer goods companies have hiked prices in recent quarters, and food prices have risen 25% between 2019 and 2023.

Ms. Harris policed “corporate greed and price gouging” when she was California’s attorney general from 2011 through 2016, challenging pharmaceutical, oil, electronics and cosmetics companies, a campaign official said.

Ms. Harris “knows costs are too high and will make tackling inflation a ‘Day One’ priority,” added the official who declined to be identified speaking about the event beforehand.

The approach marks a striking difference from Mr. Trump, who has argued that loosening regulations on industries from finance to energy will lower costs and spur growth.

Nationally, Ms. Harris was ahead of Mr. Trump by five percentage points, 42% to 37%, in an Ipsos poll published on Thursday, widening her lead from a July 22-23 Reuters/Ipsos survey. – Reuters

‘More room to stay tight,’ BSP says

PEOPLE walk past a mall in Taguig City. — PHILIPPINE STAR/WALTER BOLLOZOS

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) on Tuesday said there is “more room to stay tight” after better-than-expected gross domestic product (GDP) growth in the second quarter.

“The 6.3% (GDP growth)… there’s more room to stay tight, right? But there are many factors,” BSP Governor Eli M. Remolona, Jr. told reporters on the sidelines of a Development Budget Coordination Committee briefing at the Senate.

“It’s not like the United States, their economy is weaker. They’re more inclined to ease. That’s just one number. We will look at all (the numbers),” he said in mixed English and Filipino.

The Philippine economy expanded by 6.3% in the second quarter, faster than 5.8% in the previous quarter and 4.3% a year ago. This was also the fastest growth in five quarters or since 6.4% in the first quarter of 2023.

“We look at all the components. Our models take into account different components of GDP,” Mr. Remolona added.

The BSP chief said the latest GDP performance “helps” the case for keeping rates steady as the risk of a hard landing is lessened.

“In the US, the risk for a hard landing is higher, but I also now see less of a hard landing in the US,” he added.

The Monetary Board is set to meet on Thursday for its third-to-the-last policy review for the year.

A BusinessWorld poll conducted last week showed that nine of 16 analysts surveyed expect the Monetary Board to deliver a 25-basis-point (bp) rate cut this week.

During the hearing, Mr. Remolona told senators the 6.5% benchmark rate is “tight.”

“It’s tight because we are trying to tame inflation… the direction is to of course eventually ease monetary policy, which means lower policy rate. So, we intend to ease when the conditions are right… when we feel inflation has been tamed.”

Mr. Remolona said the BSP does not want to keep rates high for an “unnecessarily” long time because this could lead to loss of output.

“As soon as we feel inflation is on the way to our target range, we will have room to ease the policy rate,” he added.

Headline inflation accelerated to 4.4% in July, the fastest in nine months. It also ended seven straight months of inflation settling within the central bank’s 2-4% target.

The BSP earlier said the spike in July inflation is temporary, and that inflation should return to target from August onwards.

For the rest of the year and until 2025, inflation should ease further and settle within target, Mr. Remolona said.

“We are relieved that monetary policy has evidently helped to tame inflation. This is reflected in our inflation projections… We expect average inflation to fall within our target range of 2-4% in 2024 and 2025,” he said.

The BSP expects inflation to average 3.3% this year and 3.1% in 2025. For the first seven months, headline inflation averaged 3.7%.

“We used to think we could ignore supply shocks because they would eventually dissipate. The hard lesson is large supply shocks change inflation expectations, which lead to inflationary second-round effects,” Mr. Remolona added.

Finance Secretary Ralph G. Recto, who is also a Monetary Board member, said he expects policy easing to begin soon.

“As far as my expectations are concerned, I think policy rates are going to be on the way down,” he said.

“It may be tomorrow, it may be in September, it could be in October, but I think for the next two quarters I could safely predict that we could probably reduce rates by 25 to 50 bps. I foresee in the next year and a half, we could reduce by another 100 bps by next year.”

May FDI net inflows fall to 16-month low

STOCK PHOTO | Image by ❄️♡💛♡❄️ Julita ❄️♡💛♡❄️ from Pixabay

By Luisa Maria Jacinta C. Jocson, Reporter

NET INFLOWS of foreign direct investments (FDI) slipped to a 16-month low in May amid a decline in investments in equity capital, the Bangko Sentral ng Pilipinas (BSP) reported.

Preliminary data from the BSP showed FDI net inflows dipped by 1% to $499 million in May from $504 million a year ago.

Month on month, net inflows decreased by 10.3% from $556 million in April.

Net Foreign Direct Investment (May 2024)May saw the lowest monthly FDI inflow since $478 million in January 2023.

“This decline emanated mainly from the 31.7% drop in nonresidents’ net investments in equity capital (other than reinvestment of earnings),” the BSP said.

Central bank data showed net investments in equity capital other than reinvestment of earnings slid by 31.7% to $161 million from $235 million a year earlier.

Equity capital placements declined by 32.1% to $174 million, while withdrawals dropped by 36.9% to $14 million.

Reinvestment of earnings stood at $97 million, down by 3.7% from $101 million a year earlier.

Investments in equity and investment fund shares likewise slumped by 23.3% year on year to $257 million from $336 million a year ago.

On the other hand, nonresidents’ net investments in debt instruments of local affiliates jumped by 43.4% to $242 million in May from $169 million a year ago.

By source, equity placements were mainly from Japan (75%), followed by the United States (10%) and Hong Kong (7%).

These were invested mostly in manufacturing, real estate, and the arts, entertainment and recreation sectors.

FIVE-MONTH FDI
For the first five months of the year, FDI net inflows climbed by 15.8% to $4.024 billion from $3.475 billion in the year-ago period.

Foreign investments in debt instruments inched up by 1.7% to $2.479 billion in the January-May period from $2.436 billion the year prior.

On the other hand, reinvestment of earnings dipped by 1% to $407 million as of end-May from $411 million last year.

Investments in equity and investment fund shares jumped by 48.8% to $1.545 billion in the period ending May from $1.038 billion a year ago.

Net foreign investments in equity capital surged by 81.4% to $1.139 billion in the five-month period from $628 million a year ago.

This as equity capital placements soared by 75.3% to $1.387 billion, while withdrawals rose by 51.7% to $248 million.

In the five-month period, these placements mostly came from the United Kingdom (56%), Japan (29%) and the United States (6%).

“While the overall trend for the first five months of the year remains positive with a 15.8% increase, the May data suggest a potential slowdown,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

“Factors such as global economic uncertainties, domestic challenges and regional competition may have contributed to this,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower FDI was due to “risk aversion largely brought about by geopolitical risks in view of the unprecedented direct attacks between Iran and Israel (in April).”

Mr. Roces also noted the sensitivity of FDI inflows to interest rates.

“FDI data were also weighed down in recent months by the still relatively higher global and local prices and interest rates that increased borrowing costs for global and local investors and slowed down FDIs back to below pre-pandemic levels,” Mr. Ricafort added.

The BSP has kept its benchmark rate at 6.5% since October last year, its highest in over 17 years.

The central bank raised borrowing costs by 450 basis points (bps) from May 2022 to October 2023 to tame inflation.

The Monetary Board is set to meet on Thursday (Aug. 15) for its next rate-setting meeting. A BusinessWorld poll showed that nine of 16 analysts surveyed expect a 25-bp rate cut at the meeting.

“Achieving the $9.5-billion FDI target for 2024 will require sustained investor confidence and a favorable economic climate,” Mr. Roces said.

The BSP expects to record FDI net inflows of $9.5 billion this year.