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Japanese companies eyeing auction of MRT-3 O&M contract

A Metro Rail Transit Line 3 (MRT-3) train is seen along EDSA, Quezon City, March 24, 2024. — PHILIPPINE STAR/RYAN BALDEMOR

SEVERAL Japanese companies are interested in participating in the auction for the operations and maintenance (O&M) of the Metro Rail Transit Line 3 (MRT-3), according to the Japan International Cooperation Agency (JICA).

“There are many Japanese private companies that are interested to join the bid,” JICA Chief Representative in the Philippines Takema Sakamoto told BusinessWorld last week. “But they have some sort of concerns — business risks — because of the very low ticketing price.”

The Department of Transportation (DoTr) targets to auction the operations and maintenance contract for MRT-3 by the first quarter of next year.

Last month, the agency said it was still trying to determine the scope of the contract. It is now working with the Asian Development Bank to develop a public–private partnership  for the MRT-3 project.

JICA is willing to help the Transportation department create a better environment for the bidding, Mr. Sakamoto said.

“We are proposing to consider the possibility of providing the budget support to DoTr so they can prepare enough budget or resources for the availability payment for MRT-3,” he said.

“In such a case, there might be a very competitive environment for getting more competitive bids, which is a win-win case,” he added.

Availability payments refer to predetermined payments by the agency to the project proponent in exchange for the delivery of an asset or service under the contract.

The DoTr aims to privatize MRT-3 before the contract expires next year under the build, lease and transfer agreement with MRT-3 operator Metro Rail Transit Corp.

While the government had announced its intentions of going the solicited route for the operations and maintenance of the MRT-3, there are two unsolicited proposals for it.

Last month, the DoTr said it was evaluating the unsolicited proposal made by the Metro Pacific Investments Corp. to integrate the operations of MRT-3 and the LRT-1.

Aside from the group, San Miguel Corp., which was declared the original proponent for the MRT-3’s operations and maintenance contract in 2022, has also submitted a proposal. — Ashley Erika O. Jose

BIR says Sukuk gains to be taxed according to contractual terms

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TAX ON SUKUK or Islamic bonds will be determined based on how the gains or profits are specified in their contracts, the Bureau of Internal Revenue (BIR) said.

Sukuk are Islamic financial certificates that operate similarly to bonds but are structured to comply with Shari’ah law, which prohibits interest.

In a circular, the bureau said that a Sukuk bond’s gains or profits would be “calculated through profit-sharing ratios, rental income, mark-up or price differentials, or the sale of underlying assets.”

The BIR added that the gains or profits would depend on the contractual arrangements outlined in the Sukuk documentation.

Gains or profits realized from Sukuk transactions with a maturity of less than five years will be subject to a 20% final withholding tax.

If Sukuk holders withdraw their bonds before maturity, gains and profits will be subject to a 5% final withholding tax for bonds with maturities of under four years, 12% for those with under three years, and 20% for those with less than three years.

Conversely, gains or profits from Sukuk with a maturity of more than five years will be excluded from gross income and exempt from income tax, the BIR added.

A 25% final withholding tax will be imposed on gains and profits realized by Sukuk shareholders who are non-resident aliens not engaged in trade or business in the Philippines, as well as non-resident foreign corporations.

Gains or profits realized by the originator or obligor, arranger, manager, and underwriter from Sukuk transactions will be subject to regular income tax and value-added tax (VAT), as applicable.

Meanwhile, gains or profits from special purpose vehicles will be subject to regular income tax but exempt from VAT, the bureau said.

All Sukuk instruments will also be subject to a documentary stamp tax unless exempted, it noted.

“Any disposal or lease of the underlying asset, and execution of any additional instrument required in a Sukuk transaction, for the purpose of compliance with Shari’ah principles but which will not be required in a conventional bond transaction, shall be deemed excluded for taxation purposes,” BIR said.

All banks, including Islamic banks and conventional banks’ Islamic banking units or non-bank financial intermediaries, will classify and measure a Sukuk investment either at amortized cost, fair value through other comprehensive income, or fair value through profit or loss.

The investment will also be measured based on the contractual cash flow characteristics of the bond under Philippine Financial Reporting Standards, according to the BIR.

When a Sukuk is issued, it will initially be recognized at fair value, typically at its transaction price, the bureau noted. Transaction costs directly attributable to the issuance will be deducted from the initial carrying amount.

A Sukuk instrument will be assessed for impairment based on expected credit losses. It will be derecognized when redeemed, repurchased, matured, or when the contractual rights to cash flows expire.

For disclosures, a Sukuk instrument will be presented on the balance sheet according to its classification.

“Additionally, ensure that the financial instruments provide the required disclosures, including information about the nature, terms and extent of risks arising from financial instruments, including information about the nature, terms and extent of risks arising from financial instruments, as well as the accounting policies applied.”

The tax treatment of Sukuk bonds are based on Revenue Regulations No. 17-2020, which seeks a “neutral tax treatment” of equivalent transactions between Islamic banks and conventional banks. — Beatriz Marie D. Cruz

Approved investment pledges under Marcos hit P2.73 trillion

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INVESTMENT promotion agencies have approved P2.73 trillion worth of investment pledges in the first two years of the Marcos government, the Department of Trade and Industry (DTI) said last week.

The Board of Investments (BoI) and Philippine Economic Zone Authority (PEZA) approved 1,090 projects with a combined value of P2.73 trillion from July 2022 to May 2024, Trade Secretary Alfredo E. Pascual told a news briefing on Friday.

The BoI approved 668 projects worth P2.4 trillion, while PEZA greenlighted 432 investment pledges worth P331 billion.

About 90% of the projects approved by the BoI were in renewable energy, while almost half of the PEZA-approved projects were in export manufacturing, Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo told the same briefing.

Mr. Pascual said the BoI saw an increase in renewable energy (RE) projects after the government allowed full foreign ownership in the sector starting in November 2022. Foreign ownership in RE projects used to be limited to 40%.

For the first half, BoI approved P950 billion of investment pledges, up 36.1% from a year earlier, while PEZA approved P45.48 billion worth of projects, down 43.6% year on year.

This year, the BoI expects investment approvals to hit P1.25 trillion to P1.6 trillion, while PEZA estimates are from P200 billion to P250 billion.

Mr. Pascual said $18.86 billion (P1.1 trillion) worth of investment pledges have been initiated from the deals secured during President Ferdinand R. Marcos, Jr.’s overseas trips.

Of the 73 projects, 20 projects worth $1.26 billion are under category 6, meaning they are operating and are registered with an investment promotion agency. These are valued at $1.26 billion.

Investments in category 5, covering 23 projects that have registered with investment promotion agencies but are not yet operating, were estimated at $1.6 billion.

The 30 projects under category 4, which are in the process of registering, are worth $16 billion.

The 73 projects form part of the $60.9 billion worth of investment leads gathered during the President’s trips. The leads cover 210 projects and exclude 30 public-private partnerships.

Mr. Pascual said another potential indication of investment approvals are the projects endorsed for the green lane, which spans sectors such as RE, digital infrastructure, food security and manufacturing.

“For green lanes, we have already certified 102 projects worth P3 trillion,” he added.

Mr. Rodolfo said some of the projects endorsed to the BoI’s One-Stop Action Center for Strategic Investments had not been registered.

“For green lanes, not all of the projects will register with BoI, but mostly we foresee them to register with BoI due to the nature of the projects,” he added.

The government through Executive Order No. 18 established the “green lane” in all government agencies to speed up the approval and registration process for priority or strategic investments.

Aside from investments, the DTI said free trade agreements and cooperation were reached last year.

These include the Philippines-Korea free trade deal, the start of negotiations for the Philippine-European Union and ASEAN-Canada free trade agreements and the signing of the 123 Agreement. — Justine Irish D. Tabile

DoT sees sustained growth in tourism sector

Tourists enjoy the sight of Taal volcano while walking around Picnic Grove in Tagaytay City, Feb.17, 2024. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE Department of Tourism (DoT) said it expects to sustain industry growth following last year’s performance, citing the administration’s prioritization of tourism.

“The President’s prioritization of the industry enabled it to achieve record-breaking numbers and notable milestones in 2023,” said Tourism Chief Maria Esperanza Christina G. Frasco in a statement sent over the weekend.

“The DoT is optimistic about achieving even greater heights for Philippine tourism this year and in the coming years,” she added.

Ms. Frasco noted that 2023 became a banner year for the tourism sector, contributing 8.6% to the country’s gross domestic product, marking the highest growth rate in tourism direct gross value added in 24 years.

The sector also recorded a $2.45 billion net trade surplus last year, the first in 15 years, and P509 billion in investments, a 34% increase from the previous year.

The industry exceeded its 4.8 million international arrival target for last year by welcoming 5.45 million international visitors in 2023, a 75.3% increase from the previous year.

As of July 19, the country had already received 3.33 million international arrivals, representing 43% of the DoT’s 7.7 million target for 2024.

Meanwhile, January-to-June tourism earnings grew 32.8% to P282.17 billion from P212.47 billion in the same period last year.

Ms. Frasco said that with Mr. Marcos’ support, the DoT was able to craft and implement innovative programs that enhanced the quality of tourism services and expanded opportunities nationwide, resulting in longer stays and increased spending.

“Together with our partners across government agencies and the private sector, we have worked collaboratively toward the President’s aspiration for the Philippines to take its rightful position on the global tourism stage,” she added. — Justine Irish D. Tabile

More business groups seeking swift passage of Konektadong Pinoy bill

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PRESIDENT Ferdinand R. Marcos, Jr. should certify the Konektadong Pinoy bill as urgent to drive private sector and community investment in broadband infrastructure, according to some business groups.

“The bill will update outdated policies that have long hindered internet connectivity in the country, including the Public Telecommunications Policy Act (nearing 30 years old) and the Radio Control Law, as amended (nearing 75 years old),” the groups, led by the Philippine Chamber of Commerce and Industry (PCCI), said in a statement over the weekend.

“We, the signatories, believe that the proposed Open Access in Data Transmission bill is key to unlocking a more digitally inclusive, economically vibrant, and prosperous country,” they added.

The joint statement was signed by 23 parties, including Philippine Business Groups, joint foreign chambers led by the American Chamber of Commerce of the Philippines, industry associations, and civil society organizations.

They said that the bill would encourage investment in broadband infrastructure by simplifying the licensing process for internet network and service providers.

The bill aims to promote infrastructure sharing, streamline the permit approval process, and allocate radio spectrum for wireless internet to more providers, especially in rural areas.

“Given these transformative reforms, we request swift action to ensure the passage of this landmark legislation under the Marcos Administration,” the groups said.

According to the World Bank, the bill represents a promising opportunity to reform the Philippines’ outdated policy frameworks, adapting to technological and business model changes in the broadband value chain.

Reports by the Philippine Institute for Development Studies since 2021 have identified the Open Access bill as a solution to the country’s digital infrastructure gap, enhancing digital connectivity in underserved and unserved communities.

Although the House of Representatives approved the bill in December 2022, Senate Bill No. 2699 remains pending in the Senate Committee on Science and Technology.

At the PCCI’s 2nd General Membership Meeting on Thursday, Senator Francis G. Escudero said that the Open Access bill is expected to pass before Congress adjourns on Sept. 28 for the midterm recess. — Justine Irish D. Tabile

Gov’t told to advance reforms to support growth

By Beatriz Marie D. Cruz, Reporter

THE Philippine government needs to implement additional fiscal, agricultural, and energy reforms to stimulate growth, according to some analysts.

“While GDP (gross domestic product) remains positive, this is a result of the gains or victories on reforms achieved in previous administrations. The current administration is not building on these gains,” Filomeno S. Sta. Ana III, cofounder and coordinator of the Action for Economic Reforms, said in a Viber message.

“It must assert a new generation of reforms covering fiscal policy (taxes and spending), reform of military and uniformed personnel pensions, food and agriculture policy, energy policy, among other things.”

GDP growth in the second quarter was likely slower at 5.5% compared to the first three months of the year due to base effects, said Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco.

“A modest slip in the headline rate would be quite disappointing, given the favorable base effects in domestic demand; recall that private consumption, public spending, and fixed investment contracted quarter on quarter in Q2 last year,” he said in an e-mail.

“Sequentially, we suspect that the economy lost more momentum in the second quarter this year, shrinking by roughly 0.5% quarter on quarter,” Mr. Chanco said, citing a “pullback” from state spending and fixed investment.

The Philippine economy would likely hinge on household spending, supported by moderating inflation and easing monetary policy, to meet its growth prospects for the remainder of the year, Asian Development Bank Country Director for the Philippines Pavit Ramachandran said in an e-mail.

The Bangko Sentral ng Pilipinas (BSP) has kept its key rate at a 17-year high of 6.5% since October 2023 to tame inflation.

BSP Governor Eli M. Remolona, Jr. has signaled a potential rate cut as early as August, as inflation continues to cool.

However, risks from geopolitical tensions and volatility in global commodity prices pose risks to the outlook.

The ADB has kept its Philippines GDP forecast at 6% this year and 6.2% next year, both within the government’s 6-7% and 6.5-7.5% respective targets.

The Philippine Statistics Authority will release second-quarter GDP data on Aug. 8.

GenAI: A gamechanger for lasting customer relationships

IN BRIEF:

• GenAI is transforming customer experience (CX) by redefining how we perceive and design it.

• GenAI allows companies to use technology to support human-led activities, thereby enabling people to be fully oriented towards tackling the challenge of answering customer needs.

• By driving a digital and technological revolution in CX, GenAI is placing businesses in a position to realize long-held aspirations for the highest level of CX personalization.

Generative AI (GenAI) is more than a mere buzzword or fad; it’s an exciting new avenue that businesses are exploring to help reinvent customer experience (CX). In the push toward a more digitalized society in the 2010s and 2020s, customers have not only become more well-informed, but now also expect their experiences and interactions to be more personalized, efficient and engaging, regardless of the channel they are using. This has prompted organizations to rethink their CX strategies and explore how new technologies can transform customer experience.

GenAI early adopters have already leveraged the technology’s transformative power, avoiding the pitfalls of usual tech trends or fads by focusing their deployment strategies to create real, tangible business outcomes. According to the 2023 EY Innovation Realized Survey, nearly half of the C-Suite respondents cited sales and marketing as the function with the highest priority for deploying GenAI. However, there has also been a movement pushing for GenAI to play a pivotal role in the future of CX interactions, with three significant areas for transformation:

• Personalization at scale, where we can leverage AI to design hyper-personalized experiences for our customers

• Automation and efficiency, where we leverage on AI’s ability to manage routine and repetitive tasks

• Innovation and engagement, where AI can analyze behavior to predict and anticipate the needs of tomorrow and even leverage customer insights to create new ideas for products and services.

It must be noted that the intent is not to replace human resources with AI, but instead create a collaborative environment where AI turns humans into superhumans. With AI’s help, companies can redefine existing roles and lay the groundwork for a working model of the future where human ingenuity and creativity is at the forefront of the work we do in the field of CX transformation.

GENAI’S ROLE IN TODAY’S BUSINESS LANDSCAPE
GenAI is now at the center of CX’s future, enticing businesses with new possibilities and opportunities to answer the complex challenges of today’s world. GenAI technology is already reshaping the business landscape by enabling companies to analyze and synthesize large datasets without the need for the heavy workloads that characterized yesterday’s analytics. This also extends to AI being able to integrate consumer preferences such as purchase history and individual interests into strategic considerations. By leveraging AI-driven analytics suites, businesses would no longer be required to spend considerable effort and manhours on data collection and analysis.

Businesses can then focus their efforts on the next step of CX: personalization. People can focus their efforts on the actual design and implementation of personalized and targeted marketing and product or service suggestions and work towards driving real engagement with their target consumer bases. AI’s ability to not only analyze data, but make recommendations based on that analysis, helps businesses continuously adapt their approaches and strategies to the changing needs of their customers, ensuring that every interaction and touchpoint feels uniquely tailored and special.

GenAI also offers considerable benefits in terms of operational efficiency and decision-making. By automating routine, time-consuming tasks such as customer data analysis and insights generation, business leaders can allocate their human resources to more strategic, creative, and customer-facing roles. This reorientation of people will lead to a more concerted effort to provide customers with the care and attention they deserve and create a more responsive and customer-centric approach. As organizations continue to integrate GenAI into their workflows, they will be able to build upon these examples and further innovate new ways to maximize both their people and GenAI, enabling themselves to deliver more value to their customers.

As an example, a sports company aiming to revolutionize its marketplace and deepen consumer connections faced challenges in realizing its vision. Partnering with EY professionals for enterprise data and AI solutions, they were able to work together to address a range of CX transformation objectives, such as customer segmentation, churn prevention, and market strategy refinement. Utilizing AI-powered tools, they focused on a particular opportunity to optimize product substitutes. This strategic focus on personalization not only tripled their e-commerce sales but also captured market demand exceeding $1.5 billion, enabled by an innovative app feature.

PROVIDING SUPPORT FOR THE NEW AGE OF CUSTOMER TOUCHPOINT
GenAI can also be used to redefine specific touchpoints across the customer journey, primarily through its ability to automate certain actions and interactions. AI chatbots are already being trained to engage in meaningful, context-rich dialogues with customers. Where we would once have needed customers to queue up to speak to agents, AI bots would be able to meet customers, analyze customer asks and sentiments to determine the assistance needed, and, if doable, assist the customer in utilizing self-service to solve simpler problems.

The benefits are numerous, both for the customer and for the agent who is at the frontline of customer interactions:

• The AI chatbot initiating contact and analyzing the customer’s situation already cuts down significantly on the response time as encoding of the problem is already automated

• AI analysis of the customer situation lets it identify who the call should be routed to and prevent customers from being passed around between lines

• AI’s effect on follow-up or repeat calls are tangible as AI will be able to detect unresolved issues or reasons for calling

All these will have the knock-on effect of reducing stress and pressure on agents, meaning they will be happier, more productive, and more responsive to the needs of the customer, which in turn means happier customer relationships.

STRATEGIES AND CHALLENGES
It should be noted that the implementation of GenAI, while promising in its potential, is not without its challenges. Ensuring data privacy, developing the requisite skill sets, and seamlessly integrating AI into existing systems are just some of the challenges businesses must overcome. It must be stressed that upholding transparency with customers on the use of AI in our business is a key element to ensuring that the implementation does not fall through. It is also essential to avoid common pitfalls, such as overlooking the customer experience or underestimating the importance of human oversight in AI-driven processes.

Furthermore, as businesses embark on their GenAI journey, they must navigate the complexities of aligning AI initiatives with the broader organization. This does not just extend to operational, strategic, or technical integration, but also cultural adaptation. GenAI is a gamechanger, as much so for the employees of the business as for their customers because it impacts the way that work is done.

Managing the change and the resistance to it will be a fundamental challenge to its implementation, which is why it is important for the business to establish clear communication channels and training programs right from the top. Only through effectively navigating these implementation challenges can businesses unlock the full potential of GenAI and transform it into a core driver of customer satisfaction and business success.

THE CX REVOLUTION
GenAI is set to be the newest driver of the digital and technological CX revolution. When done right, GenAI can enable businesses to deliver a modern and innovative customer experience that is personalized and uniquely emblematic of their company’s brand.

However, while GenAI is a technology filled with untapped potential, it is still not without its risks. It remains imperative that businesses implement the technology properly, correctly, and responsibly. Misuse of GenAI can lead to detriments just as large and impactful as the potential gains.

With that in mind, the question we should ask ourselves at this crossroads is: Are we content to let potential remain potential? Or are we ready to take steps into a great unknown in pursuit of something greater than what we have today?

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.

 

Marnelli Eileen J. Fullon is a business consulting partner of SGV & Co.

Lawmakers told to focus on industry buildup as Congress resumes session

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By John Victor D. Ordoñez, Reporter and Kenneth Christiane L. Basilio

PHILIPPINE lawmakers should push measures that will raise farm output, boost local manufacturing and develop the renewable energy (RE) sector as Congress resumes session this week, economists and analysts said at the weekend.

“Congress should focus on enhancing productivity by using science and technology in boosting local industries, modernizing agriculture and pivoting toward renewable energy sources,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

Senate President Francis G. Escudero on Saturday said the Senate would scrutinize a proposal to amend the Electric Power Industry Reform Act (EPIRA) amid persistent power failures nationwide.

It would also prioritize changes to the Corporate Recovery and Tax Incentives for Enterprises Act. One key feature of the bill is lowering taxes on domestic and foreign companies.

“There should also be a public education program to explain that foreign manufacturing investment in the country and especially those ensconced in low value-added enclaves do not mean Filipino industrialization,” Jose Enrique A. Africa, executive director of think tank IBON Foundation, said in a Viber message.

He said the House of Representatives should fast-track debates on House Resolution 8, which seeks a framework to boost the country’s capacity to enforce renewable energy projects and focus on industry development rather than foreign investment.

“Progressive lawmakers can take the lead in pushing an official declaration of national industrialization as the country’s major strategy for structural transformation and economic development,” Mr. Africa said.

Energy Undersecretary Sharon S. Garin told senators last week her agency is trying to encourage more battery companies to set up shop in the country to fast-track the country’s RE development targets.

“The approach for now shouldn’t be to enact more laws but to ensure current laws impacting the manufacturing sector cohere with one another and align towards the same goal which is to boost the sector’s productivity,” Michael Henry Ll. Yusingco, a fellow at the Ateneo de Manila University Policy Center, said in a Facebook Messenger chat.

He added that proposals against political dynasties are unlikely to prosper in Congress.

“Lawmakers will never kill the goose that lays the golden egg for them,” Mr. Yusingco said. “The status quo keeps their families in power, so they will never be inclined to change it.”

Renato B. Magtubo, a former congressman and chairman of Partido Manggagawa, said in a Viber message that Congress should boost support for farmers through modern machinery.

“The government needs to establish a strong link between agriculture and industry sectors to promote robust agricultural production,” he said.

Hansley A. Juliano, who teaches political science at the Ateneo, said the most pressing issues for ordinary Filipinos remain to be the lack of access to quality, high-paying jobs, the spiraling costs of goods and poverty.

“They should seriously begin considering alternative policies… especially ones that tackle sociocultural inequalities,” he said via Messenger chat. “Addressing these institutional gaps could nominally bolster productivity and opportunities for Filipinos.”

Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, said the state should look at more long-term reforms in politics and the economy, noting state silence on proposals to strengthen political institutions.

REFORMS
“Proposed legislation on strengthening the political environment… is just as important,” he said via Messenger chat. “Reforms on the political environment include strengthening political parties, further electoral modernization and others are important in laying the foundations for long-term institutional maturity in the country.”

Congress will reopen on Monday after a two-month break, in time for President Ferdinand R. Marcos, Jr.’s third state of the nation address.

The House of Representatives earlier said it would prioritize the proposed 2025 national budget and amendments to laws that reformed farmers’ land ownership and liberalized the power industry before it goes on a break again in September.

Lawmakers should also prioritize measures that seek to boost local industries such as agriculture, address poverty, inflation and food insecurity, said Maria Ela L. Atienza, a University of the Philippines Political Science professor.

“The quality of services like health, education and welfare also needs more attention,” she said in a Viber message.

Speaker and Leyte Rep. Ferdinand Martin G. Romualdez said they would focus on passing the remaining priority bills.

Priority measures identified by the Legislative-Executive Development Advisory Council (LEDAC) do not address issues faced by ordinary Filipinos such as poverty and the lack of quality jobs, Mr. Juliano said.

“The entire package reeks of trickle-down economics, which belies a lot of the failures and missed opportunities of the Philippine economy,” he said.

Most of the priority bills focus on infrastructure, investments and tax administration, ignoring much-needed reforms in education and human capital development, Leonardo A. Lanzona, an economics professor at the Ateneo, told BusinessWorld.

“There is also a need to work on improving the education and health sectors as these crucially affect the future of the country,” he said via Messenger chat. “Investing in people should be the focus of these priorities.”

Put AI to good use in midterm polls, data experts tell Comelec

REUTERS

By Aubrey Rose A. Inosante

THE COMMISSION on Elections (Comelec) should use artificial intelligence (AI) to improve the integrity of the midterm elections next year amid worries about potential disruptions, analysts said.

Instead of trying to police the use of AI on social media, the agency should establish clear guidelines for candidates and supporters, Sam V. Jacoba, founding president of the National Association of Data Protection Officers, said in a Viber message last week.

The rules should include transparency requirements, data protection and guardrails on AI’s influence on voter behavior, he said.

“AI is a tool that the Comelec can use to make our elections clean, transparent and efficient,” he said. “Banning its use for elections will stifle innovation and will not be the best way to harness its potential for good governance.”

He said AI could be used to detect if a candidate is ineligible or clean the voter database.

Comelec Chairman George Erwin M. Garcia said they don’t plan to ban AI in next year’s elections.

“It was exaggerated to the point that I was asking for a ban on AI, although I honestly believe and the Commission En Banc believes that that cannot be done,” he told BusinessWorld by telephone at the weekend.

He said there are certain aspects of AI that are “so good” and certain facets that are evil. He added that the Comelec would issue the rules on AI and ethics by August.

He said deepfakes should be prohibited because it misrepresents the facts.

“The problem with this is that social media will be included [in the potential ban]” he said. “That’s a very touchy issue because there may be a very thin line between constitutionality and unconstitutionality.”

Mr. Garcia said the Comelec would partner with social media platforms after the release of the guidelines.

“We are requiring the candidates to submit social media accounts that they are going to use,” he said. The election body could then ask social media platforms to remove unauthenticated accounts that promote a candidate.

Mr. Garcia said they might not have enough manpower to monitor social media and AI use during the campaign for local and national positions. They might have to seek the help of citizen’s and interest groups, stakeholders and IT experts.

The Comelec has kept the Pastoral Council for Responsible Voting and the National Movement for Free Elections as citizen’s arms for the 2025 elections.

On July 20, the election body introduced a task force that would monitor fake information against the Comelec, its officials and the election process.

The Philippines has yet to pass a policy similar to the European Union’s AI Act, though the Trade department has launched a national AI roadmap.

Ronald B. Gustilo, national campaigner at Digital Pinoys, said not all AI-generated materials are bad.

“The Comelec should let candidates and supporters use AI-generated materials, as long as these are law-abiding and comply with existing rules and regulations,” he said in a Viber message. He agreed that deepfake videos meant to malign candidates should be banned.

Allan S. Cabanlong, regional director for Southeast Asia at Global Forum on Cyber Expertise, said it would be difficult to trace the origin of deepfake videos.

“There is a corresponding penalty in the Cybercrime law, although there is no cybercrime definition,” he said by telephone. Still, the law covers deepfakes since these involve altering data, he added.

Philippines, China agree on resupply mission arrangement

MEMBERS of a military detachment stationed aboard the BRP Sierra Madre at the disputed Second Thomas Shoal, part of the Spratly Islands, in the West Philippine Sea, March 29, 2014. — REUTERS

By John Victor D. Ordoñez, Reporter

THE PHILIPPINES and China have agreed on a “provisional arrangement” for resupply missions to Filipino troops stationed on grounded vessel at Second Thomas Shoal in the South China Sea, its Department of Foreign Affairs (DFA) said on Sunday.

In a statement, the agency said the arrangement was finalized during a bilateral consultation mechanism in Manila on July 2.

“Both sides continue to recognize the need to deescalate the situation in the South China Sea and manage differences through dialogue and consultation and agree that the agreement will not prejudice each other’s positions in the South China Sea,” it said.

Philippine Foreign Affairs spokesperson Ma. Teresita C. Daza did not immediately reply to WhatsApp messages from reporters seeking more details on the deal.

Manila and Beijing resumed talks to ease tensions in the South China Sea after accusing each other of raising tensions in disputed shoals and reefs in the waterway.

Chinese Coast Guard forces with bladed weapons on June 17 boarded Philippine rubber boats and looted several rifles stored in gun cases, actions that Manila’s military chief Romeo S. Brawner, Jr. said only “pirates” do.

A Filipino Navy officer on a rubber boat lost his right thumb after the boat was rammed by a Chinese Coast Guard rubber boat.

The Philippines and China have agreed to set up new lines of communication to improve their handling of sea disputes after both countries resumed talks on easing tensions in the waterway, the DFA said last week.

Earlier this month, Manila signed a pact with Tokyo that eases the entry of equipment and troops for combat training, saying they want stability in the region amid growing tensions with Beijing.

Beijing maintains it has sovereignty over most of the South China Sea based on its old maps and has deployed hundreds of coast guard vessels deep into Southeast Asia to assert its claims, disrupting offshore energy and fishing activities of its neighbors including Malaysia and Vietnam.

China has refused to recognize a 2016 international arbitral ruling that voided its claims for being illegal.

Marcos told to tackle human rights in third state address

PHILIPPINE STAR/MICHAEL VARCAS

By Chloe Mari A. Hufana

PRESIDENT Ferdinand R. Marcos, Jr. Should tackle human rights and how he plans to curb impunity in his third State of the Nation Address before Congress, according to a human rights lawyer.

“We hope that he mentions something about his government’s policy direction on respect and protection of human rights,” Ephraim B. Cortez, president of the National Union of Peoples’ Lawyers (NUPL), said in a Viber message at the weekend.

“We hope to hear him announce his government’s decision to abolish the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC),” he added.

The task force has been accused of branding dissenters and state critics “communists.”

During her visit to the Philippines earlier this year, United Nations (UN) Special Rapporteur on freedom of opinion and expression Irene Khan urged Mr. Marcos to abolish the task force to allow more inclusive peacebuilding platforms.

“We expect a concrete policy that will tend to curb human rights violations in the Philippines and ease the climate of impunity, not some motherhood statements praising its own human rights initiative like the human rights super body,” Mr. Cortez said.

He asked Mr. Marcos to review the government’s counter-insurgency policies and counter-terrorism measures to ensure respect for human rights and international humanitarian law.

He said peace talks should be pursued with the Communist Party of the Philippines, the New People’s Army (NPA) and the National Democratic Front to end the armed conflict.

Human rights group Karapatan said the military’s counterinsurgency campaign has led to civilian deaths.

“The frenzied campaign by the military to accumulate ‘achievements’ in the counter-insurgency drive has led to hundreds of civilians being killed and falsely portrayed as NPA combatants slain in gunbattles with soldiers,” Karapatan Secretary-General Cristina E. Palabay said in a statement at the weekend.

She cited a recent Supreme Court ruling on red-tagging, which the tribunal said threatens one’s life, liberty and security.

The human rights situation in the Philippines has been under the UN radar since ex-President Rodrigo R. Duterte’s deadly war on drugs.

Human Rights Watch (HRW) said Mr. Duterte’s centerpiece policy killed more than 12,000 Filipinos from 2016-2022, mostly urban poor.

The war on drugs is under investigation by the International Criminal Court (ICC).

The University of the Philippines-Diliman’s Project Dahas said it had counted more than 700 drug-related deaths under Mr. Marcos’s term.

The President has called his anti-illegal drug  campaign “bloodless.”

Mr. Marcos has also vowed to block the ICC’s investigation, which he said violates Philippine sovereignty.

9 of 10 Pinoys get scam texts

ABOUT 95% of Filipinos regularly receive text messages from scammers despite a law that mandates Subscriber Identity Module (SIM) card registration, according to the Computer Professionals’ Union (CPU).

The group in a statement on Sunday said 92% of respondents in its recent survey of 880 mobile phone subscribers thought the law has been a failure.

About 30% who receive scam texts fall victim to phishing, theft of personal information or money, or viruses on their devices.

CPU said 74% thought there has been no proper response from the government and telecommunication companies to help scam victims.

“With its rushed implementation and a lack of preparation, the SIM Registration Act faced issues from its first weeks —registration servers going down, a large wave of registration with fake IDs and an ever-growing risk of leaking the personal info of millions of subscribers,” it added.

The National Telecommunications Commission did not immediately reply to an e-mail seeking comment. — Chloe Mari A. Hufana

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