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EXPLAINER | Understanding Filipino consumer rights on the Internet

The Internet Transactions Act protects the consumer, the retailer, and all other players in the digital ecosystem, according to Marianne Malate-Guerrero, a professorial lecturer and faculty member of the University of Asia and the Pacific, and also a management consultant specializing in legal risk management and change management.

“Whatever rights a consumer has outside of the Internet should be the same if transacted on the Internet. That’s the overreaching principle here,” she said.

Interview by Patricia Mirasol
Editing by Arjale Jayrie G. Queral

South Korea’s Yoon to discuss Pyongyang’s ‘distinct threat’ to Europe at NATO

South Korean President Yoon Suk-yeol. — REUTERS

 – South Korean President Yoon Suk Yeol said he would discuss with NATO leaders the distinct threat North Korea poses to Europe by deepening military ties with Russia, warning that Moscow must choose between the two Koreas where its true interests lie.

It “depends entirely” on Russia where it wants to take future ties with South Korea, Mr. Yoon said, adding that Seoul would make a decision on weapons support for Ukraine based on how a new military pact between Moscow and Pyongyang plays out.

“Military co-operation between Russia and North Korea poses a distinct threat and grave challenge to the peace and security on the Korean peninsula and in Europe,” Mr. Yoon told Reuters.

The remarks came in a written response to Reuters’ questions ahead of a visit to Washington for a NATO summit.

Mr. Yoon, who became the first South Korean leader to attend a NATO summit in 2022, is set to depart on Monday for the Washington event, his third time attending such a meeting.

Together with Australia, Japan and New Zealand, South Korea makes up the four Asia-Pacific partners joining in the talks on July 10 and 11.

Relations between South Korea and Russia have soured as Moscow receives shipments of ballistic missiles and artillery from Pyongyang for its war against Ukraine. Both Russia and North Korea deny such deals.

Russia has called South Korea “the most friendly among unfriendly countries”, with President Vladimir Putin saying it would be making “a big mistake” if it decided to supply arms to Ukraine.

South Korea protested when Putin visited Pyongyang in June and signed a treaty with leader Kim Jong Un that covers mutual defense.

“North Korea is clearly a menace to the international society,” Mr. Yoon said in his comments. “I hope that Russia will sensibly decide which side – the South or the North – is more important and necessary for its own interests.”

He added, “The future of ROK-Russia relations depends entirely on Russia’s actions,” referring to South Korea by its official name, the Republic of Korea.

Russia said it “fully disagreed” with Mr. Yoon’s comments calling on it to choose between North and South Korea.

Moscow supports building good relations with its neighbors but South Korea has imposed sanctions on Russia while North Korea is a partner, Kremlin spokesman Dmitry Peskov said in comments posted by the Russian embassy in Seoul on social media platform X on Tuesday.

Mr. Yoon has pushed for greater security ties with Europe and other US allies to deter North Korea’s nuclear and missile threats.

At the same time, he has looked to boost the South’s role in global security, on issues such as Russia’s invasion of Ukraine and rivalry between China and the United States.

 

ARMS FOR UKRAINE

When asked if he would authorize weapons for Ukraine, Mr. Yoon said South Korea would look at “the level and substance of military co-operation between Russia and North Korea”.

That would include areas such as arms dealing, transfers of military technology and assistance with strategic materials, he added.

Russia, a permanent member of the UN Security Council which approved sanctions resolutions until 2017, has engaged in an “illegal” military partnership with North Korea, Mr. Yoon said, adding that it was troubling to consider what help it might be giving Pyongyang in return.

There will be a clear “negative” impact on South Korea’s ties with Russia if it continues to violate UN resolutions, he added.

Before Russia invaded Ukraine in 2022, it was South Korea’s fifth-largest export destination, while Russia was a key supplier of energy to South Korea, the Washington-based Center for Strategic and International Studies says.

South Korea will take its partnership with NATO to a new level in September, through a cyber defence exercise in which it plans to host NATO member states, organised by the country’s intelligence agency, Mr. Yoon said.

Leaders are gathering in Washington for the summit of the North Atlantic Treaty Organization that will also celebrate the 75th anniversary of the military alliance.

Mr. Yoon declined to comment on possible changes to US policies if Donald Trump becomes president a second time in November elections, but pointed to unwavering bipartisan support for the US-South Korea alliance over the past 70 years.

“The alliance will stay strong going forward,” Mr. Yoon added.

Mr. Trump’s allies are assuring officials in Japan and South Korea he will support a Biden-era effort to deepen three-way ties aimed at countering China and North Korea, Reuters has reported. – Reuters

Trump predicts Biden will stay in presidential race

Republican presidential candidate Donald Trump said he expected President Joe Biden to remain in the race for the White House despite growing calls within Biden’s Democratic Party for him to step aside for a younger nominee.

Mr. Trump, 78, said on Monday that Mr. Biden, 81, would refuse to quit the campaign because of his ego and noted that the president had the Democratic nomination locked up because of all the convention delegates he won during the Democratic primary elections earlier this year.

Mr. Biden has repeatedly said he is staying in the race.

“Interestingly, he’s got a lot of power, because he’s got the delegates. You know, when you have the delegates, unless he says, ‘I’m getting out,’ they can’t do anything to get him out other than the 25th amendment,” Mr. Trump told interviewer Sean Hannity in a telephone call broadcast on Fox News.

The 25th amendment of the US constitution enables the vice president and cabinet members to declare the president is unable to discharge the powers and duties of the office, transferring the job to the vice president as acting president. There is no indication Vice President Kamala Harris or top Democrats have advanced that option.

“He’s got an ego, and he doesn’t want to quit. He doesn’t want to do that. It just looks to me like that’s what he wants,” Mr. Trump said of his rival, who unseated Trump when the former president ran for re-election in 2020.

The interview came amid turmoil for Democrats following Biden’s disastrous debate against Trump on June 27, which has prompted growing calls within his party for him to withdraw from the campaign.

Mr. Trump’s interview contradicted casual statements captured on video recently, when Mr. Trump falsely told supporters at one of his golf courses that he had driven Biden out of the race.

“He’s quitting the race … I got him out,” Mr. Trump says in a video published by the Daily Beast on Wednesday. – Reuters

Russian corvette conducts drills with Chinese warships in Philippine Sea, TASS reports

WIKIMEDIA/MIL.RU

A Russian Sovershennyi corvette and Chinese warships conducted training exercises while patrolling in the Philippine Sea, Russia’s TASS state news agency reported, citing the Russian Pacific Fleet press services.

“The Pacific Fleet Sovershennyi corvette, together with a detachment of PLA (People’s Liberation Army) Navy warships … conducted training to inspect a suspicious vessel during a joint naval patrol in the Philippine Sea,” TASS cited the press service as saying.

“During the episode of inspecting a suspicious vessel, Russian and Chinese naval sailors worked out an algorithm for joint actions.”

No details were given on the origin of the “suspicious vessel”. – Reuters

Sri Lanka to wrap up bond talks soon, seek to balance India and China ties

PIXABAY

 – Sri Lanka will wrap up talks with international bondholders on restructuring $12.5 billion in debt within a few weeks, Foreign Minister Ali Sabry said on Tuesday, a major step for the island nation to emerge from its worst financial crisis in decades.

Sri Lanka will also seek to balance its ties with giant neighbor India and China to ensure that there is no difference in dealing with the two, he said, as the rival Asian giants are key creditors and investors but are also jostling for geopolitical influence in the small Indian Ocean country.

“Hopefully within a couple of weeks,” Mr. Sabry said in an interview at the Reuters NEXT conference in Singapore, when asked when the nation’s bond restructuring efforts with creditors will be finished.

“Towards the end of this month, officially, we are done and dusted with the restructuring process, then of course, in line with that, we need to start payment,” he said.

Sri Lanka secured a provisional agreement with some of its bondholders to move forward on restructuring its international bonds last week but now needs the other private creditors and the International Monetary Fund (IMF) to also agree.

The country, which has $37 billion in external debt in total, clinched an agreement with its official creditors including Japan, China and India in late June to restructure $10 billion in debt.

In total, the debt rework is estimated to save Sri Lanka $8 billion in write-offs and delay capital repayments by at least four years.

Sri Lanka will use this opportunity to restart about a dozen stalled, foreign-funded development projects and promote economic growth, Mr. Sabry said.

Sri Lanka needs to continue reforms including imposing property taxes, revamp loss-making state-owned companies and improve dollar reserves to put its economy fully on track, the IMF said in its latest review.

 

BALANCING INDIA, CHINA

A country of 22 million, Sri Lanka’s economy is heavily dependent on foreign tourists and investments while its strategic location on a major east-west shipping route close to the southern tip of India makes it a key political player.

India, which has strong cultural ties with Sri Lanka, and China have competed for influence in Colombo for years and the island nation has often been caught in their rivalries.

India is also critical to Sri Lanka’s tourism, port development and renewable energy sectors with the two countries planning to connect their power grids eventually, Mr. Sabry said.

Closer ties with southern Indian states such as Tamil Nadu will fuel “a lot of synergies” between the two countries that will help Sri Lanka’s economy growth faster.

New Delhi has in recent years objected to Chinese research vessels docking at Sri Lanka’s ports saying it is concerned about the capabilities and intentions of such missions close to its territory, causing Colombo to suspend foreign research ships docking this year.

Mr. Sabry said Colombo has now decided to engage with India, China and others while making it clear to its partners that it will “not allow anything which would legitimately threaten” a neighbor’s security.

“We are not going to have a system which applies to everyone else and not to China…all these systems will be universal … as a neutral player, we should do that,” he said.

Sri Lanka is scheduled to hold presidential elections before mid-October, which Mr. Sabry said was evolving into a three-horse race between incumbent President Ranil Wickremesinghe and two opposition politicians with the economy being the key battleground.

Sri Lanka is expected to grow 3% this year for the first time since its financial crisis in 2022 when the economy went into freefall due to a severe shortage of dollars that forced it to default on its foreign debt. – Reuters

Philippines rejects China’s accusation of environmental damage in South China Sea

Tensions remain high amid maritime sovereignty disputes in the South China Sea. — PHILIPPINE STAR/RYAN BALDEMOR

MANILA – The Philippines rejected on Tuesday China’s accusation that its grounded warship on the contested Second Thomas Shoal in the South China had damaged the coral reef ecosystem in the area, laying the blame for damaging the marine environment on Beijing.

The Philippine task force on the South China Sea in a statement called for an independent, third party marine scientific assessment of the causes of coral reef damage in the South China Sea.

“It is China who has been found to have caused irreparable damage to corals. It is China that has caused untold damage to the maritime environment, and jeopardised the natural habitat and the livelihood of thousands of Filipino fisherfolk,” the task force said.

On Monday, China’s Ministry of Natural Resources said in a report that Philippine warships have been “illegally beached” around Second Thomas Shoal near what it calls Nansha Islands for a long time, “and it has seriously damaged the diversity, stability and sustainability of the reef ecosystem”.

The Philippines and Beijing have been embroiled in confrontations at the Second Thomas Shoal where Manila maintains a rusting warship, BRP Sierra Madre, that it beached in 1999 to reinforce maritime claims. A small crew is stationed on it.

China has in turn dredged sand and coral to build artificial islands in the South China Sea, which it says is normal construction activity on its territory, but which other nations say is aimed at enforcing its claim to the waterway.

A report by the Center for Strategic and International Studies last year found China’s construction activity buried more than 4,600 acres (1,861 acres) of reef.

China claims almost all of the vital waterway, where $3 trillion worth of trade passes annually, including parts claimed by the Philippines, Brunei, Malaysia, Taiwan and Vietnam.

But The Permanent Court of Arbitration in the Hague in 2016 found China’s expansive claims in the South China Sea had no legal basis. Beijing does not accept the ruling.

The Philippine task-force, which warned of attempts by “Chinese experts” to sow disinformation and conduct malign influence, said it has evidence that China has been responsible for “severe damage to corals” in several areas in the South China Sea, including in Scarborough Shoal and Sabina Shoal.

Last year, the Philippines said it was exploring legal options against China, accusing it of destruction of coral reefs within its exclusive economic zone in the South China Sea, an allegation rejected by Beijing as an attempt to “create political drama”. – Reuters

Collabera Digital’s CONVERGENCE 2024 concludes bridging AI innovation and human creativity

Collabera Digital concluded the second edition of its highly anticipated CIO summit, CONVERGENCE 2024, themed ‘Creative Minds. Generative Algorithms.’, at the Shangri-La The Fort Manila, BGC, on June 20, 2024. The event brought together top executives from across industries to explore the intersection of human creativity and AI-driven innovation, shaping the future of digital transformation.

The summit featured keynote addresses and panel discussions led by industry leaders, focusing on AI adoption strategies, innovative financial services, and the transformation of global captive centers into innovation hubs. Attendees engaged in interactive experience zones, offering hands-on opportunities with cutting-edge solutions. Collabera Digital’s technology partners, including Google, AWS, and Salesforce, were also present, showcasing their solutions and contributing to the rich tapestry of innovative discussions at the event.

In his keynote speech about AI and human convergence, Kaushik Sarkar, President of Collabera Digital, said, “As AI starts ticking up all that the left side of the brain does, which is operational day-to-day routine, it is important to invest in the right side of the brain for all-round individual development to create more effective, efficient and empathetic individuals. Technology and human ingenuity are what will drive enterprises to become future-ready and navigate the evolving challenges with agility and success.”

With the engaging presence of returning host Mimi Ong, participants immersed themselves in dynamic exchanges aimed at enhancing business strategies amidst technological advancements. Highlights included sessions on fostering creativity within AI frameworks, underscoring the pivotal role of human ingenuity in leveraging emerging technologies. 

Manan Mehta, Senior Vice-President & Country Head of Collabera Digital Philippines, said, “CONVERGENCE 2024 for us is not just about fostering business relationships, but also creating a platform — a genuine, authentic platform for sharing knowledge, sharing thoughts, and making meaningful connections. We thank our clients and technology partners for making this event a great success!”

About Collabera Digital:

Collabera Digital is a new age digital engineering company delivering unique experiences, actionable insights, and intelligent products & platforms at the intersection of talent & technology. We are at the forefront of innovation, blending human creativity with smart technologies to drive transformative solutions. Our client-first and highly collaborative approach enables organizations to accelerate their digital journeys with efficiency and velocity at scale.

Since our inception in 2010, Collabera Digital has soared to unparalleled heights. With a global presence spanning 11 countries throughout APAC and Europe, our network of over 25 offices serves as the epicenter of digital innovation. We proudly cater to a prestigious clientele, counting Fortune 500 companies amongst our 300+ esteemed clients.

For more information, visit www.collaberadigital.com.

 


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Striving for change and efficiency in the police

PNP Chief Rommel Francisco Marbil

PNP Chief shares his vision for a revitalized police force

Solving crimes and building peace and trust within communities is what the police force is here for. “To protect and serve” is the most distinguished tagline of the police force worldwide, encapsulating their commitment in shaping modern societies the way that it is today.

As crimes today evolves and change, from robbery, kidnapping, and snatching, and cybercrime adding to the list, especially in a world of digital revolution, it has put the country more in danger. But, as crimes have evolved, so has our police force, the Philippine National Police (PNP), which is responsible for maintaining peace and order, solve crimes, and more importantly, ensure peace and safety of all Filipinos.

In an exclusive interview with BusinessWorld, PNP Chief Rommel Francisco Marbil noted that the Philippine force is skillful and talented; and for a long time, it’s been doing its best protect and serve its people, but more changes are to come.

Under the new leadership of Mr. Marbil, the PNP is striving for change first and foremost. According to him, PNP’s uniqueness lies on the services that they offer; and rather than being profit-oriented, they center their services on the Filipinos, ensuring it will make a positive difference into their lives.  Besides, establishing trust and confidence among Filipinos is one of the core operations on why the police force exist.

“There is no easy answer. What we’re selling is our services; we are not profit-oriented, and we want people to feel our service,” Mr. Marbil said.

To empower the institution and become agents of transformation, the police force is improving efficiency among its services. The PNP chief shared that several changes were made, including adjusting the flag raising time to be more efficient, as well as discontinuing the police band (unless when necessary) and holding athletic activities.

PNP is also changing policies within the force. One example is the unit performance, wherein Mr. Marbil said the PNP is aiming for zero cases this term.

“Before, unit performance was highly competitive, with success being determined by the number of cases solved, such as drug cases, and illegal gambling among others. Now, we’re changing that. We are aiming for zero or no cases left.”

Also, with the ever-evolving digital world, especially with the rise of cybercrime cases, what the PNP needs is digital adoption. With modern technology, the police force is finding innovative ways to ensure efficiency and public safety.

One way to do this is by digitalizing their services, such as permitting licenses for firearms and gun holders much easier and more digital.

“The process used to be complicated: You had to go to Camp Crame; wait a day for the permit/license; then return the following week for the ID, which took up another entire day. That’s why we’re making changes. We want to computerize the process to make it easier for gun holders and security guards to get their license. We want all services to be computerized and outsourced to make things easier. This way, trust will develop; and the police force can be more efficient,” Mr. Marbil said.

Another thing about digitalization is that it improves crime prevention. One of the most popular technologies used are surveillance cameras, also known as the closed-circuit television (CCTV), which are widely used in many countries, including the Philippines.

In the Philippines, surveillance cameras are installed in every establishment, along with command centers located in various cities in the metro, and other regions as well. While they have the technology, they also lack connectivity. In response, PNP is helping in drafting further legislation to improve interconnectivity in the country.

“We are helping one of the congressmen to come up with a legislation on improving interconnection among CCTVs, especially when there’s AI technology involved. The police are already using AI, in terms of body cameras and streamlining PNP operations,” Mr. Marbil said.

Mr. Marbil also emphasized the need for medical and legal assistance through outsourcing services. For the PNP chief, health services for police personnel must be improved by giving health cards available and accessible to all police officers. As for legal services, he pointed out the need for more private lawyers and private firms.

All these changes are aimed at enhancing a police force that is more equipped and empowered protect their fellow Filipinos. At the core of these transformation initiatives, for Mr. Marbil, is restoring the image and dignity of fellow policemen.

Being a police meant a lot of things, mostly it meant honor; but recently, the PNP observes, it is raising doubts, leaving negative perception from the public view.

“In the past, the word ‘police’ was associated with honor, but now it has become questionable because of the recent negative stories and events associated with them recently,” he shared. “The police’s achievements were something good to hear but over time, we are losing trust, our image is being destroyed, which is hard to recover.”

Hence, the national police force is striving for change, both internally and externally, ensuring a better force will serve and protect the Filipino people.

“We are striving for change, we hold our police officers accountable; but we don’t brag about their wrongdoings. Because we don’t want the people’s trust in us to change. There is only one PNP and that will never change,” Mr. Marbil said.

In its commitment with the government towards a “New Philippines” with its own tagline, “In a new Philippines, the police force wants its people to be safe,” the PNP is on the right track in achieving this vision.

For Mr. Marbil, the future for PNP is bright as it continues to strive for change and transformation, shaping the Philippines into a safe, peaceful, and progressive country — one that is livable for all Filipino people.

“Being the PNP chief is destiny. I want to make innovative changes for the betterment of PNP,” Mr. Marbil said. “Let’s take things slowly, focusing on efficiency and the quality of service.”

 


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PHL jobless rate hits 4-month high

People attend a job fair at a school in Pasay City, May 9. The unemployment rate rose to a four-month high in May. — PHILIPPINE STAR/RYAN BALDEMOR

By Karis Kasarinlan Paolo D. Mendoza

THE PHILIPPINE jobless rate climbed to a four-month high in May while the quality of jobs improved to its best level since 2005, the Philippine Statistics Authority (PSA) reported on Monday.

Preliminary data from the PSA’s Labor Force Survey (LFS) showed the unemployment rate inched up to 4.1% from 4% in April, as the labor force expanded. However, it was lower than the 4.3% recorded in May last year.

May saw the highest unemployment rate in four months or since the 4.5% print in January.

Philippine Labor Force Situation

This translated to 2.11 million unemployed Filipinos in May, up by 65,000 from 2.04 million in April.

Year on year, the number of jobless Filipinos went down by 61,000 from 2.17 million in May 2023.

In the first five months of the year, the unemployment rate averaged 4%, lower than the 4.6% average a year ago.

PSA Undersecretary and National Statistician Claire Dennis S. Mapa said the bigger labor force size was the main contributor to the rise in unemployment.

“One of the reasons why unemployment went up is the increase in participants in the labor market. Over half a million people joined the labor force but not all of them found employment,” he said in mixed English and Filipino during the press briefing on Monday.

PSA data showed that 50.97 million people became part of the labor force in May, growing by 575,000 from 50.4 million in April.

On an annual basis, the labor force increased by 544,000 from 50.43 million in May 2023.

This translated to a labor force participation rate (LFPR) of 64.8%, higher than 64.1% in the previous month, but lower than 65.3% a year ago. Year to date, the LFPR averaged 64%.

JOB QUALITY IMPROVES
Meanwhile, job quality in May improved as underemployment dropped to 9.9%, lower than 14.6% in April and the 11.7% reading in May last year.

May marked the lowest underemployment recorded since the start of the revised series almost two decades ago.

The number of underemployed Filipinos — those who want longer work hours or an additional job — stood at 4.82 million in May, falling by 2.22 million month on month and by 846,000 year on year.

As of end-May, the average underemployment rate was 12.3%.

“A substantial amount contributing to the decrease in underemployment came from those categorized visibly underemployed or those who work less than 40 hours per week. There were those among them that said they were working second jobs, so they were satisfied with working less than 40 hours at their primary jobs as a result,” Mr. Mapa said.

He also said that the decline in underemployment may be seen in certain subsectors such as wholesale and retail trade, agriculture and forestry, construction, manufacturing, other service activities, transportation and storage, and accommodation and food service activities.

“Notably, underemployment decreased dramatically in May, suggesting improved job quality and better skills matching despite the slight unemployment increase,” Robert Dan J. Roces, chief economist at Security Bank Corp., said in an e-mail.

The employment rate, on the other hand, inched down to 95.9% from 96% in April, but still higher than 95.7% in May 2023.

This was equivalent to 48.87 million employed Filipinos, up by 510,000 from 48.36 million in April, and 605,000 from 48.26 million in May last year.

The employment rate averaged 96% in the January-May period, up from 95.4% a year ago.

In May, the biggest monthly job loss was seen in accommodation and food service activities, which cut 322,000 jobs to bring the total to 2.43 million. Job losses were also seen in fishing and aquaculture (down 241,000 to 1.2 million) and administrative and support service activities (down 135,000 to 2.42 million).

Meanwhile, month-on-month job gains were recorded in agriculture and forestry (up 610,000 to 8.96 million), construction (up 391,000 to 5.09 million), and public administration and defense (up 309,000 to 3.13 million).

Year on year, agriculture and forestry shed 1.02 million jobs to bring the total to 10.17 million. Annual job losses were also seen in fishing and aquaculture (down 543,000 to 1.2 million) and arts, entertainment, and recreation (down 178,000 to 475,000).

On the other hand, construction posted the largest annual job gains, adding 745,000 jobs to 5.09 million. Significant job gains were also seen in administrative and support service activities (up 371,000 to 2.42 million) and manufacturing (up 347,000 to 3.85 million).

“The construction, administrative services, and manufacturing sectors showed strong growth, offsetting losses in other areas. Given these mixed signals, future unemployment trends are uncertain but may stabilize or decrease if positive sector growth continues,” Mr. Roces said.

He expects underemployment to continue to fluctuate, though “not as extremely” as the April-to-May shift.

“For the coming months, La Niña could cause business disruptions that could be a drag on employment data,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an e-mail

Sentro ng mga Nagkakaisa at Progresibong Manggagawa Secretary-General Josua T. Mata said that the government’s job generation program is lacking.

“The government clings to an outdated belief that its role is merely to enable the private sector, resisting the idea of a robust public employment program that guarantees jobs for those who want to work,” he said in a Viber message.

Delayed easing to dampen growth — BSP chief

People shop for school supplies and uniforms in Divisoria, Manila, July 6, 2024. — PHILIPPINE STAR/RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) said that it should not “wait too long” to begin policy easing as this would dampen economic growth, its top official said.

BSP Governor Eli M. Remolona, Jr. said on Monday that the central bank is trying to “strike a balance” between supply and demand to ensure stable prices.

“At this point, in the last mile, we’re almost there, but we have to be more careful than before. Because there’s a risk we might overdo it. There’s a risk we might cause unnecessary loss of output, and we want to minimize that risk,” he said at the Economic Journalists Association of the Philippines-San Miguel Corp. economic forum.

The BSP has kept policy rates at a 17-year high of 6.5% since October last year. It has raised rates by a cumulative 450 basis points (bps) from May 2022 to October 2023 in order to tame inflation.

The last time the BSP cut rates was in November 2020, when it delivered a 25-bp cut, bringing the key rate to 2% to support economic recovery amid the COVID-19 pandemic.

“When I said that we have to be cautious or we have to be careful, that basically means we have to not wait too long for easing because the longer we wait for easing, the more likely it is that we will cause a loss of output, which we don’t want,”  Mr. Remolona said.

“That’s basically where we stand. We’re not going to raise (rates).”

Gross domestic product (GDP) grew by a weaker-than-expected 5.7% in the first quarter, slower than 6.4% a year ago.

To meet the government’s 6-8% growth target, the GDP expansion should average 6.1% in the next three quarters.

Preliminary second-quarter GDP data will be released on Aug. 8, ahead of the Monetary Board’s next policy review on Aug. 15.

The BSP chief said they are still “on track towards reducing rates” despite risks to the inflation outlook. He earlier said that the central bank can cut by 25 bps in the third quarter, and by another 25 bps in the fourth quarter.

“The 3.7% (inflation) is better than expected, so there’s a bit more scope for easing, possibly in August,” he said.

Headline inflation eased to 3.7% in June from 3.9% in May. This also marked the seventh straight month that inflation settled within the BSP’s 2-4% target range.

Mr. Remolona said recent measures such as Executive Order (EO) No. 62 would help tame prices.

“The nonmonetary measures that the government has put in place, especially EO No. 62, are so helpful, because that will help us get to where we want to go, which is stable prices.”

The executive order, signed by President Ferdinand R. Marcos, Jr. last month, slashed tariffs on rice imports to 15% from 35% previously, until 2028. It is largely expected to bring down retail rice prices and overall inflation.

Mr. Remolona also reiterated that the BSP does not need to wait for the Fed before it begins cutting rates.

“I think the Fed is not the most important data among the numbers that we look at. It affects our exchange rate, as you saw, the exchange rate affects inflation, so that’s factored in, but it’s not a decisive factor,” he said.

PESO WEAKNESS
Meanwhile, Mr. Remolona said that the BSP monitors the peso to ensure it does not “depreciate too sharply,” citing its impact on trade.

“We don’t want too much volatility in the peso. We want the peso to move based on fundamentals. When there’s too much volatility, it’s bad for trade. It’s bad for both imports and exports. So, we want to make the movement of the peso smoother,” he said.

The peso has been trading at the P58-per-dollar range since it first sank to that level in May.

Mr. Remolona again said that the peso’s performance is a case of a “strong dollar” due to safe-haven demand.

“The dollar has become the single most important safe-haven currency. Whenever you have tensions around the world, the dollar is stronger. In fact, even if the uncertainty is in the US, it makes the dollar stronger,” he said, adding that other currencies have also depreciated against the US dollar.

He said that the US Federal Reserve’s latest signals have also impacted recent currency movements.

“The Fed has been saying it’s going to be higher for longer and that has weakened all the other currencies against the US dollar,” he said.

The Fed at its most recent policy meeting in June left interest rates unchanged at 5.25%-to-5.5%, and fresh projections from policy makers showed them dialing back expectations for rate cuts this year from three to just one, Reuters reported.

Financial markets and some policy makers, however, still expect the Fed to deliver two cuts of a quarter-point each by yearend.

RRR CUT
Meanwhile, the BSP governor also reiterated that they plan to lower the reserve requirement ratio (RRR), although the timing has yet to be decided.

“We have one of the highest reserve requirements in the region. It doesn’t make sense to me that we should be more strict. In fact, the ideal number is zero. It’s a matter of timing,” he said.

The BSP has already brought down the RRR for big banks to a single-digit level last year from a high of 20% in 2018.

In June 2023, the BSP slashed the ratio for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 9.5%.

“We don’t want to bring it down while we’re still at kind of a somewhat tight monetary policy,” he added.

Mr. Remolona earlier said he is seeking to bring down the RRR to as low as 5%.

Government considering Samurai, dollar bonds this year

Banknotes of Japanese yen and US dollar are seen in this illustration picture taken on Sept. 23, 2022. — REUTERS

THE GOVERNMENT is looking to issue Japanese yen-denominated and US dollar-denominated bonds within the year, the Finance chief said.

“I expect both the dollar and possibly Samurai bonds this year. Both are being considered,” Finance Secretary Ralph G. Recto told reporters on the sidelines of the Economic Journalists Association of the Philippines-San Miguel Corp. economic forum.

The government plans to borrow $5 billion this year, of which $2 billion was raised from the issuance of global bonds last May. This leaves $3 billion that has yet to be raised.

“On the Samurai bonds, the first mandate of the Department of Finance and the Treasury is to ensure that if we have to borrow, we borrow at the lowest rate possible,” he said during the forum.

“Yes, we are considering Samurai bonds, but we’re timing the market, taking a look at the best time to do it, if at all we have to do it.”

The Philippines last issued Samurai bonds in April 2022, raising ¥70.1 billion.

Mr. Recto said the timing of the bond issuance will also depend on the US Federal Reserve’s easing path.

“It depends on the Fed or global markets. Once they start reducing the rates, then that will be an opportunity to borrow,” he added.

The Fed has earlier signaled it may push back the start of its easing cycle to December.

The National Government’s outstanding debt rose to a fresh high of P15.35 trillion as of end-May, with external debt accounting for 32% or P4.9 trillion of the total.

REVENUE COLLECTIONS
Meanwhile, Mr. Recto said revenue collections jumped to P2.13 trillion in the first half of the year, 14.5% higher than P1.86 trillion collected in the same period last year.

“With 50% of the revenue target already achieved in the first semester, we are on track to reach the P4.27-trillion revenue program for 2024,” the DoF said in a separate statement.

Preliminary data from the department showed that tax revenues rose by 8.8% to P1.81 trillion as of end-June from P1.67 trillion a year ago.

Bureau of Internal Revenue collections rose by 10.2% to P1.34 trillion in the six-month period. This was already 44% of the BIR’s P3.05-trillion target for the year.

In a separate statement, the Bureau of Customs said collections jumped by 5.22% to P456.04 billion in the January-to-June period.

It also surpassed its P442.62-billion target for the six-month period by 3.03%, the agency said.

The DoF said nontax revenues in the first half expanded by 64.5% to P316.52 billion.

While the DoF said it is not looking to introduce new taxes this year, there are six measures pending in Congress that are expected to generate P42 billion in annual revenues.

These include the Package 4 of Comprehensive Tax Reform Program, which includes an excise tax on pickup trucks, the value-added tax on digital service providers, excise tax on single-use plastics, the mining fiscal regime, the motor vehicle road user’s change, and amendments to the Corporate Recovery and Tax Incentives for Enterprises law.

Tax collections are expected to increase by an average of 11.8% yearly due to digitalization and plugging of leakages in the tax system, Mr. Recto said.

‘DISCONTINUE POGO’
Meanwhile, Mr. Recto said he is willing to recommend the closure of all Philippine offshore gaming operations to President Ferdinand R. Marcos, Jr.

“If they were not doing anything hanky panky, and they’re paying taxes, fine with me. But I think there are many issues surrounding the POGO (Philippine Offshore Gaming Operators) industry,” Mr. Recto told reporters.

“Because of that, I am willing to recommend to the President to discontinue POGOs,” he said in mixed English and Filipino.

The government could lose P20 billion in annual revenues if it decides to ban POGOs, the Philippine Amusement and Gaming Corp. said earlier. — B.M.D.Cruz

PHL told to boost manufacturing jobs to achieve high-income growth

The Philippine economy is likely to grow by 6-7% this year. — PHILIPPINE STAR/BALDEMOR

By Kyle Aristophere T. Atienza, Reporter

ECONOMISTS flagged the declining employment share of the Philippine manufacturing sector, which they said is key to achieving a high-income status and meeting other development goals including bringing down poverty incidence to single digits at a faster rate.

A De La Salle University (DLSU) School of Economics report on Monday showed that most targets under the Philippines’ development plan for 2023 to 2028 will be met later than expected, and noted that the country would struggle to achieve high growth in the long-run in the absence of an industrial policy that has helped its Southeast Asian neighbors’ manufacturing industries climb the value chain.

Most Filipino workers are employed in sectors of “very low productivity,” the report said, adding the manufacturing sector’s employment share is only 8% and is expected to further decrease to 7% by 2030.

“Historically, countries that have achieved high-income status obtained employment shares in manufacturing from about 20-25%, sometimes even higher,” Mariel Monica Sauler, an economics professor at DLSU, said at the report’s launch in Makati City. “Our current manufacturing employment share is just 8%.”

For the Philippines to become an economic powerhouse, it needs to restructure its economy by taking workers out of the agriculture sector through mechanization and by significantly increasing the employment share of its manufacturing base, said Jesus Felipe, director of the Angelo King Institute for Economic and Business Studies at DLSU.

“We desperately need firms with high organizational capabilities and highly productive, that manufacture and export complex products, and that compete in the world economy,” he said during the event.

Mr. Felipe said the declining number of Filipinos leaving the country for job opportunities abroad — a phenomenon linked to an increase in wage rates locally — provides an opportunity for the country to expand its manufacturing base.

According to the report, the number of overseas Filipino workers (OFWs) will further decline to 1.91 million in 2025 from 1.97 million in 2023.

“We think that our wage rates are going to increase. Therefore, the incentive to leave the country declines,” Mr. Felipe said.

Even as the agriculture sector’s employment share has been on a decline, Ms. Sauler said the share of construction and transport and storage sectors, which have “low productivity” and “low wages,” have increased.

This means there are not enough manufacturing jobs locally, she added.

“Our ASEAN (Association of Southeast Asian Nations) neighbors seem to have always understood the importance of the manufacturing sector better than us.”

The economists said the government should shift its focus away from the agriculture sector, which “needs a solution but is not the solution” to the Philippines’ growth woes.

Achieving an upper middle-income status next year would not be possible if the Philippines’ economic expansion would be slower than expected, they said.

BELOW TARGETS
The DLSU report said the Philippine economy will likely hit 5.5-5.6% growth this year, lower than the government’s 6-7% target.

Under the Philippine Development Plan (PDP) 2023-2028, gross domestic product (GDP) annual growth target is set at 6.5-8% until 2028. However, the DLSU report said GDP growth is likely to be “below target until 2028.”

The Philippines is projected to hit its goal of having a gross national income (GNI) per capita of $6,044-$6,571 by 2029, instead of 2028.

According to the World Bank’s latest income classification data, the Philippines remained a lower-middle income country with a GNI per capita of $4,230 in 2023. To become an upper middle-income country, the Philippines now needs to have GNI per capita of $4,516 to $14,005.

Ms. Sauler said that while the Philippines could reach an upper middle-income status as early as this year, its real GDP will grow below the PDP 2023-2028 target rates.

“If we want to expedite development, the structure of the economy will need to change in the direction of industrialization,” she said. “Repeating the industrialization experience of our East Asian neighbors seems impossible but there is no other option.”

Mr. Felipe said the country needs an “industrial policy” centered on the creation of competitive firms that make high-quality products and jobs that require high skills.

While the number of middle-class Filipinos was increasing, Mr. Felipe said a huge chunk of them or 80% of Filipino workers were earning P15,000 per month at most.

“Only 15% of Filipino workers earned above P15,000. This is the reality of the country. This is the distribution of the structural economy from the point of view of output and from the point of view of employment,” he said.

The manufacturing sector accounted for 18% of the Philippine economy last year, while its employment share was only at 7.3%, he noted.

Mr. Felipe said Asian countries that have pursued the path of industrialization have overtaken the Philippines in terms of GNI per capita.

The GNI per capita of the Philippines is still $4,000, which means the country is “among the poorest countries in the world,” he said.

“All our neighbors have systematically, automatically caught up with us and overtaken us,” he said, citing Vietnam, whose GNI per capita was about eight times lower than that of the Philippines in the 1990s.

“Indonesia overtook the Philippines in about 2008 or 2009,” he added. “The same thing happened with China, and the same thing happened with Thailand. Malaysia has always been richer than the Philippines.”

‘UNNECESSARY’
At the same time, the DLSU report estimated the Philippines will only achieve its PDP target of a 3% deficit-to-GDP ratio by 2031, and the debt-to-GDP ratio of 48-53% by 2032.

Pedro Pascual, a member of the economic team of the Angelo King Institute at De La Salle University, said the Marcos administration’s fiscal consolidation plan is both “unnecessary” and ill-suited” in the current situation, which is marked by low GDP growth.

The government needs to run a larger budget deficit to build infrastructure needed to revamp its economy, he said.

Mr. Pascual noted that household spending remains subdued, as seen in the declining number of Filipinos traveling abroad for leisure.

Real wages had not fully recovered in 2023 to the pre-pandemic level due partly to inflation, he said. “They will in 2024 to 2025.”

But inflation should not be a major economic concern for the country since it’s mainly driven by rice prices, Mr. Pascual said, adding that it’s up to the government how it will lessen the country’s dependence on or find alternatives for the commodity.

Rice inflation eased for the straight month in June to 22.5% from 23% a month earlier.

“Overambitious disinflation can create a problem,” he added.

The DLSU report also projected that poverty incidence will likely go down to 8.8-9% only by 2035, instead of 2028.

The unemployment rate will settle within the 4-5% target range by 2028, the report showed.