TAIPEI – Taiwan’s defense ministry on Thursday reported a surge in Chinese military activity the previous day, but officials said they did not detect any live-fire exercises in a drill zone off the island’s southwestern coast.
Democratically governed Taiwan, which China views as its own territory, said on Wednesday the Chinese military had set up a zone for “shooting” drills in the southwestern part of the Taiwan Strait, off the major population centers of Kaohsiung and Pingtung.
Taiwan’s government condemned the move as dangerous, provocative and a threat to commercial flights and shipping, adding no prior notice was given. China has yet to comment.
In its daily morning update of Chinese military activities in the prior 24 hours, Taiwan’s defense ministry said it had detected 45 Chinese military aircraft and 14 navy ships operating around the island, including seven ships in the Chinese-declared drill zone, 40 nautical miles off Taiwan.
In an accompanying map, the ministry showed the location of the drill zone which it said was 70 nautical miles long and 20 nautical miles wide, though well outside of Taiwanese territorial waters.
NO LIVE FIRE
Two senior Taiwanese officials, speaking to Reuters on condition of anonymity given the sensitivity of the situation, said Taiwan did not detect any live-fire shooting in China’s “drill zone” and there was no further escalation of military tensions.
They said the Chinese move was very similar to China’s other recent military activity in the region, such as in the South China Sea and that off Australia’s coast, during which China’s navy did not give adequate notice about their exercises.
“This is extremely rare and exceeds general expectations,” one of the officials said, referring to the Chinese military’s move of running exercises without prior warning.
“Allies are exchanging ideas,” the official said. “The democratic camp must do some risk management for our defense.”
Taiwan’s foreign ministry said in a statement that China was the “biggest troublemaker” in the region.
“The Ministry of Foreign Affairs calls on the international community to continue to pay attention to the security of the Taiwan Strait and the region, and to jointly condemn China’s repeated and unilateral actions,” it said on Thursday.
Speaking in Washington on Wednesday, U.S. President Donald Trump declined to comment in response to a question about whether the United States would ever allow China to take control of Taiwan by force.
However, in a separate interview with Fox News, U.S. Secretary of State Marco Rubio said the government had a long-standing position on Taiwan it was not going to abandon, namely being against any forced or coercive change in Taiwan’s status.
“America has existing commitments that it has made to prevent that from happening and to react to it, and that would be executed on…The Chinese are aware of this as well,” he said, when asked what would the U.S. do if China attacked.
CHINA HOLDS PARLIAMENT MEETING NEXT WEEK
Taiwan, whose government rejects China’s sovereignty claims, has repeatedly complained of Chinese military activities, including several rounds of full-scale war games during the past three years.
Next week, China holds the annual meeting of its largely rubber stamp parliament, the country’s biggest domestic political event, where it will unveil its defense budget for the year.
March also marks the 20th anniversary of China’s “anti-secession law” that allows it to use force on Taiwan in extreme cases, though the legislation is vague.
This week, Taiwan also detained a Chinese-linked cargo vessel on suspicion of damaging an undersea communications cable.
Late on Wednesday, prosecutors in the southern city of Tainan said they had ordered the ship’s Chinese captain detained, and prohibited the seven other crew members, also all Chinese, from leaving Taiwan.
China said on Wednesday that Taiwan was casting aspersions before the facts were clear, and that undersea cables around the world are routinely damaged by accident. – Reuters
WASHINGTON – U.S. President Donald Trump’s administration on Wednesday ordered federal agencies to undertake more large-scale layoffs of workers, while the president let downsizing czar Elon Musk take a star role at his first cabinet meeting and discuss his ambitious budget-cutting targets.
A new memo instructed agencies to submit plans by March 13 for a “significant reduction” in staffing to a federal workforce already reeling from waves of layoffs and program cuts by Mr. Musk’s so-called Department of Government Efficiency. It did not specify the number of new layoffs.
The memo represents a major escalation in Mr. Trump and Mr. Musk’s campaign to slash the size of the U.S. government.
Thus far, the layoffs have focused on probationary workers, who have less tenure in their current roles and enjoy fewer job protections. The next round would target the vastly bigger pool of veteran civil servants.
At the cabinet meeting, Mr. Trump said Lee Zeldin, the Environmental Protection Agency administrator, plans to cut up to 65% of his more than 15,000 employees.
On Tuesday, an Interior Department source told Reuters that bureaus such as the U.S. Fish and Wildlife Service and the Bureau of Indian Affairs have been ordered to prepare for workforce reductions as high as 40%.
Some 100,000 of the nation’s 2.3 million civilian federal workers have been fired or taken buyouts.
Mr. Trump offered Mr. Musk an extraordinary sign of support by inviting the billionaire to tout his work to the presidential cabinet, some of whom had pushed back on his recent demand that all of their employees justify their work or face termination.
Mr. Musk is not a cabinet-level official — and faced no approval by the U.S. Senate — and the White House has claimed in court papers that he is not in charge of DOGE, even though Trump has said he is and Musk aides staff DOGE.
As cabinet secretaries looked on, the Tesla and SpaceX CEO – wearing a black “Make America Great Again” baseball cap and a T-shirt reading “tech support” – expressed confidence he can cut the $6.7 trillion budget by $1 trillion this year. That extremely ambitious target would likely entail significant disruption of government programs.
Mr. Trump made it clear he backed Mr. Musk’s effort, giving him the floor at the top of the meeting and later asking the gathered officials, “Is anyone unhappy with Elon?” to scattered laughs.
Later on Wednesday, Trump signed an executive order directing agencies to work with DOGE to review and terminate all “unnecessary” contracts and instructing the General Services Administration, which manages the government’s real estate, to create a plan for disposing of any unneeded property.
Thus far, Mr. Trump and Mr. Musk have failed to slow the rate of spending. According to a Reuters analysis, the government spent 13% more during Trump’s first month in office than during the same time last year, largely due to higher interest payments on the debt and rising health and retirement costs incurred by an aging population.
Mr. Trump reiterated his promise to refrain from cutting popular health and retirement benefits, which account for nearly half of the budget.
“We’re not going to touch it,” said Mr. Trump.
Mr. Trump is simultaneously pushing Congress to extend his 2017 tax cuts, set to expire at year’s end. The nonpartisan Committee for a Responsible Federal Budget estimates the 2017 cuts added $2.5 trillion to the nation’s debt, now $36 trillion, and that extending the tax cuts could cost more than $5 trillion over a decade.
Republicans are weighing cuts to healthcare and food aid for the poor to help pay for the tax cuts, though specifics have not yet emerged.
CONFUSION AND THREATS
Some cabinet secretaries were taken by surprise over the weekend when federal workers received an email requiring them to list their accomplishments for the week, a demand Musk said would result in termination if ignored.
Some agencies told employees to ignore the directive, prompting days of confusion over whether Musk and Trump could make good on the threat.
Mr. Musk, the world’s richest person, told the cabinet his email was an attempt to find out whether government paychecks were going to actual workers.
“We think there are a number of people on the government payroll who are dead,” he said, without providing any evidence.
Mr. Trump again suggested the roughly 1 million workers who did not respond to Musk’s email might be at risk of losing their jobs.
Mr. Trump and Mr. Musk’s unprecedented government overhaul has also frozen foreign aid and disrupted construction projects and scientific research.
In a court filing on Wednesday, the Mr. Trump administration said the State Department and the U.S. Agency for International Development had canceled nearly 10,000 grants and contracts.
The GSA, informally known as the government’s landlord, plans to terminate 1,100 leases for office space by the end of the year, according to a person briefed on the matter.
The terminations will target so-called soft-term leases, which are no longer subject to cancellation penalties and can be easily ended, the person said. The GSA manages roughly 2,800 soft-term leases in total, and thousands more “firm-term” leases that cannot be ended without cause. – Reuters
BEIJING – New Zealand’s foreign minister said he had raised concerns over China’s recent live-fire drills in the Tasman Sea during meetings with Chinese leaders on Wednesday.
The issue was a lack of notice given to New Zealand over the military exercises off its coast, Winston Peters told reporters in Beijing after meetings with Chinese Foreign Minister Wang Yi and Vice President Han Zheng.
“This is a failure in (our special relationship) at this time, and we’d like to have it corrected into the future,” he said.
In their meeting, Mr. Wang told Mr. Peters both countries should become partners of mutual trust and resolve “some specific differences” through dialogue, according to a readout from China’s foreign ministry.
Mr. Peters is in Beijing for a three-day visit after relations between the two countries became strained over the drills.
New Zealand and Australian officials said that China had conducted live-fire exercises in international waters between the two nations, giving little notice and forcing commercial airlines to divert flights.
The three Chinese ships were south of Tasmania in Australia’s exclusive economic zone and were now moving west, the New Zealand Defense Force said Wednesday.
Mr. Peters said he also raised China’s missile launch test last September that landed near French Polynesia’s exclusive economic zone, of which “most Pacific Island nations got no warning at all” and New Zealand got “little warning.”
China was considering the issue of providing earlier notice for future naval drills, he said.
COOK ISLANDS DEALS
Mr. Peters has also voiced concerns that the Cook Islands, an independent country in free association with New Zealand, had signed a comprehensive strategic partnership and other agreements with China, without satisfactorily consulting with New Zealand.
China “needs to understand the constitutional arrangement” between New Zealand and the Cook Islands, Peters told reporters, adding that New Zealand got more information out of China on the deals than it got out of the Cook Islands.
Mr. Peters said last week his country must “reset” its relationship with its Pacific neighbour after its opaque dealings with Beijing.
The agreement spans education, the economy, infrastructure, fisheries, disaster management and seabed mining. It set off alarm bells in New Zealand due to concerns over China’s growing presence in the Pacific region and potential threats to the country’s national security.
Mr. Wang said that China respects the traditional relations between New Zealand and the Pacific island countries.
The Cook Islands is a self-governing nation and maintains free association with Wellington, sharing a head of state and citizenship rights. It is permitted an independent foreign policy, but the two countries are required to consult on security, defense and foreign policy issues.
The two diplomats also discussed trade and economic issues during Wednesday’s meeting, with Wang calling for cooperation on new growth engines such as artificial intelligence and green economy.
About a quarter of all New Zealand exports went to China in 2024. – Reuters
WASHINGTON – The Federal Bureau of Investigation said on Wednesday that North Korea was responsible for the theft of approximately $1.5 billion in virtual assets from cryptocurrency exchange ByBit.
The agency said it refers to this specific North Korean malicious cyber activity as “TraderTraitor.”
“TraderTraitor actors are proceeding rapidly and have converted some of the stolen assets to bitcoin and other virtual assets dispersed across thousands of addresses on multiple blockchains,” it said in a public service announcement.
The FBI said it is expected the assets will be further laundered and eventually converted to fiat currency.
ByBit said on Friday an attacker gained control of an ether wallet and transferred the holdings to an unidentified address.
The exchange caters to more than 60 million users worldwide and offers access to various cryptocurrencies, including bitcoin and ether. – Reuters
A dishwasher-sized NASA satellite was launched into space from Florida on Wednesday to identify where water – a precious resource for lunar missions – resides on the moon’s surface in places such as the permanently shadowed craters at its poles.
A SpaceX Falcon 9 rocket lifted off from the Kennedy Space Center in Cape Canaveral carrying NASA’s Lunar Trailblazer orbiter. The Lunar Trailblazer spacecraft was built by Lockheed Martin’s space division. The satellite was a secondary payload onboard the rocket, with the primary payload being a lunar lander mission led by Intuitive Machines.
The lunar surface is often thought of as arid but previous measurements have found the presence of some water, even in warmer sun-lit locations. In cold and permanently shadowed places at the lunar poles, it has long been hypothesized that there could be significant amounts of water ice.
Lunar Trailblazer, which weighs about 440 pounds (200 kg) and measures about 11.5 feet (3.5 meters) wide when its solar panels are fully deployed, is being sent to find and map this water on the moon’s surface.
For future moon exploration, including potential long-term lunar bases staffed by astronauts, lunar water would be of vital importance because it could be processed not only as a drinking supply but also into breathable oxygen and hydrogen fuel for rockets.
The bottoms of hundreds of craters at the moon’s South Pole, for instance, are permanently shadowed and may hold ice patches. Some water also may be locked inside broken rock and dust on the lunar surface.
Lunar Trailblazer is scheduled to perform a series of moon flybys and looping orbits over a span of several months to position itself to map the surface in detail. It eventually will orbit at an altitude of roughly 60 miles (100 km) and collect high-resolution images of targeted areas to determine the form, distribution and abundance of water and to better understand the lunar water cycle.
“We see tiny amounts of water on sunlit portions of the moon, which is mysterious,” said planetary scientist Bethany Ehlmann, the mission’s principal investigator and director of Caltech’s Keck Institute for Space Studies.
But, Ms. Ehlmann added: “The most interesting (aspect) for many is the potentially large amounts of ice in the permanently shadowed regions of the lunar poles. Lunar Trailblazer will peer inside to see how much is at the surface.”
Such locations could serve as a resource for lunar explorers in the future.
“Understanding where a rover would drive or an astronaut would walk to examine deposits for science and future resource use will benefit all future landed missions,” Ms. Ehlmann said.
Two Lunar Trailblazer instruments will take measurements from orbit together. The Lunar Thermal Mapper, or LTM, will map and measure the lunar surface temperature. The High-resolution Volatiles and Minerals Moon Mapper, or HVM3, will look at the moon’s surface for a telltale pattern of light given off by water.
“We believe that the movement of water on the moon is likely driven by the surface temperature. So by measuring the presence and amount of water via the HVM3 instrument and the surface temperature via the LTM instrument we can better understand this relationship,” said University of Oxford planetary scientist Tristram Warren, who worked on developing the LTM instrument.
Lunar water is thought to come from several potential sources. One possibility is that solar wind – charged particles from the sun – could react with lunar minerals to create water. Another source might be comets or meteorites, which may have delivered water to the moon over billions of years. The exact amount of lunar water remains uncertain, but it is potentially hundreds of millions of tons.
“Other than for human exploration, lunar water is also scientifically very exciting. The moon has been orbiting near the Earth almost since the formation of Earth itself. So understanding the origin of the lunar water might help us to understand the origin of water on Earth,”Mr. Warren said. – Reuters
BOSTON – The founder of a cryptocurrency financial services firm has been extradited from Portugal to face U.S. charges that he participated in a wide-ranging scheme to manipulate the market for digital tokens on behalf of client companies.
Aleksei Andriunin, the founder and CEO of cryptocurrency “market maker” Gotbit, was ordered detained following an appearance in Boston federal court on Wednesday, one day after his extradition, the U.S. Department of Justice said.
The 26-year-old Russian national during the court hearing pleaded not guilty to charges of wire fraud and conspiracy to commit market manipulation and wire fraud. His lawyer, Roger Burlingame at the law firm Dechert, declined to comment.
Mr. Andriunin and his company were among 15 individuals and three firms charged in October following a novel investigation into the crypto sector dubbed “Operation Token Mirrors,” in which the FBI for the first time directed the creation of its own digital token to help catch fraudsters in the market.
Prosecutors said that from 2018 to 2024, Gotbit engaged in “wash trading,” a form of sham trading, and market manipulation on behalf of several cryptocurrency clients to help artificially inflate trading volume for their tokens.
The indictment cited a 2019 interview published online in which Mr. Andriunin described developing a code to wash trade cryptocurrencies to artificially inflate trading volume so they could get listed and trade on larger cryptocurrency exchanges.
Prosecutors said Gotbit made wash trades worth millions of dollars and received tens of millions of dollars in proceeds for its services for cryptocurrencies including Saitama and Robo Inu. Individuals associated with those cryptocurrencies have also been charged.
Mr. Andriunin was arrested in Portugal where he was residing in October when the charges against him and the others were first announced.
Gotbit and two of its employees in Russia are also facing charges, though they have not appeared in court to face them. – Reuters
By Luisa Maria Jacinta C. Jocson and Aaron Michael C. Sy, Reporters
THE PHILIPPINE ECONOMY’S biggest risk this year is the looming global trade war, Security Bank said, which could also cause the central bank to be more “external-dependent” to account for these uncertainties.
“We’re less affected compared to the likes of China and Japan if ever the automobile tariffs (push through). But we’re not purely unscathed from a trade war,” Security Bank Corp. Vice-President and Research Division Head Angelo B. Taningco told reporters on Wednesday.
“Being part of the global value chain, we will also get affected in terms of the growth of our exports, it will get weaker.”
Security Bank expects the country’s gross domestic product (GDP) to grow by 6.1% this year, at the low end of the government’s 6-8% target.
However, this base case does not take into account the impact of a possible trade war.
Mr. Taningco said it will be “difficult” for the Philippines to grow by 6.1% if the trade uncertainties materialize.
“It depends on the magnitude of the trade war. It depends also on how much the tariff will be hiked,” he added.
Markets are bracing for the potential impact of US President Donald J. Trump’s trade policies, such as reciprocal tariffs on all countries that tax US imports.
Since taking office in January, Mr. Trump has imposed a 10% duty on Chinese imports. A 25% tariff on Mexico and Canada, as well as a tariff on all steel and aluminum imports is set to take effect next month.
Mr. Taningco said that if the US pushes its plans for reciprocal tariffs, other countries are expected to retaliate.
He said the “tit-for-tat” retaliation will likely be more widespread than during Mr. Trump’s first term, as more countries are involved.
POLICY IMPACT
The slew of tariffs will have implications on US inflation and monetary easing, which could also impact the Philippines’ own rate-cutting cycle.
“It will be worse on inflation in the US if they do it alongside the tax cuts. Demand-side inflation, that’s scarier, because inflation will spike. So, no more rate cuts,” Mr. Taningco said.
“Growth will go down and that’s being felt by the consumers. Normally, when they are scared, consumers in the US, they pull back their spending plans.”
This could prompt the Bangko Sentral ng Pilipinas (BSP) to be “more external-dependent,” Mr. Taningco said, amid heightened global uncertainty.
“If tariffs are raised sharply, prospects for rate cuts in the US might diminish. But on second thought, your growth prospects will diminish. But the central bank has a dual mandate. It will be a delicate balancing act.”
Security Bank expects the BSP to cut rates by a total of 50 basis points (bps) this year through 25-bp cuts at each of its June and October meetings.
Mr. Taningco said the interest rate is not yet a concern for now. “It’s not yet that necessary to (move in) lockstep (with the Fed), because of the uncertainties,” he said.
“But if you ask me now, it’s safer to lockstep. If the Fed cuts now, then we can cut as well, hypothetically.”
The BSP unexpectedly left the benchmark rate unchanged at 5.75% at its Feb. 13 meeting. BSP Governor Eli M. Remolona, Jr. said the pause was due to “global trade uncertainties.” This after the central bank cut rates at three straight meetings since it began its easing cycle in August.
Meanwhile, Security Bank expects the peso to end at P58-per-dollar level this year. He also said the peso is unlikely to breach the record-low P59 mark this year.
“Across the board, the new risk of a trade war would be much higher, and the implication on the market is, the dollar will have to weaken, although it’s a risk-haven currency.”
The peso closed at P57.88 per dollar, strengthening by five centavos from its P57.93 finish on Tuesday.
On the other hand, Mr. Taningco said that growth will be supported by election-related spending ahead of the May polls.
“Historically, GDP is high during an election year compared to the prior election year. So, there’s an upside this year versus last year,” he said.
FASTER CONSUMPTION
Meanwhile, UBS Investment Bank Global Research expects Philippine GDP to expand by 5.9% this year, faster than 2024 amid a recovery in domestic consumption and investments.
“We see an improving growth outlook for the Philippines. We forecast GDP growth to accelerate from 5.6% in 2024 to 5.9% in 2025, which is close to trend,” UBS Investment Bank Global Research ASEAN and Asia Economist Grace Lim said in a webinar on Wednesday.
“The underlying positive growth is driven by domestic demand as both investment and consumption accelerate into 2025,” she added.
Ms. Lim said household consumption will be supported by labor market growth and easing food inflation.
“The labor market is still holding up and the unemployment rate has been low and stable at around 3%,” she said.
Private consumption, which accounts for about three-fourths of the economy, grew by 4.8% in 2024, slowing from 5.6% in 2023.
The unemployment rate fell to a record-low 3.8% in 2024, equivalent to 1.94 million jobless Filipinos.
“On the basis of gradually falling food prices as some of the supply constraints ease and resilient labor incomes, we still expect consumption to recover gradually from the second quarter of 2025 onwards, after a period of high inflation had weighed on consumer sentiment,” Ms. Lim said.
Headline inflation accelerated by 2.9% in January, steady from December.
However, food inflation alone accelerated to 4% from 3.5% in December and 3.3% in 2024.
Ms. Lim noted food inflation could see some volatility due to food supply shocks stemming from weather-related risks.
“In addition, we think that government spending can provide some support to growth, particularly in the first half of 2025… We also expect private investment to recover gradually as financial conditions become less restrictive and as consumer sentiment also gradually picks up,” Ms. Lim added.
Further monetary easing by the BSP, as well as the cut in banks’ reserve requirement ratio, is expected to boost private investments.
UBS said it expects the BSP to cut rates two times this year, once in April and then in September.
By Ashley Erika O. Jose, Reporter
THE PHILIPPINE stock market is likely to bounce back this year, amid easing inflation and further rate cuts by the central bank, analysts said.
“It is the first time in two years that we’re bullish on this market,” First Metro Securities Brokerage Corp. First Vice-President and Equity Research Division Head Reuben Mark Angeles said during the BusinessWorld Insights: Stock Market 2025 forum on Wednesday.
“For the last two years, we’ve been very bearish. And we see a lot of things that have turned around. And we see that at the end of the year, we will see stronger equity market performance.”
Mr. Angeles said PSEi is expected to hit the 7,600 level by yearend.
The PSE index (PSEi) closed 2024 at 6,528.79, up by 1.2% from its 6,450.04 finish in 2023. This marked the first time the bellwether index closed higher since 2019.
He noted the Philippine economy is on a “clear growth path,” with the midterm elections and favorable base effects to stimulate consumption this year.
April Lynn C. Lee-Tan, first vice-president and corporate strategy and chief investor relations officer of COL Financial Group, Inc., said there would be more opportunities for growth in the stock market, especially if foreign investments come in.
“We have a general positive outlook because of cheap valuation. The trends last year were high interest rates, high inflation, which are no longer the case now,” Ms. Lee-Tan told BusinessWorld on the sidelines of the forum.
Michael Gerard D. Enriquez, president of Sun Life Investment Management and Trust Corp., gave a moderate projection of 7,500 for the PSEi, which depends on further rate cuts, resilient corporate earnings growth and inflation is maintained at current levels.
He gave a conservative estimate of 6,608 for the PSEi if there are fewer-than-expected rate cuts, a weaker peso and heightened geopolitical tensions.
He said his “aggressive” outlook of 8,512 for the PSEi could materialize if the local currency starts to recover, the central bank implements more rate cuts and if there is renewed foreign interest in Philippine equities.
The Bangko Sentral ng Pilipinas (BSP) surprised markets after it left the benchmark rate unchanged at 5.75% at its Feb. 13 meeting. This after the central bank cut rates at three straight meetings since it began its easing cycle in August.
BSP Governor Eli M. Remolona Jr. has said the Monetary Board may slash benchmark interest rates by a total of 50 basis points (bps) this year as “policy insurance” against risks, with the cuts likely to be done in 25-bp increments each in the first and second half.
Ms. Lee-Tan said that the Philippines is less vulnerable to the US President Donald J. Trump’s tariff threats, as the country only accounts for 1% of US imports. She also noted the country is driven mainly by consumption, making it less affected by Mr. Trump’s protectionist policies.
Mr. Trump has announced this month its plans to impose tariffs on auto, chip, and pharmaceutical imports over the course of the year.
The US President has also tightened immigration policies, which may affect remittances of overseas Filipinos workers (OFW). Around 40% of remittances are from the OFWs in the US.
Mr. Angeles noted that investor confidence may be negatively impacted if remittances are significantly affected.
Unicapital Inc. Senior Vice-President for Investment Banking Pamela Louise Q. Victoriano said she sees the PSEi ending at the 7,800 level by yearend.
“Opportunities continue to persist. We are cautiously optimistic, we feel that the fundamentals for the Philippines are still there, and this represents good long-term growth prospects for the country,” Ms. Victoriano said.
BDO Securities Corp. Head Trader Jasper M. Jimenez said investors should diversify their portfolios but should favor stock market investments.
“Investors’ portfolios have to adapt to the changing market conditions. The stock market today is very different from before, we see a very fast appreciation due to market reasons. In terms of size, they can take advantage of this,” Mr. Jimenez said.
Analysts also noted that market reforms, such as the proposed reduction of sales transaction tax, are expected to boost stock market activity.
Mr. Angeles said European funds are likely to go back to the local stock market after the Philippines’ recent exit from the Financial Action Task Force’s “gray list.”
By Luisa Maria Jacinta C. Jocson, Reporter
DIGITAL BANKS in the Philippines remained in the red in 2024 and will likely continue to post losses in the near term as they struggle to expand the reach of their credit products, a central bank official said.
“Fintech startups, including digital banks (DBs), often face losses in their initial years due to significant pre-operating and establishment expenses,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier told BusinessWorld.
“As startups, it is expected that most of the DBs will not reach positive net results within the first five to seven years of operations,” she added.
Preliminary data from the BSP showed that the digital banking sector posted a P7.07-billion net loss as of end-December.
The digital bank industry has been in the red since the BSP began consolidating data from the sector starting March 2023.
Ms. Fonacier said the losses were mainly due to digital lenders putting in large investments for technology and personnel, as well as high customer acquisition costs.
Digital banks have also been unable to expand their lending products, she added.
“While DBs have been able to attract deposits at a fast rate, the rollout of credit products has not kept pace, as shown by the low industry loan-to-deposit ratio of 36%.”
“There are difficulties in securing high-quality loans due to the limited financial data or credit history of their target market,” she added.
Latest BSP data showed that deposits in digital banks stood at P87.39 billion as of September 2024, jumping by 34.1% from P65.18 billion a year prior. The number of deposit accounts stood at 16.25 million, while depositors stood at 10.55 million.
Meanwhile, the sector’s gross loans stood at P29.78 billion as of September 2024, up by 1.2% from P29.42 billion a year prior.
“In addition, retaining customers over a long term can also be a challenge given that the market still has low switching barriers,” Ms. Fonacier said.
“While this pattern aligns with the experiences of DBs in other regions, we have also observed that our DBs continue to face scaling challenges, particularly in expanding their credit market.”
She noted that digital lenders must be able to “enhance their credit scoring models, accelerate the deployment of credit products, and demonstrate their role in expanding financial access for underserved communities.”
In a recent report, Fitch Ratings said that most digital banks in the Asia-Pacific region are subject to higher credit risks as they target small businesses as their main borrowers.
There are currently six digital banks operating in the Philippines, namely, Overseas Filipino Bank, a subsidiary of Land Bank of the Philippines; Tonik Digital Bank, Inc.; GoTyme Bank of the Gokongwei group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital Bank of Union Bank of the Philippines, Inc.
Overseas Filipino Bank was the first to obtain a digital banking license, which launched in 2020. By 2022, all six digital banks were in operation.
Ms. Fonacier said the public is also still wary of using digital services, which is another barrier online banks must overcome.
“With concerns emanating from potential cybersecurity risks, lack of awareness regarding the benefits of digital banking may affect market growth, customer adoption and loyalty, and opportunities for financial inclusion.”
“To address this, DBs should continue their push for financial inclusion and invest in financial education initiatives, emphasizing the advantages, risks involved, and safe use of digital financial solutions,” she added.
One of the primary concerns of the digital banking sector has been its financial stability.
“Several rating agencies and multilateral organizations still view that DBs in the Philippines are unlikely to turn a profit soon, as they continue to face bad loans and high operating costs,” Ms. Fonacier said.
Data as of end-September showed that just two out of the six digital banks have posted net income as of the reporting period.
“For DBs to achieve profitability, they must exhibit their capacity to achieve business goals to realize overall positive margins and financial sustainability,” Ms. Fonacier said.
“DBs also need to strengthen governance, particularly oversight practices across business functions to properly direct the business operations towards achieving business goals and eventual profitability.”
Digital banks can also engage with partners that already have “established digital capabilities and broader customer base.”
“This collaborative approach has been successfully applied by DBs in other jurisdictions as it provided them the essential foundation for growth and innovation,” she added.
Digital banks are also seen to be catalysts in “deepening financial inclusion and driving digital transformation in the banking industry,” Ms. Fonacier said.
“While pain points were experienced in their first two years of commercial operations, DBs are expected to refine their business strategies and propositions to better serve the customers and the financial sector as a whole.”
The share of Filipinos with bank accounts reached 65% of the adult population in 2022, according to latest data from the BSP.
The central bank wants to onboard at least 70% of adult Filipinos into the formal financial system.
NEW DIGITAL BANKS
Meanwhile, profitability is just among several considerations the central bank will look into as it reviews new applicants.
“While profitability is a valid concern for DBs, the BSP takes a more holistic approach and does not focus solely on profitability when assessing new applicants,” Ms. Fonacier said.
“Rather, new DB applicants will undergo a more comprehensive review process that will primarily focus on value proposition, business models, and resource capabilities which should include a demonstration of their potential for sustained profitability.”
The Monetary Board in January lifted the three-year moratorium on new digital banking licenses.
The BSP is now set to allow four more digital banks to operate in the country, which would bring the total to 10.
These can either be new applicants or banks that will convert their existing license to a digital one.
“Applicants must also demonstrate sufficient capabilities and readiness to deploy their digital solutions and to sustainably grow their business given inherent challenges in the Philippine market,” Ms. Fonacier said.
While there has been no official filing yet, she earlier said there are two foreign digital banking players interested in entering the Philippine market.
“Relatedly, these new players will be assessed not only on their ability to help the digital banking industry recover from recorded losses but also on their contribution in achieving the policy objectives of the digital banking framework,” she said.
“This includes promoting wider adoption and use of digital financial services in the country and expanding their reach into underserved markets.”
LISTED DIGITAL entertainment company DigiPlus Interactive Corp. said it will establish DigiPlus Global Pte. Ltd. (DigiPlus Global) in Singapore to expand its international footprint.
“Singapore is a world-class hub for business, technology, and talent, making it an ideal base for our global initiatives,” said DigiPlus Interactive Chairman Eusebio Tanco in a statement on Wednesday.
“With the incorporation of DigiPlus Global, we are strengthening our ability to attract top-tier professionals, forge strategic alliances, and enhance our international presence, all while remaining deeply committed to our home market in the Philippines,” he added.
The company said its board of directors approved the plan during a meeting on Feb. 26.
DigiPlus Global will be wholly owned by Diginvest Holdings, Inc., a 100% subsidiary of DigiPlus Interactive. It will serve as a support function center and regional hub, focusing on strategic partnerships, talent acquisition, and international expansion — key pillars of DigiPlus’ long-term growth strategy.
DigiPlus Interactive operates digital entertainment platforms, including BingoPlus, the country’s first government-approved online bingo platform; ArenaPlus, a premier sportsbook; and Gamezone, a growing platform for casual and arcade gaming.
While DigiPlus Global will focus solely on corporate and operational support functions, it will not engage in any iGaming operations in Singapore, strictly adhering to the country’s regulatory framework, the company said.
“This milestone marks a bold step in DigiPlus Interactive’s expansion, leveraging Singapore’s advanced business infrastructure and global connectivity to further position the company as a leader in digital entertainment,” the company said.
DigiPlus Interactive has earmarked up to P3 billion for capital expenditures in 2025 as it pursues further expansion.
In January, DigiPlus announced that its subsidiary, DigiPlus Brazil Interactive Ltda., secured a gaming license from the Brazilian Ministry of Finance’s Secretariat of Prizes and Bets.
The license allows DigiPlus to operate land-based and online sports betting, electronic games, live game studios, and other fixed-odds betting activities in Brazil. The company aims to tap into Brazil’s population of over 200 million and leverage the recent liberalization of its gaming market.
At the local bourse on Wednesday, the company’s shares climbed 0.41% to close at P36.70 each. — Sheldeen Joy Talavera
ACEN CORP., through its subsidiary, has started building a large-scale battery energy storage system (BESS) alongside its 720-megawatt (MW) solar project in New South Wales (NSW), Australia.
ACEN Australia has engaged international energy storage specialist Energy Vault to lead the construction of the facility, which will be capable of storing 200 megawatts of energy for two hours, the company said in a media release on Wednesday.
The facility is the first large-scale BESS in the region and is expected to provide on-demand energy to customers in both NSW and Queensland. Its construction is supported by the NSW Government’s Emerging Energy Program.
The 400-megawatt-hour project will involve “the integration of advanced grid-forming inverters to provide system strength, stability, and network security services.”
“This is the first large-scale battery storage project to be built in New England, so this is a great milestone for the region and the National Electricity Market,” said Tim Greenaway, ACEN Australia’s head of construction and engineering.
Mr. Greenaway stated that geotechnical and design work is nearly complete, and installation of the electrical infrastructure to connect the battery is well underway.
“We expect the civil and base electrical work for the BESS to begin in the next month or two, in preparation for the delivery of the battery modules in the second half of the year,” he said.
Energy Vault Vice-President of Sales Asia Lucas Sadler said the New England Battery Project is the company’s first project to enter the construction phase in Australia.
“There’s a lot of global attention on Australia’s battery storage market, and we’re very happy to be making a positive contribution to such an important project,” Mr. Sadler said.
The BESS will be co-located at the Stage 1 Solar Power Project site, which has 400 MW of capacity and was completed in 2023. Construction of the second 320-MW phase is scheduled to begin in 2026.
A BESS is a type of energy storage system that uses batteries to store electricity from the grid and release it when needed to augment supply or enhance power quality.
ACEN, the listed energy platform of the Ayala Group, holds approximately 6.8 gigawatts of attributable renewable energy capacity across operational, under-construction, and committed projects. It operates in the Philippines, Australia, Vietnam, India, Indonesia, Laos, and the US. — Sheldeen Joy Talavera
