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US, Australia commit to better Pacific banking as China influence grows

PACIFIC ISLANDS FORUM/FORUMSEC.ORG

 – US and Australian officials said on Monday they were committed to improving financial connectivity in the Pacific, as lenders and policymakers from across the region met to discuss bolstering banking services amid increasing interest from China.

Pacific Island countries are facing challenges as Western banks end long-term relationships with their counterparts in small nations in the region and others look to close operations, limiting access to US dollar-denominated bank accounts.

Australian Assistant Treasurer Stephen Jones said Canberra wanted to be the partner of choice in the Pacific, whether in banking or defense.

“We would be concerned if there were nations operating within the region whose principle objective was advancing their own national interest as opposed to the interests of the pacific island nations,” Mr. Jones said on the first day of the two-day Pacific Banking Forum in Brisbane, when asked about Chinese banks stepping into the vacuum.

He declined to say whether China fit that description. Australia and the US are co-hosting the forum.

Washington has also boosted efforts to support Pacific Island countries to curb China’s influence.

“We recognize the economic and strategic significance of the Pacific region, and we are committed to deepening our engagement and collaboration with our allies and partners to bolster financial connectivity, investment, and integration,” said US Treasury Undersecretary Brian Nelson, who is responsible the department’s terrorism and financial intelligence office.

Western banks are de-risking to meet financial regulations, which has made it harder to do business in Pacific Island nations, in turn undermining financial resilience in these countries, according to experts.

Neither the US nor Australia have yet to make detailed announcements at the forum, much of which is closed to media, but their comments come as Western nations who have traditionally held sway in the Pacific grow increasingly concerned about China’s regional influence.

Beijing has signed key defense, trade and financial deals in the region. Bank of China has opened offices across the region and signed an agreement with Nauru to explore opportunities there earlier this year after an Australian bank said it would pull out of the country.

Mr. Nelson told those attending the meeting that the US recognized and is committed to addressing bank de-risking across the Pacific.

“There is a lot to be gained by promoting financial integration around the world,” he added. “But conversely, when correspondent banking relationships dwindle, the consequences can be substantial.”

Mr. Nelson said over the past decade correspondent banking relationships in the Pacific had declined at twice the rate of the global average. The World Bank and Asia Development Bank is working on programs to improve corresponding banking relations.

US Treasury Secretary Janet Yellen said in a virtual address to the meeting that Washington’s focus was on supporting the Pacific’s economic resilience, including through strengthening access to correspondent banks.

“The United States is committed to an Indo-Pacific that is free and open, connected, prosperous, secure, and resilient. A strong and connected Pacific region has benefits for the United States and for the global economy,” she said. – Reuters

Dubai’s high-end property sales undented by drop in listings, consultancy says

STOCK PHOTO | Image by Olga Ozik from Pixabay

 – The number of homes worth $10 million or more that were sold in Dubai held steady in the first half of the year despite a drop in listings, an industry report showed on Monday, as demand from the international ultra-rich stayed strong.

A total of 190 homes worth an overall $3.2 billion were sold in the six months to end June compared with 189 properties for $3.3 billion in the same period of 2023, according to provisional data from property consultancy Knight Frank.

The total number of deals held up despite a 65.5% year-on-year drop in the number of such luxury homes available on the market in the second quarter, the report showed.

“This is a strong sign of the ‘buy-to-hold’ buyer profile that has taken root in the market,” Faisal Durrani, Knight Frank’s head of research for Middle East and North Africa (MENA), was quoted as saying in the report.

The trend suggests international high-net worth individuals “are largely focused on purchasing homes in the city for personal use, rather than to ‘flip’, which was a defining feature of the previous two market cycles,” he added.

Home to the world’s tallest tower, the United Arab Emirates’ Dubai is the Middle East’s biggest tourism and trade hub, attracting a record 17.15 million international overnight visitors last year.

It is seeking to grow its economy through tourism, building a local financial centre and by attracting foreign capital, including into property, with property purchase and rental prices showing no signs of fizzling out.

The report showed palm tree-shaped artificial island Palm Jumeirah was the most sought-after area, recording 21 sales of homes worth $10 million or more in the second quarter, accounting for 26% of sales in the period.

It was followed by Emirates Hills with 10% and the District One area with 7.8% of such deals.

Sales of properties worth $25 million or more jumped 25% in the second quarter compared with the first three months of the year to a total of 15 homes.

Last year Dubai ranked first globally for the number of home sales above $10 million, selling nearly 80% more such properties than second-placed London. – Reuters

Philippines and Japan sign defense pact, with eyes on China

PHILSTAR FILE PHOTO

 – The Philippines and Japan have signed a reciprocal access agreement (RAA) allowing them to deploy their forces on each other’s soil, a milestone in their security relations amid rising tensions in the Indo-Pacific, an official said on Monday.

Philippine defense minister Gilberto Teodoro and Japanese foreign minister Yoko Kamikawa signed the deal in a ceremony in Manila witnessed by Philippine President Ferdinand Marcos Jr, presidential communications secretary Cheloy Garafil said in a message.

The agreement creates a framework to facilitate military cooperation, such as making the entry of foreign personnel and equipment easier for the visiting force.

The deal, the first of its kind to be signed by Japan in Asia, would take effect after ratification by both countries’ legislatures, officials said.

A Japanese military presence in the Philippines could help Manila counter Chinese influence in the South China Sea, where Beijing’s expansive maritime claims conflict with those of a number of Southeast Asia nations.

An international tribunal in 2016 said China’s claims had no legal basis, a ruling that Beijing rejects.

Both the Philippines and Japan, two of the United States’ closest Asian allies, have taken a strong line against what they see as aggressive behavior by Chinese vessels amid decades-old disputes over maritime sovereignty.

Japan does not have any claim to the South China Sea, but has a separate maritime dispute with China in the East China Sea, where they have repeatedly faced off.

In December 2023, Japan announced its biggest military build-up since World War Two, in a step away from its post-war pacifism. Tokyo has sought to strengthen defense ties with other nations due to its concerns about China’s behavior, including pressure on Taiwan, freedom of navigation and trade disputes.

Japan has supported the Philippines’ position in the South China Sea and has expressed serious concern over China’s actions, including recent incidents that resulted in damage to Philippine vessels and injured a Filipino sailor.

The Philippines has a Visiting Forces Agreement (VFA) with the United States and Australia. Tokyo, which hosts the biggest concentration of US forces abroad, has similar RAA deals with Australia and Britain, and is negotiating another with France.

Japan has agreed to provide the Philippines with coastal surveillance radars, the first cooperation project under its Official Security Assistance program that is aimed at helping boost deterrence capabilities of partner countries.

The scope of Japanese military aid is limited by a self-imposed ban on lethal equipment exports. – Reuters

[B-SIDE Podcast] Achieving energy transition goals through flexible power supply

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The Philippines outlined renewable energy targets in its National Renewable Energy Program for 2020 to 2040, but what factors need to be in place for the Philippines to reach these targets? Why is flexibility in power generation important?

In this episode, BusinessWorld discuss renewable energy in the Philippine and global contexts with Kari Punnonen, head of energy business of Wärtsilä, a power solutions provider for the marine and energy markets.

Interview by Patricia Mirasol

Editing by Jayson John D. Marinas

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Philippines wants to boost rice cooperation with Vietnam to ensure food security

HANOI – The Philippines wants to boost cooperation on rice with Vietnam to ensure its food security, Philippine Agriculture Secretary Francisco Tiu Laurel said during a visit to Vietnam over the weekend.

Mr. Laurel visited Vietnam’s Mekong Delta province of An Giang, one of the key rice-producing areas of the Southeast Asian country, the province’s People’s Committee said in a statement on Monday.

Vietnam is the world’s third-largest exporter of rice, and the Philippines has been its largest buyer in recent years.

Vietnam’s exports to the Philippines accounted for 45.4% of its total rice shipments in the first five months of this year.

“The Philippines population grows 1.5% annually, driving up its demand for rice, while domestic supplies haven’t been able to match, and therefore (it) has to increase imports,” Laurel said at a meeting with Vietnamese authorities during the visit, according to the statement.

Mr. Laurel also said he wanted Vietnamese rice companies to consider investing in the Philippines, the statement said.

Vietnam and the Philippines sealed agreements covering rice trade and agriculture cooperation during a state visit to Hanoi by President Ferdinand Marcos Jr. in January.

To manage inflation pressures, the Philippines has recently lowered its tariff on rice to 15% from 35%. – Reuters

BSP still hints at rate cut in August

A VENDOR arranges tomatoes for sale in a public market in Manila. Headline inflation eased to 3.7% in June. — PHILIPPINE STAR/RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter

A POSSIBLE BREACH in the inflation target this month will not derail the Bangko Sentral ng Pilipinas’ (BSP) planned rate cut by August, its top official said.

BSP Governor Eli M. Remolona, Jr. said July inflation overshooting the 2-4% target is “expected” and unlikely to affect the likelihood of a rate cut in August.

“We do expect it to breach in July. So, if it doesn’t breach, then it’s better than expected,” he told reporters on the sidelines of an event late on Friday.

Mr. Remolona said there is a 50-50 chance that July inflation could breach the 2-4% target.

The central bank earlier warned that inflation could temporarily accelerate to above target from May to July, but so far inflation has been below 4% in May and June.

Headline inflation eased to 3.7% in June from 3.9% in May, marking the seventh straight month that inflation settled within the 2-4% target band.

“This is a cause for reassurance because it seems to be going in the direction we expected. So, it’s reassuring, but we need a few more numbers. So, it’s not yet time to declare victory, as people say,” Mr. Remolona added.

Meanwhile, National Economic and Development Authority  Secretary Arsenio M. Balisacan said that the downtrend of inflation should continue in the coming months.

“I cannot say the worst is over, but I think that extreme situations are not likely anymore,” he told reporters on Friday evening.

“I think we expect (inflation) in the coming months to come down because the El Niño is over, hoping that the La Niña will not bring severe flooding and all that, and then I think prices will start to moderate. I think that it will enable us to achieve the target of 2-4%,” he added.

Mr. Balisacan said the outlook already takes into account the recently approved wage hike in the National Capital Region (NCR).

“More or less, that’s already anticipated. The wage increases are not unreasonable. They’re within the inflation experienced by our workers,” he added.

The Regional Tripartite Wages and Productivity Board has approved a P35 minimum wage hike for workers in NCR, bringing the daily wage to P645 starting July 17.

Meanwhile, Diwa C. Guinigundo, country analyst for the Philippines of GlobalSource Partners, said there is a “greater likelihood of an easing in 2024 especially if more of the downside risks materialize including the reduction in rice imports tariff.”

President Ferdinand R. Marcos, Jr. last month signed Executive Order No. 62, which introduces a lowered tariff regime for agricultural products until 2028, including rice. Tariffs on rice imports were slashed to 15% from 35% previously.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said that inflation may have already peaked for the year and will likely remain at the upper end of the 2-4% target in July before declining by August.

“With El Niño now over, rice production is expected to recover in the second half of the year, which could result in a drop in prices as supply improves,” Mr. Neri said in a report.

“The price decrease might be even more significant due to the rice tariff cut that the government will implement this month,” he added.

Mr. Neri said that when the Rice Tariffication Law was implemented in 2019, the “resulting decline in rice prices shaved off up to 1.2% from headline inflation.”

PESO ‘BEHAVING’
In a note, Chinabank Research said that the slower inflation in June and “upbeat” inflation outlook would support the BSP’s planned rate cut at its meeting in August.

“There is a higher chance of an August rate cut, with prices and the peso — which seems to be ‘behaving’ — a part of the decision point,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

“With the inflation outlook now improving, the BSP will likely start cutting interest rates in August,” Mr. Neri added.

Mr. Remolona noted that cutting by 75 basis points (bps) for the year may be too “aggressive” and may cause a “hard landing.” He earlier said the BSP could cut rates by 50 bps for the full year.

However, Mr. Roces warned that upside risks to inflation still remain.

“We agree with the Philippine Statistics Authority’s observation that there is no clear signal that inflation has peaked, which we attribute to the upside risks to food and fuel prices,” he said.

Mr. Guinigundo, a former central bank deputy governor, said that the BSP should monitor the potential uptick in power and transport costs as well as wage adjustments.

“Still on the supply side, if the delay in imports should be prolonged, that could push importers to delay their importation of rice and cause rice supply to dwindle and its price to surge again. The weakening trend in (the) peso could also have some inflationary impact if sharp and prolonged,” he said.

“If inflation should peak in July, that would just be a single point in the wider space of monetary policy assessment — like inflation forecasts and balance of risks,” he added.

Chinabank Research also noted the potential impact of the peso on the BSP’s easing cycle.

“Nevertheless, the persistent upside price pressures, along with the movement of the peso against the US dollar, could prompt the BSP to maintain a cautious stance with regard to its future monetary policy decisions,” it said.

The peso has been trading at the P58-per-dollar level since May.

On Friday, the peso closed at P58.53 against the greenback, strengthening by five centavos from its P58.58 finish on Thursday. This was its strongest finish in almost a month or since its P58.52-a-dollar close on June 7.

“The pass-through from the exchange rate to inflation appears to be manageable based on the analysis of the central bank and will only become a concern if the inflation target is at risk again,” Mr. Neri said.

“However, it’s still a limiting factor that will likely prevent the BSP from cutting interest rates aggressively, especially given the current account deficit that the country has,” he added.

Mr. Neri cited other risks such as the country’s external position.

“Cutting interest rates aggressively would make the buildup of (foreign exchange) reserves more challenging, which may lead to a further deterioration in the external position,” he added.

Mr. Guinigundo said the BSP should take into account the second-quarter gross domestic product data, which will come out on Aug. 8.

“Although difficult to estimate, a good idea of the output gap should be able to help guide the BSP in its decision to ease or maintain the policy rate and avoid premature or late adjustment, both of which could be costly to the economy,” he said.

Dollar reserves slip to $104.7 billion in June

US dollar and euro notes are seen in this illustration photo. — REUTERS/THOMAS WHITE/ILLUSTRATION

THE PHILIPPINES’ gross international reserves (GIR) dipped by 0.3% month on month in June, which the Bangko Sentral ng Pilipinas (BSP) governor partly attributed to its intervention in the foreign exchange market amid the peso’s continued depreciation against the US dollar.

Preliminary data from the BSP showed gross dollar reserves settled at $104.7 billion at end-June, slightly lower than $105.02 billion at end-May.

Year on year, dollar reserves rose by 5.3% from $99.39 billion.

“The month-on-month decline in the GIR level reflected mainly the National Government’s (NG) payments of its foreign currency debt obligations and downward valuation adjustments in the BSP gold holdings due to the decrease in the price of gold in the international market,” the central bank said.

BSP Governor Eli M. Remolona, Jr. said that the decrease in the end-June GIR level was partly due to the central bank’s intervention in the foreign exchange market as the peso continued to weaken against the US dollar.

“It’s not all of it, but some of it,” he told reporters late on Friday. “As I said before, we don’t want the peso to depreciate very sharply. We don’t have a target level for the peso. We just don’t want it to depreciate sharply.”

The peso depreciated to P58.61 against the dollar as of end-June from P58.51 as of end-May. The local unit has been trading at the P58-per-dollar since May.

As of end-June, the level of dollar reserves was enough to cover about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.

It was also equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.

Ample foreign exchange buffers protect an economy from market volatility and ensure the country can pay its debts in the event of an economic downturn.

Broken down, the central bank’s foreign investments slipped by 0.04% to $89.49 billion at end-June from $89.52 billion in the previous month. On the other hand, investments increased by 7% year on year from $83.66 billion.

Reserves in the form of gold were valued at $9.9 billion, lower by 1.1% from $10.02 billion as of end-May and down by 1% from $10.01 billion a year ago.

Net foreign currency deposits declined by 17.8% to $790.6 million as of end-June from $962.3 million a month earlier. It likewise fell by 31.9% from $1.16 billion as of end-June in 2023.

Net international reserves slipped by 0.3% to $104.69 billion at end-June from $104.98 billion at end-May.

Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

Meanwhile, the country’s reserve position in the IMF edged up by 0.4% to $740.4 million at end-June from $737.2 million at end-May.

Special drawing rights, or the amount the country can tap from the IMF, was unchanged at $3.77 billion.

“The BSP has previously (said) that the agency is actively but not openly intervening in the market not only to stabilize the value of the Philippine currency but also to stem the inflation that is associated with the depreciation,” Leonardo A. Lanzona, Jr., an economics professor at the Ateneo de Manila University said in an e-mail.

Mr. Lanzona said the problem with this intervention is that it leads to greater dependency on imports.

“These can also lead to short-term speculative investments instead of long-term investments that can improve domestic productive capacity,” he added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that despite the month-on-month decline, the GIR level has stayed above the $100-billion mark for a ninth straight month, which is a “good signal.”

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from overseas Filipino worker remittances, business process outsourcing revenues, exports (though offset by imports), relatively fast recovery in foreign tourism revenues, as well as continued foreign investment/FDI inflows coming from among pre-pandemic highs,” he added.

The BSP expects the GIR level to settle at $104 billion by yearend. — Luisa Maria Jacinta C. Jocson

PHL can’t handle ‘fast’ transition to renewable energy — Balisacan

WIND TURBINES are seen in Pagudpud, Ilocos Norte. — PHILIPPINE STAR/KJ ROSALES

By Beatriz Marie D. Cruz, Reporter

THE PHILIPPINE ECONOMY cannot handle a “fast” transition to a dominantly renewable energy (RE) mix, according to the National Economic and Development Authority (NEDA).

“We have to buy time… meaning, we can’t force our country to transition quickly to a fully renewable or to a dominantly renewable (energy mix),” NEDA Secretary Arsenio M. Balisacan told reporters on the sidelines of an event on Friday.

“Our economy cannot handle that (a fast RE transition.) We have to be realistic,” he added in mixed English and Filipino.

Latest data from UK-based think tank Ember showed the Philippines has become the most coal-dependent country in Southeast Asia and the seventh in the world.

Ember data showed that the share of coal-generated electricity in the Philippines rose by 2.9% to 61.9% in 2023 from 59.1% in 2022, despite efforts to shift to renewable energy sources.

“We cannot simply adopt what very rich countries say. We are not in the same situation,” Mr. Balisacan said in mixed English and Filipino. “We are not as rich as they are — we don’t have the technology; we don’t have the finances.”

Despite allowing full foreign ownership of RE projects since last year, renewables still account for only 22% of the country’s power generation mix. The government wants to increase RE’s share to 35% by 2030 and 50% by 2050.

Mr. Balisacan noted that solar batteries would help “dramatically change” the energy ecosystem in the country, although adoption would take time if there are no improvements in the enabling environment.

As of February, the Department of Energy (DoE) has awarded over 1,300 renewable energy service contracts with a potential capacity of over 134,000 megawatts.

In a bid to lessen the country’s dependency on coal, the DoE in 2020 issued a moratorium on the development of new coal-fired power plants.

Mr. Balisacan said access to technologies and financing would help fast-track the country’s RE transition.

“When we committed, we said that we were going to achieve this under the condition that we have access to technologies (and) finances,” Mr. Balisacan said in mixed English and Filipino. “But those were so slow in coming. Many, not just us, developing countries have those issues.”

Jose M. Layug, Jr., president of the Developers of Renewable Energy for Advancement, Inc., said developed countries must ramp up infrastructure, investments, as well as cheaper and concessional financing to support the shift to RE in developing countries like the Philippines.

“Developing countries’ renewables transition, like the Philippines, is a big challenge especially since we already have high cost of power and we lack the necessary infrastructure like transition and ports,” he said in a Viber message.

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said the Philippines must seek financing for its renewables transition from the Green Climate Fund and the Global Environment Facility, which have previously supported the Philippines’ climate change adaptation, disaster resilience, and biodiversity projects.

“As such, they (government) are unwilling to tax those firms that still rely on coal energy and to institute the necessary regulations that will protect the society’s property rights for a cleaner environment,” he said in a Facebook Messenger chat.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the Philippines should continue to speed up the permitting process for RE projects, lessen ambiguities in regulations, level the playing field for investors, settle any related disputes, and ensure better cooperation with local government units.

“The biggest foreign investment commitments since last year have been in renewable power such as offshore wind, solar, and other RE projects. So, we have yet to see actual rollout of more RE projects, largely from the private sector, both foreign and local investments,” he said in a Facebook Messenger chat.

GOCC subsidies up 32% in May

BW FILE PHOTO

SUBSIDIES PROVIDED to government-owned and -controlled corporations (GOCCs) jumped by 32% year on year in May, the Bureau of the Treasury (BTr) said.

Data from the BTr showed that budgetary support to GOCCs rose to P9.74 billion in May from P7.38 billion in the same month last year.

Month on month, subsidies fell by 64.86% from P27.72 billion released in April.

The National Government (NG) provides subsidies to GOCCs to help fund operational expenses covered by revenues.

The National Irrigation Administration (NIA) received the biggest amount of subsidies with P7.27 billion, which made up nearly three-fourths or 74% of all subsidies in May.

This was followed by the Philippine Rice Research Institute which received its highest subsidy for the year so far at P629 million.

The Philippine Fisheries Development Authority was granted P359 million in subsidies in May. It did not receive any subsidies in the previous month.

GOCCs that also received significant subsidies include the Philippine Children’s Medical Center with P207 million, Philippine Heart Center with P168 million, National Kidney and Transplant Institute with P133 million, National Privacy Commission with P109 million, and the Small Business Corp. with P100 million.

Other GOCCs that secured subsidies above P50 million include the Philippine Coconut Authority (P88 million), Development Academy of the Philippines (P82 million), Cultural Center of the Philippines (P73 million), Light Rail Transit Authority (P72 million), Lung Center of the Philippines (P70 million), National Dairy Authority (P62 million), and the People’s Television Network, Inc. (P60 million).

In May, no subsidies were given to the Bangko Sentral ng Pilipinas, National Home Mortgage Finance Corp., Philippine Crop Insurance Corp., Philippine Deposit Insurance Corp., Social Housing Finance Corp., Local Water Utilities Administration, National Electrification Administration, National Food Authority, National Housing Authority (NHA), Authority of the Freeport Area of Bataan, Philippine Postal Corp., the Power Sector Assets and Liabilities Management Corp. (PSALM), and the Tourism Infrastructure and Enterprise Zone Authority.

The lower GOCC subsidies for the month “may be explained by the effects of the fiscal consolidation being done by the government aimed to address budget deficit and settle external debt,” Oikonomia Advisory & Research, Inc., President and Chief Economist John Paolo R. Rivera said in a Viber message.

The NG’s budget deficit ballooned by 43.1% to P174.9 billion in May from P122.2 billion in the same month a year ago.

Outstanding debt reached a record-high P15.35 trillion in the same month, BTr reported earlier. 

In the first five months of the year, GOCC subsidies rose by 51% to P57.05 billion from P37.64 billion in the same period last year.

NIA was the top recipient in the January-to-May period with P29.01 billion in subsidies. This was followed by PSALM (P8 billion) and the NHA (P3.75 billion). — B.M.D.Cruz

SSI Group, Inc. to hold virtual annual meeting of stockholders on July 30

 

 


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Higher NAIA charges seen to weigh on travel demand

REUTERS

By Ashley Erika O. Jose, Reporter

THE EXPECTED INCREASE in fees at the soon-to-be privatized Ninoy Aquino International Airport (NAIA) could alter travel demand dynamics, potentially impacting passenger volumes and operational margins for airlines operating at the airport, according to analysts.

“Higher charges ultimately end up in passengers’ wallets, and it may depress demand in the short term,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message on Sunday.

“[This is] highly favorable to SMC (San Miguel Corp.) as it inherits these higher charges that cannot be attributed to it,” he added.

In June, the Department of Transportation announced that the proposed increase in passenger service fees at NAIA is intended to enhance operational efficiency.

The department said that the planned rate hike is within the approved parameters, terms, and conditions specified in the tender documents for the NAIA rehabilitation project.

Passenger service charges, also known as terminal fees, are imposed on departing passengers. Landing and take-off fees, on the other hand, are charges levied for the use of airport facilities and services during aircraft landings and takeoffs. Both fees contribute to the total cost of airfares paid by passengers.

Currently, domestic travelers pay a passenger service charge of P200, while foreign travelers pay P550. It is anticipated that these fees will rise to P390 and P950, respectively.

“The passenger service fees will be [implemented] in 2025, but other planned airport fees [are expected] before the end of the year; we have to finalize the amounts,” Transportation Secretary Jaime J. Bautista said, noting that the proposed hike will still require approval from Congress.

This means that landing and take-off fees levied on airlines will also increase by the end of the year.

“There will be an increase because the concessionaire needs to be compensated for their investments. The charges they will collect are expected to improve the airport’s efficiency,” Mr. Bautista said.

Enrico P. Villanueva, a senior lecturer at the University of the Philippines Los Baños Economics department, described the expected increase in airport fees as enhancing services but said, “It is just lamentable that fee increases appear to be sudden and pervasive, and mostly front-loaded.”

He said the new airport operator could phase in the proposed hike gradually or wait until services improve.

“Air travel is not a necessity for the majority, so demand for it is price sensitive or elastic. It is unfortunate that service fee increases come at a time when air travel is just beginning to surge again,” Mr. Villanueva said.

Nigel Paul C. Villarete, senior adviser on public-private partnership at the technical advisory group Libra Konsult, Inc., said the proposed hike is justified.

“This will result in better airport terminal services in NAIA, which seems to lag behind,” he said in a Viber message.

“Airlines may be tempted to increase airfares too, but let us hope they won’t… These [fees] are negligible in amount compared to the ticket sales revenues,” he added.

He also said  that travel demand might not be directly impacted by the proposed increases in passenger service charges or landing and take-off fees, as these costs are already included in the ticket price.

“It is just a small portion thereof. It is when airlines jack up their fares that may affect demand.”

For the first quarter, international passenger volume surged to 6.97 million from 3.8 million in the corresponding period last year, according to data from the Civil Aeronautics Board.

Domestic passenger numbers for the first quarter alone totaled 7.44 million, equivalent to 25.7% of last year’s total domestic passenger volume of 28.97 million.

This year, the Department of Tourism aims for 4.8 million international arrivals, up from 2.65 million last year.

In March, the New NAIA Infrastructure Corp. (formerly SMC SAP & Co. Consortium) signed a P170.6-billion contract to operate, maintain, and upgrade the country’s primary gateway for 25 years. It is scheduled to assume NAIA operations by September.

The New NAIA Infrastructure plans to construct a new passenger terminal building with a capacity of 35 million passengers annually, as part of efforts to alleviate airport congestion.

The government anticipates earning P900 billion from the project, equating to P36 billion per year. This figure is 20 times larger than the P1.17 billion annually remitted by the MIAA over the 13 years through 2023, according to the Department of Transportation.

Bringing the barong into the 21st century

Doodle City Barong, ₱20,000.00

Kelvin Morales gives the traditional shirt an edge

IN 2020, Kelvin Morales came out with a collection of cloth masks (one of our weapons against the COVID-10 global pandemic) embroidered with the death’s-head hawkmoth (Acherontia atropos) — an insect cemented in pop culture thanks to the film The Silence of the Lambs. The masks were eerie; a beautiful memento mori, in that time of death and despair.

In 2024, Mr. Morales has moved on to relatively lighter fare.

The young designer graduated from the De La Salle-College of St. Benilde in 2018, and his graduation collection was featured in several magazines, putting him on the radar of some of the city’s fashionistas. We caught up with Mr. Morales at a menswear event at Rustan’s on June 27, where his edgy collections were recently onboarded at the department store which is otherwise the epitomé of Establishment.

“We weren’t super-prepared,” he said about his collections getting picked up by Rustan’s. “Now, we’re still establishing our internal(s): our business plans and ganiyan (such).

Pero (but) we’re so happy with Rustan’s; the response of the new market.”

Mr. Morales has been known to dress indie celebrities like singers KZ Tandingan and Unique Salonga, as well as mainstream actresses with artistic bents like Nadine Lustre. “They’re more experimental in embracing artistry,” he said about these celebrities, and his own clientele.

At Rustan’s what are stocked are some of his tamer collections of modern barongs, made of silk cocoon and embroidered with more avant-garde patterns, like fish, riots of flowers, or entire blackwork cities (unlike the more traditional barong with dainty embroidered flowers).

“Next collection, we will introduce the new calado technique,” he told BusinessWorld, referring to the open threadwork technique traditionally used in barongs

Mr. Morales’ work shares a similar thread with a few young designers, showing traditional clothes with bolder, more modern strokes: it’s not to pit them against each other, but one wonders why modern Filipino menswear is moving in that direction. He said that there was a gap in more contemporary barong in ready-to-wear collections.

“Usually, iyong nakikita ko (what I see), more intentional,” he said, meaning these bolder barongs are usually custom-made.

At the same time, he compares the slow movement and evolution of the barong, to its female counterpart in Filipiniana dress, the terno. He observes that while still keeping its traditional shape, the terno can be played with, with different materials, or techniques. “Now, iyong market, it’s trickling down, like people really appreciate the contemporary and modern barong. Kaya naman palang maging (Turns out it can be) wearable, anytime.”

A way to preserve is to adapt: perhaps the intricacies of the barong are making it difficult to wear today, thus delegating them to special-occasion wear. In adapting the barong to contemporary settings, Mr. Morales might be helping in preserving them.

Iyong goal ko with my barong, ayoko lang siyang maging (my goal with my barong is for it not to be for) one-time use. Kaya ko siya ginawang (that’s why I made it) more easy to wear, and style. I’m so happy na nakikita ko iyong mga people wearing barong in a random event. You can wear it in a techno party, or the beach.” — Joseph L. Garcia