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Thai financial business law seeking to lure foreign funds to go to cabinet soon, official says

THE LOGO of Thailand’s central bank is seen at the Bank of Thailand in Bangkok, Thailand, April 26, 2016. — REUTERS FILE PHOTO

BANGKOK — Thailand’s new financial business law designed to attract foreign funds is expected to be submitted to cabinet by early February, a deputy finance minister said on Wednesday.

The law will create a “one-stop authority” agency to provide services to facilitate investment and promote Thailand’s aim to become a financial center, Paopoom Rojanasakul told a press conference.

“Thailand is open and ready to attract funds into the country,” he said, adding the law is expected to be completed later this year.

Business operators targeted in the financial hub plan will receive both tax and non-tax benefits, Paopoom said.

The target businesses are the banking sector, payment service, securities, derivatives, digital assets, insurance, reinsurance brokerage and related financial business, he added. — Reuters

Banks running Trump ‘war rooms’ as bosses prepare for trade ructions

REUTERS

DAVOS, Switzerland — JPMorgan Chase & Co bankers worked through the night in a “war room” to assess the impact of US President Donald Trump’s inauguration-day executive orders, while global markets braced for volatility following his return to the White House.

Trump revoked nearly 80 executive actions by former Democratic President Joseph Biden within hours of his second presidential oath of office, including orders for an immediate freeze on new federal regulations and government hiring.

“The last 24 hours are showing there’s going to be a lot of changes we all have to digest,” JPMorgan Chase & Co head of asset and wealth management Mary Callahan Erdoes told a panel discussion at the World Economic Forum in Davos, Switzerland.

“At JPMorgan we have a war room set up to analyze and evaluate each and every one of these, so they have been up all night and are working on it.”

The white-knuckle business of trading global assets sensitive to Trump’s “America First” policies has resumed, brokers told Reuters, pointing to a rapid fall in the Canadian dollar against its US counterpart, seconds after the president said a 25% tariff on Canadian goods could land within days.

Such changes and a possible increase in market volatility – sparked by Trump’s unpredictable use of social media as observed in his first term as president – will require adjustments but, the bankers and traders said, rewards are there for those who can navigate this.

“Time will tell but a lot of this is exactly what you would do to have a very pro-business environment,” Ms. Erdoes said, reflecting on Trump’s early executive order to ban remote working for federal staff.

“Thank God the US government has done it, and hopefully that’ll keep us ahead of other governments in the world so we can continue to compete.”

Global trade flows will suffer from “interesting ructions” as the new Trump administration settles in, Standard Chartered CEO Bill Winters told the Davos meeting.

“We’ll see what comes through in terms of tariffs…but we know China is a big part of that in terms of having a gigantic export surplus, and that will be under attack from all parts of the world,” Winters said.

Chinese officials are hopeful their country can avoid a repeat of the bruising trade wars that drove a wedge between the world’s two economic superpowers during the last Trump administration in 2017-21, despite the returning president’s robust comments on potential tariffs during his campaign.

Big, globally-focused banks will be able to benefit from that disruption in their roles connecting between markets, Winters said, while locally-focused banks may struggle.

‘REGULATION HAS BEEN STIFLING’
As well as disruption from the change in administration in the United States, banks face a slew of fresh regulations they say impede their ability to fuel a push for global growth.

“Look, regulation has been stifling,” BNY CEO Robin Vince said. “It’s really against the whole purpose that governments around the world have in trying to enable growth for their countries.”

The Bank of England said on Friday it would delay tougher bank capital rules by a year to January 2027 to get clarity on what the United States will do under Trump, prompting the European Union to say it would also weigh its options.

The standards written by the global Basel Committee are the final set of international reforms designed to make the banking system safer after the 2008 global financial crisis, and are meant to be implemented by member jurisdictions.

“This is a good time to take a step back and think about what works in regulation and what doesn’t,” Winters said, flagging his skepticism about where so-called “end-game” Basel 3.1 bank capital regulation would land, given an array of delays and revisions announced in several major markets.

BNY’s Vince concurred. “We need the right regulation, it needs to be supportive, but it needs to be in furtherance of the growth goal,” he said. — Reuters

A call for accountability: Lessons from the Pharmally case

The recent push by the Office of the Ombudsman to file graft charges against those involved in the Pharmally case has brought renewed attention to the alleged significant lapses in financial oversight and governance associated with the case. A newly registered company with P625,000 in capital secured over P11 billion in government contracts, raising concerns about compliance and governance. Public findings from the Senate Blue Ribbon Committee revealed alleged discrepancies, including P6.3 billion in tax deficiencies and P3.4 billion in undeclared purchases. These discrepancies highlight a failure of due diligence that compromises financial transparency and undermines public trust.

Among the most troubling issues were material misstatements and unsubstantiated expenses that distorted tax reporting, along with executives signing erroneous tax returns without full knowledge of the content or implications. This lack of accountability underscores the need for businesses to ensure that financial statements are properly audited, tax returns are accurate, and responsible officers are fully aware of their management duties. Ignoring these obligations exposes businesses to significant financial and legal risks.

The Pharmally case serves as a powerful reminder for companies to strengthen financial governance and prioritize tax compliance. Mon Abrea, founder and CEO of the Asian Consulting Group (ACG), has emphasized the importance of robust compliance measures to avoid these pitfalls. ACG offers expert tax solutions to help businesses resolve tax issues effectively, ensuring taxes are never a burden. Consult ACG!

 

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Microsoft relaxes data center grip on OpenAI amid $500 bln joint venture

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Microsoft on Tuesday said it has changed some key terms of a deal with OpenAI after the ChatGPT creator announced a joint venture with Oracle and Japan’s SoftBank Group to build up to $500 billion of new AI data centers in the United States.

President Donald Trump gathered the leaders of the “Stargate” effort at the White House on Tuesday to announce the deal, saying it was intended to help keep the United States ahead of China and other rivals in the global AI race, using chips from Nvidia.

Since 2019, Microsoft has had arrangements with OpenAI that gave the Redmond, Washington-based company the exclusive right to build new computing infrastructure for OpenAI. Microsoft, in a blog post, said it has “approved OpenAI’s ability to build additional capacity, primarily for research and training of models.”

That opened the door for OpenAI to work with Oracle.

A person familiar with the deal said that Stargate is a joint venture structured as new entity in which OpenAI has an equity stake, governance rights and operational control. It will have a separate board appointed by the founding members and its own CEO, this person said. The venture will also have other investors including United Arab Emirates firm MGX.

Microsoft, along with Nvidia NVDA.O and Arm O9Ty.F, will be a “technology partner” in the new venture, but is not listed as an equity funder. SoftBank CEO Masayoshi Son is will be the entity’s board chairman, according to a statement from OpenAI posted on social media site X.

But Microsoft said that it still retains the exclusive right to offer OpenAI’s API – technology shorthand for application programming interface, which is the main way that software developers and business customers buy OpenAI’s services. That means Oracle will not be able to host OpenAI’s primary source of revenue.

Oracle did not immediately respond to a request for comment on Microsoft’s statements.

Microsoft said it has “revenue sharing agreements that flow both ways” with OpenAI.

“The key elements of our partnership remain in place for the duration of our contract through 2030, with our access to OpenAI’s IP, our revenue sharing arrangements and our exclusivity on OpenAI’s APIs all continuing forward,” Microsoft said.

Microsoft also said “OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training,” referring to Microsoft’s Azure cloud computing service. – Reuters

Japan hunts for dual-use goods makers to aid military expansion

TOKYO – Kyoto-based Mitsufuji got its start nearly 70 years ago as a weaver of decorative belts for kimonos. One day soon, it could be spinning high-tech fibers to shield fighter jets from electromagnetic interference.

The company, whose core business is making consumer-facing wearable gadgets, is one of dozens of small ventures that have caught the Japanese government’s eye in recent years as it looks for dual-use technologies to beef up its military capabilities.

Cultivating a home-grown defense industry was a key plank of Japan’s 43 trillion yen ($275 billion) military build-up strategy launched in 2022 to counter escalating security threats from China, Russia and nuclear-armed North Korea.

But it faces a challenge. Unlike some of its allies, Japan has no defense industry champions, such as Lockheed Martin Corp the U.S. and BAE Systems Britain, that depend on military work for almost all of their sales. Even at Mitsubishi Heavy Industries 7011.T, Japan’s leading defense contractor, sales of combat aircraft, warships and other military equipment account for less than a fifth of revenue.

Nudged also by the fast-changing landscape of modern warfare, including the use of small drones in Russia’s war with Ukraine, Japan’s military – officially called the Self-Defense Forces (SDF) – decided to court smaller companies to cast a wider net for procurement.

“If we don’t pioneer on our own, we won’t be able to keep up with global trends,” former defense minister Minoru Kihara told Reuters. “Japan should invest in research and development that contributes to national security, including dual-use technologies, without fear of failure.”

In the latter part of 2023, the government began holding meetings with several companies at a time, looking to see what innovative products and technology they had on offer. Mitsufuji, which was already supplying the SDF with wrist bands that monitor heat stroke risk, attended the second such meeting.

“We don’t know what the needs are, so we basically showed them what we have,” Mitsufuji CEO Ayumu Mitera told Reuters. “It’s not that we have a desire to enter the defense business, but if there’s demand, we’re happy to make proposals.”

Using its highly conductive silver-metallized fiber, Mitsufuji produced a small-scale prototype of a hangar tent that could shield military aircraft and other equipment from electromagnetic interference.

In some cases, the meetings have led to deals. The Air Self-Defense Force (ASDF) last year procured powered exoskeleton “muscle suits” from Tokyo startup Innophys and introduced cutting-edge wind measuring instruments from Kyoto’s Metro Weather on a trial basis.

“I don’t think matching dual-use technologies with national security can be achieved unless the government plays an active role and does not simply wait for companies to come to it,” said former vice defense minister Kazuhisa Shimada.

 

BUILDING BRIDGES

The ASDF has been particularly active in approaching companies, meeting about 300 firms for its space operations since late 2023 in downtown Tokyo.

“Times have changed,” said ASDF Colonel Ryoji Kondo, a former F-2 fighter jet pilot. “We really need to get help from startups.”

His team is in talks towards a deal with startups CollaboGate Japan and Wyvern.

The government has also helped smaller firms set up booths at international defense exhibitions to tout their wares under the Japanese flag and drum up interest overseas.

Mitsufuji’s Mitera said his company had displayed at several such exhibitions, including the Vietnam Defense Expo last month. The company has secured deals to supply its high-tech fibre to companies in Asia and Europe, he said.

Building those bridges could also fortify Japan’s security bonds with friendly nations, Kihara said.

“Even if it doesn’t go as far as using the same technology or equipment, using the same parts will strengthen cooperation between nations, in terms of security,” he said. – Reuters

Trump announces private-sector $500 billion investment in AI infrastructure

An artificial intelligence (AI) sign is seen in this illustration taken on June 23, 2023. — REUTERS/DADO RUVIC/ILLUSTRATION

U.S. President Donald Trump on Tuesday announced a private sector investment of up to $500 billion to fund infrastructure for artificial intelligence, aiming to outpace rival nations in the business-critical technology.

Trump said that ChatGPT’s creator OpenAI, SoftBank and Oracle planning a joint venture called Stargate, which he said will build data centers and create more than 100,000 jobs in the United States.

These companies, along with other equity backers of Stargate, have committed $100 billion for immediate deployment, with the remaining investment expected to occur over the next four years.

SoftBank CEO Masayoshi Son, OpenAI CEO Sam Altman and Oracle Chairman Larry Ellison joined Trump at the White House for the launch.

The first of the project’s data centers are already under construction in Texas, Ellison said at the press conference. Twenty will be built, half a million square feet each, he said. The project could power AI that analyzes electronic health records and helps doctors care for their patients, Ellison said.

The executives gave Trump credit for the news. “We wouldn’t have decided to do this,” Son told Trump, “unless you won.”

“For AGI to get built here,” said Altman, referring to more powerful technology called artificial general intelligence, “we wouldn’t be able to do this without you, Mr. President.”

It was not immediately clear whether the announcement was an update to a previously reported venture.

In March 2024, The Information, a technology news website, reported OpenAI and Microsoft were working on plans for a $100 billion data center project that would include an artificial intelligence supercomputer also called “Stargate” set to launch in 2028.

 

POWER-HUNGRY DATA CENTERS

The announcement on Trump’s second day in office follows the rolling back of former President Joe Biden’s executive order on AI, that was intended to reduce the risks that AI poses to consumers, workers and national security.

AI requires enormous computing power, pushing demand for specialized data centers that enable tech companies to link thousands of chips together in clusters.

“They have to produce a lot of electricity, and we’ll make it possible for them to get that production done very easily at their own plants if they want,” Trump said.

As U.S. power consumption rises from AI data centers and the electrification of buildings and transportation, about half of the country is at increased risk of power supply shortfalls in the next decade, the North American Electric Reliability Corporation said in December.

As a candidate in 2016, Trump promised to push a $1 trillion infrastructure bill through Congress but did not. He talked about the topic often during his first term as president from 2017 to 2021, but never delivered on a large investment, and “Infrastructure Week” became a punchline.

Oracle shares were up 7% on initial report of the project earlier in the day. Nvidia, Arm Holdings and Dell shares also rose.

Investment in AI has surged since OpenAI launched ChatGPT in 2022, as companies across sectors have sought to integrate artificial intelligence into their products and services. – Reuters

UK’s $60 billion maintenance backlog strains public services, spending watchdog says

REUTERS

LONDON – At least 49 billion pounds ($60 billion) of maintenance work at schools, hospitals and prisons in Britain has yet to be carried out, a spending watchdog said on Wednesday, highlighting the real world impact of squeezed public finances.

Finance minister Rachel Reeves is facing growing pressure to cut spending, boxed in by fiscal rules limiting government borrowing and a reluctance to raise taxes any higher than she did in October.

However, the National Audit Office (NAO), which compiled the report, said deferring maintenance could lead to higher costs further down the line.

“Allowing large maintenance backlogs to build up at the buildings used to deliver essential public services is a false economy,” Gareth Davies, head of the NAO, said in a statement.

The Labor government said this was the result of “long-term underinvestment” by the previous administration. It was elected last July after 14 years of Conservative Party rule.

A Cabinet Office spokesperson told Reuters the government is taking immediate action to remedy the state of disrepair found across the public estate and is “already investing billions of pounds to deliver critical repairs and rebuild our public services.”

The NAO’s report on maintaining public service facilities said, however, that the true cost of remediation could be substantially higher, noting that official data on the condition of properties is incomplete and out of date.

Conservative lawmaker and chair of the Public Accounts Committee Geoffrey Clifton-Brown called on the government to “urgently break the cycle of short-term thinking, dither and delay”.

The report showed that the Ministry of Defense had the largest maintenance backlog, with an estimated 15.3 billion pounds. Schools and hospitals followed, each with a backlog of 13.8 billion pounds. – Reuters

Trump says he is open to Musk buying TikTok if Tesla CEO wants to do so

ALEXANDER SHATOV-UNSPLASH

WASHINGTON – U.S. President Donald Trump said on Tuesday he was open to billionaire Elon Musk buying social media app TikTok if the Tesla CEO wanted to do so.

 

WHY IT’S IMPORTANT

The short video app used by 170 million Americans was taken offline temporarily for users shortly before a law that said it must be sold by its Chinese owner ByteDance on national security grounds, or be banned, took effect on Sunday.

Bloomberg News reported last week that Chinese officials were in preliminary talks about a potential option to sell TikTok’s operations in the United States to Musk, though the company has denied that.

Mr. Trump on Monday signed an executive order seeking to delay by 75 days the enforcement of the law that was put in place after U.S. officials warned that under Chinese parent company ByteDance, there was a risk of Americans’ data being misused.

TikTok remained unavailable to download on Apple and Android devices in the United States on Tuesday afternoon.

 

KEY QUOTES

“I would be, if he wanted to buy it,” Mr. Trump told reporters on Tuesday when asked if he was open to Musk buying the platform.

“I have met with owners of TikTok, the big owners,” Mr. Trump added. “So, what I am thinking about saying to somebody is ‘buy it and give half to the United States of America.'”

 

CONTEXT

Free speech advocates have opposed TikTok’s ban under a law passed by the U.S. Congress and signed by former President Joe Biden.

The company says U.S. officials misstated its ties to China, arguing its content recommendation engine and user data are stored in the United States on cloud servers operated by Oracle, while content moderation decisions that affect American users are also made in the U.S.

Mr. Musk, who spent more than $250 million to help Mr. Trump win November’s presidential election, has said there was an “unbalanced” business environment between the U.S. and China.

“I have been against a TikTok ban for a long time, because it goes against freedom of speech. That said, the current situation where TikTok is allowed to operate in America, but X is not allowed to operate in China is unbalanced,” Mr. Musk, who owns social media platform X, said over the weekend. – Reuters

Global airlines in talks with Brazil’s Gol as part of bankruptcy exit, report says

STOCK PHOTO | Image from Pixabay

SAO PAULO – Major global airlines are in talks with Gol to invest in the Brazilian carrier, which is undergoing Chapter 11 bankruptcy proceedings in the U.S., local newspaper Valor Economico reported on Tuesday, citing sources.

The report mentions U.S.-based companies United Airlines and American Airlines, as well as European firms Air France-KLM, British Airways parent International Airlines Group ICAG.L and Germany’s Lufthansa Group among the carriers in talks with Gol.

Valor Economico said the investments from global airlines would be made as part of Gol’s exit from Chapter 11.

The Brazilian airline, which last week announced a memorandum of understanding to explore a merger with local rival Azul, has been in Chapter 11 bankruptcy proceedings since early 2024.

Gol’s potential merger with Azul would create a dominant airline in the Brazil domestic market, surpassing LATAM Airlines’ local unit.

The international airlines would be interested in a deal with Gol ahead of the proposed merger with Azul to strengthen their international presence at some of Brazil’s busiest airports, Valor Economico reported.

Gol and Air France-KLM declined to comment on the report. American Airlines said it was aware of Gol’s ongoing restructuring process, noting it already has a commercial agreement with the Brazilian airline.

United Airlines, International Airlines Group and Lufthansa did not immediately respond to requests for comment. – Reuters

2024 BoP surplus narrows sharply

US dollar banknotes are seen in this illustration taken July 17, 2022. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

THE PHILIPPINES’ balance of payment (BoP) surplus sharply narrowed in 2024, falling short of the central bank’s full-year projection.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the full-year BoP position stood at a surplus of $609 million last year, plunging by 83.4% from the $3.672-billion surplus at end-2023.

This was also much lower than the BSP’s full-year projection of $3.5 billion.

Philippines: Balance of Payments (BoP) PositionThe BoP shows a glimpse of the country’s transactions with the rest of the world. A surplus shows that more funds came into the country, while a deficit means more money fled.

“Based on preliminary data, the decline in the cumulative BoP surplus was due to higher trade-in-goods deficit and lower net receipts from trade in services and net foreign borrowings by the National Government (NG),” the BSP said.

Data from the local statistics agency showed the trade deficit widened by 3.2% year on year to $49.96 billion in the January-November period.

Outstanding external debt rose to a record $139.64 billion as of end-September, data from the BSP showed.

“This decline was partly muted, however, by the continued net inflows from personal remittances as well as net foreign portfolio and direct investments,” the central bank added.

In December alone, the BoP swung to a deficit of $1.508 billion, a reversal of the $642-million surplus a year earlier.

“The BoP deficit in December 2024 reflected the BSP net foreign exchange operations and drawdown on the NG deposits with the BSP to pay off its foreign currency debt obligations.”

Last year, the government raised $2 billion from global bonds in May and another $2.5 billion from its dollar bond offer in August.

At its end-December position, the BoP reflects a gross international reserve (GIR) level of $106.3 billion, down by 2% from $108.5 billion as of end-November.

“Specifically, the latest GIR level ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” the central bank said.

The level of dollar reserves was enough to cover 7.5 months of imports and payments of services and primary income. It is also equivalent to about 3.7 times the country’s short-term external debt based on residual maturity.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the wider BoP deficit in December was partly due to the trade shortfall in recent months.

“There is persistent import growth, particularly in energy, food and capital goods that likely outpaced export performance,” said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“The ongoing decline in exports due to weaker global demand particularly from major trading partners like China has exacerbated the trade deficit, a major component of the current account,” he added.

Mr. Ricafort said the peso volatility, especially from November to December, might have affected the BoP position.

“The strong US dollar also increased debt servicing costs for US dollar-denominated obligations,” Mr. Rivera added.

At end-2024, the peso closed at P57.845, declining by P2.475 or 4.28% from its end-2023 finish of P55.37 against the dollar.

The peso fell to a record-low P59 level thrice last year — twice in November and once in December.

Mr. Rivera said the recovery in tourism receipts and business process outsourcing revenues might not have been enough to “fully offset the drag from the trade imbalance.”

“Also, the government and private sector’s efforts to settle maturing foreign debt obligations may have contributed to outflows in the financial account, worsening the overall BoP position,” he added.

For the coming months, the BoP could improve if structural inflows continue to increase, Mr. Ricafort said.

“Any improvement in BoP data and in GIR data for the coming months could still help provide a greater cushion for the peso exchange rate versus the US dollar especially against any speculative attacks, as well as help strengthen the country’s external position,” he said.

Recent reforms would also help attract more investments into the country, Mr. Ricafort said.

In November, President Ferdinand R. Marcos, Jr. signed into law the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy.

The law expands fiscal incentives and lowers the corporate income tax on certain foreign enterprises.

The BSP projects a BoP surplus of $2.1 billion for 2025, equivalent to 0.4% of gross domestic product.

AMRO says Philippines likely to post 2nd fastest GDP expansion in region

A general view of the rush-hour traffic in Manila, Philippines, Dec. 20, 2024. — REUTERS

By Aubrey Rose A. Inosante, Reporter

THE PHILIPPINES is expected to be the second-fastest growing economy in Southeast Asia in 2025, as further monetary easing boosts domestic demand, the ASEAN+3 Macroeconomic Research Office (AMRO) said on Tuesday.

In its Regional Economic Outlook quarterly update, AMRO said Philippine gross domestic product (GDP) is projected to expand by 6.3% this year, unchanged from the forecast in December.

“We kept the growth forecast at 6.3%. That’s among the highest in the region and that’s partly because the Bangko Sentral ng Pilipinas (BSP) has started to also ease monetary policy.” AMRO Chief Economist Hoe Ee Khor said at a virtual news briefing on Tuesday.

This is within the Development Budget Coordination Committee’s 6-8% GDP growth target for 2025 until 2028.

The growth projection for the Philippines is the second-fastest among Association of Southeast Asian Nations (ASEAN) members, behind Vietnam (6.5%), but ahead of Cambodia (5.8%), Indonesia (5.1%), Malaysia (4.7%), Laos (4.6%), Thailand (3.1%), Brunei Darussalam (3%), Singapore (2.7%) and  Myanmar (1%).

In the ASEAN+3 region, the Philippines is also ahead of China (4.8%), Hong Kong (2.6%), South Korea (1.9%) and Japan (1.3%).

“The (central bank) governor has announced that there’s scope for them to continue to ease because the real interest rate is still pretty high. And we see signs that the economy is beginning to respond,” Mr. Khor said.

Since it began its easing cycle in August 2024, the BSP has lowered interest rates by 75 basis points (bps).

BSP Governor Eli M. Remolona, Jr. has signaled a rate cut at the Monetary Board’s first policy meeting on Feb. 13.

AMRO said stronger domestic demand and exports would support its growth outlook for the Philippines.

The think tank said tourism arrivals in the Philippines and Singapore remained below pre-pandemic levels, while the rest of the region recovered with the help of tourists from China.

Data from the Department of Tourism showed that international tourist arrivals increased by 9.15% to 5.95 million but missed its 7.7 million target in 2024.

For 2024, AMRO said the Philippine economy likely grew by 5.8%, falling short of the government’s 6-6.5% target.

“The Philippines is one of the stronger, faster-growing economies in the region. This year, we had shaved the growth down to 5.8%, but that’s because the third quarter was very weak,” Mr. Khor said.

In the third quarter, Philippine GDP expanded by a weaker-than-expected 5.2% due to bad weather affecting spending and agriculture.

This brought the average to 5.8% in the first nine months of the year. Fourth-quarter and full-year 2024 GDP data will be released on Jan. 30.

At the same time, AMRO kept its headline inflation forecast for the Philippines at 3.2% for 2025, slightly lower than the BSP’s 3.3% average forecast. In 2024, inflation averaged 3.2%.

RISKS TO OUTLOOK
Meanwhile, the ASEAN+3 region is projected to grow by 4.2% this year, same as the growth in 2024.

ASEAN is forecast to grow by 4.8% this year, slightly faster than 4.7% in 2024.

“Growth will be mainly driven by domestic demand, with firm external demand providing continued support. Nonetheless, regional growth has been revised downward from the 4.4% in the October 2024 update mainly to reflect the baseline assumption of the US increasing tariffs on imports from China in the second half of 2025,” AMRO said.

US President Donald J. Trump has vowed to impose tariffs of up to 60% on imported Chinese goods and 25% for Canadian and Mexican imports, as well as a 10% universal tariff.

“The higher tariffs are expected to increase prices in the US and constrain private sector spending. As a major export market for most ASEAN+3 economies, the resulting decline in demand from the US would weigh on regional exports,” AMRO said.

AMRO said regional growth could be lower by 0.1 percentage point in 2025.

“The impact would be considerably worse if affected economies were to retaliate, with growth being potentially 0.6 percentage point lower instead,” it added.

AMRO said the negative impact would likely build up in the next few years as demand weakens.

“Consequently, tariff retaliation could result in regional growth declining by 1-2 percentage points by 2026-2027 — marking the slowest regional growth since the Asian Financial Crisis (excluding the pandemic years of 2020-2022),” the think tank said.

Other risks to the regional outlook include a sharper growth slowdown in the US and Europe, tighter global financial conditions, a spike in global commodity prices and shipping costs and slower growth in China.

“Beyond the immediate risk of higher protectionism, the ongoing geoeconomic fragmentation and geopolitical tensions would weigh on the longer-term growth prospects of regional economies, particularly the trade-dependent ones,” AMRO said.

The region’s aging population and failure to address climate change could also impact economic growth, it added.

Philippine CEOs confident in economic growth in the next 12 months — survey

Top executives in the Philippines are optimistic about economic growth this year. — PHILIPPINE STAR/MIGUEL DE GUZMAN

MOST chief executive officers (CEO) based in the Philippines are optimistic about economic growth prospects despite worries over a shortage of skilled workers and technological disruption, a survey showed.

In the PwC 28th Global CEO Survey, 78% of Filipino CEO respondents said they expect domestic economic growth to improve in the next 12 months.

On the other hand, 9% of the Filipino executives said they expect gross domestic product growth to stay the same in the next 12 months, while 13% said they expect a decline.

PwC’s 28th Global CEO Survey gathered 4,701 responses from CEOs globally from October to November 2024. Of the total, 1,520 are from the Asia-Pacific region, including 32 from the Philippines.

For the next 12 months, 38% of the CEOs said that they are very confident about revenue growth, 38% are moderately confident, while 19% are only slightly confident.

Meanwhile, 44% of the CEOs said that they are optimistic about revenue growth in the next three years, 38% said they are moderately confident, and 13% said they are only slightly confident.

Filipino CEOs also expressed confidence in headcount expansion, with 59% saying they are planning to hire more workers in the next 12 months, higher than the global average of 42%.

“This commitment to human capital signals a long-term vision of strengthening capabilities to support business strategies,” PwC said.

However, 13% of Philippine CEOs said they would be decreasing headcount in the next 12 months, lower than  the 17% global average.

The survey showed Filipino executives cited shortage of skilled workers (28%) and technological disruption (28%) as their primary concerns, alongside macroeconomic volatility (19%) and inflation (16%).

PwC said the skill gap is especially prevalent in data analytics, digital transformation and emerging technologies.

“These immediate challenges are particularly critical because they directly impact business sustainability,” PwC said.

“These challenges emphasize the need for people and organizational reinvention, including more targeted investments in digital transformation and workforce development,” it added.

PwC said Filipino CEOs are making progress in addressing skill gaps and technological disruptions, with 75% having been able to develop innovative products and services and 65% forging partnerships with universities and managed service  providers.

The survey also showed Philippine-based executives’ confidence in the potential of artificial intelligence (AI), with 75% of Filipino CEOs personally trusting having AI, including generative AI, being embedded into key processes in their companies. This was higher than the global average of 67%.

The majority or 88% of the business leaders said they expect moderate to large AI integration in their business processes, workflows and technology platforms in the next three years.

Meanwhile, the CEOs also see moderate to large AI integration in workforce and skill development (75%), new product or service development (69%), and core business strategy (60%).

PwC Philippines Deals and Corporate Finance Managing Partner Mary Jade Roxas-Divinagracia said AI would not only help businesses in automating routine tasks but also uncover deeper insights into consumer behavior.

“Ultimately, the impact of AI depends on how it is used. Businesses that thoughtfully embed AI into their strategies will not only enhance operations but also uncover opportunities for transformative growth,” she said in a statement.

PwC Philippines Chairman and Senior Partner Roderick M. Danao said the rapid advancement of AI and digital technologies are reshaping how businesses operate today.

“While reinvention is essential for navigating these changes, it requires careful planning and measured implementation with a focus on skill development and workforce readiness to meet future demands,” he said in the statement.

“By strategically adopting new technologies, leaders can create meaningful opportunities for their organizations and work to ensure long-term viability,” he added.

According to the report, 69% of Filipino CEOs believe that their businesses will only remain economically viable as long as 10 years if they continue on their current path, which reflects concerns about changes in technology and consumer preferences, as well as increased competition. This was higher than the 42% global average.

Meanwhile, only 31% said their businesses would be viable even after 10 years on their current path, lower than the 55% global average.

“Without significant changes to their business models, operational processes and technological capabilities, organizations risk becoming obsolete in an increasingly dynamic market environment,” PwC said. “To keep up, CEOs must focus on fundamental transformation rather than incremental improvements.” — Justine Irish D. Tabile

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