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US Postal Service U-turn on China parcels sows confusion among retailers, shippers

STOCK PHOTO | Image by ha11ok from Pixabay

LOS ANGELES/LONDON – The U.S. Postal Service said on Wednesday it would again accept parcels from China and Hong Kong, reversing a 12-hour suspension after President Donald Trump scrapped an exemption used by retailers including Temu, Shein, and Amazon to ship low-value packages duty-free to the United States.

The about-face added to the growing confusion among retailers and express shipping firms over how to deal with Trump’s new 10% tariff on imports from China and his closure of the “de minimis” duty exemption for packages valued at under $800, with the stated aim of stopping the flow of fentanyl and precursor chemicals into the United States.

Major international shippers promised to maintain deliveries, but disruptions may still occur as the USPS works out how tariffs on small packages would be collected in tandem with the U.S. Customs and Border Protection department.

FedEx, meanwhile, suspended its money-back guarantee on overseas shipments as disruptions ripple through the supply chain. Indeed, one logistics executive said CBP at New York’s John F. Kennedy (JFK) International Airport is putting a hold on all incoming shipments from China until further notice.

“We’re all running around like headless chickens at this moment in time, trying to second-guess what’s going to happen. And in two weeks’ time we may be back to normal,” said Martin Palmer, co-founder of Hurricane Commerce, a cross-border ecommerce data provider.

“There has really been absolutely zero time for anyone to prepare for this,” said Maureen Cori, co-founder of New York-based consultancy Supply Chain Compliance. “What we really need is direction from the government on how to handle this.”

About 1.36 billion shipments entered the United States using the de minimis provision in 2024, up 36% from 2023, according to CBP data. Reuters reporting has found that drug traffickers have exploited the exemption to bring fentanyl and its precursor chemicals into the country unscreened.

The USPS said it was working with the CBP to institute an efficient way to collect the new tariffs on China to “ensure the least disruption to package delivery,” it said in a statement.

The USPS did not comment on whether its temporary suspension had been tied to Trump’s order ending de minimis shipments from China, which was announced on Saturday and came into force on Tuesday.

“The problem is not with the Postal Service. The problem is with Customs. They are not prepared for what’s happening,” said one postal industry expert, who requested anonymity for fear of retribution. “The trillion-dollar question,” the expert said, is who will collect the duties and who will pay them.

Kate Muth, executive director of the International Mailers Advisory Group (IMAG), which represents the U.S. international mailing and shipping sector, said making the change through the traditional federal rule-making process would have allowed affected parties to provide input and adjust in the months-long period before implementation.

“We don’t have that luxury. Everything’s happening immediately without preparation,” she said.

There is also the potential that the CBP could see a net revenue loss if the cost to collect those duties is higher than the revenue that’s collected, she said.

 

INDIVIDUAL CLEARANCES

Currently, de minimis parcels are consolidated so that customs can clear hundreds or thousands of shipments at once, but they will now require individual clearances, significantly increasing the burden for postal services, brokers and customs agents, Cori said.

The provision was initially intended as a way to streamline trade, and its use has surged with the increase in online shopping, fueling the growth of fast-fashion retailers Shein and online dollar-store Temu, both of which sell products ranging from toys to smartphones.

The two firms together likely accounted for more than 30% of all packages shipped to the United States each day under the provision, according to a June 2023 U.S. congressional committee report on China that also found nearly half of all packages shipped under de minimis come from China.

Shein and Temu did not reply to requests for comment.

 

GREATER SCRUTINY

Some international couriers including FedEx and SF Express, China’s largest express delivery company, said they will continue to send packages to the United States.

But FedEx said it had suspended its money-back guarantee for U.S.-inbound shipments effective Jan. 29, citing recent regulatory changes, according to a notice on its website.

Deutsche Post-owned DHL DHLn.DE and UPS UPS.N said they were working with customers to limit negative impacts for them and consumers, and to avoid disruption to supply chains.

UPS, FedEx and DHL have systems in place to collect duties and can switch customers over to those services, shipping experts told Reuters.

Other air freight, however, could be more vulnerable to delays.

Customs officers in telephone calls on Wednesday alerted Ram Radhakrishnan that all shipments coming from China and Hong Kong would be held at JFK until further notice. The CEO of Silq, which manages quality control, logistics and customs clearance for clients, said sweaters for his clients are being held, even though duties on those products are paid.

“It is a little gnarly,” said Radhakrishnan, whose company does not handle de minimis and is being swept up in the chaos following Trump’s order. Representatives from CBP and JFK did not immediately respond to requests for comment.

Radhakrishnan said he was not aware of CBP holds on inbound China cargo at other U.S. airports.

As of Wednesday afternoon there was still no call scheduled between Trump and Chinese President Xi Jinping to discuss the new U.S. tariffs and Beijing’s retaliatory measures, a person familiar with the matter told Reuters. – Reuters

Trump order seeks to ban transgender women and girls from female sports

REUTERS

WASHINGTON – U.S. President Donald Trump signed an executive order on Wednesday attempting to exclude transgender girls and women from female sports, a directive that supporters say will restore fairness but critics say infringes on the rights of a tiny minority of athletes.

The order directs the Department of Justice to make sure all government agencies enforce a ban on transgender girls and women from participating in female school sports under Trump’s interpretation of Title IX, a law against sex discrimination in education.

“The war on women’s sports is over,” Mr. Trump said at a signing ceremony with about 100 women and girls aligned behind him, many of the youngest ones wearing uniforms and sports jerseys.

“My administration will not stand by and watch men beat and batter female athletes.”

The order, which is likely to face legal challenges, threatens to cut off federal funding for any school that allows transgender women or girls to compete in female-designated sporting competitions.

It would affect only a small number of athletes. The president of the National Collegiate Athletics Association told a Senate panel in December he was aware of fewer than 10 transgender athletes among the 530,000 competing at 1,100 member schools.

The NCAA welcomed the executive order for providing a clear national standard in the face of “a patchwork of conflicting state laws and court decisions,” saying in a statement it would conform its policy accordingly.

“The NCAA Board of Governors is reviewing the executive order and will take necessary steps to align NCAA policy in the coming days, subject to further guidance from the administration,” the statement said.

Under current policy the NCAA requires transgender women athletes to meet testosterone limits on a sport-by-sport basis.

The issue has also connected with voters, who responded with enthusiastic applause when Mr. Trump mentioned bans on transgender athletes at his campaign rallies. He repeatedly aired television advertisements that criticized allowing transgender women and girls to compete in female sports.

Polls have found a majority of Americans oppose transgender athletes competing in sports that align with their gender identity, and 25 Republican-led states have passed laws that ban transgender girls from participating in girls’ sports.

Federal courts have generally ruled in favor of letting transgender girls compete. A 9th U.S. Circuit Court of Appeals ruling blocked Idaho’s ban, while the 9th Circuit and the 4th Circuit have also stopped bans from being enforced against specific plaintiffs in West Virginia and Arizona. A federal district court judge in New Hampshire has blocked that state from enforcing its ban against two plaintiffs.

But the Biden administration’s 2024 interpretation of Title IX that it protects transgender people from discrimination on the basis of sex was blocked by a federal judge in Kentucky in January.

 

TARGETING TRANSGENDER RIGHTS

Wednesday’s directive follows a series of other Trump executive orders restricting transgender rights, including one attempting to halt all federal support for healthcare that aids in gender transition for people under 19 and another that bans transgender people from serving in the military. Those orders encountered immediate legal challenges.

On his first day in office on January 20, Mr. Trump signed an order demanding government employees refer only to “sex” and not “gender,” and declaring sex to be an “immutable biological reality” that precludes any change in gender identity.

Mr. Trump’s order goes beyond high school and college sports, calling for the U.S. government to deny visas for transgender females seeking to compete in the United States.

It will also instruct the State Department to pressure the International Olympic Committee to change its policy, which allows trans athletes to compete under general guidance preventing any athlete from gaining an unfair advantage.

A White House official said the United States will use “all of our authority and our ability” to enforce the order in Olympic events on U.S. soil. The 2028 Summer Olympics are due to be held in Los Angeles.

Chris Erchull, a senior staff attorney at the pro-LGBTQ legal group GLAD Law, said the various interscholastic athletics associations and coaches have successfully maintained fairness in sports for years, and banning trans athletes does nothing to ensure fairness or safety.

“We’re talking about a minuscule number of students. What’s more, we’re talking about students who aren’t posing any threat to other girls in school sports, and yet there is this enormous effort to take away their rights,” Mr. Erchull said. “It’s, it’s an absurd way to approach those goals.”

Human rights organization Amnesty International called the ban an attempt to “stigmatize and discriminate against LGBTQ+ people.”

But the order was cheered by Republicans in Congress including U.S. Representative Tim Walberg, who criticized the Biden administration for trying to “unravel decades of progress made by women to appease the most radical fringes of its own base.” – Reuters

Metro Manila condo oversupply worsens, with 8.2-year market absorption time — Colliers

A VIEW of buildings in Makati City. — PHILIPPINE STAR/MICHAEL VARCAS

Metro Manila’s condominium oversupply reached a record high last year, with unsold units expected to take over eight years to be fully absorbed by the market, according to Colliers Philippines.

Unsold units surged by 77% in 2024 to P158 billion worth of inventory, up from P89.6 billion in 2023, Colliers Philippines Director and Head of Research Joey Roi H. Bondoc said during a briefing on Wednesday.

At the current market absorption rate, it would take up to 8.2 years, or 98 months, for these units to be sold, compared to just 3.2 years in 2023, Mr. Bondoc said.

Metro Manila’s overall residential vacancy rate reached 23.9%. With declining occupancy in the capital, Mr. Bondoc said there is strong demand for residential projects in areas outside Metro Manila.

Additionally, he noted opportunities for growth in the pre-selling market, particularly in the upscale and luxury segments.

Overall, Colliers Philippines said the real estate market is expected to sustain growth despite headwinds, driven by infrastructure projects and industrial expansion.

Mr. Bondoc cited ongoing infrastructure developments such as the Metro Rail Transit Line 4 (MRT-4), MRT-7, and the Taguig City Integrated Terminal Exchange as key drivers of real estate growth.

The hotel sector is also showing signs of recovery, supported by rising international arrivals and increasing occupancy rates, he said.

Foreign hotel brands are expanding in the Philippines, a trend expected to further strengthen the sector, he added.

In 2024, the Ninoy Aquino International Airport (NAIA) recorded an 11% increase in total passenger volume, surpassing 50 million, driven by a rise in flights and strong domestic travel demand.

Data from the Manila International Airport Authority (MIAA) showed that NAIA handled 50.26 million passengers in 2024, up 10.9% from 45.30 million in 2023 and 4.9% higher than the pre-pandemic level of 47.90 million in 2019.

From January to December 2024, domestic passenger traffic rose by 8.1% to 26.89 million from 24.88 million in 2023, while international passenger traffic increased by 14.4% to 23.37 million from 20.42 million.

Mr. Bondoc said ongoing infrastructure developments, particularly at NAIA and other regional airports, are expected to attract more travelers to the Philippines and support the hotel sector’s growth in 2025.

The industrial sector is also poised for sustained expansion in 2025, driven by continued investments, particularly in Luzon, he said.—Ashley Erika O. Jose

Fed officials note abundance of uncertainty in Trump’s policy moves

REUTERS

WASHINGTON – Federal Reserve officials on Wednesday pointed to the large policy uncertainty around tariffs and other issues arising from the early days of President Donald Trump’s administration as among the top challenges in figuring out where to take U.S. monetary policy in the months ahead.

Chicago Fed President Austan Goolsbee warned that ignoring the potential inflationary impact of tariffs would be a mistake, whereas Richmond Fed President Thomas Barkin said it remains impossible at this early stage to know where cost increases from any tariffs might be absorbed or passed along to consumers.

The views of the two U.S. central bankers were emblematic of the cautious approach Fed officials are angling to take in deciding whether to resume interest rate cuts later this year or continue to keep them on hold. The Fed left its benchmark interest rate unchanged last week in the 4.25%-4.50% range after cutting it at three straight meetings to close out 2024.

The U.S. economy is strong, the labor market is “plausibly” at full employment, and inflation has come down and is approaching the Fed’s 2% goal, Goolsbee said in remarks prepared for delivery to the Chicago Fed’s annual auto symposium in Detroit.

“Yet we now face a series of new challenges to the supply chain – natural and man-made disasters from fires and hurricanes to collisions with bridges that take out major ports, canal cloggings and threats of dockworker walkouts; geopolitical disruptions; immigration; and, of course, the threat of large tariffs and the potential for an escalating trade war,” Goolsbee said.

“If we see inflation rising or progress stalling in 2025, the Fed will be in the difficult position of trying to figure out if the inflation is coming from overheating or if it’s coming from tariffs,” Goolsbee said. “That distinction will be critical for deciding when or even if the Fed should act.”

The Trump administration announced last weekend that 25% tariffs on imports from Mexico and Canada would start on Feb. 4, but it delayed them until March 1 after the leaders of the two major U.S. trade partners agreed to crack down on drug smuggling and help stem the flow of undocumented migrants into the U.S.

An additional 10% tariff on imports from China went into effect on Tuesday.

LAYERS OF COMPLEXITY
Barkin, speaking to reporters after a Conference Board event in New York, said the “lean” in the latest set of policymaker projections is still toward further rate cuts this year, although uncertainty about the impact of tariffs, immigration and regulations will need to be better understood.

On tariffs specifically, Barkin said he sees three layers of complexity in arriving at their ultimate impact on inflation and demand.

First is the uncertainty around the level of duties and exactly who they are levied upon, Barkin said. The next unknown is whether other countries retaliate with tariffs of their own and to what degree companies absorb or pass on the higher import costs. Lastly, he said, is seeing “how this will all land on consumers.”

Economists generally view tariffs as a one-time lift to prices that should not feed into inflation in any persistent way or suggest the economy is overheating, which means a response from the central bank is not required.

Goolsbee, however, said this time “tariffs may apply to more countries or more goods or at higher rates, in which case the impact could turn out to be larger and longer lasting,” compared to 2018 when Trump put import duties in place during his first administration.

“If in 2018 companies shifted all the easiest things out of China, then what’s left might be the least substitutable goods,” he said. “In that case, the impact on inflation might be much larger this time.”

Goolsbee noted that in the auto industry, where parts used in the final assembly of a truck or car could cross borders multiple times as part of complex supply chains, tariffs could get stacked on top of tariffs.

And even if those tariffs don’t get passed directly along to car buyers, they can impact inflation in other ways, he suggested.

Suppliers say they believe manufacturers will balk at paying more for parts, so suppliers will end up eating the cost, and with margins tight already, they fear a wave of supplier bankruptcies, he said.

Goolsbee has until now been one of the Fed’s most vocal supporters of lowering interest rates to better align them with falling inflation. — Reuters

Inflation steady at 2.9% in January

Tomatoes are sold at a market in Manila. Prices of tomatoes have soared in recent weeks. — PHILIPPINE STAR/ RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter

HEADLINE INFLATION remained steady in January as lower utility costs offset a spike in food prices, preliminary data from the Philippine Statistics Authority (PSA) showed.

The consumer price index (CPI) rose 2.9% year on year in January, the same as December. It also settled within the 2.5%-3.3% forecast from the Bangko Sentral ng Pilipinas (BSP).

The January print was also slightly higher than the 2.8% median estimate in a BusinessWorld poll of 16 analysts.

Inflation rates in the Philippines

“The latest inflation outturn is consistent with the BSP’s assessment that inflation will remain anchored to the target range over the policy horizon,” the central bank said in a statement.

Core inflation, which discounts volatile prices of food and fuel, settled at 2.6% during the month — slower than 2.8% in December and 3.8% a year ago.

The heavily weighted food and nonalcoholic beverage index remained the top contributor to the overall CPI in January, accounting for a 50.3% share, National Statistician Claire Dennis S. Mapa said.

The index quickened to 3.8% in January from 3.4% a month earlier and 3.5% in the same period a year ago.

Food inflation alone accelerated to 4% from 3.5% in December and 3.3% in 2024.

Vegetables, tubers, plantains, cooking bananas and pulses soared to 21.1% in January from 14.2% in December and the 20.8% decline in the previous year.

In particular, tomato prices had a much faster annual growth rate of 155.7% from 120.8% a month earlier. This accounted for 0.4 percentage point (ppt) or 12.4% of January inflation.

Mr. Mapa said the increase in vegetable prices partly reflected the impact of typhoons.

Several storms hit the country in the fourth quarter, leading to billions of pesos worth of agricultural damage.

The increase in prices of meat and other parts of slaughtered land animals jumped to 6.4% from 4.9% month on month. Meat of pigs rose to 8.4% from 5.1%, while meat of poultry climbed to 8.4% from 7.7%.

Mr. Mapa said higher pork prices were due to cases of African Swine Fever (ASF) in some regions.

Data from the Bureau of Animal Industry showed some 88 municipalities across 19 provinces had active ASF cases.

Meanwhile, fish and other seafood also quickened to 3.3% from 1% a month prior.

RICE DOWNTREND
On the other hand, rice inflation contracted to 2.3% in January from the 0.8% clip in December and 22.6% jump a year prior.

This was also the lowest since the -2.8% rice inflation print in June 2020. It was also the first time that rice posted a contraction since the -0.1% in December 2021.

“Based on the current trend of prices, the expectation is that at least until July, we will expect negative inflation for rice,” Mr. Mapa added.

In January, the average price of regular milled rice declined to P48.25 per kilogram from P49.65 a year earlier. Well-milled rice decreased to P54.14 from P54.91, while special rice dropped to P63.13 from P63.90 year on year.

The Agriculture department on Monday declared a food security emergency on rice, which has remained stubbornly high despite the reduction of tariffs. The declaration will allow the National Food Authority to release buffer stocks at subsidized prices to help lower the cost of the staple grain.

“Any action to reduce the price of rice is always beneficial to our Filipino consumers, because rice has a heavy weight in our CPI basket,” Mr. Mapa said.

Meanwhile, the PSA said the housing, water, electricity, gas and other fuels index was also a main contributor to inflation, easing to 2.2% in January from 2.9% in December. However, it rose from the 0.7% print a year ago.

Manila Electric Co. lowered the overall rate by P0.2189 per kilowatt-hour (kWh) to P11.7428 per kWh in January from P11.9617 per kWh in December.

Data from the PSA showed inflation of rentals slowed to 2% from 2.4% in December, while water supply eased to 6.2% from 6.8%.

Water rates rose in January. Manila Water Co. raised rates by P5.95 per cubic meter, while Maynilad Water Services, Inc. hiked rates by P7.32 per cubic meter.

Transport inflation also slightly picked up to 1.1% from 0.9% in December and the 0.3% decline a year prior.

In January, pump price adjustments stood at a net increase of P2.65 a liter for gasoline, P4.80 a liter for diesel and P3.80 a liter for kerosene.

Data from the PSA showed inflation for the bottom 30% of income households eased to 2.4% in January from 2.5% a month prior and 3.6% in the previous year.

Consumer prices in the National Capital Region (NCR) eased to 2.8% in January from 3.1% in December. Outside NCR, inflation settled at 2.9%, the same as a month ago.

The central bank said inflation is likely to further ease in the coming months.

“The rice tariff reduction and negative base effects are expected to support disinflation,” it said.

However, the BSP noted risks to the inflation outlook continue to lean to the upside, citing “potential upward adjustments in transport fares and electricity rates.”

“The impact of lower import tariffs on rice remains as the main downside risk to inflation… However, uncertainty in the external environment could temper economic activity and market sentiment,” it added.

National Economic and Development Authority Secretary Arsenio M. Balisacan said the government is working to address food inflation as it remains “one of the government’s most pressing priorities.”

He said the government is implementing interventions to mitigate the impact of La Niña and ramping up vaccinations against ASF among other measures to help tame inflation.

DOWNSIDE RISKS
Meanwhile, HSBC economist for ASEAN Aris D. Dacanay said the risks to the inflation outlook are tilted to the downside, citing tariff cuts, the recent declaration of the food security emergency, as well as the implementation of a maximum suggested retail price for rice.

Analysts expect the Monetary Board to cut rates at its first policy review of the year next week.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the possibility of a BSP rate cut on Feb. 13 has increased as inflation provides room for easing.

“Despite the slight upside surprise, we expect the BSP to continue loosening the monetary reins to help build support for domestic demand,” Mr. Dacanay said.

HSBC expects the Monetary Board to cut by 25 bps at the Feb. 13 meeting.

“Inflation is still within the lower-bound range of the BSP’s 2-4% target band, which gives the central bank room to maneuver and slightly shift its focus on growth,” Mr. Dacanay said.

The weaker-than-expected GDP data could also “push the central bank to prioritize growth,” Mr. Neri said.

The Philippine economy grew by a slower-than-expected 5.2% in the fourth quarter, bringing full-year 2024 growth to 5.6%. This fell short of the government’s 6-6.5% target.

Mr. Neri said the central bank will also likely consider the currency in its next policy decision.

“The peso may come under pressure if the Federal Reserve leaves interest rates unchanged for longer. The BSP appears to be open to USD/PHP moving higher as long as inflation remains within target,” he added.

However, Mr. Neri said further easing this year is unlikely to be aggressive.

“Nevertheless, we believe the scope for cuts this year remains limited. Aside from interest-differential driven portfolio outflow, the economy’s sizeable current account deficit makes the economy more vulnerable to intensifying external shocks i.e. global trade tensions.”

BSP Governor Eli M. Remolona, Jr. has signaled the possibility of 50 bps worth of rate cuts this year, citing that 75 bps or 100 bps may be “too much.”

This could be delivered in increments of 25 bps each in the first and second half of the year, he added.

However, the BSP chief has said that a rate cut is still on the table at the Feb. 13 meeting.

“Cutting the policy rate aggressively could amplify this vulnerability and exert unmanageable pressure on the peso. We therefore continue to expect a total of 50 bps in RRP rate cuts this year, which will bring the policy rate to 5.25% by yearend,” Mr. Neri added.

The central bank began its easing cycle in August last year, slashing borrowing costs by a total of 75 bps by end-2024. It delivered three straight rate cuts, bringing the benchmark to 5.75%.

REBASING
Meanwhile, the PSA said it is set to change the base year of price indices to 2023 from 2018 starting January 2026.

“We are looking at rebasing it to 2023 and the technical staff are already doing the preparatory work,” Mr. Mapa said.

“I think next year, not this year. We are doing rebasing for both the GDP and the inflation rate, both 2023,” he added.

The PSA periodically rebases the CPI to ensure that the CPI market basket captures goods and services commonly purchased by households over time, update expenditure patterns and synchronize its base year with that of GDP and other indices.

The rebasing is also in accordance with a PSA Board Resolution that approved the synchronized rebasing of price indices to base year 2006 and every six years thereafter

“Right now, what we’re doing is we’re looking at the commodity items from the last family income and expenditures survey. We may adjust the weights of commodity items,” Mr. Mapa said in mixed English and Filipino.

The PSA adjusts the weights of these items based on consumption, he added.

“Second, we also look at items that are new in 2023 versus 2018. There’s what we call a commodity and outlet survey, where we go to outlets to see where consumers buy typical commodities,” Mr. Mapa said.

“When you have an inflation report, there are some 500,000 items all over the country that the PSA collects. It takes substantial time to prepare and get all of this data,” he added.

The PSA approved the CPI rebasing to 2018 from 2012, which took effect in 2022.

Bicam report on capital markets reform OKd

BW FILE PHOTO

THE SENATE and the House of Representatives on Wednesday ratified the bicameral conference report on a measure that seeks to cut the tax on stock transactions to 0.1% from 0.6%, a move that experts hope will boost the Philippine stock market.

At the same time, Congress also ratified the bicam report on the measure that will raise the capital of the Development Bank of the Philippines (DBP).

“We have come up with a piece of legislation that seeks to promote capital market development, increase capital mobility, and enhance financial inclusion,” Senator Sherwin T. Gatchalian said, referring to the Capital Markets Efficiency Promotions Act.

“A more efficient capital market means more opportunities, greater financial inclusion, and stronger economy that works for all.

Mr. Gatchalian said lawmakers agreed to reduce the documentary stamp tax (DST) on original issue of shares of stock to 0.75% from 1% of the par value of the shares of stock.

It will also exempt DST on the original issuance, redemption or other disposition of shares or units of participation in a unit investment trust fund.

Mr. Gatchalian said the move would ease the financial burden on investors and allow them to maximize their earnings without needless taxes.

He said the bill will also introduce an allowable deduction of 50% of an employer’s contribution to their employees’ personal equity and retirement accounts, which would incentivize businesses to encourage workers to prepare for retirement.

A copy of the bicameral conference committee report of the measure was not immediately available.

Based on a forecast by the Philippine Stock Exchange, the lowering the stock transaction tax to 0.1% would boost stock market’s trading volume to P4.9 trillion by 2029.

Meanwhile, the Senate also ratified bicameral conference committee report of the new DBP charter, which would boost the lender’s authorized capital stock to P300 billion from P35 billion.

The measure mandates that the National Government will own 70% of the DBP’s capital stock at all times, with P32 billion or 10.67% being fully subscribed to and paid for by the state. It will also allow the state-run lender to conduct an initial public offering.

“The increased capitalization could be provided to DBP which would give them heightened ability to issue more loans to fund critical projects for priority sectors such as infrastructure health social services and agriculture,” Senator Mark A. Villar, who sponsored the Senate bill, told the plenary floor.

A copy of the bicameral conference committee report on the DBP charter was not available.

“This proposed measure will enable the DBP to continuously support national development goals, ensuring that the benefits of these projects reach ordinary Filipinos in terms of job opportunities, better services, and improved livelihoods,” Mr. Villar said. — John Victor D. Ordoñez

Pangandaman says gov’t could adjust growth target if necessary

Motorists are seen along United Nations Avenue in Manila. — PHILIPPINE STAR/RYAN BALDEMOR

BUDGET Secretary Amenah F. Pangandaman on Wednesday said the government’s 6-8% gross domestic product (GDP) growth target this year may be adjusted after underwhelming 2024 growth and global uncertainties.

“Let’s wait for it. Maybe, we need to adjust. So, if needed, we’ll do the necessary adjustment,” Ms. Pangandaman, who chairs the Development Budget Coordination Committee (DBCC), told reporters on Wednesday.

The DBCC will conduct its first meeting this year in March.

“All the numbers are already in. We already saw our GDP, inflation, but our employment is still very good. We’ll wait for the others… There’s a policy meeting soon. So, once all the numbers are in, and then we’ll check what’s happening with our peers,” Ms. Pangandaman said.

The Philippine economy grew by a weaker-than-expected 5.6% in 2024, falling short of the government’s revised 6-6.5% target.

Asked if the country could hit 8% growth this year, Finance Secretary Ralph G. Recto earlier told BusinessWorld that “6-6.5% [growth] is doable for 2025.”

Department of Budget and Management (DBM) Principal Economist and Undersecretary Joselito R. Basilio said the DBCC will likely retain the 6% lower band for 2025.

“Most likely retain. The lower part is firmer, meaning it won’t be lowered or raised anymore. Given the reasons for achieving the growth target, such as election spending, and agriculture is okay,” Mr. Basilio told reporters.

Mr. Pangandaman said they will also wait for the Bangko Sentral ng Pilipinas’ (BSP) next policy move.

“The BSP has its own thing. They also crunch their own numbers based on the international outlook… Let’s wait for it. Maybe we need to adjust,” she said.

BSP Governor Eli M. Remolona, Jr. over the weekend said they may cut interest rates by 50 basis points (bps) this year. He said the cuts could be delivered in increments of 25 bps each in the first and second half of the year.

The central bank began its easing cycle in August last year, slashing borrowing costs by a total of 75 bps to 5.75% by end-2024.

Meanwhile, Mr. Basilio said the DBCC could revise the revenue and expenditure program for this year to be “more realistic.”

“Depending on the condition in March. It will be there’s Trump on the outside. Then, our budget is still rolling to 2025. Then, depending on what the finalized revenue measures are,” Mr. Basilio said.

The DBCC expects revenues to hit P4.64 trillion in 2025, while expenditure program was set at P6.182 trillion.

It also kept the deficit ceiling at -5.3% of GDP for 2025.

USAID FREEZE
At the same time, Ms. Pangandaman said she does not see any downside risks yet associated with recent policies announced by US President Donald J. Trump.

“Nothing yet. As of now, it’s just the pronouncements and most of it is just the policy review of the existing orders and previous policy. So, we wait, we wait, we wait until we get their final agenda in this administration,” she said.

The Trump administration on Tuesday announced that it was going to put on leave all directly hired employees of the US Agency for International Development (USAID) globally and recall thousands of personnel working overseas, Reuters reported. (Related story here: “Trump administration puts on leave USAID staff globally in dramatic aid overhaul”).

USAID programs around the world, including the Philippines, were halted after Mr. Trump ordered a freeze on most US foreign aid to ensure this is aligned with his “America First” policy.

“I think, again, what Trump’s administration said is that they will just review, give them a 30-day review of all the aid that they provide to development countries, otherwise. So, ngayon, hintay muna po tayo,” Ms. Pangandaman said in mixed Filipino and English.

Ms. Pangandaman said the government is hopeful that after the review, the US will still provide funding for projects in the Philippines.

Asked if the government can step in and provide the funding instead, she said: “We don’t know yet. The aid that is being given to us by not just the US but also our other development partners is a bit big. So, let’s see if we can.”

National Economic Development Authority Secretary Arsenio M. Balisacan said he sees no significant impact from the suspension of foreign aid. — Aubrey Rose A. Inosante

Gas stations may be required to put up EV charging points this year

Electric vehicle charging stations are seen at a mall in Eastwood City. — PHILIPPINE STAR/WALTER BOLLOZOS

By Sheldeen Joy Talavera, Reporter

THE Department of Energy (DoE) is looking to start requiring gas stations to have electric vehicle (EV) charging points this year, as part of efforts to boost EV adoption in the country. 

Patrick T. Aquino, director at DoE – Energy Utilization Management Bureau, said that the department will release the draft issuance for comments and conduct public consultations within the year.

“The proposal is to require liquid fuel retail outlets (LFRO) to have electric vehicle charging points depending on the ratio of number of dispensing pumps,” Mr. Aquino told BusinessWorld.

“The operator of the LFRO can directly install, operate and maintain the EV charging point or allow a third party to do the same,” he added.

Mr. Aquino said that the DoE will be identifying priority areas for implementation, adding that it will be done in phases.

Asked on when the department targets to implement the policy, he said: “within the year.”

“The DoE is pushing for EV charging infra in LFRO to improve access and availability for EV users,” Mr. Aquino said.

Under the Republic Act No. 11697, otherwise known as the Electric Vehicle Industry Development Act (EVIDA), gasoline stations identified in the Comprehensive Roadmap for the Electric Vehicle Industry (CREVI) are mandated to designate dedicated spaces for the installation of commercial use charging stations for the general public. 

EVIDA aims to promote the development and adoption of EVs in the Philippines by mandating an increase in the share of EVs in corporate and government fleets, which is expected to generate more demand for EVs.

Under CREVI, the business-as-usual scenario target is a 10% EV fleet share by 2040, while it sets a clean energy scenario target of at least 50%.

According to the DoE, there are 104 DoE-accredited EV charging station providers nationwide as of November 2024.

Mr. Aquino said at present, there are EV charging points in some stations of Petron Corp., Unioil Petroleum Philippines, Inc., Seaoil Philippines, Inc., and Shell Pilipinas Corp.

Edmund A. Araga, president of Electric Vehicle Association of the Philippines, said that the policy is “a bold move” showing the government’s commitment to hit the targets under CREVI.

“We are optimistic that number of EVs will continue to increase by at least 20% as more consumers are now considering owning an EV in addressing issue on gas price increase,” Mr. Araga told BusinessWorld via Viber.

Mr. Araga said there are many EV brands in the market, allowing consumers to have a wider array of vehicles to choose from.

“We see continued demand for oil products, despite developments in EV and other renewable energy sources. Especially in the Philippines, to-date, gasoline and diesel is still a strong contender in the transport sector market and no major shift is expected in the near future,” Leo P. Bellas, president of Jetti Petroleum, Inc., said in a Viber message.

Mr. Bellas said that the company has no definite plans yet but “will actively engage should the time comes in support of the initiatives of the DoE.”

For Cebu-based fuel retailer Top Line Business Development Corp., its President and Chief Executive Officer Eugene Erik C. Lim said the company is still finalizing its rollout plan for the EV charging infrastructure for its stations.

Investors on guard as US tariff threats evolve

A “Make America Great Again” hat is seen on display on the trading floor at The New York Stock Exchange. — REUTERS

NEW YORK — Investors are seeking to protect portfolios from the potential economic fallout from President Donald J. Trump’s tariff plans even as many on Wall Street doubt the situation will erupt into a sustained trade war that cripples assets.

Announcements on tariffs have whipsawed markets this week as investors try to wrap their heads around the evolving dispute. Sweeping tariffs that Mr. Trump ordered on Saturday on Mexico and Canada were paused a month, while tariffs were being imposed on China, which retaliated with levies of its own.

Some investors have been preparing for the potential for tariffs that Mr. Trump vowed to put in place during his campaign, including moving to assets seen as less vulnerable to a trade dispute or geopolitical uncertainty more broadly.

With stocks trading at lofty price-to-earnings ratios, investors also said the tariff news could warrant more caution for equities and create volatility in the near term.

At Nomura Capital Management, where stretched valuations for equities and other risk assets had already spurred the firm to become more defensive in recent months, the tariffs were further reason to be cautious, said Matt Rowe, head of portfolio management and cross-asset strategies.

With the tariff situation, “it’s really hard to see exactly where it’s going to go, how long it will last,” Mr. Rowe said. “But it’s easy to say that this is not good for growth, it’s not good for consumer spending, and it’s likely to have a negative impact on earnings.”

The tariff developments caused big swings in equities and currencies on Monday, which retraced initial moves after news of the pauses on the Mexico and Canada tariffs.

“The threat of tariffs is live and that’s unlikely to go away,” said Michael Medeiros, macro strategist at Wellington Management, adding that the uncertainty could force the firm to explore more tactical, short-term trades.

PROFIT SQUEEZE
Analysts estimate that tariffs could drive up inflation while weighing on economic growth and corporate profits. Goldman Sachs strategists said Mr. Trump’s tariffs announced on Saturday — 25% on Canada and Mexico and 10% on China — would reduce their S&P 500 earnings forecasts by roughly 2-3%, while strategists at BofA Global Research said the earnings hit could be as much as 8%.

“If company managements decide to absorb the higher input costs, then profit margins would be squeezed,” the Goldman equity strategists said in a note on Sunday. “If companies pass along the higher costs to… end customers, then sales volumes may suffer.”

The onset of tariffs raised the risk of an S&P 500 pullback of at least 5% early in the year, Lori Calvasina, head of US equity strategy at RBC Capital Markets, said in a note on Sunday.

Strategists at UBS Global Wealth Management on Monday maintained their view the S&P 500 would end the year roughly 10% above current levels, but said “tariffs are likely to represent an overhang on markets and contribute to volatility, at least until investors gain greater clarity on the path and destination of US trade policy.”

The UBS strategists recommended gold as “an effective hedge” against geopolitical and inflation risks.

Robeco added to its positions in safe havens gold and US Treasuries late last week because of concerns about market complacency with respect to tariffs, said Colin Graham, the firm’s head of multi-asset strategies.

“We’re in a worse position than we were on Friday,” Mr. Graham said as he watched the initial market reaction unfold on Monday.

FLUID SITUATION
While the tariff threats lent support to some strategists’ current allocations and encouraged others to make changes, many warned against knee-jerk reactions to Mr. Trump’s announcements.

Morgan Stanley equity strategists said the tariffs reinforced their preference for services industries, including financials, software, and media and entertainment, saying in a note on Monday that “we would expect the market to rotate further toward services given recent trade policy implementation.”

Concerns about risks from tariffs and geopolitical uncertainty more broadly have led Manulife Investment Management in recent weeks to move into more defensive equity areas and reduce exposure to riskier high-yield credit, said Nathan Thooft, chief investment officer and senior portfolio manager at Manulife.

“But we’re advocating for people to remain fairly calm,” Mr. Thooft said. “This is still very fluid, and the reality is we don’t know what the policies will be.”

Baker Avenue Wealth Management had been underweight healthcare stocks coming into 2025 but added exposure to the group in recent weeks because it seems to be relatively immune to tariff risk, said King Lip, the firm’s chief strategist. Still, Mr. Lip said he thinks Mr. Trump recognizes the concerns a trade war brings for the economy and markets, so the situation will be “ratcheted down in a reasonable amount of time.”

Indeed, many investors remained doubtful that Mr. Trump would allow the tariff dispute to spiral into a full-blown trade war that severely damages asset prices.

Spencer Hakimian, chief executive officer of Tolou Capital Management, a New York-based macro hedge fund, said he was not making any changes to his investment portfolio based on the tariff announcements.

“Trump is bluffing,” Mr. Hakimian said. “Fade all the noise.” — Reuters

PHL may need 50M sq.m. of industrial space by 2035

Biz Hub at LIMA Estates

THE PHILIPPINES may need at least 50 million square meters (sq.m.) of industrial space by 2035, with an estimated average price of P30,000 per sq.m., to accommodate surging demand from the manufacturing, logistics, and data center sectors, according to commercial real estate consultancy firm PRIME Philippines.

“By 2035, the major backbone of the Philippine economy will be the industrial sector. Industrial real estate is no longer just an asset — it’s the key to unlocking the Philippines’ economic future. The demand is here; the supply must follow,” PRIME Philippines Founder and Chief Executive Officer Jet Yu said during a briefing on Wednesday.

Warehouse supply grew by 4% to 37.6 million sq.m. in 2024, driven by new developments in Laguna, Batangas, and Cebu.

PRIME Philippines projected that supply would breach 40 million sq.m. this year, with upcoming expansions in Rizal, Cavite, Laguna, Pampanga, Cebu, and Davao.

Mr. Yu noted that about a third of the projected demand will come from the development of data centers, with over 100 data centers expected to go live in the country within the next three years.

“The 50 million sq.m. is a conservative-to-optimistic estimate. In just one or two years, we’re going to see many countries, including the Philippines, localizing and housing their own data domestically,” he said.

Mr. Yu added that the country’s manufacturing and logistics sectors are also expected to fuel industrial space demand.

“There has been a rapid decentralization across the Philippines. Logistics players have strategically positioned themselves over the past three to four years,” he said.

“On manufacturing, when many companies from China sought to diversify their operations to other ASEAN neighbors, we somewhat missed that opportunity. However, over the next ten years, we expect significant demand,” he added.

Meanwhile, Mr. Yu said the country’s manufacturing sector could continue to thrive amid geopolitical tensions.

“As long as we play it strategically and carefully, it’s safe to say that the manufacturing sector will continue to thrive in the Philippines,” he said.

“In 2025 alone, we have already received interest from companies looking to expand their existing manufacturing facilities in the Philippines. These are secondary hubs as a way for manufacturers to diversify and mitigate potential risks,” he added.

The United States paused its planned 25% tariffs on Mexico and China in exchange for concessions on border and crime enforcement.

However, US President Donald J. Trump said he is not rushing efforts to defuse a trade war with China, which was triggered by a 10% tariff on all Chinese imports.

In response, China imposed targeted tariffs on US imports and placed several companies, including Google, on notice for possible sanctions. — Revin Mikhael D. Ochave

How AirAsia Philippines is tackling recovery challenges

RICARDO P. ISLA

By Ashley Erika O. Jose, Reporter

AIRASIA PHILIPPINES is focusing on expanding domestic routes and tackling key industry challenges as part of its recovery strategy, its chief executive officer (CEO) said.

“Now five years in AirAsia, it has been a very good balance between the challenging pandemic years and the years of recovery,” AirAsia Philippines CEO Ricardo P. Isla said in an interview with BusinessWorld.

Before joining AirAsia Philippines in 2019, Mr. Isla spent nearly 20 years in the telecommunications industry, where he led the international retail sales and distribution for one of the country’s major telecom companies.

PATH TO RECOVERY
“First of all, the pandemic presented a very challenging situation for us. We had to be very resourceful and resilient. Actually, we are still on the path to full recovery,” he said.

Mr. Isla said that AirAsia Philippines’ domestic routes have fully recovered, but its international network will only fully recover by the second half of the year.

“It is because of China. It used to account for 30% of our international capacity. Right now, it is not really delivering, and we just have to catch up,” Mr. Isla said.

As a result, AirAsia Philippines will focus on maximizing its domestic destinations, particularly in areas where the airline has a strong presence.

“For 2025, we are maximizing our domestic [network], especially in leisure destinations. We’ll stay focused and further strengthen our strong territories. We expect to boost our capacity by about 10-15% in these very popular destinations,” he said.

He added that the low-cost carrier plans to concentrate on its strong territories such as Boracay, Kalibo, Palawan, and other leisure destinations.

“However, for international, we would still like to focus on our positioning as a low-cost carrier. We have to go back to basics, meaning rebuild the trust and confidence of our passengers,” he said.

Mr. Isla noted that the airline is banking on its parent company’s plans, as AirAsia Philippines stands to benefit heavily from the consolidation of AirAsia X and AirAsia Aviation Group (AAGL).

Earlier in January, AirAsia X Berhad (AAX) announced a mutual agreement with Capital A Berhad (Capital A) to extend the timeline for the completion of the proposed acquisition of the group’s aviation business.

Last year, Capital A Berhad disclosed that it had entered into a non-binding agreement with its unit, AirAsia X, for the sale of its aviation businesses — AirAsia Berhad and AirAsia Aviation Group Ltd.

“Let us also consider the status of our parent company with regard to the proposed regularization plan,” Mr. Isla said, adding that the transaction is expected to be completed soon.

According to Mr. Isla, this will be followed by its parent company’s order for over 600 more aircraft.

“We havean orderbook of around 647 aircraft, with a good spread of Airbus A320s and mostly Airbus A321NEOs. This will serve all countries, including Philippines AirAsia, Malaysia, Indonesia AirAsia, Thailand AirAsia, and Cambodia AirAsia,” he said.

REVIVAL OF ROUTES
The low-cost carrier is confident about the recovery of air travel, and AirAsia Philippines aims to capture that momentum, Mr. Isla said, adding that the company will assess which of its pandemic-affected routes to revive.

“We must be willing to sail through the uncharted waters of the travel industry. By that, we want to further widen our network. And at the same time, when we widen our network, we want to go back to where we used to fly during the early parts of 2019,” he said.

For AirAsia Philippines, the challenges in the aviation industry remain, Mr. Isla said, identifying these as manpower, supply chain issues, and the need to catch up with infrastructure.

“There are many challenges, but three key elements—people, availability of parts and resources—are particularly pressing, and now we are running out of MROs (maintenance, repair, and overhaul) facilities,” he said.

Many Middle Eastern companies are after Filipino talent, Mr. Isla noted, adding that AirAsia Philippines is further strengthening the perks it offers its employees.

He added that supply chain disruption continues to be a major challenge in the aviation industry.

“We are actively mitigating this. We are an ASEAN company, and all the other airlines within the AirAsia group. So we have the muscle when it comes to procurement of parts,” he said.

Additionally, Mr. Isla said that due to the limitations of MROs, the company has launched Asian Digital Engineering.

“This is our MRO prioritizing the Philippines. So, we’ve addressed that. These are the resources we need to maintain, namely the resources and parts,” he added.

ICTSI expands MICT capacity

ICTSI.COM

INTERNATIONAL Container Terminal Services, Inc. (ICTSI) said it is enhancing its Manila International Container Terminal (MICT) through capacity expansion and infrastructure upgrades.

In a media release on Wednesday, ICTSI announced that MICT is building Berth 8 to accommodate large container vessels with capacities of up to 18,000 twenty-foot equivalent units (TEUs).

This expansion will add 200,000 TEUs to the capacity, raising the terminal’s total volume handling capability to 3.5 million TEUs annually.

Operated by ICTSI, MICT is one of three terminals in the Port of Manila and has the largest crane fleet to date.

ICTSI said the additional yard space will support the new berth while also mitigating yard utilization for increased maneuverability.

The company is also planning to expand its sustainability efforts by continuing to incorporate hybrid and near-zero-emissions equipment into its operations.

MICT said it recently deployed eight zero-emission rubber-tired gantries (RTGs) to complement its fleet.

ICTSI added that it is also planning to acquire electric trucks and establish electric vehicle charging infrastructure.

“MICT’s expansion and modernization efforts align with the country’s economic needs and goals. These efforts further underline the terminal’s central role in the country’s logistics and supply chain resilience, as well as its prominence as a gateway for global trade,” ICTSI said.

In 2024, ICTSI announced that the Manila terminal will begin the second phase of its Berth 8 expansion, which includes the construction of a 300-meter wharf and a 10-hectare container yard.

Berth 8 will be equipped with three quay cranes for handling large-capacity vessels with a capacity of up to 18,000 TEUs, ICTSI said. The new cranes are expected to arrive in 2027.

In 2023, the company estimated that adding a new berth in Manila would cost P15 billion, enabling it to serve more large foreign vessels.

ICTSI operates 33 terminals in 20 countries across six continents. At the local bourse on Wednesday, shares in the company gained P11, or 3%, to end at P378 apiece. — Ashley Erika O. Jose

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