Trump orders US exit from the World Health Organization

January 21, 2025 | 10:56 am

NEW YORK – The United States will exit the World Health Organization, President Donald Trump said on Monday, saying the global health agency had mishandled the COVID-19 pandemic and other international health crises.

Mr. Trump said the WHO had failed to act independently from the “inappropriate political influence of WHO member states” and required “unfairly onerous payments” from the U.S. that are disproportionate to the sums provided by other, larger countries, such as China.

“World Health ripped us off, everybody rips off the United States. It’s not going to happen anymore,” Mr. Trump said at the signing of an executive order on the withdrawal, shortly after his inauguration to a second term.

The WHO did not immediately respond to a request for comment.

The move means the U.S. will leave the United Nations health agency in 12 months’ time and stop all financial contributions to its work. The United States is by far the WHO’s biggest financial backer, contributing around 18% of its overall funding. WHO’s most recent two-year budget, for 2024-2025, was $6.8 billion.

The U.S. departure will likely put at risk programs across the organization, according to several experts both inside and outside the WHO, notably those tackling tuberculosis, the world’s biggest infectious disease killer, as well as HIV/AIDS and other health emergencies.

Mr. Trump’s order said the administration would cease negotiations on the WHO pandemic treaty while the withdrawal is in progress. U.S. government personnel working with the WHO will be recalled and reassigned, and the government will look for partners to take over necessary WHO activities, according to the order.

The government will review, rescind, and replace the 2024 U.S. Global Health Security Strategy as soon as practicable, the order says.

The next-largest donors to the WHO are the Bill & Melinda Gates Foundation, although most of that funding goes to polio eradication, and the global vaccine group Gavi, followed by the European Commission and the World Bank. The next-largest national donor is Germany, which contributes around 3% of the WHO’s funding.

Mr. Trump’s withdrawal from the WHO is not unexpected. He took steps to quit the body in 2020, during his first term as president, accusing the WHO of aiding China’s efforts to “mislead the world” about the origins of COVID.

WHO vigorously denies the allegation and says it continues to press Beijing to share data to determine whether COVID emerged from human contact with infected animals or due to research into similar viruses in a domestic laboratory.

Mr. Trump also suspended U.S. contributions to the agency, costing it nearly $200 million in 2020-2021 versus the previous two-year budgets, as it battled the world’s worst health emergency in a century.

Under U.S. law, leaving the WHO requires a one-year notice period, and the payment of any outstanding fees. Before the U.S. withdrawal could be completed last time, Joe Biden won the country’s presidential election and put a stop to it on his first day in office on Jan. 20, 2021. – Reuters

Trump launches sweeping border crackdown, mass deportation push

January 21, 2025 | 10:51 am

border-us-mexico-5451883_1920 — STOCK PHOTO | Image by Mike from Pixabay

WASHINGTON/PIEDRAS NEGRAS, Mexico – President Donald Trump on Monday kicked off his sweeping immigration crackdown, declaring illegal immigration at the U.S.-Mexico border a national emergency, designating criminal cartels as terrorist organizations and taking steps to block citizenship for children of immigrants in the U.S. illegally.

The series of executive orders that Mr. Trump outlined in his inaugural address, said he would invoke a 1798 wartime law known as the Alien Enemies Act to target foreign gang members in the U.S., a legal authority last used to detain non-citizens of Japanese, German, and Italian descent in internment camps during World War Two.

Shortly after the inauguration, U.S. border authorities said they had shut down outgoing President Joe Biden’s CBP One entry program, which had allowed hundreds of thousands of migrants to enter the U.S. legally by scheduling an appointment on an app. Existing appointments were canceled, leaving migrants stunned and unsure of what to do.

Mr. Trump, a Republican, recaptured the White House after promising to intensify border security and deport record numbers of migrants. Mr. Trump criticized Mr. Biden for high levels of illegal immigration during the Democrat’s presidency. In June, Mr. Biden toughened his policies and Mexico stepped up enforcement, and the number of migrants caught crossing illegally fell dramatically.

Republicans say large-scale deportations are necessary after millions of immigrants crossed illegally during Mr. Biden’s presidency. There were roughly 11 million immigrants in the U.S. illegally or with a temporary status at the start of 2022, according to a U.S. government estimate, a figure that some analysts now place at 13 million to 14 million.

“As commander-in-chief, I have no higher responsibility than to defend our country from threats and invasions, and that is exactly what I am going to do,” Mr. Trump said in his address.

Mr. Trump’s critics and immigrant advocates say mass deportations could disrupt businesses, split families and cost U.S. taxpayers billions of dollars.

The American Civil Liberties Union said in a federal court filing on Monday that Mr. Trump’s decision to end the CBP One program removed the only avenue to asylum at the U.S.-Mexico border, an opening salvo by the civil rights group to fight Trump’s agenda in court.

California and other Democratic-led states whose policies limit cooperation with federal immigration enforcement also could clash with Trump.

Americans have grown less welcoming toward immigrants without legal status since Mr. Trump’s first presidency, but remain wary of harsh measures such as using detention camps, a Reuters/Ipsos poll in December found.

BIDEN ENTRY PROGRAM SHUT DOWN

In several Mexican border cities, migrants saw their appointments on Mr. Biden’s CBP One app canceled just after Trump took office. Some 280,000 people had been logging into the app daily to secure an appointment as of Jan. 7.

Migrants waiting in Ciudad Juarez scrambled to find short-term rentals, buy bus tickets and call family members back home.

Daynna del Valle, a 40-year-old Venezuelan, spent eight months in Mexico waiting for an appointment that would have arrived on Tuesday. In that time, she worked at a nail salon but earned so little that she barely managed to send any money back to her mother in Colombia, a cancer survivor who needed medical treatment for her blood pressure.

“I’m lost,” she said. “I don’t know what to do, where to go.”

Denia Mendez, a Honduran sitting in the courtyard of a migrant shelter in Piedras Negras – a Mexican city across from Eagle Pass, Texas – opened her email inbox 30 minutes after Trump became president. She stared at an email for several minutes, reading it over and over, before her eyes welled up.

“They canceled my appointment,” she said. Several other migrants, who just minutes ago were laughing as they fed potato chips to pigeons, huddled around her phone, their faces suddenly grave.

Ms. Mendez’s 15-year-old daughter Sofia kept trying to get into the CBP One app.

“They’re not going to let you into the app, baby,” her mother told her softly.

BIRTHRIGHT CITIZENSHIP TARGETED

In his order focused on so-called “birthright citizenship ,” Mr. Trump will challenge U.S. citizenship for children born to parents in the U.S. illegally, an incoming Trump official said earlier in the day. The text of the order was not immediately available. The right stems from an amendment to the U.S. Constitution and any move to restrict it will almost certainly trigger legal challenges.

Mr. Trump’s order dealing with U.S. refugee resettlement will suspend the program for at least four months and will order a review of security to see if travelers from certain nations should be subject to a travel ban, the official said.

Mr. Trump said in his address that he would reinstate his first-term “remain in Mexico” program, which forced non-Mexican asylum seekers to wait in Mexico for the outcome of the U.S. cases. Biden ended the program in 2021, saying migrants were stuck waiting in squalid conditions.

“All illegal entry will immediately be halted, and we will begin the process of returning millions and millions of criminal aliens back to the places from which they came,” Mr. Trump said.

Mexico’s presidency, foreign ministry, and economy ministry did not immediately respond to requests for comment on Mr. Trump’s plans. In a regular press conference on Monday, Mexican President Claudia Sheinbaum called for calm and insisted her government had to see the details of Mr. Trump’s actions before responding. – Reuters

Recto sees slower rate cuts on global risks

January 21, 2025 | 10:50 am

Philippine Inflation Cools Within Goal in Boon for Rate Cuts — Shoppers at a street market in Taguig City, the Philippines. Credit: Geric Cruz/Bloomberg

Philippine Finance Secretary Ralph G. Recto said the nation’s central bank will continue to deliver interest rate cuts this year, but they may be fewer and farther apart than in 2024 in the face of geopolitical tensions and uncertainties from US policies.

The government will return to the global debt market most likely in the first half to start raising the $3.5 billion foreign bond sale it plans for 2025, Mr. Recto told Bloomberg Television’s Haslinda Amin on Monday on the sidelines of the World Economic Forum in Davos.

The government is in talks with eight banks to help with debt sale, which will be mostly denominated in dollar, he said.

“There’s uncertainty on what he plans to do with regards to tariffs and inflation,” according to Mr. Recto, referring to the US president hours before Donald J. Trump took office and said that the US will “tariff and tax” other countries while sidestepping specific details.

The Philippines is unlikely to be directly hit by any Trump levies, yet they could lead to higher prices globally that could fan inflation and hold back policy easing, the finance secretary said. This is why Mr. Recto, who sits in the central bank’s Monetary Board, said he’s only looking at a total of 50 to 75 basis points in key rate reductions this year and staggered as far apart as 25 basis points per semester.

As Mr. Trump starts his second term after promising steep tariffs and strict immigration policies during the campaign, governments all over are trying to spell out how their economies will be affected.

Mr. Trump held off unveiling China-specific tariffs on his first day and instead ordered his administration to address unfair trade practices and investigate China’s compliance with a previous deal. The dollar fell, boosting foreign currencies, as traders bet that Mr. Trump would not implement aggressive tariffs immediately.

The peso, which has weakened by about 1% against the dollar so far this year and is among the worst performers in the region, opened 0.3% stronger against the dollar on Tuesday in Manila.

“If tariffs are imposed and inflation goes up, then interest rates may not go down as much as we want it to, right? So that would affect global growth,” Mr. Recto said, adding that he considers global uncertainty and geopolitical tensions as among the biggest risks.

Borrowing costs in the Philippines have remained elevated even after a total of 75 basis points in rate cuts from August to December last year. The finance chief said ample remittances from overseas workers and other dollar sources ease the pressure to raise more foreign funding.

About $1.5 billion in dollar bonds will be due in March and 785 million euros in euro-denominated debt in April, according to data compiled by Bloomberg. Last year, the Philippines sold about $4.5 billion in international bonds.

“There’s a lot of domestic savings in the Philippines so there’s a lot of liquidity,” Mr. Recto said. The Southeast Asian nation is expected to grow at least 6% this year, said the finance secretary who expects the country to remain resilient amid the risks. Robust household consumption will continue to drive growth, he said.

The finance chief also said that the current peso level is “okay” as it’s moving in line with other currencies that have also weakened due to a strong dollar. Authorities intervene in the currency market only when it’s volatile, he added.

“In the Philippines, we are not so much concerned about where the peso will be going. Let the market forces determine that,” he said. — Bloomberg

Trump signs TikTok order delaying ban of app

January 21, 2025 | 10:48 am

MYRIAMMIRA-FREEPIK

WASHINGTON – U.S. President Donald Trump on Monday signed an executive order seeking to delay by 75 days the enforcement of a ban of popular short-video app TikTok that was slated to be shuttered on Jan. 19.

The order directs the attorney general to not enforce the law “to permit my administration an opportunity to determine the appropriate course of action with respect to TikTok.”

It also directs the Justice Department to issue letters to companies like Apple, Alphabet’s Google and Oracle that work with TikTok “stating that there has been no violation of the statute and that there is no liability for any conduct that occurred during the above-specified period.”

When asked what TikTok order does, Mr. Trump said “just gave me the right to sell it or close it,” adding that he needed to make a decision. – Reuters

BPO sector seen to drive PHL growth

January 21, 2025 | 12:34 am

CITIGROUP, INC. (Citi) expects the Philippine economy to expand by around 6% this year, partly driven by sustained growth in the business process outsourcing (BPO) sector.

“We expect the growth in 2025 to stay within the 6% handle,” Citi Asia South Head Amol Gupte said in an online briefing on Monday.

Citi’s forecast would be at the low end of the government’s 6-8% target for the year.

“The Philippines will continue to benefit from [the BPO industry] and will create a lot of jobs. On moving up the value chain on global capability centers, countries like the Philippines will play a very large role along with India,” Mr. Gupte said.

The information technology and business process management (IT-BPM) industry ended 2024 with $38 billion in export revenue, and 1.82 million full-time employees.

Under the Philippine IT-BPM Industry Roadmap, the target is to grow into a $59-billion industry and increase the full-time employee count to 2.5 million by 2028.

“So, I think it’s really important that the Philippines, as it thinks about the BPO industry, moves up the value chain so that it retains and bring more middle-office kinds of jobs beyond the voice jobs that exist in the tens of thousands,” Mr. Gupte said.

However, the rise of artificial intelligence (AI) could be a risk to the IT-BPM sector in the Philippines.

“There’s also the risk to that in terms of what AI will do to that industry and whether that will reduce jobs,” Mr. Gupte said.

Meanwhile, Citi South Asia Corporate Banking Head K Balasubramanian said sustained economic growth ensures that Philippine banks are well-positioned to continue to generate profits.

“I think the financial profile of the Filipino banks continues to be very strong, and with 6% growth I think they are well capitalized to look at the opportunities ahead,” he said.

As of end-September 2023, the Philippine banking system’s net profit rose by 6.4% to P290 billion as both net interest and non-interest income grew.

“We just saw the upgraded Philippine sovereign rating that happened in the fourth quarter of last year. And if you look at the impact of that on the Republic of Philippines, as well as the state-owned banks of the Philippines, I think that’s going to be crucially positive because we are now up to BBB+,” Mr. Balasubramanian said.

“(This) means that the ability to access international financing is going to be better and even the cost of the access is going to be better than what it was in the past.”

In November, S&P Global Ratings affirmed the Philippines’ investment grade rating and raised its outlook to “positive” from “stable” to reflect the economy’s strong growth potential amid improved institutional strength on the back of “effective policy making.”

The debt watcher affirmed its “BBB+” long-term credit rating for the country, which is a notch below the “A” level grade targeted by the government.

A positive outlook means the Philippines’ credit rating could be raised over the next two years if improvements are sustained.

Also Mr. Gupte noted the banking industry’s financial performance this year would depend on the interest rate environment.

“On profitability of Philippine banks, I think they’re all extremely strong. They have strong balance sheets; they have low nonperforming loans. But I think that whole profitability is going to depend on how the rate environment moves both globally and how that impacts the Philippines given the large proportion of interest income that Philippine banks depend on,” he said.

The Monetary Board has slashed benchmark borrowing costs by a total of 75 basis points since it began its easing cycle in August, bringing its policy rate to 5.75%.

Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. this month said they still have room to continue cutting interest rates as inflation is well within its annual goal.

The Monetary Board will hold its first rate-setting meeting for this year on Feb. 20. — A.M.C. Sy

DoTr weighs options for MRT-3

January 21, 2025 | 12:33 am

By Ashley Erika O. Jose, Reporter

THE Department of Transportation (DoTr) is still considering two options for the planned bidding of the operations and maintenance (O&M) contract for Metro Rail Transit Line 3 (MRT-3), an official from the Transportation department said.

“In terms of MRT-3, the present contract was established through the BOT (build-operate-transfer) system. That contract will expire or will end this July. The DoTr right now is considering its two options,” Transportation Undersecretary for Railways Jeremy S. Regino told reporters last week.

“Our study is already ongoing, and we will have to decide on this within the year.”

In 2024, the Transportation department said that it plans to bid out the concession for the O&M of MRT-3 by the first quarter of this year.

“The study is now ongoing. This is a big project, and we are studying its implications. We are evaluating the best possible options,” Mr. Regino said.

He hinted that it is possible for the MRT-3 contract to lapse first before the DoTr comes up with a decision on the project.

The Sobrepeña-led Metro Rail Transit Corp. (MRTC) is set to turn over the MRT-3 to the government by July once its BOT agreement lapses.

The government said previously that it hopes to privatize MRT-3 before the contract expires this year.

The Transportation department is carefully studying its privatization options for the MRT-3, Mr. Regino said, adding that Asian Development Bank is also helping the agency assess whether it would go the solicited or unsolicited route for the project.

Meanwhile, Public-Private Partnership (PPP) Center Deputy Executive Director Jeffrey I. Manalo said that the DoTr had rejected the unsolicited proposal of Metro Pacific Investments Corp. (MPIC) for the MRT-3 project.

“In a letter dated Dec. 16, 2024, the DoTr informed the proponent of the rejection/return of its unsolicited proposal for the MRT-3 project pursuant to the grounds and procedures under the PPP Code and its IRR (implementing rules and regulations),” Mr. Manalo said in a Viber message to BusinessWorld on Monday.

BusinessWorld sought comment from MPIC but had not received a response as of the deadline.

Last year, the DoTr said the MPIC-Sumitomo Consortium had resubmitted their unsolicited proposal for the MRT-3 O&M contract.

For Nigel Paul C. Villarete, senior adviser on PPP at the technical advisory group Libra Konsult, Inc., a solicited mode would always be a better option and would serve the government’s best interest.

“In the solicited mode, the government determines what it exactly needs and requires, and has full control of the procurement process, and would have the full spectrum of the bidding to select the best offer,” Mr. Villarete said.

“Rail systems operate for a long time; thus, these PPP contracts are also for the long term. It would be in the best interests of the government and of the people if the procurement process is done carefully with the fullest of safeguards because we will be stuck with it for the longest time,” Mr. Villarete said.

Rene S. Santiago, former president of the Transportation Science Society of the Philippine, said the government should opt for an unsolicited scheme for the planned privatization of the MRT-3.

“Accept the unsolicited proposal. It is the most practical, and fastest, option. Potential non-fare revenues are very limited,” he said in a Viber message.

MPIC is one of the three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority share in BusinessWorld through the Philippine Star Group, which it controls.

DoF chief seeks to woo global investors in Davos

January 21, 2025 | 12:32 am

MORE INVESTMENTS would be needed for the Philippines to be able to reach the high end of its growth target, Finance Secretary Ralph G. Recto said.

This week, Mr. Recto is hoping to woo global investors at the World Economic Forum (WEF) annual meeting in Davos, Switzerland.

Mr. Recto, Trade Secretary Ma. Cristina A. Roque, House Speaker Ferdinand Martin G. Romualdez and Ambassador and Philippine Permanent Representative to the World Trade Organization (WTO) Manuel Antonio J. Teehankee are scheduled to hold an economic briefing for global investors in Davos.

“The event will showcase the country’s promising potential as the next big investment destination, especially with the recent enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act,” the Department of Finance (DoF) said in a statement.

CREATE MORE expanded tax incentives and streamlined value-added tax processes in a bid to make the Philippines more attractive to foreign investors.

“In the latest DBCC (Development Budget Coordination Committee), our projected growth is 6% to 8%. It would appear that the consensus would be anywhere from 6% to 7%. But it all depends. We passed CREATE MORE. We’re going to WEF… We will present CREATE MORE, and hopefully we’re able to get more investments,” Mr. Recto told reporters on Jan. 16.

Asked if the 8% growth target is realistic, Mr. Recto said: “It all depends. It really all depends on how much investments take place.”

The DBCC in December widened the gross domestic product growth target band to 6-8% for 2025 until 2028, due to “evolving domestic and global uncertainties.”

The Finance chief is also slated to hold one-on-one meetings with global firms, including banks, manufacturers, and technology companies to discuss possible investment and expansion in the Philippines.

In a separate statement, Ms. Roque said the WEF “presents a unique platform to showcase the Philippines as a dynamic and a resilient economy, driven by innovation and inclusivity.”

“Our participation underscores our commitment to strengthening international partnerships that uplift Philippine industries to thrive in the global marketplace,” she said.

Also joining the economic team in Davos are top executives such as Globe Fintech Innovations, Inc. (Mynt) Chief Executive Officer Martha Sazon; LT Group, Inc. President Lucio C. Tan III; LT Group, Inc. Director and President of Asia Brewery, Inc. Michael G. Tan; Grab Philippines Chief Corporate Officer Sherielysse Bonifacio; and Benguet Corp. Director Maria Remedios Romualdez-Pompidou.

REVENUE COLLECTION
Meanwhile, preliminary figures provided by the DoF on Jan. 16 showed revenue collection hit P4.41 trillion in 2024, 0.59% higher than the P4.38-trillion target.

Broken down, the government collected P3.78 trillion in tax revenues and P625.96 billion in nontax revenues.

“But also because of the excess revenue to fund the unprogrammed appropriations, including Philippine Health Insurance Corp. (PhilHealth) and the Philippine Deposit Insurance Corp. (PDIC), including other dividends, we were able to generate an additional P200 billion so about P450 billion more or less next year,” Mr. Recto said.

State-run firms PhilHealth and PDIC remitted P60 billion and P107 billion in “excess funds” respectively to the Bureau of the Treasury.

DoF data showed Bureau of Internal Revenue (BIR) collections hit P2.83 trillion in 2024.

In a separate statement on Monday, BIR Commissioner Romeo D. Lumagui, Jr. said its collection “will exceed its P2.85-trillion collection goal by the billions,” as it waits for the final numbers to be reconciled by early February.

On the other hand, the Bureau of Customs (BoC) also surpassed its P939.7-billion target by 2.46% to P916.6 billion, while other offices collected P32.39 billion this year.

“Moving forward, I expect the BIR also to hit the target for 2025. The challenge would be a little more for BoC because we increased their target for next year. We want them to grow double digits also for next year,” Mr. Recto said.

For 2025, BIR has been tasked to collect P3.2 trillion, while P1.06 trillion for Customs.

“Assuming they have a shortfall, assuming they don’t hit the double digits, we’re preparing what can we do to ensure that we still collect the revenues so that we don’t increase the deficit by way of nontax revenues and other privatization proceeds,” Mr. Recto said. — A.R.A. Inosante

Elections may help boost consumer goods firms’ bottom line

January 21, 2025 | 12:31 am

supermarket-grocery-shopper — A shopper looks at products at a supermarket in Mandaluyong City in this file photo. — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Revin Mikhael D. Ochave, Reporter

LISTED CONSUMER GOODS companies may see a boost in their bottom line this year as demand is expected to increase ahead of the May elections, analysts said.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said the likely increase in sales of fast-moving consumer goods during the campaign season would lift earnings of companies such as Jollibee Foods Corp., Puregold Price Club Inc., Universal Robina Corp., and Monde Nissin Corp.

“Historically, we tend to see higher spending on consumer goods during election years,” he said in a Viber message.

“This is more pronounced during presidential elections, but the effect is still there to a lesser extent during midterms,” he added.

Luna Securities, Inc. Research Officer and Market Strategist Annika Gabrielle S. Angeles said other companies also seen to benefit from the May elections include San Miguel Food and Beverage, Inc., Century Pacific Food, Inc., RFM Corp., and Emperador, Inc.

“Elections, both national and midterm, typically serve as a boost to the consumer sector. Power usage is also likely to rise due to heightened campaign activities,” she said in a Viber message.

Midterm elections are scheduled for May 12, when Filipinos will elect senators, congressmen and local officials.

The election period officially began on Jan. 12, but the 90-day campaign period for national candidates will start on Feb. 11. For local bets, the campaign period will begin on March 28.

“Midterm elections tend to boost the economy primarily due to the massive amount of campaign spending,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“This should benefit a number of listed companies, particularly those in the consumer sector,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that consumer demand will likely get a boost during the election period.

“We could see increased demand for election-related materials such as posters, advertisements, food, beverage, transportation, accommodation facilities, venues, events-related, and other logistical requirements,” he said.

“These would all entail the creation of more jobs and other economic activities that would also translate to higher sales for some local companies,” he added.

Government spending on infrastructure will also likely accelerate ahead of the ban on public works which starts 45 days before the elections. Social welfare dole-outs are also prohibited during the period.

“The possible increase in government spending is also a source of additional growth for the local economy, since the voters look for accomplishments as basis for choosing candidates, both new and incumbent officials running for the midterm elections,” Mr. Ricafort said.

Meanwhile, Ms. Angeles said the outcome of the midterm elections could impact market sentiment.

“The midterm elections can influence broader market sentiment, with investors adjusting their expectations based on potential policy changes, such as tax reforms or infrastructure investments,” she said.

Mr. Colet said the local stock market will keep a close eye on the outcome of the midterm elections and its implications on governance and political dynamics for the second half of President Ferdinand R. Marcos, Jr.’s term.

“A strong win for the Marcos ticket would imply policy continuity and administrative stability, so that should be generally positive for stocks,” he said.

“The momentum of President Marcos’ reform agenda will require a solid coalition in both the Senate and House to ensure the passage of important economic bills and initiatives,” he added.

Marcos pushes for Tesla EV plant

January 21, 2025 | 12:07 am

PRESIDENT Ferdinand R. Marcos, Jr. on Monday urged Tesla, Inc., a multinational automotive and clean energy company, to manufacture electric vehicles (EVs) in the country, citing government efforts to advance the country’s EV transition.

He was speaking at the formal opening of the company’s headquarters in Bonifacio Global City in Taguig City.

“It is our fervent hope that Tesla might one day choose to manufacture its vehicles in the Philippines,” he said, citing the company’s “plans to expand further” in the Philippines.

“Tesla is building a generation of Filipinos equipped to lead in the global shift towards sustainable technologies such as this,” he said.

The Tesla Center Philippines is a 1,900-square-meter showroom, service center, delivery center, headquarters, and main office of Tesla Motors Philippines, Inc., a subsidiary of Tesla.

The subsidiary is responsible for Tesla’s importation, customer support, services, charging infrastructure deployment, and other operations in the Philippines.

Tesla has a market capitalization of above $1.2 trillion, according to a press release from the Presidential Communications Office. Its stock price as of Jan. 20 was valued at $426.50.

Mr. Marcos said Tesla’s entry into the country “will encourage local innovation and drive new investments in the EV sector.”

Tesla’s decision to invest in the Philippines is a recognition of the country’s potential, “underpinned by forward-thinking policies and a collective determination to innovate,” he added.

Mr. Marcos cited advancements in the Philippines’ transition to clean technologies, including the launch in September of the country’s first manufacturing plant for EV batteries.

“With a more conducive and empowering environment now taking shape for the EV industry, I am very optimistic that more companies will seize the opportunity to drive this very vital sector in the coming years,” he said.

Mr. Marcos also cited the removal of excise taxes on battery electric vehicles under the Tax Reform for Acceleration and Inclusion or TRAIN Act, as well as the Electric Vehicle Industry Development Act (EVIDA), which mandated the creation of a strategic roadmap for the country’s EV transition and led to several incentives for users.

The Department of Energy (DoE) in September last year said it was creating guidelines on the construction of EV charging stations in gasoline hubs, in keeping with EVIDA.

Section 19 of the law requires gasoline station owners to install, operate, or maintain a commercial-use charging station for EVs.

The law gives the DoE the power to deny gasoline stations permits if they have no ample space for the EV charging stations.

“What may seem as aspirational today — half of the vehicles in our streets as EVs — will become attainable tomorrow,” Mr. Marcos said.

He said the launch of the Tesla Center Philippines is also a boost to the Filipino workforce, which “will drive this transition forward.”

The Philippines became Tesla’s fourth market in Southeast Asia on Nov. 8, 2024, following Singapore, Thailand, and Malaysia.

“It is a step — a very significant step forward to our long-term transformation towards a more environment-friendly transportation system,” Mr. Marcos said. — Kyle Aristophere T. Atienza

Megawide sets P1.8B for 2025 capex

January 21, 2025 | 12:06 am

Megawide-construction workers — MEGAWIDE.COM.PH

MEGAWIDE Construction Corp. is earmarking P1.8 billion for its capital expenditure (capex) budget this year to support growth in its real estate and construction businesses, its president said.

“About P1.8 billion. Half will be real estate-related, and half will be in construction and transport,” Megawide President and Chief Executive Officer Edgar B. Saavedra told reporters last week.

In comparison, Megawide allotted P3 billion for its capex budget last year.

Mr. Saavedra said Megawide’s topline is expected to grow by 20% to 30% this year, led by the company’s real estate business.

He added that Megawide’s bottom line is expected to grow faster than its topline, without providing specific figures.

Megawide operates in the property sector via its subsidiary PH1 World Developers, Inc.

Mr. Saavedra said Megawide is focusing on the lower segment of the real estate market.

“We’ll focus on the lower market, below P3.5 million, or around P2.5 million, that’s the real backlog,” he said.

However, Mr. Saavedra noted that mid-segment offerings have experienced some softness due to excess supply.

He also said that PH1 may have its initial public offering in three years.

Megawide recently secured a contract from the Office of the Provincial Governor of the Province of Cavite to construct and develop the P1.87-billion Cavite Bus Rapid Transit (BRT) project.

Partial operations of the project are expected to start by September this year.

For the first nine months, Megawide’s net income increased by 69% to P562 million as revenue grew by 7.2% to P16.3 billion.

The construction segment accounted for P15.5 billion or 96% of consolidated revenues due to increased economic activities and the government’s infrastructure buildup.

Megawide shares fell by 1.54% or four centavos to P2.56 apiece on Monday. — Revin Mikhael D. Ochave

Cemex PHL targets profitability in three years

January 21, 2025 | 12:05 am

CEMEX Holdings Philippines, Inc. (CHP) expects profitability in three years as the cement company pushes for a financial turnaround.

“Our target is profitability in three years. There are a lot of things to do. There is room for improvement,” CHP President and Chief Executive Officer Herbert M. Consunji told reporters on the sidelines of an event in Taguig City last week.

“It cannot be immediate because we are coming from a net loss,” he added.

Mr. Consunji said that CHP, the country’s fourth-largest cement producer, is looking to implement operational efficiencies to boost its financials.

“At least to go above water. We have a lot to fix in the operations,” he said when asked about CHP’s target this year.

Mr. Consunji said that CHP hopes to reduce its losses this year amid recent cost-cutting initiatives.

“A lot will be removed, such as expenses, royalties, and so on. Although the interest costs are high again. We will try everything,” he said.

Following the announcement of CHP’s acquisition, DMCI Holdings, Inc. Chairman and President Isidro A. Consunji said in April last year that the cement manufacturer is expected to have a financial turnaround this year, led by stronger demand and the government’s infrastructure program.

On Nov. 29, CHP completed the sale of its shares in foreign reinsurance unit Falcon Re Ltd. to Torino Re Ltd. for $3 million.

CHP also previously sold its entire stake in Swiss-based Cemex Asia Research AG to Cemex Innovation Holding AG for $900,459.

On Dec. 2, Consunji-led companies DMCI Holdings, Inc., Semirara Mining and Power Corp. (SMPC), and Dacon Corp. finalized the purchase of Cemex Asian South East Corp. (CASEC), which owned 89.86% of CHP.

The deal was valued at $272 million and marked the Consunji group’s entry into the cement manufacturing business.

DMCI clinched a 51% effective stake in CHP, while Dacon Corp. and SMPC accounted for 29% and 10%, respectively, at the financial close of the transaction.

For the first nine months, CHP increased its net loss by 131% to P2.87 billion due to lower cement prices, higher financial expenses, and higher income tax expenses year-over-year.

Revenue declined by 9.4% to P12.21 billion due to intense industry competition and lower cement prices.

CHP shares fell by 1.12% or two centavos to P1.77 apiece on Monday. — Revin Mikhael D. Ochave

LANDBANK and DBP recapitalization: How feasible (or can this IPO fly?)

January 21, 2025 | 12:04 am

AS A FOLLOW UP to my piece on October 2023 about the negative impact of the equity investment into the Maharlika Investment Corp. (MIC) on the capital ratios of Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP), my “Introspective” piece on Jan. 6 this year showed that after one year, the DBP remained slightly below the 10% regulatory minimum for Common Equity Tier 1 (CET1) through 2023, while the LBP’s numbers were already above minimum and significantly improved during 2023.

This writer has come upon new information that shows that the LANDBANK and DBP capital ratios are actually better than earlier computed. BSP Circular No. 781 series of 2013 (Part II, Item 9) — also published as Annex 59 of the Manual of Regulations for Banks (MORB) of 2021 — provides that “Any asset deducted from qualifying capital in computing the numerator of the risk-based capital ratio shall not be included in the risk-weighted assets in computing the denominator of the ratio.” Credit to LANDBANK President Lynette Ortiz and her Controllership group for pointing out Circular 781.

Based on the accompanying table, the DBP’s adjusted CET1 ratio by end 2023 was at 9.47%. If the DBP just records the same income for 2024 as it earned in 2023 (no profit growth) and its Risk weighted assets (RWA) grows minimally instead of contracting again, my estimate of its adjusted CET1 ratio of 10.35% will have met the 10% regulatory minimum. Hence, DBP President Michael de Jesus was correct in saying that “DBP… will meet the minimum capital ratios based on the results of 2024.”

In contrast, the Department of Finance (DoF) statement citing healthy Capital Adequacy Ratio (total CAR) for LBP at 16.42% and DBP at 14.78% as of November 2024 (https://tinyurl.com/2csrrx6o) is misleading on two counts — first, it refers only to the total CAR not CET1, and, second, the number does not account for capital deduction from the Maharlika Investment Fund (MIF) equity investment. The correct number is the CET1 adjusted for MIF equity.

RECAPITALIZATION OR IPO
This writer called out the recent IMF call for the immediate recapitalization of both government financial institutions (GFIs) so they could exit regulatory relief as half-wrong and one year late. Based on the updated/adjusted figures, the IMF was wholly wrong, since even the DBP would already be compliant by the end of 2024.

At the start of his term as Secretary of Finance, Secretary Ralph Recto announced the possibility of an initial public offering (IPO) for LBP and DBP to bolster their capital ratios. (“IPO seen to strengthen Land Bank, DBP,” Philippine Daily Inquirer, Feb. 23, 2024). This followed his announcement of the scrapping of the merger of LANDBANK and the DBP as proposed by his predecessor, Ben Diokno.

Bills were filed in Congress to amend the GFIs respective charters — Senate Bill 2804 (Senators Mark Villar and Francis Escudero) and House Bills 10720 (Rep. Bernadette Escudero) and 10817 (Rep. Wowo Fortes) for the DBP, and Senate Bill 2760 for LBP (Senator Escudero).

This piece discusses whether the proposed amendments to the charters of the LBP (RA 3844, as amended) and the DBP (RA 8523 amended by EO 81) are supportive of their recapitalization, and whether it can lead to a successful IPO.

The critical factors are the increase in authorized capital, the building blocks in governance structures necessary for a successful public listing, and whether market conditions are favorable for such a public listing.

INCREASE IN AUTHORIZED CAPITAL
To pay for the additional paid-in capital called for by proposed charter amendments, the National Government has to infuse a total of P66.5 billion in paid-in capital to both GFIs, broken down as follows:

1. LBP, P50 billion. The proposed increase in authorized capital from P200 billion to P1 trillion (Section 6, SB 2670), means an increase of P800 billion. Under the Revised Corporation Code (RCC), 25% or P200 billion of this increase in authorized capital has to be subscribed. And 25% of the incremental subscription is P50 billion. This amount is exactly the P50 billion taken out of LBP for investment in Maharlika.

2. DBP, P16.562 billion. Authorized capital from P35 billion — of which P32 billion currently paid up — to P300 billion, or an increase of P265 billion (Section 7, SB 2804 and HB 10720, HB10817). Incremental subscription of 25% amounts to P66.25 billion; the corresponding additional paid up 25% of subscribed is P16.5625 billion. This additional paid-in capital of P16.562 is less than the P25 billion transferred to Maharlika.

The idea of the National Government having to recapitalize LBP and DBP to the tune of P66.5 billion raises a most basic question — why did they have to take out the capital from both GFIs in the first place?

How will the National Government infuse the additional paid in capital?

Option 1. Infuse cash. Very unlikely, given fiscal constraints such that DoF even had to resort to “sweeping” the so-called “excess funds” from various GOCCs — including PhilHealth and Philippine Deposit Insurance Corp.

Option 2. Extended “Dividend relief.” Most likely, both GFIs will be exempted from RA 7656 requiring them to declare 50% of their net income as dividends, until their capital build up meets the target amount. At current rates, this could take two to three years for the LBP and three to four years for the DBP. This “dividend relief” is completely separate from “regulatory relief” from minimum capital ratios, which is no longer an issue by end 2024 for DBP and was never an issue for LBP.

BUYING SHARES
Will the investing public be allowed to buy LBP and DBP shares? Yes.

Their original charters provide that only the National Government can own their shares. The proposed amendments now allow them to issue common and preferred shares (DBP Section 6, item k; for LBP Section 3 item n). The National Government will retain majority ownership of 70% while Government-Owned and -Controlled Corporations (GOCCs) can buy non-voting preferred shares of both GFIs.

THE MISSING INGREDIENTS
The following are missing in the proposed charter amendments:

1. No provision for an independent external auditor aside from the Commission on Audit (CoA). This is an important governance element if the goal is to attract local and foreign investors and strategic partners. This provision for a third-party independent external auditor (on top of the CoA audit) was incorporated in the House version and RA 11954 creating the Maharlika Investment Fund. (Thank you, Congressman Joey Salceda for adopting this suggested amendment to the bill.)

2. No clear provision for the timely filing of audited financial statements (AFS) with the local stock exchange. A third-party external auditor would improve this timeline significantly towards global standards. The best practice under the ASEAN Corporate Governance Scorecard (ACGS) is to file the audited financial statement (FS) within 90 calendar days from end of the calendar year — March 1 or Feb. 29 (for leap years). In contrast, the CoA-audited FS 2023 for the DBP became available only in June 2024 while that of the LBP in September 2024 (October 2023 for the 2022 AFS). This late filing/disclosure would be unacceptable to private investors, as it would mean a very late annual stockholders’ meetings.

3. No provision for an annual stockholders’ meetings (ASM), at which the management and the board of directors report to the shareholders — with new stockholders (local and foreign, institutional and retail) — the results of the prior year and secure stockholders’ ratification for the acts of the board and management. The declaration of dividends is announced at the ASM, following an approved dividend declaration policy. The appointment of the third-party external auditor is also approved by the stockholders upon recommendation of the board and its audit committee.

This is what Foundation for Economic Freedom President Calixto “Toti” Chikiamco meant in his statement supporting the announced IPO that “apart from strengthening their balance sheets, being publicly listed will help in bank governance as the boards and managements must answer not only to the government but also to private investors.”

Even if all the building blocks for an IPO are in place, will the shares of the LBP and the DBP be attractive to investors? The short answer is NOT AT THE PRESENT TIME.

1. Investors expect an IPO company to have a track record of consistent and solid returns which underpins their expectations of dividends and stock price appreciation. Both GFIs need several years to establish this track record. They also need to get past the historical narrative of having to request for regulatory relief and dividend relief, and having been receptacles for “behest” loans in the past.

2. Market conditions not favorable. As of the end of December 2023. only three banks listed in the Philippine Stock Exchange have share prices above book value — Banco de Oro, Bank of the Philippine Islands, and China Banking Corp.(disclosure: this writer was head of investor relations for China Bank for 27.5 years until retirement three years ago). The rest of the listed banks are trading below book despite delivering return on equity of 15-16% in the previous few years.

In conclusion: the proposed charter amendments are steps in the right direction, but a few crucial elements are still missing. Once enacted, the revised charters (hopefully revised to fill in the “missing ingredients”) will be a good foundation for a successful IPO. The increase in paid-in capital has to happen first, which will boost their capacity to perform at a higher trajectory. Thereafter, a good track record and favorable market conditions augur well for a successful IPO.

Alexander C. Escucha is president of the Institute for Development and Econometric Analysis, Inc. (IDEA), and chairman of the UP Visayas Foundation, Inc. He is a fellow of the Foundation for Economic Freedom and a past president of the Philippine Economic Society. He is an international resource director of The Asian Banker (Singapore).

alex.escucha@gmail.com

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