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Southeast Asia heat breaches records and prompts gas buying

A man uses cardboard paper to shade from the sun during high temperatures in Bangkok, Thailand, on Sunday, April 28, 2024. Southeast Asia’s second-largest economy has been bracing for hotter-than-normal days due to the El Nino weather pattern that’s forecast to last until June. — ANDRE MALERBA/BLOOMBERG

SOUTHEAST ASIA’s severe heat wave is pushing temperatures and power demand to new records, straining grids and prompting traders in the region to bulk up on natural gas cargoes.

More than three dozen districts across Thailand’s 77 provinces have seen record temperatures in April, generally the hottest month of the year, with new highs beating records held as far back as 1958, according to data from the Thai Meteorological Department.

In the Philippines, temperatures reached a record of 38.8ºC (101.8ºF) in the capital Manila on Saturday and have since been even higher in other areas of the main Luzon island, according to the nation’s weather forecaster. New warnings were issued Tuesday over potential disruption to electricity supplies amid extra demand.

“Our consumption has suddenly increased because it’s very hot,” Philippine President Ferdinand R. Marcos, Jr. told reporters on Monday, saying the cooling demand is overloading power systems.

Thailand’s power usage surged to another record of 36,699 megawatts on Monday amid soaring temperatures, according to data on the state energy regulator’s website. That was the third time demand hit a new peak in about a week.

The country’s state-owned energy company, PTT, purchased a prompt delivery shipment of liquefied natural gas (LNG) to help feed the surging power demand, according to traders with knowledge of the matter. PTT is considering buying more LNG, which is used primarily for power generation, the traders said.

PetroVietnam Gas is also looking to procure a late-May delivery LNG shipment to avoid a shortfall, traders said.

In Myanmar, the region’s poorest economy, outages have already worsened in cities including Yangon, with many townships only seeing a few hours of electricity in recent days.

Thailand’s weather bureau advised people to avoid lengthy outdoor activities with maximum temperatures in most regions expected to top 40ºC on Tuesday. The health ministry said last week heat-related deaths have risen to about 30 nationwide this year.

The northern province of Lampang has seen the highest temperature so far this year at 44.2ºC, just shy of the highest temperature ever recorded in Thailand — 44.6ºC — last seen in 2016 and 2023.

The office of the nation’s Islam spiritual leader prompted followers to pray for rain this weekend, local media reported. Wat Pho, one of the most well-known Buddhist temples, started sprinkling water on its compound to give tourists relief from the weather.

The Philippines heat index, which takes into account humidity and measures the temperature felt by individuals, hit a high of 53ºC on Sunday, according to the nation’s weather forecaster, indicating incidents of heat strokes were imminent. — Bloomberg

KFC Malaysia temporarily shutters outlets citing challenging economy

PIXABAY

KUALA LUMPUR — Kentucky Fried Chicken (KFC) Malaysia has temporarily closed outlets in the country, citing challenging economic conditions, after local media reported that the closings were because of boycotts over the fast food chain’s perceived links to Israel.

Malaysia, a majority-Muslim country, is a staunch supporter of the Palestinians, and some Western fast-food brands in the country, as in some other Muslim nations, have been targeted by boycott campaigns over Israel’s military offensive in Gaza.

QSR Brands (M) Holdings Bhd, which operates KFC and Pizza Hut franchises in Malaysia, said it temporarily closed KFC outlets “in response to challenging economic conditions.”

“QSR Brands and KFC Malaysia has taken proactive measures to temporarily close outlets as means to manage increasing business costs and focus on high engagement trade zones,” it said in a statement late on Monday. The statement did not address the media reports.

It did not specify how many stores were affected, but local media reported over 100 outlets were temporarily closed.

Employees from the affected stores were offered the opportunity to relocate to outlets in areas with higher customer engagement, QSR Brands said. — Reuters

Vietnam coffee farmers boost the use of irrigation but are now running low on water, says report

A farmer picks coffee cherries at a farm in Vietnam’s central highland of Di Linh district, Dec. 12, 2011. — REUTERS

COFFEE FARMERS in Vietnam, the world’s largest producer of robusta coffee, have sharply increased use of irrigation in the main producing regions of the country amid excessive dryness, but they are now running low on water, a report said on Monday.

So far this season, many farmers have used irrigation as much as seven times already, compared with five times usually in a normal season, and they are seeing the need to irrigate coffee trees for an eighth time if they have water, said J.Ganes Consulting LLC in notes from a crop tour in Vietnam.

“The severe water deficiency and extreme temperatures have caused nutrient imbalances for the trees,” said soft commodities analyst Judith Ganes, president of J.Ganes Consulting, adding that wells used by the farmers to get water for irrigation are running low.

The report says that the hot and dry environment has favored the spread of pests such as cochinilla in some farms. That insect can hurt flowers and small fruits in the trees, leading to lower agricultural yields.

An intense heatwave is sweeping through Southeast Asia, and maximum temperatures measured in several parts of northern and central Vietnam ranged from 40.2 to 44.0 degrees Celsius, the country’s national weather agency said on Sunday, adding that temperatures will not subside until Wednesday.

Vietnam’s weather was the latest factor behind record high prices for robusta coffee. The market was already hot due to below-average production for Vietnam and Indonesia in the last crop, and now the climate conditions have not been favorable for the development of the new crop.

“The incidence of cochinilla in Gia Lai is extensive and not yet under control. The speed at which cochinilla can spread is very fast and so this situation is very concerning,” said the report regarding one of the main coffee producing regions in Vietnam. 

Ganes said there is forecast for rains coming in May, which could relieve the dryness. — Reuters

Makati Life Medical Center acquires AI-powered digital cancer detection equipment

A revolutionary technology in digital imaging for detection and treatment of cancer is finally coming to the Philippines very soon. Makati Life Medical Center is the first to bring the uMI 550 Digital positron emission tomography/ computed tomography (PET/CT) system within this year following a historic partnership agreement signed on April 26, 2024 at The Peninsula Manila in Makati City.

Makati Life Medical Center has partnered with medical imaging and radiotherapy equipment company United Imaging Healthcare and healthcare solutions distributors Operista India and Paeonmed Philippines for the acquisition and installation of uMI 550. The cutting-edge medical equipment utilizes the power of artificial intelligence (AI) to make early detection of cancer and more effective treatment more possible.

“The ability to detect cancer at its earliest stages will empower us to intervene with targeted terms, ultimately improving outcomes and saving lives,” said Makati Life Medical Center Chief Executive Officer Dr. Dennis Sta. Ana during the contract-signing ceremony. “We are not just acquiring a new machine, but also investing in a future where cancer is detected early, treated effectively, and ultimately conquered.”

Revolutionary uMI 550 

The uMI 550 produces academic level image quality that facilitates early and accurate detection of cancer. With the aid of AI, the digital PET/CT system brings about exceptional medical images that are clearer and have a larger field of view, to the benefit of medical practitioners and ultimately, the patients.

“The uMI 550 features a unique Integrated Light Guide Digital PET detector, achieving both high resolution and high sensitivity,” said United Imaging CEO Dr. Ju Song Xia, who flew to Manila for the significant partnership rite. “The technical and medical features make it a powerful tool for oncology, cardiology, and neurology scanning.”

Information from United Imaging reveals that uMI 550 offers exceptional imaging clarity and at the same time low-dose and faster whole-body scanning, which could last in as quick as just 8 minutes. The all-digital PET/CT system brings about advantages for patients as well as clinicians.

Early detection and treatment for cancer

“In medical cases when every second counts, the uMI 550 serves as a beacon of hope for patients and their loved ones,” said Dr. Sta. Ana. “Moreover, we are happy to introduce this technology to the country and especially to Makatizens (Makati residents), who will be among the first Filipinos to enjoy uMI 550’s cancer detection and treatment benefits.”

Makati City Mayor Abigail Binay was a witness to the signing of the agreement, which was attributed to her significant vision to make the city a leader in Preventive, Therapeutic, and Rehabilitative (PTR) Medicine. Dr. Sta. Ana said Makati Life Medical Center aligns with the city’s goals to bring a comprehensive healthcare system for Makatizens.

“I was more than happy with the robotic orthopedic innovations at Makati Life. I am now even more excited with this new PET/CT scanner for our Makatizens,” Mayor Binay said.

Makati Life Medical Center is the biggest healthcare public-private partnership in the country. It serves as Makati City’s 24/7 primary health and emergency care provider.

 

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Fast-fashion giant Shein wants to sell skincare, toothpaste and toys, too

LONDON — Online fast-fashion retailer Shein is courting brands like toothpaste conglomerate Colgate-Palmolive and toymaker Hasbro as it tries to sell more household names on its platform.

Known for cheap own-brand clothing and accessories, Shein is moving into other categories and has given brands and retailers access to its platform in nine European countries so far, having done so in the United States, Brazil, and Mexico last year.

The strategy, part of Shein’s plan to build credibility and better compete with Amazon, is enabling the business to expand and develop new ways of selling goods ahead of a planned stock market listing later this year.

Shein presented its marketplace services at an event in Madrid last month alongside Colgate-Palmolive, Hasbro, Orangina maker Suntory Beverage & Food, and Spanish cosmetics brand Bella Aurora.

“Everybody associates Shein with fashion, but we are doing all verticals,” Christina Fontana, senior director of brand operations for Europe, Middle East and Africa at Shein, told delegates at a conference in Paris on April 17.

Seeing shoppers opening Shein and searching for other brands provided the impetus, Fontana said.

“Our consumers want brands, [so] if that’s what they’re looking for, that’s what we’re going to give them.”

Fontana, who previously worked for AliBaba, is one of several marketplace experts Shein has poached from the Chinese e-commerce giant and other firms.

That recruitment has helped fuel rapid expansion. Shein had an average 108 million monthly active users in European Union member states in the six months to Jan. 31.

But the company’s growth has brought new complications, including new EU rules requiring it to police its platform for illegal or harmful products.

In Europe, Shein’s marketplace is so far available in Britain, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain, and Sweden.

Whether the new marketplaces succeed and enable Shein to compete with Amazon and AliExpress will depend on what brands the company can attract, experts say.

“If Shein wants to compete as a trustworthy reputable marketplace platform, it really needs endorsement from well-known Western brands,” said Xiaofeng Wang, e-commerce analyst at Forrester in Singapore.

SUPERCHARGE SALES
In a Zoom webinar aimed at potential sellers in the United States on Thursday, Shein’s head of seller marketing Claire Lin pitched an opportunity for brands to reach millions of shoppers and “supercharge” sales.

“Our shopping experience is very sticky, it’s very much gamified,” she said. “It’s fun to shop on our site, so what we see is the minimum shopping time is around eight minutes, well above industry average.”

Shein shoppers are Gen Z and millennial, and skew female – with around an 80-20 split of women versus men, Lin said.

Home, electronics, and beauty & health are currently top-performing categories, she said, and the only category Shein does not offer is food and beverages.

The gross merchandise value (total value of products sold) in the home category tripled in 2023, while electronics grew by 2.5 times, and beauty & health grew by 2.1 times, according to a slide shown during the webinar.

Selling directly through a marketplace can provide a significant sales boost for brands. But before doing so, manufacturers typically seek assurances that the marketplace is a good fit for the audience they want to reach, and that they will have control over pricing and promotions.

Shein’s platforms have attracted many third-party retailers.

Products from beauty and skincare brands like Caudalie, CeraVe, La Roche-Posay, Shiseido, The Ordinary, Rimmel, and Weleda are currently being sold on Shein’s platform in the U.S., Britain, Brazil, and Mexico via third-party retailers.

Jayn Sterland, UK & Ireland country manager at Weleda, said the Swiss cosmetics brand was not considering selling on Shein directly.

When assessing a marketplace, reputation, perception, and environmental impact are among the key factors the brand looks at, Sterland added, pointing to sustainability initiatives Weleda works on with Amazon, where it sells directly.

Colgate-Palmolive did not reply to a request for comment. A Hasbro spokesperson said the company participated in the Madrid event “to talk generally about the pros and cons of marketplaces”.

A Suntory spokesperson said: “We don’t sell any of our drinks on Shein’s marketplace and we don’t have any plans to, this was just an opportunity to share best practise.” — Reuters

Microsoft to invest $1.7B in cloud, AI in Indonesia, CEO says

REUTERS

JAKARTA — Microsoft will invest $1.7 billion over the next four years into expanding cloud services and artificial intelligence in Indonesia, including building data centers, visiting chief executive Satya Nadella said on Tuesday.

Jakarta is Nadella’s first stop on a trip to Southeast Asian countries aimed at promoting the U.S. company’s generative AI technology. He will go to Malaysia and Thailand later this week.

Microsoft’s investment will “bring the latest and greatest AI infrastructure to Indonesia,” Nadella said.

“We’re going to lead this wave in terms of AI infrastructure that’s needed,” he added.

Nadella met outgoing President Joko Widodo and his cabinet ministers earlier on Tuesday to discuss joint AI research and talent development, Communications Minister Budi Arie Setiadi told reporters.

Widodo suggested Microsoft base its data centres on the resort island of Bali or in the new capital city Nusantara, which is still under construction in the jungle of Borneo, the minister said.

Microsoft will train 2.5 million people in Southeast Asia in AI use by 2025, Nadella said, including 840,000 in Indonesia.

Microsoft is trying to expand its support for the development of AI globally, including with a $2.9 billion investment in cloud and AI infrastructure in Japan and a $1.5 billion investment in UAE-based AI firm G42.

Nadella’s Jakarta visit comes two weeks after Apple Inc AAPL.O CEO Tim Cook met Widodo and said he would look into building a manufacturing facility in Indonesia.

Indonesia has a huge, tech-savvy population, making the Southeast Asian nation a key target market for tech-related investment.

Last week, Microsoft beat Wall Street estimates for third-quarter revenue and profit, driven by gains from adoption of artificial intelligence across its cloud services. — Reuters

Philippines accuses China of damaging its vessel at hotly contested shoal

PHILIPPINE COAST GUARD/HANDOUT VIA REUTERS

BEIJING/MANILA — The Philippines on Tuesday accused China’s coast guard of harassment and damaging one of its boats in a disputed area of the South China Sea, and rejected Beijing’s position that it had expelled two vessels from the hotly contested shoal.

The Philippine coast guard said its two vessels stood their ground at the Scarborough Shoal, a key battleground in the South China Sea, but one sustained damage from use of water cannon by two Chinese coast guard ships.

“This damage serves as evidence of the forceful water pressure used by the China coast guard in their harassment of the Philippine vessels,” Philippine coast guard spokesperson Jay Tarriela said in a statement.

“They were not deterred and will persist in carrying out their legitimate operations to support Filipino fishermen and ensure their safety.”

No country has sovereignty over the strategically located Scarborough Shoal, a prime fishing patch used by several countries that is close to major shipping lanes. The shoal falls inside the Philippines’ exclusive economic zone.

China has occupied the atoll for more than a decade and waters around its lagoon, which has long been a sanctuary for vessels during storms, have been the site of multiple confrontations in recent years.

China’s coast guard said the vessels had been expelled but did not provide details of the incident.

The Philippine’ Tarriela said its vessel, the BRP Bagacay, suffered damage to its railing and canopy and China has installed a floating barrier at the shoal’s entrance, “effectively restricting access to the area”.

The two countries have traded accusations of illegal conduct at the shoal and the Philippines recently summoned a Chinese diplomat to explain the what it calls aggressive manoeuvres. China typically accuses the Philippines of encroaching on its territory.

China and Philippines previously said they would seek better communications and management around skirmishes in the vast South China Sea, but tensions have increased recently, as the Philippines forges stronger diplomatic and military ties with the ally the United States.

China claims sovereignty over almost the entire South China Sea, a conduit for more than $3 trillion of annual ship-borne commerce, including parts claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

The Permanent Court of Arbitration in 2016 said China’s expansive claim had no legal basis, a decision Beijing has rejected. — Reuters

Laying down roots

In the seventh year of its Carbon Sink Management Program, AboitizPower’s Therma Visayas, along with Ramon Aboitiz Foundation and partner farmers across Cebu, inch closer to a target of one million trees with 770,000 already planted as of end-2023.

AboitizPower harnesses the power of partnership to plant over 2M trees

Trees offer a multitude of benefits to our environment and well-being as they contribute to energy conservation, water preservation, and even heat absorption. They also provide sustenance and economic opportunities, while serving as habitats for wildlife.

Most importantly, trees are a natural carbon sink as they absorb more carbon than they produce — all this while releasing oxygen to our air. Consequently, trees help reduce the amount of carbon dioxide in the atmosphere and play a crucial role in sustaining life on Earth.

This Earth Month, Aboitiz Power Corporation (AboitizPower) recognizes its business units located in different parts of the country who took action in empowering year-round efforts to plant over two million trees and create carbon sinks for a healthier planet.

Along the way, significant bonds with local communities and stakeholders were also formed and strengthened, showing how camaraderie, responsibility, and a sense of communal ownership are needed to scale carbon sequestration activities and, ultimately, bring about sustainable environmental and socioeconomic changes within localities.

CARBON SINK MANAGEMENT PROGRAMS

AboitizPower subsidiaries Therma South, Inc. (TSI) and Therma Visayas, Inc. (TVI) have built carbon sinks in Davao del Sur and Toledo City, Cebu, respectively, en route to planting one million trees each within their host communities.

TSI began its Carbon Sink Management Program in 2015 and recently completed its goal of planting one million trees in Davao City, including areas covering the ancestral domains of indigenous peoples (IP).

Through a collaborative effort with Ramon Aboitiz Foundation, alongside the Matigsalug Council of Elders Marilog District Davao City, Inc. and the Matigsalug Manobo Tribal People Council of Elders Davao, Inc., TSI successfully planted a variety of endemic, fruit-bearing, and high-value trees in the Marilog District. It also resulted in restoring and rehabilitating over 845 hectares of the IP’s ancestral domain.

TSI and Ramon Aboitiz Foundation also held several technical training sessions in farm planning; nursery establishment and seedling production; site preparation and plantation establishment; and plantation maintenance and monitoring. Collaboration with the local public agriculture office will also bring more opportunities for the IPs, including upskilling in cacao production, marketing, and networking.

Meanwhile, TVI began its 10-year Carbon Sink Management Program in 2016 and, to date, has planted and nurtured 770,000 trees with the help of Ramon Aboitiz Foundation and the hard work of some 277 farmers in Cebu.

As of end-2023, the program has covered a land area of 1,084 hectares, spanning the municipalities and cities of Balamban, Toledo, Borbon, Asturias, Barili, Tuburan, Pinamungahan, Ronda, Cebu, and Dumanjug.

Under the program, partner farmers earn a livelihood from payments for their seedlings and maintenance services, as well as added income opportunities from the produce of fruit-bearing and high-value trees.

Native trees of mixed fruit and timber planted since 2017 include Narra, Lanutan, Kakaw, Coffee, Lomboy, Nangka, Guyabano, Rambutan, Lanzones, Avocado, Kunawom, Tugas/Molave, Duhat, Labana, Lemonsito/Kalamansi, Malaruhat, Sangil, Agoho del Monte, Caimito, Conalum, and Taguilomboy.

IF YOU PLANT IT, THEY WILL COME

The eight-hectare Aboitiz Cleanergy Park in Punta Dumalag, Matina Aplaya, Davao City actively promotes decarbonization in an urban area, showcasing a mangrove reforestation site, nursery, and botanical garden for the propagation of multiple native tree species. As a direct result, many species of birds — from migrants, residents, to localized endemics — consider it their home.

Following a recommendation by the University of the Philippines Mindanao and the University of Southeastern Philippines back in 2013, the park steadily propagated trees in the area through years of joint efforts from the public and private sectors, enabling an increase in the number of bird species residing there — rising from just five in 2015 to 106 in 2023.

As observed by birdists who frequent the park, more trees meant more food and shelter that accommodated the influx of more bird species. This growth was further sustained by habitat conservation activities and proper biodiversity management which made it a safer reserve for the birds, especially as too few people move around it. The site is jointly managed by AboitizPower subsidiary Davao Light and Aboitiz Foundation, Inc.

MANGROVE PROTECTION AND RESTORATION

Meanwhile, in Bataan, GNPower Mariveles Energy Center Ltd. Co. (GMEC) continued its five-year mangrove adoption and protection project for the province through a series of activities, including a two-day workshop and a planting activity.

Last year, GMEC signed a memorandum of agreement for an estimated P6.8-million “5 Hectares Orani Mangrove Adoption and Protection Project” to improve the existing conditions of the mangrove areas in the allotted five hectares for a period of five years, which is subject for a possible extension.

A recent workshop spearheaded by GMEC and conducted by the Wetlands International Philippines had 46 attendees from the Provincial Government of Bataan, various relevant local government offices, and community partner Tubo-Tubo Fisherfolks Association learn the ins and outs of mangrove protection and restoration.

A few days after the workshop, 1,000 mangrove saplings were planted by 35 volunteers from the Tubo-Tubo Fisherfolks Association in GMEC’s five-hectare adopted area in Tubo-Tubo, Sitio Pulo, Barangay Kabalutan, Orani, Bataan.

Together with the Provincial Government of Bataan, the Municipality of Orani, the Department of Environment and Natural Resources, and the Tubo-Tubo Fisherfolks Association, the project will help advance GMEC’s flagship environmental program called P.R.O.G.R.E.S.S., with focus on the letters “P” and “R” which stand for “Protect marine life” and “Reforest land,” respectively.

For AboitizPower and its partners and neighbors, commemorating Earth Month is about working together for the year-round practice of its core message — ultimately leaving the planet better than when we found it.

 

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Philippines aims to double solar, quadruple share of wind in power output by 2030

Solar panels are being installed on the roof of a mall. — GREEN HEAT HANDOUT PHOTO

SINGAPORE – The Philippines plans to boost the share of solar in power output to 5.6% in 2030 from 2.4% in 2024, and wind to 11.7% from 3.1%, according to a government presentation, potentially making the archipelago’s grid among the cleanest in the region.

The southeast Asian nation expects higher share of solar and wind to offset a decline in the share of other clean sources such as hydropower and geothermal energy, helping non-fossil sources account for 35% of power generation by 2030.

Hydroelectricity’s share is set to fall from 10% to 9.1%, while geothermal energy is expected to account for 7.7% of overall output by 2030, compared with 8.9% in 2024, Mylene C. Capongcol, assistant secretary at the Philippines Department of Energy, said in the presentation, at the Renewable Energy Markets Asia conference.

Philippines plans to achieve the targets by doubling solar capacity and tripling wind capacity over six years, Ms. Capongcol added in the presentation, which was shared with Reuters.

The country is betting on a rapid build out of offshore wind farms, which have high upfront costs. Spiralling costs amid high inflation have resulted in some saw developers cancel or pause projects in the U.S. and Britain last year.

The archipelago also expects to add 1,200 megawatts of Nuclear capacity by 2032, Ms. Capongcol said in the presentation, adding that the country plans to upgrade its transmission infrastructure to help manage the addition of renewables.

The energy department will also create a long-term program to facilitate the voluntary early decommissioning or repurposing of over 3.8 GW of coal-fired power plants which are more than 20 years old, Ms. Capongcol said.

Philippines is targeting reducing the share of coal in power generation to 47.6% by 2030, from about 60% currently. — Reuters

Philippines central bank sees April inflation at 3.5% to 4.3%

A rice vendor waits for customers at the Paco Market in Manila, March 13, 2024. — PHILIPPINE STAR/RYAN BALDEMOR

MANILA – Philippine annual inflation will likely be between 3.5% to 4.3% in April, the central bank said on Tuesday.

Upside pressures on inflation had come from continued price increases for rice, meat, and gasoline, as well as the peso’s depreciation, the central bank said.

But these could be offset by lower prices of fish, fruits, vegetables, and electricity rates, it added.

Philippine annual inflation accelerated for the second straight month in March, driven by the heavily-weighted rice prices, with the consumer price index rising an annual 3.7%.

The central bank said it will continue monitoring developments affecting the outlook for inflation and growth. The Philippines’ statistics agency will release inflation data on May 7. –– Reuters

China’s coast guard expels Philippine vessels from Scarborough Shoal, state media says

PHILIPPINE COAST GUARD PHOTO

BEIJING – China’s coast guard said on Monday it “expelled” a Philippine coast guard ship and another vessel from waters adjacent to the Scarborough Shoal, Chinese state media reported.

The coast guard did not provide additional information, according to the report from Chinese state media broadcaster CCTV, but the incident was the latest to occur between the two countries at the disputed atoll in the South China Sea.

Beijing and Manila have repeatedly clashed in recent months at the submerged reef, which Philippines says is in its exclusive economic zone but which China also claims as its own.

Both have also traded accusations over aggressive manoeuvres there and the Philippines recently summoned a Chinese diplomat over the actions.

China and Philippines previously said they would seek better communications and management around skirmishes in the vast South China Sea, but tensions have increased recently, especially after Philippines forged stronger diplomatic and military ties with the United States.

China claims almost the entire South China Sea, a conduit for more than $3 trillion of annual ship-borne commerce, including parts claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei. The Permanent Court of Arbitration in 2016 said China’s claims had no legal basis. — Reuters

DoF hikes dividend rate of GOCCs

FINANCE SECRETARY RALPH G. RECTO — DEPARTMENT OF FINANCE

By Luisa Maria Jacinta C. Jocson, Reporter

FINANCE SECRETARY Ralph G. Recto has ordered government-owned or -controlled corporations (GOCC) to increase their contributions to the National Government (NG) to boost state coffers.

Mr. Recto raised the mandatory dividend remittances of GOCCs to the National Government to 75% of their annual net earnings in 2023 from 50%, the Department of Finance (DoF) said in a statement.

Under Republic Act No. 7656 or the Dividends law, GOCCs must declare and remit at least 50% of their annual net earnings as cash, stock or property dividends to the National Government.

Mr. Recto also clarified that there is no need to amend the law to implement the increase.

In 2021, then-Finance Secretary Carlos G. Dominguez III proposed amending the law to hike the mandatory contributions of GOCCs to 75% of their earnings, as a way to fund fiscal stimulus measures amid a coronavirus pandemic.

Mr. Recto said the DoF is looking for ways to increase revenue without imposing new taxes.

As of April 24, dividend collections from GOCCs surged to P39.8 billion from P8 billion a year earlier.

Some state companies have remitted their adjusted contributions including the Philippine Amusement and Gaming Corp. (PAGCOR).

PAGCOR earlier said it had remitted P4.59 billion in cash dividends to the Treasury, representing 75% of its net income last year.

The DoF said Mr. Recto also signed a circular in February to further “mobilize substantial nontax revenues from GOCCs’ unrestricted fund balances to unlock the unprogrammed appropriations of the 2024 General Appropriations Act.”

This would help fund the government’s priority programs and projects, it added.

In 2022, dividends from GOCCs rose by an annual 46% to P99.98 billion.

Ateneo de Manila University economics professor Leonardo A. Lanzona said raising the contributions of GOCCs could threaten their financial stability.

“If this percentage increases, GOCCs might alter their financial strategies to accommodate the higher dividend payments,” he said in an e-mail. “This can result in cutting costs, creating negative effects on their operation and efficiency.”

“The overall institutional weakness can then lead to lower investments in these GOCCs. Furthermore, as the funds might be transferred from the National Government, more expenditures that lead to inflation can occur,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said this move would reduce the government’s borrowings and overall debt.

“This is part of the government’s fiscal reform measures to optimize the country’s financial resources that could help reduce the NG debt-to-GDP ratio to less than the international threshold of 60%,” he said in a Viber message.

Latest data from the Bureau of the Treasury showed that the NG’s outstanding debt had hit a fresh high of P15.18 trillion as of end-February.

The government seeks to bring down its debt-to-gross domestic product ratio to 60.3% this year and to 55.9% by 2028.

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