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Measures implemented to address exam cheating, says Deloitte PHL

DELOITTE Philippines said it has implemented corrective actions following the US Public Company Accounting Oversight Board’s (PCAOB) order to fine the professional services firm for exam cheating.

“With regard to the PCAOB decision, Deloitte sets the highest expectations for the conduct of its professionals. Answer sharing on learning assessments is unacceptable and a breach of our ethical code of conduct,” Deloitte Philippines said in an e-mail.

 “Deloitte Philippines self-reported these matters to the PCAOB, implemented comprehensive corrective actions, and continues to serve clients with high quality and in accordance with applicable professional standards,” it added.

 On Thursday, Reuters reported that PCAOB imposed $2 million in fines on Deloitte Touche Tohmatsu Ltd.’s affiliates in the Philippines and Indonesia. The fines were for “violating the regulator’s rules and quality control standards due to widespread answer sharing on internal training tests.”

 It said that the regulator also sanctioned a former national professional practice director at Deloitte Philippines.

 In a statement on Wednesday, PCAOB said that it settled three disciplinary orders concerning the three entities as their “quality control deficiencies resulted in widespread answer sharing on internal training tests.”

 Since 2021, the PCAOB has sanctioned nine firms for inappropriate sharing of answers on internal training exams.

 In the PCAOB order, the regulator said that Deloitte Philippines failed to establish appropriate policies for administering and overseeing internal training tests.

By failing to establish such procedures, the firm was unable to identify that nearly all of its audit partners engaged in improper answer sharing from at least 2017 until early 2019, PCAOB said.

 PCAOB also said that the audit professionals either provided answers or received answers in online tests for mandatory internal training courses without reporting them.

 However, the regulator said that since the firm has implemented remedial and corrective measures aimed at ending the misdeed, the civil money penalty imposed has been lowered.

 These corrective actions include changing quality control policies and ensuring that its personnel don’t engage in improper answer sharing while obtaining degrees of technical training and proficiency.

 “Absent this extraordinary cooperation, the civil money penalty imposed would have been significantly larger, and the Board may have imposed additional sanctions,” PCAOB said.

The PCAOB imposed a $1 million penalty on Deloitte Philippines, which must be paid within 10 days of the issuance of the order dated April 10, while it barred the former national professional practice director from being an “associated person of a registered public accounting firm” and required him to pay $10,000. — Justine Irish DP. Tabile

Hail to the Minilateral Chiefs Biden, Kishida, and Marcos Jr.

KAMRANAYDINOV-FREEPIK

THE pageantry unfolding in Washington this week, and again this summer, will speak volumes about the US and its changing role in the world, as telegraphed through its alliances. It signals what’s worked best about American leadership since World War II, but also how that model must be updated for a new century, and how all American-led alliances must be proofed in case an isolationist should ever enter the White House, perhaps even next year.

This week US President Joe Biden is hosting a historic summit with the leaders of Japan and the Philippines, Fumio Kishida and Ferdinand “Bongbong” Marcos, Jr. Each country is a long-time bilateral treaty ally of the US, and both are now also converging into a new trilateral arrangement. It’s one of several “minilateral” partnerships that Biden is building in the Indo-Pacific. And all of those are intended to form a “lattice” of interwoven relations, meant to deter Beijing from trying to isolate or attack any nation in the region.

Then, in July, Biden will host the 31 other members of NATO (the North Atlantic Treaty Organization), now including Sweden for the first time. That’ll be an occasion to celebrate 75 years of deterring the Kremlin. (The alliance’s mutual-defense clause has been invoked only once, after the US was attacked by Al-Qaeda on Sept. 11, 2001.) But the 32 leaders will also have some hard conversations about their alliance’s design flaws, in particular the problem of burden-sharing.

If Biden has his way — and that remains to be seen — he’ll be able to keep what’s best in the transatlantic alliance, namely deterrence, and extend it to the Indo-Pacific region, while gradually fixing what’s worst in NATO, namely the free-riding by some allies, and making sure it doesn’t happen again in the emerging Asian lattice.

The free-riding problem within NATO has annoyed US administrations at least since the 1990s. It’s also a pet peeve of former president Donald Trump, who feels that tightwads such as Germany fleece American taxpayers by implicitly outsourcing their security to the US. But the wrong response — Trump’s — is to cast doubt on the US commitment to mutual defense, thus undermining deterrence. The right policy is to prod allies to spend their fair share. That’s been the approach since a NATO summit in 2014, when the allies agreed to spend 2% of GDP or more on defense. Back then only three members did; this year 18 will. Obviously, there’s work left to be done.

Security arrangements in the Indo-Pacific region evolved differently after World War II, even if the challenges are similar. There was an early attempt to build a multilateral alliance analogous to NATO (called SEATO, the Southeast Asia Treaty Organization), but it foundered over diverging interests in the region (and, not least, America’s war in Vietnam). What emerged instead is what Rahm Emanuel, the US ambassador to Japan, calls a hub-and-spokes system.

In this model Washington (the hub) has discrete bilateral treaties (spokes): one with Japan, another with South Korea, others with Thailand, the Philippines, Australia, and New Zealand. The goal was and is still to deter adversaries (Pyongyang for Tokyo and Seoul, Beijing for all). But the model, unlike NATO’s, didn’t envision the various allies also cooperating with, much less protecting, one another. Some preferred to loathe each other, notably South Korea and Japan.

That’s what Biden set out to change. In a landmark agreement last summer at Camp David, he brought together South Korea and Japan for a new trilateral entente. This week’s summit adds a second trilateral, between Washington, Tokyo, and Manila. There’s also a quadrilateral security “dialogue,” imaginatively called the Quad, which includes the US, India, Australia, and Japan. And there’s a third tri (with all the quads and tris, wonks increasingly just say “mini”), called Aukus; it includes the US, UK, and Australia.

Each partnership is different, but Biden hopes that they’ll all point in the same general direction: tighter cooperation, stronger deterrence and better burden-sharing than NATO has offered. Washington is especially enthusiastic about developing Aukus, and perhaps extending it to partners such as Japan. (Diplomats need lighthearted relief too, so the race is on to coin the acronym, with Jaukus in an early lead.) Canberra, however, first wants Aukus to work properly, before thinking about enlarging it.

The bigger idea is actually about elaborating on just one aspect of Aukus. The partnership has two parts. The first aims to supply nuclear-powered (but conventionally armed) submarines to Australia. The second, called Pillar 2, is much broader and envisions the three countries jointly developing the tools of future warfare, from electronic weapons to artificial intelligence, undersea robots, quantum technologies and more.

This is where Japan could join in, and eventually other allies. The difficulty is that such collaboration requires the utmost mutual trust in keeping information secure. The Aukus countries, along with Canada and New Zealand, have practice with each other, because they already share intelligence in a grouping called the Five Eyes. Japan still has to adopt some of the protocols.

But then it could bring vast resources to joint lattice defense. Go back to that old NATO problem of burden-sharing. It’s been an issue in the Indo-Pacific too. South Korea spends more than 2% of its GDP on defense, and Australia about that much, but Japan, the Philippines, and others less. Now, though, Japan has accepted the challenge, and plans to double its military budgets to 2%. If it and other allies coordinate these investments with Washington and one another, everyone would have skin in the game, and all would be stronger together.

That’s an idea so good it should be also be re-exported back to NATO. The American side, in principle, is ready. In the past, the US wanted to dominate and hog military technology, says Kurt Campbell, a top diplomat, whereas it’s now open to sharing with its friends, as long as they do their part. I can’t wait to see how that goes down in Berlin, Madrid, and Rome.

As the various leaders file through Washington this week and in July, the pomp and circumstance may be distracting — Kishida will address a joint session of Congress, among other events. But it’s good to keep grand strategy in mind, especially as naysayers in the US and the partner nations cavil about costs and affordability.

All this military kit and summitry are certainly expensive. But it’s all meant to persuade potential aggressors — in Moscow, Beijing, Pyongyang, and beyond — that they would be foolish ever to test any alliance the US leads. As long as Washington, under Biden, Trump, or any president, can send that message credibly, it can deter a major war. And that suddenly makes the bill look rather cheap.

BLOOMBERG OPINION

How PSEi member stocks performed — April 11, 2024

Here’s a quick glance at how PSEi stocks fared on Thursday, April 11, 2024.


Peso inches down vs dollar on US inflation data

BW FILE PHOTO

THE PESO inched lower against the dollar on Thursday following faster-than-expected US consumer inflation data that raised fears of a delay in the start of the US Federal Reserve’s planned policy easing.

The local unit closed at P56.50 against the dollar on Thursday, weakening by less than a centavo from its P56.491 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session weaker at P56.53 versus the greenback. Its worst showing was at P56.58, while its intraday best was at P56.42 per dollar.

Dollars exchanged went up to $1.31 billion from $1.22 billion on Monday.

The peso weakened as faster-than-expected US inflation could push back the Fed’s rate cut cycle,  Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

US consumer prices increased more than expected in March as Americans continued to pay more for gasoline and rental housing, leading financial markets to anticipate that the Federal Reserve would delay cutting interest rates until September, Reuters reported.

The third straight month of strong consumer price readings reported by the Labor department on Wednesday also suggested that the pickup in inflation in January and February could not be solely attributed to businesses raising prices at the start of the year as economists had argued.

The consumer price index (CPI) rose 0.4% last month after advancing by the same margin in February, the Labor department’s Bureau of Labor Statistics said.

In the 12 months through March, the CPI increased 3.5%, the most since September. The CPI was also boosted by last year’s low reading dropping out of the calculation. It rose 3.2% in February. Economists polled by Reuters had forecast the CPI gaining 0.3% on the month and advancing 3.4% year on year.

Shortly after the data, financial markets pushed back their expectations for the first rate cut to September from June, according to CME’s FedWatch Tool. They now expect only two rate cuts instead of the three envisaged by Fed officials last month. A minority of economists see the window for rate cuts closing.

The central bank has kept its policy rate in the 5.25%-5.5% range since July. It has raised the benchmark overnight interest rate by 525 basis points since March 2022.

For Friday, the Mr. Ricafort said that he expects the peso to move from P56.40 to P56.60 versus the dollar. — L.M.J.C. Jocson with Reuters

PHL stocks drop further as March US CPI picks up

REUTERS

PHILIPPINE STOCKS closed lower on Thursday following faster-than-expected US consumer inflation last month, which could lead to delayed policy easing by the US Federal Reserve.

The bellwether Philippine Stock Exchange index (PSEi) dropped by 0.94% or 63.42 points to end at 6,677.65 on Thursday, while the broader all shares index retreated by 0.94% or 33.72 points to close at 3,525.87.

“Philippine shares took another plunge as investors assessed a hot US March consumer price index (CPI) reading that fueled worries the Federal Reserve may implement fewer rate cuts than expected,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Negative spillovers from Wall Street driven by the higher-than-expected US inflation for March clouded investors’ sentiment. The bourse was in the red territory for the whole session,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.

US consumer prices increased more than expected in March as Americans continued to pay more for gasoline and rental housing, leading financial markets to anticipate that the Federal Reserve would delay cutting interest rates until September, Reuters reported.

The third straight month of strong consumer price readings reported by the Labor department on Wednesday also suggested that the pickup in inflation in January and February could not be solely attributed to businesses raising prices at the start of the year as economists had argued.

The consumer price index rose 0.4% last month after advancing by the same margin in February, the Labor department’s Bureau of Labor Statistics said.

In the 12 months through March, the CPI increased 3.5%, the most since September. It rose 3.2% in February. Economists polled by Reuters had forecast the CPI gaining 0.3% on the month and advancing 3.4% year on year.

“This Thursday, the local market dropped by 63.42 points (-0.94%) to 6,677.65 as investors took cues from the hawkish pause of the Bangko Sentral ng Pilipinas (BSP) in its recent policy meeting. BSP rate cut hopes were tempered amid mounting inflationary risks at home,” Mr. Plopenio added.

Majority of sectoral indices closed lower. Property went down by 3.54% or 95.33 points to 2,595.55; industrials dropped by 1.19% or 105.18 to 8,697.41; holding firms inched down by 0.95% or 59.86 points to 6,233.91; and services decreased by 0.37% or 6.91 points to 1,855.67.

Meanwhile, financials climbed by 1.09% or 22.15 points to 2,040.69, and mining and oil rose by 1.03% or 84.20 points to 8,223.17.

Value turnover rose to P6.72 billion on Thursday with 747.92 million issues changing hands from the P4.26 billion with 571.46 million shares traded on Monday.

Decliners outnumbered advancers, 134 against 57, while 50 names closed unchanged.

Net foreign selling dropped to P222.65 million on Thursday from P930.83 million on Monday. — R.M.D. Ochave with Reuters

NFA approves palay buying prices topping out at P30/kg

A farmer threshes newly harvested palay grains at a ricefield in Mogpog, Marinduque in central Philippines, March 22, 2016. — REUTERS

THE National Food Authority (NFA) Council said on Thursday that it approved buying prices for palay, or unmilled rice, that top out at P30 per kilogram (kg), depending on how the grain is graded and with price variations by location.

“What the (NFA) Council approved is a range for dry and clean palay of between P23 to P30 (per kg). For fresh, it is about P17 to P23 (per kg),” Agriculture Assistant Secretary and Spokesman Arnel V. de Mesa told reporters.

Last year, the NFA set the purchase price for dry and wet palay at P19-P23 and P16-P19 per kg, respectively.

The NFA is tasked with purchasing domestically grown rice and hold it in reserve in the event of shortages or calamities.

Traders are buying dry palay from farmers at P27 to P30 per kg.

“If the NFA’s buying price is P23 per kilo, (they) really can’t buy anything — minimal amounts at best. So, it was hiked a little so that the NFA can catch up with the price offered by traders at the moment,” he said.

Additionally, Mr. De Mesa said that rice held by NFA warehouses will now be disposed of through auction.

Stocks held for less than six months will be about 20% cheaper than the monitored prices of the Philippine Statistics Authority (PSA), while rice kept for longer than six months will be sold at a discount of about 30% from the PSA monitored price. 

NFA OIC Administrator Larry Lacson said that the agency will begin drafting guidelines on the new purchasing price, which will vary by province.

He added that the NFA is expecting to implement the new price scheme next week.

“There is no uniform price nationwide… It’s on a per province basis. ’Yun ang isang bago ngayon (that’s what is new now). We will issue a price bulletin for each province,” Mr. Lacson said.

Asked to comment, Raul Q. Montemayor, Federation of Free Farmers national manager, said that few farmers can comply with the NFA’s quality standards due to lack of access to drying, storage and trucking facilities.  

“Still, it will be a good opportunity for some farmers to sell to the NFA rather than to traders who are currently buying at between P25 to P27 per kilo,” Mr. Montemayor said in a Viber message.

Bantay Bigas spokesperson Cathy L. Estavillo said that the government should increase the procurement budget of the NFA so that a “significant volume” of rice can be purchased from domestic farmers.

“At the same time, the NFA should also relaxing the requirement for the types of rice they buy. Ordinary farmers cannot meet the 100% clean and 14% dry standard due to the lack of post-harvest facilities,” Ms. Estavillo said in a Viber message.

As of March 1, the national inventory of rice declined 3% to 1.37 million metric tons (MT), the PSA reported.

Stocks held by NFA facilities declined 59.9% to 41,290 MT compared with a year earlier. — Adrian H. Halili 

Rice imports hit 1.18 million MT

PHILSTAR FILE PHOTO

THE PHILIPPINES imported 1.18 million metric tons (MT) of rice as of April 4, the Bureau of Plant Industry (BPI) reported.

The BPI said rice imports in April so far amounted to 23,539.92 MT.

As of the first quarter, shipments had totaled 1.15 million MT, up 43.6% from a year earlier.

The BPI reported that Vietnam remained the country’s top supplier of rice as of early April, accounting for 62.4% of all imports in the year to date, or 734,583.07 MT.

In January, the Philippines and Vietnam signed an agreement giving the Philippines a quota of 1.5 million to 2 million MT of rice annually for five years.

Thailand supplied 251,738.43 MT during the period, or 21.4% of the total, followed by Pakistan with 124,038.5 MT, or 10.5%.

Rounding out the top five were Myanmar and China which shipped 58,080 MT and 4,680 MT of rice, respectively.

The US Department of Agriculture (USDA) has estimated that Philippine rice imports will increase to 4 million MT this year. The estimate, if borne out, would be 11.7% higher than the 3.58 million MT imported in 2023.

However, the Department of Agriculture (DA) said that the imports are unlikely to hit USDA forecast levels due to better-than-expected domestic production. The DA is targeting a palay (unmilled rice) harvest of above 20 million MT.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. said that the USDA import estimate was a “worst-case scenario” should domestic rice output be severely affected by El Niño. — Adrian H. Halili

Weak evidence seen for liberal foreign ownership boosting FDI — economists

UPSE FB PAGE PHOTO

LIFTING foreign ownership restrictions does not necessarily lead to increased foreign direct investment (FDI) or boost economic growth, according to a discussion paper published by the University of the Philippines School of Economics (UPSE).

“Our objective was to address the assertion that lifting foreign ownership restrictions in the Constitution is a necessary condition for improving economic performance and catching up with Vietnam and other ASEAN neighbors. We have discussed the available empirical evidence which in our view provides only weak support for such an assertion,” it said.

The paper was written by UPSE faculty members Toby C. Monsod, Aleli D. Kraft, Cielo D. Magno, Jan Carlo Punongbayan, Orville Jose C. Solon, Elizabeth Tan; UP Los Baños College of Public Affairs and Development faculty member Agustin L. Arcenas; and Florian Alburo and Emmanuel S. de Dios, both UPSE Professor Emeriti.

In March, a bill seeking to lift foreign ownership limits in the 1987 Philippine Constitution was approved on third and final reading by the House of Representatives.

The paper noted earlier arguments for economic charter change, such as the notion that restrictions have resulted in the Philippines lagging its neighbors in terms of FDI.

“The reasoning seems to be that since the Philippines is the only country in the region with foreign equity restrictions in its Constitution, and since it has (subsequently) been receiving the smallest portion of FDI into the ASEAN, then the former must have caused the latter — an obvious post hoc fallacy,” it said.

The restrictions alone were not the main reason behind the distribution of FDIs across the region, the paper said.

“Improvements in the business regulatory environment, combined with improvements in infrastructure, have effects on FDI that dwarf the size of those coming from any change in foreign equity restrictions.”

In 2022, the Philippines posted FDI inflows of $9.2 billion, behind Singapore ($141.2 billion), Indonesia ($22 billion), Vietnam ($17.9 billion), Malaysia ($17.1 billion) and Thailand ($9.9 billion), according to the ASEAN Investment Report.

Cambodia led the laggards at $3.6 billion. Myanmar had $3 billion, Laos $600 million, and Brunei, which had a $300-million net outflow.

“Differences in foreign equity restrictions may help explain some of the observed distribution of FDI from source countries to the ASEAN-5 since 2009, but they cannot be considered as the main explanatory factor and can hardly be called necessary,” the paper said.

“If economic charter change is premised on the necessity of lifting equity restrictions as a condition for improved economic performance, then this could be considered as evidence against it,” it added.

It also cited another paper that showed that improving perceptions of public sector corruption has a much stronger effect on FDIs than just lifting restrictions.

Meanwhile, the paper also cautioned against the assumptions that FDIs are immediately “good for national development and have a net contribution to economic welfare and efficiency.”

“Moreover, there might not be a direct causal relationship between FDI and economic growth per se. The observed relationship may be, simply, that the determinants of FDI happen to be the determinants of GDP growth,” it said.

It also noted that in some cases, FDI could be “counterproductive, even hurting resource allocation and slowing growth.” FDI may be growth-enhancing only when “certain local conditions or absorptive capacities are present.”

“The macro-empirical literature, which focuses on identifying a causal relationship between FDI flows or stocks and aggregate economic growth, finds no or only weak support for the claim that FDI per se accelerates economic growth,” the paper said.

“FDI has on average a detrimental effect on long-term income levels in developing countries, with the ‘growth-limiting effects of FDI exceed[ing] growth-enhancing effects’ in most countries, including the Philippines,” it added. — Luisa Maria Jacinta C. Jocson

Clark food hub feasibility plan due later this year

CLARK International Airport Corp. (CIAC) said it will update the feasibility studies within the year for a food trading hub in Clark City, and expects to award the project to a private-sector partner by late 2025.

The updating of (feasibility) studies will happen this year, as will coming up with the terms of reference for the public tender,” CIAC President Arrey A. Perez said at the sidelines of the Asian Development Bank (ADB) Food Security Forum late Wednesday.

CIAC is working with the ADB in reviewing the feasibility study as well as the terms of reference for the $152-million food hub.

The Clark National Food Terminal project is expected to do away with the need for wholesalers and major retailers to travel to Metro Manila to access produce, Mr. Perez said.

CIAC hopes to conduct the public tender for the food hub by next year, Mr. Perez said, with awarding possibly by the third or fourth quarter of 2025.

The proposed national food hub would be built on a 64-hectare site inside the Clark Civil Aviation Complex, Mr. Perez said last year. 

The food hub would also house cold storage facilities, as well as key services like research and quality control, warehousing, food processing, international shipping, marketing services, and trading for domestic and foreign markets.

It will also be linked to a railway connected to Subic port.

The hub will also be near the sites of cargo companies FedEx and UPS, as well as satellite agri-trading hubs in northern Luzon.

The complex’s logistics access will give producers “the ability to send their products all over the Philippines and even in international markets,” Mr. Perez said. — Beatriz Marie D. Cruz

Tourism, creative industries named priorities in e-commerce dev’t plan

THE Department of Trade and Industry (DTI) said the E-Commerce Philippines 2024-2028 Roadmap will focus on growing the e-commerce ecosystem in the tourism, creative, food and agribusiness, transportation, and logistics industries.

In a statement, the DTI said the E-Commerce Promotion Council meeting it conducted on April 8 was looking at ways to expand the international footprint of Philippine products and services.

“Representatives from both the government and private sector within the e-commerce ecosystem attended the meeting, including those from digital platforms, e-marketplaces, digital payments, and telecommunication companies,” the DTI added.

In particular, the DTI said that the roadmap will emphasize building trust between online customers and sellers.

“By achieving this, we can foster a more complex economic landscape, enhance connections, and establish stronger relationships,” Trade Secretary Alfredo E. Pascual said. 

The DTI also expects the recently signed Republic Act No. 11967, or the Internet Transactions Act of 2023, to support the roadmap’s objectives, with its draft implementing rules and regulations (IRR) already nearing completion.

Undersecretary Mary Jean T. Pacheco told reporters on Thursday that the target release of the IRR is sometime in April, pending a review of public comment.

Ms. Pacheco said questions have been raised concerning consumer-to-consumer transactions, trust marks and online business databases.

On Dec. 5, President Ferdinand R. Marcos, Jr. signed the Internet Transactions Act, which aims to protect online consumers and merchants engaged in internet transactions. Under the law, an e-commerce bureau will be created within six months. — Justine Irish D. Tabile

DBP approves P3-B loan for Mandaue City Hall

THE Development Bank of the Philippines (DBP) has approved a P3-billion loan for the construction of a new Mandaue City Hall.

The building is expected to be eight storeys high and will have “green building features,” it said in a statement on Thursday.

“It will be constructed on a 4.3-hectare property in downtown Mandaue City and will house government frontline offices, satellite offices, as well as executive and legislative offices,” the DBP said.

The bank said the loan was granted under its Assistance for Economic and Social Development for Local Government Units Financing Program.

As of Jan. 31, the bank had approved P108.2 billion in loans for 378 accounts under the program. Total loan releases amounted to P33 billion.

“DBP is ready to work with more LGUs in their pursuit of various initiatives designed to accelerate infrastructure build-up and boost socio-economic development in their respective localities,” DBP President and Chief Executive Officer Michael O. de Jesus said. — Luisa Maria Jacinta C. Jocson

Education, labor policy reforms seen needed for young PHL workforce

PHILIPPINE STAR/EDD GUMBAN

By Beatriz Marie D. Cruz, Reporter

THE GOVERNMENT must enhance science education and review labor policies to suit the changing needs of the young workforce, analysts said.

Leonardo A. Lanzona, an economics professor at the Ateneo De Manila, said the government, alongside the private sector, needs a strategy to upskill workers.

“Improving science education in basic and tertiary levels should be a good start so that we do not simply implant the technology but also absorb and adapt it to suit our specific conditions,” he said in a Messenger chat.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said labor laws and policies require review to accommodate the changing preferences of young workers. 

“Gone are the days when employees are tied to their seats, depending on job/tasks. There should be more job flexibility but greater accountability,” he said in a Viber message.

Labor lawyer Jose G. Matula said young workers must also be allowed to participate in unions to address economic and social challenges.

“A multifaceted strategy that includes enhancing education and nutrition, adjusting economic policies to support workers’ well-being, and strengthening the role of unions is essential for the Philippines to fully leverage its young workforce,” Mr. Matula said via Viber.

Mr. Matula, also the president of the Federation of Free Workers, said union membership could allow the working population to negotiate higher wages and fair labor practices.

“The overall objective must be to maximize the demographic dividend, similar to what the other more developed Asian countries have done before,” Mr. Lanzona said.

The Philippines has one of the youngest working populations in the region,  the ASEAN+3 Macroeconomic Research Office (AMRO) said.

In a Regional Economic Outlook, AMRO said Cambodia, Laos, Myanmar and Indonesia have also yet to hit peak levels for its working-age populations.

The Philippines’ own working age population is expected to peak by 2051, the last of the ASEAN+3. Less than 10% of the Philippine and Lao working populations are aged 55 and up.

In the Philippines, Thailand and Vietnam, seniors active at work are mostly self-employed in agricultural and live in rural areas, AMRO said.

On the other hand, working-age populations have peaked in China, Japan, Singapore, and Malaysia.

Lower fertility rates have been observed in Asia in recent years, due to higher female labor participation, advancements in family planning and education, and better living standards.

Aging is viewed as an economic risk in most ASEAN+3 economies, citing a decline in the labor force, contracting economic output, low productivity, and reduced savings.

“Aging impacts savings at the aggregate level, which means that the real equilibrium interest rate would have to adjust in response to the changes to demand and supply for savings,” according to the report.

On inflation, having a dominantly aging population influences consumption, with older people spending more on services and younger ones spending on goods.

“Rapid aging can exacerbate fiscal vulnerabilities across the region’s economies. Moving forward, demand for healthcare services, pensions, and other elderly care facilities will increase across ASEAN+3,” according to the report.