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Philippine exports in 2023 well below target at $103.6B

ASIANTERMINALS.COM.PH

TOTAL EXPORTS, including services and goods, grew 4.8% in 2023 to $103.6 billion, below the target set for the year, according to the Department of Trade and Industry (DTI)’s Export Marketing Bureau.

The full-year performance failed to hit the 5% growth target set by the DTI last year and is well below the $126.8-billion goal laid down in the Philippine Export Development Plan (PEDP) 2023-2028.

In a statement on Monday, the DTI said services exports drove the gains. The segment increased 17.4% to $48.29 billion, it said, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

“Travel services contributed nearly 70% of the incremental services export receipts in 2023, followed by other business services. Growth was also driven by sectors including telecommunications, computer and information services, and transport services,” the DTI said.

Exports by the travel services sector more than doubled to $9.11 billion in 2023, while other business services exports totaled $23.29 billion, up 8.6%.

Meanwhile, the telecommunications, computer, and information sectors accounted for $7.1 billion of total exports in 2023, up 6.4%.

Transport exports totaled $3.04 in 2023, up 13.1%.

The DTI said that goods exports faced challenges as electronics declined 3.4% or $955 million.

BSP Balance of Payments data indicate that goods exports totaled $55.32 billion in 2023, down 4.1%.

“This decline highlights the importance of diversifying export portfolios and enhancing competitiveness in key sectors,” the DTI said.

Aside from electronics, the DTI said that exports of coconut, other agro-based, other mineral, and petroleum products, also declined in 2023, while fruits and vegetables exports increased.

“Overall contribution of exports to economic growth was dampened by weak external demand in the goods sector. In 2023, total exports accounted for 27% of the country’s GDP (gross domestic product),” the DTI added.

The DTI said it will be pursuing more initiatives to strengthen the services sector and address challenges in exporting goods.

“These efforts include expanding the services industry’s reach by entering new markets and strengthening existing ones, as outlined in the PEDP 2023-2028,” the DTI said.

In particular, the DTI said it continues to address issues related to value-added tax and green lane treatment for Philippine exports.

The DTI also plans to conduct briefings on export market opportunities and regulatory updates while leveraging technology and digital services to enhance exports.

“The path to global excellence and export growth requires shared ambition, where the government and the private sector must intensify and sustain collaboration,” Trade Secretary Alfredo E. Pascual said.

Late last year, the DTI cited the need to revisit the PEDP targets due to the volatile international trading environment. — Justine Irish D. Tabile

Labor groups expect upskilling from US firms to enhance competitiveness of PHL workforce

TESDA

By John Victor D. Ordoñez, Reporter

DIGITAL upskilling partnerships with US companies are expected to enhance the employment prospects and qualifications of the Philippine workforce, labor groups said.

“We can say that this (US upskilling pledges) is a clear signal that the Philippines is becoming an increasingly attractive destination for global companies looking to invest in talent development and digital infrastructure,” Jose G. Matula, who chairs the Nagkaisa labor coalition, told BusinessWorld via Viber.

During her visit to Manila last month, US Secretary of Commerce Gina Raimondo announced that US companies are expected to roll out digital upskilling programs with the government intended to benefit over 30 million workers.

The US Presidential Trade and Investment Mission also committed to invest over $1 billion in the Philippines.

The Commerce department also announced that Google will roll out a career certificate program in 50 virtual campuses in partnership with the Department of Trade and Industry (DTI).

Microsoft Corp. also committed to work with the DTI, the Bangko Sentral ng Pilipinas and the Department of Budget and Management to train jobseekers and students in artificial intelligence.

Sentro ng mga Nagkakaisa at Progresibong Manggagawa Secretary-General Josua T. Mata said the government must focus on ensuring these pledges materialize.

“Investors are motivated not solely by sovereign state promises, but by the profitability of their investments,” he said in a Viber message.

“Hence, immediate attention must be given to recurring investor concerns” like expensive power and corruption.

Renato B. Magtubo, chairman of Partidong Manggagawa, said the Department of Labor and Employment must also follow through on the International Labor Organization’s recommendation to investigate violations of the right to freedom of association and other labor rights.

“These US investments are tied to the Biden administration’s trade and investment policy centered on the protection of labor rights,” he said in a Viber message.

The Asian Development Bank has said the Philippines should use education technology to bridge the skills gap or risk job losses due to rapid technological advancements.

It said 20% of Philippine workers face a “high risk of losing their jobs” due to automation.

“The investments demonstrate the potential benefits of international partnerships and investments in developing the digital economy and workforce of the Philippines,” Mr. Matula said.

PHL wholesale, NCR retail price growth slower in February

PHILIPPINE STAR/ MICHAEL VARCAS

WHOLESALE price growth in the Philippines and retail price growth in Metro Manila both eased in February, according to the Philippine Statistics Authority (PSA).

In preliminary data released on Monday, the PSA said the general wholesale price index (GWPI) rose 2.8% year on year in February, slowing from the 3.5% posted in January and the 6.8% in February 2023.

The February reading was the weakest rise in bulk prices in 32 months, or since the 2.2% posted in June 2021.

Year to date, wholesale price growth averaged 3.2%, easing from 6.9% in the first two months of 2023.

Slower growth in the GWPI was primarily driven by the manufactured goods classified chiefly by materials sub-index, the PSA said in a statement. The sub-index reading in February was 2.2%, slowing from 4.6% in January.

“The slowdown can be attributed to the slowdown in headline inflation experienced during these months driven by the alleviation of supply chain constraints, and more relaxed demand due to high interest rates,” John Paolo R. Rivera, Oikonomia Advisory & Research, Inc. president and chief economist, said in an e-mail.

Mr. Rivera said the slowdown in manufactured good prices was caused by weakening demand coming off the holiday season.

Luzon wholesale price growth eased to 2.6% in February from 3.4% in January and 7% in February 2023. Meanwhile, wholesale price growth in the Visayas and Mindanao came in at 6.1% and 2.4%, respectively.

In a separate statement, the PSA said the National Capital Region’s (NCR) general retail price index (GRPI) further declined to 2.1% from 6.6% a year earlier and the 2.5% reading in January.

The February outcome was the weakest in 25 months, or since the 1.9% increase in January 2022.

In the year to date, Metro Manila retail price growth averaged 2.3%, against 6.4% at the end of February 2023.

According to the PSA, the slowdown in the GRPI was mainly caused by weakness in the food index, where price growth decelerated to 3% from 3.7% in January.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that improved agricultural output, caused by benign weather conditions, flowed on to slower year-on-year increases in wholesale and retail prices.

“The food index has slowed down due to food supply constraints being addressed and weaker demand,” Mr. Rivera said. — Karis Kasarinlan Paolo D. Mendoza

NPC issues rules governing personal data protection, certification of data handlers

JCOMP-FREEPIK

THE National Privacy Commission (NPC) said it issued two circulars outlining the tasks of data handling personnel and laying down the rules governing certification of organizations deemed compliant with data-handling rules.

In a statement on Monday, the regulator said NPC Circular 2023-06, or the Security of Personal Data in the Government and Private Sector, took effect on March 30, while NPC Circular 2023-05 or the Prerequisites for the Philippine Privacy Mark Certification Program took effect on March 15.

In the circular implemented last week, the NPC set the general obligations of personal information controllers (PICs) and personal information processors (PIPs). 

These requirements include the designation of a data protection officer, the registration of data processing systems, the conduct of privacy impact assessments, the implementation of privacy management programs, the training of personnel, and compliance with NPC orders.

NPC 2023-06 also set provisions regarding the storage of personal data, limiting the storage for only a necessary duration, while outlining industry standards and best practices for protection.

The circular also provides that PICs and PIPs should have acceptable-use policies, secure authentication mechanisms, and measures for deleting data on mobile devices.

It also tasks PICs and PIPs with implementing a business continuity plan containing the organizations’ mitigation efforts during potential disruptive events.

“(The plan) must indicate the process of personal data backup, restoration, and remedial time, including the periodic review of the plan taking into account disaster recovery, privacy, business impact assessment, a crisis communications plan, and telecommuting policy, among others,” the NPC said.

Meanwhile, NPC Circular 2023-05 outlines the requirements for certifying PICs and PIPs and accrediting recipients of the Philippine Privacy Mark.

In this circular, PICs and PIPs seeking certification must attain the ISO/IEC 27001 and ISO/IEC 27701 standards for Information Security Management Systems and Privacy Information Management System, respectively.

Aside from meeting the standards for PICs and PIPs, certification bodies must also attain the ISO/IEC 17021-1 norm for accreditation. — Justine Irish D. Tabile

Gender inequality cited as barrier in achieving work flexibility in PHL

UNSPLASH

SOME 53% of women responding to a study said gender inequality is hindering their ability to access flexible work, according to the Avon Global Progress for Women report.

The beauty products company said some 18.6% of respondents also said they were hindered in starting businesses by gender inequality.

In a statement, Avon said respondents cited childcare responsibilities as among the factors obstructing their career and entrepreneurship goals.

“This research shows that we’re still a long way off gender equality. …we need to do more to create opportunities for women to contribute to the economy, participate in work, and realize their potential,” Avon Chief Executive Officer Kristof Neirynck said in a statement.

Global research company Censuswide surveyed 7,000 women from the UK, Italy, Romania, Poland, the Philippines, Turkey, and South Africa. The survey was conducted in December.

Globally, respondents who cited gender stereotypes as a barrier to equal opportunity totaled 89% in the latest sudy, up from 86% a year earlier. Those who perceive representation in business to favor men also increased 5 percentage points to 61% between studies.

Respondents citing gender pay gaps totaled 52% in the latest study, against 46% previously.

Avon, referring to a United Nations study, said women earn a third of the global income generated by labor and estimated that for each dollar earned by men, women earned 51 cents.

According to the Global Gender Report 2022 of the World Economic Forum, the Philippines was 19th out of 146 countries in the Global Gender Gap Index.

In the Avon report, women who cited difficulties in rising to senior positions accounted for 57% of all respondents.

WORKPLACE AS A REFUGE
Despite harassment and micro-aggressions in the workplace, some women described work as a place of refuge.

In the Philippines, 44% out the 1,000 respondents said they have seen a colleague who appeared to have suffered signs of domestic abuse, including physical injuries.

About 48.79% were confided in by a colleague about being abused by a partner at home.

The Philippine National Police recorded 13,122 cases of violence against women in 2023, 59% of which turned out to be in breach of the Anti-Violence Against Women and their Children Act. — Aubrey Rose A. Inosante

PHL may tap Czech help to bolster dairy output

REUTERS

THE Department of Agriculture (DA) said on Monday that it is seeking to improve dairy and livestock output via a collaboration with the Czech government.

“The Philippines is particularly interested in the Czech Republic’s success in the dairy industry and in water and irrigation management and livestock production,” the DA said.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. said in a statement that the DA will seek Czech assistance in upgrading farming technology, particularly in dairy.

The government is hoping to grow dairy production to 80 million liters per year by 2028.

In 2023, dairy production amounted to 17,850 MT, or about 0.8% of milk demand of 1.94 million MT. The dairy herd was 75,798 head in 2023.

The National Dairy Authority is projecting production to reach 1.98 million metric tons in 2024.

Mr. Laurel added that the DA will also purchase bull sperm for artificial insemination to improve the quality of the herd.

“The Philippines imports almost all its dairy requirements and sources from overseas parent stock for cattle and other livestock,” the DA said.

He added that the DA is also looking to expand the market for agricultural goods from the Philippines within the European Union.

“We have some products ready for export, so market access is also very important to us, especially the European Union, which is one of the best markets in the world for our products,” Mr. Laurel said.

Czech Agriculture Minister Marek Vyborny has earlier signed a letter of intent with the DA to collaborate on agriculture and food production.

The agreement also covers water management, aquaculture, science, and research.

“(The Philippines’) aims and ambitions are very similar to what we have in the Czech Republic, where our agricultural sector is also undergoing dynamic changes towards modern technology, innovation, science and research, and the application of their outcomes,” Mr. Vyborny said. — Adrian H. Halili

Peso inches lower vs dollar on expectations of faster inflation

BW FILE PHOTO

THE PESO weakened slightly against the dollar on Monday on expectations that Philippine headline inflation quickened further in March.

The local unit closed at P56.255 per dollar on Monday, depreciating by 1.5 centavos from its P56.24 finish on Wednesday, Bankers Association of the Philippines data showed.

The peso opened Monday’s session stronger at P56.17 against the dollar. Its weakest showing was at P56.27, while its intraday best was at P56.125 versus the greenback.

Dollars exchanged went down to $847.15 million on Monday from $1.18 billion on Wednesday.

“The peso weakened amid local market expectations of a potentially higher domestic inflation in March,” a trader said in an e-mail.

Headline inflation may have accelerated further last month due to higher prices of food, fuel and electricity, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Inflation likely settled within the 3.4 to 4.2% range in March, the central bank said in a statement.

If realized, March inflation would be much slower than the 7.6% print recorded in March 2022. The lower end of the BSP’s estimate would also be unchanged from the February rate.

However, the upper end of the forecast would breach the BSP’s 2-4% target range for the first time since November’s 4.1% and mark the second straight month that inflation accelerated month-on-month.

Meanwhile, a BusinessWorld poll of 17 analysts conducted last week yielded a median estimate of 3.8% for March inflation, within the BSP’s forecast range.

The Philippine Statistics Authority will release March consumer price index data on April 5, Friday.

The peso was also dragged down by a generally stronger dollar and higher global crude prices on Monday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar was broadly steady on Monday as data showing easing US prices bolstered bets that the Federal Reserve could cut interest rates in June, Reuters reported.

The personal consumption expenditures price index rose 0.3% in February, the Commerce department’s Bureau of Economic Analysis said on Friday, compared with the 0.4% rise that economists polled by Reuters had forecast.

Federal Reserve Chair Jerome Powell on Friday said the latest US inflation data was “along the lines of what we would like to see,” in comments that tallied with his remarks after the Fed’s policy meeting last month.

Markets are now pricing in 68.5% chance of the Fed cutting rates in June versus 57% chance at the end of last week, the CME FedWatch tool showed. Traders are also pricing in 75 basis points of cuts this year.

The dollar index, which measures the US currency against six rivals, was 0.057% higher at 104.54, close to the six-week high of 104.73 it touched last week.

For Tuesday, the trader sees the peso moving between P56.15 and P56.40 per dollar, while Mr. Ricafort expects it to range from P56.15 to P56.35. — A.M.C. Sy with Reuters

Incentives considered to attract more green tech IP registrations

THE Intellectual Property Office of the Philippines (IPOPHL) said on Monday that it will offer incentives to attract more applications to register green technology-related intellectual property (IP).

At a briefing for National IP Month (NIPM), IPOPHL Director General Rowel S. Barba said the regulator is launching the Green Technology Incentive Program to register technologies that promise sustainable solutions.

“Through this new initiative, we hope to encourage inventors to develop green and sustainable technologies in climate change adaptation, alternative energy production, transportation, agriculture, forestry, emission mitigation, energy conversion, solid waste management, and water and wastewater management,” Mr. Barba said.

“The program will mainly involve a waiver of fees and a prioritized examination for eligible patents, utility models, and industrial design applications. We are in the process of finalizing the guidelines and workflow, and we hope to launch this green program in the middle of 2024,” he added.

Mr. Barba said the NIPM this year hopes to tie IP to sustainable development goals (SDGs), noting that the Philippines has made slow progress in achieving the SDG 2030 targets.

Citing a report from the United Nations, Mr. Barba said that zero progress was recorded in more than 30% of the measurable targets, while some have even regressed to pre-2015 levels, the year when the SDG 2030 was adopted.

“As we cross beyond the midpoint to the deadline, we find that only 15% of the targets are making progress. None of them are halfway towards the desired results,” he added.

Ann N. Edillon, IPOPHL Bureau of Patents director, said that under the proposed program, IPOPHL will waive the fees for filing and first publication, which amount to P4,000 to P5,000.

“That’s still a significant help to startups and business owners. Especially if you can imagine if they have a lot of programs or if they have a lot of innovative creations or inventions,” Ms. Edillon said.

However, she said the program will limit how many applicants can avail of the incentives in order to not overwhelm the system.

“There’s always going to be a cap. And then when we feel that the program is a success and there is a clamor for more, then it’s very easy to have our management renew it,” she added.

Mr. Barba said the incentive system aims to increase the number of green technology applications, which only account for less than 1% of filings.

“So what we want is to incentivize our inventors and creators to create concepts or products that promote green technology,” he added. — Justine Irish D. Tabile

Philippine shares up on positive US, China data

BW FILE PHOTO

PHILIPPINE SHARES closed higher on Monday following positive economic data out of the United States and China.

The bellwether Philippine Stock Exchange index (PSEi)climbed by 1.1% or 76.28 points to close at 6,979.81 on Monday, while the broader all shares index rose by 0.8% or 28.89 points to end at 3,636.40.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message that the local bourse closed higher following US and China data.

“In the US, the February print of the personal consumption expenditures (PCE) price index, the preferred inflation gauge of the Federal Reserve, was in line with consensus estimates and slower than the January data. This reinforced bets that the Federal Reserve is on track to cut interest rates as soon as June this year,” he said.

The PCE price index rose 0.3% last month, the Commerce department’s Bureau of Economic Analysis said, Reuters reported. Data for January was revised higher to show the PCE price index climbing 0.4% instead of 0.3% as previously reported. Economists polled by Reuters had forecast the PCE price index gaining 0.4% on the month.

In the 12 months through February, PCE inflation advanced 2.5% after increasing 2.4% in January.

“There was also good news from China where data showed that manufacturing activity expanded for the first time in six months,” Mr. Colet added.

“The optimism in Asia, given the expansion of China’s factory activity at its fastest rate in 13 months, lifted the sentiment at home. This gives hope for the recovery of China’s economy, which would be favorable for our economy as it affects trades and tourism in our country,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar likewise said in a Viber message.

China’s manufacturing activity expanded for the first time in six months in March, an official factory survey showed on Sunday, Reuters reported.

The official purchasing managers’ index rose to 50.8 in March from 49.1 in February, above the 50-mark separating growth from contraction and topping a median forecast of 49.9 in a Reuters poll.

Back home, the majority of sectoral indices rose. Holding firms gained by 1.75% or 113.23 points to 6,574.45; financials increased by 1.5% or 30.65 points to 2,064.92; property went up by 1.4% or 39.33 points to 2,849.14; services climbed by 0.27% or 5.01 points to 1,856.03; and mining and oil rose by 0.02% or 2.07 points to 8,125.37.

Meanwhile, industrials dropped by 0.53% or 48.28 points to 9,051.30.

Value turnover declined to P5.49 billion on Monday with 1.19 billion issues changing hands from the P10.67 billion with 2.44 billion shares traded on Wednesday.

Advancers beat decliners, 96 against 90, while 53 names closed unchanged.

Net foreign buying stood at P464.45 million on Monday versus the P310.52 million in net selling recorded on Wednesday. — R.M.D. Ochave with Reuters

Recent improvements in tax filing process

“To improve is to change; to be perfect is to change often,” said Winston Churchill.  The government has been proving this adage to be true, especially with the significant regulatory updates to taxation, the most recent iteration being the Ease of Paying Taxes (EoPT) Law. It would appear that we should continue to expect changes as Congress is continuously deliberating on new tax regulations, but change must not always be met with resistance; after all, change is a crucial element of progress. To the credit of the government and the Bureau of Internal Revenue, there have been significant efforts to improve the tax system, making compliance, including payment, easier for the taxpayers.

Taxpayers, on the other hand, must keep abreast of developments, not only to ensure compliance with their obligations, but also to be informed of how to go about compliance in the easiest way possible, as recent regulations allow.

As the April 15 deadline for the 2023 Income Tax Filing draws near, it’s a good time to be reminded of the latest developments on tax filing.

TAX PAYMENT VENUE
We begin with one of the most important updates introduced by the EoPT Law, which took effect on Jan. 22. Taxpayers can now file their Annual Income Tax Returns (AITR), either electronically or manually, and pay taxes due thereon through any Authorized Agent Bank (AAB), Revenue District Office, Revenue Collection Officer, or authorized tax software provider.

This above update must not, however, be confused with the requirement for taxpayers mandated to use the Electronic Filing and Payment System (eFPS) to file their AITRs electronically and pay the taxes due through the eFPS-AABs where they are enrolled, except in such cases where filing through eBIRForms is permitted.

Looking back, there was a time when taxpayers were required to do their filings in specific Revenue District Offices (RDOs) which have jurisdiction over their businesses. We were all witness to the administrative and logistical challenges this system posed. Thankfully, we are now moving past this chapter.

In 2023, even before the EoPT Law, the BIR, through RMC 32-2023, began to allow taxpayers to file and pay their income taxes through any AABs and RDOs.  With the EoPT Law, this policy has been institutionalized, allowing taxpayers to carry out their obligations efficiently and conveniently.

UPDATED ELECTRONIC FILING SYSTEMS
Taxpayers are reminded of the availability of offline Electronic Bureau of Internal Revenue forms (eBIRForms) Package Version 7.9.4.2, which can be downloaded from the BIR’s official website, www.bir.gov.ph or www.knowyourtaxes.ph/ebirforms. Notably, the new eBIRForms provide BIR Form No. 1702-RTv2018C with additional alphanumeric tax codes (ATC) IC, such as IC 101, IC 190 and IC 191 for Regional Operating Headquarters (ROHQs), Offshore Banking Units (OBUs), and Foreign Currency Deposit Units (FDCUs), respectively. Updated 2023 income tax rates were likewise made on BIR Form No. 1700v2018, BIR Form No. 1701v2018, and BIR Form No. 1701A.  Bug fixers were also added for BIR Form No. 1702-MXv2018C.

Meanwhile, BIR Form No. 1701A, otherwise known as the Annual Income Tax Return for Individuals Earning Purely from Business/Profession under the graduated income tax rates with Optional Standard Deduction as the mode of deduction, with the option to avail of the 8% flat income tax rate; BIR Form No. 1702-EX January 2018 (ENCS) v2, or the Annual Income Tax Return for entities EXEMPT under Sec. 30 and Sec. 27 of the Tax Code, as amended, and other special laws with no other taxable income; and BIR Form No. 1700, or the Annual Income Tax Return for Individuals Earning Purely Compensation Income, are now available on the Electronic Filing and Payment System (eFPS).

As a precaution, taxpayers who are mandated to use eFPS are advised to check the RDO they are registered with to make sure that the abovementioned returns are on the list of tax returns in their eFPS. If not, coordination with the BIR should be made as soon as possible to comply with the requirements of the concerned RDO for the uploading of the returns to the eFPS.

Mindful of the deadline to file the AITR, taxpayers are reminded that eBIRForms is required for taxpayers paying through the assistance of accredited tax agents/practitioners, accredited printers of principal and supplemental receipts/invoices, and those who file a “No-Payment Return,” among others.

While eFPS applies to taxpayers such as large taxpayers, those in the Taxpayer Account Management Program (TAMP), importers and customs brokers, taxpayers enjoying fiscal incentives, the top 5,000 individuals, corporations with a paid-up capital stock of 10 million and above, and those with complete computerized systems, among others.

These recent changes are definitely a welcome development aimed at making the tax processes easier, thus significantly affecting ease of doing business as well, which is commonly a pain point not only for Philippine businesses, but for foreign investors as well.

The enactment of the EoPT Law and the recent improvements within the BIR systems are testament to the government’s commitment to modernizing the archaic processes of the past and making them responsive to the prevailing concerns of the present. While the system is not exactly perfect, it is now easier to comply with tax filing and payment obligations.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Yben R. Rogero is a manager from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Marcos urged to keep grounded vessel at shoal

THE BRP SIERRA MADRE, a marooned transport ship which Philippine Marines live in as a military outpost, is pictured in the disputed Second Thomas Shoal, part of the Spratly Islands in the South China Sea. — REUTERS

By John Victor D. Ordoñez, Reporter

THE GOVERNMENT of President Ferdinand R. Marcos, Jr. should ensure that the World War II-era ship that the Philippines grounded at Second Thomas Shoal in the South China Sea in 1999 remains there amid Chinese pressure to get it out of the disputed shoal, according to a senator.

“The BRP Sierra Madre should remain on Ayungin,” Senator Ana Theresia N. Hontiveros-Baraquel said in a statement on Monday, referring to the Filipino name of Second Thomas Shoal. “Our troops have been risking their lives to guard that ship and we should not take their sacrifice for granted.”

China has been trying to block Philippine resupply missions to the shoal, accusing the Marcos government of bringing construction materials to fortify the ship.

China claims almost the entire South China Sea, through which more than $3 trillion of annual ship-borne commerce goes through. Its claims overlap with those of the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

A United Nations-backed tribunal in 2016 voided China’s expansive claims for being illegal.

A Chinese coast guard vessel on March 23 fired a water cannon at a Philippine boat trying to bring food and other supplies to a handful of soldiers on the dilapidated vessel.

Manila later lodged a protest and said the boat was heavily damaged and some crew injured. It then summoned China’s envoy in Manila to protest “aggressive actions” in the South China Sea.

Last week, Mr. Marcos said his government would enforce countermeasures against “illegal, coercive, aggressive and dangerous attacks” by China’s coast guard and maritime militia within the Philippines’ exclusive economic zone in the waterway.

Former presidential spokesman Herminio L. Roque has said ex-President Rodrigo R. Duterte had a “gentleman’s agreement” with China not to bring building and repair materials to troops stationed at the ship.

The deal involved keeping the “status quo” at the shoal but did not entail the ship’s removal.

Chinese Foreign Ministry spokesman Gan Yu earlier said the March 23 Philippine resupply mission had tried to transport construction materials to the grounded ship.

Ms. Hontiveros-Baraquel said the supposed deal was not surprising Mr. Duterte’s foreign policy pivot toward China.

“Duterte never accorded our 2016 arbitral award its much-deserved respect and reverence, which is why this so-called gentleman’s agreement is not surprising,” she said in mixed English and Filipino.

“A decision of such importance would have gone through a thorough policy-making process,” Senator Jose “Jinggoy” P. Estrada said in a separate statement.

He said his father, former President Joseph E. Estrada, never made a deal with China to have the dilapidated ship removed from Second Thomas Shoal.

Senate Majority Floor Leader Emmanuel Joel J. Villanueva on Monday filed a resolution condemning China’s aggression in the South China Sea, urging the government to come up with countermeasures to assert Philippine sovereignty in the waterway.

In Resolution No. 980, he urged the government to “put an end to the continued aggression” of China in the South China Sea.

Ms. Hontiveros-Baraquel last week urged the Department of Foreign Affairs to file a resolution before the United Nations General Assembly condemning China’s aggression at sea.

Under Executive Order 57 published on Sunday, Mr. Marcos ordered agencies to boost coordination on maritime security to confront “a range of serious challenges” to territorial integrity and peace, as the sea dispute with China worsens.

The order does not mention China but follows a series of confrontations and accusations between the two neighbors over disputed areas of the South China Sea.

In a separate statement, Senator and presidential sister Maria Imelda “Imee” R. Marcos said allowing too much foreign interference in the sea dispute could escalate tensions.

Citing section 7 of the order, she said the National Maritime Council’s authority to accept donations, contributions and other grants from domestic and foreign sources could lead to a “trojan horse of foreign interference.”

“Such largesse has been the fuel to never-ending conflicts as we still see in Ukraine and Gaza,” said Ms. Marcos, who heads the Senate committee on foreign relations. “To prevent yet another regional conflict, what we need instead are solutions for peace from those who claim to be our genuine allies.”

The Philippine Senate has approved a bill that seeks to set up maritime zones and territories in the South China Sea and another that aims to attract investments in local defense equipment manufacturing.

Coast guard patrols vital to Chinese control of South China Sea features

PHILIPPINE COAST GUARD FILE PHOTO

By Kyle Aristophere T. Atienza, Reporter

CHINA’s coast guard was the dominant state force in disputed waters of the South China Sea last year, holding daily patrols at key features including Second Thomas Shoal, where the Philippines has kept a dilapidated ship as a military outpost since 1999, according to a US think tank.

Its daily patrols “demonstrate the centrality of the CCG in China’s peacetime operations to assert control over its vast claims in the South China Sea,” the Asia Maritime Transparency Initiative (AMTI) said in a Mar. 29 report, citing automatic transmission system (AIS) data from Marine Traffic and Starboard Maritime Analytics.

Second Thomas Shoal, Luconia Shoals, Scarborough Shoal, Vanguard Bank and Thitu Island were the five features most frequented by Chinese patrols, AMTI said. “In total, patrols observed in 2023 at these five features amounted to 1,652 ship-days.”

It said the Chinese Coast Guard (CCG) has slightly shifted its attention away from Vanguard Bank and toward Luconia Shoals and Second Thomas Shoal, where Manila grounded the BRP Sierra Madre 25 years ago to assert its sovereignty.

Second Thomas, which the Philippines calls Ayungin, is 240 kilometers off the coast of Palawan province and is about 900 kilometers from Hainan, the nearest major Chinese landmass.

AMTI said the CCG’s patrols at Second Thomas Shoal increased to 302 in 2023 from 279 a year earlier.

Chinese patrols at Luconia Shoals, near a major cluster of Malaysian oil and gas operations, also increased to 338 from 316.

Meanwhile, CCG patrols in Scarborough Shoal and Thitu Island fell to 311 from 344 and to 206 from 208 days, respectively. Chinese patrol days at Vanguard Bank also fell to 221 last year from 310 a year earlier, AMTI said.

Scarborough and Thitu, which is part of the Spratly Islands, are both within the Philippines’ 200 nautical-mile exclusive economic zone.

The numbers are only a baseline “and that the true number of days patrolled by the CCG is likely higher,” AMTI said.

It added that “CCG vessels are not always observable on commercial AIS platforms, either because their transceivers are disabled or not detectable by satellite AIS receivers.”

Second Thomas Shoal was the site of frequent tensions between Manila and Beijing last year, with the Chinese Coast Guard backed by maritime militia ships blocking Philippine resupply missions for troops stationed on the BRP Sierra Madre.

President Ferdinand R. Marcos, Jr. last week issued an executive order (EO) ordering agencies to boost coordination on maritime security to confront “a range of serious challenges” to territorial integrity and peace, as the sea dispute with China worsens.

The order reorganized the National Coast Watch Council and renamed it to the National Maritime Council.

The new council is part of the countermeasures that the President has vowed to pursue, National Security Council Assistant Director-General Jonathan Malaya told a televised news briefing on Monday.

“Many of our countrymen think that our counter-response or measures are purely military,” he said. “The measures cover [many] dimensions, and this is one aspect of that.”

Fisherfolk group Pamalakaya questioned the creation of the new council, saying it is “redundant and insignificant” because there is already an inter-agency task force handling South China Sea disputes.

“The government agencies belonging to the newly created National Maritime Council are already constitutionally mandated to uphold and protect our national territory and natural resources,” it said in a statement. “Why the need to consolidate these agencies into a council with the sole purpose of maritime security, despite an existing task force with the very same functions?”

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