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South Korea’s Yoon urges doctors to end impasse over trainees

South Korean President Yoon Suk-yeol. — REUTERS

SEOUL – South Korean President Yoon Suk Yeol said on Monday his government is open to talks with doctors who oppose his plan to increase medical school admissions, while accusing critics of offering no reasonable alternative to ease a doctor shortage.

In a 50-minute address to the country, Mr. Yoon signaled his willingness for the first time to seek a compromise on his medical reform proposals after the government called for dialogue with striking doctors.

Mr. Yoon apologized for the inconvenience caused by the ongoing strike by trainee doctors but accused the medical sector of putting their own interests ahead of public health.

“If you come up with a more proper and reasonable solution, we can discuss it as much as you want,” he said. “If you present better opinions and rational grounds, government policy can change for the better.”

More than 90% of the country’s 13,000 trainee doctors have been staging walkouts since Feb. 20 in protest against the government’s plan to boost medical school admissions by 2,000 starting in 2025 from 3,000 now.

South Korea’s population of 52 million had 2.6 doctors per 1,000 people in 2022, far below the average of 3.7 for countries in the Organisation for Economic Co-operation and Development (OECD).

Previous governments have devised measures to tackle deepening shortages of doctors in essential services including pediatrics and emergency units, as well as clinics outside the greater Seoul area, but their efforts fell apart amid strong opposition from the medical sector.

Some medical professionals have said the Yoon administration had failed to consult in advance, and its plan would do little to fix the current situation including low pay for trainee doctors.

Mr. Yoon refuted several claims by doctors’ groups and highlighted why medical reform is imperative.

“After keeping a deafening silence over the government’s request to provide specific numbers for medical school quotas, the medical community is now throwing numbers like 350, 500 and 1,000 without any grounds,” he said.

“If they want to argue that the scale of the increase should be reduced, they should propose a unified idea with solid scientific evidence, rather than taking collective action.” – Reuters

Weak Asian factories take shine off China’s rebound

@LIFESTYLEMEMORY-FREEPIK

TOKYO – Factory activity in many Asia economies weakened in March despite a rebound in China as lacklustrer domestic demand dragged on growth, surveys showed on Monday, clouding the outlook for a once fast-expanding, key driver of the global economy.

Export powerhouses Japan and South Korea saw manufacturing activities shrink, as well as Taiwan, Malaysia and Vietnam in a sign of the fragile state of the region’s economies.

China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51.1 in March from 50.9 the previous month, a private survey showed on Monday, expanding at the fastest pace in 13 months with business confidence hitting an 11-month high.

The finding joins an official PMI survey released on Sunday that showed China’s factory activity expanded for the first time in six months.

The rebound in China, which is struggling to mount a strong economic revival partly due to a protracted property crisis, provides some welcome relief to Beijing and investors globally.

Yet, the weakness in other parts of Asia highlights the challenge the region’s policymakers face as they wrestle with patchy signs of recovery in global demand and uncertainty on when the U.S. Federal Reserve would start to cut interest rates.

“China’s exports are picking up a bit but that’s because their goods are cheap. That means other Asian countries must compete with China for demand that’s not growing,” said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute.

“With no clear driver of global growth, it’s hard to paint a rosy outlook for Asia,” he added.

Japan’s final au Jibun Bank PMI stood at 48.2 in March, the highest level since November and recovering from February’s 47.2 which marked the fastest pace of contraction in over 3-1/2 years.

But activity contracted for a 10th straight month as new export orders slumped, reflecting souring sentiment in key markets like China and North America, the survey showed.

South Korea’s manufacturing activity also weakened in March as slowing domestic demand offset robust overseas sales with the PMI falling to 49.8 in March from 50.7 in February.

Taiwan’s PMI fell to 49.3 in March from 48.6 in February, while that for Vietnam dropped to 49.9 from 50.4, and Malaysia’s declined to 48.4 from 49.5, the surveys showed.

By contrast, manufacturing activity expanded in March in the Philippines and Indonesia, the surveys showed.

In revised forecasts issued in January, the IMF projected Asia’s economy to expand 4.5% this year, driven by robust U.S. demand and the boost from expected stimulus measures in China.

But it said the recovery would be divergent across economies with Japan likely to see growth slow to 0.9%, in contrast to an expected 6.5% expansion in India. The IMF expects China’s economy to expand 4.6% this year, slowing from 5.2% in 2023. – Reuters

Chinese state media stoked allegation Taiwan’s president would flee war

CHESS PIECES are seen in front of displayed China and Taiwan’s flags in this illustration taken Jan. 25, 2022. — REUTERS

TAIPEI – Taiwan’s outgoing President Tsai Ing-wen plans to flee in a US plane if war erupts with China, according to an unsubstantiated report first published in 2021 and echoed in the run-up to the island’s January 2024 general election.

Another story said Ms. Tsai had given her confidantes VIP “runaway” passes.

They are among the many unsupported tales of Ms. Tsai’s preparations to escape harm that have been fed into the island by Chinese state media outlets, according to an analysis conducted for Reuters by the Information Environment Research Center (IORG), a Taiwan-based non-government organization.

The IORG analysis revealed that the narrative that Ms. Tsai planned to flee if war broke out with China, and that Taiwan’s military drills were rehearsals for this, originated with an outlet controlled by the Chinese Communist Party (CCP) in June 2021, and was quickly repeated by other official Chinese news sources.

Taipei has repeatedly said the reports are false. The government has not publicly detailed its plans for the leadership in the event of conflict. Reuters could not independently determine the existence of any such escape plans.

Reuters asked IORG to analyse the origin of the stories about Taiwan’s military drills because the exercises drew Chinese ire and significant international coverage.

IORG is a non-partisan group of social scientists and data analysts funded by academic institutions and organizations supported financially by Britain and the United States.

The organization found over 400 stories portraying the military exercises, including the annual Han Kuang drills, as rehearsals for Taiwan’s leadership to desert, in what IORG said appeared to be a concerted attempt by Beijing to undermine the ruling Democratic Progressive Party (DPP).

China’s Taiwan Affairs Office, which is responsible for relations with Taipei, said in response to Reuters questions that IORG’s research included “fabricated and ill-intentioned” allegations.

It said China was the victim of “cognitive warfare” – attempts to influence public sentiment via propagation of misinformation – by the DPP. The party, the office said, had created a misinformation supply chain that hurt the feelings of compatriots.

The analysis of text articles and videos published between April 2021 and January 13, 2024, was conducted with data-processing technologies that enabled IORG to identify the origins of certain narratives and related keywords.

Despite Chinese influence efforts, the DPP’s Lai Ching-te was elected president on Jan. 13, though the party lost its parliamentary majority. Mr. Lai will be inaugurated on May 20.

Beijing, which has long tried to force democratically governed Taiwan into accepting Chinese sovereignty claims, views Ms Tsai and Mr. Lai as separatists.

China portrayed support for DPP candidates as a vote for war due to Lai’s refusal to accept Beijing’s position that Taiwan is part of “one China.” Lai had insisted throughout the campaign that he does not seek to Read full story change the status quo, in which Taiwan enjoys de facto independence but with very limited official diplomatic recognition.

Beijing has insisted on an eventual “reunification” with Taiwan, which the CCP has never ruled, into “one China.” It has not renounced the use of force to achieve that aim.

 

TALKING POINTS

Stories portraying the DPP leadership as warmongers who would flee in the event of conflict became talking points in Taiwan and were used by some media outlets and opposition politicians to criticize the DPP.

The number of stories often spiked at politically sensitive moments, such as then-US house speaker Nancy Pelosi’s 2022 Taipei visit and the annual military drills, according to IORG’s analysis. Discussion of these stories by opposition politicians and on social media also rose during these periods of elevated tensions, the analysis showed.

Around those periods, state media in Beijing and Fujian province near Taiwan, as well as Hong Kong-based media outlets that Taiwan intelligence officials say are linked to the CCP, published over 93% of the 439 stories portraying the drills as preparations for key Taiwanese leaders to desert, IORG said.

Many stories were further amplified by pro-Beijing voices, including Taiwan-based media outlets and social media accounts, IORG found.

Taiwan’s defence ministry said in a March 7 report to parliament that Beijing had used state media and “local collaborators” to spread narratives that would weaken confidence in the government. It did not name the alleged collaborators.

The presidential office separately told Reuters that China was engaged in “disinformation warfare” against the island.

Taiwan’s main opposition Kuomintang (KMT), which favours closer ties with China but denies being pro-Beijing, said in response to Reuters questions that its criticism of the DPP did not mean it should “be accused as disloyal or mislabeled as a collaborator of ‘cognitive warfare’ by any external hostile force.”

The KMT added it opposes any “cognitive warfare” conducted by foreign forces, including Beijing, to interfere in Taiwan’s elections.

 

FUJIAN ORIGINS

IORG’s analysis showed that the CCP-backed Fujian Daily Press Group, which runs a network of Taiwan-focused news portals, was behind roughly 20% of the 439 stories.

Fujian Daily Press Group and the other media outlets mentioned in this story did not return requests for comment.

IORG’s research spanned more than 1,300 Chinese official news outlets; over 500,000 accounts on YouTube, Weibo, and Douyin – the Chinese version of TikTok; and more than 1.2 million Chinese-language Facebook pages.

The parent companies of YouTube, Weibo and Douyin did not respond to requests for comment.

Of the 439 articles published between April 2021 and Jan. 13 that framed Taiwan’s military drills as escape rehearsals for Ms. Tsai, 110 originated with Beijing-based outlets, including the overseas editions of People’s Daily and Global Times.

Another 169 came from Hong Kong, long a hub for Chinese-language media, and 130 were published from Fuzhou, the capital of Fujian.

Of the latter, the Fujian Daily-run Taihainet website and associated social media accounts published nearly 90 stories.

The narrative that Taiwan’s leadership would flee by plane originated in a June 10, 2021, Fujian Daily story, IORG found. The newspaper called a US military C-17 transport plane, which had visited Taiwan that month, a “runaway plane” for Taiwan’s leadership.

Within three months of the story’s publication, similar narratives emerged in 22 articles or videos published by other Chinese state media, as well as on social media accounts in China and Taiwan and in comments by Taiwanese media outlets and politicians.

Media personality Jaw Shaw-kong, who was the KMT’s vice presidential candidate this year, wrote on Facebook in August 2021 – shortly after Kabul fell to the Taliban – that he wondered if Tsai would resign and flee on a plane “if the enemy is at the gates, like what happened in Afghanistan.”

Taiwan opposition politicians seeking office in the 2024 legislative elections, such as senior KMT lawmaker Fu Kun-Chi, also suggested that the DPP would flee.

“Those who cannot run away would be like you ordinary folks gathered here,” Mr. Fu told a crowd of hundreds at a Dec. 10 rally.

Jaw and Mr. Fu’s office did not return requests for comment.

Taiwan has a lively and partisan media, with some outlets and personalities advocating formal independence and others favoring closer economic and political ties with Beijing. Freedom of speech – including on issues about the island’s future relations with China – is protected by law.

 

LOCAL NARRATIVES

Other narratives began with Taiwan-based news or social media outlets before being modified and amplified by others, according to timelines constructed by IORG.

On Sept. 8, 2022, Taiwan-based Storm Media published a story, citing unidentified sources, saying Tsai had issued a “confidential pass” giving confidantes privileged access to military shelters in the event of war.

Ms. Tsai’s office denied the story.

On Sept. 14, the story was modified into a narrative about a “runaway boarding pass” by an online publication operated by Hong Kong-based China VTV, which Taiwan’s Investigation Bureau has publicly accused of having financial ties with Chinese authorities.

VTV did not respond to a request for comment.

A version of the “runaway pass” narrative was amplified by at least two dozen Taiwan or China-based publications or social media accounts after the Storm Media story ran, IORG found.

“The more exaggerated claims make the previously exaggerated claims less exaggerated and even more believable,” said IORG co-director Yu Chihhao.

China’s external influence efforts help Beijing reach a broad audience, said University of Hong Kong journalism professor Fu King-wa.

But their outcomes aren’t often clear, he said, adding that there wasn’t “available evidence on whether it’s really effective on changing, or having an impact on the other countries’ local political conditions, or outcomes.” – Reuters

As El Nino bites, Indonesians struggle with record-high rice prices

FARIS MOHAMMED-UNSPLASH

KUALA LUMPUR/SURABAYA, Indonesia (Thomson Reuters Foundation) – It was still pitch-black outside when Indonesian housewife Sutinah made her way to a local police station early one morning last month, hoping to avoid queues and take advantage of a government scheme offering affordable rice.

Even though dry weather fueled by El Nino has led to a rice shortage and sent prices to record highs, the 52-year-old from the East Java town of Pasuruan was still shocked to see hundreds of likeminded residents already waiting patiently in line.

“By the time we got here it was already busy, we still had to queue. We had no other choice because the price of rice in the market is very expensive,” said Ms. Sutinah, who like many Indonesians goes by just one name.

The mother-of-two queued for two hours to buy two 5 kg bags of rice for 102,000 Indonesian rupiah ($6.51) – a saving of about 50,000 rupiah compared to supermarket and market prices.

Indonesia was self-sufficient in rice in the 1980s before farmland was used to build housing for the booming population, which now stands at more than 270 million people.

Despite this, more than 90% of Indonesian families still consume rice every day, providing more than half their daily calories.

The Southeast Asian nation’s per capita annual rice consumption stands at about 95 kg (210 lb) – much higher than the average yearly consumption of other carbohydrates like corn, sweet potato, potato and cassava, said Rajendra Aryal, the Food and Agriculture Organization’s representative in Indonesia and Timor-Leste.

Such is the importance of the staple to Indonesia’s economy, culture and society that high food inflation contributed to the downfall of strongman President Suharto in 1998.

Last year was relatively hot due to the El Nino weather pattern, and a prolonged dry season in parts of Indonesia saw rice production fall by around 18%, said Aryal. The sprawling archipelago is due to enter the dry season again next month.

“These conditions could cause an increase in rice prices and weaken people’s purchasing capacity, especially affecting the poorer segment of society, including smallholders,” Aryal said.

 

NO RICE? NOT EATEN

Indonesians often say if you have not eaten rice, you are yet to eat, and the staple grain is not just a relatively low-cost source of sustenance for most households, but part of the country’s cultural identity.

Rice has been an integral part of Indonesian history and culture since ancient times, and its cultivation can even be seen in the famous 9th century Borobudur temple complex in central Java, said Ika Krishnayanti, international relations officer at farmers’ group the Indonesian Peasants’ Alliance.

“Rice is one of the most important agricultural commodities in Indonesia … a symbol of culture and tradition,” Krishnayanti told the Thomson Reuters Foundation.

Rice paddies are also a distinctive part of Indonesia’s landscape, especially in regions popular with tourists, like Bali and Central Java, said Jongsoo Shin, Asia director at the International Rice Research Institute (IRRI).

“Rising rice prices and reduced availability can lead to food insecurity, particularly for low-income households. This can create feelings of hunger, anxiety, and frustration, increasing the risk of social unrest and protests,” he said.

“Farmers experiencing crop failures lose income and may face debt, further contributing to economic hardship and social instability,” Shin said, adding that Indonesia is set to import up to 5 million tonnes of rice in 2024.

But an increased reliance on rice imports can make Indonesia more vulnerable to price fluctuations and supply chain disruptions in exporting countries, he said.

“Importing large quantities of rice can put a strain on the government’s budget and weaken the agricultural sector, which is crucial for rural employment and food security,” Shin added.

 

TECH CAN HELP FARMERS FACING SOARING TEMPERATURES

To combat the rice shortfall, Indonesian President Joko Widodo last year drafted in the military to help with planting and subsidized fertilizer distribution.

Acknowledging the pressures from rising rice prices to consumers and the more than 15 million households that grow food, the Indonesian government has also begun to sell discounted rice and provide cash handouts to families worst hit.

Romauli Panggabean, environmental economist for sustainable food systems at think-tank the World Resources Institute Indonesia called for more diversification of sources of carbohydrates to help Indonesians be more resilient to rice price fluctuations.

She noted that the country’s National Food Agency was encouraging people to eat other locally available sources of carbohydrates such as corn, cassava, potatoes, banana, sorghum, and sago.

Distributing drought-tolerant rice seed varieties to farmers in affected regions was also important, said IRRI’s Shin.

In the longer term, the government should continue to invest in improving irrigation infrastructure, including rehabilitating existing canals and building new ones, to enhance water management and reduce dependence on rainfall, he added.

Early warning systems to monitor weather conditions and provide timely information to farmers about potential droughts, also allow them to take preventative measures.

This should go hand-in-hand with providing training to farmers on drought-tolerant agricultural practices, water conservation techniques and post-harvest storage, Shin said, adding that crop insurance schemes and diversifying crops offered greater security.

Technology is very much part of the solution, analysts said, with drones and sensors able to monitor crops, soil moisture, weather conditions and irrigation systems, and digital platforms enabling farmers to share information and best practices.

Apps can also help consumers find the best deals for rice.

In East Java’s Lamongan, one of Indonesia’s rice producing regions, 70-year-old farmer Salimah said extreme weather had made life more difficult.

Longer droughts had forced her to grow more crops that are resistant to dry weather, such as corn or sesame, even though they are often more expensive.

“I plant green beans to keep my income … most farmers leave their land empty because the weather is too hot,” she said. – Reuters

China’s SAIC aims to slash jobs at GM, VW ventures and EV unit, sources say

source: saicmotor.com

SHANGHAI – China’s SAIC Motor aims to cut thousands of jobs this year at its joint ventures with General Motors and Volkswagen and at an electric-car unit, two people with knowledge of the matter told Reuters.

The state-owned automaker hopes to cut 30% of employees at SAIC-GM, 10% at SAIC Volkswagen and more than half at its Rising Auto EV subsidiary, the people said.

Large-scale workforce reductions are rare at state-owned Chinese firms and come amid a cut-throat automotive price war as the nation’s economy falters. The cutbacks also reflect the explosion of electric vehicles in China, a sector where SAIC and its foreign partners have rapidly lost market share to Tesla and privately owned Chinese automakers led by BYD.

The staff reductions won’t happen all at once in mass layoffs but are targeted for 2024, the sources said. A large portion will come through implementing stricter performance standards and offering payouts to lower-rated employees who resign, they said.

A SAIC spokesperson said Reuters’ “speculation” about staff downsizing is “not true” and that the company would not set targets for worker dismissals. SAIC did not respond to questions about efforts to get low-performers to resign or other staff-reduction strategies.

The company added that it had recruited 2,000 employees in the first two months of 2024 who will focus on software and new-energy vehicles.

A GM spokesperson in China said it would be “inaccurate” to say SAIC-GM is “reducing its workforce by 30%” but declined to elaborate. A VW China Group spokesperson said it did not plan “layoffs” and that it was “incorrect” to say SAIC-VW plans to cut 10% of its workforce.

The VW spokesperson declined to comment on whether the company had changed its employee performance reviews but called them a “long-term mechanism” and said SAIC-VW provides counseling and resources aiming to ensure “every employee can be qualified for their job requirements.”

 

FALLING SALES

SAIC has been China’s biggest automaker for nearly two decades but saw its sales fall by 16% during the first two months of 2024 from a year earlier, according to an SAIC filing. It employed 207,000 people at its parent company and major subsidiaries at the end of 2023, according to SAIC’s annual report.

One of the sources said most of the reductions at SAIC-VW would come through payouts offered to resigning low performers.

SAIC rates workers on a scale from A to D. In the past, the company has rarely handed out C or D ratings, the two sources said. For 2023, however, about 10% of SAIC-VW employees received the lower ratings, one of the people said.

D-rated employees are being offered payouts to quit, and C-rated workers are being put in “uncomfortable positions” intended to encourage resignations, the source said.

The 10% target for job cuts at SAIC-VW applies to “white-collar professionals” rather than factory workers, the person said.

Such performance-based payouts are also being used at SAIC-GM, the person said. Reuters could not determine how widely the strategy is being employed at the GM joint venture, what other methods staff-reduction methods it might use, or whether factory workers are included in its 30% target for job cuts.

Rising Auto, one of two SAIC EV units, is also offering payouts to low-rated employees but will also dismiss some workers and not renew the contracts of others, one of the sources said.

 

LEFT IN THE DUST

The job cuts are a symptom of much larger problems for state-owned automakers and their foreign partners in the world’s biggest auto market.

SAIC Volkswagen was set up in 1985 and today makes the ID.3 electric car and Audi-branded vehicles, among other models. SAIC-GM was established in 1997 and makes Chevrolets, Buicks and Cadillacs.

But in recent years, SAIC and its foreign partners have seen steep drops in sales as BYD and Tesla have surged far ahead in the race to capture EV market share.

EV sales have risen sharply and now account for 23% of China’s car sales, with BYD and Tesla capturing by far the biggest shares of the electric sector.

China’s government granted Tesla a rare exception to its longstanding practice of making foreign automakers form joint ventures with state-owned enterprises. Tesla set up a wholly owned entity in 2018 to manufacture vehicles at its Shanghai factory – its biggest globally by output – as part of a government strategy to supercharge the development of China’s EV supply chains and challenge domestic automakers to compete.

BYD answered the call. Its EV sales in China have rocketed from about 130,000 in 2020 to more than 1.5 million last year and its global EV sales surpassed Tesla late last year. Last week, BYD Chairman Wang Chuanfu predicted foreign brands would see their China market share plummet from 40% to 10% in the next three to five years.

As the industry’s electrification accelerates, the Chinese government has urged state-owned entities to be more efficient and less dependent on foreign partners. But SAIC still relies on its VW and GM partnerships for a large proportion of its sales and profits. – Reuters

Max’s Group to convene on May 9 for its annual meeting of stockholders

 

 

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March inflation likely sped up — poll

PHILIPPINE STAR/WALTER BOLLOZOS

By Luisa Maria Jacinta C. Jocson, Reporter

INFLATION may have quickened for the second straight month in March, according to economists, which could make the case for the Philippine central bank to keep key rates higher for longer.

It probably rose by 3.8% last month, according to a median estimate of 17 analysts in a BusinessWorld poll, from 3.4% in February and 7.6% a year earlier.

“[Faster inflation] is likely to keep the Monetary Board ‘disciplined,’ in that it will retain a fairly hawkish rhetoric while keeping the target reverse repo rate unchanged,” Miguel Chanco, Pantheon Macroeconomics chief Emerging Asia economist, said in an e-mail.

Analysts' March inflation rate projections

The Bangko Sentral ng Pilipinas (BSP) is trying to balance supporting the economy through rate cuts while ensuring that these do not fan inflation or put pressure on the peso and lead to capital outflows.

It could be the second straight month that inflation picked up on a monthly basis, though still within the central bank’s 2-4% target for a fourth straight month.

BSP Governor Eli M. Remolona, Jr. and Finance Secretary and Monetary Board member Ralph G. Recto estimated 3.9% inflation for March.

The central bank has yet to release its inflation forecast for the month. The local statistics agency will release the March consumer price index (CPI) data on April 5. 

Analysts said inflation might have accelerated due to higher food, utility and fuel prices.

“Inflation likely quickened for the second straight month at 3.8%, driven by higher prices of rice, meat and fruits, as well as increases in the cost of gasoline and LPG (liquefied petroleum gas),” China Bank Research said in an e-mail.

Aris D. Dacanay, HSBC economist for ASEAN (Association of Southeast Asian Nations), cited “unfavorable base effects.”

The drought has led to elevated food prices especially of rice and corn, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in an e-mail.

In February, food inflation alone quickened to 4.8% from 3.3% in January, mainly driven by rice, which accounted for almost half of inflation during the month.

Rice inflation surged to 23.7% in February from 22.6% a month earlier and 2.2% a year ago, the fastest since 24.6% in February 2009.

Robert Dan J. Roces, chief economist at Security Bank Corp., in an e-mail cited rice supply shortages, a seasonal uptick in the prices of fish and certain food items and potential El Niño effects.

Agricultural damage from the El Niño dry spell had reached P1.75 billion as of March 14, according to a bulletin from the Department of Agriculture (DA).

More than 75,000 metric tons (MT) of farm output were lost, affecting 29,437 farmers and 31,231 hectares of farmland.

Rice and corn were the most affected crops, accounting for 64.4% (P1.13 billion) and 18.15% (P317.86 million) of the damage.

“Rice inflation is projected to hit 24% year on year and given its hefty weight in the CPI basket, will continue to push up inflation closer to the upper end of the BSP inflation target,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail. 

‘OFF THE TABLE’
DA data showed that the average retail price of a kilo of local well-milled rice rose to P49 to P55 as of March 27 from P39 to P46 a year earlier. The price of regular milled rice went up to P50 from P34 to P40.

“Not only did retail rice prices remain at elevated levels, but rice prices increased further in March due to the ongoing risks of El Niño and the global supply crunch caused by trade curbs in India, the largest rice exporter in the world,” Mr. Dacanay added.

“Inflation accelerated mainly due to less favorable base effects, sustained high rice inflation and the upward adjustment in Manila Electric Co. (Meralco) prices,” Philippine National Bank economist Alvin Joseph A. Arogo said in an e-mail.

Higher electricity rates were observed in Meralco areas and other parts of Luzon, China Bank Research said.

The rate for a typical household rose by P0.0229 to P11.9397 per kilowatt-hour (kWh) in March due to an increase in the transmission charge for residential customers, Meralco said earlier. 

Mr. Roces said global oil prices had also affected transportation and energy costs.

In March alone, pump price adjustments stood at a net increase of P2.30 a liter for gasoline, P0.65 a liter each for diesel and kerosene.

A number of oil companies also raised pump prices in the final week of March “in part due to speculations arising from the disruptions in Russia’s refineries,” Moody’s Analytics economist Sarah Tan said in an e-mail.

Analysts warned of risks that could stoke inflation in the coming months.

These include further electricity tariff hikes and proposals to raise the minimum wage, which could add to service inflation, Michael Wan, MUFG senior currency analyst for Global Markets Research, said in an e-mail.

“Inflation will reaccelerate anew before sustainably settling within the BSP’s 2-4% target in the fourth quarter because of the threats from El Niño, Middle East conflict escalation and the lagged impact of minimum wage hikes,” Mr. Arogo said.

The BSP expects inflation to average 3.6% this year. It earlier said prices could temporarily quicken in the middle of the year due to El Niño and positive base effects.

Inflation could rise further and exceed the target from April to July due to base effects, China Bank Research said.

March inflation that is more than the target could prompt the central bank to keep rates steady at its April 8 meeting, Mr. Arogo said.

“Higher inflation remains supply side-induced but given the elevated nature, it could give BSP all the reasons to retain policy rates at their elevated levels of 6.5%,” Mr. Mapa said.

The Monetary Board kept its key rate steady at a near 17-year high of 6.5% for a third-straight meeting in February.  The BSP hiked borrowing costs by 450 basis points (bps) from May 2022 to October 2023.

“The central bank will have some space to cut rates gradually in the second half of 2024 once the US Federal Reserve commences its rate cut cycle, and inflation moderates further through the year,” Mr. Wan said.

Ms. Tan said rate cuts are likely “off the table” amid rising food, electricity and transportation prices.

The Monetary Board may also adopt a hawkish stance if inflation spirals out of control.

“This will prompt BSP to remain hawkish in its policy stance,” John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said in a Viber message. “We might see rate cuts once inflationary pressures are well managed.”

Securing ‘A’ credit rating difficult as fiscal issues remain

PIXABAY

By Luisa Maria Jacinta C. Jocson, Reporter

SECURING an “A” level sovereign credit rating by the end of the Marcos administration may be difficult as persistent underspending and the lack of reforms to improve revenue generation continue to constrain the Philippines’ growth prospects, analysts said.

“Getting an ‘A’ rating requires marked improvement in government finances and capacity to pay,” Enrico P. Villanueva, senior lecturer of economics at the University of the Philippines Los Baños, said via Messenger chat.

“An ‘A’ rating in five years is not impossible but requires hard work in terms of plugging holes in tax collection, purging corruption in revenue and spending activities, and improving prospects for growth,” he added.

The Philippines currently holds investment grade ratings with the three major debt watchers. Fitch Ratings rates the country at “BBB,” Moody’s Ratings at “Baa2,” and S&P Global Ratings at “BBB+.”

All three also assigned a “stable” outlook to their ratings for the country.

The government is aiming to achieve an “A” level rating by 2028 or the end of the Marcos administration. The Finance department earlier said that it organized, along with the central bank, an interagency committee for the “Road to A Credit Rating Agenda” back in 2019.

“An ‘A’ rating of course is a good sign for investors. But the question is: Will we get there? In fact, we should have already attained that status if only this administration undertook the reforms that would have addressed fiscal consolidation without sacrificing growth,” Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said via Messenger chat.

He said the government should have raised its tax effort through reforms to help reduce its deficit.

“It could have also reduced the fiscal deficit by undertaking the reform of the military and uniformed personnel pension system, among other things.”

Latest data from the Bureau of the Treasury (BTr) showed that the National Government’s (NG) posted a budget surplus of P88 billion in January.

In 2023, the NG’s fiscal deficit narrowed by 6.32% to P1.51 trillion. However, it exceeded the P1.499-trillion ceiling set by the government.

As of end-2023, the deficit as a share of gross domestic product (GDP) settled at 6.2%. This was a tad higher than the 6.1% target set by the government but lower than the 7.3% ratio at end-2022.

Mr. Sta. Ana also noted the government’s issue of underspending.

“Underspending is an incorrect way of narrowing the deficit, for this results in slower growth. The correct approach is to increase revenues and at the same time remove the fat in the budget,” he said.

“The government is not serious about tax policy reform and is cutting spending that is necessary for human development but at the same time is increasing inefficient spending for partisan purposes. Do you think that this will lead to a credit grading upgrade? On the contrary, a credit downgrade can happen, unless the government reverses course,” Mr. Sta. Ana added.

The Philippine economy grew by 5.6% in 2023, falling short of the government’s 6-7% target and much slower than the 7.6% expansion in 2022 as state spending declined.

Government spending posted flat growth of 0.4% last year, slower than 4.9% in 2022.

In the fourth quarter alone, spending contracted by 1.8%, causing GDP growth for that period to slow to 5.6% from 6% in the third quarter and 7.1% expansion a year prior.

National Economic and Development Authority Secretary Arsenio M. Balisacan had said that the slower state spending seen last year was “intentional” due to the government’s fiscal consolidation plan.

For his part, IBON Foundation Sonny A. Africa said there is “little basis” for a credit rating upgrade if looking at recent macroeconomic indicators.

“The country’s external debt ratio, external debt service burden, current account deficit, NG deficit and NG revenues are all still much worse than before the overlong pandemic lockdowns,” he said in a Viber message.

Data from the central bank showed that the country’s outstanding external debt hit a record-high $125.4 billion at the end of December, up by 12.7% from $111.3 billion at end-2022. It was also equivalent to 28.7% of GDP.

The external debt service burden surged by 73.9% to $14.752 billion last year from the $8.483 billion recorded at end-2022.

Meanwhile, the NG’s outstanding debt hit a record P14.79 trillion as of end-January, data from the BTr showed. As of end-2023, outstanding debt as a share of GDP stood at 60.2%.

The BSP also reported a current account deficit of $11.2 billion in 2023, equivalent to 2.6% of GDP.

“Also, over that same period, economic growth (has slowed), the peso has depreciated, overseas remittances have slowed, and international reserves have depleted,” Mr. Africa added.

To improve the country’s credit rating, Mr. Villanueva said there must be efforts to improve Customs duties collection, mitigate smuggling, reduce corruption, and ensure efficient spending in line with the country’s development plan.

He also noted the importance of improving the ease of doing business and focusing on growth drivers like tourism and creative industries, among others.

PHL Jan. debt service up threefold to P159B

BW FILE PHOTO

THE NATIONAL Government’s (NG) debt service bill more than tripled to P158.898 billion in January as both principal and interest payments rose, the Bureau of the Treasury (BTr) reported.

Latest data from the BTr showed that the debt repayments in January surged by 232.2% from the P47.831 billion recorded in the same month a year ago.

The bulk of the debt service bill for the month was composed of amortization payments, which took up more than half or 53.3% of the total.

Principal payments in January surged (9,734%) to P84.677 billion from P861 million in the same month in 2023.

Broken down, this was composed almost entirely of principal payments on external debt at P84.539 billion, which sharply increased (9,753%) from P858 million a year ago.

Amortization on domestic debt jumped (4,500%) to P138 million from P3 million.

Meanwhile, interest payments during the month rose by 58% to P74.221 billion from P46.97 billion in the previous year.

Interest paid on domestic debt climbed by 83.2% to P48.823 billion from P26.647 billion in the same period a year ago.

Interest paid to foreign creditors went up by 25% to P25.398 billion from P20.323 billion.

Higher debt servicing costs were mainly due to a weaker peso exchange rate and elevated interest rates, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The NG front-loaded some borrowings to hedge amid the rising interest rate trend since 2022,” he added in a Viber message.

The Bangko Sentral ng Pilipinas (BSP) has kept its policy rate at a near 17-year high of 6.5% for three straight meetings.

The central bank has been among the most aggressive in the region last year, hiking borrowing costs by 450 basis points from May 2022 to October 2023.

Meanwhile, the peso closed at P56.24 per dollar on March 27, down by 1.55% from its P55.37 finish on Dec. 29, 2023

For the coming months, Mr. Ricafort said that potential rate cuts by the US Federal Reserve and the BSP could help reduce debt servicing costs.

The FOMC (Federal Open Market Committee) stood pat at its meeting in March, keeping its fed funds steady at the 5.25-5.5% range. From March 2022 to July 2023, the Fed raised rates by a total of 525 bps.

BSP Governor Eli M. Remolona, Jr. has said they will likely begin their policy easing cycle in the next few meetings.

Fed officials also affirmed last month that they remain on track to deliver three interest rate cuts this year.

In 2023, the NG’s debt service bill jumped to P1.604 trillion, higher by 24% from P1.293 billion in 2022 and exceeding its program for the year by 3%.

According to data from the latest Budget of Expenditures and Sources of Financing, the NG’s debt service program this year is set at P1.91 trillion, composed of P670.5 billion in interest payments and P1.24 trillion in amortization payments. — Luisa Maria Jacinta C. Jocson

Marcos gov’t told to turn to Japan for infra funding

PHILIPPINE STAR/ MIGUEL DE GUZMAN

By John Victor D. Ordoñez, Reporter

THE GOVERNMENT of President Ferdinand R. Marcos, Jr. should turn to Japan for funding assistance to fast-track stalled infrastructure and development projects initially designed for funding by Chinese loans, according to economists.

“The Japan International Cooperation Agency (JICA) remains the nation’s top development partner in the last few years, providing loans and aid to various projects,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in a Facebook Messenger chat.

“As long as JICA’s interest rates remain competitive for future projects, there should be no impediment to broadening our development relations,” he added.

The Marcos government has withdrawn from loan negotiations with China for three major railway projects worth at least P228 billion amid worsening tensions over their sea dispute.

These were the P142-billion South Long-Haul Project in the Bicol Region, the P50-billion Subic-Clark Railway Project and the first phase of the Mindanao Railway Project worth P36 billion.

Last month, the Philippines and JICA signed loan deals worth ¥250 billion (P93 billion) for the construction of the Metro Manila Subway and the Dalton Pass East Alignment, which will link San Jose City in Nueva Ecija to Aritao in Nueva Vizcaya, both in northern Philippines.  

The government is also banking on the Asian Development Bank’s (ADB) technical know-how to bankroll the South Long-Haul Rail Project after Chinese loans failed to materialize, National Economic and Development Authority (NEDA) Assistant Secretary Jonathan L. Uy said last month.

During a congressional oversight hearing looking into projects funded by official development assistance (ODA), the NEDA official told congressmen the agency was in talks with the ADB to start the design-build phase of the 639-kilometer rail line connecting Metro Manila to southeastern Luzon.

Only the Department of Agriculture’s Philippine Solar-Powered Irrigation Project has been lined up for Chinese funding assistance, he added.

“All development partners and multilaterals such as the ADB should be allowed to determine the viability of both projects for ODA funding,” Mr. Ridon said.

At least four Chinese ODA-funded projects have been completed. These are the P4.5-billion Chico River Pump Irrigation Project in Kalinga province, the P1.8-billion Estrella-Pantaleon Bridge and P3.4-billion Binondo-Intramuros Bridge both in Metro Manila and P65 million worth of firetrucks donated to Marawi City in southern Philippines.

Based on 2022 JICA data, the Philippines got P109 billion in ODA from Japan from April 2021 to March 2022, the biggest among Southeast Asian beneficiaries.

The government might have no choice but to seek Japanese funding because China is unlikely to fund projects such as the Metro Manila Subway, Calixto V. Chikiamco, president of the Foundation for Economic Freedom, said in a Viber message.

“From an economic perspective, the halting of China’s assistance should be considered sunk cost and we should move on,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in a Facebook Messenger chat.

“Not allowing the Japanese investments in and sticking with China will only lead to opportunity costs.”

Transportation Secretary Jaime J. Bautista has said the government is considering seeking ODA from Japan, South Korea or India to replace Chinese funding for stalled infrastructure projects.

The government should streamline preparatory stages for foreign-funded projects to avoid delays, the Congressional Policy and Budget Research Department said in a report last month.

Procurement delays, budget flow and institutional support are among the major hurdles in implementing ODA projects, the think tank said, citing NEDA reports.

Japan is keen on investing and providing grants for the Philippine government’s big-ticket investments this year, former Japanese Ambassador to the Philippines Kazuhiko Koshikawa told a business conference in Manila in October.

“JICA loans are cheaper than Chinese loans, but country limits on JICA lending is hitting a ceiling as subway (construction) has nearly doubled in cost, with the likelihood of further going up,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message.

Finance Secretary Ralph G. Recto in February said NEDA is looking into implementing the Mindanao Railway Project as a public-private partnership.

In February 2022, the Duterte government awarded a contract to China Railway Design Corp. to build the South Long-Haul Project. State-owned Export-Import Bank of China failed to confirm whether it would approve the loan request.

Mr. Marcos has ordered agencies to boost coordination on maritime security to confront “a range of serious challenges” to territorial integrity and peace, as a sea dispute with China worsens.

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.

Ban on Binance seen to chill crypto landscape

REUTERS

By Revin Mikhael D. Ochave, Reporter

THE PHILIPPINES’ ban on the crypto exchange Binance may have a “chilling effect” on the industry, according to analysts.

“Overall, this action of the Securities and Exchange Commission (SEC) sends a chilling effect to all other exchanges, whether they are international or locaI,” Innovative Movement of the Philippine Association of Crypto Traders (IMPACT) Founding Chairman Arlone P. Abello said in a Viber message last week.

“The time will come that questions may arise,” he added.

Last week, the SEC requested the National Telecommunications Commission (NTC) to block access to Binance for operating in the Philippines without a license. Subsequently, the NTC ordered internet service providers to block access to the cryptocurrency giant.

Jiro Luis S. Reyes, chief executive officer of the Filipino-led crypto education platform Bit-skwela, said in a Viber message that the ban on Binance is a “net negative” for the country as it would affect adoption in the short term.

“This will definitely affect adoption, openness, and the financial benefit for Filipinos at least in the short run. This kind of opportunity in crypto only happens every few decades. We don’t know how long it would take before the next global opportunity like this would occur. It would cost us too much in the long run to shy away from this emerging sector,” he said.

Investments made by Filipinos in Binance are still intact, with the ban only barring access to the crypto exchange’s domain, he noted.

He also said the SEC’s ban could be bypassed with the use of a virtual private network (VPN) or a different domain name system (DNS).

“If you access the site through a VPN, from another country, or a different DNS, then as of writing, you may still access Binance. But these fixes may only be short-term and can be covered by either the SEC or Binance if they choose to do so.”

For his part, Nichel Merlimichael O. Gaba, chief executive officer and founder of the Philippine Digital Asset Exchange (PDAX), said the domestic ban on Binance signals the maturation of the crypto industry and its increasing acceptance.

“The fact that it’s no longer just available in offshore platforms but in also Bangko Sentral ng Pilipinas-licensed financial institutions means we’re heading in the direction where crypto will be more accepted (by) institutions,” Mr. Gaba told reporters on the sidelines of a media briefing last week.

“What would it mean for Filipinos who are using Binance? They will have to transition. It might not be an easy experience… But it’s a transition that ultimately helps crypto grow into a mature and institutional industry… As crypto becomes more popular, we can expect regulators to continue raising the standards,” he added.

Mr. Reyes said he remains optimistic about the growth of crypto in the country.

“Given that the majority of Filipinos are turning to local or international alternatives, this slump will be picked back up in the medium to long run. We’re in a bull run, and Filipinos simply won’t and can’t afford to miss this chance,” he said.

The ban on Binance will have a positive impact on local exchanges such as PDAX and Coins.ph since these are registered as virtual asset service providers (VASPs), he noted.

“Why doesn’t Binance just get a VASP? The quick answer is they can’t… They would have to buy an existing one if they wanted to get a hold of it,” he added.

On Sept. 1, 2022, the Bangko Sentral ng Pilipinas imposed a three-year moratorium on the issuance of new VASP licenses, subject to reassessment based on market developments and the impact of existing VASPs on the financial system.

For Mr. Abello, the ban will not have a significant effect, as traders will find other means to transfer their funds.

“I don’t think this (the ban) is going to dampen the appetite of traders, knowing I’ve seen many communities that will look for other means or other wallets to transfer their assets rather. However, from a perspective of a trader, they will be more a bit mindful of secondary exchanges, so they will transfer to those recognized in the Philippines such as Coins.ph,” he said.

He also said that crypto stakeholders are considering using legal means in response to the ban on Binance.

“We’re expecting that some people who have legal knowledge can question this approach through the Court of Appeals in the form of a temporary restraining order.”

Moving forward, Mr. Abello said there should be discussions between regulators and stakeholders instead of imposing bans.

“Aside from the SEC banning, they need to have guidance on what needs to be done. They need to have clarity because if we don’t provide clarity, what will happen is that these traders might fall into scams, meaning we need to give them guidance on how to properly use their funds,” he added.

Beyond the road less traveled

PHOTO FROM SUBARU PHILIPPINES

Taking Subaru vehicles on and off the pavement

THERE’S SOMETHING extra special about the idea of driving into the great outdoors and its promise of unforgettable experiences. Clearly, not every car is designed to be both a city driver and off-road adventurer; it’s usually one or the other.

Subaru vehicles are among those that can do both.

Keeping this special talent in mind, members of the media recently took off in various Subaru vehicles, heading for Camp Well River Valley in Tanay, Rizal. Camp Well is a lovely campsite tucked away along the banks of the Tanay River, amid the Sierra Madre mountain range. It is known among enthusiasts as a nice place for various outdoor activities, which include hiking, dirt biking, and off-road driving.

My team and I took off in a Subaru Crosstrek (the new Subaru XV), while others departed in a Subaru Forester or a Subaru Outback. It took us over three hours of driving to get to the destination, coming from Subaru Manila Bay, and the Crosstrek made the journey easy, as it offered a stable ride with good power both on the highway and off-road.

Of course, Subaru vehicles are known for their Symmetrical All-Wheel Drive system, which provides exceptional traction and stability in all driving conditions. Basically, the system distributes power evenly to all of the vehicle’s wheels — effectively enhancing grip and handling, especially during off-road applications or even during inclement weather.

Moreover, Subaru’s horizontally opposed boxer engine offers a lower center of gravity for each vehicle, produces less overall vibration, and contributes to better driving dynamics. Subaru vehicles also carry the proprietary Eyesight Driver Assist Technology, which incorporates features such as adaptive cruise control, pre-collision braking, and lane departure assist to enhance driver confidence and mitigate the risk of accidents.

Then there’s Subaru’s X-Mode, a special feature which could be activated by a switch. Turning it on enhances traction, stability, and (ultimately) confidence when driving in challenging conditions. That’s because it automatically engages features such as hill descent control and Vehicle Dynamics Control, allowing drivers to focus more on navigating obstacles without having to worry about braking while descending steep inclines, or having to worry about losing traction or control while negotiating tough terrain.

The Subaru Outback blends comfort with capability and generous cabin space, the Forester effortlessly maneuvered through tight corners and narrow mountain passes while consistently delivering responsive performance, and the Crosstrek tackled rough terrain efficiently and with all the benefits of a modern crossover. All these vehicles also made it easy for drivers of any level to wade through a portion of the Tanay River at Camp Well.

To share the excitement of extraordinary adventures such as the one we had, Subaru Philippines is conducting a limited off-road drive series, called the Subaru Adventure Tour Drive. Here, interested participants get the chance to test the rugged capabilities of different Subaru vehicles in the exciting outdoors, which is partly where they excel. There will be one Adventure Tour Drive held in Bacolod on June 28, and one in Davao on Sept. 27. People interested in signing up to participate may simply visit their nearest Subaru dealership and reach out to an accredited agent.

“Get ready for an exhilarating off-road adventure with Subaru’s Adventure Tour Drive. Join us on Subaru’s rugged, adventure-ready vehicles on extreme terrain. This firsthand journey showcases the unmatched performance of our Subaru vehicles and pushes their capabilities to the limits,” remarked Tan Chong International Limited Deputy Chairman and Managing Director Glenn Tan during the sendoff activity at Subaru Manila Bay.

In a nutshell, Subaru vehicles are noted for their combination of performance, safety, durability and versatility into individual vehicles. They are a popular choice among drivers seeking dependable transportation that can handle a wide range of driving conditions and activities. With them, adventure is always a possibility.

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