Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.
Join us on Viber at https://bit.ly/3hv6bLA to get more updates and subscribe to BusinessWorld’s titles and get exclusive content through www.bworld-x.com.
SINGAPORE — Industrial metals prices extended their gains on Tuesday with expectations of a worldwide manufacturing rebound, while Asian shares crept up a little more cautiously ahead of this week’s US consumer price index (CPI) data and a crucial European Central Bank (ECB) meeting.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%. Japan’s Nikkei rose 0.8%. S&P 500 futures and FTSE futures were flat while European futures were down 0.18%.
In Shanghai, the most-traded May copper futures rose more than 1% to a record high, while zinc and tin made multi-month peaks and aluminium traded just below Monday’s two-year top.
Even iron ore, battered by China’s property downturn, steadied above $100 a ton in Singapore.
“It’s pretty much a China bet,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore.
“It’s coincided with a global manufacturing bottoming, and I think that plays well into China’s industrial recovery. That aspect of it is a broader-based story for metals.”
Last week, data showed US manufacturing growing for the first time in one-and-a-half years. China’s manufacturing activity expanded for the first time in six months in March.
Among Asian bourses, Taiwan stocks touched a record high, led by a more than 4% jump in shares of TSMC after the world’s largest contract chipmaker won a $6.6-billion subsidy for an Arizona production plant.
Chinese stocks were more circumspect, with mainland indexes marginally lower and Hong Kong’s Hang Seng up 0.7%, though proxies outside China from European stock markets to the Antipodean currencies have been standout gainers.
China’s yuan, down about 1.8% this year, has found a floor around 7.3 to the dollar.
Since the beginning of March, the EuroSTOXX index has risen 2.3% and Germany’s DAX is up 3.2%. The Nasdaq has been flat and the Nikkei has lost 1%.
CPI AND ECB AHEAD
The main focus this week is on US inflation data due on Wednesday and the ECB meeting on Thursday.
Ahead of Wednesday figures that are expected to show a slight tick higher in annualized US headline inflation, the shift in the rates outlook has driven up yields and pumped up US dollar long bets to levels starting to look stretched.
Meanwhile, the euro traded firmly in Asia at $1.0860 ahead of a Thursday policy meeting where investors expect the European Central Bank to flag a cut in June, but might see some risk that they strike a hawkish tone instead.
The yen, meanwhile, continues to face heavy pressure as investors see any lags in global rate cuts as leaving the gap wide with Japan’s near-zero interest rates.
At 151.87 per dollar, the yen is a whisker from last month’s 34-year low of 151.975. Against the euro, the yen is at its weakest for three weeks at 164.96. — Reuters
THE ANTI-RED TAPE Authority (ARTA) said it plans to streamline the permit approval process for water and wastewater pipe laying works as well as leak repairs.
In a statement on Tuesday, ARTA said it is currently consulting the water industry and government agencies.
The third meeting, which was conducted on April 3, was also attended by Israel’s Ambassador to the Philippines Ilan Fluss who expressed his support for ARTA’s plans.
“What we bring to the table is our experience, our approach, and our regulations and legislation. We share it in the Philippine context,” Mr. Fluss said.
“At the end of the day, it is an internal Philippine process that we are happy to contribute to with our best practices,” he added.
ARTA said that Israel uses sustainable water technologies to overcome water scarcity.
“We aspire to achieve several key outcomes, particularly in mirroring Israel’s sustainable water industry practices and ensuring that the permitting process does not unduly burden stakeholders and citizens alike,” ARTA Deputy Director General for Operations Gerald Divinagracia said.
“The Israeli Embassy’s contributions will guide us in formulating strategies to enhance efficiency and minimize bureaucratic obstacles,” he added.
During the meeting, Tahel Brandes, Israeli Water and Sewage Authority Senior Deputy Legal Adviser, presented Israel’s Water Law, the Water Council, and the regulatory reforms that are helping implement a sustainable water system.
The Development Academy of the Philippines, which also attended the meeting, was tasked with updating its review of the water utility industry, while ARTA is set to conduct a business process mapping workshop for the National Water Resources Board. — Justine Irish D. Tabile
REPURPOSING agricultural subsidies to infrastructure could help countries like the Philippines boost agricultural output and exports while ensuring food security, participants said at a forum organized by the Asian Development Bank (ADB).
“This repurposing benefits not just those countries, but the entire ADB region, increasing agricultural output by 17%, reducing hunger by 51 million people, or 30% in 2025,” Mark Rosegrant, research fellow emeritus at the International Food Policy Research Institute, told the ADB Food Security Forum.
Countries urged to repurpose their agricultural subsidies were the Philippines, China, India, Kazakhstan, Indonesia, Thailand, Bangladesh, and Vietnam.
“Investments in broad-based rural infrastructure cuts post-harvest losses by about 50% in the region,” Mr. Rosegrant said.
The resulting lower food prices could reduce the hungry by 16 million people in 2035, he added.
Tetsushi Sonobe, ADB Institute dean, said that agricultural subsidies should be minimized, and are better allocated to research, infrastructure and irrigation to insure long-term gains for the sector.
Mr. Rosegrant also cited the need to invest in irrigation and water use efficiency.
“When you have the same trajectory of investment in irrigation together with investment in water use efficiency, you can actually reduce water use by about 7.5% while maintaining the growth in irrigated areas,” he told the forum.
Countries should also invest in agricultural research and design as well as reducing greenhouse gas emissions, he said.
“By 2050, we would have reduced the initial emissions in Asia Pacific by a third here, and that’s because of landscape productivity growth, together with generation adoption of technologies such as conservation tillage, precision agriculture, and improved management of rice and livestock among others.”
Xianbin Yao, Senior Advisor of the ADB’s Food, Nature and Rural Development Sector Office, said investment in all segments of the agricultural food chain, especially for rice, is crucial.
“There is still a challenge to increase the productivity for the rice yield in countries where there is high demand… that can resist the heat the water and flood and then at the same time to manage it minimize post-harvest loss,” he said on the sidelines of the forum.
“One has to carry out a very thorough assessment to decide where to allocate the resources,” Mr. Yao said. — Beatriz Marie D. Cruz
By John Victor D. Ordoñez, Reporter
THE PHILIPPINES should seek out South China Sea energy exploration partners from regional or global powers like India or the US, according to maritime analysts.
“Working with large companies from important countries who might be harder for China to harass is one tactic that’s been used before,” Raymond M. Powell, a fellow at Stanford University’s Gordian Knot Center for National Security Innovation, told BusinessWorld in a message on X, formerly Twitter.
“Previously, US company ExxonMobil had an oil contract off Vietnam’s coast, and its size and US ties made it also harder to bully,” he added.
The Philippines is under pressure to find other sources of indigenous energy as its Malampaya gas field, which supplies a fifth of the country’s power requirements, nears depletion. PXP Energy Corp.’s exploration work at Reed Bank, another potential source of gas in disputed waters, remains suspended due to tensions with China.
Last month, the US and India promised to boost maritime security ties with the Philippines with China continuing to aggressively assert its territorial claims.
China has said, any plan for resource exploitation in the South China Sea should not involve countries outside the region.
Philippine Ambassador to the US Jose Manuel D. Romualdez has said Manila is “working closely with our allies, not only the US but also Japan and Australia” to exploit the resources available to it in the South China Sea.
The main venue for China-Philippines confrontation remains the BRP Sierra Madre outpost at Second Thomas Shoal. The Chinese Coast Guard routinely attempts to obstruct Philippine resupply missions to the grounded ship.
The Malampaya gas field is the country’s only indigenous commercial source of natural gas. It is expected to run out of easily recoverable gas using current techniques by 2027.
President Ferdinand R. Marcos, Jr. extended Malampaya Service Contract 38 to February 2039, allowing operators to exploit the field beyond the initial Feb. 22, 2024 expiration date.
Lucio B. Pitlo III, a research fellow at the Asia-Pacific Pathways to Progress Foundation, said many prominent multinational oil companies are still reluctant to do gas work in the South China Sea due to the political and security risk.
“However, there may be opportunities for collaboration in less fraught areas, like tapping renewable energy (RE) through floating solar or offshore wind farms and wave energy,” he said via Messenger chat.
He also noted that ”Chinese capital, technology, and experience in this field can benefit the Philippines.”
On the other hand, Infrawatch PH convenor and public investment analyst Terry L. Ridon said the government must ensure it does not conduct exploration activities in areas of the sea with overlapping claims.
“For areas with overlapping claims, it is unwise to undertake exploration as it will only raise tensions in disputed waters,” he said via Messenger chat.
The government aims to increase the share of RE in the power generation mix to 35% by 2030 and to 50% by 2040. Renewables currently account for 22% of the Philippine energy mix.
In January last year, the Philippine Supreme Court voided a 2005 government deal with China and Vietnam for joint gas and oil exploration.
It said the agreement violated the constitution for allowing foreigners to explore for natural resources in 142,886 square kilometers of Philippine territory without full supervision from the Philippine government.
Mr. Pitlo said the ruling may complicate Manila’s oil partnerships in the South China Sea.
Legislators have been pushing for measures seeking to ease the process of importing liquefied natural gas (LNG) amid the dwindling reserves of the Malampaya field.
Senator and chairman of the Ways and Means Committee Sherwin T. Gatchalian said last year that LNG will set the stage for the transition to RE.
China claims more than 80% of the South China Sea, which is believed to contain substantial oil and gas deposits and through which billions of dollars in trade passes each year.
A United Nations-backed arbitration court in July 2016 voided China’s claims, which were based on a 1940s map.
China has ignored the ruling, which has failed to stop its island-building activities in areas also claimed by the Philippines, Vietnam, Brunei, Malaysia, and Taiwan.
“Since the Philippines has the sovereign rights to explore and exploit natural resources including gas exploration in its exclusive economic zone (in the South China Sea), Manila has the prerogative to collaborate with foreign actors,” Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said via Messenger chat.
By Adrian H. Halili, Reporter
THE PHILIPPINE Rice Research Institute (PhilRice) said it is seeking more funding from the Rice Competitiveness Enhancement Fund (RCEF) for seed to be distributed to farmers.
“We are also proposing to increase the seed volume so that more farmers can be served. We hope there will also be an increase (in funding),” PhilRice Director for RCEF Program Management Office Flordeliza H. Bordey, told BusinessWorld.
The RCEF is intended to modernize the rice industry and is funded by import tariffs generated as a result of Republic Act 11203, or the Rice Tariffication Law.
A Senator has proposed another six year extension to RCEF with an increased budget of P20 billion a year.
“We welcome that development, because we are (an) implementer of the program… what we have done through the program has really helped our farmers,” Ms. Bordey said.
The fund supports the supply of machinery, seed, and fertilizer, among others, to farmers. The rice tariffs support RCEF with P10 billion annually. The tariff allocations are set to expire in June.
The law, which took effect in 2019, allowed private traders to bring in rice shipments without restriction. At the time, they had to pay a 35% tariff on Southeast Asian grain.
PhilRice handles the distribution of certified inbred seed to farmers.
She added that the agency’s seed distribution will be little changed this year with RCEF funding of P3 billion.
She added that the Department of Agriculture’s National Rice Program has also allotted P700 million for seed distribution.
PhilRice’s inbred seed yielded an average of 4.36 metric tons (MT) per hectare last year, against 3.63 MT per hectare in 2022.
RCEF has set an aspirational target of five MT per hectare by 2025.
THE Energy Regulatory Commission (ERC) said it has delivered its initial findings on power industry competition to the Philippine Competition Commission (PCC), which is currently validating its report.
“We have our own set of questions (on industry competition), our own preliminary findings,” ERC Chairperson Monalisa C. Dimalanta told reporters recently.
“We referred them to PCC for their validation. They view things from a purely competition lens and they have more data, more (expertise) in understanding market behavior,” she added.
In February, the ERC and the PCC formed a joint task force to monitor and investigate allegations of anti-competitive practices in the energy sector.
The task force stems from a 2019 memorandum of agreement between the two regulators to foster competition in the power industry. The agreement was signed in response to concerns about power outages and corresponding increases in electricity prices.
The joint fact-finding inquiries seek to uncover anti-competitive conducts that harm consumer welfare, the ERC said in its February statement.
Asked if the coordination of regulators also includes the investigation into the power outages in Panay in January, Ms. Dimalanta said they are finalizing the findings of the Interim Grid Management Committee.
“We already finished the clarificatory hearings on the Panay outage, now we’re finalizing,” she said.
Multiple power plants tripped on Jan. 2 on Panay Island, which triggered power outages in the Western Visayas. Power was restored three days after. — Sheldeen Joy Talavera
THE Philippines is expected to import more soybeans this year due to increased demand from the livestock, poultry, and aquaculture industries, the US Department of Agriculture (USDA) said.
According to a report by the USDA’s Foreign Agricultural Service, soybean meal imports for the feed industry are expected to grow 4% to 3.2 million metric tons (MT) in the marketing year 2024-2025.
The Philippines imports most of its soy to meet domestic demand, especially for animal feed.
Due to the limited land set aside for production, mostly in the Caraga and Ilocos Regions, the local harvest may likely be unchanged at 1,000 MT.
“The United States is the preferred source with an 85% market share. About 15-40% of the feed ration of animal and aquaculture feeds is soybean meal,” it said.
It added that imports of soybean meal will help offset the 16% decline in copra meal production, mainly due to the ongoing effects of El Niño on coconut production.
Copra meal is a by-product of the coconut oil extraction process.
The government weather service, known as PAGASA, has said that El Niño is starting to weaken, though its effects may last until August.
“The El Niño weather disturbance will affect coconut production… Copra crushing will decline by 15%, which will also result in a 15% reduction in coconut oil supply,” the report said.
It added that exports of coconut oil are estimated to decline to 900,000 MT.
Citing the Philippine Coconut Authority, it said that El Niño is not showing significant effects as of March. Its effect is expected to manifest 13 months after the conclusion of the weather phenomenon.
The USDA said that El Niño’s effects on copra supply for milling will be seen in areas that have been affected by drought or dry spells.
“Coconut areas affected by dry conditions, dry spells, and drought will report low coconut production, which will affect the coconut supply to oil mills located in these areas,” it added. — Adrian H. Halili
GOVERNMENTS must invest in producing food with high nutritional value and in strengthening the local sourcing of food to withstand disruptions that threaten food security, experts said at an Asian Development Bank (ADB) forum.
Cindy H. McCain, Executive Director of the United Nations World Food Programme, said Asian populations are vulnerable to health risks due to lack of nutrition content in food.
“Rural communities across Asia are experiencing concerning rates of malnutrition and micronutrient deficiencies. Lifestyle changes are a factor, along with difficulty accessing a sufficiently wide range of nutritious foods,” Ms. McCain told the ADB’s Food Security Forum.
Jyotsna Puri, Associate vice-president of the International Fund for Agricultural Development, said that official development assistance (ODAs) for food systems invest the most in humanitarian assistance (31%) but the least in nutrition and health (9%).
She said that investing in local food industries would help countries weather food crises more effectively.
“What we found is that those value chains that were very local during these crises and those that were depending on markets that were local were able to deal with a lot of the disruptions better than the others,” Ms. Puri said.
Around 400 million people in Asia are undernourished, with 64% of them are children, according to Ms. McCain.
Malnutrition must be viewed as a development challenge to be integrated across key programs, like food system initiatives, social protections, school feeding programs, and private sector partnerships, she added.
Steven Victor, Minister of Agriculture, Fisheries and Environment for Palau, emphasized the need to change behaviors on food, which should begin in schools.
Jo Swinnen, director general of International Food Policy Research Institute, said countries would need to adopt “sustainability criteria” to impact consumer spending and behavior.
“We need a system where the changed preferences, changed sustainability criteria, have to go through the value chain to reach the farmers to induce change in investments and behavior,” he said.
The ADB has committed $7.6 billion out of $14 billion to ease the food crisis in the Asia-Pacific region, “is on pace to deliver the rest by the end of 2025,” President Masatsugu Asakawa told the forum. — Beatriz Marie D. Cruz
By Kyle Aristophere T. Atienza, Reporter
PRESIDENT Ferdinand R. Marcos, Jr. on Tuesday condemned threats to Philippine sovereignty that he said were harming Filipinos, vowing to uphold a rule-based international order with the support of allies.
“Our nation remains confronted with novel challenges, in varying forms and degrees, but with the same existential impact,” he said in a speech as the country commemorated the sacrifices of Filipino soldiers during World War II, when Bataan province on the main island of Luzon fell to Japanese soldiers.
“Some portend clear and present threats to our sovereign rights, and in fact have already caused physical harm to our people,” he added.
Such present threats were “unacceptable, unjustifiable, and unjust,” he lamented, noting that nations should be having peaceful coexistence.
Mr. Marcos issued the remarks as the Philippines struggles to keep China at bay within its exclusive economic zone (EEZ) in the South China Sea.
China’s coast guard on March 23 fired water cannons at Philippine ships delivering food and other supplies to a Manila outpost at Second Thomas Shoal. A similar incident happened earlier in the same month.
Armed Forces of the Philippines Chief of Staff General Romeo Brawner, Jr. was on a similar resupply boat in December that a Chinese Coast Guard vessel fired water cannons at.
“On a much deeper level, the Fall of Bataan is not just a past event that we commemorate,” Mr. Marcos said. “It serves as a constant reminder of our singular purpose towards the future as one nation, supported by like-minded allies in this post-war, rules-based international order.”
The Philippine leader said his government has been “doubling efforts” to enhance the military’s operational capability, citing the need to procure the right equipment for them.
“I therefore task the Department of National Defense and the Armed Forces of the Philippines to assess and submit a report on the responsiveness of the current inventory of military supplies and equipment,” he added.
“These measures aim to show our unwavering support to our soldiers as they face new and growing challenges.”
Mr. Marcos, 66, has veered away from his predecessor’s pro-China policy, boosting the Philippines’ ties with the US and its allies in the region.
The Philippines held joint military drills with Japan and Australia within Manila’s exclusive economic zone in the South China Sea at the weekend.
Mr. Marcos has given the US access to four more military bases on top of the five existing sites under their 2014 Enhanced Defense Cooperation Agreement.
The two countries held their first Maritime Cooperative Activity within Philippine waters in November, and the third one in February.
The treaty allies are set to hold their annual Balikatan (shoulder-to-shoulder) exercises on Apr. 22 to May 18 where 5,000 Filipino soldiers and 11,000 US military personnel are expected to participate.
For the first time, it will be held beyond the Philippines’ 12-nautical-mile territorial waters, according to the Philippine military.
‘PEACE ZONE’
Also on Tuesday, a group of Filipino scientists urged the Philippine government to push the designation of the entire South China Sea as a marine protection area dedicated to mutual cooperation in line with international law.
The Philippines should lead efforts for a “regional agreement” that would make the entire waterway, including Manila’s exclusive economic zone, “a marine protected peace and biodiversity zone” that is free from any form of militarization, AGHAM said in a statement.
“It should be dedicated for research, fishing and mutual cooperation without undermining sovereignty,” it said.
It said studies conducted by Filipino scientists within the Philippines’ EEZ are “crucial in understanding biodiversity in the area, and assessing their conditions, which are essential for ensuring food security not only in the Philippines but in the whole region.”
AGHAM also opposed boosting military ties with the US, Japan and Australia, saying they “only heighten tensions and raise the risk of a potential military conflict.”
But the group said China has been “persistently bolstering” its military presence in the waterway “by occupying atolls and small islands, converting them into military bases.”
In March, China warned Manila to “be prepared to bear all potential consequences” if it “insists on going its own way,” adding it would not hesitate to pursue “more resolute actions.”
Filipino scientists have raised alarm over declining fish output within the Philippine EEZ in the waterway amid reports of man-made destruction of coral reefs and other marine features. They warned that fishes that depend on coral reefs could become extinct.
The Center for Strategic and International Studies earlier reported that China had destroyed at least 21,000 acres of coral reefs within the Philippine EEZ.
Another think tank, the Asia Maritime Transparency Initiative, has also attributed coral reef destruction in the waterway to Chinese activities such as dredging to build artificial islands, as well as clam harvesting.
In late March, AMTI said Second Thomas Shoal, Luconia Shoals, Scarborough Shoal, Vanguard Bank and Thitu Island were the five features most frequented by patrols of the Chinese Coast Guard last year.
“While China callously turns itself into an imperialist country who bullies and dominates its Asian neighbors by its military might, the Philippines should strongly counter by steadfastly asserting our sovereignty through diplomacy and using international solidarity,” AGHAM said.
SEVEN of 10 Filipinos support a proposal to revive mandatory military training for college students, according to a Pulse Asia Research, Inc. poll.
Based on the poll commissioned by Senate President Juan Miguel F. Zubiri in December, 69% of Filipinos said young Filipinos should undergo the Reserve Officers’ Training Corps (ROTC).
It added that 17% of Filipinos opposed the proposal to make military training mandatory, while 14% were unsure.
Across socioeconomic classes, the support for mandatory ROTC was at 65% among classes ABC, 71% for D, and 63% for E.
A similar Pulse Asia poll commissioned by Senator Sherwin T. Gatchalian in March 2023 showed a 78% approval rate. In July 2022, 69% of Filipinos said ROTC should be revived.
Mr. Zubiri earlier said the Senate would prioritize Senate Bill No. 2034, or the proposed Reserve Officers’ Training Corps (ROTC) Act, as soon as sessions resume by the end of the month. It is a priority bill of the Marcos government.
He issued the remark after being given the rank of lieutenant colonel of the Philippine Army Reserve Force at Camp Aguinaldo in Quezon City.
He said senators would discuss the bill in May.
Senator Ronald M. de la Rosa, the bill’s sponsor, told reporters most senators favor the ROTC bill.
“I’m sure the bill will get passed if there was a vote now,” he said in Filipino. “But the support won’t be overwhelming.”
Opposition Senator Ana Theresia N. Hontiveros-Baraquel earlier said the government should boost funding for military modernization especially of the Philippine Navy instead of reviving the ROTC program.
She said tensions with China should not be used as an excuse to force students to undergo training.
Congress passed a bill in 2001 making ROTC optional after the death of Mark Welson Chua, a sophomore college student from the University of Santo Tomas (UST) who died in the hands of his senior officers.
He had exposed corruption in the ROTC program to the UST college newspaper. His body wrapped in a carpet was found decomposing in the Pasig River.
Human Rights groups have opposed the proposal, saying it could risk students getting abused and that it would promote violence and militarism in schools.
The College Editors Guild of The Philippines has said the ROTC had promoted killing, hazing, harassment, red-tagging and all other violence on young Filipinos in the past, calling mandatory student military training “fake nationalism.”
Senator Sherwin T. Gatchalian in December 2022 filed a bill that seeks to revive a compulsory two-year military training program that will cover students in both public and private universities, colleges and vocational schools.
Under the version approved by several Senate committees, students with disabilities, those whose religion bars the use of firearms in serving the country and convicts are exempted from military training.
The bill will set up ROTC grievance boards in schools that will probe complaints of abuse, corruption and violence committed during military training. — John Victor D. Ordoñez
