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Back to Investment: Is the World Bank running out of ideas?

TAWATCHAI07-FREEPIK

(Part 2)

WE ARGUED in the first part of this article (https://tinyurl.com/292e53k3) that the evidence indicates that investment is not the magic elixir that the World Bank study on investment accelerations (World Bank’s Global Economic Prospects publication of January 2024, entitled The Magic of Investment Accelerations (https://tinyurl.com/yxmeg4ve) claims, despite the many correlations that the authors documented.

We believe the analysis would have made more sense with manufacturing, on the grounds that aggregate growth is ultimately related to the rate of expansion of the sector with the most favorable growth characteristics. There is a lot of historical work and empirical evidence to suggest there is something special about industry, particularly manufacturing. Indeed, there appears to be a close empirical relationship between the level of per capita income today and the share of manufacturing in GDP in the past, as well as between industrial growth and the growth of overall GDP. It is through the growth of manufacturing that investment matters: a new plant is an investment.

Given the discussion in recent years about the importance of services, this could have been the other variable to analyze. Recent research seems to indicate that some modern services have the production characteristics, i.e., static and dynamic scale economies, to induce fast growth. The relationship between the growth of GDP and the growth of services is strong but there is reason to believe that the direction of causation may be the other way around, from the growth of GDP to service growth since the demand for many services is derived from the demand for manufacturing output itself.

We also believe there are good reasons to think that the magic variable could be exports, the only true component of autonomous demand in an economy, in the sense that their demand emanates outside the economy. On the other hand, the major part of consumption and investment demand depends on the growth of income itself. Exports are the only component of demand that can pay for the import requirements of growth. Surely an economy can experience consumption-led, investment-led, or government expenditure-led growth; but each of these components of demand has an import content. If an economy does not obtain sufficient export earnings to pay for its imports (more precisely, the import content of other components of expenditure), then demand will have to be constrained. For this reason, exports play a very significant role because experience shows that countries, especially developing countries, need to maintain balance-of-payments equilibrium in the long run. Otherwise, they run into a crisis. This implies that exports not only have a direct effect on demand, but also an indirect effect by allowing all other components of demand to rise faster than otherwise would be the case.

Finally, exports matter because recent work shows that the sophistication of a country’s export basket is a good predictor of its future growth. Asian firms moved up in the development ladder, and consequently produced more sophisticated products, by slowly accumulating productive capabilities. Exporting was a means of “testing” whether firms and sectors could compete in the global marketplace by subjecting them to global competition.

Once it has been established that the key drivers of growth are manufacturing and exports, one can then argue that investment matters, both at the firm (machinery and equipment) and at the aggregate (exports require infrastructure in the form of roads and ports) levels. Surely investment has to be part of the equation, but it is not the true underlying cause of growth.

Manufacturing and exports are what the Philippines desperately needs. The country never industrialized (hence its manufacturing employment share is very low) and it is not a powerhouse exporter. These two are the two magic variables that will trigger the investment that the country needs, be it specific equipment or large-scale infrastructure.

Is the Philippines on the right track on both manufacturing and exports? If we look at exports, definitely it is not. Exports of goods and services represented just 27% of GDP in 2023, whereas in the ASEAN peers this share is well above 50%: in Thailand 65%, and 94% in Vietnam. The level of sophistication of these exports is even more important, as this is what will ultimately play a critical role in securing higher returns — higher real wages — due to the high in-come-elasticity of demand of many manufactures. Although the Philippine export basket contains some relatively sophisticated products, it also contains many simple agricultural products and manufactures. Sure, it exports electronic components, but we know that it is just assembly, part of a value chain.

Let us do not forget that exports of goods are an indicator of what is happening in the manufacturing sector. In the Philippines, manufacturing gross value-added growth had been decelerating even prior to the pandemic (removing the statistical over-shooting effect caused by the year 2020). Whereas during 2010-2018 the sector enjoyed robust and sustained growth of 6% (year-on-year average), the growth rate during 2019-2023 was only 1.8% (year-on-year average).

Is the Philippine Government — the current and the previous administrations — aware of the importance of manufacturing and exports for the country’s short- and long-term growth? No doubt it is, but it falls into the mistake of thinking that other issues or sectors are equally important, and that these may produce similar gains in terms of development. Just read the Philippine Development Plan 2023-2028.

A major mistake — in our opinion — is the chosen set of actions/indicators to foster manufacturing and exports. As an example, the Philippine Development Plan 2023-2028 does recognize the need to revitalize industry (Chapter 3) and sets a wide number of “very ambitious” — rather aspirational — targets. In the case of manufacturing, the ambition is to sustain a yearly gross value-added growth rate of 8-9.5% until 2028. Just for reference, the figure for 2023 was 1.3%. There is definitely a lot to do until 2028.

In addition, the “obsession” with the country’s ranking in international qualitative indexes of Doing Business completely misses the focus on serious and effective industrial policy. Cutting red tape and accelerating companies’ registration process is definitely a relief, but no company decides to start manufacturing because the number of days to register has dropped.

A recent significant industrial policy milestone is the passing of the Tatak Pinoy Act. This law, proposed by Senator Sonny Angara and signed into law by President Ferdinand Marcos, Jr. on Feb. 26, aims to increase the diversity, sophistication, and quality of Filipino products leading ultimately to more and better exports. We cannot be more aligned with this leading policy. Now come the big challenges of implementing it and making this ambition a reality. We welcome the inclusion of four private sector representatives in the Tatak Pinoy Council, the body that shall draft and monitor the multi-year Tatak Pinoy Strategy. One of the characteristics of this Government is the belief in establishing partnerships with the private sector as a leverage for development. Whereas we may not be so thrilled with this overarching policy for the provision of certain public services, we firmly believe that this is the only way forward in the case of industrialization.

Without strong collaboration between the private and the public sectors, the Philippines will never truly industrialize. However, it is also important to define what kind of collaboration is established. Whereas private compa-nies are absolutely free and independent to invest in the businesses or sectors that they may find more financially interesting — they are in the good economic sense “profit maximizers” —, it is the Government that has to have a clear economic long-term vision about the sectors it wants private companies — domestic or foreign — to invest in. Leaving industrialization to “market dynamics” will not work, as development is a collective effort — among competitors — that needs public coordination and support.

Finally, another industrial policy misunderstanding is the “obsession” with Foreign Direct Investment (FDI) as the “magic wand” to spur exports. Being in favor of easing foreign investment in all sectors for private companies

(state-owned companies are a different story) for the benefits it entails through increased competition, industrialization will mostly be driven by domestic corporations. No country (with exceptions like Singapore due to size) has industrialized without developing a wide base of domestic industrial companies. Surely at the micro level, we will find certain foreign companies that have specific products or technologies that are critical for a certain sector to develop, at least in the short- to medium-term. We believe in the benefits of this company-targeted approach for FDI.

Summing up: We have argued that the magic recipe for the Philippines lies in developing a manufacturing sector and in exporting. Investment is an intermediate variable, and it is investment in these two areas that matters. The six-million-dollar question is: do we have the firms to do this?

 

Jesus Felipe is distinguished professor of Economics, De La Salle University while Pedro Pascual is a board-certified economist with Spain’s Ministry of Economy and a partner at MC Spencer (Philippines).

Philippines’ gross dollar reserves dip at end-April

UNSPLASH

By Luisa Maria Jacinta C. Jocson, Reporter

THE PHILIPPINES’ gross international reserves (GIR) slipped at end-April as the National Government (NG) paid back some of its debt, the central bank said.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed reserves inched down by 0.6% to $103.44 billion as of end-April from $104.07 billion at end-March.

“The month-on-month decrease in the GIR level reflected mainly the NG’s net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the BSP said in a statement late on Tuesday.

Meanwhile, year on year, dollar reserves rose by 1.6% from $101.76 billion.

As of end-April, the level of dollar reserves was enough to cover about 5.9 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.

It was also equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.

The central bank expects the GIR level to settle at $103 billion by yearend.

Ample foreign exchange buffers protect an economy from market volatility and ensure the country can pay its debts in the event of an economic downturn.

Broken down, the central bank’s foreign investments slipped by 0.06% to $87.89 billion at end-April from $87.94 billion the previous month. Year on year, foreign investments went up by 2.5% from $85.77 billion.

Reserves in the form of gold were valued at $10.26 billion, down by 2.6% from $10.53 billion a month prior, but edging higher by 0.2% from $10.24 billion a year ago.

Meanwhile, foreign currency deposits fell by 26.9% to $791.7 million as of April from $1.08 billion in the previous month. The total was also 30.6% lower than $1.14 billion a year ago.

Net international reserves dipped by 0.6% to $103.4 billion from $104 billion a month earlier. Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

The country’s reserve position in the IMF inched down by 0.7% to $736.1 million at end-April from $741.3 million a month prior. It also dropped by 9% from $809.3 million year on year.

Special drawing rights, or the amount the country can tap from the IMF, was unchanged at $3.77 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the drop in dollar reserves as of end-April was due to “lower foreign exchange holdings amid some foreign debt payments and other expenses by the National Government.”

There was a decrease in the value of gold holdings after world gold prices corrected lower during the month, Mr. Ricafort added.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the country’s reserves declined as they were likely used to support the peso, which recently hit 17-month lows against the dollar.

“I would like to think that the reserves were used to defend the peso in April. We know that there has been a lot of pressure on emerging markets currencies since last month,” Mr. Asuncion said in a Viber message.

BSP Governor Eli M. Remolona, Jr. this week said the central bank has only had to intervene in the foreign exchange market in “small amounts” despite the peso’s recent depreciation versus the greenback.

Can’t book a table in New York? It could be worse

WYRON A-UNSPLASH

IF YOU could hear handwringing, that was the noise that sounded around the world as people scrolled through The New Yorker’s piece on the cutthroat secondary market for bookings in Manhattan’s hottest restaurants. Adam Iscoe went through the many ways diners can get to eat at some of the toughest tables in town — almost all involved spending large amounts of money, sometimes just for the right to get in the front door. Think Ray Liotta at the Copacabana in Goodfellas, but handing off a lot more cash.

Still, it could be worse. I’m reminded of a cartoon caption — most likely from the same magazine — that portrayed someone on the phone negotiating a reservation with a would-be customer, saying, “Never. How about never?”

I’m thinking of the reservation system followed by some high-end establishments in Japan: ichigensan okotowari or, no first-time customers. These are probably the best restaurants you’ve never (or will never) hear of because they only let in regulars and their guests. These guests can become regulars if they pass muster. They are then allowed to book seats under their own names. If you want to go but don’t have a member of the restaurant’s faithful to vouch for or accompany you, you’re out of luck. It’s the kind of exclusivity that’s truly meant to exclude. And while it may not be the most democratic of business models, it may be a beneficial one in terms of sustainability and culinary integrity.

For chefs and restaurateurs, getting customers into the seats is one thing; attracting people who actually appreciate what you do is another. That point was made by a story about the great New York chef David Bouley that circulated after he died in February. As the tale went, Bouley — whose eponymous restaurants were central to Manhattan’s epicurean renaissance in the 1980s and 1990s — had just received a fresh supply of Copper River salmon of exquisite quality. He put it on the menu that evening and sent it out as a first course — tenderly baked and accompanied by creamy watercress rice and a puree of peas. But to his surprise (and his staff, as well, who had been oohing and aahing over the fish), the couple they served with the dish sent it back, complaining it was fishy and could they have the shrimp instead. The chef was furious. He tore up the order ticket for the couple’s table and commanded the flustered maitre d’ to tell them “their meal is over.” The kitchen erupted in applause. And the mystified (though apparently “surly”) couple scampered out, never to darken the portals of a Bouley restaurant ever again. Or so I assume.

I remember arriving at a favorite restaurant of mine too late to get the last order of a terrific pork chop. It went to the customer seated next to me at the bar. He was very carefully cutting away all the fat and only ate the lean meat. I was exasperated: The whole point of the dish was its unctuousness; the pig was raised for its fat. I wasn’t the only person outraged. The server who took away the not-quite-empty plate came back with a message from the kitchen: “Sir, the chef noticed that you didn’t finish your food. Was everything ok?” The diner was nonplussed and mumbled something. It was the restaurant’s polite way of putting him on notice: Never do that again.

A restaurant owner I know in Copenhagen says that he’d like nothing better than to have tried-and-true regulars as their customer base. That’s not really acceptable for restaurants indoctrinated in the Western ideal of perpetual growth and the magic escalator of scalability. But it may just work for cooks and purveyors of hospitality who want to retain the quality of their craft by remaining small and off-the-radar. In Japan, some of the restaurants that practice ichigensan okotowari have been handed down through generations of chefs. But then they very rarely have to jump through the hoops that almost all Western-style restaurants do: worrying about the latest food trends; or preparing substitutes for their non-vegan or non-vegetarian specialties. If you don’t like what the restaurant is good at, the cognoscenti won’t take you there.

The practice is certainly not universal even in Japan — and there are more popular and accessible spots that will give you alternatives to shellfish and skewered poultry. But in high-end restaurants that do take call-in or online reservations, first dibs still often go to the regulars — and their friends (and would-be future regulars). At the end of a meal, most of the customers book their next. I had the great good fortune to get into Sugita, one of the best sushi-yas in Tokyo today, through a friend who is a regular there. It wasn’t an inexpensive meal but I paid much less than the amounts that diners in New York are willing to throw at the apps and sites that offer entry to the trendiest dining rooms in town. I had one of the most memorable meals of my life at Sugita. My only regret: I wasn’t asked about a reservation for my next visit.

BLOOMBERG OPINION

MacBook Air M3 now available at Power Mac Center stores

POWER MAC Center (PMC) on Friday announced the availability of the MacBook Air equipped with the latest M3 chip at its stores.

“It’s 1.4 times faster than M2, it’s super fast. It could handle if my Final Cut Pro was open, Google Docs, my PDFs for all of my readings were open — the MacBook Air M3 can handle it,” content creator Janina Vela during a launch event on May 3 at PMC Greenbelt 3.

PMC Partner Trainer Eiron Valdez said among the new MacBook Air’s notable specifications are “all-day battery life, which lasts up to 18 hours, its 13 times faster performance compared to an Intel-based model, seamless files migration even from a Windows computer, and portability.”

The new laptop has 13-inch and 15-inch models. Available colorways are space gray, silver, starlight, and midnight.

The prices of the 13-inch MacBook Air M3 range from P79,990 to P102,990, depending on memory and storage options, while the 15-inch model will cost from P89,990 to P115,990.

The new laptop has a 13.6 Liquid Retina display with 500 nits brightness. The device also has one MagSafe 3 and two Thunderbolt ports and is fanless.

Power Mac Center rolled out promos for the launch of the new MacBook Air, with details available on its social media platforms. Customers can purchase the new laptop in PMC stores or online via The Loop.

“PMC always tries to come up with offers that would make it a little easier for average Filipinos to own one because that is what the Mac&Me campaign stands for, whether you’re a student, entrepreneur, technical, creative, or professional,” PMC Brand Manager Gio Ignacio said.

Power Mac Center has 100 locations nationwide. It is an Apple Premium Reseller, Apple Authorized Education Reseller, Apple Authorized Training Provider, and Apple Authorized Service Provider in the Philippines. — A.R.A. Inosante

ERC asks SC to void CA decision favoring San Miguel units in rate hike plea

THE ENERGY Regulatory Commission (ERC) has asked the Supreme Court (SC) to reverse the decision of the Court of Appeals (CA) favoring the power units of San Miguel Corp. (SMC), allowing it to suspend its power supply deal with Manila Electric Co (Meralco).

“Yes, the Office of the Solicitor General (OSG) filed the petition with the Supreme Court,” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said in a Viber message on Wednesday.

Ms. Dimalanta said the OSG, which serves as the ERC’s legal counsel, filed the petition on Feb. 29.

This comes after the decision of the appellate court ruling in favor of SMC and Meralco’s rate hike plea.

“We welcome the move of the ERC to uphold its duty of protecting consumers from the attempt by SMC to profit off the rising price of coal and gas by passing them on to consumers. We hope the Supreme Court will see reason and rule that SMC must abide by its contract and cannot raise prices on electricity,” P4P convenor Gerry C. Arances said in a statement.

In 2022, San Miguel Global Power Holdings Corp., the power arm of San Miguel Corp. (SMC), filed a rate increase to recover P5 billion of its P15 billion in losses incurred due to a change in circumstances.

The ERC denied SMC’s petition, saying its power supply agreement with Meralco had no basis because the contract is a fixed-rate deal. SMC filed an appeal with the CA, where the appellate court reversed the ruling of the ERC.

“Those PSAs protected consumers in the Meralco franchise area from the ludicrous spike in electricity prices which plagued customers of other distribution utilities in the country during that time. In siding with SMC, the CA committed a grave disservice to consumers, exposing them to higher electricity prices even when protected by a contract,” Mr. Arances said.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

Something brewing

VECSTOCK-FREEPIK

In a recent blog, Coffee Affection’s Kate MacDonnell detailed what she perceived to be the emerging trends for the coffee industry, particularly in the US. What makes her commentary interesting, at least to me, is how she forecasts — using third-party statistics — that the consumption of coffee would increase by one-third by the year 2030.

Simply put, the coffee business will continue to flourish into the next decade even as Starbucks reports a drop in sales for the second quarter — the first time in three years — on the back of weaker demand in the US and China. The coffee store chain is also said to be affected by a boycott campaign in the Middle East and other countries over Israel’s offensive in the Gaza strip.

Coffee shop chains will continue to thrive, although additional niche markets are expected to help sustain the growth momentum of commercial coffee sales. But what I find more interesting is the growth of the home market. “Home” brewing is on the rise and we now see the emergence of at-home baristas, thanks to the broadening availability of tools that allow this to happen.

Whereas coffee consumption used to be mainly the domain of the working man, today even teens and children consume coffee in one form or the other after the iced version of the beverage was popularized by chains like Starbucks, Dunkin Donuts, and Tim Horton’s, among others. Even McDonald’s sells specialty coffee through its McCafe chain.

Moreover, espresso machines are now common household appliances, unlike in the decade before. Gone are the days when the Italians practically had a monopoly on big, expensive espresso makers. Good coffee can now be made by practically anyone at home, including teens, if they are willing to spend on “gourmet” or specialty coffee pods or expensive beans, and coffee “tools.”

MacDonnell took note of how, as of 2024, American coffee drinkers now average two to three cups daily. And while two-thirds of drinkers prefer regular coffee over espresso-based drinks, millennials prefer espresso-based drinks and gourmet coffee 70% of the time. Iced coffee is consumed by 20% of coffee drinkers at least once per week; and 59% of coffee drunk daily is “gourmet” coffee.

Another interesting point is that in the US, says MacDonnell, 70% of coffee drinkers prefer to make and drink coffee at home, and that single-cup coffee brewers — as opposed to 8-10 cup coffee makers — are now found in 41% of homes and 28% of offices. At the same time, in 2022, roasted coffee purchases hit $73.9 billion while instant coffee sold a lower $16.3 billion.

This is not to say that “instant” soluble coffee is on the way out. In fact, in Southeast Asia, 3-in-1 instant coffee is still very popular. However, gourmet coffee generates more revenue given the significant premium consumers willingly pay for every cup. Flavored coffee is in its heydays, it seems. And the fact that coffee shops continue to enjoy good business simply tells me that a lot of people still “spend” on coffee.

Increased consumption at home is one factor that will continue to sustain coffee industry growth into the next decade. And then there is the youth’s preference for cold or iced brew and coffee-based specialty drinks that di-rectly compete with soft drinks, iced tea, and other sweetened beverages. Coffee is also now readily available at drive-throughs, pick-up stations, or even via delivery.

I did not drink coffee until I started working as a journalist over 30 years ago. Back then, instant was the norm and brewed was a luxury. But when Starbucks opened here in the late 1990s, there was a shift in consumption patterns. Starbucks made it fun to enjoy a cup at a slower, more relaxed pace, in a venue that is comfortable and cool. Since then, a new coffee culture emerged.

From being mainly a breakfast brew, coffee — including iced coffee — instead became an all–day beverage. One could order a cup and sit in a shop the whole day, working on a laptop, or talking shop, or chatting with friends. Food is also available, but the atmosphere is very different from a fast food or a regular restaurant.

Up until 2019, I had a coffee maker at home, a Bodum French Press, a Bialetti Moka espresso maker, a Muji drip coffee cup, an aluminum Vietnamese coffee drip, and a Keurig K-Cup machine that was a gift from a friend. Then the COVID-19 pandemic hit in 2020, and that got my household started on a Delonghi espresso maker, then a Nespresso machine, and of late, a machine that could take ground and three types of pods.

Many people I know have now chucked the 8-10 cup, paper-filtered, drip coffee maker in favor of single-cup coffee brewers that take either beans, ground coffee, or pods. And this, to me, is one of the reasons why coffee in-dustry growth will also come from homes and businesses that self-brew, and not just coffee shop chains, and from consumers looking for convenience.

And given that more people now consume “gourmet” or flavored or specialty coffee, coffee machine capsules are very likely to continue selling briskly. Good coffee can be had at the press of a button at home or at work. Machines also allow young people to make their own specialty brews, and not just regular breakfast coffee. They go for “better” brews.

Coffee shops will continue to thrive, I am sure. And they will still attract people who drink coffee for work or enjoy coffee with company. But modern coffee machines and coffee pods will be a mainstay for those who want quality coffee at home or at work. Cold brew, popular among the young, particularly flavored ones, can be easily made anywhere with the right “tools.”

It is unsurprising that the global coffee market overview remains positive. For 2024, some available statistics point to revenues of around $94.7 billion from at-home purchases and $373.5 billion from out-of-home consump-tion in 2024. Market volume is anticipated to reach 7.7 billion kilograms, with at-home consumption accounting for 6.3 billion kilograms.

MacDonnell has a simple explanation for the coffee phenomenon: “Again, this comes back to quality. The more coffee is consumed, the more people expect it to be above par. This has created a rise in espresso-based bever-ages, specialty drinks, and innovative new coffee that is a break from the centuries-old brew coffee lovers are used to drinking.”

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council.

matort@yahoo.com

TDF yields mixed after inflation data

BW FILE PHOTO

YIELDS on the central bank’s term deposit facility (TDF) ended mixed on Wednesday as inflation accelerated in April but remained within target.

The term deposits of the Bangko Sentral ng Pilipinas (BSP) fetched bids amounting to P228.414 billion on Wednesday, below the P260 billion on the auction block and the P250.729 billion in tenders for a P320-billion offer seen a week ago.

Broken down, tenders for the seven-day papers reached P103.078 billion, below the P120 billion auctioned off by the central bank and the P110.571 billion in bids for a P160-billion offering of six-day deposits seen the previous week.

Banks asked for yields ranging from 6.51% to 6.5%, slightly narrower than the 6.5% to 6.55% band seen a week ago. This caused the average rate of the one-week deposits to inch down by 0.03 basis point (bp) to 6.5306% from 6.5309% a week earlier.

Meanwhile, bids for the 14-day term deposits amounted to P125.336 billion, lower than the P140-billion offering and the P140.158 billion in tenders for the P160 billion worth of 13-day papers placed on the auction block on May 2.

Accepted rates for the tenor were from 6.54% to 6.6%, a tad wider than the 6.5495% to 6.6% margin seen a week ago. With this, the average rate for the two-week deposits rose by 0.29 bp to 6.5736% from 6.5707% logged in the prior auction.

The BSP has not auctioned off 28-day term deposits for more than three years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the 28-day bills are used by the BSP to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields were mixed following the release of April inflation data on Tuesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Headline inflation accelerated for a third straight month to 3.8% in April from 3.7% in March, the Philippine Statistics Authority reported on Tuesday.

The April print was slower than the 6.6% print in the same month a year ago and was within the BSP’s 3.5-4.3% forecast.

It also marked the fifth straight month that inflation settled within the central bank’s 2-4% target band.

Still, the latest inflation print was below the 4.1% median estimate in a BusinessWorld poll of 16 analysts conducted last week.

For the first four months, headline inflation averaged 3.4%. The BSP expects full-year inflation to settle at 3.8%.

Mr. Ricafort said recent signals of policy easing from US Federal Reserve policy makers also affected term deposit yields this week.

On Tuesday, Minneapolis Fed President Neel Kashkari suggested the US central bank may need to forgo interest rate cuts this year due to stubborn inflation, Reuters reported.

Mr. Kashkari said at a Milken Institute conference that stalled inflation, kept higher in part by housing market strength means the central bank will need to hold borrowing costs steady for an “extended period,” and possibly all year.

Mr. Kashkari did, however, also say it is still possible the Fed could cut if inflation begins to cool again.

The comments came on the heels of remarks from Fed officials on Monday that seemed to lean toward indicating the central bank’s next move would be to lower interest rates.

Last week, Fed Chair Jerome H. Powell said the wait to loosen policy is taking longer than anticipated, but signaled his inclination is still to cut.

And while prices have been sticky, the labor market showed some signs of weakening in the monthly payrolls data from Friday. Consumer price data in a week from now will be closely watched.

The US central bank kept its Fed funds rate steady at 5.25%-5.5% at its April 30-May 1 meeting.

Following last week’s Fed policy meeting and softer-than-expected US jobs report, market expectations for two rate cuts this year have increased, with expectations for a cut of at least 25 bps in September currently at 64.5%, according to CME’s FedWatch Tool.

With a light economic calendar this week, highlighted by the consumer sentiment reading from the University of Michigan on Friday, a host of Fed officials are due to speak, including Fed Governors Lisa Cook and Michelle Bowman later in the week. — Luisa Maria Jacinta C. Jocson with Reuters

Just good breeding

PEPPER CRUSTED Corned Beef Braveheart Black Angus Choice Beef Brisket, grilled cabbage, crispy potatoes.

ANGUS beef, derived from the Aberdeen Angus breed of cattle, is one of the culinary world’s prized products. However, according to Steven Sands, creator of the Braveheart brand under the Performance Food Group, says that not everything labeled “Angus” is actually Angus. According to him, in the US, Angus is used as a brand, not a breed.

At dinner at the One World Deli branch in San Juan on April 23, Mr. Sands talked to us about good-quality beef.

He said that Angus beef would have better fat marbling and shorter meat fibers; both contributing to tenderness. To prove that their beef is indeed Angus and would display those qualities, Braveheart came up with a plan to use cow DNA for better traceability.

“If you have a tough steak four months from now, you can cut off a little piece, send it to the lab, (and) marry it up to a sample.” That sample is a bit of flesh from the original cow which is DNA-linked to its ear tag and recorded. The beef on your plate, if it is ever sampled, would show the cow’s food and health records. “We can prove it; we’ve got the DNA records,” said Mr. Sands.

We sampled their beef through a five-course dinner prepared by One World Deli’s chef Miguel Gianan. Braveheart Black Angus beef was present in Carne Asada Tacos and sliders, followed up by a Green Goddess salad. The Pepper Crusted Corned Beef made with Braveheart’s Brisket, with an excellent peppery sauce, may just have been the star of the show, but the Bistecca alla Fiorentina was a close second. Dinner ended with Apple Crumble topped with Vanilla Bean Gelato.

We’d like to think we weren’t the only ones who had a good time: we hope the cow did too, with its slaughter being the one bad day in its life. Braveheart contracts family farms to raise its cows in more humane and sustainable conditions. The farmers are prohibited from using several drugs (usually used in the industry to plump up beef), and Braveheart physically audits their partner-farms, and regularly tests the soil and water for the presence of these drugs. The cows are also slaughtered at a lower weight (around 850 lbs.) as opposed to the industry standard of 1,150 lbs.

“All the little things add up to a product that’s much, much different when you put it on a plate,” said Mr. Sands.

“We do share our knowledge. Ultimately, we’re hoping to elevate all of agriculture, not just our company. We’re trying to show that you can make money and do things in a better way.”

Braveheart beef is exclusively distributed by One World Deli in the Philippines. — Joseph L. Garcia

Mother’s Day treats

MOTHER’S DAY is on Sunday (May 12) and we made a list of things you can do together at some of the country’s best properties. We also included a couple of sweet treats you can buy for celebrations at home.

City of Dreams Manila spoils moms

City of Dreams Manila unwraps thoughtful offerings in appreciation of moms on their special day. Crystal Dragon offers Mother’s Day exclusive ala carte dishes available until May 12 for lunch and dinner. Meanwhile, moms who dine at Crystal Dragon on Mother’s Day will receive a complimentary sweet surprise. Over at Nobu Manila, moms will be treated to a celebrity-inspired Saturday and Sunday brunch experience which highlights the new-style Japanese cuisine of world-renowned Chef Nobu Matsuhisa. Not to be missed on Sunday is a lavish spread that includes a carving station consisting of roasted whole US Prime Ribeye, Smoked Beef Brisket, and Grilled Tuna Collar; and at the sushi station, fresh slices from a whole salmon. The a la carte selection will also feature new Nobu-style dishes on Mother’s Day, to complement the staple brunch offers and confections. Nobu Manila’s Mother’s Day brunch is priced at P4,388 net per person and Nobu Saturday brunch is at P3,499 net per person. Brunch service is from 11:30 a.m. to 3 p.m. Nobu’s seven-course dinner tasting menu (P8,871.43 net per person) is a perfect choice for a dinner date with mom. The seasonal tasting menu is offered until end of June. Nobu’s dinner service is from 5 to 10 p.m. from Sunday to Thursday and until 11 p.m. on Fridays and Saturdays. At Haliya, City of Dreams Manila’s restaurant specializing on reimagined Filipino cuisine, a colorful celebration of Mother’s Day awaits mom and the family with the Pahiyas Festival special menu. Inspired by the fiesta in Lucban, Quezon, the menu is available for the whole month of May. Haliya is open for dinner from 5 to 11 p.m from Mondays to Fridays, also at lunch on Saturdays and Sundays from 11 a.m onwards. Café Society sweetens the occasion with pastries and confections offered from May 9 to 12. As a special gift to moms, the options include a white chocolate tulip cake, a red box full of colorful handcrafted chocolates, granola-filled chocolate dome, and other Mother’s Day-themed confections. For inquiries, call 8800-8080 or e-mail guestservices@cod-manila.com or visit www.cityofdreamsmanila.com.

Discovery Primea pampers moms

The highlight of Discovery Primea’s Mother’s Day celebration is the Stay In The City Room Package, offering a staycation experience in the heart of Makati. Rates start at P8,500++ per night in a Business Flat. For this special occasion, Flame’s chefs present the Mother’s Day Feast, a set menu  highlighted by Roasted US Beef Tenderloin Wellington and a decadent Gianduja Chocolate dessert. The set menu is offered for lunch and dinner on May 12 at P9,500++ for a party of four, with a complimentary glass of sparkling wine for all dining moms. Terazi Spa offers the Holistic Holiday Package, designed to rejuvenate Mom’s body, mind, and spirit, with a choice of a 45-minute Body Scrub, a 45-minute Terazi Signature Massage, and a 45-minute Natural & Organic Facial. This special treatment is available for P6,500 net throughout May. For more information, visit https://bit.ly/PrimeaMothersDay. For inquiries and reservations, call 7955-8888 or e-mail dp.rsvn@discovery.com.ph.

Conrad Manila has gifts, dinners for moms

Every day until May 12, Conrad Manila’s pastry chefs prepare All About Mom Mother’s Day-themed cakes, pastries, and special hampers from Bru Coffee Bar. Cakes start at P1,500 net, while pastries are available from P200 net. The hamper box is priced at P5,000 net, and includes flaky sea salt, assorted dry nuts, red velvet crinkles, chocolate lipsticks, vanilla ganache moisturizer, and raspberry creamer, among others. Spend the weekend of May 11 to 12 for the lunch or dinner buffet at Brasserie on 3 which will feature colorful photo booths and live performances. For every four full-paying guests, mom gets lunch or dinner for free, with a “Love you, Mom” message. Diners can enjoy special meals featuring a themed cake and champagne, at P2,750 net per person for lunch (11 a.m. to 2:30 p.m.) and P3,888 net per person for dinner (6 to 10 p.m.). “Tribute to Mom” is China Blue by Jereme Leung’s specially curated lauriat menu for lunch and dinner on May 11 to 12, celebrated with the whole family. Priced at P49,888 net, this set menu good for 10 persons. Special mocktail drinks may be shared among four dining family members. Party packages set menu are also available for takeaways at lunch or dinner. At C Lounge, from May 6 to 12, spoil mom with a Mother’s Day-themed afternoon tea for P3,606 net. There are also Mother’s Day spa experiences, offering 90 minutes and 120 minutes of pure relaxation using ESPA product. Rates start at P7,500 nett. A weekend or overnight get-away at one of Conrad Manila’s rooms overlooking Manila Bay or the city view comes with a breakfast buffet for two at Brasserie on 3. For inquiries, call 8833-9999, e-mail conradmanila@conradhotels.com or visit https://eatdrinkhilton.com/brasserie-on-3-conrad-manila/.

Mother’s Day treats at Newport World Resorts

Casa Buenas at the Newport Grand Wing offers the Dulce Reina Mother’s Day menu, available throughout the month of May for P5,500 net. Highlights are Grilled Wrapped Barramundi, Roasted Herb Pork Loin with Chorizo Stuffing, and Roasted Pulpo and Tomato Salad among other savory dishes, with Strawberry Shortcake for dessert. Over at the Garden Wing Cafe at the Newport Garden Wing, a Mother’s Day special Afternoon Tea is served for P1,500 net for two persons. At Hotel Okura Manila, for Mother’s Day on May 12, the buffet at Yawaragi (P3,950++ per person) comes with a complimentary glass of Shinomine Junmai Daiginjo Aiyama Sake for mom. Yamazato Japanese Fine Dining restaurant offers a Mother’s Day Obento Kaiseki exclusively available for lunch and dinner on May 11 and 12. For P3,500++ per person, the meal is highlighted by the sustainable Filipino Maya-Maya. Mothers receive an extra treat in the form of one flight of Yamazato’s Natsu Sake Selection. Hilton Manila is serving Mama’s Fine Feast for brunch at the Kusina Sea Kitchens (with free-flowing Barefoot Pink Moscato) on Mother’s Day for P2,800++ per person. At the Madison Lounge and Bar, grab a few sweet treats like the Duo Chocolate Brownie Fudge Whole Cake for P2,500++ and Flower Mango Cream Whole Cake for P2,900++ or a box of Chocolate Roses and Pralines for P888++.

Meanwhile, the Marriott Manila has a limited-edition “HERitage Gift” from the Marriott Cafe Bakery for every dining and retail purchase worth P2,000 to P4,000 throughout the month. The special offer is exclusive to members of Club Marriott, Marriott Bonvoy, and Newport World Resorts. Sheraton Manila’s S Kitchen has a Mother’s Day lunch for P3,880 net per person, which includes photo souvenirs for families. At the Holiday Inn Express Manila-Newport City, Mother’s Day is an overnight affair in a Standard Room with breakfast for two (kids below 12 years old stay and eat breakfast for free). For P4,900 net, the package includes welcome drinks for two, a P1,000 hotel F&B voucher, and a gift. At the Newport Mall, a French Quintet will be serenading families at The Plaza while sketch artists offer live portrait sketches amid flower store pop-ups on May 12. Swarovski, Furla, Pandora and other premium retail stores will offer special Mother’s Day specials. For more information on Mother’s Day offers from Newport World Resorts, visit www.newportworldresorts.com and follow @newportworldresorts on Facebook and Instagram, and @nwresorts on Twitter.

May is for Mothers at Marco Polo Ortigas Manila

Marco Polo Ortigas’ Lung Hin restaurant has created a 10-dish Lauriat feast to celebrate mothers. From May 1 to 12, groups of five and 10 will enjoy an authentic Cantonese banquet. On Sunday, May 12, the hotel’s all-day dining restaurant, Cucina showcases Asia’s best dishes. Children below seven years old dine free of charge. For reservations, call 7720-7777.

Richmonde Hotels’ adventure for moms

The Richmonde Hotels in Ortigas, Eastwood and Iloilo have prepared to welcome all mothers with a lineup of treats in celebration this May. At the Ortigas branch, let mom pick any day in May to have a staycation and she’ll get a petite Mother’s Day cake, a Richmonde neck pillow, Sampaguita smoothies good for two, and a 15% discount on in-room massage services, and along with regular amenities including the heated indoor pool. Rates start at P4,200 net (room only) and P5,200 net (with breakfast buffet for two) and are valid until May 31. Richmonde Ortigas’ Richmonde Café serves up a Feast for Mom at the Mother’s Day Lunch Buffet from 11:30 a.m. to 2:30 p.m. The buffet is priced at P1,785 net, inclusive of one round of mimosa, and coffee or tea, plus a token for mom. Children six to 12 years old get 50% discount and those five years and below eat for free. At Eastwood, check out the summer staycation package with breakfast buffet for two adults and two children five years old and below, welcome drinks for two at Eastwood Café+Bar (choice of coffee, tea, or iced tea), a 20% discount on food and beverage orders, use of the gym and swimming pool, and, just for mom, an in-room body massage, all for P5,800 net. This promotion is available for stays from May 10 to 13. Eastwood Café+Bar brings a Feast from the Sea for mom on its Mother’s Day Buffet, available for lunch from 11:30 a.m. to 2:30 p.m., and dinner from 6 to 10 p.m., for P1,799 net inclusive of bottomless iced tea and coffee or tea. Children six to 12 years old get 50% off while those five and below eat free. Mom also gets to dine for free with the 4+1 Deal where if four persons at the table pay the full price, mom’s buffet is on the house. At Iloilo, the Wonders of Wellness Room Package is available. That includes accommodations in a spacious room; a choice of a Moroccan full body massage, aromatherapy, Ventosa, head and back massage or head and foot massage for mom; a 10% discount on additional massage and wellness services; and use of the hotel’s gym and pool. A buffet breakfast for two at The Granary, and a serving good for two of the hotel’s signature All Day Treats are also part of the package. Rates start at P7,275 net. There are also the Waves of Wanderlust Room and Cruise Packages where mom and the family get to see a different side of Iloilo City via an exclusive boat tour and relish the comforts of Richmonde at the same time. Mom’s Sunset Cruise includes a view of the sunset along Guimaras Strait from 4 to 7 p.m. and is priced at P30,000 net. A nighttime city tour along Iloilo River from 7:30 to 10:30 p.m. is also available, priced at P27,400 net. Both packages include the following: overnight stay in two Deluxe rooms for a maximum of two adults and two children 12 years old and below per room, breakfast buffet for two adults and two children five years old and below, 50% discount on buffet breakfast for children six to 12 years of age, van transfers from the hotel to The Boat Club and vice versa, charter cruise good for a maximum of 10 persons with refreshments (non-alcoholic). For additional room bookings, the special rate of P5,300 for a Deluxe room with breakfast may be applied. On Sunday, May 12, at Richmonde Iloilo’s The Granary will serve a dinner buffet filled with global cuisine. To add to the fun, MOMosas (mimosas) and other refreshments will be served at the Mother’s Day Dinner Buffet, which is priced at P1,650 net. Children six to 12 years old get half off the buffet rate and toddlers five years and below eat for free. Contact Richmonde Hotel Ortigas via 8638-7777, 0917-859-7914 or e-mail stay@richmondeortigas.com; for Eastwood Richmonde Hotel, call 8570-7777 or 0917-521-6867 or e-mail stay@eastwoodrichmonde.com; and for Richmonde Hotel Iloilo, call (6333) 328-7888 or 0917-580-9642 or e-mail stay@richmondeiloilo.com.

Pizza Hut melts mother’s hearts

Pizza Hut made Melts for dessert, with three flavors to choose from. First is the new KitKat Melt, a cheesy and chocolatey treat made with a dollop of KitKat Spread, KitKat pieces, marshmallows, and stretchy mozzarella cheese, all folded into a thin, crispy wrap and finished with powdered sugar sprinkle. The second is the Ube Cheese Melt, made with ube halaya (purple yam jam), cheddar cheese, marshmallows, and mozzarella cheese, also encased in a thin and crispy wrap and then sprinkled with powdered sugar. Finally, there’s the Apple Cinnamon Melt, also in a wrap, with apple filling, cinnamon sugar, marshmallows, and mozzarella cheese. All three Sweet Melts flavors come with a milk dip. There is also an option to top the Melts with a scoop of ice cream (available in select stores only). The new Sweet Melts flavors start at P199 and are available for dine-in and takeout orders in all branches nationwide, and for delivery via the 8911-1111 hotline, www.pizzahut.com.ph, the Pizza Hut mobile app, and Pizza Hut’s official delivery partners GrabFood and foodpanda (prices may vary).

A cake for every mom at Red Ribbon

Red Ribbon’s Specialty Cakes offer a selection of cakes to match every mom’s taste on Mother’s Day. There is Black Forest Cake, a rich chocolate fudge cake with creamy icing, cherry filling, a coating of grated chocolate and chocolate square toppings. The new Caramel Delight Cake features caramel icing inside and out. Then there are the Ube Bloom Cake and the Chocolate Heaven Cake.  Visit a Red Ribbon store or order online at order.redribbon.ph, the Red Ribbon App, or the GrabFood and foodpanda.

Free ice cream and more at Mang Inasal

From May 1 to 12, mothers can enjoy the “Treat kay Mommy” Promo at all Mang Inasal stores nationwide. Customers can get free extra ice cream scoop for every purchase of Extra Creamy Halo-Halo Regular Size. The promo can be enjoyed via dine-in, takeout, and delivery. There is also the Mother’s Day Fiesta Treat, which can be enjoyed via takeout and delivery. From May 10 to 12, families can enjoy a special Family Fiesta bundle that comes with four Extra Creamy Halo-Halo 8 oz. Add-On and four drinks small size. Mother’s Day Fiesta Treat can be availed via https://manginasaldelivery.com.ph, Mang Inasal Delivery App, GrabFood and foodpanda.

PAL Holdings, Inc. to hold Annual Stockholders’ Meeting on May 30 via remote communication

 

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Why digitization is critical for Philippine Customs to stay globally competitive

BW FILE PHOTO

Customs operations serve as the gatekeepers of international trade, regulating the flow of goods across borders and ensuring compliance with trade laws and regulations. These operations play a crucial role in facilitating trade by enforcing import and export regulations, collecting duties and taxes, and protecting against illegal trade practices.

In today’s globalized economy, the volume of cross-border trade has increased significantly, leading to a greater need for efficient and effective customs operations. Efficient customs operations are essential for the competitiveness of countries in the global market. Delays in customs clearance can result in increased costs for traders and can hinder the timely delivery of goods. By streamlining customs processes and implementing modern technologies, countries can improve the efficiency of their customs operations and enhance their competitiveness in the global trade arena.

The Philippine customs system is confronted with substantial challenges stemming from its outdated practices and lack of digitization. A 2022 study released by the Bureau of Customs revealed that most delays in import processing are attributed to pre- and post-customs processes. The reliance on manual entry for product information reflects systemic weaknesses in our customs operations that hinder the system’s ability to meet the demands of modern trade. The delays can also be attributed to the submission process of documents, with permits from government agencies not directly transmitted to the BOC. These practices underscore the necessity of improving customs digitization and enhancing trade facilitation.

The manual processes in the Philippine customs system make it difficult to keep up with the increasing volume and complexity of international trade. As trade continues to grow, customs operations become more challenging, requiring greater efficiency and transparency to ensure the smooth flow of goods across borders.

Digitization has been contributing to the dominance of several countries in global trade. China, for instance, has made significant strides in modernizing its customs operations. Its customs have adopted a systematic approach to product identification, moving away from traditional processes to digital systems. In the past two years, over 780,000 products from Chinese imports have been verified across 99 countries with the use of the Global Trade Item Number (GTIN), a unique identifier for trade items that is commonly encoded into barcodes.

The shift towards digitalization has led China’s customs to mandate the inclusion of GTINs for certain products such as infant food, wheat-based foods, biscuits, beer, imported wines and liquors, and cosmetics since 2022. This requirement has enabled automatic product identification and the determination of tariff classifications. Through this system, a consistent application of tariff rules is enforced, improving transparency for both customs authorities and businesses and reducing opportunities for fraud or discrepancies.

GTINs allow for the automatic identification of imported products, with their classification, country of origin, and specification appearing in the single window system if their GTIN is provided. This represents a key step for the adoption of barcodes in customs clearance, which has helped China to standardize customs declaration procedures and efficiency. As goods are traded globally, border agencies worldwide can be overwhelmed by the growth in the volume of trade and the increasing regulatory requirements are putting pressure on border agencies to collect taxes, tackle illicit trade, and facilitate legitimate trade.

Adopting the use of GTINs has standardized the product attributes needed in customs declarations, helping China avoid information inconsistencies that often occur when importers manually fill in product information as it circulates across multiple steps of the supply chain process. This shift has not only improved efficiency but also enhanced transparency and reduced instances of corruption in the entire customs ecosystem. 

This standardization is particularly beneficial when coupled with the Single Window System implementation. The system allows traders to submit all required documents through a single electronic platform, streamlining customs procedures and reducing the time and cost associated with clearance processes. It simplifies the complexities of import, export, and transit-related regulatory requirements, benefiting businesses engaged in cross-border trade. By eliminating the need for traders to interact with multiple agencies separately, all clearances can be obtained through a single electronic interface, enhancing transparency and efficiency in trade operations.

Thanks to various government initiatives and trade agreements, the Philippines has experienced a significant increase in international trade. The Bangko Sentral ng Pilipinas (BSP) reported a 5.4 percent increase in the country’s exports in 2023, translating into an increase of 48.42 billion USD from 45.95 billion USD in 2022.

To take advantage of this increase in trade and enhance its operations, the Philippine customs system must undergo a modernization effort, drawing valuable lessons from China’s successful example. Embracing digitization is a pivotal step toward efficiency and transparency. By implementing digital systems for product identification and customs procedures, the country’s customs system can streamline processes and minimize the risk of errors and corruption.

Much like China’s adoption of the GTIN standard, the integration of a simple barcoding system can revolutionize customs operations in the Philippines. One of the steps taken for the digitization efforts in the country is the adoption of the Bureau of Customs (BOC) to the Electronic-to-Mobile (e2m) System. This system, introduced in 2004, is an internet-based technology that automates customs procedures and significantly reduces processing times for import and export transactions. Through the system, the BOC can streamline its core processes and improve trade facilitation between the agency and its stakeholders as well as other government agencies as well as reduce human interference that will induce corruption.

To sustain the momentum for modernizing its customs operations, the Philippines must keep up to date with newly implemented processes and technologies, such as the transition from 1D barcodes to 2D QR codes that enhance the accessibility of consumers with product information and interaction with manufacturers. These QR codes leverage new technologies and the existing barcoding system to store more essential information, boosting transparency and providing in-depth product information within reach. This commitment to modernization should be complemented by a focus on capacity building, informing manufacturers on these technologies to effectively operate and maximize modernized systems.

The Philippines must remain adaptable to change, embracing new technologies and regulatory frameworks as they emerge. By staying agile and responsive, the country can ensure that its customs operations remain efficient, transparent, and capable of meeting the evolving demands of the global trade landscape.

 

Roberto “Bobby” Claudio is president of GS1 Philippines, is a renowned figure in the retail industry and is the president and a founding member of the Philippine Retailers Association. With his extensive experience and  unwavering dedication to the local retail industry, he has played a crucial role in the association’s growth and success over the years.

Philippine Labor Force Situation

THE PHILIPPINE jobless rate jumped to a two-month high in March as inflation and an El Niño-induced dry spell limited economic output, according to the local statistics agency. Read the full story.

 

Philippine Labor Force Situation

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