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Japan’s top currency diplomat warns against speculative moves as yen falls

A Japan Yen note is seen in this illustration photo taken June 1, 2017. — REUTERS

TOKYO — Japan’s top currency diplomat on Monday issued a warning against speculative moves on the foreign exchange market as the yen fell below 149 per dollar.

“We will monitor currency market moves including speculative trading with a sense of urgency,” Atsushi Mimura told reporters, reviving a verbal warning tactic that his predecessor, Masato Kanda, frequently used.

Mimura declined to comment on the specifics of the current market situation.

Separately, Katsunobu Kato, the nation’s newly appointed finance minister, said the government would monitor how rapid currency moves could potentially impact the economy and would take action if necessary.

“The government will consider what action should be taken while monitoring the impacts,” Mr. Kato said in an interview with a small group of reporters on Monday.

The yen depreciated to 149.10 versus the dollar in early trading on Monday, the weakest since Aug. 16, after a surprisingly strong US jobs report for September led traders to cut bets that the Federal Reserve will make further large interest rate cuts.

Japan last conducted yen-buying intervention in late July to support its currency after it tumbled to a 38-year low below 161 per dollar.

The yen has also been under pressure since new Japanese premier Shigeru Ishiba stunned markets when he said the economy was not ready for further rate hikes, an apparent about-face from his previous support for the Bank of Japan’s (BoJ) unwinding decades of loose monetary policy.

In Monday’s interview, Mr. Kato said the government would leave specific policy steps to the Bank of Japan (BoJ), when asked whether the policy rate should be maintained at 0.25%.

“The government hopes that the BoJ will communicate with markets thoroughly and take appropriate policy to achieve its 2% inflation target in a stable and sustainable manner,” he said.

The BoJ in March delivered its first rate hike in 17 years, arguing the pace of price and wage increases showed Japan was finally shaking its entrenched deflationary mindset. The central bank unexpectedly increased rates again in July, triggering a shakeout in domestic markets. — Reuters

PNOC eyes 20-MW rooftop solar systems

STATE-RUN Philippine National Oil Co. (PNOC) is looking to set up rooftop solar photovoltaic (PV) systems with a capacity of up to 20 megawatts (MW) through its partnership with government agencies.

“This year, maybe we will only have modest 1.5 MW, but next year, we’re targeting to set up 20 MW of rooftop solar,” PNOC President and Chief Executive Officer Oliver B. Butalid said during a signing ceremony on Monday.

Mr. Butalid said, however, that attaining the target would depend on the availability of reliable installers that will join the company’s program.

“So, our typical size is 50 to 200 kilowatt-peak (kWp). So, we are enticing these reputable suppliers to join our bidding even if they are small compared to what they are accustomed to, which are one-megawatt factories,” he said.

PNOC aims to position itself as a service agency to government entities, providing innovative energy solutions to meet national development goals.

The company had already signed agreements for the installation of rooftop solar systems with a total capacity of 750 kWp in the past weeks, and adding to its portfolio is its latest agreement with the Technical Education and Skills Development Authority (TESDA). 

Under the memorandum of agreement, PNOC will install an 80-kWp rooftop solar PV system at TESDA’s National Capital Region training center.

“This is a small step for PNOC and TESDA. But in the coming years, I’m very hopeful that this will be scaled up significantly,” Mr. Butalid said.

He also said that they are looking at utility-scale ground-mounted solar systems for off-grid islands to support areas relying on diesel-powered generation. — Sheldeen Joy Talavera

Lady Gaga’s Joker: Folie à Deux is almost as miserable as its lead character

Daniel Day-Lewis, along with Vicky Krieps, in a scene from Phantom Thread, the last film he made before retiring from acting. — IMDB

By Esther Zuckerman

Movie Review
Joker: Folie à Deux
Directed by Todd Phillips

I DID not like 2019’s Joker, Todd Phillips’ film about the Batman villain that won Joaquin Phoenix an Oscar. I found it self-important yet shockingly hollow in its attempts to say something about how society warps the lonely. And yet I’ll admit I was excited for its sequel Joker: Folie à Deux. It’s a musical co-starring Lady Gaga. How bad could it be, really?

Turns out: Very bad.

Folie à Deux is a punishingly dull affair. It’s a pointless sequel with very little plot. It wastes the talent on screen, and it squanders the genuinely intriguing conceit of its characters breaking into song. Those musical sequences, of which I had such high hopes, are lacking in creativity and fail to justify their own existence. But they’re still better than the rest of the movie, which is filled with endless dialogue that simply rehashes the events of the first movie.

If Joker was implicitly influenced by Taxi Driver — I said it was self-important — Folie à Deux announces its references right out of the gate in a Looney Tunes-inspired animated sequence in which a cartoon Joker fights with his own shadow. In the background of these scenes you can see posters for classic Hollywood musicals Sweet Charity, The Band Wagon, and Pal Joey, all a preview of the soundtrack to come.

This opening is perhaps the most inspired moment of the whole film, introducing a new visual language that is quickly discarded when the animation gives way to the dour live action version of Arkham Asylum where Phoenix’s Arthur Fleck is imprisoned. He is awaiting trial for the five murders he committed the last time we saw him. (He actually killed a sixth person, his mother, but no one knows about that yet.)

In the grim institution, he’s mocked by the guards who shepherd him to meetings with his altruistic lawyer played by Catherine Keener. She thinks she can spare him the death penalty by proving that her client has a separate, split personality from Joker, the killer. Good luck, girl.

In these early scenes, Phoenix’s Arthur is a hollow shell with deadened eyes. But he perks up when he is allowed to attend a music class in another, less severe, ward of Arkham. That’s where he meets Lee, played by Gaga, as the inmates sing “Get Happy,” a tune most associated with Judy Garland.

Lee, of course, is this universe’s version of Harley Quinn, most famously portrayed by Margot Robbie in the Suicide Squad movies as a chirpy antihero. Gaga makes Lee a sullen, sultry creature who is obsessed with Joker, wooing him with tales of her own hardscrabble upbringing. During movie night — where the crowd is watching Fred Astaire in The Band Wagon, naturally — she sets a piano on fire and they dance and sing among the chaos.

But then Lee leaves Arkham just as Arthur is about to go to trial. She promises to be in the courtroom to support him while she prepares a life for them on the outside. He’s smitten. Her motives are a little more suspect.

Alas, there’s not much more to that relationship considering the rest of the movie is spent on the legal proceedings which mostly feel like an excuse to remind the audience of everything that happened in the previous installment of this saga. Familiar faces take to the stand and recount their versions of events. Occasionally, there are pauses for some singing, most of which takes place inside of Arthur’s head, but sometimes happens diegetically, like when Lee decides to serenade him with Burt Bacharach’s “Close to You.”

The film itself seems embarrassed by its musical elements, never willing to fully commit to the endeavor. The fantasy sequences, despite some excellent production design that turns Gaga and Phoenix into Gotham City incarnations of Cher and Sonny, are staged listlessly and feel extraneous. Meanwhile, when these love birds sing in the context of the actual narrative, they do so in strained voices, as if to further prove how disturbed these people truly are. (Gaga only releases her full belt a couple of times — a true shame.)

I began to get the suspicion that Phillips believes the only people who really love musicals are lunatics — and his disdain for both categories is palpable. Arthur’s mental health is treated carelessly, with physical and psychological abuse blithely used as a talking point. Through all of this, Phoenix adds no new dimensions to the character. He still looks emaciated, and he brings an intensity to Arthur’s mania, but we learn nothing new about this man who we’re either supposed to pity or fear.

Gaga livens things up with a volatile swagger whenever she’s on screen, and yet she’s hindered by the fact that the character is brutally underwritten. Her only personality is her attraction to Joker. Beyond that she’s a blank slate with some great eye makeup.

As Folie à Deux creeps toward its underwhelming yet also laughable finish you can’t help but wonder how this all went so wrong. The trial is meaningless, the romance is half-hearted, and the musical bits, starring Lady Gaga no less, have no pizzazz. It all feels like, well, a cruel joke. — Bloomberg

Food inflation and agribusiness

Last week, the Philippine Statistics Authority (PSA) reported the country’s inflation rate for September 2024 and it was low at 1.9% compared to the 6.1% in September 2023. Good news indeed. See the following related reports in BusinessWorld: “Inflation falls below 2% for first time in over four years” (Oct. 4), “Inflation surprise backs Philippine central banker’s easing plan” (Oct. 4), “Slowing inflation gives Philippine central bank room for more cuts” (Oct. 7).

Food inflation in particular dropped to only 1.4% in September 2024 vs. 9.7% in September 2023. The January-September 2024 overall inflation and food inflation were down to only 3.4% and 4.8%, respectively (see Table 1).

With the declining inflation rate, and a declining interest rate to follow, I see household consumption (which comprises 75% of GDP) to grow around 5.5% to 6% in the second half (H2) of 2024 from 4.6% in H1 of the year. This will pull up overall GDP growth to around 6.6% in H2 of 2024 from 6.2% in H1.

AGRICULTURE BUDGET AND GROWTH
The budget of the Department of Agriculture (DA) is big and rising fast, from P78 billion in 2020 to P114 billion this year and a proposed P129 billion next year (all nominal values). The DA has had double digit yearly growth from 2022 to 2025 and possibly beyond. But the yearly growth in nominal values of Agriculture, Fishery and Forestry (AFF) is only in the single digits (see Table 2).

Somehow there is a disconnect between government’s agriculture spending and actual agriculture performance. It is possible that the bulk of the DA budget is spent on salaries, meetings, and travel and less is spent on the actual needs of the farmers.

PRIVATE AGRIBUSINESS AND SELF-RELIANT AGRICULTURE
My friend and batchmate from the UP School of Economics batch 1984, Leo Riingen, founder and president of the IT school Informatics, went into agribusiness both as a hobby and as an economic project to help expand food production in the country. He owns several hectares of land in Pampanga which are planted with fruit trees like lanzones and mangos, and sweet corn (not rice), and where he raises livestock like goats, horses, pigs, and chickens. There is also a tilapia fishpond.

Being an urbanite and having entered agribusiness rather late, he said that he went through “expensive, funny, trial and error farming.” Among his experiences and lessons — aside from the fact that farming is hard (he tried planting 200 lanzones trees and after the 10th tree he left the work to his farmhands — that he can share are the following:

1. Agritech is important. There are too many uncontrollable variables in the way of a good harvest. Calamities, insects, soil quality, and even freak small tornadoes spoiled his anticipated harvest.

2. Do not overly trust “experienced” farmers. Science is still the most reliable adviser, and this includes YouTube clips by experienced and successful farmers abroad. He trusted his farmhand who told him 10,000 tilapia fingerlings would be best for his pond. He ended up feeding 10,000 tilapias for months only to be told he needed to harvest and sell them quickly as they were getting older and he had only a few fishing rods.

3. Agri insurance is needed to help protect farmers. He was happy when his sow gave birth to 14 piglets. Then in a few weeks all the piglets died, as did their mom, from foot and mouth disease. Then 10 chickens ready to be fried the following week were hit by avian flu and all died.

4. Solar power is a heaven-sent invention for farmers. He adapted to the last dry spell with solar powered pumps to draw water from deep wells — there was no need to beg for irrigation from the government. He spent P200,000 for the solar set up with no battery, he then built irrigation canals, and the system is able to irrigate up to four hectares of land.

You are doing very well, Leo. Contributing to higher food production via the use of modern technology is a low-key but high-impact economic project.

DAR AND AGRIBUSINESS UNCERTAINTY
The government’s land reform program should have ended in 1998 because the Comprehensive Agrarian Reform Program (CARP) law of 1988 had a timeline of 10 years. Then the program was extended for another 10 years, and extended again, and now there is no more deadline. The Department of Agrarian Reform (DAR) has become a “forever” bureaucracy with a “forever” budget and powers of intervention that distortion and create business uncertainty — successful agribusiness projects with large pieces of land can still be subject to forced land redistribution.

I wish the DAR and the endless land redistribution program would shut down and end. The agrarian reform programs of Japan, Korea, Taiwan, and other Asian nations were short and swift. Once the original timeline was reached, forced land redistribution should end. All land transfers would then be done via market transactions, not political coercion.

 

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

Bank of England taps influencers in quest to reach Gen Z

People walk outside the Bank of England in the City of London financial district in London, Britain, May 11, 2023. — REUTERS

HOURS after cutting interest rates for the first time in four years, Andrew Bailey, 65, made his debut on TikTok.

It was a cautious foray for the Bank of England (BoE) governor into a social media platform known for dance battles and lip-syncing. Rather than attempt any such physical feats, Mr. Bailey got out of his comfort zone by sitting down with a personal finance influencer to explain monetary policy to a younger generation increasingly suspicious of central banking. He even abandoned his omnipresent jacket and tie to project a looser, approachable vibe.

“I read all these articles about Taylor Swift’s impact and say, ‘Yeah, it’s interesting, but it’s not the big story,’” Mr. Bailey told his interviewer, Abigail Foster, dropping a name sure to resonate with the kids while discussing the BoE’s fight to contain rising prices. (Splurging Swifties may have made that job harder when the Eras Tour rolled through Britain this summer.)

The interview is part of an evolution in the way the 330-year-old central bank — founded to fund William III’s wars in France — is trying to communicate with Generation Z, which reads few newspapers and financial news wires. While hardly a viral hit, Bailey’s video got over 42,000 views on TikTok and almost 3,000 likes on Instagram.

In recent months, the Old Lady of Threadneedle Street has enlisted influencers to expand its audience, amassing more Instagram followers than the European Central Bank. The BoE similarly featured dancing show stars Curtis and AJ Pritchard in a video to launch the new King Charles bank notes earlier this year.

Such outreach is important not only because of changing news consumption habits, but the BoE’s new, more challenging relationship with the public. While older generations might remember the world’s central bankers rushing to the rescue during financial crises past, the recent inflation shock prompted the BoE and its peers to dramatically ramp up borrowing costs, putting mortgages and car loans increasingly out of reach.

“The cost-of-living crisis significantly increased young people’s interest,” said Mr. Foster, the 30-year-old certified public accountant who interviewed Mr. Bailey. Younger people can “feel quite disconnected from financial institutions,” she said, pointing to widespread misinformation online about personal finance.

Besides posting regular social media videos explaining student loans, pension plans and investment savings accounts, Mr. Foster also founded and runs Elent, which teaches finance workshops in schools and offices.

Overall, public confidence in the bank plunged as prices soared, with the youngest age groups being the most dissatisfied with the BoE’s performance, according to its latest inflation attitudes survey. At the same time, political figures, such as former Prime Minister Liz Truss, have grown more vocal in blaming the BoE for Britain’s ills.

Online, theories circulate about how central bankers’ policies are exacerbating inequality or that their planned digital currencies are intended to control people’s behavior. The BoE is at a risk of losing touch with a growing segment of consumers at a time when interest rate decisions are reaching deep into the lives of Britons.

Still, the bank must tread carefully when a single adjective by a key policy maker can make markets swoon. Asked to discuss its social media strategy, the BoE acknowledged that it is bolstering efforts to reach the young. 

“We think it’s important for the bank to explain what we do and why to as broad an audience as possible,” a BoE spokesperson said in a statement. “That’s why we’ve been increasing our efforts to reach people where they get their news and information.”

The BoE is somewhat late to the party. The BoE’s youth forum — a panel of 24 young people discussing how policy affects them — warned officials in 2022 that they needed to post their own content to counter misinformation. The bank’s latest annual report also flagged trends on social media as an “emerging risk” to its communications.

In addition to Mr. Bailey’s interview circulating on the likes of TikTok, the BoE has been regularly putting up posts and stories on an Instagram profile launched in March. It also has its own TikTok profile, though it is yet to post anything on the platform.    

“It gives him the ability to be quite transparent about what’s going on behind the scenes of Bank of England,” Ms. Foster said on her interview with Bailey. “They can very quickly reach a broad audience almost instantaneously.”

It will be difficult for the BoE to avoid being drowned out by the torrent of content competing for the eyes of younger Britons online, where pranks and comedy sketches are more likely to go viral. The BoE has stepped up its online presence in the spring, but influencers have been explaining the bank’s policies to hundreds of thousands of viewers for years.

When searching for a explainer on the UK’s digital currency, one TikTok video that is featured prominently and has been viewed by more than half a million people spreads a conspiracy theory that the BoE will have full control over people’s money and invade users’ privacy. It also incorrectly claims that the central bank has released a CBDC, when a final decision on its launch is still yet to be made.

Another narrative that has gained traction online during the cost-of-living crisis is that the BoE’s policies worsened the inflation surge and helped widen inequality, contrary to the central bank’s messaging on these issues.

Some businesses have found success on social media platforms, such as EY and Deloitte, according to Anna Fishlock, head of digital at consultancy H/Advisors Maitland. She said that content that “lifts the lid,” and is contentious and humorous often does well on TikTok.

A number of central banks have already woken up to the problem of reaching young audiences. The Federal Reserve launched its Instagram profile last October with over 200,000 followers. While the European Central Bank has been posting on the platform since 2018, it has just over 80,000 followers, less than the BoE’s 92,000.

TikTok is owned by Chinese internet technology company ByteDance Ltd., while Instagram’s parent is Facebook owner Meta Platforms Inc.

There is a policy purpose to its foray into social media. Keeping inflation expectations under control is key for the central bank as it influences how people expect price changes to unfold in the future and stops wage demands surging.

“It’s fair to say that monetary policy would be more effective if more people were to understand the inflation target,” said Ashley Webb, UK economist at Capital Economics. “With more younger people consuming news via social media rather than more traditional news channels, perhaps the governor should record a few TikToks.” — Bloomberg

Aboitiz Construction bags contracts with APRI, Cemex Holdings

ABOITIZ Construction, Inc. has secured maintenance contracts with AP Renewables, Inc. (APRI), a geothermal energy producer, and Cemex Holdings Philippines, Inc., a cement manufacturer.

The construction company’s three-service agreement for APRI, which began in September, covers routine and outage maintenance works at the Makban Geothermal Power Plant in Bay and Calauan, Laguna, and Tiwi Geothermal Plant in Tiwi, Albay, Aboitiz Construction said in an e-mailed statement on Monday.

The contract also involves mechanical, electrical, instrumentation, and condition monitoring tasks.

APRI is a geothermal company under Aboitiz Power Corp.

Aboitiz Construction had provided manpower for maintenance at APRI’s Tiwi Geothermal Power Plant in Albay from June to August this year.

Meanwhile, Cemex extended its six-month contract with Aboitiz Construction until December this year for supplying technical manpower for the commissioning of Kiln Line 4 at its Antipolo City plant.

The commissioning activities include major equipment such as the vertical roller mill, kiln, clinker cooler, and dust collectors.

Currently, the Cemex project employs 200 personnel, with approximately 30% already sourced locally from Antipolo City.

“These projects affirm our ability to provide reliable maintenance solutions while prioritizing safety and quality of work,” said Aboitiz Construction Chief Operating Officer Ramez Sidhom.

Aboitiz Construction is the privately held construction company of the Aboitiz group.

It has over 40 years of track record in heavy industries, light industries, infrastructure, and industrial maintenance. — Revin Mikhael D. Ochave

2GO Group, DoT partner to upskill tourism frontliners

FACEBOOK.COM/2GOTRAVEL

2GO Group, Inc., a transportation and logistics provider and subsidiary of the Sy-led company SM Investments Corp., has partnered with the Department of Tourism (DoT) to support the Filipino Brand of Service Excellence (FBSE) program.

The DoT’s flagship initiative aims to equip “frontliners in the tourism and hospitality industry with the skills to deliver service infused with the essence of Filipino warmth, thereby creating a distinct national brand,” 2GO Group said in a media release on Monday.

“2GO’s commitment to the Filipino Brand of Service Excellence Program is a testament to the industry’s dedication to elevating the standards of hospitality in the Philippines,” said Shahlimar Hofer Tamano, undersecretary for tourism regulation, coordination, and resource generation.

The company said it will be sending 14 participants to a “Train-The-Trainer” learning course conducted by the DoT.

“As we anticipate more travelers in the Philippines, aligning with the FBSE program allows us to contribute to a seamless Filipino hospitality experience for our passengers traveling from shore to shore,” said Frederic C. Dybuncio, president and chief executive officer of 2GO Group.

The training focuses on demonstrating and applying the “Mabuhay” and “Salamat Gestures,” among other culturally significant Filipino practices with a 2GO touch, within 2GO establishments.

“With plans to train 200 participants from various departments across different regions, 2GO is committed to reinforcing the importance of a brand that mirrors the rich heritage of Filipino hospitality,” the company said. — Aubrey Rose A. Inosante

Daniel Day-Lewis to come out of acting retirement for son’s film Anemone

LONDON — Three-time Oscar winning actor Daniel Day-Lewis is coming out of retirement to star in his son’s feature film directorial debut, Anemone.

The highly acclaimed performer, known for films such as Lincoln and Gangs of New York, will take on his first acting role since 2017’s Phantom Thread, for which he earned his sixth Academy Award nomination.

He co-wrote Anemone with his son, painter and filmmaker Ronan Day-Lewis. Production companies Focus Features and Plan B described the movie as exploring “relationships between fathers, sons and brothers, and the dynamics of familial bonds.”

“We could not be more excited to partner with a brilliant visual artist in Ronan Day-Lewis on his first feature film alongside Daniel Day-Lewis as his creative collaborator,” Focus Features Chairman Peter Kujawski said in a statement.

“They have written a truly exceptional script, and we look forward to bringing their shared vision to audiences alongside the team at Plan B.”

The film’s cast also includes actors Sean Bean, Samantha Morton, Samuel Bottomley, and Safia Oakley-Green.

Daniel Day-Lewis’ spokesperson announced his retirement from acting in 2017.

The 67-year-old, who holds dual British and Irish citizenship, is the only man to have won three best actor Oscars, which he picked up for his performances as a writer and painter born with cerebral palsy in My Left Foot, an oil prospector in There Will Be Blood, and portraying US President Abraham Lincoln in Lincoln. — Reuters

Why Europe is a useful ally in the WPS territorial disputes

PHOTO FROM ARMED FORCES OF THE PHILIPPINES

Tensions between the Philippines and the People’s Republic of China remain high, with both countries continuing to skirmish and posture within the disputed territories in the West Philippine Sea (WPS). On Sept. 30, the Philippines held joint naval exercises alongside Australia, Japan, New Zealand, and the United States, under the auspices of Multilateral Maritime Cooperative Activity (MMCA). According to an Armed Forces of the Philippines spokesperson, the participating vessels were “tailed” by the Chinese navy. Although the incident did not result in any direct confrontations, it is evidence of the tense situation in the WPS.

The presence of ships from four other countries is a manifestation of the Philippines’ efforts at deepening security ties with its neighbors and traditional allies. This includes the signing of the Japan-Philippines Reciprocal Access Agreement (RAA), and the call to review the US-PH Mutual Defense Treaty (MDT).

Although the Philippines continues to rely on its allies in the Asia-Pacific region to boost its naval presence in the disputed territories, this column argues that the country should recognize and harness the diplomatic support the country receives from European states.

Europe may be geographically distant, and many of its states are focused on the Ukraine invasion, but the region continues to follow occurrences in the South China Sea. This is evident when one considers the public pronouncements of the European Union (EU) and its member states, such as Denmark, France, or Germany. It is also manifested in statements issued by non-EU countries, such as Norway and the United Kingdom. Since the 2016 decision by the Permanent Court of Arbitration in the Hague, which recognized the Philippine territorial claims in the WPS, European countries have expressed support for the Philippines against Chinese incursions into the disputed area. Of particular significance was a 2023 joint statement by EU and member state delegations in the Philippines recognizing the legitimacy of the arbitral award and emphasizing support for the freedoms of navigation and overflight, which are enshrined in the United Nations Convention on the Law of the SEA (UNCLOS).

Since the promulgation of the tribunal’s decision, skirmishes have continued in the disputed territories. Some noteworthy incidents include a Chinese vessel’s use of a military grade laser to blind Philippine sailors, which resulted in a diplomatic rebuke from Malacañang, as well as statements of opposition from the Swedish and Danish embassies in the Philippines. In March of this year, the Polish mission to the Philippines expressed its opposition to China’s ships blocking the movement of Philippine vessels, even using water cannons to deter them.

Although European actors’ statements may appear to be mere lip service, their statements are exercises of what International Relations scholars generally refer to as soft power. Such articulations may appear relatively ineffective compared to the sending of ships, as the US or Japan do, but they are ways to express opposition towards Chinese actions, and support for the Philippine position.

Apart from abstract articulations of support, however, recent developments have allowed for Europe to provide more material support to the Philippines. For example, the EU published its Strategy for Cooperation in the Indo-Pacific in 2023, which reconfigures the forms of cooperation between the 27-country bloc and countries, such as the Philippines. Initial results of this include the establishment of the EU-Philippines Subcommittee on Maritime Cooperation, the adoption of the EU-funded Indo-Pacific Regional Information Sharing (IORIS) Platform, and the provision of more crisis management exercises through the Critical Maritime Routes Indo-Pacific (Crimario) project. Each of these instruments deepen the EU’s involvement in the Sino-Philippine territorial dispute.

Beyond its engagements with the EU, the Philippines likewise has sought to strengthen its bilateral ties with individual European states and diversify its portfolio of security partners in responding to Chinese hegemonic ambitions. In this year alone, some of the agreements in the works include: 1.) a draft military interoperability agreement with France, 2.) the finalization of a defense cooperation pact with Germany, and, 3.) the signing of a security agreement with Sweden allowing the Philippines to procure fighter jets and Swedish-made defense equipment. Other initiatives from previous years include French participation in the “Balikatan” exercises, the deepening of defense cooperation with the Netherlands and Poland, and the visit of two German warships to the Philippines, among others.

Although efforts are underway to deepen European involvement in the Sino-Philippine territorial dispute, there is potential to build more areas of cooperation. The construction of a more robust security posture for the Philippines entails looking beyond our traditional allies in the Asia-Pacific region, and tapping into the potential for more consistent material European support. This is feasible considering the EU and individual European states’ records as reliable economic and security partners for the Philippines. Thus far, Europe has provided diplomatic support to the Philippine position in the territorial dispute, and there are nascent initiatives for deeper cooperation. However, these can be intensified further. The Philippine National Security Strategy can benefit from building upon its existing partnership with the EU and other European states.

 

Dr. Manuel R. Enverga III is the Jean Monnet chair and director of the European Studies Program at the Ateneo de Manila University. His teaching and research are focused on the areas of EU-Philippine relations, digital diplomacy, and global flows. He also hosts The Eurospeak Podcast, where he invites guests to talk about European influences on contemporary popular culture.

Vincent Carlo L. Legara currently works as a lecturer at the European Studies Program and at the Department of Political Science of the Ateneo de Manila University. He is also a junior political risk and security analyst for Polysentry.

Philippines lags in Global AI Index

The Philippines ranked the lowest in the region after placing 67th out of 83 countries in its debut in The Global AI Index 2024 by Tortoise Media with an overall score of 5.89 out of 100. The index ranks countries based on capacity for artificial intelligence (AI) using 122 indicators under three pillars: implementation, innovation, and investment.

Philippines lags in Global AI Index

How PSEi member stocks performed — October 7, 2024

Here’s a quick glance at how PSEi stocks fared on Monday, October 7, 2024.

Gov’t revenue seen taking hit from House capital reform bill

DOF.GOV.PH

THE Department of Finance (DoF) said on Monday that the House of Representatives version of a capital markets reform bill could result in a P140 billion reduction in government revenue over four years, further limiting the fiscal space available.

Finance Assistant Secretary Karlo Fermin S. Adriano said the DoF is open to cutting stock transaction taxes to 0.1% from 0.6% and reducing the dividends tax rate for non-resident investors.

Nevertheless, he urged legislators to consider the DoF’s fourth package of the Comprehensive Tax Reform Program, adding that amendments contained in the House-proposed Capital Markets Efficiency Promotion Act (CMEPA) are already included in the DoF-submitted legislation. The DoF’s version, he said, could net about P10.76 billion.

“The DoF recognizes the intent of the proposed CMEPA, but we are already pursuing similar objectives through the Passive Income and Financial Intermediary Taxation Act (PIFITA),” he said in a Senate ways and means committee hearing.

“We are okay now with reducing the stock transaction tax from 0.6% to 0.1%… we are (also) okay with reducing the dividends particularly for non-residents, which is also covered by CMEPA,” he added.

CMEPA and PIFITA are among the legislative priorities outlined of President Ferdinand R. Marcos, Jr. for the 19th Congress. The House approved both the bills on final reading while the Senate’s versions remain at the committee level.

“Given that currently we’re still in a tight fiscal position, we hope that we could push for Package 4 instead of CMEPA, especially that many of the capital market provisions in CMEPA are also found in Package 4,” Mr. Adriano said.

The DoF’s Package 4, formerly known as PIFITA, is seeking to levy a flat 20% tax rate on interest income, including savings deposits, treasury bonds and bills, and corporate bonds, among others, according to Mr. Adriano’s presentation to the tax panel.

The DoF’s fourth package also provides for a 5% gross receipts tax on banks, lending investors and other financial intermediaries’ lending and non-lending activities. It also proposes a 2% value-added tax (VAT) on health maintenance organizations and pension funds. 

Taking note of the DoF’s position on the measure, Senator Sherwin T. Gatchalian, who heads the Senate ways and means committee, said the Legislative-Executive Development Advisory Council (LEDAC) is now pushing for capital market tax reforms instead of the more expansive PIFITA.

House Bill (HB) No. 9277, or the CMEPA measure, seeks to cut stock transaction tax to 0.1% from 0.6% currently. The measure also proposes to set the dividend tax rate for non-resident investors to 10% while removing the 7% gross receipts taxes on derivative gains by financial institutions.

It also reduced tax rates on lotto winnings above P10,000 to 10% from 20%. The House’s CMEPA version also exempted property insurance policies worth less than P100,000 from documentary stamp tax while levying a maximum P200 tax on policies more than P1 million.

The Senate’s version of CMEPA includes tax overhauls to “the debt sector, bonds and debentures… and also the entire insurance industry,” according to Mr. Gatchalian, citing their interconnectedness to capital markets.

The DoF is open to working with the capital market reforms bill, requesting that Congress tweak the tax measure to make it “revenue neutral,” Mr. Adriano said.

He noted the DoF tried adding tax provisions that would make CMEPA revenue-positive for the government. “We tried to insert provisions… basically giving us positive revenue, including the gross receipts tax on financial intermediaries and excise tax on pickup (trucks).”

“It’s still not enough to counter the revenue negative impact of CMEPA,” he added.

Mr. Gatchalian said the Senate version of the measure would only result in P78 billion in foregone revenue, with no reduction in tax rates for lotto ticket sales and an excise tax on pickup trucks. “We made some modifications in the last few weeks,” he added.

It would be easier for the Senate to pursue CMEPA as it’s a “smaller bill” compared to PIFITA, he said, citing the need to expedite deliberations on reforms to the capital markets and passive income tax structures before the chamber begins discussions on the proposed 2025 national budget.

“If you ask me personally, I would prefer discussing CMEPA in the next few months for two reasons: one, it’s an easier bill to discuss because the components are only few and interrelated… and second, we can easily pass a smaller bill compared to a bigger bill,” he said. — Kenneth Christiane L. Basilio

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