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Rice tariff cut to set the stage for bringing down rates — DoF

FINANCE SECRETARY RALPH G. RECTO — DEPARTMENT OF FINANCE FACEBOOK PAGE

By Luisa Maria Jacinta C. Jocson, Reporter

THE recently approved tariff cut on rice imports will reduce government revenue by up to P22 billion, but will pave the way for inflation to fall sufficiently to justify bringing down policy rates, the Department of Finance (DoF) said.

Finance Secretary Ralph G. Recto said: “We are reducing inflation. Once we’re able to reduce inflation, hopefully we can reduce interest rates and that will create more growth so we can recover those what you claim to be losses,” he told reporters on Friday.

The National Economic and Development Authority Board last week approved a reduction in rice import tariffs to 15% from 35% previously. This was part of a medium-term plan to lower tariffs on agricultural and industrial products until 2028.

The Agriculture department earlier said that the tariff cut could bring down the retail price of rice by P6 to P7 per kilogram as early as July.

However, Mr. Recto clarified that easing tariffs is just a short-term measure.

“We are not relying on importing rice. That is (for) the short term. We continue to, as part of our Philippine Development Plan, increase rice productivity,” he said.

“We will continue to make those investments with our farmers, irrigation, mechanization, and so on …so the time will come that we will not have to import our food requirements, particularly rice. We are not abandoning our farmers.”

In its meetings with farmers the DoF discussed ways to increase productivity and spend the budget effectively to achieve this goal.

He also noted that proposed amendments to the Rice Tariffication Law could end up providing further support to farmers.

He said the DoF is studying ways to effectively spend the proposed P15 billion allocation for rice industry modernization, up from the original P10 billion a year.

The House of Representatives last month approved on third and final reading the amendments to the Rice Tariffication Law of 2019, which include extending the validity of the Rice Competitiveness Enhancement Fund (RCEF) and increasing its funding to P15 billion.

The RCEF receives its funding from tariffs generated from imports after the tariffication law liberalized rice imports. After largely taking away the government’s rice importing function, the law also freed up private traders to import rice on their own, in the process having to pay an import tariff on their grain. The tariff was originally set at 35% on Southeast Asian grain, though the geographical restrictions have since been removed and the tariff reduced to 15% as an anti-inflation measure.

Mr. Recto noted that rice prices have an outsized impact on inflation.

“If you are able to reduce the price of rice, then its contribution to inflation would dramatically go down,” he said.

Rice inflation rose to 23% in May, easing from the 23.9% posted a month earlier.

Food typically accounts for a large share of the consumer price index market basket in poor countries, with rice the most important element of the food sub-index in the Philippines.

The Department of Agriculture reported that domestically grown well-milled rice averaged P48-P55 as of June 6, from P38-P46 in the same period a year earlier. Regular-milled rice fetched between P45-P52 from P34-P42 a year earlier.

Falling inflation will strengthen the argument for reducing policy rates, he said.

“Possibly, we can reduce the policy rate…depends on what the inflation data will show later on. But by not doing anything, we won’t be able to reduce the price of rice. We won’t be able to do a policy cut,” he said.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said that the central bank can begin its policy easing cycle by August.

Mr. Recto has said that the BSP can reduce rates by 150 basis points (bps) in the next two years.

“(Given) all the data today, I still think that 150 bps in the next two years is feasible. More so that we already did the reduction in rice tariffs. So, let’s take a look at how that will affect rice prices and inflation moving forward.”

GOCC subsidies more than triple in April

SUBSIDIES provided to government-owned and -controlled corporations (GOCCs) more than tripled in April, the Bureau of the Treasury reported.

Budgetary support to GOCCs surged 209% to P27.72 billion in April compared to a year earlier.

The National Irrigation Administration (NIA) received the most subsidies during the month with P11.425 billion, accounting for 41.2% of all subsidies.

This was followed by the Power Sector Assets and Liabilities Management Corp., which got P8 billion in April. It did not receive any subsidies in the previous months.

The National Housing Authority was granted P3.749 billion, also its first subsidy for the year so far.

Other top recipients in April were the Philippine Crop Insurance Corp. (P900 million), Intercontinental Broadcasting Corp. (P512 million), Small Business Corp. (P425 million), the Philippine Rice Research Institute (P307 million), the Philippine National Railways (P285 million), the National Power Corp. (P257 million), the Philippine Coconut Authority (P225 million),  and the Philippine Heart Center (P213 million).

GOCCs that also received at least P100 million were the National Dairy Authority (P194 million), the Philippine Children’s Medical Center (P176 million), the Cultural Center of the Philippines (P164 million), the National Kidney and Transplant Institute (P133 million), the Southern Philippines Development Authority (P124 million) and the People’s Television Network, Inc. (P100 million). 

In the four months to April, subsidies extended to GOCCs totaled P47.307 billion, up 56.3% from a year earlier.

The NIA was the top recipient in the four-month period, receiving P21.742 billion. — Luisa Maria Jacinta C. Jocson

Retailers, supermarkets see voluntary price freeze providing consumer relief

PHILIPPINE STAR/MIGUEL DE GUZMAN

RETAILERS and supermarket owners said they support a move by leading manufacturers to voluntarily keep prices steady, noting the “relief” such a measure would provide to the public.

Steven T. Cua, executive director of the Philippine Amalgamated Supermarkets Association, said that he welcomes the voluntary price freeze initiated by the Department of Trade and Industry (DTI) and carried out by eight major food manufacturers.

“DTI has chosen to monitor selected food items from producers who are considered market leaders. As such, most other manufacturers would position the prices of their products versus those coming from market leaders,” Mr. Cua told BusinessWorld.

“When market leaders keep their prices steady, competitors in the same product category normally follow suit. Of course, there will always be some who will bravely apply the red ocean strategy (making a move to expand share in a crowded market) or are forced to adjust prices due to their circumstances,” he added.

He said that although the temporary price freeze is meant to provide relief, it may also mean more sales as consumers gain purchasing power.

Roberto S. Claudio, president of the Philippine Retailers Association, said that the voluntary price freeze is “a better alternative to any price control measures previously implemented.”

He cited the example of price controls on school supplies during the back-to-school season and on basic commodities priced at below the cost of production resulting in shortages.

Mr. Claudio said the PRA will further encourage other manufacturers to support the price freeze as long as possible.

On June 1, the DTI announced that eight major manufacturers had committed to a voluntary price freeze to mitigate the effects of rising prices and El Niño.

The DTI said Monde Nissin Corp., Alaska Milk Corp., Nestlé, NutriAsia, Inc., and San Miguel Foods are participating in the initiative, which brought the total number of stock-keeping units where prices have been frozen to 31.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the voluntary price freeze will help in mitigating inflationary pressures.

“Nothing really new; they do this from time to time to help. The price freeze could have been prompted by increased competition with local and even foreign/imported alternatives,” Mr. Ricafort said.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the voluntary price freeze is “a welcome example of good corporate citizenship that will help many consumers cope with inflation.”

He added that since it is only temporary in nature, the volunteers are signaling that they can manage any impact on their profitability.

“Meanwhile, the government and private sector have to continue working together for long-term solutions to increase productivity, improve supply chain efficiency, and ensure price stability,” he added.

The consumer price index rose 3.9% in May, the fastest rise since November 2023, according to the Philippine Statistics Authority’s report.

This was also higher than the 3.8% in April and brought the five-month average to 3.5%. — Justine Irish D. Tabile

Indo-Pacific framework seen playing key role in clean energy transition

REUTERS

THE Department of Trade and Industry (DTI) said on Saturday that collective action is needed to address the clean energy transitions and anti-corruption efforts.

The statement was issued in the wake of the signing of the Clean Economy and Fair Economy Agreements, as well as the Overarching Agreement on the Indo-Pacific Economic Framework for Prosperity (IPEF) agreements at the IPEF Ministerial Meeting last week.

Trade Secretary Alfredo E. Pascual said that the agreements will help empower the Philippines by boosting its value proposition as a key trade ally and prime location for strategic, sustainable, and inclusive investments.

“(These agreements) by providing access to technical assistance, capacity-building, and other collaborative activities such as best practices and information sharing, support for infrastructure modernization, workforce and project development, public-private partnerships, and collaboration with academia,” he added.

Mr. Pascual said that the agreement on clean economies will address the needs and gaps in the transition to clean economies.

He added that the cooperative work program “will serve as a platform to exchange ideas and best practices necessary to determine the best approaches towards green transition.”

Meanwhile, the agreement on fair economy will allow the Philippines to seek technical assistance to implement IPEF partners’ commitments under the UN (United Nation) Convention Against Corruption.

Mr. Pascual said that the agreement will help improve transparency and predictability in the business environment within the Indo-Pacific region.

“(These) bring us significantly closer to our vision of a prosperous Indo-Pacific region that is built on secure and resilient supply chains, transition to sustainable and clean economies, and transparency and good governance through robust tax and anti-corruption regimes,” Mr. Pascual said.

“The Philippines will continue to actively engage with the rest of the IPEF partners in working towards realizing our aspirations in this endeavor, and I also look forward to touching base with everyone again later this year,” he added.

The signing of the three agreements follows the implementation of the Supply Chain Agreement, which was signed in San Francisco last year. — Justine Irish D. Tabile

No red alerts projected in coming weeks — DoE

BW FILE PHOTO

THE Department of Energy (DoE) does not expect red alerts to be declared on the power grid in the coming weeks with the power supply stabilizing, though it added that yellow alerts remain a possibility.

“We do not see manual load dropping or red alert (but) we also do not rule out the possibility of having red alert,” Energy Assistant Secretary Mario C. Marasigan said in a forum over the weekend.

Mr. Marasigan said that the chances of declaring alerts has receded recently. No alerts have been issued since Thursday, June 6.

Mr. Marasigan said that the DoE had initially projected the surge in demand to start in mid-May at the 13,900-MW level, but it came earlier than expected, in April, due to the impact of El Niño and the dry season.

“In fact, our projection of 13,900 [MW] was breached on April 24 here in Luzon, we reached 14,017 [MW],” he said.

Mr. Marasigan said that the DoE is preparing for La Niña and the rains it will bring.

“(Power) plants have small footprints but (compared to) the footprint of our transmission lines and distribution utilities — that is what we are preparing for, which hopefully will not be affected,” he said.

On Friday, the government weather service, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration) announced the end of El Niño, with about 59% chance of La Niña developing between July and September.

However, PAGASA said that “the impact of El Niño, such as warmer-than-usual surface temperatures and below-normal rainfall, may still continue in some areas of the country.”

The PAGASA last month announced the onset of the rainy season.

“We do not expect La Niña to have the same negative effect on power generation as El Niño did on several power plants around the country,” Terry L Ridon, public investment analyst and convenor, said in a Viber message when asked to comment.

“However, generation companies should be made to account for the unexpected plant outages during the summer months, as this has caused electricity prices to rise significantly over a three-month period,” he added. — Sheldeen Joy Talavera

US releases more PHL garments caught up in Xinjiang sourcing ban

REUTERS

MORE SHIPMENTS of the top Philippine cotton apparel exporter to the US have been released after having been detained due to the US crackdown on cotton sourced from the restive Chinese region of Xinjiang, the Confederation of Wearable Exporters of the Philippines (Conwep) said.

“We have experienced the release of additional shipments, and we are still working on the release of other shipments accordingly,” Conwep Executive Director Maritess Jocson-Agoncillo told BusinessWorld.

Asked about the value of the released shipments, she said, “Our exact numbers are not yet available.”

Last month, Conwep said that L&T Clark, which is unit of Hong Kong’s Luen Thai Group, incurred around $5 million in losses after L&T exports to the US were held up while their compliance with the Uyghur Forced Labor Prevention Act (UFLPA) was verified.

Overall Philippine apparel exports held up in the US due to the forced labor act were estimated to have resulted in losses of $6 million.

Ms. Jocson-Agoncillo said that the resulting disruption in shipments has resulted in the retrenchment and forced leaves of over 5,000 workers in the Philippine wearables industry. 

Separately, Bianca Pearl R. Sykimte, director of the Department of Trade and Industry’s Export Marketing Bureau, said that six out of 15 detained shipments have been released.

“With more shipments being released, it will build the confidence of the US authorities that (Philippine) manufacturers really don’t use cotton from (Xinjiang),” Ms. Sykimte told reporters last week.

“We also talked to the experts in the US, and they said that because it involves very voluminous data — probably 500 pages of documentation per shipment — it takes a bit more time,” she added.

However, she said that the Philippines has raised concerns about the Philippine shipments detained in relation to UFLPA.

“When we look at the figures, there are more detained shipments from the Philippines compared to China. I checked the figures, but in terms of percentage, 50% of the total detained shipments were from the Philippines,” she said.

Asked when the DTI expects the release of the remaining shipments, she said that Trade Undersecretary Allan B. Gepty will be engaging in another bilateral dialogue with the US, where he is expected to raise the issue.

“Hopefully, we’ll do another round of meetings with the US in July. So, hopefully, we will have more positive news by then,” Ms. Sykimte said.

She said that the big worry for the exporters is that garments are sensitive to timing due to seasonalities, and that what the Philippines is asking is just the facilitation of the review since they are willing to comply with any proof of evidence being required.

“It’s really a market access issue. Because (our exporters) are really dependent on the US as a market. So for us, the priority is to make sure that they have market access in the US,” she said.

“Well, the US authorities said that once there are already a lot of releases, meaning that there’s no issue, hopefully it builds confidence that the manufacturer doesn’t really source cotton from Xinjiang,” the home region of the Uyghurs currently undergoing persecution in China, she added. — Justine Irish D. Tabile

ADB: Poor ocean health adds urgency to ‘green investments’ 

REUTERS

DECLINING ocean health is strengthening the argument for making “green” investments, the Asian Development Bank (ADB) said.

“The continuing decline of ocean health is already impacting critical economic sectors, threatening the food security and livelihoods of millions,” Melody F. Ovenden, senior environmental specialist at the ADB’s climate change, resilience, and environment cluster, said in a blog.

In Asia and the Pacific, fisheries and aquaculture account for $100 billion a year in terms of economic output.

The so-called blue economy, an economic model seeking the sustainable use of ocean resources through green infrastructure and technology, generates between $3 trillion to $6 trillion yearly.

Ocean-based industries expanded 21.1% in 2022, equivalent to 3.9% of Philippine gross domestic product. These include coastal accommodation, food and beverages, tourism, and offshore or coastal mining and quarrying.

The Philippines scored 58 out of 100 in the 2023 Ocean Health Index, including China’s “destructive” activities in the Philippine exclusive economic zone in the South China Sea.

“Oceans are under significant threat from pollution, ocean acidification, depletion of marine resources, and coastal degradation,” Ms. Ovenden said.

In response, the bank called on governments to push for investments in green ports and shipping, plastic recycling, and a shift in consumer behavior to “ocean-positive” practices.

It must also focus on building “nature-based” infrastructure and establish a natural capital valuation system.

The bank cited a quote from the United Nations, calling the Pacific Ocean “not just ‘the lungs of the planet’ but also its largest ‘carbon sink.’”

Any deterioration “not only jeopardizes marine ecosystems but also have far-reaching effects on global food security, livelihoods, public health, and disaster resilience.”

Countries should also build strong regional partnerships and engage local communities to strengthen ocean health, the ADB said.

Oceans produce half of the globe’s oxygen and catch 90% of excess heat generated by carbon dioxide emissions, it added. — Beatriz Marie D. Cruz

Leveraging GenAI to transform the finance function

IN BRIEF: 

• Firms and departments dealing with finance and accounting can leverage GenAI to enhance data entry and reconciliation, enrich forecasting and analysis, and fortify risk management.

• To be “future ready,” the finance function must embrace digital transformation, which is characterized by being responsive, insightful, and efficient.

The evolution of artificial intelligence (AI) has been remarkable, beginning with the conceptualization of neural networks in 1943 and progressing to the birth of machine learning (ML) in 1959 and the advent of deep learning in 2006. This trajectory led to the era of Generative AI (GenAI), which emerged around 2017. GenAI refers to the subset of AI that focuses on creating new content, from text to images, by learning from vast datasets. This leap forward enables machines to not only interpret data, but also to generate original outputs that can mimic human creativity and reasoning.

As the technology becomes more sophisticated, consumers are increasingly integrating large language models (LLMs), an application of GenAI, into their daily lives. From asking virtual assistants for weather updates to receiving personalized recommendations, the comfort and confidence in using such technology are on the rise. This adoption signifies a shift in the public’s perception of AI, viewing it as a reliable and integral part of modern living.

Part of this shift can be seen in how GenAI is revolutionizing strategic business thinking, enabling businesses to unlock new revenue sources, achieve productivity gains, and innovate existing business models, ultimately leading to value creation. In particular, firms and departments dealing with finance and accounting can leverage GenAI to enhance data entry and reconciliation, enrich forecasting and analysis, and fortify risk management.

GENAI APPLICATIONS IN THE FINANCE FUNCTION
The finance function is pivotal in supporting optimized enterprise decisioning — and rethinking enterprise structures through the lens of GenAI is key to unlocking a spectrum of new possibilities for value creation. Knowledge management and decision support in particular are among the most potent use cases for scaled AI capabilities.

GenAI can enhance an organization’s data value by asking better questions, optimizing multi-variable choices, and enabling actions at scale. In addition, GenAI can write code on demand to extract information from data sources, create reports with appropriate data visualization, and provide persona-based analysis. It also enables conversations with virtual agents for a deeper understanding of results. 

In monthly financial reporting cycles, analysts would traditionally spend hours writing code to extract data from various sources, compiling it into spreadsheets, and then painstakingly creating visualizations. GenAI allows them to input their requirements, after which the AI writes the necessary code on demand, pulling information from databases, cloud storage, and even real-time market feeds.

The data is not just tabulated — it’s transformed into compelling visual reports that highlight key financial metrics and trends. Moreover, GenAI can provide persona-based analysis, tailoring insights to the specific needs of each stakeholder. The CFO receives a high-level overview emphasizing strategic implications, while line managers get detailed breakdowns relevant to their departments.

Content creation, a repetitive and complex task, has also been redefined by GenAI. Finance teams can leverage GenAI to assist in generating various analytical documents. Variance reports, budgets, and forecasts are produced with a level of detail and accuracy that was previously unattainable. GenAI sifts through historical data, identifies anomalies, and presents findings in a clear, concise manner. Moreover, GenAI can extend its capabilities to responding to common queries from colleagues or clients. Instead of drafting individual responses, finance professionals can rely on GenAI to provide accurate and contextually relevant answers, freeing up their time for more strategic tasks.

GenAI has become an essential collaborator in meetings and project planning as well. It helps document discussions, distilling them into actionable items and comprehensive plans.

Last but not the least, perhaps the most transformative application of GenAI within the finance function is in forecasting. A GenAI model can take in vast amounts of historical financial data and current market trends to predict future performance with remarkable accuracy. It identifies patterns that might elude even the most experienced analysts and uses natural language processing to incorporate insights from news articles and external data sources. This ability allows organizations to anticipate market movements and adjust their strategies proactively. Whether in terms of revenue, expenses, profit, or cash flow, forecasts can provide more than just numbers — they can become strategic tools that inform decision-making at the highest levels.

REALIZING GENAI ADVANTAGES
To fully realize the advantages of GenAI in finance and accounting, companies need to enhance their finance and accounting functions with innovation intelligence, invest in infrastructure and develop talent in AI while putting proper governance and controls in place.

Amidst the possibilities and efficiencies that AI can create for the finance function, blind optimism and hype around this disruptive technology can have a counterproductive impact on a business that is unaware of its risks. To avoid this, companies can take the “innovation intelligence” approach through implementing planning, education and an agile test and learn strategy.

Another critical determinant of an organization’s success will be how they enhance their comprehension of and refine their data infrastructure. Companies should have a tech stack with a solid foundation and support from experts to ensure their legacy data and technologies are unimpeachable before adding any GenAI applications on top of existing systems.

Based on the EY 2023 Financial Services GenAI Survey, 44% of leaders identify access to skilled resources as a barrier to GenAI implementation. Part of the solution is to deploy upskilling programs that can equip the current workforce with the necessary skills in an increasingly AI-centric world. The human role of AI implementation is just as important as technology infrastructure.

THE GENAI IMPERATIVE IN THE FINANCE FUNCTION
Incorporating GenAI into finance is not just an option — it has become an imperative for long-term value creation. However, while it brings significant gains, it is also crucial to be mindful of potential risks. While aligning GenAI across the organization will be essential to unlock greater value, organizations must consider how GenAI can be used not only to transform the finance function, but also to redefine the future of business decision-making.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Maria Kathrina S. Macaisa-Peña is a business consulting partner and the PH Finance Fields of Play leader of SGV & Co.

Philippines told not to rely on ASEAN to resolve maritime dispute with China

PHILIPPINE COAST GUARD FILE PHOTO

By Kyle Aristophere T. Atienza and John Victor D. Ordoñez, Reporters

THE GOVERNMENT of President Ferdinand R. Marcos Jr. should temper its expectations for the Association of Southeast Asian Nations (ASEAN) under the leadership of Malaysia to support its case in its sea dispute with China, political analysts said.

Philippine officials who push security measures focused on ASEAN’s ways should consider the bloc’s “long track record of failing to respond to maritime security issues,” said Raymond M. Powell, a fellow at the Gordian Knot Center for National Security Innovation at Stanford University.

“The Philippines should temper its expectations of what support it can expect from ASEAN,” he said in an X message. “China has exploited ASEAN’s divisions to drag out the Code of Conduct negotiations for over two decades while consolidating its effective control over the South China Sea.”

“There is no downside to reminding ASEAN about China’s maritime aggression, as several of its other member states face the same adversary, if not as acutely,” Mr. Powell said. “However, the Philippines has years of painful experience that ASEAN is not an effective collective security organization.”

He added that ASEAN’s ineffectiveness as a forum against China’s incursions in the South China Sea is why the Marcos administration is seeking global partners.

“It is unlikely that Malaysia’s chairmanship will result in any groundbreaking or radical changes in steering ASEAN towards overtly stating the acute challenges the Philippines faces from China in the maritime domain,” Don Mclain Gill, who teaches international relations at De La Salle University in Manila, said in a Facebook Messenger chat.

“From Manila’s point of view, a prudent and practical expectation towards ASEAN’s position on the South China Sea should be expected,” he added.

The 10-member bloc will be headed by Malaysia, which is known for its strong trade ties with China, next year.

Malaysian Prime Minister Anwar Ibrahim said on the sidelines of the Shangri-la dialogue in Singapore last month that external parties should not be involved in the South China Sea dispute.

Tensions between the Philippines and China have worsened in the past year as Beijing continues to block resupply missions to Second Thomas Shoal, where Manila grounded a World War II-era ship in 1999 to assert its sovereignty.

There have been renewed calls for Manila to seek the help of ASEAN especially after President Ferdinand R. Marcos told the Singapore security forum his country is still banking on the bloc’s “centrality.”

Mr. Marcos has pursued closer ties with the US and other Indo-Pacific powers such as Japan and Australia amid growing tensions with China.

The Philippines has gained strong international support after it launched a transparency campaign last year that seeks to expose Chinese aggression within the Philippines’ exclusive economic zone such as the use of water cannons and dangerous maneuvers.

In mid-May, the Chinese Coast Guard seized food and supplies meant for Filipino troops stationed at BRP Sierra Madre.

‘CHINA’S TRAP’
Second Thomas Shoal, which is just about 100 nautical miles west of the Philippine province of Palawan, is among the features within the Philippines’ EEZ that are being frequented by Chinese coast guard and militia — and in some cases Navy — ships.

On Sunday, the Stanford-based Project Myoushu reported that China’s maritime militia swarm at Iroquois Reef, located at the southern end of the gas- and oil-rich Reed Bank, has risen to at least 26 ships as of June 2.

Philip Arnold P. Tuaño, dean of the Ateneo de Manila University School of Government, said any plans that limit the scope of Manila’s security plans does not bode well for some of its economic issues, including energy insecurity.

“The Philippines can navigate this complex landscape by fostering bilateral and multilateral partnerships including increasing unofficial links with Taiwan and enhancing cooperation with Japan and South Korea,” he said in an e-mail.

Manila should also strengthen its defense capabilities and leverage international fora such as the United Nations and International Maritime Organization, he added.

“By actively engaging both partners with ASEAN and with external allies and making use of international fora, the county can better safeguard its strategic interests while contributing to regional stability.”

More than $3 trillion worth of trade passes yearly through the sea, which China claims almost in its entirety. A United Nations-backed tribunal in 2016 voided its claim for being illegal.

“Raising this issue with and discussing it in ASEAN is a course of action that should be taken by the Philippine government, but not to the exclusion of other actions that could or are already being taken by the Philippines,” Herman Joseph S. Kraft, former chairman of the University of the Philippines Political Science Department, said in a Viber message. “But will having these dialogues make China less provocative in its actions?”

The Philippines should be careful not to fall into China’s trap of referring its legitimate security concerns solely to bilateral talks on one hand or to ASEAN’s code of conduct negotiations on the other, Mr. Powell said.

He said China shows no interest in completing an enforceable code of conduct for the South China Sea.

ASEAN and China have been in talks as far back as 2002 to craft the code, with both sides seeking to fast-track the measure.

In November, Mr. Marcos said he had approached Malaysia and Vietnam to discuss crafting a code of conduct, citing limited progress in striking a broader regional pact with Beijing.

The Chinese Foreign Ministry has said it is willing to work with ASEAN members including the Philippines to manage differences at sea and deepen sea-related cooperation.

“The question, however, is what is the intended outcome of any of these actions including having dialogues with ASEAN?” Mr. Kraft asked.

“Will resupply missions to Ayungin (Second Thomas Shoal) be allowed to proceed without any preconditions tantamount to accepting China’s interpretation of the status quo in the West Philippine Sea?”

Jeepney manufacturer says consolidation should not be forced

PHILSTAR

By Chloe Mari A. Hufana

JEEPNEY consolidation under the Philippines’ modernization plan should be optional to ease the burden on operators and drivers, according to a local jeepney manufacturer.

“Jeepney operators who see the benefits of forming a cooperative or corporation should be allowed to form one,” Francisco Motors Chairman Elmer B. Francisco said in a Zoom interview. Let them do it.”

“But for those who don’t see the benefits and can modernize without joining a cooperative or corporation, let them do so as well. Why force them?” he asked.

Mr. Francisco, whose family has been making jeepneys for more than three decades, noted that the government’s consolidation plan forces jeepney operators to work with each other when they are supposed to be competitors.

“If you try to bring them together, it will only create more chaos,” he told BusinessWorld in Filipino. “That’s what’s happening.”

Mr. Francisco said operators and drivers should be able to see the pros and cons of joining a cooperative and decide accordingly.

On Dec. 29, 2023, the Land Transportation Franchising and Regulatory Board (LTFRB) issued an order requiring jeepney operators to join or build cooperatives to make routes more efficient.

Jeepney drivers say joining a cooperative is expensive and forces them to give up ownership of their own vehicles. Joining a cooperative costs at least P20,000.

Jeepney driver Christian Erik V. Lirag said he had to join a cooperative so he doesn’t lose his livelihood.

“I don’t think it’s right because it feels forced,” he said in a Facebook Messenger chat. “There’s no choice, otherwise we won’t be able to operate. It’s better to make it optional because we can modernize without taking out bank loans or joining a cooperative or corporation.”

He said about 100 jeepney operators in his Balic-Balic-Quiapo route in Manila have joined the consolidation.

The modernization program seeks to eventually replace traditional jeepneys with modern ones that have at least a Euro-4-compliant engine to lessen pollution.

Francisco Motors plans to offer fully electric modern jeepneys that cost P1.99 million starting next year.

LTFRB Chairman Teofilo E. Guadiz III on May 15 said about 1,900 public utility vehicles had not joined the program. But transport group PISTON said more than 20,000 units in the capital region alone had not been covered by the consolidation.

Transportation Secretary Jaime J. Bautista said 80% of PUVs have consolidated.

PISTON has filed an amended lawsuit asking the Supreme Court to stop the state’s modernization program.

The LTFRB and the Transportation department have said unconsolidated jeepneys found plying their routes would be apprehended.

Erring drivers or operators would be slapped with a P10,000 fine and their vehicles impounded for a month. They also face a one-year suspension.

Transport group Manibela will hold another three-day transport strike starting June 10. It has cited a House of Representatives initiative for a one-year moratorium on the crackdown.

Last month, congressmen asked transport officials to suspend the crackdown and give unconsolidated jeepney operators a one-year grace period to modernize their units.

Manila to continue resupply missions to disputed shoal

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

THE PHILIPPINES at the weekend said it would continue to conduct resupply missions to its outpost at Second Thomas Shoal in the South China Sea and would not seek permission from other countries including China.

“Our operations are conducted within our own territorial waters and exclusive economic zone, and we will not be deterred by foreign interference or intimidation,” National Security Adviser Secretary Eduardo Año said in a statement.

Chinese Foreign Ministry spokesperson Mao Ning on Friday said Beijing would allow the Philippines to send vital supplies to BRP Sierra Madre if it gives advance notice, a remark that Mr. Año described as “absurd, nonsense and unacceptable.”

“We do not and will never need China’s approval for any of our activities there,” he added.

Last week, Manila said the Chinese Coast Guard had seized food and supplies meant for a handful of Filipino troops stationed at BRP Sierra Madre on May 19.

This was after Beijing accused the Filipino soldiers of pointing a gun at its coast guard vessel, which Manila has denied.

The Philippines grounded BRP Sierra Madre, a World War II-era ship, at the shoal in 1999 to assert its sovereignty.

Manila also accused China’s coast guard of conducting dangerous maneuvers against a Filipino vessel that evacuated an injured Filipino soldier from the outpost also in May. Mr. Año said this was not only a violation of international law “but also of basic human rights.”

“The recent reports of Chinese forces allegedly seizing food and medical supplies meant for our advance post in Ayungin Shoal (Second Thomas Shoal) are equally reprehensible and warrant a thorough investigation and accountability,” he added.

The shoal, which is about 100 nautical miles west of the Philippine province of Palawan, is among the features within the Philippines’ exclusive economic zone that are frequented by Chinese coast guard and militia — and in some cases Navy — ships.

On Sunday, Stanford University’s Project Myoushu reported that China’s maritime militia vessel swarming at Iroquois Reef at the southern end of the gas- and oil-rich Reed Bank had risen to at least 26 as of June 2. — Kyle Aristophere T. Atienza

Anti-crime body says POGO raid leaked

THE PRESIDENTIAL Anti-Organized Crime Commission (PAOCC) said on Sunday it was convinced that its raid of the biggest Philippine Offshore Gaming Operators (POGO) compound in Porac, Pampanga last week had been leaked out prior to the operation.

“We were going to rescue over a thousand foreign nationals,” PAOCC Spokesperson Winston John R. Casio told a news briefing, noting that only 160 were rescued from the 10-hectare compound where 46 buildings were located.

Mr. Casio said an investigation is ongoing to identify who among their ranks could have sounded the alarm that the POGO hub was going to be raided on June 5, three days after Judge Maria Belinda C. Rama of the Malolos Regional Trial Court Branch 14 issued the search warrant.

“It’s impossible no one had leaked it (the raid),” said Mr. Casio, speaking partly in Filipino. “We’re investigating and once we find out (who it was), the government will not be forgiving.”

He also said that four of those they rescued sustained severe injuries with one of them suffering from bruises and chain-whipping marks, while another claimed to have been starved for 10 days.

At least two of those rescued in the compound said they were kidnapped, added Mr. Casio.

One of them, a Chinese national, claimed being kidnapped at the Ninoy Aquino International Airport (NAIA) Terminal 1, while the second, also a Chinese, was abducted in Pasay City.

The Porac POGO compound, operated by Lucky South 99 Outsourcing Incorporated, is bigger than the Zun Yuan Technology Incorporated in Bamban, Tarlac, which was raided last March 13.

So far, authorities have only investigated four to five buildings out of 46 buildings in the Porac POGO compound.

From January to November 2023, authorities found 66 bodies in POGO compounds in Central Luzon.

Mr. Casio said that in the past year, the PAOCC has identified 402 unlicensed POGOs and that based on their monitoring, 100 of these are still operating.

He admitted it would take years before all illegal POGOs could be closed down.

Meanwhile, Secretary of Justice Jesus Crispin C. Remulla affirmed the Department of Justice’s (DoJ) hard stance against illegal POGO operations in the country.

“Foreigners are welcome to stay here in our country and may treat it as their own home as long as they whole-heartedly follow our laws accordingly and unconditionally. This is the only and last warning to every alien staying in the Philippines, lest they face severe legal consequences,” he said in a statement. — Chloe Mari A. Hufana

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