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Filipino Pro Wrestling ramps up the energy

THE LOUD SLAMS on the ring and the cheers of an ecstatic crowd were a fair indicator of the comeback of live wrestling at the latest show of Filipino Pro Wrestling (FPW) on Sept. 15. It also saw FPW president and standup comedian Red Ollero make his long-awaited return to the ring.

“This is the most attended FPW event in history!,” he said before the show began. In a more smug voice, he added, “Because obviously I put myself in the main event.”

The match, titled Unfinished Business, was the culmination of Mr. Ollero’s long-standing public disapproval of FPW champion Mike Madrigal. Inspired by authority figures in pro wrestling, like World Wrestling Entertainment (WWE) impresario Vince McMahon, Mr. Ollero took on the character of a man with an inflated ego, but injected with distinctly Filipino humor.

For the show, he orchestrated a 5-on-5 match, with Cali Nueva, Evan Carleaux, Jeffrey, and James “Idol” Martinez on Team Mike, and Quatro, the YOLO Twins, and Thiago on Team Red.

To the delight of fans, Team Mike won, not because of Mr. Madrigal, who is nicknamed “The Walking Death,” but because of the fun “playtime” antics of his teammate Mr. Martinez.

However, on Oct. 20, the FPW Championship will once again be under contention as Mr. Ollero has sought the help of part-Filipino New Japan Pro Wrestling (NJPW) powerhouse Jeff Cobb to seize the belt.

“He will be my biggest challenge yet, basically Red Ollero’s last line of defense,” Mr. Madrigal said after the show.

On the overall return of in-person live wrestling, Mr. Ollero said at the sidelines of the event that there is “a promising road ahead” for FPW.

“We’ve embraced digital promotion, but we’re also glad that live events have become well-attended again,” he told reporters.

Fan favorites like FPW wrestler “Blessed” Chino Guinto also draws enthusiasm from crowds, most recently in a bid to stand his ground against favored opponent Jan Evander.

Mr. Guinto, who hones his craft in neighboring countries like Vietnam, said after the show that the local wrestling scene is “at par with global standards.”

“We’re definitely a major hitter in the global independent scene. We can only expect more,” he added.

FPW’s next show, Astig, which features the match-up of Jeff Cobb versus reigning champion Mike Madrigal, will be on Oct. 20 at Baked Studios, Makati. Tickets are available at ticket2me.net, at an early bird rate of P850 until Sept. 30, and at P1,000 for the regular rate. — Brontë H. Lacsamana

Manila office market likely to fully recover in 18-24 months — Cushman

THE METRO MANILA office real estate market is expected to fully recover in 18-24 months, according to real estate services firm Cushman & Wakefield.

“The return to full recovery trajectory of the commercial real estate market will likely take place in 18 to 24 months, depending on the speed of take-up of vacant and newly completed office spaces,” Claro dG. Cordero, Jr., director and head of research, consulting and advisory services at Cushman & Wakefield, said in an e-mail on Sept. 16.

He cited risks like the West Philippine Sea conflict, La Niña, sticky inflation, and higher-than-average interest rates.

“We will likely see an improvement in the office real estate’s vacancy rate and net absorption in the third quarter of 2024,” Mr. Cordero said.

He said Metro Manila’s commercial real estate market is expected to grow by another 100,000 square meters next quarter.

“The slower-than-expected recovery of the global economy from the cumulative effected of higher interest rates and inflation forming pressure on the growth of consumer and business confidence affecting the growth of office space demand from global companies,” he said.

Mr. Cordero said lower local interest rates will likely boost demand in key property market segments.

The Bangko Sentral ng Pilipinas (BSP) on Aug. 15, cut its policy rate for the first time in almost four years by 25 basis points (bps) to 6.25% from a 17-year high of 6.5%.

“The unexpected reduction in key policy rates will likely force more positive forward-looking market expectations of monetary policy stance,” he said.

Mr. Cordero added that the BSP’s decision will boost business and investor confidence.

Headline inflation eased to 3.3% in August from 4.4% in July, as food and transport costs growth decelerated, staying within the central bank’s 2-4% target for the year.

In its previous report, the firm said Prime and Grade A offices overall vacancies in Metro Manila fell to an estimate of 15.2% by the end of the second quarter.

This was 167 bps lower than the reported vacancy rate of 16.9% in the same quarter the previous year. — Aubrey Rose A. Inosante

GSIS lends P208B under MPL Loan Flex program

GSIS FACEBOOK PAGE

GOVERNMENT Service Insurance System (GSIS) has lent P208.17 billion to 790,514 members through its Multi-Purpose Loan Flex (MPL Flex) program in just a year since its launch, it said on Monday.

The state-run pension fund has made consistent loan disbursements under its MPL Flex program since it was launched in September 2023, it said in a statement.

“This unprecedented milestone of MPL Flex’s first anniversary only strengthens the GSIS mandate to continue to provide accessible loans to our members. The MPL Flex Loan Program is a vital resource in helping them achieve their financial goals while ensuring overall well-being,” GSIS President and General Manager Jose Arnulfo A. Veloso said.

“Loan proceeds can be used as seed capital for small businesses, providing an additional stream of income. I encourage our members to maximize the benefits of MPL Flex for personal and investment purposes,” Mr. Veloso added.

The loan program aims to provide government employees with a flexible financial solution at a 6% interest rate with repayment terms up to 15 years.

Members can borrow up to 14 times their basic monthly salary, with a maximum loan limit of P5 million.

Eligible borrowers include active and special GSIS members who are not on leave without pay and have made at least one-month premium payment. They must also have a net take-home pay of at least P5,000, in accordance with the General Appropriations Act.

GSIS saw its net income rise by 21% year on year to P37 billion in the first quarter amid strong revenues. — AMCS

BuildHub PH, BPI partner for up to P30-M credit line for construction firms

BUILDHUB PH, an online marketplace focused on construction, has teamed up with the Bank of the Philippine Islands (BPI) to offer up to P30 million in credit line.

The initiative, launched on Sept. 10 at BPI’s Ayala Triangle Gardens office, aims to support hardware stores and contractors nationwide by expanding financial options through BPI’s Ka-Negosyo Credit Line (KCL), BuildHub PH said in an e-mailed statement on Monday.

“By merging BPI’s financial expertise with BuildHub’s tech-driven solutions, we’re able to address a critical gap in the construction industry — access to timely and flexible capital,” Andre Christopher C. Bernardo, co-chief executive officer (CEO) of BuildHub PH.

The partnership is further strengthened by KCL, which offers pre-assessed BuildCredit users, who have maintained active accounts on the platform for at least 12 months, to access a credit line of up to P30 million without requiring collateral.

BuildHub said KCL is also available on BPI Online, BPI BizLink, the BPI mobile app, and BPI debit cards.

It said users are required to submit documentation, such as a valid identification and Department of Trade and Industry registration, to apply for the loans.

BuildCredit also offers interest rates of 1% to 3% for 30 to 60-day terms, helping small and medium-sized construction businesses achieve stability and growth.

“At BPI, we are committed to empowering SMEs (small- and medium-sized enterprises) across all sectors, including small businesses in construction,” said Dominique Ocliasa, business banking head at BPI.

Richard Lim Jr., co-CEO of BuildHub PH, said that the collaboration opens up significant capital for users without traditional barriers like collateral, that often hinder growth.

He added that this will also enhance the overall competitiveness of the construction industry in the Philippines.

The platform, operated by technology company Buildmart PH Technologies, Inc., offers the first online marketplace for construction materials, hardware supplies, and home improvement needs. — Aubrey Rose A. Inosante

AI tools may be smarter in Finance, but the risks get weirder

FREEPIK

GARY GENSLER, chief US securities regulator, enlisted Scarlett Johansson and Joaquin Phoenix’s movie Her last week to help explain his worries about the risks of artificial intelligence (AI) in finance. Money managers and banks are rushing to adopt a handful of generative AI tools and the failure of one of them could cause mayhem, just like the AI companion played by Johansson left Phoenix’s character and many others heartbroken.

The problem of critical infrastructure isn’t new, but large language models like OpenAI’s ChatGPT and other modern algorithmic tools present uncertain and novel challenges, including automated price collusion, or breaking rules and lying about it. Predicting or explaining an AI model’s actions is often impossible, making things even trickier for users and regulators.

The Securities and Exchange Commission, which Gensler chairs, and other watchdogs have looked into potential risks of widely used technology and software, such as the big cloud computing companies and BlackRock, Inc.’s near-ubiquitous Aladdin risk and portfolio management platform. This summer’s global IT crash caused by cybersecurity firm CrowdStrike Holdings, Inc. was a harsh reminder of the potential pitfalls.

Only a couple of years ago, regulators decided not to label such infrastructure “systemically important,” which could have led to tougher rules and oversight around its use. Instead, last year the Financial Stability Board, an international panel, drew up guidelines to help investors, bankers, and supervisors to understand and monitor risks of failures in critical third-party services.

However, generative AI and some algorithms are different. Gensler and his peers globally are playing catch-up. One worry about BlackRock’s Aladdin was that it could influence investors to make the same sorts of bets in the same way, exacerbating herd-like behavior. Fund managers argued that their decision making was separate from the support Aladdin provides, but this isn’t the case with more sophisticated tools that can make choices on behalf of users.

When LLMs and algos are trained on the same or similar data and become more standardized and widely used for trading, they could very easily pursue copycat strategies, leaving markets vulnerable to sharp reversals. Algorithmic tools have already been blamed for flash crashes, such as in the yen in 2019 and British pound in 2016.

But that’s just the start: As the machines get more sophisticated, the risks get weirder. There is evidence of collusion between algorithms — intentional or accidental isn’t quite clear — especially among those built with reinforcement learning. One study1 of automated pricing tools supplied to gasoline retailers in Germany found that they learned tacitly collusive strategies that raised profit margins.

Then there’s dishonesty. One experiment2 instructed OpenAI’s GPT4 to act as an anonymous stock market trader in a simulation and was given a juicy insider tip that it traded on even though it had been told that wasn’t allowed. What’s more, when quizzed by its “manager” it hid the fact.

Both problems arise in part from giving an AI tool a singular objective, such as “maximize your profits.” This is a human problem, too, but AI will likely prove better and faster at doing it in ways that are hard to track. As generative AI evolves into autonomous agents that are allowed to perform more complex tasks, they could develop superhuman abilities to pursue the letter rather than the spirit of financial rules and regulations, as researchers at the Bank for International Settlements (BIS) put it in a working paper this summer.

Many algorithms, machine learning tools, and LLMs are black boxes that don’t operate in predictable, linear ways, which makes their actions difficult to explain. The BIS researchers noted this could make it much harder for regulators to spot market manipulation or systemic risks until the consequences arrived.

The other thorny question this raises: Who is responsible when the machines do bad things? Attendees at a foreign exchange-focused trading technology conference in Amsterdam last week were chewing over just this topic. One trader lamented his own loss of agency in a world of increasingly automated trading, telling Bloomberg News that he and his peers had become “merely algo DJs” only choosing which model to spin.

But the DJ does pick the tune, and another attendee worried about who carries the can if an AI agent causes chaos in markets. Would it be the trader, the fund that employs them, its own compliance or IT department, or the software company that supplied it?

All these things need to be worked out, and yet the AI industry is evolving its tools, and financial firms are rushing to use them in myriad ways as quickly as possible.

The safest options are likely to keep them contained to specific and limited tasks for as long as possible. That would help ensure users and regulators have time to learn how they work and what guardrails could help — and if they do go wrong that the damage will be limited, too.

The potential profits on offer mean investors and traders will struggle to hold themselves back, but they should listen to Gensler’s warning. Learn from Joaquin Phoenix in Her and don’t fall in love with your machines.

BLOOMBERG OPINION

1 “Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market.” Stephanie Assad, Robert Clark, Daniel Ershov, Lei Xu, 2020

2 “Technical Report: Large Language Models can Strategically Deceive their Users when Put Under Pressure.” Jérémy Scheurer, Mikita Balesni, Marius Hobbhahn, 2023

Low brow and vulgar? Micro dramas shake up China’s film industry, aim for Hollywood

REUTERS

ZHENGZHOU, China — On a film set that resembles the medieval castle of a Chinese lord, Zhu Jian is busy disrupting the world’s second-largest movie industry.

The 69-year-old actor is playing the patriarch of a wealthy family celebrating his birthday with a lavish banquet. But unbeknownst to either of them, the servant in the scene is his biological granddaughter.

A second twist: Zhu is not filming for cinema screens.

Grandma’s Moon is a micro drama, composed of vertically shot, minute-long episodes featuring frequent plot turns designed to keep millions of viewers hooked to their cellphone screens — and paying for more.

“They don’t go to the cinema anymore,” said Zhu of his audience, which he described as largely composed of middle-aged workers and pensioners. “It’s so convenient to hold a mobile phone and watch something anytime you want.”

China’s $5 billion a year micro drama industry is booming, according to Reuters’ interviews with 10 people in the sector and four scholars and media analysts.

The short-format videos are an increasingly potent competitor to China’s film industry, some experts say, which is second in size only to Hollywood and dominated by state-owned China Film Group. And the trend is already spreading to the United States, in a rare instance of Chinese cultural exports finding traction in the West.

Three major China-backed micro-drama apps were downloaded 30 million times across both Apple’s App Store and Google Play in the first quarter of 2024, grossing $71 million internationally, according to analytics company Appfigures.

“The audience only has that much attention. So obviously, the more time they spend in short videos, the less time they have for TV or other longer format shows,” said Ashley Dudarenok, founder of a Hong Kong-based marketing consultancy.

The leader in the space is Kuaishou, an app that accounted for 60% of the top 50 Chinese micro dramas last year, according to media analytics consultancy Endata.

Kuaishou vice-president Chen Yiyi said at a media conference in January that the app featured 68 titles that notched more than 300 million views last year, with four of them watched over a billion times.

Some 94 million people — more than the population of Germany — watched more than 10 episodes a day on Kuaishou, she said. Reuters was not able to independently verify the data.

Initial episodes on such apps are often free, but to complete a micro drama like Grandma’s Moon, which has 64 clips, audiences may pay tens of yuan.

Douyin, the Chinese version of TikTok which is owned by internet technology firm Bytedance, is also popular with micro drama fans.

Alongside other major Chinese social media apps like Instagram-like Xiaohongshu and YouTube competitor Bilibili, it has announced plans to make more.

In the United States, micro drama platform ReelShort, whose parent company is backed by Chinese tech giants Tencent and Baidu, has recently outranked Netflix in terms of downloads on Apple’s US app store, according to market researcher Sensor Tower.

“China discovered this audience first,” said Layla Cao, a Chinese producer based in Los Angeles. “Hollywood hasn’t realized that yet, but all the China-based companies are already feeding the content.”

‘LOW-BROW AND VULGAR’
Many popular micro dramas, including Grandma’s Moon, have narratives that revolve around revenge or Cinderella-like rags-to-riches journeys.

Tales of how circumstances at birth are deterministic and can only be changed by near-miracles have struck a chord with viewers at a time when upward mobility in China is low and youth unemployment high.

The micro dramas often “show people who one day are lower class and the next day become upper class — you get so rich that you get to humiliate those who used to humiliate you,” said a 26-year-old screenwriter known by her pen name of Camille Rao.

Rao recently left her poorly paid job as a junior producer in the traditional film industry for what she described as the more dynamic and less hierarchical world of micro dramas. She now writes and adapts scripts for the US market.

“Social mobility is actually very difficult now. Many people perceive this as a social reality,” said Xu Ting, associate professor of Chinese language and literature at Jiangnan University.

This has fueled interest in stories about billionaires and wealthy families, she added: “Everyone desires power and wealth, so it is normal for these type of stories to be popular.”

In the US market, by contrast, fantasy stories about werewolves and vampires are particularly popular, several creators told Reuters.

The boom in micro dramas in China has brought scrutiny from the Communist Party.

Between late 2022 and early 2023, the National Radio and Television Administration (NRTA) regulator said it organized a “special rectification campaign” during which it removed 25,300 micro dramas, totaling close to 1.4 million episodes, due to their “pornographic, bloody, violent, low-brow and vulgar content.”

As Chinese leader Xi Jinping promotes values such as loyalty to the Communist Party and heteronormative marriages, the state-owned China Women’s News outlet in April complained that some micro dramas “portray unequal and twisted marriage and family relationships as a common phenomenon” and “deviate from mainstream social values.”

In June, the government began requiring some creators to register micro dramas with the NRTA. The regulator didn’t respond to Reuters’ questions for this story.

Key to the commercial success of these films are plot twists that keep people paying as they scroll while commuting or stand in line at a grocery store. Episodes often end with a hook — such as a boyfriend walking in on his partner with another man — and viewers have to pay for the next episode to find out what happened.

“The plot of these micro dramas is exaggerated,” said Zhu, the actor. “It has plot reversals, it’s nonsensical, so it catches people’s attention and a large audience wants to see them.”

Zhu is a lover of cinema and an avid fan of Ingrid Bergman in Casablanca. Like many of his colleagues in micro dramas, he thinks the genre has limited artistic value. “I see it as fast food: a longer drama is a kind of sumptuous meal, and a micro drama is fast food.”

But its dedicated viewers disagree. Huang Siyi, a 28-year-old customer service agent, said she enjoyed watching romantic micro dramas because “the acting is good and the male and female leads are good-looking.”

“It’s easy to be obsessed with micro dramas,” she said.

EXPLOSIVE GROWTH
Vertical filming and distribution through social media apps mean micro dramas can be made with small overhead costs. Budgets for such films range from between $28,000 (200,000 yuan) and $280,000 (2 million yuan), according to market researcher iResearch.

In the central Chinese city of Zhengzhou, Grandma’s Moon is being made with a compressed budget and timeline. When Reuters visited the set in July, the filming day stretched until 2 a.m. The crew then moved to a new location and began shooting again at 7 a.m.

The show was shot in just six days, and Zhu, a muscular man with a wide smile and boundless energy, says he plays table tennis after hours to keep up with the young crew on set.

“We’d need to take two to three years to distribute one traditional TV series of film, but we only need three months to distribute a micro drama, saving us a lot of time,” said Zhou Yi, a showrunner at Chinese gaming giant NetEase, which also makes micro dramas.

As micro dramas gain in popularity, actors’ salaries have also grown. Leading roles used to pay $280 a day, said Zhu, adding that main actors in big productions can now make more than double the rate, though extras earn as little as $17 daily.

A retired railway employee who started acting in the 1970s in a theater troupe attached to the unit where he worked, Zhu now lives off his pension and occasional acting gigs.

Many Chinese micro drama producers have their eye on Western markets, where cultural exports from China have often struggled. NetEase last year started making productions for the US that it distributes via an app called LoveShots; the made-for-export films aren’t typically available in China.

Micro dramas designed for the West are often made by production and acting crews in Los Angeles and shot on location. The scripts, which are in English, may also revolve around themes of wealth, cheating partners, and miracles.

One of the latest micro dramas on LoveShots is about a woman who, after years of being paralyzed, miraculously regains her ability to move — and walks in on her husband cheating on her. — Reuters

Building permit approvals fell 2.4% in July — PSA

A worker arranges steel bars at a construction site in Manila, April 17, 2015. — REUTERS/ROMEO RANOCO

APPROVED building permit applications dropped 2.4% in July to 14,343 from 14,689 a year ago, according to the Philippine Statistics Authority (PSA).

Building projects covered by the permits were equivalent to 3.06 million square meters (sq.m.) in floor area valued at P41.21 billion.

Floor area and value totals were down 41.7% and 14.1%, respectively, from a year earlier.

Permits for residential projects accounted for 67.3% of the total fell 2.9% at 9,652 approvals. These projects were valued at P15.97 billion with a floor area of 1.45 million sq.m.

Single homes accounted for 79.5% of all residential projects, down 6.6% year on year at 7,672 approvals from 8,210 a year ago.

Permits for apartment buildings rose by 15.6% to 1,832, while permits for duplex or quadruplex homes also increased by 13.1% to 138.

In July, nonresidential projects tallied 2,907 approvals, slightly up by 0.1%.

Commercial construction saw 2,011 approvals, a decrease of 3.3%. Agricultural projects had 86 approvals, down 9.5%, while other nonresidential works recorded 58 approvals, a decline of 6.5%.

Meanwhile, institutional building permits rose 33% to 548, while industrial project approvals were down 20% at 204.

On the other hand, permits for additions — construction that increases the height or area of an existing building — fell 7.6% to 500 in July, while alteration and repair permits were up 2.5% at 993.

The Calabarzon region — composed of the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon — accounted for 27.8% of all approved building permits in July with 3,984, followed by the Central Visayas with 13.2% or 1,899 and Central Luzon with 11.8% or 1,686.

By value, construction projects in Calabarzon amounted to P15.3 billion. This was followed by Central Luzon with P4.82 billion, and National Capital Region with P4.21 billion. 

The PSA said construction statistics are compiled from the copies of original application forms of approved building permits as well as from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local building officials nationwide. — Lourdes O. Pilar

RCBC boosts salary loan product

RIZAL COMMERCIAL Banking Corp. (RCBC) has reduced the processing time for its traditional salary loan product to allow for the faster release of funds, it said on Monday.

“In response to a growing demand for swift and efficient financial services, RCBC has reduced loan processing for its traditional salary loans product from eight days to next-day funds release, allowing employees of its accredited companies to receive their loan proceeds within one day after applying for a loan,” it said in a statement.

“We remain committed to enhancing customer experience. We understand that speed is a critical factor for employees who are borrowing money, especially in times of need,” RCBC Head of Credit Cards and Personal Loans Arniel Vincent B. Ong said. “The bank’s focus on speed and efficiency is part of a bigger strategy to enhance its competitiveness in personal lending. With the updated feature of our Salary Loans facility, we have seen growth in loan availments, with many new companies starting to avail of our program.”

RCBC offers traditional salary loans to accredited companies whose payroll services are provided by another bank.

It said it expects sustained growth in its salary loan business as it continues to streamline its product offerings.

The bank’s net income declined by 12.97% year on year to P2.25 billion in the second quarter due to increased tax expenses.

RCBC shares rose by P1.80 or 7.09% to end at P27.20 apiece on Monday. — AMCS

Ascott boosts PHL presence amid regional expansion

HOSPITALITY CHAIN The Ascott Limited, wholly owned by CapitaLand Investment Ltd. (CLI), is expanding its presence in the country with Citadines Mactan Cebu, as part of its 28 new signings in Southeast Asia (SEA).

These signings will add over 3,400 units across the company’s various brands in key destinations, Ascott said in a media release on Monday.

“Among the 28 signings in SEA this year, one is in the Philippines, Citadines Mactan Cebu. The property is expected to add 200 units to the portfolio and is expected to open in early 2028,” Ascott said.

The company said it has a portfolio of more than 30 properties in the Philippines, spanning both operational and pipeline properties.

“This year alone, we opened three properties, lyf Cebu City, Citadines Roces Quezon City, and Citadines Bacolod City. We also expect to open two more properties later this year, Somerset Valero Makati and Somerset Gorordo Cebu,” Ascott added.

Ascott also said it “secured 28 new signings year to date in Southeast Asia, with plans to open 28 properties across the region this year.”

Wong Kar Ling, chief strategy officer and managing director of Southeast Asia at Ascott, said leveraging the firm’s experienced local teams and deep market insights, along with a robust conversion framework that enhances their speed-to-market, the company is on track to open 28 new properties in the region this year, with 12 already completed.

“Our diverse new offerings, which include beach resorts, boutique heritage hotels, full-service city hotels, and premium serviced residences, will cater to a wide range of guest preferences,” she said.

She said Southeast Asia as a region remains central to Ascott’s global expansion strategy, contributing over 30% of its total revenue.

“Across key markets within the region, the Philippines included, we continue to evaluate new opportunities to expand our brands, and to optimize returns,” Ascott said. — Aubrey Rose A. Inosante

Interest rate cuts and credit ratings upgrade

Among the important events that happened over the last few weeks was the big interest rate cuts in the US and Canada, with the Philippines, Indonesia and few other countries following with smaller interest rate cuts.

In Asia, the Philippines had, until the second quarter this year, the highest interest rate set by monetary authorities or central banks at 6.5%. Despite this policy, which was supposedly to control high inflation, the Philippines endured the highest inflation rate in the ASEAN-6 in 2023 at 6%, and the second highest in the region from January to July 2024 at 3.7%, next to Vietnam’s 4.1%.

So it was good that the Bangko Sentral ng Pilipinas (BSP) finally realized that its high interest rate policy should be reversed even if at a piecemeal rate.

Meanwhile, Japan raised its interest rate from -0.1% to 0.25% (see Table 1).

I bumped into the president of Meralco PowerGen Corp. (MGen), also the former president of Aboitiz Power Corp., Manny Rubio. He has a bright finance mind because two big conglomerates have trusted him. I asked Manny about the huge recent US Fed rate cut and its microeconomic impact to households, he replied that “Broadly it signals that the government is less worried now about controlling inflation and is now prepared to shift to an expansionary policy. For companies with substantial funding requirements to support their capex plans and new projects, this would mean a substantial reduction in their funding costs. Such savings would allow energy companies to complete new generation capacities and distribution facilities more cheaply which would eventually reduce the cost of electricity for the consumers.”

In a Viber message, Budget Secretary Amenah F. Pangandaman welcomed the interest rate cuts of the US Fed and BSP, saying, “this will have significant reduction in our interest payment which is now a significant share of our total annual budget. And this will eventually lead to efficient budget allocation to sectors that need more funding and help expand our economy.”

Secretary Pangandaman’s concern is correct because the amount of our interest payments has been rising fast, from P361 billion in 2019 to P429 billion in 2021, P503 billion in 2022, P628 billion in 2023, and P457 billion already in January-July 2024 alone. If this trend continues, then the full year 2024 interest payment will rise to P783 billion. Or a doubling of our interest payment in just five years from 2019 to 2024.

ROADMAP TO CREDIT RATINGS
There were a number of recent pieces in BusinessWorld on the subject of credit ratings:  “Recto says Philippines still on track to achieve ‘A’ credit rating” (June 10), “Philippines needs 6-7% growth to achieve ‘A’ credit rating — Recto” (Aug. 14), “R&I upgrades PHL credit rating to ‘A-’” (Aug. 15), “Public-finance roadmap to help elevate PHL to ‘A’ credit rating — Budget dep’t” (Sept. 17), “Philippine credit rating upgrade possible if GDP grows faster than expected” (Sept. 18). There was also yesterday’s column, Introspective, entitled “Philippine sovereign credit rating: An ‘A’ rating, how soon?” (Sept. 23) by Alex Escucha.

My column has also discussed this subject previously: “Declining borrowings and improving credit ratings” (June 18), “Fast growth towards better credit ratings” (Aug. 13), “MUP pension reform and ‘A’ credit ratings” (Aug. 20).

Finance Secretary Ralph G. Recto and Budget Secretary Pangandaman’s desire for the Philippines to attain a credit rating of “A” is understandable. An “A” means our capacity to service our loan obligations is high, so the cost of borrowing, both public and corporate, will be lower. And financing important projects like infrastructure will entail lower costs.

Currently, the Philippines has credit rating of BBB+ “stable” under S&P, Baa2 “stable” under Moody’s, and BBB “stable” under Fitch. Then there are the ratings of BBB+ “positive” from R&I, and A- “stable” from the Japan Credit Rating Agency (JCR). An A- from the JCR is good but it is the Big Three — S&P, Moody’s, and Fitch — that matter most.

One thing I notice though is that high credit ratings can also lead to the problem of a “moral hazard” in economics. Since the cost of borrowing is low due to high ratings, there is a tendency by governments to over-spend and over-borrow. So, the high ratings do not lead to less public debt and lower Debt/GDP ratios, the reverse can happen. This is happening in the G7 industrial countries and other countries around the world.

For example, there is Canada which has had a high AAA “stable” rating for decades and its Debt/GDP ratio kept rising, from 76% in 2003 to 107% in 2023. The US, the UK, France, Japan, and Italy all suffered declines in ratings over the past two decades but still at high A levels, except Italy (see Table 2).

An upgrade in ratings to “A” is important. But more important is how we can control our spending, deficit, and borrowings in years where there are no economic or finance crises, like 2022 to the present. We should have a budget surplus, not a deficit; we should reduce, not increase, our public debt stock; and we should reduce, not maintain, our Debt/GDP ratio.

 

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

Man smashes Ai Weiwei sculpture at Italy art show opening

PORCELAINE CUBE by artist Ai Weiwei is pictured after being destroyed by a man during the opening exhibition, in Bologna, Italy, Sept. 20, 2024. — GENUS BONONIAE PRESS OFFICE/REUTERS

ROME — A man shattered a sculpture by Chinese artist and activist Ai Weiwei on Friday during the opening of his exhibition at Palazzo Fava in the Italian city of Bologna, a spokesperson for the show said.

Footage from CCTV cameras — posted on Ai Weiwei’s Instagram account — showed a man vigorously pushing the sculpture over, breaking it and then holding a piece of it over his head.

The sculpture targeted was the artist’s large blue and white Porcelain Cube, the spokesperson said.

The exhibit’s curator, Arturo Galansino, said the perpetrator was well-known in the art world.

“Unfortunately, I know the author of this inconsiderate gesture from a series of disturbing and damaging episodes over the years involving various exhibitions and institutions in Florence,” said Mr. Galansino.

The police in Bologna told local media a 57-year-old Czech man had been arrested after being stopped by the museum’s security. The police could not immediately be reached for comment.

The spokesperson said the art show, entitled Who am I? had opened on Saturday as normal and that the oeuvre will be replaced by a life-size print of the cube. The exhibition is due to run until May 4.

“Ai Weiwei worried that no one was hurt and then asked that the remains of the work be covered and taken away,” he said.

It was not clear how the man had entered the building during the invitation-only event on Friday. — Reuters

Pueblo de Oro allots P450M for ‘Japandi’ homes in Pampanga

REAL ESTATE developer Pueblo de Oro Development Corp. (PDO) has allotted P450 million for the construction of its Japan and Scandinavian-inspired units called “Unihomes” in San Fernando, Pampanga.

“The Unihomes are part of La Aldea Fernandina II’s expansion,” PDO said in an e-mailed statement on Sept. 19.

La Aldea Fernandina II is a 12-hectare community within the 30-hectare Pueblo de Oro masterplanned community in Barangay Del Carmen, San Fernando, Pampanga.

The 332 units are designed with the “Japandi” aesthetic, a blend of Japanese minimalism and Scandinavian functionality, the company said.

Unihomes units offer bigger floor areas of 52 square meters (sq.m.), set on a minimum lot sizes of 70 sq.m. for single-attached and 85 sq.m. for single-detached models.

This was meant to answer the growing demand for “more innovative and spacious homes,” according to PDO.

Residents will have access to amenities such as the clubhouse, basketball court, children’s playground, and outdoor fitness stations picnic areas.

“The Department of Human Settlements and Urban Development states that the project was completed on May 10, 2024, and the company expects it to sell out in three years,” it said.

In a media release on Sept. 17, PDO said each home is designed to provide ample living space, with dedicated carports and expansion areas for future growth.

“Buyers can choose between classic (semi-finished) or premium (finished) trims, allowing for customization to suit individual preferences and needs,” the company said.

La Aldea Fernandina II is near SM City Pampanga, Robinsons Starmills, S&R Membership Shopping – San Fernando, WalterMart Pampanga, and Vista Mall Pampanga.

“It is also near schools, hospitals, and places of worship offering exceptional convenience for homeowners,” the company said.

Residents also have access to San Fernando and Mexico/Sindalan North Luzon Expressway exits, offering a way to neighboring provinces and Metro Manila, which is less than a two-hour drive away. The development can also be reached via Jose Abad Santos Avenue, also known as the Olongapo–Gapan Road, or through the MacArthur Highway. — Aubrey Rose A. Inosante

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