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PAL to focus on expanding route network, fleet this year

FLAG carrier Philippine Airlines (PAL) said it remains focused on expansion initiatives to meet market demand and contribute to the tourism industry’s development.

“We are aware of potential economic headwinds in global markets but we remain focused on growing our route network and our fleet progressively to meet market demand and support the tourism industry,” the airline said in a statement to BusinessWorld on Saturday.

PAL is confident about its long-term growth prospects, the airline also said, adding that this trajectory will be supported by its growing route network and an additional fleet.

“PAL and PAL Express are committed to continually improving passenger service and operational efficiency through digital transformation and greater connectivity in our existing hubs in Manila, Cebu and Davao.”

The company is preparing for the arrival of its new aircraft next year, which will include long-range Airbus A350-1000s.

The attributable net income of PAL Holdings, Inc., the listed operator of flag carrier Philippine Airlines (PAL), increased by 33.3% to P4.28 billion in the third quarter from a year earlier. Consolidated revenue rose by 16.7% to P47.13 billion.

Its nine-month attributable net income more than doubled to P15.16 billion.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc. said that airlines are projected to witness “enhanced” profitability in 2024 mainly by passenger revenues.

“Passenger revenues are anticipated to grow in 2024, potentially exceeding double the pre-pandemic  growth trend,” Mr. Arce said in a Viber message.

The Philippines recorded 5.45-million international visitors in 2023, surpassing its 4.8-million target, the Tourism department said. This year, the agency is targeting 7.7-million visitors. — Ashley Erika O. Jose

Quo Vadis, Diokno and Recto

GERD ALTMANN -PIXABAY

On Friday, Jan. 12th, Ralph Recto replaced Benjamin Diokno as the Secretary of the Department of Finance (DoF). After months of speculation, rumors which Mr. Diokno dismissed, Malacañang announced the appointment of Ralph Recto as Finance Secretary. The announcement was done late in the evening, just hours before Recto’s scheduled oath-taking.

President Ferdinand Marcos, Jr. thanked Diokno for “doing a splendid job” and “setting the economy onto the right path.” Meanwhile, the outgoing Secretary Diokno said that he was “pleased” to turn over the DoF to Recto “at a time when the Philippine economy, in general, and the DoF, in particular, are in a better state of affairs than when [he] inherited them.”

Diokno’s exit comes at a time that several crucial tax measures are still pending in Congress. The Real Property Valuation and Assessment Reform (RPVAR) is going through interpellation in the Senate plenary session. The Passive Income and Financial Intermediary Taxation Act (PIFITA), Value-Added Tax (VAT) on Digital Service Providers (DSPs), and excise tax on Single-Use Plastic Bags (SUPs) are pending in the Senate Committee on Ways and Means. Senate counterpart bills have not been filed for the Mining Fiscal Regime Reform and the Motor Vehicle Road User’s Tax (MVRUT); while excise taxes on alcohol and sugar-sweetened beverages are pending in the House Committee.

Altogether, these pending reforms would raise about P146.89 billion in the first year of implementation, or about 4.6% of the total tax revenues projected for 2024. Given the administration’s macroeconomic assumptions, failure to pass these measures would result in an increase in the deficit by 10%, or half about a percent of GDP (Gross Domestic Product).

Just the Monday prior to his departure as Finance Secretary, Mr. Diokno said that he was “fairly comfortable that we’d increase new taxes plus increase our revenue efficiency collection” and expressed confidence that “those tax measures [would] be approved in the first quarter of this year.”

Suddenly, there is new leadership in the DoF that will navigate the quickly shifting political terrain in Congress to pass the administration’s fiscal reforms. Regardless of the change in leadership, several challenges beset the Department.

In September, then Finance Undersecretary Cielo Magno was forced to resign. Executive Secretary Lucas Bersamin issued an official statement on Magno’s termination, saying that “she clearly does not support the administration and its programs for nation-building.” Her resignation came in the wake of her social media post that indirectly criticized the policy of price control on rice. In truth, her position was vindicated, for the administration soon after lifted the price ceiling.

When she was still the Finance Undersecretary, Ms. Magno spearheaded the DoF’s efforts to forward fiscal reforms. But her exit resulted in a stalling or a dilution of the reform bills.

In December 2023, Frederick Go was appointed as Special Assistant to the President for Investment and Economic Affairs (SAPIEA). The Executive Order creating the Office of the SAPIEA designates its head to chair the Economic Development Group (EDG). The EDG is actually a renaming of the Economic Development Cluster (EDC). A noticeable change in creating the SAPEIA is that the role of the Finance Secretary in the EDG has been downgraded. In the EDC, the Finance Secretary was the Chair.

While many have acknowledged Mr. Go’s qualification as SAPEIA, questions have been raised regarding the new organizational leadership structure. One concern is the Finance Secretary’s role in the economic team. The Finance Secretary is presumably the primus inter pares.

In effect, Mr. Diokno, in his remaining days as Finance Secretary, was relegated to a secondary position.

Mr. Diokno already had big expectations to live up to as previous Finance Secretaries had successfully enacted major tax reforms within the first three years of their six-year tenure. It was during the first half of Finance Secretary Cesar Purisima’s tenure that the Sin Tax Reform Law in 2012 was passed. This law nearly doubled tax revenues from tobacco and alcohol — from P55.7 billion in 2012 up to P103.4 billion in 2013. As of 2022, tax revenue from the tobacco and alcohol taxes amounted to P256.2 billion. Further, this reform provided substantial funds for the Universal Health Care program.

Secretary Carlos Dominguez III, during the presidency of Rodrigo Duterte, succeeded in passing comprehensive tax reforms (called the Tax Reform for Acceleration and Inclusion or TRAIN Law) in 2017, a year after Mr. Duterte assumed the presidency. TRAIN provided personal income tax relief (e.g., lower personal income tax rates) to the greatest number of taxpayers but at the same time increased excise taxes and reduced further the VAT exemptions. This delicate balancing act yielded substantial revenues. From 2018 to 2021, TRAIN generated P476.1 billion in additional revenues for the government, which supported the government’s higher infrastructure spending and funded major social programs like universal healthcare.

As of this writing, the Marcos administration has yet to pass a significant revenue-generating measure, which is necessary to address the narrower fiscal space arising from the pandemic borrowing and new expenditures.

In light of this, Secretary Recto must succeed where former Secretary Diokno failed.

The replacement of the Finance Secretary is like a National Basketball Association (NBA) team firing the head coach, a common strategy in the face of unmet expectations or poor performance. Just as an NBA team would replace its coach to reinvigorate championship aspirations, this administration is seeking to rejuvenate its fiscal reform efforts by appointing a new Finance Secretary.

Firing a coach is often seen as the most convenient solution and quickest response to the demand for immediate improvement. However, this move doesn’t always address the deeper, systemic issues within the team such as leadership dynamics, weak governance, team culture, or strategy. Similarly, changing the Finance Secretary might offer a symbolic fresh start, but it really does not address the bigger governance and political economy questions that beset the Marcos administration.

And just as bringing in a coach with a fresh and clear vision and system can unlock the basketball team’s potential, appointing a new Finance Secretary with a strong and clear vision can jumpstart the reforms. A new Secretary can lead the DoF and persuade the President to resist pressure from vested interests and overcome political hurdles to achieve the desired policy outcomes and overarching goals.

The appointment of Ralph Recto as Finance Secretary brings with it the imperative of advancing the reforms previously endorsed by the Department of Finance. These initiatives, having experienced setbacks and diversions during Diokno’s short term, now require unwavering commitment and follow-through. The real test lies in whether Secretary Recto will be able to convince his former colleagues in Congress to pass the crucial tax reforms without severe compromises. This challenge is made all the more difficult by the shortening period to pass the reforms amid the increasing political tensions as the midterm elections approach.

The leadership of Finance may change, but regardless of changes, we must remain steadfast in pursuing the desired reform agenda.

 

AJ Montesa heads the tax policy team of Action for Economic Reforms.

Motolite: Beware when storing used car batteries

PHOTO FROM MOTOLITE

MOTOLITE, a leader among the country’s automotive battery brands, advised motorists and businesses to exercise caution should they see the need to store used lead acid batteries (ULAB) in their premises.

In a release, the company said “this is to avoid accidents such as fire and contamination due to the chemicals and toxic heavy metals that are present in old batteries. Improper storage of ULABs could lead to acid spillage, contamination of other items placed nearby, and even fire due to the possibility of a short circuit happening when two battery terminals get into contact, or a build-up of heat and pressure that could cause the battery to explode.”

Republic Act (RA) 6969 or the Toxic Substances and Hazardous and Nuclear Wastes Control Act, lists ULABs among hazardous wastes that need to be stored, transported, and disposed of properly due to environmental, health, and safety implications. Unfortunately, motorists sometimes opt to keep their old batteries instead of trading them in for a discount when they buy new ones. They keep them for lighting or power purposes, pass on to relatives, or for use as spare batteries.

Motolite said that it makes greater sense to trade these in for discount on a fresh battery. ULABs also await for accredited transporters to pick them up, as required by RA 6969.

To help avoid accidents, the brand suggests to stack junk batteries on pallets and arrange them upright to prevent acid spillage. ULABs should be stacked to a maximum of five layers per pallet for stability and shrink-wrapped or strapped. Make sure the terminals of the batteries do not touch each other to prevent short-circuiting. The palletized junk batteries must be stored in a covered facility with cement flooring to prevent acid/electrolyte into the ground.

Leaking batteries must be stored inside acid-resistant containers and closed containers such as a polyethylene bucket or drum. It is best to have a curbed or bunded area coated with an acid-resistant epoxy or acid-resistant plastic sheeting to prevent acid spillage and contamination.

Remember to isolate chemicals from other chemicals, non-compatible goods, and combustible items. In case there is a need to transport ULABs, be sure to avoid mixing them with other hazardous materials in the vehicle and brace them to prevent damage and short-circuiting.

Motolite advises motorists and enterprises to instead contact a government-accredited entity that can ensure proper handling of ULABs, especially if they are accumulating a substantial number of ULABs regularly. Motolite and its accredited recycler Evergreen Environmental Resources, Inc. (EERI) can help. Motolite can take care of the storage, handling, transport, and recycling of the ULAB through EERI, which operates a state-of-the-art battery recycling facility in Sta. Maria, Bulacan. EERI has the capacity to recycle 10 million batteries annually and recover for reprocessing into commercial use around 99% of the components.

For battery concerns and needs, motorists can contact Motolite 24/7 via (02) 8370-6686 for Metro Manila, 1-800-10-370-6686 (provinces, toll-free), 0917-891-6686 for Globe users, and 0918-843-6686 for Smart. Motorists can also avail of free Motolite services such as battery replacement, overheating, flat tires, and emergency refueling via the Motolite Res-Q App, the first of its kind in the Philippines. Technicians will provide trade-in discounts for used batteries upon purchase so motorists wouldn’t need to store them.

AI threatens to push human fashion models out of the picture

SHUDU is not real, but rather digitally generated by former fashion photographer Cameron James Wilson in 2017 and inspired by real models including Grace Jones and Alek Wek. — INSTAGRAM.COM/SHUDU.GRAM

By Riddhi Setty, Bloomberg Law

SHEREEN WU, a Taiwanese-American model, didn’t ask for money to participate in an October fashion show. Then 21, the Californian was in it for the exposure.

So Ms. Wu was stunned a few days later when she saw a video of the show posted on the fashion designer’s Instagram account. There was Ms. Wu, walking down a runway in a black Michael Costello dress. Except, it wasn’t Ms. Wu: Her face had been replaced with the face of a White woman she didn’t recognize.

“Am I supposed to know this model? Who is it?” Ms. Wu said she asked her mother, who had first alerted her to the video.

Ms. Wu’s story reflects the rapidly increasing use of artificial intelligence (AI) in the $2.5-trillion modeling industry, a change regarded by some as transformative. Brands including Levi’s, Louis Vuitton, and Nike have already teamed up with AI modeling companies and say one benefit is the ability to showcase their products on a diverse group of models.

But in a field that’s traditionally idolized physical perfection, AI technology is creating new, and more threatening, realities.

Nearly three quarters of the fashion executives in a survey published by McKinsey in November named generative AI a priority for their companies in 2024, and more than a quarter said they already use it in creative design and development. The cost benefits are unmistakable: Where human models might start at $35 per hour and, at the top end, can command thousands for a single day, one agency is offering use of its AI models for $29 a month.

Some in the industry already see the use of AI-generated “people” violating their name, image, and likeness rights. A September preliminary survey by the Model Alliance, a nonprofit advocacy group, found nearly 18% of the 106 responding models reported being asked to undergo a body scan for a 3D model of their body or face, without knowing how the scan would be used. Fewer human models also means fewer stylists, makeup artists, and other industry-related professionals.

The emerging technology has compounded a “lack of transparency and accountability” that models have been battling for decades, said Sara Ziff, a model who founded the Model Alliance in 2012, and discussed the issues at a Federal Trade Commission roundtable on generative AI last fall. The group has been pushing New York lawmakers to enact a bill that gives models and other creatives baseline labor protections, including against exploitation through AI.

Without momentum on the legislative or legal front, the speed at which AI is expanding might be too much to overcome.

Ken Girardin, who studies organized labor for the Empire Center, a nonprofit think tank, compared the modeling profession to whale oil dealers in the mid-1800s. Those suppliers believed they were selling an irreplaceable energy source — then saw the discovery of petroleum abruptly collapse their industry.

“Ultimately, modeling may end up having been a short-term phenomenon,” said Mr. Girardin.

ARTIFICIAL DIVERSITY
The model Shudu has become the face of ad campaigns for brands such as Karl Lagerfeld, BMW, and Paco Rabanne, and has more than 241,000 Instagram followers. She’s also not real, but rather digitally generated by former fashion photographer Cameron James Wilson in 2017 and inspired by real models including Grace Jones and Alek Wek.

Shudu’s unexpected popularity, and the need for more diversity in modeling, inspired Mr. Wilson to launch their AI and 3D modeling company, The Diigitals, six years ago. The company also created Kami, the world’s first virtual influencer designed to have physical features associated with Down Syndrome, in collaboration with Down Syndrome International and creative agency Forsman & Bodenfors.

Mr. Wilson says their intent isn’t to replace human models. The Diigitals often pays real models to stand in for Shudu as “muses,” with Shudu’s face dropped in for the final image.

“I really don’t want to be seen as taking away anything,” said Mr. Wilson. “I feel like AI and 3D modeling has the potential to have this negative impact and it’s down to us to basically have the moral standing to make sure that doesn’t happen.”

Similarly, Michael Musandu said he helped establish Lalaland.ai, a company that creates AI models for fashion eCommerce brands, in part to build greater representation in fashion. His company pays people from different communities for their body data to create its AI models.

“As a person of color, I never got to see models that look like myself when I shopped online,” said Mr. Musandu, the company’s chief executive officer.

He’s been creating AI models for four years. But the company — and the questions about how the modeling profession is changing — burst into the spotlight in March, when Levi’s announced its partnership with Lalaland.ai to “supplement human models” and “increase the number and diversity” of their models. Critics saw it as a cheap and insincere solution to the bigger challenge of diversifying the profession.

Amid the outrage, Levi’s pulled back, insisting in a statement the company didn’t “see this pilot as a means to advance diversity or as a substitute for the real action that must be taken to deliver on our diversity, equity and inclusion goals.”

Still, the incident set off alarm bells about AI’s potential impact, even beyond traditional diversity.

“If this process could be automated by technology, I’m afraid anyone who doesn’t fit standardized and antiquated height and measurement standards would be first to go in order to cut costs,” Jane Belfry, founder of BTWN, an agency that specializes in body diverse models, said in an e-mail to Bloomberg Law.

Given that companies are under no legal obligation to disclose which of their images are created by AI, Belfry is also concerned about the impact on the consumer experience.

“Using computer-generated images to signal diversity and improve your optics is the exact opposite of any meaningful diversity and inclusion initiative,” she said. “Not only is it creating a bizarre user experience for consumers where you’re not seeing the actual garment on an actual person, but it is ridiculous to claim body diversity on an AI body.”

Musandu said that the use of AI models “accelerates the representation that we’ve all been missing within the fashion industry” but doesn’t replace it.

But the costs of AI and 3D models makes it tough to compete for real models. Mr. Musandu’s company charges clients anywhere between €600 to €5,000 per month for AI models, depending on their needs. Deep Agency, an AI modeling agency currently in closed beta testing, offers models for $29 a month.

Even cheaper is ZMO.ai, a company that launched in 2020 and offers an online AI art generator. It lets subscribers create three models a month for free.

NAME-IMAGE-LIKENESS CONCERNS
Beyond being completely replaced, some models are concerned that AI companies could be using their image and likeness without their knowledge.

Ziff, from the Model Alliance, said models typically hand over power-of-attorney to their agencies when they sign a representation agreement and rarely see their contracts with the brands.

The alliance’s September survey found that models who had been body scanned hadn’t been given information about how the scan would be used and were concerned about unknowingly handing away rights to their image, particularly given the rise in pornographic deepfakes.

There aren’t any image or likeness cases currently being litigated against AI companies for use of body scans, but similar issues arise with the use of copyrighted material for training data for AI generators such as OpenAI.

“To create an AI model, presumably the tool that’s being used is using scraped data that that has been used to train a large language model,” said Vivek Jayaram, intellectual property attorney and founder of Jayaram Law. “If you sort of transpose the theories in the copyright cases, somebody might say, ‘Hey, using my face to train a model that’s creating fake people, that’s a violation.’”

AI versions of celebrities such as Scarlett Johansson, Ryan Reynolds, and Tom Hanks have been used in ads without their permission.

Johansson took legal action against an AI art generator company she said used her image without permission.

Such actions and a growing call for Congress or the US Copyright office to enact new protections, might help models by creating a baseline based on which they can argue for their own right to publicity, said Sarah Odenkirk, co-head of Cowan DeBaets Abrahams & Sheppard LLP’s art law practice group.

“We already are seeing some companies that are trying to figure out ways to package name, image, and likeness and help celebrities and other people who make money in that way to manage their images within this new landscape,” said Odenkirk.

Wu’s experience, after participating in the Art Hearts Fashion show in Los Angeles last fall, speaks to a different kind of appropriation. The contract she signed said she had agreed to “walk for exposure, images and any available sponsored goods,” but included no specific language about the images being altered through artificial intelligence. She sees it as the designer taking a step at the expense of someone trying to build her career.

“By not using my face, he’s taking advantage of models without the same influence,” she posted in a now-viral TikTok video.

Wu said she planned to talk to lawyers, but has not yet taken steps to file an action. But Costello, the designer, threatened her with legal action after her TikTok post.

The experience left Wu “terrified” about the prospect of modeling again, she said. “I don’t know if I want to go back,” she said.

A statement sent by Costello’s representatives said: “The allegation of digitally altering a model’s image to change her ethnicity and identity is a serious one, and we want to clarify unequivocally that neither Michael Costello nor our team was responsible for such alteration.”

The statement did not explain how the digitally altered photos might have ended up on Costello’s Instagram account. It also said the firm’s commitment to diversity, respect, and integrity “is at the heart of everything we do.”

LEGISLATION PUSH
Following a months-long strike that paralyzed Hollywood and sparked conversation about the impact of artificial intelligence, SAG-AFTRA, the union that represents actors, performers, broadcast journalists and thousands of other media professionals, won protections allowing its members control or compensation over the use of their likeness.

Despite being in an industry that’s often intertwined with such celebrities, models can’t unionize because they are independent contractors outside the National Labor Relations Act. This means that they aren’t granted “protections against discharge, termination of contracts, or other kinds of discipline for unionizing,” said Marion Crain, a labor and employment professor at Washington University in St. Louis’ School of Law.

One reason is that their work is typically short-lived.

“If you’re not looking at a long-term relationship between employer and employee, the current labor law doesn’t really do much for you,” said Girardin.

In that vein, Ziff said, their industry is “really like the wild west” for workers, which is why they have sought legislative support.

The Model Alliance’s signature bill, the Fashion Workers Act, would establish basic labor protections for models and content creators in New York’s fashion industry. It passed the state Senate last spring but stalled in the Assembly.

In response to the growing threat of AI in the modeling industry, new provisions were added into the legislation to require management companies and brands to obtain clear written consent to create or use a model’s digital replica, and would require them to detail the scope, purpose, rate of pay, and duration of use. They would also require written consent to alter or manipulate a model’s digital replica using AI.

Additionally, the Model Alliance plans to develop policy recommendations through a research study in partnership with the Worker Institute at Cornell.

“People think the fashion industry is glamorous, so they assume that people in our industry don’t have serious concerns,” said Ziff. “But the fact is, this is a multi-trillion-dollar global industry that’s mostly built on the backs of women and girls. Workers in our community deserve basic rights and protections just like anyone else who works for a living —- and this is the next big challenge for us.” — With assistance from Ella Ceron

Rates of T-bills, bonds may climb after US data

RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week could track the rise in secondary market yields following the latest US inflation data and US Federal Reserve rate cut bets.

The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Monday, or P5 billion each in 91-, 182- and 364-day papers.

On Tuesday, it will offer P30 billion in fresh seven-year T-bonds.

T-bill and T-bond rates may track the increases seen in secondary market yields, which came amid volatility in the peso-dollar exchange rate, high global crude oil prices and geopolitical tensions in the Middle East, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At the secondary market on Friday, rates of the 91-, 182-, and 364-day T-bills went up by 11.05 basis points (bps), 8.72 bps, and 14.6 bps week on week to end at 5.337%, 5.5956%, and 5.9734% respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website.

The yield on the seven-year bond also rose by 8.47 bps week on week to end at 6.1662% on Friday.

On Friday, the peso closed at P55.911 against the dollar, strengthening by 3.9 centavos from its P55.95 close on Thursday, data from the Bankers Association of the Philippines’ website showed.

Week on week, however, the local unit weakened by 21.1 centavos from its P55.70 close on Jan. 5.

Meanwhile, Brent crude futures rose 88 cents, or 1.1%, to settle at $78.29 a barrel. The session high was more than $80, the highest this year so far. US West Texas Intermediate crude futures climbed 66 cents, or 0.9%, to settle at $72.68, paring gains after touching a 2024 high of $75.25, Reuters reported.

On the other hand, a trader expects the seven-year bonds on offer this week to fetch a coupon rate of 6.25%.

“Ultimately, the seven-year Dutch auction [this] week will be highly anticipated as it could actually fetch a coupon rate of 6.25%, forcing the yield curve to adjust,” a trader said in an e-mail.

T-bill and T-bond rates could climb amid recent US inflation data, which could support the possibility of a rate cut by the Fed as early as March, Mr. Ricafort added.

US consumer prices increased more than expected in December, with Americans paying more for shelter and healthcare, suggesting it was probably too early for the Federal Reserve to start cutting interest rates, Reuters reported.

The consumer price index (CPI) rose 0.3% last month after nudging up 0.1% in November, the Labor department’s Bureau of Labor Statistics said.

In the 12 months through December, the CPI rose 3.4% after increasing 3.1% in November.

Inflation averaged 4.1% in 2023, down from 8% in 2022.

Financial markets still see more than a 60% chance of a rate cut at the Fed’s March 19-20 policy meeting, according to CME Group’s FedWatch Tool. The Fed has hiked its policy rate by 525 bps to the current 5.25%-5.5% range since March 2022.

Meanwhile, US producer prices unexpectedly fell in December amid declining costs for goods such as diesel fuel and food, suggesting inflation would continue to subside and allow the Federal Reserve to start cutting interest rates this year.

The producer price index (PPI) for final demand dipped 0.1% last month, the Labor department’s Bureau of Labor Statistics said. Data for November was revised to show the PPI falling 0.1% instead of being unchanged as previously reported. The PPI has now declined for three consecutive months.

In the 12 months through December, the PPI increased 1% after advancing 0.8% in November.

Last week, the BTr raised P19 billion via the T-bills, more than the original P15-billion program, as total bids reached P46.875 billion.

Broken down, the Treasury raised P7 billion from the 91-day T-bills, above the P5-billion program, as tenders for the tenor reached P18.36 billion. The three-month paper was quoted at an average rate of 5.102%, down by 3.8 bps from the previous week. Accepted rates ranged from 4.98% to 5.25%.

The government also raised P7 billion through the 182-day securities, more than the planned P5 billion, as bids for the paper reached P16.91 billion. The average rate for the six-month T-bill stood at 5.582%, inching up by 0.4 bp, with accepted yields ranging from 5.29% to 5.7%.

Lastly, the BTr borrowed P5 billion as programmed via the 364-day debt papers as bids for the tenor reached P11.605 billion. The average rate of the one-year T-bill went up by 14.4 bps to 5.973%. Accepted rates were from 5.83% to 6.025%.

The Treasury plans to raise P195 billion from the domestic market this month, or P75 billion via T-bills and P120 billion through T-bond offerings.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year or P1.39 trillion. — Luisa Maria Jacinta C. Jocson with Reuters

FAO team in town to consult with industry on farm modernization

REUTERS

THE Food and Agriculture Organization (FAO) will meet with agriculture industry representatives to support Philippine efforts to modernize farming.

In a statement, the FAO said it will oversee consultations with the government, private sector, academic institutions and non-governmental organizations this week.

“The Philippines has a unique experience in resilient agriculture and fisheries but is also facing unprecedented challenges,” FAO Country Representative to the Philippines Lionel Henri Valentin Dabbadie said over the weekend.

The FAO said that the results of the consultation will form part of the input for its Regional Conference for Asia and the Pacific (APRC), in which participants will seek to work out a strategy to tackle challenges to agriculture.

“Through this consultation, we look forward to better understanding how we can best support the efforts of the government to achieve a modern agriculture and fisheries sector,” Mr. Dabbadie said.

He added that the conference will “highlight the expertise that the Philippines can share to tackle the impending threats to food security and the environment that we face as a nation, a region, and the whole world.”

The United Nations organization said that the conference will generate proposals to guide FAO operations in the Asia-Pacific and ultimately to its global conference, which is the agency’s highest governing body.

The 37th APRC session will discuss current priorities for the agriculture industry, including food production losses and waste, financing for hunger mitigation programs, animal and human diseases, and the transformation of agri-food systems and capture fisheries and aquaculture.

The APRC is a biennial conference with Ministers of Agriculture from FAO member states. — Adrian H. Halili

Want to avoid fake news? Step away from Google

ARKAN PERDANA-UNSPLASH

Searching for information has become instant and effortless — just go to your nearest device, ask Siri, or click a few keys. But are we better informed than we were before Google became a verb?

A new paper published in Nature hints that we’re not. When researchers exposed volunteers to a mix of fake and real news stories, they found people became more prone to being fooled by fake stories after being asked to do an internet search.

That doesn’t negate the value of search engines, but as with all technology, there can be unintended consequences. Searches on misleading stories often pull people into a spiral of yet more bad information.

The Nature paper included results of several studies. In some, people were asked to evaluate news stories that had just broken in the last 48 hours. In one, they saw stories from recent months on COVID-19, spanning scientific, political, and economic angles. In some cases, people were randomly assigned to evaluate stories with or without doing their own search, and in others, the same people were asked to evaluate news items before and after a search.

Participants could classify stories as true, false/misleading, or undetermined. Before doing any research, about 30% of people incorrectly labeled false items as true. Searching led to about a 20% increase over that — after doing online research, about 36% of people classified fake news as fact. While subjects could use any search engine, most chose Google.

University of Central Florida social scientist Kevin Aslett, who led the study while at the Center for Social Media and Politics at NYU, said people put an incredible amount of trust in search engines — more than they put in the mainstream media. And advocates for news literacy often encourage people to go online to check questionable news stories. That’s why he thought online searching deserves more critical attention.

Some of the fake stories included an impending mini-ice age; thousands arrested for deliberately setting wildfires in Australia; homeless people defecating in San Francisco supermarket aisles; and news that hydroxychloroquine trials were “designed to kill COVID-19 patients.”

These stories share an emotional valence, touching on such contentious issues as COVID-19 business and school closures, vaccines and vaccine mandates, the Black Lives Matter protests, claims that COVID-19 originated in a laboratory, and various statements by and about former President Donald Trump.

Looking at how people searched gave Aslett and his colleagues a clue as to why they were becoming increasingly fooled. Stories from what he called low quality news sources often used words or phrases that were specific to a particular claim. One false news item accused President Biden of engineering a famine. If people googled “engineered famine” they would find other dubious stories, because mainstream news sites didn’t use that phrase.

People are often taught bad approaches to searching, said Joel Breakstone, director of the Stanford History Education Group. They are sometimes wrongly taught they should trust .org sites, for example, or that they should not use Wikipedia.

Some of his own research compared the search methods of professional fact checkers, academics, and students, and found the fact checkers gained an edge by more diligently checking into the credibility of a source. People are often deceived by the names of some sources, he said. They thought the Employment Policies Institute was a neutral source, for instance, when further examination would reveal it’s run by a PR firm that works on the behalf of the food and beverage industry and has a vested interest in keeping the minimum wage low.

Fact checkers also tended scan the results a search engine brings up before selecting which items to read, while other people in his research focused most of their attention on whatever the search algorithm placed on top, assuming that was the highest quality item without putting any thought into how the algorithms work.

One caveat is that even fact checkers don’t always agree. That was also true in the Nature paper, in which six professional fact checkers also vetted each story. The stories on which the fact checkers differed were also the ones where searching led people away from the majority view. These included stories under the headlines, “German Official Leaks Report Denouncing COVID-19 As ‘A Global False Alarm,’” “Leftie Governor Cooper Kills RNC Convention in Charlotte Due to COVID-19 And Then Goes and Marches with Leftist Mob in Street,” and “Forced Vaccinations Will Control Your Life, Warns Religious-Liberty Group.” All involved contentious material and some subjective judgements outside of concrete facts.

What makes a story credible is complicated. Journalists should explain what they know and how they know it, and show where there’s uncertainty. This new study is a good reminder that the idea that anyone can access the truth with a few keystrokes was always too good to be true.

BLOOMBERG OPINION

Xiaomi plugs into EV realm

PHOTO FROM XIAOMI

XIAOMI formalizes its entry into the realm of electric vehicles (EVs) with the Xiaomi SU7. In a release, the company said it banners five core technologies: an e-motor, battery, die-casting, Xiaomi Pilot Autonomous Driving, and a so-called Smart Cabin. “From the development of foundational core technologies, Xiaomi aims to redefine the technology of the automotive industry,” it reported.

Described as a “pre-launch,” more details about the Xiaomi SU7 — positioned as a full-size high-performance eco-technology sedan — have been revealed, such as design, performance, range, and safety features.

“With firm strides, we are crossing its summit,” said Xiaomi Group Founder, Chairman, and CEO Lei Jun, quoting a Chinese poem. The brand is now seen as making a huge leap from the smartphone industry into “closing the loop of the human x car x home smart ecosystem.” Lei Jun further expressed that the century-old automotive industry offers little room for maneuvering today: “Xiaomi has decided to invest tenfold, starting from the development of fundamental core technologies, committing to constructing an outstanding vehicle. Through 15 to 20 years of effort, Xiaomi aims to become one of the top five global automakers.”

The company said that smart electric vehicles are trending toward integration of the automotive industry with consumer electronics and intelligent ecosystems. Integrating full-stack technologies is a vital step for the industry’s evolution, and by integrating industrial manufacturing, smart software and AI, Xiaomi’s EV efforts will “completely redefine the automotive industry, marking a significant leap in its technological landscape.”

Xiaomi revealed it has invested over CNY10 billion in the initial research and development (R&D) phase. The R&D team comprises over 3,400 engineers and over a thousand technical experts in critical domains both in China and abroad. This showcases Xiaomi’s 13 years of comprehensive technological accumulation since its inception.

Xiaomi has independently developed and manufactured e-motors: HyperEngine V6/V6s, and HyperEngine V8s. The three e-motors are said to feature innovative technologies such as Bi-directional Full Oil Cooling Technology, S-shaped oil circuit design, and staggered silicon steel laminations design — enabling them to rival the performance of traditional large V8 and V6 powertrains.

Notably, the HyperEngine V8s, with a maximum speed of 27,200 rpm and able to output 425kW and 635Nm peak torque, employs the industry’s first ultra-high-strength silicon steel plate with a tensile strength of 960MPa, boasting strength that surpasses mainstream industry offerings by more than two times. HyperEngine V8s is in development and set to be mass-produced and implemented in Xiaomi EVs in 2025. On the other hand, Xiaomi’s self-developed HyperEngine V6/V6s e-motors muster 21,000rpm — surpassing the most powerful mass-produced electric motor.

Xiaomi has also self-developed CTB Integrated Battery Technology through innovative Inverted Cell Technology, multifunctional elastic interlayer, and a minimalistic wiring system. It features a battery integration efficiency of 77.8%, the highest of CTB batteries worldwide, a 24.4% overall performance improvement, and a height reduction of 17mm, with a maximum battery capacity of up to 150kWh and theoretical CLTC recharge range exceeding 1,200 kilometers.

Inside the vehicle, the Xiaomi EV Smart Cabin adopts a human-centric interaction architecture and features a 16.1-inch 3K central console, a 56-inch HUD head-up display, a 7.1-inch rotating dashboard, and two seatback extension mounts that allow for the mounting of two tablet devices. It is equipped with the Snapdragon 8295 in-car chip with AI computing power of up to 30 TOPS, enabling an ultimate interactive experience with the linking of five different screens.

The interactive experience is similar to tablets, allowing users to quickly adopt. The system operates smoothly, with the vehicle OS launching in a rapid 1.49 seconds after the door is unlocked. Additionally, it offers seamless cross-device connection between smartphones and the EV. For example, when the phone is brought into the cabin, the console automatically displays an icon, enabling easy access to the phone’s interface with a single touch.

The in-car OS integrates mainstream applications, including the whole Xiaomi tablet application ecosystem, with gradual adaptation to over 5,000 applications. Smartphone applications can be conveniently pinned to the car console, instantly transforming them into in-car applications. The Xiaomi SU7 supports over 1,000 Xiaomi smart home devices for effortless integration with the vehicle, enabling automatic discovery, password-free access, and the ability to set up automation scenarios, creating a robust CarIoT ecosystem. The car interior also has dedicated pinpoint expansion connections, supporting plug-and-play functionality for a wide range of devices. To meet the needs of users, the Xiaomi EV fully supports CarPlay, the mounting of iPads and iPad accessories, and applications on the rear extension mount.

Investors profit-take on Ayala Land’s optimistic outlook

SHARES in the Ayala-led property developer Ayala Land, Inc. dropped last week as investors took profits amid signals of rate cuts this year, which could support the company’s rosy outlook.

A total of 44.23 million shares, worth P1.52 billion, were traded from Jan. 8 to 12, according to data from the Philippine Stock Exchange (PSE), making it the eighth most actively traded stock last week.

Shares of the property development company dropped by 0.7% week on week, closing at P34.05 apiece last Friday from its P34.30 closing price on Jan. 5.

Year to date, Ayala Land’s stock slid by 1.2%.

To kick off the year, Ayala Land announced its plans to boost activities with the aim of doubling its earnings by 2028.

The property developer’s double-digit growth, seen during the third quarter of 2023, supported Ayala Land’s aggressive stance on its medium-term goal.

In the January to September 2023 period, the company’s net income grew by 28.5% to P20.94 billion from P16.3 billion in the same period in 2022.

Net attributable income also surged by 37.9% year on year to P18.39 billion from P13.34 billion.

In an e-mail exchange, Timson Securities, Inc. Equity Trader Jervin S. de Celis said that Ayala Land’s plans to double its earnings in the next five years can be supported by better economic conditions anticipated this year.

“Foreigners are noticeably net buyers of the stock since the first week of November and I guess their appetite for [Ayala Land’s] stock is stemming from the strong earnings performance of the company for the [nine]-month period of 2023 and the anticipation for the rate cuts in 2024,” he said.

“The stock price has been moving sideways since the [third] week of December. After touching the P35 level this week, it has since then retraced to P34 and may form a support level at around P32.50 within this month,” he added. 

On a quarterly basis, Ayala Land’s net attributable income increased by 33% to P7 billion during the July-to-September period last year.

Its third quarter net income also rose by 28.1% to P7.88 billion. 

The property developer arm of Ayala Corp. also announced last week its loan deal with Metropolitan Bank & Trust Co. (Metrobank) worth P15 billion to fund its capital expenditure and debt refinancing.

Metrobank became the second largest lender to Ayala Land after the loan.

The country’s inflation slowed to 3.9% in December last year, with full-year inflation settling at 6%, meeting the BSP’s targets for 2023.

This was also the third-straight month of easing since the 6.1% inflation in September last year. 

Mr. De Celis placed his full year income forecast for the stock to reach at least P20 billion, advising investors to lookout for headwinds this year namely El Niño and the ongoing conflict in Yemen, which could affect prices of oil once again. 

For the week, he placed his support and resistance levels at P32.50 and P35, respectively. 

“[T]he big players in the [Philippine] real estate market have weathered the effects of the pandemic as well as the skyrocketing inflation and interest rates for the past couple of years, so while there are headwinds coming from the local and international scene, ‘sustained local macroeconomic expansion and sound economic policies’ as Colliers mentioned in their December 2023 report will likely support the industry’s fast recovery this year and beyond,” Mr. De Celis said. — Bernadette Therese M. Gadon

Investors increase ECB cut bets

BW FILE PHOTO

INVESTORS increased their bets on future European Central Bank (ECB) rate cuts on Friday, sending euro area government bond yields lower as data showed US producer price inflation was weaker than expected in December.

Money markets priced in 155 basis points (bps) of policy rate reductions by yearend from 145 before the US figures and 140 bps late on Thursday.

They also fully priced in a first ECB move in April, while the chances of a rate cut in March rose slightly to around 40%.

ECB Chief Economist Philip Lane said recent figures broadly confirmed current thinking at the central bank, but interest rate cuts are not a near-term topic of debate.

ECB euro-short term rate forwards priced in a 2.36% rate in December 2024, which implies a deposit facility rate at around 2.45% by yearend from the current 4%.

US producer prices unexpectedly fell amid a decline in the cost of goods, while prices for services were unchanged, which bodes well for lower inflation in the months ahead.

Analysts said the central banks’ emphasis on data dependency makes markets more prone to volatility and overshoots more in the dovish direction, but some reckon money markets went too far in their bets on future ECB moves.

Markets passed through strong US consumer prices, released on Thursday when short-dated US Treasury yields briefly moved higher before ending the day down 10 bps. — Reuters

Succession auction takes in over $600,000 as fans flock to props

TOM FORD “Jago” Sneakers worn by Jeremy Strong as the character “Kendall Roy” in the HBO Original Series Succession in Season 4, Episode 2. — ENTERTAINMENT.HA.COM

“HEY Buddha, nice Tom Fords,” says Roman Roy, pointing to Kendall’s sneakers in episode two, season four, of the HBO drama Succession. For a final price of $2,125, those Tom Fords could have been yours, spiritual teachings not included.

The shoes were among 236 lots of memorabilia from the hit series auctioned by US Heritage Auctions on Saturday, fetching a total of $627,000. The priciest item: pink notecards scribbled with the eulogy that Roman (Kieran Culkin) left undelivered at his father’s funeral in the final season. The cards sold for $25,000.

Succession, the story of three uber-rich siblings vying to take over their father’s media company, ended in May and is currently dominating the awards season. A week ago, the show scooped up four Golden Globes including best TV drama series.

One of the most iconic items listed was the “ludicrously capacious” Burberry bag carried by an outsider to a family event, which sold for $18,750. The sight of which made Tom Wambsgans, played by Matthew Macfadyen, famously quip, “What’s even in there, huh? Flat shoes for the subway?”

Collectors also vied for Lukas Matsson’s (Alexander Skarsgard) vape device; Roman’s Walmart kid’s T-shirt, which sold for $1,875; and Kendall’s (Jeremy Strong) fictional Forbes cover issue.

“We could not be more pleased with Saturday’s auction, and we’re sure those taking home a piece of the Roy legacy will feel the same way,” Heritage Screenbid Managing Director Jax Strobel said in a statement.

The auction brought in “a lot of fan engagement, not just collectors, but real fans of the show that are participating and bidding,” Mr. Strobel said in a separate statement.

The show led to Instagram accounts documenting the characters’ outfits and is credited with sparking the so-called “quiet luxury” fashion trend. A few lucky collectors now have their hands on Kendall’s Prada suit, sold for $7,500, or Shiv Roy’s (Sarah Snook) Max Mara power outfits. — Bloomberg

Philippines falls in military strength list

The Philippines ranked 34th in the latest edition of  Global Firepower’s Military Strength ranking. With a PowerIndex score of 0.4691, the Philippines fell by two notches from the previous year. The smaller the value of the score, the more powerful a country’s theoretical fighting capability is.

 

Philippines falls in military strength list