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China calls for ceasefire, peace conference on Gaza

Chinese State Councillor and Foreign Minister Wang Yi. Image via Kleinschmidt/MSC/CC BY 3.0 DE/Wikimedia Commons.

DOHA/GAZA — China called for a large-scale and authoritative peace conference on the war in Gaza, while the militant group Hamas aired video of three Israeli hostages and said their fate would be disclosed on Monday.

Speaking in Egypt at the weekend, Chinese Foreign Minister Wang Yi called for “the formulation of a specific timetable and road map for the implementation of the ‘two-state solution’ and support for the prompt resumption of Israel-Palestinian peace talks.”

Hamas aired video on Sunday showing three Israeli hostages it is holding in Gaza and urged the Israeli government to stop the offensive against the Palestinian Islamist group and bring about their release.

The undated 37-second video of Noa Argamani, 26; Yossi Sharabi, 53; and Itai Svirsky, 38; ended with the caption: “Tomorrow (Monday) we will inform you of their fate.”

Of some 240 people seized by Hamas in a cross-border killing spree that sparked the war, around half were released in a November truce. Israel said 132 remain in Gaza and that 25 of them have died in captivity.

Israel also said more than 1,200 people were killed in Hamas’ Oct. 7 assault.

The Gaza health ministry has said almost 24,000 people have been killed in the Israeli offensive that followed with more than 60,000 wounded.

The U.S. military said on Sunday its fighter aircraft shot down an anti-ship cruise missile fired from Houthi militant areas of Yemen toward a US destroyer operating in the Southern Red Sea.

The midair interception is the latest incident in the Red Sea where the Houthis have been attacking international shipping in what they say is a campaign to support Palestinians under siege from Israeli forces in Gaza.

It follows a series of American and British airstrikes on Houthi targets in Yemen last week that have drawn threats of a “strong” response from the Iranian-backed militia.

In the latest fighting in Gaza, Israeli tanks and aircraft hit targets in southern and central parts of the enclave on Sunday. Hamas also launched a fresh salvo of rockets on Sunday at Ashdod, an Israeli town 40 km (25 miles) away. There was no word of any casualties.

The Israeli military said it destroyed several silos used by Hamas to fire missiles at Israel.

NEW PHASE OF WAR
The Israeli military says it has shifted to a new phase of the war focused on the southern end of Gaza, where almost two million people are now sheltering in tents and other temporary accommodation, after the initial phase centered on clearing the northern end of the strip, including Gaza City.

Prime Minister Benjamin Netanyahu has brushed off calls for a ceasefire, saying Israel will keep going until it achieves complete victory over Hamas and recovers the remaining hostages.

The military says, though, the next phase of the war will see months of more targeted operations against the Iranian-backed movement’s leaders and positions.

On Israel’s northern border with Lebanon, where there has been a constant, low-level exchange of fire between the Israeli troops and the Iran-backed Hezbollah militia, Israel’s military said it had killed four militants trying to cross the border.

It said several anti-tank missiles were fired into northern Israel, one which hit a house in Kfar Yuval village. Medical officials said a 76-year-old woman and her son were killed. The son was in the village’s security squad, the military added.

The war in Gaza has also triggered violence in the Israeli-occupied West Bank. Palestinian health officials said Israeli forces killed five Palestinians, including boys aged 14, 16 and 17, in three separate incidents in the West Bank.

The Israeli military said two Palestinians in a car rammed through one of its checkpoints near Hebron and opened fire on pursuing troops. They were killed by return fire, it added.

Asked about a 14-year-old boy killed near Jericho, it said soldiers had shot at Palestinians who threw explosives at them.

The Israeli military also said troops shot two Palestinians throwing a bomb at an army base. — Reuters

South Korea’s Yoon pledges to extend tax benefits for chip investments

REUTERS

SEOUL — South Korean President Yoon Suk Yeol said on Monday that he would extend tax credits on investments in the domestic semiconductor industry to boost employment and attract more talent.

The country, home to the world’s top memory chipmakers Samsung Electronics and SK Hynix, aims to expand tax breaks and support to raise the competitiveness of high-tech sectors including those involving chips, displays and batteries.

“When I talk to heads of state, what I talk about most about South Korea is BTS and semiconductors,” Mr. Yoon told a meeting with chip industry officials and students, referring to the K-pop supergroup.

In January 2023, the government unveiled a plan to offer large tax breaks to semiconductor companies investing at home, which are set to end this year.

“Tax deduction for semiconductor investments is supposed to expire this year, but we will extend the effect of the law to continue with investment tax deduction,” Mr. Yoon said.

Rebutting claims that such tax credits give preferential treatment to large conglomerates, Mr. Yoon said increased investments in chips will lead to more jobs and more state tax income in the long term.

South Korean tech giant Samsung Electronics has said it expects to invest $230 billion in the period through to 2042 to develop the country’s chipmaking base. — Reuters

Pope defends same-sex blessing declaration

REUTERS

ROME — Pope Francis on Sunday defended a landmark decision approving blessings for same-sex couples, suggesting that those in the Catholic Church who have resisted it have jumped to “ugly conclusions” because they do not understand it.

In a television interview, the pope made his first public comments since the Dec. 18 declaration sparked widespread debate in the Church, with bishops in some countries, particularly in Africa, refusing to let their priests implement it.

“Sometimes decisions are not accepted, but in most cases when decisions are not accepted, it is because they are not understood,” the pope said in response to a specific question about the December declaration.

“The danger is that if I don’t like something and I put it (the opposition) in my heart, I become a resistance and jump to ugly conclusions,” he said during a link from his Vatican residence with the Che Tempo Che Fa program on Italy’s Channel 9.

“This is what happened with these latest decisions on blessings for all,” he said, referring to the declaration known by its Latin title Fiducia Supplicans (Supplicating Trust). It was issued by the Vatican’s doctrinal department and approved by him.

Since the original declaration, the Vatican has been at pains to stress that the blessings did not amount to an approval of gay sex and should not be seen as anything remotely equivalent to the sacrament of marriage for heterosexual couples.

But even a clarification earlier this month from the Vatican’s doctrinal department did not sway bishops in Africa, where in some countries same-sex activity can lead to prison or even the death penalty.

They issued a letter last week saying the December declaration had caused “unrest in the minds of many” and could not be applied because of the continent’s cultural context.

Some bishops in France told their priests they could bless gay individuals but not couples.

The Church teaches that gay sex is sinful and disordered and people with same-sex attractions should try to be chaste and the pope appeared to be alluding to this is his response.

“The Lord blesses everyone,” the pope said. “But then people have to enter into a dialogue with the blessing of the Lord and see the path that the Lord proposes. We (the Church) have to take them by the hand and lead them along that path and not condemn them from the start.”

Since his election in 2013, the pope has tried to make the Church, with its 1.35 billion members, more welcoming to LGBT people, without changing moral doctrine. — Reuters

How LMA Law’s Atty. Peaches Aranas sees mentoring and guiding people as legacy

Atty. Ma. Louella ‘Peaches’ M. Aranas

Lawyer Ma. Louella ‘Peaches’ M. Aranas believes that mentoring her law students, the next generation lawyers, to being more conscientious in the matter of paying taxes and thereby contributing to nation-building is the best legacy she can leave behind.

As a faculty member of the Lyceum of the Philippines University College of Law, Atty. Peaches mentors her students about the importance and value of taxes as well as the intricacies of tax laws. She believes that taxation is a duty of every Filipino citizen and in that regard, should be taught differently, not just like an ordinary subject in law school.

Helping people understand taxation

As a matter of fact, when she established LMA Law in 2015, Atty. Peaches made sure the law firm would go beyond standard client service by offering to teach the client and their staff the basics of Taxation, particularly in the aspect of tax compliance. The main goal has always been to help build the country by educating the people that paying taxes is not an obligation but a patriotic and nationalistic duty.

Aside from client service, LMA Law also shares knowledge in taxation and corporation law online. The law firm’s website and social media platforms are archives of written articles that focus on doing taxes right. Its Facebook page regularly shares digests that update people on the latest ruling, jurisprudence, and development in Philippine taxes and corporate practices.

“Sharing knowledge is not easy especially when it comes to taxes. In my heart, my deep desire is to help make taxation relatable to more people. We want to inspire more Filipinos to take on their patriotic duty to pay the correct taxes on time,” she said.

Mandatory Continuing Legal Education for lawyers

Way back in 2017, Atty. Peaches co-founded ACCESS, the country’s pioneer in online mandatory continuing legal education (MCLE). The primary goal was to help change the perception and attitude of lawyers towards MCLE in that, more than just complying and completing the required credit units, it is an opportunity to learn new things.

“Before the establishment of ACCESS, many lawyers thought of MCLE as just a waste of time. By curating our courses, providing three learning platforms — face to face, flexi synchronous and online on demand, we hope to make learning very convenient and of course more interesting. We aim to make lawyers look at MCLE as an opportunity for continued learning and professional growth,” Atty. Peaches said.

Atty. Peaches is also an MCLE lecturer. Through the online on demand and flexi synchronous platforms, she is able to quickly share more from her broad and wide experience in private tax and corporate practice.

“Sharing knowledge through my unique mentoring style, whether it is to my law students, my associates or even to my clients bring me a step closer to my dream. I dream of a country whose citizens believe that paying correct taxes on time makes one a true patriot,” Atty. Peaches concluded.

 

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Diplomatic competition between Taiwan and China

A globe is seen in front of Chinese and Taiwanese flags in this illustration, Aug. 6, 2022. — REUTERS/DADO RUVIC/ILLUSTRATION

Taiwan and China have engaged for years in competition for diplomatic recognition, but the pendulum has long swung decisively in Beijing’s favor.

Nauru is the latest country to sever diplomatic relations with Taiwan and recognize China. The small Pacific Islands nation announced the switch of allegiance on Monday.

Here are some facts about the diplomatic feud between Taiwan and China:

* Following the communist revolution in China in 1949, the defeated Republic of China government fled to Taiwan, insisting that it remained the sole legal representative of the Chinese people. Many non-communist countries continued to maintain ties with Taipei rather than Beijing.

* After the People’s Republic of China assumed the Chinese seat at the United Nations in 1971, more and more countries began severing official ties with Taiwan. The United States did so in 1979, but today remains Taiwan’s most important international backer and a major arms supplier to Taipei.

* After Taiwan President Tsai Ing-wen was elected in 2016, and Taiwan-China ties soured, the diplomatic shift to China accelerated.

* Taiwan’s government says that the Republic of China, which remains the island’s official name, is a sovereign country with the right to state-to-state ties and Beijing has no right to speak for it.

* China says Taiwan is merely one of its provinces and only Beijing can represent the island on the world stage.

* Nauru announced the news that it was severing ties with Taiwan just two days after Taiwanese elected Lai Ching-te president. China considers him a dangerous separatist.

* Taiwan and China have for years traded accusations about using “dollar diplomacy”, dangling generous monetary packages in exchange for recognition, though Taiwan’s government says it will no longer do so and that its aid is more appropriate than the flashy infrastructure projects Beijing often proffers.

* Taiwan says it values its allies as they often speak in support of Taiwan at the United Nations and other global bodies Taipei is locked out of due to Chinese pressure.

* Taiwan’s Latin America and Caribbean allies are extra important as they give Taiwanese presidents an excuse to “transit” the United States while on state visits, where important meetings with US officials take place.

* The United States has been concerned about countries leaving Taiwan for China, given it is viewed in Washington as Beijing expanding its influence in what is traditionally the US backyards of Latin America and the Pacific.

* Taiwan, which has long since thrown off its Cold War authoritarian mantle and become a thriving democracy, has been heartened by growing unofficial support from US allies like Japan, Britain, France and the Czech Republic, which has helped soften the blow of losing so many of its former allies.

* Some countries have swapped between Taiwan and China more than once, including Liberia and the Central African Republic. The last country to switch back to Taiwan was Saint Lucia in 2007, bucking the trend.

* The countries which still maintain ties with Taiwan are: Belize, Guatemala, Paraguay, Haiti, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Marshall Islands, Palau, Tuvalu, Eswatini and the Vatican City.

– Reuters

China central bank holds medium-term rate but adds liquidity

CARLOS DE SOUZA-UNSPLASH

SHANGHAI/SINGAPORE – China’s central bank left the medium-term policy rate unchanged on Monday, defying market expectations for a cut as a weaker currency limited the scope of monetary easing in the near term to boost the economy.

A slew of recent indicators continued to reflect the country’s uneven economic recovery, with a pick-up in exports in December but weak credit growth and persistent deflationary pressure calling for more stimulus measures.

However, a narrowing interest rate margin at commercial banks and a weakening Chinese yuan have limited the room for the People’s Bank of China (PBOC) to maneuver, and rate cuts may be postponed until later this year, some market watchers said.

On Monday, PBOC said it was keeping the rate on 995 billion yuan ($138.84 billion) worth of one-year medium-term lending facility (MLF) loans CNMLF1YRRP=PBOC to some financial institutions unchanged at 2.50% from the previous operation.

“We suspect the main reason the PBOC failed to deliver this time is a desire to avoid triggering renewed depreciation pressure on the renminbi,” economists at Capital Economics said in a note.

The yuan CNY=CFXS has weakened more than 1% against the dollar so far this year to a more than one-month low due to uncertainty around when the US Federal Reserve will start cutting interest rates.

Capital Economics continued to forecast two 10-basis-point rate cuts by the end of the second quarter and a reduction to the reserve requirement ratio (RRR).

Monday’s loan operation was to fully meet cash demand at financial institutions to “maintain reasonably ample liquidity in the banking system,” the central bank said in an online statement.

In a Reuters poll conducted last week, 19 of 35 market participants had expected the central bank to cut the MLF rate to help shore up the weak economy. And a vast majority of the respondents had also expected the PBOC to inject fresh funds into the financial system beyond the amount that were maturing.

Those expectations grew after major Chinese commercial banks lowered their deposit rates late last year, and after recent disappointing economic data stoked the view that more stimulus was warranted.

Economists at ANZ said PBOC might have held off cutting rates as “authorities may be concerned about bank profitability”.

With the steady medium-term policy rate, some market watchers now expect a reduction to the banks’ reserve requirement to release fresh funds to boost credit and growth.

The operation on Monday resulted in a net 216 billion yuan fresh fund injection into the banking system, with 779 billion yuan worth of MLF loans set to expire this month.

“We continue to see quantitative and liquidity measures as the main policy focus,” said Frances Cheung, rates strategist at OCBC Bank.

“With this morning’s decision where the net MLF injection was not huge, market expectation for an RRR cut shall stay high.”

Investor expectations of a cut in the reserve requirement came after Zou Lan, monetary policy department head of PBOC, highlighted RRR as a monetary policy option to support credit growth, according to a state media report last week.

Seasonal factors could also delay monetary easing, as financial institutions usually have to assess their profitability and their clients’ loan appetite for 2024 ahead of the Lunar New Year holiday, which starts on Feb. 10, said Marco Sun, chief financial markets analyst at MUFG Bank (China).

He maintained a forecast for a 20-basis point reduction in the PBOC’s policy rate later in 2024.

Data due this week for December industrial output, investment and retail sales, along with fourth-quarter gross domestic product will give investors clues on whether the economy will need further support. – Reuters

US congressional leaders unveil stopgap bill to avert shutdown

PIXABAY

WASHINGTON – Democratic and Republican leaders in the US Congress on Sunday unveiled a short-term spending bill that would avert a partial government shutdown and keep federal agencies operating into March.

The agreement aims to avert short-term chaos and buy more time to craft the complex spending legislation that funds government activity.

Government agencies that oversee transportation, housing, and other services are due to run out of funding by midnight on Friday and would have to scale back activity if new funding is not signed into law.

The Democratic-led Senate and Republican-controlled House of Representatives have been at odds over spending levels for months.

Senate Democratic Leader Chuck Schumer agreed on the measure with Republican House Speaker Mike Johnson, Senate Republican leader Mitch McConnell and House Democratic leader Hakeem Jeffries.

The legislation could run into difficulty in the House, where a faction of conservative Republicans have used disruptive tactics to press for lower spending levels.

Republicans control the chamber with a narrow 219-213 majority, leaving Mr. Johnson with little room for error. Some Republicans insist that any spending bills must also clamp down on the US-Mexico border.

Current funding is due to expire this week for federal programs involving transportation, housing, agriculture, energy, veterans and military construction.

Funding for other parts of the government, including defense, will continue through Feb. 2.

The new spending bill would extend the deadline to March 1 for the first group and March 8 for the second.

Mr. Schumer, the top Democrat in Congress, and Mr. Johnson, the top Republican, have agreed on a $1.59 trillion total for those bills.

That would give lawmakers more time to negotiate and pass the detailed spending legislation they should have passed before the start of the government’s fiscal year on Oct. 1, 2023.

The legislation covers roughly one-third of US government spending, which amounted to $6.1 trillion in the last fiscal year.

The remaining two-thirds includes retirement and health benefits which do not need to be approved annually by Congress, as well as interest payments.

Mr. Johnson spent much of last week in meetings with hardliners and other segments of his Republican conference, raising speculation that he could seek to revise his agreement with Mr. Schumer. But the speaker ultimately stood by the deal.

The federal government came close to a partial shutdown last autumn, when hardline Republicans ousted former Speaker Kevin McCarthy for reaching a bipartisan stopgap spending deal with Schumer. – Reuters

China’s military and government acquire Nvidia chips despite US ban

FREEPIK

BEIJING – Chinese military bodies, state-run artificial intelligence research institutes and universities have over the past year purchased small batches of Nvidia semiconductors banned by the US from export to China, a Reuters review of tender documents show.

The sales by largely unknown Chinese suppliers highlight the difficulties Washington faces, despite its bans, in completely cutting off China’s access to advanced US chips that could fuel breakthroughs in AI and sophisticated computers for its military.

Buying or selling high-end US chips is not illegal in China and the publicly available tender documents show dozens of Chinese entities have bought and taken receipt of Nvidia semiconductors since restrictions were imposed.

These include its A100 and the more powerful H100 chip – whose exports to China and Hong Kong were banned in September 2022 – as well as the slower A800 and H800 chips Nvidia then developed for the Chinese market but which were also banned last October.

The graphic processing units – a type of chip – that are built by Nvidia are widely seen as far superior to rival products for AI work as they can more efficiently process huge amounts of data needed for machine-learning tasks.

The continued demand for and access to banned Nvidia chips also underlines the lack of good alternatives for Chinese firms despite the nascent development of rival products from Huawei and others. Prior to the bans, Nvidia commanded a 90% share of China’s AI chip market.

Purchasers included elite universities as well as two entities subject to US export restrictions – the Harbin Institute of Technology and the University of Electronic Science and Technology of China, which have been accused of involvement in military matters or being affiliated to a military body contrary to US national interest.

The former purchased six Nvidia A100 chips in May to train a deep-learning model. The latter purchased one A100 in December 2022. Its purpose was not identified.

None of the purchasers mentioned in this article responded to requests for comment.

The Reuters review found neither Nvidia nor retailers approved by the company were among the suppliers identified. It was not clear how the suppliers have procured their Nvidia chips.

In the wake of US curbs, however, an underground market for such chips in China has sprung up. Chinese vendors have previously said they snatch up excess stock that finds its way to the market after Nvidia ships large quantities to big US firms, or import through companies locally incorporated in places such as India, Taiwan and Singapore.

Reuters sought comment from 10 of the suppliers listed in tender documents including those mentioned in this article – none of them answered.

Nvidia said it complies with all applicable export control laws and requires its customers to do the same.

“If we learn that a customer has made an unlawful resale to third parties, we’ll take immediate and appropriate action,” a company spokesperson said.

The US Department of Commerce declined to comment. US authorities have vowed to close loopholes in the export restrictions and have moved to limit access to the chips by units of Chinese companies located outside China.

Chris Miller, professor at Tufts University and author of “Chip War: The Fight for the World’s Most Critical Technology”, said it was unrealistic to think US export restrictions could be watertight given that chips are small and can easily be smuggled.

The main aim is “to throw sand in the gears of China’s AI development” by making it difficult to build large clusters of advanced chips capable of training AI systems, he added.

 

MILITARY, AI BUYERS

The review includes more than 100 tenders where state entities have procured A100 chips and dozens of tenders since the October ban show purchases of the A800.

Tenders published last month also show Tsinghua University procured two H100 chips while a laboratory run by the Ministry of Industry and Information Technology procured one.

The buyers include one unnamed People’s Liberation Army entity based in the city of Wuxi, Jiangsu province, according to tenders from a military database. It sought 3 A100 chips in October and one H100 chip this month.

Military tenders in China are often heavily redacted and Reuters was not able to learn who won the bids or the reason for the purchase.

Most tenders show the chips are being used for AI. The quantities of most purchases are, however, very small, far from what’s needed to build a sophisticated AI large language model from scratch.

A model similar to OpenAI’s GPT would require more than 30,000 Nvidia A100 cards, according to research firm TrendForce. But a handful can run complex machine-learning tasks and enhance existing AI models.

In one example, the Shandong Artificial Intelligence Institute awarded a 290,000 yuan ($40,500) contract for 5 A100 chips to Shandong Chengxiang Electronic Technology last month.

Many of the tenders stipulate suppliers have to deliver and install the products before receiving payment. Most universities also published notices showing the transaction was completed.

Tsinghua University, dubbed China’s Massachusetts Institute of Technology, is a prolific issuer of tenders and has purchased some 80 A100 chips since the 2022 ban.

In December, Chongqing University published a tender for one A100 chip that explicitly stated it could not be second-hand or disassembled but had to be “brand new”. The delivery was completed this month, a notice showed. – Reuters

What are solid-fuel missiles, and why is North Korea developing them?

SEOUL – North Korea test-fired what it says was a new intermediate-range ballistic missile (IRBM) on Sunday, in what would be its first such missile powered by solid fuel designed boost capabilities for launching with little preparation.

The new missile was also equipped with a hypersonic maneuverable controlled warhead, state media said.

The launch comes after the nuclear-armed North said it had tested solid-fuel engines for an upcoming new-type IRBM in November, and conducted at least three tests last year of its new solid-fuel Hwasong-18 intercontinental ballistic missile (ICBM).

Here are some characteristics of solid-fuel technology, and how it can help the North improve its missile systems.

 

WHAT ARE SOME ADVANTAGES OF SOLID FUEL?

Solid-fuel missiles do not need to be fueled immediately ahead of launch, are often easier and safer to operate, and require less logistical support, making them harder to detect and more survivable than liquid-fuel weapons.

“These capabilities are much more responsive in a time of crisis,” said Ankit Panda, a senior fellow at the U.S.-based Carnegie Endowment for International Peace.

 

WHAT IS SOLID-FUEL TECHNOLOGY?

Solid propellants are a mixture of fuel and oxidizer. Metallic powders such as aluminum often serve as the fuel, and ammonium perchlorate, which is the salt of perchloric acid and ammonia, is the most common oxidizer.

The fuel and oxidizer are bound together by a hard rubbery material and packed into a metal casing.

When solid propellant burns, oxygen from the ammonium perchlorate combines with aluminum to generate enormous amounts of energy and temperatures of more than 5,000 degrees Fahrenheit (2,760 degrees Celsius), creating thrust and lifting the missile from the launch pad.

 

WHO HAS THAT TECHNOLOGY?

Solid fuel dates back to fireworks developed by the Chinese centuries ago, but made dramatic progress in the mid-20th century, when the US developed more powerful propellants.

North Korea uses solid fuel in a range of small, shorter-range ballistic missiles.

The Soviet Union fielded its first solid-fuel ICBM, the RT-2, in the early 1970s, followed by France’s development of its S3, also known as SSBS, a medium-range ballistic missile.

China started testing solid-fuel ICBMs in the late 1990s.

South Korea has also said it has secured “efficient and advanced” solid-propellant ballistic missile technology, though in much smaller rockets so far.

 

SOLID VS LIQUID

Liquid propellants provide greater propulsive thrust and power, but require more complex technology and extra weight.

Solid fuel is dense and burns quite quickly, generating thrust over a short time. Solid fuel can remain in storage for an extended period without degrading or breaking down – a common issue with liquid fuel.

North Korea said the development of its new solid-fuel ICBM, the Hwasong-18, would “radically promote” its nuclear counterattack capability.

After the first launch South Korea’s defense ministry sought to downplay the testing, saying the North would need “extra time and effort” to master the technology. – Reuters

Fierce fighting in Gaza as war hits 100 days

DOHA/GAZA – Israeli tanks and aircraft hit targets in southern and central Gaza on Sunday and there were fierce gun battles in some areas as the war reached 100 days since the Oct. 7 attack led by gunmen from the Islamist Hamas movement.

Communications and internet services were down for the third day running, complicating the work of emergency and ambulance crews trying to help people in areas hit by fighting.

The clashes were concentrated in the southern city of Khan Younis, where Hamas said its fighters hit an Israeli tank, as well as in Al-Bureij and Al Maghazi in central Gaza, where the military said several fighters were killed.

Hamas’ armed wing spokesman, Abu Ubaida, said on Sunday the fate of many Israeli hostages captured on Oct. 7 has become unknown.

In his first televised appearance for several weeks, marking the 100th day since the outbreak of the war, he said many of the hostages “may have been killed”, blaming their fate on Israel.

Hamas showed it retained rocketry capacity, launching a fresh salvo on Sunday at Ashdod, an Israeli town 40 km (25 miles) away. There was no word of any casualties.

Abu Ubaida said the group had been told by “several parties in the resistance fronts that they will expand their strikes on the Israeli enemy in the coming days.”

The Israeli military said it destroyed several silos used by Hamas to fire missiles at Israel.

Over the past 24 hours, the Gaza health ministry said 125 people had been killed and 265 wounded, bringing the total number confirmed to have been killed since the start of the war to almost 24,000, with more than 60,000 wounded.

Israel’s military said it has killed around 9,000 Palestinian fighters, and lost 189 soldiers, in the Gaza war so far.

Speaking through video link to a conference in Istanbul, Hamas leader Ismail Haniyeh praised the Oct. 7 attack by the group’s fighters who rampaged through Israeli communities around the Gaza Strip, killing more than 1,200 people and seizing around 240 hostages, according to Israeli tallies.

“We are not seekers of wars. We are seekers of freedom,” he said, saying the attack was, in part, a response to the blockade Israel and neighboring Egypt placed on the Gaza Strip after Hamas seized control of the territory in 2007.

The Iranian-backed group is sworn to Israel’s destruction.

 

NEW PHASE OF WAR

The Israeli military says it has shifted to a new phase of the war, focused on the southern end of the territory, where almost 2 million people are now sheltering in tents and other temporary accommodation, after the initial phase centered on clearing the northern end including Gaza City.

In the northern Gaza Strip, health officials said an Israeli air strike killed a local journalist, raising the number of journalists killed in the Israeli offensive to more than 100, according to the Gaza government media office.

In a statement on Dec. 16, in response to the death of a journalist in Gaza, the Israeli army said it “has never, and will never, deliberately target journalists”.

Prime Minister Benjamin Netanyahu has brushed off calls for a ceasefire, saying Israel will keep going until it achieves complete victory over Hamas and recovers the 132 remaining hostages.

The military says, though, the next phase of the war will see months of more targeted operations against the movement’s leaders and positions.

On Israel’s northern border with Lebanon, where there has been a constant, low-level exchange of fire between troops and fighters from the Iran-backed Hezbollah militia, the military said it killed four armed militants trying to cross the border.

It said several anti-tank missiles were fired into northern Israel, one of which hit a house in Kfar Yuval village. Medical officials said a 76-year-old woman and her son were killed. The son was in the village’s security squad, the military said.

In Rafah in the southern Gaza Strip, Nana, a 17-year-old high school student displaced from northern Gaza, said 100 days of war “turned our life upside down.”

“We demand the occupation not only to end the war but also compensation for the psychological damage of displacement and the hardships endured,” she said.

The war in Gaza has also stoked violence in the Israeli-occupied West Bank. The Palestinian health officials said Israeli forces killed five Palestinians, including boys aged 14, 16 and 17, in three separate incidents in the West Bank.

The Israeli military said two Palestinians in a car rammed through one of its checkpoints near Hebron and opened fire on pursuing troops. They were killed by return fire, the military said.

Asked about a 14-year-old boy killed near Jericho, it said soldiers had shot at Palestinians who threw explosives at them.

Palestinian health officials said two boys aged 16 and 17 were killed near Ramallah in the West Bank. The Israeli military said troops shot two Palestinians throwing a bomb at an army base. – Reuters

PHL faces blacklisting risk by FATF

PHILIPPINE STAR/MIGUEL DE GUZMAN

By Keisha B. Ta-asan, Reporter

THE PHILIPPINES’ continued inclusion in the Financial Action Task Force’s (FATF) “gray list” may result in reputational consequences, as well as increases the likelihood of inclusion in the dirty money watchdog’s blacklist, the Anti-Money Laundering Council (AMLC) said. 

This, as President Ferdinand R. Marcos, Jr. earlier directed the AMLC and all government agencies to work on exiting the gray list by October this year, after failing to meet the January deadline. 

The Philippines has been under the FATF’s gray list of countries under increased monitoring for money laundering and terrorism financing risks for two years and seven months or since June 2021.

In an e-mail interview with BusinessWorld, AMLC Executive Director Matthew M. David said the FATF only encourages its members and all jurisdictions to consider the FATF information on the listed country in their financial dealings.   

“Nevertheless, continued inclusion in the gray list may pose some reputational consequences, with some financial institutions considering Philippine-related transactions to be of higher risk,” he said.   

“Continuous inclusion in the FATF gray list also increases risk of blacklisting.”

Despite remaining in the gray list, Mr. David noted the FATF has not called for enhanced due diligence or any countermeasures against the Philippines.   

“In published statements of the FATF, it has recognized the high-level political commitment of the Philippine government in addressing its deficiencies,” he said.

“Furthermore, the FATF has recognized progress made by the Philippines in strengthening its anti-money laundering and combating the financing of terrorism regime.”

In October 2023, the FATF said the country needs to further strengthen its action plan to address strategic deficiencies related to casino junkets, nonprofit organizations, and beneficial ownership.   

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. earlier said that if the Philippines failed to exit the gray list this year, correspondent banks may start to cut ties with the Philippines. These are financial institutions that provide services to another bank, usually in another country.

But Mr. Remolona has said the country is unlikely to be blacklisted by the FATF.

According to Mr. David, if a country is placed on the FATF’s blacklist of countries with high risk of money laundering and terrorism financing, countermeasures may be imposed.

Financial institutions from other jurisdictions may be prohibited from establishing subsidiaries, branches, or offices in the country. These institutions will not be able to rely on third parties located in the blacklisted country as well.

Financial institutions would be required to review, amend, or terminate any correspondent relationships with banks and other financial firms in the blacklisted country, Mr. David said.   

Other countries would also increase its supervisory examination and external audit requirements for branches and subsidiaries of financial institutions.

Asked if there is a possibility that the Philippines will be blacklisted, Mr. David said the AMLC is optimistic the country will be able to address all deficiencies identified by the FATF within the year.

He said all measures needed to strengthen the country’s anti-money laundering/countering the financing of terrorism (AML/CFT) system are producing good results. 

“All agencies should continue this momentum to eventually exit the gray list. What is crucial now is the support from the private sector,” he said.   

The Paris-based FATF re-included the Philippines in the gray list in June 2021 after the country failed a mutual evaluation by the Asia Pacific Group on Money Laundering. 

The body earlier identified 18 deficiencies in the country’s measures against money laundering and terrorist and proliferation financing. The AMLC said eight are still outstanding.   

To avoid being blacklisted, a whole-of-nation approach is needed to address the eight strategic deficiencies identified by the FATF, which are clustered into five action plans, Mr. David said.

First, relevant government agencies should demonstrate effective risk-based supervision of designated nonfinancial businesses and professions (DNFBPs), he said.

“This includes the registration as covered persons by lawyers, accountants, company service providers, jewelry dealers and real estate developers and brokers with the AMLC,” he said.

“Corporations should also increasingly submit their beneficial ownership declarations to the Securities and Exchange Commission (SEC) to further enhance the country’s beneficial ownership database.”

He said all registered DNFBPs are subjected to risk profiling and compliance examinations. These nonfinancial firms should also increase the filing of transaction reports to the AMLC. 

Meanwhile, designated authorities or nonpublic bodies should use the proper AML/CFT controls to mitigate risks in casino junkets.   

“The Philippine Amusement and Gaming Corp. should ensure that casinos are able to apply fit and proper rules and conduct customer due diligence on both the junket operator and the individual junket players. The appropriate sanctions should be implemented on casinos who fail to do so,” he said.   

The Philippines should also increase its money laundering and terrorism financing investigations and prosecutions, he said.

Aside from the AMLC, relevant law enforcement agencies should file more ML/TF financing criminal cases with the Department of Justice and courts.   

Cross-border measures should also be applied to all main sea or airports of the country, Mr. David said.

“The Bureau of Customs should continue to enhance implementation of cross-border declaration measures across all international air and seaports. This should include increasing capacity for the detection of false declarations and corresponding confiscation actions should be made,” he said.   

All AML/CTF stakeholders such as supervisors, regulators, law enforcement agencies, prosecutors, other government agencies, and covered persons in the private sectors should address the deficiencies wherever applicable, he added.

In October 2023, Mr. Marcos required the urgent implementation of the government’s National Anti-Money Laundering, Counter-Terrorism Financing and Counter-Proliferation Financing Strategy 2023-2027 and ordered concerned agencies to support efforts against money laundering and terrorism financing.

Only three countries are currently in the FATF’s blacklist — North Korea, Iran and Myanmar.

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework.

The Philippines was removed from the blacklist in 2003 after the passage of Republic Act (RA) No. 9160 or the Anti-Money Laundering Act of 2001 as well as its amendments through RA 9194.

Recto urged to prioritize reforms to boost tax compliance, not new taxes

President Ferdinand R. Marcos, Jr. with his new Finance Secretary Ralph G. Recto after the oath-taking at the Malacañan Palace, Friday, Jan. 12, 2024. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Luisa Maria Jacinta C. Jocson, Reporter

NEWLY APPOINTED Finance chief Ralph G. Recto must focus on tax reforms that will address issues preventing efficient tax collection and compliance, as well as consider more progressive taxes to boost revenues, analysts and business groups said.

“Reducing the burden of compliance with tax laws is a major concern for investors, and we look forward to the Department of Finance (DoF) and its attached agencies continuing to engage the private sector to resolve challenges related to this,” Ebb Hinchliffe, American Chamber of Commerce of the Philippines, Inc. executive director, said in a Viber message.

Enrico P. Villanueva, senior lecturer of economics at the University of the Philippines Los Baños said in a Facebook Messenger chat that he hopes Mr. Recto will focus on tax collection efficiency and reduction of corruption.

Mr. Recto on Friday took his oath as Finance secretary, replacing Benjamin E. Diokno, who is returning to the central bank as a Monetary Board member.

The former senator and Batangas congressman said that he will be continuing the strategies under the Philippine Development Plan and the Medium-Term Fiscal Framework. “There is a plan, there is a roadmap that essentially we will continue,” he added.

Mr. Recto also committed to reaching the tax collection targets this year. The Bureau of Internal Revenue is expected to raise P3.05 trillion and the Bureau of Customs is seen to collect P1 trillion, based on the Budget of Expenditures and Sources of Financing.

“So, every night, when I wake up in the morning, we should have collected more or less P20 billion to fund all the needs of our people and the requirements of government, and to make sure that money is spent wisely because we have to stretch every peso, including acting faster on investment,” he said.

In a statement on Friday, Mr. Recto said he will push for the immediate passage of key tax reforms endorsed by the President as priority measures in Congress.

“I agree that we need funds to finance growth and our people’s growing needs and install a system that promotes fair and fast tax administration. These measures will not only finance development but will reduce the deficit and our dependence on debt,” he said.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that Mr. Recto must be able to push for reforms as soon as possible, ideally within the first half of Mr. Marcos’ term.

Mr. Sta Ana said that pushing for reforms later is “dangerous” as legislators will become more “sensitive to politicking and pressure from lobbying by vested interests that dangle campaign financing to politicians.”

“The incoming Finance secretary has to pursue the reforms that the DoF has endorsed, but which have been sidelined or derailed. Where Mr. Diokno failed, the new Finance secretary must succeed. Whether the new secretary will have the courage to pursue the tax reforms remains to be seen,” he said.

“It is a big challenge, given that the window to have the reforms legislated is closing amid the politicking and infighting as we get closer to the midterm election cycle,” he added.

WEALTH TAX?
Sonny A. Africa, executive director of think tank Ibon Foundation, said he hopes that Mr. Recto will be open to moderating “regressive consumption taxes that disproportionately burden the poor and ordinary Filipinos.”

“Still, even limiting new consumption taxes to single-use plastics and digital services does not go far enough,” he said, adding that Mr. Recto should also correct the “growing regressiveness” of the tax system.

Mr. Africa also urged the new Finance chief to revisit the proposed wealth tax, which would help the government significantly ramp up revenue generation.

Data from Ibon Foundation showed that a 1% tax on wealth over P1 billion, 2% tax on wealth over P2 billion, and 3% tax on wealth over P3 billion could generate around half a trillion annually.

“I hope Mr. Recto can use his stature to advocate for wealth sharing tax or a mandatory contribution to social equity based on net worth,” Mr. Villanueva added.

Mr. Diokno earlier bucked proposals of a billionaire’s tax, preferring taxes on consumption over income.

Mr. Africa said a more progressive tax system is a “no-brainer” because of the widening gap between the super-rich and the poor.

“Improving revenue generation from the narrow but extremely resource-rich tax base of profitable firms and wealthy families is also the most rational way to control deficits and moderate debt,” he added.

PwC Philippines Vice Chairman and Tax Managing Partner Maria Lourdes P. Lim said that Mr. Recto’s background in the legislature should ensure that priority measures are “not only geared to increase revenue collection but should aim to promote economic growth, investment, competitiveness and be consistent with international standards.”

“We trust that Mr. Recto will ensure that the tax measures of the government will be implemented fairly and properly (i.e. without going beyond the provisions and spirit of the law),” she said in a Viber message.

Ms. Lim noted the value-added tax (VAT) on digital services and Passive Income and Financial Intermediary Taxation Act (PIFITA) must be given priority.

“We also ask that the private sector be consulted in the crafting of the implementing rules and regulations on the recently passed Ease of Paying Taxes (EOPT) law,” Ms. Lim added.

The Department of Finance earlier said that its priority tax reform measures could generate as much as P120.5 billion this year.

These include PIFITA, VAT on digital service providers, a new mining fiscal regime, motor vehicles road user’s tax, the excise tax on single-use plastics, pre-mixed alcohol, sweetened beverages and junk food.

DROP TAX ON JUNK FOOD
Calixto V. Chikiamco, Foundation for Economic Freedom (FEF) president, said that Mr. Recto should prioritize the passage and implementation of the VAT on digital service providers, the new mining fiscal regime, and the excise tax on single-use plastics.

However, Mr. Chikiamco said Mr. Recto should also drop the proposed junk food tax, which is “controversial and debatable.”

Mr. Diokno last year proposed a tax on junk food as well as a tax increase on sweetened beverages to address health-related diseases attributed to poor diets. A bill has yet to be filed in Congress.

Meanwhile, Senate President Juan Miguel F. Zubiri said that he is looking forward to Mr. Recto’s support for the amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, which has been approved by the House committee.

“(This) would give back the power to the freeport zones and economic zones to grant the fiscal incentives rather than going to the Fiscal Incentives Review Board, which is another layer of bureaucracy,” Mr. Zubiri said in a Viber message.

“This is a priority of the President as it has gotten investors confused and frustrated and is contrary to our Ease of Doing Business regime in the country,” he added.

INFLATION
Apart from key fiscal reforms, analysts also noted other issues that Mr. Recto must address, including inflation.

“As a member of the economic team, he should prioritize tackling food inflation. This is the number one concern among Filipinos, surveys show,” Mr. Chikiamco said.

Ateneo de Manila economics professor Leonardo A. Lanzona said via Facebook Messenger chat that Mr. Recto is facing a major problem in elevated debt that is worsened by high interest rates.

“As inflation remains, these interest rates will continue to remain high. The challenge for the DoF secretary now is how to raise the funds or generate tax revenues to pay for the maturing debts,” he added.

The Philippine Stock Exchange, Inc. board of directors and management in a statement expressed confidence Mr. Recto will be able to “fast-track fiscal reforms needed to ensure the country’s economic growth, which will help boost investor confidence.”

The Makati Business Club also said that they will support Mr. Recto in “including continuous improvement of laws and policies to attract job-creating investment and expansion.”

For his part, Mr. Recto said he will be “employing measures to shield consumers, especially the vulnerable, from the impact of elevated prices, while fully realizing the promises of game-changing reform laws.”

He also said that the Maharlika Investment Fund will be managed “in fidelity with the law and fulfill its intended objectives.”

Mr. Recto also committed to support the passage of the Capital Markets Development Act, as well as “pursue reforms in public and private pensions, prioritizing the best interests of beneficiaries while ensuring actuarial health and fund sustainability.”

In a separate Viber message to reporters, Mr. Diokno also said that he will have more free time in his new capacity as a member of the Monetary Board.

“For the last eight years, I feel like I’ve run nonstop on a treadmill — from DBM to BSP at the height of the pandemic, and then DoF. Now, I’m in the cooling down phase of that long run, which I think I truly deserve,” he added.

Mr. Diokno was appointed BSP governor by then-President Rodrigo R. Duterte. He served as Mr. Duterte’s Budget secretary from 2016 to 2019 and headed the Budget department under the Estrada administration.

Mr. Marcos said Mr. Diokno was initially offered a position in the Maharlika Investment Corp. (MIC), which is tasked to oversee the country’s first sovereign wealth fund.

“Once again, I cannot thank (Mr. Diokno) enough for setting the economy on to the right path, he has guided, he has put the essentials into place, he has made the structural changes that we need. And therefore, he has… these economic figures, the results that we are getting a lot of that can certainly be attributable to the work that he did as Department of Finance secretary,” Mr. Marcos said.

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