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DFNN forges partnership for tech sector

LISTED gaming technology firm DFNN, Inc. teamed up with the Department of Information and Communications Technology (DICT) and the Freeport Area of Bataan (FAB) to support the country’s technology and innovation sector.

In a stock exchange disclosure on Wednesday, DFNN said it signed a memorandum of understanding with the DICT and the FAB for the Horizon Philippines project of Silicon Valley-based venture capital firm Plug and Play.

The collaboration seeks to build and accelerate the thriving startup and innovation ecosystem in the Philippines to position Bataan as a hub for technology, new employment opportunities, and sustainable economic development in the region.

The project seeks to harness the potential of the country’s talent pool and drive economic growth by pushing innovation in technology and entrepreneurship and fostering an environment that would allow the possible creation of future Filipino “unicorns” in the technology and innovation sector.

“Horizon Philippines is more than a program. It represents a commitment to nation building, fostering collaboration between government, industries and innovators to propel inclusive digital transformation,” DFNN President and Chief Executive Officer Ricardo F. Banaag said.

“Together, we will shape the horizon for the Philippines, by continuously finding new avenues to create an innovation-centered technology landscape,” he added.

According to DFNN, the Horizon Philippines project will allow the company to gain firsthand and direct exposure to emerging technology startups and will help spearhead innovation in various industries, as well as provide resources and access to emerging technologies.

“Horizon Philippines is a gateway to transformative technologies that will drive our strategic initiatives and position us for sustainable growth,” Mr. Banaag said.

Plug and Play has a presence in more than 50 locations worldwide. Companies under its portfolio have raised over $9 billion in funding, with successful exits including Danger, Dropbox, LendingClub, and PayPal. 

On Wednesday, shares of DFNN at the local bourse rose 13 centavos or 4.32% to P3.14 apiece. — Revin Mikhael D. Ochave

Italy is no country for young chefs

ROME — Like many young people growing up in Sardinia, Davide Sanna loved Italian cuisine and wanted to have a successful career as a chef. But to do so, he had to move to New York.

Mr. Sanna had worked in kitchens on the Mediterranean island and in northern Italy for four years, starting when he was only 19. But he was toiling 60 hours a week to take home just €1,800 ($1,963.26) a month, at best. In the busy summer season, he’d be at the stove every day for two months, without a break.

Then a fellow chef put him in contact with a restaurateur looking for cooks in New York, Mr. Sanna said. He accepted without giving it a second thought.

For the past year, the 25-year-old has cooked at Piccola Cucina, an Italian restaurant in Manhattan’s glitzy SoHo district, home to designer boutiques and high-end art galleries. In New York, he can pull down $7,000 a month, working a 50-hour week.

“Here there are regular contracts, nothing in the ‘black,’” said Mr. Sanna, using the Italian slang for undeclared labor. “And, if you work a minute extra, you’re paid for it. It’s not like that in Italy.”

Italy’s food is famous the world over but many talented young chefs, hoping to make a career in their country, find themselves frustrated by low pay, lack of labor protection and scant prospects. Since the launch of Europe’s single currency 25 years ago, Italy has been the euro zone’s most sluggish economy.

Star chefs like Massimo Bottura, who runs the Osteria Francescana in Modena, are reinventing Italian cuisine. But, given its rich culinary tradition, Italy arguably finds itself under-represented by top-class restaurants. It has 13 with three Michelin stars — the prestigious guide book’s highest ranking — the same number as Spain. Japan, meanwhile, has 21, and France boasts 29.

The current outflow of Italian chefs due to difficult conditions at home is not a new phenomenon.

Italians began taking pizza and pasta to the world during mass emigration in the late 19th century. The popularity of Italian cuisine in Europe and the United States grew as more immigrants arrived after World War II.

But the number of young Italian leaving to seek work in faster-growing economies has been steadily rising for decades — though the trend was briefly interrupted by the COVID-19 pandemic. Emigration, and a low birth rate, has contributed to a mounting demographic crisis: Italy’s population of 59 million is shrinking.

Much of the emigration has come from the Mediterranean islands of Sicily and Sardinia, as well as Italy’s economically underdeveloped south — the mezzogiorno.

‘FIVE YEARS’ TIME? NOT IN ITALY!’
Roberto Gentile, a 25-year-old chef from Sicily, has worked for the last two years cooking French food at Le Suquet, a two-star-Michelin restaurant near Toulouse, after previous jobs in Britain and Spain.

Despite his passion for Italian cuisine and the sentimental desire to go back to what Italians call the Bel Paese (the beautiful country), Mr. Gentile said the economic disincentives were too strong to consider returning.

“After gaining experience abroad and reaching a high level, you would hope to go back to Italy and find a suitable role and salary, but that doesn’t happen,” he said. “Where do I see myself in five years’ time? Not in Italy!”

Giorgia Di Marzo decided to take a chance and return to Italy in 2018, after working in Britain as a chef and restaurant manager for eight years. The 36-year-old said she wanted to put down roots and be closer to her family.

But an offer of just €1,200 ($1,284.84) a month to work 50 hours a week in a restaurant in Milan made no sense for her. Wages in Italy have declined over the past 30 years, adjusted for inflation — the only country in Europe where that has happened.

Instead, Ms. Di Marzo opened her own eatery in her native Gaeta, a seaside town between Rome and Naples that has been a resort dating back to the Roman Empire. But soon, she ran into trouble.

Last year, rising costs forced her to close for three months during the winter low season and she could not get a loan from her bank for a sector considered at risk after the COVID pandemic.

“I stay afloat, but I can only offer seasonal contracts,” she said. “I can’t ensure work for my employees all year round.”

Eating out is part of everyday life in Italy. It has 156,000 restaurants and takeaway food outlets, the second most in Europe after France, data from international industry research group IBISWorld shows.

But the ratio of new restaurants opening to existing ones closing has been negative for each of the last six years in Italy, according to the sector’s business lobby FIPE, amid high taxes, endless red tape and the difficult economic backdrop.

‘ALWAYS IN THE BLACK’
For many restaurateurs, the answer is not to declare their workers at all and a large “shadow economy” is rife in the restaurant business. Undeclared work accounts for around a fifth of the Italian private sector’s output, well above a European Union average of 15%, according European Labour Authority statistics.

Such undeclared work is particularly rife in the hospitality sector, Italian economic data shows.

Italians take their food very seriously, not just as nourishment and pleasure, but an important part of their regional and national identity.

Typical dishes include tortellini in broth from the northern Emilia region, spaghetti alla carbonara from central regions around Rome, and pasta alla Norma in Sicily. Naples is the original home of pizza.

A peep into the kitchens of even the most traditional Italian restaurants shows the local dishes are often prepared by low-paid immigrants.

One such is Julio, a 31-year-old Peruvian who declined to give his surname because he has no work permit.

He prepares pizza and pasta in a Rome restaurant, working 48 hours a week for a monthly salary of €1,400 to €1,600 “always in the black.”

While similar situations are found in other developed nations, in Italy it is a relatively new phenomenon, with mass immigration only beginning around three decades ago.

‘COOKING IN OUR BLOOD’
Fifty-year-old Francesco Mazzei trained as a chef in his home region of Calabria in Italy’s southern toe, and then in Rome, before leaving 27 years ago for London where he arrived “without even money for cigarettes.”

He honed his art for two decades in Britain and around the world and in 2008 opened his own renowned restaurant, called L’Anima, in London’s financial district.

That launched a career which has seen him open other eateries in London and Malta and establish himself as a restaurant entrepreneur and consultant.

“I could never have done any of this in Italy,” he told Reuters.

“In England you have a chance to do business, a cook does not cost you twice as much as you pay him,” he said, referring to high Italian social charges and taxes on labor. Partly for this reason, young chefs in Italy take home half the salary of their peers in Britain while working longer hours, Mr. Mazzei said.

British people have become knowledgeable about Italian food, even learning about regional differences, he said, so he preferred to hire Italian chefs to satisfy an increasingly demanding clientele.

“We Italians have cooking in our blood. We’re the only people in the world who ask ‘what shall we eat this evening’ while they are having lunch,” Mr. Mazzei said.

MELONI’S MINISTRY FOR FOOD PRIDE
Italian Prime Minister Giorgia Meloni’s right-wing government has set up a ministry for food sovereignty as part of a drive to boost national pride. The minister, Francesco Lollobrigida, suggested in March establishing a task force of tasters to monitor quality standards in Italian restaurants around the world, to avoid chefs getting recipes wrong or using ingredients that aren’t Italian. But the government has also facilitated the temporary and informal work arrangements that blight the restaurant sector in Italy, and it opposes calls for a minimum wage.

Antonio Bassu, a 28-year-old Sardinian chef who works in a high-end restaurant in Barcelona, said Spanish salaries were lower than in northern Europe but working conditions were still far better than back home.

A chef in Spain can expect a regular open-ended contract based on 40 hours per week with two days off, he said, unlike in Italy where they are likely to be hired on a temporary contract, if there is a contract at all.

“Here you don’t have to beg for what you get,” Mr. Bassu said. — Reuters

EV on my mind

AUDIUSA.COM

Two things are starting to make me consider the shift to an electric vehicle (EV) for daily use: improvements in vehicle capability, and operating and maintenance cost. It all started with a test drive in August, that allowed me to personally drive an EV through water at wading depth, which boosted my confidence in an EVs ability to survive Philippine roads.

Then, recent information that locally available EVs now have ranges of about 400 kilometers for every full charge. And more recently, a discussion with a dealership regarding operating and maintenance costs, warranties, and after-sales support. Another confidence booster was the story on how some local logistics companies have shifted to EV fleets.

EVs are presently more expensive than regular cars, and the price difference is more than enough to make one think twice about taking the plunge. Also, hybrids appear to be more practical especially if a household can own only one car. An incentive, of course, is that by law, EVs and hybrids are exempted from number coding until 2030.

Former BusinessWorld colleague Brian Afuang gave me the chance to view up close and personally try out the fully electric Audi Q8. The experience made me realize how extensively technology has changed motoring.

The boosters: improved range and lifespan of EV batteries. The 400-kilometer range seems to have become the standard, while battery life now hovers around eight to 10 years. Improved design has also made EVs more weather-proof. But the more important consideration, in my opinion, is operating and maintenance costs.

For people who can afford to own and keep more than one motor vehicle, the option is to own at least one EV — mainly for city driving — and one gasoline or diesel car. For people who can afford only one, I suggest a hybrid car that runs on gasoline and batteries. Fuel cost and coding exemption will be the main consideration, and the limited number of public charging stations will not be an issue.

The Audi Q8 E-Tron is only for the wealthy few who can afford its price tag of P6.25 million to P7.25 million. It has a claimed range of up to 600 kilometers, and can wade in about half-meter of flood water. As I wrote previously, I am sure by next year even more EVs will start trumpeting longer ranges as well. And I would not be surprised if EV makers, by 2024, retails EVs with ranges of 700-800 kilometers.

A recent story by Reuters published in this newspaper reported the plan of the German government to put 15 million EVs and hybrid cars on the road by 2030. German Chancellor Olaf Scholz planned on meeting car executives, ministerial leaders, energy executives, and labor unions to discuss how Germany could achieve the target in seven years. To date, there are roughly 2.2 million cars with an electric motor on German roads, of which 1.3 million were fully electric cars.

“The chancellor is convinced the goal could be reached if carmakers produced more cheaply priced and longer-range cars,” government spokesperson Steffen Hebestreit told a press conference. A spokesperson for the transport ministry also said the government was working to add more to the over 100,000 public charging stations already built.

Locally, having more public charging stations will be a big plus to EV ownership. I am certain additional investments in charging networks are forthcoming. It is inevitable, especially with corporations now shifting to EV fleets. Fleet sales is a major multiplier of EV sales, and should be the focus over retail. Corporate fleets have the most to gain from the EV shift.

As for households looking at EVs for personal use, mainly in the city, the numbers have seemingly become favorable. For P1.6 million, for instance, one can buy a China-made EV or a Japan-brand hybrid car built in Indonesia. The China car gets a five-year service warranty, while the Japan car gets only three. Both have a 100,000-kilometer warranty. But, in addition, the China car gets an eight-year battery warranty.

Now, let us assume a household that runs maybe 12,000 kilometers annually, or 1,000 kilometers monthly. For the hybrid car, assuming a mileage of 25 kilometers per liter, then it is a monthly consumption of 40 liters of fuel. At an average of P60 per liter, then it is a monthly fuel cost of P2,400. For the year, it’s a total of P28,800.

In comparison, the China car claims a range of 400 kilometers for every full charge. It comes with a charging unit that can be installed at home. Eight hours to full charge from zero, I am told. I am uncertain as to how much the charging cost will be, or how much will be added to your monthly electricity bill at home. But at 400 kilometers per full charge, then the unit will have to be charged maybe only three times every month. If it adds less than P2,400 to the utility bill every month, then the EV comes out ahead in terms of “fuel” cost.

As for maintenance, at 12,000 kilometers annually, then the hybrid will need to be serviced maybe twice a year. In my case, I go for preventive maintenance service or PMS every 5,000 kilometers. At an average cost of P6,000 at every interval, for oil and lubricants and service and others, then that’s maintenance of at least P12,000 yearly for the hybrid.

As for the EV, I was told that it will require first inspection at 5,000 kilometers, then an annual inspection thereafter — just to make sure everything is in order. Unless something needs to be fixed, repaired, or replaced, then annual inspection should not cost much. Probably just a matter of checking battery life and performance. No oils or lubricants to replace, no used oil to dispose of.

Price difference? The EV costs P1.6 million. The hybrid is priced the same. The non-hybrid version of the Japan-brand car is P1.3 million. The P300,000 difference in the price of the non-hybrid and the EV can be recovered from not having to pay for fuel and higher maintenance cost. Over a five-year period, that difference is P5,000 monthly. The higher the mileage yearly, that difference becomes smaller.

While the financial math appears to make sense, I guess the only remaining question is whether one is comfortable with buying and owning a wholly China-made car. This is where brand equity, track record, and reliability will come into play.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

Mary Mediatrix Medical Center taps EEI Power in shift to renewables

LISTED construction firm EEI Corp. said its energy arm had partnered with Mary Mediatrix Medical Center (MMMC) for the installation of solar photovoltaic (PV) systems.

In a stock exchange disclosure, EEI said EEI Power Corp. signed the contract with MMMC for the installation of a 376.2-kilowatt-peak  solar PV rooftop system. MMMC is part of Mount Grace Hospitals, Inc.

The installation is in line with MMMC’s sustainability goals as the capacity is part of the company’s energy consumption, EEI said, adding that construction works for the project will start immediately.

As the healthcare facility taps renewable energy, the move will help reduce the hospital’s reliance on traditional fossil fuel and allow long-term cost savings, EEI said.

The renewable energy capacity is expected to produce about 509,000 kilowatt-hours of clean energy per year, which will help reduce MMMC’s carbon footprint by 4,988 metric tons, EEI said. The reduction is equivalent to 86,751 liters of gasoline reduction, it added.

Established in 1931, EEI has business interests in construction services and distribution of industrial and machinery systems. Its energy arm offers power solutions for electrical equipment and services.

At the stock exchange on Wednesday, shares in the company closed seven centavos lower or 1.22% to end at P5.69 apiece. — Ashley Erika O. Jose

Tatung Sarthou wins another cookbook award

IF WE’RE being honest, we’re starting to lose track of celebrity chef Myke “Tatung” Sarthou’s wins at the Gourmand World Cookbook Awards. For this year, Mr. Sarthou’s Simpol Dishkarte won the 2023 Best Celebrity Chef Book in the World at the 29th Gourmand World Cookbook Awards held at Riyadh, Saudi Arabia on Nov. 28.

Mr. Sarthou got his first Gourmand World Cookbook award for Philippine Cookery: From Heart to Platter in 2017 for the Best TV Chef Book outside Europe category, while Simpol Kitchen Secrets won in two awards in 2021: Celebrity Chef – World, and Easy Recipes at home. According to a release, there were around 205 submissions this year, with Simpol Dishkarte coming out on top.

“The contents of Dishkarte span kitchen fundamentals, safety tips, cooking techniques, ingredient deep dives, and step-by-step recipes, accompanied by illustrations and personal reflections,” said BusinessWorld’s story about Dishkarte (https://www.bworldonline.com/arts-and-leisure/2023/05/18/523457/chef-tatungs-book-dishkarte-uses-taglish-to-teach-cooking/). The book focuses on letting Filipinos learn more about cooking techniques, but also the logic behind procedure, conveniently worded in Taglish (a mixture of Filipino and English often used in casual conversation).

In a Facebook post about his latest win, Mr. Sarthou wrote, “Winning this prestigious award for the third time feels like winning the coveted Ms. Universe crown, pero wala pong lutuang naganap sa laban na ito (no cooking was done in this fight — taking after the Filipino expression that a rigged contest is “cooked”).”

“Allow me to express my deepest gratitude for the honor of having received the 2023 Best Celebrity Chef Book in the World, a grand award bestowed by the prestigious Gourmand World Awards,” he continued.

“Creating Simpol Dishkarte was a labor of love, and receiving this award validates the countless hours of dedication and hard work that went into its production. This achievement proves that hard work and perseverance does pay off. After all, when I started working on this book, there was a bit of skepticism: ‘Why invest in such a book?’ Yet here we are, winning two awards in a row. First the Filipino Reader’s Choice Award and now this very prestigious international award,” he said. “All this would have been difficult to achieve if I had been alone. And so, I am deeply thankful to everyone who contributed to the success of the cookbook; from the talented team who collaborated on the project, and to the supporters who have been with me every step of the way.”

It’s still all business for the chef: after this quite emotional post, he was already posting about their Ensaimada Grande, available at his latest venture, Gateway 2’s Tindeli. — Joseph L. Garcia

The Global South has lost faith in COP28

BRENDAN O DONNELL-UNSPLASH

THERE is no better way to remind ourselves of the urgency of climate change than by listening to the impassioned pleas of the Maldives Environment Minister, Aminath Shauna, when talking about the future of her idyllic homeland. “I do not want to leave my home, I don’t want my three-year-old daughter to leave our home,” she told me. On stage at the Bloomberg New Economy Forum earlier this month, she made that call again, urging “the world and international organizations, governments, to identify and to say the issue is a climate crisis.”

Hers is not an isolated story. The Maldives is just one of a number of countries that make up the Global South — a term used to describe developing nations, typically in Africa, Asia, Latin America, and the Caribbean. They face a trifecta of problems: poverty, inequality, and the effects of a warming planet. They are on the front line of this environmental crisis. Increasingly, they feel burned by richer states that have reaped the benefits of using dirty fuels to grow their economies, and are now not willing to cough up the cash for those suffering the consequences.

So when the United Nations Conference of the Parties, known as COP28, starts on Thursday, they will be hoping the gathering will do more than just discuss the global environmental crisis. Focusing on renewable energy, reforming the way funding is distributed to mitigate and adapt to climate change, and actually delivering money to developing nations would be huge first steps toward restoring faith in the process; and addressing goals that are in all our interests.

The frustration is growing. In September, the Least Developed Countries group pointed out that while they are home to more than 14% of the world’s population, they only contribute around 1% of emissions from fossil fuels and industrial processes. The bloc also notes that although it has the least historical responsibility for climate change, it is being forced to adapt beyond its capacities.

Most egregious, in the eyes of members of this group, is the lack of action on the loss and damage fund, a mechanism that is supposed to provide financing for poorer nations most vulnerable to, and impacted by, climate change. Developing countries want the fund to provide at least $100 billion worth of annual financing by 2030. Ahead of the conference, the chair, Madeleine Diouf Sarr from Senegal, was clear; how the new pot of money will operate and whether it will get early pledges from countries will be key criteria for success at COP28. “An empty loss and damage fund won’t do anything for our people,” she said. “When their livelihoods are dried up by drought, their schools and hospitals are washed away by floods or when the rising sea takes their homes.”

But even before the meeting in Dubai begins on Thursday, divisions are running deep. There’s been no firm commitment from developed nations for an immediate and notable financial contribution. The US, one of the greatest global champions of addressing the climate crisis, had pushed for the commitments to be voluntary. It lost that bid, but did manage to insist that the fund can receive money from the private sector, too, ensuring that financing environmental adaptability would not solely be a government matter. While the private sector has a place in climate financing, a sizeable contribution from the US would have sent a promising signal — instead of the “million” currently on the table. China, which now emits more carbon than every developed nation put together, is also falling short of expectations. It won’t help that President Joe Biden is reportedly now not planning to attend the summit. Neither will China’s President Xi Jinping, further diminishing its significance.

None of this should be seen as progress, or satisfactory for the needs of the Global South, notes Gordon Brown, the former UK prime minister who is now a UN Special Envoy for Global Education. He is proposing that this year, COP28 works to get the world’s wealthiest petroleum states to pay a 3% voluntary tax on their 2022 revenues, which he estimates could raise $25 billion. That would go a long way toward funding the needs of those least developed and developing countries to help them prepare for the future, with the ultimate aim of ensuring a climate crisis doesn’t turn into a refugee crisis.

A sensible and logical plan, but one that would need the buy-in of the petro-states. There’s been much criticism of the decision to have the United Arab Emirates, one of the world’s biggest oil producers, host the meeting: Human-rights activists and environmentalists have called for it to be boycotted all together. But this is where the UAE and its COP28 President Sultan Al Jaber, the chief executive officer of Abu Dhabi National Oil Co. — one of the largest petroleum firms on the planet — could play a bigger role in convincing producer nations of their responsibilities. That seems an unlikely priority given the latest media reports of his plans to use the summit as a way to push the oil and gas agenda. Another possible move would be to do the same with energy companies, which have seen bumper profits from Russia’s war in Ukraine, while people in poorer nations are disproportionately affected by higher electricity costs as energy prices soar.

“We cannot continue to put the interests of a few before the lives of many,” declared the Prime Minister of Barbados, Mia Amor Mottley, at the UN General Assembly in September, as she urged both companies and leaders alike to do more to address rising sea levels and a warming planet. She has been one of the biggest critics of richer, more developed countries and after last year’s COP27 summit warned of a billion environment refugees by the middle of the century if governments failed to tackle the crisis. What she and her counterparts in the Global South are asking for is climate justice. COP28 is a chance to deliver it to them.

BLOOMBERG OPINION

ICTSI to finish Australia terminal expansion by yearend

VICTORIA INTERNATIONAL CONTAINER TERMINAL — ICTSI

RAZON-LED International Container Terminal Services, Inc. (ICTSI) said the expansion of its unit in Australia is expected to be completed by yearend.

“The project is a substantial leap forward for VICT (Victoria International Container Terminal). It will redefine the container terminal landscape at the Port of Melbourne and set new industry standards for operational efficiency and capacity,” Bruno Porchietto, chief executive officer of VICT, said in a statement on Wednesday.

Phase 3A of VICT in Melbourne is projected to be finished by December, ICTSI said, adding that this would allow VICT to service larger vessels.

The project, which is valued at 235 million Australian dollars, is divided into two phases, the listed port operator said, noting that phase 3A will increase the terminal’s capacity by 30% to 1.25 million TEUs or twenty-foot equivalent units.

The listed company said VICT’s expansion includes three additional storage blocks, six auto container carriers, and six auto stacking cranes, which it said is part of the phase 3A expansion.

“With the expanded capacity and new equipment, VICT will be able to service larger vessels — particularly the neo-Panamax ships with capacities of up to 14,000 TEUs — and introduce economies of scale across the supply chain. All these improvements represent our commitment to delivering the best service to our customers at the Port of Melbourne,” Mr.  Porchietto said.

Meanwhile, the phase 3B of the project is expected to be completed by 2025, which includes the acquisition of automated ship-to-shore cranes and construction of two additional storage blocks.

ICTSI said that VICT will also invest in the development of its workforce through upskilling efforts aside from investing in infrastructure and equipment.

“This proactive approach aims to ensure that VICT remains well-prepared to effectively manage the anticipated growth across its infrastructure, equipment, operations and workforce,” the port operator said.

VICT is ICTSI’s unit in Melbourne, Australia. It is a fully automated container terminal servicing large trading vessels.

At the local bourse on Wednesday, shares in the company gained P1.60 or 0.73% to end at P221.60 apiece. — Ashley Erika O. Jose

Term deposit yields mixed amid hawkish signals from BSP chief

YIELDS on the central bank’s term deposits ended mixed on Wednesday amid hawkish signals from the Bangko Sentral ng Pilipinas (BSP) chief as they want to keep rates higher for longer to keep inflation expectations anchored. 

The BSP’s term deposit facility (TDF) fetched bids amounting to P295.971 billion on Wednesday, below the P300 billion on the auction block as well as the P333.647 billion in tenders for a P330-billion offer seen a week ago.

Broken down, tenders for the seven-day papers reached P164.686 billion, lower than the P180 billion auctioned off by the central bank and the P194.346 billion in bids for a P200-billion offering seen the previous week.

Banks asked for yields ranging from 6.62% to 6.75%, a slightly narrower margin than the 6.6% to 6.75% band seen a week ago. This caused the average rate of the one-week deposits to increase by 0.89 basis point (bp) to 6.6875% from 6.6786% previously.

Meanwhile, bids for the 14-day term deposits amounted to P131.285 billion, higher than the P120-billion offering but below the P139.301 billion in tenders seen on Nov. 22 for the P130 billion on the auction block.

Accepted rates for the tenor were from 6.6% to 6.735%, slimmer than the 6.6% to 6.768% margin seen a week ago. With this, the average rate for the two-week deposits slipped by 0.1 bp to 6.6886% from 6.6896% logged in the prior auction.

The BSP has not auctioned off 28-day term deposits for three years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the 28-day bills are used by the BSP to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields ended mixed on Wednesday amid hawkish signals from the BSP, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

BSP Governor Eli M. Remolona, Jr. on Friday said their policy stance will remain “hawkish for a while,” noting the Monetary Board could still resume tightening to keep inflation expectations anchored.

At its Nov. 16 meeting, the BSP kept its policy rate at a 16-year high of 6.5% amid easing inflation following an off-cycle hike of 25 bps last month.

The Monetary Board has raised borrowing costs by 450 bps since it began its tightening cycle in May 2022.

It will hold its last policy review for this year on Dec. 14.

Headline inflation dropped to a three-month low of 4.9% in October from 6.1% in September. This brought the 10-month average to 6.4%, still above the BSP’s 6% forecast and 2-4% target for the year.

Mr. Ricafort said a stronger peso exchange rate against the dollar and low global crude oil prices would help ease inflationary pressures, which could prompt the BSP to pause at next month’s meeting.

“Another positive factor is that the markets priced in Fed rate cuts by about 100 basis points in 2024 that could be matched locally,” he added. 

The US Federal Reserve kept its target rate unchanged at 5.25-5.5% at its Oct. 31-Nov. 1 meeting.

The US central bank has raised 525 bps from March 2022 to June 2023. — K.B. Ta-asan

A British Christmas at home with M&S

YOU WO’NTt have to travel very far for a tasty British Christmas, just like in the movies. Marks and Spencer’s (M&S) Christmas Food range comes with light-up houses and musical tins, a moving milk chocolate car, build-your-own gingerbread house kits, festive snowy pretzels and a children’s game using M&S Swiss Milk Chocolates made with ground hazelnuts.

Gifts aside, the M&S Christmas Classics make for delicious treats when hosting Christmas parties or simply as a lovely treat for yourself. Take the Classic All-Butter Mince Pies: six-month matured Christmas pudding made with a spicy mix of juicy vine fruits and lashings of cider, rum, and sherry (also available in an alcohol-free variant). Leave some room for Belgian chocolate classics and cap it all off with a Christmas Spiced Tea or Christmas Ground Coffee Blend with 100% Arabica to warm up on colder days. You can also add shortbread tree staples, Swiss chocolates, puppy shaped chocolates, and Christmas cocktails to your Christmas stocking stuffers.

Alcoholic beverages include a rich dark winter ale brewed with English malts and hops for lots of fruity festive flavor. There’s also Southworld Christmas Ale, a fruity sparkling white wine mixed with clementine and cranberry juice, and the Winter Spiced Porter.

Visit the nearest Marks and Spencer store and earn Loyalty points through the M&S Philippines Viber Community at bit.ly/MSPH-VC. Purchase selected lines online on www.marksandspencer.com.ph. — Joseph L. Garcia

Financing growth by improving revenue and controlling illicit trade

(Part 8)

There have been several positive developments in the Philippine economy aside from the 5.9% GDP growth in the third quarter (Q3) of 2023. See for instance these reports in BusinessWorld in the last two weeks: “Foreign investment pledges surge in Q3” (Nov. 15), “Tourism revenue tops P404 billion in first 10 months” (Nov. 16), “German businesses in PHL report satisfactory business conditions” (Nov. 16), “Around 80 infrastructure projects to be financed by MIF” (Nov. 17), “Marcos’ US trip yields $672M in investment commitments” (Nov. 21), “PPA profit nears P10 billion after rise in cargo volumes” (Nov. 23), “PEZA investment approvals surge” (Nov. 24), “BPO industry sees headcount growing 7-8% next year” (Nov. 27), “Philippines could reach upper middle-income status by 2025 or 2026” (Nov. 27), and, “International visitor arrivals breach 4.8 million DoT target” (Nov. 28).

Another development is the improvement in revenues in the first nine months of the year even without big new tax hikes, resulting in a lower budget deficit for the same period. Financing or borrowings have also stabilized below P2 trillion over the same period compared to 2020 and 2021 (see the table).

The government must control two big items in the expenditure side: interest payments due to high borrowing over the past three years, and controlling some disbursements like the burdensome military and uniformed personnel (MUP) pension because the active personnel here still do not contribute to their own future pension, the pensioners receive funds much higher than their last salaries before retiring, and it is tax free.

Bureau of Internal Revenue (BIR) collections this year have increased 7.2% over same months last year while Bureau of Customs (BoC) collections this year have increased only by 3.4%.

Illicit trade, smuggling, and the non-payment of the appropriate taxes are the major contributors for the BoC’s lower actual collections versus potential collections. Smuggling of tobacco products is a particular issue. See for instance these reports in BusinessWorld: “High tobacco taxes encourage smuggling, economist says” (Oct. 12), “PHL to lose P60B from illicit tobacco” (Oct. 18), “BIR confiscates illicit cigarettes” (Nov. 14), “LGU share of tobacco tax set at P21 billion” (Nov. 19), and, “PHL cited as among region’s leaders in curbing illicit trade” (Nov. 20).

The P60 billion/year in tax losses due to tobacco smuggling alone is according to Congressman Joey Salceda, chairman of the House Committee on Ways and Means. He made that estimate only last October. In March 2021, his estimate was P30 billion/year.

The last report refers to a paper released two weeks ago by the Transnational Alliance to Combat Illicit Trade (TRACIT), the 48-page report, “Fighting Fakes, Contraband and Illicit Trade: Spotlight on The Philippines.” TRACIT is a New York-based private organization composed of big multinationals whose products are subject to rampant counterfeiting and smuggling like beer, whisky, fashion and accessories, pharmaceuticals, personal care, tobacco, etc.

In their report about the Philippines, they highlighted five sectors or products subject to heavy counterfeiting and smuggling: pirated products (software, music, media…), fake medicines, illicit alcohol, illicit tobacco, and illicit petroleum products.

Among their recommendations to control the huge illicit trade are: stronger border control by the BoC, improve regional cooperation and engage international law enforcement, invest in enforcement including intellectual property rights, improve criminal deterrence including anti-money laundering measures, implement coherent domestic tax policies to avoid substitution of illicit product alternatives, enhance transparency and accountability via corruption control, empower consumers through awareness and partner with the private sector, and improve the digital environment.

A tall order but all necessary steps. I can summarize these with one phrase: enforce the rule of law. The law applies equally to unequal people and firms, no one is exempted, and no one can grant an exemption. So, the laws on importation, taxation, intellectual property, etc. should apply to all players including friends of law enforcement agencies. Thus, the huge price difference between legal tobacco (the cheapest is P130/pack because excise tax alone is already P60/pack) and illegal tobacco (currently priced at only P40/pack) should not be happening.

The economic team’s growth target of 6.5% to 8% yearly from 2024 to 2028 and beyond should be retained. The ambition to create more new jobs yearly should be retained. Financing big infrastructure, financing growth is possible without new taxes or raising existing ones, just strictly enforce existing laws on importation, taxation, and anti-corruption. n

See also previous “Financing growth” papers in this column: Part 7, “Financing growth via more PPP funding” (Nov. 2), Part 6, “Financing growth: Maharlika Fund and SWFs from abroad” (Oct. 24), Part 5, “Financing growth: Reducing interest payments and spending control” (Oct. 5), and Part 4, “Financing growth: a rice tariff cut, an MUP pension cut, and reforms in excise tax in mining, oil, and coal” (Sept. 26).

 

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

minimalgovernment@gmail.com

Proposed Philippine TikTok ban needs basis — experts

COTTONBRO STUDIO/PEXELS

By Miguel Hanz L. Antivola, Reporter

SUFFICIENT evidence is needed for the Philippines to join other countries looking to ban the use of short-form video platform TikTok due to alleged surveillance concerns, experts said.

The proposal to ban the use of the platform among public officials is indicative of “broader geopolitical tensions and our own state agencies wanting to show they’re falling in line with allies,” Jonathan C. Ong, disinformation researcher at the University of Massachusetts Amherst, said in a message to BusinessWorld.

“There is little evidence that Chinese state intelligence has actually relied on TikTok data rather than through their more traditional intelligence gathering strategies,” he added.

Solid proof is needed that data collected from TikTok are being used to monitor the public, Ronald B. Gustilo, national campaigner for Digital Pinoys, likewise said in a Viber message.

“[Then], the government is duty bound and has every right to protect the people and the government from foreign espionage,” Mr. Gustilo said.

“While these allegations may be due to the ongoing tension between Philippines and China, claims against any platform should be substantiated before making any drastic decision,” he added.

The government has formed a dedicated task force to assess whether public officials should be prohibited from using TikTok, a National Security Council (NSC) official said on Tuesday.

“The proposal to ban TikTok is simply for the security sector because many, many countries in the world have already banned TikTok in government devices,” Jonathan E. Malaya, NSC assistant director general, told reporters at the sidelines of a security forum.

“We are just waiting for the results of the threat assessment, which we will then submit to the National Security Adviser.”

The possibility of a ban was first raised in September, with officials citing data security issues.

Earlier this month, Nepal said it would ban Chinese-owned TikTok, adding that social harmony and goodwill were being disturbed by “misuse” of the popular video app and there was rising demand to control it, Reuters reported.

TikTok, owned by Chinese tech company ByteDance Ltd., has already been either partially or completely banned by other countries, with many citing security concerns.

Nepal’s neighbor India banned TikTok along with dozens of other apps by Chinese developers in June 2020, saying that they could compromise national security and integrity.

Another South Asian country, Pakistan, has banned the app at least four times over what the country’s government terms its “immoral and indecent” content.

TikTok last week said user data from the Philippines are stored in Singapore, Malaysia, and the United States.

“TikTok does not store user data in China, has not shared Philippine user data with the Chinese government, and would not even if asked,” it said in a statement last week.

“If an employee were required to access user data to perform a function specifically tied to their role (such as debugging, troubleshooting, and performance monitoring to provide an optimal user experience), logged and limited access to that data would only be granted subject to strict controls and safeguards, and adherence to the highest of approval protocols.”

The app is not headquartered and available in mainland China, even as ByteDance was founded by Chinese entrepreneurs, TikTok added, noting that the company’s ownership is split among global institutional investors (about 60%), employees (20%), and Zhang Yiming, the company’s founder (20%).

FOCUS SHOULD BE ON PROVEN LAPSES INSTEAD

For his part, Mr. Ong said there should instead be increased attention towards proven cases of cybersecurity lapses versus speculations over a platform.

“I think citizens should question the unevenness in which our political leaders are fearmongering about data privacy rather than addressing the major social media platforms like Facebook, or even Viber, or study vulnerabilities within our own Filipino corporations’ mobile apps where there are documented leaks of our data,” he said.

“We’re a country with great many experiences of government website hacking and leaking of our citizens’ personal information… so we should always be proactive about data privacy and identifying vulnerabilities,” Mr. Ong added.

Last month, the Department of Information and Communications Technology signed a commitment with ByteDance, Meta, and Google to share knowledge, insights, and technology to improve national cybersecurity.

Sam Jacoba, founding president of the National Association of Data Protection Officers of the Philippines, noted the need to follow up on the commitment signing “not through motherhood statements, but with concrete actions and plans.”

“Go beyond the paper commitment and let these big data gatherers fully comply with the Data Privacy Act,” Mr. Jacoba said. “Penalize them if they do not comply. Give a deadline (six months), then have regular reviews and checkpoints.” — with Reuters

Globe blocks almost 155,000 SIM cards related to spam and fraud

GLOBE Telecom, Inc. has blocked nearly 155,000 SIM (subscriber identity module) cards linked to fraud as of September this year, the telecommunications company said in a media release on Wednesday.

“With our proactive efforts via our Stop Spam portal bolstered by the SIM Registration Law, we were able to block a new record high in SIMs linked to fraud. Through collaboration and use of technology, we are gaining headway against these criminals,” Anton Bonifacio, chief information security officer at Globe, said on Wednesday.

Globe said it had terminated a total of 154,569 SIMs through its reporting portal.

The company described the number as record-high as SIMs related to spam and other fraud-related activities have been increasing during the period.

It said blacklisted SIMs, which also include those from other networks, surged to 148,515 as of September.

Globe also noted that it had deactivated about 16,215 Globe SIMs so far this year.

The telecommunications company said it had invested around $20 million in its spam blocking and detecting system, which functions continuously and can filter unwanted messages. The system includes app-to-person and person-to-person SMS from international and domestic sources.

At the stock exchange on Wednesday, shares in the company fell by P1 or 0.06% to end at P1,718 per share. — Ashley Erika O. Jose