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Struggling cities face more pain from AI boom

JEZAEL MELGOZA-UNSPLASH

ARTIFICIAL INTELLIGENCE (AI) is likely to transform our world in many ways, but one that hasn’t received much attention is the technology’s looming impact on real estate. As AI becomes an essential component of both business and daily life, the value of places where those who work on AI want to live will rise, provided these locales have reasonable infrastructure. At the same time, the value of lower-tier cities left out of the AI boom will diminish.

One notable feature of artificial intelligence is that it can make many companies smaller. AI can do a lot of the work that previously would have required a large office staff. Not surprisingly, the companies that use AI best are AI companies themselves. Clearview, a facial-recognition company that has had a major impact on the war in Ukraine, has only 35 employees. OpenAI during the time when it developed GPT-4 had fewer than 300 workers. Anthropic, an OpenAI spinoff, has about 200 employees.

The more companies adopt AI, of course, the more those companies will look like and be run like the AI companies themselves. With fewer workers around, commercial real estate, already reeling from a shift to work from home, will suffer.

That said, in certain places land will become much more valuable, as companies choose to locate near AI centers to access the labor markets for AI researchers, or to learn about AI from the industry’s leading actors. I predict a major real estate comeback for San Francisco and nearby environs, and probably gains for Manhattan as well. Across the Atlantic, parts of southern England and Paris may see much higher prices.

The boost in demand will come for residential property as well. Before the recent turmoil at OpenAI, the company was said to be offering senior researchers stock packages worth $5 million to $10 million. Such numbers will likely go down over time as the number of workers entering the field goes up. But the anticipated legions of highly paid AI workers will create demand for some pretty fancy homes, just as previous tech booms have done. The top AI companies aren’t stuffed with workers, but the ones they do have typically show up at the office on a very regular basis to make learning and collaborating easier, and thus live nearby.

The ability of AI to economize on (some) jobs doesn’t mean that we will see mass unemployment. While AI will replace many jobs, it will allow many more projects to be started. There will be more coding, more design, more scientific advances, and at the broadest level simply more plans of many kinds. Those plans might range from better green energy to the creative arts to more public health projects, and much more.

But most of those projects won’t be done in traditional offices, even if the core of central management is located there. Many of these workers won’t even have permanent ties to the company, just as Hollywood assembles creative teams to achieve specific ends but eventually moves on to the next project.

Over time, the more change we see, the more real estate decisions will be determined by where these in-demand workers want to live. They are likely to prefer attractive areas, not too far from central management, with sunny climates, good schools, reasonable taxes and lots of amenities. Infrastructure such as airports and internet quality will matter a great deal.

Two other natural real estate winners in that reallocation of resources are likely to be northern Virginia and the Atlanta metropolitan area. We also can expect Austin-connected workers to spread out well beyond city limits.

Natural losers might be cities such as Hartford and Minneapolis, both of which are relatively cold and have preexisting problems with crime and governance. The notion that every city needs to have a large number of service jobs will take a big knock, and that will impinge on real estate. This development will resemble the well understood effects of work from home, except the central cores of successful companies will be smaller yet, and there will be many more new projects scattered around the country. The inherited position of our older cities will matter less with time, and what people want will matter more.

Fortunes will still be made in real estate, but most of all when the investors have extreme foresight and daring in a rapidly changing America.

BLOOMBERG OPINION

Canadian homeowners eye fixed-rate loans in ‘higher-for-longer’ era

REUTERS

TORONTO — The Bank of Canada’s (BoC) warning that borrowing costs are likely to stay higher-for-longer has prompted anxious mortgage owners to turn to fixed-rate loans in the hope they will bring more stability to their finances after a choppy few years.

With the Canadian economy showing signs of a slowdown, money markets are pricing in the first interest rate cuts since March 2020 as soon as April, which would bring down mortgage costs.

Still, more home buyers took out fixed-rate mortgages in September compared with a year ago, eschewing variable rate mortgages where the interest rate varies based on current market rates. Fixed-rate loans also offer among the lowest rates available now.

The trend is being driven by homeowners preferring stability in monthly expenses rather than betting on lower rates ahead that might lower payments, after being stung by a prediction by the BoC in the early days of the COVID-19 pandemic that backfired on them.

“If you’ve got a mortgage or if you’re considering making a major purchase… you can be confident rates will be low for a long time,” BoC Governor Tiff Macklem said in July 2020 after slashing interest rates to a record low, helping prompt a housing boom that led to Canadians racking up mortgage debt over the subsequent two years.

Since then, the central bank has raised the key interest rate to a 22-year high of 5% in July. Now with more than C$900 billion ($656.07 billion), or 60%, of residential mortgages at Canada’s big banks likely to be renewed in the next three years, homeowners are having to choose between fixed or variable rate loans.

“It is tricky,” said Sophie Tremblay, an aviation professional from Montreal. “You don’t know what is the best decision to make and right now the banks are fully pushing us to go into a fixed and lock that instead.”

She said she is already thinking about her mortgage renewal even though it is three years away, given her current payments barely cover interest on her five-year variable mortgage.

Roughly half of new mortgages in early 2022 were variable-rate ones, but that number dropped to just 6% in August 2023, according to Canada’s housing agency. The share of fixed rate loans among five-year and three-year mortgages rose to 68% in August compared with 32% a year ago.

In the first three weeks of November, 79% of mortgage seekers in Canada opted for a fixed mortgage, said Hanif Bayat, CEO of financial data firm Wowa Leads.

Borrowers have turned cautious after recent rate predictions turned out wrong, but loans based on variable rates may still be popular in the next couple of years as markets gear up for rate cuts in the next two years, he said.

NEW ERA
National Bank analysts wrote in a research note this month that acceptance of rates staying ‘higher-for-longer’ might lead some to lock in rates and avoid as much uncertainty as possible.

“BoC officials are helping to ingrain this, telling Canadians to brace for an era of higher borrowing costs,” the note added.

More recently, BoC Deputy Governor Carolyn Rogers this month said Canadians should plan for higher rates, warning rates might not return to low levels seen in the pre-pandemic era as geopolitical risks such as the conflict in the Middle East have added more uncertainty to the global economy.

Asked about families making decisions based on Mr. Macklem’s 2020 comments that rates would stay low for a long time, the BoC pointed to Ms. Rogers’ comments in November that decisions at the time were made to “support an economy that had effectively been shut down” and that “two years was a long time for interest rates to be at the level they were.” — Reuters

How does the severity of humanitarian crisis in the Philippines compare with other countries?

The Philippines’ score improved to 2.5 (out of 5; lower is better) in the October update of the INFORM (Index for Risk Management) Severity Index. The index by the European Commission kept the country under category 3 or medium INFORM severity but amended its trend to “increasing” in the last three months. The index is a composite indicator that assesses the severity of humanitarian crises based on publicly available sources on conflict, violence, and natural disasters. In October, the country’s score was driven by Mindanao conflict, Typhoon Paeng (international name: Nalgae), Typhoon Egay (international name: Doksuri), and the southwest monsoon.

 

How does the severity of humanitarian crisis in the Philippines compare with other countries?

Shares may go down on profit taking, rate bets

THE Philippine stock market could succumb to profit taking this shortened trading week following its recent rally and amid expectations that interest rates here and abroad will remain high in the near term.

On Friday, the 30-member Philippine Stock Exchange index (PSEi) rose by 23.30 points or 0.37% to close at 6,269.50, while the all shares index went up by 20.21 points or 0.6% to 3,348.22.

Week on week, the PSEi climbed by 57.61 points or 0.93% from its 6,211.89 close on Nov. 17.

“Slight gains amidst anemic turnover characterized [last] week’s trade in light of Thanksgiving holiday plus ahead of a shortened trading week,” online brokerage 2TradeAsia.com said in a market report.

Philippine financial markets were closed on Monday due to a public holiday for Bonifacio Day.

For the coming days, the market may decline anew as investors could pocket their profits after the PSEi recorded gains in three out of five trading days last week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Expectations that interest rates will remain high for a while following Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.’s hawkish statements … may also weigh on the market,” Mr. Tantiangco said.   

“The local market has been building momentum lately, rising for four weeks with a total gain of 5.16%. However, trading has been lethargic, implying that the market’s current rally is not backed by strong investor participation,” he added. 

BSP Governor Eli M. Remolona, Jr. on Friday said their policy stance will remain “hawkish for a while,” reiterating that 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 basis points (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.

Meanwhile, the Fed kept its benchmark interest rate steady at the 5.25%-5.5% range for a second straight time during their Oct. 31-Nov. 1 meeting. It has hiked rates by 525 bps since it began its tightening cycle in March 2022.

The Federal Open Market Committee will next meet on Dec. 12-13 to review policy.

“[This] week, investors are expected to watch out for catalysts that can spur optimism towards the local economy. Without such, we may see selling pressures dominate leading to a pull back for the local bourse,” Mr. Tantiangco added. “Chart-wise, the market’s immediate support is seen at its 50-day exponential moving average. Resistance is seen at the 6,400 level.”

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the PSEi’s immediate major resistance at the 6,300 level and immediate major support at 6,055-6,100.

For its part, 2TradeAsia.com placed the PSEi’s support at 6,100 and resistance at 6,400. — RMDO

US Navy thwarts hijacking attempt; 2 Pinoys safe

VESSEL FINDER/PETER FAAS

TWO FILIPINO crew members of an Israel-linked ship sailing in the Gulf of Aden near Yemen have been marked safe after the United States (US) Navy thwarted a hijacking attempt by five suspected Houthi rebels at the weekend, the Department of Migrant Workers (DMW) said on Monday.

The rebels on Nov. 26 boarded and tried to seize the M/V Central Park, which is owned by an Israeli businessman, the agency said, citing a report from the US Naval Institute

The five pirates were put under US Navy custody after its warship and a Japanese Maritime Self-Defense Force ship came to the merchant ship’s aid.

The M/V Central Park is a Liberian-flagged ship owned by Israeli business magnate Eyal Ofer’s Zodiac Maritime, Reuters reported.

“The DMW has reached out to the vessel’s manning and shipping agencies to provide the department with a full report of the incident,” it said.

The agency said it is considering declaring certain areas in the Red Sea as high-risk zones for Filipino seafarers due to attacks by the Iran-backed Islamist Houthis group.

Last week, 17 Filipino seamen were taken hostage after Yemen’s Houthi rebels seized an Israeli-linked cargo ship in the Red Sea.

Yemen’s Al-Masirah TV, which is operated by the Houthis group, released a video showing Houthi forces descending from a helicopter and seizing the Japanese Nippon Yusen K.K. cargo ship in the southern part of the Red Sea on Nov. 20.

The Houthis described the ship as Israeli, Reuters reported on Nov. 20. The group also seized a British-owned cargo ship that had been sailing through the southern Red Sea.

On Saturday, DMW officer-in-charge Hans Leo J. Cacdac told a news briefing his agency has been coordinating with the cargo ship’s manning agency and the families of the 17 hostages to work on their release and safe return to the Philippines.

Foreign Affairs Undersecretary Eduardo A. de Vega on Nov. 24 told a news briefing the rebels were unlikely to demand a ransom since the group was making a “political gesture.”

“If the question is if we are paying ransom, no,” he said. “This works since the hostages are eventually released, it’s not the first time they’ve done it.”

Houthis military spokesman Yahya Saree earlier said the ship’s seizure was in response to “heinous acts” against Palestinians in Gaza and the West Bank.

Israel launched a barrage of airstrikes in Gaza after Hamas militants backed by waves of rockets stormed from the blockaded Gaza Strip into nearby Israeli towns on Oct. 7, killing about 1,200 Israelis.

More than 14,000 people have died in the war, according to the Hamas-run Gaza government. At least four Filipinos have died.

Last week, Israel and Hamas entered into a four-day truce, with the latter releasing 24 hostages, including a Filipino caregiver, on Nov. 24. The Filipino is under the custody of the Philippine Embassy in Israel.

Under the deal, the truce could be extended if more hostages are released at a rate of 10 daily. Israel also agreed to release 150 Palestinian prisoners in exchange for the hostages.

Hamas seized about 240 hostages during the October attack.

At least 256 Filipinos have come home from Israel, the DMW said on Nov. 17. Mr. De Vega earlier said 111 of the 137 Filipinos in Gaza have returned to the Philippines.

The US might designate the group as a terrorist organization after the incident, US National Security Council spokesman John Kirby earlier said.

US President Joseph R. Biden delisted the group as a “foreign terrorist organization” and “specially designated global terrorists” in 2021, over fears of worsening Yemen’s humanitarian crisis.

Yemen has the world’s worst humanitarian crisis, with 21.6 million of the population being dependent on aid, according to the United Nations.

“The Department has reached out to the Department of Foreign Affairs and partners in the international maritime and shipping industry to ensure the safety of Filipino seafarers in the region,” DMW said. — John Victor D. Ordoñez

Philippines told to resolve issues before rejoining ICC

PHILIPPINE STAR/MIGUEL DE GUZMAN

THE PHILIPPINE government should resolve sovereignty issues involving the International Criminal Court (ICC) supposedly before rejoining the tribunal, a senator who enforced ex-President Rodrigo R. Duterte’s deadly drug war as national police chief said on Monday.

“If we are interested in rejoining, then we have to resolve issues that made us withdraw in the first place,” Senator Ronald M. dela Rosa told CNN Philippines.

“The ICC can only conduct its investigation if and when the country is not capable of conducting an investigation, or if the country is not willing to conduct one on alleged crimes against humanity,” he added, citing the Rome Statue, the treaty that established the ICC.

President Ferdinand R. Marcos, Jr. on Friday said his government is considering rejoining the ICC, which is investigating Mr. Duterte for alleged “crimes against humanity.”

“Should we return under the fold of the ICC? So that’s again under study,” he told reporters. “So we’ll just keep looking at it and see what our options are.”

Mr. Marcos had ruled out cooperation with the international court, saying its probe violates Philippine sovereignty given the country’s functional justice system.

Manila Rep. Bienvenido M. Abante, Jr., Party-List Rep., France L. Castro and Albay Rep. Edcel C. Lagman earlier filed separate resolutions urging the state to cooperate with the ICC probe.

The Senate would have to approve a decision to rejoin the court, Mr. Dela Rosa said.

Under the Constitution, a concurrence of two-thirds of the Senate’s members is needed to affirm international treaties, such as the Rome Statue.

The senator said he would be ready to face ICC investigators if the government decides to cooperate with its investigation.

“I cannot be in hiding, I will really face it,” Mr. Duterte’s former police chief said in mixed English and Filipino. “I will prepare myself psychologically, physically and mentally because I know I can overcome this case.”

In 2016, Mr. Dela Rosa as national police chief signed a circular that allowed police officers to visit the homes of suspected illegal drug pushers to persuade them to stop their illegal trade.

The Supreme Court in 2021 dismissed a petition seeking to void Philippine withdrawal from the tribunal, even as it ruled that international agreements need Senate concurrence.

It said the petition was moot since the ICC had accepted the Philippines’ withdrawal in 2019. Mr. Duterte withdrew Philippine membership in the international court a year earlier.

Last week, his daughter, Vice-President Sara Duterte-Carpio said allowing the ICC to probe crimes committed in her father’s deadly war on drugs would undermine the Philippine justice system.

The High Court said withdrawing membership does not remove liability for extralegal killings committed during the previous government’s anti-illegal drug campaign.

“Withdrawing from the Rome Statute does not discharge a state party from the obligations it has incurred as a member,” according to the March 16, 2021 ruling written by Senior Associate Justice Marvic M.V.F. Leonen.

“Consequently, liability for the alleged summary killings and other atrocities committed in the course of the war on drugs is not nullified or negated here.”

The ICC in January reopened its probe of the government’s deadly drug war, saying it was not satisfied with Philippine efforts to probe human rights abuses during the period.

The court rejected a Philippine plea to suspend its probe of the drug war in July, paving the way for the ICC prosecutor to later indict and order the arrest of local officials who aided the campaign.

The Hague-based tribunal, which tries people charged with crimes against humanity, genocide, war crimes and aggression, suspended its probe of Mr. Duterte’s deadly drug war in 2021 upon the Philippine government’s request.

Justice Secretary Jesus Crispin C. Remulla earlier told the United Nations (UN) Human Rights Council the Philippines could probe erring officials without the ICC’s help.

The Department of Justice (DoJ) has said the Hague-based tribunal is undermining the Philippine government’s sovereignty by continuing its probe.

It said the ICC should abide by the principle of complementarity, a concept of international law that ensures a state’s national authorities take precedence in handling criminal cases.

The Philippines has accepted 200 recommendations from the UN Human Rights Council, including investigating extralegal killings and protecting journalists and activists.

More than 30 member-states of the United Nations Human Rights Council in November last year urged the Philippines to do something about extralegal killings in connection with Mr. Duterte’s anti-illegal drug campaign.

The Philippine government estimates that at least 6,117 suspected drug dealers were killed in police operations. Human rights groups say as many as 30,000 suspects died. — John Victor D. Ordoñez

GSP+ extended amid dire rights situation — activist groups

PHILIPPINE STAR/RUSSELL PALMA

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE CIVIL society has voiced concern about the expected extension of Philippine privileges under the European Generalized Scheme of Preferences Plus (GSP+), saying the government of President Ferdinand R. Marcos, Jr. has not addressed human rights issues.

In Defense for Human Rights and Dignity Movement and Trade Justice Pilipinas cited President Marcos’ failure to address attacks on critics and activists. Philippine laws still are being weaponized to stifle dissent, it added.

“The Philippine government seems to be advancing the narrative that the proposed extension of GSP+ privileges of the Philippines reflects somehow a vindication against these criticisms and that the program can proceed as before,” Joseph Purugganan, co-coordinator at iDefend and coordinator at Trade Justice Pilipinas, said in a Facebook Messenger chat.

He added that European policymakers supported the European Commission’s proposal to extend the privileges enjoyed by the Philippines and other developing countries under the trade scheme “not because of a more favorable assessment of the human rights situation but simply because the EU ran out of time to pass new GSP+ regulations.”

The European Parliament and European Council supported a European Commission proposal for a “rollover of the existing GSP+ for another four years,” Philippine Trade Secretary Alfredo E. Pascual said last week.

The deal, which gives the country zero duty on 6,274 locally made products, is set to expire by yearend.

In exchange, the Philippines must uphold commitments to 27 international conventions on human rights, labor, good governance and climate action.

As of June 30, a year into Mr. Marcos’s term, 342 people have been killed by state actors in connection with illegal drugs, according to a report from the Dahas Project from the University of the Philippines Third World Studies Center. “This is higher than the 302 reported in the last year of the Duterte administration,” it said.

Human Rights Watch said the European Union (EU) has tolerated human rights violations in the country by allowing it to continue enjoying the trade perks even at the peak of the bloody war on drugs of ex-President Rodrigo R. Duterte.

The report “shows that the bloc has tolerated too many serious human rights abuses under Duterte, sending a message of impunity that now risks echoing through the Marcos administration,” Claudio Francavilla, the group’s Senior EU Advocate, said in a statement.

The government estimates that at least 6,117 people were killed in Mr. Duterte’s drug war between July 1, 2016 and May 31, 2022, but human rights groups say the death toll could be as high as 30,000.

On Friday, Mr. Marcos said the government is considering rejoining the ICC, which is investigating the state’s anti-illegal drug campaign, months after saying the Philippines would disengage from the tribunal.

The ICC investigation covers crimes committed in Davao City from November 2011 to June 2016 when Mr. Duterte was still its mayor, as well as cases during his presidency up until March 16, 2019, the day before the Philippines officially withdrew from the court’s Rome Statute.

“The EU should learn and apply the lessons of the last six years to ensure that the continued implementation of the program will not be ‘business as usual,’” Mr. Purugganan said. “It has the power and the responsibility to continue to use this program to compel the Marcos administration to address the continuing human rights concerns.”

While human rights violations in the Philippines have eased, the EU should not overlook human rights issues to sustain and strengthen economic relations, the Philippine Alliance of Human Rights Advocates (PAHRA) said via Messenger chat.

The EU should adopt a more stringent approach to address any possible lapses by the Marcos government in democratic norms and human rights, it added.

The EU and Philippine government should “engage civil society and other development partners in the process of reforming the GSP+, said Sandino Soliman, executive director of the Caucus of Development NGO Networks.

“This is a crucial opportunity to institutionalize the role of civil society in monitoring not only the terms of the EU-GSP+ but also the international commitments covered by the scheme,” he added.

Labor groups unite in pushing for higher wages, inclusivity

Call for higher wages. Activists at a briefing on Monday called for higher pay for workers amid rising food prices, as the Senate targets to pass the 2024 budget bill this week. — PHILIPPINE STAR/MICHAEL VARCAS

By Jomel R. Paguian

SEVERAL labor groups converged in Quezon City on Monday to champion critical issues of workers, among them a living wage increase and the establishment of inclusive and harassment-free workplaces ahead of the celebration of Bonifacio Day on Nov. 30.

In a press briefing, multiple labor groups led by the Confederation for Unity, Recognition, and Advancement of Government Employees (COURAGE) opposed the P70-billion budget cut in the Miscellaneous Personnel Benefits Fund (MPBF).

The MPBF is a standby fund for the increase in salaries and benefits of government employees, which the groups said will reduce the chances for government workers to have any salary increase next year.

“The minimum wage for government workers is far behind from a justified living wage,” Party-list Representative and COURAGE former president Ferdinand R. Gaite, said in Filipino.

He explained that current minimum monthly wage of P13,000 for government employees in entry-level positions is significantly lesser than their demanded P33,000 monthly living wage.

The demanded P33,000 monthly wage is based on studies that showed a family of five members needs to earn P1,100 per day to have a justified living wage, explained COURAGE President Santiago Y. Dasmariñas, Jr.

He added that a salary increase is still unclear, following the budget cut from P94 billion to only P24 billion under the MPBF.

“There is no law mandating a salary increase for next year despite the inflation. If there is no approved law, there is also no expected salary increase for government employees,” said Mr. Dasmariñas.

In a separate media forum, the Philippine affiliates of global labor groups Public Services Labor Independent Confederation (PSLINK), National Public Workers’ Congress (PUBLIK), and Women Workers United (WWU) called for the ratification of International Labor Organization Convention No. 190 (ILO C-190), a treaty ending all forms of violence and harassment in workplaces.

This is the most comprehensive international treaty that clarifies and expands the definition and forms of violence and harassment in workplaces, said PSLINK general secretary Annie Enriquez Geron, highlighting that the ratification of the convention may likely strengthen regulations against workplace harassment.

The labor groups said ILO-C190 if ratified, would help in the legislation and implementation of SOGIESC (sexual orientation, gender identity, gender expression, and sex characteristics) Equality Bill.

“If this (ILO-C190) would be ratified, it will help in the campaign of legislating SOGIESC Bill because you would not be able to eliminate violence and harassment in the workplace if you leave out a certain population of people with diverse SOGIESC,” said Ms. Geron.

Analysts cite CREATE law risks

THE GOVERNMENT could lose billions of pesos in revenue once taxes under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law are lowered, economists said.

The state should instead focus on better tax administration since lower taxes would not ensure quality investments entering the country, they added.

“Lowering taxes in fact can even do more harm than good as government revenues dwindle and quality of investments, in the form of higher-earning projects, may worsen as lower value-added investments are attracted by lower taxes,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in a Facebook Messenger chat.

Former Department of Finance undersecretary Cielo D. Magno said that the government should focus more on tax administration than changing its rates.

Last week, the House Ways and Means Committee approved the CREATE MORE (CREATE to Maximize Opportunities for Reinvigorating the Economy) bill, which aims to introduce a “simplified and streamlined” refund tax system.

The proposed law aims to reduce the corporate income tax to 20% for those under the enhanced deduction regime from 20%-25%.

The measure would allow domestic and export companies, even those inside ecozones and freeports, to enjoy duty exemptions, value-added tax (VAT) exemption on importation, and the VAT zero-rating of local purchases as provided in their respective investment promotion agency (IPA) registrations.

“The Japanese investors raised the problem of input VAT refund as a problem. The only solution to fix that is the full implementation of e-invoicing by BIR which is not being discussed,” Ms. Magno commented in a Viber message.

Mr. Lanzona said that the government should focus on developing more strengthening industrial and competitive policies other than tax reforms.

“The goal then is to strengthen domestic value chains that can link these MSMEs (micro, small and medium enterprises) to larger, more productive, and stable business groups, thus creating a solution to the size problem of the firms,” he said.

“Without developing big businesses, the country cannot move away from the middle -income trap we are in for the last forty or so years,” he added.

Meanwhile, the measure also seeks to give the President the power to modify, craft and grant incentive packages, without the recommendation of the Fiscal Incentives Review Board (FIRB).

“The President has instructed us to get this done, and the (House) leadership is trying to approve it by end of this month,” Committee on Ways and Means Chairman and Albay Rep. Jose Ma. Clemente S. Salceda said last week.

Mr. Salceda added that changes to the CREATE act should also consider the possible impact of the 15% global minimum corporate tax, which other countries have adopted.

Ms. Magno said that adopting the global minimum corporate tax would mean countries would compete on other factors like human capital and infrastructure.

“Once the 15% global minimum corporate tax is implemented, the tax incentives will become immaterial,” she noted. “Don’t we need to prioritize those to ensure the competitiveness of the Philippines instead of eroding the tax base now which will result in lower revenues/available money for government to improve infrastructure and human capital?”

The measure has yet to be debated in the plenary before the House’s final approval. — Beatriz Marie D. Cruz

Leila’s bail eases business concerns

PHILSTAR FILE PHOTO

A COALITION of business groups pushing for legal reforms welcomed on Monday the release of former senator Leila M. de Lima on bail, saying it boosts investor confidence in the Philippine legal system.

In a statement, the Justice Reform Initiative (JRI) called the prolonged detention of Ms. De Lima “unjustified,” and the cases leveled against her a “waste of public funds.”

Ms. De Lima, 64, was released from detention last Nov. 13 after a Muntinlupa City court granted her request for bail while being tried in the last of three drug cases which were filed against her along with other charges after she launched a Senate inquiry in 2016 into then-president Rodrigo R. Duterte’s deadly war on drugs.

“This is a stark reminder that indiscriminate weaponization of the law spares no one and denies the universal right of access to justice,” the JRI said. 

“The improper or political use of law is one of the biggest fears of business and society, especially for micro, small and medium-sized enterprises and our less fortunate countrymen who can ill-afford the expense, inconvenience and undue hardship caused by baseless and protracted litigation,” it added.

The government estimates that at least 6,117 people were killed in Mr. Duterte’s drug war between July 1, 2016 and May 31, 2022, but human rights groups say the death toll could be as high as 30,000. — Kyle Aristophere T. Atienza

Anti-Smartmatic groups cautioned

THE COMELEC office in Intramuros, Manila — PATRICK ROQUE

THE COMMISSION on Elections (Comelec) cautioned groups against issuing statements “bordering on contempt” as the poll body is set on rendering soon its decision on the petition to bar automated election systems provider, Smartmatic, from the 2025 midterm elections.

On Monday, a group of information and communications technology (ICT) professionals and anti-fraud advocates reiterated the call against Smartmatic as contained in the petition based on allegations of irregularities during the 2022 presidential elections as cited by the group of former information and communications technology chief, Eliseo M. Rio, Jr.

“The fact that the Comelec and Smartmatic cannot allay doubts based on observed anomalies leads us to believe that electronic fraud has been committed in the 2022 national elections,” said Kim Cantillas, acting chairperson of the Computer Professionals’ Union (CPU).

Comelec’s George Erwin Garcia said: “We have a decision forthcoming. Nobody has the business of preempting it.” 

CPU, together with anti-fraud advocacy group Kontra Daya, have reiterated the points raised by Mr. Rio, who alleged that election returns from different vote-counting machines (VCMs) were illegally transmitted from the same IP address. The group also cited the alleged transmission of voluminous amounts of data from the VCMs before the closing of poll hours.

In a statement dated Nov. 25, Smartmatic denied the same allegations, citing that the Comelec has the resources and facts to affirm the election results. “Smartmatic awaits, with hopeful anticipation, Comelec’s swift dismissal of the disqualification petition, thereby confirming Smartmatic’s adherence to the contract’s provisions,” it said in a statement.

Smartmatic said the petitioners’ objective is both political and commercial by attempting to delegitimize the government and supporting Smartmatic competitors. The company added that the claims were unfounded and lacked evidence and that the petitioners had not demonstrated a single vote discrepancy.

Mr. Garcia said that the statements being thrown by groups were “rehashed statements already answered and propounded in several fora by the Commission.” He added that the call of different groups and Mr. Rio “is bordering on contempt in view of the sub judice rule.” — Jomel R. Paguian

MWSS seeks retained water flow

THE METROPOLITAN Waterworks and Sewerage System (MWSS) is seeking a retained water allocation of 50 cubic meters per second (cms) from the Angat-Ipo-La Mesa water system for December.

“In the previous years, with the 48 cms allocation, Maynilad was implementing rotational water interruption. That’s the reason why we requested NWRB for 50 cms. Also, right now, the Angat reservoir is now 210.83m, and it might just spill if we will not be maximizing the releases,” Patrick James B. Dizon, head of the MWSS Angat-Ipo operations management division, told BusinessWorld in a Viber message.

The Angat Technical Working Group met last Wednesday regarding the allocation request, but the National Water Resources Board (NWRB) has yet to issue its decision on the water allocation of the MWSS and the National Irrigation Administration (NIA) for next month.

“Considering the elevation of reservoir now and the completion of short-medium term new water resources projects, we expect we will surpass the effect of El Niño until 2nd quarter next year,” said Mr. Dizon, of the water level at Angat Dam.

In July, the government weather service, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration), announced the onset of El Niño, which is expected to persist until the first quarter of 2024.

Meanwhile, MWSS’ concessionaires Manila Water Co., Inc. and Maynilad Water Services, Inc. submitted their position papers for their application for the extension of the term of their respective revised concession agreements (RCAs).

Both companies seek the extension of the expiration date of RCAs from 2037 to 2047 to coincide with the term of their 25-year legislative franchise.

According to Mr. Dizon, the MWSS Board of Trustees created a committee for the RCA term extension to review the application of Manila Water and Maynilad. — Sheldeen Joy Talavera

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