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Hot money net inflows rise to $1B in September

Dollar and pound banknotes are seen in this picture illustration taken April 28, 2017. — REUTERS/DADO RUVIC/ILLUSTRATION

FOREIGN PORTFOLIO INVESTMENTS registered a net inflow in September, marking the third straight month that more foreign capital entered the country than left, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

Transactions on short-term foreign investments registered with the BSP through authorized agent banks posted a net inflow of $1.03 billion in September, a turnaround from the $698.01-million net outflows in the same month a year ago.

Hot money inflows also nearly doubled (92.1%) from $533.95 million posted in August.

Foreign portfolio investments are commonly referred to as “hot money” due to the ease with which these flows enter or leave the country.

Data from the central bank showed that gross inflows surged by 185.2% to $2.53 billion in September from $887.61 million in the same month a year ago. Month on month, inflows soared by 84.7% from $1.37 billion.

More than half (57.5%) of inflows was invested in peso government securities, while the remainder went to Philippine Stock Exchange-listed securities involved in banks, holding firms, property, transportation services, and food, beverage, and tobacco.

The majority or 88.4% of investments for the month came from the United Kingdom, Singapore, the United States, Luxembourg and Malaysia.

On the other hand, gross outflows declined by 5% to $1.51 billion during the month from $1.59 billion a year prior.  However, outflows surged by 80% in September from $836.78 million in August.

The central bank said that 51.1% of total outward remittances went to the United States, equivalent to $769.93 million.

For the first nine months of the year, BSP-registered foreign investments yielded a net inflow of $3.02 billion, significantly higher than the $387.24-million net inflow in the same period last year.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the inflows were driven by the recent rate cuts by the central bank.

The central bank began its easing cycle in August with a 25-basis-point (bp) reduction, the first rate cut since November 2020.

It also delivered another 25-bp cut in October, which brought the target reverse repurchase (RRP) rate to 6%.

BSP Governor Eli M. Remolona, Jr. signaled the possibility of another 25-bp cut at the Monetary Board’s last meeting for the year on Dec. 19. If realized, this would bring the key rate to 5.75% by end-2024.

Mr. Ricafort also noted the positive impact of the recent reserve requirement ratio (RRR) reduction on markets.

“Policy rate cuts and RRR cuts are good for the financial markets especially for bond markets and stock markets; also good for the economy with lower borrowing costs that spur more demand for loans, investments and other business activities,” he said.

In September, the BSP announced its plans to reduce the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5%, effective on Oct. 25.

It also slashed the RRR for digital banks by 200 bps to 4%, while the ratio for thrift lenders was reduced by 100 bps to 1%. Rural and cooperative banks’ RRR was brought down by 100 bps to 0%.

The BSP expects foreign portfolio investments to yield a net inflow of $4.2 billion in 2024. — Luisa Maria Jacinta C. Jocson

Dimalanta reinstated at ERC 

Monalisa C. Dimalanta — ERC.GOV.PH

By Kyle Aristophere T. Atienza, Reporter

MALACAÑANG has reinstated Monalisa C. Dimalanta as chairperson and chief executive officer of the Energy Regulatory Commission (ERC), amid fears that a leadership vacuum at the agency could stall some power supply deals. 

This, as the Office of the Ombudsman already lifted the preventive suspension it issued against her arising from a consumer group’s administrative complaint, Executive Secretary Lucas P. Bersamin said in a memorandum dated Oct. 30.

The memo said Ms. Dimalanta should “immediately” be reinstated as ERC head since the Ombudsman already lifted her six-month preventive suspension following an administrative complaint filed by the National Association of Electricity Consumers for Reforms, Inc. (Nasecore).

In its complaint, Nasecore alleged that Ms. Dimalanta violated the Electric Power Industry Reform Act for allowing the Manila Electric Co. to purchase electricity from the Wholesale Electricity Spot Market and pass the charges on to consumers without obtaining the necessary approval from the ERC.

In its latest decision, the Ombudsman said that after a “thorough evaluation” of the case, it found that “the ground which justifies the continued imposition of preventive suspension no longer exists.”

“Therefore, the preventive suspension is no longer necessary.”

The ERC said in a statement that the lifting of Ms. Dimalanta’s suspension “would ensure the stability within the agency and the energy industry as a whole.”

Ms. Dimalanta earlier said the leadership vacuum at the ERC could delay power supply talks involving 23 electric cooperatives.

“With Chairperson Dimalanta’s return, the ERC continues its commitment to fulfilling its mandate as the country’s energy regulator,” the commission said.

The Philippine Chamber of Commerce and Industry (PCCI) and the Philippine Exporters Confederation, Inc. (Philexport) welcomed Ms. Dimalanta’s return to the ERC.

“Chairperson Dimalanta is capable, credible and transparent in performing her mandate at ERC,” PCCI Chairman George T. Barcelon said in a Viber message. “She also initiated the staggered payment to ease small establishments.”

Philexport President Sergio R. Ortiz-Luis, Jr. said Ms. Dimalanta’s action that gained the ire of Nasecore was “in the best interest of the country.”

“We’re very happy that she’s reinstated because we believe that she’s only acting for what is the best for the country,” he said in a phone call. “Most in the business sector agree with her.”

In a statement following Ms. Dimalanta’s suspension, the PCCI and Philexport said the ERC under her leadership had taken a proactive stance in rate and service regulation, which enabled a competitive environment in the electric power industry.

“Since (her) appointment, the ERC has become more active in addressing issues in the industry,” the groups said.

They cited the initial reset of the transmission and distribution rates of ERC’s regulated entities, the integration of processes into the Energy Virtual One Shared System, and the issuance of the revised rules and guidelines on Certificates of Compliance and Competitive Selection Process.

“We are pleased with the reinstatement and look forward to improved pace of ERC matters,” Management Association of the Philippines President Jose Rene D. Almendras said in a Viber message.

In a Viber message, PCCI President Enunina V. Mangio said Ms. Dimalanta can “now oversee the full implementation of the programs she initiated at the ERC,” citing “competitive operations” of the electric power industry and the education campaign for consumer protection under her leadership.

“We hope to see Atty. Dimalanta continue on with reforms at the ERC and her efforts to improve the country’s energy situation,” she added.

Climate change could cut PHL’s GDP by 18% by 2070

Resident are seen using a boat to navigate the floods in Bula, Camarines Sur. — PHILIPPINE STAR/NOEL B. PABALATE

THE PHILIPPINES could potentially lose 18.1% of its gross domestic product (GDP) by 2070 due to climate change under a high emissions scenario, the Asian Development Bank (ADB) said.

“In the Philippines, about half of losses come from sea level rise. And then, a larger share than at the regional average would come from natural resource-based sectors, so agriculture, fisheries, forestry,” David A. Raitzer, senior economist at the ADB’s Economic Research and Development Impact Department, said in a virtual briefing on Thursday.

In particular, the Philippines’ agriculture, forestry and fisheries sectors could suffer a combined 4.7% output loss by 2070 due to the impact of climate change, according to the ADB’s inaugural Asia-Pacific Climate Report.

The estimated loss in the Philippines’ natural resource-based sectors is higher than the 2.1% average loss across the Asia-Pacific, the ADB said.

The developing Asia-Pacific region could potentially suffer a 17% loss in its collective GDP by 2070 if high emissions continue. The losses could climb to as much as 41% of the region’s GDP by 2100.

Among Southeast Asian economies, Vietnam will experience the highest overall GDP loss due to climate change at 30.2% by 2070, followed by Indonesia (26.8%).

“These losses are far above prior model-based losses and are consistent with the upper bound of econometric estimates,” the ADB said in the report. “They also confirm that climate policy responses, including adaptation and mitigation, will be essential to the future welfare of the Asia and Pacific region.”

If climate change continues to worsen, the rising sea levels and storm surges will likely cause trillions of dollars’ worth of annual damage in the Asia-Pacific by 2070, ADB Principal Economist Yi Jiang said at a briefing.

Toru Kubo, senior director at the ADB’s Climate Change and Sustainable Development Department, said inhabited parts of the Asia-Pacific will be 4 to 8 degrees Celsius (°C) warmer within the century.

“Given that warmer air of 1°C can hold roughly 7% more water, that is approximately 30-50% more moisture in the atmosphere that comes crashing down when it hits cold air masses,” Mr. Kubo told the briefing.

“Our cities, the rivers, the drainage systems, the critical infrastructure for power, transport, water, food production systems, buildings and homes are not designed to cope with such extreme heat and sudden volumes of water.”

The Asia-Pacific region generates about half of the world’s greenhouse gas emissions. Many of its countries are signatories to the Paris Agreement, which seeks to limit the average global temperature to within 1.5°C.

“Climate change has supercharged the devastation from tropical storms, heat waves, and floods in the region, contributing to unprecedented economic challenges and human suffering,” ADB President Masatsugu Asakawa said in a statement.

“Urgent, well-coordinated climate action that addresses these impacts is needed before it is too late.”

Despite significant strides in reducing emissions intensity, and a 50% decrease across developing Asia since 2000, the region still produces nearly half of global greenhouse gas emissions.

Rapid production, rising energy demand and increased domestic consumption fueled the emissions rise over the past two decades, the ADB said, with China accounting for two-thirds of the increase. South Asia and Southeast Asia contributed 19.3% and 15.4%, respectively.

The energy sector is the region’s largest emitter, responsible for 77.6% of total emissions, driven by a heavy reliance on fossil fuels.

Left unchecked, these trends place developing Asia at the center of the climate crisis, both in terms of impacts from global warming and solutions, the ADB said.

“The window to stay within the 1.5°C target of the Paris Agreement is rapidly closing,” ADB said.

It urged countries to come up with more ambitious and large-scale mitigation action plans, accelerate the transition to net-zero emissions and scale up investments in advanced climate technologies and nature-based solutions.

Meanwhile, a majority of Filipinos identify climate change as a serious problem, according the ADB’s Climate Change Perception Survey mentioned in the report.

In a survey of 1,000 Filipino respondents, 90% believe climate change affects people now and in the next 10 years, while 86% of respondents said it affects their family now or within the next 10 years.

According to the survey, most Filipinos (71%) said they were most concerned about the impact of flooding, followed by heat waves (54%), unpredictable weather (46%), less productive agriculture/higher food prices/reduced food security (34%), and drought (21%).

More than half (59%) of Filipinos surveyed supported investments in low-emissions and resilient infrastructure, while 45% backed a carbon tax.

The survey was conducted online from July 8 to 31,. It surveyed 13,500 respondents across 14 Asian economies. — B.M.D.Cruz with Reuters

Looming debt spiral in emerging markets tests IMF and World Bank safety net

Mohammed Al-Jadaan and Kristalina Georgieva during the annual meetings of the IMF and World Bank in Washington on Oct. 25, 2024. — BLOOMBERG

A LIQUIDITY CRUNCH is brewing across the developing world, raising pressure on US-backed international financial institutions to help poor nations meet mounting debt repayments and drive much-needed investments.

The Washington-based International Monetary Fund (IMF) and World Bank last week unveiled a three-pronged approach to help countries deal with a wall of maturities due over the next three years. The poorest nations have to pay more than $290 billion in foreign debt in the coming years, and billions more to domestic lenders, according to World Bank data.

There’s growing concern that without short-term financing and longer-term fixes, the situation risks tipping into a new wave of sovereign defaults, which would paralyze governments, punish their citizens and deal losses to foreign investors.

“An ounce of prevention is worth a pound of cure,” said Samy Muaddi, head of emerging markets fixed income at T. Rowe Price. “For countries that are dealing with liquidity issues rather than insolvency, which we know is a big point, it’s best to get ahead of that.”

Analysts at S&P Global Ratings said this month that higher debt and borrowing costs will lead to an increase in defaults over the next decade compared to recent years.

The liquidity crunch means that governments are spending more to service debt, limiting what they can invest in infrastructure, education and health, as well as climate-change adaptation. The world’s poorest countries this year are spending an average of 50% of their revenue to service $185 billion owed to domestic and foreign creditors, according to World Bank data.

The joint IMF-World Bank proposal calls broadly for vulnerable countries to boost government revenues and improve public spending; bilateral creditors to provide more concessional funding; and for multilateral lenders to step in with new measures like credit guarantees to help bring down borrowing costs and ease debt burdens.

That plan, however, has been criticized by the US — the biggest shareholder of both the IMF and World Bank. While the Biden administration has welcomed the institutions’ involvement in confronting the liquidity issues, it has said their proposal isn’t aggressive and targeted enough, according to people with knowledge of talks between US Treasury Department and the two so-called Bretton Woods institutions.

Among other criticisms, the US has said the initiative isn’t structured or defined enough to make it clear which countries can and should engage. And while neither side wants to name specific countries with liquidity issues — which would likely spook investors and drive-up borrowing costs — Washington wants a more clearly defined eligibility framework, the people said.

The IMF so far has preferred bespoke solutions for any country in need of liquidity help, which should be designed and led by the countries themselves, rather than the IMF or other multilateral groups.

The last big effort from the IMF and World Bank to help debt-saddled countries — the Common Framework — was heavily criticized by both debtors and creditors as being too slow and politically fraught. Debt restructurings, in some cases, have dragged on for years.

The IMF plan is expected to be discussed by Group of 20 (G20) leaders meeting next month in Brazil. It’s unclear if they will endorse any specific program, as they did with the Common Framework.

An IMF spokesperson said in an e-mail that there’s consensus on the urgency for tackling liquidity challenges and “we remain closely engaged” with stakeholders, including the G20, “on the importance of continuing to strengthen our engagement around this pressing issue.”

The US Treasury declined to comment.

The US, along with France, drafted in September a seven-page informal document called “Pathway for Sustainable Growth” that called for “ambitious, integrated, multiyear reforms” for countries facing stress, according to the paper, which was reviewed by Bloomberg. It called on the IMF and World Bank to “propose a specific, actionable plan” to be discussed during the IMF and World Bank’s annual meetings last week in Washington.

Jay Shambaugh, US Treasury undersecretary for international affairs, hinted at the rift this month in a speech, which has been his usual medium for laying out Washington’s expectations for the institutions it helped found.

“In today’s complex sovereign debt landscape, the IMF plays the critical role of guide, and sometimes referee and air-traffic controller,” Mr. Shambaugh said at the Atlantic Council. He stressed it was key “for countries to have a better understanding of the tools that exist to help them through liquidity challenges.”

The Group of Seven — a group of rich, aligned countries that counts the US as its largest member — capped off the week with a statement that called on the IMF and World Bank to refine their approach.

“We support a country-owned, reform-oriented, multidimensional approach,” it said, “and encourage the IMF and the World Bank to further develop their proposal of a three-pillar approach.” — Bloomberg

SPNEC’s P200-B Terra Solar nears completion

THE PROJECT is expected to generate more than five billion kilowatt-hours of electricity annually. — PHILSTAR FILE PHOTO

SP NEW Energy Corp.’s (SPNEC) P200-billion Terra Solar project might be completed slightly ahead of schedule as it has already achieved a 73% progress rate, the company’s president said.

“In terms of completion, the Terra Solar Project achieved 73% overall development,” SPNEC President and Chief Executive Officer Emmanuel V. Rubio said during a briefing on Monday.

SPNEC, through its unit Terra Solar Philippines, Inc. (TSPI), is developing a project in Nueva Ecija and Bulacan, which consists of a 3,500-megawatt solar power plant and a 4,000-megawatt-hour energy storage system.

The project’s first phase is set to be completed by 2026, with the second phase targeted for 2027.

“Just slightly ahead of schedule. We still have a number of transmission lands to secure. We’re close to actually finalizing and acquiring all the lots for Phase 1. Phase 2 is still ongoing,” Mr. Rubio said.

The project is expected to generate more than five billion kilowatt-hours of electricity annually.

Key progress areas include land control, which is 62% complete, and transmission line right-of-way, which is also 62% complete, according to Mr. Rubio.

The company has secured permits at 61%. Solar farm development has already attained a 96% progress rate, procurement of major equipment is at 95%, interconnecting development is at 90%, and photovoltaic site clearing is about 23% complete.

“We continue to make significant strides in our low-carbon energy transition journey, highlighted by the progress made in our flagship project, Terra Solar,” Mr. Rubio said.

In September, SPNEC and its parent company, Manila Electric Co. (Meralco), formed a strategic partnership with global investment firm Actis, which includes a $600-million investment for a 40% equity stake in Terra Solar.

TSPI has partnered with Meralco Industrial Engineering Services Corp. to build the infrastructure needed to connect the Terra Solar project to the grid.

The Terra Solar project was certified by the Energy department as an “energy project of national significance” and secured “green lane certification” from the Board of Investments, enabling it to benefit from streamlined and expedited permit processing.

SPNEC is controlled by the Pangilinan group through MGen Renewable Energy, Inc., the renewable energy development arm of Meralco Power Gen Corp. The latter is a unit of Meralco.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

Topline’s P3.2-B IPO gets PSE nod, listing set for Dec. 12

BW FILE PHOTO

CEBU-BASED fuel retailer Top Line Business Development Corp. (Topline) has secured the approval of the Philippine Stock Exchange (PSE) for its planned initial public offering (IPO) worth up to P3.16 billion.

Top Line’s maiden offering will consist of 3.68 billion primary shares and an overallotment option of up to 368.31 million shares priced at up to 78 centavos apiece, the PSE said in an e-mailed statement on Thursday.

Based on a prospectus dated Oct. 31, the offer period will be from Nov. 27 to Dec. 3, while the tentative listing date is on Dec. 12. The final price will be determined on Nov. 18.

Top Line will be listed on the PSE’s main board and will be traded via the ticker symbol “TOP.”

At the maximum offer price of 78 centavos, Top Line aims to generate P2.75 billion in net proceeds. The company will not receive any proceeds from the overallotment option.

The company will use the proceeds to build fuel depots in Mactan, Cebu, and in Bohol that will have a combined storage capacity of 30 million liters.

A portion of the proceeds will also be allocated for the acquisition of fuel tankers and tank trucks, as well as the construction of ten Light Fuels service stations.

Investment & Capital Corp. of the Philippines and PNB Capital and Investment Corp. were appointed as the joint lead underwriters and joint bookrunners for the offer.

“Doing an IPO is a big step for companies aiming for growth and expansion. We are pleased that the equities market can support Top Line’s business strategy by providing access to capital it needs to accelerate its development, which is crucial in solidifying its position in the industry,” PSE President and Chief Executive Officer Ramon S. Monzon said.

Top Line started commercial fuel trading operations in 2017, mainly in Central Visayas. The company operates a retail distribution network via fuel station chain Light Fuels.

The company is slated to be the fourth IPO this year, joining gold and copper mining company OceanaGold (Philippines), Inc., and renewable energy companies Citicore Renewable Energy Corp. and NexGen Energy Corp. — Revin Mikhael D. Ochave

Cebu Pacific adds three more aircraft

THE ARRIVAL of two A321 NEOs and one A320ceo brings Cebu Pacific to 83.3% of its 18 expected aircraft deliveries for the year. — AIRBUS.COM

CEBU PACIFIC (CEB) is close to completing its expected aircraft deliveries for the year following the arrival of three new aircraft this month, the budget carrier said on Thursday.

“We’re excited to expand our fleet with these additional aircraft ahead of the peak travel season in December,” Cebu Pacific President and Chief Commercial Officer Alexander G. Lao said in a media release on Thursday.

The arrival of two A321 NEOs and one A320ceo brings Cebu Pacific to 83.3% of its 18 expected aircraft deliveries for the year.

“These deliveries are a key part of our continuous efforts to expand routes and enhance our service, allowing us to better serve the increasing number of travelers,” Mr. Lao added.

Cebu Pacific said these new aircraft deliveries are meant to support the growing travel demand and its network expansion goals.

Airbus’ NEO aircraft also align with the budget carrier’s goal of integrating green fuel across its network. All Airbus aircraft are certified to operate with up to a 50% SAF blend, aligning with Cebu Pacific’s goal of integrating green fuel across its network.

In October, the company also finalized its aircraft order with Airbus SE, touted as the largest aircraft order in Philippine history, valued at P1.4 trillion ($24 billion), covering 102 A321neos and 50 A320neo family.

Currently, Cebu Pacific operates a diversified fleet with nine Airbus 330s, 40 Airbus 320s, 24 Airbus 321s, and 15 ATR turboprops.

The airline operates in 35 domestic and 26 international destinations spread across Asia, Australia, and the Middle East. — Ashley Erika O. Jose

Aboitiz InfraCapital eyes MCIA upgrades

MEGAWIDE.COM.PH

ABOITIZ InfraCapital, Inc. (AIC) is eyeing upgrades to Mactan-Cebu International Airport (MCIA) after acquiring Megawide Construction Corp.’s remaining equity stake, the company said on Thursday.

“With full ownership of AGMCAC (Aboitiz GMR Megawide Cebu Airport Corp.), we are committed to taking the airport to new heights, delivering exceptional passenger experience, and cementing its status as a world-class gateway,” AIC President and Chief Executive Officer Cosette V. Canilao said in a statement.

On Wednesday, Megawide announced that it had completed the divestment of its remaining equity stake in MCIA to AIC for P7.76 billion, allowing it to fully exit from the airport’s operations.

MCIA is considered the second-largest airport in the country after Ninoy Aquino International Airport.

It serves as the main gateway to Central Visayas, serving more than 11 million passengers per year.

“MCIA is more than just an airport; it’s a vital gateway to Cebu and the Philippines. Given the airport’s expansive growth, with international and domestic traffic growing by 35% and 8%, respectively, year on year, we will continue to elevate the airport and, thus, Filipino aviation by setting new standards for what it means to be a Filipino brand of airport management and operations,” said AIC Vice-President and Head of Airports Business Rafael M. Aboitiz.

According to AIC, MCIA continued to elevate passenger experience, citing the transition of MCIA into a silent airport and the introduction of “Cebu Connect,” which allows efficient and seamless passenger transfers.

The company’s acquisition of Megawide’s remaining stake in AGMCAC is part of its goal to bolster its presence in the aviation industry, AIC said, adding that it also aligns with the company’s plan to help accelerate the country’s economic recovery through infrastructure projects.

AIC is also set to take over the operations and maintenance of the Laguindingan International Airport in Misamis Oriental in April 2025.

It also holds the original proponent status for the P4.5-billion New Bohol-Panglao International Airport, which is currently undergoing a Swiss Challenge. — Ashley Erika O. Jose

Death: The Imperial way

THE Tomb of Empress Maria Theresa (background), and her son Joseph II (front). — JOSEPH L. GARCIA

By Joseph L. Garcia, Senior Reporter

DURING a trip BusinessWorld took to Vienna in October, the Austrian capital felt like the setting of a fairy tale. Across our hotel at the Neuer Markt square (the new market, but it had been so since the Middle Ages) stood the shop of A.E. Köchert, jewelers to the Habsburgs, the former Imperial dynasty of Austria (and once, the Holy Roman Empire). Their windows displayed diamond tiaras, while street performers nearby sang arias, and waltzed with their audience. Bells from St. Stephen’s Cathedral woke the square, populated by old-world shops filled with only one specialty: fur, or silver, or stationery.

Every fairy tale has an end, however, and for the rulers of the House of Habsburg, they were reminded of this by the Kapuzinergruft, the Imperial crypt. Located in the same Neuer Markt square (it was a two-minute walk from our hotel), this is where members of the Habsburg family were laid to rest. Oddly enough, it’s a mere seven-minute stroll from their once-seat of power, the Hofburg Palace (aside from being a museum, it also houses the offices of the Austrian president, now Alexander Van der Bellen). The Hofburg Palace complex also holds their treasures at the Schatzkammer (the Imperial Treasury), for all to gawk at and see — at least one thing is true: you really can’t take it to your grave.

The Habsburg dynasty once ruled over several territories beyond their capital in Vienna, which now constitute a large chunk of continental Europe: most of Germany, the modern Czech Republic, Spain, Italy, Belgium, Luxembourg, Switzerland, and so much more — all united under the Habsburg crown. A succession of wars broke up the empire over the years, concluding in the Napoleonic Wars, which ended the Holy Roman Empire and gave birth to the Austro-Hungarian Empire — later to be dissolved, along with Habsburg rule, in the ashes of World War I. No matter — while pieces of the empire were lost in war, the Habsburgs maintained their influence over most of Europe through strategic marriages, hence the family motto: Bella gerant alii, tu felix Austria nube (“May others go to war, you happy Austria, marry”).

The Kapuzinergruft, maintained in perpetuity by the Capuchin friars, was founded in 1618 by Anna of Tyrol, wife of the Habsburg emperor Matthias. Their coffins, made of lead, are among the first you see once you enter the crypt — but then there are so many tombs (about 150), it really depends on where your eyes rest first. To see the tombs of the Habsburgs, one pays about €8.50. Since the crypt is still a working church and monastery, guests are told by a sign to keep their voices down, not to take videos or photos with flash, and not to touch anything. During our visit on Oct. 12, there was just one other hushed tour group, wearing headsets, while a priest guided them through the tour, speaking in low tones into his own headset.

We skipped over some Habsburgs (sorry), and went to the tomb holding Empress Maria Theresa and her husband, Franz Stefan I, Holy Roman Emperor. Empress Maria Theresa (who died in 1780) and her offspring changed much of the world: she introduced education reform across her dominions, and united them all under one code of laws in her name. Her son, Joseph II, expanded upon these reforms and introduced legal freedom to the serfs in 1782, ending serfdom in most of Europe (and in a way, nudging in the Industrial Revolution). His successor, younger brother Leopold II, fought against the French for his sister, Marie Antoinette, trapped in the French Revolution. His son, Francis, continued this battle into the French Revolutionary Wars (he failed to save his aunt from the guillotine, and wasn’t very much interested in doing so, according to accounts), later evolving into the Napoleonic Wars. The resulting Congress of Vienna helped shape Europe as we know it today.

Maria Theresa and her husband’s tomb stands in the center of a vault: impressive, large as a small ship, beneath a dome where sunlight streams in. Veiled spirits guard her baroque tomb, and amidst all this splendor, a skull: a reminder of what we all turn into after death, no matter how great the life led (it is, however, still a skull wearing an imperial crown). Her successor, Joseph, lies in front of his parents, in humbler style, as per his own wishes: the inscription on his plain tomb is almost faded, reading: Hier liegt ein Fürst, der trotz der besten Meinung keiner seiner Pläne durchsetzen konnte (“Here lies a ruler who, despite his best intentions, was unsuccessful in all of his endeavors”).

His wife Isabella’s tomb, by a corner, changed the world in its own way, affecting the Habsburg matchmaking game. Archduchess Josepha was forced by her mother Maria Theresa to pray for her sister-in-law in the crypt. According to accounts, Isabella’s tomb was improperly sealed, and her body infected her sister-in-law with smallpox, which later killed her. With the death of Archduchess Josepha, earmarked as a bride for Naples, her sister Maria Carolina, intended as a bride for France, took her place, and in turn, younger sister Marie Antoinette was sent to France. No smallpox, no Marie Antoinette, no Napoleon, no Congress of Vienna, no Austro-Hungarian Empire, no World War I — and perhaps, little of the conflicts we see today.

We saw other Habsburg tombs: there’s Marie Christine, Maria Theresa’s favorite daughter, and everyone’s least favorite sibling (Marie Antoinette did not invite her to the Petit Trianon during a state visit), whose art collection forms the backbone of the Albertina Museum, also close by; Maria Carolina, Marie Antoinette’s favorite sister, also ousted from her throne in Italy. After seeking familiar names from that chapter of history, we went to the tomb of Empress Elisabeth, another Habsburg celebrity.

Her tomb shares raised space with her husband, Franz Joseph, and her son, Crown Prince Rudolf, though her husband the Emperor’s tomb is raised in the center a few feet above his wife and child. Elisabeth, affectionately known throughout the world as Sisi, captivated the Belle Epoque world then with her beauty, her style, and her melancholic life. Stylishly thin because of an eating disorder caused by the impact of imperial and family life on her mental health, she moved across Europe to avoid staying in the imperial capital of Vienna. Assassinated in 1898, her life and death are the subject of numerous movies, musicals, even a cartoon. The most recent showcase of her tragic life and its influence in pop culture was most recently seen in 2022, with The Empress streaming on Netflix.

Her tomb is not lonely. Again, she spares space with her husband and son (who died in a mysterious suicide in Mayerling) — but to this day, offerings are laid at her tomb. We saw flowers, a framed photograph of her, and drawings by children telling her they loved her.

Other Habsburgs of her own age are also strangely honored: her brother-in-law, Maximillian, is buried in the Kapuzinergruft as well. Mexican flags and other souvenirs from the country are laid at his tomb, despite failing to successfully rule the weak, newly established Mexican Empire. For this, he was executed in 1867 by forces led by Benito Juarez (which led to the modern state of Mexico). His wife, Charlotte of Belgium, mourned him to the point of insanity — she died a recluse in 1927, outliving the empires that shaped her world.

There are tombs of a relatively new make, still retaining their bronzed sheen. They are conspicuous in their newness: the tombs of the family of Karl, the last Emperor of Austria, who died in 1922. His wife, Zita of Bourbon-Parma, died in 1989, and was laid there to rest. After the dissolution of the Empire, the Habsburgs were exiled from Austria and banned from returning until fairly recently. The ex-Empress was allowed entry only in 1982. After her death, she was declared a Servant of God by Pope Benedict XVI, putting her on the path to sainthood (which probably explains the floral offerings at her tomb). The most recent entombment was just last year, in 2023, for Princess Yolande de Ligne, the widow of Archduke Carl Ludwig of Austria, a son of the last emperor.

We take some comfort when we are told that in death, we are all the same. Judging by the resting place of the Habsburgs, are we sure that’s true? Some graves lie forgotten, while some are cared for by priests, centuries on; flowers laid at their tombs, their names still whispered with reverence. There will be no souvenir shops with skull keychains and books about me when I die, that’s for sure. But the map to the Kapuzinergruft argues: “Those who believe that the wealthy and powerful have erected a final monument of their vanity stand corrected: beauty and splendor are strongly contrasted by bare bones and toothless skulls. Above all there is a reminder that death can strike everyone — regardless of age or rank — at any time.”

CTA denies Pilipinas Shell’s P43-million tax refund claim

PHOTO FROM PILIPINAS SHELL

THE COURT of Tax Appeals (CTA) denied Pilipinas Shell Petroleum Corp.’s petition for a P43-million tax refund on excise taxes for Jet A-1 fuel sold to tax-exempt international air carriers, citing lack of evidence.

The tax court’s Third Division, in a 15-page decision, said the oil company failed to prove payment of excise tax for the imported Jet A-1 fuel.

While Shell provided details of the alleged importations and excise tax payments, the Court noted the absence of supporting documentation.

The tribunal also emphasized the need for concrete evidence in tax refund cases, especially regarding the payment or collection of the refunded tax.

It cited a Supreme Court ruling in Coca-Cola Bottlers Philippines, Inc. vs. Commissioner of Internal Revenue to underscore that claims for tax refunds are treated as claims for exemption, requiring strict scrutiny and proof of compliance with the conditions for a refund.

“In claims for a refund, it is crucial to show the payment or collection of the amount of tax being refunded, not only for the purpose of determining whether there was a timely filing of the administrative and judicial claims… but more importantly, it is because a claim for refund must always be premised on the fact that the said amount went to the government coffers,” Associate Justice Catherine T. Manahan said in the ruling.

In denying the plea, the tribunal also emphasized the timeliness of the tax claims under the 1997 National Internal Revenue Code.

“Within two (2) years from the date of payment of the tax, the claimant must first file an administrative claim with [the] respondent (Bureau of Internal Revenue) before filing a judicial claim with the courts of law,” it said.

The CTA stressed the mandatory and jurisdictional nature of this timeline, highlighting its inability to consider claims filed outside this timeframe, regardless of subsequent developments.

The oil company said that photocopies should be admissible without comparison to originals, without objection to their authenticity.

However, the tribunal rejected this, pointing out that the BIR had agreed to the admission of the exhibits only if they were compared with the originals.

Pilipinas Shell later filed a Tender of Excluded Evidence, but the court clarified that this procedure is meant for appeals and does not change its conclusion regarding the lack of proof of payment. — Chloe Mari A. Hufana

When democracy decays and recedes

FREEPIK

Francis Fukuyama in his 2018 international bestseller Identity, about his take on political institutions, wrote that the state, rule of law and democratic accountability originated and evolved, and later on interacted with one another only to decay over time. Broadly consistent with Daron Acemoglu and James Robinson’s theory in Why Nations Fail, Fukuyama demonstrated how US institutions “were decaying as the state was progressively captured by powerful interest groups and locked into a rigid structure that was unable to reform itself.”

Fukuyama described Donald Trump as the product and a contributor to that decay. As an outsider, he won the presidency and promised to employ his popular mandate to make America great again through his America First policy.

But his policy, anchored on economic nationalism, actually reduced the perimeter of US economic trade and finance, and insularized its politics and economics. He was a populist in that he used the legitimacy of his political office secured by a democratic election to wield power. In the process, he weakened the institution of checks and balances, the hallmark of a democracy. Civil courts, Congress, independent media and professional bureaucracy were effectively emasculated.

For Fukuyama, who also wrote the more popular The End of History and the Last Man (1992) and Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy (2014), the former US president can be ranked with Vladimir Putin of Russia, Recep Tayyip Erdogan of Turkey and yes, Rodrigo Duterte of the Philippines.

Quoting his colleague Larry Diamond’s Facing Up to the Democratic Recession (2015), Fukuyama observed that in 1970, there were only about 35 electoral democracies. By the early 2000s, the number had reached nearly 120 following the collapse of the Soviet Union and the emergence of democracy across Eastern Europe. By mid-2000s, there was a reversal of democracy, and authoritarianism held sway especially with the coming of age of Beijing and the reversion to strong-man rule in Moscow.

It should be no exclamation for us that the greatest surprises for Fukuyama are first, Britain’s decision to exit from the European Union and second, Trump’s victory in the 2016 election.

Are we seeing democracy decaying in the Philippines?

If we go by Fukuyama’s proposition that democracy decays when the institution of the state is progressively captured by powerful interest groups, yes, with a plus. For one, fat and thin dynasties have proliferated, appropriating for themselves both local and national elective and appointive positions. It’s a cruel joke but true that Philippine elections are nothing but a recycling game. When the parents have maximized their tenure in public office, the children are then mobilized to run in their place. A recent phenomenon is several whole families running together like a complete political ticket, a full court press, if we will. We see the same surnames from governor to vice governor to congressman in some provinces. It’s no different in the cities. The father runs for mayor, the son for vice-mayor and the younger children for councilor or congressman. No, they can’t wait for their turn. Three years is too long. And as we are beginning to see in the national scene, even the Senate has become a family affair.

Competence aside, when powerful and moneyed families dominate politics, we lose the essence of democracy. Politicians can argue that they have the skills and the experience, and when relatives take turns at governance, there is greater stability. But what about checks and balances?

There are also signs of decay when big corporates support politicians’ run for strategic public offices like the president of the republic, or senator or member of the House of Representatives. People in these positions decide on official public policy including the budget, and which infrastructure projects will be funded. Supporting politicians could be the best investment for business. It would be difficult to monetize access to Malacañang, which appoints key officials in Agriculture, Finance, Public Works or Transportation, but it must be without doubt priceless.

Democracy could also decay when the poor electorates seem to have no other candidates to choose from except ex-convicts, comedians and actors who have become household names. Democracy decays when those who are highly qualified would rather stay on the sidelines rather than run for public office. It’s one’s choice and therefore some could blame neither of them. But when the odds are against running with an actionable platform of government but with feeble resources, it is not fair. Democracy could hardly thrive in such condition.

Which brings us to the plus, the moral dimension of democracy.

Evidence shows that the liberal democracy that we know today has not benefited most of us. In the Philippines alone, poverty remains elevated even as some measures show some mitigation in recent years. Income inequality continues to be serious, with only a small fraction of the population sharing in more than 90% of gross domestic output. Unemployment and underemployment have left millions of people without access or limited access to livelihood. The Global Financial Crisis of 2008-2009, the debt crisis in Europe and recently, the COVID-19 pandemic exacerbated the worst in liberal democracy. As Fukuyama argued, “since the United States and EU were the leading exemplars, these crises damaged the reputation of liberal democracy as a whole.”

Such a situation has not produced some recognition of human dignity. There is democratic recession when recognition of human dignity is confined only to the few, moneyed, politically empowered individuals who could, and actually do, exercise control over democratic institutions like election and appointment, grant of licenses and franchises, or even the budget process itself.

When this happens, the likelihood of the political and economic system getting reformed is very remote.

Democracy decays when people witness mass vote-buying in favor of incompetence and corruption, or when election results are clearly tampered with because those who do it are in positions of authority. This sabotage of democracy happens at the national level, down to the barangay level. This is one reason why banks are extremely busy during election time, servicing withdrawals of cold cash by politicians. And politicians can get away with it. Those who voted differently must have felt violated.

Democracy decays when licenses or franchises to operate public utilities or media outfits can easily be revoked as a matter of political revenge. Or awarded as a matter of political payback. Effective delivery of services no longer counts, what matters is whom they gave the most exposure and the air time consumed. Never mind those workers who were laid off, ending up as collateral victims to this modern vendetta. This is another form of assault to human dignity.

Democracy decays when the budget process favors one lawmaker and discriminates against another; it means some groups of people, some provinces or some cities get relatively more than the rest. In the first place, why should lawmakers be involved in identifying and funding projects based on their close connection to the party in power? That is the job of the Department of Budget and Management in coordination with local governments’ inputs through the regional development councils. This is the kind of budget process that leaves schools with fewer classrooms, textbooks and teachers; hospitals with fewer hospital beds, medicines and medical staff; and provinces and islands with no connectivity to the rest of the country. This is hardly the way to develop human capital and attain quality economic growth.

When democracy fades and recedes, it means there is little respect for human dignity as embodied in individual rights, the rule of law, the right to education and health. But as Fukuyama reminded us, such is never desirable. It was the same issue that sparked the French Revolution and similar popular movements including the Tunisian revolt and Tahrir Square uprising in recent years. With social media and the internet, these possibilities are not remote.

Which is why, the real-time coverage of the congressional hearing on the POGO controversy, extrajudicial killings and official admission of guilt, could foment another episode of asserting human dignity in the Philippines.

 

Diwa C. Guinigundo is a former deputy governor for the Monetary and Economics Sector of the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is a senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

RCBC eyes ‘regular’ bond issues to stay present in debt markets

PHILSTAR FILE PHOTO

RIZAL COMMERCIAL Banking Corp. (RCBC) may issue dollar bonds early next year as it looks to tap both the offshore and domestic debt markets on a regular basis, its top official said.

“It will probably be in the earlier part of the year, but we will obviously time it depending on US interest rates, which as you know will be influenced by November developments,” RCBC Chief Executive Officer Eugene S. Acevedo told BusinessWorld on the sidelines of an event on Wednesday.

He said the issue size could be smaller than the bank’s $400-million note issuance in January, but the final amount has yet to be decided.

“We don’t necessarily have to go big because we want to do this more regularly. I don’t know yet how much exactly, but I don’t think it’s a good idea to max out immediately because we don’t really need that much,” he added.

The US Federal Reserve will meet on Nov. 6-7 to review their policy stance. It will cut its key interest rate by 25 basis points (bps) next week, according to all 111 economists in a Reuters poll, with more than a 90% majority predicting another quarter-percentage-point move in December, Reuters reported.

Since the US central bank kicked off its long-awaited easing cycle in September with a half-percentage-point reduction in the federal funds rate to a 4.75-5% range, news on the economy has been strong, including consumer spending and jobs data.

The Fed’s next policy meeting is scheduled to start just after the Nov. 5 US presidential election, with opinion polls showing a neck-and-neck race but recent momentum behind Republican candidate Donald Trump.

All 111 economists in the Oct. 23-29 Reuters poll predicted the Fed will switch back to a quarter-percentage-point reduction next week. More than 90% of them, a total of 103, expected the same-sized move in December, taking the fed funds rate to a 4.25%-4.5% range.

RCBC on Tuesday upsized its medium-term note program to $4 billion from $3 billion and said that it will soon issue bonds under the program. It also appointed SMBC Nikko Securities, Inc. as the program arranger.

“It’s part of our regular funding plan. What we’d like to do moving forward is make it regular so that our investors get used to our papers being there on a regular basis, as opposed to the past where we would not be there all the time. So, this time, we want to have a more steady supply of our papers,” Mr. Acevedo said.

He added that the bank is also planning to issue peso-denominated bonds regularly starting next year as part of their new funding strategy to establish a regular presence in both foreign and local debt markets.

“We will also probably be doing something similar on the peso side. But depending on deposit growth, there’s a chance that we’d like to have a regular issuance,” Mr. Acevedo said. “That’s what we’d like to do moving forward — to issue more on a regular basis rather than just simply opportunistic. That’s really the change in the funding strategy… What I’m convinced of is that we have to do this on a regular basis — not exactly on tap, but as long as we make sure that our name is in the markets on a regular basis.”

“We don’t have anything in mind right now, but I anticipate that within next year, we will be doing something … to start a regularity in issuances. It’s not going to be a giant issue. We don’t even have a number in mind yet, but what’s more important to us is the regularity. Some bigger banks do something similar. Whether interest rates are high or low we will be issuing something. That’s really the general idea,” he added.

RCBC last tapped the foreign bond market in January, raising $400 million from an issuance of five-year senior unsecured sustainability notes. This marked its return to the overseas debt market after over three years.

The notes were issued out of the bank’s medium-term note program, with the proceeds set to finance and refinance its consumer loans and its operating activities for eligible green and social categories in line with the RCBC’s Sustainable Finance Framework.

Meanwhile, the bank last tapped the local debt market in March 2022, where it raised P3 billion from ASEAN sustainability bonds. This represented the seventh tranche of RCBC’s P100-billion bond and commercial paper program, which still has an unissued balance of P27.96 billion.

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

Its shares closed unchanged at P26.90 apiece on Thursday. — Aaron Michael C. Sy with Reuters

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