Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 2674

Gov’t eyes global bonds in 1st half

THE Philippines is eyeing the launch of foreign currency-denominated bonds before the end of the first half of 2024. — IMAGO/BERND LEITNER VIA REUTERS CONNECT

THE GOVERNMENT is eyeing the launch of foreign currency-denominated bonds before end-June, amid expectations of easing interest rates, Finance Secretary Benjamin E. Diokno said.

“Maybe towards the end of the first semester. We will try to look at the market situation. We’re not in a hurry to raise that yet because we expect interest rates to go down,” Mr. Diokno said in an interview with Bloomberg Television on Monday.

He said the government is planning to raise around $5 billion (around P277 billion) from the issuance of foreign bonds this year.

The government set its borrowing program at P2.46 trillion this year, of which P606.85 billion will come from external sources.

In 2023, the Philippine government raised $3 billion from its dollar bond issuance in January and $1.26 billion from its retail dollar bond offering in October. It also generated $1 billion from its inaugural Sukuk bond issuance, which was settled in December.

The government borrows from local and external sources to help fund a budget deficit capped at 5.1% of the gross domestic product (GDP) this year.

Mr. Diokno said that the government is so far on track to bring down its deficit-to-GDP ratio, which stood at 5.71% as of end-September 2023. The Marcos administration is targeting to lower the ratio to 3% by 2028.

“On the revenue (side), we are on track. We have even exceeded our revenue target (for 2023) and we expect that to happen (this) year because we have several tax measures pending in the upper House. I expect those tax measures to be approved by the first quarter of this year,” he said.

Latest data from the Treasury showed that the National Government’s budget deficit narrowed by 10.1% to P1.11 trillion in the January-November period.

State revenues rose by 8.8% to P3.6 trillion, accounting for 95.58% of the P3.729-trillion target set for 2023.

For this year, the Development Budget Coordination Committee expects revenues to hit P4.235 trillion, equivalent to 15.5% of GDP.

The Department of Finance (DoF) earlier said that its priority measures could generate as much as P120.5 billion in additional revenues this year.

These measures include the Passive Income and Financial Intermediary Taxation Act (PIFITA), a value-added tax (VAT) on digital service providers, a new mining fiscal regime, motor vehicle road user’s tax, as well as an excise tax on single-use plastics, pre-mixed alcohol, sweetened beverages and junk food.

The PIFITA, VAT on digital transactions, and excise tax on single-use plastics are currently pending at the Senate committee level, while the excise tax on pre-mixed alcohol is still pending at the House Ways and Means Committee.

“We’re fairly comfortable with the new taxes plus increased revenue efficiency collection. We just approved the Ease of Paying Taxes Act, which was just signed by the President. We expect to be on track with revenue,” Mr. Diokno added.

President Ferdinand R. Marcos, Jr. last week signed into law Republic Act No. 19976 or the Ease of Paying Tax Act, which aims to streamline the tax system.

Under the law, tax returns may now be filed electronically or manually. It also introduces a system that puts taxpayers into micro, small, medium or large categories; and classifies VAT refund claims as low, medium, or high risk.

On the expenditure side, Mr. Diokno said government agencies must ensure “quality spending.”

“We expect around 6% of GDP to be devoted to infrastructure projects, which the economy needs,” he added.

In the 11-month period, government expenditures increased by 3.6% to P4.68 trillion. This accounted for 89.42% of the full-year program.

Economic managers are targeting 6.5-7.5% GDP growth this year. — Luisa Maria Jacinta C. Jocson

BSP may cut rates by up to 100 bps this year

Families walk around Luneta Park in this file photo. — PHILIPPINE STAR/WALTER BOLLOZOS

THE BANGKO SENTRAL ng Pilipinas (BSP) may cut borrowing costs by as much as 100 basis points (bps) this year as inflation is seen to stay mostly within the 2-4% target band, the Philippines’ Finance chief said on Monday. 

Finance Secretary and Monetary Board member Benjamin E. Diokno said the BSP could mirror the policy moves of the US Federal Reserve this year.

“So, a 75-basis-point cut by the Fed this year could actually be matched by the central bank. Or even 100 bps. Right now, the policy rate is at 6.5%, so I see something like 5.5% by the end of 2024,” Mr. Diokno said in an interview with Bloomberg TV.

“The timing, of course, would be data dependent and probably towards the second semester.”

The BSP kept the benchmark rate steady at a 16-year high of 6.5% at its December meeting. This was after the Monetary Board tightened rates by 450 bps from May 2022 to October 2023 to tame inflation.

Inflation averaged 6% in 2023, higher than 5.8% in 2022. It marked the second straight year that average inflation breached the BSP’s 2-4% target.

According to Mr. Diokno, inflation is expected to be within the 2-4% range throughout the first quarter of the year.

“Inflation might increase slightly in the second quarter because of base effects. But for the whole year of 2024, it will be within the target band of 2-4%, so that’s good news,” he said.

The central bank expects full-year inflation to ease to 3.7% this year and 3.2% in 2025, according to its baseline inflation forecasts.

Mr. Diokno noted the inflation rate for 2025 may continue to be within the 2-4% range, or around 3.5%.

POLICY TO REMAIN TIGHT
Meanwhile, Fitch Solutions’ BMI Country Risk & Industry Research said inflation would likely average 3.9% this year.

BMI said the Philippine central bank would likely keep policy tight in the first half, with rate cuts seen only in the second semester.

“We think rate cuts will only materialize in the second half of 2024 at the earliest, in line with our expectations for the US Federal Reserve… A quick return to easing before the Fed could dislodge inflation expectations and weaken the peso — something which the BSP will be mindful to avoid,” BMI said in a report dated Jan. 5. 

The US Federal Reserve kept borrowing costs unchanged at 5.25-5.5% at its policy meeting last month, but signaled rate cuts this year.

BMI said the Philippines’ growth momentum “reduces the urgency for the Monetary Board to cut lower interest rates.”

“This 2024 is set to be a stellar year and we forecast the economy to expand by 6.2%. This provides the BSP with more room to keep interest rates at multi-year highs for some time,” it said.

The government has set its 2024 growth target to 6.5-7.5%.

At the same time, Moody’s Analytics in a report said inflation has significantly eased from the 8.7% peak in January 2023, giving room for the BSP to begin monetary policy easing as early as June.

“The progress made supports our view that BSP’s tightening cycle has ended… We expect the BSP to hold the (key) rate steady until June, where we should see the first rate cut of 25 basis points,” Moody’s said.

However, the challenge for this year is to ensure inflation stays firmly within the 2-4% target, it said.

“We expect some volatility in the opening months of the year given the risk that the El Niño weather pattern could strengthen and keep food prices elevated,” it said.

Higher transport charges, increased electricity rates, and rising fuel prices are also other risks to the outlook, according to the research firm.

“That should see inflation bump up around the 4% mark before returning firmly to BSP’s target range by mid-2024. We look for the full-year inflation rate to average 3.4%,” it said.

BMI sees risks to interest rate forecasts tilted to the upside, with the BSP likely to tighten if the impact would be larger than anticipated.

“The biggest uncertainty surrounds the severity of El Niño weather conditions. Similar events are often accompanied by periods of higher food prices,” BMI said.

“While we have factored this into our projections, things could still deteriorate further. A strong surge in price pressures could prompt the BSP to resume its tightening cycle,” it added.

BSP Governor Eli M. Remolona, Jr. earlier said rate cuts are not on the table in the coming months, as inflation should be seen firmly within the 2-4% target range.

The Monetary Board is scheduled to meet on Feb. 15, its first monetary review this year, to discuss policy. — Keisha B. Ta-asan

PHL seeks to unlock AI’s potential amid emerging threats

Adoption of artificial intelligence is expected to continue to increase this year. — REUTERS/DADO RUVIC/ILLUSTRATION/FILE PHOTO

By Ashley Erika O. Jose, Reporter

DIGITALIZATION has become a strategy for many businesses as more companies embraced the trend when the pandemic forced them to accelerate their digital transformation. 

Amid the shift in the digital and business space, artificial intelligence (AI) has emerged as the latest buzzword.

In the Philippines, many companies have shifted their operations to digital, signaling the country’s preparedness to adopt innovative technologies like machine learning technology.

President Ferdinand R. Marcos, Jr. in November said the country is ready to head towards this technological trend with the crafting of the national AI roadmap that is meant to drive innovation while also upskilling the country’s workforce.

At the same time, the country has been hit with cyberattacks, increasing the potential risks that this technological innovation may be used maliciously amid the growing sophistication among cyberattackers. 

According to a report by cybersecurity company Palo Alto Networks, the Philippines has been hit by the highest number of cyberattacks compared with its Southeast Asian peers this year.

Twenty-nine percent of Filipino organizations have reported an increase in cybersecurity-related incidents of 50% or more, with 51% saying that they are at high risk from threats, the report said.

The report has identified cyberattacks affecting businesses in the country including malware (66%), phishing and spear phishing attacks (63%), and password attacks (56%), it added.

Organizations now need to look for more extensive cybersecurity solutions due to the growth in digital transactions, which could expose their corporate network, it said. 

Last year, several government agencies experienced cyberattacks. For instance, the Philippine Health Insurance Corp. was hit by Medusa ransomware where more than 600 gigabytes worth of its members’ data were obtained.

Information and Communications Technology Assistant Secretary Renato A. Paraiso said cyberattacks have become more frequent. 

“On a daily basis, there are constant attempts to infiltrate and breach various systems, not only government systems but even private sectors,” he told BusinessWorld by phone.

For the Department of Information and Communications Technology (DICT), strengthening cybersecurity and upskilling of personnel are crucial in harnessing the potential of any emerging technologies.

However, technology firm Cisco said organizations in the country are unprepared to leverage the power of AI as its study found that only 17% of businesses in the country are prepared to utilize and deploy AI.

UNCHARTED THREATS
This year, the Philippines may face more cybersecurity attacks, prompting calls for the strengthening of infrastructure enterprises through cybersecurity solutions. 

“Cyberattacks are a global phenomenon. It is not isolated within the Philippines. Worse incidents have happened even in established, progressive countries,” Mr. Paraiso said.

Several firms like telecommunications and information communications technology companies have announced the integration or adoption of AI in their operations. Some are integrating AI technology in their contact services operations, cloud platforms, and even financial services platforms. 

“There’s a concern that bad actors and adversaries out there might look to utilize those AI tool sets to create new forms of compromise. Absolutely, there is a potential for adversaries and bad actors to find new, creative and innovative ways of using artificial ways and forms to compromise organizations,” Carl Solder, Cisco chief technology officer for Australia and New Zealand, said.

In the Philippines, the majority of the network remains untrusted, which makes them more prone to attacks, Now Corp. Chairman Mel V. Velarde said, adding that geopolitical tensions may also spark more cyberattacks. 

“Expect more hacking, expect more breaches because we are at the center of a geopolitical crisis. It is not surprising and not possible to deny that we have problems,” he said in a press chat. 

David R. Hardoon, chief executive officer of Aboitiz Data Innovation Pte. Ltd. (ADI), said regardless of whether it’s the Philippines or other countries, “you can assume that cyberattacks are going to increase.”

“With the increase of digitalization, the increase of technology adoption, we have to, unfortunately, but we need to acknowledge that the bad actors are also going to increase the digitization technology,” he said.

AI TO SOLVE AI-DRIVEN THREATS
“In order to protect against [cyberattacks], you also need to start thinking about using AI to fend off those AI-initiated attacks. We all need to use AI to better defend ourselves against the attacks,” Mr. Solder said.

As AI starts to gain momentum and traction, cyberattacks will become more creative to compromise any systems, Mr. Solder said.

“The industry is also looking to utilize these [AI] tool sets to provide better ways and form and to protect against those new forms of initiated attacks,” he said.

To fully unlock the potential of any technology against any threats, the DICT said the focus must be on strengthening networks and education.

“We need to strengthen our cybersecurity posture, constantly upgrade our systems and upscale our personnel to combat these challenges,” Mr. Paraiso said.

For ADI, artificial intelligence and other emerging technology innovations will be a powerful tool in revolutionizing the fight against cyberthreats.

Mr. Hardoon described AI as a mechanism to find patterns as well as irregularities within patterns.

“We should effectively use AI in order to detect [any] irregularities. [It functions as] a kind of verification. We need to use these technologies to making sure defenses and controls of our systems are as high as possible,” Mr. Hardoon said.

To navigate the right formula between challenges and opportunities that AI may bring, the right balance between robust regulatory and ethical framework must be in place, according to advocacy group Digital Pinoys.

“The increasing integration of artificial intelligence has sparked apprehensions regarding its potential misuse, particularly in the context of heightened cyber threats. As AI advances and gains sophistication, concerns grow over the possibility of its exploitation for malicious activities on a grander scale, potentially leading to more extensive cyberattacks,” Ronald B. Gustilo, Digital Pinoys national campaigner, said in a Viber message.

It is important to recognize the transformative impact of AI across diverse domains from healthcare to automation, Mr. Gustilo said.

“The benefits brought by AI, such as improved efficiency and innovative solutions, present opportunities for positive societal impact. To ensure a future where the advantages of AI outweigh potential risks, it becomes imperative to actively address ethical considerations, establish clear regulations, and foster responsible development and deployment practices within the evolving landscape of artificial intelligence,” Mr. Gustilo said.

BoC revenues hit P884B, exceed full-year target

The Customs bureau has ramped up efforts against smuggling of counterfeit goods. — PHILIPPINE STAR/EDD GUMBAN

THE BUREAU of Customs (BoC) surpassed its revenue target for 2023 amid improved collection, trade facilitation and anti-smuggling activities, the Department of Finance (DoF) said on Monday.

Data from the DoF showed that the agency collected P883.624 billion as of Dec. 31, 2023, exceeding its P874.166-billion full-year target by 1.08%.

This was also 2.46% higher than its P862.419-billion collection in 2022.

Collections by the agency’s Post Clearance Audit Group rose by 6.43% to P1.959 billion last year.

The BoC also generated P1.793 billion in revenues from Prior Disclosure Program applications, P166.286 million from other audit findings, and P164.503 million from the sale of forfeited goods through public auctions.

Customs said as of end-2023 its digitalization rate stood at 96.99%, which is equivalent to 161 out of 166 customs processes.

“Several initiatives in the pipeline include the BoC e-Pay Portal System, the e-Auction System, the Automated Export Declaration System (AEDS), and the National Customs Intelligence System,” it added.

In 2023, Customs also said that it seized P43.295 billion worth of smuggled goods.

The BoC filed 90 criminal cases before the Department of Justice. Of this, 60 cases were related to agricultural smuggling. This was followed by 13 cases related to fuel, four related to food items, four related to illegal drugs, four related to general merchandise, one related to cigarettes and one related to used clothing.

“In 2023, the BoC also recorded four conviction cases on the unlawful importation of general merchandise, cigarettes, and agricultural products,” it said.

“As part of monitoring efforts and post-evaluation of importers and brokers, the bureau revoked the accreditation of 118 importers and 46 customs brokers found to be in violation of the provisions stipulated in the Customs Modernization and Tariff Act,” it added.

The BoC is expected to collect P1 trillion this year, based on the latest Budget of Expenditures and Sources of Financing.

“In 2024, (I) expect the bureau to continue modernizing its customs administration and processes to effectively curb illicit trade, generate more revenues to fund the government’s priority development projects, ensure the protection of our consumers, and enhance the country’s ease of doing business,” Finance Secretary Benjamin E. Diokno said in a statement. — Luisa Maria Jacinta C. Jocson

MMFF 2023 grosses P1B, extends theatrical run

THE 49th Metro Manila Film Festival (MMFF) has extended its run to Jan. 14, with the box office take double that of last year’s festival.

The extension was decided upon “in response to the public clamor,” MMFF said in a statement.

“We at the MMFF would like to express our deepest gratitude to all who have supported us and watched the movie entries, particularly those who requested for the MMFF movies to extend beyond its original run,” Don Artes, chairman of the Metro Manila Development Authority (MMDA), said in a statement posted on Jan. 7, the day the festival was slated to end. The MMDA runs the yearly film festival.

The festival’s 10 movies garnered P1 billion collectively over the initial two-week run, twice as much as the P500 million earned by the eight movie entries last year.

Specific box office data per movie is unavailable, with the MMFF choosing to withhold the information so as not to influence viewers’ choice on what to watch.

The 10 movies in this year’s lineup are A Family of Two, Kampon, Penduko, Rewind, Becky and Badette, Broken Heart’s Trip, Firefly, GomBurZa, Mallari, and When I Met You in Tokyo.

All the entries will be screened at the inaugural Manila International Film Festival (MIFF), set for Jan. 29 to Feb. 2 in Los Angeles, California.

“Truly, this year’s MMFF is a certified box office hit. This is a good sign as we gear up for the MIFF,” said Mr. Artes. — Brontë H. Lacsamana

Meralco sees slight increase in generation charge for January

PHILIPPINE STAR/ MICHAEL VARCAS

POWER distributor Manila Electric Co. (Meralco) is expecting a slight increase in the cost of power from suppliers this January, the company’s spokesman said on Monday.

“We are still completing the billing from our suppliers, but initial indications show that there may be a very minimal increase in the generation charge in the January bills,” Joe R. Zaldarriaga, Meralco spokesperson and vice-president for corporate communications, said in a Viber message.

He noted higher charges from the Wholesale Electricity Spot Market (WESM), the trading floor of electricity.

Data from the Independent Market Operator of the Philippines showed that the average electricity price in WESM increased to P4.74 per kilowatt-hour (kWh) as of Dec. 25, from P4.12 per kWh in November.

Mr. Zaldarriaga said this was likely linked to a rise in the average capacity in the Luzon grid that is unavailable due to outages.

Some power plants are undergoing scheduled maintenance shutdown in preparation for the summer months, he said.

In December last year, the power distributor implemented a reduction from P12.0545 per kWh to P11.2584 per kWh amid a decrease in generation charges.

Generation charge usually accounts for more than half of a consumer’s total monthly electricity bill. 

Meanwhile, Bienvenido S. Oplas, Jr., president of Minimal Government Thinkers, expects a slight decrease due to lower coal prices in December-January and a lower Dubai crude price, to which the Malampaya gas price is pegged.

“But Meralco noted higher plant outage in WESM, so this may cancel out any potential price decrease,” he said in a Viber message.

Mr. Oplas said that he expects power rates to drop in the first quarter despite the onset of El Niño and upcoming dry months.

“This will affect and reduce hydro output, raise power demand, but since this is a mild El Niño, at least in Metro Manila and neighboring provinces, power demand will not rise as projected by alarmist models and scenarios,” he said.

Meralco said it has prepared to ensure the delivery of power to its consumers with the bid launch for interim power supply agreements (IPSAs) covering a 260- MW peaking requirement and 400-MW baseload requirements.

The power distributor also said that it aims for the procurement to be “ready in time for the summer months when demand usually spikes.”

The deadline for generation companies to submit expressions of interest for both IPSAs is Jan. 15.

A pre-bid conference will be held on Jan. 22, while the bid submission deadlines for the 260 MW and 400 MW are set on February 26 and 27, respectively.

“I would also like to remind our customers to be mindful of their consumption and continue practicing energy efficiency,” Mr. Zaldarriaga said.

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

Oppenheimer starts Oscars march with 5 Golden Globe trophies

THE cast of Succession backstage with their Best Television Series - Drama award.

OPPENHEIMER, the biographical movie about the inventor of the atomic bomb, was crowned best dramatic film at the Golden Globe Awards Sunday night, setting up what looks to be a successful run for the picture on the Hollywood awards circuit.

The Universal Pictures film took home five awards in all, including best director for Christopher Nolan, dramatic actor for Cillian Murphy, and supporting actor for Robert Downey, Jr.  Lily Gladstone won the best dramatic actress award for Apple, Inc.’s Killers of the Flower Moon.

Oppenheimer and Barbie, from Warner Bros., led among films with the most nominations going into the ceremony. Barbie took home the top prize in a new category designed to recognize popular films, but lost the race for best comedy picture to Poor Things, a fantasy from Walt Disney Co.’s Searchlight division. Emma Stone won best comedic actress for her work in Poor Things.

Succession, the HBO show about the battle to lead a family run media empire, won best dramatic TV series, picking up four awards in all. The Bear, a series about a Chicago restaurant from Disney’s FX unit, won best TV comedy.

The Golden Globes are one of the first events on the awards circuit, which will culminate with the Oscars on March 10. Studios campaign vigorously to win the trophies, which can lead to a bump in ticket sales and online purchases of their films, and score points with talent. Oscar nominations will be announced on Jan. 23.

This year’s Globes are the first under new owners. Financier Todd Boehly and Hollywood trade publisher Jay Penske took control of the program last year after a scandal involving its previous owner, the Hollywood Foreign Press Association.

The association was criticized for its lack of diversity and ethical lapses. The voting body has since been expanded to 300 entertainment journalists, whose names and photos are published on the Golden Globes’ website. Gifts to members have been banned.

The Globes ceremony, the 81st in its history, was hosted by comedian Jo Koy. It aired on CBS after a long run on NBC ended.

Barbie and Oppenheimer were released on the same weekend in July, an event dubbed “Barbenheimer” on social media, and that led some moviegoers to see both pictures on the same day. Barbie was the top film release last year with $1.44 billion in global ticket sales, while Oppenheimer finished third with $952 million, according to BoxOfficeMojo. — Bloomberg

And the winner is…

The following is the full list of winners at the 2024 Golden Globe awards on Sunday.

FILM
Best Drama: Oppenheimer
Best Comedy or Musical: Poor Things
Best Director: Christopher Nolan, Oppenheimer
Best Actor, Drama: Cillian Murphy, Oppenheimer
Best Actress, Drama: Lily Gladstone, Killers of the Flower  Moon
Best Actor, Comedy or Musical: Paul Giamatti, The Holdovers
Best Actress, Comedy or Musical: Emma Stone, Poor Things
Best Supporting Actor: Robert Downey, Jr., Oppenheimer
Best Supporting Actress: Da’Vine Joy Randolph, The Holdovers
Best Animated Film: The Boy and the Heron
Best Non-English Language Film: Anatomy of a Fall (France)
Best Screenplay: Anatomy of a Fall
Best Original Score: Oppenheimer
Best Original Song: “What Was I Made For?,” Barbie
Cinematic and Box Office Achievement: Barbie

TELEVISION
Best Drama Series: Succession
Best Comedy/Musical Series: The Bear
Best Actor, Drama: Kieran Culkin, Succession
Best Actress, Drama: Sarah Snook, Succession
Best Supporting Actor: Matthew Macfadyen, Succession
Best Supporting Actress: Elizabeth Debicki, The Crown
Best Actor, Comedy/Musical: Jeremy Allen White, The Bear
Best Actress, Comedy/Musical: Ayo Edebiri, The Bear
Best Limited Series, Anthology Series or Motion Picture Made for Television: Beef
Best Performance by a Male Actor, Limited Series, Anthology Series or Motion Picture Made for Television: Steven Yeun, Beef
Best Performance by a Female Actor, Limited Series, Anthology Series or Motion Picture Made for Television: Ali Wong, Beef
Best Performance in Stand-up Comedy on Television: Ricky Gervais: Armageddon — Reuters

DMCI Power reports 7% increase in energy sales 

OFF-GRID energy generator DMCI Power Corp. (DPC) registered a 7% increase in energy sales volume in 2023 due to higher demand in underserved and unserved areas, its parent company said on Monday.

In a regulatory filing, DMCI Holdings, Inc. said that its subsidiary recorded an energy sales volume of 454 gigawatt-hours (GWh) last year, an increase from the 426 GWh in 2022.

“Our sales have grown steadily for 11 consecutive quarters because of solid demand and our targeted investments in underserved and unserved areas,” DPC President Antonino E. Gatdula, Jr. said.

The company operates in the provinces of Palawan, Masbate, and Oriental Mindoro.

According to the DPC, energy sales to Palawan increased by 12% to 200 GWh from 179 GWh in 2022. This accounted for 44% of the total sales volume. 

The company attributed the increase to the “combined effect of higher capacity and demand.” The Palawan Electric Cooperative, Inc. served the 67-megawatt (MW) demand of the province, it said.

In August, the company commenced the operations of its P1.5-billion thermal power plant in Palawan, which it said coincided with “a surge in both local and international tourist arrivals in the area.”

Masbate energy sales, contributing 34% to the overall sales, increased by 5% to 156 GWh from 148 GWh previously due to higher demand, approximately 25-26 MW, and plant availability.

Meanwhile, energy sales to Oriental Mindoro fell by 2% to 97 GWh from 99 GWh “due to the increased availability of renewable energy power plants.” This accounted for 22% of the total sales volume with a demand of about 70 MW.

In 2023, DPC had a total installed capacity of around 160 MW, a 17% increase from the previous year.

For the third quarter, DPC reported a core net income of P267 million, a 26% increase from the previous year, driven by growth in electricity sales volume, lower fuel costs, and wider margins.

Revenues dropped by 13% to P1.86 billion due to the operation of the Palawan thermal power plant with a lower tariff, which DPC said has softened the impact of higher energy sales.

Established in 2006, the company is primarily engaged in energizing off-grid small and remote islands. Its portfolio includes diesel, bunker, and thermal energy. — Sheldeen Joy Talavera

Taylor Swift is helping Singapore ditch its dull reputation

IT IS the thing every mother of a teenage girl dreads. Taylor Swift is coming to your city — and you don’t have tickets. I scoured high and low for what has become a precious commodity in Singapore these days, without success: They’d all been snapped up in a buying frenzy for The Eras Tour last year. The going rate on the resale market is anywhere between S$3,000 ($2,253) to above S$5,000. Luxury VIP packages can go up to S$50,000. You would think with six shows — in a stadium that holds 55,000 in a city of under 6 million people — that it would be possible to get a couple of tickets. Surely not every 13-year-old is attending the event?

But that’s precisely the point. Swift’s performances are attracting thousands to Singapore, including fans from Southeast Asia and beyond. It’s not just the Queen of Pop. From Coldplay to Seinfeld to Ed Sheeran and even the Broadway musical Hamilton, it feels like every major act is coming to the Lion City in the post-COVID era. Visitors are thronging to these events, so much so that locals, irate at having lost out on tickets, have proposed that sales should be prioritized for citizens. The entertainment industry is gearing up for a bumper year. Tourist arrivals are also recovering, reaching about 80% of pre-pandemic levels.

The concerts have revitalized its reputation, according to Lau Kong Cheen, associate professor at the Singapore University of Social Sciences. “It makes us look like a modern, open-minded, and vibrant place,” he told me. “It’s creating an image that is inviting to entertainment acts from all over the world, resonating with people of all walks of life.”

This was not always the case. In 2018, the island was voted one of the least exciting cities in the world in a Time Out City Life Index, and pronounced the worst rated for culture. Not to be cowed, the Singapore Tourism Board hit back with a smart and sarcastic video that showcased highlights of the island. This month, another blow to its reputation came via a slight from a Malaysian actor, who recommended that visitors not spend more than two to three nights because it is “man-made” and “too boring.” That rankled local netizens, eventually forcing an apology from the offending party.

The truth is Singapore has always struggled with a dull reputation compared to its more grungy and authentic neighbors like Jakarta and Bangkok in Southeast Asia. Long hair was banned in the 1970s under a scheme called Operation Snip Snip, which meant bands like Led Zeppelin had to cancel their gigs because they weren’t allowed to enter without getting a haircut. It is often described as safe and stable — worthy virtues when trying to attract investment flows, not so much when you’re trying to have a bit of fun.

But Singapore is on its way to becoming Asia’s capital of cool, by design if not through any organic means. The government’s build-it-and-they-will-come approach, often scornfully dismissed for being too manufactured, has in large parts worked. The process started more than a decade ago, with the return of Formula 1, and the introduction of casinos, both at the time huge shakeups to its staid image. The gamble has paid off. Casinos brought in a record $649 million in the second quarter of last year, and F1 regularly attracts thousands of visitors and famous musical acts annually, making that weekend in September a key event on the global entertainment calendar.

It has also entered the cinematic zeitgeist, with the global success of films like Crazy Rich Asians showcasing some of the city-state’s most beautiful attractions. It’s now being name dropped in popular series like Succession, as a cooler destination to host a party than even New York.

So is it, as the Financial Times proclaimed earlier this year, finally cool? Not so fast, says Vijay Singh, a local producer and music artist who also goes by the name  Swtlkr. “While we may have progressed on bringing in a lot of commercial artists, what is sorely missing is the support that develops culture,” he told me. “What’s happening now doesn’t benefit local artists or musicians.”

Indeed, there is still much work to be done on Singapore’s journey to coolness. It doesn’t have Tokyo’s cultural relevance, or Seoul’s booming film and music industry. Still, there is much to celebrate, particularly given the options that are now available. The plethora of choices also makes the pain of not getting Taylor Swift tickets far more bearable. Looks like it will be Hamilton for us instead. — Bloomberg Opinion

The rise of revenge property investing in PHL

FIREWORKS explode over Rockwell Center in celebration of the New Year in Makati City, Philippines, Jan. 1, 2024. — REUTERS

WE’VE HEARD of revenge spending and dining in 2022 and 2023 and how personal consumption expenditures helped sustain Philippine economic growth the past two years. Filipinos also did a lot of revenge travel in the past 24 months, resulting in a substantial increase in domestic tourists, local visitor receipts, average daily rates and hotel occupancies across the Philippines.

But what appears to be becoming mainstream now is revenge investing. And massive property investments are not just trickling in from the affluent market but also from the young and millennial workforce. In fact, some developers are actively targeting this young segment given their rising purchasing power and the potential of their disposable incomes to further surge in the years to come.

What’s also quite surprising is that these young buyers of residential units are acquiring properties not just for end-use but also as investments, banking on the properties’ live-work-play-shop features, proximity to public infrastructure, and the units’ attractiveness as possible sources of passive income once turned over.

UNDERSTANDING DEMAND OR LUXURY UNITS
While the millennial buyers help fuel the demand for affordable to lower mid-income residential units and have become a key segment to target for some developers, we cannot deny the fact that the demand for the upscale to luxury units remains strong, with take-up mainly coming from the affluent market.

Colliers has seen the upscale and luxury segments’ resilience even at the height of the pandemic in 2020 and 2021. Now that the property market is rebounding, especially the residential market, developers are lining up their luxury projects to tap demand from an affluent and discerning segment.

Over the past few years, local developers have aggressively partnered with foreign firms and we see more pronounced joint ventures (JV) with foreign property firms moving forward.

Take-up  for upscale to luxury projects remains strong with demand focused on major business districts such as Fort Bonifacio, Makati CBD and Ortigas Center. Colliers believes that the luxury and ultra luxury segments will likely remain resilient amid the rising interest and mortgage rates. We attribute it to investors mainly banking on the capital appreciation potential of these upscale and luxury residential projects.

ROOM FOR PRICE ACCELERATION
Colliers sees the rising interest rates as among the headwinds in the residential market, especially their potential impact on mortgage rates.

Despite higher interest rates, Colliers has seen a stable demand for upscale to ultra luxury condominium projects in Metro Manila. Over the past few years, we have also recorded a healthy level of price increases for these residential projects. 

Colliers Philippines believes that the increase in prices will only result in investors and end-users looking for greater amenities as well as innovative facilities.

Due to Metro Manila traffic, there will be greater demand for connectivity to master planned communities and topnotch concierge services.  With more luxury and ultra luxury projects being launched in Metro Manila, Colliers Philippines sees the rise of more discerning buyers. Hence, developers need to further innovate and differentiate in a highly competitive luxury residential segment.

Based on regional prices, it appears that there is still room for further expansion of Metro Manila prices on a per square meter basis. What we can conclude based on this regional comparison is that the Philippines is barely scratching the surface. The price per square meter of Metro Manila’s most expensive condominium units is much cheaper compared to the most expensive ones in more affluent cities such as Hong Kong, Tokyo, and even Bangkok.

SUSTAINED GROWTH TO FUEL PROPERTY
Overall, we are optimistic with the Philippines’ strong macroeconomic fundamentals. The Philippine economy continues to expand despite soaring commodity prices and global geopolitical headwinds. The country remains one of the fastest-growing economies in Asia, primarily backed by resilient personal consumption and private investments.

Sustained recovery is likely to benefit major economic sectors including property development. The luxury and ultra luxury condominium segments showed resilience during the pandemic. Hence, it won’t be startling to see these developments proliferating in the near to medium term as the Philippines recovers from the pandemic.

The luxury and ultra luxury projects are also likely to benefit from the reopening of Philippine tourism and the return of foreign employees. Affluent investors are likely to continue buying luxury units as they upgrade, bank on potential price appreciation, and look for a viable hedge against inflation.

CASHING IN ON PROPERTY’S VIABILITY AS AN INVESTMENT OPTION
Revenge property investing is likely to persist, especially for the Philippines where investors do not have several options to choose from. Colliers sees young buyers and the affluent investors continuously looking for residential units that have strong rental prospects and potential for price appreciation.

Colliers Philippines believes that developers should highlight their projects’ attractiveness for lease or potential for capital value growth, whether targeting local buyers or foreign investors.

With tempered launches and availability of substantial number of ready for occupancy (RFO) units in Metro Manila, we expect aggressive marketing initiatives from property firms over the next 12 months. Developers should also curate promotions and offerings based on their target markets, whether overseas Filipino workers (OFW), young local investors, or the experienced and affluent buyers.

 

Joey Roi Bondoc is the research director for Colliers Philippines.

Gov’t hikes T-bill award on strong demand

BW FILE PHOTO

THE GOVERNMENT raised the volume of Treasury bills (T-bills) it awarded for a second straight week on Monday at mixed rates as demand continued to climb amid expectations that the Bangko Sentral ng Pilipinas (BSP) will keep borrowing costs higher for longer.

The Bureau of the Treasury (BTr) raised P19 billion via the T-bills it offered on Monday, above the original P15-billion program, as total bids reached P46.875 billion or more than thrice the amount on the auction block.

“The auction was 3.1 times oversubscribed,… prompting the committee to double the accepted volume of non-competitive bids for the 91- and 182-day T-bills,” the BTr said in a statement.

Broken down, the Treasury raised P7 billion from the 91-day T-bills, above the P5-billion program, as tenders for the tenor reached P18.36 billion. The three-month paper was quoted at an average rate of 5.102%, 3.8 basis points (bps) below the 5.14% seen last week. Accepted rates ranged from 4.98% to 5.25%.

The government also raised P7 billion through the 182-day securities, above the planned P5 billion, as bids for the paper reached P16.91 billion. The average rate for the six-month T-bill stood at 5.582%, inching up by 0.4 bp from the 5.578% quoted previously, with accepted yields ranging from 5.29% to 5.7%.

Meanwhile, the BTr borrowed P5 billion as programmed via the 364-day debt papers as bids for the tenor reached P11.605 billion. The average rate of the one-year T-bill went up by 14.4 bps to 5.973% from 5.829% previously. Accepted rates were from 5.83% to 6.025%.

At the secondary market on Monday, the 91-, 182-, and 364-day T-bills were quoted at 5.2265%, 5.5084%, and 5.8274%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

T-bill rates were mixed on Monday as “investors considered prospects that the BSP will keep policy rates unchanged,” a trader said in an e-mail.

The central bank will likely keep benchmark interest rates elevated in the coming months until inflation settles within their 2-4% annual target, BSP Governor Eli M. Remolona, Jr. said last month.

The BSP last month kept its policy rate unchanged at a 16-year high of 6.5% for a second straight meeting.

The central bank raised benchmark interest rates by a cumulative 450 basis points from May 2022 to October 2023 to help bring down elevated inflation.

Headline inflation slowed to 3.9% in December from 4.1% in November and 8.1% in the same month a year ago, the Philippine Statistics Authority reported last week. This marked the first time the consumer price index (CPI) settled within the central bank’s 2-4% target and was the slowest in 22 months or since the 3% reading in February 2022.

However, for 2023, inflation averaged 6%, faster than 5.8% in 2022 and marking the second straight year that the CPI exceeded the BSP’s 2-4% target.

The Monetary Board will hold its first meeting this year on Feb. 15.

Strong US jobs data recently also affected T-bill rates on Monday, the trader added.

The monthly nonfarm payrolls report showed the US economy added 216,000 new jobs in December, Reuters reported.

The jobless rate held steady at 3.7%, down from most forecasters’ expectations for it to rise, prompting concerns that the US Federal Reserve’s long battle to tame inflation may have further to run.

The Federal Open Market Committee will hold its first policy meeting this year on Jan. 30-31.

On Wednesday, the BTr will auction off P30 billion in new five-year Treasury bonds (T-bonds).

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

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year. — A.M.C. Sy with Reuters

OECD’s Global Minimum Tax: The good and the bad

FREEPIK

A few months ago, the Philippines joined the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) as a member in a move to reaffirm its commitments in upholding tax fairness and combating tax avoidance schemes.

So, what does this Inclusive Framework on BEPS entail?

All in all, there are 15 actions set out under the framework, each seeking to address a particular issue related to tax avoidance. For instance, the first action outlined under the framework is “Tax Challenges Arising from Digitalization.”

In our previous column*, we discussed how the digitalization of the economy brought with it several problems when it comes to taxation. Specifically, it allowed large tech companies to be able to evade their tax obligations by hiding their income in tax havens. The scope of this issue necessitates the reliance on a global approach.

To address this issue, the Organization for Economic Cooperation and Development (OECD) has developed the Two-Pillar Solution.

The first pillar concerns itself with the determination of the taxation nexus and the tax base for large multi-national companies (MNCs). The second pillar concerns itself with the establishment of a global minimum corporate tax rate for MNCs. These two pillars ensure that MNCs would no longer be able to hide their income away in countries which impose practically zero taxes.

The Two-Pillar Solution, however, has its pros and cons.

The main advantage of the Two-Pillar Solution is that it can address the issue of excessive tax avoidance or, the worse version, tax evasion. It would ensure that the corporations would be liable for taxes in the countries that they are operating in. By the OECD’s own updated estimate, the Two-Pillar Solution would result in an annual global revenue gain of $220 billion (as opposed to their previous estimate of $150 billion) for Pillar Two, and up to $36 billion for Pillar One.

This also addresses the issue of how to tax tech companies since, given the scope of their operations, there have been difficulties in imposing taxes on them.

Another advantage is that it would lead to a fairer distribution of tax rights. Due to the way MNCs operate, it is possible for them to produce parts of a product in Country A, manufacture the product in Country B, and sell the product in Country C. By laying down rules on how to determine the applicable tax jurisdiction, the Two-Pillar Solution ensures that the company won’t just get to pick to get taxed at the country with the lowest tax rates.

However, as noted above, it has its disadvantages as well.

A major criticism against the Two-Pillar Solution or, specifically, the imposition of the global minimum tax is that it can be disadvantageous to developing countries.

Given the choice of investing in a developed country and a developing country, it is not difficult to guess that a corporation would rather invest in a developed country, especially given the likelihood of already established institutions, infrastructure, and technology. One of the ways that developing countries can become a viable investment option is by offering lower tax rates or offering tax incentives.

The imposition of the global minimum tax affects that option for developing countries. They would have to comply with the minimum rates.

For instance, in the Philippines, the present corporate income tax rate is, generally, 25%. At first glance, the imposition of a global minimum tax of 15% would not affect the Philippines since the present tax rate is already above 15%. However, the Philippines also grants tax incentives such as income tax holidays, tax exemptions, and enhanced deductions.

In other words, the global minimum income tax would affect the power of a developing country to offer incentives or to lower its tax rates as a way of attracting foreign investment.

Another criticism against the Two-Pillar Solution is that it is complex and would actually add to taxpayers’ compliance burden. Tax solutions that increase the compliance burden would be counterproductive as they could increase non-compliance arising from such complexity and would not be beneficial for countries, given the trend of simplifying tax systems all over the world.

Finally, another criticism is the narrowness of its scope. Pillar One covers only MNCs with €20 billion in annual revenue, while Pillar Two only applies to MNCs with €750 million in annual revenues. Converted to the Philippine Peso, this would equate to P1.3 trillion in the case of Pillar One, and P45 billion in the case of Pillar Two.

Despite these flaws, something must be done. At the present, MNCs are able to get away with not paying taxes. In the Philippines, while tech companies generate millions of dollars, they have paid zero in taxes to the Bureau of Internal Revenue.

Still, any proposal that seeks to adopt the OECD’s Two-Pillar Solution must consider these advantages and disadvantages. On Feb. 27, tax experts and representatives from international organizations, including the OECD, will be attending the 2024 International Tax and Investment Conference, organized by the Asian Consulting Group, a tax advisory firm based in Quezon City, to discuss the various tax initiatives and proposals that could address various issues, especially in the Digital Economy. Among the topics to be covered during the conference is the OECD’s Two-Pillar Solution. For more information, about the conference, visit www.acg.ph or e-mail <mon@acg.ph>.

* Finding solutions to economic and tax issues — BusinessWorld Online (https://tinyurl.com/ysgl7zsr)

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.

 

Raymond “Mon” A. Abrea is an MPA/mason fellow at the Harvard Kennedy School. He is a member of the MAP Tax Committee and the MAP Ease of Doing Business Committee, co-chair of Paying Taxes on Ease of Doing Business Task Force, and chief tax advisor of the Asian Consulting Group.

map@map.org.ph

mon@acg.ph

1...2,6732,6742,675...13,098Page 2,674 of 13,098
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube