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China says PHL violates its sovereignty, ‘illegally’ occupied Pag-asa Island 

PHOTO FROM PHILIPPINE COAST GUARD

The Philippines has seriously violated Chinese sovereignty, Chinese foreign ministry said on Monday.

The comment came after Manila said a Chinese navy ship shadowed and attempted to cut off a Philippine navy vessel conducting a resupply mission near Pag-asa Island (Thitu island) in the South China Sea.

“The Philippine side illegally occupied the islands and seriously violated China’s sovereignty,” the foreign ministry spokesperson Mao Ning told a regular news conference. — Reuters

US tackles loopholes in curbs on AI chip exports to China – official

PIXABAY

The US will take steps to prevent American chipmakers from selling semiconductors to China that circumvent government restrictions, a US official said, as part of the Biden administration’s upcoming actions to block more AI chip exports.

The new rules, details of which Reuters is reporting for the first time, will be added to sweeping US restrictions on shipments of advanced chips and chipmaking equipment to China unveiled last October. The updates are expected this week, other people familiar with the matter said, though such timetables often slip.

The new rules will block some AI chips that fall just under current technical parameters while demanding companies report shipments of others, said the official, who provided information on condition of anonymity.

A spokesperson for the US Department of Commerce, which oversees export controls, declined to comment.

The latest crackdown on tech exports to China coincides with US efforts to thaw difficult relations between the world’s two largest economies. Several senior members of the Biden administration have met their Chinese counterparts in recent months, and the latest round of rules risks complicating the diplomatic effort.

The Biden administration has said it designed the export curbs to keep U.S. chips and equipment from strengthening China’s military. Beijing has accused the United States of abusing export controls to suppress Chinese companies. The restrictions marked a historic shift in US-China tech policy.

The Chinese embassy in Washington did not immediately respond to a request for comment.

Last year, government restrictions kept Nvidia, the world’s most valuable chipmaker, from shipping two of its most advanced AI chips to Chinese customers, chips that have become the industry standard for developing chatbots and other AI systems.

But Nvidia soon released new variants for the Chinese market that were less sophisticated and got around the US export controls. One, named the H800, has as much computing power at some settings used in AI work as the company’s more powerful but blocked H100 chip. Still, some key performance aspects are limited, according to a specification sheet seen by Reuters.

The US now plans to introduce new guidelines for AI chips that will restrict certain advanced datacenter AI chips that are not currently captured, the US official said.

While the official declined to identify which additional chips will be effectively banned, Nvidia’s H800 is a semiconductor sources have suggested the administration has wanted to block.

Santa Clara, California- based Nvidia did not immediately respond to a request for comment. In June the company’s chief financial officer said that if the H800 and a related chip called the A800 were restricted, they did not anticipate it “would have an immediate material impact on our financial results.”

Chips meant for consumer products like laptops will be exempt from the new curbs, the official said. But companies will need to tell the Commerce Department when they are filling orders for the most powerful consumer chips to make sure they are not being used in ways that threaten national security, according to the official.

In order to keep AI chips the US views as too powerful from China, the official said the US planned to remove one of the parameters – the “bandwidth parameter” – it has used to restrict exports of certain AI data center chips. By removing this parameter, another guideline kicks in, widening the scope of chips covered. This would likely mean the speed at which AI chips talk to each other would be reduced.

This is important because training the largest AI models is impossible on one chip and requires many chips tied together. If one slows the speed they communicate at, it makes AI development more challenging and expensive.

The US also plans to introduce a “performance density” parameter to help prevent future workarounds, the official said, but declined to elaborate.

 

Evolving technology

The updated rules also are meant to cover AI chips as technology evolves. The US will require companies to notify the government about semiconductors whose performance is just below the guidelines before they are shipped to China, the official said. The government will decide on a case-by-case basis whether they pose a national security risk but they can be shipped unless the chipmaker is told otherwise.

The updates to the October 2022 rules may also close a loophole that gives Chinese companies access to American artificial intelligence chips through Chinese units located overseas, as Reuters reported last week.

The rules are not expected to include restrictions on access to US cloud computing services, or those of allies, but the US will seek comments on the risks of such access and how they might be addressed, the official said.

The Biden administration told Beijing of its plans to update the contentious rules this month, Reuters reported earlier in October, as part of a policy aimed at stabilizing relations between the superpowers. – Reuters

Fearing China, South Korea targets contractors on Taiwan navy submarines

STOCK PHOTO | Image by 12019 from Pixabay

SEOUL – South Korean authorities cited the risk of Chinese economic retaliation when they charged marine technology firm SI Innotec last year with violating trade laws for its work on Taiwan’s new military submarine program, according to a police document seen by Reuters and two people familiar with the matter.

In a Feb. 17, 2022 affidavit to a judge seeking the arrest of SI Innotec executive director Park Mal-sik, police said authorities feared a repeat of the sweeping sanctions imposed by Beijing in 2016, after Seoul decided to install THAAD, a U.S. anti-missile system. China agreed to lift those measures in late 2017.

The affidavit said SI Innotec’s deal to supply Taiwan with submarine manufacturing equipment “directly impacts the overall security of South Korea” and police, who had consulted with the country’s arms sales regulator, were “concerned about a crisis similar to a second THAAD deployment, such as economic retaliation”.

The Defense Acquisition Program Administration (DAPA)regulator had told an unidentified subcontractor that the government had “export concerns” regarding Taiwan, and “takes a very cautious stance” on such approvals, the affidavit said.

The judge ordered Park’s arrest on Feb. 28 on grounds that he posed a flight risk and might destroy evidence, according to a person familiar with the matter.

In the sealed affidavit reviewed by Reuters, police cited China’s furious reaction in a 2021 Reuters report about defence contractors and experts from South Korea and six other countries working on Taiwan’s submarine program.

SI Innotec, which was fined in August 2022, and Park, who received a suspended prison sentence, deny wrongdoing and have appealed. Through a company lawyer, Park declined comment.

In a sign of a broader crackdown, two other South Korean companies that allegedly supplied Taiwan were also charged in November with breaking trade laws, and one of their chief executives was accused of industrial espionage, according to court records and four people familiar with the matter.

The identities of defense engineering subcontractors Keumha Naval Technology (KHNT) and S2&K, and the charges facing the co-defendants in their closed-door trial, have not been previously reported. Reuters could not determine if geopolitical tensions were discussed in those ongoing proceedings.

A KHNT official, speaking on condition of anonymity because he was not authorized to talk to media, confirmed an ongoing criminal case. The company declined further comment. S2&K had no comment.

Amid rising military tensions with China, Taiwan unveiled its first homegrown submarine on Sept. 28 in the southern port city of Kaohsiung. The vessel will soon enter sea trials.

The SI Innotec affidavit and interviews with seven people with military, shipbuilding and legal ties show how political considerations about an economic rupture with China, Seoul’s largest trading partner, have weighed on South Korea’s investigations into the three companies. The people spoke on condition of anonymity to discuss ongoing legal proceedings with national security implications.

Seoul’s foreign ministry was “completely against” KHNT’s work with Taiwan and signaled its disapproval to DAPA, according to a person familiar with the subcontractor.

The affidavit said many firms with submarine expertise avoided helping Taiwan because they did not expect government approval given the risk of “bigger damage to (the) economy than benefits”, including a possible Chinese ban on South Korean exports.

Police declined to comment, citing national security concerns. The prosecutors’ office that charged the three subcontractors declined to comment on ongoing legal proceedings. Reuters attempted to reach then-president Moon Jae-in through the office of a former aide. The office referred questions to the foreign ministry.

The foreign ministry said it was aware the trials were underway and referred detailed questions to DAPA. DAPA said it follows the law when making decisions on exports, but had no further comment.

A police investigator, who spoke on condition of anonymity to discuss ongoing legal matters, said that there was no pressure from Moon’s liberal government, which left office in May 2022, to get tough on SI Innotec.

Reuters could not determine whether Beijing pressured Seoul to clamp down on the companies.

Asked by Reuters for comment, a Chinese Foreign Ministry spokesperson accused Taiwan’s ruling Democratic Progressive Party of “colluding with external forces”. The spokesperson did not address a question on whether Beijing pressed Seoul about the subcontractors.

Beijing told Reuters in 2021 that countries involved in Taiwan’s project were “playing with fire”.

Taiwan’s foreign and defense ministries had no comment.

Seoul has no formal diplomatic ties with Taipei and has avoided arming the democratically ruled island over which China claims sovereignty, even as its companies ink weapons deals with other Asian neighbors.

 

FOREIGN EXPERTISE

Taiwan President Tsai Ing-wen initiated the Indigenous Defense Submarine program in 2016.

The new vessels, which complement two delivered by the Netherlands in the 1980s, are a “strategic deterrent” that make it more challenging for China to project naval power in the Pacific, the Taiwanese admiral leading the project told an internal briefing in September.

Many military experts say that an expanded Taiwanese submarine fleet could complicate a potential invasion by Beijing. US officials, however, warn that such assets should not come at the expense of smaller weapons that would help Taiwan wage “asymmetrical warfare” against China’s far-larger arsenal.

Taiwan drew on the expertise of retired South Korean naval officers – including managers at SI Innotec and KHNT – who are not required by defense ministry regulations to seek permission before working overseas.

SI Innotec is accused of violating the Foreign Trade Act, which requires DAPA’s approval to transfer abroad many “strategic goods” for military use.

The regulator is also tasked with promoting exports, a role that requires officials to make hard decisions on otherwise profitable deals that might irk China, said four people familiar with the criminal cases.

In 2019, SI Innotec agreed a deal with Taiwanese shipbuilder CSBC to supply and install $12 million in welding and assembly equipment for submarine pressure hull manufacturing, according to contracts presented at trial.

The equipment was not designed solely for military purposes and did not involve sensitive technology, SI Innotec told Reuters.

SI Innotec said the contract, at CSBC’s request, listed the equipment’s primary use as for wind power generation. It told Reuters it is “customary” for dual-use equipment contracts to be “signed for industrial use, not exposing military use” and Taiwanese clients are discreet about defense work.

CSBC, which leads construction for the submarines, has an offshore wind power business. It declined to comment on its contracts.

In April 2020, DAPA suggested SI Innotec check with it whether the equipment could be categorized as military goods and require export approval, according to court documents.

In response to Reuters questions, the subcontractor said it told DAPA it was exporting dual-use goods, which can undergo a self-certification process that the regulator does not oversee. The results of that self certification showed export approval was not needed and DAPA was informed, SI Innotec said.

In August 2022, the Changwon District Court fined SI Innotec 14 billion won ($10.42 million).

“The accused were fully aware that the subject equipment would be used to manufacture a military submarine”, the court ruled.

SI Innotec said police designated its equipment as military goods after a “subjective and opaque” consultation with DAPA reliant on “limited data”. It said it had “strong doubts” about whether its exports would be considered military grade if they had not been sent to Taiwan.

SI Innotec CEO Park Moo-sik — who was not personally charged — continues to work in Taiwan on the project, said two people familiar with his movements. He declined comment through a company lawyer.

 

QUESTION OF PERMISSION

KHNT and its chief executive, retired naval officer Yang Hyang-kweon, are alleged to have illicitly transferred a submarine component to Taiwan, said two people familiar with the subcontractor’s agreement.

Yang – who did not respond to requests for comment – was detained last year and released on bail in March, court records show.

The component was related to a torpedo launching tube, according to two people familiar with KHNT’s work. KHNT’s co-defendant, S2&K, specializes in such systems.

KHNT initially went through DAPA’s process, according to three people familiar with the matter. But it received no response when it wanted to send detailed designs and went ahead to meet a deadline, two of the people said.

It was at this point that Seoul’s foreign ministry told DAPA it disapproved of the deal, one of them said.

“There are many things that South Korea can help Taiwan with but can’t in reality”, said defense diplomacy researcher Cho Hyeon Gyu, who served as military attache in Taipei and Beijing. Relations with China and the difficulty of secretly supporting Taiwan severely narrowed Seoul’s ability to help, he added. – Reuters

Deadly Indonesian cough syrup was almost pure toxin, court papers show

STOCK PHOTO | Image by Steffen Frank from Pixabay

JAKARTA – An Indonesian drugmaker whose cough syrup is among products linked to the deaths of more than 200 children last year used ingredients with toxin concentrations of up to 99% in 70 batches of medicine, prosecutors said in a court filing.

The accusations against drugmaker Afi Farma were made in a court in Kediri, in the province of East Java, where the company is based, and Reuters is the first to report the charge that it used highly toxic ingredients.

The criminal case comes as efforts grow worldwide to tighten oversight of drug supply chains after a wave of poisonings linked to contaminated cough syrups that killed dozens more children in countries such as Gambia and Uzbekistan.

Two batches of propylene glycol, a key base for syrupy medicines that Afi Farma received from October 2021 to February 2022 and used in its cough medicine, contained instead as much as 96% to 99% of a toxic substance, ethylene glycol (EG), a charge sheet in the case showed, in an undated court filing.

When asked who had carried out the testing and how, prosecutor Ikhsan Nasrulloh told Reuters it was done by police last year.

A lawyer for Afi Farma, Reza Wendra Prayogo, told Reuters no accusation of intentional poisoning had been proved against the company, adding that Indonesia’s drug regulator, BPOM, did not require drugmakers to do a rigorous testing of ingredients.

He said a 2018 BPOM regulation allowed drugmakers to use tests done by raw material suppliers, requiring them only to run “identification tests” that do not stipulate toxicity testing.

BPOM did not immediately respond to a request for comment.

Afi Farma is one of four companies Indonesian police have charged in an investigation into the supply of tainted cough syrups, with a court case set to be heard on Oct 18.

The World Health Organization (WHO) says the safe limit for the known toxins EG and diethylene glycol (DEG) is no more than 0.10%, based on global standards.

Indonesia’s health ministry also adopted that limit in its 2020 guidelines on drug standards.

EG is employed in making antifreeze and de-icing solutions for cars, among other uses. If swallowed, it may cause acute kidney injury.

Both EG and DEG can be substituted for propylene glycol by unscrupulous producers as they cost less than half the price, several drug experts told Reuters.

Afi Farma’s licence to make drugs was revoked late last year and its products taken off the shelves for violating rules on manufacturing.

Four company officials, including the chief executive and the quality control manager, have been arrested and charged with negligence for “consciously” not testing the ingredients, despite having the means and responsibility to do so, the charge sheet shows.

Instead they relied on certificates provided by its supplier regarding product quality and safety. Now prosecutors are seeking jail terms of up to nine years for the officials, according to the charge sheet.

Afi Farma denied the accusation through its lawyer.

Domestic drug regulator BPOM has previously said several parties in the drug supply chain had exploited a gap in the safety rules and drugmakers did not run sufficient checks on raw ingredients used.

The contaminations have sparked criminal investigations, lawsuits and a surge in regulatory scrutiny worldwide.

Last month Reuters reported that some Indian drugmakers involved could not prove they had bought pharmaceutical grade ingredients or tested their medicines for the toxins. – Reuters

[B-SIDE Podcast] Divorce in the PHL: Reimagining Filipino norms and values

Follow us on Spotify BusinessWorld B-Side

Divorce is quite a taboo topic in the predominantly Catholic Philippines. Lobbying for divorce has mapped its way into Filipinos’ understanding of the State, religion, family, abuse, principle, and love.

In this B-side episode, Athena Charanne R. Presto, a sociologist and policy consultant for the United Nations Development Programme, discusses with BusinessWorld reporter Miguel Hanz L. Antivola the challenges and sociocultural implications of enacting divorce in the Philippines.

A Senate committee approved in September Senate Bill No. 2443, a consolidated measure on absolute divorce — the farthest legislative push it has reached to date.

Ms. Presto observed that the latest version of the divorce bill has reached a commendable level of inclusivity and safety, almost identical to the grounds for annulment.

“You have to have been separated for a number of years, have irreconcilable differences, or have a proven case of domestic violence or abuse,” Ms. Presto said, listing the grounds for absolute divorce in SB 2443.

“But I think we can still push our definition of divorce beyond that,” she added.

“I think divorce should include the fact that you, as adult individuals, decide to call it quits already without the need for ‘acceptable reasons’… perhaps you just fell out of love or have differences.”

The Philippines remains one of only two countries in the world, alongside Vatican City, without a divorce law.

Amid decades of lobbying, one major challenge remains: “The loudest critics of divorce are not religious actors themselves but policymakers who conveniently invoke religious doctrine to serve their own political interests,” Ms. Presto said.

She noted that comparing the successes and failures of other countries’ marriage customs can be misguided. “That should not be the be-all and end-all of implementing divorce in the Philippines.”

“Having divorce is better than not having divorce,” she said. “We need to argue more based on Philippine data.”

“A divorce law must address misconceptions about the law itself,” she added, referring to dismantling misinformed associations such as people using it as an ‘emergency exit’ or ‘harming Filipino family values.’

Ms. Presto said that Filipino norms and values are bound to change over time with society, given the increasing number of transnational families, same-sex couples who adopt children, and single parenthood, even as depicted in national media.

“Whether you like it or not, the composition of the Filipino family is changing,” she said. “Our marriage norms will change, but not for the worse.”

Passing divorce will challenge the Filipino toxic mentality of ‘relentless suffering’ in marriage, alongside empowering wives and husbands to continue their lives through a viable option, Ms. Presto noted.

Along with norms, social institutions are also seeing changes, such as the Catholic Church ‘relieving pressure’ and opening up to more nuanced realities, and media representation straying away from damaging stereotypes, she added.

However, Ms. Presto noted an increasing number of politicians who believe that men and women are equally oppressed, which undermines the rightfully women-centric arguments for divorce.

The 2017 National Demographic and Health Survey conducted by the national statistics agency reported that one in four Filipino women aged 15-49 had experienced physical, emotional, or sexual violence by their husband or partner.

“You need to expose the misinformed opinions of all these senators, but you also need their support,” Ms. Presto said, addressing the ‘checkmated’ advocates and stalled progress of divorce in the country.

Recorded remotely on Oct. 9, 2023.

Follow us on Spotify BusinessWorld B-Side

Biden says Hamas must be eliminated, US officials warn war could escalate

REUTERS

WASHINGTON – US President Joe Biden said on Sunday he believes the Hamas militant group must be eliminated but there should be a path to a Palestinian state, after top US officials warned the war between Israel and Hamas could escalate.

Mr. Biden did not think American troops would be necessary on the ground as Israel has one of the “finest fighting forces,” even as American warships headed to the area amid growing clashes on Israel’s northern border with Lebanon.

Israel unleashed a ferocious bombing campaign over Gaza in retaliation for unprecedented attacks by Hamas eight days ago that killed some 1,300 Israelis, mostly civilians.

When asked if he believes Hamas must be eliminated entirely, Biden said “Yes, I do. But there needs to be a Palestinian authority. There needs to be a path to a Palestinian state,” he said during a CBS 60 Minutes interview broadcast on Sunday.

The US President warned it would be a mistake for Israel to occupy Gaza but that “taking out” Hezbollah and Hamas was a “a necessary requirement.” He said “It would be a mistake to … for Israel to occupy … Gaza again.”

Israel captured and occupied the West Bank, Gaza, and East Jerusalem in the 1967 Middle East war. It withdrew its settlers and troops from Gaza in 2005, before Hamas’ takeover of the Strip in 2007.

The conflict has sent tensions soaring.

“There is a risk of an escalation of this conflict, the opening of a second front in the north and, of course, Iran’s involvement,” White House national security adviser Jake Sullivan told CBS earlier in the day.

Gaza authorities say more than 2,670 people have been killed there, a quarter of them children. Casualties are expected to rise as Israel prepares for a ground assault on the tiny, densely populated enclave that could start within days.

US Defense Secretary Lloyd Austin announced deployment of a second aircraft carrier group late on Saturday, calling it a sign of “our resolve to deter any state or non-state actor seeking to escalate this war.”

The aircraft carrier the Dwight Eisenhower will join a small fleet including the massive Gerald R. Ford aircraft carrier in the eastern Mediterranean.

“Iran is the elephant in the room,” a US official briefed on the situation said about the increasing military presence. “The carriers are accompanied by warships and attack planes. Every effort is being made to stop this from becoming a regional conflict.”

Mr. Biden said his message to Iran is to not escalate the conflict.

Iran Foreign Minister Hossein Amirabdollahian warned on Sunday his country could act, telling al Jazeera that it had conveyed a message to Israeli officials that “if they do not cease their atrocities in Gaza, Iran cannot simply remain an observer.”

“If the scope of the war expands, significant damages will also be inflicted upon America,” he warned.

Mr. Biden told CBS the threat of terrorism in the US has increased due to growing unrest in the Middle East. He said, however, the US can take care of wars in Israel and Ukraine and still maintain its “international defense.”

Violence on Israel’s northern border is already escalating. Lebanon’s Iran-backed Hezbollah fighters launched attacks on Israeli army posts and a northern border village on Sunday; Israel retaliated with strikes in Lebanon.

The US is urging Israel to hold off on its ground offensive to allow humanitarian efforts for Gaza’s residents trapped in the area, several US officials said.

Mr. Sullivan discussed a new weapons package for Israel and Ukraine that would be “significantly higher” than the previously reported $2 billion. He told CBS that Biden planned to have intensive talks on the package this week with the US Congress, which has been hobbled by Republicans’ struggles to pick a new speaker of the House of Representatives.

Senate majority leader Chuck Schumer, speaking in Tel Aviv on Sunday, said the U.S. Senate could move first to approve more funding for Israel. “We’re not waiting for the House (of Representatives),” he said.

Republican Senator Lindsey Graham said on Sunday he is traveling to the region with other senators in coming days to push continued negotiations between Saudi Arabia and Israel.

Mr. Graham said he intended to introduce a bill that would “allow military action by the United States in conjunction with Israel to knock Iran out of the oil business” if Iran attacks Israel.

 

HUMANITARIAN CRISIS

US government officials also said they are mobilizing to help alleviate the humanitarian crisis in Gaza, anticipating a brutal ground offensive.

Israeli officials have made clear it will not be an easy or swift campaign. It faces the challenge that scores of hostages seized by Hamas on Oct. 7 could now be held in a warren of underground tunnels, which its soldiers must clear to destroy Hamas.

Mr. Biden, in a message posted on X, formerly Twitter, said: “We must not lose sight of the fact that the overwhelming majority of Palestinians had nothing to do with Hamas’ appalling attacks, and are suffering as a result of them.”

The US has appointed former ambassador to Turkey David Satterfield as a special envoy for Middle East humanitarian issues. His focus would be to “promote the safety of civilians,” the State Department said.

“We’re pushing Israel to delay any action on the ground,” said one US official briefed on the situation. Asked directly if the US was pushing Israel to delay its ground war for civilians, Sullivan told NBC “we are not interfering in their military planning or trying to give them instructions…”

However, he added, the US is telling Israel any actions should follow the law of war, and that “civilians should have a real opportunity to get to safety.”

US Secretary of State Antony Blinken said on Sunday that the Egyptian-controlled border crossing into Gaza would reopen and the US was working with Egypt, Israel and the United Nations to get assistance through it.

Hundreds of tonnes of aid from several countries have been held up in Egypt’s Sinai peninsula for days pending a deal for its safe delivery to Gaza and the evacuation of some foreign passport holders through the Rafah crossing.

Mr. Sullivan told NBC, “so far, we have not been able to get American citizens through the border crossing and I’m not aware of anyone else being able to get out at this time.”

He added that he wanted to make sure the civilian population that remained in Gaza had access to food, water and safe shelter, and in an interview with CNN said Israeli officials had recently “turned the water pipe back on in southern Gaza.”

Republican Senator Lindsey Graham told Reuters that the Israel assault on Gaza would be bloody.

“I expect urban warfare on steroids,” he said. “There will be cries from the international community for Israel to stand down, but I think it’s imperative that we give Israel the time and space to destroy Hamas.” – Reuters

Philippines denounces China for ‘dangerous and offensive’ actions in South China Sea

PHILEMBASSY.NO

MANILA – The Philippine military has called out China to stop “unsafe actions” in the South China Sea, after a Chinese navy ship shadowed and attempted to cut off a Philippine navy vessel conducting a resupply mission late last week.

A Chinese People’s Liberation Army Navy (PLAN) vessel came as close as 350 yards as it tried to cross in front of the Philippine ship near Thitu island, Manila’s biggest and most strategically important outpost in the South China Sea, according to armed forces chief Romeo Brawner.

“These dangerous and offensive maneuvers by China’s PLAN not only risk collision but also directly endanger the lives of maritime personnel from both sides,” Mr. Brawner said in a statement on Sunday.

The Chinese embassy in Manila did not immediately respond to a request for comment on Monday.

It was the latest in a series of attempts by China to monitor and block Philippine resupply missions to personnel in Manila-occupied features in the Philippines’ exclusive economic zone in the South China Sea.

China’s claims sovereignty to almost the entire South China Sea, through which more than $3 trillion of trade passes each year.

Ties between Manila and Beijing have soured since Philippine President Ferdinand Marcos pursued closer ties with Washington, including increasing U.S. access to more Philippine military bases. – Reuters

X-PITCH 2023 releases its global top 100 startups list; five enterprises selected from the Philippines

The X-PITCH competition, renowned as the “X Games for Startups,” recently introduced its top 100 startups for this year. Chosen from a pool of over 3,000 startups around the world, this year’s selection showcases a diverse and vibrant ecosystem of entrepreneurial talent.

Among the semifinalists, 88% originate from Asia, while the Americas, Europe, Middle East, and Africa collectively make up the remaining 12%. These startups are at various stages of development, with 53% in Seed/Pre-A, 40% in Pre-Seed, and 7% in Series A/B.

The categories they represent reflect the pressing needs of today’s world, with 39% focusing on digital economy, 29% on sustainability, 20% on healthcare, and 12% on advanced manufacturing.

Among the startups in this list, which is published at www.xpitch.io, five are from the Philippines. These are: AtoANI Agriventures, a Bohol-based social enterprise that produces and distributes fresh produce through its own farm and partner farmers; CAWIL AI Solutions, an industry-agnostic artificial intelligence solution that provides AI-driven business solutions integrated to web, mobile application, and industry automation; LESSTICS, a producer of construction materials made of single-use plastics; SACHI-Group, a manufacturer of biodegradable biobags made from cassava; and TANAW (by Samar Island GIS and Data Analytics Center), a project that uses augmented reality and virtual reality for digital city models in Catbalogan City, Samar.

All of them are nominated by the Department of Science and Technology-Philippine Council for Industry, Energy and Emerging Technology Research and Development (DoST-PCIEERD).

X-PITCH 2023’s overarching theme revolves around “Accelerating Deeptech.” The primary objective is to foster innovation that not only advances technology but also contributes to the betterment of society. With a commitment to “Tech for Good,” the competition aims to harness the power of deeptech in addressing critical global challenges.

X-PITCH has a history of hosting pitches in unconventional locations, including skyscraper elevators, self-driving cars, and even the MRT. This year’s semifinals take place on the Singapore River, where startups will pitch aboard the city’s iconic bumboats.

The journey culminates with the selection of the top 10 startups from the semifinals, who will advance to the finals at the National Gallery Singapore.

The grand finale, scheduled for Nov. 9, will see the presentation of ten awards. The Deeptech Summit, a focal point of the event, will feature thought leaders exploring deeptech’s transformative potential in different industries.

“X-PITCH 2023 aspires to be a platform for deeptech innovation, bringing together outstanding startups from across the globe in the shared pursuit of groundbreaking solutions,” said K. Yu, organizing committee chair of X-PITCH 2023. “We cordially invite you to join us for the finals in Singapore, where these visionary founders will take center stage, contributing to a future where technology serves the greater good.”

Since 2021, X-PITCH has expanded its global footprint, reaching over 50 countries, engaging over 8,000 startups, and involving more than 100,000 participants. The competition has been instrumental in securing a total of US$2 million in investment prizes and over $38 million in funding for the winners.

Beyond the competition, X-PITCH’s global partners will provide a range of value-added activities to benefit the top 100 startups. These activities include market access seminars, pitch training, workshops, investor matching, and more.

Hosted by venture capital firm XCEL NEXT and tech media platform e27, X-PITCH 2023 is made possible through the support of Enterprise Singapore and A*StartCentral. DoST-PCIEERD is listed among the co-organizers, along with Block71 Singapore, BSSC, Cool Japan Fund, HKSTP, HUB.ID, KOVA, MDEC, TA, TINVA, TusStar, and VITTBI.

TIP teams up with William Davidson Institute for tech commercialization

From L-R: TIP International Relations and Linkages Officer Mandy Taller Bravo; Technology Business Incubator Program Manager/Technopreneurship Coordinator Engr. Shearyl Arenas; Vice-President for Student Affairs Dr. Frank Alejandrino; Vice-President for Quality Management & Strategic Initiatives Dr. Conrado Navalta; WDI President Dr. Paul Clyde; MAP Team Members Jason Kovacs, Matthew Stone, Patrick O’Sullivan, Aditya Sridhar, and Dr. Niral Shah; TIP Vice-President for Administration Dr. Elizabeth Pader; TIP TechnoCoRe Director Dr. Therese May Alejandrino; TIP Innovation Technology Support Unit Manager/Assistant Technopreneurship Coordinator Dr. Jennifer Enriquez; and TIP TechnoCoRe Senior Project Manager Engr. Annah Sibal

The Technological Institute of the Philippines (TIP) has engaged the services of William Davidson Institute (WDI) at the University of Michigan (UM) to develop a strategic road map for commercializing TIP technologies produced through funded research and special projects.

The commercialization plan will guide TIP researchers in their initiatives along technology transfer. As a component of this partnership, a WDI-UM Multidisciplinary Action Project (MAP) team visited the TIP campuses in Quezon City and Manila from Sept. 18 to 22.

The collaboration seeks to assess the readiness of various externally funded TIP technologies and intellectual properties, and obtain economic value from them down the road through licensing, startup ventures, or corporate spinoffs.

This will be a six-month project between the WDI and TIP. Michigan-based WDI is expected to deliver a comprehensive report on the commercial viability of TIP technologies and how these can be marketed moving forward.

“We’re talking about taking ideas that come out of the industry or out of an academic institution and making them progress to the point that they can end up in the customers’ hands,” said WDI President Dr. Paul Clyde.

This entails a multidisciplinary approach. Hence, there is a need to strengthen the synergy among the engineering and business education departments, the legal consultants of TIP, and all the various units that support the aforementioned objectives.

“We need to be prepared for the fact that most ideas that come up are likely to fail,” Dr. Clyde noted. “But when you combine it with educational opportunities, it’s not a failure… This is part of a longer journey between TIP and the William Davidson Institute.”

Dr. Clyde conducted learning sessions for TIP Quezon City and Manila faculty researchers during the one-week visit in the Philippines. The MAP team also held discussions with educators and industry partners to conduct market research on two potential business ideas.

“Getting to know the originators of technologies and the resources at TIP TechnoCoRe (Technopreneurship and Collaborative Applied Research) gave us a good launching point for this longer-term collaboration with WDI,” the MAP team said.

Dr. Therese May Alejandrino, director of TIP TechnoCoRe, said engaging WDI-UM and its MAP team in this project offers a necessary “outsiders’ perspective” for TIP to evaluate its existing structures and practices and how those may be improved further through a tailored commercialization plan.

“We always have to be anchored on TIP’s vision of ensuring a better life for the Filipinos. We hope that as we firm up our commercialization road map, in collaboration with WDI and other stakeholders, we will ensure that TIP technologies benefit the Filipino communities,” she added.

Multiple wins at Vietnam conference

Jan Marielle Bidayan, Arjen Guila Cruz, John Rei Garchitorena, Erika Mae Ople, and Carl Joseph Quintana, together with their teacher, Engr. Jaypy Tenerife, took second place in the Undergraduate Research competition of the 4th Asia Pacific Conference on Industrial Engineering Operations and Management in Vietnam for their project “WasteNot,” a food container with spoilage detector.

Meanwhile, several teams representing TIP prevailed in competitions at the 4th Asia Pacific Conference on Industrial Engineering Operations and Management (IEOM) held last Sept. 12 to 14 in Ho Chi Minh City, Vietnam.

Leading the list of podium finishers this year is the group who designed a technology-enabled service, where students may lease essential devices to their fellow learners at lower cost, so they would no longer have to buy them.

Fresh graduates Mary Jo Santiago, Christine Joy Olanosa, and Angel Shaine Martin presented this concept and called it “Helpy: A Mobile Application System for Engineering and Architecture Tools Rental Business.” It won first place in the Senior Design Project category.

Another team composed of Thea Espinueva, Jhia Angelyck Mavy Cruz, and Vincent Matthew Labrador also placed third in the same competition with their project titled “Filtrar: A Canal Solid Waste Collector and Compactor Machine.” This group created an innovative prototype using Arduino technology that can stand as an alternative solution to collect discarded materials in urban waterways.

Both groups are from TIP Manila and worked with the guidance of Dr. Maria Teresa Mendoza.

Two teams from TIP Quezon City likewise won in the Undergraduate Research competition. Engr. Jaypy Tenerife and his students took second place for developing a food container with spoilage detector. Jan Marielle Bidayan, Arjen Guila Cruz, John Rei Garchitorena, Erika Mae Ople, and Carl Joseph Quintana named their project “WasteNot.”

Lastly, Engr. Ma. Teodora Gutierrez and her students — Mac Friedrich Dantes, Antonio Mari Garcia, Carlo Gonzalez, John Matthew Halog, Alliyah Jade Paguio, and Marinell Santos — claimed third place for their project that caters to the elderly and persons with disabilities (PWD). The group submitted “Ergo Let,” which aims to ease the accessibility of senior citizens and PWDs to conventional public restrooms in Metro Manila.

Crypto firm CEO: Philippines needs to focus on blockchain education

Global Miranda Miner Group CEO Arlone Abello, also known on social media as Coach Miranda Miner

Blockchain education should be the Philippines’ focus for now as its regulatory landscape remains in a nascent stage, according to Arlone Abello, crypto market analyst, educator, and CEO of Global Miranda Miner Group (GMMG), as he spoke about the fundamentals of blockchain with hundreds of students from different universities during the Philippine Blockchain Week’s “Block Bytes: Blockchain 101 for Students” session organized by the Department of Information and Communications Technology (DICT).

“I think it’s education which should be one of the areas that we need to focus [on]. From regulatory clarity and obviously gaming, I would say from a Philippines perspective, we’re yet to adapt to that. We’re still following that US discussion on SEC (Securities and Exchange Commission) regulatory issues, particularly for exchanges. Not necessarily copying or mirroring, but we’re obviously observing and waiting for it to kind of unfold,” he said.

In his resource speech that provided students with a dissected discussion and a clearer perspective on blockchain, Mr. Abello explained the core principles of blockchain and the five layers of the technology, namely Presentation, Consensus, Network, Data, and Hardware Infrastructure.

He also touched on the common misconceptions surrounding the technology, such as that it is a tangible asset, solely focused on cryptocurrency, confined to computer systems, functions like a traditional bank, or exists in the physical realm.

“Misconceptions can hold us back from harnessing the true potential of blockchain technology. By dispelling myths and embracing accurate knowledge, we can unlock a world of possibilities of blockchain and drive innovation in various industries,” Mr. Abello said.

Mr. Abello, widely known in the social media community as Coach Miranda Miner, founded the Web3 learning platforms Elite University and FEASTGold to share valuable trading techniques, expert advice, and the latest news in the crypto world with more Filipinos.

In 2022, his firm GMMG also launched “CrypTalk: University Caravan,” a free educational initiative that aims to equip students with basic knowledge of blockchain technology. The team has already visited 12 Philippine universities and recently engaged with students and faculty members of the Junior Confederation of Finance Associations (JCFA) and the National University’s (NU’s) Finance Executives.

“Blockchain is something I encourage all of you, young people, to get to know. It’s something I would like to oversimplify just because people have fear of what blockchain is, simply because it appears to be hard to comprehend,” he added.

The universities that participated in the full house session included Mapua University, Polytechnic University of the Philippines, De La Salle University, Our Lady of Fatima University, University of Batangas, and AMA Computer Learning Center. Students had the chance to engage in interactive discussions, ask questions, and explore practical applications of blockchain in various industries.

DICT Industry Development Bureau Director Emmy Lou Delfin delivered the closing message, urging students to recognize the immense potential that emerging technologies, like blockchain, offer.

“The world is evolving at an unprecedented pace, and it is your generation that will shape the destiny of our nation. Blockchain is not just a buzzword; it is a powerful tool that can revolutionize industries, enhance transparency, and drive innovation,” Ms. Delfin said during the Block Bytes session.

Despite the bear market, Mr. Abello stated that he expects to see more and more students taking an interest in the real-world implementations of blockchain beyond cryptocurrencies.

Universities and colleges looking to incorporate GMMG’s free blockchain and cryptocurrency courses into their educational programs can send their inquiry through their official website, www.globalmirandaminer.com.

PEZA investment approvals hit P132B

LIMA Estate’s 30-hectare commercial area in Batangas. — BW FILE PHOTO

THE PHILIPPINE Economic Zone Authority (PEZA) has approved P131.76 billion worth of investments as of the first week of October, putting the investment promotion agency (IPA) on track to meet its P154-billion full-year target.

At the same time, PEZA Director-General Tereso O. Panga said the agency will continue to push for amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to attract more foreign and local investments, particularly in the information technology (IT) sector.

The PEZA Board of Directors on Oct. 6 greenlit 25 new projects worth a combined P20.55 billion. This brought the total number of PEZA Board-approved projects to 169, 14% higher than the 148 projects worth P39.63 billion approved a year ago.

“This is a tangible demonstration of our dedication to positioning our country as an attractive investment destination, thereby encouraging greater local and foreign investments in the Philippines,” Mr. Panga told reporters on Thursday.

Of the 25 newly approved projects, 13 are in the export sector, six are in the information technology sector and three are in logistics. Two projects involve the construction of facilities, while one is still in development.

These new projects are expected to have an export value of $643.32 million and generate 5,500 jobs.

Mr. Panga said the PEZA Board approved two big-ticket projects, one by Japan’s Murata Manufacturing Co., Ltd. and another by American company Analog Devices, Inc. Big-ticket projects are those with investments of P1 billion and above.

Asked whether the agency will be able to surpass its P154-billion approval target for this year, Mr. Panga said that PEZA has a “fearless target” of approving new investments worth as much as P300 billion.

“Once the investment from Texas Instruments, Inc. enters, although that has been previously announced, that is already worth a billion dollars, and then we are also expecting more big projects that I am not at liberty to disclose,” he said.

In 2022, the PEZA approved P140.7 billion worth of new investments.

Mr. Panga said the strong investment figures reflect investor confidence in the Philippine economy and its growing domestic market.

Economic managers are targeting 6-7% gross domestic product (GDP) growth this year.

The PEZA also expects four more economic zones, with a total investment of P773.96 million, to be proclaimed before the end of the year.

To date, the PEZA hosts 422 economic zones and 4,352 locator companies and projects.

CREATE AMENDMENTS
Meanwhile, Mr. Panga said the agency is working with several business groups on the proposed amendments to the CREATE law.

At the IT & Business Process Association of the Philippines (IBPAP) Infrastructure Series at LIMA Estate, he said that PEZA is still seeking to have work-from-home (WFH) eligibility for its locators.

“We need to do something about the WFH… We are asking for PEZA locators to be given the chance to do WFH,” said Mr. Panga. “But also, to support the IT developers putting up costly IT centers, our business model is 70% on-site and 30% WFH for our locators to be able to enjoy the incentives.”

Under Section 9 of the CREATE law, a qualified registered project or activity under an IPA administering an economic zone shall be exclusively operated within the geographical boundaries of the zone. Any project or activity conducted outside the geographical boundaries of the zone shall not be entitled to the incentives.   

Mr. Panga said that there is a need to update the CREATE law in order for PEZA to be given an “equal footing” as the Board of Investments (BoI) can provide incentives for IT and business process management firms with up to 100% WFH scheme.

From January to October, PEZA-approved locator investments under the IT sector reached P7.13 billion which comprised 36 projects and 1.05 million direct employment. It also approved 13 developer projects under the IT sector with total investments worth P36.07 billion.

Mr. Panga said PEZA is consulting the IBPAP, Semiconductor and Electronics Industries in the Philippines Foundation, Inc., and Philippine Ecozones Associations on the proposed CREATE amendments that will be given to Congress.

He said the proposed changes to the law would include a longer sunset period, separate Customs territory status, removal of the cap for tax- and duty-free importation and investment threshold of IPAs, and longer fiscal incentives period.

“The 10-year sunset period is so short for existing locators, even the 17 years for existing registered business enterprises,” Mr. Panga said.

“Imagine if that time comes, it will be graduated to the regular corporate income tax (CIT) rate and we are up against ASEAN (Association of Southeast Asian Nations) economies offering a much lower CIT rate. That would surely signal exodus of our existing locators,” he added.

On the investment threshold for IPAs, he said that PEZA has been approving projects with investments far bigger than the current cap.

“It is delaying the process, it takes longer to approve big-ticket projects, so these have to be addressed by the government,” he added. — Justine Irish D. Tabile

Contributions to Maharlika fund may threaten state lenders’ financial stability

By Luisa Maria Jacinta C. Jocson and Keisha B. Ta-asan, Reporters

THE CONTRIBUTIONS of state-run banks to the Maharlika Investment Fund (MIF) may threaten the lenders’ financial stability, analysts said.

“We warned that the Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines’ (DBP) capital contribution to the MIF will weaken their respective balance sheets and said that the Bangko Sentral ng Pilipinas (BSP) will erode its moral standing on disciplining banks if it gives regulatory forbearance to these two government financial institutions,” Calixto V. Chikiamco, Foundation for Economic Freedom (FEF) president, said in a Viber message.

The Philippines’ first sovereign wealth fund will be managed by the Maharlika Investment Corp. (MIC), which will have an authorized capital stock of P500 billion. Under the law, the LANDBANK and DBP will contribute P50 billion and P25 billion, respectively, for the MIC’s initial funding.

BSP Governor Eli M. Remolona, Jr. last week said both banks are still compliant with regulations even after remitting their contributions to the MIC. But the contributions put these lenders at risk of being noncompliant with their capital requirements.

“With capital charge of 100% on their investment in MIF, the two GFIs (government financial institutions) must be in need of more time to build up their capital to be able to sustain their usual volume of lending,” GlobalSource Partners Country Analyst Diwa C. Guinigundo said in a note.

DBP President and Chief Executive Officer Michael O. de Jesus earlier said the lender and LANDBANK are seeking regulatory relief from the BSP for their contributions to the sovereign wealth fund.

Under BSP regulations, all investments of banks, be it to allied or non-allied undertakings, will be fully charged against a bank’s capital. This means the investment of DBP and LANDBANK in the MIF will be deducted from the banks’ capital when they compute their capital adequacy ratio.

This ratio compares the available capital that a bank has on hand to its risk-weighted assets, which measures the risk profile of the lender’s lending and investing activities. The more risk a bank is taking, the more capital it will be required to have to protect depositors.

“The MIF implementation is also starting on the wrong foot, with contributing GFIs already asking for capital relief this early in the game. It reflects the lack of foresight of government,” Enrico P. Villanueva, senior lecturer of economics at the University of the Philippines Los Baños said in a text message.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that the consequences of the fund are now becoming apparent.

“Sound, prudential banking practice is sacrificed. National Government spending is sacrificed.  But how society will benefit from funds transferred to Maharlika remains muddled,” he said via Facebook Messenger chat.

Sonny A. Africa, executive director of think tank Ibon Foundation, said that requiring the state banks to contribute to the fund is “fundamentally problematic” since it diverts them from fulfilling their primary mandate of providing financing to rural producers and smaller enterprises.

“The promise of financial returns from the Maharlika fund is a specious justification that, moreover, raises the risk profile of these government financial institutions. It is unlikely that, before the Maharlika fund, they would have invested in similarly risky instruments. Their ability to absorb financial losses is being compromised,” Mr. Africa said in an e-mail.

In a statement on Sunday, the LANDBANK said it remains “strong, adequately capitalized, and compliant with regulatory requirements of the BSP.”

As of June, the bank’s capital adequacy ratio (CAR) stood at 16.61%. LANDBANK noted this was a “very healthy level” and above the 10% minimum requirement of the BSP.

LANDBANK also said that it will meet its CAR requirements even with its P50-billion contribution to the MIC.

“Our Common Equity Tier 1 (CET 1) ratio stands at 15.73%, also compliant with the 10.25% CET 1 requirement,” it added.

Last week, President Ferdinand R. Marcos, Jr. signed an executive order slashing LANDBANK’s remittances to the National Government to 0% of its net earnings from 50% previously.

DBP’s Mr. De Jesus said that the bank is also requesting for a similar dividend relief.

“We need to reduce the mandated dividends to the National Government to 0% so we can use the funds to build up our capital position. This will allow us to book more loans and fulfill our mandate of developmental financing,” Mr. De Jesus said in a Viber message.

Finance Secretary Benjamin E. Diokno earlier said that the MIC is expected to be operational by the end of the year and will begin market activities by the first quarter of 2024.

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