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Philippines’ BoP deficit sharply narrows in January

REUTERS

By Katherine K. Chan, Reporter

THE PHILIPPINES’ balance of payments (BoP) deficit sharply narrowed to $373 million in the first month of 2026, the Bangko Sentral ng Pilipinas (BSP) reported.

Based on central bank data released on Thursday, the country’s BoP position stood at a $373-million shortfall in January, sharply narrowing from the $4.078-billion gap recorded in the same month last year.

It was likewise smaller than the $827-million deficit posted in December 2025.

January also marked the third straight month that the country’s BoP position stood at a deficit.

BoP refers to the country’s economic transactions with other nations. A surplus indicates more funds entered into the country, while a deficit shows that the country spent more than it received.

“[The] deficit largely reflects seasonally strong import payments and profit remittances at the start of the year, alongside some portfolio repositioning amid global rate uncertainty,” SM Investments Corp. Group Economist Robert Dan J. Roces said in a Viber message.

Easing external pressures at the start of the year as well as steady inflows of remittances and services may have also driven the narrower deficit, he added.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the BoP deficit came on the back of the country’s persistent trade deficit.

“The BoP is still in deficit mainly because imports are outpacing exports,” he said via Viber. “That reflects strong domestic demand and infrastructure spending, while global demand for our exports — and services like BPO (business process outsourcing) and tourism — has been softer.”

Latest data showed that the country’s trade-in-goods deficit ended 2025 at its narrowest level in four years at $49.17 billion, down by 9.5% from the $54.33-billion shortfall logged in 2024.

However, Mr. Ravelas noted that the BoP deficit is “not a crisis signal,” noting that the Philippines’ external buffers are still solid.

“This isn’t a crisis signal; it’s a growth-related deficit, and our external buffers remain solid,” he said.

In the near term, the Philippines’ BoP position could remain at a deficit but may stabilize due to recovering exports, improving tourism and rising remittance inflows.

“In the coming months, the BoP should stabilize as remittance inflows rise and tourism receipts improve, though much will depend on oil prices, electronics exports, and the direction of US rates,” Mr. Roces said. “At this level, the deficit remains manageable and does not point to external vulnerability.”

Investment reforms may also provide some relief for the country’s BoP position, Mr. Ravelas added.

“The key now is to boost export competitiveness and attract more long-term investments, rather than overreacting to the headline number,” he said.

For this year, the central bank expects the BoP position to end at a deficit of $5.9 billion or -1.2% of the country’s gross domestic product.

16-MONTH HIGH RESERVES
Meanwhile, the Philippines’ foreign reserves rose to their highest level in over a year at $112.6 billion at end-January.

This was the highest in 16 months or when the gross international reserves (GIR) level stood at $112.707 billion at end-September 2024.

Month on month, it climbed by nearly 1.6% from $110.833 billion in December.

In the first month of the year, the country’s GIR level translated to 7.5 months’ worth of imports of goods and payments of services and primary income, exceeding the three-month standard.

“Specifically, the latest GIR level ensures the availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme cases when there are no export earnings or foreign loans,” the BSP said in a statement.

It is also enough to cover about 4.1 times the country’s short-term external debt based on residual maturity.

GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.

The BSP projects the Philippines’ dollar reserves to hit $110 billion by yearend.

DoF to review OECD call to phase out VAT exemptions for senior citizens, private schools

PHILIPPINE STAR/MIGUEL DE GUZMAN

By Beatriz Marie D. Cruz, Reporter

THE DEPARTMENT of Finance (DoF) is reviewing the Organisation for Economic Co-operation and Development’s (OECD) suggestion for the Philippines to remove the value-added tax (VAT) exemptions for senior citizens, private education and healthcare providers.

“OECD has a lot of good suggestions, but we have to study them. We’ll see which ones we can do, which ones we cannot do,” Finance Secretary Frederick D. Go told reporters on Feb. 18.

The OECD in a report last week recommended that the Philippines phase out VAT exemptions for senior citizens, private healthcare and education, as part of efforts to reduce public debt and narrow its budget deficit. 

The Philippines imposes a 12% VAT on sales, leases, barter, and imports of goods and services. However, senior citizens are granted a 12% VAT exemption under Republic Act No. 9994 or the Expanded Senior Citizens Act.

Private healthcare and educational institutions also benefit from tax breaks.

At the same time, business groups said the government should focus on plugging tax leakages and addressing corruption and smuggling, instead of removing VAT exemptions and tax incentives.

“If you look at our VAT system, there’s still a lot of inefficiencies. While the VAT exemption is being seen as a leakage, I would say that there are many more leakages in terms of execution,” Makati Business Club Chairman Edgar O. Chua told BusinessWorld on the sidelines of the Philippine Business for Education (PBEd) Leadership Forum on Feb. 18.

Management Association of the Philippines President Donald Patrick L. Lim said the OECD’s proposal should be assessed for its social and inflationary impacts.

“While broadening the VAT base and modernizing corporate incentives can strengthen fiscal sustainability and transparency, reforms must not undermine our regional position in attracting investments or weaken protections for vulnerable sectors,” he said in a Viber message.

Mr. Chua said the government should focus on curbing loopholes in its tax collection system, citing rampant smuggling in the country.

LEAKAGES
The Philippines’ VAT collection efficiency is just about 35% to 40%, significantly lower than the Southeast Asian average of 57%, Asian Consulting Group Chairman and Chief Executive Officer Raymond A. Abrea told a forum on Feb. 17.

In comparison, Thailand has the highest VAT collection efficiency of 71% to 79% despite having the lowest VAT in the region of 7%.

“I guess our VAT system should be better managed to make sure there are no leakages. If it’s not managed properly, I’m sure people are finding their ways around it,” PBEd President and Co-founder Chito B. Salazar told BusinessWorld.

The Philippines’ total outstanding debt ballooned to P17.71 trillion in 2025, bringing the debt ratio to a 20-year high of 63.2% of the gross domestic product (GDP).

The OECD estimates the country’s public debt share of the GDP to hit 62.4% in 2026 before declining to 61.6% in 2027.

Federation of Philippine Industries Chairman Elizabeth H. Lee said removing tax relief for senior citizens, schools, and hospitals would dampen consumption and raise costs for vulnerable sectors.

“Any abrupt changes could ripple through households and, at the margins, labor markets, affecting employment and service access. Safeguards are essential and we must be sensitive on the effects of these changes,” she said in a Viber chat.

Jose Rene D. de Grano, president of the Private Hospitals Association of the Philippines, Inc., said the government should focus on addressing corruption to improve its tax take.

“If only we remove corruption in these agencies, there is no need to remove these exemptions and social aids,” he said via Viber.

Anthony C. Leachon, former president of the Philippine College of Physicians, said via text message that removing VAT breaks for private healthcare providers can increase operating costs, translating to higher costs for Filipino patients.

The OECD also recommended the Philippine government phase out tax holidays and focus on expenditure-based corporate tax incentives “to realign incentives with efficiency and fiscal discipline.”

Mr. Lim said a shift toward expenditure-linked incentives is “a positive direction,” but its implementation must be predictable and aligned with regional benchmarks.

“The Philippines competes directly with Vietnam, Indonesia, Thailand, and Malaysia for capital. Our tax reforms must enhance, not dilute, our attractiveness as an investment destination,” he said.

Gov’t raises P235B in new money from FXTNs

PHILSTAR FILE PHOTO

By Aaron Michael C. Sy, Reporter

THE GOVERNMENT has raised P235 billion in fresh funds from its offering of new fixed rate Treasury notes (FXTNs), closing the public offer period a day after the rate-setting auction due to strong demand.

“Apart from supporting the National Government’s financing requirements, this 10-year FXTN issuance underscores our commitment to establishing liquid benchmark securities that strengthen secondary market activity,” National Treasurer Sharon P. Almanza said in a statement on Thursday.

“The pricing of the FXTN, which came in close to the 10-year Bloomberg Valuation (BVAL) rate, reflects our disciplined and prudent approach to fiscal management.”

The BTr’s offer period was cut short from the original three-day window of Feb. 18 to 20 after reaching the funding target.

The government had raised an additional P127.93 billion from the tap facility it opened on Wednesday from the P107.07 billion earlier raised from the rate-setting auction.

“Please be informed that the BTr will no longer accept bids for the new money component of the FXTN 10-74 amidst the strong demand received during the first day of the public offer period,” the Treasury said in a separate memo.

Total tenders at the tap facility reached P135.8 billion, underscoring enduring robust demand as the offering was timed a day ahead of the anticipated policy rate cut by the Bangko Sentral ng Pilipinas (BSP).

The BSP on Thursday lowered its benchmark policy rate by 25 basis points (bps) to 4.25% as widely expected.

At the rate-setting auction, total tenders for the paper reached P328.467 billion. The new Treasury bonds (T-bonds) fetched a coupon rate of 5.925%, resulting in an average rate of 5.893%. Accepted bid yields ranged from 5.75% to 5.928%.

In April last year, the government raised P300 billion via new 10-year benchmark notes, above the P30-billion program, with P135 billion initially raised from the rate-setting auction.

While the sale of the FXTN 10-74 has been concluded, the BTr kept the exchange program open for holders of securities maturing on April 8, Sept. 7, Sept. 20, Oct. 20, and Jan. 4, 2027.

The exchange program will be open until Feb. 20 unless ended earlier by the BTr.

“Total volume awarded is a bit small, likely due to the offering being closed early. Around P20 billion more could be raised from the exchange program,” a trader said in a text message.

Another trader said in a text message that the total amount raised from the FXTN offer, including the exchange program, could be close to P300 billion.

“(The) result proved there is appetite for duration, not only because of policy rate forecast, but more on the negative growth outlook which investors really see from the ground,” the trader said.

On the other hand, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the total amount raised is unlikely to breach P300 billion.

Ms. Almanza previously said the BTr is aiming to raise at least P200 billion from the issuance but noted the total will also depend on the demand from the exchange program.

The government aims to raise P308 billion from the domestic market this month, or P108 billion via T-bills and up to P200 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.647 trillion or 5.3% of gross domestic product this year.

First Gen Corp. expects to close P75-B Prime Infra deal this year

THE UPPER WAWA DAM — PRIMEINFRA.PH

LOPEZ-LED power producer First Gen Corp. expects to close its P75-billion acquisition deal with Razon-led Prime Infrastructure Capital, Inc. (Prime Infra) this year as it seeks approval from the competition watchdog.

“Closing of the transaction is expected to occur within the year,” First Gen said in a regulatory filing on Thursday.

After signing an initial agreement, the company said it still needs approval from the Philippine Competition Commission before completing the deal.

Once regulatory approval and other conditions are met, the company’s subsidiaries will execute the required documentation for the transfer of the underlying shares.

First Gen is set to acquire a 40% equity interest in Prime Infra’s pumped storage hydropower portfolio for P75 billion.

The transaction covers Prime Infra’s 600-megawatt (MW) Wawa pumped storage hydropower project in Rizal province and the 1,400-MW Ahunan project in Laguna.

The Lopez-led firm said the pumped storage hydropower facilities will complement its 132-MW Pantabangan-Masiway and 165-MW Casecnan hydroelectric power plants, as these are expected to provide grid stability and reliability.

“First Gen’s investment in these projects strengthens its partnership with Prime Infra and crystallizes the shift of the company’s portfolio to renewable energy,” the company said.

First Gen is an independent power producer with a total installed capacity of 3,717 MW across natural gas, geothermal, hydropower, wind, and solar technologies.

Last year, Prime Infra acquired a 60% equity stake in First Gen’s gas assets for P50 billion.

The deal covered the 1,000-MW Santa Rita power plant, the 500-MW San Lorenzo plant, the 450-MW San Gabriel plant, the 97-MW Avion plant, and the proposed 1,200-MW Santa Maria power plant.

At the local bourse on Thursday, shares in the company fell by 4.19% to close at P18.30 apiece. — Sheldeen Joy Talavera

Megaworld to spend P10 billion on lifestyle malls in four provinces

MAPLE GROVE in General Trias, Cavite — MEGAWORLD CORP.

MEGAWORLD Lifestyle Malls, the retail arm of Megaworld Corp., will invest about P10 billion to develop new lifestyle malls and commercial projects across several townships this year and next, adding more than 150,000 square meters (sq.m.) of gross floor area to its portfolio.

“Stronger consumer spending continues to drive demand for quality commercial space, particularly in key growth centers where our townships are located. This allows us to expand our leasing portfolio while introducing new lifestyle concepts that enhance the overall value proposition of our developments,” Megaworld Lifestyle Malls Head Graham Coates said in a statement on Thursday.

The projects include Capital Mall in San Fernando, Pampanga; Northwin Global Concourse in Marilao and Bocaue, Bulacan; Maple Grove Mall in General Trias, Cavite; and The Upper East Mall in Bacolod City.

Capital Mall is a four-level development within Capital Town Pampanga that honors the heritage of the Pampanga Sugar Development Company (PASUDECO).

Northwin Global Concourse is a two-level retail complex in Northwin Global City connected to the upcoming Northwin Station of the North-South Commuter Railway.

Maple Grove Mall offers a two-level classical modern design with retail and dining spaces, while The Upper East Mall features a three-level contemporary classic layout inspired by New York’s Upper East Side and centers on a preserved century-old Balete tree.

“These ‘curated lifestyle malls’ will serve their respective township communities through enhanced commercial synergy, providing a broader and more integrated selection of retail, dining, and lifestyle options for future mallgoers and customers,” the company said.

Megaworld is also adding a two-level extension to Festive Walk Mall in Iloilo Business Park, slotted between the existing mall and Richmonde Hotel, which will house a Landers Superstore branch.

The company targets one million sq.m. of gross leasable area (GLA) by 2030.

Megaworld’s retail expansion is part of its P65-billion 2026 capital expenditure program, which funds growth in residential, office, hospitality, and retail across townships in Metro Manila and provinces including Bacolod, Iloilo, Pampanga, Cavite, and Palawan.

The company currently has over 500,000 sq.m. of GLA, with upcoming mall projects continuing its retail expansion after last year’s rollout.

In 2025, Megaworld Lifestyle Malls opened four new retail developments at McKinley West in Taguig, Alabang West in Las Piñas City, Boracay Newcoast in Aklan, and Vion Tower in Makati, including the two-level Shoppes at Park McKinley West, new retail spaces at Vion Tower along EDSA corner Chino Roces Ave., expanded areas in Alabang West, and Newcoast Beachwalk in Boracay Newcoast.

The company said it also intends to infuse certain mall and retail properties into MREIT, Inc., as it works toward growing the REIT’s GLA to one million sq.m. by 2027.

At the local bourse on Thursday, Megaworld shares rose by 0.44% to close at P2.30 apiece. — Alexandria Grace C. Magno

SM Offices investing P1B in Cebu expansion

NU Cebu — SM INVESTMENTS CORPORATION

SM OFFICES, the commercial property arm of SM Prime Holdings, Inc., plans to add more than 60,000 square meters (sq.m.) of new leasable space worth about P1 billion at SM City Cebu Towers by the fourth quarter of 2026.

“Cebu is a major economic hub because of its strong infrastructure, exceptional talent pool, and complete business ecosystem,” Vice-President and Head of SM Offices Alexis L. Ortiga said in a statement on Thursday.

“SM City Cebu Towers is meant to support this growth by providing well-managed high-quality and well-connected office spaces that meet the evolving needs of businesses expanding in the region,” he added.

According to Leechiu Property Consultants, Cebu recorded office space take-up of 150,000 sq.m., or 55% of provincial demand, in 2025, representing a 33% increase from the previous year.

SM City Cebu Towers is located on A. Soriano Avenue in the North Reclamation Area. The development attracts traditional corporations and business process outsourcing (BPO) firms seeking in-city alternatives to higher costs and traffic congestion in Metro Manila.

The project forms part of the redeveloped SM City Cebu North Wing complex, which integrates retail spaces and a National University (NU) campus.

The site provides access to the South Road Properties, Mactan-Cebu International Airport, the port area, and government centers. Its proximity to NU allows office tenants to build recruitment and training linkages with students, potentially reducing hiring costs and lead times.

NU Cebu opened on June 14 last year as the university’s seventh provincial campus, staffed entirely by local hires to support education and employment in the region.

“Over the medium term, we believe that Cebu remains a very strong growth market for us, but any expansion will be measured in time to demand so that we sustain the growth and protect our long-term value,” Mr. Ortiga said.

SM Prime develops mixed-use projects nationwide, integrating offices, residences, retail, education, meetings, incentives, conferences and exhibitions (MICE), and leisure components to support tenant efficiency and employee retention through shared amenities.

At the local bourse on Thursday, shares in SM Prime fell by 1.41% to close at P21 apiece. — Alexandria Grace C. Magno

Metrobank’s 2025 net income hits record high

BW FILE PHOTO

METROPOLITAN BANK & Trust Co. (Metrobank) in 2025 posted an all-time high net income for the fourth consecutive year, backed by steady loan growth and strong trading gains.

The bank booked a P49.7-billion net profit in 2025, it said in a disclosure to the stock exchange on Thursday, marking the fourth year in a row that it saw record earnings.

Its performance was supported by “modest asset expansion, resilient margins, healthy trading income and contained cost growth,” it said.

Before provisions, its operating profit grew by 17.1% year on year to P78.4 billion.

“This full-year performance reflects the trust of our clients, the dedication of our people, and our commitment to disciplined growth. We continue to strengthen our balance sheet while expanding support to businesses and consumers who drive the Philippine economy. Our focus remains clear, and that is, to grow alongside our stakeholders and contribute to the country’s sustained progress,” Metrobank President Fabian S. Dee said.

The bank’s net interest income climbed by 9.2% to P124.6 billion last year.

This was backed by an 8.8% growth in its gross loans to P2.04 trillion. Metrobank said its corporate and commercial loan book expanded by 7.4%, in line with economic growth trends. Meanwhile, its consumer portfolio grew by 13.9%.

Asset quality was “intact” as its nonperforming loan (NPL) ratio was at 1.7% and its NPL cover or buffers against potential credit risks stood at 140.8%.

On the other hand, its non-interest income increased by 11.6% year on year to P33.5 billion in 2025.

This was mainly driven by a 47.2% jump in its trading and foreign exchange income to P8.2 billion amid “strong customer flows and favorable trading opportunities,” it said.

Fee and trust income also rose by 6% to P19.2 billion.

Meanwhile, Metrobank’s operating costs went up by 3.3% to P79.7 billion.

As a result, cost-to-income ratio improved to 50.7% in 2025 from 53.8% in the year prior.

Total deposits went up to P2.7 trillion at end-2025, with 59.2% of the total being low-cost current and savings accounts.

Its loan-to-deposit ratio was at 74.9%, which it said shows that it is capable of meeting its customers’ funding needs.

Metrobank’s consolidated assets stood at P3.88 trillion at end-2025, expanding by 10.2% year on year.

Its total equity increased by 9.4% to P421.7 billion.

Capital adequacy ratio was at 16.8% and common equity Tier 1 ratio stood at 16.1%, well above the central bank’s required minimum levels. Its liquidity coverage ratio was at 181.7%.

“The bank believes that its robust capital position and balance sheet strength will provide ample support as it navigates through uncertain times,” it said.

Metrobank shares closed at P73.30 apiece on Thursday, down by 85 centavos or 1.15% from the previous session. — A.M.C. Sy

Winter in Seoul

GYEONGBOKGUNG PALACE

Text and photos by Brontë H. Lacsamana, Reporter

ON A TRIP this writer’s family took to Seoul early in February, the Korean capital was beset by a period of intense cold thanks to the arctic air from Siberia sweeping into the peninsula.

The moment we stepped out of our hotel in Dongdaemun district’s Janghanpyeong — a quaint area characterized by used car dealerships and mechanic shops, like Banawe in Quezon City — we were greeted by the biting cold. Everyone we saw was in puffer jackets, be it at the nearby convenience stores where we tapped up our T-money cards, the buses and subways which we took to go everywhere, or the touristy places themselves where we shopped, ate, and took pictures.

Apparently, there was heavy snow before our arrival, with the last week of January considered the coldest days of winter. By the time we were exploring Seoul, only the aftermath was left, patches of ice morphed into dirty sludge marking the edges of sidewalks.

SHOPPING FRENZY
The shopping district of Myeongdong was alive as ever despite the cold snap. Located in the center of Seoul, it is the busiest place in the city. It is home to street food, nightlife, and fashion brands, both Korean and international. The likes of Adidas, Nike, H&M, Converse, and North Face (which was probably making a killing with its puffer jackets) are there. Nearby, the flagship branches of key department stores like Lotte and Shinsegae serve as large landmarks for those walking the streets.

One store seemed to rule the entire area, though. The grip of Olive Young, Korea’s leading health and beauty store, on the shoppers of Myeongdong is evident in the sheer number of branches found there — eight. Yes, you will come across eight Olive Young stores if you decide to walk between Myeongdong Station and Euljiro il-ga Station. K-beauty has found a huge market globally, after all, and that is where most people seem to go for skincare and makeup.

Shopping amid the crowds and city lights of Myeongdong was made fun by the street food stalls lining the heart of the bustling shopping district. They offered an array of tasty dishes, like tteokbokki (spicy rice cakes), meat skewers, grilled seafood, and even fruit skewers coated in a sugary shell.

Dialing in on the typically touristy parts of our itinerary, we trudged to a different area for another bout of shopping a few days later. Namdaemun Market, the largest traditional market in Korea, opened in 1964, and it is where goods are sold at affordable prices, much like a cleaner and safer Divisoria. There are thousands of stalls where one can buy clothes, snacks, and little knick-knacks — a perfect place to get pasalubong to bring home.

During our visit on Feb. 8, the bitter cold seemed to be at its height as we wandered from one stall to another, seeking refuge in the enclosed ones with heaters. At one point, a kindly shopkeeper ushered us into their store for some tea. (Of course, we were obligated to purchase packs of kimchi-flavored seaweed out of gratitude — it turns out winter winds are an ally for market vendors to lure tourists in to take a look at their goods.)

As someone who is easily shopped out, what made the area fun was, again, the food. Alleys and storefronts in the market offer fare like kalguksu (knife-cut noodles), mandu (dumplings), and kimbap (rice rolls). A memorable sweet snack, simple as it was, was hotteok (pancake), which can be enjoyed as is, filled with vegetables, noodles, or red beans, or even coated with cheese powder. Whichever way you order it, it provides instant relief from all the walking.

HISTORY AND CULTURE
We were a group of mainly older people, so we tried to keep the long walks in the cold to a minimum, which meant fewer outdoor visits and more toasty indoor sights, like museums.

Seoul has five major palaces from the Joseon Dynasty, the biggest being Gyeongbokgung Palace, and that’s where we went. To get there, we alighted from the bus at Gwanghwamun Square and opted to walk through the public square fronting the palace in order to see the tremendous view of the structure with the Bugaksan Mountain in the background.

At the center of the plaza stand statues of King Sejong (the inventor of hangeul, the Korean alphabet) and Admiral Yi Sun-shin (who prevailed against the Japanese navy). Aside from plaques detailing their roles in history, an elevator in the square leads to an underground museum that elaborates on their lives, for those seeking more knowledge on these major figures — or for those seeking a heated enclosed space to take shelter from the bitter cold.

Built in 1395, Gyeongbokgung Palace is a marvel to look at from up close and from the inside, the roof forming gentle curved lines and the walls and ceilings of natural wood painted with colorful patterns.

But its charm quickly faded in the freezing air. During warmer seasons, it must be a pleasant walk around the grounds and a fun chance to take pictures in hanbok (Korean traditional wear), but for our visit, it was a quick stop before we left. A lot of tourists were still there despite the weather, as well as some locals, a few of whom were filming a TikTok dance video by the main gate.

A highlight within the complex is the National Folk Museum of Korea, which is accessible both by exiting the palace grounds and from a nearby bus stop. A free attraction we just had to have a glimpse of was the Street of Memories, an outdoor recreation of a 1980s Seoul neighborhood, complete with diners, barber shops, grocers, and houses. K-drama enthusiasts would know this as the best way to relive the series Reply 1988, which follows a group of childhood friends and their coming-of-age in the 1980s.

A few steps from that open-air exhibit is the museum itself, a large structure that houses exhibits on domestic and agricultural artifacts and cultural beliefs. A memorable part was being serenaded in the lobby by a madugum (a Mongolian string instrument) player while a pair of dancers performed a tango in the hall.

We went to another museum a few days later: the National Museum of Korea, which is accessible from the Ichon subway station. Its grounds are spacious and elegantly designed, with a gazebo overlooking a pond, which was still frozen over.

The walk up to the museum showcased its modern architecture, with a city view of the rest of Seoul (including its highest point, N Seoul Tower) in the background. Inside, it is divided into Prehistory, Ancient History, Medieval, and Early Modern History, with another building focusing on the 1900s onwards still under development. From ornate maps, paintings, and Buddha statues to massive thrones and wooden pagodas, there’s a lot to see here, and gives one a chance to appreciate just how well Koreans preserve pieces of their history.

DIFFERENT PERSPECTIVES
Speaking of N Seoul Tower, we visited it as well to check out what Seoul’s highest point has to offer. Located in Namsan Mountain Park, physically active tourists can hike up the peak through different routes, though most tourists took the cable car for a short and leisurely climb (as we did). The tower does not just have a view deck, but a few floors of cafés, restaurants, and convenience stores. Going up to the observatory on the highest level, which offers 360-degree views of the city, costs more.

The view deck itself already provided stunning city views, though, so we settled for that and took as many pictures as we could in the cold before retreating into one of the heated cafes. For couples who want to do something cheesy, there’s an open-air section that displays “love locks,” a trend popularized in Paris, which allows couples to attach symbols of their love to the fences. Otherwise, the top of N Seoul Tower is a spacious, relaxing place to lounge and see the city from a different perspective.

While our preference when it comes to traveling is exploring a place on foot to see what the local neighborhoods are like, the biting cold, exacerbated by strong winds, kept us from doing so. The only time we sort of wandered the streets leisurely (without rushing through a touristy place to take quick pictures and get indoors) was on our last day, when we browsed through the motorcycle shops along Toegyero starting from Chungmuro Station.

One of our group was looking for bike accessories, and our research brought us to this stretch that was once renowned as a motorcycle street, filled with dealers, used bikes, and specialty stores. Now, likely due to the pandemic and the rise of online shopping, it seems to have quieted down and become gentrified, and is now home to a variety of other establishments.

For a newbie to winter, the unforgettable part was how mild the cold was on this particular day. The walk turned magical when a gentle snowfall began, with snowflakes appearing like droplets from the sky and specks of white dotting the hats and coats of people passing by.

Shortly after we arrived at a hidden gem — the reason we go on these spontaneous walks in the first place! — a quaint café and vintage shop called Street275. Its exterior is fronted by 1990s American diner aesthetics and a stylish black Vespa (which we later learned belonged to the owner, whose English name is Jacob). Inside is a cozy café set-up, with comfortable chairs and a counter manned by Jacob himself. The menu has coffee, alcohol, and desserts, which we enjoyed after the pleasant walk, while next door is the adjoining shop filled with vintage clothes, bags, accessories, and shoes. Aside from being able to haggle for good prices, the owner and waiters were lovely to chat with.

Overall, we don’t recommend visiting Seoul in the harsh winter cold (avoid late January to early February!), especially if you aim to explore and walk around. It has none of the winter wonderland snowscapes but all of the biting winds, which will simply wear you down and prevent you from wandering, even if you are snug and warm under layers of clothing. Taking pictures? Forget it, you’ll want your hands safe in your gloves and pockets rather than going numb from handling your phone or camera in the open air. Joint pains will likely emerge. Approaching mid-February, though, the temperature eased from the usual -7°C to a more bearable 4°C or 5°C, and, most importantly, the arctic wind receded, replaced by gentle, drizzle-like snow that would last only minutes.

What we learned is that you have to discover where to take refuge — like the beef bone broth restaurant next to our hotel in Janghanpyeong, the handmade dumpling soup restaurant towards the back of the Samsung headquarters in the city center, or the spicy kimbap store just steps away from Sindang Station. Travel is all about finding the little gems here and there, and if you sometimes stray from the usual touristy path, Seoul happens to be full of them.

Seen at the DTI fair: Chocolate. Shell jewelry. Venus flytraps?!?!

Everjade Ceramic Arts — JOSEPH L. GARCIA

THERE are over 300 stalls at this edition of the DTI (Department of Trade and Industry) Bagong Pilipinas National Trade Fair, with the vendors coming from all over the Philippines, occupying Megatrade Halls 1 through 3 at SM Megamall. The fair is still ongoing, running from Feb. 18 to 22.

BusinessWorld took a leisurely stroll around the fair, before the barrage of VIPs and shoppers (it is open and free to the public). We were surprised to find heads of some of the country’s artisanal fairs also walking around, perhaps to scout new talent.

To the right of the stage is a whole section devoted to piña (barongs and Filipiniana dresses and such), but coming from different regions, so one can make comparisons between the work of each. There are wooden goods inlaid with shell from Lanao del Sur.

There’s a little bit of chaos when it comes to the grouping this year (we were expecting them to be arranged by region) but there is some order in some sections when it comes to similar product types. For example, there’s a whole alley devoted to footwear from Liliw. (We liked the espadrilles from Aishe fashion, which have been seen on some beauty queens, embroidered with images of ambulant vendors. Fancy wearing taho or balut vendors on your tootsies?) Their Laguna neighbors occupy stalls in the same section, but then, so do similar crafts from other towns and cities. Just behind them though are shoes from the country’s shoe capital Marikina (there are several stalls of loafers).

There are several booths featuring coconut-based products, spilling over from the Philippine Sustainability Pavilion. That pavilion features furniture, textiles, and other products made with coconut-based materials, natural fibers, and native grasses.

Nearby are coconut and chocolate products (not just from storied Davao anymore, but from as far as Benguet). Strangely enough, the section for potted plants can also be found here, featuring succulents and such, but also one stall with carnivorous plants (such as Pitcher Plants and Venus Flytraps).

Product prices can range from P50 for a small pouch to the high thousands for jewelry from Meycauayan, Bulacan. Last year, the 10 DTI fairs held brought in P665.13 million in cash sales, orders, and “ongoing negotiations,” according to a press release. The DTI plans to hold 13 trade shows for this year — thus ensuring that there will always be a chance to score a find, made by fellow Filipinos. — JL Garcia

4 energy players keen on Agus-Pulangi hydro rehabilitation

PSALM.GOV.PH

By Sheldeen Joy Talavera, Reporter

FOUR ENERGY players have expressed interest in rehabilitating the Agus-Pulangi hydroelectric power complex in Mindanao, according to state-run Power Sector Assets and Liabilities Management Corp. (PSALM).

“There were three proposals, and I was made aware there is a fourth pending PPP (Public-Private Partnership) Center evaluation,” PSALM President and Chief Executive Officer Dennis Edward A. Dela Serna told BusinessWorld on Wednesday.

He said the company is currently evaluating the unsolicited proposals endorsed by the PPP Center.

While Mr. Dela Serna did not name the companies, he previously said some are established energy players.

Following the successful turnover of the Caliraya-Botocan-Kalayaan (CBK) hydroelectric power plants in Laguna earlier this month, the government is now setting its sights on the rehabilitation of the Agus-Pulangi complex.

The facility consists of seven run-of-river hydro plants with a combined installed capacity of about 1,000 megawatts (MW), though only up to 700 MW are operational due to aging equipment.

To push through with the rehabilitation, the state-run firm is considering a concession-type agreement, with a timeframe aligned with the PPP Code.

The concession is targeted to be implemented in 2027, after which the government may opt to privatize the asset outright. The project could generate as much as P90 billion in revenue once completed, Mr. Dela Serna said.

The government recently turned over the CBK hydroelectric power plant complex to a consortium led by the Aboitiz group after offering a P36.27-billion bid.

Created under Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001, PSALM is mandated to privatize government-owned power assets and manage the proceeds to settle the financial obligations of the National Power Corp.

The state-run company earlier reported that it had wiped out P13.4 billion in financial obligations last year, bringing its remaining debt to P260.6 billion.

PSALM has crafted a 10-year plan to liquidate remaining liabilities through several measures.

EastWest Bank profit climbs 21% to P9.2B

EASTWESTBANKER.COM

EAST WEST BANKING Corp.’s (EastWest Bank) net income jumped by 21% to P9.2 billion last year on strong growth in its revenues and fee-based income.

Its full-year financial performance translated to a return on equity of 11.9%, it said in a disclosure to the stock exchange on Thursday.

The bank’s financial statement was unavailable as of press time.

“Our 2025 performance demonstrates the bank’s ability to grow efficiently amidst a competitive environment and evolving market conditions,” EastWest Bank President Jackie S. Fernandez said. “We strengthened revenue generation across businesses, supported by resilient asset growth and improved fee momentum.”

The bank’s revenues rose by 20% year on year to P51 billion in 2025, it said.

Its net interest income grew to P40.6 billion, backed by a 13% expansion in interest-earning assets.

Meanwhile, non-interest revenues were mainly supported by a 21% increase in its fee income to P7.1 billion.

EastWest Bank’s operating expenses went up by 8% to P25.4 billion last year, which it said was due mainly to volume-related costs and “sustained investments in people and technology — investments that are now translating into productivity gains.”

“The bank also continued to advance digital and service initiatives that strengthen customer experience and operational scalability, anchored on the EasyWay ecosystem and core modernization priorities,” it said.

Its pre-provision operating profit rose by 33% to P25.5 billion.

Cost-to-income ratio improved to 49.7% last year from 55.2% in 2024.

EastWest Bank set aside provisions amounting to P14.2 billion last year. Its nonperforming loan coverage ratio was at 86%.

“Our prudent provisioning strategy ensures the bank remains well-positioned against macroeconomic uncertainties. Even with these added buffers, we delivered solid profitability and improved returns,” EastWest Bank Chief Executive Officer Jerry G. Ngo said.

Total deposits increased by 13% to P437.8 billion in 2025, 82% of which were low-cost current account, savings account or CASA deposits, which grew by 14% year on year.

“Priority Banking momentum also strengthened, with assets under management increasing 40% to surpass P100 billion,” the bank said.

EastWest Bank’s assets stood at P577.1 billion at end-2025, expanding by 10% year on year.

Its capital adequacy ratio was at 13.5% and common equity Tier 1 ratio was at 12.6%, both well above regulatory thresholds.

“The bank noted its core businesses remain resilient, supported by steady loan demand and improving asset quality trends,” it said.

“We enter 2026 with strong momentum. Our continued investments in digital transformation, customer experience, and risk management will reinforce EastWest’s competitiveness and position us for sustained growth this year,” Mr. Ngo added.

EastWest Bank’s shares climbed by 18 centavos or 1.44% to finish at P12.72 each on Thursday. — Aaron Michael C. Sy

The limits and responsibilities of flexible inflation targeting

PHILIPPINE STAR/MIGUEL DE GUZMAN

Last Monday, this paper bannered the now-familiar refrain: sluggish growth and benign inflation give the Bangko Sentral ng Pilipinas (BSP) ample room to cut rates again.

All 16 analysts surveyed expect another 25-basis-point reduction, bringing the policy rate to 4.25%, the lowest in more than three years. The argument appears neat and compelling. Growth has disappointed. GDP averaged only 3.9% and 3% in the third and fourth quarters. Full-year 2025 came in at a modest 4.4%, well below the downgraded 5.5% to 6.5% target and slightly under the BSP’s own 4.6% projection.

Inflation, meanwhile, has remained within the 2% to 4% target band.

So why not cut again?

Because monetary policy is not a reflex. It is a judgment call. And judgment requires asking a harder question:

Has further easing become less effective — and potentially more risky?

THE GROWTH PROBLEM IS NOT PURELY MONETARY
Since the BSP began its easing cycle, policy rates have been reduced by 200 basis points. That is not trivial. It is a substantial accommodation.

Yet growth continued to decelerate.

Private household consumption, nearly 73% of GDP, slowed from 4.9% to 4.6%, even as inflation fell sharply from 3.2% to 1.7%. This should have unleashed purchasing power. Instead, spending remained cautious.

Why?

Because inflation moderating does not mean prices returned to old levels. The absolute price base remains elevated. Households are not reacting to inflation rates; they are reacting to price levels. Food, transport, utilities — these remain expensive relative to income growth.

This is not a monetary malfunction. It is structural.

Logistics inefficiencies. Trade frictions. Supply chain rigidities. Agricultural vulnerabilities. These are beyond the reach of interest rate policy.

Even remittances, over $32 billion in the first 11 months of 2025, did not spark a spending surge. That suggests precautionary behavior and diminished confidence.

Gross capital formation sends an even stronger signal. Investment growth plunged from 7.7% to 2.1%. That is not a rate problem alone. That is a confidence problem.

Liquidity cannot substitute for trust. Interest rate cuts cannot compensate for governance uncertainty. Monetary policy cannot build roads, reform procurement, or restore institutional credibility.

At some point, additional easing yields diminishing returns.

We may already be there.

LIQUIDITY IS ABUNDANT BUT TRANSMISSION IS WEAK
The banking system is unmistakably flush with liquidity. Reserve requirement reductions and policy rate cuts have expanded monetary space. The loans-to-deposit ratio (LDR) improved from 75.2% to 78.2%.

But this improvement is modest relative to the scale of easing.

More troubling is that real lending rates actually rose.

High-end lending rates increased from 9.9% to 10.66%. On the other hand, low-end rates climbed from 4.63% to 5.62%. Meanwhile, average bank lending rates rose from 5.09% in 2024 to 6.22% in the first 11 months of 2025.

In other words, policy easing did not translate into cheaper effective borrowing costs.

Why?

Because banks remain cautious.

Based on BSP senior loan officers survey for the 4th quarter 2025, credit standards, while officially “unchanged” for many, show net tightening under diffusion analysis. Collateral requirements could have remained strict. Loan sizes more conservative. Tenors could be shorter.

This pro-cyclical tightening during down periods weakens monetary transmission.

If liquidity does not translate into credit expansion, the marginal impact of further rate cuts could actually shrink.

And when effectiveness shrinks, risks loom larger.

THE INFLATION RISKS ARE NOT HYPOTHETICAL, THEY ARE BUILDING
The dominant narrative says inflation is benign.

But this may be backward-looking comfort.

The risks ahead are mounting — and they are largely supply-side and cost-push in nature, precisely the type that can quickly unanchor expectations if credibility falters.

For instance, utilities and administered prices are bound to increase. Tollway charges may increase anytime. Power distributors have signaled rate adjustments. Water concessionaires may implement FX-linked and periodic adjustments. These are not marginal items. They feed into transport, logistics, food distribution, and household utility costs. Their second-round effects are powerful.

For another, rice policy is being reversed. Any tightening of rice import policies or tariff reversion risks immediate price pressure. Rice carries heavy weight in the consumer basket. Even modest increases have outsized inflation expectation effects.

The exchange rate is also vulnerable. The recent stabilization of the peso was not purely structural. It was partly driven by expectations that the easing cycle is nearing its end. If the BSP continues cutting while the US Federal Reserve remains cautious, the interest differential narrows. Capital flows respond quickly to that differential. A weaker peso feeds directly into higher fuel prices, imported food inflation, higher cost of imported capital goods and production inputs.

Imported inflation is not theoretical. It is immediate.

And once the exchange rate narrative shifts from “stable” to “weakening,” expectations could adjust rapidly.

We also have to reckon with positive base effects. The whole year 2025 is characterized by extremely low inflation. The base effects would be positive in 2026. Moreover, December 2025 inflation was elevated. That could help push the forecast for early 2026. Combined with cost pressures, the probability of breaching the upper end of the 2% to 4% target band increases.

The BSP’s December forecast of 3.2% inflation for 2026 may now prove optimistic.

Finally, inflation expectations are poised to be unhinged. Flexible inflation targeting works because expectations remain anchored. But expectations are forward-looking. If households see rising tolls, higher electricity bills, water rate adjustments, rice price pressures, and a weakening peso, they do not parse output gaps or core inflation models.

Households adjust expectations upward. Once expectations drift, restoring credibility requires sharper tightening later. Prevention is cheaper than correction.

THE COST OF MISCALIBRATION
Flexible inflation targeting (FIT) involves calibrated response.

The BSP has done commendable work since 2002 anchoring price stability while acknowledging growth and financial stability concerns.

But flexibility does not mean asymmetry.

If policy leans too heavily toward growth support when transmission is impaired and inflation risks are rising, credibility can erode gradually, then suddenly.

A central bank’s greatest asset is not liquidity. It is credibility. And credibility is cumulative, but fragile.

The output gap may still be negative. But if additional easing does little to close it while materially raising inflation and currency risks, the trade-off becomes unfavorable.

MONETARY POLICY CANNOT CARRY THE ECONOMY ALONE
There is a deeper institutional question here.

If structural and governance bottlenecks are restraining investment and productivity, should monetary policy continue compensating even if there is nominal scope?

Doing so risks asset mispricing, peso instability, imported inflation, and future abrupt tightening cycles. We have to recall that monetary policy can buy time. But it cannot manufacture confidence.

If fiscal reforms, supply-side improvements, and institutional clarity lag, monetary accommodation becomes a blunt instrument applied to a structural wound.

Eventually, the wound demands surgery, not anesthesia.

THE STRATEGIC PAUSE IS NOT WEAKNESS, IT IS STRENGTH
A pause at this stage would not signal policy exhaustion.

It would signal recognition of diminishing marginal returns, awareness of rising inflation asymmetry, commitment to credibility preservation, and respect for exchange rate stability.

The BSP can always ease again if data deteriorate meaningfully.

But reversing an inflation resurgence or stabilizing a disorderly peso is far more costly. Sometimes the most forceful move a central bank can make is restraint. Flexible inflation targeting demands agility, not momentum for its own sake.

The BSP has shown flexibility before: easing when necessary, tightening when required, stabilizing when markets trembled.

The moment now calls not for reflex, but for resolve.

Growth is important. But price stability and the credibility that underpins it is indispensable.

And once credibility slips, no number of basis points can easily restore it.

 

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

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