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On declining inflation and unemployment, and trade with China

This week, the Philippine Statistics Authority (PSA) released three important pieces of economic data — the inflation rate for April, and the unemployment rate and international trade numbers for March. To put the Philip-pines data in context, I update the data for other countries to see what the trends are over the past few years or quarters.

DECLINING INFLATION RATE
The Philippines’ inflation rate continues its deceleration at 3.8% in April 2024 vs 6.6% in April 2023 — this is good.

This same trend is true for many other countries and the challenge for the various stakeholders here is how to bring this down further, to below 3%, in the coming months. Especially the food inflation rate which remains stubbornly high at 5.6% and 6% in March and April this year, versus the overall inflation rate of 3.7% and 3.8% over the same period.

There have been various proposals to amend the Rice Tariffication Law and thus help reduce rice and food prices, but one thing that seems missing in these proposals is to encourage large-scale corporate rice farming to sig-nificantly increase output and reduce crop losses and waste, especially in the harvesting, drying and milling phases. Thailand and Vietnam are doing large-scale corporate farming. This plus their favorable geography — they have wide swathes of flat land with access to huge water bodies like the Mekong River and Ton le sap River — is why they are major rice exporters.

DECLINING UNEMPLOYMENT RATE
The country’s unemployment rate in January, February, and March 2023 were 4.8%, 4.8%, and 4.7% respectively. Over the same months in 2024 the unemployment rate was 4.5%, 3.5%, and 3.9%. Our job generation situation is improving — this is good.

Many countries do not share the same trend as many of them have seen either flat or rising unemployment rates in Q1 2024 vs Q1 2023, including all G7 industrial countries except Italy, and other East Asians except Indone-sia (see Table 1).

So, congratulations to the Philippines’ economic team for steering the country away from the trend of flat or rising unemployment rates seen in many countries in the world.

NO. 1 TRADE PARTNER
Looking at total merchandise trade (exports plus imports) per country from 2021 to Q1 2024, we see that China is our No. 1 trade partner, with a 19.6% average of total trade over this period. This is followed by Japan with 10.8%, the US with 10%, South Korea with 6.5%, Hong Kong with 6.2%, Singapore with 5.4%, Thailand with 5.3%, and Malaysia with 4.2%.

The yearly exports and imports over these four years are shown in Table 2. I did not include columns for total trade in million dollars and percent share to total for purposes of brevity.

But with the ongoing political noise and lobbying for war preparations versus China — a very dangerous, very costly, and backward maneuver — we have to ask our people and businesses if they are prepared for the mas-sive trade distortions that could result if the situation would further deteriorate?

We have progressed far since World War 2, which ended in September 1945. We have had nearly 80 years of peace, with no world or regional wars. People are conducting more trade and commerce, and there have been more tourism and investment flows across countries and continents for eight decades. Conflicts were discussed peacefully without resorting to shooting.

We should avoid taking sides in the deteriorating conflicts of the US vs Russia in Ukraine, the US vs Iran in the Middle East, and the US vs China in Taiwan and the South China Sea. Our main concern should remain high economic growth, sustained fast growth and job creation for our people.

We should want more trade and investments promotion, not war preparations; more negotiations and international diplomacy, not saber rattling. Our tax money should be used for more physical infrastructure here, not for the purchase of unproductive submarines, battleships, and missiles.

 

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

BPI expects BSP to cut rates by 50 bps

BPI FACEBOOK PAGE

BANK of the Philippine Islands (BPI) expects the Bangko Sentral ng Pilipinas (BSP) to implement fewer rate cuts this year after inflation picked up slightly in April.

The listed lender now sees the central bank reducing interest rates by just 50 basis points (bps) this year, smaller than its previous forecast of 75 bps, it said in a note on Wednesday.

“We now expect a rate cut of around 50 bps this year, assuming the FOMC (Federal Open Market Committee) eases sometime in the second semester,” BPI said.

Philippine consumer price index (CPI) quickened to 3.8% year on year in April from 3.7% in March, preliminary data showed. Still, this was slower than the 6.6% print in the same month a year ago.

For the first four months, headline inflation averaged 3.4%, still below the BSP’s 3.8% full-year forecast and within its 2-4% target.

The central bank has said it expects inflation to overshoot its annual goal anew this quarter and next amid the impact of the El Niño dry spell on prices of key commodities like rice.

BSP Governor Eli M. Remolona, Jr. earlier said the central bank may begin to cut rates if inflation can ease to about 3% and stay within that range for several months.

Meanwhile, markets are pricing in 45 bps of cuts from the Fed this year, with a rate cut in November fully priced in, Reuters reported.

The Ayala-led bank added that if the BSP cuts earlier than the US central bank, this could add to inflationary pressures as the peso could depreciate further against the dollar.

“Moreover, the economy has been resilient despite the normalization of interest rates, with loan growth accelerating for the third straight month in February,” it said.

BPI has also cut its full-year inflation forecast to 3.5% from 3.7%, it said.

It added that inflation is likely to exceed 4% from May through July due to risks related to food, the weak peso, and oil prices, in line with the BSP’s expectations.

“However, the breach in the inflation target may be temporary and may be more benign than originally expected, with inflation likely to ease in the second half of the year,” BPI said.

The bank saw its net income grow by 25.8% year on year in the first quarter to P15.3 billion as higher revenues offset increased provisions and expenses.

BPI’s shares dropped by 60 centavos or 0.48% to end at P124.40 apiece on Wednesday. — A.M.C. Sy

Kevin Spacey overturns UK ruling in sex assault case over lawyers’ mistake

KEVIN SPACEY in a scene from the 2022 film The Man Who Drew God. — IMDB

LONDON — Oscar-winning US actor Kevin Spacey on Tuesday overturned a London court ruling which effectively found him liable for an alleged sexual assault on a British man, after his lawyers mistakenly failed to serve a defense to a civil lawsuit.

Mr. Spacey is being sued at London’s High Court by a man, who cannot be identified for legal reasons, who alleges that in 2008 he was sexually assaulted by the Hollywood star. The actor has denied the allegations.

In 2022, the 64-year-old was charged in Britain with nine sexual offenses against four men between 2004 and 2013 but was acquitted of all charges after a high-profile trial last year.

One of those four complainants separately sued Spacey in a civil lawsuit at London’s High Court in 2022.

Earlier this year, a judge granted the man “judgment in default” — a ruling in his favor without a trial — after Mr. Spacey’s lawyers failed to serve a defense to the lawsuit in time.

Adam Speker, a lawyer representing Mr. Spacey, said it was a “genuine error” by the actor’s legal team from the prominent British law firm Carter-Ruck.

Mr. Speker argued it would be unfair for the claimant to effectively win his lawsuit against Mr. Spacey without a trial when he had been “disbelieved on oath by a jury.”

Judge Jeremy Cook ruled in Mr. Spacey’s favor and overturned the judgment in default against the actor.

“The defendant’s solicitors have made an error,” Mr. Cook said. “In my view, that error should not be visited upon the defendant.”

Tuesday’s ruling means that the claimant’s case against Mr. Spacey will proceed towards a full trial.

The ruling comes a day after Britain’s Channel 4 broadcast a documentary featuring testimony from several men who made allegations of inappropriate behavior by Mr. Spacey.

Mr. Spacey gave an interview to British broadcaster Dan Wootton ahead of the broadcast in which he denied any illegal activity and said he would not allow himself to be “baselessly attacked without defending himself.”

“I take full responsibility for my past behavior and my actions, but I cannot and will not take responsibility or apologize to anyone who’s made up stuff about me or exaggerated stories about me,” he said. — Reuters

​UnaCash partners with Comworks for smartphone loans

FINANCIAL SOLUTIONS provider UnaCash has partnered with Comworks, Inc. to offer point-of-sale loans for gadgets at the retailer’s branches, it said on Monday.

The partnership aims to allow Filipinos to increase their accessibility to smartphones, UnaCash said in a statement.

Customers may apply for an installment option through the UnaCash app for up to 12 months and as low as 0% interest.

“With 28 years in the industry, Comworks, Inc. has facilitated wholesaler telecommunications services and mobile network equipment to cater to the needs of the local market. UnaCash is thrilled to advance this partnership as we are confident that we can bring in innovative point-of-sale solutions to address their customers’ needs, and support them in expanding credit accessibility within the Philippines,” UnaCash Product Head Erwin G. Ocampo said.

“We are excited to partner with Una-Cash to bring greater convenience and accessibility to our customers. This partnership reflects our dedication to innovation and customer-centric solutions in the smartphone market,” Comworks Chief Operations Officer Elizabeth M. Leyeza added.

Data from UnaCash showed 70.17% of purchases made through its app are electronics and gadgets.

UnaCash and Comworks are looking to expand their offerings to the local market, the former said.

“This partnership is forged through a shared commitment to meeting the increasing demand for digital innovation and ensuring accessibility to high-quality products and services for all Filipinos,” UnaCash said.

The financial solutions provider recently introduced installment loans worth P3,000 to P50,000 with flexible repayment terms.

This new feature is offered to existing customers with outstanding credit history as it aims to promote responsible borrowing. — A.M.C. Sy

Performance of Philippine Agriculture

PHILIPPINE AGRICULTURAL production growth was flat in the first quarter amid a prolonged dry spell induced by El Niño, according to the local statistics agency. Read the full story.

 

Performance of Philippine Agriculture

RLC Residences opens Dubai office 

RLC Residences announced on Wednesday the opening of its first international office in Dubai.

This office will serve as a central hub for after-sales service operations in the Middle East, the company said in a statement.

“We have one major purpose in mind — help our clients abroad after they decide to invest in one of our developments,” RLC Residences Senior Vice-President, Business Unit General Manager, and Robinsons Land’s Chief Marketing Officer John Richard B. Sotelo said.

Mr. Sotelo said this addresses the need to assist home investment seekers’ queries during the “longest stage of their investment journey.”

The company said the office gives customer support for buyers and investors based in the region. This also answers the challenge of managing international clients’ home investments in the Philippines while they are abroad.

“We look forward to our next international office so we can continuously extend our after-sales support to more clients wherever they are in the world,” Mr. Sotelo said.

RLC said the service expansion comes at a time of rapid growth for the company, which has seen strong demand in the properties situated in key areas of the Philippines.

The company’s portfolio includes pre-selling and ready-for-occupancy residential development.

RLC Residences is the property arm of Robinson Land Corp. — Aubrey Rose A. Inosante

Coins.ph gets sandbox approval from central bank for peso stablecoin

CRYPTOCURRENCY platform Coins.ph has received sandbox approval from the Bangko Sentral ng Pilipinas (BSP) to issue a peso stablecoin called PHPC, which will be available to retail customers.

“PHPC is unique in that it will be the first regulated Philippine stable point for, and not just for all users. Users such as you and I can actually buy PHPC, transfer it, trade it on Coins.ph, and potentially on other wallets and exchanges, as we roll out its adoption and can make further approvals for the PHPC,” Coins.ph Chief Executive Officer Wei Zhou said at a briefing on Wednesday.

Stablecoins are pegged to a fiat currency or commodity to give it a stable value, unlike other cryptocurrencies like Bitcoin or Ethereum, which have volatile prices as they are not backed by assets.

PHPC will remain at a stable value of one-to-one to the peso and backed by cash and cash equivalents stored in Philippine bank accounts, he said.

“These will be secured in trust accounts with our banking partners to ensure that the stablecoin is 100% fully backed, fully redeemable for pesos,” he added.

Mr. Zhou said Coins.ph expects to receive full approval for the stablecoin in two to three months, and the pilot is expected to be launched on the Coins.ph platform early June.

The platform aims to have at least 20,000 to 30,000 users of PHPC within the first month or during the sandbox period.

“We’re being monitored for performance and there’s a set of metrics that we have to hit. Once we hit those metrics, then we can leave the sandbox,” Mr. Zhou said.

Coins.ph aims to allow the use of PHPC for remittances, trading, business to business (B2B) payments, and Web3 gaming to help lower costs.

“PHPC will empower Filipinos to transact seamlessly and securely in the digital economy, while also providing a stable store of value as they participate in the rapidly evolving digital asset landscape,” Mr. Zhou said.

“Remittance senders can actually purchase the PHPC and actually send it directly to the wallets here at Coins.ph. That it will reduce costs of sending funds across borders. It will also improve efficiency and turnaround time,” he added. “I think [the cost of remittance] has been going down, which is a good thing. I think about five years ago it was hovering around 10%, now it’s around 5% or 6%. But I think with these rails, we hope to get down into the 1% to 2% range.”

The company hopes to list PHPC on other exchanges, wallets and blockchains.

Coins.ph is also targeting to make PHPC available on remittance platforms in countries where money is frequently being sent to the Philippines, Mr. Zhou said.

He added that Coins.ph, which is a virtual asset service provider and an electronic money issuer, will add PHPC to the e-money products available on its partner banks’ platforms.

“This will be an addition to the e-money that we currently carry,” he said. — AMCS

Relieving stress in the workplace

CREATIVEART-FREEPIK

EVEN with the growing option of working from home (WFH) after the lockdown experiences in the pandemic, stress in the workplace is now a serious concern. There are even regular sessions (accessible virtually) that promote mental health and work-life balance for the employees as a corporate goal.

Has “catharsis” now become part of corporate jargon?

Catharsis refers to a flushing out, a purgation of the digestive system of toxins that harm the body. In psychology, it refers to cleansing out negative emotions, especially anxiety, fear, and anger. Such techniques remove heavy burdens pressing down on the mind and body.

Freudian psychologists hold that recurring dreams provide insights into deep-seated childhood fears. Such phobias need to be unearthed through hypnosis and free association while lying on a couch. Maybe a furled umbrella refusing to open in a dream stands for something recently experienced… like a stuck zipper. Exerting greater force in either case does not improve matters.

What is it in the workplace that causes anxiety and stress?

The usual suspects include impossible goals, workmates that are hard to coordinate with (so you’re free after Christmas?), and bosses that think that “angst” is a new deodorant. (I don’t get stress; I give it out.)

How does one release these fears? The Chief Stress Officer (CSO) can provide several de-stressing activities.

In determining work-life balance, it is difficult to draw the line between time-off and work in this time of the WFH option. The therapy of taking time away from the office can be ambiguous, as one is already at home most of the week. This timeout must then be out of town. Is unplugging the WiFi system at home enough to stay away from work? Well, the mobile phone can still send and receive messages — WRU?

Equipping a corporate gym (or one accessible to the distressed employees) with the visage of the leader may be quirky. Even with HR arguing that this is all in the name of cathartic relief, it is risky to be the proponent of such ideas intended to raise mental health. (The boss is convinced he is universally loved and respected, okay maybe sometimes feared.)

While the boss nods gamely and seems to be texting while the power point presentation featuring possible designs of punching bags and dartboards is going on, even getting into the spirit of the proposal (let’s put him in suspenders), the proponent’s days are surely numbered. The CSO may find her name on the passenger list of the next aircraft spewing out jumpers into the void, swinging under golden parachutes.

Anxiety is mostly in the mind. Revenge scenarios and conspiracy theories, usually featuring the stressed-out individual at its center as the besieged heroine, are based on biased observations. Encounters and events are mined for meanings — what did he mean when he greeted me in the elevator — looking good?

Getting stressed by examining hidden and maybe non-existent motives or lamenting missed opportunities for sucking up to the boss only raises the anxiety level — I should have dabbed his sweaty face with a towel, after his gym.

Proof of being free of anxieties entails talking about topics unrelated to deliverables and key result areas, or a particular person in the office who causes the bile to rise. This is followed by interest in new hobbies like reading the history of the Vietnam War or collecting antique jars.

Psychiatrists listen to patients talk about fears that haunt them. The professional listener doesn’t always refrain from comments — are you perhaps over-analyzing this? But a patient listener clarifies the anxieties — you think he’s still trying to make you miserable, even if you no longer work for him?

The best form of catharsis involves assuming total indifference to worries, a conscious effort to stop thinking of the past (or even the stressful present) taking life one day at a time. Repeat after me — It’s just an amortization.

Like the brown stuff in the bowl, the only way to get rid of the unpleasant smell is to flush it down. There is no need to remember a time when it used to be paella and roast pork. Wipe away the goo and hitch up the pants… and watch out for anything getting caught in the zipper.

 

Tony Samson is chairman and CEO of TOUCH xda

ar.samson@yahoo.com

How PSEi member stocks performed — May 8, 2024

Here’s a quick glance at how PSEi stocks fared on Wednesday, May 8, 2024.

House bill raising RCEF funding to P15B a year clears committee

PHILIPPINE STAR/KRIZ JOHN ROSALES

THE House Appropriations Committee approved an unnumbered substitute bill on Wednesday amending the Rice Tariffication Law of 2019, including an expansion of funding for rice industry modernization to P15 billion a year from P10 billion.

The bill also extended the life of the Rice Competitiveness Enhancement Fund (RCEF) which is due to expire this year, for another six years. Under the law, RCEF receives its funding from tariffs generated from imports.

The original law liberalized private imports of rice, though it required importers to pay a 35% tariff on their shipments of Southeast Asian grain. The tariff has since been modified to apply to shipments from any country of origin as an inflation-control measure. 

The amendment also seeks to reinstate the National Food Authority’s (NFA) power to regulate the rice market when needed to keep prices from rising unduly.

The amendments modify the way RCEF is allocated, proposing to grant 53.3% of its disbursements to farm mechanization, up from 50%. RCEF also funds seed development, farm credit, and extension services.

The new allocation for rice seed is 28%, and now allows the distribution of hybrid seed. The current version of the law only allows the distribution of inbred seeds.

“(The Rice Tariffication Law’s) focus really is to lower the cost of production, improving productivity, increasing yield, and increasing farmer income,” Nueva Ecija Rep. Mikaela Angela B. Suansing told BusinessWorld on the sidelines of the committee hearing.

The amendments are considered a means of easing the inflationary pressures blamed mainly on rice prices.

The average retail price of the grain currently ranges between P50 and P60, according to the Philippine Statistics Authority.

Speaker and Leyte Rep. Ferdinand Martin G. Romualdez said last week that the amendments have the potential to cut rice prices by at least P10 to P15 per kilo.

Allowing the NFA to regulate the market would allow the government to intervene during times of high retail prices, Quezon Rep. Wilfrido Mark M. Enverga told BusinessWorld.

“If this is enacted, it will be a big deal because (the government will regain) influence on the market through the NFA,” he said on the sidelines of the committee hearing.

Mr. Enverga, who also chairs the House Agriculture and Food Committee, said the NFA would make the rice prices more rational.

“We have to remember that it’s not only about the market interventions of the NFA… what we want to realize in the future… is that we fix our supply chain to lower the cost of rice production,” he said.

Commenting on the tweaks to the fund’s allocation, Ms. Suansing said: “The mechanization is still lacking… Even with the P30 billion allocated over the last 6 years, the mechanization coverage is only 14%… that’s why we increased it effectively.”

The new allocations also include 6% for credit assistance, 5% for extension services, 4% for soil health improvement, 2% for pest management, and 1.5% for the creation of a rice development office.

Mr. Enverga said he is hopeful that the amendment can go before plenary next week. — Kenneth Christiane L. Basilio

BoI seeking European funding for EV, RE dev’t

THE Department of Trade and Industry (DTI) said on Wednesday that the Board of Investments (BoI) will embark on an investment mission to Europe to solicit electric vehicle (EV), renewable energy (RE), upskilling, and agriculture investments.

In a statement, Trade Secretary and BoI Chairman Alfredo E. Pascual said that the investment promotion agency will be visiting Paris, London, and Berlin for roundtable and one-on-one meetings with industry representatives.

Mr. Pascual recently attended the European-Philippine Business Dialogue, presenting key industries welcoming European investment, including the industries that the BoI will deliver presentations on.

He said that the Philippines “is strategically positioned to become a leading player in Southeast Asia’s EV market,” which the DTI plans to achieve through the EV Incentives Scheme (EVIS).

“Through the EVIS, we target to produce four million locally manufactured EVs in the next 10 years,” he said.

“To achieve this, we aim to manufacture e-public utility vehicles (e-PUVs) and two-wheelers as our niche in Southeast Asia. We seek to be a competitive exporter of these products in our region,” he added.

He said European investors will have ready access to abundant green metals, a robust electronics industry, and a software development industry.

“These strengths complement the EU’s goal of eliminating greenhouse gas emissions by 2050 and support the transition from internal combustion engines to EVs,” he said.

“We are on track to build capacity for our flagship e-PUV model and develop light trucks and social-purpose vehicles to expand our domestic and export capabilities,” he added.

For renewable energy, he said that the Philippines has rich sources of renewable energy. He added that agriculture accounted for around 9% of Philippine gross domestic product and nearly 24.4% of the workforce last year.

“To seize these opportunities, the BoI is set to conduct a follow-through outbound mission to Europe for investment promotion with a focus on key markets in Paris, London, and Berlin,” Mr. Pascual said.

He said the Philippines produces around 900,000 graduates a year which will help support growth in the EV, renewable energy, and agriculture industries.

“The National Government calls for stronger collaboration with the EU on skills recognition, validation, and qualification alignment — all aimed at strengthening education and training systems to better serve the needs of European businesses operating in the country,” he added. — Justine Irish D. Tabile

PHL import dependence seen leading to market abuse, price shocks

PHILSTAR FILE PHOTO

THE Philippines’ dependence on imports to address food shortages leaves it exposed to price shocks and food market manipulation, the World Food Programme (WFP) said.

In a report, “Feeding Resilience: Unraveling the Asia-Pacific Food Crisis,” the WFP said the Philippines’ “unique contextual specificities of being a net food importer, particularly for staple commodities like rice, contribute to vulnerabilities in its food system.”

Heavy reliance on food imports, especially staples like rice, expose the country to price manipulation and artificial shortages, leading to economic impacts and corruption within government food procurement programs,” the WFP said.

“Opportunistic traders exploit market dynamics by hoarding essential supplies, exacerbating fluctuations in prices and availability,” it added.

Earlier, President Ferdinand R. Marcos, Jr. issued Executive Order (EO) No. 20 to ease the import process for agricultural products.

Farmers have opposed the EO, citing further exposure to smuggling and price manipulation.

Food inflation averaged 8% last year, a major factor being onion prices, which hit P600 to P700 a kilogram. A House of Representatives investigation pointed to an alleged onion cartel for the price surge.

Meat and egg production are also under strain from bird flu and African Swine Fever, it said.

It also noted the high costs of animal feed, which accounts for up to 70% of total production expenses in poultry, livestock, and aquaculture operations.

The WFP also cited a decline in the Philippines’ “resilience capacities” for food security, while its infrastructure and social capital have “better coped” with shocks.

“Unequal capacities among local government units (LGUs) in implementing government programs highlight the need for a more inclusive approach for urban and rural populations,” the WFP said.

LGUs should expand urban gardening, diversify staple food promotion, and strengthen local governance to ensure food security and nutrition, it said.

The Philippines was also noteworthy for its high consumption levels of food and beverages with poor nutritional value, such as fast food, processed food, and sugar-sweetened beverages.

“During the pandemic, the government’s distribution of food baskets aimed to assist the population in meeting its food needs, but unfortunately, many of these provisions failed to offer nutritious options,” according to the report.

“Despite the existence of a national policy on sugar sweetened beverages, with proceeds directed towards public health nutrition, the industry has seized the opportunity during this period to increase its sales.” — Beatriz Marie D. Cruz

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