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Singapore to expand ocean CO2 removal project as scientists call for more research

STOCK PHOTO | Image by Pexels from Pixabay

 – Singapore is planning to expand a pilot project that boosts the ocean‘s capacity to absorb carbon dioxide emissions, using one of several emerging technologies that supporters hope can play a decisive role in the global battle against climate change.

As scientists call for more research into ocean carbon dioxide removal (OCDR), PUB, Singapore‘s national water agency, has built a plant that uses electricity to extract CO2 from seawater, allowing it to absorb more greenhouse gas from the atmosphere when it is pumped back out into the ocean.

The project, built at a desalination facility on Singapore‘s western coast, extracts 100 kilograms of CO2 a day using technology designed by US firm Equatic, founded by scientists at the University of California, Los Angeles (UCLA).

At the plant, seawater is run through an electrolyzer, which converts dissolved CO2 into calcium carbonate and produces hydrogen.

PUB is aiming to secure funds by the end of the year to build a demonstration plant with a daily capacity of 10 tons, and will look at expanding further, said Gurdev Singh, a PUB general manager who leads the project.

“We have shown that the technology works, but the key now is to optimize the technology at scale,” he said.

The Intergovernmental Panel on Climate Change (IPCC) has said the removal of CO2 in the atmosphere will be as important as cutting emissions when it comes to curbing temperature rises.

But while OCDR has been described by one environmental group as an “unsung hero” in the fight against global warming, it remains unclear whether the new technologies are feasible when deployed at scale.

Equatic founder Gaurav Sant stressed the commercial potential.

“What makes this a resilient commercial opportunity is that you can essentially have the same equipment to give you two products: carbon credits and hydrogen,” he said.

It could also profit by selling calcium carbonate to the local building industry, he added.

The project is one of several pilot OCDR ventures around the world. Some rely on bringing nutrient-rich deep-sea water to the surface to stimulate seaweed growth, while others aim to reduce ocean acidification levels and thereby boost CO2 uptake.

Some experts warn that the potential ecological impact of these technologies is still unknown. On Tuesday, more than 200 scientists said in an open letter that OCDR research should be prioritized not only to maximize its potential, but also head off potential risks.

Sir David King, head of the Climate Crisis Advisory Group and one of the letter’s signatories, said he favored nature-based approaches, and was skeptical about the efficacy of energy-intensive OCDR technologies like the Equatic venture, which will cost a lot to pump water in and out of the plant.

But billions of tons of CO2 need to be removed from the atmosphere, and more investment in OCDR research was needed urgently, he said.

“What is needed today is to shorten the experimental timeline, and that really demands much more funding,” he said.

“If somebody came up with a few billion dollars, I believe we would accelerate these programs to the level that is really needed.” – Reuters

Georgia can resume ban on hormone treatment for transgender youth, judge says

SORA SHIMAZAKI-PEXELS

US judge on Tuesday allowed the state of Georgia to resume enforcing a new Republican-backed ban on hormone replacement therapy for transgender people under age 18, after a federal appeals court allowed a similar law in Alabama to go back into effect.

US District Judge Sarah Geraghty in Atlanta two weeks ago blocked enforcement of the Georgia law after concluding that a group of parents and transgender minors would likely succeed in establishing it violated the US Constitution‘s guarantees of equal protection under the law.

But a day after MS. Geraghty ruled, a three-judge panel of the 11th US Circuit Court of Appeals on Aug. 21 reversed a lower-court ruling that had blocked enforcement of a similar Alabama law banning the use of puberty-blocking drugs and hormones to treat gender dysphoria in transgender minors.

The appeals court panel was entirely comprised of judges appointed by Republican presidents. The 11th Circuit hears appeals from Georgia as well, and after it ruled, the state’s Republican attorney general, Chris Carr, urged Geraghty to vacate her injunction.

Ms. Geraghty, an appointee of Democratic President Joe Biden, on Tuesday instead put it on hold, saying it “rests on legal grounds that have been squarely rejected by the panel” in the Alabama case, but that further appeals in that matter were underway.

We are pleased with the court’s decision and will continue fighting to protect the health and well-being of Georgia‘s children,” Kara Richardson, Carr’s spokesperson, said in a statement.

The plaintiffs’ lawyers did not respond to requests for comment.

Republican lawmakers in several states have passed laws restricting medical treatments for transgender minors. Many have been blocked in court challenges, with judges finding they discriminate by sex and interfere with parents’ right to direct their children’s treatment.

Georgia Governor Brian Kemp, a Republican, in March signed the state’s law that bans certain medical procedures and therapies for minors who experience gender dysphoria, the term for psychological distress that some individuals experience because of a mismatch between their biological sex and gender identity.

The law also prevents minors from receiving gender-affirming surgeries, though that provision was not at issue in the case before Ms. Geraghty. – Reuters

Panama Canal water levels at historic lows, restrictions to remain

STOCK PHOTO | Image by D. Koch from Pixabay

 – The Panama Canal‘s water levels have not recovered enough as the end of the rainy season approaches and limits on daily transit and vessel draft will stay in place for the rest of the year and throughout 2024, the waterway’s authority said on Tuesday.

The restrictions, implemented earlier this year to conserve water amid prolonged drought, triggered a backlog of ships waiting to pass the key global waterway, which handles an estimated 5% of world trade, contributing to more expensive freight costs ahead of the approaching Christmas season.

The bottleneck at the canal connecting the Pacific and Atlantic Oceans has eased about 20% since last week, but waiting times to transit the waterway doubled last month from July in some vessel categories, while many ship owners have opted for alternate routes to avoid costly delivery delays.

The authority that manages the canal added in a statement that this week’s ship traffic represents a “normal” level for this season.

It noted that a month before the end of its 2023 fiscal year, the canal‘s total vessel crossings already total nearly 800 more that what the canal authority’s budget had forecast.

The additional vessel crossings, which contribute to a total of more than 13,000 transits so far during the fiscal year, show strong demand by vessel owners.

But insufficient rainfall continues to negatively impact the Gatun Lake, which feeds the canal, lowering its water level to 24.2 meters (79.7 feet), versus 26.6 meters (87.41 feet) for the month of September in recent years.

Each vessel passing through the 50-mile (80-km) trans-oceanic waterway uses some 51 million gallons (193 million litres) of water from the lake.

At the end of the rainy season in November, the lake’s water level typically reaches some 27 meters (89 feet) and then drops to slightly below 26 meters (85 feet) after the dry season ends in April, according to the canal authority.

Experts have warned about maritime trade disruptions ahead of what is shaping up to be an even drier period next year. They argue that a potential early start to Panama‘s dry season and hotter-than-average temperatures could increase evaporation and result in near-record low water levels by April. – Reuters

US commerce secretary doesn’t expect changes to Trump China tariffs until review complete

REUTERS

– US Commerce Secretary Gina Raimondo said on Tuesday she does not expect any revisions to US tariffs on China imposed during President Donald Trump‘s administration until an ongoing review is completed by the U.S. Trade Representative’s Office.

“I don’t think the (Biden) administration will make any changes until that review is completed,” Ms. Raimondo told CNBC. It is not clear when USTR will conclude the review.

Mr. Trumpa Republican, imposed tariffs in 2018 and 2019 on thousands of imports from China valued at some $370 billion at the time, after a “Section 301” investigation found that China was misappropriating US intellectual property and coercing US companies to transfer sensitive technology to do business.

“We didn’t put those tariffs in place. We don’t think they make a whole of sense in many cases,” Ms. Raimondo, part of the administration of Democratic President Joe Biden, said on Tuesday. “I think the Trump tariffs could have been much more strategic and that’s why we are doing this four-year review.”

The review by USTR is “to see if (the tariffs) are effective,” she said.

But Ms. Raimondo added, “China‘s practices of subsidizing their businesses have hurt US workers so we need a level playing field.” Last week, she criticized various new Chinese restrictions on US businesses operating in China.

China‘s commerce minister last week urged Chinese companies investing in the US to be given “equal treatment” and called US 301 tariffs on Chinese imports “discriminatory,” when he met with Ms. Raimondo in Beijing.

The Trump administration used Section 301 of the Trade Act of 1974, a statute aimed at combating trade partners’ unfair practices, to launch the tariffs in 2018 and 2019. – Reuters

SoftBank’s Arm launches IPO courting T Rowe in $52 bln valuation ask

SoftBank Group’s Arm Holdings Ltd. launched the roadshow for its blockbuster initial public offering (IPO) on Tuesday as the chip designer tries to convince investors it is worth as much as $52 billion in this year’s biggest share sale.

Arm kicked off its roadshow in Baltimore, where influential asset manager T Rowe Price is headquartered, underscoring the fund manager’s significance in big IPOs.

T Rowe Price has been an anchor investor in some of the biggest stock market debuts, including that of electric car maker Rivian Automotive Inc., which was valued at $66.5 billion in its IPO in 2021. Arm‘s IPO is the largest since then.

Arm met also with other potential investors on Tuesday, including Arlington, Virginia-based Sands Capital, according to sources who requested anonymity discussing private meetings.

SoftBank is offering 95.5 million American depository shares of Cambridge, England-based Arm for $47 to $51 apiece and is looking to raise up to $4.87 billion at the top of the range.

Arm disclosed the proposed range would value it at between $48 billion and $52 billion. It also revealed that it could issue some shares as compensation for its employees, taking its valuation, on a fully diluted basis, at up to $54.5 billion.

The valuation that Arm is chasing represents a climb-down from the $64 billion valuation at which SoftBank last month acquired the 25% stake it did not already own in the company from its $100 billion Vision Fund.

Yet even with this more modest valuation ask, SoftBank would fare better than its $40 billion deal to sell Arm to Nvidia Corp., which it abandoned last year amid opposition from antitrust regulators.

Jamie Mills O’Brien, portfolio manager at British fund manager Abrdn, said he found SoftBank’s valuation ask in the IPO “more palatable than initially discussed.”

“We are watching closely how the company handles the relationship with its China business – alongside any further impacts from the technology ‘war’ between China and the United States,” he said.

The Japanese conglomerate will own 90.6% of Arm‘s ordinary shares after the offering closes, the company said, adding that it will not receive any proceeds from the IPO.

Arm has signed up many of its major clients as cornerstone investors in its IPO, including Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel and Samsung Electronics.

Arm said the investors have indicated an interest in buying a total of $735 million of the stock being sold in the offering.

 

RETURN TO THE PUBLIC MARKETS

Arm was founded in 1990, as a joint venture between Acorn Computers, Apple Computer, and VLSI Technology.

Its shares traded on the London Stock Exchange and the Nasdaq from 1998 until 2016, when it was taken private by SoftBank in a deal that valued it at $32 billion.

Arm‘s listing is expected to buoy the IPO market globally and fuel other startups toward going public as its success would signal the return of investor appetite for technology companies.

Several other big names including grocery delivery service Instacart Inc, marketing automation platform Klaviyo and footwear brand Birkenstock are expected to list their shares on US exchanges in the coming weeks.

It will also be a milestone for SoftBank, as it taps several marquee technology names as investors to drum up support for the company whose designs power more than 99% of the world’s smartphones.

Reuters first reported on SoftBank’s proposed price range for the IPO on Saturday. Sources also said it could possibly raise this range before the IPO prices, should investor demand prove strong.

Arm generates a big share of its revenue through royalty fees based on either the average selling price of the customer’s Arm-based chip or a fixed fee per chip.

For the year ended March 31, Arm‘s sales fell to $2.68 billion, hurt mainly by a slump in global smartphone shipments.

Unlike most loss-making but high-growth tech companies that debut with lofty valuations but later plummet below list price, Arm is profitable. This is expected to significantly reduce investor anxieties, analysts have said.

Sara Russo, senior analyst at Bernstein, said it is early days for Arm to benefit from the boom in artificial intelligence but the space represents an area of potential growth for Arm.

Analysts have said Arm can potentially ride on Nvidia’s coattails, which has been the biggest beneficiary of the AI boom with the stock surging more than 230% year-to-date, as its chips must be coupled with energy-efficient central processing units (CPUs) – Arm‘s specialty.

Barclays, Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group are the lead underwriters for the offering.

If the underwriters exercise their right to buy shares in Arm in full as part of ‘greenshoe option’, it would take the IPO amount to be raised to $5.2 billion.

Arm, which has tapped a total of 28 banks for the IPO, has not picked a traditional “lead left” bank and will split underwriter fees evenly among the top four banks.

Arm expects to trade on the Nasdaq under the symbol “ARM“. – Reuters

Malaysia seeks return of ex-Goldman banker convicted in 1MDB case

 – Malaysia wants a former Goldman Sachs banker convicted last year in New York of helping loot billions of dollars from its 1MDB sovereign wealth fund to return to the country before starting his 10-year US prison sentence.

US District Judge Margo Brodie in Brooklyn on Tuesday delayed Roger Ng’s scheduled Sept. 6 surrender date by one month to Oct. 6after federal prosecutors said they needed more time to talk with Kuala Lumpur about first letting him stand trial on charges there.

“The United States is also working to ensure that the procedures governing the defendant’s return to Malaysia will not unduly delay the service of his US sentence,” prosecutors said.

Mr. Ng’s lawyers agreed to the one-month delay, prosecutors said. Marc Agnifilo, one of the lawyers, declined to comment.

The case stemmed from about $6.5 billion in bonds that Goldman helped 1MDB sell in 2012 and 2013.

US prosecutors said $4.5 billion of that sum was embezzled by officials, bankers and their associates.

Mr. Ng, 51, was convicted in March 2022 on bribery and money laundering conspiracy charges. Brodie called his embezzlement “a crime of pure greed” when sentencing Ng a year later.

At a court hearing last month, US prosecutor Drew Rolle said Ng could be returned to Malaysia to stand trial there once he is in US custody.

Mr. Agnifilo said at the hearing that Malaysia wanted Mr. Ng’s cooperation with an ongoing 1MDB probe.

Mr. Ng was arrested in Malaysia in November 2018 and agreed to be extradited to the United States three months later.

In a separate letter to Brodie on Tuesday, lawyers hired this month by Malaysia‘s government said the United States had “backtracked” on its commitments regarding Ng’s surrender. The lawyers called the matter a “very serious issue.”

Another onetime Goldman banker, Mr, Ng’s former boss Tim Leissner, pleaded guilty and testified against Ng at trial. He has not yet been sentenced.

Jho Low, the alleged mastermind of the 1MDB scheme, was also criminally charged but is at large. – Reuters

The 12th Arangkada Philippines Forum: Towards Sustainable Transformations

The seven members of the Joint Foreign Chambers (JFC) of the Philippines will host the annual Arangkada Philippines Forum on Oct. 25, 2023 at the Marriott Grand Ballroom in Pasay City.

Now in its 12th year, the Arangkada Forum will explore perspectives on further integrating sustainability objectives in accelerating inclusive economic growth. Representatives from the public and private sectors will explore opportunities to collaborate in boosting green investments, encouraging sustainable production and consumption practices, and advocating for responsible management and utilization of natural resources amid the long-term social, economic, and environmental impacts of climate change in the Philippines.

The first panel, Trade, Investment, and Sustainable Growth, will assess the intersection between trade, investment, and sustainable development by looking into mainstreaming sustainable finance, identifying green investment opportunities, and integrating sustainability provisions and capacity-building of micro, small, and medium enterprises in the implementation of trade agreements.

There will also be a special session on evaluating the progress of the Philippines in achieving its commitments to the UN Sustainable Development Goals halfway through the 2030 deadline.

Recognizing the role that the Philippine business community plays in raising awareness, the special panel on Driving Change, Building Momentum: Conversations on Sustainability in Doing Business will feature insights from industry representatives on embracing innovative business solutions and in advocating for responsible production and consumption practices.

Advancing the Nexus in Water, Energy, and Food Security in Policy Development will discuss the prospects of adopting a nexus approach in developing policies and strategies towards making the Philippines more water-, energy-, and food-secure.

The JFC will also hold its annual Arangkada Lifetime Achievement Award ceremony, which recognizes an individual of any nationality residing in the Philippines who has contributed significantly to improving the country’s business environment.

The 2023 Arangkada Forum is supported by Capital One, First Philippine Holdings, Eastern Communications, Marubeni, Royal Cargo, AIG Philippines, Amazon Web Services, BDO Unibank, Cargill, Converge, EON Group, Asia Society Philippines, British Chamber of Commerce of the Philippines, Financial Executives Institute of the Philippines (FINEX), IT and Business Process Association of the Philippines (IBPAP), Philippine Exporters Confederation (PHILEXPORT), Business Mirror, BusinessWorld, CNN Philippines, and Philippine Daily Inquirer.

Since 2012, the Arangkada Forum is the annual flagship event of the JFC that provides a platform for collaborative engagement among business leaders, industry experts, representatives from the public sector, the diplomatic community, and the media.

The JFC is a coalition of the American, Australian-New Zealand, Canadian, European, Japanese, and Korean chambers as well as the Philippine Association of Multinational Companies Regional Headquarters, Inc. It supports and promotes open international trade, increased foreign investment, and improved conditions for business to benefit both the Philippines and the countries the JFC members represent.

To register for the 2023 Arangkada Philippines Forum, visit www.arangkadaphilippines.com/forum2023 or contact Alyx Flojo at alyx.flojo@tcb-ph.com or to forum@arangkadaphilippines.com For more information on the Arangkada Philippines Project, visit http://www.arangkadaphilippines.com.

 


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Inflation accelerates in August for 1st time in 7 months

Philippine inflation accelerated to 5.3% in August on higher rice and fuel prices. — PHILIPPINE STAR/WALTER BOLLOZOS

By Keisha B. Ta-asan, Reporter

HEADLINE INFLATION accelerated for the first time in seven months in August, amid a spike in the prices of rice, vegetables and fuel, the Philippine Statistics Authority (PSA) said on Tuesday.

Preliminary data from the PSA showed the consumer price index (CPI) quickened to 5.3% in August from 4.7% in July, but slower than the 6.3% clip a year ago.

This was above the 4.9% median estimate in a BusinessWorld poll conducted last week. However, it settled within the Bangko Sentral ng Pilipinas’ (BSP) 4.8-5.6% forecast range for the month.

Inflation rates in the Philippines

August also marked the 17th consecutive month that inflation surpassed the BSP’s 2-4% target range.

At 5.3%, last month’s inflation print was the fastest in two months, or since the 5.4% in June. Stripping out seasonality factors, month-on-month inflation inched up 1.1% in August. 

For the first eight months of 2023, inflation averaged 6.6%, still above the BSP’s 5.6% full-year projection.

Core inflation, which excludes volatile prices of food and fuel, further eased to 6.1% year on year in August. This was lower than the 6.7% seen in July, but above the 4.6% in August last year. 

“Higher prices for oil and key agricultural commodities drove inflation during the month,” the BSP said in a statement.

National Statistician Claire Dennis S. Mapa said inflation was mainly driven by the faster annual increase in the heavily weighted index for food and nonalcoholic beverages to 8.1% in August from 6.3% in the previous month.

Food inflation alone quickened to 8.2% in August from 6.3% in July.

Rice inflation surged to 8.7% in August from 4.2% in July due to tight supply. This was the fastest pace since the 9% print in November 2018 when the country experienced another rice shortage. August also marked the sixth straight month of increase or since 2.2% in February.

Mr. Mapa noted that an increase in rice prices typically signals rising inflation since rice accounts for 8.9% of the total CPI basket for all income households and 17.9% for the bottom 30%.

Bottom 30% inflation rate in the Philippines

Meanwhile, inflation for vegetables, tubers, plantains, cooking bananas and pulses climbed to 31.9% in August from 21.8% a month prior. This was the fastest since 33% in February.

Mr. Mapa said recent typhoons have caused agricultural damage, which drove up prices of vegetables and rice, especially in Central Luzon.

Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said the inflation trend in the next few months will largely depend on food supply.

“The upcoming harvest season for rice may help in stabilizing the price of the commodity. However, local production can only cover around 85% of rice consumption and the country needs to import the rest from abroad,” he said in a note.

Mr. Neri said retail prices may stay elevated in the near term, as global rice prices are at a 12-year high. There may be uncertainties as well on the ability of other countries to supply rice amid the El Niño weather event.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa in a note said the uptick in August inflation was a reversal from the steady downtrend in inflation in the last six months.

“With supply shocks to important food items and imported energy, we could see a resumption of price pressures building up,” he said.

The government on Tuesday began implementing a nationwide price ceiling on regular and well-milled rice as part of efforts to address rising prices of the national staple.

How much did each commodity group contribute to August inflation?

FUEL PRICES
“Another threat we are looking at is the consistent increases in fuel prices (in recent months). If pump prices continue to rise, other commodity items may be affected,” PSA’s Mr. Mapa said.

PSA data showed transport inflation quickened to 0.2% in August from -4.7% in July, ending three months of decline.

In August alone, oil firms hiked fuel prices by P5.90 per liter for gasoline, P9.90 per liter for diesel and P10 per liter for kerosene.

Meanwhile, the inflation rate for the bottom 30% of income households rose to 5.6% in August from 5.2% in July. However, it was slower than the 7.3% print in August 2022.

From January to August, inflation averaged 7.4% for the bottom 30%.

In the National Capital Region (NCR), inflation inched up to 5.9% from 5.6% in July. Inflation in areas outside NCR accelerated to 5.2% in August from 4.4% in July.

POLICY OUTLOOK
The BSP said inflation may remain elevated in the coming months due to the impact of supply shocks on food prices as well as the increase in global oil prices.

Despite the uptick in August, the central bank said it still projects inflation to decelerate to within the 2-4% target by the fourth quarter.

“The BSP stands ready to adjust the monetary policy stance as necessary to prevent the further broadening of price pressures as well as the emergence of additional second order effects in view of the persistent upside risks to the inflation outlook,” the BSP said.

The BSP has kept the key rate steady at 6.25% at its last three meetings. It has raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023 to curb inflation.

According to the BSP, the balance of risks to the inflation outlook remains on the upside due to the potential impact of additional transport fare increases, higher-than-expected minimum wage hikes in other regions, and supply constraints for key food items.

It also cited the El Niño weather phenomenon and the likely knock-on effects of higher toll rates on prices of agricultural products as upside risks to the inflation outlook.

The impact of a weaker-than-expected economic recovery globally remains as the primary downside risk.

“The August upside surprise now has BSP on notice although we doubt one data point will be enough for Governor Eli M. Remolona, Jr. to flip back into tightening mode,” ING’s Mr. Mapa said.

Should inflation for rice, electricity and transportation accelerate further, he said that Mr. Remolona will not hesitate to raise rates to get a hold of inflation expectations.

Finance Secretary Benjamin E. Diokno said that the government is “resolute” in mitigating the impact of inflation on the public.

“While we are seeing a slight uptick, our inflation rate assumption of 5% to 6% for full-year 2023 remains doable,” he said in a separate statement.

With the higher-than-expected August print, Pantheon Chief Emerging Asia Economist Miguel Chanco said they have raised their average inflation forecasts to 5.6% for this year and 2.8% for 2024 from 5.4% and 2.6% previously.

“A return to the BSP’s target range in the fourth quarter still is very much in the cards, from our perspective, given the favorable food base effects from the fourth quarter last year,” Mr. Chanco said in an e-mail.

“We continue to believe that the BSP will cut its benchmark rate by 50 bps in the fourth quarter in order to take pressure off the economy, though the risks to this forecast are now more skewed to the upside,” he added.

For BPI’s Mr. Neri, rate cuts are still premature due to the likelihood of inflation remaining above target in the next six months.

“It should be noted that inflation has been above the target of the BSP for almost two years already. A longer period of above-target inflation may affect the BSP’s credibility as an inflation targeting central bank, which in turn may limit their ability to control inflation,” he said.

“Inflation can easily bounce back given these conditions. With the trade and current account deficit of the Philippines at substantial level, the BSP may find it difficult to decouple its monetary policy from that of the US,” he added.

The next meeting of the Federal Open Market Committee is scheduled for Sept. 19-20, while the BSP’s next policy meeting is on Sept. 21.

NEDA considers temporary cut in rice tariffs

A stall owner complies with the price ceilings on regular and well-milled rice, which took effect on Sept. 5. — PHILIPPINE STAR/EDD GUMBAN

By Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Economic and Development Authority (NEDA) is looking into a temporary reduction in tariffs for rice to help lower domestic prices.

“To partially counterbalance the rise in global prices and alleviate the impact on consumers and households, we may implement a temporary and calibrated reduction in tariffs,” NEDA Secretary Arsenio M. Balisacan said in a statement on Tuesday.

Mr. Balisacan made the statement after data showed August inflation accelerated to 5.3% due to the spike in rice and fuel prices. In particular, rice inflation quickened to 8.7% in August from 4.2% in July.

A nationwide price ceiling on rice took effect on Tuesday, as part of the government’s effort to address rising prices of the national staple amid reports of hoarding and price manipulation by cartels.

Price monitoring data from the Department of Agriculture (DA) showed that as of Sept. 4, the retail price of local well-milled rice ranged from P48 to P56 per kilogram, while regular milled rice ranged from P52 to P55 per kilogram.

Executive Order (EO) No. 39 set the price cap on rice at P45 per kilogram for well-milled rice and P41 for regular milled rice.

“To manage upward pressures in rice prices, price controls on rice through EO No. 39 serves as a short-term measure against non-competitive practices by some market players. Price controls, when carefully calibrated and closely implemented, are effective in the near term,” Finance Secretary Benjamin E. Diokno said in a Viber message.

Mr. Diokno noted that if price controls are allowed to be implemented longer than necessary, it would trigger unwanted consequences.

“Supply will disappear, output will fall as farmers are discouraged to plant, and importers will refuse to import because the suggested domestic retail price is lower than the implied landed costs of imports,” he said.

Meanwhile, former Agriculture Undersecretary Fermin D. Adriano said that the price ceiling will rattle the rice supply chain.

“The price cap will negatively impact the rice value chain from farmers whose palay (unmilled rice) will not be bought because traders will lose money. Traders will not import because the rice ceiling is lower than the cost of rice imports, and consumers because rice will gradually disappear from the market since traders will not sell if they are going to lose money. A black market will develop,” he said in a Viber message.

Sonny A. Africa, executive director of think tank Ibon Foundation, said that the price cap may initially stabilize prices but noted the second-round effects on small traders and rice farmers.

“A protracted price cap without minimum farmgate prices and support for small traders may just end up disrupting rice supplies which would only drive up the underlying price of rice even more,” he said in a Viber message

On the other hand, Jayson H. Cainglet, executive director of Samahang Industriya ng Agrikultura (SINAG), said in a statement that the price cap is a compromise to help farmers and protect consumers.

“If they lower the price ceiling, farmers will be the most hit by this and farmgate prices will sink to P17-19 per kilogram. If they raise it, consumers will be affected by this and importers,” he said.

Mr. Cainglet said that there is no reason to hike the retail price of rice as there is no shortage of supply.

“Traders capitalized on the initial public panic created by the statement of the National Food Authority (NFA) that government buffer stock is only good for 1.5 days. Our stocks are good to last until the first quarter of next year and we have yet to harvest the expected 7 million metric tons (MT) of rice this harvest season,” he said.

“At any given time, our buffer stock is good for 50-60 days, prior to the onset of the harvest season later this month.”

For his part, Mr. Adriano called on the government to lift the price cap immediately and instead reduce or remove tariffs on rice imports.

The Foundation for Economic Freedom (FEF) earlier suggested the government cut import tariffs on rice from Association of Southeast Asian Nations (ASEAN) countries to 10% from the current 35%.

Mr. Africa said that the government should focus on the long-term solutions to rely less on imports and focus on ramping up local production.

“The government should accept that domestic rice production hasn’t substantially improved since rice liberalization four years ago and, if anything, our rice import dependence is getting worse. We may be forced to import more if supplies remain low in the coming harvest season, but this should be a temporary stop-gap measure at best. Rice self-sufficiency should be a goal exactly as it has been for the countries that we’re importing our rice from,” he added.

Data from the Bureau of Plant Industry showed that the Philippines imported 2.19 million MT of rice in the January-August period.

The United States Department of Agriculture projects the Philippines’ rice imports to reach 3.8 million MT this year.

Panel OK’s bill lowering tax on stock transactions

The lobby of the Philippine Stock Exchange in Taguig City, Sept. 30, 2020. — REUTERS

By Beatriz Marie D. Cruz, Reporter

THE HOUSE Committee on Ways and Means on Tuesday approved a bill that seeks to deepen Philippine capital markets by lowering the tax on stock transactions.

Albay Rep. Jose Ma. Clemente S. Salceda, who also chairs the committee, said the proposed Capital Markets Efficiency Promotion Act is “part of a broader effort to make the country’s capitals markets deeper, more liquid, and more competitive.”

The unnumbered substitute bill seeks to reduce the stock transaction tax to 0.1% from the current 0.6%.

According to Mr. Salceda, the Philippines’ 0.6% stock transaction tax is the highest among Association of Southeast Asian Nations (ASEAN) members.

“Vietnam and Indonesia only impose 0.1% while other neighboring countries exempt the sale of shares of stock. This keeps the Philippine bond and equity markets small relative to our regional peers,” he said.

The lawmaker noted the Philippine Stock Exchange (PSE) has only 283 listed companies, while other stock exchanges in the region have between 425 and 963 listed companies.

“An outright reduction from 0.6% to 0.1% may foster a conducive environment for investments and help domestic corporations raise capital. This will simplify the tax system as the distinction on the tax on trading of domestic shares whether in the local or foreign stock exchange will be removed,” Mr. Salceda said.

PSE President and Chief Executive Officer Ramon S. Monzon said the trading volume would have to increase over three times to compensate for the loss in revenues from the reduction in the stock transaction tax.

“I think we are very confident that this could be met because the increase in volume will not only increase transaction tax, it will increase income tax on the fees charged on stock trading. It will increase taxes on the earnings of brokers and on the earnings of the clearing and other organizations that have to do with the market,” he told the committee.

Mr. Monzon noted that countries like Taiwan and South Korea saw an increase in stock market volumes after reducing the tax on stock transactions.

“We foresee [that] any reduction in such taxes will encourage more participation in the stock market, and thereby add liquidity to our capital markets,” Kelvin Lester K. Lee, commissioner at the Securities and Exchange Commission (SEC), told the committee.

The bill also expands the definition of shares of stock to include options, derivatives, and short selling, as suggested by the PSE.

It also seeks to remove the 7% gross receipts tax on net trading gains by banks and financial institutions, as well as reduce the tax on dividends for nonresident investors to 10% from the current 25%.

“Lower dividend tax rates can encourage cross-border investments and participation in the local capital market by nonresident investors. This increased participation can lead to improved liquidity, depth, and efficiency of the capital market,” Mr. Salceda said in his sponsorship speech.

He said the bill would “help potential listings in the market, including the Maharlika Investment Fund and the proposed listing of shares of the Land Bank of the Philippines.”

Mr. Salceda said the increase in stock market volumes will benefit pension funds, such as the Government Service Insurance System (GSIS) and the Social Security System (SSS).

The panel also removed the proposed debt transaction tax, which was included in the original bill, at the suggestion of the Bankers Association of the Philippines.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said removing the tax on debt instruments would make the stock and bond markets both attractive and competitive to investors.

“The proposed debt transaction tax of 0.1% was intended to equalize the tax treatment of debt and equity transactions, as the current stock transaction tax is 0.6%. However, some experts argued that it would discourage investors from buying bonds and increase borrowing costs for the government and corporations,” Mr. Arce said in a Viber message.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the government should consider other factors to catch up with other stock markets in the region.

“The tax measures alone may not be enough to catch up with our ASEAN neighbors. There are other important factors, including fundraising costs, company eligibility, speed to market, and regulatory environment,” Mr. Colet said in a Viber chat.

“The proposed tax cuts are expected to improve market liquidity, so that will be a favorable factor when companies assess whether to list shares on the PSE,” he added.

Full impact of tightening has not yet ‘run its full course’ — FSCC

PHILIPPINE STAR/ MICHAEL VARCAS

THE FULL IMPACT of the Bangko Sentral ng Pilipinas’ (BSP) aggressive monetary tightening since last year has not yet “run its full course,” the Financial Stability Coordination Council (FSCC) said in a statement on Tuesday.

The interagency body said global growth prospects are more positive compared with several months ago, although pressures from advanced economies are still evident.

“The Council’s Systemic Risk Review highlighted that the growth prospects of the Philippines’ major trading partners are expected to diverge. As market rates have swung from a lower-for-longer to a high-for-now environment, its full impact may not have yet run its full course,” it said.

To tame inflation, the BSP hiked benchmark interest rates by 425 basis points (bps) from May 2022 to March 2023. This brought the key policy rate to 6.25%, its highest level in nearly 16 years.

BSP Governor and FSCC Chairman Eli M. Remolona, Jr. said authorities must continue to be vigilant against risks even if there are no immediate signs of sector-wide pressures among corporates.

“While the high-level indicators are notable, there are many developments that we should still monitor,” he said. “This is where systemic risk surveillance is critical because we need to assess if and how changing conditions in the global and regional markets mesh with our own domestic situation.”

According to the FSCC, the interagency body has approved a broad range of actions to enhance the resiliency of the Philippine financial system to combat systemic risks.

These actions cover communication to the capital and contingent markets, as well as using the right tools and better data to manage possible contagion risks more effectively. 

“In managing systemic risks, we prepare for viable possibilities rather than forecast the most likely outcome,” Mr. Remolona added.

The FSCC is an interagency body composed of representatives of the BSP, the Department of Finance, the Insurance Commission, the Philippine Deposit Insurance Corp., and the Securities and Exchange Commission.

In July 2021, Executive Order 144 institutionalized the FSCC to focus on assessing and implementing policies to prevent systemic risk factors or company- and industry-level events that have the potential to trigger severe instability within entire industries, or even the economy.

The FSCC convenes on a quarterly basis. The regularity of their meetings may be increased “when market conditions warrant.” — Keisha B. Ta-asan

ACEN board clears investment in 335-MW onshore wind farm project

ACEN Corp.’s board has given the green light for the Ayala-led company to invest in a 335-megawatt (MW) onshore wind power project after its subsidiary won in a government auction for renewable energy (RE) capacity.

In a stock exchange disclosure on Tuesday, the company said its unit Giga Ace 6, Inc. had been recently awarded for its successful bid for the second round of the Department of Energy’s green energy auction (GEA-2).

ACEN said its board on Sept. 4 approved the company’s procurement of a performance bond for the benefit of its subsidiary “to enable the latter’s compliance with the requirements of GEA-2.”

The government’s green energy auction program is a competitive process of procuring RE supply by offering capacities to qualified bidders at a set maximum or ceiling price.

Based on the Energy department’s list of winning bidders, Giga Ace won the bid for its Isla wind power project located in the provinces of Laguna and Quezon with an offered capacity of 230 MW for P5.79 per kilowatt-hour.

The wind project’s operation is set to start on Dec. 24, 2026.

ACEN did not disclose more details on the amount of investment and timeline of the operations.

Under GEA-2, which was conducted on July 3, successful bids reached an equivalent of 3,440 MW, or below the 11,600-MW offered capacity.

Earlier, ACEN said that it expects to ramp up its RE expansion after raising P25 billion from a perpetual preferred share offering under the first tranche of its shelf registration of up to 50 million preferred shares.

Currently, ACEN has approximately 4,200 MW of attributable capacity spanning the Philippines, Vietnam, Indonesia, India, and Australia.

The energy company aspires to become the largest listed RE platform in Southeast Asia with a target portfolio of 20 gigawatts by 2030.

The existing capacity attributable to the company has a renewable share of 98%, the company said, claiming the figure to be among the highest in the region.

At the stock exchange on Tuesday, shares in ACEN slipped by four centavos or 0.78% to close at P5.06 apiece. — Sheldeen Joy Talavera