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US, Vietnam firms hold business summit during Biden visit

US President Joseph R. Biden holds a press conference in Hanoi, Vietnam, Sept. 10, 2023. — REUTERS

HANOI — Executives at top US and Vietnamese firms in the semiconductor, tech and aviation sectors met on Monday as part of US President Joseph R. Biden’s visit to Hanoi, seeking to forge business partnerships with new deals in artificial intelligence (AI) unveiled.

Senior executives from Google, Intel, Amkor, Marvell, GlobalFoundries and Boeing attended the Vietnam-US Innovation & Investment Summit, according to the meeting agenda.

From Vietnam, there were executives from half a dozen companies, including Nasdaq-listed electric car maker VinFast, flag carrier Vietnam Airlines, tech company FPT, MoMo, the country’s biggest e-wallet by users, as well as internet firm VNG, which filed in August for a US IPO.

Mr. Biden reiterated at the meeting that the two countries were deepening cooperation in cloud computing, semiconductors and artificial intelligence, and stressed Vietnam was crucial for critical minerals supplies.

The country has the world’s second-biggest estimated deposits of rare earths, which are used in electric vehicles and wind turbines.

The meeting, which followed a historic upgrade of diplomatic relations agreed on Sunday, underscored US desire to boost Vietnam’s global role. This is particularly so in chipmaking with Washington seeking to reduce the sector’s exposure to China-linked risks, including trade friction and tensions over Taiwan.

US State Secretary Antony Blinken and Vietnam’s investment minister Nguyen Chi Dzung chaired the meeting, which was followed by discussions with Mr. Biden and Vietnam’s Prime Minister Pham Minh Chinh.

Newly unveiled deals by the White House include plans by Microsoft to make a “generative AI-based solution tailored for Vietnam and emerging markets.”

Nvidia will also partner with Vietnam’s FPT, Viettel and Vingroup, VinFast’s parent company, on AI in the country, it said.

The White House also highlighted the number of chip-related investments by US firms in Vietnam, including plans by Marvell and Synopsys to build chip design centers in the country.

A new $1.6 billion Amkor factory near Hanoi that will assemble, package and test chips is due to start operations in October, it added.

The investment value is on par with Intel’s $1.5 billion chip assembling plant in the south of the country — the company’s biggest worldwide. Sources said earlier this year that it may be expanded.

Vietnam Airlines will also purchase 50 Boeing 737 Max jets, the White House said, in an agreement that a source told Reuters was valued at about $7.5 billion.

US conglomerate Honeywell will cooperate with a Vietnamese partner to launch a pilot project to develop Vietnam’s first battery energy storage system, the White House also said. — Reuters

Malaysia targets at least 5% economic growth annually until 2025 — PM

REUTERS

KUALA LUMPUR — Malaysia is aiming for economic growth of at least 5% annually until 2025, lower than the Southeast Asian nation’s previous target, Prime Minister (PM) Anwar Ibrahim said on Monday.

The lower forecast comes as Malaysia’s economy takes a hit from a global slowdown. Growth was the slowest in nearly two years in the second quarter as exports slumped.

Malaysia had earlier targeted growth of 4.5% to 5.5% annually between 2021 and 2025 as part of its five-year economic growth plan.

Tabling the midterm review of the plan in parliament, Mr. Anwar said Malaysia’s economic growth will be supported by a focus on accelerating the transition to high-value industries, and bigger investments.

He said Malaysia was targeting private investments of 300 billion ringgit ($64.17 billion) annually until 2025.

“The government aims to make Malaysia the preferred destination for investors by enhancing competitiveness,” Mr. Anwar said.

Mr. Anwar also said the government will increase the budget allocation for the economic plan to 415 billion ringgit ($88.77 billion), compared to the 400 billion ringgit previously announced.

Last month, the central bank said Malaysia’s full-year economic expansion would be at the lower end of the 4% to 5% range it had forecast earlier. — Reuters

Smart makes history with PHL’s epic hosting of FIBA Basketball World Cup 2023

Smart transformed the MOA Ball into a massive basketball tribute.

The final buzzer to the FIBA Basketball World Cup 2023 rang with a much deeper meaning for Filipinos who witnessed the best players from all over the world and immersed in world-class hardcourt action in Manila, powered by FIBA global partner Smart Communications, Inc. (Smart).

After setting a new attendance record on opening day with 38,115 fans at the Philippine Arena in Bulacan, hundreds of thousands more flocked to the rest of the games at the Araneta Coliseum in Quezon City and Mall of Asia Arena in Pasay to root for their favorite players and teams.

Dennis Schroder of Germany moves past Bogdan Bogdanovic of Serbia during Sunday night’s finals game of the FIBA Basketball World Cup 2023 at the Mall of Asia Arena.

Smart is the mobile network of choice of FIBA goers

Ahead of the tournament, Smart teamed up with technology partners Huawei and Ericsson to further expand and permanently optimize its LTE and 5G mobile network coverage across all venues. Understandably, Smart emerged as the mobile network of choice of fans with up to 59 percent of live attendees relying on their Smart-powered SIMs and eSIMs to share real-time updates and upload online content on the fly, according to an internal report covering the Phase 1 games from Aug. 26 to Sept. 3.

Filipinos’ love for basketball spilled over on Facebook, Instagram, and TikTok, the three top apps used by fans during the games, according to the same report. Smart made it so much easier for local and foreign basketball fans to latch on to the Smart network by making available Prepaid SIMs and eSIMs at Smart Stores and accredited retailers near the venues and airports. 

“Whether at Araneta or MOA Arena, I enjoyed seamless and hassle-free connection while posting on social media. I was able to share content in real-time, which got several of my friends’ attention,” said Dan Reyes, a long-time Smart subscriber, who watched the Serbia vs China match at Araneta Coliseum and Serbia vs Lithuania match at MOA Arena.

Larger-than-life basketball tributes 

Luka Doncic of Slovenia leaves Manila with a win after escaping Italy for 7th place in the FIBA world rankings.

Smart pulled out all the stops to bring epic basketball fan experiences to subscribers. Ten days before the games, Smart transformed the MOA Ball into a giant basketball with a hoop for one of the most awe-inspiring basketball tributes ever seen. The giant installation — measuring 1.5 meters in diameter, inside a ring with 111 meters in circumference — officially signaled the country’s all-out efforts to kick off the hosting of the FIBA World Cup 2023, as well as the larger-than-life passion and energy that Filipinos have for basketball.

Smart also drummed up the excitement of fans by unveiling an interactive LED billboard with a massive basketball ring and augmented reality integration along EDSA, complete with a QR code allowing fans to view FIBA stars’ signature moves on their smartphones. Smart also took it a step further with an interactive 3D Billboard featuring the FIBA official mascot JIP at Bonifacio Global City (BGC), captivating fans and spectators.

Epic basketball fan experiences 

Smart helped mount an epic street festival at BGC for the FIBA Draw. Aside from the live viewing of the much-awaited draw, fans were treated to a concert, games, and other exciting activities. Moreover, subscribers were given a chance to own a piece of basketball history as Smart unveiled limited-edition Gilas Prepaid Cards, and FREE collectible non-fungible tokens or NFTs exclusive to Smart subscribers.

During the tournament, basketball fans trooping to the venues enjoyed awesome augmented reality activities, such as the Smart Quiz, Smart Shirt Blast, and Smart Power Dribble Cam for a shot at winning premium tickets, exciting prizes, and limited-edition merchandise.

Real-time access to all FIBA games

Taking mobile livestreaming to a new level, Smart and US-based Radisys Corporation ran its beta test of Smart LiveStream App’s new features for a more immersive and interactive streaming experience.

Smart left no stone unturned when it comes to using technology to bring FIBA closer to every Filipino. As a huge treat, Smart gave all its subscribers FREE access to all FIBA games via the Smart LiveStream App. By downloading the app and connecting to the Smart mobile network, fans could stream the games live anytime, anywhere, or replay and relive all the FIBA hardcourt action.

Smart also introduced GILAS POWER 399, a prepaid data pack that comes with 78 GB valid for 30 days, including access to FIBA World Cup Games via the Smart LiveStream App.

During the Gilas vs. Italy game last Aug. 29, Smart and US-based Radisys® Corporation, a subsidiary of Jio Platforms Limited, showcased the future of mobile streaming with its beta test of Smart LiveStream App’s groundbreaking new features, enabling select Smart users to enjoy 360 viewing, live chat, and viewing party features.

After playing a pivotal role in the FIBA Basketball World Cup 2023 with its world-class mobile network, Smart continues its global partnership with FIBA for the 2027 World Cup games in Qatar.

As FIBA Global partner, Smart also provided Prepaid eSIMs to all the the players, coaching staff, and delegates who flew to Manila for the tournament so they may stay connected with their loved ones back home. 

Smart powered the FIBA Basketball World Cup 2023 with the Philippines’ fastest and best mobile network, as recognized by Ookla, the global leader in mobile and broadband network intelligence for three consecutive reporting periods – Q1-Q2 2022, Q3-Q4 2022, and Q1-Q2 2023.

For more FIBA highlights, follow Smart’s official Facebook, Instagram, and X (Twitter) accounts.

 


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PM Sunak raises concern over interference in UK democracy with China’s Li

Rishi Sunak. — Picture by Pippa Fowles/No 10 Downing Street/Flickr/CC BY-NC-ND 2.0

Prime Minister Rishi Sunak said he had raised his concern over any Chinese interference in Britain’s parliamentary democracy during a meeting with Chinese Premier Li Qiang at a G20 summit in India, after the reported arrest of two alleged spies.

The Sunday Times reported that one of the people arrested on suspicion of spying for China was a researcher in the British parliament.

Mr. Sunak said he was limited in what he could say about an ongoing investigation but told reporters he had raised “his very strong concerns about any interference in our parliamentary democracy, which is obviously unacceptable”, with Mr. Li.

London’s Metropolitan Police said two men were arrested in March under the Official Secrets Act, and had been released on police bail until early October.

The allegations potentially undermine Mr. Sunak’s bid for more dialogue with China, illustrated by a visit by foreign minister James Cleverly to Beijing last week.

Mr. Sunak’s Conservative government has sought a thaw in relations with China, engaging with Beijing on matters such as climate change but also criticising it in several areas including human rights.

Mr. Sunak said he raised areas where there are disagreements, but the meeting showed the value of the strategy of engaging “where it makes sense”.

“I think the right thing to do was take the opportunity to engage, to raise concerns specifically, rather than just shouting from the sidelines,” he said.

A Chinese readout from the meeting did not mention the spying allegation but welcomed Britain’s expanded practical cooperation with China, adding Mr. Li had said that “the two sides should properly handle their differences”.

However, the Chinese embassy in the UK responded to the arrests, saying the allegations were made up and that China firmly opposed them.

“The so-called claim that China is suspected of ‘stealing British intelligence’ is completely fabricated and malicious slander,” the embassy said on its website, urging relevant parties to stop anti-China political manipulation and “self-directed political farce”.

Iain Duncan Smith, Conservative lawmaker and China critic, said Beijing’s attitude seriously questioned Sunak’s approach.

“I don’t think it’s a dialogue. I think it’s a kind of pathetic monologue,” Duncan Smith, who has been sanctioned by China, told Times Radio. “What’s actually going on is China is ignoring much of what we say.” — Reuters

Racist, sexist, casteist: Is AI bad news for India?

STOCK PHOTO | Image by Gerd Altmann from Pixabay

Thomson Reuters Foundation — After communal clashes in Delhi’s Jahangirpuri area last year, police said they used facial recognition technology to identify and arrest dozens of men, the second such instance after a more violent riot in the Indian capital in 2020.

In both cases, most of those charged were Muslim, leading human rights groups and tech experts to criticise India’s use of the AI-based technology to target poor, minority and marginalised groups in Delhi and elsewhere in the country.

As India rolls out AI tools that authorities say will increase efficiency and improve access, tech experts fear the lack of an official policy for the ethical use of AI will hurt people at the bottom, entrenching age-old bias, criminalising minorities and channeling most benefits to the rich.

“It is going to directly affect the people living on the fringes – the Dalits, the Muslims, the trans people. It will exacerbate bias and discrimination against them,” said Shivangi Narayan, a researcher who has studied predictive policing in Delhi.

With a population of 1.4 billion powering the world’s fifth-biggest economy, India is undergoing breakneck technological change, rolling out AI-based systems – in spheres from health to education, agriculture to criminal justice – but with scant debate on their ethical implications, experts say.

In a nation beset by old and deep divisions, be it of class, religion, gender or wealth, researchers like Narayan – a member of the Algorithmic Governance Research Network – fear that AI risks exacerbating all these schisms.

“We think technology works objectively. But the databases being used to train AI systems are biased against caste, gender, religion, even location of residence, so they will exacerbate bias and discrimination against them,” she said.

Facial recognition technology – which uses AI to match live images against a database of cached faces – is one of many AI applications that critics say risks more surveillance of Muslims, lower-caste Dalits, Indigenous Adivasis, transgender and other marginalised groups, all while ignoring their needs.

Linking databases to a national ID system and a growing use of AI for loan approvals, hiring and background checks can slam doors firmly shut on the marginalised, said Siva Mathiyazhagan, an assistant professor at the University of Pennsylvania.

The growing popularity of generative AI applications such as chatbots further exacerbates these biases, he said.

“If you ask a chatbot the names of 20 Indian doctors and professors, the suggestions are generally Hindu dominant-caste surnames – just one example of how unequal representations in data lead to caste-biased outcomes of generative AI systems,” he told the Thomson Reuters Foundation.

DIGITAL CASTE PANOPTICON
Caste discrimination was outlawed in India 75 years ago, yet Dalits still face widespread abuse, many of their attempts at upward mobility met with violent oppression.

Under-represented in higher education and good jobs despite affirmative action programmes, Dalits, Muslims and Indigenous people lag higher-caste Indians in smartphone ownership and social media use, studies show.

About half of India’s population – primarily women, rural communities and Adivasis – lacks access to the internet, so “entire communities may be missing or misrepresented in datasets … leading to wrong conclusions and residual unfairness,” analysis by Google Research showed in 2021.

The ramificiations are widespread; not least, in healthcare.

“Rich people problems like cardiac disease and cancer, not poor people’s tuberculosis, is prioritised, exacerbating inequities among those who benefit from AI and those who do not,” researchers said in the Google analysis.

Similarly, mobile safety apps that use data mapping to flag unsafe areas are skewed by middle-class users who tend to mark Dalit, Muslim and slum areas as dodgy, potentially leading to over-policing and unwarranted mass surveillance.

“The irony is that people who are not counted in these datasets are still subject to these data-driven systems which reproduce bias and discrimination,” said Urvashi Aneja, founding director of Digital Futures Lab, a research collective.

India’s criminal databases are particularly problematic, as Muslims, Dalits and Indigenous people are arrested, charged and incarcerated at higher rates than others, official data show.

The police registers are used for potential AI-assisted predictive policing to identify who is likely to commit a crime. Generative AI may come to court, with the Punjab and Haryana high court earlier using ChatGPT to decide whether to award bail for a suspect in a murder case – a first in the country.

“Any new AI-based predictive policing system will likely only perpetuate the legacies of caste discrimination and the unjust criminalisation and surveillance of marginalised communities,” said Nikita Sonavane, co-founder of the Criminal Justice and Police Accountability Project, a non-profit.

“Policing has always been casteist in India, and data has been used to entrench caste-based hierarchies. What we’re seeing now is the creation and rise of a digital caste panopticon.”

The ministry of information technology did not respond to a request for comment.

CALIFORNIA CASTE LAW
Governments worldwide have been slow to regulate AI. China’s draft rules for generative AI took effect last month, while the EU’s AI Act is in the final stage of negotiations, and the US AI Bill of Rights offers guidelines for responsible design and use.

India does not have an AI law, only a strategy from government thinktank NITI Aayog that states that AI systems must not discriminate on the basis of religion, race, caste, sex, descent, place of birth or residence, and that they must be audited to ensure they are impartial and free from bias.

But there is little discussion in India about bias in AI, even as there is growing awareness of caste in the tech industry in the United States, with California poised to become the first state to ban caste discrimination, after Seattle became the first US city to do so.

South Asian immigrant communities make up large numbers of tech workers in the United States, where Dalit engineers – including women – have complained of discrimination and abuse from high-caste men.

Having mostly high-caste men design AI tools can unduly benefit the privileged and altogether bypass women, lower-caste and other marginalised groups, said Aneja.

“How much agency do women or lower-caste groups have to check or contradict what’s coming out of a system? Especially generative AI, which is designed to seem human-like,” she said.

A technical fix cannot take existing bias out of the system; what’s needed is a better understanding of the biases and their impacts in different social contexts, Aneja said.

“We should shed the assumption that bias is going to go away – instead, we should accept that bias is always going to be there, and design and build systems accordingly.” — Reuters

Biden speaks to China’s Li at G20, says economic ‘crisis’ makes Taiwan invasion less likely

HANOI — US President Joe Biden said on Sunday he held his highest level talks with Chinese leadership in months, adding that Beijing’s economic wobbles would not lead it to invade Taiwan.

Mr. Biden said he met with Chinese President Xi Jinping’s No.2, Chinese Premier Li Qiang, at the annual G20 summit in New Delhi. The talks were the highest level meeting between the two powers in nearly 10 months since Biden and Xi spoke at last year’s G20 in Indonesia.

Mr. Li, who took became premier in March, attended the gathering of world leaders in place of Mr. Xi. The two leaders were not expected to hold talks at the G20 but unscripted encounters at summits are common.

“My team, my staff still meets with President Xi’s people and his cabinet,” Mr. Biden told reporters. “I met with his No.2 person in India today.”

He added: “We talked about stability,” and the Southern Hemisphere. “It wasn’t confrontational at all.”

The White House on Sunday said Mr. Biden had met with a Chinese leader at the summit.

The two super powers have been trying to thaw frosty relations this year after a spat over a suspected Chinese spy balloon that flew over US territory, while fears of an economic slowdown have gripped Beijing.

Speaking at a press conference in Vietnam, Mr. Biden touted the US economy as the “strongest” globally. He told reporters that China’s growth was slowing due to a weak global economy as well as Chinese policies but did not specify which policies.

Mr. Biden called China’s economic situation a “crisis,” citing issues in the real estate sector and high youth unemployment.

“One of the major economic tenets of his plan isn’t working at all right now,” Mr. Biden said of Mr. Xi, without elaborating. “I’m not happy for that, but it’s not working.”

Mr. Biden added: “He has his hands full right now.”

The Democratic president is headed into a 2024 re-election campaign where his own handling of the economy and inflation has become a central concern for voters.

The US economy grew at a 2.1% annualised rate last quarter. Central bankers have sharply raised interest rates to bring inflation back down to target levels.

August trade data showed China’s exports and imports both narrowing their declines, joining other indicators showing a possible stabilisation in the economic downturn, as policymakers seek to spur demand and fend off deflation.

Mr. Li has said China should achieve its 2023 growth target of around 5%, but some analysts think a worsening property slump, weak consumer spending and tumbling credit growth could mean lower growth.

OPEN DIALOGUE
Mr. Biden has tried to keep communications open with China to lower the temperature in international frictions including over Taiwan, the self-ruled island claimed by China.

“I don’t think this is going to cause China to invade Taiwan,” Mr. Biden said of the country’s economic troubles. “As a matter of fact, the opposite, probably doesn’t have the same capacity that it had before.”

He described the United States as a Pacific power with no intention of withdrawing from the region.

Mr. Biden also said recent moves by Chinese officials to curb the use of US-designed Apple iPhones by state employees amounted to trying to “change some of the rules of the game” on trade.

“I am sincere about getting the relationship right,” he said. — Reuters

US, Vietnam reach deals on planes, tech and human rights as Biden visits

US PRESIDENT JOSEPH R. BIDEN — WHITEHOUSE.GOV

HANOI – The United States and Vietnam announced new deals and partnerships as US President Joe Biden visited Hanoi on Sunday including billions of dollars in plane orders, heightened human rights discussions, digital economy education and semiconductor design centers.

Here are the highlights:

BOEING AND VIETNAM AIR

Vietnam Airlines has agreed to buy about 50 Boeing 737 Max jets in a deal valued at about $7.5 billion. The deal will support “over 33,000 direct and indirect jobs” in the US, the White House said in a statement.

AMKOR, MARVELL, SYNOPSIS INVEST IN VIETNAM

Arizona’s Amkor Technology will start operations at a new $1.6 billion factory in Bac Ninh Province in October, the White House said. Delaware’s Marvell Technology and California’s Synopsys, will invest in semiconductor design and incubation centers in Ho Chi Minh City and Saigon, respectively.

AI FOR EMERGING MARKETS

Microsoft will make a “generative AI-based solution tailored for Vietnam and emerging markets,” the White House said, while NVIDIA will partner with Vietnam’s FPT, Viettel and Vingroup on AI in the country.

HUMAN RIGHTS

The two countries have an “enhanced commitment” to talking about human rights, the US said, building on the decades-old US-Vietnam Human Rights Dialogue, an annual meeting.

The United States and the United Nations recently criticized Vietnam’s detention of members of an environmental group as part of a wider trend of Vietnamese authorities targeting free speech.

ILLEGAL FISHING

The US is helping to “build Vietnamese capacity to fight regional and international transnational crime,” the White House said, including “illegal, unreported and unregulated fishing.”

China and Vietnam have a long-simmering dispute about fishing and other rights in the South China Sea; Beijing claims the waters almost entirely, ignoring other nations’ exclusive economic zones.

US WAR LEGACY

The US will expand its efforts to address lingering damage from the Vietnam war, which ended in 1975, including increasing funding from $183 million to $300 million for a dioxin remediation project in the Bien Hoa Air Base area.

Dioxin is a component of “agent orange” toxic herbicides sprayed by the US during the war.

The US will also provide an additional $25 million to clear unexploded ordnances in Vietnam; these efforts have totaled more than $230 million since 1993, the White House said. — Reuters

[B-SIDE Podcast] Ghost Month and the stock market

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Ghost Month, a tradition deeply rooted in Chinese culture, has fascinated financial analysts for years.

In this B-Side episode, Carlos A. Temporal, a senior equity research analyst at Unicapital Securities, Inc., discusses the impact of Ghost Month on the stock market with BusinessWorld reporter Justine Irish DP. Tabile.

This year, Ghost Month, the seventh month in the Chinese lunar calendar, runs from Aug. 16 to Sept. 14.

Ghost Month, which usually falls in the month of August, stems from an ancient Chinese belief that claims the gates of hell open, letting ghosts return to the living world.

“Given that major businesses in the Philippines and most of the index constituents of the Philippine Stock Exchange are owned by Filipino-Chinese businessmen, and considering how superstitious Filipinos are, which is also attributable to the ingrained Chinese culture in the Philippines, Ghost Month has become a widespread phenomenon believed by many local market participants,” said Mr. Temporal.

In the case of the local bourse, he said, the period that Ghost Month covers is seasonally weaker, which is why investors are driven to position themselves ahead of it.

“By positioning, they are liquidating their positions and their stocks ahead of the potential decline in August, so that is how it affects the market,” he noted.

“Given that the belief during Ghost Month is that doing big-ticket things such as investments may cause some bad luck, which could upset spirits visiting our world, this has prompted investors and market participants to delay making investments in the market,” he added.

For this year, he said that although the weeks covered by Ghost Month showed a slowdown, it is not that much different from prior months.

“I won’t really say that what happened in the market is mostly attributable to that phenomenon, but I think it did play its part because we have that low liquidity. But again, the negative macro-conditions are what really drove the sell-off,” he also said.

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IMF urges pact to boost its resource quota, strengthen world economy

REUTERS

NEW DELHI – It is vital to increase quota resources for the International Monetary Fund (IMF) before year-end, its chief, Kristalina Georgieva, said on Sunday, while urging members of the G20 bloc to deliver on a promise of $100 billion a year in climate funds.

In a declaration at its summit in New Delhi this weekend, the grouping vowed to tackle debt vulnerabilities in low and middle-income countries “in an effective, comprehensive and systematic manner”, but offered no fresh plan of action.”G20 members must lead by example in delivering on the promises of $100 billion per year for climate finance, supported by strengthening the multilateral development banks,” Georgieva said in a statement at the end of the two-day summit.

“Countries also need to mobilize domestic resources to finance and manage the green transition through tax reforms, effective and efficient public spending, strong fiscal institutions, and deep local debt markets.”

She urged the grouping to strengthen the global financial safety net.

“To make the global economy stronger and more resilient in a more shock-prone world, it is vital to reach an agreement to increase the IMF’s quota resources before the end of the year,” she said.

Such a pact would secure resources needed for the Fund’s interest-free support to the poorest countries through the Poverty Reduction and Growth Trust, she added.

The G20 summit also pledged to strengthen and reform multilateral development banks, while accepting a proposal to regulate cryptocurrencies more tightly worldwide.

“More work lies ahead, including in the realm of digital money and crypto assets,” Georgieva said. — Reuters

DoF eyes temporary zero tariffs on rice

A store owner complies with the mandated price ceiling of rice at Blumentritt market in Manila. — PHILIPPINE STAR/EDD GUMBAN

By Luisa Maria Jacinta C. Jocson, Reporter

THE DEPARTMENT of Finance (DoF) is proposing to temporarily slash the tariff rates for rice imports to zero to curb the spike in retail prices of the national staple.

“We need to adopt a comprehensive approach to help ensure that rice supply remains sufficient at reduced prices,” Finance Secretary Benjamin E. Diokno said in a press chat on Friday.

He said the DoF proposed the “reduction of the 35% rice import tariff rates, both ASEAN (Association of Southeast Asian Nations) and MFN (Most Favored Nation) rates, temporarily to zero percent or maximum of 10% to arrest the surge in rice prices.”

This as inflation unexpectedly quickened to 5.3% in August from 4.7% in July, driven by the rise in pump prices and food costs, particularly rice.

The government began implementing a nationwide price ceiling on rice last week, as part of efforts to address increasing prices of the national staple amid reports of hoarding and price manipulation by cartels.

The ceiling is at P41 per kilo for regular milled rice and P45 per kilo for well-milled rice.

Mr. Diokno said price ceiling on rice would likely last only a month. He noted that price controls, if “closely implemented,” are effective in the near term.

“However, the government recognizes that it also has adverse effects if allowed to linger for a longer period. The President has directed the economic team to implement measures that will mitigate the negative impact of the price controls on rice retailers and farmers,” he said.

The Finance chief admitted he was “surprised” when Mr. Marcos first announced the price cap on rice on Sept. 1. At that time, Mr. Diokno was in Tokyo with National Economic and Development Authority Secretary Arsenio M. Balisacan, and Budget Secretary Amenah F. Pangandaman for the Philippines-Japan High-Level Joint Committee Meeting.

“We were in Japan when that was announced. I was beside Arsi (Mr. Balisacan). We were surprised, of course,” he said in mixed English and Filipino.

On the proposed cut in rice tariffs, Mr. Diokno said this can only be approved when Congress is in recess. Congress is set to adjourn on Sept. 30 and resume session on Nov. 6.

The tariff reduction will also only require an executive order (EO) for its implementation.

“There’s no need for Congress… The President may adjust the tariff when Congress is not in session,” he said. “There is just a hearing, then the Tariff Commission will recommend, it needs an EO. The Tariff Commission will draft an EO to the President.”

Mr. Diokno said the temporary tariff cut will only be applied to rice and not include the other MFN rates for pork, corn and coal.

“The relaxing of the tariff is forward-looking because the price of rice is going up globally… rice is really, I think, the biggest contributor to inflation,” he said.

Food inflation quickened to 8.2% in August from 6.3% in the previous month. This was partly driven by rice inflation, which surged to 8.7% in August from 4.2% in July.

Apart from the tariff cut, Mr. Diokno said the government is seeking “cooperation with tollway concessionaires and operators for the temporary exemption of trucks that cater to agricultural goods from the increase in toll fees.”

Mr. Diokno noted that this would mean trucks would still pay the regular toll, but not the recently adjusted increases.

“The private concessionaires agreed with the proposal, they’re just trying to define the guidelines on how to identify these delivery trucks,” Finance Undersecretary Zeno Ronald R. Abenoja said.

The Toll Regulatory Board (TRB) will be in charge of issuing the guidelines for the toll exemption, he added.

To curb rice price increases, Mr. Diokno said the government will encourage the timely importation of rice by the private sector and fully implement the Super Green Lane to expedite rice imports.

“There is also a need to curb noncompetitive behavior in the rice industry by aggressively pursuing cases of hoarding, smuggling, and economic sabotage; strictly monitoring the prices of imported rice in the logistics chain; and encouraging the public, including retailers, to report individuals violating price caps on rice,” Mr. Diokno said.

“At the same time, we have to pursue programs to protect vulnerable sectors by safeguarding our farmers from the effect of the price ceiling; provide targeted subsidies to small traders and retailers of rice; and provide support to low-income households to address the impact of the surge in rice prices,” he added.

The Department of Social Welfare and Development began distributing a P15,000 cash subsidy to small rice retailers on Saturday.

Mr. Diokno said that there is a need for “timely, granular and accurate information on the status of the rice industry.”

“In this regard, the government must also devote more resources to satellite-based technology and data analytics to complement the dashboard,” he added.

Inflation unlikely to overshoot target in Q1

Headline inflation accelerated to 5.3% in August from 4.7% in July amid a spike in food and fuel costs. — PHILIPPINE STAR/MIGUEL DE GUZMAN

INFLATION is on track to return to the central bank’s 2-4% target range in the fourth quarter, but unlikely to overshoot the target in the first quarter of 2024, Finance Secretary Benjamin E. Diokno said.

“By the first quarter of next year, instead of overshooting — because we expect overshooting before — we will be right smack in the middle of the 2-4% range,” he told reporters on Friday.

Inflation unexpectedly quickened for the first time in seven months in August, as food and transport costs jumped. Headline inflation accelerated to 5.3% in August from 4.7% in July, ending six months of decline.

For the first eight months of the year, inflation averaged 6.6%. This is still higher than the central bank’s revised 5.6% inflation forecast for this year.

Despite the faster August inflation, Mr. Diokno noted that the Bangko Sentral ng Pilipinas (BSP) still sees inflation falling within the 2-4% target range by the fourth quarter.

“While there was a spike in the inflation rate for (August), the continued decline in the year-to-date inflation rate suggests our (Development Budget Coordination Committee) full-year 2023 inflation rate assumption of 5-6% remains doable,” he said.

BSP Governor Eli M. Remolona, Jr. last week said the central bank will likely revise its full-year inflation forecast for 2023 at its Sept. 21 policy meeting.

Mr. Remolona has also said that inflation will likely return to the 2-4% target in the first quarter of 2024.

Meanwhile, former BSP Governor Felipe M. Medalla said inflation is now likely to remain above the target band for up to 22 straight months or until January 2024.

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

“My original forecast was that inflation will be higher than target in 20 consecutive months (or November 2023) — the previous longest period wherein that was the case was 15 months. With the global rice price shocks, we could end up with 22 consecutive months of higher-than-target inflation,” he said in a text message.

Global rice prices soared after India banned the export on non-basmati white rice in July. India accounts for over 40% of global trade.

Even as inflation remains above the target range, Mr. Medalla said the BSP’s credibility will not be at risk.

“We have always said that the forecast of when inflation will be back within target was based on the assumption that there will be no new major shock. And clearly what happened to global rice prices was a surprise to anyone without a crystal ball,” he said. 

University of Asia and the Pacific (UA&P) Senior Economist Cid L. Terosa in an e-mail said that it will be difficult for inflation to ease to the 2-4% target in the fourth quarter due to supply-side constraints. 

Supply constraints contribute significantly to inflation, but “are not susceptible to change in monetary policy,” he noted.

“Moreover, the BSP does not have direct control over the actions of wholesalers and retailers, who are critical conduits of increases in prices,” he said.

Mr. Terosa also noted that the August headline inflation rate of 5.3% was expected due to high food and energy prices.

August inflation was mainly driven by the faster annual increase in the heavily weighted index for food and nonalcoholic beverages, which rose to 8.1% in August from 6.3% in the previous month.

Rice inflation surged to 8.7% in August from 4.2% in July due to tight supply, marking the fastest pace since the 9% print in November 2018.

Transport inflation quickened to 0.2% in August from -4.7% in July, ending three months of decline.

China Banking Corp. Chief Economist Domini S. Velasquez said the price cap on rice imposed by the government may cause inflation to ease in September, and return to within the 2-4% target in November.

The government on Sept. 5 began implementing a price ceiling on rice at P41 per kilogram for regular milled rice and P45 per kilogram for well-milled rice.

“The reaction of traders to the rice price ceiling merits close attention and monitoring,” Mr. Terosa said.

The Foundation for Economic Freedom earlier said the rice price cap may cause harm to retailers, farmers, and even consumers, as it will only “aggravate the current tight rice supply situation into a full-blown rice crisis.”

Meanwhile, Ms. Velasquez noted that upside risks to inflation have emerged in recent months.

“Vegetable prices are at risk due to consecutive typhoons, sometimes hitting northern Luzon. Oil prices will likely stay elevated especially with the recent production cuts of Saudi Arabia and Russia,” she said.

“Lastly, this month we expect the regional wage board decisions that could fan demand-side inflation.

Last week, the Regional Tripartite Wages and Productivity Board in Region IV-A (Calabarzon) issued a wage order which provides a 9-11% increase from the current daily minimum wage rates, ranging from P35 to P50 depending on the geographical area and labor sector. The higher daily minimum wage for the region, which is considered a manufacturing hub, will take effect on Sept. 24.

For his part, Mr. Terosa said supply shortages in agricultural products, higher fuel prices and the start of holiday-related spending may stoke inflation in the coming months.

“Nonetheless, I believe the BSP is still on top of things since it continues to mindfully address what it can control,” he said.

“Unfortunately, there are several external conditions that the BSP cannot influence or control such as weather disturbances, supply chain disruptions, policy actions of foreign governments, and geopolitical events, which have tightened supply of various commodities considerably,” he added. 

To tame inflation, the Monetary Board has raised borrowing costs by 425 basis points, bringing the benchmark interest rate to a near 16-year high of 6.25%.

Ms. Velasquez said the BSP may not respond with another rate hike in September. “For now, we expect BSP to stand pat at 6.25% but remain hawkish if inflationary expectations become de-anchored.”

Mr. Medalla also said that the BSP is unlikely to cut policy rates this year. 

“It is also worth noting that the current policy rate will be higher than the forecasted monthly headline inflation rates in the last four months of 2023 and average inflation in 2024,” he said. — Keisha B. Ta-asan with inputs from Luisa Maria Jacinta C. Jocson

Gov’t may launch dollar RTB offer this month

REUTERS

THE GOVERNMENT may push through with the launch of its US dollar retail Treasury bond (RTB) offer this month, National Treasurer Rosalia V. de Leon said.

“We’re monitoring the markets right now. We’re conducting financial literacy (seminars), including in Doha and Dubai. So, we’re looking at the interest of overseas Filipino workers (OFWs),” Ms. De Leon said in a press chat on Friday.

“So maybe at the end of the month, we’re looking. We will see, we’re not officially saying we are going to launch,” she added.

Earlier in July, Ms. De Leon said that they were planning to launch the retail dollar bond offering by September.

The government then said it was targeting an offer size of $2 billion.

The Philippines’ last retail dollar bond sale was in 2021, when it raised almost $1.6 billion.

In January, the government also raised $3 billion from its second global bond offering under the Marcos administration.

Ms. De Leon earlier said that the retail dollar bonds can be marketed through platforms such as the Bonds.PH app, the Land Bank of the Philippines mobile app and selling agents. The government is also working on coordinating with banks to waive the fees for opening dollar accounts.

This year, the government plans to borrow P2.207 trillion, of which 75% will be sourced locally. Broken down, P1.654 trillion will be sourced domestically and P553.5 billion will come from overseas.

As of end-July, the National Government’s (NG) outstanding debt stood at P14.24 trillion.

External debt rose by 9.3% to P4.43 trillion at the end of July, which consisted of P2.42 trillion in global bonds and P2.02 trillion in loans.

UNUSED LOAN PROCEEDS
Meanwhile, Finance Secretary Benjamin E. Diokno said that the Philippines is returning unused loan proceeds worth $320 million to the World Bank.

Last week, the World Bank held a high-level meeting with the heads of the departments of Finance and Health, as well as the National Economic and Development Authority.

“The $320 million was excess from the pandemic. The World Bank advised us to return that and come up with a new program,” Mr. Diokno said in mixed English and Filipino.

The loan proceeds were supposed to be used to purchase coronavirus disease 2019 (COVID-19) vaccines. However, Mr. Diokno said the funds were not utilized as the country is already recovering from the pandemic and there were enough donations of the COVID-19 vaccines.

Mr. Diokno said that the government is working on another health-related loan program focusing on “strengthening local health (and) preparing for the next pandemic.”

From 2020 until July 2023, the World Bank has provided over $7 billion for COVID-19 programs for the Philippines. — Luisa Maria Jacinta C. Jocson