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Ship with radioactive zinc dust stuck near Philippine port, official says

The city skyline in Manila. / BLOOMBERG

A ship with 23 containers of radioactive zinc dust is stuck off the coast in the Philippines, unable to unload because there’s no site that has agreed to entomb the offending material, according to a top official.

Port authorities aren’t allowing the ship, which arrived a few days ago from Indonesia, to offload in Manila unless there’s a local government that’s willing to take custody of the cargo for temporary storage or disposal, Carlo Arcilla, director of the Philippine Nuclear Research Institute, said on Tuesday.

“These containers aren’t a danger to the public because there’s very little radiation outside the containers,” Mr. Arcilla said in a phone interview. The ship crew aren’t sick, he added.

Even so, the situation adds new complexity to the growing issue of radioactive materials found in various parts of Southeast Asia. An Indonesian investigation in September uncovered cesium-137 at a metal-processing hub that supplies materials for construction and manufacturing in a western Java industrial park. Separately, it also flagged the containers of zinc powder from the Philippines at a Jakarta port. Indonesia this month halted imports of scrap metal.

Cesium-137 is an artificial radionuclide used in medical devices and gauges, and is also one of the by-products of nuclear fission processes in reactors and weapons testing.

Exposure to the isotope can raise the risk of cancer, according to the US Centers for Disease Control and Prevention.

A probe was initiated after the US Food and Drug Administration in August reported the detection of trace amounts of the radioactive material in frozen shrimp shipments from one of Indonesia’s largest prawn companies, leading to recalls by companies such as Walmart Inc.

The shipment now stuck off the coast of Manila contains zinc powder contaminated with cesium-137 that was exported to Indonesia by Zannwann International Trading Corp., a Chinese trading firm with offices in the Philippines, Mr. Arcilla said. It was returned to Manila following the detection of cesium-137, he said.

Zannwann didn’t respond to requests for comment. The Philippine Ports Authority referred queries to the Bureau of Customs, which didn’t respond.

The Philippine Nuclear Research Institute official said the zinc dust was sourced from Philippine steelmaker SteelAsia Manufacturing Corp. and another steel firm, and that radioactivity was only detected at SteelAsia’s scrap recycling plant located in Batangas province, south of the capital.

Zinc dust has a wide range of industrial and chemical uses because it resists corrosion.

SteelAsia on Saturday said it rejected the nuclear agency’s order to take custody of the containers, saying it has no connection to the zinc powder and that the cargoes didn’t originate from it. Nevertheless, the company, the Philippines’ top steelmaker, has voluntarily suspended operations at its plant out of caution.

The priority now, Mr. Arcilla said, is to look for a site to dispose of or entomb the 23 containers and remove the radioactive materials in SteelAsia’s facility and Zannwann’s warehouse, which he said could be “substantial.” Around 100 workers at both SteelAsia and Zannwann also need to be screened for any possible contamination illnesses, he added.

There have been no incidents of radioactivity detected in previous Zannwann shipments to Indonesia, Mr. Arcilla said. He couldn’t say whether the latest shipment from the Philippines is linked to the cesium-137 contamination in Indonesia. — Bloomberg

Marcos signs bill banning POGOs

A sign protesting the presence of Philippine offshore gaming operators (POGOs) is seen at a posh residential village in Muntinlupa City, July 13. — PHILIPPINE STAR/RYAN BALDEMOR

President Ferdinand R. Marcos, Jr. has signed a measure banning all Philippine Offshore Gaming Operators (POGOs), citing links to money laundering and human rights abuses.

Under Republic Act No. 12312 or the Anti-POGO Act of 2025, all work permits and visas issued to people involved in offshore gaming — including employees of operators, content providers and accredited service firms — are now revoked.

Mr. Marcos signed the measure on Oct. 23, ordering the Department of Labor and Employment to create programs that will help Filipino workers transition after the industry’s shutdown.

The President first announced the total ban during his 2024 state of the nation address, after a series of criminal cases tied to POGOs.

He said offshore gaming hubs had become breeding grounds for money laundering, human trafficking and torture, adding that such operations have “no place in a just and orderly society.” — Chloe Mari A. Hufana

Filinvest Group earns ICD Golden Arrow, enhances stakeholder trust

The Filinvest Group at the 2025 ASEAN Corporate Governance Scorecard Golden Arrow Awards. From left: FDC and FILRT Group Investor Relations Manager Rens V. Cruz II; FLI Assistant Special Projects Head-Legal Atty. Maria Tanya E. Llamas; FLI Investor Relations Head Melissa Regina C. Ortiz; FDC and FILRT Group Investor Relations Head Patricia Carmen D. Pineda; Filinvest Cyberparks, Inc. Deputy CFO Yasmin M. Dy; FILRT President and CEO Maricel Brion-Lirio; EastWest Chief Compliance Officer Atty. Amy Belen R. Dio; FLI and FILRT Assistant Corporate Secretary Atty. Jennifer C. Lee; FLI and FILRT Corporate Secretary and Corporate Information Officer Atty. Katrina O. Clemente-Lua; and FDC Chief Finance Officer and Treasurer Ven Christian S. Guce. Not in photo, FDC Legal Head Atty. Star C. Elamparo.

The Filinvest Group’s four listed companies were recognized for strong corporate governance at the 2025 Golden Arrow Awards by the Institute of Corporate Directors (ICD). Filinvest Development Corporation (FDC), Filinvest REIT Corp. (FILRT), and EastWest Banking Corporation (EastWest) each received two Golden Arrows, while Filinvest Land, Inc. (FLI) received one Golden Arrow.

For Filinvest, good governance is the backbone of sustained growth and stakeholder trust.

“This recognition reflects our collective effort to institutionalize strong governance practices in all aspects of our operations,” said Rhoda A. Huang, President and CEO of FDC. “At Filinvest, we understand that this is not a one-time achievement — it requires continuous effort. Embedding good governance principles in the organization supports our growth plans and fosters trust among our stakeholders.”

The Golden Arrow Awards honor publicly listed companies that achieve high ratings in the ASEAN Corporate Governance Scorecard (ACGS), an internationally benchmarked framework that measures corporate governance across five principles: shareholder rights, equitable treatment, stakeholder relations, transparency, and board accountability. ICD’s recognition of the Filinvest Group affirms the companies’ alignment with these global best practices.

Strength in Governance Across the Group

As banking becomes increasingly digital, EastWest Bank emphasizes strong governance by focusing on customer needs and protection, ensuring accountability while safeguarding its presence in the digital space.

“Good governance shapes the way we lead, serve, and make decisions at EastWest. It ensures we remain anchored in integrity, accountability, and the trust our customers place in us. This shared commitment unites us with the broader Filinvest Group and reinforces our dedication to responsible, sustainable growth,” shared Jerry G. Ngo, CEO of EastWest.

In real estate, FLI’s governance principles guide the development of sustainable and inclusive communities nationwide while ensuring its projects are accessible to a wide range of homeowners.

“At Filinvest Land, good governance means staying true to our purpose of building communities where Filipinos can live better lives,” said Tristan Las Marias, President and CEO of FLI. “By upholding integrity and accountability in everything we do, we ensure that our growth translates into real value for our homeowners, partners, and stakeholders.”

FILRT continues to strengthen its portfolio through a more diverse tenant mix while maintaining prudent and responsible management for its shareholders.

“Earning the 2-Golden Arrow recognition from the Institute of Corporate Directors affirms FILRT’s continuing progress in advancing sound governance principles. It reflects our steadfast commitment to integrity, transparency, and accountability as we strengthen our REIT platform and uphold the Filinvest Group’s vision of sustainable growth,” said Maricel Brion-Lirio, President and CEO of FILRT.

Sustaining Excellence Across the Group

The Filinvest Group’s recognition at the Golden Arrow Awards underscores its culture of trust which has guided the company’s growth for seven decades. FDC and FLI were honored by the ICD for the fourth consecutive year, while EastWest and FILRT celebrated their third consecutive recognition. As it continues to expand across real estate, banking, power, hospitality and other industries, it remains committed to upholding best governance practices while fulfilling its purpose of enabling Filipino dreams.

 


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Nvidia’s stock market value nears record $5 trillion

Jensen Huang, Nvidia's founder, president, and CEO.—NVIDIA NEWSROOM

Nvidia was on the verge of becoming the first company worth $5 trillion on Tuesday after the heavyweight chipmaker said it had $500 billion in bookings for its artificial intelligence processors and that it will build seven new supercomputers for the US Department of Energy.

Nvidia’s stock closed almost 5% higher, adding over $230 billion in market value, bringing its total value to $4.89 trillion after briefly touching $4.94 trillion.

CEO Jensen Huang kicked off a keynote address at a developer conference in the US capital on Tuesday by praising policy by U.S. President Donald Trump while announcing new products and deals.

Nvidia is at the core of the global rollout of AI, and is striking deals while navigating a US-China trade war that could determine which technology from the two countries is most used around the world.

The Santa Clara, California, company’s stock has surged 50% in 2025. Its market capitalization closed above $4 trillion for the first time in July.

Microsoft, the world’s second most valuable company, rose 2%, lifting its market capitalization to $4.03 trillion. It and OpenAI announced a restructuring deal that frees the ChatGPT maker to move away from its nonprofit roots and likely go public.

The supercomputers Nvidia is building for the Energy Department will in part help the US maintain and develop its nuclear weapons arsenal. The largest of the supercomputers will be built with Oracle and contain 100,000 of Nvidia’s high-end Blackwell AI chips.— Reuters

Jamaica’s strongest-ever storm, Hurricane Melissa, turns to Cuba

Classic car passing in front of a monument in Cuba. — STOCK PHOTO | FREEPIK

KINGSTON — Hurricane Melissa churned north-east toward Cuba’s second-largest city on Tuesday as a powerful Category 4 storm, hours after making landfall in nearby Jamaica as the strongest-ever storm to hit the Caribbean island nation.

Melissa struck land near Jamaica’s southwestern town of New Hope, packing maximum sustained winds of 295 kilometers per hour (kph), the US National Hurricane Center said in an advisory, well above the minimum strength of a Category 5 storm, the most powerful level on the Saffir-Simpson scale.

In southwestern Jamaica, the parish of St. Elizabeth was left “underwater,” an official said, and over half a million residents were without power.

By 2100 GMT, Melissa had weakened to 233 kph, the NHC said, as it moved past the mountainous island, where highland communities are vulnerable to landslides and flooding.

It is now forecast to curve toward Santiago de Cuba, Cuba’s second-largest city.

“We should already be feeling its main influence this afternoon and evening,” Cuban President Miguel Diaz-Canel said in a message published in state newspaper Granma, in which he called on citizens to heed evacuation orders.

“There will be a lot of work to do. We know that this cyclone will cause significant damage.”

Cuban authorities said they evacuated about 500,000 people. In the Bahamas, next in Melissa’s crosshairs, the government ordered further evacuations for people living in southern parts of the archipelago.

Nearby Haiti and the Dominican Republic have faced days of torrential downpours leading to at least four deaths, authorities there said.

Local media reported at least three deaths in Jamaica during storm preparations, and a disaster coordinator suffered a stroke while carrying out her duties in the onset of the storm and was rushed to hospital. Late Tuesday, many areas remained cut off.

JAMAICA’S ‘STORM OF THE CENTURY’
No stranger to hurricanes, Jamaica had never before taken a direct hit from a Category 4 or 5 storm.

The Jamaican government called for foreign aid as it prepared for the fallout of the strongest-ever storm to directly strike its shores.

Meteorologists at AccuWeather said Melissa was the third most intense hurricane observed in the Caribbean after Wilma in 2005 and Gilbert in 1988 – the last major storm to make landfall in Jamaica.

“It’s a catastrophic situation,” the World Meteorological Organization’s tropical cyclone specialist Anne-Claire Fontan told a press briefing, warning of storm surges up to four meters high. “For Jamaica, it will be the storm of the century for sure.”

Colin Bogle, an adviser to aid group Mercy Corps in Portmore, near Jamaica’s capital of Kingston, said he had heard a loud explosion in the morning, and then everything went dark. Sheltering with his grandmother, he heard relentless noise and saw trees violently tossed in the wind.

“People are scared. Memories of Hurricane Gilbert run deep, and there is frustration that Jamaica continues to face the worst consequences of a climate crisis we did not cause,” he said.

Scientists warn that storms are intensifying faster as a result of climate change warming ocean waters. Many Caribbean leaders have called on wealthy, heavy-polluting nations to provide reparations in the form of aid or debt relief.

Melissa’s size and strength ballooned as it moved over unusually tepid Caribbean waters, but forecasters warned that its slow movement could prove particularly destructive.

Food aid will be critical, Bogle said, as well as tools, vehicle parts and seeds for farmers. Like last year’s devastating Hurricane Beryl, Melissa crossed over some of Jamaica’s most productive agricultural zones.

On Monday, Jamaican Prime Minister Andrew Holness said the government had an emergency budget of $33 million and insurance and credit provisions for damage a little greater than Beryl.

‘LIKE A ROARING LION’
Melissa made landfall in southwestern Jamaica, near the parish border between Westmoreland and St. Elizabeth, which was one of the areas worst-hit by Hurricane Beryl last year.

Authorities reported severe damages to public infrastructure including hospitals, and said that as of 4 p.m. (2100 GMT), over half a million residents were without power.

St. Elizabeth was “underwater”, local government minister Desmond McKenzie told a press briefing. Its only public hospital lost power and reported severe damage to one of its buildings, and several families were marooned in their homes.

Rescue teams were struggling to reach stranded families, McKenzie added, but had managed to reach one group marooned with four babies.

In Portland Cottage, some 150 kilometers away from where Melissa made landfall, 64-year-old retiree Collin Henry McDonald told Reuters as the storm advanced that his community was seeing strong rain and winds, but his concrete roof was holding steady.

“It’s like a roaring lion. It’s mad. Really mad,” he said.

Around 15,000 Jamaicans were in temporary shelters by late Tuesday, McKenzie said. The government had issued mandatory evacuation orders for 28,000 people, but many were reluctant to leave their homes.

The International Federation of the Red Cross said up to 1.5 million people in Jamaica were expected to be directly affected by the storm.

The NHC advised Jamaicans to remain in shelter overnight as winds and rains continue to batter the island.— Reuters

Israel strikes Gaza after accusing Hamas of violating US-brokered ceasefire

REUTERS FILE PHOTO

JERUSALEM/CAIRO — Israeli planes launched strikes in Gaza on Tuesday after Israel accused the militant group Hamas of violating a ceasefire in the Palestinian territory, the latest test of a fragile deal brokered earlier this month by US President Donald Trump.

Local health authorities said the strikes killed at least 26 people, including five in a house hit in the Bureij refugee camp in the central Gaza Strip, four in a building in Gaza City’s Sabra neighborhood, and five in a car in Khan Younis. The attacks by Israeli planes continued into early Wednesday across the Gaza Strip, according to witnesses.

The Israeli military did not immediately comment on the strikes, the latest violence in a three-week-old ceasefire and which followed a statement by Prime Minister Benjamin Netanyahu’s office saying he had ordered immediate “powerful attacks.”

The statement did not give a specific reason for the attacks but an Israeli military official said Hamas had violated the ceasefire by carrying out an attack against Israeli forces in an area of the enclave that is under Israeli control.

“This is yet another blatant violation of the ceasefire,” the official said.

The US-backed ceasefire agreement went into effect on October 10, halting two years of war triggered by deadly Hamas-led attacks on Israel on October 7, 2023.

Both sides have accused each other of ceasefire violations.

US Vice President JD Vance, part of a parade of Trump administration officials who visited Israel last week, said that despite the latest flare-up, “the ceasefire is holding.”

“That doesn’t mean that there aren’t going to be little skirmishes here and there,” he told reporters on Capitol Hill. “We know that Hamas or somebody else within Gaza attacked an (Israeli) soldier. We expect the Israelis are going to respond, but I think the president’s peace is going to hold despite that.”

Earlier on Tuesday, Israeli media reported an exchange of fire between Israeli forces and Hamas fighters in the southern Gaza city of Rafah. The Israeli military did not respond to a request for comment on the reports.

Hamas denied responsibility for an attack on Israeli forces in Rafah. The group also said in a statement that it remained committed to the ceasefire deal in Gaza.

Tuesday’s strikes on Gaza City followed what Israel called a “targeted strike” on Saturday on a person in central Gaza who it said was planning to attack Israeli troops.

NETANYAHU ACCUSES HAMAS OF VIOLATING CEASEFIRE
Netanyahu said earlier on Tuesday that Hamas had violated the ceasefire by turning over some wrong remains in a process of returning the bodies of hostages to Israel.

Netanyahu said the remains handed over on Monday belonged to Ofir Tzarfati, an Israeli killed during Hamas’ October 7, 2023, attack. Tzarfati’s remains had already been partially retrieved by Israeli troops during the war.

Hamas initially said in response to this that it would hand over to Israel on Tuesday the body of a missing hostage found in a tunnel in Gaza. However, Hamas’ armed wing, Al-Qassam Brigades, said later it would postpone the planned handover, citing what it said were Israel’s violations of the ceasefire.

Late on Tuesday, Al-Qassam issued a statement saying it had recovered the bodies of two Israeli hostages, Amiram Cooper and Sahar Baruch, during search operations in Gaza.

Hamas said Netanyahu was looking for excuses to back away from Israel’s obligations.

Under the ceasefire terms, Hamas released all living hostages in return for nearly 2,000 Palestinian convicts and wartime detainees, while Israel pulled back its troops and halted its offensive.

SEARCH FOR HOSTAGE BODIES
Hamas has also agreed to hand over the remains of all dead hostages yet to be recovered, but has said it will take time to locate and retrieve the bodies amid Gaza’s ruins. Israel says the militant group can access the remains of most of the hostages.

The issue has become one of the main sticking points in the ceasefire, which Trump says he is watching closely. He has touted the truce and hostage-prisoner exchange deal as one of the top foreign policy achievements of his second term, and he and his top aides have sought to keep the ceasefire intact.

The White House did not immediately respond to a question on whether Israel notified the US before carrying out the Gaza strikes.

In Gaza City, an Israeli strike that killed four people hit a residential building near Shifa hospital, the largest operational hospital in northern Gaza. The hospital itself was also hit, according to Gaza officials, witnesses and Hamas media. Two people were wounded in an attack on a tent in Zawayda in the central Gaza Strip, according to local health authorities.

The search for hostage bodies stepped up over the past few days after the arrival of heavy machinery from Egypt. Bulldozers were working in Khan Younis on Tuesday, in the southern Gaza Strip, and further north in Nuseirat, as Hamas fighters deployed around them.

Some of the bodies are believed to be in Hamas’ network of tunnels running below Gaza.

Witnesses in Khan Younis said the Egyptian teams, working with armed Hamas fighters, were digging deep near the Qatari-funded Hamad Housing City in the western side of Khan Younis, reaching tunnel shafts.

Reuters images showed an excavation a dozen or so meters below the surface, with Hamas men at the bottom of the trench next to a tunnel opening in an apparent search for bodies.

Gaza health authorities say 68,000 people are confirmed killed in the Israeli strikes and thousands more are missing. Israel launched the war after Hamas-led fighters stormed through southern Israel, killing 1,200 people and bringing 251 hostages back to Gaza.— Reuters

Hegseth to meet Japan counterpart as Tokyo bolsters defense

US DEFENSE SECRETARY PETE HEGSETH — REUTERS

TOKYO — US Secretary of Defense Pete Hegseth is set to hold talks with his Japanese counterpart Shinjiro Koizumi in Tokyo on Wednesday, as Japan strives to fortify its defense posture and strengthen its decades-old alliance with the United States.

The meeting comes a day after Japanese Prime Minister Sanae Takaichi told visiting US President Donald Trump that she was determined to bolster Japan’s defense capabilities and expressed her desire to realize a “new golden age” of the alliance.

Japan already hosts the largest concentration of US forces overseas, including an aircraft carrier, a Marine expeditionary unit, and dozens of fighter jets.

Takaichi said in her policy speech last week that the government plans to raise Japan’s defense spending to 2% of gross domestic product in the current fiscal year to March 2026, from about 1.8% currently.

That would be two years earlier than originally planned, but the level falls short of NATO’s new defense investment pledge of 5% of GDP by 2035.

Japan regards the security environment surrounding the country as the gravest since the end of World War Two due to destabilizing factors in the region including China’s military expansion and North Korea’s missile and nuclear programs.

Koizumi, son of former Prime Minister Junichiro Koizumi, ran in the ruling Liberal Democratic Party’s leadership election this month, but lost to Takaichi, who then went on to become Japan’s first female prime minister. — Reuters

Peso slumps to new all-time low

A US five-dollar note is seen in this illustration photo, June 1, 2017. — REUTERS/THOMAS WHITE

THE PHILIPPINE PESO breached the P59-per-dollar level for the first time on Tuesday, amid market concerns of slowing economic growth and expectations of further monetary easing.   

At the same time, the Bangko Sentral ng Pilipinas (BSP) said it will allow market forces to determine the peso-dollar exchange rate.

The local unit closed at P59.13 versus the greenback, sinking by 23 centavos from its P58.90 finish on Monday, Bankers Association of the Philippines data showed.

This was a new all-time low for the peso, eclipsing the previous record of P59 logged on Dec. 19, 2024.

Year to date, the peso has depreciated by P1.285 or 2.17% from its P57.845 finish on Dec. 27, 2024.

The peso opened Tuesday’s session steady at P58.90 versus the dollar, which was already its intraday best. Its worst showing was at P59.20 against the greenback.

Dollars exchanged rose to $1.75 billion on Tuesday from $1.6 billion on Monday.

“The recent peso depreciation may reflect market concerns over a potential moderation in economic growth due in part to the infrastructure spending controversy, as well as expectations of additional monetary policy easing by the BSP,” the central bank said.

On Monday, Monetary Board member Benjamin E. Diokno said the BSP may cut its key interest rate again in December and further in 2026, as the economy may “slow down a bit” due to a corruption scandal and trade uncertainties.

The BSP earlier this month lowered interest rates by 25 basis points (bps) to 4.75%. It has cut rates by 175 bps since it began its easing cycle in August 2024.

The BSP said the peso will continue to be supported by “resilient remittance inflows, still relatively fast economic growth, low inflation, and ongoing structural reforms.”

“Foreign exchange inflows from business process outsourcing, tourism, and overseas Filipino workers continue to buffer external shocks,” it added.

It also said it continues to maintain “robust” foreign reserves, which stood at $108.8 billion at end-September.

‘MARKET FORCES’
The BSP also signaled it may tolerate more weakness in the peso.

“When we do participate in the market, it is largely to dampen inflationary swings in the exchange rate over time rather than to prevent day-to-day volatility,” it said.

A trader said in an e-mail that the peso fell after the BSP’s latest signals.

“The peso closed to record levels after the BSP ruled out any near-term intervention in the local FX (foreign exchange) market despite apparent pressures on the local currency,” the trader said.

First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message the peso’s recent weakness will likely have a minimal impact on inflation.

“In terms of inflation, the pass-through is really small coming from the peso-dollar weakness, but of course, the confidence level is being eroded by the weak peso,” she said.

Another trader said in a text message that the peso could remain at the P59 level in the short term if weakness persists, but this could be offset by the seasonal increase in remittances towards the yearend.

“Seasonally speaking, we expect dollar inflows courtesy of remittances. So, we expect natural support for the peso moving forward,” the trader said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that local sentiment could be supported by reforms toward addressing corruption.

“The US dollar/peso exchange rate would now be a function of the BSP in terms of smoothening the volatility, as one of the major catalysts going forward,” he said.

“Thus, ignoring the BSP factor would be a mistake for those looking for higher levels.”

For Wednesday, both Mr. Ricafort and the first trader see the peso moving at P58.95 to P59.20 per dollar. — A.M.C.Sy

Nomura slashes Philippine growth forecast amid graft scandal

High-rise buildings dominate the skyline of Makati City’s central business district on Tuesday. — PHILIPPINE STAR/RYAN BALDEMOR

PHILIPPINE ECONOMIC GROWTH may slow to 4.7% this year, as government spending is expected to further decline amid the corruption investigation in infrastructure projects, Nomura Global Markets Research said.

In a report dated Oct. 27, Nomura Chief ASEAN (Association of Southeast Asian Nations) Economist Euben Paracuelles and Macroeconomic Research Analyst Yiru Chen said the gross domestic product (GDP) forecast was slashed to 4.7% this year from 5.3% previously as downside risks increased due to the corruption scandal involving flood control projects.

“This pencils in GDP growth slowing to just 4% in the second half from 5.4% in the first half and is based on the assumption that the decline in government expenditures in September will worsen in the next 3-4 months,” they said.

Nomura’s latest forecast is below the government’s 5.5-6.5% GDP growth target for the year and is slower than the 5.7% growth in 2024.

“Taking into account the sharp drop in fiscal spending in September, we think the ‘bad scenario’ on the growth impact of the ongoing corruption scandal is materializing,” they said.

Third-quarter GDP data will be released on Nov. 7.

President Ferdinand R. Marcos, Jr. had flagged anomalous flood control projects during his State of the Nation Address in late July. This sparked several investigations into alleged corruption involving lawmakers, government officials, and private contractors.

Latest Treasury data showed government expenditures declined by 7.53% in September, worsening from the 0.7% drop in August, mainly due to lower spending by the Department of Public Works and Highways. Nomura also noted that government spending declined by 2.8% in the third quarter, a reversal of 1.6% growth in the second quarter.

“Excluding interest payments and debt servicing, expenditure growth slumped even more to -10.2% y-o-y (year on year) in September from -3.5% in August, the weakest since 2020. This suggests a relatively rapid deterioration in the pace of budget disbursements after President Marcos brought to light the corruption scandal of flood control projects,” they said.

Nomura also noted that the reallocation of funds to other types of capital expenditures such as school buildings has been “challenging” to implement.

“In addition, we incorporate some spillovers into other components of domestic demand, which were also evident in these previous episodes, including household consumption spending. Our forecast continues to take into account the impact of the US tariffs, which, as we have argued before, pose significant headwinds for goods exports,” they said.

The US had imposed a 19% duty on many goods from the Philippines starting Aug. 7.

Nomura also maintained its fiscal deficit forecast at 5.5% of GDP for this year.

“The decline in government expenditures, which we now assume in the coming months (under the ‘bad’ scenario), puts the MTFF (medium-term fiscal framework) target of 5.5% still within reach. Nevertheless, our fiscal deficit forecast implies a weaker fiscal impulse in Q4, when the output gap will likely remain negative,” they said.

For 2026, Nomura maintained its Philippine GDP forecast at 5.6%, but uncertainty over the timely passage of the 2026 national budget poses risks to the outlook.

“For now, we monitor signs of whether the budget can be passed on time, i.e. by December. If not, the ‘severe’ scenario could play out, potentially prolonging fiscal tightening with no new disbursements allowed until a new budget is enacted,” they said.

RATE CUTS
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) will likely implement another 50 basis points (bps) worth of cuts in this easing cycle, bringing the benchmark rate to 4.25%.

“We still pencil in a 25-bp cut at BSP’s next meeting in December and another 25 bps in Q1 2026, i.e. a more frontloaded trajectory, based on our view that the corruption scandal could hit growth in the near term significantly,” Nomura said.

The central bank lowered borrowing costs earlier this month by 25 bps to 4.75%. Its latest move brought its total reductions to 175 bps since it began its easing cycle in August 2024.

“Still, we continue to see the risk of BSP delivering additional policy rate cuts next year if the more ‘severe’ scenario materializes, including a delay in the enactment of the 2026 budget,” they added.

Separately, Budget Assistant Secretary Romeo Matthew T. Balanquit said easing inflation rates and low borrowing costs could still drive the country’s third-quarter growth.

“My only good hope is that we have a low inflation rate, 1.7% year to date,” he told reporters on the sidelines of an event on Monday. “So, with that, I am expecting a high contribution [from household] consumption.”

Inflation accelerated to 1.7% in September, faster than 1.5% in August but slower than the 1.9% in the same month last year. In the nine-month period, headline inflation matched the Bangko Sentral ng Pilipinas’ (BSP) 1.7% full-year target.

“And one more would be the investment because of the CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) and also the low interest rates. I am hopeful that the private sector will step up,” Mr. Balanquit added.

IMPACT ON LUXURY GOODS, SERVICES
Meanwhile, Capital Economics said the corruption scandal may not just affect investments but also hurt sales of luxury goods in the country.

“The experience from other emerging markets suggest that, even if the ongoing corruption scandal in the Philippines doesn’t fuel further unrest, a more concerted effort by the government to clamp down on graft could hurt investment as well as purchases of luxury goods and services,” it said in an Oct. 22 report.

Even if unrest is avoided, Capital Economics said there could be more concerted effort to look into corruption across the economy.

“The resulting backdrop of heightened political uncertainty and fear of getting caught up in corruption allegations could prompt firms to delay investment,” it said.

It noted individuals may also avoid buying land or property, while others with illicit gains could move assets abroad “which may result in a spike in capital outflows and weigh on the currency.”

“The government could also try to clamp down on ostentatious public sector consumption. That could weigh on demand for luxury goods and services,” Capital Economics said.

It also said the Philippine government could try other policies to curb corruption such as demonetization.

BSP Governor Eli M. Remolona, Jr. has already rejected a proposal to demonetize P1,000 and P500 bills as an anti-money laundering measure, saying it may do more harm than good.

“We’ve warned before that if the government turns to populist measures, investors could build in higher risk premia on Filipino assets,” Capital Economics said. — K.K.Chan

SEIPI projects single-digit growth in electronic exports

Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken on Feb. 25, 2022. — REUTERS

PHILIPPINE EXPORTS of semiconductor and electronic products may see single-digit growth this year, but uncertainty over the US tariff policy continues to cloud the industry’s outlook, the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) said.

“We’re looking forward to a single-digit growth, which means anywhere from 1% to 9%,” SEIPI President Danilo C. Lachica told reporters on the sidelines of the Philippine Semiconductors and Electronics Convention and Exhibition on Tuesday.

“My official position is still flat [growth,] but like I said before, there are signs of a positive outlook, modest growth,” he said.

Citing the latest trade data, Mr. Lachica said there are signs of export growth.

“If you look at the PSA (Philippine Statistics Authority) numbers, it looks like we might look forward to that modest growth, a single-digit growth. But now, the projection for the industry is still flat,” he said.

PSA data showed that as of end-August, exports of electronic products reached $29.48 billion, 7.4% higher than a year ago. Semiconductor exports during the period likewise grew by 4.9% year on year to $22.07 billion.

The SEIPI board is set to meet in November to review its industry projections.

“Even though I’ve seen positive movement, I was hesitant to declare, ‘OK, we’re going to grow,’ because who knows what’s going to happen with the US tariffs,” Mr. Lachica said. “It depends on what side of the bed Trump wakes up on.”

US President Donald J. Trump earlier threatened to slap sectoral tariffs on chips as high as 300%, a move expected to bring back manufacturing to the US.

At present, semiconductor exports are not included in the 19% tariff imposed by the US on Philippine-made goods.    

The US Supreme Court is set to hear oral arguments on Nov. 5 on the legality of Mr. Trump’s tariffs.

“We’ll just continue to ride the wave of zero-percent tariffs for semiconductors and some selected EMS (electronics manufacturing services) products,” Mr. Lachica said.

The SEIPI official said Philippine exports of electronics and semiconductors to the US have declined since the tariffs took effect in August.

“The US Embassy called me and asked, ‘Why are the exports to the US decreasing?’ I said, ‘Why do you think?’” Mr. Lachica said.

The electronics industry is looking to diversify its trade relations with the European Union (EU) and the rest of Asia to mitigate the risks of the US’ uncertain tariff policies, Mr. Lachica said.

“One of the strategies, notwithstanding the progress of the tariff, is we’re looking at diversifying our markets, whether that’s the EU or whether that’s with the rest of Asia,” he added.

Meanwhile, Mr. Lachica said the ongoing corruption scandal involving infrastructure projects is a “major concern” for the industry as investors may reconsider expansion plans in the country.

Asked if corruption in government is affecting investor sentiment, Mr. Lachica replied: “Absolutely.” — Beatriz Marie D. Cruz

ASEAN, China seal upgraded free trade deal

Association of Southeast Asian Nations (ASEAN) Chairman and Malaysia’s Prime Minister Anwar Ibrahim (right) and Chinese Premier Li Qiang (left) shake hands after witnessing the signing of the ASEAN-China Free Trade Area 3.0 Upgrade signed by Malaysia Trade Minister and ASEAN Economic Ministers Chairman Tengku Zafrul Aziz and Chinese Commerce Minister Wang Wentao ahead of the 28th ASEAN-China Summit in Kuala Lumpur, Malaysia, Oct. 28. — REUTERS/HASNOOR HUSSAIN

KUALA LUMPUR — The Association of Southeast Asian Nations (ASEAN) and China on Tuesday signed an upgraded free trade pact that seeks to deepen regional integration in the face of increased protectionism from the US.

Closer economic cooperation instead of confrontation could help overcome global uncertainties amid coercion and bullying, Chinese Premier Li Qiang told the ASEAN-China Summit meeting after the signing, in a swipe at the US.

ASEAN leaders including Philippine President Ferdinand R. Marcos, Jr. witnessed the signing of the third revision of the deal that was first inked in 2002 and took effect in 2010.

“The ACFTA (ASEAN-China Free Trade Area) 3.0 Upgrade Protocol seeks to expand ASEAN-China cooperation into new and emerging areas, including the digital and green economies, supply-chain resilience, competition and consumer protection, as well as support for micro, small, and medium enterprises (MSME),” according to a statement from Mr. Marcos’ office.

The free trade agreement (FTA) lowers tariffs on goods and boosts the flow of services and investment in an area that covers a combined market of more than two billion people.

Chinese trade with the 11-member bloc reached $771 billion last year, making ASEAN its biggest trading partner, according to ASEAN data.

Beijing is looking to deepen its engagement with the region, which has a combined gross domestic product (GDP) of $3.8 trillion, as it seeks to offset the impact of steep import tariffs imposed globally by US President Donald J. Trump’s administration.

China and ASEAN are also members of the Regional Comprehensive Economic Partnership, the world’s largest trade bloc, encompassing nearly one-third of the global population and around 30% of global GDP.

Mr. Trump slapped almost all of its trading partners with varying tariff levels. He imposed a 30% tariff on Chinese exports to the US in a bid to protect his country’s industries.

The US has also imposed a 19% duty on many goods from the Philippines, Cambodia, Malaysia, Thailand and Indonesia since Aug. 7.

The Philippine Department of Foreign Affairs (DFA) earlier said the new protocol aims to make the regional trade framework “more modern, more comprehensive, and better aligned with today’s global realities.”

The enhanced deal expands the scope of the original ACFTA — which focused on goods, services, and investment — to include new areas such as fair competition, consumer protection, digital transformation, green growth, and supply-chain connectivity.   

It also strengthens mechanisms to support MSMEs, helping them integrate more effectively into regional value chains.

According to the DFA, the upgrade will “open new opportunities for high-impact cooperation” in critical areas that are key to the region’s long-term resilience and sustainability.

It also introduces frameworks to promote inclusive and broad-based growth across member economies.

The original ASEAN-China FTA, launched in 2010, covers trade in goods, rules of origin, customs and trade facilitation, technical regulations, sanitary measures, and investment cooperation.   

The latest revision reflects both sides’ efforts to future-proof their trade ties amid shifting global economic conditions.

ASEAN Studies lecturer at De La Salle-College of St. Benilde Josue Raphael J. Cortez said the ACFTA 3.0 serves as Beijing’s strategic move to strengthen its regional influence amid intensifying US efforts to expand its own economic foothold in Southeast Asia through tariff-based policies.   

While the Philippines can use the upgraded pact as limited leverage, its complex political and security ties with China temper this advantage, he added.

“With the Philippines trying to widen its trading relations both with traditional and new markets, the promise this agreement holds is a challenge for Washington to overcome by proving that the alliance we share goes beyond issues of mutual benefit in the political and security sphere. And as treaty allies, we show the same extent of commitment as well to the geoeconomic challenges of our time,” he said via Facebook Messenger. — Chloe Mari A. Hufana

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