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Mexican goods worth $1 bln stuck at US border amid migration checks

STOCK PHOTO | Image by WikiImages from Pixabay

CIUDAD JUAREZ – Trade across the US-Mexican border has been slowed over the past week as US authorities have shut down crossings and imposed extra security checks amid an increase in migration, sparking concern in Mexico.

About 8,000 trailers carrying an estimated $1 billion worth of goods have been stranded on the Mexican side over the past week, said Manuel Sotelo, president of the transport association of Ciudad Juarez, a major manufacturing hub across from El Paso, Texas.

Some companies were sending merchandise through entry points in New Mexico and Arizona to avoid the long wait times at the Texas border, Sotelo told Reuters on Monday.

The delays forced a Canadian snowmobile and off-road vehicle manufacturer to suspend production on Monday and Tuesday at three factories in Ciudad Juarez that employ some 9,000 people.

“Due to the waiting times on the international bridges in Ciudad Juarez, we have had a significant reduction in the volume of units that we can export daily,” the Quebec-based company, BRP, said in a statement.

Jesus Salayandía, a representative of the Mexican industry association Canacintra, said he expected other companies in Ciudad Juarez would announce temporary work stoppages if the long wait times at the border continue.

US border authorities suspended cargo processing at one of El Paso’s international bridges last week to shift officers to process more migrant arrivals.

Some 500 northbound trucks normally cross that bridge each day, though only 40% are carrying cargo into the United States, US Customs and Border Protection said in response to a Reuters request for comment. It added that “suspending services there would have the least total impact on our trade partners.”

Texas authorities also began conducting enhanced vehicle inspections of commercial trucks and trailers at the city’s other two bridges.

The moves prompted Mexico’s foreign ministry to urge US authorities not to take “unilateral measures” complicating trade. Truck drivers in Mexico told Reuters they had to wait hours to clear the bridges.

In addition to the slowdown for trucks and trailers, some 2,400 Union Pacific railroad cars were also stalled after border officials temporarily halted processing at the international railway crossing bridge in Eagle Pass, Texas, on Wednesday.

Union Pacific told Reuters it expected to finish working through the backlog by Tuesday morning. It declined to estimate the financial impact.

Some cargo train service was also disrupted in Mexico, when Ferromex temporarily suspended the operations of some 60 northbound trains last week after about a half dozen migrants were injured or died.

Previous slowdowns at US-Mexico border crossings have resulted in billions of dollars in total losses, according to analyses by the Texas-based economic research group, The Perryman Group.

It estimated that the last such slowdown, in April 2022, represented a daily loss to GDP of $996.3 million dollars. – Reuters

Biden makes new pledges to Pacific island leaders as China’s influence grows

US PRESIDENT JOSEPH R. BIDEN — WHITEHOUSE.GOV

WASHINGTON – President Joe Biden met Pacific island leaders for a second White House summit in just over a year on Monday, part of a charm offensive aimed at curbing inroads by China into a region Washington considers strategically crucial.

Before welcoming the island leaders, gathered under the umbrella of the 18-nation Pacific Islands Forum (PIF), Mr. Biden announced US diplomatic recognition of two more Pacific islands nations, the Cook Islands and Niue.

“The United States is committed to ensuring an Indo-Pacific region that is free, open, prosperous, and secure. We’re committed to working with all the nations around this table to achieve that goal,” Mr. Biden said at the welcoming ceremony.

Mr. Biden pledged to work with Congress to provide $200 million more in funding for projects in the region aimed at mitigating the effects of climate change, spurring economic growth, countering illegal fishing and improving public health, according to a document issued after a working lunch with the group.

“These new programs and activities continue to demonstrate the US commitment to work together with the Pacific Islands to expand and deepen our cooperation in the years ahead,” the document said.

A joint statement said the sides agreed to hold another summit in 2025 and political engagements every two years thereafter.

Cook Islands Prime Minister Mark Brown, the island forum’s chair, called the summit “an opportunity … to develop our partnerships for prosperity.” He urged Washington “to actively engage at the highest level” in the 52nd PIF leaders meeting he would host in a few weeks to endorse its 2050 Strategy.

 

US WANTS TO HELP ISLAND NATIONS FEND OFF CHINA

Mr. Biden hosted an inaugural summit of 14 Pacific island nations a year ago and was to meet them again in Papua New Guinea in May. That meeting was scrapped when a U.S. debt- ceiling crisis forced Biden to cut short an Asia trip.

Last year, his administration pledged to help islanders fend off China’s “economic coercion” and a joint declaration resolved to strengthen their partnership, saying they shared a vision for a region where “democracy will be able to flourish.”

Mr. Biden said recognizing the Cook Islands and Niue would “enable us to expand the scope of this enduring partnership as we seek to tackle the challenges that matter most to our peoples’ lives.”

He highlighted a personal link to the region – an uncle killed in World War Two after crash landing off the coast of Papua New Guinea. He said the summit, as then, was “to build a better world.”

In Baltimore on Sunday, Pacific island leaders visited a Coast Guard cutter in the harbor and were briefed on combating illegal fishing by the Commandant of the Coast Guard.

They also attended Sunday’s National Football League (NFL) game between the Baltimore Ravens and the Indianapolis Colts. Dozens of NFL players are of Pacific Islander heritage.

 

SOME SKIP SUMMIT

Representatives of all 18 PIF members attended the summit, but not all at leader level.

Solomon Islands Prime Minister Manasseh Sogavare, who has deepened ties with China, did not attend, and a senior Biden administration official said the US was “disappointed” by that.

Washington appears to have made no progress on offers of substantial infrastructure funding and expanded aid to the Solomons. Sogavare visited China in July, announcing a policing agreement with Beijing that builds on a security pact signed last year.

The White House in 2022 said the US would invest more than $810 million in expanded programs to aid the Pacific islands.

Meg Keen, director of Pacific Island Programs at Australia’s Lowy Institute, said that although the US had opened new embassies and a USAID office in the region since last year’s summit, Congress had yet to approve most of the funding pledges made last year.

She added that Pacific island countries “welcome the US re-engagement with the region, but don’t want geopolitical tussles to result in an escalation of militarization.” Vanuatu Prime Minister Sato Kilman also did not attend the summit. He was elected two weeks ago to replace Ishmael Kalsakau, who lost a no-confidence vote for actions including signing a security pact with US ally Australia.

The US is still negotiating to open an embassy in Vanuatu, but has not significantly increased engagement with that nation, which counts China as its largest external creditor. China signed a policing agreement with Vanuatu last month.

A senior Biden administration official said the US was on track to open the Vanuatu embassy by early next year.

Fiji has welcomed the stronger US regional presence as making the Pacific “more secure,” but Kiribati, one of the most remote Pacific island states, 2,500 miles (4,000km) southwest of Hawaii, said this year it plans to upgrade a former World War Two airstrip with Chinese assistance. A $29 million program to assist Kiribati youth find work internationally was signed at the summit.

Washington renewed agreements this year with Palau and Micronesia that give it exclusive military access to strategic parts of the Pacific, but has yet to do so with the Marshall Islands, which wants more money to deal with the legacy of massive US nuclear testing in the 1940s and 50s.

The summit statement said the US “plans to work expeditiously to meet the needs of the Republic of the Marshall Islands through ongoing Compact negotiations” and was committed to addressing its “ongoing environmental, public health concerns, and other welfare concerns.” – Reuters

Thomson Reuters AI copyright dispute must go to trial, judge says

FREEPIK

A jury must decide the outcome of a lawsuit by information services company Thomson Reuters accusing Ross Intelligence of unlawfully copying content from its legal-research platform Westlaw to train a competing artificial intelligence-based platform, a Delaware federal judge said on Monday.

The decision by US Circuit Judge Stephanos Bibas sets the stage for what could be one of the first trials related to the unauthorized use of data to train AI systems. Tech companies including Meta Platforms, Stability AI and Microsoft-backed OpenAI are also facing lawsuits from authors, visual artists and other copyright owners over the use of their work to train the companies’ generative AI software.

A spokesperson for Thomson Reuters, the parent company of Reuters News, said it looks forward to presenting evidence to a jury.

“This case continues to be about Ross’ theft of Thomson Reuters proprietary commentary, analysis, and organizational system,” the spokesperson said. “We sought summary judgment on select issues because we believe the facts of the case are clear cut.”

Representatives for Ross did not immediately respond to requests for comment.

Thomson Reuters’ 2020 lawsuit accused legal research company Ross Intelligence of copying Westlaw’s “headnotes,” which summarize points of law in court opinions. Thomson Reuters accused Ross of misusing thousands of the headnotes to train its AI-based legal search engine.

Ross said it shut down its platform in January 2021, citing the costs of the “spurious” litigation. Reuters could not establish if it did so.

Both companies asked the court for pretrial wins in the case. Ross argued in part that it made fair use of the Westlaw material, raising what could be a pivotal question for legal disputes over generative AI training.

Ross said that the Headnotes material was used as a “means to locate judicial opinions,” and that the company did not compete in the market for the materials themselves. Thomson Reuters responded that Ross copied the materials to build a direct Westlaw competitor.

Mr. Bibas said on Monday that a jury should decide fair use and other questions, including the extent of Thomson Reuters’ copyright protection in the headnotes. He noted that there were factors in the fair-use analysis that favored each side.

The judge said he could not determine whether Ross “transformed” the Westlaw material into a “brand-new research platform that serves a different purpose,” which is often a key fair use question.

Mr. Bibas also said he could not decide whether a ruling for Ross or Thomson Reuters would best serve the public interest.

“Here, we run into a hotly debated question,” Mr. Bibas said. “Is it in the public benefit to allow AI to be trained with copyrighted material?”

No trial date has been set in the case. – Reuters

Philippines says no standoff with China after removal of floating barrier in South China Sea

The floating barrier with an estimated length of 300 meters was discovered on Sept. 22 at the vicinity of Bajo de Masinloc. — PHILIPPINE COAST GUARD

MANILA – The Philippines on Tuesday said China’s coastguard had removed remnants of a floating barrier severed by its Filipino counterparts at a fiercely contested shoal the South China Sea, adding there was no standoff or signs of aggression.

The Philippines on Monday executed what it called a “special operation” to cut a 300-meter barrier installed by China at the Scarborough Shoal, one of Asia’s most contested maritime features, a move likely to further strain ties that have deteriorated in the past year.

China’s coastguard was measured in its response to a Philippine vessel that reached its closest point to the rocky outcrop since China seized control of it in 2012, according to Commodore Jay Tarriela, a coastguard spokesperson.

The Philippines coastguard, posing as regular fishermen aboard a small boat, later cut the ball-buoy barrier and took away the anchor, Mr. Tarriela told DWPM radio and ANC news channel.

He said four China coastguard vessels were in the area and were “not that aggressive” after seeing media on board a Philippine ship.

The Chinese took away the barriers, a few hours after discovering it was no longer aligned and blocking the lagoon, Mr. Tarriela said.

The Scarborough Shoal, a prime fishing spot located about 200 km (124 miles) off the Philippines and within its exclusive economic zone, is the site of decades of on-off disputes over sovereignty.

China on Monday made no direct mention of the barrier but said coastguard had moved to repel a Philippine vessel that was “intruding” in its waters.

The Philippines and China have repeatedly sparred over the shoal but under the previous pro-China administration in Manila, tensions had been lowered for several years.

Relations have soured in the past year, however, as President Ferdinand Marcos Jr, who authorised the cutting of the cordon, seeks to establish tighter defence ties with ally the United States, including access to his country’s military bases.

China claims ownership of almost all of the South China Sea, including the Scarborough Shoal, despite an arbitration ruling in 2016 that said that was baseless. China does not recognise the ruling.

Philippine Foreign Secretary Enrique Manalo, speaking to reporters about the removal of the barrier, on Tuesday said the move was consistent with the country’s stance on the South China Sea.

“Technically, we had the right to practice our sovereignty and sovereign rights so it would have been consistent with our position,” he said. — Reuters

[B-SIDE Podcast] Beyond handshakes: In search of a diplomatic silver lining amid South China Sea tensions

Follow us on Spotify BusinessWorld B-Side

For the longest time, the Philippines has maintained a modest relationship with its Southeast Asian neighbors. Recurring tensions in the South China Sea have left the ten-member Association of Southeast Asian Nations (ASEAN) seeking clarity on how to navigate potential conflicts with China, even with the involvement of the United States.

In this B-Side episode, Herman Joseph S. Kraft, a political science professor at the University of the Philippines, discusses with BusinessWorld reporter Beatriz Marie D. Cruz the ways in which ASEAN can leverage its already strong ties to protect peace within its waters.

“Relations within the region are increasingly dominated by the rivalry between China and the US, and even if we keep emphasizing the idea of ASEAN centrality, it’s becoming more and more difficult to assert that,” he said in an interview.

The goal is to ease constraints felt by ASEAN within the ongoing rivalry between China and the US, Mr. Kraft noted.

“Ideally, ASEAN is going to be able to work in a way where it doesn’t have to actually play or at least play a role within the competition between China and the United States,” he said.

However, this is easier said than done, with ASEAN countries having their own national interests to consider.

The Philippines, Brunei, Malaysia, and Vietnam, for instance, each have territorial interests in the South China Sea, with China claiming more than 80% of the waters.

“It’s much more difficult for ASEAN to actually come up with a common appreciation of its strategic environment. Some of the members of ASEAN are actually closer to China, for instance, and some are actually closer to the US,” Mr. Kraft said.

As a long-standing treaty ally, the Philippines has allowed the US more access to military bases under the 2014 Enhanced Defense Cooperation Agreement. However, this has caused China to accuse the US of aggravating tensions in the Asia-Pacific due to its continued military expansion.

“There’s a tendency to see that or at least to look at the Philippines as going too close to the United States at the expense of our relationship with China, so our situation is seemingly a zero-sum game,” Mr. Kraft said.

He said that the Philippines should strengthen its diplomatic prowess to be recognized for its role in maintaining peaceful navigation in the disputed waters, especially within ASEAN, where the former is not seen as an “agent” of the US.

Members of ASEAN have been vocal about the need to ensure peace and stability in the region. Even Philippine President Ferdinand R. Marcos, Jr. said, without naming China, that ASEAN “must never allow the international peaceful order to be subjected to the forces of might.”

“We cannot emphasize enough that actions, not words, should be the ultimate measure of our commitment to securing peace and stability in the South China Sea,” Mr. Marcos Jr. said during the 43rd ASEAN Summit in Jakarta, Indonesia earlier this month.

Also present during the summit, Chinese Premier Li Qiang warned of a “new Cold War,” and called on affected states to “appropriately handle differences and disputes.”

“China has not necessarily been forthright about how it wants to deal with us,” Mr. Kraft said.

A security hotline between the Philippine and Chinese coast guards has been inactive since January of this year.

China and ASEAN also have yet to agree on a code of conduct in the South China Sea.

Mr. Marcos Jr. reported progress on the code of conduct at the ASEAN summit, with “milestone issues and a preliminary review of the Single Draft Negotiating Text…achieved in Manila.”

Foreign Affairs Spokesperson Teresita C. Daza recently said that the Philippines has submitted 43 diplomatic complaints against China this year. These protests are in response to China obstructing the Coast Guard’s resupply missions at the Second Thomas Shoal, also known as Ayungin, where the old World War II ship BRP Sierra Madre is stationed to assert the Philippines’ ownership in the area.

Given the region’s proximity to the South China Sea, ASEAN members should agree to a consensus on how the strategic environment should work, according to Mr. Kraft.

He cited how ASEAN made a strong stance against Vietnam’s invasion of Cambodia in the late 1970s and 1980s.

“It’s a very good example of how small countries, but acting collectively…[and] being able to sway public opinion on an issue that is central to their own regional concerns,” Mr. Kraft said.

He noted that stronger ASEAN ties would not likely be a threat to China and would similarly draw in conflict. “ASEAN has always been what some authors have said a political diplomatic community.” “Any increase in the [ASEAN’s] capability is going to be largely political-diplomatic, not hard security or military,” Mr. Kraft said.

When asked about China’s relationship with ASEAN, Mr. Kraft said: “Historically, it’s always been good.”

AFP MODERNIZATION

Alongside leveraging its diplomatic capabilities, Mr. Kraft also urged the Philippine government to be consistent with its modernization plan. He pointed out the country’s tendency to recognize the importance of enhancing its military capability when issues arise.

“Do we have to wait for a crisis to take the modernization of our instruments for asserting our sovereignty seriously?” Mr. Kraft said.

“All that China has to do is wait for us to lose interest.”

Follow us on Spotify BusinessWorld B-Side

S&P slashes PHL growth forecast

THE OUTLOOK for the Philippine economy remains cloudy due to elevated inflation and high interest rates. — PHILIPPINE STAR/WALTER BOLLOZOS

By Keisha B. Ta-asan, Reporter

THE PHILIPPINE ECONOMY will likely expand by just 5.2% this year as high inflation and the lagged impact of the central bank’s aggressive monetary tightening dampen growth, S&P Global Ratings said.   

The debt watcher’s latest Philippine gross domestic product (GDP) growth estimate for this year is lower than its 5.9% forecast given in June.

This is also below the government’s growth target of 6-7% for 2023, and much slower than the 7.6% GDP expansion in 2022.

“Growth this year will be weaker than in 2022, but our outlook remains broadly favorable,” S&P said in a report. “We lowered (our forecasts) for Hong Kong, the Philippines, Singapore, Thailand and, notably, Vietnam.”

S&P’s lower forecast comes after Philippine GDP grew by a weaker-than-expected 4.3% in the second quarter. In the first half, GDP expanded by 5.3%.

For 2024, S&P raised its GDP projection to 6.1% from 5.9% previously. However, it lowered its growth forecast for 2025 to 6.2% from 6.6%.

Meanwhile, the credit rater expects inflation to average 5.8% this year, in line with the Bangko Sentral ng Pilipinas’ (BSP) revised full-year forecast.   

It also sees inflation easing to 3.2% in 2024, slightly below the BSP’s 3.5% forecast.

According to S&P, core inflation has eased in Asia-Pacific economies, including the Philippines. But recent spikes in international prices of oil and food, especially rice, were reflected in the higher headline inflation in August.

“A fuller picture of the effect will emerge in coming months, depending on the evolution of global prices and government policies (an export ban on rice in India, the world’s largest rice exporter, contributed significantly to the increase in rice prices in Asia),” it said.

The debt watcher also noted that the El Niño weather pattern may likely persist until 2024, which will lead to weaker agricultural activity in the region and potentially higher food prices.

Headline inflation quickened for the first time in seven months in August to 5.3% from 4.7% in July. Meanwhile, core inflation further eased to 6.1% year on year in August from 6.7% in July.

“The recent rise in oil and food prices hasn’t yet led to a renewed worsening of external deficit trends in the Asian economies that ran current account deficits in 2022: India, New Zealand, the Philippines, and Thailand. Earlier declines in oil and commodity prices helped to reduce those deficits,” S&P said.

In the first semester, the country’s current account deficit stood at $8.2 billion (-4% of GDP), 32.2% lower than the $12.1-billion deficit (-6.1% of GDP) in the same period last year.

The BSP projects the current account deficit to reach $11.1 billion (-2.5% of GDP) for this year, before narrowing to $10.3 billion (-2.1% of GDP) in 2024.

“In New Zealand, the Philippines, and Thailand, rising tourism revenues are also making a difference. However, the new rise in oil and food prices will put pressure on the external deficit data in coming months,” the credit rater said.

Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said the Philippines cannot rule out the debt watcher’s lower growth outlook for this year.

“We are a bit more optimistic than S&P though: while we think that making up for public sector underspending in the second quarter will be an uphill climb, we are likely to see improvements in government spending in the second half of 2023 to bring growth to the 5.5% to 6% range,” Mr. Neri said in a Viber message.

Aside from higher interest rates, he noted that growth has also been dampened by persistent inflation, government underspending and possible erosion of investor confidence due to geopolitical issues.

George N. Manzano, an economist at the University of Asia and the Pacific, said it will not be easy for the Philippines to achieve its 6-7% GDP growth target this year.

“The economy has to grow by 6.6-6.7% in the second half to hit the lower bound 6% government target,” he said.

“At the rate that inflation is increasing, with the food and energy prices, it may hamper demand and investment, especially if the BSP will hike interest rates further in the year. Thus, the burden will be on government spending to spur growth,” he added.

Last week, the BSP kept its key interest rate for a fourth straight meeting at 6.25%. From May 2022 to March 2023, the Monetary Board raised borrowing costs by 425 basis points (bps).

In the report, S&P expects the BSP’s policy rate to reach 6.5% this year. This assumes that the Monetary Board may still hike by 25 bps in the fourth quarter.

By end-2024, S&P expects the Monetary Board to cut its key rate to 5.75%.

The credit watcher also noted that they do not see any policy easing in the near term due to challenges in inflation and uncertainties from the US Federal Reserve.

“Most Asia-Pacific central banks consider the recent currency weakening as manageable but given renewed increases in global energy and food prices, they would be reluctant to see large currency depreciation stoke so-called imported inflation,” it said.

BSP Governor Eli M. Remolona, Jr. earlier said that the Monetary Board may raise policy rates again at its next meetings on Nov. 16 and Dec. 14 if inflationary pressures persist.

Retail dollar bond offer to start on Wednesday

REUTERS

THE GOVERNMENT is set to launch on Wednesday the first dollar-denominated bond offering targeting retail investors under the Marcos administration.

In a notice on its website, the Bureau of the Treasury (BTr) said it will hold a price-setting auction for the five-and-a-half-year onshore retail dollar bonds (RDB) on Sept. 27.

The bonds will also be offered to the public starting Sept. 27 until Oct. 6.

The issue date is set for Oct. 11. The bonds will mature on April 11, 2029.

The BTr set the minimum issue size at $200 million, although Finance Secretary Benjamin E. Diokno earlier said the government will try to raise $1 billion from the RDB offering.

“I think initially (the size is) $1 billion, but the demand for the offering is too big. Maybe we can upsize,” Mr. Diokno said on Friday.

This would be the Philippines’ second RDB issuance but the first one under President Ferdinand R. Marcos, Jr. The first offering raised $1.6 billion in 2021, under the Duterte administration.

“The RDBs shall be issued in scripless form and will be sold during the public offer period in minimum denominations of $200 (around P11,400) and multiples of $100 (P5,700) after,” the BTr said.

To encourage more investors, the RDBs will be exempted from taxes, such as the final withholding tax on coupon payment and documentary stamp tax on original issue.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the yields for RDBs could range from 5.2% to 5.4%, similar to previously issued offshore dollar bonds in the secondary market.

“The relatively higher interest rates/yields for the RDBs could be attractive for retail investors and could lead to strong demand given the low minimum amount to enjoy the higher interest rates, especially if the investors hold the bonds until maturity to prevent market risk and enjoy the relatively higher coupon/interest rate income,” he said in a Viber message.

China Banking Corp. Chief Economist Domini S. Velasquez said she expects decent demand for the RBDs as “its rate will be higher than what we have seen in recent years.”

“The relatively small amount to enter the RDB market will prompt retail investors to take advantage of the issuance,” she said in a Viber message.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the timing of the RDBs aligns with market conditions.

“The flexible tenor options, lower minimum denomination, and plans for Sukuk bonds should make these offerings more attractive to a broad range of investors,” Mr. Roces said in a Viber message.

Investors can order and purchase the new subscriptions to the RDBs through the BTr Online Ordering Facility on its website and settle through electronic payment facilities of China Banking Corp., Land Bank of the Philippines. (LANDBANK), and Metrobank via First Metro Securities Brokerage Corp.

Other online channels for the RDBs include Bonds.ph, and the mobile banking apps of Overseas Filipino Bank and LANDBANK.

The BTr is also targeting to launch Sukuk bonds within the fourth quarter this year. Mr. Diokno said that the Sukuk bonds will likely have an offer size of $1 billion. This would also mark the Philippine government’s first issuance in the Islamic bond market.

This year, the government’s borrowing plan is set at $2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources. — A.M.C.Sy

Finance dep’t ready to privatize PAGCOR’s gaming operations

A casino dealer collects chips at a roulette table in Pasay City, Metro Manila. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

THE DEPARTMENT of Finance (DoF) is ready to privatize the Philippine Amusement and Gaming Corp.’s (PAGCOR) gaming operations once the agency finalizes its shift to become a purely regulatory body.

“We are waiting for PAGCOR’s cue. Chairman (Alejandro H. Tengco) asked for time to organize the transition and increase cash flows to the casinos for higher value sales,” Finance Undersecretary Catherine L. Fong told BusinessWorld in a text message.

“Once PAGCOR is ready, we can acquire independent appraisals to set a base price for auction,” she added.

Ms. Fong noted that the timetable for divesting PAGCOR’s assets by 2025 is “very feasible.”

Last week, PAGCOR announced its plan to let go of its operator role to fully become a regulatory body. It is beginning preparations for the transition, which will likely be completed by 2025.

Mr. Tengco earlier said that the move will “level the playing field and ensure future growth and viability for all gaming industry players.”

The DoF as well as some lawmakers have been pushing to relieve PAGCOR of its role as a casino operator and commit to being a regulator.

Antonio A. Ligon, a law and business professor at De La Salle University, said that this decision is a “welcome development.”

“Drawing of lines as to the responsibilities will be relevant and necessary to avoid conflict of interest,” he said in a Viber message.

Ateneo de Manila University economics professor Leonardo A. Lanzona said that PAGCOR’s dual role as operator and regulator had “created conditions more favorable to their operations at the expense of the other firms.”

“As a result, PAGCOR ends up mainly as a monopoly, thus raising the prices for the patrons of these services and resulting in lower revenues for the government,” he said in an e-mail.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that PAGCOR’s commitment to being a regulator will help create a “better and more accessible gaming landscape for everyone.”

PAGCOR regulates and issues licenses to all gaming operations within the Philippines. This includes land-based casinos, bingo, electronic bingo, e-Casino games, sports betting, specialty games and e-Billiards.

It currently operates 42 Casino Filipino branches and satellite operation groups nationwide.

Mr. Tengco earlier noted that PAGCOR’s estimated sales from gaming venues could yield between P60 billion and P80 billion.

To ensure a successful transition, Mr. Ligon said that PAGCOR must focus on delineating functions.

“Crucial in the transition will be the personnel and the necessary system operations. It will be a good opportunity to come up with streamlined operation structures, together with a corrupt-free mechanism,” he said.

He also noted that the DoF should be transparent in setting guidelines and procedures in screening private operators.

Mr. Lanzona said this shift will also be an opportunity to revisit the country’s gaming laws.

“(The government) also needs to highlight the taxes and other services that new gambling facilities will need to pay society. Limitations on certain socially unacceptable side products of these firms should also be set. Otherwise, social damages or unethical activities may prosper as the market becomes more competitive,” he added.

Senator Ana Theresia “Risa” N. Hontiveros-Baraquel also said that PAGCOR must work on strengthening its regulatory powers.

“PAGCOR needs a plan on how it will help tax the operators, ensure compliance with laws against money laundering, conduct due diligence, and exercise vigilance to avoid working with and giving licenses to bad elements,” she said in a Viber message.

“It’s harder to do this when the government loses access to the goings-on inside gaming establishments. PAGCOR needs to identify the new legal, personnel, and technological capabilities it needs to have,” she added.

Mr. Limlingan said that PAGCOR should also be vocal on the changes happening in the gaming environment.

“Concerning privatization strategy, it is always recommended to be mindful of all shareholders and ensure that there will be a smooth transition in the privatization process,” he added.

PHL financial resources further rise at end-July

Bangko Sentral ng Pilipinas main office in Manila. — BW FILE PHOTO

THE TOTAL RESOURCES of the Philippines’ financial system further rose at end-July, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Resources of banks and nonbank financial institutions increased by 6.7% to P28.796 trillion in the first seven months of the year, from P27 trillion in the same period in 2022.

However, the growth in total resources is slower than the 7.7% recorded a month ago.

These financial resources are held by banks and nonbank financial institutions. These include funds and assets such as deposits, capital, as well as bonds or debt securities.

“The growth in the total assets/resources in the financial system and of banks is similar to the growth in loans; but still faster/better than the economic growth as consistently seen in recent years,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Earlier BSP data showed outstanding loans of big banks grew by 7.7% to P11 trillion in July from P10.21 trillion a year ago. This was slower than the 7.8% seen in June.

“The sustained growth in bank loans may also be attributed and consistent with the continued growth in deposits, as supported by the economic reopening narrative,” Mr. Ricafort said.

He said the sustained growth in the net income of banks has contributed to the increase in the financial system’s total resources. 

The Philippine banking system’s combined net profit climbed by 27.7% to P182.764 billion in the first half of the year, from P143.122 billion in the same period in 2022, separate BSP data showed.

“However, the slower growth in the total assets/resources of banks and nonbanks could be partly attributed to higher prices/inflation and higher interest rates,” he said.

To tame inflation, the Monetary Board hiked borrowing costs by 425 basis points from May 2022 to March 2023.

Based on data from the BSP, banking resources rose by 7.5% to P23.763 trillion at end-July from P22.095 trillion a year prior. Banks include universal and commercial banks, thrift banks, as well as rural and cooperative banks.

Broken down, the total banking resources held by universal and commercial banks stood at P22.338 trillion as of end-July, up by 7.5% from P20.775 trillion a year ago.

Thrift banks held P1.018 trillion of total resources, increasing by 7.7% from P945 billion a year ago.

The total resources of rural and cooperative banks climbed by 8.8% to P408 billion as of end-July from just P375 billion in the same period in 2022.

Meanwhile, the resources of nonbanking financial institutions inched up by 2.6% to P5.033 trillion from P4.906 trillion as of end-July 2022.

Nonbank financial institutions include investment houses, finance companies, security dealers, pawnshops and lending companies. 

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System and the Government Service Insurance System are also considered nonbanks.

The financial system’s total resources stood at P28.806 trillion in 2022, up by 9.3% from a year prior. — Keisha B. Ta-asan

DMCI Mining expects record nickel ore shipments

DMCI Mining Corp. is on track to surpass last year’s nickel ore shipments, its president said, as the company recorded robust production in 2023 while also targeting to start operating a new mine site by December.

“We’re very pleased that we will have a historical year in terms of shipments this year and that will help offset the lower prices because [we’ve recorded] volume gain,” DMCI Mining President Tulsi Das C. Reyes said in a media briefing on Friday.

His optimism comes as the mining firm’s subsidiary, Zambales Diversified Metals Corp. (ZDMC), produced more than one million tons of nickel ore in the first six months.

“Kung mataas ’yung volume mo, bababa ’yung cost per ton mo (If your volume is high, your cost per ton will go down),” he added.

Company data show its nickel ore production stood at 1.12 million wet metric tons (WMT) in the January-to-June period, nearly double the 567,000 million WMT a year earlier.

First-half output is also higher than the 1.03 million WMT produced during the full-year 2022.

Meanwhile, shipments reached 1.06 million WMT, equivalent to 73% of the total sales volume of 1.45 million WMT.

“We attribute our strong performance to improved operational efficiency and permit timing,” Mr. Reyes said.

“Shortly after [ZDMC] was granted an ECC (environmental compliance certificate) amendment, we worked on securing the auxiliary permits, local manpower and heavy equipment needed to boost our production capacity,” he said.

In January, ZDMC was granted an amended ECC that allowed it to produce two million WMT of nickel ore from the previously permitted one million WMT.

DMCI Mining has said that it is eyeing to ship out 1.5 WMT of nickel ore this year.

Meanwhile, Mr. Reyes said that the company is looking to open a mine in Zambales which is targeted to be operational by December this year, and another mine by the second quarter of next year.

DMCI Mining is currently securing a tree-cutting permit for an area inside ZDMC that is likely to produce 20 million tons of nickel ore, he said.

“I strongly believe that we have a very good chance to get this permit before year-end,” he said. “Once we get the tree-cutting permit, we can already mine.” 

The new mine site will be operated by another subsidiary, Zambales Chromite Metals Corp. It was not operating in 2019 due to the lack of permits to commence.

Mr. Reyes did not disclose the location of the other mine prospect.

He said he was bullish about ending the year with good results amid the projected higher selling prices with the closures of some mining operations in Surigao.

“With Surigao shutting down or closing for the season in October, we feel that prices will go high because the supply is naturally decreased,” he said.

“So I’m very positive for the outlook for the last quarter of this year and the first quarter of next year, for me, personally, because our mine sites normally operate when Surigao closes,” he added.

DMCI Mining is the mining subsidiary of Consunji-led listed holding firm DMCI Holdings, Inc. — Sheldeen Joy Talavera

San Miguel says its power unit is still ‘viable’

SMCGLOBALPOWER.COM.PH

LISTED CONGLOMERATE San Miguel Corp. (SMC) said that the businesses of its power unit, San Miguel Global Power Holdings Corp. (SMGP), and its subsidiaries are still “viable” and are able to meet financial obligations.

“SMGP remained profitable in 2022, as it has been since it started operations in 2011, in spite of the rise of coal and other fuel prices to unprecedented levels,” SMC told the local bourse on Monday.

The company said the unit’s consolidated revenues of P221.4 billion and earnings before interests, taxes, depreciation, and amortization (EBITDA) of P42.32 billion are “both at par with results in prior years.”

It said that this is due to the implementation of “various power plant operating cost optimization strategies combined with viable commercial arrangements with its existing bilateral customers.”

SMC said that certain loan maturities this year have been refinanced and SMGP is currently closing a project financing arrangement for its battery energy storage systems, which is expected to contribute to its revenues.

“SMGP remains confident of its ability to tap the local market as proven by its successful issuance of the P40 [billion] peso retail bonds,” the company said.

Meanwhile, SMC said the unit is still on track with the development of solar-based power generation projects while remaining “fully compliant” with existing local and international requirements, laws, and regulations.

“To date, the Company and its subsidiaries, including SMGP, are fully compliant with and continue to comply with their financial obligations,” it said.

As of June, it said SMGP had a combined installed capacity of about 19% of the national grid, 25% of the Luzon grid, and 7% of the Mindanao grid, with power supply agreements with distributors and other end users.

On Monday, SMC shares rose by 30 centavos or 0.29% to close at P104.80 apiece. — Sheldeen Joy Talavera

SEC advises against investing in unlicensed Eatcited, Amelia Mall 

THE Securities and Exchange Commission (SEC) warned the public against investing in Eatcited Pasalubong Center and Amelia Mall Online as these are not authorized to solicit investments. 

In two separate advisories posted on its website, the corporate regulator said that Eatcited and Amelia Mall are operating without the necessary license to solicit, accept, or take investments from the public. 

According to the SEC, Eatcited and its representatives are enticing the public to invest in its wholesale and retail food product services. The entity allegedly promises a guaranteed 5% earnings per month for a minimum investment of P20,000 and a guaranteed 10% earnings per month for a maximum investment of P500,000. 

Eatcited, located in Tayabas, Quezon province, is registered with the Department of Trade and Industry as a sole proprietorship.

“As appearing in its social media posts, Eatcited Pasalubong Center claims that it is looking for partners/silent investors for a short- or long-term contract with the possibility of earning money up to 120% for a period of 12 months,” the SEC said. 

“The scheme employed by Eatcited Pasalubong Center has the characteristics of a Ponzi scheme where money from new investors are used in paying fake profits to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors,” it added. 

Meanwhile, the SEC said Amelia Mall Online/AriaMall/Amelia-Mall Philippines, Inc. allegedly offers a part-time job by placing orders online with a promise of receiving a commission, which could only be withdrawn upon payment of a tax charge. 

The corporate regulator added that the certificate of registration being shown by Amelia Mall to the public is bogus, as the commission’s records showed that the entity is not registered as a corporation, partnership, or one-person corporation. 

“Reports revealed that the entity is engaged in a scheme known as tasking and recharging where the public is invited on purported online jobs by performing certain tasks for a promise of receiving monetary rewards or what they call commission and once the tasks are completed, the investor will be given another task to perform for the same promise of receiving commissions which can only be withdrawn upon payment of what they call a tax charge,” the SEC said. — Revin Mikhael D. Ochave

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