Services, BPOs, semiconductors to remain growth drivers in 2023

December 26, 2022 | 7:41 pm

THE SERVICES, business process outsourcing (BPO), semiconductor, and infrastructure industries are expected to be the growth drivers for the economy next year, analysts said.

“The crucial sector will be services. Digital technology has made it possible to realize economies of scale in services since face-to-face transactions are no longer necessary,” Ateneo de Manila University Economics Professor Leonardo A. Lanzona said in an email.

“Trade in services especially with the numerous college graduates, is feasible as long as we improve our internet infrastructure. This can include professional services such as accountancy, advertising and computer services. Educational and health services may also be viable,” he said.

“Services with the new technology can blur distinctions between sectors since services can enhance industry and agriculture by reducing transaction costs between buyers and sellers. We cannot ignore industry since this will absorb relatively unskilled labor,” he added.

In the third quarter, services grew 9.1%, the most of any sector. It also had the biggest contribution to gross domestic product (GDP) growth.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said that the semiconductor and BPO industries are also key growth areas.

“The semiconductor and BPO sectors remain our best bet in driving high-value economic growth, and the Marcos government should find ways to further raise incentives and cut costs in these sectors,” he said in an email.

“The country is at a good spot in developing the semiconductor business given the new chips ban on China. Government should be agile in convincing US chipmakers to transfer their factories here instead of our other ASEAN neighbors,” he added.

Last year, the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) exceeded its 10% growth target.

Electronics exports ended 2021 at $45.92 billion, up 12.9%, on the back of strong demand for new technologies, SEIPI said.

As of September, year-to-date electronics exports totaled $35.34 billion, up 4.71%, according to SEIPI.

Electronics exports remain the top export category, accounting for 60.60% of the $58.31 billion worth of overall commodity exports.

Mr. Ridon also said BPOs remain a significant growth and employment driver, enabling Filipino providers to service various international firms.

In November, the Philippine Economic Zone Authority (PEZA) endorsed 163 information technology and BPO projects for registration transfer to the Board of Investments (BoI). The 163 companies have taken in investment of P13.9 billion.

The industry is expected to generate up to 1.1 million direct jobs by 2028, according to the Finance department.

In June, the IT and Business Process Association of the Philippines (IBPAP) said that the industry is running ahead of the pace for its 2022 goals of 1.43 million full-time employees (FTEs) and $29.1 billion worth of revenue.

In 2021, the industry’s FTEs increased by 120,000, bringing total headcount to 1.44 million, up 9.1%. The industry also generated revenue of $29.49 billion.

Pantheon Chief Emerging Asia Economist Miguel Chanco said that construction and utilities are likely targets for new investment next year, as infrastructure remains one of the key areas in which the Philippines lags its regional peers.

“I’d go so far as to say that these ambitions shouldn’t be limited to just 2023. The Marcos administration would do well to encourage such capital expenditure throughout its entire term. We’re seeing an arguably faster shift out of export manufacturing in China, and into Southeast Asia. The only way the Philippines can benefit from these structural flows is to make sure that it has a more conducive environment for labor-intensive industry,” he said in an email.

Mr. Chanco added that there should also be more public investment in human capital, particularly in public healthcare and education systems.

Infrastructure spending rose 39.3% to P99.1 billion in September. In the nine-month period, infrastructure spending was up 13.4% at P727.7 billion, but 4.11% lower than the P758.9 billion targeted for the period. — Luisa Maria Jacinta C. Jocson

PHL rated 17^th in global manufacturing risk index

December 26, 2022 | 7:40 pm

THE PHILIPPINES placed 17^th out of 45 countries in Cushman and Wakefield’s manufacturing risk index (MRI), indicating further room for improvement in making manufacturing more attractive to investors.

The ranking was the outcome of the firm’s “baseline” scenario. The Philippines did much better in a scenario weighted towards cost (ninth) and much worse when risk was the main consideration (33^rd).

The cost scenario scores countries higher for low operating costs, while the risk scenario favors countries presenting lower levels of economic and political risk.

“While the Philippines has continued to move up in the ranking of countries in the MRI index, there are several factors that will strengthen the attractiveness of the country as a manufacturing destination,” Cushman and Wakefield said in a statement.

A year earlier, the Philippine ranking on the baseline scenario was 28^th.

Cushman and Wakefield, a real estate services consultancy, said structural reform is needed to unlock the manufacturing industry.

“While the Philippines maintains strong and growing domestic consumer markets, the country is also beset by lack of qualified labor (i.e., new skills given advancements in technology), aging infrastructure networks and facilities, low commitment on renewable energy sources and still opaque level of business transparency,” it added.

“Overall, the Philippines needs to clearly demonstrate its strength and arrest the weaknesses by dismantling the barriers that make it less competitive in any of the aforementioned factors,” the firm said.

The MRI assesses the most suitable locations for global manufacturing among 45 countries in Europe, the Middle East and Africa (EMEA), the Americas and Asia-Pacific (APAC).

China placed first in all three scenarios, with half of the top 12 countries in the cost scenario being from the Asia-Pacific.

“Asian markets have dominated an annual study ranking top manufacturing destinations according to baseline, cost and risk scenarios, holding the most top quartile rankings of any region across each of the scenarios,” Cushman and Wakefield said.

The report also noted that emerging Asia Pacific markets continue to benefit from expanding labor pools as unemployment rates continue to fall. — Aaron Michael C. Sy

Chinese companies express interest in RE collaboration

December 26, 2022 | 7:40 pm

THE DEPARTMENT of Energy (DoE) said it is in official talks with China on possible areas of collaboration within the energy industry, after Chinese companies indicated their interest in investing in renewable energy (RE) projects.

“We’ve had discussions with the Ambassador of the People’s Republic of China on different aspects of cooperation in the energy sector,” Energy Secretary Raphael P.M. Lotilla said in a virtual briefing last week.

Mr. Lotilla said that in the past few months a number of companies from China have engaged with the DoE to declare their interest in investing in renewable energy (RE) projects involving offshore wind, solar and other technologies.

In November, the RE industry was opened up to full foreign ownership following a legal opinion issued by the Department of Justice, with Mr. Lotilla releasing a circular amending the implementing rules and regulations (IRR) of the Renewable Energy Act of 2008.

The law previously limited foreign ownership of RE projects to 40%, the constitutional limit for many industries.

The circular allows foreign nationals and foreign owned entities to explore, develop and use RE resources such as solar, wind, biomass, ocean or tidal energy.

Mr. Lotilla said that the Energy department is also keeping an eye on any possible breakthroughs regarding exploration activity in the West Philippine Sea.

“As far as joint exploration is concerned the Department of Foreign Affairs (DFA) of course takes the lead in the negotiations and any announcement in this regard will be coming from the President. We continue to work with all concerned regarding the prospects of developing the service contracts in the West Philippine Sea,” he said.

Mr. Lotilla said that the discussions on exploration are currently at a “delicate stage” but said the DoE remained engaged with all the other agencies involved.

Earlier this month, PXP Energy Corp. said it is time to resume discussions on the exploration in the West Philippine Sea and hopes that President Ferdinand R. Marcos, Jr., who is scheduled to visit China in January, could negotiate a suitable agreement.

PXP Energy said it wants to be guided by the government on its next steps regarding the development of the company’s service contracts in the disputed waters.

The oil and gas company’s subsidiary Forum (GSEC 101) Ltd., serves as the operator of SC 72 at Recto Bank. Within its block is the Sampaguita gas discovery, which is estimated to contain about 2.6 trillion cubic feet of contingent gas resources. PXP Energy also holds a 50% interest in SC 75 in northwest Palawan.

These areas are also claimed by China.

The DoE in April ordered the suspension of joint exploration activities in the West Philippine Sea due to the maritime dispute. This led to the suspension of all exploration work in SC 72 and 75.

In October, the DoE approved a declaration of force majeure covering the two service contracts in response to a PXP Energy request made in April. — Ashley Erika O. Jose

The concept of profit level indicator in TPD

December 26, 2022 | 7:39 pm

Another year is dawning, and the countdown has begun. As we take the first step in faith towards the new year, we hope everyone can reflect and truly say that it was indeed a year of intense growth. Since I am a believer that the new year is neither an end nor a beginning, I wish to take everyone back and to the Let’s Talk Transfer Pricing (TP) articles that we published throughout the year so we may welcome 2023 with proper guidance.

To name a few, we started 2022 with our first article entitled “Are your related party transactions at arm’s length?” followed by other monthly installments such as “Transfer pricing policies are a must-have,” “How FAR are you in transfer pricing documentation?,” “Fundamentals of entity characterization in TPD,” “What’s #TRENDING? Understanding and documenting industry analysis,” and most recently “Understanding transfer pricing methodologies”.

Before 2022 ends, our last Let’s Talk TP article of the year deals with the concept of profit level indicator (PLI) in transfer pricing documentation (TPD) as discussed in Revenue Regulations (RR) No. 2-2013 and Revenue Audit Memorandum Order (RAMO) No. 1-2019.

WHAT IS PLI?
PLI is the ratio of net profit to an appropriate base (e.g., sales, costs incurred, assets employed). It measures the relationship between the net profit and the appropriate base.

Examples of PLI are return on sales (gross margin or operating margin), return on costs, and return on capital.

WHERE IS PLI USED IN TPD?
The discussion and selection of an appropriate PLI is presented in the “Application of the transfer pricing method” or “Benchmarking” section of the TPD.

In applying the transfer pricing method, consideration must be given to the choice of PLI. The use of an appropriate PLI ensures better accuracy in the determination of the arm’s length price of a related party transaction.

The Resale Price Method (RPM), Cost Plus Method (CPM) and Transactional Net Margin Method (TNMM) are the transfer pricing methods that use PLI to determine whether the related party transaction involved is carried out at arm’s length.

HOW DO WE SELECT AN APPROPRIATE PLI?
The selection of an appropriate PLI depends on the facts and circumstances of the related party transaction involved. Factors to consider include but are not limited to: (1) characterization of business; (2) availability of comparable data; and (3) the extent to which the PLI is likely to produce a reliable measure of arm’s length profit.

In determining the numerator and denominator of the PLI, taxpayers should bear the following principles in mind: (a) only those items that are directly or indirectly related to the related party transaction involved and are of an operating nature should be considered; and (b) items that are not similar to the independent party transaction being compared should be excluded.

Further, the determination of the denominator used in PLI is done by considering the company’s profit drivers and their independence from the denominator that is used. Other factors that need to be considered in selecting the PLI are the type of business and the availability of data.

WHAT ARE THE GENERALLY USED PLIs?
While PLI differs from case to case depending on the characterization of the business, among others, presented below are the generally used PLIs.

Business characterization is important because by determining the accurate characteristics of the entity’s business, the expected level of price or return by the entity can be known and the selection of reliable comparable can be made.

HOW IS PLI APPLIED?
A benchmarking study or comparable analysis is conducted to find comparable independent transactions or companies to verify the arm’s length nature of the related party transactions under evaluation.

a. Search for comparable

In searching for comparable independent transactions or companies, it is advisable to consult commercial databases to generate reliable comparables. The data obtained from commercial database only leads you to a set of candidate comparables. Candidate comparables must be subjected to a manual selection process (i.e., General and Financial Review) mentioned in RAMO No. 1-2019 to be able to arrive at the final comparable.

a. Use of multi-year data

Then, the chosen appropriate PLI of the final comparable is computed. Multi-year PLI data (usually three years) rather than single-year data improves the reliability of the analysis. The inclusion of numerous years makes it easier to pinpoint variables that may have influenced or should have influenced transfer prices, like long-term arrangements and business or product life cycles, which may also need to be considered when determining comparability. Further, the use of multi-year data can help neutralize the impact of extreme data points, like abnormally high profits or abnormal losses, while at the same time ensuring that the arm’s length range/ price is representative of the data points identified.

a. Use of interquartile range

In some cases, it will be possible to apply the arm’s length principle to arrive at a single figure of PLI that is the most reliable to establish whether the conditions of a transaction are at arm’s length. However, because transfer pricing is not an exact science, there will be many occasions when the application of the most appropriate method produces a range of figures all of which are equally reliable. This is often the case in practice where the comparable is extracted from a commercial database. In such cases, if the range includes many observations, statistical tools that account for a central tendency to narrow the range (e.g., the interquartile range or other percentiles) might help enhance the reliability of the analysis.

a. Benchmarking

The PLI of the tested party or related party transaction involved is compared with the interquartile range of PLIs of the comparable.

If the PLI of the tested party is within the arm’s length range, the related party transaction is carried out at arm’s length basis. Hence, no adjustments are likely to be made by the tax authority in case of audit.

However, if the PLI of the tested party falls outside the arm’s length range, the tested party must be able to present justifiable commercial reasons that the conditions of the related party transaction satisfy the arm’s length principle. If the tested party is unable to establish this fact, the related party transaction is deemed not to have been carried out at arm’s length basis. Hence, the tax authority will make adjustments and determine the point within the arm’s length range to which it will adjust the conditions of the related party transaction.

TAKEAWAY
Much like how life is about the choices we make and how the direction of our lives comes down to the choices we take, the use of an appropriate PLI grants taxpayers relief from questioning by tax authorities. Good life choices help us build healthy relationships and reliable PLI ensures better accuracy in the determination of the arm’s length price of a controlled transaction. As we welcome the new year, may we all start doing our best to make decisions that matter, both in life and in choosing the appropriate PLI.

Happy new year and we hope everyone makes the conscious choice of staying tuned in for next month’s Let’s Talk TP article as we walk you through the remaining concepts of transfer pricing.

Let’s Talk TP is an offshoot of Let’s Talk Tax, a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

Paul Vinces C. Leorna is a manager from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

At least 6 dead, 19 missing due to floods, landslide

December 26, 2022 | 6:46 pm

Flood1 — MISAMIS OCCIDENTAL PROVINCIAL POLICE

1 of 2

AT LEAST six people died and 19 others were reported missing as heavy and incessant rains triggered landslides and flooding in several parts of central and southern Philippines during the Christmas weekend, authorities reported on Monday.

More than 44,000 people across the regions of Mimaropa, Bicol, Eastern Visayas, Zamboanga Peninsula, and Northern Mindanao were evacuated on Dec. 25, and emergency response teams remained on alert Monday as continued rains were expected based on the forecast of state weather agency PAGASA.

Among the confirmed deaths were in Oroquieta City, Misamis Occidental due to a landslide, according to a report from the provincial police office.

Among those missing were three fishermen in Catanduanes, who failed to return home on Christmas eve after going out to sea, according to the Philippine Coast Guard.

The Coast Guard said search and rescue operations were still ongoing Monday with the help of local fishermen.

In an 11 a.m. bulletin Monday, the National Disaster Risk Reduction and Management Council (NDRRMC) said over 23,000 families were affected by flooding, composed of 100,691 people.

Of the those affected, 44,707 were moved to 27 evacuation centers.

Northern Mindanao — composed of the provinces of Misamis Oriental, Misamis Occidental, Bukidnon, Lanao del Norte and Camiguin, including the independent city of Cagayan de Oro — accounted for majority of those affected.

The Department of Social Welfare and Development’s office in Northern Mindanao said in an 8 a.m. report on Monday that 45,883 people in the region have been evacuated.

The Zamboanga City government tallied 433 families affected by flashfloods and one person missing.

SHEAR LINE
State-run Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) said in a weather advisory Monday that the regions of Eastern Visayas, Caraga, and Northern Mindanao along with the provinces of Bohol and Davao Oriental will likely experience moderate to heavy rains in the next 24 hours.

The rains are caused by a shear line, which occurs when there are abrupt changes in wind component and easterly winds and the northern cold front interact.

PAGASA Weather Forecaster Patrick Del Mundo, in an interview with One Balita Pilipinas on Monday, said that moderate to heavy rains in the Visayas and Mindanao will continue until December 28 due to a shear line.

“The northeast monsoon and shear line continue to prevail… It could possibly dissipate by Dec. 29 but the northeast monsoon will continue to bring rains in Luzon up to Mindoro,” Mr. Del Mundo said in Filipino.

Philippine National Police Spokersperson Jean S. Fajardo, meanwhile, told a separate televised briefing that emergency response teams have been deployed to help distribute relief goods to affected residents.

“We will have a sufficient number of officers from the reserve standby force in the Eastern Visayas who can respond to our countrymen affected in the region,” she said in Filipino.

The NDRRMC also reported an initial P5.3 million worth of damage in public infrastructure and an estimated P54.78 million damage cost in agriculture. — Marifi S. Jara, John Victor D. Ordoñez and Beatriz Marie D. Cruz

More than 7,000 Filipinos repatriated this year

December 26, 2022 | 6:44 pm

DFA-airport-passengers — THE PHILIPPINE Embassy in Bahrain brought home 50 Filipinos from Manama in January, the first batch of the Department of Foreign Affairs’ repatriation program for 2022. — DFA

THE DEPARTMENT of Foreign Affairs (DFA), through its Office of the Undersecretary for Migrant Workers Affairs, repatriated over 7,000 overseas Filipinos this year, according to a statement released by the Office of the Press Secretary on Monday.

Of the 7,880 repatriated Filipinos as of end-November, more than half or 58% were from the Middle East, with 942 from Kuwait, and another 70 from Sri Lanka, based on DFA data.

President Ferdinand R. Marcos, Jr. earlier assured of stronger coordination between the DFA and the newly-formed Department of Migrant Workers (DMW) to provide better assistance to overseas Filipinos.

“We will intensify this partnership to provide fast and competent services and assistance to overseas Filipinos who need help,” the Chief Executive told a Filipino community in Cambodia in Filipino on the sidelines of the 40^th and 41^st Association of Southeast Asian Nations (ASEAN) Summit in November.

There were about 1.83 million overseas Filipino workers as of 2021, higher than the 1.77 million estimate in 2020, based on data from the Philippine Statistics Authority released on Dec. 2.

Those with existing work contracts comprised 96.4% or 1.76 million of the 2021 total. The rest were Filipinos working abroad under a tourist, visitor, student, medical, and other types of non-immigrant visas.

The top country destinations were Saudi Arabia at about 24.4% and United Arab Emirates at 14.4%. Other countries in Asia with large number of overseas Filipino workers were: Hongkong (6.7%), Kuwait (5.9%), Singapore (5.8%), and Qatar (4.8%).

Remittances by overseas Filipino workers reached $2.91 billion in October, higher than the $2.81 billion in the same month last year, based on data from the Bangko Sentral ng Pilipinas released on Dec. 15.

The amount of money sent home by migrant workers was the highest in three months or since the $2.92 billion in July.

Mr. Marcos had on several occasions described overseas Filipino workers as the pride of the Philippines as they “bring honor to the Filipino nation.”

“You provided a much-needed boost to the pandemic-stricken economy… allowing us to fund social programs that help the poor and the most vulnerable families in the Philippines,” he said.

Meanwhile, the DFA also said in its yearend report that it issued a total of 3,589,620 passports from January to October.

As of November, the department has also issued 55,574 visas and 551,635 apostille certificates.

Six temporary off-site passport services facilities were also opened this year.

The agency also cited bilateral agreements it signed on defense, culture, counterterrorism, trade and investment, technology and data protection, and migrant workers protection. — Alyssa Nicole O. Tan

BI expects passenger traffic at airports to increase heading into 2023

December 26, 2022 | 6:44 pm

Naia-T3-airport-PHILSTAR-MIGUEL-DE-GUZMAN — PHILIPPINE STAR/ MIGUEL DE GUZMAN

THE BUREAU of Immigration (BI) on Monday said it expects passenger traffic to continue to increase up to New Year’s Eve as more Filipinos and foreign visitors arrive and leave.

“Usually during New Year’s, departures also increase since Filipinos who live abroad, especially our overseas Filipino Workers return to the countries they came from,” Immigration Spokesperson Dana Krizia M. Sandoval told a televised briefing.

“We see that the tourism and international travel sector is really on the rebound.”

Ms. Sandoval gave assurance that airports will have enough manpower to process arrivals despite the expected influx.

A total of 31,992 visitor arrivals at the Ninoy Aquino International Airport (NAIA) were processed on Dec. 24, the BI reported on Sunday.

The agency said NAIA Terminal 1 recorded 10,047 passenger arrivals, while Terminals 2 and 3 saw 4,646 and 12,615 arrivals, respectively.

A total of 22,248 departures were also processed on Christmas Eve.

No data on passenger movement was immediately available for other international airports in the country.

The BI earlier implemented an electronic gate system at the NAIA to fast-track the passport processing process.

The bureau also scrapped the arrival card requirement for returning Filipinos at airports to lessen processing time.

Last month, the Department of Tourism reported over two million visitor arrivals, which surpassed its projection of 1.7 million after the Philippines eased restrictions.

In the first nine months of 2022, tourist arrivals in the Asia-Pacific region were still 83% below pre-pandemic levels, the United Nations World Tourism Organization said in its November World Tourism Barometer report. — John Victor D. Ordoñez

Solon calls on Marcos to revive peace talks with communist leaders for true ‘unity’

December 26, 2022 | 6:43 pm

NPA-returnees-OPAPRU — FORMER members of the New People’s Army, also referred to as communist terrorist group by the government, attend an orientation activity in Nueva Ecija as part of the reintegration program for rebel returnees. — OPAPRU/PEACE.GOV.PH

AN OPPOSITION lawmaker who is part of a progressive bloc in Congress called for the revival of peace talks with the communist movement in response to President Ferdinand R. Marcos, Jr.’s “unity” campaign.

House Deputy Minority Leader France L. Castro said true unity would only be possible if the Philippine government reopens peace negotiations with the National Democratic Front of the Philippines (NDFP).

The NDFP is a coalition of left-wing organizations and is considered as the political wing of the Communist Party of the Philippines (CPP).

“President Ferdinand Marcos Jr.’s wish for unity in the country can only be achieved if the inequalities plaguing the Philippines are addressed,” the ACT Teachers Party-list representative said in a statement on Monday, the 54^th founding anniversary of the CPP.

“The peace negotiations have gained milestone agreements since 1992. Ironically, the GRP (Government of the Republic of the Philippines) and NDFP panels were set to formally sign a number of agreements, important components of an aspired-for Comprehensive Agreement on Social and Economic Reform (CASER) that would address the root causes of the armed conflict, when President Duterte unilaterally ‘terminated’ the peace talks in November 2017,” Ms. Castro said.

President Rodrigo R. Duterte, who immediately called for a resumption of peace talks with Maoist rebels at the start of his term in July 2016, ordered a withdrawal of negotiations in early 2017, citing continued attacks by members of the New People’s Army (NPA), the armed groups of the CPP.

In a Twitter video uploaded by the Office of the President on Christmas day, Mr. Marcos said, “I pray that the promise of a comfortable and beautiful future will give hope to each Filipino. Let us have faith that if we help each other, that we would fulfill this promise. Most of all, let us open our hearts to the spirit of unity.”

Unity was also the battlecry Mr. Marcos’ 2022 presidential campaign.

“Under the Marcos administration’s banner of unity, the government should vigorously carry out interventions in order to sustain and build on the gains we have achieved under the peace process,” Peace Secretary Carlito G. Galvez Jr. said in a Dec. 17 statement following the passing of CPP’s founding chairman Jose Maria C. Sison.

Mr. Galvez, who served the same position under Mr. Duterte, had previously expressed support to the localized peace talks strategy adopted by the former president after he declared a permanent end to the negotiations with the NDFP-CPP.

The localized peace talks are carried out alongside the rollout of social and economic program in communities with NPA presence.

Police and military leaders had said that the NPA are a waning force on the ground.

On Monday, the police presented at least 55 alleged former NPA rebels who surrendered to authorities.

Ms. Castro, however, said, “No amount of fake news, red tagging and presentation of fake surrenderers can change the fact that there are glaring inequalities present in Philippine society. If these are not addressed then it will only worsen until the present oppressive and exploitative system is replaced by a more just and humane compensation.” — Beatriz Marie D. Cruz

Cargo, passenger vehicles build up at Matnog Port due to rough seas

December 26, 2022 | 6:43 pm

A LONG line of cargo and passenger vehicles was building up outside the Matnog Port in southern Luzon on Monday as roll on-roll-off vessels were being delayed by rough seas, the Philippine Coast Guard (PCG) reported.

“Vehicular traffic was slowing down as strong winds and high waves were affecting maritime operations,” the PCG said in Filipino in posts on its social media pages.

Matnog Port in Sorsogon is the jump-off point for cargo and passenger vehicles traveling from Luzon to Visayas and Mindanao, the central and southern parts of the country.

The port serves as a key link for the movement of people and goods across the country.

As of Dec. 26, the Coast Guard said there were no closed ports or stranded passengers despite incessant rains in many areas.

PCG reported that as from 6 a.m. to 12 noon Monday, there were 42,131 outbound passengers and 40,027 inbound passengers in all ports nationwide.

“The PCG has placed its districts, stations, and sub-stations on ‘heightened alert’ to manage the influx of port passengers during the Yuletide Season from 15 Dec. 2022 to 07 January 2023,” the agency said. — MSJ

Taiwan reports China’s largest incursion yet to air defense zone

December 26, 2022 | 6:08 pm

TAIPEI — Seventy-one Chinese air force aircraft including fighter jets and drones entered Taiwan’s air defense identification zone in the past 24 hours, the island’s government said on Monday, the largest reported incursion to date.

Of the aircraft, 43 also crossed the Taiwan Strait’s median line, an unofficial buffer between the two sides that lies within the defense zone, Taiwan’s Defense Ministry said in a report, as Beijing continues military activities close to the Chinese-claimed island.

Taiwan’s official Central News Agency said it was the largest Chinese air force incursion to date, although there was no sense of alarm on the island, which has witnessed a steady increase in Chinese pressure in recent years.

China, which claims Taiwan as its own territory, said it had conducted “strike drills” in the sea and airspace around Taiwan on Sunday in response to what it said was provocation from the democratically governed island and the United States.

Taiwan, which strongly rejects China’s sovereignty claims, said the drills showed Beijing was destroying regional peace and trying to intimidate Taiwan’s people.

The office of Taiwan President Tsai Ing-wen said Ms. Tsai will call a high-level national security meeting on Tuesday morning to discuss reinforcing the island’s civil defense system, followed by a press conference on new civil defense measures.

The statement gave no details, but the defense ministry has said it was considering extending compulsory military service beyond four months, as the war in Ukraine and rising tensions with Beijing renewed discussion about how to respond to Chinese military pressure.

“The more preparations we make, the less likely there will be rash attempts of aggression. The more united we are, the stronger and safer Taiwan would become,” Tsai told a military ceremony on Monday.

During the latest incursion, several Chinese planes, mostly fighter jets, briefly crossed the median line in the sensitive Taiwan Strait before returning to China, according to a map provided by Taiwan’s defence ministry. Seven Chinese navy ships were also detected near Taiwan, the ministry said.

China’s military also sent early warning, electronic-warfare and antisubmarine aircraft, as well as drones, into Taiwan’s southern air defense identification zone, or ADIZ, according to the report, which detailed Chinese activities near Taiwan over the 24 hours to 6 a.m. (2200 GMT on Sunday).

Taipei has complained of repeated missions by the Chinese air force over the last two years, often in southern areas of its ADIZ.

Taiwan sent unspecified combat aircraft to warn away the Chinese planes, while missile systems monitored their flight, the ministry said, using standard wording for its response.

China has stepped up its diplomatic, military and economic pressure in recent years on the self-governed island to accept Beijing’s rule. Taiwan’s government says it wants peace but will defend itself if attacked. — Reuters

China limps toward living with COVID

December 26, 2022 | 6:07 pm

Shanghai, China-subway — PEOPLE wearing face masks are seen at a subway station in Shanghai, China, Jan. 18, 2021. — REUTERS

BEIJING/SHANGHAI — Mask-wearing Beijing and Shanghai commuters crowded subway trains on Monday, with China’s two biggest cities edging closer to living with coronavirus disease 2019 (COVID-19), as millions have been infected with the largely unchecked virus across the country.

After three years of ruthless anti-coronavirus curbs, President Xi Jinping scrapped the country’s zero-COVID policy of lockdowns and relentless testing this month in the face of protests and a widening outbreak.

Health experts and residents worry that China’s statistics, which show no new COVID deaths reported for the six days through Sunday, do not reflect the actual number of fatalities, and that the country’s fragile health system is being overwhelmed.

After the initial shock of the policy U-turn, and a few weeks in which people in Beijing and Shanghai stayed indoors, either dealing with the disease or trying to avoid it, there are signs that life is on track to returning closer to normal.

Subway trains in Beijing and Shanghai were packed, while some major traffic arteries in the two cities were jammed with slow-moving cars on Monday as residents commuted to work.

“I am prepared to live with the pandemic,” said 25-year-old Shanghai resident Lin Zixin. “Lockdowns are not a long-term solution

This year, in an effort to prevent infections from spiraling out of control across the country, the 25 million people in China’s commercial hub endured two months of bitter isolation under a strict lockdown that lasted until June 1.

Shanghai’s lively streets were a sharp contrast with the atmosphere in April and May, when hardly anyone could be seen outside.

An annual Christmas market held at the Bund, a commercial area in Shanghai, was popular with city residents over the weekend. Crowds thronged the winter festive season at Shanghai Disneyland and Beijing’s Universal Studios on Sunday, queuing up for rides in Christmas-themed outfits.

The number of trips to scenic spots in the southern city of Guangzhou this weekend increased by 132% from last weekend, local newspaper The 21^st Century Business Herald reported.

“Now basically everyone has returned to a normal routine,” said a 29-year-old Beijing resident surnamed Han.

China is the last major country to move toward treating COVID as endemic. Its containment measures had slowed the $17-trillion economy to its lowest growth rate in nearly half a century, disrupting global supply chains and trade.

The world’s second-largest economy is expected to suffer further in the short-term, as the COVID wave spreads toward manufacturing areas and workforces fall ill, before bouncing back next year, analysts say.

Tesla suspended production at its Shanghai plant on Saturday, bringing ahead a plan to pause most work at the plant in the last week of December. The company did not give a reason.

RISING WAVE
The world’s most populous country has narrowed its definition for classifying deaths as COVID-related, counting only those involving COVID-caused pneumonia or respiratory failure, raising eyebrows among world health experts.

The country’s health care system has been under enormous strain, with staff being asked to work while sick and retired medical workers in rural communities being rehired to help, according to state media.

The provincial government of Zhejiang, a big industrial province near Shanghai with a population of 65.4 million, said on Sunday it was battling about a million new daily COVID-19 infections, a number expected to double in the days ahead.

Health authorities in the southeastern Jiangxi province have said infections would hit an apex in early January, adding that there could be other peaks as people travel next month for Lunar New Year celebrations, state media reported.

They warned that the wave of infections would last three months and that about 80% of the province’s 45 million residents could get infected.

The city of Qingdao, in the eastern Shandong province, has estimated that up to 530,000 residents were being infected each day.

Cities across China have been racing to add intensive-care units and fever clinics, facilities designed to prevent the wider spread of contagious disease in hospitals.

The Beijing municipal government has said the number of fever clinics in the city had increased from 94 to almost 1,300, state media said. Shanghai has 2,600 such clinics and has transferred doctors from less-strained medical departments to help out.

Worries remain about the ability of less-affluent cities in China to cope with a surge in severe infections, especially as hundreds of millions of rural migrant workers are expected to return to their families for Lunar New Year.

“I am worried the flow of people will be huge … (and) the epidemic will break out again,” said Lin, the Shanghai resident. — Reuters

Only Russia’s nuclear arms preventing West from declaring war — Putin ally

December 26, 2022 | 6:07 pm

RUSSIA’S nuclear arsenal and the rules Moscow has laid out for its use are the only factors preventing the West from starting a war against Russia, a top ally of President Vladimir Putin said in an article published on Sunday.

Former President Dmitry Medvedev, now deputy chairman of Russia’s Security Council, also said Moscow would pursue its war in Ukraine until the “disgusting, almost fascist regime” in Kyiv was removed and the country had been totally demilitarized.

In an interview aired separately on Sunday, Putin said Russia is ready to negotiate with all parties involved in the war, but said that Kyiv and its Western backers have refused to engage in talks.

Mr. Medvedev, who once cast himself as a liberal modernizer as president from 2008 to 2012, is one of the most hawkish proponents of the war. He regularly denounces the West, which he accuses of wanting to break Russia apart to benefit Ukraine.

“Is the West ready to unleash a fully-fledged war against us, including a nuclear war, at the hands of Kyiv?” he wrote in a 4,500-word article for the Rossiiskaya Gazeta newspaper.

“The only thing that stops our enemies today is the understanding that Russia will be guided by the fundamentals of state policy… on nuclear deterrence. And in the event that a real threat arises, it will act on them.”

Mr. Putin and other senior officials have repeatedly said Russia’s policy on nuclear weapons dictates they can be used if there is a threat to territorial integrity.

Russia has the world’s largest stockpile of nuclear weapons, with close to 6,000 warheads, according to experts.

Earlier this month, Mr. Putin said the risk of a nuclear war was rising, but insisted Russia had not “gone mad” and that it saw its own nuclear arsenal as a purely defensive deterrent.

“The Western world is balancing between a burning desire to humiliate, offend, dismember and destroy Russia as much as possible, on the one hand, and the desire to avoid a nuclear apocalypse, on the other,” said Mr. Medvedev.

If Russia did not get the security guarantees it is demanding, he said, “The world will continue to teeter on the brink of World War III and nuclear catastrophe. We will do everything we can to prevent it”.

Mr. Medvedev also said Russia could forget about normal ties with the West for years and perhaps decades to come and would focus instead on relations with the rest of the world. — Reuters