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German push to ease migrants’ citizenship path faces red tape reality check

FREEPIK

BERLIN — Germany’s cabinet on Wednesday passed a draft bill to ease the citizenship law, hoping a faster track to German nationality will attract skilled migrants to plug chronic labor shortages holding back Europe’s biggest economy.

Some experts caution that progress may be slow, noting parts of Germany’s administrative machinery are already creaking under a big backlog of existing citizenship applications.

The draft, first presented in May, shortens the required residency time for migrants to five years from eight years and to three if migrants make so-called special integration efforts, such as speaking German very well or doing voluntary work.

The new law also allows dual citizenship and grants automatic naturalization to children born in Germany to a parent who has lived in the country for more than five years.

Germany, like industrialized countries around the world, is facing deep labor shortages, particularly in skilled high-growth sectors, which are taking their toll on an economy that could yet face a recession this year.

Official estimates suggest Germany’s ageing society will be short seven million skilled workers by 2035.

German citizenship is not a condition of employment for migrants, but Germany wants to establish itself as a migration destination for foreign talent, like the US and Canada, and Berlin hopes the prospect of a smoother, quicker path to German nationality will attract skilled migrants.

The draft bill will also simplify the path to a German passport for thousands of foreign “guest workers” brought in decades ago from Turkey and southern Europe to rebuild Germany’s post-war economy. It will do this by lowering German language requirements and by withdrawing a naturalization test.

But with German authorities already overwhelmed by thousands of backlogged naturalization applications, some experts doubt the reforms can quickly achieve their main goal of luring global talent to fill hundreds of thousands of vacancies.

“We see very clearly that the law actually will offer relatively liberal regulations, but that these regulations will only exist on paper,” Holger Kolb, a researcher at The Expert Council on Integration and Migration, told Reuters.

Mr. Kolb said similar problems with long waiting times for appointments were also hindering Germany’s parallel reforms in related areas such as visas for skilled workers from abroad.

LONG WAITING TIMES
Staff shortages in the public sector, whose jobs are mostly not as competitive as other sectors, a lack of digitization and the impact of several related migration reforms that were passed this year were overwhelming immigration authorities, Mr. Kolb added.

“You can change a law relatively quickly, but upgrading, digitizing and reorganizing an administration, that will be difficult,” he said.

Germany’s naturalization rate of 1.1% is well below the European Union’s average of 2%, according to the interior ministry, which says this reflects the reluctance of foreigners to give up their old citizenship for German nationality — a predicament the new bill addresses.

Migrants complain of long waits even for a first citizenship consultation appointment. But not everyone is deterred.

Hundreds of thousands of Syrian refugees who arrived in Germany in 2015/2016 are now eligible for the red passport, largely contributing to a rise in naturalization applications, a study by Mediendienst Integration, an online portal that collects data on immigration and asylum, showed in March.

The number of applications has been growing faster than the number of naturalizations processed by authorities and has doubled within a year in the cities of Cologne and Dresden and even tripled in Bielefeld, the study showed.

Waiting times for applications vary between one year in cities like Hamburg and Munich to up to 36 months in Chemnitz, the study, which surveyed migration authorities in 23 of the most populous cities in Germany, found.

Asked about the long waiting times, Interior Minister Nancy Faeser said handling applications and other administrative work by migration authorities was an issue regulated by federal states, adding that waiting times varied between regions.

Tariq Tabbara, a citizenship law professor at Berlin University of Economics and Law, said the new law contained new regulations that would probably make the process even more complicated, such as stricter conditions for ensuring the person can independently support themselves financially, a requirement that is already subject to lengthy scrutiny by officials.

“Even with this reform in Germany, access to citizenship is still much easier in traditional immigration countries like Canada. In the end it may be even more difficult,” Tariq Tabbara told Reuters. — Reuters

E-commerce boom spurs demand for fulfillment services 

FullFill (We Empower Ecommerce Solutions, Inc.) warehouse in Pasig City.

Emerging entrepreneurs expanding their businesses in big cities continue to benefit from fulfillment services centers, according to an industry player.

“In the dynamic landscape of small business ownership, the demands of daily operations such as storing, picking, packing, and logistics coordination can be overwhelming — leading emerging entrepreneurs to lose focus on the bigger picture of furthering their ventures,” FullFill (We Empower Ecommerce Solutions, Inc.), a Pasig City-based fulfillment support hub, said in a press release on Thursday. 

According to Straits Research, companies without sufficient internal warehouse space for efficient inventory management and those unwilling to allocate extra resources for shipping will find that a fulfillment center offers an optimal solution.

“The rise of e-commerce worldwide and the subsequent increase in people shopping online due to this trend, particularly in developing economies, is driving the demand for e-commerce fulfillment services,” the research firm said in a statement.

FullFill, which supports the operations of small businesses based in Manila and various parts of the country, said that the fulfillment services sector helps boost growth and create stability among entrepreneurs who aim to professionalize and scale their ventures.

The company currently provides fulfillment services and micro-warehousing support for home-based entrepreneurs.

“The concept was curated to help entrepreneurs who want to expand their business in Manila but don’t have the capacity to set up a new team,” FullFill said.

The company noted that it has started offering temperature-controlled shelf spaces that can maintain a temperature of approximately 24 to 26 degrees Celsius. This expansion caters to a broader range of temperature-sensitive products such as vitamins, health supplements, skin care, and more.

According to an analysis report by Grand View Research, the size of the worldwide market for e-commerce fulfillment services was assessed at $97.33 billion in 2022. The report forecasts a compound annual growth rate of 13.9% from 2023 to 2030. — Arjay L. Balinbin

SMEs must prepare, respond swiftly to rising cyber threats — experts

TIRACHARDZ-FREEPIK

Cybersecurity measures must be employed by all scales of business, including small and medium enterprises (SMEs), due to the increasing threats and attacks, according to experts.

“Even if they’re small businesses, they should also keep pace with what’s going on out there,” Pebbles L. Sy-Manalang, chief technology and operations officer at GCash, said in an interview with BusinessWorld at the cyber risk management forum of the Management Association of the Philippines (MAP) on Tuesday.

“So they know that it’s happening, and they can prepare for it and respond quickly,” she added, regarding SMEs enforcing basic security hygiene measures.

“Good security governance at every enterprise level is the key,” said Ivan John E. Uy, secretary of the Department of Information and Communications Technology (DICT).

Mr. Uy noted that businesses must adopt a risk management framework and secure critical information infrastructure to stay on top of increasing cyber threats. However, building awareness of such attacks is the first gap entrepreneurs and individuals must face, he said.

“You can have the most sophisticated system, but if your manager happens to give the password to somebody else, then all is lost.”

Mr. Uy said that the Philippines is fourth in the world with the most number of cyber attacks, and the second most attacked country by web threats worldwide last year, citing data from the DICT and Kaspersky.

Kaspersky has reported that SMEs in the Philippines experienced 658,874 web attacks in the first half of 2022 alone, with 17,786 detections of Trojan-password stealing ware attempting to infiltrate the corporate network and steal sensitive information.

“Small business owners may think their companies are too insignificant to become a target for cybercriminals. There is a certain logic in that because attackers usually look for maximum profit with minimum effort,” said Yeo Siang Tiong, general manager for Southeast Asia at Kaspersky, in a press statement.

“This sector is part of a bigger chain and like dominoes, if a single password stealer can enter a small enterprise’s systems, consider the entire chain compromised,” he added.

Amid the limited availability of resources, Kaspersky suggested that SMEs should adopt practices aimed at improving employees’ awareness of such cyber threats. These include developing a cybersecurity manual, granting a minimum set of access rights, using a secure password manager, and installing antivirus software on business devices.

“It is free to educate and protect your employees. You don’t need sophisticated tools yet,” Ms. Sy-Manalang said. “But as you scale your business, you become more of a target.”

Mr. Uy said that the DICT has partnered with the Department of Trade and Industry (DTI) to develop the e-commerce platform on the eGov PH superapp, which will host and support SMEs while employing best practices for cybersecurity.

“They’re on their own for now, but the government is doing something for them and it should be out soon,” he said, referring to current initiatives from the DICT to support SMEs in grappling with cybersecurity issues. — Miguel Hanz L. Antivola

Navigating forward: Philippines embraces technological reformation with Hyper Interdisciplinary Conference 2023

Leave a Nest Philippines invites local and international researchers, innovators, students, and industry partners to participate in the 4th Hyper Interdisciplinary Conference in the Philippines (HIC PH). Several panel sessions and research poster and pitching sessions will be conducted during this program.

The Philippines has experienced a slight setback in its Global Innovation Index (GII) ranking for the year 2022. The country’s GII rank slipped by 8 positions, moving from 72nd place in 2021 to the 76th position in 2022. Alongside this decline, the Innovation Input and Innovation Output rankings also saw a decline to 76th and 51st positions as compared to the 72nd and 40th ranks in 2021. A notable cause that is being looked into as to why this happened was the reduced performance scores in Knowledge and Technology Outputs. These scores were primarily influenced by factors concerning knowledge creation, knowledge impact, and knowledge diffusion.

Despite this setback, the Philippines continues to outperform the regional average when compared to neighboring countries. This underscores the nation’s dedication to advancing technological solutions tailored to local needs. Recognizing the importance of cross-disciplinary and cross-country collaboration, the Philippines seeks to engage with experts from various fields to collectively brainstorm innovative ideas and develop well-informed strategies for effective implementation.

In light of these developments, the upcoming Hyper Interdisciplinary Conference Philippines aims to address the theme of “Convergence of Reformative Technologies for Localized Solutions.” This conference will serve as a platform to discuss the amalgamation of transformative technologies to tackle unique challenges faced by the Philippines, particularly through discussions regarding how knowledge and technologies around Asia have been used (or will be used) to solve such local and unique issues in the Philippines.

Through the collaborative efforts, rigorous research, and the implementation of innovative solutions that will sprout from the discussions in this Hyper Interdisciplinary Conference, we hope that the Philippines will be able to make significant progress in its innovation journey, promising a brighter and more prosperous future for its citizens.

If you are a researcher, professor, student, or faculty from any academia or research institution, we would like to invite you to become part of our research presenters for the conference who will be given the chance to present their studies and research to the entire conference participants. Admission of participants affiliated with any academia institution is FREE of charge. We’re exploring the potential of technological transformation by embracing global innovations and reshaping them to uniquely address the Philippines’ local issues. Your participation is key to shaping a brighter future!

There are only 20 slots available for Research Splash Presenters (with posters) with 20 additional slots for Poster Presenters. Research Splash Presenters will be given the opportunity to give a three-minute presentation in front of the audience during the given time slot as well as have a poster presentation within the venue. For those who would prefer to only do a poster presentation, they are open to join and participate in the conference solely as Poster Presenters.

For more information about the Hyper Interdisciplinary Conference Philippines and to register for the event, please visit https://hiconf.lne.st/conference/hicph2023/.

 


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Kacific meets with Pres. Ferdinand R. Marcos, Jr. to map out PHL’s digital connectivity future

President Ferdinand R. Marcos Jr. and senior officials with Kacific CEO, Christian Patouraux and Kacific Executives

Kacific  CEO Christian Patouraux met with President Ferdinand R. Marcos, Jr. in Malacañang to discuss the future of digital connectivity in the Philippines. Kacific executives and senior Government officials explored potential collaborative opportunities. Discussions covered how the Philippines could leverage the Kacific’s future second satellite Kacific2 to support enhanced connectivity and cyber security across the country.

Currently, Kacific’s geostationary satellite, Kacific1, delivers powerful spot beams, covering the entire Philippines and neighboring regions. Notably, Kacific1 has achieved this milestone through strategic partnerships with over 164 distributors, 19 ISP partners, and the Department of Information and Communications Technology (DICT) in the Philippines. By successfully connecting over 2,000 businesses in the Philippines, Kacific1 has been a catalyst for economic growth and global market access.

Looking ahead, with the planned commissioning of Kacific2 in 2027, the available capacity will significantly expand, enabling Kacific to reach more communities, businesses, and homes throughout the archipelago, especially in rural and remote areas where traditional internet infrastructure poses challenges in deployment and maintenance. Aiming to enhance broadband services even further, Kacific2 will incorporate the latest software-defined technologies. These advanced capabilities will enable efficient frequency reuse and targeted coverage, catering to areas that require higher capacity and address the ever-changing demands of customers.

High-level discussions about strengthening digital connectivity and cyber security in the Philippines took place between the Government and Kacific in Malacañang.

President Marcos emphasized the importance of building the country’s long-term digital capacity, ensuring the strong and equal participation of the Philippines in an increasingly digital world. This vision informed partnership conversations: “We have to keep up. We are always looking for additional capability when it comes to all these communications, especially with the problems of cybersecurity,” President Marcos said. “It’s the capability that the Philippines really needs… so yes, let’s set it up,” he added.

Accompanying senior officials who participated in the high-level discussions about this ground-breaking initiative included Information and Communications Secretary Ivan John Uy, Science and Technology Secretary Renato U. Solidum Jr., the Secretary of the Department of Trade and Industry, Alfredo E. Pascual, NDC General Manager Antonilo DC Mauricio, the Director General of Philsa, Dr. Joel Joseph S. Marciano Jr., and Presidential Adviser for Investment and Economic Affairs, Frederick Go.

Numerous partnership opportunities were explored, including a closer collaboration with the Philippines Department of Trade and Industry (DTI) and a continued partnership with the Department of Information and Communication (DICT) and the Department of Science and Technology (DOST), both of which recognize the potential for advancing existing connectivity targets together. “The broadband services offered by Kacific2 could enable government-to-government communications from specific central offices to remote constituents and also support the existing government initiatives that promote better Internet connectivity such as the Free Wi-Fi For All Program, the National Broadband Program, and the eGOV PH super app,” said Cheloy Garafil, Press Secretary of the Presidential Communications Office.

The benefits of the partnership to the Philippines are clear and substantial. Both parties recognize the economic and social benefits that would arise from the collaboration. Information and Communications Technology Secretary Ivan John E. Uy said additional bandwidth from Kacific2 would “help the economy through the propagation of the digital economy.”

“We are proud to be able to help the government of the Philippines achieve its goal of building long-term digital capacity,” said Mr. Patouraux, “and we are honoured to be partnering with this in an endeavour that will positively impact the lives of many millions of Filipinos.”

 


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Nvidia bets $25 bln that AI boom is far from over

The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. — REUTERS/ROBERT GALBRAITH/FILE PHOTO

Nvidia’s CEO Jensen Huang said he expects the artificial intelligence boom will last well into next year and made what could be the largest single bet yet in the tech sector to back up his optimism.

The company’s sales forecast on Wednesday blew past Wall Street’s expectations and it said it would buy back another $25 billion of its shares, a move most companies make when their leadership thinks the company is undervalued. Nvidia’s stock price, though, has more than tripled this year and was set to hit an all-time high after Wednesday’s results.

Nvidia said it plans to ramp up production of its hardware into next year, quashing doubts that a few analysts had raised about how long the AI craze could last. The company has a near-monopoly on the computing systems used to power services like ChatGPT, OpenAI’s blockbuster generative AI chatbot.

“We have excellent visibility through the year and into next year, and we’re already planning the next generation infrastructure with leading (cloud computing firms) and data center builders,” Mr. Huang told investors on a conference call.

In an interview with Reuters, Mr. Huang said two things are driving that demand: a switch from traditional data centers that were built around central processors to ones built around Nvidia’s powerful chips, and the rising use of content generated by AI systems in everything from legal contracts to marketing materials.

“These two fundamental trends are what’s behind everything that we’re seeing, and we’re about a quarter into it,” he said. “It’s hard to say how many quarters are ahead of us, but this fundamental shift is not going to end. This is not a one-quarter thing.”

Huang’s move to buy back stock when it is more expensive than it has ever been tops the bets that even other large tech companies are making on AI, but comes as its price-to-earnings multiple fell to about 43 from 60 after analysts upgraded their earnings estimates in May.

Microsoft said the $10.7 billion in capital expenditures it made in its fiscal fourth quarter – a large portion of which went toward Nvidia hardware – is a figure that would continue to rise. It has also invested $10 billion in OpenAI.

Meta Platforms, Amazon.com’s cloud computing unit AWS and others have also bet tens of billions of dollars collectively on AI-related hardware and products.

Demand for the chips has given Nvidia the cash for the investor payday. The company reported its adjusted gross margins nearly doubled to 71.2% in its second quarter, when most semiconductor companies have gross margins between 50% and 60%.

Kinngai Chan, an analyst at Summit Insights Group said Nvidia’s inventory of $4.32 billion is “light.”

“We think (Nvidia) will continue to beat the $16 billion guide for the October quarter as demand continues to outstrip supply,” Chan said, referring to the company’s third-quarter revenue outlook.

To be sure, some analysts don’t see unlimited demand. Dylan Patel of SemiAnalysis said many tech companies are spending heavily on Nvidia graphics processing units (GPUs) this year before determining how they will actually make money off products developed with those chips.

“They must overinvest in GPUs or risk missing the boat. At some point the true use cases will shake out, and many of these players will stop investing, though others will likely continue accelerating investment,” Mr. Patel said.

Mr. Huang declined to comment on whether the AI boom will last past next year. He said the biggest risk Nvidia faces is securing supplies.

The company said the biggest sales driver this quarter was its HGX system, which is an entire computer built around Nvidia’s chip. That system is much more complex than just the chip itself, and any missing piece can delay shipments.

“We’re getting great cooperation from our supply chain. And it’s a complicated supply chain,” Mr. Huang told Reuters. “People think it’s a GPU chip. But it’s a very complicated GPU system. It’s 70 pounds. It’s 35,000 components. It’s $200,000.” — Reuters

India set to ban sugar exports for first time in 7 years

GRANULATED WHITE SUGAR and sugar cubes are seen in this picture illustration taken on Dec. 16, 2018. — REUTERS

MUMBAI/NEW DELHI – India is expected to ban mills from exporting sugar in the next season beginning October, halting shipments for the first time in seven years, as a lack of rain has cut cane yields, three government sources said.

India’s absence from the world market would be likely to increase benchmark prices in New York SBc1 and London LSUc1 that are already trading around multi-year highs, triggering fears of further inflation on global food markets.

“Our primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane,” said a government source who asked not to be named in line with official rules. “For the upcoming season, we will not have enough sugar to allocate for export quotas.”

India allowed mills to export only 6.1 million tons of sugar during the current season to Sept. 30, after letting them sell a record 11.1 million tons last season.

In 2016, India imposed a 20% tax on sugar exports to curb overseas sales.

Monsoon rains in the top cane growing districts of the western state of Maharashtra and the southern state of Karnataka – which together account for more than half of India’s total sugar output – have been as much as 50% below average so far this year, weather department data showed.

Patchy rains would cut sugar output in the 2023/24 season and even reduce planting for the 2024/25 season, an industry official, who declined to be named, said.

Local sugar prices jumped this week to their highest level in nearly two years, prompting the government to allow mills to sell an extra 200,000 tons in August.

“Food inflation is a concern. The recent increase in sugar prices eliminates any possibility of exports,” said another government source.

Retail inflation in India jumped to a 15-month high of 7.44% in July and food inflation to 11.5% – its highest in over three years.

India’s sugar production could fall 3.3% to 31.7 million tons in the 2023/24 season.

“We’ve allowed mills to export large volumes of sugar during the past two years,” said the third government source. “But we also have to ensure sufficient supplies and stable prices.”

India surprised buyers last month by imposing a ban on non-basmati white rice exports. New Delhi also imposed a 40% duty last week on exports of onions as it tries to calm food prices ahead of state elections later this year.

A Mumbai-based dealer with a global trade house said lower output in Thailand was also expected to reduce shipments and major producer Brazil would alone not be able to fill the gap. — Reuters

China’s Xi vows to support Cuba in defending its national sovereignty

Chinese President Xi Jinping speaks during the opening ceremony of the 20th National Congress of the Communist Party of China, at the Great Hall of the People in Beijing, China Oct. 16, 2022. — REUTERS

BEIJING – China’s President Xi Jinping has pledged to support Cuba’s defense of its national sovereignty, opposing foreign interference and a US economic blockade, and will expand strategic coordination with Havana.

Mr. Xi made the remarks in a meeting with Cuba President Miguel Diaz-Canel on the sidelines of the BRICS Summit in Johannesburg on Wednesday, according to a statement from the Chinese foreign ministry on Thursday.

“China highly appreciates Cuba’s consistent firm support for China on issues involving China’s core interests, and will continue to firmly support Cuba in defending its national sovereignty, opposing foreign interference and blockade, and doing its best to provide support for Cuba’s economic and social development,” Mr. Xi said at the meeting, according to the release.

During talks Mr. Diaz-Canel labeled Cuban-Chinese relations at an “all-time high”.

“The Cuban people greatly admire President Xi Jinping and sincerely thank China for its understanding and valuable support for Cuba’s just cause,” Mr. Diaz-Canel said at the meeting, which was also attended by Chinese Foreign Minister Wang Yi.

The meeting between the two leaders comes months after a media report surfaced that China had reached a secret deal with Cuba to establish an electronic eavesdropping facility on the island. But the US and Cuban governments cast strong doubt on the report.

China quickly denounced the US government and media for releasing what it called inconsistent information, calling the allegations false. — Reuters

US says stolen COVID relief funds seized so far top $1.4 bln

WASHINGTON – The US Justice Department said on Wednesday it has seized over $1.4 billion in COVID-19 relief funds that criminals had stolen, and charged over 3,000 defendants with crimes in federal districts across the country.

The Justice Department disclosed the results of a nationwide enforcement action to combat coronavirus fraud, including federal criminal charges against 371 defendants for offenses related to over $836 million in alleged COVID fraud.

“This latest action, involving over 300 defendants and over $830 million in alleged COVID-19 fraud, should send a clear message: the COVID-19 public health emergency may have ended, but the Justice Department’s work to identify and prosecute those who stole pandemic relief funds is far from over,” US Attorney General Merrick Garland said in a statement.

A total of 119 defendants pleaded guilty or were convicted at trial during the sweep, according to the Justice Department.

The United States is probing many fraud cases pegged to US government assistance programs. In May 2021, Mr. Garland launched a COVID fraud enforcement task force.

Last year, the US Justice Department tapped federal prosecutor Kevin Chambers to lead its efforts to investigate alleged fraud schemes targeting pandemic assistance programs.

Over $200 billion from the US government’s COVID-19 relief programs were potentially stolen, a federal watchdog said in late June, adding that the U.S. Small Business Administration (SBA) had weakened its controls in a rush to disburse the funds.

In September 2022, the inspector general for the US Labor Department said fraudsters likely stole $45.6 billion from the United States’ unemployment insurance program during the coronavirus outbreak by applying tactics like using Social Security numbers of deceased individuals.

Earlier this year, a separate watchdog report said the US government likely awarded about $5.4 billion in COVID-19 aid to people with questionable Social Security numbers. — Reuters

Policy easing not on BSP’s radar yet

Commuters use their umbrellas during a downpour along Taft Avenue, Manila, July 13, 2023. — PHILIPPINE STAR/EDD GUMBAN

BANGKO SENTRAL ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. maintained his “hawkish stance,” saying that monetary policy easing is not on the “radar” given still-above target inflation.

Mr. Remolona on Tuesday said sudden reversals in monetary policy confuse the market and create uncertainties.

“We’re in a hawkish stance, which means either we pause or we raise. We’re still not comfortably within the target range… A cut is not on our radar screen,” he said during a gathering with newspaper editors at the BSP.

Last week, the BSP extended its policy pause for a third straight meeting, keeping the benchmark interest rate at a near 16-year high of 6.25% amid upside risks to inflation.

The BSP has raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023 to tame inflation.

Headline inflation slowed for a sixth straight month to 4.7% in July, which also marked the 16th straight month of inflation exceeding the BSP’s 2-4% target band.

Inflation averaged 6.8% in the first seven months of the year, which is still above the central bank’s revised 5.6% forecast.

Former BSP Deputy Governor Diwa C. Guinigundo said the BSP’s hawkish monetary policy stance is “most appropriate” as both headline and core inflation remain elevated. 

“With these inflation dynamics it would be counterintuitive for BSP to even consider cutting the policy rate or reducing the required reserves. That would indeed confuse the market, or upset inflation expectations,” he said.

Core inflation, which excludes volatile food and fuel prices, slowed to 6.7% in July from 7.4% in June. For the first seven months of the year, core inflation averaged 7.6%.

Mr. Guinigundo said that a pause is consistent with cautious monetary policy.

“The next meeting of the Monetary Board (on Sept. 21) is critical because that would validate whether the upside risks (to inflation) would materialize. Then the econometricians in the research department would be able to incorporate the outcome in their next run and see how the forecasts would work out,” he said.

At its Aug. 17 meeting, the Monetary Board identified potential price pressures linked to the “impact of possible higher transport charges, higher minimum wage adjustments, persistent supply constraints on key food items, and the effects of El Niño weather conditions on food prices and power rates.”

In deciding to extend the pause, the BSP also recognized the “challenging outlook” for the economy, as the slower-than-expected 4.3% second-quarter gross domestic product (GDP) expansion reflected a broad-based slowdown in domestic demand.

“A slowdown in growth is something that we should expect from this fight against inflation. Monetary policy is the right tool for stabilizing inflation,” Mr. Guinigundo said.

He noted that fiscal policy and non-monetary measures by the Trade and Agriculture departments should “provide the counterweight to weakening growth momentum.”

“We don’t use monetary policy to address government underspending or weak investments, the major reasons behind the 4.3% (growth) in the second quarter,” he added.

HSBC economist for Association of Southeast Asian Nations (ASEAN) Aris Dacanay in a note on Wednesday said the BSP is unlikely to cut policy rates even with slowing economic and easing inflation, mainly because of the US Federal Reserve

“Across ASEAN, the Philippine economy has the least monetary policy freedom from the Fed. The current account deficit is still wider than pre-pandemic levels and cutting ahead of the Fed risks putting downward pressure on the peso,” he said.

Based on the latest central bank data, the current account deficit was at $4.3 billion or equivalent to -4.3% of GDP in the first quarter, up from $4 billion a year ago.

The current account deficit is projected to reach $15.1 billion or -3.4% of GDP this year.

The peso closed at P56.73 on Wednesday, falling by 35 centavos from P56.38 previously. Year to date, the peso depreciated by 1.7% or 97.50 centavos from its P55.755 close on Dec. 29.

RRR CUT IN Q4?
Meanwhile, Mr. Remolona reiterated the BSP is taking a cautious approach in cutting banks’ reserve requirement ratios (RRR).

“If we’re tightening, we should not cut RRR. But my target is to lower it eventually,” he said.

HSBC’s Mr. Dacanay said he expects the BSP to cut the RRR of big banks by 100 bps to 8.5% in the fourth quarter this year, when inflation reaches the 2-4% target and economic growth continues to slow. He noted the Philippines still has the highest RRR level in the Southeast Asian region.

“We estimate the cut to inject P127 billion of liquidity in the system, of which the BSP will likely neutralize using its constantly improving array of monetary tools; this is to ensure that the central bank’s monetary stance does not change even with a cut in the RRR,” he said. 

Earlier in June, the BSP cut the RRR for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 9.5%. It has also reduced the ratio for digital banks by 200 bps to 6% and by 100 bps for thrift banks, and rural and cooperative banks to 2% and 1%, respectively.

Although the cut in RRR does not imply a change in monetary stance, the liquidity injected can be absorbed easily by the BSP’s monetary toolkit, Mr. Dacanay said.

“The central bank, nonetheless, wants the RRR cut to be consistent with monetary policy to limit confusion in the market. This means inflation needs to be well within the central bank’s target range before a cut is announced,” he said.

However, Mr. Dacanay said that if the peso weakens further against the dollar in the fourth quarter, the BSP may not cut the RRR.

“HSBC Foreign Exchange (FX) Research team’s base case is for the peso to strengthen to P54.50 against the dollar by the end of 2023. This should provide the BSP room to cut the RRR without the peso breaching P57. Without this buffer, however, the BSP may opt to delay the RRR cut to a later date,” he said.

HSBC Global FX Strategist Lenny Jin in the same note said Philippine markets tend to reward good RRR cuts and penalize the bad cuts.

“When RRR cuts help to ease growth constraints while inflation and currency pressure is relatively contained, the peso will likely react positively,” she said.

“The risk is that, should the dollar downtrend not be established by yearend or if inflation remains too close to the upper-band target, a RRR cut may see similar negative reactions in 2018.” — Keisha B. Ta-asan

Public bidding for NAIA rehabilitation now open

The government on Wednesday opened the bidding for the Ninoy Aquino International Airport public-private partnership project. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE PHILIPPINE government on Wednesday invited local and foreign investors to bid for the P170.6-billion public-private partnership (PPP) project to upgrade and operate the aging Ninoy Aquino International Airport (NAIA).

The Department of Transportation (DoTr) and the Manila International Airport Authority issued on Wednesday the invitation to bid for the contract to rehabilitate, operate, optimize and maintain the NAIA.

The contract will initially cover 15 years but can be extended by another 10 years.

This project will be under a rehabilitate-operate-expand-transfer arrangement, as provided for under the Build-Operate-and-Transfer Law.

“With a total project cost of P170.6 billion, the NAIA PPP project will cover all facilities of the airport, including its runways, four terminals, and associated facilities,” the PPP Center said in a separate statement.

The NAIA PPP project, which was approved by the National Economic and Development Authority (NEDA) Board in July, aims to increase the current annual passenger capacity of the airport from 35 million to at least 62 million.

Under the indicative schedule, bids for the NAIA PPP project should be submitted on Dec. 27.

A draft concession agreement will be out on Sept. 8, while the final version will be released on Dec. 4.

A pre-bid conference is scheduled on Sept. 22, while one-on-one meetings with prospective bidders will be held in October and November.

Bidders can participate in the bidding once they have paid a non-refundable participation fee of P2.75 million or $50,000.

The bidding is open to local and foreign parties who comply with legal, technical and financial capability qualification requirements.

To qualify, a bidder must have been the owner or concessionaire of an airport for which capital costs reached at least P10 billion.

It must also have expertise and experience in operating and maintaining an international airport for at least three consecutive calendar years. The international airport should have handled at least 25 million passengers per annum, of which at least 10 million should have been international passengers.

The bidder must also have a net worth of at least P20 billion (or foreign currency equivalent) as of its latest audited financial statement. For consortiums, the net worth of members who have an equity share of at least 25% each in the consortium may be added to meet the required net worth.

Bidders should also be registered with the Securities and Exchange Commission, while foreign parties should be registered with the appropriate government agency in the foreign country where it was registered.

Bidders are also required to secure a letter testimonial from a domestic universal/commercial bank or an international bank in the Philippines attesting that the bidder or consortium members are “in good financial standing and are qualified to obtain credit accommodations from such banks to finance the project.”

The government had opted to bid out the NAIA PPP project under a solicited proposal scheme, effectively rejecting the unsolicited bid of the Manila International Airport Consortium (MIAC).

The MIAC’s proposal involved P267 billion worth of investment, which included a P57-billion upfront payment and around P211 billion in development costs over a 25-year concession period. — Revin Mikhael D. Ochave

3 more added to list of flagship infrastructure projects

ARSENIO M. BALISACAN — PHILIPPINE STAR/KRIZ JOHN ROSALES

THE NATIONAL Economic and Development Authority (NEDA) Board has approved the inclusion of three more projects under its infrastructure flagship project (IFP) program, bringing the total list to 197 projects worth P8.71 trillion.

NEDA Secretary Arsenio M. Balisacan identified the three projects as the Tarlac-Pangasinan-La Union Expressway (TPLEX) extension; the Philippine Rural Development Project (PRDP) Scale Up; and the upgrade, expansion, operation, and maintenance of the Laguindingan International Airport in Misamis Oriental.

“With their inclusion in the list, these projects will be prioritized in the government’s annual budget preparation and will benefit from the expedited issuance of applicable permits and licenses, in accordance with current legal frameworks,” he said during a Palace briefing on Wednesday.

Mr. Balisacan said this would also help the government avoid the possibility that project costs would increase and financing charges would be imposed due to delays.

The P23.947-billion TPLEX extension project will be financed through a public-private partnership (PPP) scheme. The 59.4-kilometer, four-lane toll road will start from the last exit of the TPLEX in Rosario, La Union and end at San Juan, La Union.

The $818.4-million PRDP Scale-Up project aims to improve farmers and fisherfolk’s access to markets and profitability in value chains. It is jointly funded by the World Bank, which has committed $600 million or around P34 billion for the project.

The Laguindingan airport upgrade is a PPP project with a total cost of P45.75 billion. It aims to improve and expand the terminal facilities and operations of the airport.

The three projects were included after the NEDA Board revised guidelines for the formulation, prioritization, and monitoring of the IFPs.

“Particularly, projects approved by the Investment Coordination Committee and confirmed by the NEDA Board, which are not in the current IFP list, but meet the criteria indicated in the IFPs guidelines, shall be included in the IFP list, subject to the endorsement from the concerned implementing agencies,” Mr. Balisacan said.

At the same time, Mr. Balisacan said there are now 71 ongoing IFPs worth P4.11 trillion as of July, from 68 projects reported in the first quarter.

“The three additional projects that have advanced to the ‘ongoing’ phase are the Metro Cebu Expressway, the Nautical Highway Network Improvement, and the Daang Maharlika Improvement projects,” he said

These connectivity projects are implemented by the Department of Public Works and Highways.

Of the remaining 123 IFPs, Mr. Balisacan said that 27 have been approved for implementation, eight are awaiting government approval, 52 are in the preparation phase, while 36 are under the pre-project preparation phase.

By the end of the year, 12 of the 197 IFPs are expected to be completed.

“Four are on schedule, one is ahead of schedule, the rest have some challenges, but we are speeding up addressing those challenges,” Mr. Balisacan said.

“Next year, we are expecting about 16 of those projects to be completed. We are also making sure we are starting new ones, so our progress is continuous. Many of the projects starting now will be completed by the next administration,” he added.

The IFPs cover physical and digital connectivity, water resources, agriculture, health, power and energy, and other infrastructure.

Mr. Balisacan said the NEDA Board also approved the request for the change in the cost, scope, and implementation timeline of the Flood Risk Management Project for the Cagayan de Oro River. The project aims to reduce flooding in high-risk areas and strengthen the resilience of communities in flood-prone areas.

The NEDA Board also approved the provision of six fire trucks for Marawi City to support the city’s rehabilitation efforts. It will be funded through an official development assistance grant from China worth P72.5 million.

“By ensuring the efficient implementation of high-impact infrastructure projects, the Marcos administration aims to get the job done: we will enhance connectivity, reduce the cost of doing business, promote the creation of high-quality jobs, and ultimately reduce poverty sustainably to improve the lives of every Filipino,” Mr. Balisacan added. — Luisa Maria Jacinta C. Jocson

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