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Switching companies

ANDY BEALES-UNSPLASH

EVEN large organizations only pay lip service to filling up key vacant (or vacated) positions through an internal search and “promoting from within.” The instinct to get some talent from outside is premised on the need to introduce a fresh perspective, shake up the organization from its lethargy, or give a stiffer push to the competition (sometimes the source of the talent).

Whatever the reason for uprooting tradition and kicking aside the corporate culture (ours is the best company to work with), outside hires at senior levels are becoming routine.

Changing careers or affiliations is never supposed to be about money (name your price). The profession of principles (I want to find my right place in the cosmos) or a community of interests (we like to play beach volleyball) are invoked, especially in a high-profile move.

Someone who is already recognized in the industry and highly paid in his existing job can still be pirated by a prospective employer for a challenging job with a lot of financial incentives. The “pull” premium is based on a needed skill, a personal network of clients, or simply the ability to cripple the current employer with the loss of a key player. Sometimes, it’s all three.

Why do already well-paid executives switch companies?

Bigger pay is a start, especially if it’s a multiple over two. This single factor tends to dominate the decision — it’s the easiest to explain to relatives and former associates. There are small details like the offer needing to be in black and white (I thought it was clear that you had to earn your own compensation) and whether the company can afford to pay the promised package for the duration of the contract. Big numbers are easy to dangle, but not as simple to provide.

Beware the “poisoned chalice.” Is this job being offered doomed to failure, like being the fourth appointee in a year heading a failed invasion of a neighboring country? Is the position given appropriate support and reasonable targets? Usually, “turnaround” situations of rescuing failing companies with little chance of success can offer attractive packages with a high variable pay based on turning red numbers into black.

Many have been lured from their comfortable jobs to do rescue work in another organization which requires the parting of the red sea of numbers. Desperate companies can offer mind-boggling compensation packages. Like the famous series Mission Impossible, the instructions tend to self-destruct after being read.

A special case involves joining the competition. High-profile personalities like media talent or sports figures are usually photographed signing up with the competition. They even thank their former organizations for building them up and allowing them to be appetizing targets for the competition — I did not get a despedida party.

The decision to jump from one organization to another entails many unknowns. Even when joining long-lasting friends already working in the new company, one is likely to be surprised at the lukewarm reception they will be confronted with early in the onboarding session. Are the incumbents jumping with joy being united with an old friend at work? Not likely, especially when they must report to this familiar person in an unfamiliar relationship. (And he’s even getting a better car.)

At once, the ties of friendship, now overlaid with hierarchical considerations (like performance reviews), are strained. Those friendly lunches of months ago become distant reminders of camaraderie now turned into formal meetings — did you meet your targets?

Career moves presume making deliberate decisions, often between the status quo and change, which is often imposed from the outside. It could be new technology, acquisition of the company, new management, a radical reorganization, friends needing one more investor, or all of these at the same time.

In the matter of changing sides, switching political loyalties is a special case. Political turncoats are given some leeway as they maneuver to join the winning side. They even have a set formula for justifying their action — “we are beyond party interest when it comes to serving the country.”

As in all switches, for them to work, it is not just the willingness of the switcher to work with his new colleagues. It is also the traps that will likely be laid out for him… to walk into.

 

Tony Samson is chairman and CEO of TOUCH xda

ar.samson@yahoo.com

PHL unprepared for RCEP — agriculture groups 

PHILIPPINE STAR/EDD GUMBAN

A coalition of agriculture stakeholders on Wednesday urged the Senate to reject the Regional Comprehensive Economic Partnership (RCEP), saying the Philippines is unprepared for such a trade deal.

“Joining RCEP is like entering the Olympics of boxing… You have players like Australia, New Zealand. These are heavyweights, not just agriculturally but also industrially,” Leonardo Q. Montemayor, a former agriculture secretary, told a televised briefing in mixed English and Filipino.

Mr. Montemayor said that Filipino farmers will have a hard time competing due to a lack of cold storage and irrigation facilities. 

“Papasok ka, hindi ka preparado (It’s like entering the arena unprepared),” he added.

The Philippine Senate failed to ratify RCEP — touted as the world’s largest free trade agreement — last year, with senators citing the lack of safeguards for agriculture.

It is currently with the Senate Committee on Foreign Relations chaired by Senator Maria Imelda Josefa R. Marcos.

The trade deal started coming into force in the various jurisdictions on Jan. 1 last year. The participating countries include the 10 members of the Association of Southeast Asian Nations, Australia, China, Japan, South Korea, and New Zealand. 

It is seen to help attract more investors, but Mr. Montemayor said it is akin to throwing Filipino farmers off a cliff if they are not given the tools they need to be competitive.

According to Elias Jose M. Inciong of the United Broiler Raisers Association, liberalization only benefits those with huge capital and the ability to import.

“What happened to the consumer?” he asked. “Nawalan ng trabaho, naging (They lost their jobs and became) OFWs.”

“NEDA (National Economic Development Authority) has to be humble enough to acknowledge that they failed. Until this happens, the suffering will continue.”

For his part, Rene E. Ofreneo of the Freedom from Debt Coalition said the Philippines could become a “Republika ng Ukay-Ukay,” referring to the secondhand goods from North America and Europe that fill local thrift shops.

“‘Yung ukay sa damit naging ukay sa surplus, kaya namatay ang industriya ng machine shops, ng fabrication (The proliferation of secondhand clothes led to the proliferation of surplus goods. This is how our machine shops, our fabrication industry, died),” he added.

Proponents of trade liberalization have been pushing for the adoption of RCEP, saying it complements the government’s economic agenda.

“Para manalo tayo, kailangan ready ang army, ang industry (For us to win, we need to prepare our army, our industry),” Mr. Ofreneo said. — Patricia B. Mirasol

[EXPLAINER] Will Manila become a 15-minute city?

A CITY WHERE residents can walk or bike to essential services in 15 minutes is possible in the Philippine capital, where people endure long commutes, according to urban planner Felino A. Palafox, Jr. 

The ambitious concept can be realized by allocating a portion of the city to the working class, Mr. Palafox told BusinessWorld.

Individuals working in Makati City, the country’s financial hub, spend an average of three to five hours daily coming to and from work, he noted.

“Fifteen minutes is the threshold of an ideal city — a 15-minute city with five-minute neighborhoods and 10-minute communities.”

Carlos Moreno, a scientific director and professor specializing in complex systems and innovation at the University of Paris 1 Panthéon-Sorbonne, devised the concept aimed at improving quality of life by designing cities where everything a resident needs can be reached within 15 minutes by foot or bike.

Mr. Palafox suggests allocating a part of a city to individuals and families of different ages and income levels to address concerns that segregated neighborhoods imposed by technocratic and colonial planning may be further alienated by gentrification. 

He noted that housing for the urban poor is subsidized in places like Vienna and Manhattan, to the point where it is possible for a secretary to live right next door to an NBA player.

“If you give me a big eraser to do BGC [Bonifacio Global City in Taguig City, Metro Manila] again, I would have allocated 30% for employees. There was an opportunity to do so because it was government land,” Mr. Palafox said.

“The biggest landowner is the government, so maybe it should start allocating land for self-contained cities that are mixed-income and cross-generational.” 

Mr. Palafox, who walks about 7,000 steps when in Manhattan and Dubai, said the Philippine capital lacks transportation and connectivity.

Only about 2% of Filipinos own cars, Mr. Palafox said, adding, “Those who have less wheels should have more roads.”

To make the idea a reality, there must be strong political will, he stressed.

He said the Philippines will need to create 100 new cities by 2050, or existing cities “will become as bad, if not worse,” than Metro Manila, as well as address urban sprawl to avoid encroaching on forests and farms.

At the same time, he emphasized the importance of developers avoiding siloed planning.

The concept plan for Rockwell, Makati — one of Mr. Palafox’s firm’s projects — was “up to EDSA, Buendia, and across the river.”

“When we plan, we don’t treat our projects like an island. We look at the surrounding areas, and how [our projects] contribute to the neighborhood, community, and city,” he said.

“In our part of the world, it’s mostly short-term and opportunistic, not long-term and visionary,” he noted.

“Our country is so blessed… but [first] we have to address corruption towards good governance, criminality towards better peace and order, and inequality, infrastructure, and incompetence.” 

Interview and text: Patricia B. Mirasol
Videography: Joseph Emmanuel L. Garcia
Video editing: Earl R. Lagundino

Wikipedia Middle East editors ban shows risks for creators

BEIRUT, Jan 26 (Thomson Reuters Foundation) — Rights groups have accused the Saudi Arabian government of “infiltrating” and seeking to control Wikipedia, after the Wikimedia Foundation banned 16 users for engaging in “conflict of interest editing” in the Middle East and North Africa.

The ban late last year came after an almost year-long investigation that concluded that the users had close connections to “external parties”, and that these links were a source of “serious concern for the safety” of users, said the Wikimedia Foundation.

Beirut-based digital rights group SMEX and human rights group Democracy for the Arab World Now (DAWN) said that Saudi authorities had recruited Wikipedia’s most reputed administrators in the country to control information about the kingdom.

The government jailed administrators who contributed critical posts about political detainees to the free online encyclopedia, the two groups said earlier this month.

A spokesperson from the Wikimedia Foundation said the organization’s investigation found no evidence of Saudi infiltration.

Saudi Arabia’s Ministry of Communication and Information Technology did not respond to a request for comment.

The Saudi government’s actions, if proven, were “novel” but mirrored trends by oppressive governments worldwide to control online spaces, said Pat de Brún, head of artificial intelligence and big data at rights group Amnesty International.

“A huge amount is at stake,” de Brún told the Thomson Reuters Foundation.

“Knowledge is power, and the power to rewrite history and do propaganda is valuable for governments who have a lot to hide and have a shameful human rights record.”

‘TWO CLASSES OF HUMANS’
Entries on Wikipedia are created and edited by dedicated volunteers around the world. While anyone can edit most of the pages, only a small group of users tend to do so regularly – which has opened up the site to controversy.

In 2019, Justice for Iran, a London-based human rights group, said Wikimedia, which runs Wikipedia, had opened an investigation into Persian Wikipedia following concerns about the neutrality of the platform.

“Restrictions, deletions, and edits of facts followed by addition of false information have played into the hands of the Iranian state and promoted their official narrative,” the group said in a statement at the time.

And in 2021, Wikimedia banned seven pro-Beijing editors, and removed the administrative powers of a further 12, sparking criticism of the platform’s bias and Western stance. Those involved were accused of bullying and intimidating pro-democracy editors.

Wikimedia’s business model is to blame, as it has created “two classes of humans” – those that are paid to manage Wikimedia, and the volunteers who produce and edit Wikipedia’s content for free, said Raed Jarrar, DAWN’s advocacy director.

“The biggest question here is about Wikimedia’s model of relying on volunteers who are operating in authoritarian countries, and putting them in danger, and not advocating for their release when they are in trouble,” he said.

A spokesperson from Wikimedia said crowd-sourced knowledge is a core value for the company, that paid workers are available to support the volunteer community and the company is deeply committed to protecting the safety of volunteer contributors.

MORE TRANSPARENT MODEL
Wikimedia’s most recent bans drew the ire of the Arabic Wikipedia community, which slammed the confidential nature of the investigation, and called for a more transparent model that would allow communities on the platform to hold themselves accountable.

Of the 16 accounts banned in December, six were engaged in edits on Persian language Wikipedia, Jarar said. Another set of accounts making up 30% of Arabic Wikipedia’s administrators were also banned, Arabic Wikipedia said in a statement.

“We lost seven active administrators in one fell swoop! This has set our community back years and does not, surely, contribute to encyclopedia growth.”

Wikimedia’s investigation had “concluded that the actions of these users caused a credible threat to harm, and the overall safety of Wikipedia, and the security of Wikipedia platforms,” said a spokesperson from the Wikimedia Foundation.

The banned accounts created “problematic edits” on English Wikipedia about the Saudi investment fund, a minister who held senior posts with oil giant Aramco, and The Line, a hi-tech city that rights groups have warned will subject residents to surveillance.

“One of the editors also significantly softened descriptions of Saudi government detention of journalist Jamal Khashoggi who was later murdered and dismembered,” said a statement on Wikipedia’s volunteer-led online newspaper Signpost, referring to the 2018 incident.

Wikimedia said the publication does not speak for other volunteers and thus does not represent Wikipedia.

The ban included all of Wikipedia’s administrators in Saudi Arabia, according to SMEX and DAWN, which was founded by the slain journalist. Jarrar said there was a connection between the Saudi Arabian government and the banned administrators.

“They were pressured or recruited, we are not sure,” Jarrar said. “This is very concerning.”

PUBLIC MORALS
Saudi Arabia regularly muzzles dissenting voices, and has adopted a harder stance on online content it deems unfavourable, human rights groups say, pointing to the sentencing last year of a woman to 45 years in prison for social media posts.

In the case of Wikipedia, the Saudi government arrested two administrators in September 2020, charging them with “swaying public opinion” and “violating public morals,” according to DAWN and SMEX.

The two men were initially sentenced to up to eight years in prison, with the sentence of one then being extended to 32 years.

They were prosecuted because they had contributed information deemed to be critical about the persecution of political activists in Saudi Arabia, the groups said this month.

Saudi officials have not commented on the arrests or sentences. But it was “entirely predictable” that they were prosecuted merely for posting content about the government’s human rights abuses, Jarrar said.

“Wikimedia also needs to take responsibility for the fact that its authorized editors are today languishing in prison for work they did on Wikipedia pages,” he said.

The Wikimedia Foundation said that anyone can edit Wikipedia and editors are not authorized by the Wikimedia Foundation. — Reuters

South Korea slides toward recession as Jan exports plunge

Image by manu zoli from Pixabay

SEOUL — South Korea’s economy inched toward its first recession in three years as data on Wednesday showed its January trade deficit soared to a record thanks to a plunge in exports caused by a combination of long holidays and cooling global demand.

Asia’s fourth-largest economy, which relies heavily on trade for growth, shrank by 0.4% in the October-December quarter and is now on the brink of falling into what would be its first recession since the middle of 2020 during the height of the COVID-19 pandemic.

Exports fell 16.6% in January from a year earlier, trade ministry data showed, worse than an 11.3% decline predicted in a Reuters survey and the fastest drop in exports since May 2020.

Imports fell 2.6% compared with a year earlier, less than a 3.6% drop predicted in the survey. As a result, the country posted a monthly trade deficit of $12.69 billion, setting a record amount for any month.

“I have a zero percent forecast for the first-quarter growth but today’s trade figures are definitely a minus to that,” said Park Sang-hyun, economist at HI Investment and Securities.

The increasing chances of recession – two consecutive quarters of decline in gross domestic product – also underscore growing bets in markets that the central bank’s campaign of raising interest rates since late 2021 has run its course.

Leading the sluggish trade performance in January were a 44.5% dive in semiconductor exports and a whopping 31.4% plunge in sales to China, the trade ministry data showed.

Both were the worst rates of decline since the 2008/2009 global financial crisis.

South Korean bond yields fell across the board on the growing bets for a less restrictive monetary policy ahead, while stock .KS11 and currency KRW= investors largely shrugged off the monthly figures.

Finance Minister Choo Kyung-ho blamed long lunar New Year holidays in China and a steep fall in computer chip prices versus a year ago for the sharp declines in export values, adding China’s reopening would help ease the situation over time.

“The government will mobilize all available policy resources to help support a drive to boost exports so that the timing of improvement in trade balance can be advanced,” Choo said at a meeting of trade-related officials, without elaborating.

The government has forecast this year’s exports would fall 4.5% after posting a 6.1% gain in 2022, and the trade ministry has said it would do what it can to avert a decline. — Reuters

New Zealand extends cut in fuel excise duty amid inflation woes

Image by Simon from Pixabay

SYDNEY — New Zealand will extend the duration of cuts in fuel excise tax and public transport fares until the end of June, Prime Minister Chris Hipkins said on Wednesday, in a bid to provide relief to families struggling with higher living costs.

Official data out last week showed New Zealand’s consumer inflation held near three-decade highs in the fourth quarter with prices rising for house construction and household utilities, and food costs on an upward trajectory.

Petrol prices in New Zealand, like elsewhere, have risen sharply since Russia’s attack on Ukraine started around a year ago, contributing to significant inflation.

“I’ve said bread-and-butter issues like the cost of living would be my top priority,” said Mr. Hipkins, who last month was elected the country’s leader in the wake of Jacinda Ardern’s resignation and could face a national election in October.

“This is our first step in dealing with some of the persistent cost pressures on businesses and families.”

Cutting fuel excise and keeping half-price public transport will give extra relief for the flood-hit residents in the country’s largest city of Auckland, Hipkins said.

The Labour government in March 2022 introduced the cut in fuel excise tax by 25 cents and the temporary measure has been extended three times.

The measures will reduce the cost of filling up a 60-litre tank of petrol by NZ$17.25 ($11.10), Mr. Hipkins said. Discounts on road user charges – a charge levied on diesel vehicle users – have been re-introduced and will continue through June 30.

The measures are expected to cost about NZ$718 million, Finance Minister Grant Robertson said.

“With economists forecasting New Zealand’s inflation to remain at elevated levels for longer than we’ve seen in the past, we have decided to revisit our decision on the transport support package,” Robertson said. — Reuters

Boeing delivers last 747, saying goodbye to ‘Queen of the Skies’

Image by Andy Choinski from Pixabay

SEATTLE — Boeing bid farewell to the iconic 747, delivering the final plane to Atlas Air on Tuesday afternoon and marking an end of an era when the first-ever “jumbo jet” ruled the skies.

Thousands of Boeing employees – including some of the so-called “Incredibles” who developed the jet in the 1960s – watched the last delivery of the historic plane, which brought air travel to the masses and represented an indelible slice of Americana.

The event at the mammoth manufacturing plant was capped off by a celebrity appearance by John Travolta, who recounted learning to fly the 747-400 as an ambassador for Qantas Airlines. “[It was] the toughest program that any commercial pilot will ever have to endure,” said Travolta, who called the jet the “most well thought out and safest aircraft ever built.”

Known as the “Queen of the Skies,” the 747 was the world’s first twin-aisle jetliner, which Boeing designed and built in 28 months and Pan Am introduced in 1970.

“It’s the airplane that redefined the industry and redefined air travel,” said Guy Norris, co-author of “Boeing 747: Design and Development Since 1969.”

British billionaire entrepreneur Richard Branson, who was inspired to start an airline with a single Boeing 747 after getting stuck on a delayed flight, earlier on Tuesday called it a “wonderful beast” as he bid farewell.

Boeing’s Everett, Washington, facility has been the 747’s production site since the plane’s conception. Built in 1967 to produce the mammoth jet, it remains the world’s largest manufacturing plant according to Boeing.

But after five decades, customer demand for the 747 eroded as Boeing and Airbus AIR.PA developed more fuel efficient two-engine widebody planes. When Boeing confirmed in July 2020 that it would end 747 production, it was already only producing at a rate of half an aircraft a month.

Boeing delivered five 747s in 2022, while in 1990, the peak delivery year of the bestselling 747-400 version, Boeing delivered 70 747s.

As different sections of the last 747 – the wings or fuselage structures, for example – were complete, the production line “just slowly started to shut down,” said Kim Smith, Boeing’s vice president and general manager for the 747 and 767 programs.

Smith said all 747 program workers were transferred to other jobs or voluntarily retired.

The last 747 rolled out on Dec. 7, capping the program at 1,574 total. The plane has since completed inspections and flight tests, flying to Portland over the holidays to get a paint job. The plane will fly off on Wednesday morning to Atlas’ headquarters in Cincinnati, Ohio.

While Boeing also builds the 767 and 777 in Everett, the company has yet to decide which program will permanently take over the 747 production bay, which is currently being used for 787 inventory and 777X work, Smith said.

Boeing will remain tied to the 747 through the aftermarket business and the Air Force One replacement program, which Boeing won in 2018.

The heir apparent to the 747, the 777X will not be ready for delivery until 2025, but Boeing Chief Executive David Calhoun focused his goodbye on that future: “The 777, the next plane to dominate this space, displaced all its competition just like that – and we haven’t even introduced the best version.” — Reuters

My Big Coin cryptocurrency firm founder gets 8 years in prison for fraud

BOSTON — The founder of a defunct cryptocurrency business was sentenced on Tuesday to more than eight years in prison for defrauding investors and customers out of millions of dollars by marketing a virtual currency called My Big Coin with lies and half-truths.

Federal prosecutors had urged US District Judge Denise Casper in Boston to impose a 13-year prison term on Randall Crater to send a message to others in the first sentencing of a cryptocurrency company founder for a marketing fraud.

While Ms. Casper concluded that that request went too far, she rejected Mr. Crater’s contention that a 30-month prison term was sufficient to punish him for his false claims, including that My Big Coin was a real cryptocurrency backed by gold.

“Certainly cryptocurrency is a newer enterprise, a newer market, a 21st Century market,” Ms. Casper said. “But the scheme at its core was age-old, and that was fraud.”

Mr. Crater, who was sentenced to 100 months in total and ordered to forfeit nearly $7.7 million, is expected to appeal. In court, he apologized but said he never meant to defraud anyone.

“I did not set out to steal money from anyone,” he said. “That does not mean I am not remorseful.”

A jury in July found Mr. Crater, 52, guilty of committing wire fraud and making unlawful monetary transactions in a prosecution that spilled out of a precedent-setting case by the US Commodity Futures Trading Commission.

The CFTC’s 2018 lawsuit against Crater and his failed company, Nevada-based My Big Coin Inc, led to one of the first court rulings holding that a virtual currency could be considered a commodity within the regulator’s jurisdiction.

Prosecutors subsequently secured Mr. Crater’s indictment in 2019 and accused him of causing investors and customers to lose $7.5 million from 2014 to 2017 with lies about My Big Coin, whose name sounded similar to the popular virtual currency bitcoin.

Prosecutors said those false claims included that My Big Coin was a real virtual currency, was backed by gold and had a partnership with MasterCard Prosecutors said he used the money to buy cars, jewelry, artwork and antique coins. — Reuters

Austin’s Manila visit to bring deal on expanded base access – Philippines official

DEFENSE.GOV

WASHINGTON – U.S. Defense Secretary Lloyd Austin’s visit to the Philippines this week is expected to bring an announcement of expanded U.S. access to military bases in the country, a senior Philippines official said on Tuesday.

Washington is eager to extend its security options in the Philippines as part of efforts to deter any move by China against self-ruled Taiwan, while Manila wants to bolster defense of its territorial claims in the disputed South China Sea.

U.S. officials have said Washington hopes for an access agreement during Austin’s visit, which began on Tuesday, and that Washington has proposed additional sites under an Enhanced Defense Cooperation Agreement (EDCA) dating back to 2014.

“There’s a push for another four or five of these EDCA sites,” a senior Philippines official said. “We are going to have definitely an announcement of some sort. I just don’t know how many would be the final outcome of that.”

The official declined to be named because of the sensitivity of the matter.

Manila and Washington have a mutual defense treaty and have been discussing U.S. access to four additional bases on the northern land mass of Luzon, the closest part of the Philippines to Taiwan, as well as another on the island of Palawan, facing the disputed Spratly Islands in the South China Sea.

EDCA allows U.S. access to Philippine bases for joint training, pre-positioning of equipment and building of facilities such as runways, fuel storage and military housing, but not a permanent presence. The U.S. military already has access to five such sites.

The Philippines official said increased U.S. access needed to benefit both countries.

“We don’t want it to be directed to just for the use of the United States purely for their defense capabilities … it has to be mutually beneficial,” he said.

“And obviously, we want to make sure that no country will see … anything that we’re doing … was directed towards any conflict or anything of that sort,” he added.

Manila’s priorities in its agreements with Washington were to boost its defense capabilities and interoperability with U.S. forces and to improve its ability to cope with climate change and natural disasters, the official said.

He said that after cancelling an agreement for the purchase of heavy-lift helicopters from Russia last year, Manila had reached a deal with Washington to upgrade “a couple” of Blackhawk helicopters that could be used for disaster relief.

“The deal with Russia was very attractive because for a certain budget we were able to get something like 16 of these heavy-lift helicopters,” the official said. “Now with the United States, obviously their helicopters are more expensive, so we’re looking at how we can fit in the budget that we’ve had.”

Gregory Poling, a Southeast Asia expert at Washington’s Center for Strategic and International Studies think tank, said access to sites in northern Luzon would help U.S. efforts to deter any Chinese move against Taiwan by putting the waters to the south of the island within range of shore-based missiles.

He said the U.S. and Philippine marines were pursuing similar capabilities with ground-based rockets, with Manila’s particular interest being to protect its South China Sea claims.

The Philippines is among several countries at odds with China in the South China Sea and has been angered by the constant presence of vessels in its exclusive economic zone it says are manned by Chinese militia. China is also Manila’s main trading partner. — Reuters

Inflation remained high in Jan. — BSP

Onions are for sale at a supermarket in Quezon City, Jan. 16. — PHILIPPINE STAR/MIGUEL DE GUZMAN

HEADLINE INFLATION likely settled within the 7.5% to 8.3% range in January due to a rise in power and water rates, and higher pump prices, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.   

The BSP’s month-ahead forecast range indicates that inflation may have been faster than the 14-year high of 8.1% in December and the 3% seen in January 2022.   

The upper end of the forecast or 8.3% would also be the fastest pace since the 9.1% print in November 2008 amid the global financial crisis.

January would also mark the 10th straight month that inflation surpassed the BSP’s 2-4% target range.

The Philippine Statistics Authority will report January inflation data on Feb. 7.   

“Upward price pressures for the month are expected to emanate from higher electricity rates, approved water rate rebasing, higher domestic petroleum prices, uptick in the prices of key food items, and the annual increase in sin taxes,” the BSP said in a statement.   

Manila Electric Co. (Meralco) earlier said the overall rate for a typical household went up P0.6232 to P10.9001 per kilowatt-hour (kWh) in January.   

Metro Manila’s two main water concessionaires also began implementing higher rates in January.

Starting January, Manila Water raised rates by P8.04 per cubic meter, while Maynilad hiked rates by P3.29 per cubic meter.

Fuel retailers continued to implement price hikes in January. For the month, pump price adjustments stood at a net increase of P7.2 a liter for gasoline, P3.05 a liter for diesel, and P4.55 per liter for kerosene.      

“Meanwhile, the reduction in LPG prices as well as the peso appreciation could contribute to easing price pressures for the month,” the central bank said.   

Cooking gas prices declined by P4.20 per kilogram in January after two straight months of price hikes.   

The peso also rebounded to the P54-a-dollar mark in January, closing the month at P54.64 on Tuesday, up by P1.115 or 2.04% from its P55.755 finish on Dec. 29, 2022.

“The BSP will continue to adjust its monetary policy stance at the necessary pace to prevent the further broadening of price pressures and monitor emerging price developments closely in accordance with the BSP’s price stability mandate.”   

BSP Governor Felipe M. Medalla earlier signaled more policy rate increases in the first quarter this year to ensure inflation falls within the 2-4% target range by the second half.   

The Monetary Board is scheduled to have its first policy meeting this year on Feb. 16.

The BSP sees headline inflation averaging 4.5% this year, lower than the actual 5.8% recorded in 2022. — Keisha B. Ta-asan

IMF maintains PHL growth forecast

A woman fixes the display of Chinese lanterns at a mall in Manila. — PHILIPPINE STAR/EDD GUMBAN

THE INTERNATIONAL Monetary Fund (IMF) kept its growth projection of 5% for the Philippines this year, even as it slashed the forecast for the ASEAN-5 grouping amid a looming global economic slowdown.

“Our projections, which pre-date the release of the fourth quarter 2022 GDP estimates, point to (Philippine) growth slowing down to 5% in 2023 due to a tighter policy stance and the confluence of global shocks, including spillovers from the war in Ukraine and tighter global financial conditions,” IMF Representative to the Philippines Ragnar Gudmundsson said in an e-mail.

The IMF’s forecast is lower than the 6-7% gross domestic product (GDP) growth target set by the government this year. It is also slower than the 7.6% GDP expansion in 2022, which was the best economic performance in over four decades.

IMF GDP forecasts for select Asia-Pacific economies

For 2024, the IMF sees the Philippines expanding by 6% “as the global economy bottoms out” and the government accelerates structural reforms, including infrastructure and agricultural development.

“Potential growth could be boosted by further efforts to raise productivity, reduce infrastructure and education gaps, strengthening existing social protection schemes, and harnessing benefits from the digital economy,” Mr. Gudmundsson said.

In its World Economic Outlook update released on Tuesday, the IMF said the world economy will likely expand by 2.9% this year, slower than the 3.4% expansion in 2022, amid the global fight against inflation and Russia’s war in Ukraine. Global growth will rebound to 3.1% in 2024, it said. (Related story on S1/9, “IMF upgrades global growth forecast”)

The multilateral lender trimmed the 2023 forecast for ASEAN-5 to 4.3% from 4.5% in the October forecast. For next year, it also cut the ASEAN-5 forecast by 0.2 percentage point to 4.7%.

ASEAN-5, comprised of the Philippines, Singapore, Malaysia, Vietnam, and Indonesia, is estimated to have expanded 5.2% in 2022.

Mr. Gudmundsson noted the Philippines’ growth for 2023 will still be higher than the ASEAN-5 forecast.

At a media briefing on Tuesday, IMF Division Chief Daniel Leigh said there would be a moderation of the region’s strong growth last year due to the policy tightening of central banks. 

“Because of the increase in inflation in the region, central banks have stepped up and raised interest rates. There is a downgrade in 2023 partly because of that tightening in monetary policy,” Mr. Leigh said.

However, he said the region is expected to recover in 2024, thanks to a stronger growth outlook globally, including China.

Mr. Leigh said ASEAN-5 economies would benefit from the likely faster growth in China next year.

INFLATION
Philippine inflation is expected to ease this year, after price growth accelerated to 5.8% in 2022.

“We project inflation to decline modestly to 4.7% in 2023, supported by some moderation in commodity prices and the tighter monetary policy stance, and to converge to the midpoint of the BSP’s target band in 2024,” Mr. Gudmundsson said.

The Bangko Sentral ng Pilipinas (BSP) sees headline inflation averaging 4.5% this year, higher than the 2-4% target range, before easing to 2.8% in 2024.

“In the near term, continued tightening of monetary policy is appropriate to keep inflation expectations anchored and reduce headline inflation securely within the 2-4% range,” he said.

Last year, the BSP hiked its benchmark interest rate by 350 bps, bringing it to a 14-year high of 5.5% to tame inflation.

BSP Governor Felipe M. Medalla earlier signaled more policy rate increases in the first quarter this year. The Monetary Board will have its first policy review on Feb. 16. — K.B.Ta-asan

PHL up a spot in corruption index but score remains low

A Philippine flag flutters in the air at the Bonifacio Monument in Caloocan City in this file photo. — PHILIPPINE STAR/MICHAEL VARCAS

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINES saw its ranking improve one spot in a global corruption index by watchdog Transparency International, although its score remained at record low.

Based on the 2022 Corruption Perceptions Index (CPI), Manila ranked 116th out of 180 countries, up one spot from its worst-ever showing of 117th place in the previous year. The Philippines ranked 115th in 2020, 113th in 2019, and 99th in 2018.

However, the country’s score was unchanged at 33 out of 100 in a scale that measures perceived levels of public sector corruption. A score of 100 means a country is “very clean,” while zero means it is “highly corrupt.”

Philippines’ corruption perception rank improves in 2022This is the second straight year the Philippines had a score of 33, its lowest ever in the index. Its highest score so far was 38 in 2014.

The Philippines’ latest score is also below the global average of 43 and Asia-Pacific region’s average of 45.

“Asia-Pacific continues to stagnate for the fourth year in a row with an average score of 45 points. While some governments have made headway against petty corruption, grand corruption remains common. Pacific leaders have renewed focus on anti-corruption efforts, but in Asia, they have focused on economic recovery at the expense of other priorities,” Transparency International said in its report.

In a bid to consolidate power, Transparency International said regimes in the region have been curtailing space for dissent through “draconian” laws that restrict free speech. It also cited a “worrisome” trend toward authoritarianism as governments maintained — and in some cases expanded — restrictions on civic space and basic freedoms imposed during the pandemic.

“Democracy has been declining in the region, including in some of the most populous countries in the world, such as India (40), the Philippines (33) and Bangladesh (25),” it said.

Among Asia-Pacific countries, the Philippines lagged behind Singapore (5th), Hong Kong (12th), Japan (18th), Taiwan (25th), South Korea (31st), Malaysia (61st), and China (65th). It was also behind Timor-Leste (77th), Vietnam (77th), Thailand (101st), and Indonesia (110th).

The Philippines was only ahead of Laos (126th), Cambodia (150th), Myanmar (157th), and North Korea (171st).

Denmark, which scored 90, topped the 2022 CPI, followed in second spot by Finland and New Zealand, which both scored 87.

At the bottom of the list were Somalia, Syria and South Sudan, which continued to be involved in a protracted conflict.

Nearly 90% of countries in the region “have made no significant progress” since 2017, Transparency International noted.

PATRONAGE POLITICS
“Corruption has been a trend not just in Asia but worldwide,” Hansley A. Juliano, a political economy researcher, said in a Facebook Messenger chat.

“What we are seeing here as well is an exposure of the significant weaknesses of democratic checks and balances and a disconnect between traditional ‘value holders’ of democratic politics and the larger population.”

In the Philippines, Mr. Juliano said patronage politics continue to worsen corruption, with citizens seeing the practicality of siding with politicians.

Opposition forces and other anti-corruption advocates would have a hard time defeating corruption because for ordinary people, “the exchange of political support for tangible gains is ‘democratic enough,’” he added.

“The fact that we seem to have settled into primarily taking potshots at the Marcos administration’s blatant excesses, which do not translate to any form of public support decline, is already telling,” he said. 

The inability to “genuinely normalize” support for institutional means of accountability, coupled with political disinformation, helps build “constituencies for draconian governments,” he added.

Emy Ruth D. Gianan, an economics professor at the Polytechnic University of the Philippines (PUP), said the Philippines’ low score in the corruption perceptions index “is a reminder that our political institutions remain untrustworthy for experts and investors.”

Ms. Gianan said via Messenger that the long-standing issue of corruption in the Philippines is worsened by the “poor regard for human rights and significant socioeconomic inequalities.”

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said the prevalence of corruption against the backdrop of the country’s economic problems is worrisome.

“Aside from its impact on the macroeconomy, corruption can play a significant role in exacerbating labor market conditions and thus poverty,” he said via Messenger chat.

Corruption, Mr. Lanzona said, reduces the availability of public resources and social protection measures for low-skilled workers, making it harder for them to compete in the labor market and increasing their vulnerability to poverty and unemployment.

He noted the government failed to highlight the economic importance of anti-corruption efforts in the Philippine Development Plan for 2023 to 2028, which was approved by President Ferdinand R. Marcos, Jr.

“Given its enormous impact on developing and protecting the capabilities of individuals and families, the PDP 2023-2028 could have used corruption as a focal point for coordination and implementation.”

BLEAK OUTLOOK
Mr. Marcos earlier said foreign investors who want to do business in the Philippines are more concerned about high power costs and ease of doing business than they are about domestic transparency and accountability.

“Those who are actually contemplating putting good money in the Philippines have other issues. Accountability and transparency (are) not an issue,” he said.

Maria Ela L. Atienza, a political science professor at the University of the Philippines, said she believes there is no seriousness in the government’s anti-corruption campaign.

“Crony capitalism and patronage and traditional politics continue in the absence of weak political parties and with threatened civil society as well as a pressured justice system,” she said.

To boost anti-corruption efforts, the government needs to improve the credibility of independent political institutions and speed up the trials for high-profile graft and corruption cases, PUP’s Ms. Gianan said.

“Long-shot for us to regulate political dynasties and nepotism, but a serious public discourse on that may help shed light on potential solutions against the undue advantages of familial ties in politics.”

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