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IKEA considering more stores in the Philippines  

SWEDISH furniture retailer IKEA is looking to establish more stores in the Philippines to address growing local demand and as part of its expansion efforts.

Georg Platzer, IKEA Philippines store manager, said that the retailer is studying more stores in Metro Manila in addition to its first branch in the country. IKEA Philippines opened the doors to its Pasay City store on Nov. 25 last year.

“We need to have a second, and maybe even a third store in Metro Manila to cover the needs of the many consumers coming. No timing yet, no place yet but definitely on the expansion, it is on the drawing table,” Mr. Platzer said in an interview at the sidelines of a seminar in Pasay City last week.

“The Pasay City store is the beginning for IKEA in the Philippines and there’s a future of more stores to come. It is just a matter of time. Because it is a big market, it is a growing market and in one moment, this store will be even too small to host so many people,” he added.

In terms of IKEA’s expansion outside of Metro Manila, Mr. Platzer said that the idea is “far from the pipeline.”

“IKEA needs a certain amount of visitation. We live from visitation. We need a lot of visitors. Outside of Metro Manila, there [are] not enough people. And, if there [are] enough people, they need to travel a long way to come to IKEA. So, that would be a hindrance. We can think about cities like Cebu and maybe Davao, but I think that’s about it,” Mr. Platzer said.

However, Mr. Platzer said that IKEA Philippines plans to add more “fulfillment areas” to serve more consumers buying online. The areas are where customers can pick up the products they purchased online.

“We are about to stretch our fulfillment areas… In the future, we are going to serve more of the islands. Customers hopefully from Iloilo and Leyte can order online,” Mr. Platzer said.

Meanwhile, Mr. Platzer said that IKEA Philippines had raised the prices of some of its products due to the depreciation of the Philippine peso versus the US dollar. He did not provide specific figures or products that had price increases.

On Sept. 23, the peso dropped to a new all-time low of P58.50 versus the greenback.

“It’s a drama for us. The US dollar is too strong because we pay everything in dollars. We buy our goods in US dollars and that is not good,” Mr. Platzer said.

“We always try to keep the prices as low as possible, and we still do. We still believe we have the lowest possible price in the country for this quality. But the whole currency challenge globally, the war in Europe with Russia and Ukraine, all these challenges have an impact on the supply chain and the prices,” he added. — Revin Mikhael D. Ochave 

Digital banks seen to meet BSP standards

DIGITAL BANKS are likely to meet the reserve requirement ratio (RRR) of 8% and are expected to comply with the existing prudential requirements for big banks, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Deputy Governor Chuchi G. Fonacier said in a Viber message that they considered digital banks’ scope of authority, capital requirement, and ability to rapidly expand operations in setting up the 8% RRR.

“The 8% reserve requirement rate (RRR) for digital banks was the result of discussions during the BSP’s consultation process taking into account RRR across banking categories,” Ms. Fonacier said.

“Moreover, the final RRR of digital banks is consistent with the BSP’s long-term goal of implementing graduated, single-digit RRRs across all banking institutions towards more market-oriented instruments for liquidity management,” she added.

BSP Circular No. 1154 set digital banks’ reserve ratio, or the percentage of deposits and deposit substitutes they must keep with the BSP, at 8%. The RRR for big banks is currently at 12%, one of the highest in the region. Reserve requirements for thrift and rural lenders are at 3% and 2%, respectively.

“Nonetheless, the BSP can adjust the RRRs of banks, including digital banks, as may be warranted, consistent with its price and financial stability objectives,” Ms. Fonacier said.

Under the same circular, digital banks must also meet the same Basel III capital, liquidity and leverage requirements covering universal and commercial banks.

The Basel III framework contains measures that aim to improve banks’ risk management so they can withstand excessive financial stress. These came in the aftermath of the 2008 Global Financial Crisis. 

“The guidelines provide, among others, that a digital bank shall be considered a ‘complex bank’ for purposes of compliance with corporate and risk governance standards in view of its wide reach and ability to rapidly expand operations,” Ms. Fonacier said.

“This policy approach ensures that digital banks operate in a safe and sound manner as they offer and promote access to innovative financial services,” she added.

In a conference hosted by The Asian Banker on Thursday, BSP Assistant Governor Lyn I. Javier said digital banks are more exposed to risks such as cybersecurity threats as well as issues about money laundering and consumer protection.

“We issued prudential regulation for digital banks just to level the playing field, recognizing digital banks as complex banks,” Ms. Javier said.

“Now, we have also issued the open finance framework and the institutionalized regulatory sandbox. I think that already provides an enabling environment for these players to continue to provide financial services and create partnerships within the industry,” she added.

Earlier this month, the BSP approved the regulatory sandbox rules formalizing the “test and learn” (T&L) approach for startups. Meanwhile, the Open Finance Framework, which was published in 2021, lays out the rules for enabling open finance in the country.

According to Ms. Fonacier, digital banks undertake a chartering process on the suitability of shareholders, adequacy of financial strength, technical expertise, and integrity of their board and senior management. They also conduct a detailed review and assessment of support information technology (IT) systems and infrastructure.

“Thus, these banks, once in operation, can meet the BSP’s prudential standards and perform in a safe and sound manner,” she said.

Ms. Fonacier said BSP Circular No. 1154 forms part of the BSP’s Digital Payments Transformation Roadmap aimed at advancing the central bank’s financial inclusion agenda while driving the adoption of digital services in the country.

When asked about the BSP’s initial observations on the operation of digital banks in the country, Ms. Fonacier said the positive response of the public is “very encouraging” based on the number of deposits recorded by these lenders.

“More than the attractive rates and ease in onboarding, the trust gained from the public knowing that these digital banks are regulated by the BSP is certainly a big factor,” Ms. Fonacier said.

“On the side of our digital banks, they have leaned towards a calculated strategy in the initial months of operations. Amid the clear public interest, most have opted to first offer their products to targeted customers just to ensure that any possible issues are readily resolved prior to fully launching to the public,” she added.

The central bank capped the number of digital banking licenses to six last year to monitor the development of the sector, ensure competition, and boost its capacity to regulate these kinds of lenders.

The six online lenders that secured licenses to operate in the country are Tonik Digital Bank, Inc.; GOtyme of the Gokongwei group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; Overseas Filipino Bank, a subsidiary of Land Bank of the Philippines; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital of UnionBank of the Philippines, Inc. — Keisha B. Ta-asan

India free food program for poor to cost $10 billion if extended

REUTERS

NEW DELHI — India is likely to extend its free food program for the poor by three to six months, CNBC TV18 reported, a move that could cost the government $10 billion more and make it challenging for it to meet its fiscal deficit target.

India has spent nearly $43 billion since April 2020 on its free food program known as ‘Pradhan Mantri Garib Kalyan Anna Yojana’ where it provides 5 kg of foodgrain to poor families.

A six-month increase could cost the government an additional 800 billion rupees ($10 billion), according to a government official, who did not want to be named.

A spokesperson for India’s finance ministry did not immediately reply to a message seeking comment.

Most economists expect the Indian government to miss its fiscal deficit target of 6.4% of GDP for the 2022/23 year that started on April 1 as it has taken a number of measures to fight inflation that could cost the government over $20 billion. — Reuters

Hilary Mantel, award-winning British author of Wolf Hall trilogy, 70

Bitish author Hilary Mantel — 4THESTATE.CO.UK
Bitish author Hilary Mantel — 4THESTATE.CO.UK

LONDON — Hilary Mantel, the best-selling British author of the award-winning Wolf Hall Tudor trilogy, died peacefully on Thursday at the age of 70, her publisher said on Friday.

Wolf Hall, published in 2009, and its sequel Bring Up the Bodies, released three years later, both won the Booker Prize, an unprecedented win for two books in the same trilogy and making Ms. Mantel the first woman to win the award twice.

The final in the series, The Mirror & the Light, was published in March 2020 and long-listed for the Booker Prize. It won the Walter Scott Prize for Historical Fiction in 2021, an award she also won for Wolf Hall.

“It is with great sadness that HarperCollins announces that bestselling author Dame Hilary Mantel DBE died peacefully, surrounded by close family and friends, yesterday,” a statement on the website of her publisher 4th Estate Books, which is owned by HarperCollins, said.

“Hilary Mantel will always be remembered as a truly original writer. She leaves behind a remarkable body of work which inspire readers around the world.”

The Wolf Hall trilogy, which has been serialized by the BBC and was also adapted for the stage, charted the fortunes of Thomas Cromwell, the blacksmith’s son who rose to be King Henry VIII’s most powerful adviser only to fall from grace and meet a gruesome end.

It has been translated into 41 languages and sold more than 5 million copies worldwide.

In a 2020 interview with the Guardian, Ms. Mantel described the books as being “about all the big important things that matter, about sex and power and high politics, statecraft and forgery and delusion and lies.”

Other best-selling authors took to Twitter to express their sadness at the news of her death, with Harry Potter author J.K. Rowling saying: “We’ve lost a genius.”

Fellow Booker Prize winning author Bernardine Evaristo said: “So very sorry to hear about Hilary Mantel’s passing. We were so lucky to have such a massive talent in our midst.”

HISTORICAL INSIGHT
Born in Derbyshire on July 6, 1952, Ms. Mantel studied Law at the London School of Economics and Sheffield University and first worked as a social worker. She turned to writing fiction while living in Botswana for five years.

Ms. Mantel also lived in Saudi Arabia, returning to Britain in the mid-1980s. Her first novel, Every Day is Mother’s Day, was published in 1985.

In total she authored 17 books, including non-fiction works, and was awarded a damehood in 2014 for services to literature.

“It is impossible to overstate the significance of the literary legacy Hilary Mantel leaves behind. Her brilliant Wolf Hall trilogy was the crowning achievement in an outstanding body of work,” Scottish First Minister Nicola Sturgeon said on Twitter.

Ms. Mantel drew criticism from many, including then Prime Minister David Cameron, in 2013 for comments in which she described Prince William’s then pregnant wife Kate as “a jointed doll on which certain rags are hung.”

“She was a shop-window mannequin, with no personality of her own, entirely defined by what she wore,” Ms. Mantel had said in a lecture at the British Museum in London.

Ms. Mantel suffered chronic health problems for much of her life, speaking of the debilitating pain and fatigue caused by severe endometriosis, a condition where tissue similar to the lining of the womb grows in other places.

She said her illness, and the infertility caused by treatment she received for it, had contributed to a temporary split from her geologist husband Gerald McEwen, whom she had wed at the age of 20. The pair divorced but soon remarried.

Her agent, Bill Hamilton at AM HEATH, said she had dealt with her health problems “courageously” and it had been a privilege to work with her.

“Her biting wit, stylistic daring, creative ambition and phenomenal historical insight mark her out as one of the greatest novelists of our time,” he said.

“There was always a slight aura of otherworldliness about her, as she saw and felt things us ordinary mortals missed, but when she perceived the need for confrontation she would fearlessly go into battle.” — Reuters

Geely PHL notches ‘Outstanding Distributor Award’

PHOTO FROM GEELY PHILIPPINES
PHOTO FROM GEELY PHILIPPINES

SOJITZ G AUTO Philippines Corp. (SGAP), official distributor of Geely in the Philippines, announced that it was given the Outstanding Distributor Award at the recently concluded Geely Automotive Annual International Conference. The online gathering was attended by top executives from Geely Automotive International Corp. and representatives from 35 overseas distributors.

It was bestowed with the honor “based on annual overall sales, marketing efforts and strategies and after-sales service index which drove the expansion and upgrade of Geely business in the Southeast Asian region.” SGAP was one of only three distributors which received the recognition.

Aside from the recognition, Geely Philippines took home the Best Network Award, meant to “recognize the outstanding performance in sales, market share expansion, customer satisfaction and quality of services.” Its flagship, company-owned North EDSA dealership is able to sell more than 100 units a month on average. The distributor also received the Best Customer Service Award, “given based on overall satisfaction and experience provided to its customers.”

Geely Philippines, throughout its dealership network, showed an increase of 115% in service retention and a 300% increase in sales on top of a high 9.6/10 service satisfaction index score.

“We are very honored to receive all these distinguished awards among numerous Geely distributors across the globe. The credit goes to all of our customers who believe in the Geely brand, and to our dealer network for providing value-added customer experience. This trust is what continuously drives us to always provide the best possible customer experience, products and services that Geely can offer to the Filipino market. Together with all our 34 dealerships nationwide, business partners and associates, we always put forth that our customers are our inspiration and motivation to always do our best to exceed their expectations,” SGAP President and CEO Yugo Kiyofuji said.

In less than three years since the brand was relaunched here in 2019, Geely has marked its 10,000th vehicle sold. The 6,199-unit total sold this year has already surpassed last year’s total sales, representing 89% growth year-to-date.

“As the Philippine economy and automotive industry continue to recover and show indications of growth, Geely Philippines will maintain its best effort to provide global quality products that will surely satisfy the needs and requirements of the market. Going closer to where the customers are by expanding our network has been one of our priorities and so shall be our efforts to provide the best customer experience possible. This is our commitment to our clients and future customers who have believed in us and trusted us over the years,” Mr. Kiyofuji concluded.

Debt yields rise on rate hikes, weak peso

YIELDS on government securities (GS) rose as the market awaited the US Federal Reserve’s and the local central bank’s rate hikes and the peso depreciating to a new record low.

Debt yields, which move inversely to prices, jumped by an average of 12.31 basis points (bps) week on week, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates as of Sept. 23, published on the Philippine Dealing System’s website.

Yields on the short end of the curve climbed the most as the 182-day Treasury bills (T-bills) increased by 23.52 bps (to 3.7042%), followed by the 91-day and the 364-day T-bills, which went up by 20.93 bps (2.7762%) and 1.33 bps (3.9280%).

The belly of the curve ended mixed with the two- and three-year Treasury bonds (T-bonds) decreasing by 6.71 bps (5.1587%) and 2.98 bps (5.5341%), while the four-, five-, and seven-year T-bonds rose by 5.21 bps (5.9070%), 14.65 bps (6.2568%), and 22.24 bps (6.6793%), respectively.

At the long end of the curve, yields on the 10-, 20-, and 25-year papers rose by 22.48 bps (6.9460%), 17.65 bps (7.2329%), and 17.07 bps (7.2255%).

Total GS volume traded reached P11.839 billion on Friday, lower than the P6.563 billion recorded on Sept. 16.

In an e-mail, ATRAM Trust Corp. Head of Fixed Income Jose Miguel B. Liboro said that the market was affected earlier in the week by the US Fed and the Bangko Sentral ng Pilipinas’ (BSP) meetings as well as after it, which made the market defensive all week.

“Defensive bids and thin volumes in the market were directly related to risks of a more hawkish than expected Fed and the immediate implications on both the USD/PHP spot rate as well as policy actions from our own BSP,” Mr. Liboro said.

Last week, the US Fed announced its third consecutive rate hike, going up by 75 bps.

A bond trader said in a Viber message that the market expected the move as the Fed continues to aggressively lower inflation.

“The US Fed Funds Target rate is now expected to remain high through 2023, according to the official projections made by its members,” the trader added.

Locally, the BSP also had its monetary board meeting on Sept. 22, which resulted in another 50-bp rate hike to also address inflationary pressures in a move to bring down the country’s inflation within the 2% to 4% target range of the central bank by the end of 2022.

“Given elevated uncertainty and the predominance of upside risks to the inflation environment, the Monetary Board recognized the need for follow-through action to anchor inflation expectations and prevent price pressures from becoming further entrenched,” the central bank said in a press release.

Both analysts said that the market was expecting the rate hike by the BSP, which was welcomed by the market in hopes of lessening the risk of the further depreciation of the peso against the greenback.

Last week, the peso closed at P58.50 versus the dollar, a new record low as the currency continues to be affected by the US Fed’s aggressive move.

“Market players also can’t ignore the local currency navigating uncharted territory at the P58.00 to P58.50 levels this week, this may have dampened sentiment for local assets given its effect on our domestic inflation. Obviously, these developments did not bode well for local bonds which caused domestic yields to rise week on week,” the trader said.

BSP Governor Felipe M. Medalla said in an interview that the central bank looks at borrowing more through auctions and hiking rates in the coming months to address the depreciating peso.

“Immediate impact will be more sentiment-based with investors likely to remain defensive for the time being. With broad USD strength expected to continue until year-end, at the very least, investors will be looking keenly at the impact that further peso depreciation could have on inflation expectations as well as the risk of potentially negative outlooks towards the Philippines’ credit rating,” Mr. Liboro said.

“For the week ahead, bearish sentiment is expected to persist given the foreseen rise in policy rates in the coming months. This week’s 16-year FXTN auction is another catalyst that will also be looked at. Said auction may range from 7.250% to 7.500% levels,” the bond trader said.

“Front-end will be most affected by the recent (and potential subsequent) BSP rate hikes — but the long end will continue to remain defensive until market expectations of inflation begin to stabilize amid the current strong USD environment. That being said, with absolute levels already attractive and the prospect of yields north of 7% in play, we may see bargain hunters start to emerge on the long end of the curve,” Mr. Liboro said. — Bernadette Therese M. Gadon with Bloomberg

Share buyback plan moves Converge stocks

LISTED fiber internet provider Converge ICT Solutions, Inc. was the seventh most actively traded stock last week after investors opted to pocket gains following its approved buyback program and talk about the company’s removal from a global equity index.

Data from the Philippine Stock Exchange (PSE) showed Converge ranked first in value turnover with P855.31 million worth of 54.33 million shares traded from Sept. 19 to 23.

Shares in the Dennis Anthony H. Uy-led fiber internet provider closed at P15.14 apiece on Friday, down 12.5% from the P17.30-per-share close on Sept. 16. Converge’s share price decline more than doubled since the start of the year.

“Mainly, the share buyback plan of P1.50 billion shares has contributed to [Converge being] one of the most active stocks last week,” said Diversified Securities, Inc. Equity trader Aniceto K. Pangan in an e-mail.

Last week, the board of directors of Converge approved a plan to buy back common shares of the company worth up to P1.5 billion to increase shareholder value and to show confidence in its fundamental value, business, and prospects.

Converge said that acquired shares during the buyback period may be re-issued by the company for valid corporate purposes, such as for an employee stock plan.

The buyback transaction will not adversely affect the company’s ability to fund any of its prospective and existing projects and investments.

Mr. Pangan said that partnering with UnionBank of the Philippines to combat cybercrimes could boost Converge’s credibility and support the increase in its subscriber base.

In a press release on Sept. 15, Converge said it had signed a memorandum of understanding with UnionBank to join efforts in fighting financial cybercrimes.

So far in 2022, Converge blocked more than 4.1 million unique web addresses tied to illicit content. It said that banking is the second top industry affected by cybercrime.

Jeff Radley C. See, an analyst at Mercantile Securities Corp., said in a Viber message that rumors of the removal of Converge from the MSCI Global Standard index made the stock the most actively traded last week.

“Rumors are circulating that Converge will be removed in the MSCI this coming November 2022. The stock was sold down by foreign brokers even before the rumor went out pushing the price further down beyond its IPO (initial public offering) price of P16.80,” Mr. See said.

PSE market data showed that the net selling of Converge shares amounted to P88.25 million from Sept. 19 to Sept. 23.

To recall, Converge experienced heavy foreign selling driven by the expiration of Coherent Cloud Investments B.V.’s 365-day lockup in October 2021.

Coherent Cloud, owned by US private equity firm Warburg Pincus, had a 15.83% stake in Converge put under lockup for 365 days, which expired on Oct. 8 and became tradable on Oct. 11, 2021.

Mr. See also said that the only news that contributed to the bullish sentiment on the stock is the approved buyback program.

For the first half of the year, Converge saw its bottom line hit P3.95 billion, up 21.5% from the same period in 2021. Its revenues increased by 36.3% to P16.05 billion from P11.78 billion previously.

Mr. Pangan expects Converge’s revenues to reach P9 billion in the third quarter and P33 billion for the full-year 2022.

“Converge may recover due to its oversold state and buyback program as [the] company sees the price is at a bargain,” Mr. Pangan said.

He placed the company’s immediate resistance at P17.30 and its immediate support at P14.88.

Mr. See expects Converge to trade at oversold levels and might be poised for a bounce.

He pegged the stock’s support between P15.00 and P14.50 per share, while its resistance at between P16.00 and P18.00 per share. — Lourdes O. Pilar

Nearly 1 million people face starvation, UN says

REUTERS

LONDON — Nearly one million people in Afghanistan, Ethiopia, South Sudan, Somalia, and Yemen are starving or will face starvation this year in the absence of aid, as the global food crisis worsens, United Nations (UN) agencies warned.

Local conflict and weather extremes remain the primary drivers of acute hunger, aggravated this year by economic instability linked to the ripple effects of the COVID-19 pandemic and the Russia-Ukraine war.

“The severe drought in the Horn of Africa has pushed people to the brink of starvation. Acute food insecurity is rising fast and spreading across the world. Without a massively scaled up humanitarian response, the situation will likely worsen in the coming months,” said the head of the UN Food and Agriculture Organization (FAO).

Although global agricultural commodity prices have come off record highs in recent months, local food prices in several countries remain high and risk heading back up if a UN-brokered deal to boost Russian and Ukrainian grain and fertilizer shipments collapses.

Ukraine is the world’s fourth largest grain exporter, while Russia ranks third for grain and first for fertilizer exports.

According to the FAO’s quarterly “hunger hotspots” report, co-authored by the UN World Food Programme, high prices for food, fuel and fertilizer have forced advanced economies to tighten monetary policy.

This has increased the cost of credit for low-income countries, constraining their imports and forcing them to introduce austerity measures.

“These trends are expected to increase in coming months, with poverty and acute food insecurity rising further, as well as risks of civil unrest driven by increasing socio-economic grievances,” said the report. — Reuters

Business expectations survey

Business expectations survey

How PSEi member stocks performed — September 23, 2022

Here’s a quick glance at how PSEi stocks fared on Friday, September 23, 2022.


Shares seen to move sideways on record-low peso

REUTERS

LOCAL STOCKS may move sideways this week on the lingering effects of the interest rate hikes by the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) amid the depreciating peso.

The bellwether Philippine Stock Exchange index (PSEi) slipped by 42.17 points or 0.66% to close at 6,259.54 on Friday, while the broader all shares index went down by 14.95 points or 0.44% to 3,341.29.

Week on week, the PSEi declined by 289.23 points or 4.42% from its close of 6,548.77 on Sept. 16.

“Selling marked this week’s trades, given the Fed’s 75 basis points (bps) and BSP’s 50-bp rate hike adjustment,” online brokerage 2TradeAsia.com said in a report.

In a Viber message, Salisbury Securities Corp. Equity Sales Trader JP Dela Cruz said the market was down again “due to the more hawkish stance of the Fed” while the Philippine market is expecting the BSP “to continue hiking rates in line with the Fed to protect the peso and slow down inflation.”

Last week, the Fed raised its monetary policy rate by 75 bps for a third time, bringing the Fed’s cumulative hikes for this year to 300 bps.

Meanwhile, the BSP raised benchmark rates by 50 bps for a second straight meeting to bring the hike in borrowing costs to a total of 225 bps since May.

For the week, Salisbury Securities’ Mr. Dela Cruz said that the PSEi “has more room to go down.”

“[However,] we remain bullish and investors or traders should take advantage of these dips going into the fourth quarter of 2022,” he added.

Meanwhile, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said that “trading may remain tepid as the market continues to move without a positive catalyst.”

“We do not expect a significant rally from the market yet as it is seen to continue dealing with expectations of further policy rate hikes by the Federal Reserve and the Bangko Sentral ng Pilipinas,” Mr. Tantiangco said.

He added that the Philippine peso, which is now below the P58-per-US-dollar level, “is also expected to continue weighing on sentiment.”

On Friday, the local unit closed at P58.50 versus the greenback from its P58.49 finish on Thursday, data from the Bankers Association of the Philippines showed.

Year to date, the peso has weakened by 14.7% or P7.49 from its P51-close in the previous year.

“For now, a defensive portfolio with strong balance sheets should be able to weather the brunt of weak currency, higher cost of debt, and generally volatile inputs market,” 2TradeAsia.com said. It placed the PSEi’s immediate support at 6,000 and resistance at 6,400.

Philstocks Financial’s Mr. Tantiangco put the PSEi’s immediate support at 6,200, key support between the 6,000 and 6,100 range, and resistance at the 6,400 level.

Salisbury Securities’ Mr. Dela Cruz placed the index’s support at 6,000 and resistance at 6,300. — Justine Irish D. Tabile

Experts see return of steady PHL-US relations under Marcos Jr.

PRESIDENT Ferdinand R. Marcos, Jr. and US President Joseph R. Biden hold a bilateral meeting on September 22, 2022 in New York, USA. — OFFICE OF THE PRESS SECRETARY

By Kyle Aristophere T. Atienza, Reporter

FOREIGN policy experts are detecting signs of steady relations between the Philippines and the United States under the administration of President Ferdinand R. Marcos, Jr. who is seen veering away from his predecessor’s conciliatory stance toward Beijing.

However, some experts said the Philippines’ foreign policy towards China and other rising powers remains vague, noting that it should be among the top concerns of the national security sector.

During his US visit last week, Mr. Marcos expressed his commitment to preserving the Philippines’ alliance with the US, which has been calling for a rules-based order in the Indo-Pacific region amid China’s expansive activities.

“In the context of the country’s current approach toward China, the recent pronouncements and initiatives of President Marcos indicate a shift in the country’s foreign policy,” said Victor Andres “Dindo” C. Manhit, president of Stratbase ADR Institute for Strategic and International Studies.

“Unlike the previous government, which repeatedly announced the country’s separation from the US, the President has been more open to the idea of broadening the country’s network of allies and strategic partners,” he said in a Messenger chat.

Mr. Manhit said a return to US-Philippines relations at a level before former President Rodrigo R. Duterte’s administration is being driven by Mr. Marcos’ “view of the multipolar world” and not a “competition between China and the US that Duterte got drawn in.”

“This marks a clear departure from the foreign policy position pursued by the previous administration.”

Mr. Marcos said in New York on Saturday (PHL time) that his country has no territorial conflict with China, noting that it is Beijing that is claiming Philippine territories.

“I think it’s no surprise to anyone that the Philippines has some of these conflicts with the People’s Republic of China. And the position that the Philippines takes is that we have no territorial conflict with China. What we have is China claiming territory that belongs to the Philippines,” he told Asia Society CEO and former Australian prime minister Kevin Rudd in an interview.

This is the position the Philippines and its American partners “have promoted,” said Mr. Marcos, who said US-Philippines ties could keep tensions in the region at bay.

“That statement is the finest rhetoric from President Marcos,” said Chester B. Cabalza, who studied national security and policymaking at the University of Delaware.

“I think Marcos Jr. is prepared for the consequences of his statements in Washington,” he said. “We will get the feel of the entirety of his core foreign policy, after his official visit to Beijing.”

In a meeting with US President Joseph R. Biden, Jr. last week, Mr. Marcos recognized Washington’s role in maintaining stability in the region.

“That is much appreciated by all the countries in the regions and the Philippines especially,” he said.

“His utterances to Biden is a sound of music to Washington, in time when allegations arise in Beijing that Xi Jinping is being deposed by the Chinese Communist Party (CCP),” said Mr. Cabalza, who has observed “evolving and proactive” US-Philippines relations under Mr. Marcos.

“It is symbolic.”

Several social media posts published by some media outlets based in India showed that Chinese President Xi Jinping has been under house arrest after he was forcibly removed as head of China’s People Liberation Army. The state media and the ruling Chinese Communist Party have yet to release an official confirmation.

“Any monumental shift like that in China will definitely compel Marcos to recalibrate,” Hansley A. Juliano, who has written on global political economy, said in a Messenger chat.

CHINA POLICY
Mr. Juliano and Robin Michael U. Garcia, who teaches political economy at the University of Asia and the Pacific, both believe that Mr. Marcos’ China policy remains vague and lacks substance.

“This is still not a concrete China policy. It is broad and vague,” Mr. Garcia said in a Messenger chat. “There is nothing new with the President’s statement actually. It also does not tell China and the US that much.”

Mr. Garcia said Beijing’s concern is the extent to which the Philippines is willing to compromise and negotiate, while the US is concerned with the level of Philippines’ commitment to asserting its territories in the South China Sea “and the extent to which we’re willing to ally with them.”

“There is not much difference in the motherhood statements he is speaking about here,” Mr. Juliano said.

“As a given countries are supposed to balance their treaty commitments even with competing blocs or groups,” he said. “However, what world leaders do is not give away their strategy publicly.”

Mr. Juliano said changes in the Philippines’ foreign policy, or the rule of engagement with China for that matter, would reflect in the country’s trade as well as international relations (IR) commitments.

“Will the Department of Foreign Affairs under Marcos Jr. and other relevant agencies recalibrate our trade and IR  commitments,” he asked. “Or will it remain business as usual?” 

“Sometimes the conversation here is not just the individual will of the President, but more his economic managers and business allies,” Mr. Juliano noted. “It has been the case with Duterte and Marcos, and even to a lesser extent Arroyo and Aquino III.”

At the House of Representatives, Speaker Martin G. Romualdez said on Sunday that the chamber will pass any legislation that the President needs to fulfill investment pledges.

“If the President needs any piece of legislation to materialize the objectives of these bilateral trade and investment agreements, we will answer the call,” Mr. Romualdez said in a statement.

Mr. Marcos urged global investors, traders, and other guests at the New York Stock Exchange to come to the Philippines and tap its potential as one of the fastest-growing economies in Asia.

In terms of economic policy, maintaining the Philippines relationship with mainland China is “weightier,” Mr. Juliano said. “However, there has been more consistent cultural and economic ties with the Philippines by virtue of our shared American alliance.”

In his interview with the Asia Society, Mr. Marcos said while his government would maintain its position on the sea dispute with China, it will continue to engage Beijing on other aspects.

The Philippine leader told Philippine media after the event that he’s willing to explore all options in the handling of territorial disputes with China.

Experts have said the Philippines’ foreign policy direction would likely be tested by the escalating dispute between China and Taiwan, which is just 190 kilometers away from northern Philippines.

“The ongoing conflict between China and Taiwan poses a risk to the Philippines and the rest of the region,” Mr. Manhit said. “This should be viewed as a part of a more complex and multifaceted geopolitical landscape that the Philippines should navigate.”

The Philippines should strategize with the intent of minimizing risks and safeguarding the country’s national interests, he said.

Mr. Biden earlier said American forces would defend Taiwan in case of a Chinese invasion, according to a Reuters report. US officials have made the same commitment to Manila, but local experts have doubted Washington would keep its promise.

Mr. Cabalza, meanwhile, said the government’s food security push should prompt Mr. Marcos to protect Filipino fishermen being harassed by Beijing.

His action on food security as agriculture secretary will open doors on how he will protect Filipino fishermen who are disallowed to fish in their traditional fishing ground in the contested waterways,” he said.  “He needs to use his political capital to safeguard our territorial integrity and national sovereignty from encroachment and illegal fishing of Chinese fishing fleets.”

A comprehensive territorial defense should involve the Bureau of Food and Aquatic Resources and Department of Agriculture, which should be responsible in protecting marine natural resources, Mr. Cabalza said.

Mr. Marcos took office in June, vowing to make the Philippines “a friend to all and an enemy to none.” — with a report from Kyanna Angela Bulan