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Getting on track

JOHANNES PLENIO-UNSPLASH

About 42 years ago, I recall taking the train to Quezon province from Makati City. Our Boy Scout troop walked about half a kilometer, carrying all our gear, from our school to the PNR Pasay Road Station. We boarded the train, took our seats in ordinary coaches, and rode the rails for hours to the PNR Station in Candelaria. From there, Army trucks took us to our campsite in the mountains.

Back in the day, I was told, the Philippine National Railway (PNR) actually ran from Manila all the way to Legazpi, Albay in the Bicol region in the south, and all the way to Damortis, Sto. Tomas, La Union in the north. From Damortis, which is near Rosario, one could then take either a PNR bus or car to go up to Baguio City via Naguilian Road.

Going through the countryside by rail gives one the opportunity to see more of the land — and the people — at ground level. Flying does not accord one the more granular experience of travel by land, either on a train, bus, car, or horse. And ordinary, diesel-fed heavy gauge trains, the slow ones that constantly rock and sway passengers, give the most textured experience of all.

I have not been on a PNR train for over 30 years. The last time was in the late 1980s, when as a university student I would occasionally commute by rail from España in Manila to Sucat in Muntinlupa. But I have seen the new trains servicing Metro Manila nowadays, and it seems that heavy gauge has gone a long way from the slow, smoky, diesel-fed chuggers of the past.

In the 1990s, I had the good fortune of traveling around Europe on rail. It was my first time in the Old World, and we rode the rails from Spain to Portugal, then back to Spain and onto France. Whistle stops included Lisbon, Seville, Madrid, Barcelona, and Paris. Paris-Gare-de-Lyon Station was the last stop. Then, it was a flight from Paris’ Charles De Gaulle to London’s Heathrow, then onto to Washington Dulles in the US.

Far more convenient, in my opinion, is train travel around Japan. Out-of-town trips from either Tokyo or Osaka are easy, comfortable, convenient, and provide good value. Japan’s rail system takes a bit of learning. But of late it has become easier particularly for foreign tourists with stored value train cards, and English-language signages, directions, and instructions.

A foreign tourist can easily travel to destinations like Nikko, Hakone, Yokohama, Kamakura, or Mt. Fuji from Tokyo, or to places such as Kyoto and Nara from Osaka. Trains stations are convenient and comfortable, and located in areas near bus carousels and with plenty of options for food and lodging. In Tokyo and Osaka, it makes more sense to take the train than to drive.

And this brings us to the point of why a rail system like PNR, which previously ran to northern and southern Luzon in the 1950s to the ’70s, should be fully rehabilitated to become once more an effective and efficient transport for people and cargo in and out, and within, Metro Manila. Light rail is good for transporting people, but heavy gauge rail like PNR can take bulk cargo as well.

In many industrialized countries, prioritizing investments in mass transit infrastructure proved crucial to ensuring economic success. The Philippines can have only so many airports and seaports. But travel in the interior, and to and from and within cities, will be best served by a combination of efficient rail systems and rapid bus systems. In place like Japan, Korea, and Singapore, even motorists are more likely to take public transportation because it is available.

Traffic and congestion, particularly in densely populated urban areas, cannot be addressed by expanding the road network or by electronic road pricing systems. Mass transit is the more efficient solution. However, the ongoing extension of light rail systems as well as the construction of the Metro Manila and Makati City subways will still take time.

But the rehabilitation, further expansion, and modernization of PNR is a low-hanging fruit. Heavy gauge rail at ground level is fairly easier to work on than those underground or overhead. Little to no digging required, and all stations are above ground as well, requiring only new platforms and waiting sheds plus a few other creature comforts.

To a large extent, expansion is a matter of adding train engines or locomotives and coaches. For now, these locomotives run mainly on diesel-electric. An advantage over light rail, which run on electricity, is not having to provide power through overhead lines. Unlike light rail, which cannot be expanded until power capacity adjustments are first made, PNR rail can run as many trains as their engines can pull and their tracks can carry.

Moreover, PNR trains can haul bulk and containerized cargo. This is crucial to a growing economy like ours. Freight rail can help take more cargo trucks off roads during peak hours. Fewer cargo trucks also lighten the “load” of roads, making their maintenance easier. Cargo trains can also run for 24 hours and do not encounter traffic or port congestion.

The US freight rail network, for instance, runs about 220,000 route kilometers. It is operated by seven Class I railroads and 22 regional and 584 local/short line railroads. Its operation is said to reduce road congestion, highway fatalities, fuel consumption, greenhouse gases, cost of logistics, and public infrastructure maintenance costs.

The US freight rail network is widely considered the largest, safest, and most cost-efficient freight system in the world. It works because the railroads are owned by private companies that are responsible for their own maintenance and improvement projects, with railroad owners said to be investing roughly 20% of revenues to maintain and add capacity to their system, spending nearly $25 billion annually.

In this line, it may not be enough for the Philippine government to simply fund the PNR’s modernization or get foreign investments. Perhaps, its operation should actually be divided into commuter and freight, with freight service perhaps going to the private sector to modernize and operate. Even if this means building two rail networks running side by side.

In Japan, even commuter trains were privatized in 1987 and broken into six regional rail companies and one freight company. This strategy proved effective as five of those companies — JR East, JR Central, JR West, JR Kyushu, and JR Freight — are said to be operating profitably to date. Train operators JR East, West, Central, and Kyushu are even publicly traded.

An option is for the Philippine government to retain ownership over station land, railroad tracks, and all related property. The private sector can take over the ownership and management and maintenance of engines and coaches and stations, and derive income from operations and rental of station spaces. The government derives income from long-term rental of station land and use of rail right of way, as well as a share in operating income.

There are many ways the government can consider in modernizing PNR and making it a more efficient and effective mass transit and freight rail system. What is crucial now is the political will and leadership to provide for the appropriate investment and regulatory environment for the private sector to help modernize the country’s railways.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

Quiet quitting is the fakest of fake workplace trends

AMANO PUNCH CLOCK

PERHAPS you’ve heard of “quiet quitting.” It’s telling that the phrase has taken off on social media — but this is the fakest of fake “workplace trends.”

Think of it as the third iteration of dubious pandemic work-related fads. After the original COVID-19 variant, we heard about the Great Resignation, but the data didn’t support it beyond a few sectors hit hard by lockdowns such as hospitality. Then came the Delta wave and the “lie flat” movement, another trend based largely on anecdata and a catchy phrase. In the aftermath of Omicron, we’ve got quiet quitting.

The reason for bosses to concern themselves with these trends isn’t that they’re describing real behavior, but that so many people find them appealing. They speak to employees’ fantasies, not their actual career plans.

As with all spurious trends, the definition is impossibly broad. Some describe quiet quitting as “doing the bare minimum,” while others say they’re “meeting all their obligations.” Some are “coasting,” while others are “leaving work at 5 p.m.” Some are just hoping for better work-life balance.

But these are pretty different from each other. Consider someone who routinely works from 9 to 5, but typically avoids putting in overtime. Is that person “doing the bare minimum” or are they just incredibly efficient? Should someone who is meeting all their obligations really be considered a slacker? Is it fair to call any of these a form of “quitting”?

Quiet quitting is also something we’re probably talking about more than we’re actually carrying out. A recent Axios poll of younger workers found that 15% were doing the minimum at work, despite large majorities admitting that it sounded “appealing.”

Even if it’s true that some segment of the workforce is mailing it in, this isn’t new. Workplace engagement has been pretty stable for years. Polling organization Gallup has been tracking it for over two decades, during which time the percentage of “actively disengaged” employees has held largely steady, at between 13% and 20% of employees. The percentage of engaged employees has also been stable for decades, at around 30% of employees.

While Gallup recently rebranded the middle — the people who are neither engaged nor disengaged — as “quiet quitters,” that seems like a leap. Lots of people neither love nor hate their jobs, and they’re not quitters.

Every company needs some people who are content to do their jobs reasonably well and who don’t badger management for bonuses or accolades, people who accept a slower career path as an acceptable price for a lower-stress life. Teams also benefit from long-tenured members who know how things work. If everyone is hustling to move up and out as fast as possible, who is the custodian of the team’s collective knowledge? Who transmits team culture?

Perhaps the TikTok-ers in Generation Z who coined “quiet quitting” have simply discovered what their elders eventually learned: that for a sizable number of people, work can be … work. A job is sometimes just a source of income, not deeper meaning. And to get fired, some people have to be actively bad at their jobs — not just quietly coasting. (Although as my colleague Kami Rieck points out, this is a privilege not everyone gets to enjoy.)

Few of us keep our foot on the gas 100% of the time. Those who do may find themselves at a higher risk of burnout or workaholism and its attendant health risks. There’s an assumption that the most engaged employees are the least burned out, but that’s not always true — sometimes, a high degree of engagement is what makes disconnecting from work so tough. A study at Yale found that one in five employees reported high levels of simultaneous engagement and exhaustion. Lots of engagement can push you into overdrive for too long.

It’s also normal for workloads and motivation to ebb and flow. Sometimes, the cause is random, but often it’s seasonal. A tax accountant is going to be busier in March than he is in July, for instance — we don’t accuse him of quiet quitting just because he has less to do. I used to feel anxious earlier in my career when I’d have a slow day. (What if someone found out and I got fired!) Now I’m wise enough to know that a fallow period never lasts long.

Instead of managers worrying about quiet quitting, I think they should take away one lesson: Don’t rely so heavily on employees going above and beyond their job description.

It’s common for companies to expect employees to take on work outside their normal jobs. But that assumption hurts people who haven’t gotten the unwritten memo. And it leads to the same people always getting saddled with thankless tasks like taking notes and scheduling meetings.

Seen from that perspective, quiet quitting is an understandable response to a workplace in which much is silently expected.

Then there are the disgruntled employees taking a much louder route. Cornell’s Labor Action Tracker found roughly 265 major work strikes in 2021. There have been 273 already in 2022. Among the major complaints we’ve seen recently from workers are 24-hour shifts (where workers are only paid for 13 hours); overwork caused by persistent staff shortages; and having to remain on-call for days or weeks at a time, and called to work at a moment’s notice. Those are legitimate grievances and failures of management.

Maybe bosses should worry a little less about quiet quitters and a little more about that.

Ideas such as lying flat and quiet quitting will keep taking off online, even if they’re not widespread trends in real life. Perhaps just talking about them is a necessary corrective to an era in which work has often taken on outsized importance — shaping our identities, providing a source of meaning, even reassuring us that we are, in fact, good and virtuous people. In previous eras, it was often religion or family that offered these things. But your family — unlike your job — probably loved you back.

BLOOMBERG OPINION

Suppressing dissent’s limited shelf life

MIKA BAUMEISTER-UNSPLASH

Images of dissent and violent crackdowns on such protests by repressive regimes have been shown on all online channels and cable TV platforms in the last several days.

In Iran, the Agence France Presse (AFP) reported that as of Saturday, Sept. 24 (Sunday, Sept. 25 in Manila), at least 41 people have died “according to official figures,” as protests flared over the death of a 22-year-old woman in custody of Iran’s morality police.

AFP states that Oslo-based Iran Human Rights (IHR), however, put the death toll at 54, excluding security personnel. The IHR claimed that in many cases, authorities had made the return of bodies to families contingent on them agreeing to secret burials.

Per the AFP report, the main reformist party inside Iran called for the repeal of the mandatory Islamic dress code that Mahsa Amini had been accused of breaching.

As further proof of the intensity of the repression and crackdown, the AFP says that Web monitor NetBlocks reported that Skype was now restricted in Iran to limit communication that has already targeted the last accessible international platforms there — Instagram, WhatsApp, and LinkedIn.

CNN’s latest report on Monday evening in Manila stated that confirmation of figures of deaths, injuries, casualties, and arrests are hard to come by as the government has shut down almost all communications platforms and disrupted the internet. Security forces are reportedly using live ammunition and firing directly at crowds, something difficult to confirm. Reports of deaths by shooting have reached as high as more than a thousand — with no independent confirmation available, however. In the meantime, despite the clampdown on the internet and the paucity of detailed information, demonstrators in other Iranian cities and in Paris, in solidarity with the Tehran protesters, have taken to the streets to voice their support for Iranian dissenters and have lately started to attack the regime of Sayyid Ebrahim Raisolsadati.

The expansion of the protest, marked initially by women defiantly cutting their hair and removing their head covers in public, has to be watched closely. It appears that most of the protesters are young people who long for the same freedom that their peers in other countries freely enjoy.

The strict dress code imposed on women is applied in all aspects of human activity in Iran. In sports where the general unspoken rule is “the lighter the clothing or athletic wardrobe, the better,” Iranian female volleyball players are all wrapped up from head to toe. The same dress code applies to teams from Indonesia, the Maldives, and Bahrain, among others. Turkey, which has one of women’s volleyball powerhouse teams, can be considered more liberal and relaxed in its sports dress code. In athletics/track and field, Iranian women are also covered from head to toe.

Athletics competitions are not mixed gender: women have their own competition days with no males allowed inside the venue, whether spectator or technical or officiating official.

In Moscow and other parts of Russia, there is, as described by Ben Hubbard of The New York Times, “a lot of panic (as) Russian men, fearing Ukraine draft, seek refuge abroad.” There is however a major change in that description in that it seems that minorities, mainly from Central Asia, are the first targets of the conscription. There are stories of young men inside colleges and universities being “grabbed by recruiters” and loaded into vehicles to be brought to registration centers.

Hubbard writes that since Vladimir Putin’s announcement on Sept. 21 (coincidentally, an unforgettable date among Filipinos), of a new troop call up, some Russian men who had once thought they were safe from the front lines have fled the country. And they have done so in a rush, lining up at the borders and paying rising prices to catch flights to countries that allow them to enter without visas, such as Armenia, Georgia, Montenegro, and Turkey. Ticket aggregators say that one-way tickets from Moscow to Istanbul that normally cost $350 are now priced at $2,500 and that was late last week as antiwar demonstrators appeared on Moscow streets and were promptly arrested by police. Reports indicate that around 1,500 protesters were picked up at that time, and now, Monday evening in Manila, up to 2,300 are now in police custody.

Although it was pointed out that Putin officially called up only reservists, saying that only men with military experience would receive orders to report for duty, many worried that the government would impose new travel restrictions on conscription-aged men and wanted to make a quick escape, just in case.

Those anxieties are justified. Putin has cultivated the image of a new Peter the Great, a giant at 6’9” compared to Putin whose height is estimated as 5’7”. In countless statements and monographs, Putin has been trying to reposition Russia to its old Russian empire status from the tsarist period. Such visions of grandeur, with Ukraine as a colony of Russia, is what Putin wishes to reprise. It is quite like the United Kingdom wanting to bring its old colony, the United States of America, back into its fold.

The New York Times stated that Turkey was already among the countries that received a large exodus of Russians at the beginning of the Ukraine invasion. Many were fleeing the crackdowns at home, including the criminalization of dissent, with speaking against the invasion or even calling it a war now carrying serious penalties. Others worried about the impact of international sanctions and Russia’s (ever) growing isolation on the economy and their jobs.

At this point, it is crystal clear that this rush for air tickets and the long lines of cars and other types of vehicles at Russia’s borders show that prospects of an expanded conscription beyond the so-called partial mobilization of 300,000 is very possible but will encounter even bloodier opposition and threaten the very foundations of Putin’s 22-year rule.

What happens then now to Russia’s grand plan to obliterate Ukraine which Putin has said is not a “real country”? Putin continues to bluff and threatens the use of nuclear weapons. It appears that the ex-KGB operative is being slowly boxed in and care must be taken to provide him with a way out, a face-saving route out of the mess he himself created.

Putin and the Kremlin have consistently boasted of the public backing they have for the invasion of Ukraine. Some government-initiated surveys have shown that 15% oppose the war, another 15% declare they support their country “right or wrong,” while 60% “don’t care.”

We suspect that prior to these continuing antiwar protests, Putin and his hawkish generals did not know (or perhaps didn’t even care to know), the extent and intensity of dissent. The main reason for this is that Putin’s security forces had so mastered suppressing dissent, they now have no real empirical evidence of how deep is this dissent.

Now Putin knows. His conscription agenda has brought all the dissent out into the open. Counteracting this exodus of dissent, so graphically displayed by air ticket purchases and lines at the borders, will be a big challenge — almost an impossible one. One wonders if Putin and his cronies will be able to muster public support during this Putin-created crisis.

 

Philip Ella Juico’s areas of interest include the protection and promotion of democracy, free markets, sustainable development, social responsibility and sports as a tool for social development. He obtained his doctoratein business at De La Salle University. Dr. Juico served as secretary of Agrarian Reform during the Corazon C. Aquino administration.

Table for one

ISMAIL HAMZAH-UNSPLASH

EVEN WITH THE DECLINE of the work-from-home protocol, it’s not always easy to meet up for lunch at a restaurant. The sudden cancellation two days before a confirmed appointment (I just tested positive) can throw off even a long-planned get-together.

Attempts to book another lunch mate at short notice can look a bit desperate. So, why not just go solo for the calendared lunch? Dinner or a karaoke outing is easier to cancel altogether, unless it is a big group or a special occasion.

Restaurants have introduced table settings for the unaccompanied diner, offering tables with single settings. It must have been the social distancing practiced over two years now that spaced out the table layout for good, complete with outdoor seating.

There is now a menu intended for “solo serving.” This single offering is a countertrend to the traditional group style of dining where the ordered menu (no allergies here?) is shared by all. Now, even Chinese restaurants offer dim sum and rice toppings for the solitary patron.

The soloist is anxious to show that choosing to dine alone is intentional. He communicates with body language that if he wanted to, he could easily have been with someone interesting and attractive. He projects a relaxed demeanor.

Eating alone allows the soloist to order without pressure his plant-based diet of salad and bottled water. He keeps busy reading his kindle app on his phone — the Spanish Civil War, in this case. He does not crave company, putting down his gadget only to summon the waiter for the dessert menu. He knows he will order fruit.

More noticeable is the solo diner looking out the window at passers-by, as if anxious to talk with anyone. Even if he seems to be having a video call with his wireless earplugs, who can he possibly be chatting with — please check if the terrapin has been fed? Is he just making up some fictitious conversation?

Here are possible mischaracterizations of the solo diner.

He’s been stood up. Somebody who was supposed to be with the diner somehow neither showed up nor bothered to send regrets. Note the frantic texting of the abandoned one sitting by himself at a table for four — is this lunch for next Thursday?

He is politically radioactive. Maybe he has been in the news lately getting trolled on social media and subjected to threats of legislative investigation. There could be scandals on sugar imports, face mask overpricing, and forbidden mergers. This solo diner may later opt to work from home and go for food delivery, just to avoid being seen in public.

He is an introvert. He prefers to have lunch by himself. He tries to eat at different places, making up food reviews in his mind — the only Italian taste in this restaurant is the décor.

Dining alone can really be a personal choice, even if done only occasionally. The solo diner is not averse to occasionally taking the stage at karaoke parties, without masks.

Mastication of food by itself does not attract curiosity. Just sitting down and putting food in the mouth and watching out for food splatter on the white shirt offers little interest to other tables caught up in corporate gossip and recent deaths.

Solo dining, however, can elicit an unexpected invitation from an acquaintance — you want to join me with a couple of strangers who wonder what you’re doing here by yourself?

Managing a solitary lunch requires confidence. Most will just order takeout at the office rather than step out of the cubicle farm to sit in a public place alone. It can be daunting to take soup and salad alone, without any props to pretend one is busy and doesn’t want any attention, except from the waiter.

Still, there are some benefits in occasional solitude even in this most social of settings. It is best to project that one is not in desperate need of company. Only a secure person can maintain equanimity at a table for one.

Asking for the bill and completing this ritual requires a complete indifference to what people will think. It helps if one steps out to the curb to be picked up by a new car with a driver. One just needs to check the mobile app to see if this is the right car.

 

Tony Samson is chairman and CEO of TOUCH xda

ar.samson@yahoo.com

Chinese snap up used Rolexes, Birkins to satisfy luxury cravings amid slowdown

REUTERS

SHANGHAI — China’s coronavirus-driven economic slowdown is proving to be a boon for Zhu Tainiqi, the Shanghai-based founder of second-hand luxury goods marketplace ZZER, who is now scouting for shop space to expand the business. 

The former venture capitalist is seeing a surge in people looking to sell their Hermes Birkin bags or Rolex watches to raise cash, as well as a jump in interest from belt-tightening shoppers. 

“More and more people are now aware they can sell luxury goods for some money and the buyer side is noticing that they can get a great deal,” said Mr. Zhu, 33. “They think, ‘Why not give it a shot?’” 

He said the number of ZZER’s consignors, or people putting up their goods for sale, has soared 40% so far in 2022 over the same period of last year. The platform now has 12 million members and expects to sell 5 million luxury pieces this year. 

The trend indicates a significant change in China’s $74 billion luxury goods sector, where the second-hand luxury sub-segment has been slow to take off versus other markets such as Japan and the United States due to a preference for newness and fears of unsuspectingly buying a fake. 

It could have ramifications for the China-focused strategies of the world’s big luxury goods makers, who are grappling with softening demand in the key market. 

“I think because of China’s interest … that can really move the needle for some brands to think about how they’re going to handle this (resale) market, and what role they are going to play in the whole process,” said Iris Chan, a partner and head of client development at consultancy Digital Luxury Group. 

China’s second-hand luxury market is tipped to grow to $30 billion in 2025 from $8 billion in 2020, consultancy iResearch said late last year. New estimates from this year are yet to be released.  

HANDBAGS, JEWELRY
Office worker Wang Jianing is exploring buying second-hand luxury products, given the economic climate. 

“My consumption will definitely be downgraded (this year), but I still like what I like, and I can’t control the desire to buy it,” she told Reuters, standing in front of a wall displaying Louis Vuitton and Gucci bags in ZZER’s cavernous downtown Shanghai warehouse. 

ZZER is banking on sentiments like Ms. Wang’s for growth. The company, which started as an online platform in 2016, began opening offline stores in Shanghai and Chengdu last year and is now looking for more shop space in Beijing, Guangzhou and Shenzhen. 

Besides ZZER, other top platforms are local names, such as Feiyu, Ponhu, and Plum. Each of them drew tens of millions of dollars in venture capital funds in 2020 and 2021 with an eye to improving authentication practices, widening customer reach and, in some cases, moving from online-only to online-offline models. 

China’s luxury resale marketplace is expected by analysts to remain dominated by local players for now. International companies such as Vestiaire Collective and The RealReal are yet to enter the mainland China market and confirmed to Reuters they have no immediate plans to do so. 

Though handbags remain the top-selling category on luxury platforms like ZZER, Mr. Zhu said sales of watches and jewelry are also growing fast. 

While a nylon Prada Messenger or Fendi Baguette bag sells for 30%–40% less on resale platforms than in luxury boutiques, some products have seen the price gap widen further as more consigners rush to sell goods online. 

Veteran vintage seller, Ou Huimin, who opened her Ding Dang store in Guangzhou a decade ago and also sells country-wide via livestreams, said speculators in the market have sent prices for top-tier luxury goods soaring. 

Ms. Ou said Rolex Submariner watch prices rose almost 250% between 2020 and 2021, but have pulled back as much as 60% this year. “Now consumption has become more rational,” she added. — Reuters

US fines 16 Wall Street firms $1.8B for talking deals, trades on personal apps

UNSPLASH

US regulators on Tuesday fined 16 financial firms, including Barclays, Bank of America, Citigroup, Credit Suisse, Goldman Sachs , Morgan Stanley and UBS, a combined $1.8 billion after staff discussed deals and trades on their personal devices and apps. 

The sweeping industry probe, first reported by Reuters last year and subsequently disclosed by multiple lenders, is a landmark case for the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), marking one their largest collective resolutions. 

From January 2018 through September 2021, the banks’ staff routinely communicated about business matters such as debt and equity deals with colleagues, clients and other third-party advisers using applications on their personal devices such as text messages and WhatsApp, the agencies said. 

The institutions did not preserve the majority of those personal chats, violating federal rules which require broker-dealers and other financial institutions to preserve business communications. That impeded the agencies’ ability to oversee financial markets, ensure compliance with key rules, and gather evidence in other, unrelated investigations, the agencies said. 

Spokespeople for UBS, Morgan Stanley, and Citi said the banks were pleased to have resolved the matter. Bank of America, Barclays, Goldman Sachs, Nomura and Credit Suisse declined to comment. 

“Today’s actions — both in terms of the firms involved and the size of the penalties ordered — underscore the importance of recordkeeping requirements: they’re sacrosanct. If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. 

The failings occurred across all 16 firms and involved employees at multiple levels, including senior and junior investment bankers and traders, the SEC said. 

In a major victory for the agencies, the institutions admitted the facts and acknowledged that they violated federal laws, although Bank of America and Nomura neither admitted nor denied aspects of the CFTC’s investigative findings, it said. 

The institutions, which cooperated with the investigation, have begun implementing improvements to their compliance policies and procedures, the SEC said. 

‘WE DELETE CONVOS’
Wall Street banks have for years struggled to stamp out the use of personal devices at work — often banning them altogether from trading floors — but the problem became acute as bankers and traders worked from home during the pandemic. 

According to CFTC Commissioner Christy Goldsmith Romero, staff used personal apps to evade oversight, sometimes at the direction of senior executives who knew they were violating bank policies but wanted to obfuscate trading communications. 

In one example cited by her office, Bank of America staff used WhatsApp, with one trader writing: “We use WhatsApp all the time but we delete convos regularly.” The head of a trading desk routinely directed traders to delete messages on personal devices and to use Signal, including during the CFTC’s probe. 

In another example, a Nomura trader deleted messages, which included incriminating statements about trading, after the CFTC sent a request to preserve documents, her office said. 

“Those choosing to participate in US financial markets are on notice: the era of evasive communications practices is over,” Ms. Goldsmith Romero said in a statement. — Reuters

National Developers Convention 2022 to address solutions for the housing industry in support of Marcos admin’s key economic agenda

DHSUD Secretary Acuzar and NEDA Chief Balisacan lead the roster of speakers

The Subdivision and Housing Developers Association, Inc. (SHDA), in partnership with the Department of Human Settlements and Urban Development (DHSUD), will bring together developers, policymakers, suppliers, and other housing industry stakeholders to discuss macro trends, current issues and solutions in the industry at the National Developers Convention 2022 on Oct. 5 to 6 to be held at the Grand Hyatt Manila, Bonifacio Global City, Taguig City.

With the theme “Change-proofing the Industry: Building Homes for Filipinos, Today and Tomorrow,” the National Developers Convention 2022 aims to tackle the new administration’s priorities for the housing industry as well as the importance of digitalization to resolve the emerging challenges brought by the pandemic and global economic crisis.

“We proudly organize the biggest event for the housing industry, which brings together housing developers, policymakers, and other housing stakeholders. The event will provide an avenue for them to meet and discuss future partnerships that can help us build more affordable housing for Filipinos through policy reforms and dialogues,” SHDA President May Rodriguez said.

President Ferdinand Marcos, Jr.’s administration has made the country’s rising housing backlog a priority, and is creating plans involving private developers and financial institutions in a more participative and inclusive approach for faster housing production.

Other top government officials who will grace the two-day event include Housing Secretary Jose Rizalino Acuzar and Socioeconomic Planning Secretary Arsenio M. Balisacan, who will deliver a keynote message and facilitate the Philippine macroeconomic briefing, respectively.

“The housing sector in the country needs aggressive efforts. Therefore, we have to involve every stakeholder that can take part in this advocacy of the new administration — that is to provide shelter to millions of Filipinos,” Secretary Acuzar stressed.

Senate Committee on Urban Planning, Housing and Resettlement Chairman Sen. Joseph Victor Ejercito and House Committee on Housing and Urban Development Chairman Rep. Jose Francisco B. Benitez will also attend to discuss the legislative initiatives on housing and urban development.

Change-proofing the housing industry

The convention is expected to gather around 300 housing sector stakeholders, who will hear from speaker experts on how they can respond together to the disruptive changes in the housing sector.

On the first day of the event, speakers will spotlight on the most talked-about topics, including urban planning and development initiatives, legislative initiatives on housing and urban development, sustainable financing for housing, and success stories of the private sector in housing and urban development programs.

Some notable speakers on the first day are Chairman and Co-Founder of 8990 Holding, Inc. Mariano Martinez, Pag-IBIG CEO Acmad Rizaldi Moti, President and CEO of BDO Unibank Nestor Tan, Chairman of I-Remit, Inc. Bansan Choa, President of Damosa Land Ricardo Lagdameo, President and CEO of Century Properties Group Jose Marco Antonio, and PRO-Friends Co-Founder Guillermo Choa.

The second day of the convention will highlight regional development and local government units’ processes, innovation for housing through technology, incentives and smart subdivisions, public utilities in housing development, and public housing and subsidies.

Bacolod City Mayor and Chairman of League of Cities of the Philippines Alfredo-Benitez, President and CEO of Meralco Ray Espinosa, Vice-President of PrimeWater Infrastructure Corp. Romeo Sabater, General Manager of National Housing Authority Joeben Tai, and President and CEO of PhilGuarantee Alberto Pascual are some of the speakers on the last day.

Last year’s National Developers Convention was held virtually from Oct. 28 to Nov. 5 and recorded 7,000 participants. With the theme “Beyond the Pandemic: The Future of Housing — Redesigning the Housing Industry through Innovation and Green Initiatives,” the 7-day event yielded the concept of the Smart Subdivision, which is now a new category in the Board of Investment’s Special Investment Priorities Plan.

 

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IMF criticizes UK policy, Bank of England to make big response

CHRISTOPHER BILL/UNSPLASH

LONDON — The International Monetary Fund (IMF) openly criticized Britain’s new economic strategy on Tuesday, following another slide in bond markets that forced the Bank of England (BoE) to promise a “significant” response to stabilize the economy.

Pressure piled on new finance minister Kwasi Kwarteng to reassess his policy, which unleashed turmoil in financial markets, as leading economists, investors and executives said that rock-bottom investor confidence would recover only if the plan was scrapped.

New British Prime Minister Liz Truss of the Conservative Party came into office on Sept. 6 saying she wanted to snap the economy out of years of stagnant growth with deep tax cuts and deregulation.

Mr. Kwarteng’s plan, designed to support households and businesses with energy bills while doubling the long-run rate of economic growth. It requires an additional 72 billion pounds ($77.17 billion) in government debt issuance in this fiscal year alone, shocking investors, sending the costs of such borrowing even higher.

The IMF said the proposals, which sent the pound to touch an all-time low of $1.0327 on Monday, would likely increase inequality and it questioned the wisdom of such policies.

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” an IMF spokesperson said.

“We are closely monitoring recent economic developments in the UK and are engaged with the authorities,” the spokesperson said.

The IMF holds symbolic importance in British politics: its bailout of Britain in 1976 following a balance-of-payments crisis had long been regarded as a low point of modern British economic history.

BUDGET

The Fund said a budget due from Mr. Kwarteng on Nov. 23 would provide an “early opportunity for the UK government to consider ways to provide support that is more targeted and reevaluate the tax measures, especially those that benefit high-income earners.”

Earlier in the day, BoE Chief Economist Huw Pill said the central bank was likely to deliver a “significant” rate increase when it meets next in November, adding that financial market upheaval would have a big impact on the economy and would be factored into its next forecasts.

British government bonds have sold off at a ferocious pace since the fiscal plans sparked a crisis of confidence in Ms. Truss’s handling of the economy.

“It is hard not to draw the conclusion that this will require a significant monetary policy response,” Mr. Pill told the CEPR Barclays Monetary Policy Forum.

With analysts still speculating about Britain’s future financial direction, and markets volatile, a growing number of mortgage providers, unable to price loans, suspended sales.

REVERSE COURSE?

US economist Larry Summers, a former US Treasury Secretary, said rocketing interest rates on long-dated British debt were a sign that credibility had been lost.

Shai Weiss, head of airline Virgin Atlantic, urged the government to stabilize economic affairs and accept that a move to fund huge tax cuts with vast government borrowing had left Britain in a weaker position.

“All of us in this room should be humble enough to say that if I said something that is not working, maybe I should reverse course, that is not a bad thing to do,” he said at a press conference to announce an alliance with SkyTeam.

Two years before a general election is due, the opposition Labour Party has a 17-point lead over the Conservatives, a level not seen in more than two decades, according to a YouGov opinion poll for The Times newspaper.

The Bank of England and Treasury had released statements on Monday afternoon in the hope of reassuring investors, with the central bank saying it would not hesitate to raise interest rates if needed.

That immediately knocked the pound further, however, as some investors had bet on an emergency rate hike. It recovered slightly on Tuesday and was up 0.4% on the day at $1.0726 at around 2006 GMT.

Mr. Kwarteng met leading bankers, insurers and asset managers on Tuesday and said he was “confident” that his economic strategy would work when combined with supply side reforms.

But many remain unconvinced.

“(There) is still no clear sign that the source of the problem — the government’s fiscal strategy — is being reversed or reconsidered,” J.P. Morgan economist Allan Monks said.

“This will need to happen before November in order to avoid a much worse outcome for the economy.” ($1 = 0.9330 pounds) — Reuters

Angkas: PHL poised to leap forward in tech and startup space in 2022

From L to R: Angkas Chief Marketing Officer Brian Go, IMMAP DigiCon Co-Chair Denise Haak, IMMAP DigiCon Ways & Means Head Janelle Barretto, and IMMAP DigiCon Co-Chair Trish Elamparo-Esteban

IMMAP DigiCon’s co-presenter, Angkas, draws the road map for the tech-enabled industries and players in the coming years

Despite the global pandemic, the Philippines is poised to be one of five ASEAN countries to become tech powerhouses in the next fifteen years, according to the Center for Economics Business Research (CEBR).

Angkas CEO George Royeca

Angkas CEO George Royeca believes the country is ready for a big leap forward in the tech and startup sectors. These industries and their continuous growth in recent years will be the primary focus of this year’s IMMAP DigiCon Valley 2022, which will be co-presented by Angkas, the leading motorcycle taxi and delivery platform.

“While the pandemic has been the worst global crisis of the millennium, it undeniably opened new avenues for rapid growth in the country, particularly in the tech sector. Overnight, e-commerce, online payments, e-wallets, telemedicine, online gig employment, digital banks as well as delivery and logistics services experienced exponential growth which then had to be supported by faster internet speeds,” points out Mr. Royeca.

“The pandemic and the restricted mobility it necessitated primed the market in terms of tech literacy and a willingness to adopt tech-based solutions. There are products and services the market is ready for now that would not have been viable pre-pandemic, and that might have otherwise taken another 5-10 years for the country to be ready for,” adds Mr. Royeca. “We have had, and continue to have an ideal and unprecedented climate for both developing and funding tech startups. The kind of businesses that offer innovative products and services we couldn’t have even imagined pre-pandemic,” he concludes.

The road less trafficked

Angkas was itself an innovation, far more unconventional than it seems on the surface. Motorcycle taxis were already in wide use for public transport all over the region at the time of Angkas’ inception in 2015. Despite the crippling traffic in Metro Manila and its staggering economic cost, motorcycle taxis were not a solution being considered by anyone at the time, because motorcycles had an appalling safety record.

The Metro Manila Accident Recording and Analysis System (MMARAS) Traffic Accident report for 2015 indicated that motorcycle accidents comprised 39.6% of all vehicular accidents and 33.6% of all fatal accidents in Metro Manila. In each case they were by far the single largest contributors. Filipino motorcycle riders were regarded as too undisciplined for such a service to be reasonably safe.

Angkas’ innovation was in actually believing that with training, motivation and support, Filipinos could be the backbone of a safe and professionalized app-enabled motorcycle taxi service. “We shoulder the training of all rider applicants, then we carefully select only the top 30%. We also hold regular company events that serve as refreshers, and venues for more training in soft skills, and even things like anti-sexual harassment education,” explains Mr. Royeca. “The result is that after literally millions of rides booked, our safety record is 99.997%,” he concludes.

Sense of purpose, grit resilience

“I think the number one thing that potential startups should begin with is seeing the bigger picture: are you solving a real problem?” asks Mr. Royeca. “Any business venture is always going to have a money-making aspect, but in this day and age, it is businesses that have an innate sense of purpose and that offer real solutions to real problems that are embraced by the public,” Mr. Royeca points out.

Mr. Royeca had specific advice to would-be startups on failure: “Don’t be afraid of failure or adversity, these build grit. As long as you are imbued with a sense of purpose, you will overcome failure and adversity and come out stronger, and with more grit.”

In Angkas short history, they were ordered to cease operations twice, their rider pool was capped, and just when they seemed in the clear, the pandemic hit. Showing true resilience, it was then that Angkas launched a courier and buying assistant service, allowing more people to do errands and business safely from home. Angkas also formed a partnership with the Red Cross to assist with the delivery, and administration of COVID-19 test kits. When it became reasonably safe to do so, Angkas also offered free rides to medical frontliners.

Co-creation Breeds Innovation

Community building begins when everyone contributes for the welfare of everyone, and that is exactly what resonated with Angkas to sign up and be a co-presenter for this year’s IMMAP DigiCon Valley 2022, one of the most anticipated digital conferences in the industry which gathers professionals from marketing, advertising, and digital sectors to hear and learn from world-renowned and celebrated local keynote speakers.

Internet and Mobile Marketing Association of the Philippines (IMMAP) is an organization that works toward educating and providing the necessary digital tools for advertising and integrated marketing professionals to make better communication decisions. One such effort is the yearly DigiCon.

Mr. Royeca explains, “When you have a business that serves many, it is impossible to innovate without co-creation. Angkas would not have been possible without the coming together of technology innovations, government regulators, customers, and of course our rider partners, to create a “winnovation,” an innovation in which everyone has a stake, and in which everybody wins.”

After two years of purely virtual connections, this year’s IMMAP DigiCon Valley 2022 will finally bring back face-to-face networking through the DigiCon After-Hours, which will be held during the evenings across the city, promising to provide cocktails and entertainment, and allow delegates to physically reconnect with other industry players.

“I think what Angkas is excited about is this live interaction; a lot of the best collaborations and partnerships happen because of these more spontaneous, in-person things, and human interaction is what makes all the creativity and innovation grow more,” muses Mr. Royeca.

As co-presentor for this year’s IMMAP DigiCon Valley 2022, Angkas hopes that this can be a great model to induce new SMEs in the tech and startup sector, while also introducing a community mindset that can hopefully solve daily problems for Filipinos.

DigiCon Valley 2022 is happening on Oct. 10-14 from 9 a.m. to 1 p.m. PST using ViVYD platform, with all new tracks that tackle the different stages of innovation: Launchpad, Hypergrowth, Breakthrough, and Enterprise.

This year’s prestigious keynote speakers include one of the most influential women in the world and Huffington Post founder, Arianna Huffington; Rappler Founder and the first Filipino Nobel Peace Prize laureate, Maria Ressa; internationally acclaimed marketing expert and academic, Mark Ritson; co-founder of Character ventures and Design Sprint inventor, Jake Knapp; and Global CMO of Dole Sunshine Company, Rupen Desai.

Buy tickets now and learn more about IMMAP DigiCon Valley 2022 at www.digicon.com.ph and follow their social pages on Facebook, Twitter, and Instagram.

IMMAP DigiCon Valley 2022 is co-presented by Angkas, and would like to thank Platinum Sponsors: Manulife Philippines, Share Treats, and TikTok; Gold Sponsors: Investing in Women, an initiative of the Australian Government, Grab Ads, Kroma Entertainment, McDonald’s Philippines and Meta Philippines; and Silver Sponsors: Digital Turbine, Hepmil Philippines, and Metrobank.

A special thanks to IMMAP’s event partners: Creators and Influencers of the Philippines (CICP), Endeavor, and Kickstart Ventures.

This event is also brought to you by our media partners: Manila Broadcasting Company (MBC), Rappler, ABS-CBN, CNN Philippines, Manila Bulletin, One Mega Group, Inc., Podcast Network Asia, theAsianparent, BusinessWorld, Inquirer.Net, Kroma Entertainment, and The Philippine STAR.

Be an IMMAP Member today! To know more about IMMAP, please visit: www.immap.com.ph or contact us at connect@immap.com.ph, SMS/Viber: 0917-631-0206 / 0918-577-2357.

 

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Europe investigates ‘attacks’ on Russian gas pipelines to Europe

Image via Danish Defence/forsvaret.dk

STOCKHOLM/COPENHAGEN — Europe was investigating on Tuesday what Germany, Denmark, and Sweden said were attacks which had caused major leaks into the Baltic Sea from two Russian gas pipelines at the center of an energy standoff.

But it remained far from clear who might be behind the leaks that were first reported on Monday or any foul play, if proven, on the Nord Stream pipelines that Russia and European partners spent billions of dollars building.

German Economy Minister Robert Habeck told business leaders the leaks were due to targeted attacks on the infrastructure and Berlin now knew for sure “that they were not caused by natural occurrences or events or material fatigue.”

Sweden’s and Denmark’s prime ministers said the leaks were clearly caused by deliberate actions, with information suggesting likely sabotage, while Poland’s premier blamed sabotage, without citing evidence.

Russia, which slashed gas deliveries to Europe after the West imposed sanctions over Moscow’s invasion of Ukraine, also said sabotage was a possibility and that the leaks undermined the continent’s energy security.

A senior Ukrainian official called the incident a Russian attack to destabilize Europe, without giving proof.

“We see clearly that it’s an act of sabotage, related to the next step of escalation of the situation in Ukraine,” Polish Prime Minister Mateusz Morawiecki said at the opening of a new pipeline between Norway and Poland.

Sweden’s Prime Minister Magdalena Andersson told a news conference that two blasts had been detected in relation to the leaks and though this did not represent an attack on Sweden, her government was in close contact with partners such as NATO (North Atlantic Treaty Organization) and neighbors such as Denmark and Germany concerning the developments.

Seismologists in Denmark and Sweden said they had registered two powerful blasts on Monday in the vicinity of the leaks.

“The signals do not resemble signals from earthquakes. They do resemble the signals typically recorded from blasts,” the Geological Survey of Denmark and Greenland (GEUS) said.

And seismologists at Sweden’s Uppsala University, which cooperates with GEUS, said the second, bigger explosion “corresponded to more than 100 kilos (kg) of dynamite,” adding the blasts were in the water not under the seabed.

The Nord Stream pipelines have been flashpoints in an escalating energy war between capitals in Europe and Moscow that has damaged major Western economies, sent gas prices soaring and sparked a hunt for alternative supplies.

“Germany is a country that knows how to defend itself. And Europe is a continent that can protect its energy infrastructure,” Germany’s Mr. Habeck said, adding the energy supply of Europe’s largest economy was not affected.

Denmark’s armed forces said the largest gas leak had caused a surface disturbance of well over 1 km (0.6 mile) in diameter.

‘RISK OF EXPLOSIONS’

The leaks were very large and it could take perhaps a week for gas to stop draining out of the Nord Stream 2 pipeline, the head of Denmark’s Energy Agency Kristoffer Bottzauw said.

Ships could lose buoyancy if they entered the area.

“The sea surface is full of methane, which means there is an increased risk of explosions in the area,” Mr. Bottzauw said.

The Swedish Maritime Administration (SMA) said two leaks on Nord Stream 1, one in the Swedish economic zone and another in the Danish zone, were northeast of Denmark’s Bornholm.

“We are keeping extra watch to make sure no ship comes too close to the site,” an SMA spokesperson said.

Kremlin spokesperson Dmitry Peskov called it “very concerning news. Indeed, we are talking about some damage of an unclear nature to the pipeline in Denmark’s economic zone.” He said it affected the continent’s energy security.

Neither pipeline was pumping gas to Europe at the time the leaks were found, but the incidents will scupper any remaining expectations that Europe could receive fuel via Nord Stream 1 before winter.

Operator Nord Stream said the damage was “unprecedented.”

Gazprom, the Kremlin-controlled company with a monopoly on Russian gas exports by pipeline, declined comment.

“There are some indications that it is deliberate damage,” said a European security source, adding it was still too early to draw conclusions. “You have to ask: Who would profit?”

Norway, meanwhile, said it will strengthen security at its oil and gas installations in the wake of leaks and reports of drone activities in the North Sea, Energy Minister Terje Aasland said in a statement.

Authorities in Denmark asked that the level of preparedness in its power and gas sector be raised, a step that would require heightened safety for power installations and facilities.

CUTTING SUPPLIES

Russia reduced gas supplies to Europe via Nord Stream 1 before suspending flows altogether in August, blaming Western sanctions for causing technical difficulties. European politicians say that was a pretext to stop supplying gas.

The new Nord Stream 2 pipeline had yet to enter commercial operations. The plan to use it to supply gas was scrapped by Germany days before Russia sent troops into Ukraine, in what Moscow calls a “special military operation,” in February.

“The multiple undersea leaks mean neither pipeline will likely deliver any gas to the EU over the coming winter, irrespective of political developments in the Ukraine war,” Eurasia Group wrote in a note.

European gas prices rose on the news, with the benchmark October Dutch price climbing almost 10% on Tuesday. Prices are still below this year’s peaks but remain more than 200% higher than in early September 2021. — Reuters

US seeks allies as split emerges over global plastics pollution treaty

PHILIPPINE STAR/ MICHAEL VARCAS

WASHINGTON D.C. — The United States is seeking to form a coalition of countries to drive negotiations on a global plastic pollution treaty, weeks after a similar group involving several other Group of Seven (G7) nations was launched, according to a document seen by Reuters.

The move underlines its desire to keep the treaty’s focus on the efforts of individual countries in a model similar to the 2015 Paris climate accord, rather than provide new universal rules favoured by other major nations, according to six government and civil society sources involved in the talks.

United Nations members agreed in February to create the world’s first treaty to tackle the scourge of plastic waste which extends from ocean trenches to mountain tops, with the aim of finalising it by the end of 2024.

In August, 20 countries, including Britain, Canada, France, Germany, and several developing nations at the sharp end of the environmental crisis, formed a “High Ambition Coalition To End Plastic Pollution” advocating for the treaty to include global standards, bans and restrictions on plastic.

Now, the United States is seeking to form its own group with a different approach, and has invited several countries to join including Australia and Japan, the sources said.

A concept note for its coalition seen by Reuters says “the development of national action plans” should be “the primary mechanism” for countries to contribute to the treaty, an approach environmentalists say will not be robust enough to curb the runaway problem.

The US-led coalition aims to launch at or before the first round of treaty negotiations scheduled to take place in Uruguay from Nov. 28 to Dec. 2, the draft document says.

The State Department did not directly answer questions about the proposed coalition.

In an emailed statement, Monica Medina, the US official leading its treaty negotiations, said the country was committed to ending plastic pollution by 2040.

“The best way is through a Paris-like agreement that helps countries take ambitious action and holds them accountable, lets them be innovative on finding solutions, and leads to action now and not later,” she said.

The United States was a key architect of the country-driven approach of the Paris agreement, a landmark international deal to limit global warming to at least 2 degrees Celsius. But that deal has faced criticism for having no enforcement mechanism as countries have missed deadlines to ratchet up their climate actions.

Japan’s vice minister for global environmental affairs, Hiroshi Ono, said he knew of a proposed coalition on plastic involving the United States but declined further comment. Australia’s environment department said in a statement it was aware of different coalitions forming, without elaborating.

‘LIGHT TOUCH’

Environmentalists say measures taken by individual countries must be complemented by more top-down measures like coordinated curbs on virgin plastic production and universal design standards to increase the recyclability of plastics.

Plastic production is forecast to double over the next 20 years while the amount of plastic flowing into the ocean will triple. That will cause widespread environmental damage, destroying sensitive ecosystems and putting some species at risk of extinction, according to a World Wildlife Fund study.

“We don’t need a treaty for countries to decide themselves what their national actions should be. We need a treaty that can actually add on top of that,” said Eirik Lindebjerg, global plastics policy manager at WWF, calling such an approach a “light touch.”

However, Mr. Ono, the Japanese environment official, said that the treaty cannot take a “one-size-fits-all approach” as countries have different “national circumstances” and “priorities” towards upstream measures, like plastic production, or downstream measures, like waste collection.

Calls for tougher global measures such as those focused on plastic production have also met resistance from the powerful oil and petrochemical firms that make plastic. Industry groups have been lobbying governments, including the US, to reject any deal that would limit plastic manufacturing, Reuters reported in February.

John Hocevar, a campaign manager for Greenpeace, and two other sources who requested anonymity told Reuters that US officials had privately said they are wary of agreeing to any global rules that would likely be rejected by its divided Congress.

That is why the United States is keen to pursue a Paris-like deal, the sources said, which did not have to be ratified by Congress because it largely relies on voluntary commitments based on national laws.

“If we are working from the position of we are only going to negotiate what we can get done at home, we’ve lost before we’ve even started,” said Jane Patton, a US-based campaign manager for plastics and petrochemicals at the Centre for International Environmental Law. — Reuters

WB upgrades PHL growth outlook

Buildings are seen along EDSA in Quezon City, July 3, 2022. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

By Diego Gabriel C. Robles 

THE WORLD BANK (WB) upgraded its growth forecast for the Philippines for this year and 2023, citing an “accommodative” fiscal policy conducive to recovering domestic demand despite a hawkish central bank and a pessimistic global economic outlook.

In its East Asia and the Pacific Economic Update report for October released on Tuesday, the Washington-based lender raised the Philippines’ gross domestic product (GDP) outlook to 6.5%, from the 5.7% given in April. This is at the lower end of the government’s 6.5-7.5% goal this year.

The World Bank projects the economy to grow by 5.8% in 2023, from 5.6% previously, but still below the government’s 6.5-8% assumption for next year.

World Bank GDP growth forecasts for select East Asia and Pacific economies

Still, the Philippines’ growth projections for 2022 and 2023 were higher than the average for the ASEAN-5 (Association of Southeast Asian Nations-5) at 5.4% and 5.1% respectively. It was also above the East Asia and Pacific average of 3.2% and 4.6% for this year and next year.

The growth projections for the Philippines are second highest in the region, only lagging behind Vietnam’s 7.2% for 2022 and 6.7% in 2023.

Aaditya Mattoo, chief economist for the East Asia Pacific Region of the World Bank, attributed the Philippines’ growth outlook upgrade to the rebound of private consumption as the economy reopened after the coronavirus disease 2019 (COVID-19) pandemic-related lockdowns.

“It is also evident to us that the Philippines is one of the countries which saw reasonably good export performance. But even more than that, [it’s] the revival of both public and private investment, and some of that boost might have come related to the electoral activities in the region,” Mr. Mattoo said during a webinar on Tuesday, also citing the revival of its tourism sector.

“While some aspects of Philippine monetary policy may have been tight, its fiscal policy seems to us at least to be a little bit more accommodative,” he added.

The Bangko Sentral ng Pilipinas (BSP) has hiked its rates by 225 basis points since May.

Also, the World Bank report noted that output in Cambodia, the Philippines, and Thailand is already expected to surpass pre-pandemic levels this year.

However, it noted that while sectors like information and communication technology, finance, and agriculture have been resilient, the output of transportation, accommodation and catering sectors remains well below pre-pandemic levels in the Philippines, Malaysia and Thailand.

“In the Philippines’ case, there is also an interesting contrast,” Mr. Mattoo said. “That when it comes to agricultural policies, the Philippines has implemented significant liberalization and relied more on transfers in general than price subsidies. [But] when it comes to energy and fuel, [it is] less so.”

For next year, growth is expected to moderate as pent-up demand is expected to eventually fade amid continued elevated inflation, while public spending is anticipated to slow down in view of the limited fiscal space.

SLOWDOWN
The slowdown in global economic activity was also flagged as a downside risk to growth in the Philippines and the rest of the East Asia Pacific region.

“A slowing growth of one percentage point in the rest of the world and China could mean growth in the region slowing down by more than one percentage point,” Mr. Mattoo said.

The World Bank lowered its growth outlook for the East Asia and Pacific region, which includes China, to 3.2%, down from its 5% forecast in April. Last year, the region expanded by 7.2%.

The Chinese economy is already expected to slow to 2.8%, down from its previous forecast of 5% because of the Zero-COVID policy. China expanded by 8.1% in 2021.

“Even though tourism is reviving, supporting growth in countries like Thailand, the Philippines and many Pacific Islands, the global economic slowdown is dampening demand for the region’s exports,” the World Bank said.

The World Bank also noted that inflation in the Philippines, which has averaged 4.9% in the eight months to August, is still above the central bank’s target of 2-4%.

“Food prices have increased considerably in Indonesia, Malaysia, the Philippines and Thailand during the last few months and appear to be the major contributor of higher inflation,” it said, while also noting the rise in energy prices in the Philippines, as well as in Thailand and Vietnam.

Mr. Mattoo said that the resulting increase in interest rates from various central banks, particularly the US Federal Reserve, resulted in capital outflows and has depreciated currencies in the region.

In the year to date ending Sept. 27, the peso has weakened by 15.66% or P7.99 from its P51-a-dollar close last year.

“The combination of higher interest rates and depreciating currencies means that the burden of debt is increasing,” he said.

The Philippines’ debt-to-gross domestic product (GDP) ratio stood at 62.1% as of end-June, above the 60% threshold prescribed by multilateral lenders.

“On average, primary deficits have contributed to increasing public debt-to-GDP ratio by 1.1 percentage points. The historical patterns observed in most East Asia Pacific countries suggest that relying on fiscal consolidation as a policy option to deal with high debt to GDP would be challenging,” the World Bank said, noting how previous fiscal consolidations contributed to lower debt-to-GDP ratios in the Philippines, among other countries.

According to the World Bank, the Philippines’ fiscal balance posted a deficit of 6.5% as a ratio of GDP in the first half, which is lower compared with 7.8% in the same period last year. This was due to higher tax collections and a windfall from oil excise taxes.

Before the pandemic, the negative primary deficit in the Philippines helped reduce the debt-to-GDP by 1.9 percentage points, the World Bank added.

While dollar-denominated debt is just 10% of all debt in the Philippines, most of it is shouldered by the private sector, which is another risk in itself.

“Firms in Indonesia, the Philippines, and Vietnam have a greater share of maturing debt in the form of syndicated loans than in bonds, and at least 60% of the debt coming due is denominated in foreign currency, making the firms particularly vulnerable to exchange rate depreciations,” the World Bank said.

Still, Mr. Mattoo said that foreign direct investments can still be a source of growth for the region, as it has been before.

“The kind of reforms we have seen in Indonesia and are seeing in the Philippines are definitely going to see a lot of investment creation,” he said.

“There are new areas, like the utilities and the various infrastructure services, in the Philippines and in Indonesia; especially the green transition throughout the region. I think those are going to draw in a lot of new investment.”

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