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Rule of law, authoritarianism, and civil society

DAN KIRK FORMENTERA-UNSPLASH

The Asia Liberty Forum interview with Professor Raul Fabella

(Part 2)

(This is the second part of the interview with Prof. Raul Fabella conducted by Romeo Bernardo that was the culminating activity of the “Asia Liberty Forum” in Manila on Sept. 29-30, presented by The Atlas Network (https://www.atlasnetwork.org/) and the Foundation for Economic Freedom or FEF (https://www.fef.org.ph/). Through panel discussions, break-out sessions, the Asia Liberty Awards Dinner, and other events, attendees heard from leaders from across the continent about the challenges and opportunities ahead for liberal democracy. The second part of the interview follows below.)

Romeo Bernardo (RB): Rule of law is almost always cited as a lynchpin of economic freedom. For example, the index of the Heritage Foundation lists it as No. 1, followed by government size, regulatory efficiency and market openness.

The UN Charter and the Universal Declaration of Human Rights, defines such to include right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education, and many more, without discrimination.

Your thoughts please on such a broad definition of human rights vs. the narrower one espoused in writings of some authors — and practiced in some authoritarian regimes, especially ones which have been quite successful in bringing millions of their people out of poverty, trading off limitations on political liberties — e.g. China, Vietnam. Arguably even Singapore.

RF: Rule of Law and inclusion/inequality: Acemoglu and Robinson’s monumental opus (Why Nations Fail) argues that economic liberalization in the form of thin definition of rule of law (protection of property rights and enforcement of contracts) is the lynchpin of long-term sustained growth. Thus, economic liberalization is conducive to improved inclusion (as poverty reduction shown in the People’s Republic of China [PRC]) as growth reduces poverty (Burnside and Dollar, 2000). However, the reduction in poverty incidence does not preclude the violation of the thick definition of rule of law as including respect for basic human rights (the treatment of Uighurs in PRC comes to mind).

Barro and Salai-Martin (2004, Economic Growth) were the first to point out that whereas economic liberalization significantly associates with economic growth, political liberalization has at best a little and negative association. This suggested a tradeoff and a spirited backlash. In the new world of the 21st century, well-being has many more dimensions than monetary income: environmental sustainability, shared well-being and resilience, etc., all of which can be attenuated on the way to higher per capita.

The tension spikes when the tradeoff is couched in terms of basic human rights: Did the so-called social contract to attenuate political space in exchange for economic space pay off? Depends upon the criteria of validity. If economic space means economic convergence with the high-income economies and lower poverty incidence, East Asia and PRC are evidence of its payoff.

Was it worth the lives lost or crippled? Was the Tiananmen Square Massacre in China a fair price to pay for 600 million graduating out of poverty? This is a question of the Sphinx!

There is, however, a strong evidence-based consensus that the race to the top of the per capita income ladder has scarred the environment, sometimes irretrievably; that climate change has a human agency footprint. Incidentally, the scars are worse for the previous socialist bloc than for market economies. Social unrest can follow norm violations in these other dimensions despite or because of rising income which also changes public values and perception. Finally, the carbon footprint of energy-impoverished Filipinos is so small you would need a microscope to see it.

RB: In recent years, there seems to be a drift away from liberal regimes that espouse market-based solutions (economic freedoms) towards authoritarian regimes from both the right and the left, everywhere globally. To what extent is this being driven by income inequalities and the failure of governments to address poverty and create jobs with globalization and tech change? Notable examples in developing countries are: to the right Brazil, and to the left, Colombia, Chile, Bolivia. (In the west, the USA is poster boy No. 1, and from the news earlier this week — Italy seems to have turned neo-Fascist!). Is Philippines at any risk at risk of being next? What conditions promote these?

RF: There is a great deal of debate and interest on how Francis Fukuyama (End of History) — that liberal democracy is the future of humanity — got it wrong. Is income inequality the culprit: possibly, but more salient in the literature is the loss of accustomed and expected entitlements (falling wages, potential loss of jobs from new entrants, threats to accustomed cultural matrix and social contracts from growing diversity, etc.), which can happen with or without growth in inequality. James Scott (Moral Economy of the Peasants, 1976) noted that peasants in East Asia tended to resort to violence when their accustomed standards (food intake, say) are attenuated, especially after adverse climate and harvests and the shares of the landowners do not adjust to accommodate as dictated by the moral economy. So, both inequality cum rigidity and broken expectations are indicted.

RB: I like much of what you have written in the past on the role of civil society and organizations like FEF. What can we in FEF (and similar like-minded institutions) do to help improve social welfare and preserve economic freedoms? How do we help ensure that we don’t suffer the reversals and drift to illiberal regimes, both left and right, as had happened in other developing countries?

RF: On the role of Civil Society and incremental market liberalization reforms: Most reform battles in the Philippines involve market liberalization. The reflex response of Philippine political actors to economic difficulties is to find scapegoats among market actors such as the profiteers, oligarchs, foreign investors and speculators. The normal state response is to ban or restrain market exchanges and let government take over: thus the old NFA (National Food Authority, a state monopoly in imports of rice), the OPSF (the Oil Price Stabilization Fund, a state monopoly in imports of petroleum), ban on land ownership over five hectares (CARP, the Comprehensive Agrarian Reform Program), ban on mining and forestry activities; the Agri-Agra law (restraint on bank allocation), blam[ing] oligarchs for nature-triggered water shortages, etc. The Philippine economic saga from the 1990s is one of slow and spasmodic extrication from the straitjacket the state has imposed on the market.

On FEF engagements: Economic liberalization is where civil society has had the most impact. FEF has been leading the charge to economic liberalization: rice import liberalization, PSA (amended Public Service Act) law allowing foreign participation in more economic activities, free patent law allowing faster grant of titles to patent holders and now allowing consolidation by lifting the five-hectare ownership ceiling and facilitating farm consolidation in the food production sectors. As in Deng’s China, market liberalization is very inclusive in the sense of poverty reduction although it may raise income inequality. The advantage of FEF over other business clubs (MAP or Management Association of the Philippines, MBC or the Makati Business Club, etc.) is that its membership/fellows is not limited to representatives of businesses and firms but also include academics, independent researchers, and public intellectuals.

Note: (i) the relationship between tech revolution/social media and polarization/inclusion is murky and already heavily covered and discussed in many other local and global fora; added insight may be hard to offer; and, (ii) the response to social cost of illiberal politics and economy is imbedded in the discussion above.

RB: Economic freedom metrics typically include size of government. As a former Finance undersecretary, I have often wondered whether this is appropriate for a developing country like the Philippines with low tax to GDP ratios and under invests in public goods, especially education and health? In our case we have slipped to the bottom in global rankings on literacy and numeracy, and, not coincidentally, among those who spend least for basic public education. What do you think?

RF: Barro and Salai-Martin also used size of government as regressor for growth and found that the sign of association is negative. Their interpretation was that it was a proxy for corruption: the more government the more corruption. This interpretation jibes with the weak institution narrative: weak governance tends to throw money and government administration at perceived problems leading to higher government budgets, waste, and corruption. And the allocation of these state resources is skewed towards the squeakiest wheels, fast burn explosions that threaten Armageddon now.

Unfortunately, neglect of education and human capital infrastructure is a slow burn issue and gets the least attention. And when allocation is increased for education, it supports the same tired formula: more classrooms, more teachers, and more textbooks which result in the same more illiteracy. V. Fabella (2017, “Political-Economic Determinants of Education Reform: Evidence and Interest Group and Student Outcome,” European Journal of Political Economy) has shown that in the battle for reforms in education, access reforms (more classrooms and textbooks) normally trump quality reforms (better trained and motivated teachers) due especially to the opposition of the teachers’ union. In our case, a mortal sin: we can never access exam results of national high school exams to compare quality of high school education outcomes.

RB. I much enjoyed and learned from your book Capitalism and Inclusion Under Weak Institutions that came out in 2018. It was also the subject of our FEF Paderanga Valera lecture that year. Would you care to talk about it in the remaining time we have?

RF: On Capitalism and Inclusion: My thesis in the book is that under weak institutions, a greater role of markets is more inclusive defined as poverty incidence. This flies in the face of Piketty (2011) who showed that capitalism or market economics in affluent well-run economies militates against inclusion defined as income inequality. For low-income countries, poverty incidence is the more compelling metric of success. Poverty incidence in the Philippines is highest in the rural areas where the government has effectively vetoed the role of markets for land and finance.

 

Romeo L. Bernardo was finance undersecretary from 1990-1996. He is a trustee/director of the Foundation for Economic Freedom, the Management Association of the Philippines, and the FINEX Foundation. He is the principal Philippine Adviser of Globalsource Partners (globalsourcepartners.com). He also serves as a board director in leading companies in banking and financial services, telecommunication, energy, food and beverage, education, real estate, and others.

romeo.lopez.bernard @gmail.com

Why we should raise taxes on vapes

CDC-UNSPLASH

Over the past decade, the Philippines has achieved a level of international best practice in its tobacco control policies. In 2015, when the number of current smokers went down from 17 million (2009) to 15.9 million, the World Health Organization (WHO) commended the country for achieving the largest number of smokers that quit in a short period of time in the Western Pacific.

Despite the great strides we’ve made in preventing Filipinos from smoking, we face a unique new challenge in the form of electronic nicotine and non-nicotine delivery systems (ENDS), otherwise known as e-cigarettes or vapes.

The problem with vaping is its deceptive harmlessness. Although vapes are marketed as a safer alternative to traditionally manufactured cigarettes and a form of harm reduction that will give smokers a chance to quit, they bring about massive collateral damage.

Vape products only have the potential to reduce harm when used by smokers. When used by young non-smokers, the industry’s usual target market, vape products introduce a completely new harm. Attracted by the many vape flavors, young non-smokers are largely unaware of the health risks, and view vaping as a fun activity in a social context. In the Philippines, one in seven teenagers aged 13-15 is using e-cigarettes, according to the 2019 Global Youth Tobacco Survey.

E-cigarettes, despite their branding as a “safer” alternative to cigarettes, do cause harm to users. To quote the WHO, “all forms of tobacco are harmful, and there is no safe level of exposure to tobacco.” The WHO includes various smokeless tobacco products in their definition of tobacco.

Vape liquids and aerosols have nearly 2,000 chemicals, most of which are unidentified — including a pesticide, three industrial chemicals, and two flavorings linked to possible toxic effects*. An outbreak of lung injuries and deaths associated with vaping (EVALI) has taken place in the US, with 2,807 cases as of 2020, and one confirmed case in the Philippines.

Vaping’s smokeless nature also makes it inconspicuous. While one would often have to step out of a building to smoke a cigarette, vapor is almost undetectable and its smell usually does not linger. This means users are more inclined to vape more often, anywhere, at any time. This exposes the user to more harm at more frequent intervals.

To make matters worse, Republic Act 11900 or the Vape Law was passed in July 2022, despite opposition from the medical community, the Department of Health, and the Department of Education. The law loosened vape regulation by lowering the age limit of vaping from 21 to 18 years old, transferring jurisdiction from the Department of Trade and Industry (DTI) to the Food and Drug Administration (FDA), and removing the two-flavor limit. And while pro-vape groups have rejoiced and defended the law by saying it has given smokers more options to quit, the fact is, the new controversial law supplanted an already existing legislation that gave smokers access to these products. All the new law did was expand the vape market by incentivizing young non-smokers to try vaping.

It is thus essential that we strengthen regulation on e-cigarettes. In line with this, Rep. Joey Salceda, the Chair of the House Committee on Ways and Means and a long-time sin tax advocate, has filed House Bill (HB) 5532, raising excise taxes on e-cigarettes and HTPs (heated tobacco products). This bill was discussed in the Ways and Means hearing on Nov. 21.

Currently, vape products are taxed less than traditional cigarettes. HB 5532 raises rates on nicotine salts and heated tobacco products by an average of 14% to narrow the gap between tax rates of traditional manufactured cigarettes and e-cigarettes. This is to prevent non-users from being enticed by vapes.

The bill also introduces taxes on e-cigarette or vape devices. The imposition of a 20% ad valorem and P20 specific tax on vaping devices will act as a market barrier to the consumption of e-cigarettes.

Further the bill intends to effectively repeal the harmful provisions of the deregulatory Vape Law. It brings back the two-flavor limit, sets the age limit of access at 21 years old, and gives regulatory purview back to the FDA.

During the Ways and Means Committee Hearing on HB 5532, the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) presented data on the volume of removals and revenue collection of e-cigarettes following RA 11346, the first law passed in 2019 imposing excise taxes on e-cigarettes. The revenue impact of e-cigarettes, according to the implementing agencies, is miniscule – over the past four years, the Bureau of Customs only collected a total revenue of P122 million from e-cigarette taxation. There seems to be inconsistency between the data on revenue collection from the BIR and BoC and consumption surveys, which show that many Filipinos are vaping.

There could be several explanations behind the low revenues, including the fact that excise taxes on e-cigarettes are fairly new and our government agencies need time to solve problems of tax leakage and illicit trade. Another factor to take into account is the fact that vapes are proliferated on unregulated online platforms, indicating a greater opportunity for tax leakage.

However, a few legislators suggested that the committee focus on addressing the tax administration gaps or leakage and shelve the bill, as they presumed that the revenue impact of HB 5532 would be minimal as well. Other legislators argued that the recently passed vape-related laws need more time to be implemented before imposing a new tax.

But while we acknowledge that tax efficiency, tax leakage, and smuggling of e-cigarettes must be addressed, this is a separate issue. Raising revenue is crucial for our post-pandemic recovery, but it is not the primary justification behind HB 5532. The primary objective is to deter non-smokers from starting the addictive and harmful habit of e-cigarette smoking. The recent passage of a deregulatory law also makes it all the more important that tax rates are raised in order to deter the youth from vaping.

In the case of vaping, the precautionary principle applies. Although vape can be used for harm reduction, this is not yet conclusive. It has been established that vape is harmful — the debate is on the extent of its harm. Even as science continues to gather longer-term evidence, the risk still exists. Preventive or precautionary measures, like taxation through HB 5532, must be put in place to address the potential harm.

Through Mr. Salceda’s HB 5532, our legislators have a chance to put an end to the youth vaping crisis before it escalates any further. If, in 10 years, a Filipino child suffers from serious lung injury due to a vaping addiction, the blame will be on our legislators who sided with the tobacco industry by allowing a deregulatory, anti-health law to pass and actively blocking a pro-health, pro-poor bill.

*Tehrani et al. Chem. Res. Toxicol. 2021.

 

Pia Rodrigo heads the health policy team of Action for Economic Reforms.

Thailand’s looming household debt crisis

DAN FREEMAN-UNSPLASH

Household loans are the best thing invented since the proverbial sliced bread.

It has enabled families to purchase homes and fixed asset investments. It has also enabled individuals to buy cars, appliances, go on vacation, stay in hotels, shop and dine in a consume-now-pay later manner.

Economies benefit tremendously from household loans too. It creates demand for goods and services, helps ease mobility through the sale of cars, and helps bridge the housing gap through the easy acquisitions of homes.

While household loans can drive an economy forward, it can also cause financial catastrophe on both a macro and micro level if abused. Still fresh in our memories was how cheap credit and lax lending standards fueled a housing bubble in 2007. When the bubble burst, the banks were left holding trillions of dollars of worthless investments in subprime mortgages. A protracted recession followed that resulted in billions in losses for countries and corporations. Millions of jobs were lost, and the wealth of many households dissipated.

Thailand, despite its thriving tourism and auto manufacturing sectors, is treading a slippery slope with its high level of household loans. The Central Bank of Thailand recently announced that as of last June, the ratio of household loans to GDP was a staggering 89.2%. This is a 16-year high and also the highest in the world. Nominally, Thailand’s household loans amount to $388 billion.

In the Philippines and Indonesia, the household loans to GDP ratio stands at only 10% and 13%, respectively. But we are an unfair point of reference. This is because Thailand has a more efficient and mature banking system which allows its citizens to borrow easily and safely.

The banking systems in the Philippines and Indonesia are arguably still a decade behind that of Thailand. More than 50% of the populations of the Philippines and Indonesia are unbanked compared to only 15% in Thailand. The unbanked rely on community funds in corporations or barangays (paluwagan) and loan sharks for their emergency cash needs. The Thais can easily borrow from mainstream sources, all of which are reported to its Central Bank.

Singapore’s banking system is the most advanced in the region and its household loan ratio is 64.9%. However, Singapore’s situation does not raise red flags for reasons that will be revealed later in this piece.

A recent survey conducted in Thailand revealed that more than half of its 70 million population are in debt. Among those who owe, 65.9% admitted to have missed a repayment at least once over the last 12 months. They cite reduced incomes, a sluggish economy, and the rising cost of living as among the reasons for the default.

The average personal debt in Thailand is 501,000 Bhat or $13,300, whereas the average monthly income of Thais is only 328,224 Bhat or $8,700 per year. In other words, the average Thai has 53% more debt than his annual salary.

But as is well know, there is good debt and bad debt.

Good household debt consists of that accrued as a result of an investment that appreciates over time. This includes homes, land, as well as valuable antiquities and art. Debt accrued to pay for education is also considered good debt. Bad household debt, however, is that which accrues out of consumption and/or those that depreciate over time. These include cars, consumer electronics, travel, clothes, food and the like.

Thailand’s ratio of good household debt is only 34%. In contrast, Singapore’s is 74%, mostly due to home loans. This is why no one is worried about Singapore.

The scale of Thailand’s bad quality debts has raised red flags both domestically and among international credit watchers.

To mitigate the situation, Thailand has since raised consumer loan interest rates to make borrowing costs more prohibitive. In parallel, they have begun to impose stricter regulations and stiffer requirements for those applying for new loans.

A campaign to educate the Thai people on debt stewardship has been launched to increase financial literacy.

The Thai government hopes that these remedial measures will keep its household loans at bay while the economy expands. Household debt ratios will decline as the economy grows in size.

But until debt levels drop, Thailand will remain in a precarious position. A shock in household incomes, like a global recession or political instability, can easily cause an avalanche of loan defaults. This will trigger a banking crisis that could hurt the Thai economy.

The Philippines is deeply connected to Thailand as it is the rest of ASEAN. A wounded Thai economy will have adverse ramifications for the Philippines. For the sake of the Thais and the rest of the region, let us hope that Thai financial mangers succeed in managing their household debt situation.

 

Andrew J. Masigan is an economist

andrew_rs6@yahoo.com

Facebook@AndrewJ. Masigan

Twitter @aj_masigan

Filipino values in personal finance

TOWFIQU BARBHUIYA-UNSPLASH

“Ma’am, I want to enroll my daughter, Jane, in ballet classes, and I have to buy her the leotards and tights for the twice a week classes in Megamall,” Agring said. My mother was aghast. Her jaw dropped and froze her face to a stunned grimace. Her housemaid of 10 years, Agring, then already retired and married, with three young girls, was like family and was always welcome to come and visit, but this urgent request for a special loan perplexed Mom.

Agring and her family were so poor that Mom had given them money to build a shack to live in one of her (Mom’s) vacant lots in Kamias. Mom would find odd jobs for the couple to do, and eventually placed the husband in a casual janitorial position in a relative’s company. Mom also gave Agring a small monthly stipend as bantay (watcher) over the property (to keep away squatters), but more as a help for the family’s food and utilities.

Whenever Agring would come to “visit” Mom, there would likely be a need for money or some “facilitation” for a “connection” with the person or entity that Mom knew, who made the decisions in a particular situation. Mom would always try to help, as she loved Agring like a daughter, and was godmother at her wedding. How confident Agring was with asking Mom for ready assistance! When Agring needed money, she would always say, “It is a loan, Ma’am, I will pay you back.” Of course, Agring never paid back any “loan” from Mom.

This time, Mom had to say, “No!” to Agring’s requested “loan” to enroll her daughter in expensive ballet classes and buy imported leotards and tights, tutus, and ballet shoes and pay for all the appurtenances of the training. The daughter was not a child prodigy who needed a break to crash into the limelight — she did not even show much interest in ballet, only, her mother was ambitious for her to learn how to dance ballet, like the children of middle-class parents. “Help us out of our constraints,” she begged my Mom. Still, Mom said, “No. Better for you to live within your constraints, while you work hard to lift yourself up — not by the instant help of benefactors but in the slower, character-building struggles of achieving sustainable goals.”

Although the story is almost 20 years old (Mom and Agring have passed on since), the children of Agring and their families have lived on in our Kamias property, with the same benefactor-protector role I inherited from my mother towards the family of Agring. It is not a role that is unwanted, despite the disparity between my late Mom’s resources and mine to help the poor family whom we loved and still love. But the scenarios of relationships in Filipino culture and values are shown by this example, of how survival and well-being in our country is more dependent on connections and influence based on entitlements from family and friends. Personal finance, especially loans, are facilitated by the social values of relatedness and dependence.

Data from the Bangko Sentral ng Pilipinas (BSP) show that as of 2015, around 47% (or nearly half) of all Filipino adults had an outstanding loan. Much of these borrowings are not from formal sources like banks or cooperatives, but a stunning 62% borrowed from family members, relatives, and friends, while 10% borrowed from informal lenders like loan sharks and “5-6” lenders (2015 National Baseline Survey on Financial Inclusion: BSP cited in rappler.com, Jan. 14, 2017).

Micro, small and medium enterprises, MSMEs, which comprise around 99.6% or nearly all business establishments in the Philippines, act like the individual borrowers who rely on the informal lenders because of the same reasons such as accessibility of credit most often without collateral and audit/accounting recording and registering.

It might also be cynically thought that such loose arrangements of lending and borrowing would give much room for flexibility of payment terms and conditions — but informal lenders will always find a way to collect in the end, while often-onerous compounded interest rates apply, like the 20% interest rate in “5-6” loans. Family lenders might have less suasion to collect on bad loans because of the Filipino values of lunos at pakikiramay (mercy and compassion) and pakikisama (group identity, “we are one,” like atin ito, meaning “this is our man” or “we belong”). Good-bye then, to money lent to family and friends.

The government has been trying to wean borrowers from informal lenders, with the objective of disciplining and regulating lending and borrowing activities — towards financial inclusion of the underprivileged sectors in economic development. In 2007, Congress passed the “Magna Carta for MSMEs” which required banks to allocate at least 8% of their loan portfolio to micro and small enterprises, and 2% to medium enterprises. Community-based microfinance institutions (MFIs), patterned after the Nobel Prize-winning Grameen Bank, have been established, making use of existing community relations, and lending with minimal requirements. Collection is helped by the peer-group pressure in the close community, with the overshadowing Filipino values of hiya (shame) and palabra de honor (word of honor); and the discipline of paninindigan (integrity and responsibility).

Yes, more than the kindly inclusion of the “un-banked” borrowers in the financial mechanisms of development, the negative social values of overdependence on family and “connections” must be countered by inculcating the disciplines of integrity and responsibility, honesty and prudence in financial transactions, as in all transactions.

The National Economic and Development Authority (NEDA) has espoused a “Financial Literacy” program where the financially literate Filipino plans, saves, invests, and accumulates more wealth; has less credit card debt; manages loans better, refinances mortgages, avoids high-cost borrowing methods (nro13.neda.gov.ph, May 11, 2019). The Department of Education (DepEd), through the Bureau of Curriculum Development (BCD), has expanded and intensified the integration of financial education in the K-to-12 Basic Education Curriculum “to improve the financial literacy and capability of its learners, teachers, and personnel which will enable them to acquire financial health and financial inclusion (deped.gov.ph, July 8, 2021).

But the COVID-19 pandemic wrought extensive damage to the financial health of the country before inclusion and literacy issues could slowly be eased. Nonperforming loans (NPLs) held by Philippine banks surged by 83% to P479.481 billion in May 2021 from P262 billion a year earlier. Bad loans also increased by 3.4% from the P463.659 billion in April (bworldonline.com, July 9, 2021). Are the banks more confidently lending again now?

Today the national debt has increased by another $2 billion borrowed by President Ferdinand “Bongbong” Marcos, Jr. from foreign lenders, on top of the P13.02-trillion debt the government has incurred as of end-August (ph.news.yahoo.com, Oct. 7). Filipinos now have a debt of over P127,000 each, which will be paid in the form of taxes, as the country’s debt grows (Ibid.).

“Oh, leave us alone to our devices, in the challenges to survival,” the Filipino might say. “Buti na lang, nandiyan ang kamag-anak at kaibigan.”

Thank God for family and friends.

 

Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Three out of four PHL youth believe life will improve in next 5 years — survey

Young men and women attend their graduation ceremony in Pasay City. — PHILIPPINE STAR/EDD GUMBAN

Three-fourths of Filipino youth aged 15 to 30 are optimistic that their quality of life will improve over the next five years despite the pandemic, according to a national survey conducted in 2021 by Youth Leadership for Democracy (YouthLed) and Social Weather Stations (SWS). 

“The survey was conducted to help us as an organization and as a program unpack what the current perspectives of youth in the country are,” said Sam Chittick, country representative of the Asia Foundation, in a press conference that presented the survey results on Friday. 

YouthLed, which aims to increase civic engagement, is a project of the Asia Foundation and the United States Agency for International Development (USAID).

The net optimism score of +72 in the State of the Filipino Youth 2021 survey is a significant increase from the +46 tallied in April 1996, the last time the SWS was tasked to do a comparable large-scale poll by the National Youth Commission (NYC). 

The net optimism score is computed by subtracting those who responded negatively from the number of those who responded positively.

This year’s respondents included 4,900 Filipino youths, ages 15 to 30 years old, with 81% belonging to Class D. 

The coronavirus pandemic and the subsequent lockdown was the “most important issue they [respondents] had in mind” when answering the survey, said SWS vice president and chief operating officer Gerardo Sandoval.

Despite the pandemic, survey results reflected a positive outlook on health, with 66% of respondents describing their health as “good,” an improvement over the 51% in 1996.

INFLUENCES

Almost all, or 99% of respondents, use traditional media, with three out of four young Filipinos watching the news on television at least once a week. More respondents find traditional media “very reliable and factual” (20%) than social media (7%). 

Traditional mass media (20%) came in second only to the home (24%) as the main influence in finding references on the responsibilities of a Filipino citizen. High school  (17%) and social media (15%) rounded out the list.

Majority of the respondents see their family as a guide to their stance on political issues (59%) and their support for government policies and activities (57%).

The survey was conducted March 14 to March 29, 2021, during general community quarantine (GCQ), and was released this February. 

The survey had an error margin of +/-1.4% at 95% confidence level for national percentages. — Aaron Michael C. Sy

Budget deficit widens to P99B in October

PHILIPPINE STAR/ MICHAEL VARCAS

By Luisa Maria Jacinta C. Jocson, Reporter

The National Government’s budget deficit ballooned to P99.1 billion in October, as state spending outpaced revenue collections, the Bureau of the Treasury (BTr) reported on Friday.

In its latest cash operations report, the BTr said the October budget gap rose by 54.08% from the P64.3 billion deficit in the same month a year ago.

“The higher deficit for the period resulted from the year-over-year acceleration in government spending outpacing revenue growth,” it said in a statement.

National Government fiscal performanceMonth on month, the October deficit sharply narrowed from the P179.8 billion in September.

In October, government expenditures rose by 22.23% to P387.9 billion from P317.4 billion a year ago.

The BTr said faster government spending was driven by higher tax allotments of local government units (LGUs) and subsidy releases for programs implemented by government corporations. National tax allotments to LGUs stood at P86.5 billion, while subsidies amounted to P40 billion.

“Disbursements for the social protection programs of the Department of Social Welfare and Development (DSWD) and road infrastructure projects of the Department of Public Works and Highways (DPWH) also contributed to the higher October spending,” the BTr added.

Primary expenditures, which refers to total expenditures minus interest payments, jumped 24.11% to P354.7 billion, accounting for 91% of the total monthly spending.

Interest payments rose by 5.23% to P33.2 billion in October.

Meanwhile, total revenue collection increased by 14.14% to P288.9 billion in October from P253.1 billion in the same period last year.

Tax revenues rose 19.53% to P261.9 billion in October from P219.1 billion a year ago.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR) with P186.8 billion, up 15.20% year on year.

The Bureau of Customs (BOC) collections also jumped 35.16% to P75.1 billion in October, while tax collections from other offices plunged 94.31% to P99 million.

Nontax revenues also fell by 20% to P27 billion from P34 billion as nontax collections from other offices, privatization proceeds and fees and charges declined 44.2% to P13.7 billion.

BTr revenues surged 47.24% to P13.2 billion “due to higher National Government share from the Philippine Amusement and Gaming Corp. (PAGCOR) profit and Bond Sinking Fund (BSF) investment performance which offset lower dividend remittance.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an email that the higher expenditures for the month was due to soaring inflation and rising borrowing costs.

Headline inflation accelerated to 7.7% in October, its fastest pace in 14 years, mainly driven by soaring food costs. In the 10-month period, inflation averaged 5.4%.

The Bangko Sentral ng Pilipinas (BSP) delivered a 75 bp hike this month, increasing its benchmark rate to 5%, the highest in nearly 14 years. It has so far hiked rates by 300 bps since May to tame inflation and keep in step with the Fed.

“The continued growth in government revenues has been consistent with measures to further re-open the economy towards greater normalcy (which) could have increased government tax revenue collections with more businesses operating at higher capacity,” Mr. Ricafort added.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said that the fiscal deficit in October was a “reversal from the fiscal prudence that we have seen in most of the third quarter.”

“Nevertheless, we think that if revenues continue its double-digit growth, it will be a leg up for fiscal management moving forward,” Mr. Asuncion added in a Viber message.

10-MONTH DEFICIT

Meanwhile, the fiscal deficit narrowed by 7.61% to P1.11 trillion in the January to October period, from the P1.2 trillion during the same period a year ago. This accounts for just 67% of the P1.7-trillion full-year program.

Total expenditures rose 9.87% to P4.1 trillion in October, as interest payments jumped 16.8% to P433.2 billion.

On the other hand, state revenues increased by 18.31% to P2.9 trillion as of end-October, accounting for 89% of the P3.3 trillion goal for the year.

Tax collections jumped 17.67% to P2.6 trillion in the 10-month period, while non-tax revenues rose 24.33% to P299.5 billion.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of gross domestic product (GDP) this year.

As of end-September, the deficit to GDP ratio eased to 6.5%, from 8.3% a year ago.

UK pork producer pays £4M to hire Filipino butchers

REUTERS

One of the UK’s biggest pork producers has spent £4 million ($4.8 million) hiring butchers from the Philippines, after a staffing crisis threatened to hamper production.

Cranswick Plc, which supplies supermarkets with pork and poultry, is paying for 400 butchers to travel from the Asian islands to work in Britain after staff from continental Europe flocked home following Brexit.

“It’s absolutely necessary if we want food on the plates,” said Cranswick’s Chief Executive Officer, Adam Couch. “Obviously it’s very expensive to bring them over, but it’s far better to bring them over than to curtail production as we did this time last year.”

Mr. Couch said that paying for each butcher from the Philippines cost between £10,000 and £12,000 — equivalent to more than £4 million. Each butcher needs a visa, a flight to the UK, an English test, and accommodation. Cranswick has an apprenticeship program to train up new butchers, but Mr. Couch said that there was just “not enough people”.

Jayne Arnold from the Food and Drink Federation said the whole industry is suffering from a lack of staff “despite employers making significant efforts to attract workers from offering higher wages to introducing more flexible shifts.”

RECESSION RISK

Earlier this week, Tony Danker, director general of the Confederation of British Industry, said the UK needed more foreign workers to help it escape a likely recession.

Labor shortages have prompted businesses to seek new ways to find workers. Halfords Group Plc, the motoring and bike retailer, has launched a recruitment drive to hire 1,000 new technicians — prioritizing the over 50s.

Until Britain voted to leave the European Union, 65% of Cranswick’s workers in the UK came from central Europe. That number has since plunged. Last year, the staff shortage was so severe that Cranswick had 25% fewer staff than required at its processing plants in areas such as Hull, northern England, and Norfolk, eastern England. — Bloomberg

In Britain, nurses prepare for unprecedented strike over pay

REUTERS

GOSPORT, England/LONDON — Chukwudubem Ifeajuna, a nurse in the south of England, loves his job, but next month will walk out for two days as part of British nurses’ biggest ever strike action, which he says is necessary for staff and patient welfare alike.

The industrial action on Dec. 15 and Dec. 20 is unprecedented in the British nursing union’s 106-year history, and comes as the state-run National Health Service (NHS) braces for one of its toughest winters ever. 

Mr. Ifeajuna has seen members of his team leave to work in supermarkets, where there is less stress and better pay, while he has had to cut back on spending. 

“I have a few staff who are using food banks at the moment. I’ve had to cut down on a lot of things with the kids which I can’t afford to provide for them because of the high cost of living. So it’s really really tough, for everyone, not just myself,” he told Reuters. 

“We are striking because we deserve to be paid better. We haven’t had decent pay for over a decade now.” 

Strike action is also impacting Britain’s rail, postal and education sectors as workers struggle with soaring prices. 

Patricia Marquis, director of the Royal College of Nursing (RCN) union in England, said the government must listen. 

“This is not something that nurses do at the drop of a hat,” she told Reuters. 

‘MOST VICIOUS OF CYCLES’ 

The RCN says experienced nurses like Mr. Ifeajuna are 20% worse off in real terms than they were in 2010 after a string of below-inflation pay awards, and are seeking a pay-rise of 5% above RPI (retail price index) inflation. 

That would amount to a payrise of 19.2%, based on October’s inflation data. The government says the RCN demands would cost 10 billion pounds ($12.14 billion) a year and are unaffordable. 

But the RCN’s Ms. Marquis said that without higher pay, staff would continue to leave the profession, increasing the pressure on those who remain and ultimately damaging patient care. 

Billy Palmer, at the Nuffield Trust health think-tank, told Reuters that those who were considering leaving “often cite issues around not having enough staff to do a good job,” but their departure further exacerbates the staffing problem. 

“It’s the most vicious of cycles,” he said. 

Mr. Ifeajuna says he has also sometimes considered quitting. 

“But each time I’ve had the chance, I sort of had to pause for a minute and say ‘I can’t leave my patients. I can’t leave my colleagues to suffer alone,’” he said. — Reuters

 

Researchers test mRNA technology for universal flu vaccine

FREEPIK

An experimental vaccine provided broad protection against all 20 known influenza A and B virus subtypes in initial tests in mice and ferrets, potentially opening a pathway to a universal flu shot that might help prevent future pandemics, according to a US study published on Thursday.

The two-dose vaccine employs the same messenger RNA (mRNA) technology used in the coronavirus disease 2019 (COVID-19) shots developed by Pfizer with BioNTech, and by Moderna. It delivers tiny lipid particles containing mRNA instructions for cells to create replicas of so-called hemagglutinin proteins that appear on influenza virus surfaces.

A universal vaccine would not mean an end to flu seasons, but would replace the guess work that goes into developing annual shots months ahead of flu season each year.

“The idea here is to have a vaccine that will give people a baseline level of immune memory to diverse flu strains, so that there will be far less disease and death when the next flu pandemic occurs,” study leader Scott Hensley of the Perelman School of Medicine at the University of Pennsylvania said in a statement.

Unlike standard flu vaccines that deliver one or two versions of hemagglutinin, the experimental vaccine includes 20 different types in the hope of getting the immune system to recognize any flu virus it might encounter in the future.

In lab experiments, vaccinated animals’ immune systems recognized the hemagglutinin proteins and defended against 18 different strains of influenza A and two strains of influenza B. Antibody levels induced by the vaccine remained unchanged for at least four months, according to a report published in the journal Science.

The vaccine reduced signs of illness and protected from death even when the ferrets were exposed to a different type of flu not in the vaccine, the researchers said.

Moderna and Pfizer both have mRNA flu vaccines in late-stage human trials, and GSK and partner CureVac are testing an mRNA flu vaccine in an early-stage safety trial in humans. These vaccines are designed to defend against only four recently-circulating influenza strains but could theoretically be changed up each year.

The universal flu vaccine, if successful in human trials, would not necessarily prevent infection. The goal is to provide durable protection against severe disease and death, Mr. Hensley said.

Questions remain regarding how to judge efficacy and potential regulatory requirements for a vaccine against possible future viruses that are not currently circulating, Alyson Kelvin and Darryl Falzarano of the University of Saskatchewan, Canada, wrote in a commentary published with the study.

While the promising results with the new vaccine “suggest a protective capacity against all subtypes of influenza viruses, we cannot be sure until clinical trials in volunteers are done,” Adolfo García-Sastrem, director of the Institute for Global Health and Emerging Pathogens at Mount Sinai Hospital in New York, said in a statement. — Reuters

Slower Fed hikes spell relief from Tokyo to Buenos Aires

REUTERS

FRANKFURT — The Federal Reserve’s signaling of a slowdown in the pace of US interest rate hikes takes pressure off global peers to keep on raising rates and offers relief to emerging markets, which have suffered their biggest rout in over a decade this year.

Central banks around the world have taken their cue from Washington in lifting borrowing costs at record pace. 

So a signal in the minutes of the Fed’s November meeting that policy tightening will soon slow has global ramifications, from a drop in global yields and rising stocks to a rebound in currencies against the dollar. 

More importantly, the Fed’s hint suggests that inflation may be coming under control, bolstering hopes of a “soft landing” for the world’s biggest economy that could in turn cushion others, many of which are already in recession. 

The inflation fight is far from over, especially in Europe, where the energy shock from the Ukraine has hurt most, but the Fed’s shift eases the pressure on central banks to keep moving in big steps. 

Major peers like the European Central Bank (ECB) and Bank of Japan (BoJ) will clearly benefit but emerging economies, which moved early with rate hikes and suffered a double whammy of higher borrowing costs and currency depreciation, will be the biggest winners. 

“Many emerging markets, for instance in Latin America, have reached peak rate pretty much already, and actually are in a position where they could take the foot off the accelerator a little bit if the Fed did,” Paul Watters at S&P Global said. 

Emerging economies started hiking before the Fed, and quickly, partly because their currencies had weakened against the dollar, raising funding costs and importing inflation. 

Before this month’s hint of a Fed slowdown, the dollar index, which measures the greenback’s strength against major currencies, had risen 18% year-to-date. That had quickly fed through to prices, especially energy and some food commodities that are generally traded in dollars. 

The index has now dropped 6% from that peak, suggesting that some relief is already feeding through. 

“This year’s interest rate hikes in the United States are set to cut an estimated $360 billion of future income for developing countries, excluding China, and signal even more trouble ahead,” the United Nations Conference on Trade and Development says. 

UBS, which is predicting 8–12% returns in emerging market equities next year and 10–15% returns in the mainly dollar-denominated emerging market hard currency debt indexes, argues that emerging market assets have fared worse through the current Fed tightening than they have in the previous five cycles. 

“Many countries are intervening to protect their currencies from rout,” S&P Global said. “Total reserves in the emerging markets had fallen by over $400 billion, down 7%, this year as of September.” 

Though the Fed signals a respite, Nomura said some economies still face the threat of a currency crisis, according to its in-house “Damocles” warning system, which uses eight disparate indicators over a longer period to model risk. 

“Damocles is flashing warning signals for seven countries: Egypt, Romania, Sri Lanka, Turkey, Czech Republic, Pakistan and Hungary.” 

BNP Paribas meanwhile sees Hungary, Colombia, Egypt and Malaysia as most vulnerable, and notes that Brazil’s fortunes are tied to the policies of the incoming government. 

ECB & BoJ 

At the ECB, the Fed’s signal bolsters an already strong case for more measured rate hikes after back-to-back 75 basis point moves and eases growth concerns. 

The euro’s 7% rise against the dollar since its autumn lows will curb import costs, which are now quickly feeding into consumer prices via energy. 

This shallower rate path will then ease growth and debt concerns especially on the euro zone’s vulnerable periphery. 

Italian bond yields are down sharply in the past month, while the closely watched spread between Italian and German borrowing costs is at its narrowest since May, signaling growing investor confidence in highly indebted Italy. 

Slower Fed rate hikes also help the BoJ, whose ultra-low rates have been criticized for fueling a sharp yen decline that inflates the cost of imports. 

Less downward pressure on the yen would give the BoJ space to gauge whether inflation will sustainably hold around 2% next year. On the other hand, if global yield moves stabilize, that could give scope for the BoJ to make its policy framework more flexible, some analysts say. 

Sayuri Shirai, a former BoJ board member who is considered a candidate to become deputy governor next year, said a slower pace of Fed tightening would ease pressure on the BoJ to ramp up bond buying to defend an implicit 0.25% cap for the 10-year Japanese government bond yield. 

“When the appropriate timing comes such as when the US monetary policy is becoming closer to the terminal rate, the BoJ should phase out its operation that offers to buy unlimited bond buying to defend its yield cap,” Ms. Shirai said. — Reuters

 

Weapons industry booms as Eastern Europe arms Ukraine

152mm artillery ammunition. — MIL.IN.UA/FLICKR

PRAGUE/WARSAW — Eastern Europe’s arms industry is churning out guns, artillery shells and other military supplies at a pace not seen since the Cold War as governments in the region lead efforts to aid Ukraine in its fight against Russia.

Allies have been supplying Kyiv with weapons and military equipment since Russia invaded its neighbour on Feb. 24, depleting their own inventories along the way. 

The United States and Britain committed the most direct military aid to Ukraine between Jan. 24 and Oct. 3, a Kiel Institute for the World Economy tracker shows, with Poland in third place and the Czech Republic ninth. 

Still wary of Russia, their Soviet-era master, some former Warsaw Pact countries see helping Ukraine as a matter of regional security. 

But nearly a dozen government and company officials and analysts who spoke to Reuters said the conflict also presented new opportunities for the region’s arms industry. 

“Taking into account the realities of the ongoing war in Ukraine and the visible attitude of many countries aimed at increased spending in the field of defence budgets, there is a real chance to enter new markets and increase export revenues in the coming years,” said Sebastian Chwalek, chief executive officer of Poland’s PGZ. 

State-owned PGZ controls more than 50 companies making weapons and ammunition — from armoured transporters to unmanned air systems — and holds stakes in dozens more. 

It now plans to invest up to 8 billion zlotys ($1.8 billion) over the next decade, more than double its pre-war target, Mr. Chwalek told Reuters. That includes new facilities located further from the border with Russia’s ally Belarus for security reasons, he said. 

Other manufacturers too are increasing production capacity and racing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic said. 

Immediately after Russia’s attack some eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition that Ukrainians were familiar with, as Kyiv waited for NATO-standard equipment from the West. 

As those stocks have dwindled, arms makers have cranked up production of both older and modern equipment to keep supplies flowing. The stream of weapons has helped Ukraine push back Russian forces and reclaim swathes of territory. 

Mr. Chwalek said PGZ would now produce 1,000 portable Piorun manpad air-defense systems in 2023 — not all for Ukraine — compared to 600 in 2022 and 300 to 350 in previous years. 

The company, which he said has also delivered artillery and mortar systems, howitzers, bulletproof vests, small arms, and ammunition to Ukraine, is likely to surpass a pre-war 2022 revenue target of 6.74 billion zlotys. 

Companies and officials who spoke to Reuters declined to give specific details of military supplies to Ukraine, and some did not want to be identified, citing security and commercial sensitivities. 

HISTORIC INDUSTRY 

Eastern Europe’s arms industry dates back to the 19th Century, when Czech Emil Skoda began manufacturing weapons for the Austro-Hungarian Empire. 

Under Communism, huge factories in Czechoslovakia, the Warsaw Pact’s second-largest weapons producer, Poland and elsewhere in the region kept people employed, turning out weapons for Cold War conflicts Moscow stoked around the world. 

“The Czech Republic was one of the powerhouses of weapons exporters and we have the personnel, material base and production lines needed to increase capacity,” its NATO Ambassador Jakub Landovsky told Reuters. 

“This is a great chance for the Czechs to increase what we need after giving the Ukrainians the old Soviet-era stocks. This can show other countries we can be a reliable partner in the arms industry.” The 1991 collapse of the Soviet Union and NATO’s expansion into the region pushed companies to modernize, but “they can still quickly produce things like ammunition that fits the Soviet systems,” said Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute. 

Deliveries to Ukraine have included artillery rounds of “Eastern” calibres, such as 152mm howitzer rounds and 122mm rockets not produced by Western companies, officials and companies said. 

They said Ukraine had acquired weapons and equipment via donations from governments and direct commercial contracts between Kyiv and the manufacturers. 

NOT JUST BUSINESS 

“Eastern European countries support Ukraine substantially,” Christoph Trebesch, a professor at the Kiel Institute, said. “At the same time it’s an opportunity for them to build up their military production industry.” 

Ukraine has received nearly 50 billion crowns ($2.1 billion) of weapons and equipment from Czech companies, about 95% of which were commercial deliveries, Czech Deputy Defence Minister Tomas Kopecny told Reuters. Czech arms exports this year will be the highest since 1989, he said, with many companies in the sector adding jobs and capacity. 

“For the Czech defense industry, the conflict in Ukraine, and the assistance it provides is clearly a boost that we have not seen in the last 30 years,” Mr. Kopecny said. 

David Hac, chief executive of Czech STV Group, outlined to Reuters plans to add new production lines for small-calibre ammunition and said it is considering expanding its large-calibre capability. In a tight labour market, the company is trying to poach workers from a slowing car industry, he said. 

Defense sales helped the Czechoslovak Group, which owns companies including Excalibur Army, Tatra Trucks and Tatra Defence, nearly double its first-half revenues from a year earlier, to 13.8 billion crowns. 

The company is increasing production of both 155mm NATO and 152mm Eastern calibre rounds and refurbishing infantry fighting vehicles and Soviet-era T-72 tanks, spokesman Andrej Cirtek told Reuters. 

He said supplying Ukraine was more than just good business. 

“After the Russian aggression started, our deliveries for Ukrainian army multiplied,” Mr. Cirtek said. 

“The majority of the Czech population still remember times of a Russian occupation of our country before 1990 and we don’t want to have Russian troops closer to our borders.” — Reuters

 

China hustles on summit sidelines to challenge US outreach

CHINESE AND US flags flutter near The Bund in Shanghai, China July 30, 2019. — REUTERS

When Chinese President Xi Jinping and his Indonesian counterpart Joko Widodo sat together last week to watch a trial run of a new China-backed high-speed railway, it was a clear sign of their expanding economic involvement. “Begin,” was the command they gave, as the train pulled out of a Bandung station.

Projects like this are key to Beijing’s strategy to compete with the US for clout in Southeast Asia, as it looks to cement its position in a region that counts China as its biggest trading partner. Two-way trade grew 13.8% year-on-year in the first 10 months of 2022, reaching $798.4 billion. The raft of new infrastructure and trade deals signed at a series of summits over the last two weeks, shows China only seeks to enhance this further. 

Here’s what was agreed:

INDONESIA

Mr. Xi and Jokowi, as the Indonesian president is known, signed agreements on the sidelines of the Group of 20 in Bali, bolstering digital economy cooperation and increasing bilateral trade. China also pledged to encourage companies to support the development of Indonesia’s $34 billion new capital in Borneo, as well as an industrial park on the island.

Jokowi, who referred to Mr. Xi as “big brother” when the two met, has turned to Beijing to fuel his ambitious infrastructure projects before his final term in office expires in 2024. China has been Indonesia’s largest trade partner for the past decade, with foreign investment doubling to $3.63 billion in the first half of this year, according to Indonesian government data.

CAMBODIA

Chinese Premier Li Keqiang used his trip to close ally Cambodia, for the Association of Southeast Asian Nations summit, to ink more than 10 cooperation agreements with Prime Minister Hun Sen. The deals ranged from agriculture to infrastructure, education, traditional Chinese medicine and science and technology.

The two countries also signed a $1.6 billion deal to build an expressway from the Cambodian capital to the Vietnamese border. China has invested heavily in the country, including upgrades to the Ream Naval Base along Cambodia’s southwestern coast. That’s raised concerns in the US, including from President Joseph R. Biden, Jr., over possible activities by China’s military there.

China is by far Cambodia’s largest trading partner, and accounted for 43% of the nearly $3 billion in investment it approved in the first half of this year, Xinhua reported.

THAILAND

Mr. Xi sought greater “synergy” when he met Thai Prime Minister Prayuth Chan-Ocha on the sidelines of the Asia-Pacific Economic Cooperation forum in Bangkok on Nov. 19. The two sides signed a five-year strategic cooperation agreement, and a deal promoting Belt and Road projects. 

China said it wanted to strengthen cooperation in trade, tourism and infrastructure, and cultivate new growth areas like the digital economy, new energy vehicles and technological innovation. It also stressed the need to speed up China-Thailand-Laos railway cooperation.

SINGAPORE

China welcomed Singapore’s “in-depth participation” in China’s “new development paradigm,” Mr. Xi said in his meeting with Prime Minister Lee Hsien Loong in Bangkok, according to a readout. Mr. Xi also said efforts need to be made to upgrade their bilateral free trade agreement and implement the previously agreed New International Land-Sea Trade Corridor.

In talks between their defense ministers, the two nations also agreed to hold joint military exercises next year, and set up a hotline between ministries. China has been Singapore’s largest trading partner since 2013.

PHILIPPINES

Mr. Xi said China views its relations with the Philippines from a “strategic height” and they should improve their cooperation quality, after meeting Philippine President Ferdinand R. Marcos, Jr., in Bangkok on Nov 17. China also expressed a willingness to import more quality agricultural and other products, and said the two sides must handle differences properly when it comes to the South China Sea.

Amid the ongoing territorial dispute, the Philippines has also been strengthening security ties with the US, with an agreement to start building training facilities and warehouses on the nation’s military bases next year. — Bloomberg

 

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