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BSP signals more rate hikes, FX moves to defend peso

REUTERS

The Philippine central bank signaled it will resort to more interest-rate hikes depending on the Federal Reserve’s action, while also considering proactive market interventions to curb currency losses.

“Strong dollar is requiring us to have bigger policy rate increases,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said in an interview from New York with Bloomberg Television’s Shery Ahn and David Ingles after delivering a half-point increase. “Clearly the Fed’s policies have affected our choices. We don’t want to match the Fed, at the same time we have to respond.”

The Philippines was one of three Southeast Asian nations to raise borrowing costs Thursday, with cumulative hikes by BSP touching 225 basis points so far this year.

Besides the policy rate, Mr. Medalla said the central bank has the option of actively intervening to support the peso, which fell to a record low this week amid an exceptionally strong US dollar. The Fed’s hawkish rhetoric on controlling inflation has piled pressure on Asian currencies, including the Japanese yen, while economies facing a current-account deficit are particularly vulnerable to a sell-off.

“We have been quite active this week,” Mr. Medalla said on the BSP’s intervention in the foreign exchange market, adding that the moves will possibly be even more active in the coming days.

“We clearly are intervening in the forex market. One approach is to intervene more strongly because the volatility is actually now much higher,” the governor said. The other approach is to reduce local currency liquidity by borrowing more from the central bank’s weekly auctions so there will be less peso to chase dollars, he said.

The peso rose as much as 0.3% in Friday trading to 58.30 per dollar.

Mr. Medalla sees inflation returning within its 2%-4% goal next year, saying it will be possibly closer to 3% than 4%.

While elevated price growth is weighing on consumption, the economy is still seen as among Asia’s bright spots, suggesting space to further tighten monetary policy.

Philippine economic managers have been joining President Ferdinand R. Marcos, Jr., in international trips this month, in part to woo investors. Earlier this week, Marcos touted the Philippines as “vibrant economy,” as his government gears for an “A” credit rating in the medium-term. — Bloomberg

Australia seeks stable ties with ‘great power’ China, minister says

STOCK PHOTO | Image from Pixabay

SYDNEY — Australia is aiming for a stable relationship with China despite differences, in particular, on trade, Australia’s foreign minister said, as she called on China to use its influence as a great power to help end the war in Ukraine.

Australia’s ties with its largest trading partner are at a low after disputes over a number of issues including the origins of the coronavirus disease 2019 (COVID-19) pandemic, trade, and Australian accusations of Chinese interference.

“I think it is a long road on which many steps will have to be taken by both parties to a more stable relationship,” Foreign Affairs Minister Penny Wong told reporters after meeting her Chinese counterpart, Wang Yi, on Thursday on the sidelines of the UN General Assembly in New York.

“In terms of issues of difference, obviously first amongst them is the issue of trade blockages, and that is the issue I focused on at the outset,” she said.

Ms. Wong said her meeting with the Chinese foreign minister was constructive and she urged China, as one of the five permanent members of the UN Security Council (P5), to use its influence to help end the Ukraine crisis.

“China is a great power … We encourage China as a P5 member with a special responsibility to uphold the UN charter to use its influence to end the war,” she said.

She said Russia’s invasion of Ukraine was illegal and President Vladimir Putin’s threat to use nuclear weapons was “unthinkable and irresponsible.”

Ms. Wong said in her talks with Wang Yi she had raised the issue of Australian journalist Cheng Lei and blogger Yang Hengjun, who have been detained in China and face espionage charges.

Thursday’s meeting with Wang Yi, the second in three months, comes as the recently elected Labor government looks to rebuild ties after a sharp deterioration during the term of the previous conservative government.

Deputy Prime Minister Richard Marles said this week “there was a belligerence in the way in which the former government spoke” and his government was looking to change the tone. — Reuters

Poorer nations face rising debt servicing costs in 2024 — report

PHILIPPINE STAR/ MICHAEL VARCAS

LONDON — Some of the nations most vulnerable to climate change face a sharp rise in debt service payments in the coming two years, hampering their ability to invest in climate proofing and shoring up their economies, a research report found.

The Vulnerable Group of Twenty (V20) — a group of 55 economies exposed to the fallout from climate change — expect debt service payments to rise to $69 billion by 2024 — the highest level in the current decade, according to calculations from the V20 and the Boston University Global Development Policy Centre.

Debt service payments in 2022 are at $61.5 billion and are set to be a touch above that in 2023, the authors said.

Emerging market and developing countries (EMDs) are struggling with the coronavirus disease 2019 (COVID-19) pandemic, Russia’s war in Ukraine, the climate crisis, and interest rate increases in advanced economies, wrote Luma Ramos in the report published on Friday.

A number of debt relief schemes for the world’s poorest nations were launched after the pandemic roiled global financial markets and hammered economies around the world.
However, progress has been slow and some of the schemes — such as the Debt Service Suspension Initiative (DSSI) — have expired.

“Without debt relief and other complementary measures such as grants, V20 countries will postpone their ability to reap the benefits of climate investments, such as improved resilience and enhanced power generation through renewables,” the report added.

Adding to the complexity was a change in creditor structure across the $686.3 billion in external public debt owed by V20 nations. Private creditors were now the biggest group, holding over a third of the debt while the World Bank and other multilateral institutions held a fifth each, the report found. V20 nations owed 7% of the total to China, while 13% was owed to Paris Club wealthy creditor nations.

The authors also urged the International Monetary Fund to upgrade its Debt Sustainability Analysis to account for climate risks faced by vulnerable nations.

“Given that climate impacts are increasing the cost of capital increase for vulnerable countries, the close association between climate change and debt sustainability needs to be captured and should inform the discussion on the countries needing debt relief,” the report found.

The V20 economies include Barbados, Cambodia, Costa Rica, Ethiopia, Honduras, Lebanon, Morocco, Nepal, the Philippines, Rwanda, Senegal, Sudan, Tanzania, Tunisia, Tuvalu and Vietnam. — Reuters

US-led Pacific group to focus on climate, connectivity amid China concerns

PACIFIC ISLANDS FORUM/FORUMSEC.ORG

WASHINGTON — China’s ambitions in the Pacific are a concern for some Pacific Island leaders, White House Indo-Pacific coordinator Kurt Campbell said on Thursday, but a growing US partnership with allies in the region aims to address issues such as climate change, health, and technology links.

Mr. Campbell spoke after US Secretary of State Antony Blinken hosted a meeting with foreign ministers from the Partners in the Blue Pacific (PBP) — a group formed in June that includes the United States, Australia, Japan, New Zealand, and the United Kingdom.

US officials briefing reporters on the meeting said Canada and Germany intended to formally join the initiative, which seeks to coordinate assistance to the strategically vital region in the face of competition from China.

“I think as we’ve seen in some instances, clearly China has ambitions in the Pacific, some of which have caused concern among Pacific Island leaders,” Mr. Campbell said. But he said the group’s agenda would be guided by Pacific Island countries’ needs.

“When we engage with Pacific Islanders one of the first things that they say is that for us national security really involves our environment and how climate change is an existential issue for them,” Mr. Campbell said.

The Blue Pacific event, held on the sidelines of the UN General Assembly in New York, comes ahead of a Sept. 28–29 summit US President Joseph R. Biden, Jr., plans to host with Pacific island leaders.

The Biden administration has said that the summit reflects its commitment to Pacific Island countries, whose leaders said this month Washington should accept their priorities, making climate change — not superpower competition — the most urgent security task.
Mr. Campbell added that the group was also working on increasing connectivity among island states.

He said the United States, Australia, and Japan had been involved in a number of efforts to advance undersea cables in the Pacific and added, in apparent reference to the summit, “we’ll have more to say about this next week.”

Mr. Campbell said two of the initiatives the Quad group of countries — the United States, Japan, India and Australia — wanted to focus on in the Pacific were maritime domain awareness and increasing communication links among island states with countries like Japan, Australia, and India.

“That can only be accomplished through the laying of … undersea cables. And so, I think the challenge is before us,” he said. “We think it’s important, and it will require financing and capacity, not just of any one state, but our combined efforts together.”

In a separate meeting, Mr. Blinken and his South Korean and Japanese counterparts affirmed a shared commitment to support Pacific Island countries. A joint statement said they pledged to look at ways to better help the island nations access climate finance and reaffirmed support for their efforts to boost maritime security and fisheries protection. — Reuters

IMF’s board seen backing ‘food shock window,’ aiding Ukraine and others

WASHINGTON — The board of the International Monetary Fund (IMF) is expected to approve a new “food shock window” in the next few weeks that will allow the global lender to provide emergency funding to Ukraine, the head of the fund’s European department said on Thursday.

Alfred Kammer told a conference hosted by Bloomberg that the Ukrainian government and its central bank deserved “huge credit” for managing the economic shocks caused by Russia’s invasion of the country on Feb. 24.

He said an IMF mission would examine Ukraine’s budget plans and the fiscal-monetary policy mix in late October, and stressed that the central bank needed to avoid printing money to finance its budget deficit, while focusing on tax revenues instead.

The fund provided $1.4 billion in emergency assistance to Ukraine in March, shortly after the war began, and worked with authorities with great success, using “orthodox and unorthodox” measures to stabilize the macroeconomy.

Ukraine could receive another $1.3 billion in emergency assistance when the IMF’s board approves expanded access to its Rapid Finance Instrument (RFI) for countries experiencing food shocks as a result of the war, Mr. Kammer said.

Mr. Kammer said that a vote was expected in the next few weeks, and a source familiar with the matter said it was likely to occur on Sept. 30.

“We are discussing with Ukraine a macro stabilization framework … that will help Ukraine in terms of internal coordination of policies, it will help in terms of identifying the external financing needs, and it will help donors to provide that financing in a timely manner,” he said.

Mr. Kammer said the fund had remained in close touch with Ukrainian authorities since the war began, and was now discussing a more formal monitoring arrangement.

“What we’re aiming at ultimately — this is leading towards a fully-fledged IMF program,” he added, noting that the situation was challenging given that planning was only possible on a “month-to-month” basis at the month given the ongoing war. — Reuters

Biden, Marcos discuss tensions in South China Sea

PRESIDENT Ferdinand R. Marcos, Jr. at the New York Stock Exchange. — OFFICE OF THE PRESS SECRETARY

NEW YORK — US President Joseph R. Biden, Jr., and his Philippine counterpart, Ferdinand R. Marcos, Jr., underscored their support for freedom of navigation and overflight in the South China Sea on Thursday, in response to China’s efforts to exert its influence there.

Messrs. Biden and Marcos held their first face-to-face talks on the sidelines of the United Nations General Assembly. Mr. Marcos, son of the late Philippine President Ferdinand E. Marcos, Sr., took power in June.

“The leaders discussed the situation in the South China Sea and underscored their support for freedom of navigation and overflight and the peaceful resolution of disputes,” the White House said in a statement after the talks.

Mr. Biden said as the two men began their talks that he wanted to talk about the South China Sea, coronavirus disease 2019 (COVID-19) and renewable energy. He thanked Mr. Marcos for opposing Russia’s war in Ukraine.

The United States has accused China of increased “provocations” against rival claimants to territory in the South China Sea and other countries operating there.

“The role of the United States in maintaining the peace in our region is something that is much appreciated by all the countries in the region and the Philippines especially,” Mr. Marcos said.

The Philippines is a key ally of the United States and vital strategically in case of any US need to defend Taiwan militarily from Chinese attack, given its geographical position.

The United States is keen to arrange greater access to bases in the Philippines given the need to prepare for that contingency.

“The leaders reflected on the importance of the US-Philippines alliance. President Biden reaffirmed the United States’ ironclad commitment to the defense of the Philippines,” the White House said.

Manila’s ambassador to the United States, a relative of Mr. Marcos, told Japan’s Nikkei newspaper this month the Philippines would let US forces use the Southeast Asian nation’s military bases in the event of a Taiwan conflict only “if it is important for us, for our own security.”

The meeting with Mr. Biden underlines the stunning turnaround in fortunes for the disgraced former first family of the Philippines, 36 years after Mr. Marcos’s father was driven into exile by a “people power” uprising.

The new president is on his first trip to the United States in 15 years. He is the subject of a US contempt-of-court order for refusing to cooperate with a Hawaii court that ruled the Marcos family must pay $2 billion of plundered wealth to victims of abuses during his father’s martial law era.

He has rejected allegations his family stole from the treasury and has diplomatic immunity as head of state. — Reuters

Puregold expands campaign for plastic usage reduction

Puregold store promoting sustainability campaign

Walking through the aisles of grocery stores, one patent is that most products are packaged with plastics. After all, aside from providing convenience, plastics have brought consumer goods at a cheap cost like those that come in tiny packets. But a great dependence on single-use plastics such as multi-layer sachets and pouches, according to World Bank, has steered the country to become a sachet economy.

The World Bank said that 2.7 million tons of plastic waste are created yearly in the Philippines, and an approximated 20% wind up in the ocean.

Plastic waste polluting the waters not only poses risk to the marine environment but also to human health.

To address and manage the country’s plastic waste problem, one of the various ways to do so is reducing the use of plastics.

Puregold, for its part, is expanding its “No Plastic Use” campaign that will further encourage its customers across the country to shop sustainably and reduce plastic usage by bringing their own reusable bags.

“Public support for cutting down plastic use is growing, and establishments are responding positively to the call for reduced plastic packaging and single-use plastics. We know that these kinds of products clog the waterways, and endanger marine life and ecosystems, which is why taking steps towards curbing their use couldn’t be timelier than right now,” Puregold said in a statement.

The supermarket chain launched the No Plastic Use in all its stores in National Capital Region last July, initially done once a week through the Walastik Mondays or Walang Plastik Mondays. Under the campaign, customers, particularly the Perks and Tindahan Ni Aling Puring members, also receive a Php 1 cashback for every eco bag they use.

Through the No Plastic Use days, Puregold was able to save over 110,000 plastic bags in its stores in Metro Manila during the first month of the rollout. It expects another 30% reduction in its plastic bag purchases from last year.

“We are now expanding Puregold’s ‘No Plastic Use’ nationwide, and extending this to include Mondays and Wednesdays starting Sept. 26, as we continue to work on operating more sustainably,” Puregold President Vincent Co said.

This plastic reduction program, according to Puregold, is part of the larger goal of lessening the excessive plastic bag usage and encourage customers, especially those shopping in bulk, to make changes in their way of consuming goods and its related aspects such as packaging and its impact on the environment.

The supermarket chain also stressed its awareness of the significance of sustainability in its operations, especially packaging.

To further its sustainability efforts apart from the No Plastic Use, Puregold will also bring back its recycling program this month to encourage customers to exchange their recyclable wastes for essential grocery items in designated Puregold stores.

 

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BSP raises key rates to tame inflation

A wide variety of fish at the Marikina Public Market. — PHILIPPINE STAR/ WALTER BOLLOZOS

THE PHILIPPINE central bank raised benchmark interest rates on Thursday for a fifth time this year to rein in persistently high inflation amid a struggling peso and hawkish US Federal Reserve.

The Bangko Sentral ng Pilipinas (BSP) increased its overnight borrowing rate by 50 basis points (bps) to 4.25% effective Friday, and its corresponding lending rate to 4.75%, as predicted by 11 of 15 analysts in a BusinessWorld poll last week.

“Price pressures continue to broaden,” it said in a statement. “Second-round effects continue to manifest, with inflation expectations remaining elevated in September following the approved minimum wage and transport fare increases.”

The move followed the Fed’s 75-bp hike and signals of larger increases to come that caused the peso and Philippine stocks to tumble. The central bank has raised key rates by 225 bps since May.

“Average inflation is still projected to breach the upper end of the 2-4% target range at 5.6% in 2022,” the central bank said, adding that the forecast for next year had also increased to 4.1%. The forecast for 2024 eased to 3%.

The central bank would “take all necessary actions to steer inflation towards a target-consistent path over the medium term, consistent with its primary mandate to promote price and financial stability.​”

BSP said the risks to the inflation outlook remained on the upside until next year and broadly balanced in 2024. Price pressures might continue to come from rising global nonoil prices and petitions for more fare increases.

It also cited the pressure from typhoons on the prices of food items including sugar.

“The impact of a weaker-than-expected global economic recovery continues to be the main downside risk to the outlook,” it added.

The central bank noted that given elevated uncertainty about the inflation environment, there is a need for follow-through action to anchor inflation expectations and prevent price pressures from becoming further entrenched.

“The domestic economy can accommodate a reasonable tightening of the monetary policy stance, as demand has generally held firm owing to improved employment outturns and ample liquidity and credit,” it added.

It also urged the government to enforce timely nonmonetary interventions to ease the impact of persistent supply-side pressures on food and other commodity prices.

The consumer price index climbed to 6.3% year on year in August from the nearly four-year high of 6.4% a month earlier and 4.4% a year ago. It was the fifth straight month that inflation exceeded the BSP’s 2-4% target this year.

BEATEN PESO
The central bank’s rate increase had little impact on the battered peso as it weakened to a fresh record low against the dollar after the Fed’s 75-bp rate increase for a third time this year.

It closed at P58.49 against the dollar, down by 49 centavos from its P58 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso has weakened by 14.68% or P7.49 this year from its P51-a-dollar close last year.

“The intention is not to target a particular level for the exchange rate,” BSP Deputy Governor Francisco G. Dakila, Jr. told a news briefing after the rate hike decision. “That is not the policy objective. In deciding on the appropriate stance of monetary policy, the priority is to bring inflation back to within the target band over the medium term.”

The rate increase should help ease pressure on the peso, he said. “The BSP stands ready to participate in the foreign exchange market only to ensure orderly market conditions and to reduce excessive short-term volatility in the exchange rate.”

The central bank would also use other tools to respond to exchange rate fluctuations to ensure that legitimate demand for foreign currency is satisfied, he added.

The BSP might have to offload more foreign exchange reserves to manage the peso’s depreciation, said Emilio S. Neri, Jr., lead economist at Bank of the Philippine Islands in Manila.

“This could put the country’s credit rating at risk since a substantial decline in reserves will lead to a deterioration in the country’s external position,” he said in a note.

The gross international reserves hit $98.98 billion as of end-August, slipping by 0.85% from a month earlier and by 8.3% from a year earlier, according to BSP data. It was the sixth consecutive month of decline.

More rate hikes are likely in the near term, but the tightening cycle might end this year, Gareth Leather, senior Asia economist at London-based Capital Economics, said in a note. The Philippine central bank will have too more rate meetings this year. 

“Further tightening is likely in the near term, but with inflation having probably peaked and the economic recovery likely to struggle over the coming months, the tightening cycle is likely to be over by yearend,” he said.

“Overall, we are expecting a further 75 bps of hikes this year, but we think the tightening cycle will come to a finish before the end of 2022. In contrast, most other analysts are expecting further tightening next year,” he added.

The BSP might have to slow its rate increases to avoid an economic collapse, Miguel Chanco, chief emerging Asia economist at UK-based Pantheon Macroeconomics, said in a separate note. “We suspect that the peso’s sell-off to new lows is the main reason that the BSP did not deviate from its current path.”

“The Monetary Board will come to its senses soon, and pause its overly aggressive hiking cycle in the immediate future,” he said. “Crucially, the economy isn’t as strong as the BSP thinks it is, with a technical recession still very much on the cards after the Q2 contraction.” — Norman P. Aquino and Keisha B. Ta-asan

Kishida tells Marcos he wants to improve ties

JAPANESE Prime Minister Fumio Kishida (R) met Philippine President Ferdinand R. Marcos, Jr. on Sept. 21. — PHL MEDIA DELEGATION POOL

By Kyle Aristophere T. Atienza, Reporter

NEW YORK — Japanese Prime Minister Fumio Kishida met Philippine President Ferdinand R. Marcos, Jr. on Wednesday and said he wanted to strengthen cooperation in priority areas such as agriculture, energy, health and infrastructure, a Japanese spokesperson said.

The leaders held a working lunch on the sidelines of the United Nations General Assembly in New York.

“The two leaders concurred on continuing to convene the high-level joint committee on infrastructure development and economic cooperation in order to elevate the bilateral cooperation to a higher level,” Japanese Foreign Ministry Press Secretary Hikariko Ono told reporters.

Mr. Kishida also said at the meeting “the international community needs to oppose unilateral attempts to change the status quo by force in the East and South China Sea, as well as economic coercion,” the spokesperson said in an apparent reference to Chinese activity regularly criticized by Japan.

The Philippine presidential palace separately confirmed the meeting.

“Both sides exchanged views on bilateral, regional and international concerns,” Press Secretary Trixie Cruz-Angeles said in a statement. “PM Kishida reiterated Japan’s commitment to supporting the Philippines’ economic development to become an upper middle-income country.”

Mr. Kishida had also stressed the importance of a rule-based order in the Indo-Pacific region, she said.

The leaders tackled security, domain awareness and law enforcement at sea, as well as peace in southern Philippines, she added.

“During their meeting, the two leaders reaffirmed their commitment to reinforce ties and strengthen cooperation in response to the challenges and opportunities in the regional security and economic landscape,” Ms. Angeles said.

Mr. Marcos, 65, also discussed his government’s priorities, particularly infrastructure development, food and security and cybersecurity.

After Mr. Marcos’ election in May, Japan said it wanted to continue cooperation in infrastructure development, including railways, the Subic Bay development, as well as in security and coast guard law enforcement.

Japan, an ally of the US, has rejected China’s attempts to limit freedom of navigation in the waterway, which is subject to overlapping claims from the Philippines, Taiwan, Brunei, Indonesia, Malaysia and Vietnam.

Japan has been the Philippines’ top source of official development assistance in the past two decades, according to the Finance department.

Mr. Marcos also met with former British Prime Minister Anthony Charles Lynton Blair and discussed with him issues on trade, food security, climate change and peace.

“We tackled the optimistic peace process in the Bangsamoro Autonomous Region in Muslim Mindanao and explored concrete ways to address other priority issues in the global economy,” Mr. Marcos said in a Facebook post.

Mr. Blair is executive chairman of the Tony Blair Institute For Global Change, an organization that helps political leaders and governments build inclusive societies.

Mr. Marcos also met with business leaders during his working visit in New York, advancing his food security agenda.

He participated in a business dialogue with members of the US-Association of Southeast Asian Nations (ASEAN) Business Council and US Chamber of Commerce.

“We really have to leverage whatever assets, whatever capabilities, whatever we have so that we can maximize our ability to grow and pull the economy,” Mr. Marcos said during his meeting with the business leaders in New York City, based on a report by state-run Philippine News Agency.

“Let us find new ways to partner, let us find new ways to develop, let us find new ways to strengthen this relationship between the United States, ASEAN and the Philippines,” he added.

The Philippine leader also met with executives of Cargill Corp., a global food company based in Minnesota.

In a Facebook post, Mr. Marcos said he and Cargill executives discussed a possible cooperation in agriculture. “We discussed how to attain food security and self-sufficiency, and explored ways to boost agricultural productivity in the Philippines.”

During his presidential campaign, Mr. Marcos vowed to review a 2019 law that removed quantitative restrictions on rice imports.

He took the helm of the agriculture agency in June, vowing to boost local food production and limit imports as much as possible amid a looming global food crisis.

But experts said his local push would likely be challenged by rising prices and costs of farm inputs spurred by Russia’s invasion of Ukraine. Mr. Marcos would probably continue to pursue a free trade agenda despite his protectionist stance, they said. — with Reuters

Philippine healthcare among most vulnerable to attacks — Kaspersky

TOWFIQU BARBHUIYA-UNSPLASH

THE PHILIPPINES’ healthcare industry is among the most vulnerable to cyberattacks in Southeast Asia, according to Kaspersky.

The ProxyLogon vulnerability often attacks the Philippine healthcare sector, Thailand’s government services and Indonesia’s industries, the global cybersecurity company said in its Digital Footprint Intelligence report.

ProxyLogon allows threat actors to bypass authentication and execute code remotely as privileged users. This means malicious actors can reach a victim’s server from any location with internet connectivity.

In the Asia-Pacific region, the Philippines is also the most affected country by ProxyShell, which allows a cyber-criminal to bypass authentication and execute code as a privileged user. It is also common in Pakistan and Malaysia, Kaspersky said.

ProxyLogon and ProxyShell attacks allow cyber-criminals to execute what they please within a victim’s computer environment.

The government and industries are the most vulnerable from ProxyLogon and ProxyShell, Kaspersky said. “Attackers prepare to attack, exchange data and get money on the Darknet.”

It added that cyberattacks are being prepared against companies from these countries, data with their users are sold on Darknet forums and malware is hidden in their infrastructure.

Kaspersky said the best defense against these threats is to keep public-faced systems updated. Companies should also avoid direct access to exchange servers from the internet.

In 2021, Kaspersky monitored 16,003 remote access and management services available for exploitation.

“Indonesia, India, Bangladesh, the Philippines and Vietnam provide the maximum facilities for an attacker to gain remote access,” said Kaspersky, adding that government institutions are serving more than 40% of the attack surface for “brute force attacks and credential leaks reuse.”

Cyber-criminals now have many options to infect lucrative industries, Chris Connell, managing director for Asia-Pacific at Kaspersky, said in a statement.

“In short, a cyberattack is like a ticking bomb,” he said. “While worrisome, reports such as our Digital Footprint Intelligence can be used as a tool to guide the cybersecurity capacity-building of concerned organizations. If you know your weak areas, it’s easier to prioritize.” — Arjay L. Balinbin

Senator asks peers to review contradictions in gov’t enforcement of Corporate Recovery law

PIXABAY

A RESOLUTION that seeks to review the government’s enforcement of a law that extends fiscal relief to local and foreign corporations in the Philippines has been filed at the Senate.

Senator Ana Theresia N. Hontiveros-Baraquel in Senate Resolution 219 called on her peers to convene as an oversight committee to review the rules that enforce the Corporate Recovery and Tax Incentives for Enterprises Act.

The law’s implementing rules could block local companies from qualifying for exemptions from the value-added tax (VAT) and zero-rating on local purchases, she said.

The rules and Revenue Regulation No. 21-2021 appear to be inconsistent with the language and spirit of the National Internal Revenue Code, which is to make VAT exemption on imports and zero-rating on local purchases available to both export and domestic enterprises, she added.

On June 21, the Finance and Trade departments approved the rules that will enforce the law, modifying the scope of the tax incentives and exemptions.

Under section 5 of the rules, VAT exemptions and zero-rated sales only apply to goods and services used in registered projects of export enterprises for up to 17 years.

The law allows any registered businesses to apply for VAT exemptions and transactions traced to zero-rated sales — transactions made by VAT-registered taxpayers that do not result in any output tax.

Ms. Hontiveros noted that the rules have affected the cost of doing business for 212 domestic industries, while potentially discouraging local companies from registering with investment promotion agencies.

These state-run agencies seek to attract investors by linking them to local suppliers and companies.

The Corporate Recovery law, which took effect in April 2021, reduced the corporate income tax on domestic companies by 5 percentage points to 25%.

“This disparity has to be examined promptly, so that the intended effects of the law may be fulfilled and our already overwhelmed local economy can be prevented from collapsing,” Ms. Hontiveros said. “We can’t claim to be foreign investor-friendly while at the same disincentivizing foreign investments.” — John Victor D. Ordoñez

More firms to make hybrid work available for all by 2025 – JLL

SHRIDHAR GUPTA-UNSPLASH

MORE than half of organizations in the Asia-Pacific region are likely to make remote work arrangements available to their employees by 2025, prompting them to rethink their office spaces, a real estate consultant said.

They will also invest in new technology and prioritize sustainability, as hybrid work is here to stay even as the office remains crucial to business operations, Jones Lang LaSalle, Inc. (JLL) added.

“We see that organizations will accelerate strategic investments over the next three years to realize their long-term workforce and workplace priorities, and the remaining four months of 2022 will be a critical phase for CRE (corporate real estate) strategy,” JLL Philippines Country Head Joey M. Radovan said in a press release on Wednesday.

He was referring to the findings included in JLL’s “Future of Work” report, which surveyed more than 1,000 responses across 13 markets worldwide.

The report said that 56% of organizations in the region are likely to keep remote work available to all employees by 2025.

CRE executives said that successfully operating hybrid work will be their most important strategic priority over the next three years.

“This includes exploring flexible space options, with the average proportion of flexible spaces in Asia Pacific expected to grow between now and 2025,” JLL said.

“The shift to hybrid work has become a marker of change in the workplace, placing greater emphasis on how companies can support employee mental well-being and maintain productivity,” it added.

JLL found that 80% of Asia-Pacific organizations agree that quality space is a top priority to “facilitate the kind of workplaces, health and wellbeing amenities, and sustainability credentials employees and corporates increasingly need.”

“As the office continues to evolve post-pandemic into a destination for collaboration, occupiers will need to continue increasing their investments in creative spaces,” JLL Head of Work Dynamics Research James Taylor said.

“Real estate portfolio strategies to enhance social interaction among a geographically dispersed workforce will be more important than ever, and the focus is on organizations to create offices with less me-space and more we-space,” he added.

JLL said that companies should invest in quality spaces to ensure the “long-term success of hybrid work.”

“Office remains as an important element of work. We see wellness, sustainability, and technology gaining greater prominence in shaping the built-up environment,” JLL Philippines Head of Research and Strategic Consulting Janlo de los Reyes said.

Meanwhile, JLL said that the total headcount and real estate footprint are also expected to grow.

“With buildings accounting for over 60% of carbon emissions in cities, organizations face ever-increasing pressure to deliver clear outcomes in the race to net zero and create social value through real estate,” it said.

JLL said that sustainability strategies have a direct impact on real estate decisions. It said 71% of the organizations are likely to pay a premium for green building credentials in the future.

“As employees return to the office and the workforce recovers its momentum, flexible working spaces and environmental ambitions will increasingly become the cornerstones of a hybrid workplace,” the consultant said.

JLL said that “Philippines’ awareness when it comes to sustainability practices has gone up by leaps and bounds.”

It identified five critical areas that local organizations will need to consider for a sustainable, resilient, and inclusive future of work: rejuvenation of the office for hybrid work setup, investing in quality space, environmental and social aspirations, intelligent technology investments and real estate complex needs.

JLL is a professional services firm that specializes in real estate and investment management. It is a Fortune 500 company operating in over 80 countries with a global workforce of more than 100,000 as of March 31. — Justine Irish D. Tabile

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