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Diokno does not favor tax hikes to tackle debt

Benjamin E. Diokno, Bangko Sentral ng Pilipinas Governor — BLOOMBERG

Philippine central bank governor Benjamin E. Diokno, who takes on a new role as finance secretary next month, said on Friday he does not favor raising taxes even as the incoming government is set to inherit a huge pile of debt.

Mr. Diokno, who is President-elect Ferdinand “Bongbong” R. Marcos, Jr.’s choice to lead the finance ministry, would rather see an improvement in tax administration and collection, including reducing corruption through digitalization, he said.

“To me, grow the economy, focus on tax administration first, improve the collection,” Mr. Diokno told ANC news channel.

Mr. Diokno’s comments should help ease concerns among labor groups, which have opposed proposals by the outgoing government to impose more excise taxes on oil, defer scheduled tax cuts, and remove some value-added tax exemptions.

Mr. Marcos on Thursday said he preferred to reduce the tax burden for those suffering from the economic impact of the pandemic.

Mr. Diokno, who before being appointed central bank governor in 2019 served as budget minister, said he was “satisfied with the current tax structure.”

The tax system has already undergone reform in the past six years after incumbent President Rodrigo R. Duterte’s government lowered corporate and personal income taxes while raising levies on tobacco and alcohol products.

The new Marcos administration is inheriting P11.7 trillion ($224 billion) in government debt, equivalent to 60.5% of gross domestic product as of the end of 2021, the highest ratio in 16 years, fueled by borrowing to address the coronavirus disease 2019 (COVID-19) pandemic.

The debt level was almost double the P6.4 trillion of liabilities when Mr. Duterte took office in June 2016, government data showed.

“I am not worried about the level of the debt,” said Mr. Diokno, who sees it as “easily manageable” as long as the economy is able to return to a pre-pandemic annual growth rate of 6% to 7%. ($1 = P52.26) — Reuters

‘Protect the truth’: A Marcos return in Philippines triggers fear for history

UNIVER

Books about the late Philippine dictator Ferdinand E. Marcos and his brutal era of martial law are flying off the shelves, spurred by “panic buying” after his son and namesake won a May 9 presidential election. 

Ferdinand “Bongbong” R. Marcos, Jr.’s presidency, set to begin on June 30, has many people worried about losing access to books and other accounts of his father’s rule, given his family’s decades-long effort to rehabilitate its name through what critics describe as a campaign of historical revisionism. 

“They are panic buying,” Alexine Parreno said of her customers, many of them parents buying books about martial law aimed at children. 

“They are really worried and scared that the books will be pulled out and that everything will be revised.” 

One shopper was Faith Alcazaren, a mother of two, who picked up extra bundles of books to send to friends overseas. 

“I felt like the smallest thing I can do and have control over is to protect the truth,” she said. 

Thousands of opponents of the senior Marcos were jailed, killed or disappeared during martial law, from 1972 to 1981, when the family name became synonymous with cronyism and extravagance as billions of dollars of state wealth disappeared. 

The younger Marcos has called for a revision of textbooks that cover his father’s rule, saying they are teaching children lies. 

His choice of education minister, vice president-elect Sara Z. Duterte-Carpio, daughter of outgoing strongman leader Rodrigo R. Duterte, has raised fears the Marcos family will finally succeed at entrenching its sanitized version of history. 

“We already thought that textbooks and the teaching of history in basic education was woefully inadequate in terms of explaining to our youth and children what the martial law period meant,” said Ramon Guillermo, a professor at the University of the Philippines. 

“If the Marcoses come back to power and Dutertes are supporting them, we could even have a more difficult situation in teaching what really happened,” said Mr. Guillermo. 

YEARS OF INVESTIGATION 

Mr. Guillermo, with a group of fellow scholars, launched a manifesto last week pledging to combat attempts to falsify history to suit the Marcos narrative, and to oppose all censorship and book-banning. 

The manifesto, signed by 1,700 people, came after a government task force labeled as communist a children’s book publishing firm selling five titles on martial law and dictatorship it called “#NeverAgain Book Bundle.” 

“Never Again!” was the battlecry of millions of protesters who joined the historic “people power” revolution that toppled the 20-year dictatorship in 1986, when the senior Marcos and his notoriously extravagant wife, Imelda, fled with their children into exile in Hawaii. 

“History cannot be bought, but books about history can be purchased,” one book buyer said on Instagram. 

“We will continue to fight historical revisionism.” 

Mr. Marcos and Ms. Duterte-Carpio did not respond to requests for comment. In a 2020 media forum, Mr. Marcos dismissed accusations his family was attempting to rewrite history. 

“Who is doing revisionism? They put it in the books, the children’s textbooks that the Marcoses stole this, we did this … what they have been saying about what we stole, what we did, not all of them are true.” 

Years of investigation and legal proceedings followed the rule of the senior Marcos. The Presidential Commission on Good Government set up in 1986 has retrieved about $5 billion of the Marcos fortune, its chairman, John A. Agbayani said. Another $2.4 billion is still caught up in litigation, he said. 

‘TSUNAMI OF DISINFORMATION’ 

The younger Marcos fought the election with the slogan “Together, we shall rise again,” invoking nostalgia for his father’s rule, which his family and supporters have portrayed as a golden age. 

His campaign rode what academics called a “tsunami of disinformation” with social media flooded with narratives playing down rights abuses and corruption under his father. 

On the day it became clear that Marcos had won, a book published in 1976 that details corruption and abuses during the Marcos regime sold 300 copies, its publisher said. 

More than a week later, 500 copies of the book, The Conjugal Dictatorship of Ferdinand and Imelda Marcos, were sold within an hour of being posted online. 

“I wanted to make sure that inside our home, I can keep a version of the martial law era that has not been tampered with by their hands,” said college student Jose Anonat, who got the book. 

In an indication of the sort of history re-writing that Marcos supporters want, Juan Ponce Enrile, the late dictator’s defense minister, said in a conversation with the younger Marcos that appeared on YouTube in 2018, that not one person was arrested for political and religious views, or for criticizing the elder Marcos. 

The clip has been viewed more than 1.5 million times. 

There were also attempts to remove the terms “dictator” and “kleptocrat” describing the elder Marcos on Wikipedia, said Carlos Nazareno, of the Wiki Society of the Philippines, part of a movement against disinformation. 

Carmelo Crisanto, who heads an agency memorializing martial law victims, is digitizing documents relating to 11,103 survivors who were awarded reparations from seized Marcos family wealth. He hopes the database will be online by September, in time for the 50th anniversary of the declaration of martial law. 

“These archives will be alive,” said Mr. Crisanto. “They will never be suppressed.” — Reuters

Demand for Filipino seafarers still high, but quality of training is dipping

UNSPLASH

The Philippines risks losing out on seafaring jobs if the quality of training in local maritime schools continues to dip, according to experts.

“Is there still a demand for Filipino seafarers? The answer is a big yes,” said Jøran Nøstvik, a captain and global owner’s representative of Noatun Maritime, a crew assessment and development services company.

The demand, however, has been difficult to fill: Noatun Maritime recruited 400 local applicants at one point, but only two passed its screening. 

At a May 26 joint maritime committee meeting by the German-Philippine Chamber of Commerce and Industry (GPCCI), Mr. Nøstvik recommended developing senior crew officers; developing ratings for crew roles such as fitters, bosuns, and pumpmen; tapping senior crew officers to serve as part-time school instructors; and creating more government-owned maritime schools. 

“If we invest and spend more time and money on this, the return on investment will be three months after the [trained crew] has onboarded,” he said.

Shipping companies that have compensated for substandard training by implementing their own bridging programs bear “a responsibility for the sad state of affairs,” said Tore Henriksen, chair of GPCCI’s joint maritime committee.

“The schools never had to deliver — because we have accepted that it’s substandard,” he said. 

In Europe, incompetent applicants aren’t accepted in the first place, said Mr. Nøstvik.

According to the European Maritime Safety Agency Outlook for 2020, the Philippines leads non-European Union countries in the number of officers working on EU-flagged vessels, with a total of 30,615.

Ship management companies want quality labor and not cheap labor, according to a 2022 survey reported by Splash, a maritime news site. 

The Philippines, known to be the seafaring capital of the world, had a total of 217,223 seafarers deployed overseas in 2020 — a drop of 54% from the 2019 figure.   

In October 2018, the Maritime Industry Authority (MARINA) submitted proof of its compliance with the recommendations for Philippine maritime education given by the European Maritime Safety Agency (EMSA). 

In the same year, both the agency and the Commission on Higher Education (CHED) monitored the country’s 75 approved maritime schools, and noted deficiencies in facilities and training equipment; examination and assessment system; quality standard shipment shortcomings; and quality of shipboard training.  

MARINA is open to publishing the passing rates of these schools, pending the approval of the CHED, said Marina administrator and vice admiral Robert A. Empedrad, at the same hybrid May 26 meeting. 

The marine authority inaugurated on May 26 a training and research development arm in Panaad Park, Bacolod City.  

“There is much to be done in terms of raising our standards… we will make sure that we continue to be the number one producing country as far as professional seafarers are concerned,” Mr. Empedrad said. — Patricia B. Mirasol

A first look: How financial intermediaries can integrate crypto

By Team Ripple

SAN FRANCISCO — Most crypto owners would prefer to interact with digital assets through their banks and other traditional financial institutions. In the United States, as many as 65 million customers — most of whom do not own any digital assets today — are potential owners, and would use digital assets through their existing financial institution if available.

“Navigating Crypto: How Banks and Other Financial Intermediaries Can Integrate Crypto Assets,” a new report from Oliver Wyman commissioned by Ripple, examines how banks and other intermediaries are increasingly exploring offering digital assets to their customers and outlines the necessary requirements to do so. This involves accommodating a range of technical, commercial, organizational and regulatory factors to enable customers to interact with crypto, which must be done strategically in order for banks and FI’s to position themselves for success in the short and long terms.

Nikolai Dienerowitz, Oliver Wyman Partner in London, said: “Financial institutions that develop capabilities to serve this market have an opportunity to differentiate themselves in the near term — and develop capabilities in the longer term that may position them well to broaden out their digital asset services. For example, a bank investing in technology to manage the nearly-instant settlement with digital assets today may be better placed in the future if they want to serve customers with CBDCs.”

A Deep Dive into the Current Crypto Landscape

Broken out into five distinct sections, the paper explores the evolution of the market and highlights its rapid growth over the last few years, extrapolating along its current growth trajectory. (If extrapolated, there could be as many as 1 billion global crypto asset owners by 2024.)

While the authors acknowledge the future of crypto is still uncertain and hinges on three primary factors — regulatory oversight, new use cases and end-user demand — they say the potential to serve these customers and become the primary gateway between fiat and digital assets is real for banks and financial intermediaries. Those that do so have the opportunity to position themselves for success in a potential future in which digital assets are more prevalent.

What Do I Need to Offer Crypto Services?

For banks seeking to capitalize on this opportunity, the paper outlines seven core technical requirements (e.g. liquidity solution, settlement network, etc.) and suggests a five-step checklist for how to begin this process, including goal setting, identifying key requirements, determining a development strategy, accounting for risk and regulation, and establishing a delivery strategy.

Since many organizations lack the expertise and capabilities to build and manage these requirements in-house, the report highlights the benefits of a partnership strategy to help maximize speed to market and fully realize the customer opportunity. In support of that strategy, it also provides a high-level overview of the types of crypto partners available and how each fulfills specific strategic requirements. Arriving later this year, Ripple Liquidity Hub is one such solution that is purpose-built to solve many of the challenges financial intermediaries face that are outlined in the report.

“With a decade of experience in crypto, Ripple has a deep understanding of what it takes to build crypto-first products, with a track record of leveraging blockchain to serve financial institutions,” comments Brad Chase, Ripple’s Senior Director of Engineering. “In launching Liquidity Hub, we are packaging Ripple’s expertise and capabilities behind simple APIs, so these customers can easily offer crypto to their end-users without having to rebuild the entire tech stack.”

Eric Czervionke, Oliver Wyman Partner in New York, adds “Large banks with commensurate tech budgets typically have advantages in realizing economies of scale in investing in new technology capabilities. That may be less true in crypto where most banks will rely on partners to offer new services to their clients — so smaller banks may compete on relatively more equal footing.”

What’s Next For the Market and Financial Institutions

Ultimately, the paper predicts that those banks and financial providers that move quickly and decisively to meet demand can become vital members of the crypto market. Those that adopt a “wait and see” approach run the risk of being crowded out by competitors, including crypto-native firms that will continue to build better products, attain bank-level security and convenience features, and gain greater brand recognition and trust.

Download Oliver Wyman’s Navigating Crypto report here to read more about the future of crypto and how financial organizations can get ahead.

About Ripple

Ripple is a crypto solutions company that transforms how the world moves, manages and tokenizes value. Ripple’s business solutions are faster, more transparent, and more cost effective — solving inefficiencies that have long defined the status quo. And together with partners and the larger developer community, we identify use cases where crypto technology will inspire new business models and create opportunity for more people. With every solution, we’re realizing a more sustainable global economy and planet — increasing access to inclusive and scalable financial systems while leveraging carbon neutral blockchain technology and a green digital asset, XRP. This is how we deliver on our mission to build crypto solutions for a world without economic borders.

 


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China, Russia veto US push for more UN sanctions on North Korea

PXHERE

UNITED NATIONS — China and Russia vetoed on Thursday a US-led push to impose more United Nations sanctions on North Korea over its renewed ballistic missile launches, publicly splitting the UN Security Council for the first time since it started punishing Pyongyang in 2006. 

The remaining 13 council members all voted in favor of the US-drafted resolution that proposed banning tobacco and oil exports to North Korea, whose leader Kim Jong Un is a chain smoker. It would also have blacklisted the Lazarus hacking group, which the United States says is tied to North Korea. 

The vote came a day after North Korea fired three missiles, including one thought to be its largest intercontinental ballistic missile (ICBM), following US President Joseph R. Biden Jr.’s trip to Asia. It was the latest in a string of ballistic missile launches this year, which are banned by the Security Council. 

US Ambassador to the UN Linda Thomas-Greenfield described the vote as a “disappointing day” for the council. 

“The world faces a clear and present danger from the DPRK (North Korea),” she told the council. “Council restraint and silence has not eliminated or even reduced the threat. If anything, DPRK has been emboldened.” 

She said Washington had assessed that North Korea had carried out six ICBM launches this year and was “actively preparing to conduct a nuclear test.” 

Over the past 16 years the Security Council has steadily, and unanimously, stepped up sanctions to cut off funding for Pyongyang’s nuclear weapons and ballistic missile programs. It last tightened sanctions on Pyongyang in 2017. 

Since then China and Russia have been pushing for an easing of sanctions on humanitarian grounds. While they have delayed some action behind closed doors in the Security Council’s North Korea sanctions committee, the vote on the resolution on Thursday was the first time they have publicly broken unanimity. 

“The introduction of new sanctions against the DPRK (North Korea) is a path to a dead end,” Russia’s UN Ambassador Vassily Nebenzia told the council. “We have stressed the ineffectiveness and the inhumanity of further strengthening the sanctions pressure on Pyongyang.” 

China’s UN Ambassador Zhang Jun said that additional sanctions against North Korea would not help and would only lead to more “negative effects and escalation of confrontation.” 

“The situation on the Peninsula has developed to what it is today thanks primarily to the flip flop US policies and failure to uphold the results of previous dialogues,” he told the council. 

China has been urging the United States to take action — including lifting some unilateral sanctions — to entice Pyongyang to resume talks stalled since 2019, after three failed summits between Kim and then-US President Donald Trump. The United States has said Pyongyang should not be rewarded. 

The UN General Assembly will now discuss North Korea in the next two weeks under a new rule requiring the 193-member body to meet every time a veto is cast in the Security Council by one of the five permanent members — Russia, China, the United States, France and Britain. — Reuters

China strategy is about rules-based order, not ‘new Cold War,’ Blinken says 

REUTERS

WASHINGTON — The United States will not block China from growing its economy, but wants it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in a long-awaited speech on US strategy to address China’s rise as a great power. 

Washington will not try to change China’s political system, but will defend international law and institutions that maintain peace and security and make it possible for countries to coexist, he said. 

“We are not looking for conflict or a new Cold War. To the contrary, we’re determined to avoid both,” Mr. Blinken said in the 45-minute speech at George Washington University, which covered most contentious bilateral issues. 

US-China relations sank to their lowest level in decades under former President Donald Trump and have soured further under President Joseph R. Biden, Jr., a Democrat who has kept up his Republican predecessor’s sweeping tariffs on Chinese goods while pursuing closer ties with allies to push back against Beijing. 

Seventeen months into his administration Mr. Biden had faced criticism from Republicans and some foreign policy watchers for not announcing a formal strategy on China, the world’s second-largest economy and Washington’s main strategic rival. 

Foreign crises, including the messy US withdrawal from Afghanistan last year and Russia’s war in Ukraine, have created distractions for Biden, who has vowed not to let China surpass the United States as global leader on his watch. 

But his administration has sought to capitalize on fresh solidarity with allies spurred by the Ukraine crisis and the “no-limits” partnership China announced with Moscow just weeks before Russia’s Feb. 24 invasion of its neighbor. 

‘MOST SERIOUS LONG-TERM CHALLENGE’ 

Mr. Blinken said China posed “the most serious long-term challenge to the international order.” 

He laid out the contours of a strategy to invest in US competitiveness and align with allies and partners to compete with China, calling that competition “ours to lose.” 

He said the Biden administration stood ready to increase direct communication with Beijing across a full range of issues, and would “respond positively” if Chinese officials take action to address concerns. 

“But we cannot rely on Beijing to change its trajectory. So we will shape the strategic environment around Beijing to advance our vision for an open and inclusive international system,” he said. 

In response, China’s Washington embassy said the United States and China shared “extensive common interests and profound cooperation potential” and “competition … should not be used to define the overall picture of the China-US relations.” 

“China and the US both stand to gain from cooperation and lose from confrontation,” embassy spokesperson Liu Pengyu said. 

He noted a virtual summit between Mr. Biden and Chinese President Xi Jinping last November and said the relationship was “at a critical crossroads.” 

“We hope the US side will work with China to earnestly implement the common understanding reached by the two leaders to enhance communication, manage differences and focus on cooperation,” he said. 

‘REPRESSIVE’ AND ‘AGGRESSIVE’ 

While Mr. Blinken credited the hard work of the Chinese people for their country’s historic economic transformation in the last four decades, he took direct aim at Xi Jinping, saying: 

“Under President Xi, the ruling Chinese Communist Party has become more repressive at home and more aggressive abroad.” 

Mr. Blinken’s speech coincided with the start of a sweeping tour by China’s foreign minister of Pacific island countries, an increasingly tense front in competition for influence between Beijing and Washington. 

The speech was postponed earlier in May after Mr. Blinken tested positive for coronavirus disease 2019 (COVID-19) and follows a month of intensive US diplomacy focused on the Indo-Pacific, including Mr. Biden’s first trip as president to the region. 

Mr. Blinken reiterated US commitment to the one-China policy over Chinese-claimed democratic Taiwan, even though Mr. Biden earlier this week said the United States would get involved militarily should China attack Taiwan. 

Washington has had a long-standing policy of strategic ambiguity on whether it would defend Taiwan militarily and Mr. Biden and aides later said his remarks did not reflect a policy shift. 

Under the one-China policy, Washington officially recognizes Beijing diplomatically, although it is bound by law to provide Taiwan with the means to defend itself. Mr. Blinken said this was unchanged and Washington did not support Taiwan’s independence. 

“What has changed is Beijing’s growing coercion, like trying to cut off Taiwan’s relations with countries around the world, and blocking it from participating in international organizations,” he said, calling the Chinese military’s nearly daily activity near the island “deeply destabilizing.” — Reuters

Finance faces new nature-positive disclosure requirements

PHILSTAR

DAVOS, Switzerland — Financial firms already struggling with climate-compliance due to unclear measurement metrics will soon face new disclosure requirements for biodiversity, or nature-related, investments. 

“Nature is a financial risk for business,” Elizabeth Mrema, co-chair of the Taskforce on Nature-related Financial Disclosures (TNFD), told the Reuters Global Markets Forum, adding that $10 trillion is accrued every year from nature. 

The TNFD working group is putting together metrics to measure biodiversity targets in consultation with industry and financial institutions. Its post-2020 Biodiversity Framework is expected to be adopted later this year. 

“It’s about accountability. You cannot improve what you cannot measure. What gets measured gets done. We need that robust measurement system,” said Daniel Stander, deputy chair of the Resilient Cities Network. 

The framework will ask financial institutions and corporate bodies to shift their financial flows from nature-negative to nature-positive outcomes. 

Another metric will ask the private sector to repurpose and redirect harmful subsidies, worth over $500 billion a year. 

“Biodiversity is getting higher on the agenda,” said David Knibbe, CEO of Dutch insurer NN Group NV, which has 200 billion euros ($214 billion) in assets under management and is active in sustainable finance. 

“If we get biodiversity problems, let’s say the ecosystem is being disturbed, that could lead to food shortages and instability,” Mr. Knibbe said, adding that NN plans to engage with companies so that the insurer can track their progress. 

“The good news is quite a few of the biodiversity projects go hand-in-hand with the climate projects,” Mr. Knibbe said. — Reuters

Get your crypto house in order, old guard tells Davos debutantes

REUTERS

DAVOS, Switzerland — Cryptocurrency firms, many of which lined the main street in Davos this week, were told they will need to clean up their act before gaining complete acceptance from the World Economic Forum’s old guard. 

“The future of crypto, I’m sorry to say, looks regulated to me,” said Nela Richardson, senior vice president and chief economist for human resources software provider ADP. She said she thinks central banks will step in to provide oversight. 

Blockchain and crypto firms blitzed Davos with parties, briefings and panels on the sidelines of the main conference, with the hope of gaining credibility and inking deals with companies ranging from Tyson Foods Inc. to Salesforce.com Inc also perched on the main street. 

Some of the events outside the security cordon of the main event featured speakers from traditional financial institutions, including Perella Weinberg Partners and State Street. 

But, inside the gates, there was a cry for regulation and concerns about risks from the sector, including about it being used illegally by sanctioned Russians. 

“Crypto currencies have received a big push from (Russian) sanctions,” Saudi finance minister Mohammed al-Jadaan said. “And I’m worried because it could be used for illicit activities.” 

David Rubenstein, co-founder and co-chairman of US buyout firm Carlyle, shared his concerns. 

“A lot of wealthy people who want to hide their assets after the Russian situation will say I will put 5% to 10% in some basket of cryptocurrencies,” he said. 

“The government won’t know what I have, they can’t get it and I can always get access to it.” 

CRASHING INTO THE FUTURE 

The roles of regulators, authenticators and custodians have come into sharp focus in Davos, which began after a crypto crash that saw digital assets lose some $800 billion in market value and one of the top ten digital coins become worthless. 

“It’s still early days (for crypto) in terms of an investment class,” Ling Hai, co-president for international markets at Mastercard, told the Reuters Global Markets Forum (GMF). “It needs to be sanctioned and regulated by the central bank and government. It has monetary implications. Value needs to be stable.” 

However, crypto and financial executives on the sidelines said the rout would strengthen the industry because strong technology and coins would survive it. 

“There’s been a lot of volatility but the reality is it’s here to stay,” said Justin Fogerty, managing director and founder at financial consultancy Pivotas AG. “I think what’s happened with the volatility, (it) has actually taken a lot of speculators and gamblers out of the market.” 

Cryptocurrency firms have also attracted new interest at Davos, especially from locations looking for investment. 

Vit Jedlick, the President of Liberland, a micronation claiming disputed land between Serbia and Croatia, attended an event for Polkadot in the hope of starting a stronger partnership with the blockchain technology. 

The Indian delegation to Davos, which included six state governments, was housed in pavilions surrounded by blockchain and crypto houses, and has been meeting many of them to attract investment, particularly in education and training. 

“When you map out where the next generations of developers are and where is the talent and where actually should we go, India pops up very, very high on the map,” Marieke Flament, CEO at NEAR Foundation, which backs blockchain projects, told GMF. 

Miami Mayor Francis Suarez, in the spotlight over the crash of the city’s MiamiCoin, said he was working with the operators to fix glitches. 

“I still am taking my salary in bitcoin,” Mr. Suarez told a WEF panel. “I will note for the record it’s not my only salary.” — Reuters

NTC approves registration of Musk’s Starlink

Starlink mission. SpaceX/Flickr

The National Telecommunications Commission (NTC) announced on Friday that it recently approved Starlink Internet Services Philippines, Inc.’s registration as a value-added service (VAS) provider, allowing it to directly access satellite systems, build and operate broadband facilities to offer internet services in the country.

Starlink, a satellite internet constellation operated by billionaire Elon Musk’s Space Exploration Technologies Corp. (SpaceX), will offer “high speed low latency satellite internet service with download speed between 100Mbps to 200Mbps” to Filipinos, the NTC said in a statement.

The NTC approved Starlink Internet Services Philippines’ VAS registration on May 26, according to a copy of the certificate of registration provided by the agency.

The company’s certificate of registration is valid until April 14, 2023.

“We would like to thank the NTC for issuing Starlink’s VAS license 30 minutes after we submitted our application with complete requirements. This shows the government’s seriousness in addressing the connectivity needs of our countrymen in unserved and underserved areas. This will also prepare us in the event of natural disasters and calamities,” Bien Marquez of Quisumbing Torres, SpaceX’s counsel, was quoted as saying in the NTC’s news release.

NTC Commissioner Gamaliel A. Cordoba said the agency is “steadfast in helping ensure that roll-out of Starlink’s internet access services will be done expeditiously and professionally.” 

According to the agency, the Philippines will be the first country in Southeast Asia to offer Starlink services. 

“Starlink is expected to cover villages in urban and suburban areas and rural areas that remain unserved or underserved with internet access services. The service is expected to bring cost effective internet access in these areas,” it said. — Arjay L. Balinbin

More ‘hot money’ enters the country in April

More foreign capital entered the country in April reflecting improved economic conditions as pandemic restrictions further eased.

Data from the Bangko Sentral ng Pilipinas (BSP) showed foreign portfolio investments (FPI) or “hot money,” yielded a net inflow of $1.36 billion in April, a reversal from the $373.95 million net outflow seen in April 2021.

This was also a turnaround from the $305.08 million in net outflow recorded in March.

The net inflow of foreign portfolio investments reflected improving pandemic conditions and pandemic management relative to other economies, Asian Institute of Management economist John Paolo R. Rivera said in a Viber message.

In the first three months of the year, the Philippine economy expanded by a better-than-expected 8.3% growth, surpassing the pre-pandemic output level amid the easing of coronavirus disease 2019 (COVID-19) curbs.

Metro Manila and other parts of the country were put under tighter restrictions in January to contain an Omicron-driven surge in COVID-19 infections. This was downgraded to the most lenient alert level in March that allowed businesses to operate at full capacity.

Mr. Rivera also mentioned that the response of the Philippine economy to stimulus from abroad such as the US Federal Reserve’s policy direction in the country affected investor confidence.

“Market sentiment also supported by generally better local economic data recently as bright spots for the economy,” said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in an e-mail.

BSP data showed gross inflows of hot money climbed by 70.1% to $2.18 billion from the $651.16 million a year prior.

The top five investor countries during the month included Singapore, the United Kingdom, the United States, Hong Kong, and Luxembourg which accounted for 94.3% of foreign portfolio investment inflow.

Majority of investments went to securities of electricity, energy, power and water; banks; holding firms; property; and transportation services. The rest were invested in peso government securities.

Meanwhile, gross outflows for the month decreased to $823 million from $1.025 billion a year ago.

In the first four months of the year, the BSP-registered FPIs yielded net inflows rose to $1.34 billion, a reversal from the $857.44 million net outflows in the same period last year.

For the coming months, foreign investments are expected to come in as the next government assembles its economic team, Mr. Rivera said.

“So far, the incoming Marcos administration is getting this right,” he added.

International developments will likely continue to cause worry among foreign investors, Mr. Ricafort said.

“More aggressive Fed rate hikes, lingering Russia-Ukraine conflict for more than three months already, some lockdowns in China could be external headwinds to the recovery in the local economy and financial markets,” he added.

The central bank expects hot money to yield a net inflow of $4 billion in 2022. — Keisha B. Ta-asan

NG budget balance swings to surplus in April

BW FILE PHOTO

The National Government’s (NG) budget gap swung to a surplus in April as revenue collection grew by double digits, while spending inched up by single digits, the Bureau of Treasury (BTr) reported on Friday. 

Data from the BTr showed the Philippines’ budget recorded a surplus of P4.9 billion in April. This was a reversal from the P44.4 billion deficit posted a year earlier. 

The last time the government recorded a budget surplus was in June 2020, with P1.8 billion.

National government fiscal performanceMonth on month, the fiscal balance reversed from the P187.67 billion deficit in March. 

State revenue collections for the month hit P348 billion, climbing by 19.19% year on year from P56 billion, as the BTR reported that all government collecting agencies saw positive results.

Tax revenues grew by 12.95% to P306.9 billion, while nontax revenues soared by 103.12% from a year ago.

The Bureau of Internal Revenue (BIR) collected P239.6 billion, inching up by 9.39% year on year, which takes into account P413 million in tax refunds.

The deadline for filing for income tax returns was on April 18.

The Bureau of Customs (BoC) collected P65.7 billion, an increase of over 26%. BTr attributed this to “improved valuation, intensified enforcement against illegal operations, and the improved compliance by traders to customs laws.” 

The BTr saw revenues surge by 184.14% to P25.7 billion from P9 billion from the previous year, more than doubling the amount. Higher collections were due to higher dividend remittances, income from its Bond Sinking Fund investments, and the NG’s share from the Philippine Amusement and Gaming Corp.’s income.

Meanwhile, government spending inched up by 1.98% year on year to P343 billion. 

Primary expenditures, or spending net of interest payments, declined by 2.18% year on year to P305.7 billion from P312.5 billion. However, last year’s primary expenditures excludes a one-time financial assistance by the NG provided to local government units (LGUs) that were under enhanced community and the timing of subsidy releases given to government-owned and controlled corporations. 

Lastly, interest payments jumped by 56.61% to P37.3 billion. 

Year to date, the government still rests at a budget deficit of P311.9 billion, narrowing by 14.75% from the P365.9 billion gap seen from the same period last year.

The period of January to April saw revenues improve by 14.56% year on year to P1.13 trillion from P988.4 billion.

Broken down, tax collections in this period saw an increase of 12.14%, with the BIR and BoC collections rising by 7.79% and 26.50% to P742.4 billion and P254.2 billion respectively.

Non-tax revenues also saw a growth of P37.94%, to P128.2 billion, as BTr collections surged by 53.85% to P74.4 billion, while revenues from other offices made up the remainder.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the surplus in April was a seasonal increase due to the government’s revenue collections for that month, a “consistent pattern seen in recent years.”

“Furthermore, the 45-day election ban on some public works [and] other government spending since March 25, 2022, could have also led to the unusual reduction in government expenditures that partly contributed to the budget surplus in April 2022,” he added.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa likewise attributed the surplus to the ban on public works during the election period.

“We expect the budget to revert to deficits in the near term as spending is allowed to resume,” Mr. Mapa said in an e-mail. “In the coming months, revenue collection will be key to ensuring deficits are contained in an effort to limit the impact on the overall debt levels.”

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail that the surplus was good news for the incoming administration, which is inheriting record-high debt.

“Anything positive that may contribute to its plans of fiscal consolidation is most certainly appreciated,” he said.

The government has set a budget deficit ceiling of P1.65 trillion for 2022 equivalent to 7.7% of gross domestic product. — Tobias Jared Tomas

Globalization’s cheerleaders grasp for new buzzwords at Davos

World Economic Forum/Pascal Bitz

DAVOS, Switzerland — World leaders, financiers and chief executives said they were leaving this week’s World Economic Forum (WEF) with an urgent sense of the need to reboot and redefine “globalization.” 

The framework of open markets that has shaped the last three decades of commerce and geopolitics looks increasingly wobbly as trade spats fan economic nationalism, a pandemic exposes the fragility of global supply networks, and a war in Europe could reshape the geopolitical landscape. 

Worry over signs of this breaking down were palpable at this week’s reboot of the WEF, an annual gathering of the world’s well-heeled, most of whom have championed globalization. 

International Monetary Fund Managing Director Kristalina Georgieva summed up the mood of the event. 

Ms. Georgieva said she fears the risk of a world recession less than “the risk that we are going to walk into a world with more fragmentation, with trade blocs and currency blocs, separating what was up to now still an integrated world economy.” 

“The trend of fragmentation is strong,” she added. 

Corporate executives in Davos were among the loudest in decrying signs of a world reverting to blocs defined by political alliance rather than by economic cooperation. 

“We cannot let globalization reverse,” said Jim Hagemann Snabe, chairman of German industrial powerhouse Siemens AG . “I will not leave Davos with that thought. I will leave with the thought that we will need more collaboration.” 

Volkswagen (VW) CEO Herbert Diess said he was concerned by the discussions of new bloc building as the German carmaker ramps up production in the United States. 

“Europe and Germany depend on open markets. We would always try to keep the world open,” he said at a briefing on the sidelines of summit. 

Officials clutched at new euphemisms for describing a new style of globalization, with “multilateralism” a favorite among buzzwords including “reshoring,” “friendshoring”, “self-sufficiency,” and “resilience.” 

“Multilateralism works!” said German Chancellor Olaf Scholz: “It is also a prerequisite for stopping the deglobalization that we are experiencing.” 

PARTY’S OVER? 

Not all are unhappy with how globalization has frayed since the last time officials and executives gathered in January 2020, just before the coronavirus pandemic took off. 

“Brazil’s out of sync with the rest of the world,” Brazil Economy Minister Paulo Guedes said. “We stayed out of the party. There was a 30-year party of globalization. Everyone took advantage. Everyone integrated the value chain. We were cursed because we were out of this thing. Now, we’re blessed.” 

Global trade accelerated from the 1990s onward as governments struck regional pacts that lowered tariffs and then as China emerged as the dominant low-cost goods producer. 

Together they enabled wide-spread adoption of just-in-time supply networks that helped speed the delivery of goods and hold down costs, contributing to the low-inflation environment that prevailed in the years before the pandemic. 

It also fueled a loss of manufacturing jobs in developed economies like the United States and Europe, a trend Guedes derided as a “global labor arbitrage” he sees coming to an end. 

Even before coronavirus disease 2019 (COVID-19) upended those supply networks, the system had come under fire from economic nationalist policies like those championed under former US President Donald Trump. The war in Ukraine has only fanned talk of a breakdown. 

Yet for all the chatter about “deglobalization,” there is little evidence so far of countries distancing themselves from one another through trade, with the notable exception of Russia after a host of sanctions and trade restrictions. 

A global index of world trade volumes from the CPB Netherlands Bureau for Economic Policy Analysis declined by 0.2% in March but is off by only 1% from its record high in December. It remains 2.5% higher than a year earlier and 11% above its pre-pandemic level. 

Still, it could emerge in the near future as companies shift some production closer to target markets to guard against single-source dependency in their supply chain. 

SELF SUFFICIENCY 

VW’s Mr. Diess said that the shift to self-sufficiency because of global supply chain disruptions should be tempered by concern for keeping markets open — even for his own company. 

“This way now of nations or big blocs becoming too self-sufficient there really is a big risk of an ever closing world. And less competitiveness. So we are really looking and hoping for open markets, which are just much better for the world.” 

Global supply chain dependencies may be seen as a problem now, but they also “help people talk to each other,” he said. 

Siemens’ Mr. Snabe said it was relatively easy for many companies to withdraw from Russia after its invasion of Ukraine because for most their exposure was relatively small. 

“Well, what if this was China? Completely different situation, completely different dependency,” Mr. Snabe said. 

“In many ways the situation in Russia and in Ukraine for me is a wake-up call … and hopefully it’s a wake-up call to collaborate more.” — Reuters