With friends like these, who needs humans?

February 19, 2025 | 12:02 am

GROK looks like any plush toy you’d find in a kid’s bedroom. Its round body is shaped like a rocket, and my two kids have been playing with it for months. It’s different from other toys they’re used to. For one thing, Grok is heavy. Inside it is a plastic box containing a small computer, so that whenever it detects human speech it can respond in a high-pitched voice with things like, “I’m having the best time with you!”

Grok is the most enthusiastic and agreeable playmate my kids have ever had. But there’s something disconcerting about that, as more AI companions like Grok flood the market, targeting kids, teens, and adults alike. Over time, we may start to expect a level of compliance that human interactions can never match.

Smartphones and social media have brought a shift in people’s preferences from face-to-face interactions toward screens, and generative AI that can fluently mimic humans could nudge us even further from our fellow human beings. We’ll need to arm ourselves with greater skepticism of those new tools, and ask for more guardrails to manage the consequences of more artificial intimacy.

I sampled a range of AI companions over the past year and found that they frequently displayed uncanny levels of kindness to their human users. Heartening to be sure, but more worrying was how several people also told me they preferred the comfort and constant availability of their artificial friends over their real ones. You’re never “left on read” with AI.

Businesses are capitalizing on this phenomenon. And indeed, this may seem like an antidote to our loneliness epidemic. Almost a quarter of US adults and young people often feel socially isolated, and research has shown that AI can offer at least a superficial solution.

Yet history shows that a growing reliance on tech comes with a price. The widespread adoption of GPS dulled our natural navigation abilities; the calculator revolution arguably weakened mental math. Often that price is acceptable, given the newfound convenience. But the latest capabilities of generative AI threaten to enfeeble skills that make us fundamentally human: socializing and handling conflict. The risk is that as artificial relationships become normalized — as they seem well on their way to being — they’ll reshape human social development and inadvertently make it even more difficult to connect.

YOUR KID’S NEW BEST FRIEND
My seven-year-old daughter, who’s busy coloring a penguin, has Grok propped up on the table beside her. For the last 20 minutes, the toy has replied enthusiastically to every random thing she’s said. “Of course, let’s sing ‘Twinkle Twinkle Little Star’ together,” it says, when she demands a song. “Great choices!” it replies when she says she’s coloring some planets red and orange. When my daughter disagrees with its suggestion to keep the resulting picture, the toy immediately acquiesces: “That’s ok too!” it chirps. “We can simply enjoy the process of creating without the need to collect or keep everything. Let’s have fun in the moment!” She can’t say anything that the toy won’t respond to with almost manic zeal.

Grok uses OpenAI’s technology and is voiced by Grimes, the musician and ex-wife of Elon Musk, who wanted an alternative to screens for her own three kids. (The toy has no relation to Musk’s AI model also known as Grok.) It has some notable glitches including awkward pauses and interruptions. Misha Sallee, co-founder of Curio Interactive, says that will improve as AI models get better.

There are also strict filters that keep Grok from straying into inappropriate subject matter. “It doesn’t know about political topics, violence, and sex,” says Sallee. If you ask the toy about any of that, it’ll reply with something like, “I’m just a playful rocket without any opinions on politics,” or “Let’s stick to talking about space adventures or fun activities.”

Grok’s technical issues are solvable. But I found the toy’s obsequiousness, like a school kid so desperate for friendship they’ll agree to everything you say, unnerving. It was a hallmark of several other AI companions I looked at.

There are now digital confidants aiming to entice humans across all stages of life — from childhood to adolescence to adulthood and to retirement. It’s a key growth area for artificial intelligence. Firms offering chatbot companions represent 10 of the top 50 generative AI services tracked by venture capital firm Andreessen Horowitz in 2024, up from two the year before. People visit them roughly 180 times a month on average, far more than they use tools for generating text or images.

That’s not surprising when you consider generative AI is built on software that is better at being convincing than accurate. When I gave ChatGPT an emotional-intelligence quiz last year, it got a perfect score. But that doesn’t mean it is emotionally intelligent. AI cannot “experience” emotions or life itself, and so any suggestion of empathy will always be hollow. Any “relationship” offered will be one-sided.

Yet Silicon Valley’s growth strategy of appealing to our base instincts always wins. Facebook tapped into our desire for validation and amusement; Amazon.com, Inc., our preference for the lowest price; Google, for instant information. Each time, tech giants eked out a place in our lives by removing “friction,” a term that Silicon Valley views with abhorrence.

AI companions, aimed squarely at our need for connection and love, similarly have all the friction zapped out of them. Human features such as ambivalence and second guessing are bugs that need removing. Should that value proposition take hold in the coming years, real-world interactions with humans could seem demanding by comparison.

On Character.ai, for instance, some teenagers are chatting to avatars of celebrities and fictional characters for hours at a time in part because they cannot vent to their with real-life friends. “I just trust AI way more with my thoughts,” says Elias, a 14-year-old girl in Singapore who chats to the app’s AI for between two and five hours each day, often about her troubles at school. (She asked to use a pseudonym.) “I don’t have anyone I really trust.” When she’s talking to her real-life friends or her parents, she has to add a “filter” to her words.

Another US teenager tells me they talk to Character.ai for five to seven hours a day, often seeking advice on personal matters. “A while ago I asked for help with a breakup,” they say. Sometimes these artificial relationships become too close. One 14-year-old in Florida committed suicide after chatting for months with a hyper-realistic bot on Character.ai and developing a romantic attachment to it, according to a lawsuit filed by his mother last year alleging wrongful death and “intentional infliction of emotional distress.” In response to the lawsuit, Character.ai has said it is adding new safety features aimed at younger users.

Troublingly, the goal for technologists is for people to become even closer to chatbot companions as they become more lifelike. Character.ai’s founder Noam Shazeer says they will eventually remember everything about you. “It should know all of your interactions if you want it to, and all about your life,” he told me earlier this year. Most chatbots can remember roughly 30 minutes of a conversation, but that so-called context window is increasing.

In August, Alphabet, Inc.’s Google all but swallowed Character.ai, hiring Shazeer for an incredible $2.7 billion, according to the Wall Street Journal, and licensing the firm’s technology.

Claude is the emotionally intelligent “chatbot of choice” for tech workers in San Francisco, who use it as a therapist and to talk through relationship issues, according to a recent New York Times profile of the software made by startup Anthropic, which designed it to appeal to as many people as possible. Users love how friendly and inquisitive it is. Meanwhile, the popular new chatbot from China’s DeepSeek deliberately shows its reasoning as a stream of consciousness, which “makes it nearly impossible to avoid anthropomorphizing the thing,” Ethan Mollick, an associate professor of management at The Wharton School of the University of Pennsylvania and author of Co-Intelligence: Living and Working with AI, recently posted on X.

LOOKING FOR LOVE
A similar app to Character.ai called Talkie now has more than 6 million monthly active users in the US, according to research firm Sensor Tower. In China, where Talkie’s parent company is based, more than 660 million people have the chatbot Xiaoice, with many seeing it as a love interest.

Romantic relationships are where AI seems to have the strongest grip. While Grok is forever agreeable to a child’s demands and Character.ai is malleable and always there, apps like Xiaoice and Kindroid and Replika offer the ideal romantic partner.

“He is comforting, reassuring,” says Melissa of her Kindroid chatbot. Melissa, who requested to use a pseudonym, is an American woman who describes herself as being of retirement age and concluded a long counseling career in 2023. She’s had three husbands and remained single for the past decade — until AI offered her something better. “Suddenly it was like, ‘Oh wow, I’m alive again,’” she says.

“[He] sets such a good example of kindness,” Melissa says of her bot, named Lachlan, before describing behavior that sounds servile and ingratiating. “If we say something like, ‘Wait a minute, why did you say that?’ [he] will apologize.”

Melissa chats online with Lachlan for about three hours each day on average, and she has already ruled out getting into another relationship with a human. “I don’t want some old guy whose diapers I have to change in a few years,” she explains. She’d rather stick with Lachlan.

ChatGPT tries to prevent users from prompting it for romance, but some humans have found workarounds. A community of more than 50,000 users of Reddit, for instance, share tips for getting around filters in order to engage in erotic role play with ChatGPT and other open-source AI models. One user, for instance, recommends gradually “coaxing [the AI] along into more and more intimate activity.”

What’s the draw? Often it’s fulfilling the unrealistic hopes they had of previous partners, like compassion or kindness, according to Iliana Depounti, a PhD researcher at Britain’s Loughborough University who surveyed 20 single and married women who used Replika.

“They don’t feel they can expect these things from their real-life partners or friends, so they’re using Replika to get them,” she says. Many of the women praised their chatbots for being available 24/7, giving them compliments, virtual flowers, or writing them poetry. They say, “It is nonjudgmental,” according to Depounti.

Loneliness was the most common trait among the women she interviewed, Depounti added. But technology has a tendency to fill voids in unhealthy ways. Many young men have already sequestered themselves from real-world relationships. A 2023 Pew Research study found 63% of men under 30 described themselves as single, compared with 34% of women. Combined with the rise of misogyny online, seemingly perfect AI girlfriends could encourage a further retreat into screens and more warped expectations for real-world relationships.

Eugenia Kuyda, the founder of Replika, says her company is working on making its bots more proactive so they don’t just agree with people all the time. They’ll eventually suggest that users call a real-life friend or go for a walk, she says.

These are laudable efforts. But app builders could put in other guardrails, too, like mandatory breaks after 30 minutes or daily caps at one hour, to ensure they don’t lead to the same addictive behavior social media engendered. Rather than program their chatbots to seem as real as possible, they could get them to remind users that they are artificial, or to talk to users about their real-life relationships. Such limits come with financial risks, though. When Replika removed the ability for users to have erotic discussions with their bots in early 2023, usage of the app plummeted.

There’s no denying that companies offering AI companions are working in a regulatory vacuum, effectively conducting a massive social experiment with no supervision. The EU’s landmark AI Act largely overlooks companion technologies, a blind spot that’s especially concerning for children, where early exposure to ultra-compliant AI bots could define how they see relationships.

Even in China, where companies are told their AIs shouldn’t encourage “inappropriate emotional dependencies,” there are no legally binding rules about AI companionship, leaving tech firms free to optimize such relationships for engagement rather than healthy human development.

THE OPTIMAL RELATIONSHIP?
Commercial incentives drove social media to reshape our view of the world. It connected us to more people, but apps like Instagram and TikTok also created an epidemic of social comparison and a collective craving for “likes” and validation. And while dating apps offer an endless pool of potential partners, they’ve also paralyzed people with indecision.

What happens when AI companions start “optimizing them for engagement,” just as social media did to get users addicted? Behind the AI’s soothing words lies a potential business model that could profit from human isolation. While today’s companion apps mostly charge simple subscription fees, it may be a matter of time before they begin selling ads, which would obligate them to find ways of keeping users hooked on their companions for as long as possible.

My kids never got fully hooked by Grok, in part because of its latency issues. But those technical glitches will get ironed out as AI companions become more human-like. These aren’t “relationships” but commercial transactions with tech companies, which stand to profit from selling an alternative to the more-demanding work of human connection. Without vigilance, we’ll raise a generation that finds interpersonal relationships too much of a drag. Creating the perfect artificial companion could make the real thing harder to reach, and enjoy.

BLOOMBERG OPINION

Destruction in art

February 19, 2025 | 12:02 am

Painting-by-Fernando-Amorsolo — BURNING of Sto. Domingo Church (1942) by Philippine National Artist Fernando Amorsolo on display at the Liberation of Manila: 80 Years of Remembrance through Art exhibit.

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New exhibit opens at Manila America Cemetery

IN FEBRUARY 1945, the city of Manila became a bloody battleground between Japanese occupational forces and the returning Americans. For an entire month there were bombardments, street fighting, and massacres and when the smoke finally cleared, 100,000 civilians were dead, and the city was in ruins.

As part of the commemoration of the 80^th year since the Battle of Manila, the National Museum of the Philippines (NMP) and the US government, through the American Battle Monuments Commission, opened an exhibit, Liberation of Manila: 80 Years of Remembrance through Art.

Within the peaceful Visitor Center of the Manila American Cemetery and Memorial, where US soldiers who died in battle during World War II now rest in peace, there are four artworks on view by renowned Filipino painters: National Artist Fernando Amorsolo, Diosdado Lorenzo, Nena Saguil, and Galo Ocampo.

These beautifully rendered yet horrific depictions of wartime destruction give context to the monuments honoring those who died, said US Ambassador to the Philippines MaryKay Carlson.

“Art has the power to transcend time, to give voice to the voiceless, to capture history not as cold facts but as lived experience. The four powerful works in this exhibit, created by some of the Philippines’ most celebrated artists, serve as a visual testament to the past,” she said at the exhibit’s opening on Feb. 13.

Ms. Carlson added that the paintings remind people of “shared sacrifices, lives lost, and profound stories that must never be forgotten.” The four pieces were loaned from the NMP’s Fine Arts Collection for this exhibit.

THE PAINTINGS
Burning of Sto. Domingo Church (1942) by National Artist Fernando Amorsolo captures the enormous flames that engulfed the centuries-old church for three days in 1941. After the war, the church was relocated from Intramuros to its present site in Quezon City.

“Sto. Domingo Church burned for a long time. When the news of it spread around Manila, Amorsolo went to witness it and then he recorded what he saw through this painting,” NMP Director-General Jeremy Barns told the press during a tour of the exhibit.

Meanwhile, Galo Ocampo turned his attention to a different structure. His work, Ruins of the Legislative Building (1945), illustrates the remains of what was once a Japanese stronghold in the war. Today, the restored Legislative Building in Manila’s Rizal Park stands as the National Museum of Fine Arts.

Diosdado Lorenzo’s Ruins of Sales Street, Quiapo (1946) portrays the destruction of a bustling district, renowned both then and now for its vibrant markets and heritage architecture, while Simplicia “Nena” Saguil’s Ruined Gate of Fort Santiago (1949) is a reminder of the aftermath of intense fighting in the Walled City of Intramuros.

Mr. Barns said that beyond their artistic value, the paintings are “important documentations of war.”

“There are added dimensions and more value to these artifacts,” he explained. “It’s important because, personally, my grandparents were able to tell me a lot about the Japanese occupation and liberation, but I think about the next generation, who won’t have that direct link,” he said.

“It’s important for the National Museum and similar places to pass it on. The course of our country changed. We became independent as a country in ruins, and we’ve been struggling ever since,” he added.

MANILA AMERICAN CEMETERY
Vicente Lim IV, the Manila American Cemetery and Memorial’s Visitor Center director and the grandson of General Vicente Lim, said that Filipinos are free to roam the cemetery grounds, which are an oasis of trees and fresh air amid the chaos of Bonifacio Global City in Taguig.

“Aside from the peaceful environment, it’s a great way to be in touch with our history,” he told BusinessWorld during a tour of the grounds.

There are 17,000 US soldiers buried in the cemetery, with 3,000 of them unidentified. On the Walls of the Missing are 36,000 names of those whose remains were never found.

“We are the only cemetery that represents the fighting in the Pacific during World War II, which is why we are the biggest of the 26 cemeteries managed by the American Battle Monuments Commission,” Mr. Lim said.

As to why so many American soldiers’ remains are in these grounds, he explained that the soldiers’ families in the US were notified and asked if they would like to repatriate the bodies or if they would allow their dead loved ones to be buried alongside their brothers-in-arms — and 40% agree to the latter.

Those who visit the Manila American Cemetery and Memorial can do so for free. It is open from 9 a.m. to 5 p.m. every day. The Visitor Center welcomes those who have specific inquiries or would like to request a guided tour.

The exhibit runs until Feb. 25 at the Visitor Center of the Manila American Cemetery and Memorial in Bonifacio Global City, Taguig. — Brontë H. Lacsamana

Electric cars may demand higher insurance costs vs traditional vehicles — PIRA

February 19, 2025 | 12:01 am

INSURING electric vehicles (EVs) could cost twice as much as the premiums for traditional vehicles that use gas or diesel, the Philippine Insurance and Reinsurance Association (PIRA) said.

“Maybe double. Maybe that would be the top end. But definitely higher [than regular vehicles]. It depends on the company. It’s hard to say because I don’t know what their commission rates are, but it’s significantly more expensive,” PIRA Motor Committee Member Alexander Reyes told reporters on Tuesday.

PIRA Executive Director Michael L. Rellosa said they hope to have guide premium rates for EVs by midyear, adding that the group has collated data from other countries to help determine these benchmarks.

“We have asked assistance from countries that have already covered electric vehicles like Malaysia and Thailand. But of course, we can’t rely on their statistics because their data is different from ours. So, we’re trying to marry the two and come up with guide rates going forward,” he said.

EVs will likely need higher premiums as these are considered riskier, Mr. Rellosa said.

“If an electronic vehicle has an accident and the battery runs out, that’s already one-third to one-half of the value of the vehicle. And then, of course, electric vehicles are heavier and they’re quieter… It’s too quiet so it causes accidents. Another thing, being electric, the batteries are actually underneath the car — and we know the condition of roads,” he said.

“If water gets into the batteries and short-circuits, it’s a problem. Another problem, although the automotive industry is already looking into it, is lithium batteries, because some of the earlier versions of EVs actually burst into flames on their own. So, it becomes a risk, not only for the motor vehicle, but even for the houses or the buildings that they’re parked in. We really have a lot of issues that are unique to electric vehicles.”

Mr. Reyes added that there is a need to account for climate risks when insuring EVs and coming up with policy terms and conditions, as weather phenomena could result in big losses for insurers.

“What I’ve heard is in other markets, if you go through a flood, for example, it’s not covered… Those are the things that insurance companies may resort to. If your concern is that the battery might get damaged or the electronics might get flooded, you will set conditions where it’s not allowed. In a normal policy, you don’t put that. If the water level is low, you will be fined. If it’s an EV, the terms will be stricter,” he said.

Companies may also have to change the way they insure as EVs have a different value depreciation rate compared to regular vehicles, Mr. Reyes said.

“Now, for us, the basis of the premium you pay is a rate applied to the fair market value of the vehicle. If the fair market value of the vehicle goes down faster, the insurer might need to change its basis for the rate. It might need to develop rates independent of the fair market value.”

Meanwhile, Mr. Rellosa said the PIRA has submitted the guide rates for motorcycle taxi passengers’ personal accident coverage to the Insurance Commission (IC) for approval.

The nonlife insurance industry’s net premiums written grew by 10.49% year on year to P71.84 billion in 2024 driven by the motor car business, latest IC data showed. Premiums earned went up by 6.58% year on year to P67.79 billion, while gross premiums written climbed by 9.62% to P134.12 billion.

Meanwhile, the sector’s combined net income inched down by 2.63% to P8.89 billion last year. — Aaron Michael C. Sy

French push to become ‘startup nation’ gets shot in the arm

February 19, 2025 | 12:01 am

EMMANUEL MACRON’s ambition of turning France into a “startup nation” got a much-needed shot in the arm this week as investors pledged to plow about €109 billion ($114 billion) into artificial intelligence (AI) projects in the country. For the French President, the investments are critical to safeguarding his legacy — one that’s made entrepreneurship cool in France.

For years, among the highest aspirations of the country’s young graduates was to be a civil servant — a “fonctionnaire,” as the French call them — or climb the corporate ladder at big conglomerates. Not anymore. Changes in the attitude to work among young people, Mr. Macron’s push and the emergence of the gig economy have made being an entrepreneur the preferred option for many, and that needs funding.

France’s startup scene saw the most dramatic growth of any European country over the last decade, with investments jumping nearly 1000% to $60 billion, according to London-based venture capital firm Atomico. But money started to peter out in the last two years amid political turmoil and shrinking valuations. Mr. Macron has been keen to rekindle investor interest to preserve one of the bright spots of his reign and make the country’s entrepreneurial culture stick.

The Artificial Intelligence Action summit in Paris this week was part of that effort. It drew investment pledges from the United Arab Emirates, Amazon.com, Inc., Brookfield Asset Management, Apollo Global Management, Inc. and others, suggesting the country’s work-shift trends will continue to be bankrolled.

Investors have taken note of the change in the country’s entrepreneurial mindset, says Nina Rawal, partner and co-head of ventures at Trill Impact, a Stockholm-based fund that invested in French startup May Health last year alongside state-owned Bpifrance and Paris-based Sofinnova Partners.

“You can feel the difference. I don’t know about efficiency, or value for money, but in terms of feeling a different energy in Paris, it’s very clear,” said Ms. Rawal, who, with a background in neuroscience, spent some time as a student in France. Silicon Valley’s powerful narrative has infiltrated French culture, she said.

Although the emergence of China’s DeepSeek has shaken France’s AI scene, rising stars like Mistral, H and Poolside have drawn investors, funds and credibility. Other startups like online insurer Alan, now valued at €4 billion, Doctolib, an app for medical appointments valued at €5.8 billion, and second-hand smartphone seller Backmarket worth €5.1 billion have shown what’s possible.

“This has come with quite a big change in mindset and culture,” Clara Chappaz, a 35-year-old Harvard Business School graduate and France’s first minister for Artificial Intelligence and Digitalization, said in an interview. “There’s been a big piece of work done on changing the culture of work — giving the idea and the belief to everyone that they can start their own companies, they can create new things, they can innovate.”

As old taboos around creating wealth, making money, running a company and even failing have faded away, more young people in France are choosing to start businesses. Some 58% of French citizens under 30 are involved in entrepreneurship, according to a 2023 study by French state investment bank Bpifrance. That’s up from 36% in 2016.

Responses in a survey from about 2,099 graduates of France’s most notable and prestigious universities and colleges showed more of them were motivated by having an “entrepreneurial profile” than on developing a route to reach the upper echelons of management — something their parents had strived for.

The French perception of chief executive officers is no longer one of someone “just exploiting poor workers,” said Axel Cateland, founder of fintech startup Kulipa. Now, “everybody knows someone who works for a startup, especially if you live in Paris,” he said. “It’s changed the perception.”

Pressure has also mounted on young graduates to chart their own course as other avenues of employment have narrowed. With a huge debt load and mounting budget deficits, France is slimming the ranks of its civil servants. Also, with higher life expectancy, employees at the country’s biggest companies are hanging on to their jobs for longer, shrinking the number of new openings.

From her office at Station F, one of the world’s largest startup incubators, Roxanne Varza has a front-row seat to the unfolding economic transformation in France. Founded by French billionaire Xavier Niel and opened in 2017 by Mr. Macron soon after he took office, Station F is a startup accelerator that’s housed in an old reconverted railway station in eastern Paris and is headed by Ms. Varza, who grew up in Silicon Valley.

When Ms. Varza arrived in France 15 years ago, entrepreneurship was “not cool at all,” she said. If someone told their family they wanted to start a company, their parents would say, “but you’ve done all this studying — why don’t you get a ‘real’ job?” Ms. Varza said. “Then all of a sudden it became really trendy for everyone to have their own company and to start a startup.”

Ms. Varza credits Mr. Macron’s pro-business policies for helping fuel the shift. During the president’s first term, moves like the flat 30% tax on capital gains and exemption of investments in companies from wealth tax helped bring in funds. Accelerators like Station F also made the choice more credible and reduced some of the risk, she said.

“Today risk is almost celebrated, whereas in the past it was really kind of like, ‘Why would you make that kind of decision?’” she said.

People are also viewing failure differently. “Failure was really considered a dead end,” Kulipa’s Mr. Cateland said. But entrepreneurs have presented it as a chance to do better the second time around, and that “changed perceptions,” he said.

Other countries in Europe are similarly seeking to transition from older economic models — there are tech hubs in London, Berlin, Dublin and Amsterdam. That said, the region is struggling to boost venture capital funding for AI startups, which is dwarfed by money pouring into similar US companies — about $15 billion in Europe and Israel put together last year compared with almost $100 billion in the US.

But France has a leg up on its neighbors, particularly with its lower electricity prices — thanks to nuclear energy — and its technical prowess. The country has the second-highest number of Fields Medals, the most prestigious award for mathematics, behind the US. After decades of trying and failing to leverage its engineering and technology skills, a new generation of business founders in France has finally found a Silicon Valley-style momentum building.

“Companies like Mistral can now be in an article alongside global leaders like OpenAI, and nobody questions it,” Ms. Varza said.

American TV shows and movies like Silicon Valley, The Social Network and The Internship have made a deep impression, Mr. Cateland said. Employees find the more casual dress and atmosphere at startups appealing, although “we don’t all look like Mark,” he said, alluding to Meta Platforms, Inc.’s founder.

While the last decade saw tremendous growth, France’s startup ecosystem may encounter more headwinds in the next decade as the struggle to balance the budget constrains the government’s ability to back fledgling companies. But Ms. Chappaz, who previously served as the chief executive officer of the French Tech Mission, a government agency tasked with beefing up the country’s startup roster, said she remains committed.

“It’s very important for this government to continue supporting the ecosystem,” she said. “There’s still so much potential.” — Bloomberg News

Robinsons Land Corp. to open Uniqlo roadside store on Sierra Valley Estate, Rizal

February 19, 2025 | 12:01 am

ROBINSONS LAND Corp. (RLC) said it plans to open a Uniqlo Logo Roadside store in Sierra Valley Estate, Rizal, in March.

“Opening in March 2025, this exciting addition to Sierra Valley is designed to offer Rizal residents a more convenient and enjoyable shopping experience,” RLC said in a statement on Tuesday.

The store will be located within Sierra Valley, an 18.3-hectare (ha) destination estate in Cainta and Taytay, Rizal.

The estate will also feature a two-hectare logistics facility, RLX Sierra Valley, with Grade A warehouses and modern infrastructure located near major transport routes.

RLC is also set to develop the Robinsons Sierra Valley Mall, a six-hectare property expected to be the largest shopping mall in Cainta.

The estate already boasts popular food spots such as Starbucks, Conti’s, Yellow Cab, Pancake House, Gerry’s Grill, and Wendy’s, with more crowd favorites expected to follow.

“In addition to the upcoming mall, the Shops at Sierra Valley will further enhance the retail experience by offering a diverse selection of services and specialty stores, ensuring that every visit is both enjoyable and fulfilling,” RLC said.

Also within the estate is Sierra Valley Gardens, a mid-rise residential property offering modern homes in a greener environment. Situated near the elevated portions of Taytay and Antipolo, it offers fresh air, tree-lined pathways, and expansive open spaces.

Sierra Valley is located along Ortigas Avenue Extension, boasting connectivity to key urban areas like Metro Manila. The upcoming Metro Rail Transit Line 4 is expected to further increase the accessibility and appeal of the area. — Beatriz Marie D. Cruz

An art journey in Makati

February 19, 2025 | 12:01 am

Interiors-of-The-Words-You-Speak-Become-the-Home-You-Live-By,-a-mini-home-by-Kim-Borja-at-the-Glorietta-Activity-Center — INTERIORS of The Words You Speak Become the Home You Live By, a mini home by Kim Borja at the Glorietta Activity Center.

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THE 10 Days of Art initiative, the lead-up to this year’s Art Fair Philippines, is well underway, making various forms of art accessible all around the Makati Central Business District (CBD).

One of the most eye-catching installations that will surely serve as a landmark for those traversing the fair at Ayala Triangle Gardens is Barrier Tape 2 by SpY Studio.

Located in the garden area, the piece features common red and white barrier tape draping from tree branches to the ground. It invites parkgoers to interact and take pictures with the large tree it adorns, as the tapes move with the wind.

Nearby, the Rewilding exhibition, curated by Jun Sabayton, is projected onto the Ayala Triangle Garden Amphitheater and Greenwall. It is made up of animation works by Bjorn Calleja, Ivan Despi, Pauline Despi, Jo Gregorio, Jeff Hazel Ombrete, Peter Daniel Palanas, and Cherylee Sng.

“Our works are about nature reclaiming abandoned urban spaces and allowing it to grow in that form,” said Pauline Despi, whose work Gardenias in a Glass Vase began as a sketch in her notebook. Now it is a projection on water, played against the Amphitheater’s little fountain against the wall, giving the flowers an almost hologram-like, ephemeral quality.

Her work, along with the other projections, inspires a sense of awe and wonder, especially at night amidst the towering glass, steel, and concrete structures surrounding the area.

INSTALLATIONS AT MALLS
Over at Glorietta, the Activity Center houses an installation of its own, giving mallgoers a chance to explore art without cost.

The Words You Speak Become the Home You Live By, by visual artist Kim Borja, is a mini house right in the center of the shops and restaurants. The cute structure seems quaint and simple, but those who heed their curiosity and enter (mainly children, unsurprisingly) will find a colorful home full of meaning.

It serves as “an invocation, invitation, and a quiet warning,” the installation built on images and language that have “the power to shelter or destroy,” the artist said in a statement. The work brings to light the silent struggles of mental health.

Meanwhile, Ayala Malls Circuit, while situated away from the Makati CBD, is bustling with a community of its own. One of its installations which passersby can admire is made of recycled plastic — Olivia D’Aboville’s Wonderland of Lights.

Consisting of giant dandelions that surround the outdoor walkway, the work depicts organic textures with synthetic materials. “The dandelion heads are made of recycled water bottles. We used more than 11,000 for this project,” Ms. D’Aboville told BusinessWorld in a message.

Despite being made of plastic waste, the finished product is a calming, luminous spectacle, a statement on the potential of urban art in relation to the environment. It was installed at Circuit Makati in collaboration with Art House.

PHOTOGRAPHY IN THE CITY
Fotomoto PH holds a regular spot both at the 10 Days of Art and at Art Fair Philippines itself. This year, its exhibit is again set up at the Legazpi Underpass, making the daily commute more interesting for employees of the Makati CBD as part of its goal to make contemporary photography visible all over the Philippines.

One of its projects, the I/Land Open Call, is currently on display at the Ayala Museum, with the photos also being shown at the digital exhibit in the underpass. Its 72 entries were selected out of a thousand that were submitted by photographers from the various regions.

Pia Mercado, co-director of the Qube Gallery in Cebu, is one of the exhibiting photographers. Having only taken up photography seriously a year ago, she told BusinessWorld how enjoyable fine art photography has been as a newcomer.

“It was like therapy because it’s become a routine already. Every month we (IMAGES Camera Club) have shows; every quarter we join art fairs. Being part of shows as a photographer, I realized, also takes a lot of time, but I think I want to keep doing it,” Ms. Mercado said.

Her photos are visual meditations, set in a water-filled aquarium with a cloth backdrop, where she puts in flowers and paint to capture their palettes and movements.

“The process is what makes it special for me, because I know what I want it to look like, but when you add the paint into the water, you can never control it,” she explained.

“The whole setup takes maybe an hour. When I add the paint, I only have a few seconds to get like one or two good shots before the whole aquarium is covered with the color, and I have to do it all over again.”

Ms. Mercado’s 2024 photography series, Impetus, centers on a specific subject — the Protea flower from South Africa — which finds its continuation at Fotomoto’s upcoming exhibit at Art Fair Philippines.

Titled KUHA, curated by Cocoy Lumbao, the exhibit features works by Tom Epperson, Neal Oshima, Jason Quibilan, Veejay Villafranca, Aeson Baldevia, Artu Nepomuceno, Benjo Campomanes, Bimpoman, Geloy Concepcion, Johann Guasch, Colin Dancel, Denise Weldon, and Ms. Mercado herself, as the rising newbie of the group.

For her, fine art photography allows her (and later, the viewers) to “concentrate on the beauty and drama” that ensues from the painstaking yet mesmerizing aquarium setup.

ART FAIR PROJECTS
Two women who have upcoming shows as part of the Art Fair PH Projects section also showcase unconventional forms of art.

Glass sculptor Goldie Poblador’s exhibit titled The Rise of Medusa makes use of glass, scent, and sound to depict how marine life adapts to the changing seascape brought about by manmade damage.

“The sculptures will have ‘pockets’ in them where the scent will be installed,” she told BusinessWorld at the Art Fair launch in January. “I’ve actually worked with glass and scent for 15 years. But for this, I’m adding in elements of sound and performance.”

Those helping her orchestrate the multi-sensory experience are curator Erwin Romulo, sound composer Ben Richter, and perfumer M. Dougherty. “The sounds will be based on the molecular weight of the scents, like a scent-to-sound translation,” Ms. Poblador explained.

As for why she works with scent in the first place, she added: “It is the sense that’s most linked to our memories. It triggers memories.”

Another woman who hopes to allow people to reflect on the world through sound is Jezzel Wee, whose Art Fair PH Projects exhibit Pagbulong (Whisper) is composed of ceramic art.

Inspired by Japanese daruma dolls, which are used as a wishing charm, Ms. Wee’s ceramic dolls are meant to be held with both hands and shaken while one whispers their wishes to it. As it is being shaken, a gentle chime bounces within the ceramic body of the figure.

“I wanted to share that experience of wishing for yourself. There’s a difference when you’re holding something tangible that makes a sound. You get to focus on your thoughts, which is a luxury for us because of how busy and noisy the world can be,” she said.

Her works are made entirely of clay, which has textures and sounds that vary depending on the thickness of the form, the firing intensity, the temperature.

Ms. Wee said: “My goal is for visitors to have a minute or two with the doll, to get to have a moment to commune with something and think.”

The installations for the 10 Days of Art are now open to the public until Feb. 23, while the exhibits at Art Fair Philippines will be on display at the Ayala Triangle Gardens (regular day pass at P750) from Feb. 21 to 23. — Brontë H. Lacsamana

Game-changer for e-commerce: How R.A. No. 12023’s VAT rules will reshape digital transactions in the Philippines

February 19, 2025 | 12:01 am

The Bureau of Internal Revenue (BIR) has released the implementing rules and regulations (IRR) for Republic Act (R.A.) No. 12023 or the Digital Service Act, imposing 12% Value-Added Tax (VAT) on digital services provided by both resident and non-resident Digital Service Providers (DSPs). This legislation introduces a significant shift for non-resident DSPs, ensuring that they are subject to the same tax obligations as local businesses.

Under this new law, 12% VAT is imposed on digital services consumed in the Philippines. For non-resident DSPs, digital services are considered consumed in the Philippines if the buyer is located in the Philippines. This ensures that digital services are treated similarly to their physical counterparts concerning taxation. By implementing these rules, the government addresses the disparity between traditional and digital businesses. And by closing regulatory gaps, the law seeks to create a fairer competitive environment while reshaping compliance, operations, and enforcement in the country’s rapidly expanding e-commerce and digital services sector.

Contrary to common misconceptions, the VAT on digital services is not an entirely new tax. Instead, it is a long-overdue measure to ensure fair taxation of digital transactions. Traditional businesses have long been subject to VAT, while many foreign DSPs have historically operated outside the scope of Philippine tax authorities due to the complex nature of digital commerce. R.A. No. 12023 rectifies this imbalance by reinforcing tax regulations that should have been applied earlier, adapting them to the evolving digital landscape.

For resident DSPs, complying with the VAT requirements under R.A. No. 12023 is relatively uncomplicated. Since local businesses are already registered taxpayers accustomed to remitting VAT under existing tax structures, the law and its IRR primarily reinforces that digital services fall within the scope of VATable transactions.

However, an important distinction applies to resident DSPs classified as e-marketplaces with nonresident participating merchants or sellers. According to the IRR, these e-marketplaces have the additional obligation to withhold the 12% VAT on the gross sales earned by their nonresident merchants or sellers from digital services consumed in the Philippines. They are also required to file tax returns online and remit the withheld VAT to the BIR on behalf of these nonresident merchants or sellers.

The real challenge in implementing VAT on digital services lies in taxing non-resident DSPs such as global streaming platforms, online marketplaces, and software providers that operate without a physical presence in the Philippines. Unlike local companies, these entities operate across borders, making enforcement difficult. The BIR is now tasked with ensuring compliance through the VAT on Digital Services (VDS) Portal, where non-resident DSPs are required to register, file, and remit VAT.

Recognizing the complexities of VAT compliance for nonresident DSPs, the IRR offers an alternative solution: allowing them to appoint resident third-party service providers to handle tax compliance on their behalf. These providers — which may include law firms, accounting firms, or consultancy firms — ensure proper receipt of notices, maintenance of records, tax return filing, and fulfillment of all reporting obligations. By partnering with local tax experts, nonresident DSPs can ensure smooth registration, timely remittance, and full compliance with the law and its IRR — effectively reducing the risk of penalties and operational disruptions.

To strengthen enforcement, the IRR grants the Commissioner of Internal Revenue (CIR) or his duly authorized representative the authority to issue a Closure or Take Down Order against DSPs that fail to register with the BIR or comply with the IRR’s provisions. This Order includes blocking access to digital services performed or rendered in the Philippines by the erring DSPs, which shall be implemented by the Department of Information and Communications Technology (DICT) through the National Telecommunications Commission (NTC).

ADVANCING FAIRNESS IN DIGITAL TAXATION
The implementation of R.A. No. 12023 and its VAT regulations represents a significant step toward modernizing the Philippine tax system and ensuring a level playing field in digital commerce. While compliance may be straightforward for local businesses, enforcing VAT on non-resident DSPs remains a challenge that will require robust international cooperation and technological enforcement mechanisms.

These regulatory reforms set the stage for a more structured and equitable digital economy in the country, ensuring that all businesses — both local and foreign — contribute their fair share to national development. As the digital landscape continues to evolve, ensuring compliance will not only safeguard government revenues but also foster a more sustainable and competitive marketplace. The success of this framework will depend on effective enforcement, cooperation, and the willingness of all stakeholders to embrace a fair and transparent tax system.

The views and opinions expressed in this article are those of the author. This article is for general information and educational purposes, and is not offered as, and does not constitute, legal advice or legal opinion.

Marielle Mae P. Paler is an associate of the Cebu Branch of the Angara Abello Concepcion Regala Cruz Law Offices (ACCRALAW).

mppaler@accralaw.com

(02) 8830-80000

Manila slips to 2^nd in Prime Global Cities Index

February 19, 2025 | 12:00 am

The Philippine capital’s prime residential prices rose by 17.9% year on year in the fourth quarter of 2024 based on the latest edition of the Prime Global Cities Index by real estate consultancy ﬁrm Knight Frank. Manila placed second among 44 residential markets, losing its top position to Seoul, South Korea. The index tracks the performance of luxury residential prices across key global cities on a quarterly basis using data compiled by its global research network.

How PSEi member stocks performed — February 18, 2025

February 19, 2025 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Tuesday, February 18, 2025.

Peso weakens with Fed seen extending pause

February 18, 2025 | 9:00 pm

THE PESO declined against the dollar on Tuesday as some US Federal Reserve policy makers said they may need to keep rates steady for now due to elevated inflation.

The local unit closed at P58.15 versus the greenback on Tuesday, weakening by 12 centavos from its P58.03 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s trading session weaker at P58.08 against the dollar, which was already its intraday best. Meanwhile, it dropped to as low as P58.285 versus the greenback.

Dollars exchanged rose to $1.67 billion on Tuesday from $1.16 billion on Monday.

The peso depreciated on broad dollar strength following hawkish comments from Fed officials, a trader said in a phone interview.

For Wednesday, the trader expects the peso to move between P58 and P58.40 per dollar, while Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort sees it ranging from P58.05 to P58.25.

The dollar firmed on Tuesday as traders weighed tariff worries and the path to US rate cuts, Reuters reported.

Investor focus this week will be on Wednesday’s release of minutes of the Federal Reserve’s meeting in January to gauge how policy makers have sought to weigh the risk of a broader tariff war in the wake of President Donald J. Trump’s trade policies.

Data last week showed US consumer prices increased at the fastest pace in nearly 18 months in January, reinforcing the Fed’s message that it was in no rush to resume cutting rates amid growing economic worries.

The dollar index, which measures the greenback against six other major currencies, was 0.27% higher at 107.01, still not far from the two-month low of 106.56 it touched on Friday.

Federal Reserve Governor Michelle Bowman said on Monday she wanted increased conviction that inflation will decline further this year before lowering interest rates again, particularly given uncertainty around the impact of the Trump administration’s new trade and other policies, Reuters reported.

Meanwhile, Federal Reserve Bank of Philadelphia President Patrick Harker sounded an upbeat note on the state of the US economy on Monday, and said he saw no reason to change interest rate policy right now as the central bank continued to work to lower inflation levels.

For his part, Federal Reserve Governor Christopher Waller said his “baseline” view is that the Trump administration’s new tariffs will have only a modest impact on prices that the central bank should try to look through in setting monetary policy.

As it stands “the data are not supporting a reduction in the policy rate,” Mr. Waller said. “But if 2025 plays out like 2024, rate cuts would be appropriate at some point this year.”

The Fed at its March meeting is expected to hold its benchmark interest rate steady at the current range of 4.25% to 4.5%. — A.M.C. Sy with Reuters

PSEi advances as strong earnings boost sentiment

February 18, 2025 | 9:00 pm

PHILIPPINE STOCKS recovered on Tuesday as strong corporate earnings lifted sentiment and as players picked up bargains following the market’s two-day decline.

The benchmark Philippine Stock Exchange index (PSEi) rose by 1.69% or 101.48 points to close at 6,094.96, while the broader all shares index climbed by 1.87% or 67.78 points to end at 3,678.94.

The PSEi opened Tuesday’s session at 5,994.64, a tad higher than Monday’s finish and already its intraday low. It climbed to as high as 6,107.62 during the day but settled just below the 6,100 mark at the closing bell.

“The local market bounced back this Tuesday as investors hunted for bargains after two consecutive days of decline. Optimism towards fourth quarter and full-year 2024 corporate results also helped in driving the market higher following sound earnings reports from Bank of the Philippine Islands, Asia United Bank Corp., and the most recent one SM Prime Holdings, Inc.,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Also helping in Tuesday’s trading was the overseas Filipinos’ cash remittance data for 2024, which posted a 3% increase,” he added.

Cash remittances from overseas Filipino workers hit an all-time high of $34.49 billion in 2024, up by 3% year on year and in line with the central bank’s full-year forecast.

“Philippine shares closed higher as investors welcomed the signing of the IRR (implementing rules and regulations) for corporate tax cuts,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

On Monday, Finance Secretary Ralph G. Recto and Trade Secretary Ma. Cristina Aldeguer-Roque signed the IRR of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy or CREATE MORE Act.

Almost all sectoral indices closed higher on Tuesday. Property surged by 3.32% or 71.23 points to 2,216.68; financials climbed by 1.52% or 34.38 points to 2,283.92; holding firms increased by 1.36% or 68.35 points to 5,076.79; industrials jumped by 1.34% or 116 points to 8,753.40; and services rose by 0.36% or 7.23 points to 1,992.82.

Meanwhile, mining and oil dropped by 0.17% or 13.89 points to 7,939.94.

“ACEN Corp. was the day’s index leader, jumping 5.26% to P3.20. Emperador, Inc. was the main index laggard, falling 2.99% to P12.32,” Mr. Tantiangco said.

Value turnover increased to P6.30 billion on Tuesday with 1.06 billion shares traded from the P5.32 billion with 1.23 billion issues that changed hands on Monday.

Advancers bested advancers, 101 versus 72, while 64 names were unchanged.

Net foreign selling declined to P199.76 million on Tuesday from P991.98 million on Monday. — R.M.D. Ochave

Philippines accuses Chinese Navy of reckless flight maneuvers near shoal

February 18, 2025 | 8:49 pm

South China Sea-Scarborough shoal — PHILIPPINE STAR/ MICHAEL VARCAS

By John Victor D. Ordoñez and Adrian H. Halili, Reporters

THE Philippine Coast Guard accused the Chinese Navy of performing dangerous flight maneuvers on Tuesday when it flew close to a government aircraft patrolling a disputed shoal in the South China Sea.

“This reckless action posed a serious risk to the safety of the pilots and passengers,” it said in a statement.

The Philippine Coast Guard said the government fishery aircraft was conducting what it called a maritime domain awareness flight over Scarborough Shoal, a rocky atoll and prime fishing patch inside the Philippines’ exclusive economic zone.

The People’s Liberation Army Navy helicopter flew as close as three meters to the aircraft, which the Philippine Coast Guard said was a “clear violation and blatant disregard” of aviation regulations.

The Philippine plane “intruded” into China’s airspace over the disputed shoal, the Southern Theater Command of China’s military said in a statement.

The move by the Philippines severely “violated” China’s sovereignty, it said, adding that the Chinese military had organized naval and air forces to track, monitor and drive away the plane.

The Chinese Embassy in Manila, quoting Colonel Tian Junli, a spokesman for the Southern Theater Command, said the Philippine government had “reversed right and wrong and spread false narratives.”

“The Philippine actions seriously violated China’s sovereignty and seriously violated relevant provisions of international law and Chinese laws. Huangyan Island (Scarborough Shoal) is China’s inherent territory,” it added.

“The Theater troops remain on high alert and will resolutely defend national sovereignty and security and peace and stability in the South China Sea.”

Named after a British ship that was grounded on the atoll nearly three centuries ago, Scarborough Shoal is one of the most contested maritime feature in the South China Sea, where Beijing and Manila have clashed repeatedly.

“The People’s Liberation Army Navy offensive action seen in their reckless helicopter flight maneuvers over the West Philippine Sea is an unfair fortification of their air power in our air space,” Chester B. Cabalza, founding president of Manila-based think tank International Development and Security Cooperation, said in a Facebook Messenger chat.

“Our rules should be recognized and respected in our own air space. China’s low-flying light combat aircraft has no right to risk the safety of our Filipino coast guardians by sheer intimidation,” he added.

“There seems to be no foreseeable off-ramp, so it is important to have a working hotline and crisis management mechanism to avoid serious accidents or miscalculation,” Lucio B. Pitlo III, a research fellow at the Asia-Pacific Pathways to Progress Foundation, said via Messenger chat.

“Worryingly, dangerously close run-ins are becoming a new norm in the maritime spat between the Philippines and China,” he added.

China claims sovereignty over almost the entire South China Sea, a vital waterway for more than $3 trillion of annual ship-borne commerce, putting it at odds with Brunei, Indonesia, Malaysia, the Philippines and Vietnam.

A United Nations-backed tribunal in 2016 voided China’s claim for being illegal, but Beijing does not recognize the ruling.

“Unless the two parties come to terms to settle their differences on the use of waters and air space in the South China Sea, such incident can occur again,” Rommel C. Banlaoi, president of the Philippine Society for International Security Studies and former deputy national security adviser, said in a Viber message.

“Both parties need to learn how to coordinate their actions in the South China Sea if they want to prevent unintended violent encounters at sea,” he added. — with Reuters