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Mass biodiversity loss would slash global credit ratings, report warns

WIKIMEDIA COMMONS

LONDON — Major global biodiversity loss could cause enough economic damage by the end of the decade to severely cut more than half of the world’s sovereign credit ratings — including China’s, the first major study on the issue has warned. 

The research published on Thursday by a group of British universities looked at a range of scenarios, including one where a partial collapse of key ecosystems savaged nature-dependent industries such as farming and fishing that some economies rely on. 

It estimated that the detrimental impact would result in 58% of the 26 countries studied facing at least a one notch downgrade of their sovereign credit rating. 

As ratings affect how much governments have to pay to borrow on the global capital markets, the downgrades would result in between $28 to $53 billion of additional interest costs annually. 

“The ratings impact under the partial ecosystem services collapse scenario is in many cases significant and substantial,” the report said, adding that those additional debt costs would mean governments have even less to spend and that things like mortgage rates would go up. 

The study carried out by the University of East Anglia, Cambridge, Sheffield Hallam University and SOAS University of London shows that China and Malaysia would be most severely hit, with rating downgrades by more than six notches in the partial collapse scenario. 

India, Bangladesh, Indonesia, and Ethiopia would face downgrades of approximately four notches, while almost a third of the countries analyzed would see more than three. 

For China, that drop in creditworthiness would add an additional $12 to 18 billion to its yearly interest payment bill, while the country’s highly-indebted corporate sector would incur an additional $20 to 30 billion. 

Malaysia’s costs would rise between $1 to 2.6 billion, while its companies would need to cover additional $1 to 2.3 billion. 

“More importantly, these two sovereigns would cross from investment to speculative-grade,” the report said, referring to what investors usually dub a higher risk “junk”-grade credit rating. 

“Biodiversity loss can hit economies in multiple ways. A collapse in fisheries, for example, causes economic shockwaves along national supply chains and into other industries,” said co-author Dr. Patrycja Klusak, affiliated researcher at Cambridge’s Bennett Institute and Associate Professor at the University of East Anglia. — Marc Jones/Reuters

Some Brits turn to gambling, crypto to make ends meet, charity warns

PIXABAY

LONDON — Britain’s worsening cost-of-living squeeze is pushing some people into gambling and cryptocurrency investments in last-ditch attempts to make ends meet, a gambling charity warned on Thursday.

GamCare said it had increasingly received calls from people receiving state welfare payments who had gambled in the hope they could cover soaring energy and food bills, and lost.

The charity reported that some people who it had helped successfully in the past had relapsed into gambling again under the growing financial pressure.

British households are grappling with the highest rate of inflation out of the Group of Seven advanced economies, which hit a new 40-year high of 9.1% in May. The Bank of England has warned of inflation exceeding 11% by October.

A YouGov survey of more than 4,000 people commissioned by GamCare and published on Thursday showed 46% were worried about their financial situation.

More than half of those polled said they had gambled over the past 12 months, and most of this group had lost money.

“Our helpline advisers are hearing that the cost of living is impacting people’s gambling behaviors — particularly those gamblers who have recovered,” said Anna Hemmings, chief executive of GamCare.

“We also know that our team are hearing from more and more people who are reaching out for help around crypto trading.”

Someone who paid in sterling to invest in Bitcoin six months ago to help hedge against the rising cost of living would have lost 55% of their investment as of Thursday.

GamCare said 43% of problem gamblers had invested in cryptocurrency, and 25% out of this group said they wanted to invest more to chase losses — compared with only 7% of the wider population of crypto investors. — Reuters

Why is there a worldwide oil-refining crunch?

RAWPIXEL

Drivers around the world are feeling pain at the pump with fuel prices soaring, and costs are surging for heating buildings, power generation, and industrial production. 

Prices were already elevated before Russia invaded Ukraine on Feb. 24. But since mid-March, fuel costs have surged while crude prices are up only modestly. Much of the reason is a lack of adequate refining capacity to process crude into gasoline and diesel to meet high global demand. 

  • HOW MUCH CAN THE WORLD REFINERIES PRODUCE DAILY? 

Overall, there is enough capacity to refine about 100 million barrels of oil a day (bpd), according to the International Energy Agency (IEA), but about 20% of that capacity is not usable. Much of that unusable capacity is in Latin America and other places where there is a lack of investment. That leaves somewhere around 82–83 million bpd in projected capacity. 

  • HOW MANY REFINERIES HAVE CLOSED? 

The refining industry estimates that the world lost a total of 3.3 million barrels of daily refining capacity since the start of 2020. About a third of these losses occurred in the United States, with the rest in Russia, China, and Europe. Fuel demand crashed early in the pandemic when lockdowns and remote work were widespread. Before that, refining capacity had not declined in any year for at least three decades. 

  • WILL REFINING PICK UP? 

Global refining capacity is set to expand by 1 million bpd per day in 2022 and 1.6 million bpd in 2023. 

  • HOW MUCH HAS REFINING DECLINED SINCE BEFORE THE PANDEMIC? 

In April, 78 million barrels were processed daily, down sharply from the pre-pandemic average of 82.1 million bpd. The IEA expects refining to rebound during the summer to 81.9 million bpd as Chinese refiners come back online. 

  • WHERE IS MOST REFINING CAPACITY OFFLINE, AND WHY? 

The United States, China, Russia and Europe are all operating refineries at lower capacity than before the pandemic. U.S. refiners shut nearly one million bpd of capacity since 2019 for various reasons. 

Nearly 30% of Russia’s refining capacity was idled in May, sources told Reuters. Many Western nations are rejecting Russian fuel. 

China has the most spare refining capacity, refined product exports are only allowed under official quotas, mainly granted to large state-owned refining companies and not to smaller independent companies that hold much of China’s spare capacity. 

As of last week, run rates at China’s state-backed refineries averaged around 71.3% and independent refineries were around 65.5%. That was up from earlier in the year, but low by historic standards. 

  • WHAT ELSE IS CONTRIBUTING TO HIGH PRICES? 

The cost to carry products on vessels overseas has risen due to high global demand, as well as sanctions on Russian vessels. In Europe, refineries are constrained by high prices for natural gas, which powers their operations. 

Some refiners also depend on vacuum gasoil as an intermediate fuel. Loss of Russian vacuum gas oil has prevented certain from restarting certain gasoline-producing units. 

  • WHO IS BENEFITING FROM THE CURRENT SITUATION? 

Refiners, especially those that export a lot of fuel to other countries, such as U.S. refiners. Global fuel shortages have boosted refining margins to historic highs, with the key 3-2-1 crack spread nearing $60 a barrel. That has driven big profits for U.S.-based Valero and India-based Reliance Industries 

India, which refines more than 5 million bpd, according to the IEA, has been importing cheap Russian crude for domestic use and export. It is expected to boost output by 450,000 by year-end, the IEA said. 

More refining capacity is set to come online in the Middle East and Asia to meet growing demand. — Laura Sanicola/Reuters

Unilever vowed to scrap polluting plastic packets, then fought to keep them

COLOMBO — Two years ago, Unilever plc Chief Executive Alan Jope said his company would get rid of the tiny plastic packets it uses to sell single servings of shampoo, toothpaste, and other basics because of the widespread pollution this packaging creates. 

These palm-sized pouches, known as sachets, are commonly associated with ketchup or cosmetics samples in wealthy countries. But they have exploded across the developing world where they are used to sell everything from laundry detergent to seasoning and snacks to low-income households. 

They have also helped fuel a global waste crisis. Made of layers of plastic and aluminum, sachets are nearly impossible to recycle and aren’t biodegradable. They’re littering neighborhoods, jamming garbage dumps, choking waterways and harming wild creatures. Yet even as Unilever executives have publicly decried the environmental harm done by this packaging, the multinational has worked to undercut laws aimed at eliminating sachets in at least three Asian countries, Reuters has learned. 

In Sri Lanka, the company pressed the government to reconsider a proposed sachet ban, then tried to maneuver around it once regulations were imposed, a senior environmental official told Reuters. In India and the Philippines, Unilever lobbied against proposed sachet bans that were later dropped by lawmakers, sources directly involved said. 

London-based Unilever declined to comment on the company’s lobbying activities in these markets and said it adheres to Sri Lankan law. A spokesperson said the firm is “phasing out” multilayered sachets by using a variety of potential fixes, including product refill systems, new recycling technology and packaging material that’s easier to recycle. 

Unilever, the maker of hundreds of household brands including Dove soap, Ben & Jerry’s ice cream, and Hellmann’s mayonnaise, first marketed plastic sachets on a mass scale in India in the 1980s. The consumer giant remains among the biggest users of this packaging, and other companies have followed suit. Now, 855 billion plastic sachets are sold every year industry-wide, enough to cover the entire surface of Earth, according to A Plastic Planet, a London-based environmental group. 

In recent years, Unilever has become a vocal critic of sachets. 

The multilayered design of the packages is “evil because you cannot recycle it,” Hanneke Faber, Unilever’s President for Global Food & Refreshments, said in a 2019 investor presentation. 

At an online plastic sustainability event in July 2020, Mr. Jope went further. 

“We have to get rid of them,” Mr. Jope said in response to a question about how using sachets fit into Unilever’s stated plans to reduce plastic pollution. “It’s pretty much impossible to mechanically recycle and so it’s got no real value.” 

Eight months later, the firm got its chance. Sri Lanka last year implemented new regulations to phase out sachets in an effort to stem a tide of plastic waste despoiling beaches, bleaching coral reefs and endangering wildlife on this island nation in the Indian Ocean. 

But Unilever continued to sell tiny 6 milliliter (ml) single-portion sachets of shampoo and hair conditioner in Sri Lanka, despite the new ban on plastic sachets sized 20 ml or smaller, according to the nation’s Ministry of Environment and two local plastic pollution charities. 

Sachets sold in local shops are displayed in sheets stuck together with tear-away seams, making it easy for buyers to detach a single portion. To sidestep the prohibition, the three sources said, Unilever relabeled its 6 ml sachets to indicate they should not be sold individually, rather in four-packs as one 24 ml unit. 

“Unilever tried to deceive us,” Anil Jasinghe, secretary of Sri Lanka’s Environment Ministry, told Reuters from his office in Colombo, the country’s largest metro area with a population of more than 2.3 million residents. 

Mr. Jasinghe said his ministry threatened legal action, and that “to their credit” Unilever quickly stopped selling 6 ml sachets. Still, the hard-fought measure applied only to the smallest sizes. Millions of larger sachets continue to be sold in Sri Lanka every day. 

In a statement to Reuters, Unilever said it was fully compliant with Sri Lanka’s regulations. 

FIGHTING SACHET BANS 

Mr. Jasinghe said that episode capped months of efforts by Unilever to upend the proposed legislation. When Sri Lanka was debating the measure in 2020 — the same year Mr. Jope declared sachets to be an environmental scourge – the multinational gave two presentations to officials at the environment ministry discouraging the government from phasing them out, Mr. Jasinghe recalled. 

“Unilever approached us and said: ‘Don’t do this, sachets are a poor man’s commodity.’ We said: ‘Yes, you have addicted the poor man to sachets. Now they have no choice.’” 

Unilever did not respond to questions about Mr. Jasinghe’s assertions. 

The company, which makes 58% of its revenue from emerging markets, has also lobbied against proposed bans on plastic sachets in India and the Philippines in the past few years, according to interviews with a dozen people involved, including government officials, industry sources and environmentalists. 

Sachet bans were later dropped by lawmakers in India and the Philippines, which together account for more than 10% of Unilever’s global sales. Reuters could not determine if Unilever’s lobbying influenced the outcome. 

Unilever did not respond to questions about the thwarted legislation. 

The details of Unilever’s campaigns to derail single-use sachet bans, reported for the first time by Reuters, come as Mr. Jope promotes the $113-billion company as a green champion which he says is on a journey to become the world leader in sustainable business. 

Part of its efforts have focused on ways to recycle or reduce single-use plastic packaging. 

Reuters found that five such programs launched by Unilever over the last decade in India, the Philippines and Sri Lanka — including novel recycling technology and refill vending machines — have been dropped or not progressed beyond the pilot stage. 

In response to Reuters’ questions about these failures, Unilever said in a statement that ending the use of multilayered plastic sachets was “a complex technical challenge, with no quick fixes.” 

The company would not disclose how many sachets it sells currently or whether its projects have reduced their use. In a promotional video in 2012, Unilever said it sells 40 billion plastic sachets a year. 

Nestle SA and The Procter & Gamble Company, Unilever’s rivals who are also major purveyors of products packaged in sachets, declined to answer questions about how many sachets they sell. 

Prior to the advent of sachets, many shops in developing countries would measure out tiny portions of sugar, coffee and other basics for sale to poor customers who’d bring their own containers, according to Von Hernandez, global coordinator of Break Free From Plastic, a coalition of more than 2,000 environmental groups focused on plastic pollution. He said this style of buying — known as “tingi” culture in the Philippines — is common throughout Asia. Through the development of sachets, Mr. Hernandez said big brands “appropriated it with plastic packaging to foster and promote loyalty to their products.” 

GREEN CREDENTIALS MOCKED 

Faced with a wave of plastic bans and polluter-pays laws globally, consumer brands and plastic makers have launched dozens of voluntary initiatives over the last decade which they say will help reduce plastic waste. Yet this pollution gets worse every year. 

The United Nations in March approved an agreement to draw up the world’s first-ever plastics treaty, which could include capping plastic production, imposing recycling targets and making consumer goods companies pay to collect this trash. 

Only 9% of all the plastic ever made has been recycled, partly because most plastic packaging is designed to be used just once, according to a landmark 2017 study published in the journal Science Advances. 

Unilever, which was a principal partner of COP26, the United Nations climate change conference held in Glasgow last year, has in recent years promoted itself as an industry standout on sustainability. That claim has elicited skeptical responses from several environmental groups. 

Criticism has also come from one of its biggest shareholders: Fundsmith LLP, a British fund manager. In this year’s annual letter to investors, Fundsmith CEO Terry Smith in January said Unilever had “clearly lost the plot” over its green policies and was “obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.” He did not elaborate. 

Mr. Smith and Unilever declined a request to comment on the letter. 

Plastic sachets are especially prevalent in Asian countries that contribute the most to ocean plastic pollution, making them a lightning rod for environmental groups seeking tougher laws on the biggest users of single-use plastic packaging. 

At Unilever’s annual general meeting on May 4, Mr. Jope was harangued about the firm’s continued use of sachets by London-headquartered nonprofit ClientEarth, which had temporarily borrowed shares from an activist investor in order to voice its concerns at the high-profile event. 

Mr. Jope responded by saying Unilever was “determined to find a solution” to end sachet waste while also continuing to serve low-income consumers. 

DEAD ELEPHANTS 

Plastic sachets are designed to be cheap and durable, so they pile up in landfills, clog sewers and spill out from urban waterways into the ocean, where animals often mistake them for food. 

Sri Lanka’s crackdown has not eliminated this waste. Its ban excludes larger sachets as well as those containing food or medicine. In Colombo, fisherman Lalith Prasanna pointed across a beach to surf awash with these packets, including sachets of Unilever’s Sunsilk shampoo and Surf laundry detergent. 

“I have seen fish with plastic inside their bodies,” Mr. Prasanna said. He said sachets have littered prawn breeding grounds, reducing catches. 

Land creatures, too, are suffering, said Nihal Pushpakumara, a wildlife veterinarian based in the Amapara region, 130 miles east of Colombo. He said around 20 elephants have died over the last eight years after eating plastic from an open landfill there, autopsies on these giants have revealed. 

“They eat all of those sachets” and other plastic garbage, Mr. Pushpakumara told Reuters. “They fill their tummies, then they can’t eat their usual diet so they get weaker and weaker, day by day, and die.” 

Still, the partial ban on sachets in Sri Lanka has reduced pollution, according to The Pearl Protectors, an independent marine protection group based in Colombo that conducts ocean and beach cleanups. It said its volunteers have reported collecting fewer sachets than before the ban, but had not quantified or documented the exact impact. 

“If this is what a ban on some sachets in one country can do, imagine how the environment could change if companies like Unilever got rid of sachets,” said Muditha Katuwawala, coordinator at The Pearl Protectors. 

Unilever told Reuters that despite the environmental downsides of sachets, they provide the poor with access to cleaning products and food in small sizes that fit their budgets. 

A SACHET A DAY 

Some low-income consumers dispute that claim. 

In Crow Island, a suburb of Colombo where barefoot children play in alleyways strewn with used sachets, Fathima Insana, 26, told Reuters that Sri Lanka’s ban on the smallest packets had led to cost savings for her household, which includes her husband, infant son and parents. 

She said she used to purchase a 6 ml sachet of Unilever’s Sunsilk shampoo every day for 8 rupees ($0.02), but now saves up to buy a 180 ml recyclable bottle for 190 rupees. That same 6 ml portion works out to be 25% cheaper, and the bigger container lasts her family a month. “A sachet is just for one day,” she said. 

Unilever said in a statement it was working with local governments in countries like Sri Lanka to improve plastic waste collection and disposal. It said those efforts include providing vending machines where customers can refill reusable bottles with products such as liquid dish soap and laundry detergent. It would not disclose how many countries it was working with or how many machines it had deployed. 

Some of Unilever’s refill machines in Sri Lanka, India, and the Philippines have been placed in upscale malls or supermarkets, far from the poor communities most dependent on sachets, Reuters found. 

In Sri Lanka, Reuters could locate only one Unilever refill vending machine, placed at the back of a Cargills supermarket in Colombo. 

Unilever declined to comment on its Sri Lanka refill program. 

The company told Reuters it had launched six refill stations in Mumbai, India, in 2021 and 2022 to sell products like dishwashing liquid in refillable bottles. At a Reliance SMART supermarket in a middle-class neighborhood, a Unilever employee overseeing one of those refill stations told Reuters they sell only around 10 bottles’ worth of products a day. 

Unilever’s Mr. Jope said in a tweet on July 31, 2019 — six months after he became CEO — that the company was looking at ways to help people buy one container to be used “over and over again.”  

Along with the hashtag #ReuseRevolution, the post linked to a press release touting efforts such as refill vending machines planned for the Philippines to dispense shampoo and hair conditioner. 

Reuters visited three locations in metro Manila where Unilever publicly launched refill stations in 2019. The units were gone. Staff in two of the malls where the stations were placed said they were taken away by Unilever within a month. 

Unilever declined to comment. 

COURTING A SENATOR 

The Philippines, a sprawling Southeast Asian archipelago of more than 7,600 islands and 110 million people, has been inundated with garbage as sachets have proliferated. 

A staggering 163 million sachets are used there every day, many swept out to sea by garbage-strewn rivers flowing through teeming cities like Manila, according to a 2019 study by the Global Alliance for Incinerator Alternatives, an environmental group. 

In August last year, the nation’s House of Representatives passed a bill that would phase out the use of many single-use plastic items, including Styrofoam cups, plastic cutlery and sachets. 

The following month, the bill moved to the Senate to be reconciled with other proposed plastic regulations. Helming that effort was Cynthia Villar, the influential chairperson of the Senate Committee on the Environment and a member of a political family dynasty in the Philippines. 

Ms. Villar and Unilever have a history of working together on plastic waste. 

The senator’s anti-poverty charity, Villar SIPAG Foundation, in 2017 announced a partnership with Unilever in which the company would train homemakers and the unemployed to make handbags from plastic litter. That same year, Ms. Villar delivered the keynote address at the launch of Surf Misis Walastik, a local Unilever project to collect sachets and other plastic waste to be used as fuel and converted into chairs for schools. 

Unilever directly lobbied Villar last year to focus the government’s plastic regulation on cleaning up sachets rather than banning them, two people involved in the talks said. 

In January, Ms. Villar announced that the Senate had passed the Extended Producer Responsibility Act, which requires consumer brands to contribute to the cost of collecting and disposing of plastic waste, incentivized by tax breaks. The proposed phaseout of single-use plastic was not included in the final legislation. 

Ms. Villar told Reuters the law was “the compromise alternative” and that it would help to reduce packaging waste and increase recycling. She and Unilever did not respond to questions about their charitable partnerships or the company’s alleged lobbying of the senator regarding the proposed sachet ban. 

The measure was ratified by Congress on May 26 and now needs the signature of the nation’s president to come into force. President Rodrigo Duterte, who leaves office on June 30 when his term expires, has yet to receive the bill and will review it when it is submitted, deputy spokesperson Kris Ablan said in response to Reuters’ questions. President-elect Ferdinand “Bongbong” Marcos Jr. did not respond to requests for comment. 

The Philippine Alliance for Recycling and Materials Sustainability, a consumer goods lobby group in which Unilever is a member, publicly said it supported this version of the law. 

The legislation calls for fines on companies that fail to hit targets to clean up plastic waste. But environmental groups say the penalties are too small to worry big consumer brands. They range from P5 million ($92,000) to P20 million ($369,000) for serial offenders. Unilever posted global revenue of 52 billion euros ($55 billion) last year. 

Activists have also raised concerns that the legislation doesn’t mandate recycling for the plastic waste that’s collected. The law allows this garbage to be used as fuel in waste-to-energy plants and cement kilns, a practice green activists say will increase carbon dioxide and toxic emissions. 

“This will only fuel the climate crisis,” said Coleen Salamat, who campaigns against plastic waste at Ecowaste Coalition, an environmental group based in greater Manila. “This bill is … another band-aid solution without clear targets on phasing out single-use plastics.” 

In an investigation last year, Reuters revealed plans by Unilever, Nestle, and other big brands to burn plastic waste in cement kilns as part of their public pledges to remove trash from the environment. Ecologists say the practice pollutes the air and undercuts efforts to boost recycling rates. 

BURNING PLASTIC WASTE 

In India, Unilever has been part of industry groups that have raised concerns in recent years over proposals to ban sachets and other multilayered plastic packaging, according to two people with knowledge of the matter. 

India is Unilever’s second-largest market globally after the United States. The country in 2016 announced new rules proposing to phase out such packaging within two years. 

Those rules were amended in 2018 to exempt packaging that could be “recovered” for energy. It’s a suggestion that arose from a meeting between industry associations and representatives of India’s Ministry of Environment, Forest and Climate Change in late 2017, minutes from the meeting show. 

That change rendered the ban “toothless” because all plastic, which is derived from oil and gas, can be burned as fuel, said Dharmesh Shah of the Legal Initiative for Forest and Environment, a New Delhi-based nonprofit. Another Indian proposal to ban some sachets was shelved in 2019 following industry opposition, Reuters reported at the time. 

India’s environment ministry did not respond to a request for comment about its position on sachets or its meetings with Unilever and industry groups. 

Unilever said in a statement that it was working with the Indian government to reduce plastic waste, including funding waste cleanups and programs to teach school children about recycling. The company, which reported revenue of 5.6 billion euros ($5.9 billion) last year in India, declined to say how much it spends on its plastic waste-reduction projects or to state its position on India’s plastic waste rules. 

In 2012, Unilever said in a promotional video it had found a new high-tech solution for its sachet waste in India. Unilever proposed using a super-heating process called pyrolysis, also known in the industry as “chemical recycling,” to convert sachets into fuel. 

Offcuts and misprints of new Unilever sachets were sent to a waste-to-fuel facility in Chennai owned by a company named MK Aromatics, the Indian partner in the project. There they were heated and condensed into oil, along with other municipal waste, and then sold back to Unilever to be used as fuel for one of its nearby factories, according to Mahesh Merchant, managing director of MK Aromatics. 

Merchant told Reuters the arrangement with Unilever began in 2012 but stopped two years later after the company declined to invest in his facility. 

Unilever told Reuters it stopped working with MK Aromatics due to unspecified safety concerns. Unilever declined to elaborate. 

MK Aromatics’ Merchant said its facility was legally compliant and “very safe.” 

The failure of that project is part of a bigger trend. Reuters revealed last year that dozens of chemical recycling projects worldwide promoted by the plastics industry and consumer goods firms have either closed down or stalled at the pilot stage over the last decade because they were not commercially viable, including a Unilever project in Indonesia. 

At Unilever’s annual general meeting this May, Mr. Jope said the company still believed in chemical recycling. 

“We just haven’t cracked that particular solution yet,” he said. — Joe Brock and John Geddie/Reuters

The Philippine shift to a Lexus electrified future has begun

Lexus’ current line of hybrid vehicles is a stepping stone toward an electrified and sustainable future.

For over 15 years, Lexus has pioneered and innovated electrification, culminating in cars that are exciting, efficient and durable. Near silent powertrains provide dynamic driving experiences while protecting the planet. World leading technology makes everything safe, seamless and luxurious.

The road to a Electrified future in the Philippines is already being paved by the current crop of hybrid models and is being led by Lexus.

The Lexus LS flagship, IS Sport sedan, RX SUV, and NX Crossover for instance, feature hybrid technologies which are a result of genuine and ongoing concern for the harmful effect vehicle emissions can have on the environment while simultaneously enhancing personal mobility.

The LS 500h flagship model is equipped with the new Lexus Multi Stage Hybrid System, a technology that transforms the performance and driver appeal of hybrids, providing improved responsiveness and more rewarding, linear acceleration, particularly when moving off from stationary.

The new IS 300h sport sedan was born and bred at the Shimoyama Technical Center Test Track—where the toughest and most challenging roads in the world have been recreated. The outcome was an IS lineup that is agile and provocative. The IS 300h—while boasting hybrid technology—thoroughly espouses Lexus’s DNA.

The RX 450h makes a bold and completely new statement in this segment while building on and staying true to the pioneering values of previous hybrid RX generations while the NX 300h also features the Lexus Multi Stage Hybrid System bringing a new level of technology and a heightened driving experience to a Lexus crossover.

From Hybrid to Electric

The recently-launched Lexus RZ marks the transition of Lexus into a BEV-centered brand and embodies the unique Lexus vehicle design and driving experience brought on by advanced electrification technology.

The Lexus RZ is a showcase of advanced driver technologies that will eventually find its way to all Lexus models in the future. The RZ has been developed with the aim of creating a uniquely Lexus BEV that feels secure to ride in, is pleasing to the touch, and is exhilarating to drive. It won’t be long until its technology becomes available to Filipino customers.

 


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Leisure & Resorts World Corp. announces annual stockholders’ meeting on July 29

 


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Golden MV Holdings, Inc. to hold annual meeting of stockholders on July 15

 


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Peso slumps to lowest since 2005

REUTERS

THE PHILIPPINE PESO on Wednesday slumped against the US dollar, closing at its lowest value since November 2005, amid the Bangko Sentral ng Pilipinas’ (BSP) signals of gradual policy tightening.

The BSP is widely expected to fire off a 25-basis-point (bp) hike at its policy meeting today (June 23) to curb inflation.

The local unit closed at P54.47 versus the dollar on Wednesday, shedding 20.5 centavos from its P54.265 finish on Tuesday, data from the Bankers Association of the Philippines showed.

This was the peso’s worst close in 16-1/2 years or since it ended P54.74 against the greenback on Nov. 21, 2005.

The local unit’s weakest showing was at P54.635 on Wednesday, the lowest since March 2003. Its intraday best was P54.30 against the greenback.

Dollars exchanged inched down to $1.34 billion on Wednesday from $1.38 billion on Tuesday.

“The peso’s performance continues to be driven by fundamental factors such as a strong dollar and the country’s increasing import demand,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

The BSP’s signals of gradual monetary tightening was also a factor in the peso’s weakening against the US dollar, she added.

“The BSP’s dovish stance on monetary policy normalization against aggressive rate hikes of the Fed contributed to the recent weakening of the Philippine peso. Even if BSP hikes its policy rate by 25 bps in every meeting this year, we expect domestic policy rates to continue to lag behind,” Ms. Velasquez said.

“This gradual pace of BSP’s monetary tightening will contribute to the general weakness of the peso as investors will opt to move to higher yielding assets.”

A BusinessWorld poll last week showed 15 out of 16 analysts anticipate a rate hike at the June 23 meeting. Nine analysts expect the Monetary Board to raise rates by 25 bps. Six analysts see an increase of 50 bps, after the US Federal Reserve hiked rates by 75 bps last week.

BSP Governor Benjamin E. Diokno and current Monetary Board member Felipe M. Medalla have said it is unlikely that they will raise key rates by more than 25 bps in today’s meeting.

“Personally, I do not like 50 basis points. It signifies that we know something bad that you don’t know. It could be misread, as ‘wow, what does the central bank know that we don’t know,’” Mr. Medalla said during a roundtable with BusinessWorld editors on June 14.

The BSP still has the “luxury of time and large reserves,” Mr. Medalla said at that time. “If the markets think we’re behind the curve, they will attack the peso,” he added.

The peso continued to weaken against the US dollar despite the latest declines in global crude oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort pointed out.

A trader also attributed the peso’s performance to hawkish expectations ahead of US Fed Chair Jerome H. Powell’s two-day testimony to Congress.

“For (June 23), the peso exchange rate could range at P54.40-P54.60 levels,” Mr. Ricafort said.

The Monetary Board kicked off its tightening cycle on May 19 by raising the yield on the BSP’s overnight reverse repurchase facility by 25 bps to 2.25%. Interest rates on the overnight deposit and lending facilities were also increased to 1.75% and 2.75%, respectively.

This was the first increase in borrowing costs since 2018 and followed cuts worth 200 bps in 2020 as the BSP moved to support the economy amid the coronavirus pandemic. — Keisha B. Ta-asan

PHL to reach ‘upper-middle’ status by 2024, Balisacan says

People flock to the Dolomite beach in Manila, June 12. — PHILIPPINE STAR/ WALTER BOLLOZOS

THE PHILIPPINES is likely to achieve its goal of becoming an upper middle-income economy by 2024, incoming Socioeconomic Planning Secretary Arsenio M. Balisacan said.

“It might take a while for us to reach that point. So, if we grow at 7% next year, maybe by 2024 we would probably be there,” he said in a roundtable with BusinessWorld editors on June 16.

This is in contrast to Socioeconomic Planning Secretary Karl Kendrick T. Chua’s projection that the Philippines will become an upper middle-income economy by next year.

The Philippines had originally targeted to attain upper middle-income status by 2022, but this was derailed by the coronavirus pandemic.

Last year, the World Bank increased its income range for the upper middle-income bracket to a gross national income (GNI) capital of $4,096-$12,695 from $4,046-$12,535. This definition is expected to be updated by the World Bank by July.

According to Philippine Statistics Authority (PSA) data, the country’s GNI per capita stood at P182,438, or about $3,500 in 2021, slightly higher than the GNI per capita of P177,546 in 2020. However, this is still lower than the GNI per capita of P200,135 in 2019.

Mr. Balisacan said the new administration is aiming to ramp up economic growth this year.

“We plan to get economic recovery moving quickly, moving the economy to its high-growth trajectory, and achieve over the duration of the administration a 6-8% growth,” he said.

In May, the Development Budget Coordination Committee (DBCC) tweaked its gross domestic product (GDP) growth target to 7-8% this year, from 7-9% previously, amid the prolonged Russia-Ukraine war, economic slowdown in China and monetary policy tightening in the United States.

The DBCC kept the GDP growth target at 6-7% for the years 2023 to 2025.

“We will need to accompany that growth with better access to, or improvement and access to social services, particularly health and education, to make sure growth is inclusive,” Mr. Balisacan said.

The current Philippine Competition Commission chairman said he wants to prioritize services and infrastructure projects to generate much-needed jobs.

“We’ll also focus on jobs, particularly on high-quality jobs and that will mean that we’ll have to revisit our manufacturing to make it a more robust contributor to quality job creation,” he said.

“The instruction of the incoming president is we should continue infrastructure projects that are near completion, given limited resources. So, in terms of priority, we should give priority to those projects where benefits can be realized sooner rather than later, and also can generate jobs.”

The unemployment rate eased to 5.7% in April, from 8.7% in April 2021, based on preliminary results of the PSA Labor Force Survey. This is equivalent to 2.76 million jobless Filipinos in April, as mobility restrictions eased and economic activity picked up.  TJT

Locked-down Filipino college graduates face gloomy COVID-19 labor market

PHILIPPINE STAR/KRIZ JOHN ROSALES

By Arjay L. Balinbin, Senior Reporter

JEROEN O. MANAHAN, 21, will get his Bachelor’s degree in business administration and management this October after taking classes online amid the coronavirus pandemic.

After graduation, he will fly to Dubai to join his family as an overseas Filipino worker, hoping to find a job that pays at least P50,000 a month.

“There will be better opportunities for me in Dubai than in the Philippines,” the student from Southville International School and Colleges said by telephone. “The starting salary for fresh graduates here isn’t competitive.”

That’s especially true after a number of companies trimmed their workforce to save costs after pandemic lockdowns in the past two years slashed sales and profits.

This year, more than 1.6 million students will graduate from 200 state-run higher education institutions nationwide, according to government media, further worsening the country’s job situation.

Fresh graduates in the Philippines get a monthly average salary of P16,509, based on 1,200 salaries reported as of May 19, according to job website Indeed.

For highly skilled new graduates, the monthly pay is P20,000 to P25,000, Trade Union Congress of the Philippines (TUCP) spokesman Alan A. Tanjusay said.

“When disorientation occurs as a result of a mismatch between graduates’ salary expectations and the actual salary, they choose to work abroad,”  he said in a phone interview.

Starting June 3, Metro Manila workers will get a P33 wage hike and those in Western Visayas will get a P55-P100 increase, according to the Labor department. Separate wage increases were also approved for the Ilocos, Cagayan Valley, and Caraga regions.

Almost four million more Filipinos became poor in the first half of last year amid the coronavirus pandemic, bringing the total to 26.14 million, the Philippine Statistics Authority said. The country’s per capita poverty threshold — the amount needed by a person to buy basic goods such as food — rose to P2,416.33 a month from P1,474.83 in 2018, according to the local statistics agency.

The unemployment rate eased to 5.7% in April from 5.8% in March and 8.7% a year earlier, with 2.76 million jobless Filipinos.

But about 6.4 million employed Filipinos were still looking for extra jobs or longer work hours, or an underemployment rate of 14%.

“It looks like we’re promoting cheap labor,” Mr. Tanjusay said. “The government hasn’t said so, but the way it does things now, especially with wages, it promotes our country as a cheap labor hub. Investments will come in and guarantee profits to existing businesses and incoming investors because the Philippines is also competing with its neighbors in Southeast Asia.”

Troy A. Manuel, 22, will finish his BS Mathematics degree at the University of the Philippines (UP) this month, and would rather look for local jobs. His father is coming home after working in Saudi Arabia for more than two decades.

“I’m not expecting that much because I don’t have any experience — maybe P20,000 to P30,000 a month,” he said by telephone. “But I’m not very optimistic.”

A number of workers who lost their jobs at the height of the pandemic have yet to be called back to work, said Sergio R. Ortiz-Luis, Jr., president of the Employers Confederation of the Philippines.

‘VOLATILE’
“Fresh graduates will have to compete with returning workers, including migrant workers who are coming home,” he said by telephone. “Competition will be harder.”

Fresh graduates do have an advantage because they might be more tech-savvy, he added.

The government partnered with the employers’ group to generate a million jobs last year, and they expect to offer a million more this year, Mr. Ortiz-Luis said. The jobs will come from the manufacturing, construction, and outsourcing sectors, he added.

“There is a need to create jobs for those who are still unemployed because there are still so many of them, as well as for those who will be coming into the labor market,” he added.

The incoming government of President-elect Ferdinand R. Marcos, Jr. “must create four million jobs in two years or else poverty will worsen,” Mr. Tanjusay said, citing recent labor force surveys.

Ethan J. Parreño, a 22-year-old AB Management Economics student who is graduating from the Ateneo de Manila University in August, is worried about his job prospects.

“Apart from the competition, half of my college education was done online including my on-the-job training due to the pandemic,” he said by telephone. “I’m worried that I might not be able to adjust as quickly to on-site work.”

He hopes to get a job that pays P20,000 to P30,000 a month. “But my dad tells me that I shouldn’t expect to get a big salary on my first job.”

Mr. Tanjusay said it’s not wrong for new graduates to expect a high salary. “Graduates, especially those from private universities, were exposed to good facilities, and they paid high tuition fees, so they would really have high expectations. However, in our existing economy, the reality is that the starting salary is really small.”

“Very few businesses and employers are innovative, adoptive and receptive to the needs of new graduates,” he added.

The Philippine job market is expected to remain gloomy, UP Professor Emeritus Rene E. Ofreneo said.

“The employment rate isn’t yet at the pre-pandemic level, but even before the pandemic, the situation wasn’t good,” he said by telephone.

“Even the overseas market isn’t that bright for workers in general,” he said. “Many Filipinos want to work abroad, but remember that the world in general is very uncertain and volatile. The pandemic has disrupted the so-called global economic order, in particular those tied to the global value chain, and that’s why even China is in crisis.”

The coronavirus pandemic also disrupted the Fourth Industrial Revolution, Mr. Ofroneo said. “Some jobs disappeared, while some new jobs were created. You also have the Ukraine-Russia war, Russia versus the US, and Russia versus the North Atlantic Treaty Organization, resulting in oil and fertilizer crises, as well as a looming food crisis.”

The labor situation is a big challenge for the Marcos government, he said.

Mr. Marcos in January vowed to generate more jobs during the pandemic. “We have to put Filipinos back to work, and the way we do it is to invest in sectors with a good return.”

Mr. Ofreneo and Mr. Tanjusay said Mr. Marcos’ labor policy remains unclear.

“He’s focusing too much on continuity,” Mr. Ofreneo said. “If the focus is continuity, then it’s just like business as usual.”

“He should initiate something bold that will capture the support of the majority. If his message is ‘We will rise,’ then how? What we need is productive capital that can create productive jobs now,” he added.

“The policies of the Marcos administration aren’t clear to us, although the TUCP endorsed Mr. Marcos because our members chose him,” Mr. Tanjusay said.

Victor D. Rodriguez, who will be Mr. Marcos’ executive secretary, did not immediately reply to two mobile phone messages seeking comment.

Mr. Manahan, the management student, hopes for a time when he and his family will no longer have to live and work overseas. “Given the chance, I really want to work in my homeland.”

PHL withdraws from EITI over ‘biased’ assessment

A port is pictured as trucks and a backhoe load rocks and soil containing nickel-ore minerals into a barge in the mining town of Sta Cruz, Zambales, Feb. 8, 2017. — REUTERS

THE PHILIPPINES has withdrawn from a global initiative on extractives transparency over the latter’s “subjective, biased and unfair” assessment process, Finance Secretary Carlos G. Dominguez III said.

The Department of Finance (DoF) on Wednesday said Mr. Dominguez sent a June 20 letter to the Extractive Industries Transparency Initiative (EITI) Chair Helen Clark, informing her of the Philippines’ withdrawal.

“We find that the manner by which the EITI board undertakes its validation is unduly subjective, biased and unfair,” he was quoted as saying in the letter to Ms. Clark, a former prime minister of New Zealand.

“The Philippines has no confidence in the ability of the EITI to undertake an impartial, transparent, and evidence-based validation process.”

The EITI sets the standard for transparency and accountability in the mining, oil and gas industries. The DoF heads the multi-stakeholder body that oversees the implementation of the EITI in the country.

Mr. Dominguez’s statement comes after the EITI board downgraded the Philippines’ score to “moderate” last February.

While the score reflected the Philippines’ high marks in stakeholder engagement, transparency, and outcomes and impact, the EITI board at that time said “the objective of full, effective and active engagement by civil society is only partly met, given government constraints on freedom of expression, operation and association in the EITI process.”

The EITI board also mentioned allegations of intimidation of civil society activists and journalists, and urged the government to improve the environment for civil society participation. It said it will revisit the issue in October.

The DoF said it has repeatedly asked the EITI to provide details on the issues, but the EITI has not supplied such information.

Mr. Dominguez criticized the EITI board for treating the Philippines unfairly “by using irrelevant metrics and relying on unvalidated reports in assessing the status of civic space in the extractives sector.”

“We refuse to be taken hostage by unverified allegations from foreigners and people who have no mandate from the electorate,” Mr. Dominguez said.

Despite this withdrawal, Mr. Dominguez said the government had systems in place to ensure continued transparency in the extractives sector.

“The government will continue to champion better resource and revenue management, and ensure that resource utilization remains open, accountable, and responsive to the needs and aspirations of Filipinos,” he added.

The country has been part of EITI since 2013.

In 2017, the Philippines was declared the first among 50 other members to have achieved “satisfactory” progress in meeting EITI requirements.

EITI implementing countries are required to undergo a validation process every three years. — Tobias Jared Tomas

Telcos renew support for SIM card registration bill

PHILSTAR FILE PHOTO

By Arjay L. Balinbin, Senior Reporter

THE country’s major mobile network operators said on Wednesday that they are ready to support the legislative process for the proposed measure mandating the registration of subscriber identity module or SIM cards under the Marcos administration.

PLDT, Inc.’s wireless arm unit Smart Communications, Inc., Globe Telecom, Inc., and DITO Telecommunity Corp. issued statements on Wednesday expressing their support for the bill that was previously vetoed by President Rodrigo R. Duterte.

Senator Grace S. Poe-Llamanzares, who chairs the Senate committee on public services, said on June 15 that she intends to refile her original bill.

The bill will “ensure consumer protection,” PLDT’s Smart said.

“As a longtime advocate of consumer online protection, Smart has been actively implementing initiatives to keep our customers safe, especially from scams and fraud,” Alfredo S. Panlilio, PLDT and Smart president and chief executive officer, said in an e-mailed statement.

“We are always ready to support the legislative process. We welcome any opportunity to contribute to the success of the SIM card registration bill and support the government in developing its implementing rules and regulations,” he added.

PLDT and Smart recently said that more than 23 million SMS containing three URLs identified as phishing sites have been blocked.

In a statement to BusinessWorld, Globe said its support for the bill is “part of our commitment to support the government in its fight against fraud, terrorism and other crimes.”

“It also paves the way for greater digital and financial inclusion.”

At the same time, it noted that the National ID system rollout should be completed for this proposed measure to be successful, “as we need a reliable and verifiable source of identification to lay the foundation for a credible database.”

“This is a critical component in ensuring mobile phone users are protected against text scams and crimes perpetrated in anonymity.”

“We look forward to working with Congress in threshing out critical issues surrounding the bill’s proposed implementation once enacted into law, particularly in addressing challenges on the timetable for registration of tens of millions of SIM cards currently in use,” it added.

The company has around 87 million mobile customers out of the more than 120 million total mobile customers in the country. It said that around 95% of these customers are using prepaid SIMs.

For his part, DITO Chief Administrative Officer Adel A. Tamano said the company is “ready for it.”

“We support the government’s objective to protect the public from criminality based on the use of unregistered SIM cards,” he said in a statement to BusinessWorld.

Malacañang said that Mr. Duterte vetoed the bill because such a measure could result in “dangerous state intrusion and surveillance, threatening many constitutionally protected rights,” as it also calls for the registration of social media accounts.

The proposed measure sets penalties for anyone who registers a SIM card using false information.

Ms. Poe has said that she intends to talk with her fellow senators in the incoming 19th Congress to “rally support for the measure to help expedite deliberations.”

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.