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Peso may climb amid hawkish policy signals

BW FILE PHOTO

THE PESO could strengthen against the dollar this week as the Philippine central bank’s chief hinted at more rate increases moving forward to help tame red-hot inflation.

The local unit closed at P55.24 per dollar on Friday, weakening by 12 centavos from its P55.12 finish on Thursday, data from the Bankers Association of the Philippines’ website showed.

Week on week, the peso dropped by 82 centavos from its P54.42 finish on Feb. 3.

The peso opened Friday’s session at P55.25 per dollar. Its weakest showing was at P55.335, while its intraday best was at P55.15 against the greenback.

Dollars exchanged fell to $878.3 million on Friday from $1.143 billion on Thursday.

The peso depreciated after hawkish signals from officials of the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP on Thursday raised benchmark interest rates by 50 basis points (bps) for a second straight meeting, and signaled more tightening to come to tame inflation.

The central bank increased its policy rate to 6%, the highest in nearly 16 years or since May 2007 when it stood at 7.5%. It has now hiked borrowing costs by 400 bps since May 2022.

The BSP raised its average inflation forecast for 2023 to 6.1% from 4.5% previously. This is beyond the BSP’s 2-4% target range.

It also hiked its 2024 inflation projection to 3.1% from 2.8% previously.

BSP Governor Felipe M. Medalla said after the meeting that they could not rule out a third or fourth rate increase this year and could consider a 25-bp or 50-bp hike at their next review on March 23.

Meanwhile, Cleveland Fed President J. Loretta Mester and St. Louis Fed President James Bullard both supported a 50-bp hike in the next Federal Open Market Committee meeting following data showing sticky US inflation.

US consumer prices accelerated in January amid higher costs for rental housing and food. The US consumer price index (CPI) increased 0.5% last month after gaining 0.1% in December.

In the 12 months through January, the CPI increased 6.4% following a 6.5% rise in December.

The US central bank this month raised its target interest rate by 25 bps to a 4.5%-4.75% range, bringing cumulative hikes since March 2022 to 450 bps.

The Fed’s next policy review will be held on March 21-22.

For this week, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a report that the BSP’s hawkish tone could support the peso against the dollar.

“Markets will have to contend with the BSP capable of being uber hawkish than the Fed, if demanded by local inflation risks… Following the BSP’s recent hawkish stance, the BSP’s higher inflation forecast will likely prompt more rate hikes in succeeding months to deter persistent inflation overshooting, and thus, uplift peso sentiment. In short, the BSP’s terminal policy rate cannot stay at 6% where the policy rate is now, which will be supportive of the peso,” Mr. Asuncion said.

The market will also wait for upcoming releases for leads, including the Philippine balance of payments report on Monday, Fed meeting minutes, as well as US data on employment, housing, and manufacturing, Mr. Ricafort added.

Mr. Ricafort expects the peso to trade between P55 and P55.50 per dollar this week, while Mr. Asuncion sees the local unit moving from P54.70 to P55.40. — A.M.C. Sy

BoI expects P1-T investment goal to be 80-90% filled by midyear

TRADE Secretary Alfredo E. Pascual expects the Board of Investments (BoI) to hit its P1-trillion investment target for 2023 following “serious interest” from foreign investors.

“With investment prospects being very positive, and as we continue to receive serious interest from global investors, we are definitely on track to meeting our annual investment target of P1 trillion. We are not even through with the second month of the year and we already have secured nearly half of our full-year target for investment approvals,” Mr. Pascual said in a statement.

The BoI is an investment promotion agency (IPA) of the Department of Trade and Industry.

Mr. Pascual, who chairs the BoI, was commenting after the BoI reported P414.3 billion worth of approved investments as of Feb. 9, equivalent to a 142.9% increase year on year.

Mr. Pascual said the BoI could hit 80% to 90% of the target before the middle of the year as the IPA is still following up on other investment leads.

“So far, the agency still has potential investment leads of around P344 billion that have yet to be processed,” Mr. Pascual said.

“The increase in investments proves that the government’s promotional visits abroad led by no less than the President himself, are working as a growing number of investors from around the globe, from Southeast Asia, the US, Belgium, China, and most recently Japan, have shown strong interest in putting in more investments into the country,” he added.  

Last year, the BoI recorded P729 billion worth of approved investments, up 11%.

The BoI accounted for 76% of the P927 billion worth of total IPA foreign and domestic approved investments in 2022.

Mr. Pascual said BoI foreign investment approvals as of Feb. 9 amounted to P163 billion. Investments from Germany accounted for P157 billion, followed by the Netherlands with P2.7 billion, Japan P524 million, the US P509 million, and the UK P194 million.  

“BoI-approved foreign capital for barely the first months of 2023 has already reached 56% of the total figure for all IPAs last year. So, this year looks very promising with heightened prospects and through our collective efforts, we are on course to surpass the 2022 figure way ahead of time,” Mr. Pascual said.

The BoI said the Western Visayas led the regions in investment as of Feb. 9 with P293.3 billion, followed by Calabarzon with P111.7 billion, Eastern Visayas P3.5 billion, Central Luzon P3 billion, and the National Capital Region P783 million.

The renewable energy sector had the biggest share of investment approvals at P398.7 billion, up 138%.

One of the top projects approved in January was the P392-billion investment in offshore wind farms by German-owned wpd Philippines, Inc. in Cavite, Negros Occidental, and Guimaras.  

“We aim to be a global hub for sustainability and green projects that align with the National Government’s policy of promoting cleaner sources of energy, for which full foreign ownership is now allowed under the amended implementing rules and regulations of the Renewable Energy Act,” Mr. Pascual said.

Other sectors posting significant investment approvals were manufacturing with P12.3 billion, administrative services P1.3 billion, agriculture P901 million, and transportation P847 million. — Revin Mikhael D. Ochave 

Regulatory overhaul needed for domestic mineral processing

BW FILE PHOTO

THE Department of Trade and Industry (DTI) said it is working towards establishing a domestic mineral processing industry to tap the potential of Philippine metals for the burgeoning electric vehicle (EV) industry.

Dita Angara-Mathay, DTI commercial counselor and special trade representative to Tokyo, said in a recent virtual briefing after the Japan visit of President Ferdinand R. Marcos, Jr. that the DTI is pushing for more domestic ore processing to move the Philippines into more high-value activities like battery production for EVs.

“The aspiration of the DTI is that we will find it in our regulations to stop the direct sale of ore because that’s a depletable resource, and only encourage new entrants if they invest in processing the ore into high value-added products. That doesn’t only apply to nickel but also copper, etc. So, we have to move up the value chain,” Ms. Angara-Mathay said.  

“They should also bring the processing technology so that our ore can be used in batteries ahead of the surge in demand for EVs. That’s what we really want,” she added.

Ms. Angara-Mathay said the DTI is convincing mineral processors Coral Bay Nickel Corp. and Taganito HPAL Nickel Corp. to consider higher-value activities.  Both companies are Philippine units of Sumitomo Metal Mining Co., Ltd.

Coral Bay and Taganito are hydrometallurgical nickel processing plants that utilize high-pressure acid leaching, which converts low-grade nickel lateritic ores into nickel and cobalt mixed sulfide. The mixed sulfide is an intermediate product that is further refined for use in special steels, electric materials, and battery materials.

“What we really want to do is to convince them to migrate the processing to even higher value-added stages of the production chain to include, hopefully, the manufacturing of lithium-ion batteries,” she said. 

“We’re hoping that since our mining regulations are getting clear. I think we’re waiting for more details from those regulators or authorities who actually oversee exploration and processing,” she added.

Ms. Angara-Mathay also disclosed that the DTI has already identified companies that should be working with the Philippines in processing its metals into batteries.

However, she said that there has been no interest from these companies as they are waiting for policies from relevant government authorities.

“We’re just hoping that some of these people will come in and be brought in after we have a very clear-cut policy that we announce from the relevant authorities. So right now, nobody has expressed any interest,” Ms. Angara-Mathay said.

Trade Assistant Secretary Glenn G. Peñaranda said that the DTI has formed a technical working group (TWG) to look into the possible policy changes to boost mineral processing investments.

“The TWG started last year. We looked at what Indonesia was doing. I think very soon, there should be a recommendation from the TWG. Today, some of the bigger users, particularly China, are really scrambling to secure their supply of the green metals. I think there is market pressure in a way to secure the minerals. The sooner we can make a decision, the better so it is clear,” he added.

Indonesia froze nickel ore exports last year in a bid to do more domestic processing.

The Mines and Geosciences Bureau said in December that the value of Philippine metallic mineral output in the first nine months of 2022 rose 29.21% to P175.61 billion. — Revin Mikhael D. Ochave

Marcos sees manufacturing as key to export growth

RIO LECATOMPESSY-UNSPLASH

PRESIDENT Ferdinand R. Marcos, Jr. said he views building up manufacturing to be a key prerequisite to growing the export sector.

“If the manufacturing operations (gain momentum), we can also export,” he said in a latest video blog. “That’s a big help because we can expand our business to other countries.”

Mr. Marcos said the money saved from foregoing imports can be invested in the economy.

Philippine manufacturing, as measured by the volume of production index, expanded 4.8% year on year in December, the weakest gain since the 4.6% reading in September, according to the Philippine Statistics Authority.

The December reading slowed from the revised 5.9% posted in November and 19.2% a year earlier. 

Mr. Marcos said cheap and reliable energy was also key to boosting factory output.

He said public-private partnerships will play an important role in the manufacturing sector.

The Presidential Communications Office (PCO) said two major consumer goods companies — one of them Procter & Gamble Co. (P&G) — are currently establishing state-of-the art manufacturing facilities in the Philippines, “with one securing a registration with the Board of Investments.”

P&G is establishing a new facility for production of diapers “for export,” while the other, which is European is setting up a facility for personal care products, the Palace said, citing Lanie Dormiendo, head of the International Investments Promotion Service of the Board of Investments (BoI).

The Philippines also plans to host a French ship builder, “which is just finalizing its agreement with the government for the establishment of a shipbuilding facility,” the Palace said. The French company currently operates a ship repair facility in the Philippines.

A Chinese company is also setting up a $3.5-billion integrated steel mill in the Philippines.

“We also met last week a Chinese company that will be building an EV (electric vehicle) facility. They plan to manufacture three types of e-vehicles in the country with more than one billion dollars’ worth of investments,” Ms. Dormiendo said.

The PCO said the Marcos government is making the manufacturing sector “innovative and sustainable.”

The administration has been “aggressively promoting the country’s priority sectors, such as green, innovative and sustainable manufacturing and services, to attract more foreign investors,” it said.

These sectors include high-value manufacturing activities such as electric vehicle assembly, battery manufacturing and mineral processing.

“We have a lot of minerals that can be processed to form part of batteries not only for electric vehicle but even for battery energy storage system,” Ms. Dormiendo was quoted as saying, noting that the government wants to capitalize on the resources already available in the Philippines instead of just exporting them to China and Japan as raw minerals.

“We want to attract foreign investors to do a higher value activity (like) mineral processing, and then attract battery manufacturers and eventually the EV assemblers and EV manufacturers.”

Ms. Dormiendo said the Marcos administration is also actively promoting renewable energy.

The government has so far registered more than P400 billion worth of investments this year, much of it related to the RE sector, she noted.

The Department of Energy last year amended the implementing rules and regulations governing clean energy investment to allow 100% foreign equity in wind, solar and tidal power generation.

Separately, the Palace announced that the Fiscal Incentives Review Board had approved a proposal from a Singapore company to operate a 23-megawatt data center.

A US company is also putting up two 200-megawatt data centers in the northern Philippines, it added.

“Elon Musk’s Starlink is also setting up its low-earth orbit satellite-based internet services in the country, which will make the Philippines Asia’s first to have this type of service,” it said, citing Ms. Dormiendo. — Kyle Aristophere T. Atienza

‘Blended financing’ could unlock private investment as fiscal resources dwindle

DPWH

By Luisa Maria Jacinta C. Jocson, Reporter

LEGISLATION proposing a “blended financing” model will help the Philippines tap more private funding, giving it more financing flexibility after its own ability to invest in projects was weakened by the pandemic, analysts said.

“Flexible funding modalities allow other interested parties to engage in development projects in the Philippines. This allows bilateral and multilateral partners to limit their exposure in specific development projects and provide space for private sector participation,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in an e-mail.

“As long as there is transparency in the so-called blended financing approach, it could be a welcome development, as manifested if one of the objectives is to have flexibility in financing — which is advantageous to loan borrowers,” De La Salle University law and business professor Antonio A. Ligon added in a Viber message.

Albay Rep. Jose Ma. Clemente S. Salceda last week filed House Bill No. 7135, which proposes a blended financing model that allows for more diversified loan sources.

The model is defined as a “financing arrangement where the bilateral or multilateral partners mobilize funds from commercial or private financing institutions.”

It can be applied as long as the projects are covered by national or international official instruments in the nature of exchanges of notes, memoranda of understanding, or similar instruments.

The bill also seeks to reduce the official development assistance (ODA) grant component to 15% and remove the 40% requirement for the weighted average of the grant component of all ODA-funded initiatives.

According to the bill, current ODA guidelines under Republic Act No. 8182 “do not explicitly provide a mechanism for ODAs in the blended financing approach.”

“As such, similar financing arrangements could be subject to litigation, raising the risks of materially-adverse government action for such projects,” it added.

The bill also noted that these risks could also restrict bilateral partners, particularly those from Europe, and their ability to provide their expertise in many areas where cooperation could contribute to development.

Analysts said that the bill will attract more investors and speed up the completion of projects.

“ODA provides cheaper financing at much longer tenors and better terms such as grace periods, but greater flexibility though blended funding from commercial or private sources would improve flexibility in terms of more infrastructure projects being financed and rolled out, as well as completed at a shorter time period,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Given the limited budget and financial resources of the government, more financing options and flexibility would be welcome,” he added.

However, Mr. Ridon noted that the blended financing model may not be immediately adopted.

“While providing this option opens wide-ranging opportunities to engage new development partners, we have yet to see whether blended funding modalities will be the norm in future projects. At present, ODAs are essentially vertically integrated endeavors, as funding partners typically originate development projects from conceptualization and feasibility determination to project construction, turnover and even maintenance,” he said.

Development partners may reject participation in projects if a major development partner is already leading various components of it, Mr. Ridon added.

“Public-private partnerships, in essence, are nothing new in the country, and with these projects come the benefit of likely faster execution, but also the potential downside of key public infrastructure in private hands, who will want to recoup their investment at some point, either initially or through the course of a long-term contract,” Pantheon Chief Emerging Asia Economist Miguel Chanco added in an e-mail.

At the end of December, around 44% or P1.663 trillion of external debt was contracted through ODA, according to the bill.

In 2021, the active ODA loan and grant portfolio of the Philippines was worth $32.24 billion, consisting of 107 loans and 297 grants.

This year, the National Government is expected to obtain around $19.1 billion worth of ODA, of which $9.2 billion in loans will come from multilateral development partners and $9.8 billion from bilateral lenders.

Labor group seeks relief for workers as LRT, MRT poised to raise fares

PHILIPPINE STAR/MIGUEL DE GUZMAN

A LABOR group said workers need relief more urgently than the capital’s light rail systems, whose proposed fare hikes have been billed as a means of helping them recover from losses incurred during the pandemic.

“It was reported that the fare hike is being considered to offset the losses incurred by the train systems due to the pandemic. However, the Federation of Free Workers (FFW) asserts that workers should not be made to bear the cost of these losses,” the FFW said in a statement.

Metro Manila’s commuter railway operators are the Manila Metro Rail Transit (MRT) and Manila Light Rail Transit System (LRT). LRT Line 1 is seeking a fare increase of P17-P44 from the current P11 to P30. LRT Line 2 is seeking stored value fare increases of P14-P33 from the current P12-P28, while raising the single-value ticket fare by P15-P35 from the current P15-P30.

The MRT proposed a fare hike of P4-P6.

“The proposed fare hike will impose a heavy burden on workers who are already struggling to make ends meet due to the high cost of living,” FFW Vice-President Jun Mendoza Ramirez said.

The FFW is asking the Department of Transportation (DoTr) and the Department of Labor and Employment (DoLE) “to prioritize the welfare of workers and find solutions that do not involve a fare hike.”

Transportation Science Society of the Philippines Ex-President Rene S. Santiago said that the price increase is expected, but he said the bigger issue is how much the increase will be.

“To reduce subsidies, rail transit fares have to go up. Only urban commuters benefit from subsidies to rail, but the majority of Filipinos (are not) and they are poorer. What the government has failed to do, for decades, is to rebalance fares among buses, jeepneys, trikes, taxi in terms of value-for-money,” Mr. Santiago said.

The government needs to establish a responsive fare collection system just like in other countries, according to Libra Konsult, Inc. Senior Adviser Nigel Paul Villarete.

“The sooner the government can come up with the correct Service Contracting and Fare Collection systems, the sooner our mobility woes will come to pass,” Mr. Villarete added.

The increase in fares reflects the rising price of fuel and electricity, analysts said.

“The public never likes price hikes. No different for fare hikes. But it is necessary, especially for rail because it is most capital intensive among all transport modes, import dependent, and (endures the most delayed fare adjustments),” Mr. Santiago said.

“The rising cost of living is impacting almost all sectors and it was only a matter of time that fares would need to be adjusted to cover expensive energy costs,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

“The increase in fares however is an example of second round effects and could feed into more price pressures in the coming months,” he added.

“Personally, I think fare hikes are the least of our concerns. What’s crucial and exigent is the bad state of our mobility sector … If DoTr remains clueless in addressing mobility, people will continue to suffer, and so will the Philippine economy,” Mr. Villarete said.

“Fare rates should not even matter because transportation has always been and will always remain beneficial with excellent economic returns,” he added.

On Friday, the Department of Transportation held a public hearing for the proposed fare hikes, with petitioners Light Rail Manila Corp. and Light Rail Transit Authority pitching the fare hikes as a means of financing improvements and rehabilitation of their facilities.

The fare hike is also expected to “unburden” the National Government, which provides a P1-billion subsidy to MRT-3. MRT-3 General Manager Federico Canar, Jr. said these funds can be realigned to other government priority projects. — Justine Irish D. Tabile

Deepening the strategic value of the CHRO

(First of two parts)

Organizations have been undergoing wave after wave of transformation since disruption is now a modern-day constant, and managing talent plays a key role to overcoming every obstacle that organizations encounter. The war for talent continues to heat up in today’s uncertain business landscape.

In order to support and counsel the CEO on their transformation and growth strategy, Chief Human Resources Officers (CHROs) and their equivalents have had to go well beyond traditional human resources territory. However, in order to recruit, keep, and utilize the best talent now and in the future, organizations must acknowledge that talented workers have a significant amount of negotiating power.

The CHRO is responsible for all things related to people in an organization, including the development and implementation of a people management strategy. This includes how to attract, onboard, engage, develop, reward, and retain the talent necessary for the organization to succeed. It also includes succession for C-Suites, change management, executive compensation, and diversity, equity and inclusion (DE&I) initiatives.

In the current talent landscape, the role expands further to include purpose, culture, and well-being, which are all increasingly important factors for employees. More recently, these factors include access to more flexibility in ways of working as well as development opportunities.

Boards must manage the talent agenda in a way that takes the current dynamic into account. This means ensuring that the CHRO role is elevated from business function to strategic collaborator, and that talent management continues to be a primary business focus. Additionally, it entails helping the CHRO listen to employees and influence the company to develop a human-centered culture and a more tailored employee experience.

In order to better understand why the connection between the board and the CHRO is becoming more crucial, insights from EY thought leaders and clients were gathered to further uncover the strategic value of the CHRO role. These insights fueled strategies to improve the board and CHRO dynamic along with the ways of working. Instead of merely reducing potential risk, organizations can find opportunities in current, unheard-of labor trends to gain a competitive advantage.

CHALLENGES IN TALENT
The responsibility of the board is to ensure that management provides the organization with the key talent it needs to execute its strategy. However, in recent years, a depleting talent pool and rising employee demands have made this difficult. The pandemic and its economic repercussions compounded the issue by creating a shift in what employees value in both their professional and personal lives — and the situation is still evolving.

Talent challenges are being exacerbated by a constantly evolving environment. Just three years ago, flexible working was a differentiator or a means of achieving a competitive edge. Now, according to the EY 2022 Work Reimagined Survey, as much as 90% of the respondents said they would think about quitting their current position if flexible working was not an option. Flexibility also has different meanings, as younger individuals might prefer to work from the office more as a result of rising heating and cooling expenditures. However, those who drive or commute to work are more inclined to prefer the reverse to save money on fuel and time.

A recent EY survey of graduates and interns looked into what will keep younger generations engaged and motivated due to their tendency to shift employment more frequently. Since flexibility is becoming more and more synonymous with mobility for these groups, governments all around the world need to develop policies that can compete with the attractiveness of traveling abroad for work. This reality is particularly true for the Philippines with our sizable overseas worker population.

Meanwhile, since the COVID-19 pandemic started, a sizable number of the population over the age of 50 have quit working in some advanced economies. Organizations have to assess the effects of this shift while monitoring market conditions and, where necessary, think about strategies to entice this group back.

Organizations are being forced to react quickly in the short term as a result of this ongoing disruption. One way is by assessing how the cost-of-living crisis is affecting employees and developing assistance strategies. However, focusing on the short term may also keep CHROs and their boards from thinking strategically. The organization must be able to assess the talent it currently has, the talent it will require in the future, and the best way to bridge the talent gap.

PERCEPTION GAPS WITH EMPLOYEES
Boards and their CHROs must make decisions about how to carry out commitments related to the talent agenda while navigating a rapidly shifting, occasionally contradictory reality. While they are better positioned to do so now than before the pandemic, the EY 2022 Work Reimagined Survey found that employers and employees are not always on the same page when it comes to employee engagement.

For instance, when asked why they would change professions, employees most frequently cited career advancement and an increase in overall salary. On the other hand, employers say that learning, skills development, and well-being are some of the key elements to ensuring their employees can thrive. Additionally, there is a “loyalty disconnect” where employers think younger generations are less dependable. However, younger workers claim that they merely have different loyalties and values. Younger workers, for instance, place a higher priority on mental health, the mission of an organization, and its ethical standards than they do on management structures or the actual work.

Organizations must act fast to close these perception gaps while maximizing the abilities of each and every worker. Putting humans at the center needs to be a strategic focus for the board and the CHRO to better understand what employees across all demographics want.

CONSIDERATIONS FOR BOARDS
Boards will need to ask themselves how they enhance both formal and informal talent governance to support and reflect the strategic relevance of the CHRO role. By collaborating with the CHRO, they can make sure the company stays on top of talent issues and can deal with the constantly shifting attitudes of its employees.

The management group and the larger employee organization will have to determine how they uphold the culture and values of the company, as well as the systems in place to quantify this. Boards will also have to determine if the company has the necessary expertise and abilities, particularly those for future leadership, to execute its business plan.

Lastly, board members must ask themselves what role they see themselves playing in developing a sustainable workforce and advancing the talent agenda. This can range from retraining the workforce and gauging the employee experience to boosting staff retention and integrating hybrid working styles into organizational culture.

The second part of this article will discuss three strategies for boards and CHROs to help each other succeed: strengthening and enabling the CHRO role, re-examining the risk framework to support the talent agenda, and supporting CHROs in developing a human-centric strategy and employee value proposition.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Lisa Marie T. Escaler is the People Advisory Services Workforce Advisory (PAS WFA) leader of SGV & Co.

Rise in sea tensions expected with impending military drills

PHILIPPINE COAST GUARD FACEBOOK PAGE

By Kyle Aristophere T. Atienza, Reporter

TENSIONS between the United States and China could worsen in the Indo-Pacific region this year as Washington holds its biggest joint military drills with the Philippines since 2015, according to security analysts.

The two superpowers are expected to use their economic and cultural platforms to gain influence in the region, which has been beset by the South China Sea dispute and tensions between China and self-ruled Taiwan, they said.

“There will be a tug of war of military strength as the US is expected to mount its biggest Balikatan exercises with the Philippine Armed Forces,” Chester B. Cabalza, who studied national security and policymaking at the University of Delaware, said in a Facebook Messenger chat.

“This is while China is perfecting its simulation of new weapon system using electronic and cyber-capabilities.”

Philippine President Ferdinand R. Marcos, Jr., 65, took office in June amid tensions in the South China Sea and naval competition between the US and China.

Analysts said his independent foreign policy talks would be challenged by regional tensions as well as economic realities facing the Philippines, which is under pressure to fund its economic recovery programs.

“We will see an intensified showdown of economic prowess in the Philippines between the world’s two biggest economies,” Mr. Cabalza said.

“We will see heightened cognitive warfare as the two superpowers are expected to compete for people and cultural engagements to win the hearts and minds of people through scholarships, alumni associations and recognition of historical ties,” he added.

He noted that Washington has boosted the US Trade and Development Agency, which links US businesses to the Indo-Pacific Economic Framework, which counters China’s Belt and Road Initiative.

“If mainland Chinese businesses become convinced or are brought on side by the Chinese Communist Party in its posturings in the region, that’s when we should be really worried,” Hansley A. Juliano, a political economy researcher, said in a Facebook Messenger chat.

“If Belt and Road is doing its job of carving the intended Chinese sphere of influence, it really doesn’t make sense for them to escalate.”

He said the US and European Union (EU) might impose economic sanctions on the US once it continues with aggressive activities in the region.

Tensions across the Taiwan Strait have also undermined regional stability, with analysts expecting China to invade self-ruled Taiwan in the coming years.

“The Russia-Ukraine case is being seen as the test case since the contraction of the Russian economy via imposed economic sanctions from the US and European Union is also what can deter China,” Mr. Juliano said. “However, if China has already realized its preferred economic supply chain via Belt and Road, that might blunt the effects of US-EU sanctions.”

“Scholars, security analysts and journalists must watch out for that.”

Mr. Marcos visited New York last year for the United Nations General Assembly, where he called for a rule-based order in the South China Sea, which is being claimed by China almost in its entirety.  

On the sidelines of the United Nations event, Mr. Marcos met with US President Joseph R. Biden. 

Last month, the Philippine leader met with his Chinese counterpart in Beijing, with Mr. Xi promising to find a solution to avoid tensions in the South China Sea. The two leaders signed bilateral deals covering agriculture, energy, maritime security and tourism.

‘WATERS AND ROCKS’
But despite the Philippine-China talks, conflicts have persisted.

The Philippine Coast Guard has accused its Chinese counterpart of trying to block a resupply mission at Second Thomas Shoal on Feb. 6 by pointing a military-grade laser on a Philippine vessel.

The Philippines has filed a diplomatic protest, but China insists it had only used a handheld laser to ensure navigational safety.

“As long as Xi Jinping leads China, his hawkish leadership toward his country’s stronger armed forces will be direct and astute in the contested waterways of the West Philippine Sea,” Mr. Cabalza said, referring to areas of the sea within the Philippines’ exclusive economic zone.

He said China would continuously challenge the Philippines’ claims to the South China Sea “while pushing Manila to its limits.”

“Not only will Beijing test Washington’s commitments to Manila but it will try to distract it until the ties crack.”

On Saturday, Mr. Marcos said the laser incident committed by China was not enough for him to invoke the Philippines’ 1995 Mutual Defense Treaty with the US.

“Chinese control over the sea has been a pretty transparent, objective, and recent episodes do not bode well that China will respect borders in good faith — not when they have found it easy to intimidate and play with former President Rodrigo R. Duterte and Marcos, Jr.,” Mr. Juliano said.

The Philippines has given the US access to four more military bases under their Enhanced Defense Cooperation Agreement. Mr. Marcos earlier this month expressed willingness to a three-way defense pact with the US and Japan, which are seen as major obstacles to China’s global ambitions.

“The agreed EDCA locations, especially the additional ones, joint patrols with the US in the South China Sea and a brewing trilateral security arrangement with the US and Japan may signal where Manila stands in the US-China competition,” Lucio Blanco Pitlo III, a research fellow at the Asia-Pacific Pathways to Progress Foundation, said in a Messenger chat.

“This may limit the country’s legroom in navigating this growing great power gulf and puts it in a precarious position should tensions escalate.”

Mr. Pitlo said the Philippines’ aggressiveness in pursuing defense deals happen while its neighbors in the region “remain on the fence.”

Regional peers are “probably agreeing for more strongly worded expressions of concern and call for restraint but are unlikely to offer military access to either side.”

He urged the Marcos government to address its sea dispute with China peacefully, especially since US Secretary of State Antony Blinken and China’s top diplomat Wang Yi had both agreed to address South China Sea tensions diplomatically  on the sidelines of the Munich Security Conference.

“If rival great powers who clash across the board continue to hold talks, why not neighbors quarrelling over waters and rocks?” Mr. Pitlo said.

Philippine labor group urges Marcos gov’t to work with ICC probe of Duterte

PHILIPPINE STAR/ MIGUEL DE GUZMAN

By John Victor D. Ordoñez, Reporter

THE BIGGEST labor coalition in the Philippines on Sunday urged the government of President Ferdinand R. Marcos, Jr. to cooperate with the International Criminal Court’s (ICC) probe of his predecessor’s deadly war on drugs, saying the tribunal has the authority to probe abuses during the period.

“The ICC’s intervention does not mean that the Philippine justice system is incapable of delivering justice,” Nagkaisa said in a statement.

“It only means that the ICC is stepping in, due to a special circumstance because the domestic justice system has failed to hold perpetrators accountable and provide justice to victims of extrajudicial killings related to the anti-drug war,” it added.

Last month, the ICC pre-trial chamber reopened its investigation into the killings and so-called crimes against humanity under ex-President Rodrigo R. Duterte’s anti-illegal drug campaign

The Hague-based tribunal said it was not satisfied with Philippine efforts to probe the deaths.

Mr. Marcos on Saturday called the ICC’s probe a threat to the country’s sovereignty, saying the international tribunal did not have jurisdiction over the Philippines.

“I have stated it often, even before I took office as president, that there are many questions about their jurisdiction and what can be — what we in the Philippines regard as an intrusion into our internal matters and a threat to our sovereignty,” he told reporters.

He said the Philippines has a working justice system that can hold erring officials accountable.

In a decision on Feb. 17, the ICC appeals chamber granted the Philippine government’s request for more time to file its appeal to suspend the probe. It gave the country up to March 13.

ICC prosecutor Karim Ahmad A. Khan had asked the international court to deny the Philippines’ request, saying it did not raise arguments to justify halting the probe.

“The prosecution submits that granting suspensive effect is not necessary in the circumstances of this case,” he said in a five-page letter to the appeals chamber dated Feb. 16.

The international tribunal, which tries people charged with crimes against humanity, genocide, war crimes and aggression, suspended its probe of Mr. Duterte’s deadly war on drugs in 2021 upon the Philippine government’s request.

It was also set to probe vigilante-style killings in Davao City when Mr. Duterte was still its vice mayor and mayor.

Nagkaisa said it was disappointed with former President and Pampanga Rep. Gloria Macapagal Arroyo’s call to defend Mr. Duterte.

“It was during her time that capital punishment was abolished and this commitment to human rights and the rule of law is a legacy that the Philippines must uphold,” the labor group said.

Last week, Ms. Arroyo and more than a dozen congressmen filed a resolution seeking the “unequivocal defense” of Mr. Duterte.

The labor group cited government efforts to look into extralegal killings in the labor sector when it met with representatives from the International Labor Organization (ILO) who were looking into cases of violence and killings against workers.

Last month, Philippine trade unions told ILO officials in a joint report the Philippine government had failed to comply with international conventions on freedom of association and the right to organize.

“The government should be consistent with its commitment to serve justice for slain workers and their families by accepting the ICC investigation with open arms,” Nagkaisa said.

“The ICC is a threat to mass murderers, despots and tyrants, not to Philippine sovereignty per se,”  Maria Kristina C. Conti, secretary general of the National Union of People’s Lawyers in Metro Manila and legal counsel for several victims of the drug war, said in an e-mail.

“Filipinos, victims of the war on drugs, asked for the international court and community to step in because our government could not and would not give them genuine justice here.”

Ephraim B. Cortez, president of the National Union of Peoples’ Lawyers, said the ICC could still investigate Mr. Duterte over drug war abuses since they happened before the Philippines withdrew from the ICC in 2018.

“The process for withdrawal is explicitly laid down in the Rome Statute and the Philippine government is supposed to be aware of this when they ratified it,” he said in a Viber message.

Mr. Marcos has said the Philippines would not rejoin the international court.

Mr. Cortez said House support for Mr. Duterte showed the Philippine government’s failure to provide relief to the families of drug war victims.

At least 6,117 suspected drug dealers had been killed in police operations, according to data released by the Philippine government in June 2021. Human rights groups estimate that as many as 30,000 suspects died.

The Philippine Human Rights Commission has said the Duterte government had encouraged a culture of impunity by hindering independent inquiries and failing to prosecute erring cops.

“President Marcos is duty-bound to protect the father of a major player in the Marcos bloc — Vice-President Sara Duterte-Carpio,” Arjan P. Aguirre, who teaches political science at the Ateneo de Manila University, said in a Facebook Messenger chat. “He is aware too that people still support Duterte and that also helped him in the May 2022 elections.”

More than 30 member-states of the United Nations Human Rights Council in November urged the Philippine government to do something about extralegal killings in connection with Mr. Duterte’s anti-illegal drug campaign.

The Philippines has accepted 200 recommendations from the UN Human Rights Council, including investigating extralegal killings and protecting journalists and activists.

“The ICC’s investigation is not a threat to Philippine sovereignty,” Nagkaisa said. “Rather, it will strengthen respect for human rights in the country as well, as it is a legitimate exercise of the ICC of its mandate under the Rome Statute, to which the Philippines was once a signatory.”

Gatchalian calls for immediate termination of contract between PAGCOR, third-party auditor 

A SENATOR has called for the termination of the contract between the Philippine Amusement and Gaming Corp. (PAGCOR) and its third-party auditor after a New York-based bank denied issuing a certificate to the latter that supposedly qualified it for the P6-billion government engagement.   

Senator Sherwin T. Gatchalian, chair of the Senate ways and means committee, called for the “immediate” termination of the contract following a letter from Soleil Chartered Bank (SCB) that categorically denied providing any certification.   

“SCB would like to make record that it did not issue the questioned bank certification dated June 15, 2017,” it said in the letter.   

The Senate committee’s recent hearings on PAGCOR showed the government-owned corporation failed to comply with existing procurement rules when it awarded a 10-year contract to the auditor despite its inability to meet the operating capital requirement.    

The bank also said that it does not have a record of any account of the auditing consortium, certifying that it was not a client of SCB.  

The bank added that it did not engage in banking operations nor maintain an office in the Philippines, and its supposed address in the country, as claimed by the auditor, is “spurious.”  

“The bank guarantee submitted by the third-party contractor to PAGCOR is clearly fake,” Mr. Gatchalian said.   

“Because of this, the declared income of POGOs is questionable because it appears that the audit process has no credibility,” he said, referring to Philippine Offshore Gaming Operators. 

The auditor was supposed to review the income declaration of PAGCOR-licensed POGOs. 

In the same letter, the bank also noted that those involved in the issuance of the fake bank guarantee will be brought to court.  

“We trust that this matter has been clarified and hope that whoever may have committed this forgery will be dealt with accordingly in the proper court of law,” the SCB said.  

Offices declared by the consortium to PAGCOR were also found to be fictitious and inappropriate venues of operation. — Alyssa Nicole O. Tan 

Possible Cessna crash site in Albay found 

MEMBERS of the Camalig disaster response teams were immediately deployed on Feb. 18 for search and rescue operations on the Cessna 340 aircraft, with four people on board, that went missing shortly after taking off from the Bicol International Airport. — BUREAU OF FIRE PROTECTION-CAMALIG

THE POSSIBLE crash site of the Cessna plane that went down early Saturday morning in the town of Camalig has been found based on a photo taken by a foreign search and rescue volunteer, according to the mayor.   

“The camera revealed debris hanging from a tree, along with some broken branches,” Camalig Mayor Carlos Irwin G. Baldo, Jr. said in post on his Facebook page around noon Sunday.   

He said responders were already on their way to the area.   

“As of 11:42 AM, 256 responders, 12 drones, and 4 K9 dogs are presently deployed in Anoling and Quirangay,” the mayor said.   

A Cessna 340 aircraft went missing in Camalig, Albay at 6:46 a.m. on Feb. 18, just three minutes after taking off from the Bicol International Airport, according to the Civil Aviation Authority of the Philippines (CAAP).  

The flight, bound for Manila, had four people on board — a pilot, a crew member and two passengers, CAAP said in a statement on Saturday.   

The incident comes after another Cessna 206 type aircraft crashed in Isabela on Jan. 24 and has yet to be found.   

It had six persons on board, including the pilot.   

It left Cauayan Airport and was bound for Maconacon, Isabela on a 30-minute flight.

Solon pushes for appointment of an ‘air traffic czar’

PHILIPPINE STAR/ MIGUEL DE GUZMAN

A HOUSE minority leader is pushing for more government control of commercial flight operations to decongest the main gateway in Manila by appointing an administrator who will coordinate with airlines.    

“We would urge Malacañang to look for an air traffic czar who can manage commercial flight activity, compel airlines to reschedule flights if necessary, and to oversee the shift to Clark,” 4Ps Party-list Rep. Marcelino C. Libanan said in a statement on Sunday.  

He earlier recommended that government should force airlines to transfer about half of their flights from the Ninoy Aquino International Airport (NAIA) in Manila to the Clark International Airport located about 115 kilometers north of the capital.   

He added that the government must provide subsidies for the airlines’ relocation costs.   

“There’s really no point in overloading NAIA with more flights, considering that we have Clark nearby that is four times larger, has unused capacity, and is ready to handle more aircraft and passengers at any given time,” Mr. Libanan said. — Beatriz Marie D. Cruz 

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