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Hidden loopholes and privacy risks loom over online age check laws

PIXABAY

LONDON — As the New Year dawned in Louisiana, the US state’s 4.5 million residents woke to a new rule that restricts their access to the internet — a measure aimed at stopping children from viewing pornography online.

Act 440, which requires residents to submit a digital driver’s license for third-party age verification before they can access adult websites, is among a clutch of new laws in the United States, Europe, and Britain seeking to protect children on the internet.

“Young people are very, very vulnerable online, and we really don’t think the online platforms do enough,” said Lisa Hallgarten, head of policy and public affairs at Britain’s Brook Health Centre, which advocates for children’s online safety.

Campaigners hope the advent of laws requiring age verification to access certain online content or particular websites could mark a turning point.

The European Union’s Digital Services Act and Britain’s Online Safety Bill require age verification — a way of changing a user’s internet experience according to their age — in order to stop targeted advertising for young people and block their access to adult and other content deemed harmful to minors.

At the same time, some large tech companies have introduced age verification measures, partly to ensure young children cannot open social media accounts.

While children’s safety campaigners broadly welcome such laws and safeguards, data experts warn that age verification and other forms of identity checking threaten the privacy of internet users of all ages through data gathering, storage, or possible leaks.

“As this becomes standard — social compliance essentially — with more sites requesting ID validation, it normalizes the behavior and consequently increases the risk of this information getting into the wrong hands,” said James Walker, chief executive of UK-based consumer data action service Rightly.

FRIENDS, FACE SCANS AND PHISHING
Age verification methods are not new. In the 1990s, the US Communications Decency Act restricted online pornography and gambling websites by requiring users to submit credit card information as a way to stop under-18s from accessing them.

As internet use increased and concern grew about phishing attacks targeting credit card users, companies tried to find less risky ways of detecting users’ ages.

Some adopted trust-based systems, such as a button confirming that a user is over 18 — a mainstay of pornography websites, but such controls have been criticized for being too easy to evade.

Last year, Meta’s Instagram platform rolled out social vouching, whereby three mutual followers confirm how old another user is.

The company also uses artificial intelligence (AI) to estimate a user’s age from their posts, interactions with other accounts, and certain types of content.

Digital rights experts say that method highlights just how much data tech firms can access.

“Social media sites already collect vast troves of deeply personal data. They should not be encouraged or compelled to collect even more through digital identity checks,” Mark Johnson, advocacy manager at the Big Brother Watch rights group, told the Thomson Reuters Foundation.

Meta also uses Yoti, a tool that scans video selfies to estimate a user’s age. It says the data is deleted as soon as the verification check is completed.

But accessing users’ cameras is inherently invasive, according to the French National Commission on Informatics and Liberty (CNIL).

The CNIL noted last year that face scans, especially if required for pornographic websites, may be used for blackmail, and has condemned all current forms of age verification.

Measuring reliability, data privacy, and whether the systems worked across all ages, the group found that there is “currently no solution that satisfactorily meets these three requirements (and) all the solutions proposed can easily be circumvented.”

DATA BREACHES
The success of online age verification is heavily constrained by the way the internet has been built, primarily through closed digital worlds of numerous, private-user accounts which pose a significant risk to user rights, experts say.

“Consumers hand over their email addresses to companies they don’t know, click on emails from organizations they aren’t familiar with, or sign up to competition sites without thinking of the consequences of sharing data,” said Mr. Walker at Rightly.

“Gathering personal information for age verification does run an inherent risk because the only person who can take back control of your data is you,” he added.

Young people’s data has already fallen into the wrong hands in an attempt to provide age verification measures.

In November, a database of 28 million children’s learning records was used by gambling websites to help develop age verification checks. The British government was later criticised by the regulator for its handling of the data in question.

The database included a child’s full name, date of birth, and gender, with optional fields for email address and nationality.

“No one needs persuading that a database of pupils’ learning records being used to help gambling companies is unacceptable,” John Edwards, the head of Britain’s Information Commissioner’s Office, a data protection watchdog, said at the time.

In Louisiana, critics say Act 440 is unlikely to achieve its goal of keeping children from seeing adult content, not least because the age checks can be easily bypassed by using mobile data or a Virtual Private Network that can route internet traffic from elsewhere.

“I imagine that there are going to be some other states that say this isn’t a bad idea, though I don’t think it’s going to be very effective,” said Ken Levy, a professor of Law at Louisiana State University.

Without a coordinated, global approach to keeping the internet safe, experts say there is only so much that lawmakers can do at a local or national level.
“They’re legislators, using the only tools they have in their toolkit,” Mr. Levy said. — Thomson Reuters Foundation

Undersized poultry, egg shortage, and the need for an information network to improve Philippine agriculture

STOCK PHOTO | Image by Ralph from Pixabay

The broiler industry is in the black, but Filipino producers are still being cautious, according to Elias Jose “Bong” M. Inciong, president of the United Broiler Raisers Association (UBRA), a group of small- and medium-scale poultry producers.

Farmgate prices usually collapse after Christmas, given the Filipino pamahiin (superstition) of avoiding poultry consumption during the New Year, Mr. Inciong said.

The superstition is in reference to the Filipino expression “isang kahig, isang tuka,” (hand-to-mouth existence) that describes how chickens eat.

This hasn’t happened this year, yet “this minor miracle is also a cause for concern… Is there a supply production problem in breeders, or have inputs gone so high that risk-taking among [producers of] layers have gone down?” Mr. Inciong asked.

Layers are chickens reared for eggs, whereas broilers are chickens reared for meat.

Another cause of concern is the undersized poultry that producers have observed of late.

Producers have three size categories: prime, regular, and off-size, Mr. Inciong told BusinessWorld in a Jan. 18 Zoom call.

“Since summer last year, nagkakaroon na ng [we’ve started seeing] undersized broilers and runts,” he said. “Nawala na, pero bumalik [We didn’t have this problem anymore, but then it happened again].”

SHORTAGE OF EGGS

The reported egg shortage, meanwhile, is a case of not being able to find the balance between supply management and free enterprise, according to Mr. Inciong.

Medium-sized eggs retail for P9 each, up from P6.90 in December.

People who lost money in the hog and broiler industry went into eggs because there were no imports to compete with, said Mr. Inciong.

“This mindset created overcapacity,” he said. “Unlike in other countries where they regulated capacity, here it was a free enterprise.”

The resulting losses incurred by players prompted them to depopulate. This move was exacerbated by the effects of bird flu and the increase in feed-related production costs, he added.

Mr. Inciong noted that solving this problem depends on how fast breeders are brought in for repopulation.

Recovery from layer-related losses are time and money-consuming because the chickens take 6 months to grow, and then take another six months to produce table eggs.

POINTS FOR IMPROVEMENT
Philippine agriculture offers many points for improvement, Mr. Inciong said. A place to start is in the implementation of Section 13 of the Agriculture and Fisheries Modernization Act of 1997 (Republic Act 8435), which calls for consultations with agricultural frontliners in the crafting of policy.

Government has yet to implement Sections 38-45 of the Act, Mr. Inciong also pointed out. The sections require the establishment of an information network with international and domestic dimensions.

“We have import and export ambitions. In order to do that, you need data,” he added. “Unless you have that information network, you cannot compete.” — Patricia B. Mirasol

As South Korean government proposes flexible overtime rules, some fear workers may suffer

UNSPLASH

SEOUL — The administration of South Korean president Yoon Suk Yeol wants to allow people to work up to 69 hours a week — up from the current 52 — and bank overtime hours in exchange for time off, a plan it hopes will promote family growth alongside productivity.

The government says the plan, set to be announced next month, will provide more flexibility in the labor market. Officials say people would work less as a whole, encouraging them to have families and shore up a fertility rate that is projected to hit a global-low 0.7 in 2024.

It would supersede a 2018 law that limited the work week to 52 hours — 40 hours of regular work plus 12 hours of overtime. The Ministry of Employment and Labor said in a statement that law had fallen behind the times.

“If you are working at ice cream factories for example, you can work overtime seasonally, then save the hours of work and use later to go on a longer holiday,” the ministry said of the reform.

The proposal would allow employers and workers to agree on whether to count overtime by the week, with 12 hours allowed; the month, with 52 hours allowed; the quarter, with 140 hours allowed; a half year, with 250 hours; or a full year, with 440 hours of overtime allowed.

For counting periods of a month or longer, up to 29 hours a week of overtime would be allowed, for a total of 69 work hours in one week. Overtime could be exchanged later for time off at a rate that has not been announced.

Only 14% of South Koreans were in trade unions in 2021, data show, which could limit how much workers can negotiate. In a statement, the Korean Women’s Associations United said “only regulations like the 52-hour workweek and pressure from labor unions can protect workers from long working hours.”

The law must be passed by the National Assembly, where Mr. Yoon’s political opponents hold the majority. Opposition politicians have said they oppose the plan, with Rep. Park Yong-jin of the main opposition Democratic Party of Korea calling it a “shortcut to population extinction.”

The labor ministry has brushed off such criticisms, saying the proposal would “only add more choice.”

More than 18% of South Koreans worked more than 50 hours a week in the world’s 10th-largest economy in 2021, according to unpublished data from the Organisation for Economic Co-operation and Development (OECD) — the fifth-highest after Turkey, Mexico, Colombia and Costa Rica.

The move has been welcomed by the country’s major business lobbying groups, including the Korea Enterprise Federation, which described it as “necessary.” But some experts are sceptical that the new proposal would reduce how much people work.

“The beauty of introducing a 52-hour workweek was that you gave a signal to employers, unions and workers saying, ‘Listen, you really have to do something about the long working hours culture in your country,’” said Willem Adema, a senior economist at the social policy division of the OECD. “If the current legislation is all about giving flexibility then that’s fine. But it doesn’t seem to be interpreted as such.”

The government says allowing workers to spend accrued overtime hours on vacations will mean people who want to work less — such as parents or caregivers — will be able to do so.

Extending working hours, even temporarily, affects women more than men, said Lee Min-Ah, Professor of Sociology at Chung-Ang University.

“When male partners work more, women’s economic activity will be discouraged and their responsibility of childcare will only increase,” Ms. Lee said.

The country already has the lowest fertility rate in the world, and a rapidly ageing population. The working-age population peaked at 38 million in 2019 and is set to drop by more than 9 million by 2040, government data show.

Lee Yoon-sun, a 29-year-old office worker, said working high-intensity hours and then taking time off would be disruptive.

“Working long hours when you have a heavy workload and then resting when you are less busy seems like a pattern that will lead to an irregular life, affecting having children and taking care of them,” said Lee, who does not have children.

Other workers say the new plan ignores a lot of the cultural and social nuances of work in South Korea.

“If it’s 6 p.m., you don’t just run out the door, you carefully put on your clothes and make sure you watch what your co-workers are doing so you are not the one leaving while everyone else is still working,” said Albert Kim, a 27-year-old living in Seoul, who also does not have children. “There are a lot of gray areas I wish the proposal would have addressed.” — Reuters

‘No more in the tank’: Jacinda Ardern to step down as NZ leader

New Zealand Prime Minister Jacinda Ardern. — REUTERS

WELLINGTON — New Zealand Prime Minister Jacinda Ardern on Thursday made a shock announcement she had “no more in the tank” to continue leading the country and would step down no later than early February and not seek re-election.

Ms. Ardern, holding back tears, said that it had been a tough five and a half years as prime minister and that she was only human and needed to step aside.
“This summer, I had hoped to find a way to prepare for not just another year, but another term — because that is what this year requires. I have not been able to do that,” Ms. Ardern, 42, told a news conference.

“I know there will be much discussion in the aftermath of this decision as to what the so-called ‘real’ reason was… The only interesting angle you will find is that after going on six years of some big challenges, that I am human,” she continued.

“Politicians are human. We give all that we can, for as long as we can, and then it’s time. And for me, it’s time.”

A ruling New Zealand Labour Party vote for a new leader will take place on Sunday; the party leader will be prime minister until the next general election. Ms. Ardern’s term as leader will conclude no later than Feb. 7 and a general election will be held on Oct. 14.

Ms. Ardern said she believed Labour would win the upcoming election.

New Zealand Deputy Prime Minister Grant Robertson, who also serves as finance minister, said in a statement he would not seek to stand as the next Labour leader.

Political commentator Ben Thomas said Ms. Ardern’s announcement was a huge surprise as polls still ranked her as the country’s preferred prime minister even though support for her party had fallen from the stratospheric heights seen during the 2020 election.

Mr. Thomas said that there was not a clear successor.

Ms. Ardern said she was not stepping down because the job was hard, but because she believed others could do a better job.

She made a point of telling her daughter Neve that she was looking forward to being there when she started school this year and told her longtime partner Clarke Gayford that it was time they married.

EMPATHETIC LEADER
Ms. Ardern burst onto the global scene in 2017 when she became the world’s youngest female head of government at age 37.

Riding a wave of “Jacinda-mania,” she campaigned passionately for women’s rights, and an end to child poverty and economic inequality in the country.

Eight months after becoming premier she became the second elected leader to give birth while in office, after Pakistan’s Benazir Bhutto. Many saw Ms. Ardern as part of a wave of progressive female leaders, including Finnish Prime Minister Sanna Marin.

Her empathetic leadership style was cemented by her response to the mass shootings at two mosques in Christchurch in 2019 that killed 51 people and injured 40.

“Her universal call for human unity with compassion made me cry with joy then, and it makes me cry now,” said Farid Ahmed, survivor and husband of a Christchurch attack victim.

“Her kindness, wisdom and efforts for a peaceful world have been a remarkable example for world leaders,” he said. “I understand that she needs rest, and I wish her all the best in her life.”

Ms. Ardern swiftly labeled the attacks “terrorism” and wore a hijab as she met with the Muslim community a day after the attack, telling them the whole country was “united in grief.” She promised and delivered major gun law reform within a month.

“Jacinda Ardern has shown the world how to lead with intellect and strength. She has demonstrated that empathy and insight are powerful leadership qualities,” Australian Prime Minister Anthony Albanese said on Thursday.

Ms. Ardern won plaudits across the political spectrum for her handling of the coronavirus disease 2019 (COVID-19) pandemic, which saw the country face some of the strictest measures globally but also resulted in one of the lowest death tolls.

But her popularity has waned over the past year as inflation has risen to nearly three-decade highs, the central bank has aggressively increased the cash rate and crime has risen.

The country has become increasingly politically divided over issues such as a government overhaul of water infrastructure, and the introduction of an agricultural emissions program. Ms. Ardern and Labour have seen their opinion poll support suffer. — Reuters

China recovery could be very quick — IMF’s Gopinath

International Monetary Fund (IMF) Deputy Managing Director Gita Gopinath. — WORLD ECONOMIC FORUM/SIKARIN FON THANACHAIARY

DAVOS, Switzerland — China could see a sharp recovery in economic growth from the second quarter onwards based on current infection trends after the dismantling of most coronavirus disease 2019 (COVID-19) restrictions, International Monetary Fund (IMF) Deputy Managing Director Gita Gopinath said on Wednesday.

Speaking to Reuters on the sidelines of the World Economic Forum in Davos, Ms. Gopinath also reiterated the Fund’s calls for nations to avoid a descent into protectionism.

She hailed China’s reopening as a positive sign, alongside indications it was ready to re-engage with the world.

“We expect growth in China to come back, to rebound,” Ms. Gopinath told Reuters in an interview.

“Looking at the infection trends, and if those persist, we could see a very quick recovery starting from after the first quarter of this year,” she said of a current surge in infections seen as an “exit wave” linked to the economic reopening.

China’s economy grew 3.0% in 2022, one of its worst economic performances in nearly half a century, hit by strict COVID curbs and a property market slump.

Economists polled by Reuters see Chinese growth in 2023 at around 4.9%, with some of them recently upgrading forecasts to around 5.5%.

Ms. Gopinath said that a growth rate “in the 4%-plus ballpark” would likely mean that any global inflationary pressures would be counter-balanced by the slowdown in demand elsewhere.

“But if growth in China comes in much more strongly, which is a possibility, then we could see another spike in oil prices or energy prices,” she said.

Asked about recent US inflation readings that suggest a cooling, Ms. Gopinath said it was too early to say for sure whether they meant that inflation was heading durably back down to the US Federal Reserve’s target of 2%.

“If we get readings similar to what we saw in the last month or two for another few months then we’ll be in a good place,” she said, noting that the labor market remained tight.

Ms. Gopinath reaffirmed the Fund’s concern that geopolitical tensions would lead countries towards protectionism as they tried to shore up their economic security.

Asked about the US Inflation Reduction Act package of measures to boost green transition investment, she said it treated electric vehicles in a discriminatory way by favoring US producers over other manufacturers.

Washington said on Tuesday it was trying to address European concerns over the $369 billion plan.

“The administration of the US is rethinking this and thinking of ways for it become less discriminatory,” said Ms. Gopinath. “Our only request would be for it to do this for all your partners and not just a subset of them.” — Reuters

Exhausted and struggling to pay bills, British nurses go on strike

REUTERS

LONDON — Tens of thousands of nurses across England walked out of hospitals on Wednesday, on strike over low pay that they say leaves them struggling to cover their bills and extreme stress at work that has pushed many to the edge.

Nurses, like ambulance workers, train drivers, teachers, postal workers and employees in many other sectors, are taking industrial action in search of better pay and conditions as inflation tops 10% while their wages rise much more slowly.

“This job is slowly killing nurses,” said David Hendy, a 34-year old nurse joining around 100 others on the picket line outside University College London Hospital.

That was one of dozens of protests taking place as part of strikes by the Royal College of Nursing — the second wave of its industrial action, having walked out en masse for the first time in its 100-year history in December.

“The nursing workforce in the last 10 years has been through hell and back. We’ve got through COVID, I’ve got colleagues who died from COVID. I myself have had it three times,” Mr. Hendy said, holding back tears. “Morale is rock bottom.”

The government has so far resisted pressure to meet nurses’ demands for a discussion about pay, insisting it will not revisit the 4%–5% it awarded in 2022/23 on the recommendation of a pay review body, and will only discuss the pay review process for 2023/24.

Health minister Steve Barclay told reporters during a visit to a hospital on Wednesday he was disappointed by the strikes and that meeting nurses’ pay demands would be unaffordable.

“We want to work constructively with the trade unions in terms of this coming year’s pay review process, recognizing the pressures of inflation and recognizing the pressures on the (National Health Service),” he said.

Others on the picket line echoed Mr. Hendy’s concerns, stressing that the dispute was about more than just pay.

“The workload is phenomenal now and our patients are more sicker than they’ve ever been,” said Victoria Banerjee, 44, a mother of two teenagers who has been a nurse for 20 years.

Nevertheless, with inflation at 10.5% according to data released on Wednesday, and food and drink prices rising at the fastest rate since 1977, pay still sits at the heart of the protest.

“We’ve been struggling over the last few years. Definitely bills are going up and our pay is not reflecting that,” said Jenny Gyertson, 42, who has worked as a nurse for two decades.

“You’re basically living month to month. If something goes wrong, like the car breaks, or the boiler breaks or there’s an unexpected bill, it’s very, very difficult and it’s very Stressful.” — Reuters

Marcos pitches wealth fund in Davos

PCO.GOV.PH

PHILIPPINE PRESIDENT Ferdinand R. Marcos, Jr. on Wednesday pitched a still unapproved sovereign wealth fund measure to top business and world leaders at the World Economic Forum (WEF) in Davos, Switzerland, saying it would help diversify the country’s financial portfolio.

“The process of establishing our first-ever sovereign wealth fund is under way,” Mr. Marcos said at the WEF Country Strategy Dialogue in Davos, Switzerland, based on a video posted by Radio Television Malacañang.

Mr. Marcos said the proposed wealth fund is “one tool among many in our efforts” to diversify the Philippines’ financial portfolio, “which includes our existing institutions pursuing investment that will generate stable returns.

It will also have “welfare effects spanning employment creation, improvement of public service, and a decrease in costs of economic activities,” he added.

House Speaker Ferdinand Martin G. Romualdez said in a separate statement there was “huge interest” in the proposed wealth fund from WEF attendees.

The House of Representatives in December approved the bill creating the fund, but no counterpart measure has been filed in the Senate.

“It is unfortunate that the President himself talked about a fund that is yet to be deliberated by the Senate,” Enrico P. Villanueva, senior economic lecturer at the University of the Philippines Los Baños, said in a Twitter message.

Mr. Marcos’ move shows disregard for the democratic process, he added. “It will be hard to attract investors if the Executive branch cannot follow basic protocol and governance standards.”

If approved, the sovereign wealth fund named Maharlika will be used to “invest in a wide range of outlets” including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, commercial real estate, and infrastructure projects, according to the Budget department.

The $1.34-billion Maharlika Investment Fund (MIF) is expected to finance big government projects such as power grids and dams. Its main funders are government banks, after a backlash against a proposal to tap pension funds.

Maharlika Investment Corp., the state firm that will manage the fund, will be headed by the Finance secretary.

Maria Ela L. Atienza, who teaches political science at the University of the Philippines, said the premature launch of the sovereign wealth fund is a “display of power” meant to pressure senators into approving the proposed law.

“It is interesting to see how senators will respond,” she said in a Viber message. “Will they readily capitulate and therefore show publicly that the Senate is a mere rubberstamp of the president or will there be senators who, for either personal reasons and political ambitions or principles, respond in defiance?” 

The proposal faced public backlash last year, with critics questioning the Philippines’ readiness for a sovereign wealth fund, which has drawn mixed results in other countries. For instance, Malaysia’s former Prime Minister Najib Razak was implicated in a multibillion-dollar graft scandal involving the 1Malaysia Development Berhad fund.

Critics of the fund have cited the government’s widening budget deficit and ballooning debt, which hit a record of P13.644 trillion at the end of November.

“Investors are no fools,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in a Facebook Messenger chat. “They know that there is no substantial basis or source for setting up these funds.”

Mr. Lanzona said investors are aware the wealth fund is still being discussed in Congress.

The fund would boost infrastructure projects, the Palace said in a statement, citing Finance Secretary Benjamin E. Diokno.

“We have many projects that need funding such as infrastructure projects… Now, if we have such a fund, we can use it to fund these projects,” he said.

7% GROWTH THIS YEAR
Meanwhile, the Philippine economy will probably grow about 7% this year, according to Mr. Marcos. He said the nation could weather a dimmer global outlook to come up with what could be the fastest expansion in Asia.

“There is so much space, room to grow, in the sense that we are starting very many new things now,” Mr. Marcos said in an interview with Bloomberg Television’s Haslinda Amin on the sidelines of the WEF in Davos.

The economy has been “rather stable” and unemployment is continuing to decline, he said. Mr. Marcos said the domestic economy “will be able to manage at least 7% growth for last year” and expand by a similar pace in 2023.

Mr. Marcos has faced numerous economic challenges in his first six months as the country’s leader, including tight public finances and rising borrowing costs. Soaring prices of essential goods from sugar to onions have driven inflation to a 14-year high and Mr. Marcos, who heads the Agriculture department, has said farm production would be ramped up to rein imports and prices.

“The long-term solution of course will be to increase production. That is what we are working on,” the Philippine leader said. He added that his government has “started to rationalize the system because illegal imports have been a problem.”

Mr. Marcos also spoke about geopolitical tensions during interview, where he said trying to break an “impasse” with Beijing on South China Sea oil exploration talks was “a difficult thing.”

“We may find a way around that if we limit it to exploration, and hopefully, I think there’s still some give and take possible there,” the president said.

Like most in Southeast Asia, Mr. Marcos has sought to balance interests between the US and China. He has tried to cooperate with China in agriculture and infrastructure and met with President Xi Jinping earlier this month, agreeing to pursue South China Sea energy exploration talks.

Tensions between Manila and Beijing in the disputed sea have risen recently, with the Southeast Asian nation expressing “great concern” over Chinese vessels massing off its western coast. China is building up several unoccupied land features in the South China Sea, Bloomberg News reported in December.

Mr. Marcos said he would not concede the Philippines’ territorial claims in the disputed sea. “That is the red line. That’s something that will not move and it’s something that we cannot cross because it’s a very slippery road from there.”

He also said the US has committed to give security support in the South China Sea. “When there are certain reports that come in, some of the American ships come down and make their presence felt. We were hoping that we keep and maintain that at that level.” — Kyle Aristophere T. Atienza and Bloomberg

BSP to pilot test  wholesale digital currency ’til 2024

Bitcoin cryptocurrency representation is pictured on a keyboard in front of binary code in this illustration taken Sept. 24, 2021. — REUTERS

THE BANGKO SENTRAL ng Pilipinas’ (BSP) pilot project that tests the use of wholesale central bank digital currency (CBDC) among selected financial institutions will run until 2024, an official said on Wednesday.

“This project was launched in 2022 and will run until 2024. The coverage of the pilot project is wholesale CBDC whereby the BSP will use the test and learn approach using a sandbox environment,” BSP Currency Policy and Integrity Department Director Eloisa T. Glindro said during the central bank’s 4th Regional Macroeconomic Conference Series virtual event.

“So, this will involve transfers of large value transactions among a limited number of participating financial institutions,” Ms. Glindro said.

The BSP last year launched the CBDCPh project to better understand the opportunities and risks of wholesale CBDC, as well as address gaps in the national payment system.

The project covers areas including policy and regulatory considerations, technological infrastructure, governance and organizational requirements, legal matters, payment and settlement models, reconciliation procedures, and risk management.

“The objectives of this project are very modest. One is to build a necessary capacity within the BSP as well as with supervised financial institutions to have that hands-on knowledge on the functionality, architecture, as well as the operational and organizational requirements for CBDC,” Ms. Glindro said.

“Second is that we want to leverage from the learnings of this pilot project in defining the roadmap for future pilot projects for other use cases like cross-border payments, intraday liquidity facility, among others, and also equity settlement,” she added.

The project is led by a management team from multilateral institutions and international standard-setting bodies to ensure coverage of critical operational areas.

The BSP chose to focus on the wholesale aspect of CBDCs as it is mainly restricted to banks and other financial institutions. Retail CBDC is intended for the general public.

CROSS-BORDER PAYMENTS
“We are currently talking to other central banks in Asia to make cross-border payments more affordable and efficient,” Monetary Board Member Eli M. Remolona, Jr. said in Filipino.

The BSP earlier signed a memorandum of understanding (MoU) with other central banks in the Association of Southeast Asian Nations to strengthen collaboration on payment connectivity.

The MoU on Cooperation in Regional Payment Connectivity was signed on the sidelines of the G20 Leaders’ Summit with the Bank of Indonesia, Bank Negara Malaysia, Monetary Authority of Singapore, and Bank of Thailand on Nov. 14 in Bali, Indonesia.

The memo is expected to contribute in accelerating economic recovery and promoting growth as it aims to foster a more inclusive financial ecosystem by enabling fast, seamless, and cheaper cross-border payments across the region.

The cross-border payment connectivity will support and facilitate international trade, investment, and other economic activities, the BSP earlier said.

By this year, the central bank hopes 50% of payments, both in volume and in value, will be done online, while increasing the number of adults with bank accounts to 70%. — Keisha B. Ta-asan

Diageo’s acquisition to help Don Papa Rum reach more markets

DON PAPA RUM FACEBOOK PAGE

By Justine Irish D. Tabile, Reporter

DIAGEO PLC’s acquisition of Don Papa Rum is expected to help the Philippine brand expand to more markets around the world, according to analysts.

Diageo, which owns brands such as Johnnie Walker and Smirnoff, on Tuesday announced it was acquiring Don Papa Rum, a homegrown dark rum brand, for an initial €260 million (around P15.3 billion). Depending on the brand’s performance, Diageo will pay up to €177.5 million (around P10.5 billion) through to 2028, which may bring the total deal value to €437 million (around P26 billion).

“This acquisition underpins the increasing investment appetite in the luxury or premium goods sector post-pandemic,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

“A rationale behind this is the resiliency of demand in this sector against the backdrop of surging interest rates and inflation,” he added.

Don Papa Rum was launched in 2012 by entrepreneurs Stephen Carroll and Andrew John Garcia. The super-premium dark rum is distilled and aged in American oak barrels in Negros Occidental.

“Diageo’s acquisition of Don Papa at a hefty valuation of P26 billion… reflects the attractive growth narrative of the company and the premium derived from the brand that it was able to build through the heritage of Negros Occidental, production’s competitive edge which is its proximity to Mt. Kanlaon and the use of native sugarcanes, and superb packaging,” Mr. Temporal said.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message that Diageo’s acquisition of Don Papa Rum bodes well for the company and the brand.

Mr. Arce noted Diageo’s network and proven track record will be “a great opportunity” for Don Papa to grow and expand into more markets.

Diageo is a global leader in beverage alcohol with brands, such as Johnnie Walker, Tanqueray, Ciroc, and Guinness, that are distributed in more than 180 countries.

“Diageo has a strong track record in nurturing founder-led brands. They believe in our unique story and have genuinely embraced our brand idea. We believe this acquisition is a great opportunity to take Don Papa into the next exciting chapter of its development,” Mr. Carroll said in a statement.

Mr. Carroll will continue to be involved in Don Papa Rum, which is currently distributed in 30 countries. France, Germany and Italy are the brand’s biggest markets.

“We are excited by the opportunity to bring Don Papa into the Diageo portfolio to complement our existing rums. This acquisition is in line with our strategy to acquire high-growth brands with attractive margins that support premiumization, and enables us to participate in the fast-growing super-premium plus segment,” John Kennedy, Diageo Europe and India president, said in a statement.

Diageo said that Don Papa Rum, which registered a compound annual growth rate (CAGR) of 29% from 2016-2021, has outperformed the CAGRs of super premium rum segments in Europe and US at 18% and 27%, respectively.

“While the spirits segment in the Philippines is expected to grow at CAGR of 6% from 2023 to 2025, at par with Southeast Asian region, and 8% globally, we note that for the company, it is projected to grow at double digits given that it is still in the early stages of premiumization,” Mr. Temporal said.

He noted the valuation for Don Papa Rum also takes into account its growth potential as it expands to other markets.

Mr. Arce said the outlook for alcoholic drinks in the Philippines remains positive as sales, in total volume terms, are on track to return to pre-pandemic levels by 2024.

While the acquisition is seen to boost Diageo’s presence locally, Mr. Arce said domestic players such as Emperador, Inc., San Miguel Brewery, Inc. and Ginebra San Miguel, Inc. continue to dominate the Philippine market.

“Established brands will see greater resilience moving forward,” Mr. Arce added.

Korea’s KEPCO expects to sell PHL energy assets in 1st half

KOREA Electric Power Corp. (KEPCO) targets to finalize the sale of two energy assets in the Philippines within the first semester of this year as shortlisted bidders are set to submit their final offers for these investments, which include a stake in a 200-megawatt (MW) power plant in Cebu.

In a statement on Wednesday, the South Korean state-owned energy group said the second round of the sale process of its two “non-core” assets has started.

“Since the distribution of a teaser in October, several domestic and foreign bidders expressed high interest in the assets and subsequently submitted preliminary bids,” KEPCO said.

It said shortlisted bidders are now undergoing due diligence and site visits. They are expected to submit final offers in the first quarter. The company said it aims to enter into a sale agreement within the first half.

The energy firm said that it will still be in the Philippines as it still has an existing investment in Solar Philippines Calatagan Corp.

“As the marketing process drew more than the expected interests, the potential sale process has gained further traction towards a successful closing,” KEPCO said.

Up for the sale is its 60% stake in a thermal power plant in Cebu, KEPCO SPC Power Corp. (KSPC), and its stake in listed firm SPC Power Corp. KEPCO in June 2022 appointed Samil PwC as its financial advisor for the sale.

KSPC is a joint venture between KEPCO Philippines Holdings, Inc. and SPC Power. It owns and operates the 200-MW circulating fluidized bed coal-fired power plant in Naga, Cebu.

“Since its operation in 2011, the plant has been supplying stable and efficient power to the Visayas region,” KEPCO said.

KEPCO Philippines Holdings also directly owns a 37.96% stake in SPC Power, it said, citing regulatory filings last year.

“Despite the worldwide ESG (environmental, social, and corporate governance) movement, the country’s rising electricity demands and reliance on coal, as power source, allowed for competitive bids,” KEPCO said.

The company said a key factor for the interest in the Cebu power plant is its technology, “regarded as the environmentally optimized combustion process among coal-fired power plants.”

It said the move to place the assets on sale aims to strengthen its commitment to carbon neutrality and to completely phase out coal by 2050. SPC Power earlier expressed interest in KEPCO’s stake and assets.

Meanwhile, KEPCO said that it is looking to invest in more renewable energy (RE) projects.

In 2022, the Department of Energy opened the Philippines’ RE sector to full foreign ownership, after Energy Secretary Raphael P.M. Lotilla signed a circular amending the implementing rules and regulations of the Renewable Energy Act of 2008 to allow 100% foreign capital in RE projects. — Ashley Erika O. Jose

Macay Holdings buys RC Cola firm for $21.4 million

RCCOLAOFFICIAL/FACEBOOK

MACAY Holdings, Inc. has completed the acquisition of RC Global Beverages, Inc. (RCGBI) after it fulfilled the closing conditions in the two parties’ share purchase agreement, the listed firm said on Wednesday.

In a regulatory filing, the company said it now has 100% voting and controlling interest in RCGBI, the owner of the licensing rights to RC Cola and associated brands in over 100 countries, after the execution of the instrument of transfer.

The company purchased one share representing 100% voting and controlling interest of RCGBI for $21.4 million in cash.

According to Macay Holdings, the acquisition will provide the company with a global platform and foreign currency revenues as well as geographic and political risk diversification.

“The acquisition is also immediately financially accretive to MACAY and will strengthen the food & beverage investments portfolio of MACAY,” the firm said referring to its stock symbol.

The acquisition is also seen to enhance synergies between Macay Holdings, the Philippine bottler of RC Cola, and RCGBI, as “trademark owner and supplier of concentrates.”

The acquisition dates back to Oct. 28, 2022 when Macay Holdings signed a share purchase agreement with RCGBI’s sole owner, RC Global Ventures, Inc.

RCGBI is 100%-beneficially owned by Mazy’s Capital, Inc., which is also a majority shareholder in Macay Holdings. It has a wholly-owned subsidiary, Royal Crown Cola International, LLC.

In September last year, Macay Holdings President Antonio I. Panajon said the company had been looking at opportunities in the food and beverage sector to expand its portfolio, and pursue growth.

“We acquired Kitchen City in 2020 and that allowed us to enter the institutional customer space and cross-sell our other products,” he previously said.

He said the acquisition of RCGBI would allow the company to “expand geographically and provide diversification and increased opportunities.”

He described RC Cola as an iconic 117-year-old brand that would allow Macay Holdings to establish cross-border relationships with different food and beverage companies in other countries, “potentially leading to substantial opportunities in our current product offerings and offshore partnerships.”

In the third quarter of last year, Macay Holdings returned to profitability with an attributable net income of P73.93 million, turning around from a net loss of P48.62 million in the same period in 2021.

On the stock exchange on Wednesday, shares in Macay Holdings closed unchanged at P6.70 apiece. — Justine Irish D. Tabile

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