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Fear driving China’s tech manipulation poses threat to all -UK spy chief

LONDON – China is using its financial and scientific muscle to manipulate technologies in a manner that risks global security, Britain’s top cyber spy will say on Tuesday, warning that Beijing’s actions could represent “a huge threat to us all.”

In a speech, Jeremy Fleming, director of the GCHQ spy agency, will say that the Chinese leadership was seeking to use technologies such as digital currencies and its Beidou satellite navigation network to tighten its grip over its citizens at home, while spreading its influence abroad.

“They seek to secure their advantage through scale and through control,” Fleming will say in the annual security lecture at the Royal United Services Institute think tank, according to extracts released by his office.

“This means they see opportunities to control the Chinese people rather than looking for ways to support and unleash their citizens’ potential. They see nations as either potential adversaries or potential client states, to be threatened, bribed, or coerced.”

The remarks are Fleming’s latest public warnings about Beijing’s behavior and aspirations. Last year, he said the West faced a battle to ensure China did not dominate important emerging technologies such as artificial intelligence, synthetic biology and genetics.

Fleming will say the Chinese leadership was driven by a fear of their own citizens, of freedom of speech, of free trade and open technological standards and alliances, “the whole open, democratic order and the international rules-based system.”

That fear combined with China’s strength was driving it “into actions that could represent a huge threat to us all,” he will say.

China has previously described similar accusations from Western governments as being groundless and politically motivated smears.

Fleming will also highlight technologies where he says China is seeking to gain leverage, such as its development of a centralized, digital currency to allow it to monitor the transactions of users, as well as to possibly evade the sort of sanctions Russia has faced since its invasion of Ukraine.

He will also point to Beidou, China’s answer to the U.S.-owned GPS navigation system.

“Many believe that China is building a powerful anti-satellite capability, with a doctrine of denying other nations access to space in the event of a conflict,” he will say. “And there are fears the technology could be used to track individuals.” – Reuters

World Bank to launch new trust fund for emissions reduction grants

WASHINGTON – The World Bank said on Monday it is launching a trust fund aimed at pooling public funds to provide grants for projects to reduce carbon emissions, including decommissioning coal-fired power plants.

The Scaling Climate Action by Lowering Emissions (SCALE) fund will provide grants to developing countries as they deliver pre-agreed results in reducing greenhouse gas emissions, World Bank President David Malpass said in a LinkedIn post.

SCALE will be the new umbrella trust fund for the bank‘s results-based climate finance activities. Malpass said the World Bank was in the process of capitalizing the new fund, with the aim of launching it at the COP27 climate change conference in Egypt in November.

In a paper provided to the World Bank‘s and International Monetary Fund‘s joint Development Committee, the bank said it has identified three areas that are particularly well suited to such results-based financing grants: natural climate solutions based on agriculture, forestry, land-use and oceans; sustainable infrastructure such as energy and transport; and fiscal and financial solutions that directly or indirectly mobilize resources for climate actions.

The bank said the SCALE fund will bring new resources to emissions reduction projects in low- and middle-income countries, help generate larger projects, generate high-quality carbon credit assets and help countries enhance access to international carbon markets.

The World Bank did not identify a projected size for the new fund. The world‘s biggest multilateral development lender in fiscal 2022, ending on June 30, delivered over $30 billion in climate-related finance.

But U.S. Treasury Secretary Janet Yellen last Thursday urged the World Bank and other multilateral development banks to shift their business models beyond country-specific project finance and to dramatically boost lending to address climate change and other pressing global needs. Read full story – Reuters

Debt costs overshadow climate finance in small island states-report

PIXABAY

LONDON -Small developing island states heavily exposed to the effects of climate change and often in critical debt situations spend at least 18 times more on debt servicing than they receive in climate finance, a report showed.

A group of 37 island states, home to some 65 million people, “urgently need to increase their fiscal space to tackle the multiple challenges and crises facing them,” wrote Iolanda Fresnillo, one of the authors of the European Network on Debt and Development (Eurodad) report.

The Eurodad report found that the island states from Guinea-Bisseau to the Dominican Republic to Samoa received just $1.5 billion in climate finance between them between 2016-2020.

Over the same period, 22 of the nations paid more than $26.6 billion to their external creditors, which comprises 50 non-governmental organisation, it said.

Public debt levels in the island states had risen from an average of near 66% of GDP in 2019 to nearly 83% in 2020 and were set to remain above 70% until 2025, the report found.

This in turn meant governments needed to spend more revenue on debt servicing, with countries like Belize, Cape Verde, Dominican Republic, Jamaica, Maldives, Grenada and Papua New Guinea allocating between 15%-40% to pay their external creditors, it said.

More countries had turned to the International Monetary Fund for help, with the number of countries having programmes with the fund jumping from three in 2019 to 20 between 2020 and 2021.

In June, the fund’s executive board approved a $60 million programme for Cape Verde while Barbados struck a deal for $293 million in late September.

The report found that more than 80% of the island states were in debt difficulties under criteria established by the IMF and World Bank Debt Sustainability Analysis, or by civil society groups Debt Justice UK and Jubilee Germany.

How to shore up fragile, smaller economies buckling under the strain of fallout from COVID-19 and Russia’s war in Ukraine is poised to garner much focus this week when policy makers from around the globe gather in Washington for the annual IMF/World Bank meeting until Oct. 16. — Reuters

Biden’s new Arctic strategy foresees competition with Russia, China

US PRESIDENT JOSEPH R. BIDEN — WHITEHOUSE.GOV

WASHINGTON — The United States on Friday unveiled a new strategy for the Arctic that foresees increasing competition with Russia and China in the strategic region.

“We will exercise US government presence required to protect the American people and defend our sovereign territory,” said a fact sheet about the new strategy released by the White House.

Russia has reopened hundreds of Soviet-era military sites in the region, NATO Secretary General Jens Stoltenberg said in August, adding that Russian capabilities there pose a strategic challenge to the 30-nation alliance.

China, which describes itself as a “near-Arctic” state, also has ambitions in the region and has said it intended to build a “Polar Silk Road.” China has its eye on mineral resources and new shipping routes as ice caps recede with rising temperatures.

The new US strategy, an update of its 2013 predecessor, says the United States seeks an Arctic region that is “peaceful, stable, prosperous, and cooperative.” It addresses climate change with greater urgency and directs new investments in sustainable development to improve livelihoods for Arctic residents, while conserving the environment.

The strategy “also accounts for increasing strategic competition in the Arctic, exacerbated by Russia’s unprovoked war in Ukraine and the People’s Republic of China’s increased efforts to garner influence in the region, and seeks to position the United States to both effectively compete and manage tensions,” the White House said.

The White House said the United States “will deter threats to the US homeland and our allies by enhancing the capabilities required to defend our interests in the Arctic, while coordinating shared approaches to security with allies and partners and mitigating risks of unintended escalation.” — Reuters

Tycoon Razon postpones $474 million Prime Infrastructure IPO on bearish market

PHILIPPINE STAR/KRIZ JOHN ROSALES

MANILA – Philippine tycoon Enrique Razon has delayed to the middle of next year plans to launch an up to P28 billion ($474 million) listing for his infrastructure and energy holding firm because of a market downturn, its underwriter said on Monday.

The initial public offering (IPO) of Prime Infrastructure Capital Inc, originally set for October, could have been the Philippines’ largest this year.

“We will wait for the markets to recover,” Eduardo Francisco, president of deal underwriter BDO Capital, told reporters at the sidelines of a media forum.

The earliest an IPO for Prime Infrastructure could occur would be May or June next year, enough time to wait for global economy to rebound, inflation to ease and markets to recover, Francisco said.

Eight companies, mostly small firms, have listed in the Philippine bourse, whose broader index has fallen 18% and is Southeast Asia’s second worst performer year-to-date.

In June, Prime Infrastructure filed its listing documents with the corporate regulator. It planned to sell up to 1.93 billion shares, including an over-allotment option, at a maximum price of 14.60 pesos each. In Philippine filings, IPO prices are typically set above final selling prices.

Prime Infrastructure planned to use IPO proceeds to finance its energy, water, and waste and sustainable fuels businesses.

Razon, who Forbes says is the second-richest person in the Philippines with a net worth of $5.6 billion, built his fortune through global port operator International Container Terminal Services and casino owner Bloomberry Resorts. — Reuters

Aug. trade deficit hit record $6 billion

The country’s trade balance swung further into record $6-billion deficit in August as imports growth rose to a two-month high while exports slid for the second straight month, the Philippine Statistics Authority (PSA) reported on Tuesday morning.

Preliminary PSA data showed the value of merchandise exports shrank by 2% year on year to $6.410 billion in August, a reversal from the 18.9% growth in the same month in 2021.

However, it marked the second straight month of year-on-year contraction in exports after the revised 4.1% drop in July.

Meanwhile, the country’s merchandise imports rose 26% to $12.413 billion in August. This was slower than the 28.3% growth in August 2021 but faster than the 22.2% import in the previous month.

This was the highest import print in two months or since the 26.3% growth in June.

This brought the trade-in-goods deficit — the difference between exports and imports — to $6.003 billion in August, nearly double the $3.310-billion shortfall of the same month last year. It was also wider than the $5.989-billion gap in July.

Total trade — the sum of exports and imports — grew by 14.8% to $18.823 billion. This pace was faster than the 11.8% in July, but lower than the 24.4% in August 2021.

In the eight months to August, exports grew by 4.4% year on year to $51.155 billion, below the 7% growth target set by the Development Budget Coordination Committee.

Imports during the same period climbed by 26% to $92.966 billion. This was already above the government’s 18% full-year target this year.

Year to date, the trade balance ballooned to a $41.811-billion deficit, wider than the $24.77-billion trade gap in the comparable eight months last year. — Lourdes O. Pilar

FDI inflows slump to 14-month low

PHILSTAR FILE PHOTO

FOREIGN DIRECT investment (FDI) net inflows declined for a third straight month in July, slumping to the lowest level in 14 months as investors remained cautious amid elevated inflation and slowing global growth.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed FDI net inflows fell by 64.4% to $460 million in July from $1.29 billion a year earlier. 

This was the lowest monthly FDI inflow recorded since the $455 million posted in May 2021.

Net foreign direct investmentsMonth on month, FDI net inflows dropped by 2.3% from $471 million in June.

“In July 2022, FDI net inflows decreased due largely to the lower non-residents’ net investments in debt instruments of their local affiliates. This decrease more than offset the growth in their net investments in equity capital,” the BSP said in a statement. 

By component, non-residents’ net investments in debt instruments of local affiliates plunged by 80.6% to $213 million in July, from $1.093 billion a year ago.

In contrast, investments in equity and investment fund shares rose by 24.7% in July to $248 million. 

FDIs in equity capital (other than reinvestment of earnings) surged by 268.2% to $137 million in July from $37 million in the same month last year.   

Broken down, equity capital placements jumped by 63.5% annually to $155 million, while withdrawals dropped by 69.1% to $18 million.   

For the month, equity placements were mainly from Singapore, Japan, and the United States. These were placed mostly in construction, manufacturing, and real estate industries.

Reinvestment of earnings dropped by 31.4% to $111 million year on year in July, from the $162 million in 2021.

The latest FDI data reflected worries over an expected global recession as many economies are expected to slow down next year, China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

“Tighter financial conditions in major source countries could have contributed to lower FDI. A rising interest rate environment, more pessimistic business environment, and higher cost may refrain foreign companies from investing in the near term,” she said.   

Heightened market volatility may have also contributed to the drop in FDI inflows in July, when the US Federal Reserve delivered another large rate hike, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail note.

“(FDI) was also partly weighed (down) by higher inflation and interest rates that are drags to new investments/FDIs globally and locally,” Mr. Ricafort added.   

In an off-cycle move, the BSP raised its benchmark interest rate by 75 bps in July, bringing it to 3.25% in an attempt to curb inflation.

Inflation climbed to 6.4% year on year in July, from 6.1% in June and 3.7% a year ago. It was also the fourth straight month that inflation breached the BSP’s 2-4% target.   

For the first seven months of the year, total FDI net inflows fell by 12% to $5.101 billion from $5.795 billion during the same period in 2021.

“All major FDI components yielded lower net inflows in January-July 2022 as foreign investors remained cautious amid continued adverse global conditions,” the BSP said.   

In the January to July period, foreign investments in debt instruments slipped by 12.6% year on year to $3.555 billion.

Investments in equity and investment fund shares declined by 10.4% to $1.546 billion in the first seven months.

Net foreign investments in equity capital dropped by 13.7% to $876 million. Equity capital placements fell by 21.6% to $977 million, while withdrawals decreased by 56.2% to $101 million.   

Most of these placements were from Japan, the United States, Singapore, and Malaysia.

Reinvestment of earnings was down by 5.7% to $670 million in the first seven months of the year.

According to Mr. Ricafort, there may still be an uptick in FDI inflows in the coming months as the Marcos administration secured investment commitments during the President’s visits to Indonesia, Singapore, and United States.

Investors could also become more decisive on expansion projects as the economy further reopens, Mr. Ricafort said.   

“As evident in industries that are experiencing positive inflows, such as construction, real estate, and manufacturing, medium-term outlook in the Philippines remain bullish,” Ms. Velasquez said.   

The central bank projects FDI net inflows will reach $10.5 billion this year. — Keisha B. Ta-asan

Congress vows to approve Marcos’ legislative priorities

President Ferdinand R. Marcos, Jr. and Vice-President Sara Duterte-Carpio attend the Legislative Executive Development Advisory Council meeting in Malacañan Palace, Manila, Oct. 10, 2023. — JONATHAN CELLONA/PPA POOL

LEADERS OF CONGRESS on Monday agreed to approve 30 bills identified as priorities of the Marcos administration, including the amendments to the Build-Operate-Transfer (BOT) Law and the National Government rightsizing program.

President Ferdinand R. Marcos, Jr. on Monday convened the 20-member Legislative-Executive Development Advisory Council (LEDAC) for the first time under his administration.

During Monday’s meeting, the LEDAC listed 32 bills under the common legislative agenda, which includes 20 priority measures earlier mentioned by Mr. Marcos during his State of the Nation Address in July.

Twelve measures were added by Congress leaders including the SIM Registration Act, which was signed into law on Monday, and the postponement of the Barangay and Sangguniang Kabataan elections.

In a statement, Senate President Juan Miguel F. Zubiri said the Senate and House agreed to approve six of the 30 measures by yearend, namely the amendments to the BOT Law, Medical Reserve Corps, National Disease Prevention Management Authority/Center for Disease Prevention and Control, Virology Science and Technology Institute of the Philippines, mandatory Reserve Officers’ Training Corps and National Service Training Program (ROTC/NSTP), and Condonation of Unpaid Amortization and Interest on Loans of Agrarian Reform Beneficiaries.

House Speaker Martin G. Romualdez said in a separate statement that legislators will give the “utmost priority” to the remaining 30 bills under the common legislative agenda.

“The House is in full support of the President’s entire legislative agenda, including the key priority measures for legislation he has asked Congress to consider. We will act on these with dispatch,” Mr. Romualdez said.

Aside from the six measures earlier mentioned, Mr. Marcos’ legislative agenda includes the National Government Rightsizing Program, amendments to the Electric Power Industry Reform Act (EPIRA), the Real Property Valuation Reform Bill, Passive Income and Financial Intermediary Taxation Act, E-Governance Act, E-Government Act, Internet Transaction Act, Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Bill, Unified System of Separation, Retirement and Pension Bill, Department of Water Resources Bill, National Land Use Act, Budget Modernization Bill, National Defense Act, and the Enabling Law for the Natural Gas Industry.

The House and Senate identified their priority measures, which included the establishment of Regional Specialty Hospitals, the Magna Carta of Filipino Seafarers, establishing the Negros Island Region, New Philippine Passport Act, Waste-to-Energy Bill, Apprenticeship Act, a bill providing free legal assistance for military and uniformed personnel, Magna Carta of Barangay Health Workers, creation of the Leyte Ecological Industrial Zone, and creation of the Eastern Visayas Development Authority.

To expedite the passage of these bills, Mr. Romualdez said the House will continue to use a rule that allows committees to immediately dispose of priority measures that were approved on third reading in the previous Congress.

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“The passage of many of these bills banks on the popularity of the president. In fact, these bills can facilitate the president’s agenda: infrastructure program, reforms in the ROTC/NSTP, and interventions in the agriculture sector,” Jan Robert S. Go, a political analyst, said in a Messenger chat. “Right now, Marcos enjoys the support of both chambers.”

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in a Messenger chat that the Marcos administration’s priority bills “fail to take into account the current situation that most households are faced with.”

“This involves an assessment of the current problems arising from the economic crisis and the capacity of the institutions designed to enforce them,” he said.

Mr. Lanzona noted the government needs to “focus only on two or three measures and to strengthen the institutions that will implement these measures.”

“Amendments to the BOT Law should not go the current route of its IRR amendment, in which tariff and fees may be raised by private proponents even prior to regulatory approval,” Terry L. Ridon, a public investment analyst, said in a Messenger chat.

Mr. Ridon noted amending the EPIRA, which paved the way for the privatization of the energy sector, would be difficult.

“Energy companies with political allies in Congress will certainly make sure to further limit the government’s regulatory powers,” he said.

Mr. Ridon said amendments to EPIRA and BOT Law “should only be undertaken to enhance protection for consumers and end-users and to prevent regulatory capture by interest groups.” — Kyle Aristophere T. Atienza

Meralco rates drop in October

Linemen of Manila Electric Co. fix electric posts in Tondo, Manila in this file photo. — PHILIPPINE STAR/ RUSSELL PALMA

HOUSEHOLDS in Metro Manila can expect lower electricity bills this month, with typical households set to see a P15 reduction, the Philippine capital’s largest power distribution utility said on Monday.

In a statement, Manila Electric Co. (Meralco) said the overall electricity rate dropped by P0.0737 per kilowatt-hour (kWh) to P9.8628 in October from P9.9365 per kWh in September due to the reduction in the feed-in-tariff allowance (FIT-All).

“For a residential customer consuming 200 kWh, the reduction is equivalent to a decrease of almost P15 in their total electricity bill,” Meralco said.

Those using 300 kWh, 400 kWh and 500 kWh can expect their monthly bills to go down by P22, P29 and P36, respectively.

Meralco Vice-President and Head of Corporate Communications Joe R. Zaldarriaga said the October rate was lower due to the P0.0619 per kWh cut in the FIT-All and the drop in generation charge.

The Energy Regulatory Commission (ERC) had approved the collection of a FIT-All of P0.0364 per kWh starting this October billing period. This is lower than the previous rate of P0.0983 per kWh.

Generation charge also slipped by P0.0201 to P6.9192 per kWh in October, from P6.9393 per kWh last month “on the back of lower costs from Meralco’s supply contracts.”

Mr. Zaldarriaga said charges from independent power producers (IPPs) and power supply agreements (PSAs) slipped by P0.5073 and P0.0702 per kWh, respectively.

“The reduced use of more expensive alternative fuel by the First Gas-Sta. Rita and San Lorenzo plants and increased plant utilization of IPPs and PSAs more than offset the impact of the steep depreciation of the peso in September,” Meralco said, noting that dollar-denominated costs made up 98% of IPP and 38% of PSA charges.

The peso closed at P58.625 per dollar on Sept. 30, weakening by P2.48 or 4.4% from its Aug. 31 close of P56.145.

Meralco said the lower IPP and PSA charges offset the higher rates from the Wholesale Electricity Spot Market (WESM), which went up P4.8128 to P11.9990 per kWh amid tighter supply in the Luzon grid.

“Both demand and capacity on outage increased, and the grid was placed on Red Alert on Sept. 12,” Meralco said, adding that it sourced 4% of its power requirement from WESM compared with 10% in September.

Transmission, taxes, and other charges for residential customers increased by P0.0083 per kWh.

Meanwhile, Meralco said South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC), the administrators of the Ilijan and Sual power plants, continued to supply power at ERC-approved rates “under protest.”

Last week, the ERC denied the joint petition of Meralco and San Miguel Corp. (SMC) for a rate increase to cover the losses of SMC’s two power plants.

Jose Ronald V. Valles, Meralco first vice-president of Regulatory Management Office, said the companies will “exhaust all remedies” to prevent the termination of the PSAs with SPPC and SMEC.

“Should SPPC and SMEC decide to pursue the contract termination, we will ensure continuity of stable, reliable and adequate supply for our customers by getting supply from other sources like the WESM and other generation companies,” Mr. Valles said in a statement.

Lawrence S. Fernandez, Meralco’s vice-president and head of utility economics, said that SPPC and SMEC supply around 1,000 megawatts under baseload PSAs which  translated to 19% of Meralco’s power supply last month.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

DICT eyes partnerships for fiber projects

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THE Department of Information and Communications Technology (DICT) is looking at partnering with private companies for fiber connectivity projects in rural communities.

“We need to connect more provinces and municipalities. The partnership can be with private companies, or it can be a partnership with local government units,” DICT Assistant Secretary Philip A. Varilla said during the Economic Journalists Association of the Philippines (EJAP) Economic Forum 2022.

Mr. Varilla said partnerships with the private sector will make the implementation of broadband projects “easier and faster.”

However, he noted public-private partnerships for “geographically isolated and disadvantaged areas,” may not be viable. Instead, he said these areas will be serviced by satellite technology, which requires less investment than fiber connectivity.

Overall, the department is “initially looking at P3 billion for 5,000 locations,” Mr. Varilla said.

At the same time, he said that the first phase of the government’s national broadband program, which covers 12 provinces in Luzon, is now 73.56% complete. The project will be completed by next year.

The National Telecommunications Commission, an attached agency of the DICT, recently approved the registration of Starlink Internet Services Philippines, Inc., a subsidiary of Elon Musk’s Space Exploration Technologies Corp. (SpaceX).

Starlink Internet Services Philippines is expected to offer high-speed low latency satellite internet service with download speeds between 100 megabits per second (Mbps) and 200 Mbps to Filipinos, according to the DICT.

Mr. Varilla said the department is now identifying the remote locations that will be covered by Starlink’s service.

The DICT reported on Monday that three remote islands in Zamboanga are now connected to the broadband program. These are Sacol, a geographically isolated island that houses four barangays, and nearby islands Tigtabon and Pangapuyan.

The EJAP Economic Forum was co-presented by Metro Pacific Investments Corp. and PLDT, Inc. — Arjay L. Balinbin

Property market uptrend expected if POGOs stay

PETR MAGERA-UNSPLASH

SEGMENTS of the property market are bound to maintain their uptrend as long as Philippine Offshore Gaming Operators (POGOs) are allowed to continue, Leechiu Property Consultants, Inc. said.

It also expects the demand for commercial properties to remain as jobs could be shifted to the country if a downturn happens globally, as what happened in the past.

“If the POGOs are allowed to continue, then we will establish a floor in the stock market, residential market, and office market,” Leechiu Chief Executive Officer David Leechiu said during a media briefing on Monday.

Mr. Leechiu said that despite the US saying that interest rates will keep climbing for the next 12 months, the rise will be offset by the improvement in logistics, which in turn can ease costs.

“Yes, interest rates are going to climb but that will be partly offset by the drop in construction costs, drop in distribution costs, and by the drop in food prices,” Mr. Leechiu added.

“Late next year, you’re gonna see a lot of these stabilizing, and then it’s gonna produce improved sentiment and that’s when the stock market will go up. It’s [also] gonna improve sentiment in the Philippines and that’s when foreigners will start investing in Philippine property again,” he said about rising interest rates and the depreciating peso.

Leechiu Director for Investment Sales Alvin Magat similarly said that POGOs are important to the commercial segment to keep its uptrend next year.

“Yes, it will be positive for commercial properties considering that POGO will stay because if that will be gone right now, we will need to come up with a demand that will fill up all the supply that will be left out by the POGO industry,” Mr. Magat said.

He added that demand for commercial properties will be maintained even if a recession happens in the US or globally because jobs will again shift to the Philippines, which he said happened during the global financial crisis of 2008.

“We should not forget the fact that the Philippines has its own competitive advantage compared to other BPO (business process outsourcing) countries like India and Vietnam, and that is the average age that we have for our BPO industry and the ability and fluency of [our] BPO employees,” Mr. Magat said.

Meanwhile, Leechiu Director for Commercial Leasing Mikko Barranda said that the occupancy rate in the BPO sector is on an uptrend despite the work-from-home arrangement extending to next year and industry projects of hiring full-time employees (FTE).

“The uptick is seen; we see the uptrend. [And we give] a lot of emphasis to the BPO sector [by] them taking space despite the current working arrangements,” Mr. Barranda said.

He added that projections from the IT and Business Process Association of the Philippines (IBPAP) about the number of FTEs who will be hired in the next few years “gives us the confidence in terms of properties or real estate that the BPO sector will take.”

The IBPAP roadmap shows that the information technology and business process management (IT-BPM) industry is projected to hire 1.1 million FTEs in the next six years, which translates to 476,000 square meters (sq.m.) of annual office space requirement until 2028.

“There is optimism if you look at the charts from 2020 at 380,000 sq.m., 540,000 sq.m. in 2021, and in the first nine months of 2022 at 694,000 sq.m.,” Mr. Barranda said.

He said the BPO industry has a “multiplier effect” in which the hiring of a single FTE has the potential to indirectly hire three or four FTEs.

“So, what a one million FTE count through six years [could mean] is actually three or four million added FTEs to the economy,” Mr. Barranda added.

For the residential segment, Leechiu Director for Research and Consultancy Roy Amado Golez, Jr. said that the government’s call to build a million houses per year could help the movement of the low-cost and affordable housing segments.

“With the government’s call to build more houses, in all likelihood next year we will be seeing the low-cost and affordable segments to start moving and hopefully the compliance requirements of the developers will start to be released from escrow,” Mr. Golez said.

He said that funds stuck in the escrow arrangement with the Department of Human Settlements and Urban Development can instead be used for low-cost housing.

However, he said that movement in middle to upper-middle housing sectors is likely to be flat next year until developers start to have more confidence in the costs of their developments.

“Right now, the interest rates [and] the logistics problems make it very unpredictable for the costs of construction. If that can be solved next year, then in all likelihood the middle to the upper-middle segment will also start moving significantly upwards,” Mr. Golez said.

“The BPO sector will start to absorb more and more office spaces, the corporates are gonna start expanding again as well as the real estate,” Mr. Leechiu said.

Mr. Leechiu said: “I’m quite hopeful about 2023 despite all the things that are happening in the world because again the crisis in the world is gonna produce more jobs in India and Philippines. And remember that this is all predicated on us keeping POGOs alive today, if you take that away then I don’t know.” — Justine Irish D. Tabile

Macay set to acquire RC Global Beverages for $21.4M

LISTED holding firm Macay Holdings, Inc. is set to acquire 100% of RC Global Beverages, Inc. (RCGBI) for $21.4 million after the close of its share purchase agreement with RC Global Ventures, Inc.

“The acquisition by Macay of RCGBI provides Macay a global platform and foreign currency revenues in addition to the current peso revenues from its local operations,” the firm said in a disclosure to the Philippine Stock Exchange on Monday.

RCGBI holds global licensing rights to RC Cola and associated brands in over 100 countries and has a wholly owned subsidiary, Royal Crown Cola International, LLC.

“The acquisition is also immediately financially accretive to Macay and will strengthen the food and beverage investments portfolio of Macay,” it added.

If realized, Macay will acquire 100% voting and controlling interest in RCGBI. The acquisition will be through a share purchase transaction and is expected to close not earlier than a month after the execution.

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

Macay said that the acquisition is a way to expand its business across other territories as it introduces new brands or products.

The acquisition is still subject to the fulfillment of closing conditions and is still subject to adjustments, the firm added.

According to the disclosure, both Macay and RCGBI are beneficially owned by the investment management firm Mazy’s Capital, Inc.

On the stock market on Monday, shares in Macay closed unchanged at P4.59 apiece. — Justine Irish D. Tabile

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