Reinforcing the 2016 Arbitral Victory to uphold a Rules-Based Maritime Order

July 12, 2022 | 4:59 pm

high-angle-small-origami-boat-world-map — FREEPIK

Over the years, the maritime domain has become a key security concern in the Indo-Pacific. Territorial disputes, unlawful acts against the safety of maritime navigation, and illegal activities in the fisheries sector have affected global efforts to promote and advance a rules-based maritime order.

The increasing complexity of the region’s security architecture caused by China’s expansionism has also undermined the capacity of states to manage and address issues collectively.

In the context of the Philippines, the new administration under the leadership of President Ferdinand Marcos, Jr. is expected to face many challenges in the West Philippine Sea. Marcos’ assertion of talking to China with a “firm voice” and his promise of not giving up “a single millimeter of the country’s maritime coastal rights” will be closely observed, especially in his future engagements with China.

The foreign policy pivot made by the previous administration in 2016 has greatly affected the country’s position and claims in the disputed waters. Gray zone operations, illegal incursions, and the construction of military facilities on reefs within the country’s exclusive economic zone (EEZ) have also continued.

While the country waits for a more precise and unequivocal national security policy, President Marcos Jr. should look into ways of developing the country’s defense and security potential. Establishing multilateral and inclusive cooperation with like-minded states are key to the enforcement of our rights in the West Philippine Sea.

The 2016 arbitral ruling issued by the Permanent Court of Arbitration in The Hague is a monumental win for the Philippines. Although the previous administration dismissed it in exchange for infrastructure funding from China’s Belt and Road Initiative (BRI), the ruling remains a relevant foreign policy tool that can and should be used to help the country pursue its strategic interests and effectively address issues in the West Philippine Sea.

President Marcos Jr. can remain committed to his promise of safeguarding the country’s national sovereignty and territorial integrity with the acknowledgment and support of the international community, including the United States, Australia, Japan, the United Kingdom, and the European Union.

On the 6^th anniversary of the landmark ruling, the new administration should be reminded of its role and commitment to promote and maintain a rules-based maritime order in the region. Although domestic issues, including the country’s high budget deficit and income inequality, continue to be a concern, issues in the West Philippine Sea should not be set aside.

President Marcos Jr. and the new members of his Cabinet must stand firm in acknowledging and asserting the country’s claims over the West Philippine Sea. At the same time, they should establish policies that are consistent with the interests of the Filipino people.

The results of the Pulse Asia survey commissioned by the Stratbase Albert del Rosario Institute on June 24 to 27, 2022 reveal the strong public perception on issues in the West Philippine Sea. In the survey, 89% of respondents believe that President Marcos Jr. must assert the country’s rights in the West Philippine Sea as stipulated in the 2016 Arbitral Ruling of the Permanent Court of Arbitration. Ninety percent agree that in asserting these rights, the new administration must invest in the capability of the Philippine Navy and the Philippine Coast Guard to protect the country’s territory and marine resources within its EEZ. Public opinion on alliances also remains high, with 84% agreeing that President Marcos Jr. should form alliances with other countries to defend Philippine territorial rights in the West Philippine Sea.

In line with this, the Stratbase Albert del Rosario Institute recently organized a hybrid international conference titled “Redefining Maritime Cooperation in the Indo-Pacific in an Age of Uncertainty” to examine and discuss how the Philippines can harness its inherent maritime potential and position itself as a key player in the maritime domain.

Moderated by Professor Charmaine Willoughby, the conference gathered local and regional security experts, including Lisa Curtis (Director of the Indo-Pacific Security Program, Center for a New American Security), Yusuke Takagi (Associate Professor, National Graduate Institute for Policy Studies), Murray Hiebert (Director for Research, BowerGroupAsia), John Blaxland (Professor of International Security & Intelligence Studies, Australia National University), Dr. Renato de Castro (Trustee and Program Convenor, Stratbase ADR Institute); and Rear Admiral Rommel Jude Ong (Executive Director, Security Reform Initiative, Professor of Praxis, Ateneo School of Government).

Members of the diplomatic community such as Ambassador Jose Manuel “Babe” Romualdez (Philippine Ambassador to the United States), and Ambassador Jana Sediva (Ambassador, Embassy of the Czech Republic) also spoke at the event to share their insights on multilateral cooperation and maritime security in the region.

The international conference highlighted the need for states like the Philippines to engage in multilateral and strategic cooperation to respond to current and emerging challenges in the maritime domain. It also emphasized the significance of reinforcing the 2016 arbitral victory to strengthen the capacity of the Philippines to manage issues in the West Philippine Sea. Aside from these, the experts also shared their policy recommendations for the new administration, especially on the future direction of its foreign and security policy.

The new administration must learn from the lessons of the past administrations. President Marcos Jr. now has the chance to implement policies and initiatives that will allow the Philippines to defend and assert its rights in the West Philippine Sea and be one with nations that bolster a maritime rules-based order.

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.

Calling all plantitos and plantitas

July 12, 2022 | 4:58 pm

(Part 1)

The looming food crisis (and even possible starvation here and in many parts of the world because of the Russia-Ukraine war) will require some quick emergency and urgent measures to increase our domestic supply of food. As a “plantito” (gardening enthusiast) myself, I recommend that the thousands of amateur gardeners who turned to growing vegetables, flowers, and decorative plants during the pandemic should all now focus on growing edible plants (especially vegetables) to add to the national supply both for self-consumption and for sale in the market. Since there is no data on how many there are of us belonging to this army of amateur gardeners, I cannot quantify how much we can contribute to improving food security at least in the coming months. Any amount will be better than none, however, considering the possibility of starvation for some, especially among the marginalized people. I am doing my share: I am growing red lady papaya.

It is obvious that this is an emergency solution to a crisis in food security. No reasonable person will consider it as a permanent solution or policy to attain the primordial objective of our President-Secretary of Agriculture in improving agricultural productivity in the country, and thus improve the lives of the farmers who are among the poorest of the poor. This is a short-term solution to a food crisis brought about by not only the war going on in Ukraine (a major supplier of food and feeds) but also by the African Swine Fever (ASF) that has been diminishing the supply of hog products for some time now. To the hog supply problem, there is no alternative but to import pork. To the serious shortage of the staple products of rice and corn (because rice exporting countries such as Vietnam, Thailand and even India are banning exports of these crops), the short-term strategy is to try to be as self-sufficient as possible in these vital food products, no matter what the cost. Self-sufficiency is being recommended because of a crisis situation.

We have to keep in mind, however, that as in the case of us plantitos and plantitas wanting to be part of the solution during these times of crisis, we know that we will have to bow out once things return to normal. The same thing can be said of other solutions, whether importing pork in which we can be self-sufficient when are able to lick the ASF problem. Or as in the case of trying to be self-sufficient in rice, in which we can never be as cost effective as our Thai, Vietnamese, or Indian neighbors. When things return to normal and these countries with a competitive advantage in the production of rice no longer ban exports, it would be wise to import part of our rice requirements to promote the welfare of our 112 million consumers vs. that of the 2 million rice farmers. Food security measures always involve balancing the welfare of consumers with that of the farmers.

But let me turn to other low-hanging fruits in improving the supply of food that, if followed during these times of crisis, can actually be long-term solutions to food security. I am referring to developing an army, not of amateur gardeners like me, but of “master gardeners” who can be trained among numerous unemployed or underemployed workers. A friend of mine, Dr. Napoleon Juanillo, who obtained his Ph.D. in Agriculture from Cornell University in the US, informed me of the Master Gardner Basic Training program which is an extension program of Penn State University. This is a skills training program (non-degree) which include topics such as botany, plant propagation, soil health and fertilizer management, composting, controlling pests safely, entomology, plant diseases, indoor plants, vegetables, lawn care, pruning, woody ornamentals, herbaceous plants, native plants, weeds and invasives. Unlike amateur gardeners that we plantitos are, master gardeners, without having an academic degree in agriculture, are steeped in agricultural technology. Master gardeners are required to participate in a minimum of 40 hours of basic training. To become a master gardener, each trainee is expected to attend all core classes, with any missed sessions to be made up at the discretion of the supervising Master Gardener Coordinator. There is no reason why President Marcos Jr. cannot mandate some selected State Universities and Colleges (SUCs), especially in land-rich provinces, to put up skills training programs in the coming months in order to increase significantly the supply of vegetables and other quick gestating food crops.

There are other US universities from which we can learn about organizing skills training programs for master gardeners. At the University of Illinois Urbana-Champaign, its Illinois Master Gardener program has the mission of “helping others learn to grow.” To become a Master Gardener, one only needs an interest in gardening, time to volunteer in the community, and a desire to share one’s knowledge with others. Master Gardener training, taught by University of Illinois Extension educators and specialists, emphasizes practical, research-based information. Training topics include botany, annuals and perennials, soils, insects, woody ornamentals, vegetables, fruits, integrated pest management, and wildlife. After the training program, Master Gardeners volunteer their time and expertise by sharing their horticulture skills with the community through garden projects, educational outreach, and helping others learn to grow. Still another is the Michigan State University whose extension master gardener training program is an adult horticulture education and volunteer leader training program committed to improving science-based horticulture information in communities throughout the State. Courses are being offered via Zoom and D2L.

These master gardening programs can be part of the reskilling, upskilling, and retooling programs that are taking the place of degree programs in the Philippine educational system. The pandemic has opened the eyes of our educators that many of the post-secondary programs we are offering have no direct relevance to the needs of industry and agriculture. What we badly need are non-formal and informal means of imparting skills to our unemployed and underemployed that in a very short period of time can enable them to be fully employed. Recent data from the Philippine Statistics Authority show that as of May 2022, 2.93 million Filipinos were unemployed while 6.67 million were underemployed (those looking for additional work hours or better job opportunities). The underemployment rate is equivalent to 14.5% of the work force. Just imagine how much more food can be produced if a good number of the unemployed and underemployed can take master gardening classes that in a few months can enable them to grow vegetables and other high-value food products in underutilized farms and empty lots in and around the National Capital Region and other urbanized areas in the country. Funding can come from the Department of Agriculture, now under the leadership of the President himself. A good number of NGOs and CSR programs of large corporations can also pitch in.

In fact, this very practical way of upskilling and reskilling Filipino workers to contribute to an increase of very healthy vegetable and fruit products was adapted to Philippine conditions by the private sector. The State institutions, especially the SUCs, have lagged behind. It was the SM Foundation, under the leadership of its founder, the late Henry Sy, Sr., who initiated the Kabalikat Sa Kabuhayan (KSK) in 2006 to provide a serious training program on simple and doable agricultural technologies for small vegetable farmers all over the Philippines. Since the start of the first project in Bacolod City in May 2007, the program’s 187^thbatch of trainees finished by the end of 2018. There have been more than 22,000 graduates who completed the 12 weekly sessions, hands-on, season-long training program on vegetable farming.

The agricultural technology and skills training program of SM Foundation has as its partner the Harbest Agribusiness Corp., a Philippine agribusiness enterprise that has been a most effective channel to the Philippines of the most relevant agricultural technology from Taiwan which did wonders in improving the productivity of their small farmers in the last century.

Under Chiang Kai-shek, the Taiwanese Government implemented a thorough agrarian reform program under which huge tracts of land (except in the sugar industry) were distributed to small farmers. Unlike our failed agrarian reform program, however, the State in Taiwan followed through with farm to market roads, irrigation systems, post-harvest facilities, and a myriad of other agricultural extension and credit services to the small farmers, thus enabling them to become rich. The Taiwanese also did a lot of scientific research to identify the types of machinery and equipment that were most appropriate to their small farms. They were also pioneers in the development of high-quality hybrid seeds, agri-plastics for soil and seedling health, sustainable crop nutrition and protection inputs, climate-resilient greenhouse and irrigation systems, labor efficient machines like tractors and drones, and many more.

Fortunately, the founder of Harbest Agribusiness Corp., Arsenio Barcelona from Negros Occidental, found an appropriate Taiwanese company called Known You Seed to transfer all these advanced agribusiness technologies to the Philippines since 1997. With eight branches and over 100 dealers and partners throughout the Philippine archipelago, these products of Taiwanese technology are being brought to Filipino farmers nationwide.

With his exceptional entrepreneurial talent, the late Mr. Sy Sr. saw the potential of partnering in 1998 with Harbest Agribusiness Corp. to train vegetable farmers all over the Philippines with the very practical and down-to-earth advanced farming technology learned from Taiwan and other more successful East Asian neighbors. By improving the productivity of small vegetable farmers, SM has made it possible for Filipino consumers to have access to high-quality and reasonably priced products that could be sold in the SM outlets. Although there was a business element in initiating the project, it also had an eminently social purpose of helping the small farmers. Without knowing it, Mr. Sy Sr. was already starting what is known today as a “social enterprise.”

SM Foundation’s KSK program fits perfectly with the concept being proposed by President Marcos Jr. of asking the private sector (both business and civil society) to join hands with Government in the primordial goal of food security. From the very beginning, the Department of Agriculture (DA) has been a partner of the KSK. During the Duterte Administration, KSK linked up with the Office of the High Value Crops Development Program under Undersecretary Evelyn Lavina. A Memorandum of Agreement (MoA) with SMFI and the DA provided the basis for the closer involvement of its regional field offices. The Department of Social Welfare and Development (DSWD), in turn, partnered with KSK in providing trainees from among the 4Ps beneficiaries who are involved in farming or gardening of vegetables. DSWD’s role is to provide trainers to conduct training sessions on character formation and community development modules. These training modules were incorporated in the weekly KSK training sessions with Harbest.

(To be continued.)

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

Employer’s flexible work options

July 12, 2022 | 4:58 pm

computer-laptop-women — ISRAEL ANDRADE-UNSPLASH

In response to the ongoing COVID-19 pandemic, employers were constrained to adopt alternative work arrangements to continue business operations while preserving their workforce. At the height of this health crisis, employers resorted to flexible work arrangements to replace or augment their office set-up.

Remarkably, before flexible work arrangements were put under the spotlight, the Department of Labor and Employment (DoLE) had, as early as 2009, issued guidelines on the adoption of flexible work arrangements as an alternative to outright separation of employees or the closure of business. Under Labor Advisory No. 2-2009, employers and their respective employees are encouraged to discuss the propriety of adopting alternative work arrangements such as the compressed work week of five days rather than the usual six days of work, reduction of workdays, rotation of workers, forced leaves, broken time schedule, and flexi-holiday schedules. In adopting any of these alternative work arrangements, employers are required to notify the DoLE, through its Regional Office, of the intended arrangement before its implementation.

DoLE GUIDELINES ON FLEXIBLE WORK DUE TO COVID-19
At the onset of the COVID-19 pandemic, one of the remedial measures adopted by the DoLE to cushion this health crisis’ economic impact was the issuance of Labor Advisory No. 17-2020, which serves as a guide for both employers and employees in the adoption of flexible work arrangements upon the resumption of business operations.

Notably, Labor Advisory No. 17-2020 distinguished between telecommuting work arrangements (popularly known as “work-from-home” or WFH) and alternative work schemes. Nonetheless, the advisory prescribed the adoption of both when necessary.

Even before the pandemic, the Philippines had already institutionalized telecommuting as an alternative work arrangement involving the use of telecommunications and other computer technologies through Republic Act No. 11165 or The Telecommuting Act. Under the law, for a telecommuting program to be valid, it must meet minimum labor standards and must be mutually agreed upon by the employer and the employee. In addition, an employee must be provided with relevant written information adequately describing the terms and conditions of the program.

On the other hand, alternative work schemes include the transfer or assignment of employees to another function or branch/outlet of the same employer, reduction of normal work days per week, job rotation, partial closure of the establishment, and other feasible work arrangements considering the needs of individual businesses. Unlike telecommuting, however, Labor Advisory No. 17-2020 prescribes alternative work schemes only as an alternative to the termination of employees and are temporary in nature, i.e., only for as long as the pandemic persists.

CSC ADOPTS FLEXI-WORK FOR GOV’T EMPLOYEES
Recently, the Civil Service Commission (CSC) promulgated CSC Resolution No. 2200209 and issued Memorandum Circular No. 06-2022, which effectively authorized government agencies to adopt flexible working arrangements.

In its rationale, the CSC specifically stated that it hopes to incorporate new information communication technologies to address the peculiar conditions of labor in the Philippines brought about by the pandemic, the country’s traffic congestion problem, and the frequency of man-made and natural calamities. Among the work arrangements that may be adopted are:

(a) Flexi-place, which includes WFH, work from satellite office, and work from another fixed places;

(b) Compressed workweek for employees whose tasks cannot be accomplished outside the workplace;

(d) Work shifting for agencies mandated to operate 24/7;

(e) Flexitime, or choosing the time to report for work in the morning and the time to leave the office; and,

(f) Any combination of the above-mentioned arrangements.

While CSC Resolution No. 2200209 and Memorandum Circular No. 06-2022 were enacted to complement the Telecommuting Act, the Resolution placed no requirement on the use of telecommunications and other computer technologies to perform work. In fact, the CSC specifically provided for the assignment of alternative tasks outside of the office when necessary, and highlighted the adoption of WFH in combination with other flexible working arrangements.

This article is for informational and educational purposes only. It is not offered and does not constitute legal advice or legal opinion.

Mark Ernest E. Mandap is an associate of the Labor and Employment of the Angara Abello Concepcion Regala & Cruz Law Offices or ACCRALAW.

(632) 8830-8000

memandap@accralaw.com

DoH reports 60 new cases of BA.5 Omicron subvariant, PHL remains ‘low risk’

July 12, 2022 | 4:13 pm

The Philippines tallied 60 new BA.5 cases from July 7 to 11, bringing the total number of cases due to the fast-spreading Omicron subvariant to 293, according to Department of Health (DoH) Undersecretary Maria Rosario S. Vergeire at a July 12 briefing.

While BA.5 is driving infections of coronavirus disease 2019 (COVID-19) in the US and Europe, the Philippines remains at “low risk” she added.

The DoH reiterated the need to get boosted as it sees COVID-19 cases may peak by end of July while hospitalization may rise by end of August.

“Based on the projections, it would be as low as 1,800 cases nationally to as high as 11,000 cases nationally,” Dr. Vergeire said in a July 12 interview with CNN.

At the briefing, she said that healthcare utilization remains at low risk in most areas, and severe and critical cases are at less than 1.5% among total hospital admissions nationally despite the increase in cases.

Based on sequencing results from July 7 to 11, 58 individuals from region 6 and one each from regions 11 and 12 tested positive for the BA.5 variant.

One was unvaccinated; the vaccination status of the remaining 59 is still being determined. The individuals’ exposure is likewise unknown and is still being verified. Forty-three of these are tagged as recovered, 14 are undergoing isolation, while the outcome of the remaining three is being verified.

Two additional BA.4 cases, meanwhile, were detected from the July 7 to 11 sequencing results. One was fully vaccinated; the other was unvaccinated. Both presented mild symptoms and have been tagged as recovered.

“People who are vaccinated and boosted can still get infected with BA.5,” Ms. Vergeire said. “The promise of the COVID-19 vaccines is not to block COVID-19, but to protect us from severe and critical infection and death.”

The number of severe and critical admissions at the national level has plateaued and has remained under 1,000 since mid-March.

“We saw a slight uptick in total admissions by 12%, and a decline of 1.8% in the total number of dedicated beds for COVID-19, which resulted in an increase in the utilization rate by 3%,” she said.

The country confirmed 10,271 additional coronavirus infections, or an average of 1,467 cases per day, in the past week.

Save for the National Capital Region, regions 4A and 6, and Cordillera Administrative Region (CAR), which have an average daily attack rate (DAR) of 1.3–4.44 cases per 100,000, all regions have an ADAR of 1 case per 100,000.

As of July 11, more than 71 million Filipinos have been fully vaccinated. More than 15.3 million individuals, moreover, have received their first booster. Close to a million have already received their second booster shots.

To increase booster uptake, the DoH is adopting a “settings approach.” “This means going to areas that people commonly [frequent], like schools, workplaces, and communities,” she said. “Within a community, we plan to include public spaces like markets and churches.”

The DoH also plans to seek out members of the vulnerable population who still haven’t completed their primary series through a mapping initiative.

“We encourage the public to wear masks, follow health and safety protocols, and encourage their loved ones to get vaccinated and boosted to minimize infections and control the increase in cases,” said Dr. Vergeire. — P. B. Mirasol

UK watchdog seeks review into government use of WhatsApp, messaging apps

July 12, 2022 | 12:01 pm

whatsapp-1789194_1920 — STOCK PHOTO | Image by Webster2703 from Pixabay

LONDON – Britain should review the use of WhatsApp, private emails and other messaging apps by ministers and government officials after an investigation found “inadequate data security” during the COVID-19 pandemic, its data protection watchdog said on Monday.

The Information Commissioner’s Office (ICO) said the review should examine the “systemic risks” around the use of private correspondence channels and to ensure improvements were made.

“I understand the value of instant communication that something like WhatsApp can bring, particularly during the pandemic where officials were forced to make quick decisions and work to meet varying demands.” said John Edwards, the UK Information Commissioner.

“However, the price of using these methods, although not against the law, must not result in a lack of transparency and inadequate data security,” he added.

The recommendation follows a year-long investigation into the use of such messaging channels by government ministers and officials at the Department of Health and Social Care (DHSC) during the COVID pandemic.

The IOC said the investigation found a “lack of clear controls” and the potential of important information “being lost or insecurely handled”. – Reuters

No fries till autumn at some of McDonald’s Russian successor restaurants

July 12, 2022 | 11:57 am

french-fries-616115_1920 — STOCK PHOTO | Image by Bella RaKo from Pixabay

MOSCOW – Excitement was on the menu when former McDonald’s restaurants reopened in Russia last month under new management and branding, but the successor to the golden-arched throne has a problem: a shortage of French fries.

McDonald’s quit Russia after a Western backlash against Moscow’s military campaign in Ukraine, which included a barrage of economic sanctions, and sold all the restaurants it owned to a local licensee in May.

The new ownership, however, now faces problems securing supplies of potatoes, blaming a poor harvest in Russia and difficulty in importing potatoes due to supply chain disruptions.

Under the new name Vkusno & tochka, or “Tasty and that’s it”, the restaurants started reopening on June 12, and sold almost 120,000 burgers that day. Read full story

But after customers last week began posting pictures of menus without French fries, Vkusno & tochka said it would be leaving fries and potato wedges off the menus of some of the newly opened restaurants until autumn.

It said that while it had for years focused on buying ingredients locally, it was now “impossible to import from markets that might have become temporary suppliers of potatoes”.

“Potatoes will return to the chain’s menu in full at the beginning of the next harvest year, autumn 2022,” it said.

The shortage highlights the challenges facing Russian businesses as sanctions over Moscow’s actions in Ukraine and supply chain disruptions complicate the import of goods.

Vkusno & tochka’s Chief Executive Oleg Paroev told Reuters last month that “a significant percentage” of ingredients were sourced abroad. Read full story

Despite Vkusno & tochka’s problems, Russia’s agriculture ministry said last week that the potato harvest would be bigger than last year’s and that the market was “fully supplied with potatoes, including processed potatoes”.

“The new crop is now arriving, which rules out the possibility of a shortage,” it said. – Reuters

Twitter hits back at Musk, says no deal obligations breached

July 12, 2022 | 11:53 am

Twitter Inc fired back at Elon Musk on Monday, accusing the world’s richest person of “knowingly” breaching an agreement to buy the social media firm, days after the Tesla Inc. chief sought to back out of the $44 billion deal.

In a letter sent to Mr. Musk, dated Sunday and filed with regulators on Monday, Twitter said it had not breached its obligations under the merger agreement as indicated by Musk on Friday for looking to end the deal. (https://bit.ly/3c2QVoP)

“Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Agreement,” the letter said.

The company has planned to sue Mr. Musk to force him to complete the deal, a threat he laughed off on Monday, when he sent a series of tweets joking about Twitter and its threat to enforce the agreement in court. Twitter is planning to file a lawsuit early this week in Delaware, people familiar with the matter told Reuters. Read full story

Twitter said in the letter that the merger agreement remained in place, adding it would take steps to close the deal. Read full story

Twitter‘s shares ended down 11.3% at $32.65, a 40% discount to Mr. Musk‘s $54.20 bid and the biggest daily percentage drop in more than 14 months. They rebounded less than 1% in extended trading.

Tesla’s shares closed down almost 7%.

Traders short selling Twitter‘s tumbling stock made $148 million in mark-to-market profits on Monday, while short bets against Tesla resulted in $1.3 billion in mark-to-market profits, according to S3 Partners.

“Twitter‘s board must contemplate the potential harm to its employee and shareholder base of any additional internal data exposed in litigation,” Benchmark analyst Mark Zgutowicz said.

Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, said Mr. Musk could put the social media giant’s so-called “bots” front and center in future litigation if he defends against Twitter‘s lawsuit by claiming the company misrepresented the number of fake accounts.

“I’d be surprised if he’s prohibited from getting that information,” Mr. Pileggi said.

Mr. Pileggi said if the number of fake accounts is many times higher than the 5% estimated by Twitter, it could lead to negotiations for a reduced price for the social media platform.

Legal experts say the 16-year-old social media company has a strong legal case against Musk, but could opt for a renegotiation or settlement instead of a long court fight.

“We believe that Elon Musk‘s intentions to terminate the merger are more based on the recent market sell-off than … Twitter‘s ‘failure’ to comply with his requests,” Jefferies analyst Brent Thill wrote in a note.

“In the absence of a deal, we would not be surprised to see the stock find a floor at $23.5.” – Reuters

Chile currency plunge, inflation rattle Latin America’s copper king

July 12, 2022 | 11:43 am

SANTIAGO – Chile‘s tumbling currency and runaway inflation are testing the Andean copper giant’s economic and financial systems, and complicating President Gabriel Boric’s plans to push through a tax reform bill to fund ambitious social programs.

The Chilean peso has plummeted more than 15% over the last month, briefly hitting 1,000 pesos per dollar for the first time ever, sparking alarms. Yearly inflation hit 12.5% in June, the highest in nearly three decades. Read full story

In an interview with Reuters, Finance Minister Mario Marcel said that the country’s market-orientated model and free-floating exchange rate meant that while the currency could be more volatile, this didn’t necessarily reflect wider strains.

“Because (Chile) has a floating exchange rate, it is more volatile than other Latin American countries, but the difference is that we have an economy that is not dollarized,” Mr. Marcel said.

“Therefore exchange rate volatility does not generate risks for financial stability as can happen in other countries.”

Chile‘s central bank also sought to calm fears over a weaker peso, stating that it does not pose a significant harm to the financial system.

“Our evaluation indicates that up until now, markets have been able to absorb shocks appropriately,” the bank said in a statement issued later on Monday, adding that it will monitor any further fluctuations.

The global economy is facing a rising risk of recession, with concerns over slowing demand from China pulling the global price of copper back sharply from recent highs. Chile is the world’s No. 1 producer of the red metal.

Russia’s invasion of Ukraine has also raised fears over the global supply of grains and energy, pushing up inflation that is rattling countries around the world as rising food and gas prices hurt consumers and stoke unrest.

Mr. Marcel said that to soften the blow to citizens from rising prices, the government is providing a subsidy for low-income families and stabilizing prices for fuel and basic goods.

“What we are doing is using the mechanisms we have to stabilize some prices, so we have a fuel price stabilization mechanism,” Mr. Marcel said. “We have been able to cushion more than countries that have simply eliminated specific taxes.”

The economic turmoil comes as the government is trying to push through a tax reform bill that seeks to collect 4.1 points of GDP over four years by implementing tax hikes on top earners and a mining royalty, as well as eliminating tax loopholes. Read full story

Young, progressive President Gabriel Boric said that the plummeting currency was “tremendously worrying” during a press conference last week, attributing the decline to weakening copper prices, as well as uncertainty over a planned new constitution.

“Uncertainty, without a doubt, plays a role and that’s why it’s important that all the different political actors give signals that promote certainty,” Mr. Boric told reporters.

Chileans will vote in September to approve or reject a new constitution, which focuses on social rights and the environment. It would replace the current market-led text that dates back decades to the Augusto Pinochet dictatorship. Opinion polls currently suggest it lacks enough support to pass. – Reuters

US Treasury’s Yellen, Japan’s Suzuki to discuss weak yen, more sanctions on Russia

July 12, 2022 | 11:42 am

TOKYO – US Treasury Secretary Janet Yellen will discuss ways to further strengthen Western sanctions against Russia over its war in Ukraine when she meets with Japanese Finance Minister Shunichi Suzuki on Tuesday, the Treasury Department said.

Ms. Yellen‘s meeting will also focus on working with Japan and other trusted partners to build stronger and more resilient supply chains to help lower prices for consumers in the United States, where inflation is running at 40-year highs, it said.

A comprehensive agenda will also include currencies, a Japanese official said, as the yen hit a fresh 24-year low beyond 137 yen to the dollar JPY= on Monday, adding to concerns about the rising cost of living.

“Currencies will be discussed as one of various issues,” the official said speaking on condition of anonymity.

The Japanese finance minister fired off a fresh warning shot against the renewed yen weakness.

“There are various global problems. We’d like to make maximum use of today’s meeting to deepen our coordination to resolve them,” Mr. Suzuki told reporters on Tuesday.

“A sharp yen weakening is seen in recent currency market. I’m concerned,” he said, “The government will watch the currency market even more closely while liaising with the Bank of Japan.”

Japan would respond appropriately as needed while coordinating with currency authorities from other countries in line with a G7 agreement on exchange rates, Mr. Suzuki added.

Meanwhile, the US Treasury secretary paid her respects to slain former Prime Minister Shinzo Abe, Japan’s longest serving modern leader at a private wake on Monday evening, lauding his work to increase Japan’s prosperity and advance the status of women.

She canceled a public speech at the Port of Yokohama out of deference to Mr. Abe’s death, but will still meet privately with Japanese business leaders to discuss how improved supply chain resiliency and greater use of “friend-shoring” can help ease inflationary pressures and address the bottlenecks.

Ms. Yellen will also continue talks with Japan about setting a price cap on Russian oil to limit Moscow’s profits and help lower energy prices.

The two sides will likely affirm conformity to a price cap but stop short of reaching any concrete agreement on a scheme, the Japanese official said.

On Wednesday, Ms. Yellen will travel to Indonesia to meet with Suzuki and other Group of 20 finance officials for their July 15-16 gatherings. – Reuters

May trade deficit widens as imports climb

July 12, 2022 | 10:22 am

The country’s trade-in-goods deficit grew slightly in May as imports rose to its five-month high, the Philippine Statistics Authority (PSA) reported this morning.

Preliminary data from the PSA showed the value of merchandise exports went up by 6.2% year on year to $6.310 billion in May, steady from the revised 6.2% in April but lower than 30.8% in May last year.

Likewise, merchandise imports grew by 31.4% annually to $11.989 billion in May. This was faster than the revised 29.4% in April, but slower than the 55.8% growth in May 2021.

This was the highest import growth in five months or since the 39.1% growth in December 2021.

This brought trade-in-goods deficit — the difference between exports and imports — to $5.679 billion in May, wider than the $3.180 billion deficit a year ago. The trade gap that month was also larger than the revised $5.349 billion deficit in April.

Total trade — the sum of exports and imports — grew by 21.5% to $18.299 billion, up from 20.3% in April, but lower than the 44.9% in May 2021.

Year to date, exports rose by 8.4% to $31.874 billion, above the 7% growth projected by the Development Budget and Coordination Committee for 2022.

Similarly, imports grew by 29% year on year to $56.796 billion in the first five months of 2022. This was also above the revised 18% imports growth penciled in by the government this year.

In the five months to May, the trade balance ballooned to a $24.922 billion deficit from $14.623 billion trade gap a year ago.

Total trade in the first five months rose by 20.8% to $88.670 billion from $73.421 billion in the January-May period last year.

FDI net inflows rise to 4-month high

July 12, 2022 | 12:34 am

dollar-currency — ALEXANDER MIL-UNSPLASH

By Keisha B. Ta-asan

NET INFLOWS of foreign direct investments (FDIs) into the Philippines surged to a four-month high in April as further reopening of the economy and trade liberalization reforms lifted investor confidence.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed that FDI net inflows rose by 48.3% to $989 million in April from $667 million in the same month in 2021.

This was the highest monthly FDI inflow recorded since the $1.06 billion in December last year.

Month on month, net inflows of FDIs, which stand as a key source of jobs and capital for the local economy, grew by 36% from $727 million in March.

“The pickup in FDI reflects the positive fallout from reopening of the economy. With the Philippines posting a solid 1Q GDP report and with mobility restrictions lowered, this may have prompted investments into the Philippines, including the placement of equity or ‘fresh FDI,’” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Metro Manila and most areas in the country have been under the most lenient alert level since March, as coronavirus infections declined.

“Vaccination rates and the country’s ability to control COVID surges without having to resort to crippling lockdowns also indicated a better business outlook for investors,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

Ms. Velasquez also noted the FDI inflows are mainly driven by the economic reforms put in place by the Duterte administration.

“The amendments to the Public Service Act (PSA) and the Retail Trade Liberalization Act (RTLA) which loosened restrictions of some sectors to foreign ownership likely drew investors’ interests,” she added.

President Rodrigo R. Duterte in March signed into law Republic Act No. 11659, which amended the PSA to allow up to 100% foreign ownership in airports and airlines, subways and railways, telecommunications, domestic shipping, and tollways and expressways.

Mr. Duterte also signed into law the measures amending the RTLA and the Foreign Investment Act, which are expected to boost the competitiveness of the Philippines’ industries and services.

Data from the BSP showed net inflows of FDI went up, following the increases recorded across all components, led by non-residents’ net investments in debt instruments.

April data showed a 40.6% increase in foreign firms’ investments in debt instruments of local affiliates to $684 million from $487 million a year ago.

Foreigners’ net investments in equity capital surged by 127.8% to $206 million in April. Equity capital placements jumped by 103.3% to $224 million, while withdrawals declined by 9.9% to $18 million.

The equity placements were mainly from Malaysia, the United States, and Japan, and invested mostly in construction, real estate and manufacturing industries.

Reinvestment of earnings fell by 10.2% to $99 million in April.

For the first four months of the year, total FDI net inflows grew by 12.1% to $3.4 billion.

“Cumulative FDI net inflows rose due mainly to the increase in non-residents’ net investments in debt instruments,” the BSP said, referring to the 35.3% jump in foreign investments in debt instruments to $2.5 billion.

Reinvestment of earnings was flat at $329 million in the January to April period.

Meanwhile, investments in equity capital slumped by 37.2% to $517 million in the four-month period, as placements declined by 39.4% to $576 million. Equity withdrawals also dropped by 53.2% to $59 million.

Net inflows of FDIs are expected to slow in the next few months, amid the darkening global economic outlook.

“We could see a moderation in the near term as the economy faces short-term headwinds but should the Philippines weather the turbulence, we can expect FDI to resume once we have cleared the present challenges,” Mr. Mapa said.

Aside from economic reforms, Ms. Velasquez said FDI net inflows may get a boost from “infrastructure investments with private sector participation, and efforts to streamline tax administration.”

“Outside of these reforms, ease of doing business, anti-corruption efforts, and firmly instilling the rule of law will be favorable to investors,” she added.

The central bank projects FDI net inflows will reach $11 billion this year.

Marcos’ planned new taxes may have limited impact

July 12, 2022 | 12:33 am

By Diego Gabriel C. Robles and
Alyssa Nicole O. Tan, Reporter

THE ECONOMIC TEAM’S plan to pursue new taxes on digital services and pollutants, as well as “rightsizing” of the bureaucracy, may not generate enough revenues needed to repay the Philippines’ ballooning debt, experts said.

Finance Secretary Benjamin E. Diokno last week said they are considering the imposition of taxes on digital or online transactions, single-use plastics, and carbon emissions. This as the Marcos administration looks for new sources of revenues to lower the fiscal deficit and repay the P3.2-trillion additional debt incurred during the coronavirus disease 2019 (COVID-19) pandemic.

“New taxes on digital transactions, single-use plastics, carbon and online services will likely help deliver fresh revenue streams to government coffers. Estimates have been floated on projected collections although it may be difficult to say whether this will be enough to completely offset the current debt and deficit levels,” said ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa.

Bernardo M. Villegas, economist at the University of Asia and the Pacific, said these additional taxes “will not be enough but they will contribute to reducing the fiscal deficit.”

“We need all the tax increases we can get,” Mr. Villegas said.

The Bureau of the Treasury (BTr) earlier estimated the government needs to raise P249 billion annually in incremental revenues to avoid new borrowings and repay debt.

“Given the amount of plastics, carbon and online services that are being used, this can bring in a sizable amount. This may not be enough to pay for the debt, but its consequences in terms of the environment and the inequality are probably more important than reducing the debt,” said Leonardo Lanzona, director of the Ateneo Center for Economic Research and Development.

John Paolo R. Rivera, economist from the Asian Institute of Management, said a tax on single-use plastics and carbon emissions will have “good environmental implications because it will inhibit its use, which is good for the environment in the long run.”

Finance Secretary Benjamin E. Diokno last week broached the possibility of taxes on single-use plastics and on carbon emissions, which would also aid the country’s efforts against climate change and pollution.

Under the previous administration’s fiscal consolidation plan, a P20 excise tax per kilogram of single-use plastics would generate P1 billion in revenues annually.

A 12% value-added tax on online advertisement services and other digital and online services would also generate P13.2 billion in annual revenues.

SENATE SUPPORT
Several senators backed the proposed tax on single-use plastics and online transactions.

“Goods and services bought through the internet should really be taxable for VAT (value-added tax) as all goods and services are, unless expressly made exempt by law,” Senator Juan Edgardo M. Angara said in a Monday statement.

Other countries already impose a tax on single-use plastics, which is intended to encourage the use of recyclable bags, Mr. Angara added.

In a Viber message, Senator Mary Grace Natividad S. Poe-Llamanzares said taxing single-use plastics would hopefully discourage people from using these, and lessen their impact on the environment.

Also, Senator Ramon B. Revilla, Jr. said Congress should review and update its existing tax laws on the digital economy.

“It is also unfair because local online businesses are covered by taxation laws, but multinational corporations who have less physical presence but a wider reach do not seem to be within the scope. They may have to be properly taxed given the outdated provisions and leakages in tax measures,” Mr. Revilla said in a statement.

The House of Representatives approved in September 2021 a bill seeking to impose a 12% VAT on digital sale of services such as online advertisements, subscription services, etc. However, the Senate did not approve the counterpart measure.

Meanwhile, Senator Francis Joseph G. Escudero said that it may not be the best time to implement the two proposed measures.

“It’s always easier to go for imposing new, or increasing whatever existing, taxes in order to raise revenues for (the) government,” he said in a Monday statement. “However, this is burdensome and is not in keeping with the times of slow economic growth, increased unemployment and rising inflation.”

Mr. Escudero suggested that Mr. Diokno focus on plugging tax loopholes and improving revenue collection by the Bureau of Internal Revenue and Bureau of Customs.

“With nearly P200 billion in uncollected taxes lost to either corruption and/or inefficiency, this is by far more than any projected revenue of the new taxes he is mulling,” he said.

RIGHTSIZING BILL
Economic managers are also pushing for the passage of a government rightsizing law that would eliminate redundancies and duplication in government operations.

Budget Secretary Amenah F. Pangandaman last Friday said they will endorse the rightsizing bill as one of the legislative priorities.

“It’s fairly unpopular, I think, but with the instructions of the President to the Cabinet members to also look at your existing structures, it’s wise to refile the bill,” she said.

For Security Bank Corp. Chief Economist Robert Dan J. Roces, rightsizing the bureaucracy is fine, “as long as this supports the objective of fiscal consolidation without crimping government functions and the private sector’s recovery.”

Mr. Lanzona noted that reducing the bureaucracy will result in greater savings for the government.

“[But] the amount saved may not be enough relative to the huge debt but its externalities are very important not only for economic but also institutional efficiency,” he added.

Mr. Rivera said the impact of this measure may not be huge, but “some impact is better than no impact.”

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