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North Korea after 10 years of Kim Jong Un: Better armed but more isolated than ever

KCNA VIA REUTERS

SEOUL — Ten years after Kim Jong Un assumed power, North Korea is better armed but deeply isolated and more dependent on China, despite actions by the young leader that raised — and dashed — hopes of economic transformation or international opening.  

Mr. Kim’s pursuit of nuclear weapons defined his first 10 years in power, but analysts say the path has left him isolated and facing perhaps the greatest challenges yet.  

Those weapons may stand in the way of political breakthroughs needed to improve a shattered economy and prevent millions from starving, as ongoing anti-pandemic lockdowns and sanctions have left him over-reliant on China.  

Mr. Kim embraced a different style than his idiosyncratic father, seeking to “normalize” North Korea by institutionalizing and delegating more leadership; winning international respect through nuclear weapons and summits with foreign leaders; and displays of transparency and empathy toward improving the lives of everyday citizens.  

At times that raised expectations of economic reform in the socialist state, or changes in its relationship with longstanding rivals such as the United States and South Korea.  

But systemic change has failed to materialize as Mr. Kim continued many of his father’s worst practices, from political prison camps and brutal executions to tight control over the economy and society.  

“I think the experience of Kim’s rule for ordinary North Koreans was a moment of hope in those early years followed by regression to the mean,” said Christopher Green, a Korea specialist at Leiden University in the Netherlands.  

Mr. Kim will have to make hard decisions over whether to trade any of his arsenal to win sanctions relief, or find other ways to boost the economy, such as through a distrustful but vital relationship with China or allowing more economic and social opening without losing political grip.  

“[Sanctions] put an upper limit on what he can do with his economy but doesn’t mean he can’t get to a point that’s much more comfortable for people than where he is now,” said Robert Carlin, a former CIA officer now with the Washington-based Stimson Center.  

After the damage done by the pandemic, calls for controlled openness may again be heard from within the regime elite, but the challenges of turning the international situation in North Korea’s favor are as big as ever, Mr. Green said.  

“Without a big uptick in foreign capital, the cause of economic reform is almost certainly doomed,” he added.  

WEAPONS FOR SANCTIONS  

Under Mr. Kim, North Korea conducted four of its six nuclear weapons’ tests — including what appears to be its first hydrogen bomb — and developed a series of intercontinental ballistic missiles with the range to strike as far as the United States.  

For Mr. Kim that arsenal is the “treasured sword” that will protect North Korea — and his rule — from outside threats, while making the country an equal with other nuclear powers.  

But it also brought North Korea to the brink of war with the United States in 2017, and prompted even the country’s partners in China and Russia to approve strict UN sanctions.  

Mr. Kim’s attempts to win sanctions relief and a breakthrough in relations with the United States led to historic and unprecedented summits with US President Donald J. Trump, but talks have since stalled with Washington demanding Pyongyang surrender some of its weapons before any sanctions are eased.  

Mr. Kim will likely continue to “play tough” in nuclear diplomacy because further nuclear weapons development will increase his political leverage and bargaining power both in negotiations and during stalemates, said Duyeon Kim, with the US-based Center for a New American Security.  

“We can expect to see him continue to shape his personal and his country’s image as normal, modern, and advanced across all sectors particularly nuclear and economic, and even foreign affairs when the pandemic subsides,” she added.  

After sending the China-North Korea relationship to a historical low by prioritizing nuclear weapons and missiles development then harshly criticizing Beijing for supporting sanctions, Mr. Kim managed to quickly repair ties, said Zhao Tong, a strategic security expert in Beijing.  

China now accounts for the vast majority of North Korea’s limited international trade, and the current governments in both countries share the goals of promoting socialist ideology and countering Western influence, Mr. Zhao said.  

“Despite Kim’s preference of diversifying North Korea’s international partnerships, he is likely to continue relying heavily on support from China and a small number of other like-minded countries,” he said.  

TIGHTENING CONTROL  

In his early years, Kim Jong Un experimented with economic reform in order to generate the surpluses he needed to run the patronage networks that sustain autocratic rule, said Mr. Green.  

“But it appears the risks of and opposition to this became too great in time, and he dialed it back,” he said.  

A United Nations rights investigator has warned that vulnerable populations in North Korea risk starvation if the economic and food situation is not reversed.  

The pandemic has seen the government further strengthen its grip on the economy, casting doubt on the future of the black markets and as well as official businesses that many North Koreans had come to rely on.  

Mr. Kim’s rule has seen the proliferation of new technologies such as cellphones in North Korea, but activists say he has simultaneously adopted a more high-tech approach to surveillance and oppressive political control as he seeks to outlaw and stamp out foreign influence and any hint of domestic protest.  

Still, it’s not too late for Kim to make good on promises to improve lives in North Korea if he embraces diplomacy, said Ramon Pacheco Pardo, a Korea expert at King’s College London.  

“Ultimately, Kim’s time in power could be defined by his ability to raise the living standards of ordinary North Koreans once the pandemic is over,” he said. — Josh Smith/Reuters 

From schools to sports, a new wave of COVID-19 disrupts US life

Image via US Army National Guard/Sgt. Amouris Coss

NEW YORK — Universities canceled events, the National Football League (NFL) reported a record number of cases, and long lines formed at New York City testing clinics as a sharp rise in coronavirus disease 2019 (COVID-19) cases and concern over the Omicron variant disrupted American life anew.  

The NFL and two other major North American sports leagues scrambled to control outbreaks as the threat of widespread schedule disruptions loomed larger.  

US diplomatic efforts fell victim to the new spate of infections with US Secretary of State Antony Blinken cutting short a brief trip to Southeast Asia after learning of a COVID-19 case in the press corps accompanying him.  

Over the past month, new cases have risen nearly 50% to a seven-day average of 122,000 new infections per day, according to a Reuters tally. At this point in 2020, the United States was reporting an average of 219,000 new infections per day.  

Across the country, COVID hospitalizations have risen about 40% over the last month, according to a Reuters tally  

At least 36 states have reported confirmed cases of the Omicron variant, representing about 3% of COVID-19 cases in the country, US Centers for Disease Control and Prevention Director Dr. Rochelle Walensky said in a briefing on Wednesday.  

At a COVID testing site in the Chicago suburb of Geneva, Illinois, the number of people seeking tests has nearly doubled in the past two weeks.  

“Ever since Thanksgiving more people have been coming in,” said Mona Kawaiah, who collects the test kits. The site has gone from 30 tests per day before Thanksgiving to now 52 tests per day. “Some of them have the flu symptoms and want to make sure it’s not COVID,” she said.  

The Metropolitan Opera in New York said on Wednesday it would require audiences and staff to show proof of a booster shot starting in January. In what is thought to be the first such move to stricter rules in New York City theaters, the requirement will take effect on Jan. 17, 2022, the Met Opera said in a statement on its website.  

The United States leads the world in the daily average number of new infections reported, accounting for one in every 5 infections reported worldwide. There have been 50 million infections and more than 800,000 coronavirus-related deaths reported in the country since the pandemic began.  

Urging Americans to get booster shots, top US infectious disease expert Dr. Anthony Fauci said an additional dose of currently available COVID-19 vaccines work against the Omicron variant of the coronavirus and there appears to be no need for variant-specific boosters.  

LONG LINES  

In Harlem on Wednesday, about two dozen people stood in a queue to enter the City MD clinic on busy 125th Street. A staff member came out just before 4 p.m. to announce there was a two-hour wait, owing in part to efforts to disinfect rooms between patients.  

Chris Johnson, a sophomore at Fordham University, said he would wait as long as it takes. “I gotta get a test to take my final tomorrow,” he said.  

Students at New Jersey’s Princeton University will take all finals remotely starting on Thursday. The school ordered the cancellation of all indoor gatherings with food, and those where face coverings cannot be worn, effective from Thursday to Jan. 7, the university’s dean Jill Dolan said in a statement.  

New York University in New York City canceled all “non-essential” gatherings and events. Provost Katherine Fleming said in a statement on Wednesday that data from a testing program had shown a considerable acceleration in the rate of new cases.  

“It’s not a cause for alarm, but it is a cause for concern, caution, and appropriate actions,” she said, adding that the school is strongly encouraging final exams be taken online.  

In retailing, Apple Inc. temporarily closed three retail stores in Miami, Annapolis, and Ottawa after a rise in COVID-19 cases and exposures among employees, the iPhone maker said on Wednesday.  

The National Hockey League, already dealing with a backlog of postponed games, was bracing for more headaches as the Nashville Predators, Boston Bruins, Carolina Hurricanes and Calgary Flames confirmed players and staff had been forced into COVID-19 protocols.  

After the NFL reported a record 37 positive tests on Monday, another 22 players were added to the COVID reserve list on Tuesday.  

The surge continued into Wednesday with ESPN reporting the Washington Football Team added eight players to COVID protocols and the Cleveland Browns placed quarterback Baker Mayfield and head coach Kevin Stefanski on the reserve list.  

In the National Basketball Association, Sacramento Kings interim head coach Alvin Gentry tested positive for COVID-19 and will miss Wednesday night’s game against the Washington Wizards. — Tyler Clifford and Lisa Shumaker/Reuters

Fed signals three rate hikes in the cards in 2022 as inflation fight begins

REUTERS/KEVIN LAMARQUE/FILE PHOTO

WASHINGTON — The US Federal Reserve (Fed) said on Wednesday it would end its pandemic-era bond purchases in March and pave the way for three quarter-percentage-point interest rate hikes by the end of 2022 as the economy nears full employment and the US central bank copes with a surge of inflation.  

“The economy no longer needs increasing amounts of policy support,” Fed Chair Jerome Powell said in a news conference in which he contrasted the near-depression conditions at the onset of the coronavirus pandemic in 2020 with today’s environment of rising prices and wages and rapid improvement in the job market.  

The pace of inflation is uncomfortably high, he said after the end of the Fed’s latest two-day policy meeting, and “in my view, we are making rapid progress toward maximum employment,” a combination of circumstances that has now convinced all Fed officials, even the most dovish, that it is time to exit more fully the pandemic policies put in place two years ago.  

The scenario laid out by the central bank in its new policy statement and economic projections envisions the pandemic, despite the spread of the Omicron variant, giving way to a particularly benign set of economic conditions — a “soft landing” in which inflation eases largely on its own, interest rates increase comparatively slowly, and the unemployment rate is pinned to a low 3.5% level for three years.  

Some analysts were skeptical.  

“This is a forecast that implicitly has favorable developments that allow them to leave accommodation but get favorable inflation,” said Vincent Reinhart, chief economist at Dreyfuss & Mellon, noting that the three-year rate hike cycle projected by Fed officials never reaches levels that would be considered restrictive, yet inflation is still expected to fall.  

“Is that the way to bet?” he said.  

The core of Fed officials thinks so. In their new economic projections, policymakers forecast that inflation would run at 2.6% next year, an increase over the 2.2% they projected in September, but then fall to 2.3% in 2023 and 2.1% in 2024.  

Unemployment is seen dropping to 3.5% next year, well below the point Fed officials feel is sustainable in the long run, and remaining there through 2024.  

As a result of that combination of rising prices and strong employment, officials at the median projected the Fed’s benchmark overnight interest rate would need to rise from its current near-zero level to 0.90% by the end of 2022. That would kick off a hiking cycle that would see the policy rate climb to 1.6% in 2023 and 2.1% in 2024  still loose by most estimates.  

Dropped from the latest policy statement was any reference to inflation as “transitory,” with the Fed instead acknowledging that price increases had exceeded its 2% target “for some time.”  

Annual inflation has been running at more than double the Fed’s target in recent months.  

To open the door to higher borrowing costs, the Fed announced it was doubling the pace of its bond-buying taper, putting it on track to end the purchases of Treasuries and mortgage-backed securities (MBS) by March. Until recently, the central bank had been buying $120 billion of Treasuries and MBS each month to help fuel the economic recovery.  

US stocks closed higher, with the S&P 500 gaining more than 1.6%, while yields on Treasury securities were also up. The dollar initially strengthened after the release of the Fed statement and projections before surrendering the gains to trade lower on the day against a basket of major trading partners’ currencies.  

Traders in interest rate futures were pricing a first rate hike in May, and two more by the end of 2022.  

PRICE STABILITY  

Though the Fed made any rate hikes contingent on some further improvement in the job market, the new policy projections left little doubt that borrowing costs will rise next year, absent a major economic shock. All 18 policymakers indicated at least a single rate increase would be appropriate before the end of 2022.  

All told, the new projections and policy statement began to pin down the central bank’s plan to exit the extraordinary monetary policy put in place in the spring of 2020 to nurse the economy through the fallout of the pandemic.  

The health crisis is still underway, the Fed acknowledged, with the new variant adding to uncertainty about the course of the economy.  

Mr. Powell, for example, told reporters that he would like to know how the US labor market will function after people are free of healthcare, childcare and other pandemic worries, but “it doesn’t look like that is coming anytime soon.”  

Yet he also downplayed Omicron’s potential economic risks, saying he did not expect the Fed would have to resume emergency bond purchases or take other steps to counter any fresh coronavirus disease 2019 (COVID-19) wave, and that economic performance would be less and less influenced by the pace of coronavirus infections.  

Fed officials projected US economic growth of 4.0% next year, an increase over the 3.8% forecast in September and more than double the economy’s underlying trend.  

In some of his most pointed comments about inflation yet, Mr. Powell said that sharply rising prices had now emerged as a bigger threat to jobs than the pandemic.  

“What we need is another long expansion,” he said. “That’s what it would really take to get back to the kind of labor market that we’d like to see, and to have that happen we need to make sure that we maintain price stability.” — Howard Schneider and Jonnelle Marte/Reuters

TransUnion advocates data analysis in resurgence vs economic paralysis

Holds virtual Big Data Summit to share best practices and open conversations with stakeholders

Global information and insights provider TransUnion (NYSE: TRU) is urging the business community to embrace the increasing role of data analytics in order to find stability during these uncertain times. By coming together and adopting best-practice and new technologies, the current economic downturn caused by the COVID-19 pandemic can start to be addressed before it escalates into a longer-term economic paralysis, reversing progress achieved in previous years.

“The cautious and reactive stance that many businesses are taking often stems from information gaps and an inability to make informed decisions. When lenders, for instance, have a limited view of their portfolio, they can find it difficult to take action. However, stifling growth has historically been an unsustainable strategy. Philippine businesses must not allow themselves to be crippled by this pandemic, and instead, embrace an information-powered recovery,” said Pia Arellano, TransUnion Philippines president and CEO.

In its virtual Big Data Summit held recently, TransUnion gathered industry leaders and wider stakeholders to tackle the challenges ahead and to discuss the path to recovery and growth. By helping inform policy and inspire data-led actions, TransUnion believes businesses can continue to provide services and solutions with confidence and fulfill their role as economic enablers.

As digital transformation accelerates, new trends and new realities emerge, which may require major upgrades in systems and possibly even business models. In the banking sector, for example, ensuring trust in a digital environment is a massive undertaking that, while slowly being rolled out even before the pandemic, continues to create challenges.

In navigating pandemic uncertainty, data insights and new technology can provide a more certain map. The use of artificial intelligence and machine learning in data analytics can ensure a wealth of insights is at hand. Data gives a rounded and more encompassing understanding of consumers or segments, which can enable businesses to create a more strategic decisioning framework on whether to engage them and how best to do it.

Pia Arellano, President and CEO, TransUnion and Arniel Ong, President and CEO, RCBC Bankard

Data solutions available in PH
Many of the challenges that businesses face have digital solutions readily available to solve the problem. It’s just a matter of employing the right solution(s) at the right time to achieve set goals.

Take lender portfolio reviews, for instance. Increased portfolio reviews — coupled with trended credit data and alerts on shifting consumer behaviors — can help businesses better address customer needs and provide instant transactions and access to finance they have come to expect.

It can answer questions like, “Will having an equal or higher credit limit vs. their first credit card result in a higher share of wallet shift in terms of spend, principal, and unbilled balances?” and “Will giving an equal or higher credit limit impact credit card delinquency or bad rate?” By unearthing off-books consumer behavior, frequent portfolio reviews can provide the basis for strategy that will drive preference and increase customer loyalty, among other capabilities.

Lending industry leaders said that they have to check their data on a daily basis now, compared to at least monthly during pre-pandemic times. The volume of data generated by digital channels now provides richer insights into how consumer behaviors change, highlighting the need for businesses to be flexible and respond to changes. In other words, they should be able to quickly react to events, as well as shifting regulatory requirements, without being hampered by in-house technology limitations.

Pursuing growth in an uncertain environment also means being open to explore market segments that were previously overlooked. Specifically, new-to-credit (NTC) consumers comprise a big chunk of the Filipino population, which presents a vast growth opportunity for proactive players. This is also a chance for lenders to attract and gain the loyalty of the tens of millions of consumers who aren’t credit-visible yet by extending them access to credit products and other services that may be critical in these trying times.

Often this is a risk that not all lenders have enough appetite or ability to take. To bridge that gap, technology providers like TransUnion have started harnessing the power of trended data and alternative data from non-traditional sources such as telecom companies to create lookalike models that generate scores to underwrite NTC consumers. This ultimately allows lenders to say ‘yes’ to more customers while keeping risk flat or even reducing it on a consistent volume basis.

Jesus Angelo ‘Biboy’ Gomez, SVP, Group Head, Credit Cycle & Enabling Services, Bank of the Philippine Islands and Aylwin Herminia ‘Mia’ P. Tamayo, FVP & Head, Credit Cards and Business Governance, EastWest Bank

Protecting businesses and consumers
As consumers become increasingly comfortable with transacting digitally, the biggest risk often comes from fraudsters who target industries with high transaction volumes. Businesses are faced with finding the balance between providing instant decisioning and transactions and successfully catching fraud, while still maintaining friction-right customer experiences lest they risk letting even the good ones get away. At this point, multi-layered defenses are necessary.

TransUnion has found that adding device intelligence to its bureau data and alternative data sources expose fraud and fraud linkages that can’t be detected by simple security questions or even face and ID scans. Its advanced insights and a global network of reported fraud enable it to help members discover their vulnerabilities and manage risk. Coupled with continuous consumer education, addressing the rise in digital fraud attempts through these technologies can also enhance the acquisition experience of genuine customers and result in growth for the business.

‘Information for Good’
TransUnion uses data, software and technology in a smart way, providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. It helps drive better decisions, enables secure friction-right customer experiences and encourages greater engagement through better offers and communication. TransUnion is driven by its purpose of helping businesses and consumers transact with confidence and achieve great things. This is ‘Information for Good.’

Guided by the principle of responsible data stewardship, TransUnion’s data security adheres to global InfoSec standards. This ensures that the information and technology that fuels its solutions are trustworthy and accurate, while also complying with local privacy and other relevant legislation around the world. In addition, it collaborates closely with members to actively manage risks related to technology adoption and data innovations.

“At a time when the pandemic poses an imminent threat of economic paralysis, data solutions offer a new perspective that promises more accurate, efficient, and inclusive results. TransUnion makes the task easier by providing a much-needed reliable basis for mutual trust between businesses and consumers. When both are better informed, they make smarter financial decisions that contribute to the growth of the economy,” Arellano said.

Pursue growth through data and information and make an impact in your industry today. For more information, visit the website or contact your TransUnion Relationship Manager.

 


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Bill amending PSA gets Senate nod

REUTERS

By Alyssa Nicole O. Tan

THE SENATE on Wednesday approved on third and final reading a bill amending the Public Service Act (PSA) to allow 100% foreign ownership in telecommunications, airlines, domestic shipping, among others.

Nineteen senators voted in favor of Senate Bill 2094, which seeks to amend the 85-year-old Commonwealth Act 146 or PSA, while three senators voted against the measure.

Certified as urgent by President Rodrigo R. Duterte, the bill is one of the key reforms expected to help boost the economy’s recovery from the pandemic.

Under the approved version, the definition of public utility was changed to those involved in distribution and transmission of electricity, petroleum and petroleum products pipeline transmission, water and wastewater pipeline distribution systems, airports, seaports, public utility vehicles, and expressways and tollways. The Constitution limits foreign ownership in public utilities to 40%.

This amendment means 100% foreign ownership will now be allowed in telecommunications, air carriers, domestic shipping, railways and subways, and canals and irrigation.

“I believe that by opening up our economy to a diverse set of investors, we could provide our fellow Filipinos with more and better choices,” Senator Mary Grace Natividad S. Poe-Llamanzares, primary author and sponsor of the bill, told the plenary on Wednesday. “We are only making our country more competitive in the world stage.”

Senators Ana Theresia N. Hontiveros-Baraquel, Francis Pancratius N. Pangilinan and Ralph G. Recto voted against the measure.

Ms. Hontiveros-Baraquel said that she was “saddened” that many critical services such as telecommunications were opened up to 100% foreign ownership when foreign participation could have been limited to 70%.

She also noted that “tech-savvy neighbors” and “rogue non-state elements” have been targeting government and military installations and other very critical infrastructure in the region. The Philippines does not have proper cyber defense operations.

“I fear that we have just brought our guards down.”

Ms. Poe, who chairs the Senate Public Services Committee, said that national security concerns were taken into consideration by placing several layers of safeguards. “The country is now open for business, but it must be according to our terms and our specific needs.”

During the period of amendments, Mr. Recto proposed to include telecommunications, domestic shipping and airlines as part of the public utility industry but lost the nominal voting.

Senator Emmanuel Joel J. Villanueva said that he had voted in favor of 100% equity for the telecommunication industry because he was for liberalizing the economy while ensuring there are safety nets.

As for the airlines, Ms. Poe noted the need to provide assistance to the pandemic-battered industry. She said the country also needs more shipping companies to provide better services to Filipinos.

The bill’s final version also amended the definition of foreign state-owned enterprises, which now refers to “an entity in which a foreign state directly or indirectly owns more than 50% of the capital taking into account both the voting rights and beneficial ownership.”

Also included was a provision that states the National Economic and Development Authority (NEDA) and the Philippine Competition Commission are to “provide periodic advice to regulators as to which subcontracts will also need to be covered by the constitutional and other legal restrictions and which ones may be delivered even by foreign-owned subcontractors without putting operational resiliency at risk.”

Mr. Recto also recommended the removal of a paragraph that states that “reciprocity may be satisfied by any form of arrangement of exchange that is beneficial to Filipinos including according to rights of similar value in other economic sectors” as determined by NEDA, to ensure a “one is to one” reciprocity.

Meanwhile, foreign chambers said the approval of the PSA bill “will create jobs, improve technology, modernize and lower the prices of services to the benefit of Filipino consumers.”

“Liberalization of the economy is one of the most important measures needed to attain similar levels of foreign investment received by ASEAN neighbors and ensure the Philippine economy’s continued recovery from the pandemic,” seven foreign groups said in a joint statement on Wednesday.

They noted Philippine infrastructure consistently ranks 6th behind Indonesia, Malaysia, Singapore, Thailand, and Vietnam in international indices.

“The PSA amendments will match policies that Singapore, Thailand, and Vietnam already allow and that Indonesia last year opened to foreign investment… And it will allow the Philippines to better qualify to be a member of advanced plurilateral trade and investment agreements such as the Comprehensive and Progressive Transpacific Partnership,” it said.

The joint statement is backed by the American Chamber of Commerce of the Philippines, Australian-New Zealand Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce & Industry of the Philippines, Korean Chamber of Commerce of the Philippines, and Philippine Association of Multinational Companies Regional Headquarters, Inc.

Cash remittances hit three-month high

REUTERS

By Luz Wendy T. Noble, Reporter

MONEY SENT HOME by overseas Filipino workers (OFWs) increased anew in October to mark the ninth straight month of annual growth in inflows, as more economies reopen and holiday season approaches.

Cash remittances coursed through banks rose by 2.4% to $2.812 billion year on year in October from $2.747 billion, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday.

Inflows also jumped by 2.74% from $2.737 billion in September. The October remittances were the highest in three months or since the $2.853 billion in July.

Remittances in the 10-month period reached $25.929 billion, up by 5.3% from the $24.633 billion in the same period of 2020.

The higher cash remittances reflected the increase in money sent by OFWs to their families in the Philippines as Christmas approaches, Asian Institute of Management economist John Paolo R. Rivera said.

“Remittances usually increase in the latter part of the year because of the holiday rush. This is driven by the altruism motive of OFWs in providing for the consumption of their families during the holidays,” Mr. Rivera said in a Viber message.

It also helped that more economies have relaxed their restrictions, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. In October, most countries reopened as vaccination rates improved and coronavirus disease 2019 cases declined.

“Further recovery of many economies worldwide towards greater normalcy as they move closer to herd immunity fundamentally led to more OFW employment created, thereby also supporting the recent improvement in remittances,” Mr. Ricafort said in a Viber message.

BSP data showed that the biggest remittance sources were the United States, Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar, and South Korea, which accounted for 78.9% of total inflows from January to October.

Meanwhile, personal remittances that include inflows in kind inched up by 2.4% year on year to $3.117 billion in October.

For the first 10 months of 2021, personal remittances rose by 5.3% to $28.816 billion from $27.346 billion in the same period of 2020.

Last week, the central bank kept its projections for remittance growth to 4% this year.

With the emergence of the Omicron variant, risks to remittance growth remain despite its improvement in the previous months, Mr. Rivera said.

“Disruptions in mobility will affect deployment and employment, disrupting also remittance inflows and the consumption of remittance-dependent households thereby affecting the Philippine macroeconomy,” Mr. Rivera said.

The Department of Health on Wednesday confirmed that there were already two imported infections with the Omicron variant. Both patients are isolated in a quarantine facility, the agency said in a statement.

Several countries have implemented stricter border controls and travel bans after Omicron was first detected in South Africa last month. The World Health Organization has said that Omicron is a variant of concern for its higher transmissibility.

Overseas Filipinos’ Cash Remittances (Oct. 2021)

Congress ratifies bicameral report on 2022 national budget

PHILIPPINE STAR/ MICHAEL VARCAS
The 2022 national budget includes an allocation for additional coronavirus vaccines and booster shots — PHILIPPINE STAR/ MICHAEL VARCAS

CONGRESS on Wednesday ratified the Bicameral Conference Committee report for next year’s P5.024-trillion national budget.

“We are still focused on our economic recovery, so it’s not just purely health as we cannot tell how fast or slow our recovery is in the coming year so we have to be prepared either way… What people are looking right now is for work and livelihood,” Senator Juan Edgardo M. Angara, chair of the Senate Finance Committee, told reporters.

Mr. Angara expressed hope that President Rodrigo R. Duterte will sign the General Appropriations Bill (GAB) before Christmas, although he noted this would depend on the printing of the measure.

“The printing office said that they are (open) until 22. If they reopen, it might be signed after Christmas,” he added.   

Mr. Duterte should sign the measure before Dec. 31 to ensure the government does not operate on a reenacted budget.

A copy of the approved Bicameral Conference Committee report showed the Department of Public Works and Highways’ (DPWH) budget increased by P87.56 billion, bringing the total to P785.73 billion.

The Department of Education’s budget went up by P2.55 billion to P592.695 billion, state universities and colleges got an additional P32.47 billion to bring its budget to P104.18 billion.

“We increased funds (in education) because there was no budget in the President’s (version) for face-to-face (classes) since they didn’t anticipate it,” Mr. Angara said in Filipino.

The bicameral committee also raised the Agriculture department’s budget by P3 billion to P68.57 billion.

The Department of Transportation saw its budget slashed by P42 billion, ending up with only P75.24 billion.

The Department of Health’s (DoH) budget went up by P1.22 billion to P183.89 billion.

Mr. Angara said around P45-50 billion in both programmed and unprogrammed funds were allocated for coronavirus disease 2019 (COVID-19) vaccines and booster shots.

The lawmaker also said that around P20 billion was realigned in the DoH’s budget to provide healthcare workers with allowances and benefits such as hazard pay and special risk allowance.

Also, Mr. Angara said the committee also agreed to allocate P17 billion for the controversial National Task Force to End Local Communist Armed Conflict (NTF-ELCAC), adding that 95% of it will be allotted for its Barangay Development Program.

The barangay development program would provide government funding to villages that would be deemed cleared of alleged communist influence by the police, military, and local government units for projects such as farm-to-market roads and social assistance.

“That’s the menu for projects that local government units choose from, so almost all senators are united there. They did not want to put the money in maintenance, training, and the like. They want the people to see the results of the projects,” Mr. Angara said.

However, Bayan Muna Rep. Carlos Isagani T. Zarate said that the bicam report “needs a lot of improvements” to make it responsive against the pandemic.

“The health budget is still far compared to (the budget of) DPWH with P785.73 billion. This is truly tragic since more funds are needed especially for the benefits of frontliners as well as booster shots and syringes. Again, these can be sourced from the NTF-ELCAC funds,” he said in a statement.

Mr. Zarate added that the funding for the Health department is still smaller compared with the budget of the Armed Forces of the Philippines and the Philippine National Police in the reconciled version, which were at P213.78 billion and P190.69 billion respectively. — R.L.C.Ku

RCEP tariff concessions seen to result in lower PHL exports

REUTERS

By Arjay L. Balinbin, Senior Reporter

PHILIPPINE EXPORTS are expected to dip as the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade deal, enters into force on Jan. 1.

A study done by United Nations Conference on Trade and Development (UNCTAD) economist Alessandro Nicita found that Philippine exports could fall by $100 million, or equivalent to about -0.1% when measured as percentage of exports to RCEP members in 2019.

“The reason for this is the negative trade diversion effects, as some exports of these economies are expected to be diverted to the advantage of other RCEP members because [of] differences in the magnitude of tariff concessions,” it said.

After eight years of talks, the RCEP trade deal was signed on Nov. 15 last year. It includes China, Australia, New Zealand, Japan, South Korea and all 10 countries in the Association of Southeast Asian Nations (ASEAN), which account for around a third of the global population and economy.

India had opted out of the agreement, citing the risk posed by imports to its domestic industries. Based on the UNCTAD’s estimates, India’s export losses are expected to reach $900 million, and 2.1% of its exports to RCEP will be diverted to favor RCEP members.

“The export losses of countries such as Bangladesh, Pakistan, Sri Lanka and India are more significant when measured in percentage terms,” UNCTAD said.

Tariff concessions are a central principle of the agreement, which will eliminate 90% of tariffs within the trading bloc.

Aside from the Philippines, the UNCTAD study found that the RCEP tariff concessions would result in lower exports for Cambodia, Indonesia, and Vietnam.

“Some of the imports of China from Vietnam will be replaced by imports from Japan because of the stronger tariff liberalization between China and Japan,” UNCTAD said.

“Importantly, the overall negative effects for some of the RCEP members do not imply that they would have been better off by excluding themselves from the RCEP agreement, as trade diversion effects would have accrued notwithstanding,” it added.

UNCTAD pointed out that even without considering the other benefits of the trade pact beyond tariff concessions, the trade creation effects associated with RCEP membership “softens” the negative trade diversion effects.

“Overall, RCEP tariff concessions are expected to increase trade within RCEP by nearly $42 billion, equivalent to almost 2%,” it said. “Most of the effects would be driven by trade diversion (about $25 billion) away from non-member countries. Trade creation due to lower tariffs would contribute about $17 billion.”

For the Philippines, UNCTAD estimated total trade diversion at $200 million, although total trade creation is $200 million.

Japan is seen to benefit the most from RCEP tariff concessions. This is mostly because of trade diversion effects.

Japan’s exports are expected to go up by about $20 billion, an increase equivalent to about 5.5% relative to its exports to RCEP countries in 2019, UNCTAD noted.

“In 2019, Intra-RCEP trade represented about 50% of the total trade of RCEP members, reaching nearly $2.3 trillion, or 13% of global trade in goods,” it said.

The Philippines’ Trade department has been promoting the deal as a market access advantage.

RCEP Lead Negotiator and Trade Assistant Secretary Allan B. Gepty said during a Senate hearing on the matter in October that the key benefits of the trade deal for the Philippines are cheaper costs for sourcing key inputs of the manufacturing sector, convenience for businesses in trading with key free trade agreement partners, competitiveness for Philippine industries, among others.

PNOC-EC withholds consent to Malampaya deal

PNOC Exploration Corp. (PNOC-EC) said on Wednesday that it had withheld its consent to the sale of Shell Philippines Exploration B.V.’s (SPEx) 45% stake in the offshore Malampaya gas-to-power project to a subsidiary of Udenna Corp.

“As of Dec. 13 2021, PNOC-EC has officially communicated to SPEx that PNOC-EC is withholding its consent to the transaction,” PNOC-EC President and Chief Executive Officer Rozzano D. Briguez disclosed during a Senate hearing, reading the letter sent by the company to SPEx.

PNOC-EC is a unit of state-led energy company Philippine National Oil Co. (PNOC). It holds a 10% stake in the Malampaya project, which is covered by Service Contract (SC) 38.

Mr. Briguez said that after telling SPEx on Monday of the decision, it is now up to SPEx — the operator of SC 38 — to act on the withheld consent.

SC 38 is the agreement between the Malampaya consortium partners — SPEx, Chevron Malampaya LLC, and PNOC-EC — and the government covering the resource block that includes the Malampaya gas field.

In May this year, Shell Petroleum N.V. announced that it had signed an agreement with Udenna unit Malampaya Energy XP Pte. Ltd. for the sale of its 100% shareholding in SPEx.

Shell Petroleum said the base consideration for the sale is $380 million, with additional payments of up to $80 million between 2022 and 2024 “contingent on asset performance and commodity prices.”

The deal came after Udenna unit UC Malampaya Philippines Pte. Ltd. signed on Oct. 25, 2019 a sale and purchase agreement to acquire 100% of the shares of Chevron Malampaya LLC.

Chevron Malampaya is a subsidiary of Chevron Philippines, Ltd., which held a 45% non-operating interest in the Malampaya gas field.

The Chevron deal was approved by Department of Energy (DoE) Secretary Alfonso G. Cusi on March 26, 2021.

On June 8, SPEx requested for the DoE’s approval of the transfer of shares between Shell Petroleum and Malampaya Energy XP, according to information disclosed by the department in a Senate hearing in July this year.

During the hearing on Wednesday, Senate Committee on Energy Chairman Sherwin T. Gatchalian asked Mr. Briguez whether the withheld consent meant that SPEx could no longer sell its interest.

Mr. Briguez said, “we can’t enforce that for now, we don’t know how the operator will move forward, but I think it’s enough that we told them that we are withholding our consent.”

He also declined to explain how PNOC-EC arrived at the decision, but said that the company also did not include the reason in the letter sent to SPEx.

“Out of respect and deference to the other parties, we beg the committee’s understanding not to disclose the reasons behind our decision as of the moment because our other partners and our stockholders have to be informed first,” the retired general said.

Meanwhile, SPEx expressed its disappointment on the state-run exploration corporation’s decision during the six-hour hearing.

“We are very disappointed at the outcome of the decision of PNOC-EC. However, we will continue to engage with them to find out if there is anything we can do to address the concerns that might have led them to this decision,” said Kiril Caral, SPEx managing counsel.

Mr. Caral said the next step is for SPEx and PNOC-EC to meet and discuss the reasons behind the decision.

“Without the consent from PNOC-EC, we will not be able to proceed with the transaction at the moment,” he said.

PNOC-EC has the “right of to match” the offer to acquire the SPEx shares based on the joint operating agreement it signed with Chevron Malampaya and SPEx.

Under the right to match, the selling party must first offer its interest to the parties holding such right and it is only upon the refusal that the seller may offer it to other parties outside the consortium.

Earlier in the Senate hearing, Mr. Cusi admitted that he approved the decision of PNOC-EC not to match the offer of UC Malampaya to buy the 45% share of Chevron Malampaya. — Marielle C. Lucenio

IT-BPM sector seen to continue driving office demand

LEECHIU Property Consultants (LPC) said it expects the information technology and business process management (IT-BPM) sector to continue to drive demand over the next years, anticipating the market to hit pre-pandemic levels seen in 2016 or 2017.

According to the latest LPC study, office take-up surged in the last quarter to 74% to 160,000 square meters (sq.m.). The IT-BPM sector accounted for half of the fourth-quarter demand or 81,000 sq.m. 

The office market will finish with a “strong” demand of 540,000 sq.m., 48% of which is accounted for by the IT-BPM sector.

“Given that in 2021, we haven’t seen much of the POGO (Philippine offshore gaming operators) transactions, we believe that we are aiming to look at numbers closer to 2016 or 2017,” Leechiu Commercial Leasing Director Mikail C. Barranda said in a briefing on Wednesday.

The total office demand in 2016 stood at 647,000 sq.m., while 2017 booked 868,000 sq.m.

Demand from POGOs drove the office market at all-time highs in 2019 with 782,000 sq.m. in demand out of the 1.75 million sq.m. booked and in 2018, it logged a demand of 437,000 sq.m. out of the total 1.63 million.

The 540,000 sq.m. demand seen this year is still a far cry from the level seen in 2019.

“2019, specifically, is a landmark year for the Philippine office market. We’ve never seen that much transactions ever before and that was because of the POGO industry being the dominant demand driver at the time,” Mr. Barranda said.

Unrenewed leases in the fourth quarter led Metro Manila to have an 18% vacancy rate.

“POGO hotspots” suffered the pinch with the Bay Area’s vacancy rate standing at 27%, while Quezon City is at 24%. LPC said Makati and BGC still have “manageable levels” of vacancy at 12% and 13%, respectively.

Meanwhile, LPC expects the provincial office sector to see increased demand by next year. Iloilo accounted for 41% of provincial office demand, followed by Clark/Pampanga at 15%, Davao at 12%, and Cebu and Laguna, both at 9%. 

Iloilo received the second-largest demand for office spaces to host IT-BPM firms after the Bay Area.

Over the next six months, LPC said office requirements of 224,000 sq.m. “will likely conclude” and IT-BPM firms account for 132,000 sq.m. 

Asked if the demand from the new hot sector will likely match the demand seen from POGOs, which spurred the office market in 2018 and 2019, LPC Chief Executive Officer David T. Leechiu said this “depends on what the next administration does.”

“I think we have every opportunity to do so,” Mr. Leechiu said in a separate interview on Wednesday, adding that more international companies have become interested in the country’s number of growing key cities as infrastructure projects continue to improve connectivity. — Keren Concepcion G. Valmonte

Tea for Christmas

FROSTY White Chocolate Chai — PHOTOS FROM TEAINSPIRED.COM

YOU can have anything you want on Christmas Day, so why not tea?

Dilhan Fernando, Dilmah Tea CEO, made a case for serving tea-based food and drink for the holidays. On a demonstration streamed through YouTube and Facebook, Mr. Fernando said, “Let us celebrate, but we’ve also got to wash it down with something good, that tastes good, brings out the taste in our food, but also helps us to wash down all the bad stuff —  the fat and the sweets and so on.”

He is of course, talking about the family crop, tea, grown in the company’s plantations in Sri Lanka. “Tea goes magically with some of the ingredients of Christmas. Try cardamom, cinnamon — beautiful spices, all made here in Sri Lanka.”

For this demonstration, titled A Tea-Inspired Christmas, Mr. Fernando got on board chef and restaurateur Peter Kuruvita, World Champion Flair Bartender Tomek Malek, and mixologists Robert Schinkel and Albert Pizzaro, who appeared on the stream via Zoom.

Mr. Kuruvita brought out a familiar surprise called A Pink Christmas, a riff on Filipino halo-halo. “The pride of the people in their food is amazing,” he said, recalling a trip to the Philippines. He describes the dessert as having fruit, shaved ice, “crispy crunchy bits,” and milk. For his version, he makes it with strawberries, mango, and jackfruit, shaved ice, and ice cream and jelly infused with Dilmah’s Elderflower and Apple Infusion. He instructs that in case one can’t make ice cream from scratch, one may mix in the chilled tea or infused sugar syrup into commercial vanilla ice cream.

Next came Mr. Schinkel’s Frosty White Chocolate Chai. It was made with Dilmah’s Breakfast Tea, milk, white chocolate, vanilla, cardamom, cinnamon, and lemon zest. “It’s a very easy drink — but looks fancy,” he said. The tea is brewed for five minutes, infused with cardamom, whisked with white chocolate and milk infused with the cinnamon, and poured into a glass decorated with sugar (hence the “frost”).

Mr. Malek served something a little harder to put together: a cocktail called Santa’s Delivery, made with gin infused with Dilmah Mandarin Marzipan Pekoe. “Our house was always full of the beautiful mandarin smell,” said Mr. Malek, reminiscing about Christmas. The tea infusion is made by immersing a teabag in 200 ml of gin at room temperature for 30 minutes. He warns that the tea shouldn’t be left in too long or at temperatures that are too hot, otherwise, the gin would get too much of an astringent flavor.

Finally, Mr. Pizzaro demonstrated how to make the Love the Giver cocktail, made of rum and Dilmah’s Moroccan Mint green tea. During the demonstration, he placed several ice cubes both in the glass and into the shaker. “This cocktail needs to be very, very cold to be enjoyed.” The cocktail was also made of triple sec, tamarind puree, and apple juice; then garnished with a candy cane.

Here are two of the recipes from Dilmah’s tea webinar, but you can find more at Dilmah’s website for recipes, teainspired.com/dilmah-recipes. One can find resources on the website for tea pairings, or even savory dishes with some elements made out of tea. — JLG

 


A Pink Christmas

Ingredients

1 cup assorted summer berries

1 cup of apple cubes cut into 2.5 cm cubes and cooked with three Dilmah Elderflower & Apple Infusion tea bags

2 ripe mangoes (peeled and cut into 1 cm pieces)

1 cup jack fruit strips

1 large ripe banana, sliced

1 cup chopped elderflower and apple jelly*

2 cups shaved ice

250 ml (1 cup) evaporated milk

4 scoops of Elderflower and hot apple ice cream

Crunchy nut cornflakes or peanut brittle, and assorted edible flowers to serve

*For the jelly:

500 ml coconut water

80 g sugar

5 g vegan jelly powder

6 g agar-agar

8 Dilmah Elderflower and Apple Infusion tea bags

Directions

Bring coconut water to boil with sugar and tea bags.

Turn off and allow the tea to brew.

Remove the tea bags and return the liquid to the boil.

Add the jelly and agar-agar and bring to the boil, simmer for 3 minutes and then pour out onto a 20 x 20 cm tray and allow to set, cut into cubes.

Divide the fruit and jelly among 4 tall glasses. Top each glass with ½ cup shaved ice, 60 ml (¼ cup) evaporated milk and a scoop of ice cream.

Sprinkle nuts or Rice Krispies on top and serve immediately.

Frosty White Chocolate Chai

Ingredients

300 ml Dilmah Breakfast Tea (5 min. brew)

100 ml Full cream milk

40 g white chocolate

Spice combination: Pinch of vanilla (or a few drops of vanilla extract), pinch of dried ground cardamom and cinnamon

Lemon zest

Directions

Add the cardamom to the tea in the teapot.

Brew the tea for at least 5 minutes at 95°C.

Warm up the milk in a pan or microwave.

Chop up the white chocolate and dissolve it in the hot milk, add the vanilla.

Add the milk to the tea and air the mixture in chai mugs or whisk it in a saucepan.

Pour into the glass.

Garnish with a zest of lemon and a pinch of cinnamon.

Cover the bottom of the outside of the glass with food glue/honey/syrup to make it sticky.

Sprinkle sugar over the glass to give it a frosty look.

Magnolia Hotshots make winning debut in beating Terrafirma Dyip, 114-87

CALVIN ABUEVA — PBA MEDIA BUREAU

By Olmin Leyba

THE last time it played in front of fans back in March 2020 at the Smart Araneta Coliseum, the Magnolia came out on the losing end.

On Wednesday, with the crowd finally back for Governors’ Cup action at the Big Dome, the Hotshots made sure they wound up victorious this time around.

The Hotshots waylaid Terrafirma, 114-87, to make a winning debut in the import-flavored tournament and a triumphant return to same venue where 21 months ago, they yielded a 94-78 setback to San Miguel Beer in the last non-closed-door game held pre-pandemic.

The 27-point romp was also a confidence-builder coming off Magnolia’s 1-4 loss to the TnT Tropang Giga in the battle for the coveted Philippine Cup last October.

“We want to start strong and send a signal right away,” said coach Chito Victolero, remembering how their flat start in 2020 led to quarterfinal exit and strong opening in the last All-Filipino led to a finals appearance.

Mike Harris turned in a dominant 30 points and 15 rebounds as four Magnolia locals produced double-digit outputs. Calvin Abueva, fresh from his Best Player of the Conference accolade last conference, had a 17-11 while Paul Lee shot 16 and Ian Sangalang and Aris Dionisio chipped in 10 apiece.

“It’s a total team effort. Even si Mike, iyon ang gusto niya: Good ball movement at ma-involve ang locals sa offense,” said Mr. Victolero.

The Magnolia mentor shared how playing in a venue with a live audience again fired them up.

“It adds to the motivation, fire, energy, aggressiveness,” Mr. Victolero added.

Harris’ counterpart, Antonio Hester, finished with 21 markers and eight boards before hurting his neck early in the fourth.