Pablo Carreño Busta isn’t one of the favorites in the Australian Open. He isn’t even the best Spaniard on the men’s draw; that distinction belongs to living legend Rafael Nadal. Yet, he wound up hogging headlines Down Under because of a single moment in his second-round match yesterday. At one set all and tied six games into the third set, he found himself needing to execute a remarkable return in order to gain a break of serve. That he did speaks volumes about his unique combination of talent, speed, and anticipation, not to mention make the most of the opportunity before him.
Indeed, Carreño Busta could have simply given up on the point. Opponent Tallon Griekspoor hit an overhead smash, albeit with the racket frame, resulting in the ball barely going over the net, and slowly. Moreover, the errant shot produced such English that the ball reversed direction and traveled back over the net anew. As he himself pointed out in the aftermath, “I tried to run because I could see that it might go in and that it would be difficult for me. I actually had a lot of time because the ball went very high and bounced close to the net. As I was running, I could see that it would bounce back, because when you hit a smash like that with the frame of the racket, it normally does.”
As thing turned out, Carreño Busta produced a highlight-reel return that required him make sure he did not hit the net as he ran past it to flick the ball in play. In hindsight, it proved to be the turning point in the five-set triumph. He noted that he was fortunate to have been in the right place at the right time; “otherwise, I would have had to jump over the net,” he said, “and I’m not [Gael] Monfils.”
Whether Carreño Busta can improve on his third-round showings in the last two years remains to be seen. Up next is Sebastian Korda, whom he will meet for the first time in his career. And while he’s favored against the unseeded competition, there is, as his immediate past experience highlighted, luck to be considered. In any case, he will always have The Shot.
Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.
THE PESO strengthened versus the greenback on Thursday as the central bank said the local unit is seen to remain stable despite its recent depreciation and as coronavirus infections ease slightly.
The local unit closed at P51.34 per dollar on Thursday, appreciating by 16 centavos from its P51.50 finish on Wednesday, data from the Bankers Association of the Philippines showed.
The peso opened Thursday’s session stronger at P51.45 versus the dollar. Its weakest showing was at P51.485, while its intraday best was at its close of P51.34 against the greenback.
Dollars exchanged increased to $858.95 billion on Thursday from $754.2 million on Wednesday.
The peso strengthened versus the greenback on Thursday after the Bangko Sentral ng Pilipinas (BSP) said the local unit is expected to remain stable, a trader said.
The peso was also boosted by profit-taking after consecutive days of depreciation, the trader added.
BSP Governor Benjamin E. Diokno said the peso will continue to be supported by steady inflows from overseas remittances, receipts from business process outsourcing and foreign direct investments.
“The peso will remain to be market driven. We expect it to continue to reflect the economy’s macroeconomic fundamentals, meaning manageable inflation environment, strong and resilient banking system, a prudent fiscal position and an ample level of international reserve buffer,” Mr. Diokno said in an online briefing on Thursday.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso appreciated as local infections were relatively lower in the past days.
Active coronavirus disease 2019 infections rose by 31,173 to 275,364 on Thursday, based on data from the Department of Health. In the previous days, infections rose by around 20,000, much lower than the record 39,004 seen on Jan. 15.
For Friday, Mr. Ricafort gave a forecast range of P51.23 to P51.48 per dollar, while the trader expects the local unit to move within P51.15 to P51.40. — L.W.T. Noble
PHILIPPINE STOCKS ended lower on Thursday to track Wall Street amid inflation concerns due to rising oil prices.
The bellwether Philippine Stock Exchange index (PSEi) declined by 22.26 points or 0.30% to end at 7,239.28 on Thursday, while the broader all shares index inched up 0.59 point or 0.01% to close at 3,855.84.
“The local market extended its decline as it continued to take cues from Wall Street’s negative performance,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
Timson Securities, Inc. Trader Darren Blaine T. Pangan said the index moved sideways on renewed inflation fears amid the rise in global oil prices.
Wall Street’s main indexes ended sharply lower on Wednesday, with the tech-heavy Nasdaq confirming it was in a correction, after a diverse set of corporate earnings and as investors continued to worry about higher US Treasury yields and the Federal Reserve tightening monetary policy, Reuters reported.
The Nasdaq ended down 10.7% from its Nov. 19 closing record high, as stocks sold off into the market close. A correction is confirmed when an index closes 10% or more below its record closing level.
Stocks have gotten off to a rocky start in 2022, as a fast rise in Treasury yields amid concerns the Fed will become aggressive in controlling inflation has particularly hit tech and growth shares. The benchmark S&P 500 is down about 5% so far this year.
The Dow Jones Industrial Average fell 339.82 points or 0.96% to 35,028.65; the S&P 500 lost 44.35 points or 0.97% to 4,532.76; and the Nasdaq Composite dropped 166.64 points or 1.15% to 14,340.26.
Oil prices climbed to their highest since 2014. Brent crude futures rose $1.03 or 1.2% to settle at $87.51 a barrel, while US West Texas Intermediate crude futures ended $1.61 or 1.9% higher at $85.43 a barrel.
Back home, the sectoral indices were mixed on Thursday. Property declined by 54.71 points or 1.72% to 3,124.06; services lost 13.60 points or 0.68% to 1,982; and holding firms slid 8.64 points or 0.12% to end at 7,089.85.
Meanwhile, mining and oil jumped 333.63 points or 3.24% to 10,605.14; financials advanced 16.05 points or 0.97% to 1,665.18; and industrials gained 31.43 points or 0.30% to close at 10,434.22.
Philstocks Financial’s Mr. Tantiangco said market activity improved after days of tepid trading.
Value turnover was at P6.15 billion on Thursday with 2.57 billion issues traded, from the P5.3 billion with 859.13 million shares that changed hands the previous day.
Advancing issues outnumbered decliners, 109 against 81, with 44 names closed unchanged.
Net foreign selling increased to P538.95 million from the P143.67 million logged on Wednesday.
Timson Securities’ Mr. Pangan put the PSEi’s support at 6,940 and resistance at 7,450. — MCL with Reuters
WASHINGTON — World Bank President David Malpass on Wednesday criticized Microsoft’s $69 billion takeover of gaming developer Activision Blizzard as a questionable allocation of capital at a time when poor countries are struggling to restructure debts and fight coronavirus disease 2019 (COVID-19) and poverty.
Mr. Malpass said during a Peterson Institute for International Economics virtual event that more capital needed to flow into poor countries, but these flows have been disrupted by unusually easy monetary policies in developed countries.
He said he was struck by the scale of Microsoft’s acquisition deal for Call of Duty maker Activision Blizzard. This dwarfed the $23.5 billion in cash contributions agreed in December by wealthier donor countries to the International Development Association, the World Bank’s fund for the poorest countries — about $8 billion annually over three years, he said.
“You have to wonder: ‘Wait a minute, is this the best allocation of capital?’” Mr. Malpass said of the Microsoft deal. “This goes to the bond market. You know, a huge amount of [capital] flows are going to the bond market.”
A very small portion of the developing world has access to such bond financing, while too much capital remains bottled up in advanced countries, especially in central bank reserve assets used to back long-term bond purchases, he added.
A spokesperson for Microsoft did not immediately respond to a Reuters request for comment on Malpass’ remarks.
His comments echoed a similar call last week for central banks to cut long-term bond holdings to free up lending capital.
“That gets you into a situation where a huge amount of the capital is being allocated to already capital-intensive parts of the world — the advanced economies — building more and more on top of already heavily built infrastructure and real estate, for example,” Mr. Malpass said.
Meanwhile, a return to more normal global investment returns is needed to bring more financing capacity to small businesses in the developing world,” he said.
“In order to address the refugee flow, that malnutrition that’s going on, and so on, there has to be more money and growth flowing into the developing countries,” Mr. Malpass added. — David Lawder/Reuters
Antibiotic resistance tests; the bacteria in the culture on the left are sensitive to the antibiotics contained in the white paper discs. The bacteria on the right are resistant to most of the antibiotics. Image via Dr. Graham Beards/CC BY-SA 4.0/Wikimedia Commons
More than 1.2 million people died in 2019 from infections caused by bacteria resistant to multiple antibiotics, higher than HIV/AIDS or malaria, according to a new report published on Thursday.
Global health officials have repeatedly warned about the rise of drug-resistant bacteria and other microbes due to the misuse and overuse of antibiotics, which encourages microorganisms to evolve into “superbugs.”
The new Global Research on Antimicrobial Resistance report, published in The Lancet, revealed that antimicrobial resistance (AMR) was directly responsible for an estimated 1.27 million deaths and associated with about 4.95 million deaths. The study analyzed data from 204 countries and territories.
“These new data reveal the true scale of antimicrobial resistance worldwide… Previous estimates had predicted 10 million annual deaths from AMR by 2050, but we now know for certain that we are already far closer to that figure than we thought,” said Chris Murray, co-author of the study and a professor at the University of Washington.
Last year, the World Health Organization warned that none of the 43 antibiotics in development or recently approved medicines were enough to combat antimicrobial resistance.
Cornelius Clancy, professor of Medicine at the University of Pittsburgh, said one of the ways to tackle AMR is to look at a new treatment model.
“The traditional antibiotic model that we’ve had for past number of decades since penicillin. I think it is tapped out.”
Most of 2019’s deaths were caused by drug resistance in lower respiratory infections such as pneumonia, followed by bloodstream infections and intra-abdominal infections.
AMR’s impact is now most severe in Sub-Saharan Africa and South Asia, while around one in five deaths is in children aged under five years.
There was limited availability of data for some regions, particularly many low and middle-income countries, which may restrict the accuracy of the study’s estimates.
Mr. Clancy said the focus has been on coronavirus disease 2019 (COVID-19) for the past two years, but AMR is a “long-term kind of challenge.” — Mrinalika Roy/Reuters
WASHINGTON — A senior US policy official for China said on Wednesday that Washington aims to establish “common goals” on economic cooperation with Indo-Pacific countries in early 2022, as Washington seeks to counter Beijing’s influence in the region.
US President Joseph R. Biden, Jr., told Asian leaders in October that Washington would launch talks on creating an Indo-Pacific economic framework. But few details have emerged and the administration has avoided moves towards rejoining trade deals critics say threaten US jobs.
White House senior director for China Laura Rosenberger told a webinar that discussions with partners in recent months had helped “crystallize” the administration’s thinking on how to pursue such a framework.
“Our initial ideas on proposed areas of economic cooperation include trade facilitation, digital economy standards, supply-chain resiliency, infrastructure, decarbonization and clean energy, export controls, tax and anti-corruption,” Ms. Rosenberger told the National Bureau of Asian Research think tank event.
“And we will continue to focus on establishing common goals and end states that we would jointly announce in the coming months, early period of 2022,” she said without giving details.
Conversations on different pieces of the framework “will move at different speeds,” she said.
Ms. Rosenberger said she had nothing new to say on the administration’s view of a regional trade framework now known as CPTPP that the Trump administration quit in 2017. But she stressed the importance both of promoting a free and open region and protecting American workers who critics argue would be threatened by US participation in the pact.
US officials “all feel a sense of general urgency” to put the United States in the best position to be able to compete, she said.
US-China relations have sunk to their lowest point in decades as Mr. Biden has sought to leverage ties with allies and partners to counter what Washington sees as Beijing’s increasing economic and military coercion.
The White House has touted its so-called AUKUS pact, under which the United States and Britain have agreed to help Australia acquire nuclear submarines — as well as leader-level summits between the United States, Australia, India and Japan — as evidence that US partnerships are causing China “heartburn.”
But some Indo-Pacific countries, many of which count China as their top trading partner, have lamented what they see as lacking US economic engagement. — Michael Martina and David Brunnstrom/Reuters
LONDON — Inflation in Britain rose faster than expected to its highest in nearly 30 years in December, intensifying a squeeze on living standards and putting pressure on the Bank of England (BoE) to raise interest rates again.
The annual rate of consumer price inflation (CPI) increased to 5.4% from November’s 5.1%, the highest since March 1992, the Office for National Statistics said. Economists polled by Reuters had expected a rise to 5.2%.
Financial markets now price in a more than 90% chance that the BoE will raise its main interest rate to 0.5% on Feb. 3. Last month it became the world’s first major central bank to tighten policy since the start of the COVID-19 pandemic.
“The Bank of England was already feeling uncomfortable about its monetary policy stance. Today’s upside surprises to both the headline and core inflation readings will certainly not have helped,” said Ambrose Crofton, global market strategist at J.P. Morgan Asset Management.
Two-year British government bond yields, which are sensitive to financial markets’ interest rate expectations, came within a whisker of their highest level since 2011.
Inflation has risen sharply across most advanced economies, reflecting a global rise in energy prices and supply chain difficulties.
But the BoE appears more concerned than the US Federal Reserve or the European Central Bank that labor shortages and wage pressures will cause inflation to be slow to fall back once immediate price pressures have passed.
Speaking to lawmakers on Wednesday, Governor Andrew Bailey said financial markets expected energy prices would take longer to fall than had been the case two months ago, while BoE staff had found tentative signs inflation was pushing up pay settlements.
“Please don’t think we don’t think these are serious pressures. They are,” Mr. Bailey said, when challenged over whether the central bank had been complacent about price risks.
A surge in cases of the Omicron coronavirus variant had negligible impact on inflation, ONS statisticians said.
Instead, prices for food, hospitality, and household goods were the main factors pushing up inflation in December while fuel prices — the main driver in previous months — remained at recent highs.
“Not only does this provide additional evidence that inflation is becoming endemic rather than transitory, it also bodes ill for households facing multiple rises in the cost of living this spring,” said Kitty Ussher, chief economist at the Institute of Directors.
APRIL PEAK?
British inflation is widely expected to peak in April when regulated household energy bills look set to increase by around 50%. Last month the BoE forecast a peak of around 6%, but now some economists see 7% as more likely.
Inflation was just 0.6% in December 2020, and the BoE repeatedly had to revise up its forecast last year. A new inflation forecast is due on Feb. 3. The last one in November showed inflation staying above its 2% target until mid-2024.
Rising inflation is also turning into a political problem for Prime Minister Boris Johnson’s government, which faces calls from the opposition and charities to offset the rise in energy bills, which comes at the same time as a tax increase on wages to fund higher health and social care spending.
“I understand the pressures people are facing with the cost of living, and we will continue to listen to people’s concerns,” finance minister Rishi Sunak said after the inflation data.
Wednesday’s figures showed that CPI — which excludes more volatile food, energy, alcohol and tobacco prices — rose to a record 4.2% from November’s 3.9%.
Retail price inflation — an older measure that the ONS says is no longer accurate, but which is still widely used by government and businesses — rose to a 30-year high of 7.5% from 7.1%.
Factory price inflation showed tentative signs that cost pressures may have peaked, cooling to 9.3% from 9.4% in November. Inflation for costs paid by producers for material and energy also decreased, to 13.5% from 15.2%. — David Milliken and Andy Bruce/Reuters
Image via Facebook/Manila Public Information Office
The Philippines opened a zoo on Wednesday as a makeshift vaccination center in the hope its elephants and eagles can attract young and elderly people hesitant about getting inoculated against coronavirus disease 2019 (COVID-19).
Manila Zoo was giving vaccinations to young people age 12–17 and the elderly and allowing recipients of jabs to spend time observing its elephant enclosure, peacocks, and more.
“Aside from being safe and also getting vaccinated, the kids can also enjoy the outdoors, the scenery, and the animals that are here inside,” said Joyce Pablo, mother of one of the children being inoculated.
The Philippines has so far fully inoculated about half of its population, but many areas outside the capital region are lagging far behind, complicating efforts to suppress fresh outbreaks of COVID-19.
Daily coronavirus infections have hit records several times this month, driven by the especially contagious Omicron variant, prompting a tightening of curbs on mobility, including a public transport ban for the unvaccinated.
The Philippines has had problems with vaccine hesitancy that pre-date COVID-19, particularly among children.
For his part, President Rodrigo R. Duterte has even threatened to arrest unvaccinated people.
Ray Salinel, a doctor, said the zoo was a great idea to encourage more people to be inoculated.
“After the vaccination of those aged 12–17 years, seniors, and those with multiple illnesses, they can go around the zoo,” he said. “Even if the zoo isn’t completely open, they can enjoy the sights, the peacocks, eagles, and Mali (elephant). They can relax and forget about their problems.” — Reuters
CHINESE flags are seen near the logo of the China Evergrande Group on the Evergrande Center in Shanghai, China, Sept. 24, 2021. — REUTERS/ALY SONG
HONG KONG — China is drafting nationwide rules to make it easier for property developers to access funds from sales still held in escrow accounts in its latest move to ease a severe cash crunch in the sector, four people with knowledge of the matter said.
Regulatory curbs on borrowing have driven the sector into crisis, highlighted by China Evergrande Group which was once China’s top-selling developer but is now the world’s most indebted property firm with liabilities of $300 billion.
The new rules would help developers meet debt obligations, pay suppliers and finance operations by letting them use the funds in escrow that are currently controlled by municipal governments with no central oversight, the people said on condition of anonymity due to sensitivity of the matter.
“An abrupt clampdown on escrow accounts by local authorities after Evergrande’s crash choked liquidity for some good quality names. A correction by the central government is much needed,” said Nan Li, associate professor of finance at Shanghai Jiao Tong University.
Chinese developers are allowed to sell residential projects before completing them but are required to put those funds in escrow accounts. The cash held in escrow typically accounts for 50% to 70% of developers’ pre-sale funds, one of the people said, without giving an estimate on the amount held.
Guided by the cabinet-level Financial stability and Development Committee, the sector’s main regulator the Ministry of Housing and Urban-Rural Development and other authorities are drafting the new rules, three of the people said.
Beijing aims to roll them out as early as end of January in a push to prevent a wider crisis, the people said.
The Hang Seng Mainland Properties index rose 1.6% in afternoon trading after the Reuters report and ended nearly 6% higher on Wednesday. Chinese property developers Shimao Group Holdings, Sunac China Holdings and Country Garden Holdings led the sector’s gains, closing up 11.3%, 7.6% and 8.3%, respectively.
US dollar bonds issued by developers including Sunac and Country Garden also rose following the report.
The property sector accounts for about a quarter of China’s economy, the world’s second-largest after the United States.
The State Council Information Office and the Ministry of Housing and Urban-Rural Development did not immediately respond to requests for comment.
CASH CRUNCH
Many local governments curbed withdrawals from the escrow accounts in 2021 amid fears of contagion after news of Evergrande’s debt problems, leaving several projects across the country unfinished and worsening cash flow for developers.
While some municipalities have eased withdrawal restrictions since late last year, one of the sources said that due to lack of nationwide rules on this front, local enforcement had already gone too far in several cities.
The proposed new rules are aimed at allowing developers to use escrow funds to first complete unfinished buildings and then for other purposes, three of the sources said.
The rules would also prioritise the repayment of onshore debt of developers with better credit profiles, the fourth source said.
Nomura estimates that Chinese developers would need to meet onshore and offshore maturities of about 210 billion yuan ($33 billion) each in the first two quarters of 2022, compared with 191 billion yuan in the last quarter of 2021.
In recent weeks, Beijing has taken steps to restore stability in the property sector including making it easier for state-backed developers to buy up distressed assets of indebted private firms, a source told Reuters this month.
On Tuesday, a senior official at the People’s Bank of China (PBOC) said the central bank would maintain “continuity, consistency and stability” of property financial policies.
Property sales and financing are gradually returning to normal, and market expectations are improving, Zou Lan, head of financial markets at the PBOC said. — Julie Zhu, Clare Jim and Xie Yu/Reuters
With the sudden rise of COVID-19 cases due to the omicron variant, companies are once again forced to shift to work-from-home setup. How has workplace productivity turned out in different organizations? What are the experiences learned to balance a healthy work environment while elevating work efficiency remotely?
Join BusinessWorld Insights together with experts in a discussion themed “Evaluating Efficiency: Workplace Productivity in the New Normal” LIVE and FREE on BusinessWorld’s and The Philippine STAR’s Facebook pages.
This session of #BUSINESSWORLDINSIGHTS is supported by Bank Marketing Association of the Philippines, British Chamber of Commerce of the Philippines, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, People Management Association of the Philippines, and The Philippine STAR.
The Philippines is likely to see “substantial scarring” to economic output from the coronavirus pandemic. — PHILIPPINE STAR/ MICHAEL VARCAS
By Luz Wendy T. Noble, Reporter
THE PHILIPPINE ECONOMY is likely to be among the laggards in Southeast Asia this year as policy direction in pandemic management remains unclear, analysts said.
At Fitch Ratings’ Credit Outlook Asia Pacific 2022 forum, the debt watcher said it will continue to monitor the country’s debt metrics and the fiscal policy of the upcoming administration.
“When you think about Indonesia, Thailand, the Philippines, these are countries that have been deeply hurt by the pandemic, and still don’t see any clear light as to how they will approach 2022, in opening up their economy, drawing foreign tourists to come back, which is such a critical component of their economy,” Taimur Baig, managing director and chief economist, Group Research at DBS Bank said at the virtual forum on Wednesday.
Mr. Baig said the Philippines, along with Thailand, Indonesia and Malaysia, will face “substantial scarring” to economic output from the coronavirus disease 2019 (COVID-19) pandemic.
“These countries in the last two decades have invested so much on tourism, high-end tourism, low-end tourism, mass Chinese tourism, fancy European and US tourism,” he said.
However, the continued surge in COVID-19 infections has dampened tourists’ interest in these markets, Mr. Baig said. He noted these countries, which heavily rely on international tourism, are missing Chinese tourists as China continues to keep its borders shut in line with its zero-COVID policy.
The Philippine economy contracted by a record 9.6% in 2020. For the first nine months of 2021, gross domestic product (GDP) grew by 4.9%. Economic managers raised their GDP growth forecast to 5-5.5% for 2021, after mobility curbs were eased and business capacity increased as COVID-19 cases fell.
Nomura Holdings, Inc. Chief ASEAN (Association of Southeast Asian Nations) Economist Euben Paracuelles said the Philippines and Indonesia would be “laggards” in the region as they continue to struggle to contain COVID-19 and face the threat of emerging variants.
“Vaccination is important. Healthcare infrastructure is important. And for Indonesia and Philippines, I think they’ve struggled a lot [in these areas],” Mr. Paracuelles said.
The Philippines has fully vaccinated more than 56 million Filipinos, based on data from the Department of Health. The government now aims to fully vaccinate 77 million people against COVID-19 by the end of March.
The Health department reported 22,958 new COVID-19 infections on Wednesday, bringing active cases to 270,728. It also confirmed the first local deaths caused by the highly infectious Omicron variant — two unvaccinated people with existing medical conditions.
EYE ON DEBT The country’s debt levels and fiscal space will closely be assessed as the pandemic drags on, said Sagarika Chandra, director, Asia-Pacific Sovereign Ratings.
“There are certain concerns that we have about the recovery. And you know, whether the authorities will be able to stick to the fiscal policies, which we saw prior to the pandemic — it is something which is quite important for us,” Ms. Chandra said.
Over the course of the crisis, Ms. Chandra said the country’s debt ratio largely increased, although it is still below the median for its BBB-rated peers.
The country’s debt-to-GDP ratio stood at 63.1% as of end-September, based on data from the Bureau of the Treasury. This is the highest in 16 years or since the 65.7% seen in 2005.
In July 2021, the debt watcher revised its outlook for the Philippine investment grade “BBB” sovereign rating to “negative” from “stable,” which means there could be a downgrade in the next 12 to 18 months.
“The macro-policy framework, and how prudent the government is with respect to fiscal management, that’s an important driver of rating and the outlook for the Philippines, especially given the increase in debt levels,” she said.
Ms. Chandra said they will also await the outcome of the May presidential elections for clarity on the economic recovery outlook.
The ratings agency expects the GDP to grow by 6.8% this year, which is below the government’s 7-9% target.
“We’ll have to assess what the policy outlook is post-elections and what it means for overall fiscal as well as the recovery prospects for the Philippines,” she said.
BANK PROFITS Separately, credit raters expect the local banking sector to recover this year as profits improve despite the pandemic and the likely increase in interest rates.
The gradual improvement of the economy this year will in turn improve prospects for the banking industry, said Tamma Febrian, associate director, and Willie Tanoto, director of the Asia-Pacific banking team of Fitch Ratings.
“The more supportive operating environment should buoy business and consumer demand, and drive credit costs lower for most banks, aiding their overall profitability,” the analysts said in an e-mail.
“Nonperforming loans (NPL) formation appears to have also slowed down in the last few months of 2021, owing to the opening up of the economy, and we expect it to stabilize in the near term,” they added.
The bad loan ratio in November stood at 4.35%, the lowest in eight months or since the 4.21% in March 2021, as the banks’ loan portfolio expanded.
It helped that the industry has ample capitalization which “provided cushion” for credit losses, S&P Global Ratings associate director Nikita Anand said.
“Banks’ disposal of NPLs to asset management companies could also bring down the level of stressed loans visible in the system,” Ms. Anand said in an e-mail.
On the other hand, Fitch’s Mr. Febrian and Mr. Tanoto said there is still a risk to asset quality due to pandemic uncertainties and the impending monetary policy tightening.
“If rising global interest rates were to also pull up domestic lending rates significantly later in the year, that could also dampen demand for credit and add to borrowers’ interest burden, which could pressure asset quality,” Mr. Febrian and Mr. Tanoto said.
The US Federal Reserve and many other central banks have started to raise interest rates. The BSP said it will still prioritize support for economic recovery, with Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno saying a rate hike in the first half of 2022 is unlikely.
Central bank data showed the banking system’s total assets as of end-November rose by 7% year on year to P20.4 trillion.
THE FLUID NATURE of online work has led to gaps in taxation and social protection, issues that have become more urgent with the increased adoption of remote work during the pandemic, a report from the Philippine Institute for Development Studies (PIDS) found.
In the report “Exploring Policies and Initiatives for Online Workers in the Philippines,” PIDS Senior Research Fellow Ramonette B. Serafica and Research Analyst Queen Cel A. Oren found that the overlapping classification of online workers has affected their tax payments to the Bureau of Internal Revenue (BIR).
“Even if Filipino online workers want to register with the BIR and pay their fair share, anecdotal evidence reveal confusion with respect to their proper category. The registration requirements and procedures could also be problematic,” the authors said.
Online workers are often freelancers hired on a per project basis, which means income is not always steady.
Some work depends on the availability of clients and contracts. They can fall under varying categories — entrepreneurs, part-time workers, freelancers, or independent contractors — at different times.
For instance, freelancers are not among the list of individuals who should file an income tax return (ITR) under the National Internal Revenue Code. But a freelancer can be classified as self-employed professional, mixed-income individual or sole proprietor, depending on their profession.
“Even if Filipino online workers want to register with the BIR and pay their fair share, anecdotal evidence reveal confusion with respect to their proper category,” PIDS researchers said.
Some online workers are not able to register at the BIR because they cannot submit a residence certificate without the required storefronts.
“Platform workers have a different perception of their employment status. Depending on the nature of their work, they may be recognized by the BIR as individual and non-individual taxpayers,” the authors said.
At the same time, freelance workers are able to tap social insurance programs, but they often fall into overlapping employment status categories.
“Online workers might find it challenging to make regular contributions or may not be motivated to voluntarily do so,” PIDS said. “Thus, the current social protection schemes will have to be reviewed and updated to be responsive to the needs of new types of workers and work arrangements.”
Social Security System and Pag-IBIG benefits have contribution-based eligibility rules, which means online workers that have not paid contributions over a certain number of months will not be able to avail of benefits.
The government should help simplify social protection registration processes and using online payment systems, the PIDS researchers said.
“Like the Universal Health Care Act, the government can consider providing universal social protection,” the authors said.
“Whether it is to design a social protection scheme suitable for online workers or a mechanism to increase tax compliance, field experiments could be conducted to determine the appropriate interventions that will encourage participation and reduce the informality of online work.”
The PIDS researchers expect online work to surge, with a third of the workforce partly or fully working remotely after five years.
“With the COVID-19 pandemic, the market for online work is believed to expand further with the increase in outsourced tasks and availability of workers due to job losses in other sectors.”
Several bills related to online workers are pending in Congress, including the Philippine Digital Workforce Competitiveness Act that would help improve digital training, and the Freelancers Protection Act that would give them the right to social welfare benefits and simplified tax registration. The National Digital Careers Act would roll out subsidies, scholarships, and incentives for digital work. — Jenina P. Ibañez
