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Mining fiscal reform bill stalls over ore export ban

NICKELASIA.COM

By Kenneth Christiane L. Basilio, Reporter

A BILL establishing a new fiscal regime for large-scale miners has hit an impasse at the bicameral conference committee, with legislators failing to resolve a deadlock over a proposed ban on ore exports, a senior member of the House of Representatives said.

A “workable compromise” on the mineral ore export ban is necessary for the measure to move forward, Albay Rep. Jose Ma. Clemente S. Salceda told BusinessWorld.

“It’s an impasse,” he said via Viber, adding that such a compromise has not yet emerged.

The ore export ban, which Mr. Salceda said was supported by some Senators, is designed to force investment in domestic mineral processing facilities. The absence of such processing plants makes the mining industry an ore exporter, losing out on the opportunity to add value to the Philippines’ commodity mineral ores.

The Philippines is estimated to hold about $1 trillion worth of copper, gold, nickel, zinc and silver ore reserves, much of which is shipped in ore form to Japan or China in the absence of processing infrastructure and high power costs.

Mr. Salceda said the proposal to force investment in domestic smelting facilities “could backfire” because of the “risks of pushing exports underground, losing up to $4 billion (P223 billion) in legal trade, and scaring off investors already starting to process locally,” he said.

“We are not ready to refine everything here,” he added, noting that stubbornly high power costs are discouraging investment in smelting facilities. Electricity rates are among the highest in Southeast Asia, according to a 2022 Ateneo de Manila University report.

“Industrial power costs are over $0.10 per kilowatt-hour,” Mr. Salceda said. “Smelters need $0.05 to $0.07 to operate competitively.”

He said the government should levy an export tax instead of an outright export ban, but the Department of Finance is not supportive of his proposal to the bicameral conference committee.

The mining industry does not support an export ban nor an export tax over raw minerals, Chamber of Mines of the Philippines Chairman Michael T. Toledo said via Viber.

“We support neither proposal,” he said. “Imposing an export tax on miners while already increasing excise taxes on large-scale metallic mining… would result in an overlapping tax situation that would reduce the mining sector’s viability.”

He said potential investors may see the proposed tax regime as “unstable” and “overly burdensome,” which could discourage foreign direct investment in mining. 

“A balanced, transparent and stable tax policy is generally more effective for sustainable resource management,” Mr. Toledo said.

Authorities should instead look at improving infrastructure and making electricity cheaper while tweaking mining regulations to attract investment in mineral processing, he added.

The government is pushing to simplify its mining fiscal regime to capture a greater share of industry profits, with President Ferdinand R. Marcos, Jr. saying last year that rationalizing duties could create a more equitable wealth-sharing system from the industry while making taxes simpler to attract investment.

Tax obligations for miners currently vary depending on their agreements with the government.

A priority measure of the Marcos administration, the proposed mining fiscal regime overhaul intends to charge large-scale miners operating within mineral reservations 4% of their gross output, according to House Bill No. 8937, which was approved in September 2023.

Senators are pushing for a 5% rate in Senate Bill No. 2826, which passed in February.

The House also proposed an eight-tier margin-based royalty regime ranging from 1.5% to 5% and a 10-tier windfall profit tax system ranging from 1% to 10%; while the Senate is seeking a five-tier margin-based royalty system ranging from 1% to 5% and a windfall profit tax system ranging from 1% to 10%.

The bicameral conference committee has been meeting since February, not counting an election campaign break.

The 19th Congress is set to resume session on June 2 for its last two weeks, which would be the final opportunity for both chambers’ representatives to finalize the measure before the new Congressional starts in late July.

Failure to pass the proposed mining fiscal regime would be a “waste of time” for “the industry, other private stakeholders and the government,” Mr. Toledo said adding that the lack of progress towards a signed law could cut into the government’s ability to effectively capture revenue from the industry.

Study ordered on feasibility of expanding P20 rice coverage to 50% of population

PHILIPPINE STAR/NOEL B. PABALATE

SPEAKER Ferdinand Martin G. Romualdez directed a congressional think-tank to assess the feasibility of making the Marcos administration’s P20-per-kilo rice program available to half the population, with the study to evaluate the program’s fiscal requirements and the legislative means to move it forward.

The Congressional Policy and Budget Research Department was tasked with producing a report within 60 days, to guide legislators during budget hearings set later this year, Mr. Romualdez said.

“This study will not be limited to subsidy calculations. We need to overhaul the entire system — from seed to store shelf,” he said in a statement.

The government in early May started selling P20-per-kilo rice in some state-subsidized mini-markets, and plans to continue retailing the subsidized rice to low-income families and other disadvantaged categories until December.

President Ferdinand R. Marcos, Jr. campaigned in 2022 on a pledge to lower rice prices to P20 per kilo, but the early years of his administration have been marked by a surge in the cost of rice.

“If it can be done in some areas, it should be achievable nationwide,” Mr. Romualdez said. “It is now our job in Congress to support that vision with data, strategy and decisive legislation.”

The Speaker last month pledged to allocate funding for the rice subsidy program in the 2026 budget.

Mr. Romualdez said the program could cost the government about P51.1 billion annually, leading him to propose a four-year “phase-in plan” to ensure its sustainability.

“In 2025, the program will cover only the bottom 20% of the population, requiring about P17 billion. In 2026, it will expand to the bottom 35%, costing P30 billion,” he said.

“By 2027, it could reach the bottom 50%, with the full P51 billion requirement,” he added, saying that authorities should look at optimizing the system and integrating it with other food aid programs by 2028. — Kenneth Christiane L. Basilio

NG borrowing surges to P390B in April

BW FILE PHOTO

THE National Government’s (NG) gross borrowing grew 337.28% year on year to P390.06 billion in April as domestic debt surged, the Bureau of the Treasury (BTr) reported.

Nearly all of April’s gross borrowing — 98.63% — was accounted for by domestic sources.

Gross domestic debt totaled P384.71 billion in April, up 367.11% from a year earlier.

Domestic borrowing consisted of P300 billion in fixed-rate Treasury notes, P67 billion in fixed-rate Treasury-bonds (T-bonds) and P17.71 billion in Treasury bills (T-bills).

Gross external debt in April fell 21.81% year on year to P5.35 billion in April.

External borrowings during the month consisted entirely of P6.84 billion in new project loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the uptick in borrowing is “a timing issue more than anything else.”

“The timing of matured government debt to be repaid” and the “hedging of some of the government borrowings such as the $3.29-billion global bond issue in the latter part of January 2025” explains the surge in borrowing, he said via Viber.

The government is nearly done with its commercial borrowing program of $3.5 billion, he said.

Mr. Ricafort also cited the P300-billion 10-year Treasury note in late April, which was offset by about P140 billion in maturing Treasury bonds that month.

“The fourth largest budget surplus on record on a monthly basis helped somewhat in reducing NG borrowings/debt,” he said.

Separately, the BTr said the NG posted a P67.3-billion surplus in April with tax revenue coming in that month accompanied by a decline in government spending.

Meanwhile, in the four months to April, NG gross borrowing totaled P1.14 trillion, down 2.39% year on year.

Domestic debt accounted for 73.60% of the total for the period.

This consisted of P469.40 billion in retail T-bonds, P300 billion in fixed rate Treasury notes and P66.11 billion in T-bills.

External borrowing in the first four months rose 141.49% to P299.69 billion year on year.

This was composed of P191.97 billion in global bonds, P85.20 billion in program loans, and P22.53 billion in new project loans.

Mr. Ricafort noted that the government was “opportunistic in borrowing, more local in the total borrowing mix to better manage forex risk that foreign borrowing entails.”

He said the government’s maturing Treasury bonds are expected to be significant in August and September.

The government set its gross borrowing program at P2.55 trillion, targeting 80% in domestic borrowing and 20% foreign, according to the 2025 Budget of Expenditures and Sources of Financing. — Aubrey Rose A. Inosante

SMC’s Boracay toll bridge to undergo Swiss challenge

NEWS5

THE P8.01-billion unsolicited proposal submitted by San Miguel Corp. (SMC) to build a toll bridge connecting the resort island of Boracay to the Panay mainland is scheduled to undergo a Swiss challenge by July, the Department of Public Works and Highways said.

“We are in the process of finalizing (approvals) with the local government. The plan of San Miguel to build the Boracay bridge has already received initial approval,” Public Works Secretary Manuel M. Bonoan told reporters last week.

“Before we subject it to Swiss challenge, we want to determine if it has a go-signal from the local government unit. We have to finalize the arrangements with the local government. If approved, then we will proceed with the Swiss challenge.”

Boracay is under the jurisdiction of the municipality of Malay, Aklan. In a Swiss challenge, rival bids to an unsolicited proposal will be invited, with the original proponent holding the right to match the best opposing bid.

The Public-Private Partnership (PPP) Center lists the project components as financing, design, construction, and maintenance of a 1.2-kilometer bridge between Boracay island and the Caticlan district of Malay.

The proposed bridge will be a two-way two-lane bridge with a provision for a bike lane and sidewalk on each side, the PPP Center said.

Mr. Bonoan said the conclusion of the May elections should mean the local government officials providing the necessary approvals will be in place shortly.

“We have to settle with new leadership; there will be changes with political personalities. So maybe between June or July,” Mr. Bonoan said.

The project is expected to help address Boracay’s growing solid and liquid waste management issues by providing reliable access and provisions for waste disposal, the PPP Center said. — Ashley Erika O. Jose

CAMPI backs law to formalize auto incentives

USERTRMK-FREEPIK

THE Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) said the government should enshrine in law a car manufacturing incentive program to attract more car manufacturers.

“We want consistent policy implementation. Incentives like the Comprehensive Automotive Resurgence Strategy (CARS) program, which was an executive order, should be legislated,” CAMPI President Rommel R. Gutierrez.

“This will make incentives long term. Investments require long-term planning and commitments on both the government and the private sector,” he added.

He said that the CARS program was proven effective due to the commitments on both sides and the policy’s performance-based provisions.

Created through Executive Order (EO) No. 182 by President Benigno S. Aquino III, the CARS program sought to encourage domestic assembly of selected mass-market models to create jobs and spur the growth of the supplier ecosystem.

The EO set aside three slots for car manufacturers, who were required to produce at least 200,000 units of an enrolled model in order to avail of incentives.

Only two slots were filled: Toyota Motor Philippines Corp., which produces the Vios sedan, and Mitsubishi Motors Philippines Corp., which manufactures the Mirage hatchback and Mirage G4 sedan.

According to Mr. Gutierrez, turning the incentive program into a law will help attract more manufacturers to assemble domestically.

“Once it is legislated. It will be more certain, and it will give stability. Because even the budget will be identified,” he said.

“In fact, a bill has already been sponsored by Rep. Rufus B. Rodriguez, but it needs a Senate counterpart,” he added.

On Aug. 30, 2022, Mr. Rodriguez filed House Bill (HB) No. 4206, or the Philippine Motor Vehicle Manufacturing Act.

It has since been replaced by a substitute measure, HB 11402, which was approved on second reading on Feb. 4.

The government is planning to implement a new auto industry revival program through a joint administrative order.

Expected to be issued within the year, the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program is expected to cover the production of three specific models of four-wheeled internal combustion engine vehicles.

Under the new program, the participating carmakers will have to commit to domestically assemble 100,000 units.

The RACE program was among the Department of Trade and Industry’s budgeted items in the General Appropriations Act for 2025. It was allotted P250 million. — Justine Irish D. Tabile

Coffee seen as viable growth export to Europe to offset US tariff impact

STOCK PHOTO | Image by Kelly Sikkema from Unsplash

THE PHILIPPINES needs to expand agricultural exports to Europe, with a particular focus on coffee, to bolster its trade position in the face of the new US tariff regime, the head of the House trade committee said.

In an interview, Iloilo Rep. Ferjenel G. Biron said the government should push for more European trade in farm products to cushion the impact of the Trump tariffs.

“We should select commodities that we can efficiently export and that have economies of scale, so the impact of tariffs on us is minimized,” according to Mr. Biron. “Agriculture, specifically coffee… I think that is an area where we can truly compete.”

Southeast Asia is bracing for the impact of the US reciprocal tariffs, which have been paused until July. Six ASEAN countries are facing tariffs of between 32% and 49%. The Philippines has been assigned a 17% tariff, the second lowest in the region.

Mr. Biron said Philippine food and agricultural produce may face “tougher” market competition in Asia, noting that competitors can offer trade “cheaper” products.

His assessment appears to run counter to the message of President Ferdinand R. Marcos, Jr., who last week called for deeper economic ties with Southeast Asia to help mitigate the impact of the US tariffs. At the ASEAN summit in Kuala Lumpur, he urged his fellow leaders to “sell in each other’s markets.”

“It would be challenging for us to compete in the Asian market,” Mr. Biron said.

“If you’re focusing on food exports, Europe and America offer better premium pricing,” he said. “In Asia, competition is tougher because there are more affordable sources of processed food, like Vietnam, Cambodia and Thailand.”

The Philippines exported $1.53 billion worth of agricultural goods to the European Union last year, accounting for 19% of agricultural exports, according to government data.

“The idea of targeting western markets for agricultural exports such as coffee and processed food is strategically sound in principle,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said via Viber.

“Coffee and niche food products can find high-value segments abroad,” he said, but noted the need for producers to improve quality to meet stricter regulations in western markets.

Exporting to developed countries may mean strengthening our product standards, and also our logistical support for producers as western markets are farther than our regional neighbors, Philip Arnold P. Tuaño, dean of the Ateneo School of Government, said via Facebook Messenger.

“Mitigating the effects of US tariffs may mean bolstering our exports to other markets by improving our food safety and marketing,” he added.

Mr. Rivera said legislators should look at drafting laws to help diversify Philippine exports by incentivizing companies that comply with logistics and food processing standards in developed countries. — Kenneth Christiane L. Basilio 

Foreign chambers back passage of key reforms before 19th Congress adjourns

PHILSTAR FILE PHOTO

THE Joint Foreign Chambers (JFC) asked legislators to pass key economic measures, including the Konektadong Pinoy Act and the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, before the 19th Congress adjourns.

In a statement on Sunday, the JFC said that it sent letters to the House and Senate leaders noting the progress made in introducing and moving forward with measures to attract more investment and create jobs.

In the letter, the group indicated its support for bills that have “already secured (approval) from both chambers of Congress,” particularly “a number of important reforms have reached the last step of the legislative process, or the Bicameral Conference Committee,” the JFC said.

Apart from the Konektadong Pinoy Act, the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, it also cited amendments to Republic Act No. 7652, or the Investor’s Lease Act.

According to the JFC, the Konektadong Pinoy Law will help provide accessible, affordable, and reliable internet.

Meanwhile, the proposed fiscal mining regime streamlines taxes on the industry to provide clarity and consistency for investors in critical minerals.

It sees the amendments to the Investor’s Lease Act creating a more predictable leasehold system to attract more foreign investment.

“As the 19th Congress nears its end, the JFC is hopeful that these three major reform bills will be enacted without delay,” it said.

“We see their passage as key to unlock new economic opportunities and strengthen the Philippines’ overall competitiveness in the ASEAN region,” it added. — Justine Irish D. Tabile    

Investor Lease Act amendments lack lessor protections — academic

PHILIPPINE STAR/MIGUEL DE GUZMAN

THE proposed amendments to the Investors’ Lease Act, which would lengthen the lease periods available to foreign investors, inadequately protects the lessors who own the land, an Ateneo de Manila political scientist said.

Hansley A. Juliano, a lecturer at the Ateneo de Manila, called the prominence of the Investors’ Lease Act in the legislative agenda a stark contrast to the measures on healthcare, virology, and digital connectivity, which actually align with voter concerns.

“I find it a bit of a red flag to put the foreign lease bill on top,” he said via Facebook Messenger. “It suggests a desire to give up property rights to foreign investors in a very neoliberal fashion, without even actual guarantees of protection to local owners.”

He added that the 99-year maximum allowable lease period is the most problematic feature of the proposed law.

The Palace unveiled last week its seven priority bills for the remaining six session days of the 19th Congress.

The members of the Legislative-Executive Development Advisory Council said the other bills scheduled for deliberation at Bicameral Conference Committee level include the proposed Rationalization of the Mining Fiscal Regime; the proposed Amendments to the Universal Health Care Act; the proposed E-Government Act/E-Governance Act; the proposed Konektadong Pinoy Act; the proposed Virology Institute of the Philippines act; and the proposed Blue Economy Act.

The 19th Congress will resume session today before adjourning sine die on June 13. The 20th Congress is scheduled to convene its first regular session on July 28.

Mr. Juliano noted that the 99-year lease period “is definitely the biggest (concern)… Functionally, it means guaranteeing foreign control for three generations, and considering how many lease arrangements tend to pan out, there is no genuine and fruitful way to contest it, more so if the entire leasing process involves the deprivation of residents, as has been documented many times now.”

According to Mr. Juliano, the seven-item list reflects continuity rather than change in the country’s economic policy stance.

“What it says to me is that Mr. Marcos and his cabinet are still latching onto the same economic policies that are criticized and rejected by the electorate during the recent midterm cycle,” he said, noting the recently concluded polls, which delivered weaker-than-expected results for the administration.

He said the implied policy agenda “can hardly be seen as being accountable to the voters who already told you to change course.”

He warned that the policy direction favoring foreign ownership, mining liberalization, and the Blue Economy framework could deepen divisions with civil society groups and segments of society advocating for stronger environmental and property protections.

The House of Representatives in December approved on third and final reading House Bill 10755, which sought to amend Republic Act 7652, or the Investors’ Lease Act.

The 1987 Constitution prohibits foreigners from owning land, but the 31-year-old Investors’ Lease Act allowed foreign investors to lease private land for an initial period of 50 years, renewable once for a maximum of 25 years.

The bill seeks to allow foreign investors to sublet properties unless prohibited under the lease contract. Sublease contracts longer than 25 years or more are required to be registered with the Register of Deeds, while contracts of less than 25 years are exempt.

The measure listed the approved purposes of land leases by foreigners to include industry, agro-industrial, commercial, tourism, agriculture, agroforestry and ecological conservation. — Chloe Mari A. Hufana

WB country partnership to focus on building PHL resistance to shocks

REUTERS

THE Department of Finance (DoF) said the World Bank’s (WB) new Country Partnership Framework (CPF) for the Philippines is designed to help it become more resilient in the face of external shocks.

In a statement on Sunday, the DoF said the new CPF is “more ambitious and inclusive,” incorporating lessons from the 2019-2024 CPFs.

Finance Secretary Ralph G. Recto said this new partnership aligns with the administration’s priorities, such as “healthcare, education, job creation, digitization, and building a more resilient and inclusive economy.”

The CPF is a joint strategy of the International Bank for Reconstruction and Development, the International Finance Corp., and the Multilateral Investment Guarantee Agency.

“(The CPF) is designed to help the Philippines build on this positive momentum to create more jobs for its young population, build resilience to shocks, further reduce regional disparities, and invest in education and health,” Manuela Ferro, World Bank Vice-President for East Asia and Pacific said.

On May 22, the World Bank Group’s executive directors endorsed the CPF for the Philippines for 2026 to 2031.

Among the targets of the CPF includes generating 4 million new or improved jobs, expanded broadband access for 19 million Filipinos, and the mobilization of $2 billion in private capital.

“Recognizing the country’s vulnerability to natural disasters and climate change, the CPF places strong emphasis on resilience. It will support 12.5 million beneficiaries of social protection programs and enhance climate resilience for 13 million people, helping shield communities from future shocks,” the DoF said.

The World Bank expects the Philippine economy to grow at a sub-6% pace until 2027 following an expected slowdown in global activity due to the shift in US trade policy.

It forecasts a 5.4% growth rate for 2026 followed by 5.5% in 2027.

These would all fall short of the government’s 6-8% growth targets for this year until 2028. — Aubrey Rose A. Inosante

Engaging the independent consumer

IN BRIEF:

• Consumers are becoming more discerning, favoring quality and affordability over brand loyalty.

• The integration of AI with personalized human interaction is essential for creating seamless customer experiences.

• As consumers focus on meaningful home life, brands and retailers must adapt their strategies to meet these changing expectations.

Consumers today are more conscious of their choices and prioritize quality products and services at reasonable prices. They are not merely following trends; instead, they are actively seeking out what aligns with their needs and values. This shift toward a more independent consumer was highlighted in the evolving nature of consumer engagement, where the emphasis is now on creating meaningful connections through data, technology, and genuine human interaction.

According to the EY Future Consumer Index, which provides insights that reflect the current mindset of consumers and the implications for businesses aiming to meet their needs, understanding consumer behavior is crucial for brands and retailers looking to adapt to these changes. By adapting to the evolving consumer preferences discussed below, business can form strategies they can implement to stay relevant in a competitive market.

A SHIFT IN CONSUMER PRIORITIES
Consumers are increasingly viewing private label products as viable alternatives to branded items, often perceiving them as comparable in quality rather than just cheaper options. This trend is evident as more consumers express satisfaction with private labels, leading to a significant shift in purchasing behavior.

The growing acceptance of private label products is notable, with 48% of consumers indicating that brand names are not a major factor in their purchasing decisions. Additionally, 38% of consumers do not intend to revert to branded products after trying private labels, and 34% are open to purchasing lower-cost versions of popular items.

This change is largely driven by economic factors, as consumers seek to save money amid rising prices. As a result, private label products have become a habitual choice across various income levels, proving that they can meet consumer needs effectively.

THE EVOLVING ROLE OF BRANDS AND RETAILERS
This shift in consumer behavior challenges traditional advantages held by consumer packaged goods (CPG) companies, while retailers are seizing the opportunity to promote private label offerings. Retailers are strategically placing these products in prominent locations and expanding their ranges to include various price points. By analyzing point-of-sale data, they can respond quickly to emerging trends, allowing them to curate choices that resonate with consumers and foster loyalty.

As consumers become more brand-agnostic, particularly younger generations, they actively seek out affordable alternatives and share their discoveries on social media. This trend, often referred to as “dupe culture,” has made bargain hunting a popular pursuit.

The influence of established brands is waning, especially as some companies face backlash for raising prices or reducing product sizes to maintain profit margins. Today’s consumers have access to a wider array of choices and are more informed than ever about alternatives to higher-priced brands, often learning about them through social media and digital channels.

MEETING THE NEEDS OF THE MODERN CONSUMER
As customer journeys become more complex and less linear, consumers expect to shop on their terms — whether in-store, online, or through various digital platforms. They desire seamless experiences that blend technology with personal interaction. While artificial intelligence (AI) can enhance the shopping experience through personalized recommendations, consumers still value the human touch, especially for significant purchases.

To succeed, companies must effectively combine technology with human engagement. By leveraging AI to support customer interactions, businesses can help consumers make informed decisions while also ensuring that sales associates are equipped to provide valuable assistance. For example, a local airline leverages an AI agent that allows the automation of common inquiries such as flight bookings, itinerary changes, and travel documentation requirements, but also maintains in-person customer service at airports. Additionally, a large local fast-food chain adopted a composable architecture while maintaining flexibility across its tech ecosystem as part of its global business strategy. It also focused on automating key areas of its business to reduce manual work in store operations and main office functions while reducing the burden of back-end processes.

Achieving a holistic view of each customer through AI will be vital, yet many organizations are still working toward this goal. There is also a pressing need to address customer service gaps, as consumers often express dissatisfaction with online processes and support. A more integrated approach that combines advanced technology with empathetic human service is essential for resolving customer concerns effectively.

EMBRACING A NEW CONSUMER MINDSET
As consumers reevaluate their values and spending habits, particularly considering recent economic challenges, their preferences are shifting. Many are now focused on value for money and are adapting their behaviors to navigate affordability concerns. This includes a renewed emphasis on home life, where consumers are opting for experiences that hold personal significance over convenience services.

A significant 72% of consumers indicate they will prioritize value for money moving forward, while 55% express concern about the rising cost of living. The home has become a central hub for consumption, with consumers increasingly choosing to cook and entertain at home rather than spending on restaurants or cinemas.

To remain relevant, consumer companies must reassess their engagement strategies, particularly with younger audiences. As consumers become less willing to pay for digital conveniences, businesses need to redefine the role of digital channels in driving revenue while enhancing their physical presence to foster deeper connections.

ALIGNING WITH CHANGING PREFERENCES
Consumers are becoming more intentional about their purchases and how they spend their time. They seek seamless experiences throughout their shopping journeys and appreciate the benefits of technology in delivering personalized recommendations. However, they also desire human interaction for complex transactions and reassurance on larger purchases. Ensuring confidence in their spending has become increasingly important as consumers prioritize meaningful in-home activities.

To thrive in this evolving landscape, companies must adapt their strategies to align with the changing preferences of consumers, blending digital efficiency with authentic, real-world interactions to create a cohesive and engaging consumer experience.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Maria Kathrina S. Macaisa-Peña is a business consulting partner and the consumer products and retail sector leader of SGV & Co.

Philippines tells China to build trust, credibility before South China Sea talks

PHILIPPINE Defense Secretary Gilberto C. Teodoro, Jr. spoke at the International Institute for Strategic Studies Shangri-La Dialogue in Singapore on Sunday. — DND

By Kenneth Christiane L. Basilio, Reporter

TALKS between the Philippines and China on their South China Sea dispute must be built on mutual trust to ensure progress, Manila’s defense chief said on Sunday, stressing that Beijing must first build credibility before meaningful dialogue can take place.

Speaking at the Shangri-La Dialogue in Singapore, Philippine Defense Secretary Gilberto C. Teodoro, Jr. said China has a “deficit of trust” in relation to the disputed waterway, making reference to Mischief Reef, a disputed atoll in the contested Spratly Islands that Beijing fortified into a military base after an intense infrastructure build-up in the last decade.

The Chinese Embassy in Manila did not immediately reply to a Viber message seeking comment.

“For dialogue to be effective, it must be coupled with trust,” Mr. Teodoro said during the security forum’s plenary session, based on a Youtube livestream. “That is the biggest stumbling block to dispute resolution or dialogue with China.”

“China has a lot of trust-building to do to be an effective negotiating partner in dispute settlement,” he added.

Manila and Beijing have repeatedly locked horns over disputed features in the South China Sea, leading to escalating tensions as both remain firm in their claims in the waterbody that serves as a vital shipping route for global trade.

China claims nearly all of the potentially mineral- and oil-rich South China Sea based on a 1940s nine-dash line map that overlaps with the exclusive waters of the Philippines and neighbors like Vietnam and Malaysia.

A United Nations-backed tribunal in 2016 voided China’s sweeping claims for being illegal, a ruling that Beijing does not recognize.

“China says that it has peaceful intentions. [If so,] why does it continue to deny the Philippines its rightful provenance under international law?” said Mr. Teodoro.

Chinese ships have repeatedly barred Filipino fishermen from accessing Scarborough Shoal, which lies within Manila’s exclusive economic zone. The atoll is a vast fishing lagoon near major shipping lanes that China seized in 2012 after a standoff with Philippine troops.

The disputed shoal has been a source of tension between Manila and Beijing, whose bigger coast guard vessels frequently fire water cannons at Philippine ships to discourage them from getting closer to the feature.

Mr. Teodoro called for a need to form “flexible, issue- and needs-based groupings” to bypass gridlocks in traditional international institutions. “These developments are driven by gridlocks in the decision-making of multilateral organizations.”

“We must enhance cross-regional security cooperation,” he said. “Among the concrete measures we can take are joint strategic dialogues, such as trilateral or quadrilateral summits among regional blocs on shared security concerns.”

On Saturday, Mr. Teodoro met with top defense officials of Australia and Japan, including US Defense Secretary Peter Brian Hegseth, marking the fourth multilateral security meeting between the nations in three years, the Department of National Defense (DND) said in a statement.

The Philippines is a member of the Squad, an information grouping with Australia, Japan and US, and whose military forces have conducted joint sails in Manila’s exclusive waters within the disputed South China Sea since last year.

“The defense leaders expressed continued serious concern about China’s destabilizing actions in the East China Sea and the South China Sea, and any unilateral attempts to change the status quo by force or coercion,” the Defense department said, particularly China’s “dangerous” actions against the Philippines and other countries.

The grouping agreed to help the Philippines’ force improvement efforts by deepening defense cooperation in infrastructure investments in Manila, DND said.

Australia, Japan, the Philippines, and the US also pledged to strengthen maritime cooperation in the South China Sea, committing to more frequent joint drills to enhance regional security.

“They also reached consensus to explore planning joint intelligence, surveillance and reconnaissance activities to improve interoperability and coordination on effective maritime and air domain awareness,” it said.

Sweden and the Philippines also explored possible joint military training and ship visits in the future, the DND said in a separate statement on Sunday.

PHL urged to push stronger defense deal during talks with EU

A EUROPEAN UNION’S flag flutters outside the European Commission headquarters in Brussels, Belgium, Oct. 15, 2020. — REUTERS

By Adrian H. Halili, Reporter

THE PHILIPPINE government should use the upcoming visit of the European Union’s (EU) top diplomat to push for an official security agreement between the country and the EU, analysts said.

“Aside from the joint patrols that are being undertaken alongside our troops by some EU member states, we may also explore possibilities of forging a security agreement with the EU,” said Josue Raphael J. Cortez, a diplomacy lecturer at the De La Salle-College of St. Benilde in a Messenger chat.

He added that given that EU member states are among our primary allies in this regard, then an agreement would be a viable strategy to pursue better and stronger security arrangements to maintain rules-based order and freedom of navigation.

“We must maximize this opportunity to discuss on how it can play a more integral role in aiding us in light of the challenges we face today over the disputed territories,” he added.

“With the EU, also yearning to become a security actor in the region, this visit will certainly be beneficial for both parties to discuss what they can do more collectively.”

EU High Representative for Foreign Affairs and Security Policy and Vice President (HRVP) Kaja Kallas will conduct an official visit to Manila from June 1-2, according to the Department of Foreign Affairs.

Ms. Kallas will meet with Foreign Affairs Secretary Enrique A. Manalo and other government officials to discuss ways to improve ties between the Philippines and the EU amid regional and global challenges.

High-level visits like this reaffirm a strong relationship and shared interest between the Philippines and the EU, Francis M. Esteban, associate dean at the Far Eastern University’s Institute of Arts and Sciences, said.

“This is a telling sign that we are really going through a multipolar world where traditional powers no longer dictate economic and security relations. We can expect more from this relationship,” Mr. Esteban said via Messenger chat.

Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said the meeting will cement both their stances in maintaining rules-based order on defense and security, tariff and trade, the environment, and educational and cultural exchanges.

“There should be structures [and] mechanisms through treaty or memoranda to legitimize the partnership to halt Chinese aggression in the international waters in defending freedom of navigation and overflight,” he added.

Tensions in the South China Sea have heightened as Beijing, through its coast guard ships, asserts its claim over areas that fall within the Philippines’ exclusive economic zone. 

China claims more than 80% of the South China Sea based on a 1940s map, which a United Nations-backed arbitration court in The Hague voided in 2016 for being illegal.

TARIFFS AND LABOR
Apart from defense, Mr. Cortez said the meeting between the EU and Philippine officials should also focus on possible areas to safeguard their respective economies from the negative repercussions of the Trump administration’s reciprocal tariffs.

“Both the Philippines and its neighbors, and the EU are challenged by the repercussions of the reciprocal tariffs imposed by President Trump to their respective economies, this is also a time for us to manifest our intent as an alternative market for goods and service,” he added.

The Philippines was slapped with a 17% tariff reciprocal tariff from the US, the second lowest among Southeast Asian countries. The implementation was paused until next month.

“We must maximize this opportunity to leverage the country as an alternative market for EU products and services,” he said.

The Philippines and the EU are currently negotiating a potential free-trade agreement which could boost trade and economic bilateral ties.

Mr. Cabalza said that Philippine officials can also secure the labor rights of Filipino seafarers working in the EU.

“While many big European shipping industries employ Filipino ship captains and laborious blue collars seamen, EU can secure their labor rights and protection as the Philippines is seen as one of the powerhouses in shipping industry in the world,” he added.

He said that the EU can also support the migration policy of overseas Filipino workers to “ease the plight of many Filipinos in Europe seeking for golden visas in many of the countries in the EU.”

There are an estimated 900,00 Filipinos working and residing within the member countries of the EU.

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