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Trade non-growth and budget expansion

Last Friday the Philippine Statistics Authority (PSA) released the December — and hence, full year 2024 — merchandise (or goods) trade data. It showed that exports were flat at $73 billion for both 2023 and 2024, as imports marginally increased by $1 billion.

But what significantly changed was the further rise in China’s share of our imports, from 23.3% in 2023 to 25.7% in the 2024 total imports. The total trade (exports plus imports) with China in 2024 at $42 billion is larger than those of Japan plus the US combined at $41 billion, and is slightly lower than trade with our five ASEAN neighbors with a combined total trade of $46 billion (see Table 1).

This has a big implication on our foreign policy. If so much of our imports — our clothes, shoes, buses, trucks, gadgets, other consumer and capital goods — comes from China, why is there so much noise against China? It does not make sense. We should focus on trade and commerce, tourism and investment, and economics over war mongering with countries around the world, especially our Asian neighbors.

It is a good thing that Donald Trump is back in the White House. Trump has a record of having started no new US wars from 2017-2020. It is likely that this will be repeated in 2025-2028. Now war mongering versus China, the Ukraine war, and the Middle East war has significantly simmered down. I think the deep state operatives that promote the US’ endless wars abroad are scared that Trump will fire them soon, or that their agencies will suffer budget cuts.

OPPOSITION TO GAA
The General Appropriations Act (GAA) 2025 is now being implemented but the political opposition against it continues, mainly over the defunding of Philippine Health Insurance Corp. (PHIC or PhilHealth) whose subsidy this year is zero.

I will compare the proposed versus the approved budget for 2025. While there is a small decline in the overall budget, there are huge increases in the budgets of the departments of Public Works and Highways (DPWH) and Health (DoH), and Congress. And there are big declines in the budgets of the departments of Education (DepEd) and Social Welfare and Development (DSWD), in Budgetary Support for Government Corporations (BSGC), and, of course, zero for PhilHealth (see Table 2).

I believe that the fact that PhilHealth and the DoH are getting funding from smokers, vapers, and drinkers is problematic. The health establishment says that tobacco and alcohol are bad and hence, people should avoid these. Then, ironically, the same health establishment is happy when billions of pesos are collected from taxing more smokers and drinkers of legal products. The political opposition to GAA 2025, health advocates, and activists, are angry that PhilHealth gets zero this year from the taxes paid by smokers and drinkers.

To remove the irony of health being funded by unhealthy products, the earmarking of the proceeds from the tobacco tax to health agencies should be removed. The DoH and PhilHealth should get nothing from tobacco tax revenues, which should instead go to the general fund. That way, when revenues further decline due to there being fewer smokers and drinkers because of the high taxes — or due to greater illicit trade and smuggling — they will not be sad because they do not rely on it anyway.

With more public-private partnerships (PPP) in roads, airports, seaports and other infrastructure, there is little justification for the DPWH to have so large a budget. The priority should have been reducing the public debt stock, reducing interest rates or the cost of borrowing, and reducing public interest payments, from the projected P848 billion this year to below P500 billion or less. Interest payments from January-November 2024 were P705 billion, or equivalent to P2.1 billion/day. To be clear, that was interest payment alone.

And since there is no more virus crisis nor economic crisis, the budgets of the DSWD, state universities, and the Commission on Higher Education should further decline. The focus should be on fiscal responsibility, the aim should be for a balanced budget if not a budget surplus in years where there is no crisis in order to compensate for high budget deficits during years of economic crisis years.

 

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

Borgen creator says fiction challenged by Trump’s Greenland gambit

Borgen (2010) — IMDB
Borgen (2010) — IMDB

COPENHAGEN — The creator of the Danish political TV drama Borgen, Adam Price, says US President Donald Trump’s wish to control Greenland has created an “absurd” reality that has made it more challenging to write political fiction.

Trump’s refusal to rule out using military or economic power to take control of Greenland, a semi-autonomous territory of Denmark, has caught many by surprise, including Price.

“When reality becomes absurd, like I think it has become in recent weeks when we are talking about the current situation with Greenland and Trump and Trump’s demands, what are we to write?” Price said in an interview this week with Reuters.

“Because if I had pitched this as a new season of Borgen, I think most people would say, like five or 10 years ago, that I was completely out of my mind and had lost my sense of reality,” he said.

Price, 57, said he was concerned that what previously had been considered politically extreme or bizarre would increasingly be considered “normal” under Trump’s presidency.

In fact, Price did anticipate the current international focus on Greenland in the latest season of his fictional series from 2022, in which the vast Arctic island makes a significant discovery of oil and becomes the center of a power struggle between Denmark, Russia, China, and the United States.

As in that last season of Borgen, Trump’s remarks have thrust Greenland into the global spotlight, reigniting a public debate about independence and the island’s complicated relationship with Denmark, its former colonial power.

Borgen, which in Danish means “fortress” — a direct reference to the informal name for Denmark’s parliament — was first aired in 2010 and tells a fictional story of Denmark’s first female prime minister and her rise to power.

Price said one idea for a potential new season of Borgen could be to “make the EU sexy” in a dramatic way, as many viewers may find the European Union difficult to grasp.

“When you deal with politics that maybe on the surface seem more cold and not as emotional, you need to find topics that are really explosive when it comes to emotions,” he said. — Reuters

Monetary Board orders closure of rural lender

BW FILE PHOTO

THE BANGKO SENTRAL ng Pilipinas has ordered the closure of Emerald Rural Bank, Inc.

The central bank’s policy-setting Monetary Board, in Resolution No. 77. A dated Jan. 23, decided to prohibit the bank from doing business in the Philippines, pursuant to Section 30 of Republic Act No. 7653 or the New Central Bank Act, according to a circular letter posted on the regulator’s website.

Section 30 of the New Central Bank Act is focused on proceedings regarding receivership and liquidation.

“The Philippine Deposit Insurance Corp. (PDIC) has been designated as receiver with a directive to proceed with the takeover and liquidation of the aforementioned rural bank,” it added.

In a separate bulletin, the PDIC said it took over the bank and its assets, records and affairs on Jan. 24.

“The PDIC charter provides in Section 13, that a bank placed under liquidation shall in no case be reopened and permitted to resume banking business,” it said.

“Furthermore, Section 12 expressly provides that banks closed by the Monetary Board shall no longer be rehabilitated.”

The powers, functions and duties of directors, officers and stockholders of the bank have also been terminated upon its placement under liquidation, the PDIC said.

“Accordingly, the directors, officers, and stockholders shall be barred from interfering in any way with the assets, records and affairs of the bank,” it added.

“Therefore, anyone in possession of any asset and/or records of the closed Emerald Rural Bank, Inc. is advised not to allow or honor any transaction affecting the same without the consent of the receiver and to immediately turnover the said assets and/or records to the designated deputy receiver.” — Luisa Maria Jacinta C. Jocson

More telco, aviation firms to tap coworking spaces — IWG

WORK.IWGPLC.COM

MULTINATIONAL office solutions firm International Working Group Plc (IWG) anticipates that more companies from the telecommunications and aviation sectors will tap coworking spaces for office flexibility.

“With the GDP (gross domestic product) growth rate in the Philippines being as high as it is, and with the many game-changing legislation that has been passed, the question is now, why not the Philippines? The Philippines is really the choice we see to a higher and higher degree,” IWG Country Manager for the Philippines Lars Wittig said during a recent briefing.

The country’s GDP growth averaged 5.8% in the first nine months of 2024.

Mr. Wittig said more companies from sectors such as aviation and telecommunications are expected to utilize coworking spaces, as Republic Act No. 11659, or the Public Service Act, allows full foreign ownership in these sectors.

The creation of green lanes, which seeks to expedite the permit and licensing processes, is also favorable for coworking space providers, according to Mr. Wittig.

“We see that it’s approaching 1,000 companies, investors in the Philippines that are now on the so-called registered green lane… and many of those are our customers or are becoming our customers,” he told reporters.

He also anticipates that more start-ups and government offices will adopt coworking spaces to better meet their needs.

“If you are a start-up in the Philippines…, your primary resource is yourself, your time, idea, and skills, and you don’t want to tie your money up in real estate or office investment. You want it all to be focused on getting your first customer,” Mr. Wittig said in an interview with BusinessWorld.

Around 20% of IWG’s customers come from the start-up sector, Mr. Wittig said.

Government demand for office spaces was the highest in seven years, accounting for 11% or 122,000 square meters of total demand in 2024, according to Leechiu Property Consultants.

“Hopefully, I will soon be able to welcome many of these critical government offices that also want to not only be flexible with multiple locations for the sake of their employees and productivity, but also for the sake of the population they’re servicing,” Mr. Wittig added.

IWG earlier stated that it plans to have at least 50 open sites nationwide by the end of 2025, with each location having an average of 200 to 250 seats.

It is set to launch at least 17 new sites in locations such as Makati, Pampanga, Cavite, and Batangas this quarter. — Beatriz Marie D. Cruz

Skip the hype, here’s how AI ‘agents’ can really help

FREEPIK

SO-CALLED agents are meant to be the next big thing in artificial intelligence (AI) this year. If the breathless headlines about them are to be believed, you might think your job is on the line. It’s not (for now at least) — but some back-office occupations probably are.

Last week, OpenAI announced its first agent-like tool called Operator, which carries out online tasks like navigating to a website and clicking on buttons, according to the company. But the idea is not unique. Alphabet, Inc.’s Google, Anthropic, and Salesforce, Inc. have all launched platforms for agents, or AI systems that can act autonomously. Imagine, for instance, a customer service bot that doesn’t just generate information, but can also book an appointment or lodge a complaint. Mark Zuckerberg has said they’ll replace mid-level software engineers this year, and earlier this month, Axios reported that a tech firm was preparing to release software that could autonomously handle complex tasks at a “PhD level.” The hype around AI agents and their capabilities has reached fever pitch.

Yet while Silicon Valley dreams big, a small startup in London called REKKI offers a more realistic preview of how agents could transform business. It sells access to a bot dubbed Claire, which processes orders for restaurant suppliers. Using large-language models from vendors such as OpenAI and Anthropic, the software can convert midnight voicemails from chefs into standardized data for a food seller’s enterprise-resource planning (ERP) systems.

The result is that one wine supplier canceled plans to hire six seasonal workers during the 2024 Christmas rush, according to Orat Benyamini, REKKI’s co-founder and chief operations officer, while other companies have cut their order processing teams from 15 people to just three or four. “We’re seeing more and more suppliers being able to transition headcount, or not hiring,” she says. Naming the agents makes it easier for suppliers to conceptualize their return on investment. “You can compare it to the cost of a salary of a person,” Benyamini adds. 

The startup has a second agent called Aileen, designed to support the restaurant tendering process, scanning a spreadsheet of, say, 800 necessary ingredients and matching that data to a catalogue. And a forthcoming third bot will help suppliers boost their sales, scanning the menus of prospective customers and advising on what ingredients could be upsold to the restaurant.

Businesses don’t have to wait for PhD-level agents, or even the next big breakthrough from OpenAI. “It’s now about conventional software engineering, evaluation, and iterating,” says Raza Habib, the chief executive officer of San Francisco-based AI startup Humanloop.

It’s also safer to keep tasks narrow, when large language models have been known to make mistakes. Combine their access to customer data with the ability to take action and you get more risk, and not just for making errors.

One of the earliest uses of AI agents has been to send personally crafted sales e-mails. Downtown San Francisco is currently filled with billboards urging businesses to hire an “AI sales representative.” But they’ve had mixed results, according to Habib: “I get so many of these (sales) messages now that I’m not sure if they’re human-sent or not.”

The reality of where AI agents are headed is that they won’t be blank-slate geniuses that can handle lots of tasks. Instead, they’ll be highly specialized at repetitive chores, particularly where the risk of a mistake won’t kill the business.

“A lot being sold about AI and ‘agentic’ in particular is a fantasy,” says Matt Calkins, the CEO of enterprise software firm Appian Corp., a company that has spent years automating processes for major banks. “AI shouldn’t be making big decisions. It should be doing discrete tasks for which it is suited, as part of a team pointed toward a greater goal.”

Sometimes the most powerful technology isn’t the most ostentatious, but the kind that quietly gets the job done. (“Secret agents,” anyone?) Companies that wait for super-intelligent AI tools promised by OpenAI might miss a more immediate opportunity focused on more focused automation. You don’t need PhD agents to process orders and handle routine documents — but for now, handing such assignments over to software is more likely to help the bottom line.

BLOOMBERG OPINION

PHINMA Corp. plans socialized housing in Bacolod, Davao

PHINMA Corp. plans to launch two socialized housing projects in Bacolod and Davao this year, its chairman said on Monday.

“Our first (socialized housing) project will be in Davao, then Bacolod,” PHINMA Corp. Chairman and Chief Executive Officer Ramon R. del Rosario, Jr. told reporters on the sidelines of the Financial Executives Institute of the Philippines 2025 Inaugural Meeting in Makati City.

The company is also eyeing a socialized housing project in Iloilo.

“The idea there is to put some of the basic necessities that families need, such as a daycare center, skills upgrading facilities, and even employment opportunities,” Mr. Del Rosario said.

“The way we are organizing it is we’re calling it community housing so that it’s not just physical homes, it’s building communities,” he added.

PHINMA is looking at an initial 200 units to test its entry into the community housing segment, with each unit priced from P750,000 to P800,000.

Mr. Del Rosario said PHINMA is also looking at possible locations in Luzon.

“We really want to make sure we know what we’re doing and that we can do it at scale and at a reasonable cost, and hopefully generate reasonable profits as well,” he said.

PHINMA shares were last traded on Jan. 24 at P18.20 apiece. — Revin Mikhael D. Ochave

Snap Fitness PHL relaunches, welcomes fitness enthusiasts and aspiring franchisees

WHEN the new year begins, many Filipinos set health and fitness goals, but hitting the gym can feel intimidating. Snap Fitness Philippines aims to change that with the reopening of its Cubao Spark Place branch on Wednesday, providing a welcoming space for fitness enthusiasts and offering franchising opportunities.

Vanessa Orendain, Chief Executive Officer of Snap Fitness, told BusinessWorld that the newly reopened branch operates 24/7, ensuring accessibility for all and a pressure-free workout environment.

“Schedule and availability don’t matter — just find the time and get moving. You don’t need a full 30-minute workout; even 15 minutes makes a difference,” Ms. Orendain said.

Just like Snap Fitness’ tagline, it is important to work out “for the feeling,” rather than just for aesthetic results, she added.

The relaunched Snap Fitness in Cubao features state-of-the-art gym equipment from Matrix Fitness and a partnership with a payment gateway provider, offering members more convenient payment options.

Ms. Orendain also told BusinessWorld that Snap Fitness has staff and trainers, some of whom hold degrees in sports science.

Snap Fitness Philippines is also opening franchising opportunities for aspiring business owners and investors as the country’s fitness industry continues to grow.

According to data from Statista, the gym and training market in the Philippines is projected to grow at a compound annual growth rate of 1.7% from 2025 to 2029, with revenue expected to reach $19.2 million in 2025.

By investing in Snap Fitness, business owners can reduce the challenges of entering the industry, as essential systems — such as equipment from its partners, financing solutions, real estate assistance, and operational support — are already in place, Ms. Orendain said.

“So, taking all of these together… I think we have the winning formula to succeed here,” Ms. Orendain said, highlighting the brand’s proven success with over 1,000 clubs in more than 20 countries.

Apart from its relaunching in Cubao, Ms. Orendain said that the construction of a branch in the Makai Central District has already started, with further plans to expand In Luzon, Visayas, and Mindanao.

For membership rates and franchising details, visit their social media pages. — Edg Adrian Eva

IC lifts stop order against HMO

BW FILE PHOTO

THE INSURANCE COMMISSION (IC) has lifted the cease-and-desist order it issued against Forticare Health Systems International, Inc. (FHSII), allowing the firm to exit conservatorship after nearly six months.

The cease-and-desist order was lifted effective Jan. 17, releasing the company from conservatorship, the IC said in a notice dated Jan. 20.

“The issued order of this Commission is without prejudice to other findings/actions it may take upon the completion of the Company’s 2024 Audited Financial Statement verification/examination,” it added.

The IC issued the stop order versus the health maintenance organization (HMO) and placed it under conservatorship on July 31, 2024, due to its inability to comply with the regulator’s minimum capitalization and financial capacity requirements, prohibiting it from conducting business.

Latest available IC data showed that FHSII booked a net income of P4.81 million and had assets worth P134.79 million at end-September 2024.

Its liabilities stood at P11.80 million in the period, while it recorded revenues worth P47.499 million and expenses worth P42.69 million.

Meanwhile, the HMO industry posted a combined net income of P800.86 million at end-September 2024, improving from the P2.15-billion net loss booked in the same period a year prior. — A.M.C. Sy

How PSEi member stocks performed — January 27, 2025

Here’s a quick glance at how PSEi stocks fared on Monday, January 27, 2025.

ILO: Philippines’ jobless rate expected to be lower by 2026

The country’s unemployment rate — or the proportion of the jobless to the labor force — is expected to drop by 2026, based on latest projections from the International Labour Organization’s (ILO) World Employment and Social Outlook: Trends 2025 report. The Philippines will be the sixth lowest in terms of unemployment rate among its peers in the region compared with the projected jobless rate for Southeast Asia of 2.5% and 4.9% globally by 2026. Meanwhile, the country’s employment rate is expected to dip to 59.1% by 2026, lower than Southeast Asia’s 64.2% but higher than the world’s projected share of 57.7%. Its labor force participation rate is seen to grow to 60.3% (vs. Southeast Asia’s 65.8% and the world’s 60.6%).

ILO: Philippines’ jobless rate expected to be lower by 2026

Tobacco leaf production rises 7.45% in 2024

PHILSTAR FILE PHOTO

TOBACCO leaf production increased 7.45% to 45.4 million kilograms in 2024, with more farmers encouraged to plant by export opportunities and local government prodding, according to the National Tobacco Administration (NTA).

NTA Deputy Administrator Nestor C. Casela said on Monday that the output boost was accompanied by a weakening of buying prices for leaf tobacco to P129.04 per kilogram in 2024 from the P137.32 per kilo average reported for 2023.

“Our tobacco became competitive in international markets. Aside from that, local government units’ share (of tobacco taxes) is higher; that’s why they are so motivated to encourage their farmers to plant more,” Mr. Casela told reporters on the sidelines of the International Tobacco Summit.

He added that China, the top producer of tobacco, reduced its production, opening the door for more Philippine tobacco to enter the global market.

Virginia tobacco output rose to 16.79 million kilos from 14.77 million, Native tobacco output increased to 20.98 million kilos from 20.59 million, while Burley tobacco output rose to 7.63 million kilos from 6.89 million.

Philippine Tobacco Growers Association President Saturnino Distor also attributed the increase in production to corn farmers switching to tobacco.

“Corn farmers are having problems with the fall army worms,” Mr. Distor said on the sidelines of the summit.

Fall army worms feed on more than 80 crop species including corn, rice, sorghum, and vegetables.

The NTA also reported that the number of tobacco farmers in 2024 grew to 43,098 from 40,786 tallied the prior year.

Land area planted to tobacco rose to 25,926 hectares from 25,309 hectares a year earlier.

For 2025, the NTA is targeting output of 45.58 million kilos, which if realized would be a 0.4% increase from 2024.

Mr. Distor said the production goal for the year will likely be met due to better climate conditions compared to 2024, when the country faced the impact of El Niño and La Niña. — Adrian H. Halili

PPA allocates P2.11B for Camarines Norte port upgrade

NICHOLAS DOHERTY-UNSPLASH

THE Philippine Ports Authority (PPA) is allocating P2.11 billion to improve Jose Panganiban port in Camarines Norte to make it suitable for servicing the offshore wind industry.

The port regulator is inviting interested parties to submit bids for the port improvement project on or before Feb. 4, it said in a bid notice.

According to the PPA, the winning bidder for the project will have 840 calendar days or approximately two years and three months to complete the upgrade of the port.

The Energy department has identified Jose Panganiban port as one of three lined up for repurposing to service the offshore wind industry.

Situated close to 14 offshore wind energy service contracts (OWESCs), the Port of Jose Panganiban is expected to service wind farms with an estimated capacity of 8,150 megawatts (MW). Two projects in the area are in the advanced pre-development phase.

The port of Jose Panganiban is among PPA’s 14 big-ticket flagship projects valued at a total P16 billion, scheduled for completion by 2028.

The Department of Energy has awarded 92 offshore wind energy service contracts to 38 renewable energy developers with combined potential capacity of 66.10 gigawatts (GW).

According to the Philippine Offshore Wind Roadmap, the Philippines has a potential capacity of about 63 GW if it taps offshore wind resources.

Also identified as priorities for redevelopment as offshore wind service bases are Currimao, Ilocos Norte and Sta. Clara, Batangas City.

Last year, the PPA awarded the P839.18-million Currimao Port expansion project to a Davao-based construction company Khan Kon Chi Construction and Development Corp. — Ashley Erika O. Jose

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