WASHINGTON – U.S. Treasury Secretary Janet Yellen will press multilateral development banks to channel positive net financing flows to countries hit with food insecurity prompted by the Ukraine war, she said in congressional testimony released on Tuesday.
Yellen, in prepared remarks to the House of Representatives Financial Services Committee for a hearing on Wednesday, said she will ask institutions including the World Bank and the African Development Bank to expand ways to address food security, “including long-term investments in agricultural productivity and agricultural infrastructure.”
The international financial institutions, including the International Monetary Fund, will play a critical role in addressing spillovers from the Ukraine conflict that are heightening economic vulnerabilities in many countries battered by the COVID-19 pandemic, she said.
“The IMF, World Bank, and EBRD (European Bank for Reconstruction and Development) will be critical partners in rebuilding Ukraine, alongside bilateral donors, and they also will provide vital support to neighboring countries welcoming refugees,” Yellen said.
The IMF has provided $1.4 billion in rapid financing for Ukraine, while the World Bank has provided $490 million in rapid financing for Ukraine, part of a $3 billion package of support planned in coming months. The EBRD has proved an initial 2 billion-euro package for Ukraine.
Yellen said this assistance has given Ukraine fiscal space to pay salaries for soldiers, doctors, nurses and civilian government employees while meeting its external debt obligation.
“These are admirable acts of credibility by a government under siege,” she said.
Yellen added that the multilateral development banks should promote energy efficiency and capital investments to help governments diversify away from fossil-fuel-based energy sources including Russia.
She said the Biden administration was seeking congressional authorization to provide financing to bolster IMF lending facilities for poor and vulnerable countries — the Poverty Reduction and Growth Trust and the new IMF Resilience and Sustainability Trust. – Reuters
WarnerMedia CEO Jason Kilar said the future of Hollywood is in the blockchain as he prepares to leave the media company that he helped lead into the streaming era.
Mr. Kilar said he saw new opportunities at the intersection of storytelling and technology although he declined to discuss his next pursuit.
The veteran tech executive said he had no plans to retire after announcing his departure from AT&T Inc T.N unit WarnerMedia ahead of its merger with Discovery Inc DISCA.O in a deal expected to close this month. Read full story
Mr. Kilar‘s career has straddled Hollywood and Silicon Valley, and he sees blockchain, the digital ledgers that keep track of transactions across computer networks, as transforming the entertainment business, especially as the process of acquiring unique digital collectibles such as Non Fungible Tokens becomes simpler.
“I think that’s going to be a potential wave that’s going to be coming to Hollywood, in the same way that the DVD wave came to Hollywood in the ’90s,” Mr. Kilar told Reuters in an interview after he announced his departure to staff on Tuesday.
“Obviously, that changed the economic fortunes of a lot of these companies, WarnerMedia included.”
The blockchain may also open up new forms of financing, Kilar said.
STREAMING WAR
Mr. Kilar has a long track record of pushing technology and change in entertainment.
The former Amazon.com AMZN.O executive was recruited to lead Hulu, because he did not rely on a set of assumptions about the way television should work, according to executives who were involved in the creation of Hulu.
Within two months of Hulu’s launch in March 2008, the site, once dubbed by critics in the blogosphere as ClownCo, surged in popularity.
Mr. Kilar left Hulu in 2013, following disagreements with the company’s owners, the former News Corp NWSA.O, NBCUniversal and the Walt Disney Co DIS.N, which had pushed for more advertising and an end to the free version of the service.
Mr. Kilar launched his own subscription video service for social media content, Vessel, which was subsequently sold in 2016 to Verizon, and four years later he joined WarnerMedia, just as the COVID-19 pandemic was spreading.
That experience led him to changes which threaten to reshape Hollywood. Faced with closed movie theatres and surging competition online, Kilar shattered the traditional release “windows” for films, which have always brought movies into homes after lengthy showings in theatres.
Mr. Kilar premiered new films in theatres and on the HBO Max streaming service on the same day, during the pandemic. The experiment began with the premiere of “Wonder Woman 1984″ on Christmas Day 2020, and continued through 2021.
The move provided a steady flow of new entertainment to the service at a time when the pandemic had disrupted production schedules throughout the industry. It also helped the fledgling HBO Max, and the HBO cable TV network, to add 73.8 million subscribers.
“History has shown that incumbents tend to fight trends that challenge established ways,” to their detriment, Mr. Kilar wrote in a 2011 blog post. – Reuters
SAN FRANCISCO/NEW YORK – Did Elon Musk break securities laws again?
Former securities officials and professors said Musk may have missed a key disclosure deadline when he bought 9% of Twitter. And Securities and Exchange Commission regulators could use any shortfall to try to punish Musk more for other lapses, some believe.
Musk on Monday disclosed that he bought a 9.2% stake in Twitter Inc TWTR.N, making him the micro-blogging site’s largest shareholder and triggering a rise of more than 27% in the company’s shares. The filing said March 14, 2022 is the date of the event that requires the statement.
U.S. securities law requires disclosure within 10 days of acquiring 5% of a company, which in Musk‘s case would be March 24. A late report could lead to per-violation civil penalty of up to $207,183, when adjusted for inflation, according to Urska Velikonja, a law professor at Georgetown University Law Center.
That’s a financial slap on the wrist for Musk, the world’s richest person with $302 billion net worth, according to Forbes, but the regulator could look into market manipulation allegations regarding the Twitter stock buy and seek harsher sanctions in an ongoing investigation regarding his Tesla stock sales, experts say.
“This is not really a gray area. He acquired it and didn’t file within 10 days. It’s a violation. And so this is a slam dunk case from the SEC perspective,” Adam C. Pritchard, a law professor at University of Michigan Law School, said.
The SEC is also investigating Musk‘s Nov. 6, 2021, tweet asking his followers whether he should sell 10% of his Tesla stake. The regulator reached a 2018 deal for Musk to get preapproval on some of his tweets, following a Musk tweet that he had “funding secured” to take Tesla private. The SEC said that defrauded investors.
The SEC said last month it has told Musk’s and Tesla’s counsel that staff are conducting an investigation relating to potential federal securities law violations.
Pritchard said the SEC could “tell a court that he’s a recidivist violator of the securities laws and that he needs to be dealt with harshly.”
SEC and Tesla did not respond to Reuters’ requests for comments.
Musk also made market-moving comments about Twitter, after his purchase, without disclosing his stake.
On March 25, Musk tweeted a poll: “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”
A day later, Musk, a prolific user of Twitter himself, said that he was giving “serious thought” to building a new social media platform.
“Musk is taking real risks here,” said Velikonja. Musk was playing a game with the SEC officials, saying “‘Stop me if you can, but you can’t,” she said, adding, “I do suspect the SEC is going to look long and hard into whether they can bring manipulation charges, along with the failure to file.”
Musk has been critical of the social media platform and its policies of late, accusing the company of failing to adhere to free speech principles.
“Arguably, his social media posts about potential alternatives to Twitter can be seen, in light of his previously undisclosed stake, as a form of market manipulation to affect the share price, but proving that seems difficult,” Howard Fischer, a former SEC council and a partner at law firm Moses & Singer, said.
“The fact that the revelation of his stake caused a price rise that resulted in Musk‘s stake increasing in value is something that the SEC might look into.”
Twitter stocks have surged since mid-March when Musk purchased his stake. Musk‘s stake, valued at around $2.4 billion at the closing price of March 14, jumped to $3.7 billion as of Monday’s closing price.
“The SEC certainly would look at if anyone who knew about the acquisition of these shares trading in advance of the filing. I really think that would be the focus rather than the tardiness,” Jacob Frenkel, a former SEC enforcement attorney and government investigations and securities enforcement practice chair for law firm Dickinson Wright. – Reuters
PLDT Inc., the Philippines’ biggest telecommunications and digital services provider by market value, has picked Edgepoint Infrastructure and edotco Group Sdn. as the preferred bidders for its local towers, people familiar with the matter said.
Edgepoint, backed by DigitalBridge and Abu Dhabi Investment Authority, is in exclusive talks with PLDT for a portfolio of about 3,000 towers in the greater Manila area, according to the people. Malaysia’s telecommunications tower firm Edotco has entered into exclusive discussions for another 3,000 towers outside of Manila, said the people, asking not to be identified because the matter is private.
The two deals could be valued at about $1.5 billion and agreements could be reached as soon as in the coming days, the people said.
Talks could still fall apart and no final decision has been made, the people said. Other bidders including private equity firms and industry players remain interested in the assets, the people said. Representatives for Edgepoint and DigitalBridge declined to comment, while representatives for Edotco and PLDT didn’t immediately respond to requests for comment.
PLDT has been working with an adviser to find a buyer for its phone towers in the Philippines, Bloomberg News reported last year. A transaction would involve PLDT selling the towers and then leasing them back, people familiar with the matter said at the time.
PLDT, which has a market value of about P392 billion ($7.6 billion), counts Japan’s Nippon Telegraph & Telephone Corp. and Hong Kong-based investment firm First Pacific Co. among its major shareholders, according to data compiled by Bloomberg. — Bloomberg
The past two years, highlighted by the coronavirus disease 2019 (COVID-19) pandemic, further stressed the value of having resilient healthcare, as well as the advantage of cooperation among organizations, sectors, and even nations. Between India and the Philippines, for instance, great opportunities abound to optimize their long-running ties by cooperating to improve each other’s healthcare and medical services.
Such opportunities were explored during the India-Philippines Business Conference on Healthcare and Medical Cooperation, held for the first time as a hybrid event last March 23. Organized by the Indian Embassy, Manila and BusinessWorld, as a special edition of BusinessWorld Insights, the conference was attended by Philippine and Indian business leaders and representatives in the healthcare and medical fields online and on-site, at Shangri-la at the Fort, Bonifacio Global City, Taguig.
In his opening remarks, Amb. Shambhu S. Kumaran, Ambassador of India to the Philippines, highlighted that the “deep-seated vulnerability” of the two countries in terms of supply chains, exposed by the pandemic, requires building partnerships grounded on trust, especially as there are untapped capabilities seen on both sides.
“As two democracies, we recognize that our people need accessible healthcare. They need affordable healthcare, and they need healthcare to be available. This is only possible if we look at the value of partnerships looking beyond the immediate value to the transaction, to society,” Mr. Kumaran said.
Philippine Ambassador to India Ramon S. Bagatsing Jr., meanwhile, encouraged Indian investors to invest in the Philippines as immense opportunities emerge and several incentives await them. “It is to be expected that in light of the current pandemic, Philippine health expenditure will continue to rise due to cost expansion and spending on health services by government and private entities, which in turn opens a window of opportunity for local and international pharmaceutical companies to [meet] these gaps,” he said.
Karthik Rajagopal, a co-chair at the Federation of Indian Chambers of Commerce and Industry, highlighted that the two countries have a big potential to collaborate in health technology; while Arun Kumar Garodia, senior vice-chairman of India’s Engineering Export Promotion Council, noted that the Philippines is an important market for medical devices, which he noted has become “a sunrise sector” in India.
The discussions that followed delved deeper into engagement opportunities in healthcare services, pharmaceuticals, and medical devices.
During the session on healthcare services, Dr. Karan Thakur, vice-president for public affairs at integrated healthcare provider Apollo Hospitals Group, shared that they look forward to bringing its expertise in medical technology, mobile health technologies, and clinical care to the Philippines.
Also, Vikram Vuppala, founder and CEO of NephroPlus, India’s largest dialysis network, shared that they would like to improve access to dialysis in the Philippines, as their company did within India. “What my team tells me is the dialysis capacity is a little bit lopsided when you compare it to the size of the population. Our vision in the Philippines is to address that lopsided supply and demand..,” he said.
Christian S. Argos, president and CEO of Maxicare Healthcare Corp., also noted that health technology is a striking opportunity for cooperation as such services are seen to support the medical community in allocating limited resources. Rafael Jaime Recio, head of corporate strategy and development at AC Health, observed that the emergence and acceptance of new healthcare delivery models provide ample opportunities for cooperation.
Within pharmaceuticals, M V Ramana, CEO for Branded Markets (India and Emerging Markets) at multinational Dr. Reddy’s Laboratories, finds opportunities in localizing the production of pharmaceuticals to achieve self-sufficiency. To make this much possible, however, approval process can be accelerated to make partnership with Indian companies more convenient, as Lakshminarayana Neti, chief operating officer for operations planning at India-based Biological E. Ltd., stressed.
“If the countries can mutually respect each other’s regulators, and then if they can accelerate the pathways for approvals, that would help us to serve the market of the Philippines,” he said.
Higinio P. Porte, Jr., senior vice-president and chief manufacturing officer at Pascual Laboratories, Inc., and Christopher M. Bamba, business development director of Lloyd Laboratories, Inc., both highlighted the Philippines’ capability in research and development, and technology transfer in partnering with Indian companies within the field.
Medical devices, for Association of Indian Medical Device Industry founder and forum coordinator Rajiv Nath, is the “next big story” in India after IT and pharmaceuticals. But for the country’s numerous manufacturers to fruitfully collaborate in the Philippines, Mr. Nath continued, easier and more affordable registrations are needed.
“We think that there can be a mutual recognition agreement between the Indian and the Philippine governments whereby…certification for medical devices…can be used to fast-track their registration process,” he explained. “We also seek that there would be an MoU whereby registration cost could possibly we lowered for India companies coming into the Philippines.”
Among the medical devices companies becoming a part of this “next big story” are BPL Medical Technologies, whose products range from imaging to home care, and Remidio Innovative Solutions, which builds smart medical devices to improve eye-care access. These were represented by CEO Praveen Nagpal and Vice-President Bhargav Sosale, respectively, during the forum.
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Motorcycle riders are seen at a gas station in Marikina, March 14. — PHILIPPINE STAR/ WALTER BOLLOZOS
By Bernadette Therese M. Gadon, Researcher
PHILIPPINE INFLATION climbed to a six-month high in March as food, utilities, and transport costs rose due to the spike in global oil prices after Russia’s invasion of Ukraine.
Preliminary data from the Philippine Statistics Authority (PSA) showed annual headline inflation accelerated to 4% last month from 3% in February, but slightly slower than the 4.1% print in March last year.
The March inflation was fastest since the 4.2% inflation in September 2021. It matched the 4% print in October last year and the 4% median in a BusinessWorld poll conducted last week.
It was also near the upper end of the 3.3-4.1% forecast range of the Bangko Sentral ng Pilipinas (BSP) for March.
Inflation, meanwhile, picked up by 0.9% on a monthly basis.
For the first quarter, inflation settled at 3.4%, within the 2-4% central bank’s inflation target band for 2022 but below the full-year forecast of 4.3%.
The central bank said the average inflation this year could breach the upper end of its target band due to surge in global crude oil prices.
However, it projects that inflation will decline and settle within the target band at 3.6% by next year.
“Inflation expectations have likewise risen, but continue to be anchored to the 2-4% target band,” BSP Governor Benjamin E. Diokno said in a Viber message to reporters.
The BSP chief noted Russia’s invasion of Ukraine is now a “significant headwind” to the global economic recovery.
“The Russia-Ukraine conflict could affect the Philippines through slower world GDP (gross domestic product) growth, higher crude oil prices, higher world non-oil prices, and potential second-round effects on inflation through transport fares, wages, and food prices,” he said.
“Under these circumstances, the BSP will closely monitor the emerging risks to the outlook for inflation and growth, and remain vigilant against possible second-round effects from supply-side pressures or any shifts in the public’s inflation expectation,” Mr. Diokno said.
Global crude oil prices have surged above $100 a barrel since Russia invaded Ukraine in late February due to supply concerns. Russia is the world’s second-largest exporter of crude oil.
Since the start of the year, local prices of gasoline, diesel, and kerosene posted a net increase of P16, P26, and P24.10 per liter, respectively.
PSA data showed inflation of heavily weighted food and non-alcoholic beverages picked up to 2.6% in March from 1.2% in February.
Housing, water, electricity, gas, and other fuels rose to 6.2% from 4.8%, while transport quickened to 10.3% from 8.8%.
The PSA also reported electricity and liquified petroleum gas (LPG) prices rose 18% and 26.5%, respectively, in March, from 13.5% and 17.6% in February, respectively.
Meanwhile, the inflation as experienced by the bottom 30% income households — at constant 2012 prices — quickened to 3.3% last month from 2.7% in February, but lower than 5.5% in March 2021.
Year to date, inflation as experienced by poor households settled at 3%.
The statistics agency targets to release the 2018-based inflation data for the bottom 30% by December 2022, as soon as it finishes conducting its commodity and outlet survey, National Statistician Claire Dennis S. Mapa said at a press briefing on Tuesday.
The nationwide commodity and outlet survey provides the basis for the identification of the market basket at different income levels — upper 70% and bottom 30%. It was last conducted in 2008.
The National Economic and Development Authority, for its part, said the government has taken steps to address the inflationary pressures brought by the Russia-Ukraine conflict.
“We have been proactively monitoring the impact of the Russia-Ukraine conflict,” Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a statement.
Analysts said that March marks the start of a steady increase in consumer prices in the coming months.
Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail interview that the continued rise in fuel prices may spill over to fares and wages.
“Based on the current trajectory, headline inflation may exceed the central bank’s target band beginning this second quarter — which is likely the peak quarter — before tempering and remaining near the 4.0% area for the balance of the year,” Mr. Roces said.
“As there is scope for oil prices to continue to remain elevated with more forthcoming sanctions against Russia, this points to upside risks to the inflation outlook, which we currently see averaging 4.2% for the year,” he added.
China Banking Corp. Chief Economist Domini S. Velasquez said oil prices have been increasing even before the geopolitical tension between Russia and Ukraine.
“We suspect higher input costs, such as that of elevated fuel prices, have already trickled to food inflation, such as in the prices of meat, fish, and vegetables,” she said in a Viber message.
“Continued elevated global commodity prices, worsening of supply chain bottlenecks due to lockdowns in China, secondary round effects of fuel prices on food products and manufactured goods will push up inflation next month,” she added.
In a press release, Bank of the Philippine Islands said: “Upside risks to inflation continue to build up and most likely we have not seen the peak yet.” — with inputs fromLuz Wendy T. Noble
BANGKO SENTRAL NG PILIPINAS GOVERNOR BENJAMIN E. DIOKNO — PHILIPPINE STAR/ GEREMY PINTOLO
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno gives a speech at the Philippine Economic Briefing at the Philippine International Convention Center, Pasay City, April 5. — PHILIPPINE STAR/ GEREMY PINTOLO
By Luz Wendy T. Noble, Reporter
THE PHILIPPINE central bank is ready to take preemptive action if inflation expectations are at risk of being “disanchored,” its governor said on Tuesday.
“We are prepared to take preemptive action as needed if inflation expectations become at risk or disanchored,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said at the Philippine Economic Briefing held in Pasay City on Tuesday.
He said they continue to be patient and will consider a rate hike adjustment by the second half of 2022.
Mr. Diokno said March consumer price index (CPI) data suggest that inflation will likely be elevated in the coming months.
Inflation jumped to 4% in March, near the upper end of the BSP’s projected range of 3.3-4.1% for the month and still within the 2-4% target band for the year.
“This means that the BSP must be prepared to take action to prevent price pressures from broadening and becoming more entrenched which could translate to second-round effects,” Mr. Diokno said.
In March, the BSP kept rates at record lows as it cited the need to keep supporting the economy at a time of increased uncertainties to the growth and inflation outlook. At the same time, it acknowledged that economic recovery has already gained traction.
The Monetary Board now expects inflation to breach the target at 4.3% for 2022 from 3.7% previously, citing the surge in oil and commodity prices due to the Russia-Ukraine war.
“Now, on the timing of the disengagement strategy, I think we are still on track despite the Russia-Ukraine crisis. We’re still looking at the second half of the year for our normalization [of rates] strategy,” he said.
Mr. Diokno said their eventual normalization of policy setting will be supported by firmer signs of a “durable economic recovery.”
The key policy rate is currently at a record low of 2%, and Mr. Diokno has earlier said this could reach 2.75% by 2023.
For UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, a preemptive rate hike from the central bank could do “more good than harm.”
“I believe that it would be good for monetary policy to anticipate right away and hike rates, albeit gradually, to help tame the actual rise in prices,” Mr. Asuncion said in a Viber message.
Meanwhile, Security Bank Corp. Chief Economist Robert Dan J. Roces said non-monetary policy measures like fuel subsidies and wider food imports are crucial to respond to inflationary pressures.
“However, we think the BSP may also be standing ready to raise the benchmark rate earlier than planned as a form of preemptive strike to further moderate inflation should price pressures start to become too compelling to ignore,” he said.
The Monetary Board will have its next policy review on May 19. Its first policy-setting meeting in the second half is on June 23.
Meanwhile, Mr. Diokno said they have extended another P300-billion zero-interest loan to the National Government.
“They recently renewed it and it will be paid by June 12. So, by the time the new administration takes over, there will be no more advances from the central bank,” he said.
A decision on future direct advances will be made by the next administration.
This is the sixth time the BSP extended direct advances to the National Government since the pandemic. It is lower than the P540 billion which was extended thrice in 2021, reflecting the gradual withdrawal of the BSP’s budgetary support to the National Government.
Under Republic Act (RA) No. 11494 or the Bayanihan to Recover as One Act, the BSP is allowed to lend the National Government an equivalent of 30% of its average revenue or P850 billion. This is higher than the cap set at 20% of its average annual revenue provided by RA 7653 or The New Central Bank Act.
Mr. Diokno also said they have significantly reduced their purchase of government securities.
“It’s been declining significantly. Right now, we almost don’t trade anymore. There are days when we don’t buy it,” he told reporters in mixed Filipino and English.
People hold umbrellas as they walk along UN Avenue in Manila, April 5. — PHILIPPINE STAR/ RUSSELL PALMA
By Tobias Jared Tomas
THE WORLD BANK trimmed its growth forecast for the Philippines to 5.7% in 2022 due to the impact of the war in Ukraine, warning that growth could further slow to 4.9% if conditions worsen.
At a briefing on Tuesday, World Bank East Asia and Pacific Chief Economist Aaditya Mattoo said the Philippine growth projection for 2022 was downgraded from 5.8% forecast given in October, which he said was already conservative.
The Philippine economy expanded by 5.6% in 2021.
For 2023 and 2024, the World Bank expects the country’s gross domestic product (GDP) to grow by 5.6% on average.
However, these new projections are below the Philippine government’s 7-9% target for 2022, and 6-7% for 2023.
“Growth will draw strength from the domestic environment with declining COVID-19 (coronavirus disease 2019) cases, looser restrictions, and wider reopening. The strong domestic condition will help compensate for the weak external environment, reeling from a global growth deceleration, rising inflation, and geopolitical turmoil,” the World Bank said in a report released on Tuesday.
Consumption growth would be higher if not for the Russia-Ukraine conflict, which pushed up prices of fuel and food.
Mr. Mattoo said the Philippines is vulnerable to the impact of the Russia-Ukraine war since it is a net importer of fuel. Oil prices have surged since Russia’s invasion of Ukraine, which began on Feb. 24.
The World Bank said Philippine poverty incidence is estimated at 18.3% in 2021, and this is expected to decline to 16.2% this year as the economy recovers. However, the drop in poverty may be affected by the spike in inflation.
“In the Philippines, we have done a simulation that showed if food prices increased by say, 10%, it would lead to an increase in the poverty head count by 1% or another million. The fuel price increase will have an impact of one-third as large if it’s about 10%. There’s a big adverse effect on poverty reduction goals, and will hurt growth,” Mr. Mattoo said.
The World Bank said the Philippines faces significant external risks from the global policy tightening and rising commodity and energy prices, while domestic risks emanate from the upcoming May elections.
“The political transition risks policy discontinuity that may undermine market confidence,” it said.
Threats from new COVID-19 variants also loom, but the World Bank noted the Philippines has adopted systems to allow increased mobility and localized responses to fresh outbreaks that reduce the impact on the economy.
‘TRIAD OF SHOCKS’ Meanwhile, the Washington-based lender said developing East Asia and Pacific (EAP) region’s GDP is now expected to grow by 5% this year, lower than the 5.4% forecast given in October.
Mr. Mattoo said the region is facing a “triad of shocks which threaten to undermine its growth momentum,” citing the Russia-Ukraine war as the biggest risk.
“Shocks emanating from the war in Ukraine are disrupting the supply of commodities, increasing financial stress, and dampening global growth, which will mean lower economic growth and higher poverty in developing EAP,” the World Bank said.
Growth in the region, which includes China, may slow to 4% “if global conditions worsen and national policy responses are weaker,” it added.
Other risks include the ongoing coronavirus pandemic, the financial tightening in the United States, and China’s economic slowdown.
The US Federal Reserve raised its policy rate for the first time since 2018 last month to combat decades-high inflation. It also signaled more aggressive hikes in the coming meetings.
China is battling the biggest surge in COVID-19 cases since the start of the pandemic, as it continues to stick to a “zero-COVID” strategy.
The World Bank sees China, which accounts for 86% of regional output, growing by 5% this year in a baseline scenario and 4% in a lower-case scenario.
The EAP region, excluding China, is forecasted to grow by 4.8%, while growth in ASEAN+5 countries is projected to expand by 4.9%.
“The succession of shocks means that the growing economic pain of the people will have to face the shrinking financial capacity of their governments. A combination of fiscal, financial and trade reforms could mitigate risks, revive growth and reduce poverty,” Mr. Mattoo said.
The World Bank recommended four types of policy action to help economies mitigate the risks and revive growth. This includes providing efficient and targeted support to households and firms, instead of price regulations; and “stress-testing financial institutions could help identify risks that fester behind the veil of regulatory forbearance.”
It also proposed reforms of trade-related policies in goods, and improving skills to strengthen the capacity to adopt new digital technologies.
FINANCE SECRETARY CARLOS G. DOMINGUEZ — PHILIPPINE STAR/ GEREMY PINTOLO
Finance Secretary Carlos G. Dominguez delivers a speech at the Philippine Economic Briefing on Tuesday. — PHILIPPINE STAR/ GEREMY PINTOLO
THE BUDGET deficit is expected to start narrowing this year, with borrowings likely to decline and revenues seen to rise as the economy rebounds from the coronavirus pandemic, Finance Secretary Carlos G. Dominguez III said at the Philippine Economic Briefing on Tuesday.
For 2022, Mr. Dominguez said the budget deficit is expected to hit P1.65 trillion, slightly lower than 2021’s actual deficit of P1.67 trillion.
“Last year, our revenue collection was already 5% higher than in 2020, signaling a return to robust economic activity. This year, we expect to bring back our revenue collections to pre-pandemic levels,” he said.
Domestic and external borrowings are also expected to drop to P1.65 trillion and P560 billion respectively, from local and foreign borrowings of P1.98 trillion and P568 billion respectively in 2021.
Mr. Dominguez said the Philippine economy is now recovering “strongly,” but has to deal with volatility arising from the Russia-Ukraine war.
“As the pandemic subsides, the Philippine economy is now well on its way to rapid recovery,” Mr. Dominguez said, citing the decline in coronavirus disease 2019 (COVID-19) cases and reopening of the economy.
Economic managers expect the economy to grow by 7-9%, after gross domestic product (GDP) expanded by 5.6% in 2021.
Mr. Dominguez said economic managers are keeping a close eye on the impact of the Russia-Ukraine war on the economy, particularly on fuel prices.
“Our optimism is, of course, tempered by the uncertainties introduced by the Ukraine conflict. We face a situation that will almost certainly raise inflation levels in all countries. This will be due primarily to the spike in oil and commodity prices,” he said.
The Finance chief emphasized there is no shortage of commodities, despite the spike in prices.
“There is no shortage of commodities, there is no shortage of fuel, of corn, of wheat. It’s actually the anticipation of shortages that are driving up prices,” Mr. Dominguez said.
“It’s affecting us negatively, but we’re confident that since our agricultural production in the Philippines, particularly for our staple food especially for rice, is constant.”— Tobias Jared Tomas
THE Securities and Exchange Commission (SEC) has revoked the certificates of incorporation of ScentKoWorld Corp. and Brendahl Cruz Holdings, Inc. for illegally selling securities to the public.
In its revocation order, the SEC found the two companies to have been promising the public a 400% return for investing in their “buy and earn” programs.
“Under its investment scheme, ScentKoWorld entices the public to buy perfume and beauty products in exchange for ‘cash sales rewards’ equivalent to 400% of the purchase price. Hence, their member was promised a return of P20,000 for simply buying a package worth P5,000,” the SEC said.
“Also, their members may receive the promised return in about 30 days, without having to resell the products, depending on how soon ScentKoWorld can recruit new members. Accordingly, the company encourages its members to recruit others as well. And lastly, ScentKoWorld promises a referral fee equivalent to 10% of the amount invested by the new member,” it added.
The SEC said the investment scheme has the characteristics of an investment contract, which must first be registered with the commission before it is offered and sold or distributed to the public.
The regulator found that ScentKoWorld and Brendahl Cruz Holdings have not registered any securities that would allow them to offer or sell securities to the public and that they are not licensed capital market professionals such as, among others, securities brokers.
In 2019, a cease-and-desist order was issued by the commission against entities affiliated with Brendahl Cruz, including ScentKoWorld and Brendahl Cruz Holdings.
“The said corporations did not pay attention thereto, and in fact, continued their investment-taking activities,” the SEC said.
“The department was able to prove that the entities involved therein were engaged in illegal activities of soliciting investments from the public without the requisite secondary license, and worse, the investment-taking activities are within the context of a Ponzi Scheme as there was nothing that would indicate that there is a lawful business activity from which to generate the supposed income to be distributed to their member-investors,” it added.
In 2018, ScentKoWorld registered with the commission with its primary purpose stated as “to engage in wholesale trading of goods and merchandise, provided that the corporation shall not solicit, accept or take investments and placements from the public neither shall it issue investment contracts.”
Meanwhile, Brendahl Cruz Holdings registered with the commission in 2019. It stated its primary purpose was to “acquire by purchase, exchange, assignment or otherwise, and sell, assign, transfer, exchange, lease, let, develop, mortgage, pledge, deal, in and with and otherwise operate, enjoy, and dispose of, all properties of every kind and description and wherever situated and to the extent permitted by law, including but not limited to real estate, whether improve or unimproved, and any interest or rights therein, as well as buildings, tenements, warehouses, factories, edifices and structures and other improvements, and shares of capital stock or other securities, among others.”
The SEC warned the public not to invest or stop investing in any investment scheme being offered by the two companies.
“Those who act as salesmen, brokers, dealers or agents in selling or convincing people to invest in [said entities] including soliciting investments or recruiting investors through the internet may be held criminally liable,” the commission said.
Violators may also face a penalty of a maximum fine of P5 million or imprisonment of up to 21 years. — Luisa Maria Jacinta C. Jocson
ABOITIZ Power Corp.’s joint venture with Norwegian firm Scatec will start this month the construction of a 20-megawatt (MW) battery energy storage system (BESS) located at the Magat hydroelectric power plant in Ramon, Isabela province, the listed energy company said on Tuesday.
In a disclosure, AboitizPower said the joint venture, SN Aboitiz Power (SNAP) Group, signed on March 25 the engineering, procurement and construction (EPC) agreement with Hitachi Energy for the development of the Magat BESS project.
“We are excited about technologies like BESS that complement our ambition of bringing forth an RE (renewable energy)-powered future, and continue to explore and assess other greenfield and brownfield opportunities beyond hydropower and floating solar. We also appreciate the support of our banking partners for project financing,” SNAP Group President and Chief Executive Officer Joseph S. Yu said.
The joint venture tapped Bank of the Philippine Islands and China Banking Corp. to provide financing for the project.
Early-phase activities for the Magat BESS project were completed in 2021 as part of the pre-construction stage, which included site surveys and basic engineering design, AboitizPower said.
Magat BESS, which is expandable to 24-MW, is planned to be used primarily for ancillary services or reserve power.
The project marks the first venture between renewable energy providers AboitizPower and Scatec after the latter acquired hydropower developer SN Power. It is targeted for commercial operation in the first quarter of 2024.
Scatec General Manager for Southeast Asia Torbjørn Elliot Kirkeby-Garstad said that building the BESS facility is the first step in the company’s ambition to work on more initiatives in the Philippines.
“The Philippines is an important market for Scatec, and we see several promising opportunities, especially in renewables,” he added.
AboitizPower said in line with the BESS project, grid operator National Grid Corporation of the Philippines is set to upgrade the 230-kilovolt Magat-Santiago transmission line.
“The upgrade will allow SNAP to continue adding capacities within the Magat area for additional projects,” it said.
On Tuesday, shares in AboitizPower rose by a centavo 2.78% to close at P37 apiece. — Ram Christian S. Agustin
