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White House defends firing of labor official as critics warn of trust erosion

STOCK PHOTO | Image from Rawpixel

WASHINGTON – White House economic advisers on Sunday defended President Donald Trump’s firing of the head of the Bureau of Labor Statistics, pushing back against criticism that Trump’s action could undermine confidence in official U.S. economic data.

Later on Sunday, Trump again criticized BLS Commissioner Erika McEntarfer, without providing evidence of wrongdoing, and said he would name a new BLS commissioner in the next three or four days.

U.S. Trade Representative Jamieson Greer told CBS that Trump had “real concerns” about the BLS data, while Kevin Hassett, director of the National Economic Council, said the president “is right to call for new leadership.”

Mr. Hassett said on Fox News Sunday the main concern was Friday’s BLS report of net downward revisions showing 258,000 fewer jobs had been created in May and June than previously reported.

Mr. Trump accused Ms. McEntarfer of faking the jobs numbers, without providing any evidence of data manipulation. The BLS compiles the closely watched employment report as well as consumer and producer price data.

The BLS gave no reason for the revised data but noted “monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.”

Ms. McEntarfer responded to her abrupt dismissal on Friday in a post on the Bluesky social media platform, saying it was “the honor of her life” to serve as BLS commissioner and praising the civil servants who work there.

Ms. McEntarfer’s firing added to growing concerns about the quality of U.S. economic data and came on the heels of a raft of new tariffs on dozens of trading partners, sending global stock markets tumbling as Trump presses ahead with plans to reorder the global economy.

Investors also are watching the impact of the surprise resignation of Federal Reserve governor Adriana Kugler, which opened a spot on the central bank’s powerful board and could shake up what was already a fractious succession process for Fed leadership amid difficult relations with Mr. Trump.

Mr. Trump said on Sunday he would announce a candidate to fill the open Fed position within the next couple days.

 

REVISIONS ARE COMMON

In an interview with CBS’ “Face the Nation,” Greer acknowledged there were always revisions of job numbers, “but sometimes you see these revisions go in really extreme ways.”

Brian Moynihan, CEO of Bank of America, said large revisions of economic data could undermine public confidence and that government officials should develop ways of improving data quality.

“They can get this data, I think, other ways and I think that’s where the focus ought to be: how do we get the data to be more resilient and more predictable and more understandable?” he said on CBS. “Because what bounces around is restatements … that creates doubt about it.”

Critics, including former leaders of the BLS, slammed Trump’s move and called on Congress to investigate Ms. McEntarfer’s removal, saying it would shake trust in a respected agency.

“It undermines credibility,” said William Beach, a former BLS commissioner and co-chair of the group Friends of the BLS.

“There is no way for a commissioner to rig the jobs numbers,” he said. “Every year we’ve revised the numbers. When I was commissioner, we had a 500,000 job revision during President Trump’s first term,” he said on CNN’s “State of the Union.”

Former Treasury Secretary Larry Summers, who worked in both the Clinton and Obama administrations, also criticized Ms. McEntarfer’s firing.

“This is a preposterous charge. These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals,” Summers said on ABC’s “This Week.”

 

LARGE REVISION

The BLS surveys 121,000 employers – businesses and government agencies – each month, seeking their total payroll employment during the week in which the 12th day of the month falls. The response rate has fallen sharply since the COVID pandemic, from 80.3% in October 2020 to about 67.1% in July.

Knowing that, BLS allows late-arriving employer submissions, and revisions to earlier submissions, to be taken into account over the next two months.

That means each month’s initial estimate of employment for the immediately preceding month also contains revisions to the two months before that.

The revisions in Friday’s report were large by historic standards. The downward revision of 125,000 jobs for May was the largest between a second estimate and third estimate since a 492,000 reduction for March 2020. That was the largest ever and was reported in June 2020 for the payrolls report for May 2020. – Reuters

China’s independent oil firms elbow into Iraq’s majors-dominated market

STOCK PHOTO | Image by Ratfink1973 from Pixabay

SINGAPORE/BAGHDAD – China’s independent oil companies are ramping up operations in Iraq, investing billions of dollars in OPEC’s number two producer even as some global majors have scaled back from a market dominated by Beijing’s big state-run firms.

Drawn by more lucrative contract arrangements, smaller Chinese producers are on track to double their output in Iraq to 500,000 barrels per day by around 2030, according to estimates by executives at four of the firms, a figure not previously reported.

For Baghdad, which is also seeking to lure global giants, the growing presence of the mostly privately run Chinese players marks a shift as Iraq comes under growing pressure to accelerate projects, according to multiple Iraqi energy officials. In recent years, Iraq’s oil ministry had pushed back on rising Chinese control over its oilfields.

For the smaller Chinese firms, managed by veterans of China’s state heavyweights, Iraq is an opportunity to leverage lower costs and faster development of projects that may be too small for Western or Chinese majors.

With meagre prospects in China’s state-dominated oil and gas industry, the overseas push mirrors a pattern by Chinese firms in other heavy industries to find new markets for productive capacity and expertise.

Little-known players including Geo-Jade Petroleum Corp., United Energy Group, Zhongman Petroleum and Natural Gas Group and Anton Oilfield Services Group made a splash last year when they won half of Iraq’s exploration licensing rounds.

Executives at smaller Chinese producers say Iraq’s investment climate has improved as the country becomes more politically stable and Baghdad is keen to attract Chinese as well as Western companies.

Iraq wants to boost output by more than half to over 6 million bpd by 2029. China’s CNPC alone accounts for more than half of Iraq’s current production at massive fields including Haifaya, Rumaila and West Qurna 1.

 

PROFIT-SHARING, RISK TOLERANCE

Iraq’s shift a year ago to contracts based on profit-sharing from fixed-fee agreements – an attempt to accelerate projects after ExxonMobil and Shell scaled back – helped lure Chinese independents.

These smaller firms are nimbler than the big Chinese companies and more risk-tolerant than many companies that might consider investing in the Gulf economy.

Chinese companies offer competitive financing, cut costs with cheaper Chinese labor and equipment and are willing to accept lower margins to win long-term contracts, said Ali Abdulameer at state-run Basra Oil Co, which finalizes contracts with foreign firms.

“They are known for rapid project execution, strict adherence to timelines and a high tolerance for operating in areas with security challenges,” he said. “Doing business with the Chinese is much easier and less complicated, compared to Western companies.”

Smaller Chinese firms can develop an oilfield in Iraq in two to three years, faster than the five to 10 years for Western firms, Chinese executives said.

“Chinese independents have much lower management costs compared to Western firms and are also more competitive versus Chinese state-run players,” said Dai Xiaoping, CEO of Geo-Jade Petroleum, which has five blocks in Iraq.

The independents have driven down the industry cost to drill a development well in a major Iraqi oilfield by about half from a decade ago to between $4 million and $5 million, Dai said.

 

TRADE-OFFS

A Geo-Jade-led consortium agreed in May to invest in the South Basra project, which includes ramping up the Tuba field in southern Iraq to 100,000 bpd and building a 200,000-bpd refinery. Geo-Jade, committing $848 million, plans to revive output at the largely mothballed field to 40,000 bpd by around mid-2027, Dai told Reuters.

The project also calls for a petrochemical complex and two power stations, requiring a multi-billion-dollar investment, said Dai, a reserve engineer who previously worked overseas with CNPC and Sinopec.

Zhenhua Oil, a small state-run firm that partnered with CNPC in a $3 billion deal to develop Ahdab oilfield in 2008, the first major foreign-invested project after Saddam Hussein was toppled in 2003, aims to double its production to 250,000 bpd by 2030, a company official said.

Zhongman Petroleum announced in June a plan to spend $481 million on the Middle Euphrates and East Baghdad North blocks won in 2024.

Chinese firms’ cheaper projects can come at the expense of Iraq’s goal to introduce more advanced technologies.

Muwafaq Abbas, former crude operations manager at Basra Oil, expressed concern about transparency and technical standards among Chinese firms, which he said have faced criticism for relying heavily on Chinese staff and relegating Iraqis to lower-paid roles.

To be sure, some Western firms are returning to Iraq: TotalEnergies announced a $27 billion project in 2023, and BP is expected to spend up to $25 billion to redevelop four Kirkuk fields in the semi-autonomous Kurdish region, Reuters reported. – Reuters

Iran sets up new defense council in wake of war with Israel

STOCK PHOTO | Image by jorono from Pixabay

DUBAI – Iran’s top security body approved the establishment of a National Defense Council on Sunday, according to state media, following a short air war with Israel in June that was Iran’s most acute military challenge since the 1980s war with Iraq.

“The new defense body will review defense plans and enhance the capabilities of Iran’s armed forces in a centralized manner,” the Supreme National Security Council’s Secretariat was quoted as saying by state media.

The defense council will be chaired by Iranian President Masoud Pezeshkian, and consists of the heads of the three government branches, senior armed forces commanders, and relevant ministries.

On Sunday, the commander-in-chief of Iran’s military, Amir Hatami, warned that threats from Israel persist and should not be underestimated. – Reuters

UK’s FCA proposes 9 billion to 18 billion pound redress scheme for motor finance claims

REUTERS

LONDON – Britain’s Financial Conduct Authority (FCA) on Sunday proposed a redress scheme for consumers with motor finance compensation claims following last week’s Supreme Court ruling, estimating the cost at between 9 billion and 18 billion pounds ($12 billion and $24 billion).

Friday’s court decision had calmed the industry’s worst fears about the size of the bill it would face over improperly disclosed commissions on car loans – a sum analysts had estimated could run to tens of billions of pounds.

However, after considering that ruling, which was largely seen as a win for the banks, the FCA still proposed an industry-wide redress scheme for certain types of compensation claims.

“At this stage, we think it is unlikely that the cost of any scheme, including administrative costs, would be materially lower than 9 billion pounds and it could be materially higher,” the FCA said in a statement.

It said the total cost was hard to estimate. It cautioned that any estimates were indicative and susceptible to change, but it said those in the middle of the 9 billion to 18 billion pounds range were “more plausible.”

Some level of further compensation payout had still been expected by banks after Friday’s ruling, placing investor focus on the FCA’s decision over whether to launch a full redress scheme, what it might look like, and how much it would cost.

Lenders, including Lloyds Banking Group, Close Brothers, Barclays and the UK arms of Santander and Bank of Ireland, have already set aside nearly 2 billion pounds between them to cover potential motor finance compensation claims.

The FCA said firms should now refresh estimates of their liabilities, increase provisions where necessary, and keep markets informed.

 

CONSUMER FAIRNESS

Prior to the Supreme Court ruling, which overturned a previous court decision, there were fears the cost of redress could rival that of a payment protection insurance mis-selling scandal, which cost lenders over 40 billion pounds between 2011 and 2019.

The proposed motor finance scheme would cover so-called discretionary commission arrangements – those where the broker could adjust the interest rate offered to a customer – if they had not been properly disclosed.

The consultation will also look at which non-discretionary commission arrangements should be included.

The regulator said agreements dating back to 2007 should be considered and it would publish a consultation by early October, with an expectation that people start receiving compensation in 2026.

“Our consultation will cover how firms should assess whether the relationship between the lender and borrower was unfair for the purposes of our scheme,” the statement said.

“Any redress scheme must be fair to consumers who have lost out and ensure the integrity of the motor finance market, so it works well for future consumers.”

The consultation will also look at how interest is calculated on compensation, saying it estimated a simple annual rate of around 3% would be applicable.

The regulator said it had not decided whether the scheme should require customers to opt in, or be automatically involved unless they opt out. – Reuters

A call for smarter tax policy: Why the Philippines must lead bold reforms now

By Mon Abrea

Chief Tax Advisor, Asian Consulting Group

Following the Philippines’ 2025 State of the Nation Address, I offer this perspective, not as a politician or academic observer, but as someone who has worked closely with taxpayers, policymakers, international experts, and MSMEs to push for reforms that promote inclusive growth, responsible investment, and public trust.

After recently completing a tax policy program at Duke University’s Sanford School of Public Policy and building on past work in collaboration with international institutions and business communities, I believe this is the right time and opportunity to act.

If we want a more competitive and equitable Philippines, we must begin with a tax system that rewards productivity, empowers small businesses, and invites responsible foreign investment, without placing unnecessary burdens on those who already comply.

⸻

Five Policy Priorities to Transform the Philippine Tax System

As the 20th Congress of the Philippines opens a new legislative session, it presents a critical opportunity to advance genuine tax reform that balances fiscal responsibility, ease of doing business, and inclusive economic growth. Based on global best practices, local realities, and over a decade of field experience, I respectfully propose the following five tax policy priorities:

  1. 10% Minimum Tax for Self-Employed and Professionals (SEPs)

Establish a fair, predictable, and administratively simple baseline tax for self-employed individuals and professionals, who currently contribute disproportionately less to national revenue.

Despite earning substantial incomes, less than 3% of total income tax collections come from professionals, and less than 10% from the self-employed. In contrast, over 85% of individual income tax collections come from withholding taxes on individuals with fixed incomes.

This proposal seeks to:

  • Promote equity and broaden the tax base
  • Minimize tax evasion and underdeclaration
  • Encourage voluntary compliance through a flat, non-punitive rate

It’s a practical and politically viable way to restore fairness without increasing the burden on salaried workers or MSMEs.

  1. Risk-Based and Digital Audit System

    Replace outdated, discretionary audit selection with data-driven, risk-based frameworks supported by digital infrastructure. This will ensure audit resources are focused on high-risk, high-impact cases and reduce abuse and corruption in enforcement.

Current audit-related and deficiency collections account for less than 3% of total revenues, while 97% of tax collections rely on voluntary compliance. This exposes a systemic inefficiency and a need to professionalize tax enforcement.

This reform will:

  • Eliminate arbitrary selection and harassment
  • Improve taxpayer confidence
  • Maximize collection efficiency through targeted enforcement

Countries like Estonia and Chile have already proven how digital audit systems can dramatically increase compliance and transparency.

  1. Strengthen Super IPAs to Streamline Tax and Investment Processes

Empower Super Investment Promotion Agencies (IPAs) with centralized authority over regulatory processes, including national and local taxes, customs, permits, and audit coordination, for all Registered Business Enterprises (RBEs).

This addresses one of the most cited concerns of both foreign and domestic investors: fragmentation, duplicative audits, and inconsistent local policies.

By institutionalizing Super IPAs, we can:

  • Protect legitimate investors from regulatory friction and overlapping audits
  • Lower compliance costs and eliminate bureaucratic redundancies
  • Align incentives with national development goals and ESG priorities

This approach mirrors successful models in Singapore and the UAE, where regulatory streamlining is a cornerstone of global competitiveness.

  1. Full Automation, or Institutional Reform, of Tax Administration

Modernize the tax system through complete end-to-end digital transformation, or if necessary, abolish and replace the current tax authority with an independent, professionally managed institution.

Corruption and inefficiency thrive in manual, discretionary systems. To build credibility and restore public trust, the Bureau of Internal Revenue (BIR) must either:

  • Be fully automated, minimizing human discretion; or
  • Transition into a government-owned but privately managed authority, similar to Singapore’s Inland Revenue Authority (IRAS), operating with less political interference and greater professional accountability.

This bold reform will:

  • Improve taxpayer experience and reduce red tape
  • Prevent leakages and strengthen data-driven decision-making
  • Signal political will for real institutional change
  1. Simplified and Tiered Compliance Framework for MSMEs

Adopt a graduated and proportional compliance system for Micro, Small, and Medium Enterprises (MSMEs) based on turnover, industry, and capacity.

The issue is not just tax rates, but the cost, complexity, and fear of compliance. Many MSMEs and informal enterprises avoid registration not to evade taxes, but to avoid complicated rules, high fees, and frequent inspections.

A simplified framework will:

  • Encourage formalization and improve inclusion
  • Reduce the burden on micro and marginal income earners
  • Create a culture of compliance built on trust, not fear

With more than 99% of businesses in the Philippines classified as MSMEs, empowering them through tax simplicity is vital to inclusive recovery and national resilience.

These five tax policy priorities aim to build a modern, investment-friendly, and citizen-focused tax system; one that collects fairly, administers efficiently, and supports long-term economic transformation.

These reforms are not just policy options; they are economic necessities. Without a smarter, more inclusive tax system, we will continue to burden those who are already compliant, while failing to capture untapped revenues and foreign investment opportunities.

Reimagining the World: Starting with Tax

These priorities align with the core message of my book series, Reimagining the World, which seeks to confront the world’s most urgent challenges through systemic reforms. The first volume, Without Corruption, launched at Harvard. The second, Without Climate Change, will be released this August at Oxford. The final installment, Without Poverty, will be published in 2025 and focuses on eradicating poverty through inclusive economic and tax policies.

Tax policy is not just a matter of collection. It reflects our national values and determines who bears the cost of development and who gets left behind. It can, and must, be a tool for equity, resilience, and empowerment.

A Global Effort with Local Impact

To promote this agenda, I will lead an international tax and investment roadshow across the United States, Europe, Oceania, and Asian Region, including stops in New York, Washington D.C., Los Angeles, San Francisco, London, Paris, Madrid, Milan, South Korea, Dubai, Sydney, and Melbourne.

This roadshow will include:

  • Investment dialogues with foreign business chambers and embassies
  • Tax and policy briefings with global think tanks and Filipino leaders abroad
  • The launch of Reimagining the World: Without Climate Change
  • Engagements with international partners to position the Philippines as an ESG-aligned investment destination

The world is watching how we reform and rebuild. If we want to be seen as a serious investment hub, we must have a tax system that reflects competence, consistency, and a real commitment to inclusive growth.

As the SONA Concluded

To the President’s address, there was no renewed commitment to genuine tax policy reform, not merely as a revenue measure, but as a foundational pillar of good governance, economic justice, and global competitiveness.

Let’s not waste another year debating reforms we already know we need. Let’s act. Let’s lead. 

Let’s reimagine the Philippines and the world through smarter, bolder, and more inclusive tax policies.

Let’s get to work.

⸻

About the Author:

Mon Abrea is a global tax policy expert and the Founding Chairman and Chief Tax Advisor of the Asian Consulting Group (ACG), the Philippines’ leading tax advisory firm. A Harvard-educated public servant and Oxford-trained climate policy specialist, he recently completed the Tax Policy Executive Program at Duke University’s Sanford School of Public Policy to strengthen his work in shaping global tax reforms, particularly in developing economies like the Philippines.

Widely recognized as the most prominent advocate of genuine tax reform in the Philippines, Abrea works closely with policymakers, international organizations, and foreign investors to modernize the country’s tax system, attract sustainable investments, and protect micro, small, and medium enterprises (MSMEs). He is also the author of the Reimagining the World book series, which envisions a world without corruption, climate change, and poverty.

 

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Poll: Inflation likely slowed in July

People buy goods at the Commonwealth Market in Quezon City. Inflation likely slowed to 1.2% in July, a BusinessWorld poll showed. — PHILIPPINE STAR/EDD GUMBAN

By Luisa Maria Jacinta C. Jocson, Senior Reporter

HEADLINE INFLATION likely fell to a near six-year low in July due to softer prices of food and fuel, analysts said.

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.2% for the July consumer price index, within the central bank’s 0.5%-to-1.3% forecast for the month.

The July print would be slower than the 1.4% in June and 4.4% clip a year ago.

Analysts’ September inflation rate estimates

If realized, this would be the slowest inflation in nearly six years or since the 0.6% print posted in October 2019.

The Philippine Statistics Authority is scheduled to release the July inflation data on Tuesday (Aug. 5).

“For July inflation, my forecast is 1.2% and drivers continue to be soft food prices and muted nonfood prices, especially in energy despite some pump price adjustments of late,” Sun Life Investment Management and Trust Corp. economist Patrick M. Ella said.

In July, pump price adjustments stood at a net decrease of P1.10 a liter for gasoline and P1.10 a liter for kerosene. On the other hand, it stood at a net increase of P1.20 for diesel.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the headline rate may have slowed in July “thanks to what should be a drop in food inflation into the red, outright.”

“Food and energy prices will likely remain subdued, although the impact of lower rice tariffs, which took effect in late June 2024, will fade from annual comparisons,” Moody’s Analytics economist Denise Cheok said.

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co. said July will likely mark the fifth straight month of below-target inflation this year as rice deflation persists.

Rice inflation has been on the decline in the last few months as the government has deployed several measures to tame prices of the staple grain. These include slashing tariffs on rice imports, declaring a food security emergency on the commodity, and lowering the maximum suggested retail price (MSRP) for imported rice.

In June, rice inflation decelerated for the sixth straight month to a record 14.3%, the biggest drop since 1995.

“Moreover, the high base effect (given that inflation peaked at 4.4% in July 2024) is expected to help keep the year-on-year figure subdued despite the monthly increase,” Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also noted the one-year anniversary of the tariff cut on rice imports, which were slashed to 15% from 35% in July 2024.

“Base effects likely played a huge role but retail prices, too, remained manageable month on month,” HSBC economist for ASEAN Aris D. Dacanay said.

“Softer prices of rice, fruits, and LPG may have also contributed to the slowdown, though these may have been tempered by higher costs of fuel, electricity, and other key food items such as vegetables, meat, fish, eggs, and cooking oil,” Chinabank Research said.

Analysts also noted the upside risks to the inflation print for the month.

“The uptick was mainly driven by higher oil prices, electricity rates, and select food items such as vegetables, fish, and meat,” Mr. Neri said.

Manila Electric Co. (Meralco) hiked rates by P0.4883 per kilowatt-hour (kWh) in July, bringing the overall rate for a typical household to P12.6435 per kWh from P12.1552 per kWh a month earlier.

“Upward price pressures were seen, however, in electricity rates and diesel but we don’t think these were enough to offset the deflationary pressures from rice and gas,” Mr. Dacanay said.

BAD WEATHER
Meanwhile, some analysts surveyed expect July inflation to accelerate from a month ago as bad weather disrupted economic activity in key areas.

“The uptick is driven by lagged effects of food and transport costs, weather-related supply disruptions from early monsoon and typhoon activity, and seasonal demand linked to school openings and midyear bonuses,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said.

The latest data from the Department of Agriculture showed damage to the agriculture sector from three successive tropical storms and the southwest monsoon has climbed to P3 billion.

“The recent wave of typhoons and bad weather may have also affected domestic supply chains especially for food, which may have caused the price increases,” Oikonomia Advisory & Research, Inc. economist Reinielle Matt M. Erece added.

Mr. Asuncion also noted exchange rate movements influenced import prices.

The peso fell to P58.32 against the greenback at end-July from its finish of P56.33 at end-June. The peso’s close at end-July was its weakest in almost six months or since its P58.34 finish on Feb. 4.

FURTHER EASING?
With inflation still below the 2-4% target, analysts said the Bangko Sentral ng Pilipinas (BSP) has more than enough room to continue on its rate-cutting cycle.

“Inflation remains below target and is forecast to remain within target over the policy horizon, giving BSP ample space to cut rates and support moderating growth momentum,” Mr. Mapa said.

Chinabank Research expects the central bank to deliver another 25-bp cut at its meeting later this month.

“With inflation possibly falling to its lowest since October 2019 — and average inflation expected to remain below target this year — we think the BSP has room to continue easing monetary policy with a 25-bp rate cut at its August meeting,” it said.

The Monetary Board’s next meeting is on Aug. 28.

“We’re currently looking at a 25-bp rate cut from the BSP this month, as the window for easing could likely narrow starting in the fourth quarter, with headline inflation seen rebounding toward the 3% level, and possibly even higher in 2026,” Mr. Neri said.

BSP Governor Eli M. Remolona, Jr. has said a rate cut is still on the table at their policy review later this month.

“The BSP may continue its policy easing with another 25-bp cut in their next meeting. This is as inflation continues to be below the 2% target and gross domestic product (GDP) growth is still expected to be below the ideal 6% growth or faster,” Mr. Erece said.

Chinabank said a weaker-than-expected second-quarter GDP print would likely further strengthen the case for a cut.

Meanwhile, Security Bank Corp. Vice-President and Research Division Head Angelo B. Taningco said there is a possibility that the BSP could hold rates this month.

“We still expect further monetary easing but may not be immediate for this month of August as the recent and expected peso depreciation could weigh on it,” he said.

The central bank could also remain cautious moving forward, analysts said.

“Subsequent moves following a potential August cut are expected to be more measured, with our in-house view seeing further reductions in the fourth quarter as less likely,” Mr. Neri said.

He cited inflation risks, a prolonged hawkish stance from the Federal Reserve and substantial current account deficit, which could constrain the BSP’s flexibility in adjusting monetary policy.

“A pause in the fourth quarter may be warranted to help manage pressure on the local currency,” Mr. Neri added.

Mr. Ella said a rate cut in the fourth quarter is possible “if growth will surprise on the downside due to trailing impact of global tariffs.”

“The BSP will be closely monitoring potential inflationary pressures stemming from geopolitical tensions and tariff-related supply-chain disruptions,” Ms. Cheok added.

Mr. Chanco expects the Monetary Board to cut at least twice before the year ends.

Mr. Remolona earlier said he is keeping to his outlook for two more rate cuts this year. After August, the Monetary Board has two remaining meetings scheduled for October and December.

“Moving forward, inflation will likely begin its steady climb as the favorable base effects from lower rice prices fade,” Mr. Dacanay said.

“Nonetheless, with inflation staying within the lower-end range of the BSP target band, there is room for the BSP to continue its easing cycle and, perhaps, deepen the cycle further in the last five months of the year.”

PHL loses tariff edge as US also sets 19% rate on 4 ASEAN members

A US FLAG and a “tariffs” label are seen in this illustration taken on April 10, 2025. — REUTERS/DADO RUVIC/ILLUSTRATION

By Aubrey Rose A. Inosante, Reporter

THE PHILIPPINES may have lost its edge in the US market as the US imposed a similar 19% tariff on imports from Indonesia, Cambodia, Malaysia and Thailand, analysts said.

Analysts warned this may undermine the Philippines’ competitiveness as it erodes the margin of preference and limits opportunities for trade diversion.

In an executive order signed on July 31, US President Donald J. Trump imposed a 19% duty on many goods from five members of the Association of Southeast Asian Nations (ASEAN) — the Philippines, Cambodia, Malaysia, Thailand and Indonesia. This will take effect on  Aug. 7.

“What we’ve been saying before is that a 20% or even 19% tariff is acceptable — as long as our competitors have higher rates than us,” Philippine Exporters Confederation, Inc. (Philexport) President Sergio Ortiz-Luis, Jr. said in a phone interview over the weekend.

“The problem now in Asia is that countries like Japan and South Korea have even lower tariffs, and now we’ve been matched by Indonesia, Thailand, and the rest of the ASEAN+5, who are also our direct competitors. That’s where the problem lies for us.”

The Philippines had received the smallest tariff discount among ASEAN members even though Philippine President Ferdinand R. Marcos, Jr. met with Mr. Trump at the White House. The new rate is slightly lower than the 20% the US had threatened to impose, but higher than the 17% tariff announced in April.

Unlike the Philippines, other ASEAN countries received significant tariff discounts from the US, namely, Indonesia (from 32%) Malaysia (from 25%), Thailand (from 36%), Cambodia (from 36%), and Vietnam (from 46%).

At the same time, Mr. Trump set 15% duty on goods from South Korea (from 25%) and Japan (from 25%).

As the new US tariffs are set to take effect on Aug. 7, Trade Secretary Ma. Cristina A. Roque said the talks with the US are still ongoing to come up with a “mutually beneficial deal.”

“While some ASEAN member states got also 19% reciprocal tariff rate, I am not aware what deals or concessions were given for that because every country has its own sensitivities and priorities,” Ms. Roque told BusinessWorld in a Viber message on Saturday.

LOWER EXPORTS
Mr. Ortiz-Luis warned the higher US tariffs will dampen demand for Philippine goods, which will lead to lower exports for the US market. He said this also leaves no room for Philippine exporters to increase prices as regional competitors now have similar or lower tariff rates.

In June, the United States was the top destination for Philippine-made goods amounting to $1.22 billion, 35.2% higher from the same month a year ago.

“[Exporters] will be scared. We look to the government now to come up with mitigating measures to support our exporters. But I don’t know if the government is prepared to do that,” he said.

Mr. Ortiz-Luis also said the exporters group is still in the dark on the comprehensive details of the recent US-Philippines trade deal

Jose Enrique A. Africa, executive director at IBON Foundation, said “the Philippines loses much of the margin of preference and price-based advantage that the government was counting on to offset our underdeveloped manufacturing workforce, infrastructure, and ecosystem.”

He also said the changes in tariff rates in the region further reduce the chances of the Philippines benefiting from trade diversion or US manufacturers looking for supply-chain players.

“The right direction is definitely not to recklessly pursue more free trade agreements, since decades of such openness have already led to our premature deindustrialization and current inability to compete or take advantage of market access, even when it exists on paper,” Mr. Africa said.

Former Tariff Commissioner George N. Manzano said the Philippines is “not disadvantaged” even though it has the same US tariff rates as  Cambodia, Malaysia, Thailand, and Indonesia.

“My only observation is that in relative terms, we paid a steep price in concessions in terms of tariff revenue foregone by agreeing to duty-free imports of US imports in some products compared to our ASEAN neighbors, because we had a reduction of only 1 percentage point from 20%,” Mr. Manzano told BusinessWorld in a Viber message.

Finance Secretary Ralph G. Recto earlier said the government is anticipating between P3 billion and P6 billion in foregone revenues following its decision to grant zero tariffs on selected US products such as automobiles, wheat, soy, and pharmaceuticals.

Meanwhile, Ms. Roque said the Philippines remains competitive as it recently introduced economic reforms such as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act, and free trade agreements with other countries.

BSP to refine economic surveillance tools

High-rise buildings dominate the Manila and Makati skyline. — PHILIPPINE STAR/EDD GUMBAN

THE Bangko Sentral ng Pilipinas (BSP) is working on further refining their economic surveillance tools to better capture data and enhance policymaking, an official said.

The central bank is shifting from mainly traditional data to more soft data in their monitoring, surveillance, and assessment, BSP Deputy Governor Zeno Ronald R. Abenoja said.

“We’re trying to improve a lot of things at the central bank, including our ability to monitor what’s happening on the ground real time and what it means going forward,” he told reporters on Friday.

“As we improve the surveillance, it helps us communicate, hopefully, what we think is happening on the ground and what we think are important developments that could affect policies moving forward.”

For example, the BSP is studying how to mine more data from the Consumer Expectations Survey and Business Expectations Survey.

“We are reviewing the instruments. We want to improve the ease of filling up or getting more information,” he said, adding that they are also reviewing the content of these surveys.

The BSP is also looking at how to streamline the data without sacrificing the information gathered.

“We are trying to improve our ability to mine more information from these different surveys. We are also trying to improve our understanding of what’s happening in the different regions.”

Mr. Abenoja said the BSP is also working to improve the data capture effectiveness of their surveys, and is considering the use of supplementary surveys.

He cited the US Federal Reserve, which uses strategic surveys on consumer sentiment that have more forward-looking aspects of household expectations.

“We’re thinking of doing those types (of survey) that are more forward-looking to have a sense how households are thinking of reacting or their expectations under different circumstances.”

Policy recommendations to the Monetary Board would be based on more solid and current information, he added.

The BSP is also keen on implementing more early warning exercises to better “anticipate possible scenarios that could influence developments and impact our policy stance.”

It is also studying how to leverage developments in the information technology sector and harness computing power.

FX PlAYBOOK
Meanwhile, Mr. Abenoja said they are in the process of developing an “FX (foreign exchange) playbook.”

“There are a lot of studies, analysis being done on the relationship between exchange rate and inflation, exchange rate and inflation expectations,” he said.

BSP Governor Eli M. Remolona, Jr. earlier said they are seeking to develop a “playbook” to guide foreign exchange intervention.

“There are asymmetric effects and threshold effects. The impact of FX movements on inflation is not the same in the sense that the significant, sharp depreciation over a short period of time could have big implications on inflation,” Mr. Abenoja said.

“But we may want to smooth out this impact on inflation because sometimes there are swings, there is a deficit and then it suddenly returns to the previous level. But the impact on inflation is already there,” he said.

Mr. Abenoja said there is room for foreign exchange intervention to smooth out its effects.

“The playbook is being reviewed… to ensure there is a development on our analysis of the dynamics of foreign exchange market. We want to preserve our flexible exchange rate regime,” he said.

“But probably we can improve the inflation dynamics by smoothing out some of these temporary effects of exchange rate on inflation, so we’re doing the playbook.” 

Meanwhile, in a separate memorandum, the BSP is advising banks on the revised the Residential Real Estate Price Index (RREPI), which seeks to provide a more comprehensive overview of the sector.

In a memorandum posted on its website, the BSP reminded universal and commercial banks, thrift banks and digital banks to submit their quarterly reports on residential real estate loans and appraised commercial properties in view of the revised index.

“With the transition to the hedonic methodology, the RREPI has been renamed the Residential Property Price Index (RPPI),” it said.

All references to the RREPI shall now refer to RPPI, it added.

“This change aligns the index’s nomenclature with international standards and more accurately reflects its comprehensive coverage of residential property prices on the banking segment of the market.”

The BSP monitors banks’ exposure to the property sector as part of its mandate to maintain financial stability.

The RREPI tracked the average price changes of residential properties across different housing types and locations.

The BSP in a separate notice said the RREPI relied on “simple averages (and) oversimplified the residential property market by assuming homogeneity within the stratum and failing to address outliers.”

“The use of hedonic regression — widely regarded as the gold standard in property price index generation — allows for the observation of how intrinsic characteristics of the residential real estate market independently influence prices,” it added.

The latest first-quarter data were released with the RPPI format. Latest data showed that the RPPI rose by an annual 7.6% in the January-March period, though slower than the 9.8% expansion logged in the fourth quarter. — Luisa Maria Jacinta C. Jocson

IPO pipeline seen to stay thin for remainder of 2025

BW FILE PHOTO

By Revin Mikhael D. Ochave, Reporter

DOMESTIC initial public offering (IPO) activity is expected to remain limited for the rest of the year amid uncertainties related to tariffs, according to analysts.

Only three initial public offerings are expected to take place this year, which would be half of the Philippine Stock Exchange’s (PSE) target of six, said DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin in a Viber message.

Aside from the lone IPO so far — Cebu-based fuel distributor and retailer Top Line Business Development Corp. in April — Mr. Tin said two more companies could push through with their public listing plans this year, consisting of integrated resort operator Hann Holdings, Inc. and west zone water concessionaire Maynilad Water Services, Inc.

“The tepid IPO pipeline reflects a subdued market environment and lingering uncertainty over the US tariff policies, both of which continue to dampen investor appetite and discourage companies from listing. We believe IPO sentiment will likely remain muted under these conditions,” Mr. Tin said.

United States President Donald J. Trump announced a 19% tariff rate for products from the Philippines following a meeting with President Ferdinand R. Marcos, Jr. in Washington. The tariff rate is marginally lower than the 20% that Mr. Trump threatened to impose, but higher than the 17% announced in April.

“Investor sentiment is being weighed down by global concerns such as the trade tariffs, alongside local worries such as inflation and interest rates,” Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said in a Viber message.

Despite the cautious outlook, Ms. Estacio-Cruz said there is still some room for optimism.

However, she said the planned IPOs of GCash operator Globe Fintech Innovations, Inc. (Mynt) and the real estate investment trust (REIT) of Sy-led property developer SM Prime Holdings, Inc. are unlikely to happen this year.

“There’s some appetite for IPOs, especially for companies with solid fundamentals or exposure to resilient sectors like gaming, tech, and logistics,” she said.

“Big names like GCash or SM Prime’s REIT might be a stretch this year, but if market conditions hold steady, we could see a few more listings, especially from firms that have been waiting for the right timing,” she added.

Jayniel Carl S. Manuel, Seedbox Securities, Inc. sales and trading department assistant manager, said in a Viber message that the local bourse could see three to four IPOs this year depending on market sentiment.

“Realistically, I think we’ll be lucky to see three to four IPOs push through this year, assuming market sentiment remains cautious,” he said.

“While there’s still investor interest, most are becoming more selective, favoring proven names over riskier bets. Unless a major player like GCash or SM Prime REIT surprises us, I don’t see a significant pickup in IPO filings for the rest of the year,” he added.

On July 17, the Securities and Exchange Commission (SEC) approved the IPO of Hann Holdings, which expects to generate up to P11.43 billion in net proceeds. The company is expected to list its IPO on Sept. 23.

Maynilad postponed its IPO to no later than end-October from its initial listing date of July 17 to accommodate interest from cornerstone investors. The water provider aims to raise up to P37.41 billion in net proceeds.

Last month, the PSE raised its target for capital raising this year to over P186 billion, with some P123.7 billion expected in the second half.

The market operator raised about P62.6 billion in the first six months.

Pangilinan-led conglomerate Metro Pacific Investments Corp., which holds a majority stake in Maynilad, is one of three Philippine subsidiaries of First Pacific Co. Ltd., alongside Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.

MGen sees power generation capacity doubling by 2030

MERALCOPOWERGEN.COM.PH

MERALCO PowerGen Corp. (MGen), the power generation arm of Manila Electric Co. (Meralco), expects to deliver 10,346 megawatts (MW) of net sellable capacity and 5,288 MW of attributable capacity over the next five years, according to its president.

This would double the company’s current net sellable capacity of 5,068 MW and attributable capacity of 2,559 MW from its Philippine and Singapore operations, MGen President and Chief Executive Officer Emmanuel V. Rubio said in a Viber message over the weekend.

Mr. Rubio attributed the anticipated increase to its “growth projects,” such as the MTerra Solar Project, which consists of a 3,500-MW solar farm paired with a 4,500-MW-hour battery energy storage system.

“MGen is set to exceed its 1,500-MW attributable renewable energy capacity goal by 2027, three years ahead of the original 2030 timeline,” he said.

The company is also banking on the 1,200-MW Atimonan coal-fired power plant in Quezon province and the 73-MW Toledo coal-fired power plant in Cebu. Other assets include Excellent Energy Resources, Inc.’s Unit 4 in Batangas and PacificLight Power Pte. Ltd.’s 600-MW gas-fired power facility in Singapore.

For the first half, MGen delivered a total of 12,644 gigawatt-hours of energy, a 66% increase compared to the same period last year.

“This significant growth was driven by improved dispatch across our plants, consistently high plant availability, increased capacity contributions, particularly with the successful integration of Chromite Gas Holdings, and our team’s continued commitment to operational excellence and reliability across the portfolio,” Mr. Rubio said.

Meralco’s power generation business accounted for 37% of its total earnings in the six-month period, which rose by 10% to P25.54 billion.

Manuel V. Pangilinan, chairman and chief executive officer of Meralco, said the power distributor is on track to hit its target bottom line of P50 billion for this year. 

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

T-bill, RTB rates to track secondary market levels

STOCK PHOTO | Image by RJ Joquico from Unsplash

RATES of the Treasury bills (T-bills) on offer on Monday could end mostly lower on bets of further monetary easing by the Bangko Sentral ng Pilipinas (BSP), while the five-year retail Treasury bonds (RTBs) could fetch yields close to comparable secondary market levels at the rate-setting auction.

The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Monday, or P7 billion in 91-day securities, P8.5 billion in 182-day debt, and P9.5 billion in 364-day papers.

On Tuesday, the government will hold the rate-setting auction for its offering of five-year RTBs, from which it targets to raise at least P30 billion. The BTr cancelled its scheduled auction of P30 billion in five-year Treasury bonds (T-bonds) on Aug. 5 to give way to the RTB offer.

“The upcoming Treasury bill average auction yields could again slightly ease after the comparable short-term PHP BVAL (Bloomberg Valuation Service) yields were mostly slightly lower, particularly the six-month and one-year tenors,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Upcoming local inflation data expected to be benign… could still support the dovish signals recently by local monetary authorities on possible 50-basis-point (bp) rate cuts for the rest of 2025, the earliest of which would be a possible 25-bp rate cut as early as the next rate-setting meeting on Aug. 28,” Mr. Ricafort said.

At the secondary market on Friday, the rate of the 91-day T-bill inched up by 0.48 bp week on week to end at 5.4152%, based on PHP BVAL Reference Rates data as of Aug. 1 published on the Philippine Dealing System’s website. Meanwhile, the 182- and 364-day papers went down by 2.47 bps and 1.72 bps to fetch 5.557% and 5.6628%, respectively.

Meanwhile, a BusinessWorld poll of 17 analysts yielded a median estimate of 1.2% for the July consumer price index, within the central bank’s 0.5%-to-1.3% forecast for the month.

If realized, the July print would be slower than the 1.4% in June and 4.4% clip in the same month a year ago.

BSP Governor Eli M. Remolona, Jr. said on Wednesday that a rate cut is “on the table” at the Monetary Board’s Aug. 28 review. If realized, this would mark the BSP’s third straight easing move since April.

The BSP has lowered borrowing costs twice this year, with cumulative cuts since it began its easing cycle in August 2024 now at 125 bps.

Mr. Remolona also said he is keeping his outlook for two more rate cuts this year. After this month’s review, the Monetary Board has two remaining meetings scheduled in October and December.

On the other hand, the five-year RTBs could fetch yields at par with comparable secondary market rates, Mr. Ricafort said. At the secondary market on Friday, the five-year bond rose by 0.49 bp week on week to end at 5.9734%, based on PHP BVAL Reference Rates data.

“The upcoming RTBs could add to the supply of bonds in the market and siphon off excess peso liquidity,” he said.

“The expected coupon rate is 6%. Eligible bonds for exchange amount to P566 billion, which could relieve liquidity pressure,” a trader added in an e-mail.

The public offer period for the RTBs will run from Aug. 5 to Aug. 15, unless ended earlier by the Treasury.

For the first time, the retail bonds will be available on an e-wallet, as they will be sold on GCash’s GBonds platform.

As part of the retail bond offer, the BTr is also conducting a bond exchange program for holders of eligible three-, seven- and 10-year T-bonds set to mature from September this year to February next year.

Last week, the Treasury raised P28.4 billion from the T-bills it auctioned off, higher than the P25-billion plan, with the offer more than four times oversubscribed as total bids reached P103.45 billion.

Broken down, the BTr borrowed P7 billion as planned via the 91-day T-bills as total tenders for the tenor reached P37.74 billion. The three-month paper was quoted at an average rate of 5.388%, down by 3.4 bps from the rate seen at the previous auction. The BTr only accepted bids with this yield.

Meanwhile, the government raised P11.9 billion from the 182-day securities, higher than the P8.5-billion program, as bids amounted to P36.74 billion. The average rate of the six-month T-bill was at 5.543%, down by 2.3 bps from the previous week, with accepted yields ranging from 5.54% to 5.55%.

Lastly, the Treasury sold the programmed P9.5 billion in 364-day debt as demand for the tenor totaled P28.97 billion. The average rate of the one-year T-bill inched down by 0.4 bp to 5.627%. Tenders accepted carried rates ranging from 5.6% to 5.648%.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year. — A.M.C. Sy

SEC says no new tax, just standardization

BW FILE PHOTO

THE Securities and Exchange Commission (SEC) said the 20% tax on long-term deposit interest under the newly implemented Capital Markets Efficiency Promotion Act (CMEPA) is not a new levy but part of a standardization move.

The corporate regulator said the 20% tax on interest income from long-term deposits under the CMEPA has “standardized the tax rate across investment instruments.”

“The new law merely standardizes the tax on interest income for all types of deposits,” SEC Chairperson Francisco Ed. Lim said in an e-mailed statement over the weekend.

“The tax code previously discriminated against short-term deposits by unduly burdening them just because they cannot keep cash in banks for longer periods,” he added.

The SEC issued the statement after the CMEPA faced backlash for removing the tax exemption previously enjoyed by long-term deposits.

With the new law, interest income from deposit products — including savings deposits, time deposits, deposit substitutes, trust funds, negotiable certificates of deposit, and similar financial instruments — now faces a uniform final withholding tax of 20%, regardless of holding period.

Prior to the CMEPA, interest earned from time deposits with a term of five years or more was tax-exempt. Time deposits of more than three years but less than five years also enjoyed varying preferential rates.

Mr. Lim said the lower stock transaction tax (STT) under the CMEPA is also expected to generate more savings for investments, which would help improve stock market liquidity.

The CMEPA slashed the STT to 0.1% from 0.6%. The previous rate was the highest in the Association of Southeast Asian Nations (ASEAN).

“The previous rate had the effect of discouraging the public from investing in the stock market, especially those who may want to engage in bulk transactions. With the lower tax, the savings that investors get can be reinvested back to the capital market,” Mr. Lim said.

“The reduced STT is one of the most important reforms under the CMEPA, as it brings the rate in the Philippines at par with our peers in ASEAN,” he added.

Investment & Capital Corp. of the Philippines President and Chief Operating Officer Jesus Mariano “Manny” P. Ocampo said the CMEPA has already helped improve market liquidity since it took effect.

“Following the implementation of CMEPA, average daily trading value jumped from P6.8 billion in June to P10.6 billion in early July. That’s a 50% increase, suggesting improved liquidity and renewed interest among investors,” he said in a separate statement.

The CMEPA is also expected to entice more Filipinos to increase their retirement funds through Republic Act No. 9505, or the Personal Equity and Retirement Account (PERA), by enabling employers to claim an additional 50% tax deduction for PERA contributions, provided they match or exceed the employee’s contribution.

Other provisions under the CMEPA include the harmonization of the capital gains tax to a flat 15% on shares of foreign corporations and the reduction of the documentary stamp tax on the original issuance of shares of stock to 0.75% from 1% of par value. — Revin Mikhael D. Ochave

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