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Philippines urged to guard maritime claims in China energy negotiations

BW FILE PHOTO

ANALYSTS warned the Philippines risks weakening its sea claims if it revives joint energy exploration talks with China without strictly anchoring any arrangement on a 2016 arbitral ruling that voided Beijing’s expansive claims in the South China Sea.

Any agreement must preserve Manila’s sovereign rights under international law and the Philippine Constitution to avoid creating ambiguity over ownership and control of resources in contested waters, they said.

“The Philippines should approach any agreement with China with extreme caution,” Stratbase Institute President Victor Andres C. Manhit said in a Viber message last week. “All actions must be firmly anchored in international law, particularly the arbitral award.”

President Ferdinand R. Marcos, Jr. last week said he is open to restarting talks on joint oil and gas exploration with Beijing as the country faces higher fuel costs linked to the war involving the US and Israel against Iran.

Analysts said the timing and manner of any renewed discussions would likely face close scrutiny from lawmakers, courts and the public given past legal challenges and persistent security frictions at sea.

“The proposal was likely floated to check its political acceptability and domestic support,” Julio C. Amador III, a distinguished visiting fellow at US-based research center Perry World House, said in a Viber message. “In any case, any deal should not violate the Constitution and the arbitral award.”

Joint oil and gas development in the South China Sea resurfaced in 2023 after Mr. Marcos met Chinese President Xi Jinping, following years of strained relations driven by maritime incidents, diplomatic protests and rival patrols in disputed waters.

Earlier negotiations collapsed after the Philippine Supreme Court voided a joint seismic survey agreement involving China and Vietnam, citing constitutional and legal deficiencies. The court ruled that provisions in the deal appeared to undermine the Philippines’ sovereign rights over its exclusive economic zone.

Any revived talks could face similar hurdles. The Constitution requires the state to retain full control and supervision over the exploration, development and use of natural resources, limiting how foreign entities may participate in energy projects.

“The Philippines must remain firm and unequivocal in upholding its sovereign rights and ensure that no arrangement dilutes its legal position or creates ambiguity over ownership,” Mr. Manhit said. “Any subsequent agreement must fully recognize that all resources developed belong to the Philippines.”

He said China’s refusal to recognize the 2016 decision of the Permanent Court of Arbitration in The Hague casts doubt on its reliability as a partner in resource development.

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

‘UNNECESSARY’ DEAL
China claims nearly the entire South China Sea based on a U‑shaped, nine‑dash line map from the 1940s, a stance rejected by the tribunal, which ruled the claims had no legal basis under international law.

The decision also found that Reed Bank, a resource‑rich area west of Palawan, lies within the Philippines’ continental shelf. A 2024 Philippine law defining the country’s maritime zones reinforced Manila’s rights to explore and exploit resources there.

Despite the ruling, tensions in the waterway have persisted, discouraging energy exploration. Philippine companies have faced repeated disruptions at Reed Bank, including encounters with Chinese coast guard and maritime militia vessels.

The area may contain as much as 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas, according to a 2013 estimate by the US Energy Information Administration.

Mr. Manhit said Manila could instead seek domestic firms or upstream oil companies from allied countries to develop offshore resources. Such an approach would remove the risk of entering arrangements that could weaken the country’s legal standing.

“This makes it unnecessary to pursue arrangements with actors that cannot be trusted and could ultimately compromise national interests,” he said.

The debate over joint development unfolded as Philippine defense officials reported an increase in Chinese maritime activity across contested areas.

Last week, the military said it monitored at least 90 Chinese vessels in various parts of the South China Sea, including navy and coast guard ships.

At Scarborough Shoal, 49 vessels were spotted — 17 Chinese navy ships and 32 coast guard vessels, according to Rear Admiral Roy Vincent T. Trinidad, Philippine Navy spokesman for the South China Sea.

At Thitu Island, the military counted 15 Chinese vessels, including four navy ships and 11 coast guard units. Second Thomas Shoal had 14 vessels, while 12 ships were detected near Sabina Shoal, he said.

“We have noted in the past two weeks an escalation of their numbers, which coincided with developments in the Middle East region,” Mr. Trinidad told reporters. “These are deliberate.”

“They are trying to normalize their illegal presence and take advantage of the focus of the international community in the Middle East,” he added.

The Philippines faces mounting pressure to secure alternative energy sources as output from existing gas fields that supply power plants in Luzon declines in the coming years.

Analysts said that need must be weighed against long‑term strategic costs.

“Unless China abandons its position of refusing to recognize or comply with the ruling, the prospects for such an agreement are unlikely to advance,” Mr. Manhit said. “Given China’s consistent track record, it is highly unlikely that it will agree to terms that fully respect and reinforce the Philippines’ rights under international law.” — Kenneth Christiane L. Basilio

Hormuz access secures PHL fuel flows, not prices

A 3D-printed oil pump jack and a map showing the Strait of Hormuz and Iran appear in this illustration taken March 2, 2026. — REUTERS

By Sheldeen Joy Talavera and Chloe Mari A. Hufana, Reporters

THE PHILIPPINES’ access to safe passage through the Strait of Hormuz reduces the risk of fuel supply disruption but would not immediately lower pump prices, Energy Secretary Sharon S. Garin said, as oil prices remain driven by geopolitics and global trading conditions.

The arrangement helps protect deliveries routed through one of the world’s most important oil chokepoints but does not change the factors that determine domestic fuel prices, she pointed out.

“This development will not immediately bring down fuel prices, nor does it resolve our long-term structural challenges in energy,” she said in a Facebook post late on Saturday. “What this does is help ensure continuity of supply and stability, especially at a time when further disruptions could significantly affect our economy and our people.”

Ms. Garin said the government pursued the arrangement as a risk‑mitigation measure amid escalating war in the Middle East.

The Strait of Hormuz connects the Persian Gulf to the Arabian Sea and handles a significant share of global crude exports. Shipping disruptions there have historically triggered price spikes, particularly for fuel‑importing economies such as the Philippines.

The Department of Foreign Affairs last week said Iran had agreed to allow Philippine‑flagged vessels to transit the waterway following diplomacy between officials. The announcement came as conflict involving the US, Israel and Iran disrupted regional shipping and tightened oil markets.

Energy analysts said the assurance improves logistical certainty but does not override pricing mechanisms set by global benchmarks.

“This is a step in the right direction,” Noel M. Baga, co‑convenor of the Center for Energy Research and Policy, told BusinessWorld. “But for it to affect pump prices, the assurance needs to be formalized in writing, the scope clarified and the logistics worked through.”

Mr. Baga said most Philippine fuel imports arrive on foreign‑flagged tankers under long‑term supply contracts, limiting the immediate effect of Iran’s commitment. He said the government should pursue parallel steps such as reinforcing strategic fuel stockpiles and diversifying sourcing routes.

“Imposing price controls on oil, reinforcing strategic reserves and diversifying energy supply sources remain just as important,” he added.

Jose M. Layug, a former Energy undersecretary and executive board member of the Philippine Energy Research & Policy Institute, said market pricing would remain volatile as long as conflict persists.

“The best long-term solution for the Philippines is still to reduce reliance on oil,” he said in an interview.

Oil companies said the Hormuz assurance lowers delivery risk but provides little protection from international price swings.

Top Line Business Development Corp. Senior Vice‑President and Chief Operating Officer Brigitte Carmel C. Lim said the move supports supply security. “This doesn’t automatically mean lower pump prices, since prices are still driven by global market conditions, and volatility may continue due to ongoing geopolitical tensions,” she said in a Viber message.

Jetti Petroleum, Inc. President Leo P. Bellas said the agreement could reduce some risk premiums but warned that prices would stay high absent broader de‑escalation. “Prices will continue to remain elevated until more signals of de-escalation are seen by the market,” he said.

Industry projections show diesel prices facing another increase, with gasoline also set for further hikes. Diesel prices could reach as high as P170 per liter, while gasoline may rise to about P119 per liter if trends continue.

‘WARM AND OPEN’
Analysts said the Hormuz arrangement underscores the Philippines’ vulnerability as a near‑total fuel importer.

Josue Raphael J. Cortez, a diplomacy lecturer at De La Salle-College of St. Benilde, said Manila should treat the agreement as a tactical gain rather than a solution. “It is still in our best interest to strengthen ties with traditional partners while building relationships with other suppliers,” he said via Facebook Messenger.

The Philippines imports about 98% of its petroleum, much of it from the Middle East. Rising fuel prices have strained household budgets and raised inflation concerns since fighting intensified in late February.

President Ferdinand R. Marcos, Jr. earlier said the government has pursued deals with nontraditional suppliers, including Russia, Japan and South Korea. A shipment of more than 700,000 barrels of Russian crude arrived in the Philippines late last month.

Foreign Affairs Secretary Ma. Theresa P. Lazaro and Ms. Garin met Iranian Ambassador Yousef Esmaeilzadeh last week to discuss energy cooperation. “We are committed to deepening cooperation across all fronts, particularly on energy,” Ms. Lazaro said.

Palace Press Officer Clarissa A. Castro said the meeting was “warm and open,” adding that Iran expressed readiness to help.

The Philippines remains under a one‑year state of energy emergency as supply risks persist. Mr. Marcos formed an inter‑agency committee to manage responses, while fuel and cash subsidies for transport workers and low‑income households began rolling out nationwide.

Analysts said emergency measures soften the shock but fail to address structural weaknesses.

Anthony Lawrence A. Borja, an associate professor of political science at De La Salle University, said Congress should prioritize legislation that strengthens long‑term energy resilience. “Legislation that paves the way for the long-term security of the country is more politically expensive than knee-jerk reactions that could be left to the Executive branch,” he said in a Messenger chat.

Congress resumes session on May 4 after a six‑week recess.

University of Santo Tomas Political Science Department Chairman Dennis C. Coronacion said lawmakers should examine measures promoting renewable energy adoption and review tax relief mechanisms.

President Marcos signed Republic Act No. 12316, authorizing him to suspend or cut excise taxes on petroleum products during emergencies. Analysts said decisive use of that authority would shape near‑term relief.

Labor groups fault Philippine govt’s patchwork response to energy crunch

Workers are seen in a construction site in Manila. — PHILIPPINE STAR/RUSSELL PALMA

By Erika Mae P. Sinaking, Reporter

LABOR LEADERS warned that the government’s response to the energy crisis remains fragmented and leaves working households exposed, citing heavy reliance on cash aid without a consolidated plan to protect wages, jobs and purchasing power.

“I have yet to hear any comprehensive government plan on how to respond to this multiple crisis,” Josua T. Mata, secretary general of Sentro ng mga Nagkakaisa at Progresibong Manggagawa, told BusinessWorld via teleconference last week. “By the time they gave this money, the transport workers have already subsidized the whole society’s oil price hike.”

Mr. Mata said assistance has been uneven and slow, with food delivery and parcel riders excluded from key programs and many eligible workers facing hurdles in accessing support. Cash aid helps absorb shocks, he said, but does not address income erosion as fuel costs lift food, rent and transport expenses.

Labor groups are pushing for a multi‑sector summit to forge a unified response that includes farmers, fisherfolk and transport workers.

Mr. Mata said the crisis should trigger overdue reforms, including a review of the Oil Deregulation Law and the Electric Power Industry Reform Act, after decades of limited state capacity to manage price shocks and supply risks. He also cited the country’s lack of strategic oil stockpiles comparable to regional peers.

Debate has also sharpened over fiscal choices. Mr. Mata warned against suspending fuel excise taxes, arguing the move would sap public revenue with limited relief. He instead backed a wealth tax targeted at billionaires to fund broader protection for workers and stabilize essential services.

Jose Sonny G. Matula, president of the Federation of Free Workers and chairman of the Nagkaisa Labor Coalition, said the most glaring gap is the absence of direct wage protection for minimum earners and the lower‑middle class.

“The biggest thing missing in the government’s response is this: there is still no direct wage protection for minimum wage earners and the lower middle class,” he said in a Viber message.

He said the P5,000 cash aid for transport workers and the Labor department’s P1.2‑billion standby fund provide short‑term relief but miss the broader workforce that commutes daily, pays rent and lives on fixed wages. He described emergency frameworks and committees as insufficient substitutes for income measures that reach households.

Fuel costs have climbed amid geopolitical tensions tied to the war involving the US and Israel against Iran, raising transport fares and food prices.

The government has rolled out transport‑focused measures that include direct assistance, fare stabilization and operational support, while placing the country under a one‑year energy emergency.

Labor leaders said negative income pressures would deepen without wage adjustments, as inflation risks compound household strain. They urged the administration to convene employers, unions, transport groups and civil society to align relief with longer‑term safeguards.

Akbayan Partylist added to the calls last week, urging President Ferdinand R. Marcos, Jr. to expand national service contracting so public utility jeepney drivers receive fixed salaries and commuters ride free. Party leader Rafaela David said a nationwide rollout could build on local government pilots, stabilize driver income by moving away from boundary systems, and cushion commuters from fuel volatility.

Fake energy claims may draw jail time

FREEPIK

THE PRESIDENTIAL Communications Office on Sunday warned that people who deliberately spread false information about the Philippines’ energy situation could face criminal charges, as authorities seek to curb disinformation during a nationwide energy emergency.

Posting or sharing false claims online about fuel supply, prices or energy security could expose offenders to prosecution under the Revised Penal Code and the Cybercrime Prevention Act, the Palace said.

Publishing false news carries penalties of up to six months in prison, with penalties doubled when committed through digital platforms, Presidential Communications Office Secretary Dave M. Gomez said in a statement.

“There will be zero tolerance for those who maliciously and deliberately commit these acts to advance their personal or political vested interest,” he said.

Mr. Gomez said misleading information could erode public trust, distort markets and worsen economic stress during the energy emergency.

“Any attempt to mislead the public about energy security, supply or pricing to sow confusion will be treated as a serious offense,” he said.

He added that the office’s anti‑fake news desk would coordinate with the Department of Justice in filing cases against those who share false information or manipulate markets.

He urged social media users to think carefully before posting or sharing claims, and encouraged Filipinos, media partners and stakeholders to rely on official briefings and verified information.

“Sharing unverified posts can cause public harm,” Mr. Gomez said.

The Philippines is under a one‑year state of energy emergency, declared by President Ferdinand R. Marcos, Jr., after the war involving Iran threatened fuel flows critical to the import‑dependent economy.

The declaration grants broader authority to secure fuel imports, manage distribution, curb hoarding and stabilize prices amid mounting inflation risks. — Chloe Mari A. Hufana

Palace expects weaker peso

Photo shows US dollar bills and Philippine peso coins. — PHILIPPINE STAR/RYAN BALDEMOR

MALACAÑANG expects the Philippine peso to continue depreciating despite the central bank’s interventions as it anticipates a wider current account deficit this year.

Palace Press Officer Clarissa A. Castro said the country’s current account deficit could further weaken the peso, but said the Bangko Sentral ng Pilipinas (BSP) is prepared to deploy a range of policy tools to stabilize the local currency.

“In the short run, we will attempt to dampen inflationary swings in the exchange rate,” she told BusinessWorld via Viber.

The peso’s decline drives up the cost of imported goods, especially petroleum, amplifying inflationary pressures as global oil prices stay high amid supply disruptions tied to the Middle East conflict.

Ms. Castro said that near-term measures will focus on dampening sharp exchange-rate swings that could stoke inflation.

“The BSP will rely mainly on intervention in the spot market to smoothen excessive short-term fluctuations amid potential outflows and market volatility,” she added.

The country is seeking to contain inflation risks as the Middle East crisis pushes the local currency to record-low levels.

The peso slid to a new record low last March 31, closing at P60.748 against the US dollar as escalating conflict in the Middle East drove investors toward the safe-haven greenback amid oil-driven inflation risks.

The currency has hit historic lows for three straight sessions and has repeatedly weakened since the US and Israel launched attacks on Iran on Feb. 28.

Malacañang last week acknowledged external shocks tied to the Middle East conflict had undercut the peso’s value and indicated the administration was preparing a suite of measures to mitigate the fallout for households and businesses.

The administration is strengthening price support and social relief efforts as part of its broader response, with interagency coordination to stabilize key commodity costs and speed up assistance delivery.

Measures under discussion include price caps on imported rice and an expansion of subsidized rice outlets, as well as potential adjustments to fuel tax policy. — Chloe Mari A. Hufana

67 OFWs from Qatar repatriated

PRESIDENT Ferdinand R. Marcos, Jr. personally welcomed 343 Filipinos repatriated from the Middle East at Villamor Air Base on Monday. — PHILIPPINE STAR/RYAN BALDEMOR

SIXTY-SEVEN overseas Filipino workers (OFWs) from Doha, Qatar returned to the Philippines on Saturday evening, the Overseas Workers Welfare Administration (OWWA) said on Sunday.

According to a Facebook post by OWWA, the newly repatriated OFWs were carried by Qatar Airways flight QR 928 which landed at the Ninoy Aquino International Airport Terminal 3.

The Department of Migrant Workers (DMW) and OWWA have been tapping both commercial and government-chartered flights to bring home OFWs from countries affected by the war such as the United Arab Emirates, Kuwait, Bahrain, Qatar, and Saudi Arabia.

OWWA said the newly repatriated OFWs have received post-repatriation assistance for food, domestic flight, land transport, and accommodation upon the directives of President Ferdinand R. Marcos, Jr.

Last Friday, 344 OFWs and dependents from Dubai, the United Arab Emirates and 244 from Bahrain also returned to the country through government-chartered flights which arrived at the Villamor Air Base in Pasay City.

The Department of Foreign Affairs said about 2.4 million Filipinos live in the Middle East, the region affected by the war between US-Israel and Iran which started on Feb. 28.

The conflict has prompted Philippine government agencies such as the DMW, OWWA, and Philippine embassies in Middle East countries to come up with assistance programs for OFWs and stranded Filipinos which includes the repatriation.

The government has so far chartered seven flights since the repatriations started in March, bringing home thousands of OFWs in a month based on data from the DMW. — Chloe Mari A. Hufana

SC clarifies SEC salary rules

BW FILE PHOTO

THE Supreme Court (SC) has ruled that the Securities and Exchange Commission (SEC) cannot unilaterally increase salaries without executive approval but cleared the agency’s officials and 440 employees from refunding P92.74 million in disallowed payments.

In a 46-page en banc decision made public on March 18, penned by Associate Justice Amy C. Lazaro-Javier, the high court partially reversed a Commission on Audit (CoA) ruling that held former SEC Chairperson Teresita J. Herbosa and other officials liable for the 2012 disbursements.

The dispute centered on “Step 7” salary adjustments implemented by the SEC in 2012, in which it argued that Section 7.2 of the Securities Regulation Code (SRC) granted it authority to fix its own compensation system, comparable to the Bangko Sentral ng Pilipinas (BSP), and exempted it from the Salary Standardization Law.

The commission further noted that these adjustments were a condition for a $200-million loan from the Asian Development Bank intended to restructure the agency.

However, CoA issued a notice of disallowance in 2014, maintaining the SEC improperly used its P100-million retention income, legally reserved for maintenance and capital outlays, to fund personal services.

The commission also argued that such increases required prior recommendation from the Department of Budget and Management and approval from the President.

The SC sustained CoA’s finding that the SEC lacks “absolute and illimitable” authority to bypass executive oversight. It clarified that while the SRC grants the SEC independence in formulating its pay plan, it remains under the President’s power of control as mandated by the Constitution.

Despite this, the tribunal absolved the officials, citing “good faith” and a “difficult question of law,” regarding the interpretation of the SRC at the time of the 2012 payments.

“It is unfair to penalize public officials based on overly stretched and strained interpretations of rules which were not that readily capable of being understood at the time such functionaries acted in good faith,” the SC said.

The 440 passive recipients were also excused based on the principle of “immutability of judgments” and social justice considerations, noting the commission’s efforts to align staff skills with market standards. — Erika Mae P. Sinaking

OceanaGold allocates P569M in community funds

OCEANAGOLD (Philippines), Inc. (OGP) said it is increasing its social investments to a combined total of P569 million in 2026, following strong operational and financial performance in 2025.

In a statement on Sunday, the listed miner said it has allocated P250.24 million to its Community Development Fund (CDF), P125.12 million to its Provincial Development Fund (PDF), and P195.75 million to its Social Development and Management Program (SDMP).

According to OGP, the CDF and PDF allocations represent a 29% year-on-year increase from P194 million and P97 million, respectively, in 2025. The SDMP allocation is also higher than last year’s expenditure of P190.98 million.

OGP said the funds will support projects across Nueva Vizcaya and Quirino provinces, including agricultural infrastructure, water distribution facilities, health and child development center upgrades, multi-purpose building rehabilitation, livelihood programs, and scholarship initiatives.

“With over 400 barangays benefiting from the SDMP, CDF, and PDF programs, we ensure that responsible mining promotes shared development through expanded support for [such] initiatives,” OGP President Joan Adaci-Cattiling said in the statement. — Vonn Andrei E. Villamiel

Forest fire shuts down trekking at Mt. Kabunian in Bakun, Benguet

BAKUN, Benguet — Tourism in this upland town has been hit after the temporary closure of trekking activities at Mt. Kabunian was ordered due to a forest fire.

Mayor Fausto T. Labinio issued Executive Order No. 26, series of 2026, suspending all climbs to Mt. Kabunian starting on Friday, April 3, until further notice, citing safety risks after a fire on Thursday.

The fire has reportedly created hazardous conditions, with smoke, active flames, and unstable ground threatening trekkers and residents.

Known as one of Benguet’s top hiking destinations, Mt. Kabunian regularly draws local and foreign visitors, providing income to guides, homestays, and small businesses in Bakun town.

With the closure in place, local officials said safety remains the priority as monitoring and response efforts continue, even as the tourism-dependent community braces for temporary losses. — Artemio A. Dumlao

Two dead, 9 hurt in Easter road crash in San Ildefonso, Ilocos Sur

SAN ILDEFONSO, Ilocos Sur — Two motorcycle riders died while nine others were injured in a crash early Easter Sunday, along the national highway in Barangay Gongogong, San Ildefonso town in Ilocos Sur.

The accident happened around 3 a.m. involving a Ford Everest and five motorcycles carrying 10 riders and passengers from Indang, Cavite, police said.

The SUV, driven by a 23-year-old man from Sto. Domingo, swerved into the opposite lane while trying to overtake another vehicle, hitting the oncoming motorcycles.

The motorcycles were badly damaged, while the SUV was also wrecked. All victims were taken to the hospital, where two were declared dead on arrival, police added.

The SUV driver, who was also injured, tested positive for alcohol, an investigation showed. — Artemio A. Dumlao

Marines force armed men out from Cotabato City’s Timako Hill

COTABATO CITY — Combatants of the 6th Marine Battalion drove away a group armed with assault rifles that attacked two men gathering firewood at the forested Timako Hill in Barangay Kalanganan 2 in this city on Saturday afternoon.

It was residents and Moro community leaders in Barangay Kalanganan 2, supporting the joint law-enforcement efforts of Mayor Bruce C. Matabalao and the Cotabato City Police Office, who led the Marines to the exact location of the gunmen who opened fire at Asraf Talusan Guialal, 33, and his 26-year-old relative, Zaldy Ali Guialal, enabling them to drive away the duo’s attackers after a brief exchange of gunfire.

The Guialals, then gathering fallen dried tree branches at the Timako Hill near Cotabato City’s west coast, survived the attack unscathed.

Col. Jibin M. Bongcayao, director of the Cotabato City police, said the gunmen who shot them ran away when they sensed that more Marines, backed by armored combat vehicles, were closing in.

Residents had told reporters that the gunmen who harassed the two firewood gatherers could have come from a beachfront area west of the Timako Hill. They assured to help identify the culprits for prosecution.

Mr. Bongcayao said Marine combatants and policemen found in the scene of the encounter a chainsaw, five magazines of 5.56 M16 assault rifles, 100 rounds of 5.56-millimeter ammunition and other personal belongings the armed men left as they scampered away. — John Felix M. Unson

Navigating the new global norm in financial regulation

IN BRIEF:

• Regulatory divergence is accelerating globally, with the US easing supervisory transitions to support competitiveness and innovation while the EU and UK maintain a stability-focused approach, creating operational complexities for multinational financial institutions.

• Asia-Pacific regulators are pursuing market-specific, stability-oriented strategies and domestic market development rather than mirroring Western regulatory shifts.

Technology, operational resilience, consumer protection, and emerging systemic risks are reshaping oversight, as regulators strengthen frameworks around AI governance, digital assets, fraud prevention, financial crime compliance, and the growing interconnectedness of nonbank financial institutions.

The global financial system is entering a period of intense structural change, driven by competing political priorities, technological disruption, and diverging regulatory philosophies. If past cycles of reform were characterized by coordination and standards-setting, the current environment reflects a more fragmented, multipolar world. This is evidenced by diverging perspectives on competitiveness and innovation between the US, UK and the European Union, underpinned by recent geopolitical and trade policies. In the Asia-Pacific region, regulators gravitate towards a more cautious stance to develop their respective markets.

While this is the case, there has been a common theme emerging from the current shakeup caused by the conflict in the Middle East that has had direct impact on energy security. Regulators are imploring financial institutions to tighten their respective scenario stress testing exercises to make sure their capital buffers are resilient enough, and calling for increased vigilance on energy shock-induced inflation, supply chain disruptions and their impact on their respective portfolios.

In this situation, institutions pursuing cross-border transactions and those that have operations in various jurisdictions must now navigate a landscape where rules are increasingly diverging. The EY 2026 Global Financial Services Regulatory Outlook highlights this shift, along with the implications for supervision, risk management, and long-term competitiveness of financial institutions.

This is the first article of the Financial Regulatory Outlook series, which will discuss insights from the SGV Knowledge Institute event titled “Global Shifts, Local Impact: Navigating the Next Wave of Banking Regulation.”

REGULATORY FRAGMENTATION WIDENS
Global financial regulation is becoming increasingly fragmented as major economies adopt contrasting approaches to competitiveness, innovation, and systemic oversight. The US is moving towards easing supervisory oversight focusing on capital rules, supervisory methodology, decreasing barriers to innovation, and an increased openness towards mergers and consolidation among major US banks.

This supervisory shift signals that the US is prioritizing economic expansion and domestic competitiveness over multilateral alignments that were emphasized after the Global Financial Crisis.

Meanwhile, the EU and the UK are pursuing growth agendas of their own, but one anchored in maintaining stability within the existing regulatory architecture. The bloc’s decision to delay the Fundamental Review of the Trading Book (FRTB) to 2027 reflects its cautious stance, prioritizing prudential safeguards despite market and geopolitical pressures.

This divergence in regulatory direction creates operational challenges for multinational banks, wherein institutions operating across the US and EU face significant asymmetries in capital requirements, reporting timelines, and supervisory expectations. As global standard setters avoid intervening in these geopolitical drivers, firms must adapt to a regulatory landscape where policy alignment is no longer guaranteed. This regulatory fragmentation appears to be the new norm rather than a transitory cycle while institutions wait for the current geopolitical uncertainties to subside.

ASIA-PACIFIC MARKET FOCUS, STABILITY ORIENTATION
In the Asia-Pacific, regulators are pushing for a more independent trajectory, guided by the US push for less stringent regulatory supervision and more by domestic priorities in innovation, regional competitiveness, and financial stability. Hong Kong and Singapore continue to lead in digital assets and sustainability standards, reflecting their continuous push for regional financial regulatory leadership. Their regulatory stance pairs innovation with strong safeguards that heavily focuses on risk assessment, operational resilience, and capturing cross-border flows.

Meanwhile, India is pursuing rapid financial sector development, implementing measures to boost domestic capacity and build a modern regulatory foundation suited to its expanding economy. On the other hand, Japan is emphasizing trust and system security while strengthening regional financial functions, signaling a preference for stability and predictability. Australia stands as a cautious outlier, closely tracking artificial intelligence (AI) governance and digital asset developments abroad as it evaluates potential reforms domestically.

Despite their varied approaches, APAC regulators share a common orientation: to maintain resilience amid geopolitical uncertainty. Many jurisdictions are tightening cyber and operational standards, as seen in the EU-aligned Digital Operational Resilience Act (DORA) efforts and new oversight regimes for critical third-party service providers. This regional focus on digital resilience and local market strengthening underscores a broader shift where the Asia-Pacific is not reacting to Western recalibrations, but designing frameworks tailored to its own structural needs and competitive aspirations.

EMERGING RISKS
Across global markets, regulators are increasingly concerned about risks arising from fast-moving technological adoption, the expansion of digital assets, and growing dependence on third-party service providers. AI remains a focal point of regulatory inconsistency, with more than 40 jurisdictions issuing guidance or conducting supervisory exercises while applying different expectations around transparency and model governance. Firms now must manage dual risks in this area as well as risks arising from AI used in operations and from AI deployed in compliance functions.

Digital assets, particularly stablecoins, are prompting varied responses worldwide. The US Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act introduces a federal framework emphasizing reserve backing and redemption rights, while Hong Kong, Japan, the EU and UK advance licensing and supervisory regimes customized for their markets. These diverging views are expected to accelerate jurisdictional regulatory arbitrage and reshape business models for digital-native firms.

Operational resilience has also become a supervisory priority. The EU’s DORA regime, the UK’s Critical Third Parties (CTP) framework, and Canada’s operational resilience deadlines all reflect rising concerns about the systemic risks tied to digital infrastructure. Regulators are increasing scrutiny of critical third-party technology providers and intensifying scenario testing. As geopolitical uncertainty heightens vulnerability exposures, firms must build robust, technology-driven controls to withstand disruptions and safeguard business continuity.

CONSUMER PROTECTION, RISK GOVERNANCE, AND NBFIS
Regulators worldwide are strengthening oversight aimed at protecting consumers, enhancing governance, and monitoring emerging threats from non-bank financial institutions (NBFIs). The increasing occurrence of fraud, particularly through digital channels, has led to tougher monitoring, expanded liability expectations, and new obligations for platforms and payment service providers. The UK Financial Conduct Authority’s Consumer Duty continues to influence global standards, with Singapore, Japan, and New Zealand introducing parallel regimes emphasizing fair treatment, transparency, and enhanced complaint handling.

At the same time, supervisors are devoting attention to NBFIs, whose increasing interconnectedness with the regulated banking system raises systemic concerns. The UK’s System-Wide Exploratory Scenario and France’s stress testing exercises reflect efforts to map vulnerabilities in markets where leverage or liquidity mismatches could spill over into traditional finance infrastructure.

The current geopolitical situation has seen a rise of sanctions and asset freezes, and financial crime regulations are expected to continuously evolve. This gives rise to inconsistent reporting requirements in different jurisdictions. While the EU’s Anti-Money Laundering Authority (AMLA) is expanding direct supervision and the Monetary Authority of Singapore (MAS) requires stricter reporting standards, the US Financial Crimes Enforcement Network (FinCEN) has amended its rule on beneficial ownership: foreign entities registered to do business in the US are required to report but are exempt from reporting US citizens as beneficial owners. These are just some of the differing levels of AML compliance that multinational financial institutions operating in different jurisdictions must contend with, and they should have institutional agility to comply.

THE ROAD AHEAD
The regulatory landscape entering 2026 is unlike any in recent memory. It is no longer defined by synchronized reforms, and it is increasingly shaped by national priorities, global geopolitical tensions, and rapid technological change. For financial institutions, success will depend on how agile these institutions are in building robust compliance frameworks, strengthening risk governance, and anticipating divergent rules before they materialize.

At this global crossroads, regulation is no longer merely a compliance exercise. It is now a strategic determinant of an institution’s competitiveness. Firms that understand this shift and adapt accordingly will be best placed to navigate this new global norm in financial regulation.

In the next part of this Financial Regulatory Outlook series, we will be discussing local insights and how Philippine financial institutions will be affected.

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

 

Ruben D. Simon, Jr. is a financial services consulting senior director of SGV & Co.

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