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The Anti-Money Laundering Council (AMLC) is pushing amendments to the Anti-Money Laundering Act as part of its next steps to ensure the country stays out of the Financial Action Task Force’s (FATF) “gray list.”

These amendments aim to align the Philippines’ law with international standards, such as the enhanced monitoring of virtual asset service providers (VASP).

“As part of the preparations for the forthcoming mutual evaluation, the AMLC is currently undertaking a review of the Anti-Money Laundering Act of 2001 (AMLA), as amended,” it said in an e-mail to BusinessWorld.

“With the country’s recent exit from the FATF gray list, this initiative is essential in ensuring sustained compliance with international standards and preventing any potential relisting.”

In February, the FATF removed the Philippines from its list of jurisdictions under increased monitoring for “dirty money” after over three years or since June 2021.

The next assessment is slated for 2027, when the FATF will verify if the anti-money laundering measures are being sustained and still in place.

“As part of this initiative, a set of proposed amendments has been formulated to enhance the provisions of the AMLA,” the AMLC said.

The proposed tweaks to the AMLA would “address the technical compliance requirements arising from the updated FATF standards.”

These include the authority to temporarily suspend transactions and the designation of VASP as covered persons under the revised international standards and FATF recommendations, it added.

The FATF said in its latest recommendations that countries must ensure VASPs are regulated for AML/CFT (countering the financing of terrorism) purposes. These providers must also be licensed or registered, as well as subject to effective systems for monitoring.

Virtual assets, also called crypto assets, refer to “any digital representation of value that can be digitally traded, transferred or used for payment.” However, these do not include digital representation of fiat currencies.

“Without proper regulation, virtual assets also risk becoming a safe haven for the financial transactions of criminals and terrorists,” the FATF earlier said.

The proposed amendments also aim to “ensure its continued effectiveness in addressing emerging threats.”

It will also ensure the alignment with international standards on its AML/CFT/CPF (countering proliferation financing) regime, as well as address gaps identified in previous FATF reports.

While AMLC gave no timeline for the proposed amendments to the AMLA, this is likely to be tackled by the 20^th Congress, which will formally open in late July. 

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. It was removed from the blacklist a year later after the passage of the AMLA.

The AMLA criminalizes money laundering, relaxes tight bank deposit secrecy laws, imposes requirements to better track transactions, and provides for international cooperation, among others.

Risk assessment

Meanwhile, the AMLC is currently conducting a National Risk Assessment (NRA), with a draft expected to be completed within the year.

“The NRA aims to evaluate potential money laundering threats and vulnerabilities affecting our country,” it said.

“Through the NRA, we will be able to adopt measures to address determined risks. This will ensure the sustainability of our country’s AML/CFT/CPF regime.”

The AMLC said the results of the risk assessment aim to guide government agencies in their preparations for the forthcoming mutual evaluation.

Aside from the ongoing NRA and proposed AMLA amendments, the AMLC said it is working on other initiatives after the Philippines’ exit from the gray list.

“Systems have been institutionalized to prevent another FATF gray-listing,” it said.

Malacañang last year issued an executive order mandating all government offices to adopt the National Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing Strategy 2023-2027.

“Likewise, the AMLC is consistently coordinating with relevant government agencies to ensure that the improvements made in our AML/CFT/CPF framework are continuously implemented and sustained.”

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that even with the gray list exit, money laundering risks still exist.

“The truth is money laundering is alive and well in the Philippines despite our exit from the gray list. It’s also an open secret that banks tolerate it,” he said via Messenger.

Mr. Sta. Ana said that the “shadow economy” in the Philippines accounts for about one-fourth or one-third of gross domestic product (GDP).

“That’s pretty high and that means money laundering is prevalent. I think the most effective solution is to lift the Bank Secrecy Act,” he added.

Earlier data from Moody’s Investors Service showed that from 2018 to 2023, the Philippines was among the top five countries in Southeast Asia with money laundering activity events added over the five-year period. The number of money laundering events added in the Philippines jumped by 45% from 2022 to 2023. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Philippine President Ferdinand R. Marcos, Jr. expressed concern over the impact of the US tariffs on the global economy, warning of possible “shrinkage in economic activity.”

Speaking at a press conference following the 46^th ASEAN Summit in Kuala Lumpur on Tuesday evening, Mr. Marcos said the US tariffs imposed on Association of Southeast Asian Nations (ASEAN) members will have a significant impact on the region’s economies.

“If the tariff regime is unilaterally imposed, there will be a real collapse. It has a global effect, and it is not going to be a good one. There will be, I believe, a shrinkage in economic activity. I hope not. I hope I’m wrong,” he said.

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

Even if the tariff is rolled back, Mr. Marcos said there is already a permanent effect on the economy that cannot be undone.

Southeast Asian leaders on Tuesday evening issued a statement expressing “deep concern” over the Trump administration’s tariff policies.

“We express deep concern over the recent announcement by the United States to impose unilateral tariffs and their potential impact on our economies,” according to a statement by the chairman of the ASEAN on Tuesday evening.

“The uncertainties arising from these tariffs and potential retaliation could heighten volatility in both capital flows and exchange rates.”

However, Southeast Asian leaders said they will continue their dialogue with the US, “and commit not to impose any retaliatory measures in response to US tariffs.”

“We also emphasized the urgency of diversifying trade beyond traditional markets,” according to the statement.

Meanwhile, Mr. Marcos said uncertainty remains as countries are awaiting developments in their negotiations with the US.

“We don’t know what will happen between now and July when the 90 days run out,” he said.

Mr. Marcos also called for stronger regional coordination and deeper economic integration within ASEAN.

“If we cannot sell to these markets anymore, then let’s sell to each other’s markets. The best, most solid way forward is to be a reliable partner for each other in ASEAN,” he said.

The Philippine president said he chatted with Chinese Premier Li Qiang during the ASEAN Summit on the issue of US tariffs.

“I asked him, ‘Premier, what do you think?’ He says, “Well, we do not want any of this.” They don’t want this (trade) war. And I said, ‘We’re very worried because China is the biggest economic driver in the region,’” Mr. Marcos said.

The US and China earlier this month agreed to temporarily cut the reciprocal tariffs for 90 days. The US slashed the extra tariffs it imposed on Chinese imports to 30% from 145%, while China’s levies on US imports will be reduced to 10% from 125%.

Negotiations

Meanwhile, Southeast Asian leaders reached an understanding on Tuesday that any bilateral agreements they might strike with the United States on trade tariffs would not harm the economies of fellow members, Malaysia’s premier Anwar Ibrahim said.

Mr. Anwar, the current chair of the ASEAN, said there was consensus during the ASEAN Summit that any deals negotiated with Washington would ensure the interests of the region as a whole were protected.

The ASEAN meeting came at a time of global market volatility and slowing economic growth, and amid uncertainty over a trade war that has ensued since US President Donald J. Trump’s announcement of sweeping “Liberation Day” tariffs.

“While proceeding with bilateral negotiations…, the consensus rose to have some sort of understanding with ASEAN that decisions should not be at the expense of any other country,” said Mr. Anwar, who on Monday said he had written to Mr. Trump requesting an ASEAN-US meeting on the tariffs.

“So, we will have to protect the turf of 650 or 660 million people,” he said of ASEAN.

ASEAN, a region with a combined gross domestic product of more than $3.8 trillion, is in a precarious position in relation to the United States, which is the biggest market for the region’s exports, which are key drivers of its growth.

The 10-member bloc on Tuesday released a five-year strategic plan to better integrate its economies, citing challenges that meant “carrying on business as usual will not suffice.”

Tuesday’s meetings also included an economic gathering of leaders of the ASEAN, Gulf countries and China.

At a dinner event late on Tuesday, China’s Mr. Li urged Gulf and ASEAN countries to remove trade barriers and expand liberalization in the face of rising protectionism and unilateralism.

“We all need to firmly maintain the multilateral trading system with the World Trade Organization as the core and promote the creation of a stable and orderly international market environment,” he said. — CMAH and Reuters

The Department of Tourism (DoT) said on Wednesday that it is seeking to establish the Philippines as a food and gastronomy destination within Southeast Asia.

Tourism Undersecretary Verna C. Buensuceso said at the launch ceremony for the gastronomy tourism roadmap that the program will tout the Philippines’ “culinary diversity and local produce.”

The roadmap includes strategies for creating food-focused tourism experiences to increase awareness of and recognition for Filipino food.

Tourism Secretary Ma. Esperanza Christina Garcia Frasco said the launch marks gastronomy tourism’s formal incorporation in the National Tourism Development Plan (NTDP).

“For the first time, gastronomy has been formally incorporated in the NTDP, not as an afterthought, but as a central pillar of our tourism strategy,” she said.

“It is not a top-down plan; it is a bottom-up strategy created in partnership with the people who know our food best,” she added.

In parallel, the DoT also launched its Market Tourism Product Development Program, which aims to transform public markets into destinations.

“Our markets are not merely venues for commerce and trade; they are our cultural landmarks. In Baguio, our pilot program has proven how a public market can become both a heritage site and an economic engine, and now we are ready to take this nationwide,” Ms. Frasco said. 

She said market tourism as a sub-product of gastronomy tourism took in ideas and contributions of culinary tourism advocates and the academic community.

“We will have market tours, and various places will now have an opportunity to become tourism destinations. We will give out handbooks to our local government units, which will serve as a guide on how to develop their markets into tourism circuits,” she said. — Justine Irish D. Tabile

The national government’s (NG) fiscal position swung to a surplus in April as an uptick in tax revenues offset the decline in state spending, the Bureau of the Treasury (BTr) said on Tuesday.

Data from the Treasury posted a PHP 67.3-billion surplus in April, a turnaround from the PHP 375.73-billion deficit in March.

The surplus was also 57.51% higher than the PHP 42.7-billion surplus seen in April 2024.

This was the first budget surplus since the PHP 68.36-billion surplus in January.

Revenue collections slid by 2.82% to PHP 522.1 billion in April from PHP 537.2 billion in the same month last year, “due solely to the timing of nontax collections.”

Nontax revenues plunged by 68.08% to PHP 24.1 billion in April from PHP 75.4 billion in the same month in 2024.

“This is because most government-owned and -controlled corporations (GOCCs) have yet to remit dividends, unlike the same period last year,” it said.

BTr revenues dropped by 77.42% to PHP 14.5 billion in April, while other offices saw a 15.64% decline to PHP 9.6 billion.

The Department of Finance last week reported that state-run firms remitted PHP 76 billion worth of dividends to the Treasury as of May.

On the other hand, tax revenues jumped by 7.84% to PHP 498 billion in April from PHP 461.8 billion in the same month in 2024.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR), whose collections rose by 11.1% to PHP 420.5 billion in April from PHP 378.5 billion a year ago.

“This strong performance was driven by higher collections from corporate income tax (CIT), value-added tax (VAT), and personal income tax (PIT),” BTr said, noting the annual tax filing deadline was April 15.

Improvements in personal income tax and VAT collections were attributed to BIR’s efforts to simplify tax filing through digital services, it added.

“The increase in VAT collections was also supported by the Bureau’s crackdown on the use of fake receipts and its continued campaign against illicit trade,” the BTr said.

The Bureau of Customs saw revenues fall by 7.48% to PHP 74.7 billion in April from PHP 80.7 billion a year ago.

“This is partly due to the fewer working days for the month and the impact of lower import volumes amidst global trade challenges,” the Treasury said.

In April, US President Donald J. Trump announced a baseline 10% tariff on all its trading partners, as well as higher reciprocal tariffs on some countries, including the Philippines. The reciprocal tariffs have been paused until July.

Meanwhile, government expenditure fell by 8.03% to PHP 454.8 billion in April from PHP 494.5 billion in the same month last year.

The BTr attributed the drop in state spending to lower interest payments, and subsidies to government corporations, particularly the National Irrigation Administration.

“The timing of transfer of the capitalization requirement of the Coconut Farmers and Industry Trust Fund also weighed down on the growth of April spending. In the previous year, the transfer was taken up in April while this year’s capitalization requirement was released in March,” it said.

Primary spending — which refers to total expenditures minus interest payments — slipped by 4.37% to PHP 408.3 billion in April from PHP 427 billion a year earlier.

Interest payments fell by 31.19% to PHP 46.4 billion in April this year from PHP 67.5 billion in the same month in 2024.

The annual decline in interest payments was attributed to the shift in the timing of payments of both domestic securities and external loans related to Lenten and Eid’l-Fitr holidays.

“Fundamentally, budget surpluses are expected during the month of April in a given year during the tax collection/filing month on a yearly basis. The budget surplus could reduce the need for additional borrowings/debt by the NG,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc. said the drop in spending may have been due to the election ban on some public spending which started in late March and ran until election day.

“However, this surplus may not last long as faster government spending is expected this year to support the economy,” he said.

4-month gap

At the same time, the NG’s fiscal deficit widened to PHP 411.5 billion in the January-to-April period, 78.98% bigger than the PHP 229.9-billion gap a year ago, as the pace of expenditures outpaced revenues.

The BTr said the deficit ballooned due to the “faster expansion in public spending to fuel economic activity and support priority programs of the Marcos Jr. administration.”

State spending went up by 13.57% to PHP 1.93 trillion in the first four months from PHP 1.7 trillion in the same period last year.

Primary spending increased by 14.16% to PHP 1.64 trillion, while interest payments rose by 10.35% to PHP 287.4 billion.

On the other hand, revenues inched up by 3.35% to PHP 1.52 trillion in the January-to-April period from PHP 1.47 trillion a year ago.

Taxes, which account for 94.03% of the total revenues, increased by 11.49% to PHP 1.43 trillion.

BIR revenues rose by 14.5% to PHP 1.11 trillion in the first four months, due to the intensified campaign against fake receipts, illicit trade, digitalized tax filing and higher excise tax collections.

Customs collections inched up by 2.16% to PHP 306.1 billion as of end-April.

Meanwhile, nontax revenues slumped by 51.94% to PHP 90.7 billion in the January-to-April period from PHP 188.8 billion a year earlier. 

The NG’s deficit ceiling for 2025 is capped at PHP 1.54 trillion or 5.3% of gross domestic product. — Aubrey Rose A. Inosante

The Asian Development Bank (ADB) on Tuesday said it is set to approve this year a new USD  400-million loan for the Philippines, which would fund efforts to boost the country’s marine ecosystem and “blue economy.”

“Today, I am pleased to share that a USD  400-million loan for the Philippines is set for approval this year, to strengthen marine ecosystems and support the blue economy under its National Adaptation Plan,” ADB President Masato Kanda said during the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) Summit in Kuala Lumpur.

Mr. Kanda was referring to the loan for the Marine Ecosystems for Blue Economy Development Program (Subprogram 1). The program falls under the National Adaptation Plan, which aims to reduce the country’s vulnerability to climate change impacts by boosting adaptive capacity, fostering resilience, and integrating adaptation into relevant policies and programs.

According to the ADB’s website, this project aims to establish an integrated and inclusive management of coastal and marine ecosystems, improved plastic and solid waste circularity.

The “blue economy” refers to the responsible use of ocean resources to foster economic growth, improve livelihoods, and ensure the long-term sustainability of marine ecosystems.

Valued at PHP 943.05 billion in 2023, the blue economy covers fisheries, manufacturing of ocean-based products, tourism, shipping, and offshore energy.

Meanwhile, Mindanao Development Authority Chairman Leo Tereso A. Magno said the multilateral lender has committed to extending assistance to projects in Mindanao.

“They gave an amount during the meeting earlier and they committed for some funds, additional funds for our country, to develop Mindanao and Palawan,” he told reporters in Kuala Lumpur.

Separately, the ADB also expects to approve a USD 62.7-million loan for the first phase of the Mindanao Irrigation Development Project in 2026.

It aims to improve irrigation planning and promote climate-resilient farming systems to boost agricultural productivity in Mindanao.

Another related initiative scheduled for approval next year is the USD  61-million Promoting Sustainability and Productivity for Enterprise Resilience and Upscaling in the Philippines (ProSPER) Project.

ProSPER supports agricultural diversification and food value chain development in Mindanao by “promoting private investments in agro-industry, improving agricultural logistics and services, and enhancing product quality and competitiveness.”

‘Dynamic growth hub’

Meanwhile, Mr. Kanda said the ADB supports BIMP-EAGA’s Vision 2035, which positions the region as a “dynamic growth hub.”

“We stand at a crucial juncture and must navigate a great deal of uncertainty. The region must face the impacts of trade and geopolitical tensions, rapid technological shifts, and threats to food and energy security,” he said.

To unlock the region’s potential, Mr. Kanda said there is a need to tackle vulnerabilities in the food system.

“BIMP-EAGA is known as ASEAN’s (Association of Southeast Asian Nations) food basket, sustaining millions through agriculture, fisheries, and aquaculture. But climate change threatens food security and marine ecosystems. We must act to address this,” he said.

Mr. Kanda said the ADB is scaling up its investment in food security to USD 40 billion through 2030.

“In the Philippines, we have deployed USD 500 million for agricultural development through policy and regulatory reforms, enhanced public services and financial support, and protection of rural families,” he said.

To boost regional energy integration, Mr. Kanda said the ADB is also prepared to commit up to  USD  10 billion to advance the ASEAN Power Grid.

Mr. Kanda also sees opportunities in BIMP-EAGA’s expanded economic corridors and special economic zones.

The ADB chief said the bank is ready to double trade finance in the ASEAN to more than USD  2.5 billion annually by 2030. — A.R.A. Inosante

 

The PHP 8.7-billion rehabilitation of the Epifanio de los Santos Avenue (EDSA) is set to begin on June 13 and expected to be completed by 2027, the Department of Transportation (DoTr) said on Monday.

The DoTr outlined plans to address the traffic congestion that is expected to worsen once parts of Metro Manila’s busiest highway will be closed for rehabilitation work.

“We will rebuild EDSA. This project by the Department of Public Works and Highways (DPWH) will rehabilitate the full stretch of EDSA and make it a green and walkable highway. We need to change the entire concrete structure of EDSA,” Transportation Secretary Vivencio B. Dizon said at a media briefing on Monday.

The EDSA rebuild project, which will run for two years, will be the highway’s first major rehabilitation since 1980. Around 437,000 vehicles use EDSA every day.

Public Works Secretary Manuel M. Bonoan said the project aims to make Metro Manila’s longest and most congested highway a more pedestrian and commuter-friendly road.

Preparatory works will begin on the night of June 13, while construction will go full blast a week after, Mr. Bonoan said. This will include laying out the sections as the rehabilitation project is intended to be implemented lane by lane.

“The concept of the rebuild project, our deliverables are to rebuild and reconstruct the entire EDSA. We will change the pavement into a new one, in other words we will flip the entire EDSA and adapt the latest technologies on concrete mix,” Mr. Bonoan said.

“We will deploy several contractors simultaneously. Construction will proceed lane by lane.”

Overall, a total of 200 kilometers of lane covering both northbound and southbound of EDSA will be rehabilitated, Mr. Bonoan said, adding that the south portion will be done first, followed by the northbound section next year.

“I do not think we can finish the southbound portion this year because it is already the middle of the year. We will continue the implementation of southbound and northbound until next year, simultaneously,” Mr. Bonoan said.

Starting mid-June, the government will work on the excavation of the existing surface and installation of new concrete, prioritizing the sections of Pasay and Guadalupe.

Mr. Bonoan said the EDSA Bus Lane, which serves nearly 200,000 average daily passengers, will continue to operate during the rehabilitation period.

He said the government is prioritizing the south portion of EDSA due to the country’s anticipated hosting of the Association of Southeast Asian Nations (ASEAN) Summit in 2026 which is expected to be held in the south of Metro Manila.

“Our consideration for this scheme is the ASEAN meeting. We will have to avoid the construction in EDSA during that time,” Mr. Bonoan said.

Traffic management

DoTr’s Mr. Dizon said that San Miguel Corp. (SMC) had agreed to waive the toll fee for some segments of the Skyway Stage 3 during the EDSA rehabilitation period.

“We understand that this temporary arrangement might result in loss of income to SMC, the operator of Skyway. In response, the DoTr and Toll Regulatory Board are exploring options to grant SMC some reprieve, including possible extension of their concession agreement with the government,” he said.

BusinessWorld also sought comment from SMC but it has yet to respond as of the deadline.

“The free toll will begin once the full blast of construction starts, so maybe that is July or August,” Mr. Dizon said.

The DoTr and the Metropolitan Manila Development Authority (MMDA) have also developed their initial traffic mitigation plans which include the deployment of 100 units of bus on EDSA Busway; and more trains at Metro Rail Transit Line 3 (MRT-3).

MMDA Chairman Romando S. Artes said the odd-even scheme for private cars will also be strictly implemented along EDSA for a 24-hour period except on Sundays.

Under this scheme, private cars with plates ending in odd digits will be barred from using EDSA during Mondays, Wednesdays, and Fridays, while vehicles with plate numbers ending in even numbers cannot use EDSA on Tuesdays, Thursdays, and Saturdays.

“With this scheme, we expect a 40% reduction of vehicles in EDSA. The existing coding schemes will continue to be in place for roads outside EDSA,” Mr. Artes said.

Electric vehicles, and hybrid cars are exempted from the number coding scheme, under the Electric Vehicle Industry Development Act (EVIDA) in the Philippines.

Transportation Network Vehicle Service (TNVS) like Grab and inDrive are also exempted from the odd-even scheme on EDSA.

Further, trucks and provincial buses will also be prohibited from using EDSA during 5 a.m. to 10 p.m. starting June 13.

Economic impact

A 2018 Japan International Cooperation Agency (JICA) study had estimated the economic cost of traffic congestion in Metro Manila stood at around PHP 3.5 billion a day.

“EDSA rehabilitation should have been done years ago. It would create temporary pains. I was part of the JICA study (in 2018), and the economic loss is now already bigger than that. It can go down, after the completion of EDSA rehabilitation,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message to BusinessWorld.

Manila was the 14^th most traffic congested city in the world, with an average travel time of 32 minutes for an average 10-kilometer distance, according to the latest edition of the TomTom Traffic Index.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said that the closure of parts of EDSA would likely worsen traffic and affect consumer activity.

“The expected traffic disruptions caused by construction, coupled with the odd-even scheme, are likely to discourage individuals from visiting shopping malls, restaurants, and entertainment venues along EDSA. People may prefer to visit establishments outside of congested areas or accessible via alternate routes,” he said in a Viber message.

However, Mr. Rivera said that once the project is completed, it can deliver long-term benefits including improved traffic flow and reduced travel time.

“This will increase productivity and lower vehicle operating costs and fuel consumption. It will also help better road safety and commuter experience; higher business confidence and increased property values along EDSA,” he said.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that the EDSA rehabilitation can have a significant impact on both traffic patterns and economic activities, especially for businesses reliant on foot traffic.

Mr. Arce said this may boost online shopping as consumers prioritize convenience.

“Some businesses may adapt by emphasizing delivery services or offering online shopping options. However, those unable to pivot effectively may suffer more severely,” he said.

Shopping malls and entertainment venues could face lower revenues, Mr. Arce said, noting that these businesses rely on impulse visits and foot traffic.

“Overall, while the rebuild project is necessary for long-term improvements, its short-term disruptions will likely affect consumer habits and business revenues unless proactive steps are taken to manage and mitigate the impacts,” he said. – Ashley Erika O. Jose, Reporter

Monetary policy may not be enough to cushion the economy from the potential impact of trade shocks, the Bangko Sentral ng Pilipinas (BSP) said.

“Today, unprecedented policy shocks are fueling a befuddling kind of uncertainty. Monetary policy alone cannot fully shield the economy from the repercussions of these shocks,” BSP Deputy Governor Zeno Ronald R. Abenoja said at a forum hosted by the Philippine Institute for Development Studies (PIDS) and central bank on Monday.

“Broader, coordinated strategies would indeed help.”

Quoting BSP Governor Eli M. Remolona, Jr., Mr. Abenoja said that trade shocks are “more damaging” than supply shocks.

“Unlike your usual supply shocks, which tend to be transitory, trade shocks have deeper, more persistent effects,” he said.

Last month, US President Donald J. Trump slapped reciprocal tariffs on nearly all its trading partners. However, he suspended the implementation of the higher tariffs until July but kept the baseline 10% tariff.

“In particular, trade shocks affect the capital stock of developing economies. Left unchecked, they can slow growth trajectories and erode decades of hard-won progress,” Mr. Abenoja said.

Mr. Remolona earlier said that central banks have been concerned about the global trade uncertainties, prompting the need to update models and frameworks to better account for these risks.

However, Mr. Abenoja said the Philippines is “well-positioned to manage inflation.”

Headline inflation slowed to an over five-year low to 1.4% in April, bringing the four-month average to 2%.

“This gives us extra degrees of freedom to ease monetary policy which in turn can support growth,” he added.

Mr. Remolona has signaled the possibility of two more rate cuts this year, in “baby steps” or increments of 25 basis points (25 bps).

Last month, the Monetary Board lowered benchmark interest rates by 25 bps to bring the policy rate to 5.5%.

The central bank has so far slashed borrowing costs by a total of 100 bps since it began its easing cycle in August last year.

“The BSP stands ready to do what is necessary to keep inflation steady and maintain the country’s macroeconomic stability,” Mr. Abenoja added.

Industrial policy

Meanwhile, PIDS Emeritus Research Fellow and former Trade Undersecretary Rafaelita M. Aldaba said the government must continue to pursue more structural reforms to benefit from the trade diversion arising from these tariff policies.

“A lot of countries are also strategizing, and hence it’s really important for the Philippines to quickly move swiftly towards the implementation of our strategies. We don’t want to be a passive beneficiary,” she said.

“What we want is for the Philippines to be a strategic player in this global economy,” she added.

Ms. Aldaba said the country is well positioned to take advantage of manufacturing and production relocation.

“These are opportunities, like I said, for relocation production from China and the ASEAN-5 countries can absorb these diverted investments,” she said.

For example, the Philippines and Malaysia are well-positioned to absorb the manufacturing of electronic products.

“Philippines also, we can be a location for light electric devices, appliances, footwear, garments, accessories, and toys,” she said.

Ms. Aldaba said there is a need to continue enhancing industrial policy.

“Our recommendation is, perhaps, to build on the new industrial policy that was started from 2012 onwards. We hope that we’ll be able to integrate this industrial policy with our trade policy.”

“There are two measures that I would like to highlight. One is on industrial policy, and the other is in terms of protecting our exports and improving our industries,” she added.

Ms. Aldaba said it will be vital for the country to be able to “move up the global value chain from final assembly to more high-value stages.”

There is also a need to diversify production and trade partners, she added.

“And in terms of the rules of our trade compliance, this is also very important. Of course, rescaling, upskilling the workforce to make more complex, more advanced production would also be a vital part of the middle elements for us to promote our industries.”

“Two very important elements of our strategy would be the industrial upgrading part and trade defense and monitoring mechanisms,” she added. — Luisa Maria Jacinta C. Jocson