THE EnTrEprEnEur

tHe inflation rate to a certain degree is predictable. Prices as measured by the consumer price index readily go up in times of a supply shock, as in the case of a turbulent global oil price market. they also spike seasonally—or when prices of commodities such as rice and vegetables increase on lean harvests because of adverse climate like typhoons that destroy crops and disrupt the supply chain.

The Russian invasion of Ukraine over a year ago immediately sent world oil and wheat prices surging as the two warring nations are major suppliers of the two commodities. This geopolitical conflict caused the global inflation rate to rise, prompting the United States and other major economies to raise their interest rates in their attempt to curb spending.

The Philippines also suffers high inflation on an intermittent basis because of animal diseases that curtail poultry and meat production. With a fast-growing population, it will be difficult for the Philippines to play catch-up with the demand, especially on low agricultural and livestock output.

Government intervention measures, however, can address the high inflation rate and provide temporar- ily relief to a supply shortfall and the nuances of domestic trading. President Ferdinand Marcos Jr. and his Cabinet are taking a holistic approach in combatting a high inflation rate that could derail the nation’s economic goals.

President Marcos on May 26, 2023 signed Executive Order 28 creating the Inter-Agency Committee on Inflation and Market Outlook. Beyond monitoring price movements, the committee plans to enhance government coordination in managing inflation and mitigating the impact of rising commodity prices. Of course, it is too early to say that the committee’s work has paid dividends. But I am confident that it is the right direction to take in fighting high prices that erode the purchasing power of the ordinary

The inflation rate in May, per the report of the Philippine Statistics Authority, dropped further to a near one-year low of 6.1 percent from 6.6 percent in April on slower increases in the prices of transport, food and non-alcoholic beverages. The May inflation was the slowest since the 6.1 percent registered in June 2022, although still higher than the rate of 5.4 percent a year ago.

President Marcos was pleased with the declining inflation rate, calling it a welcome development and a sign of continued progress towards affordable prices of goods.

The annual decline in the index of transport led the drop in the headline inflation at -0.5 percent from 2.6 percent in the previous month. The heavily weighted food and nonalcoholic beverages, per the PSA report, also pulled down the overall inflation during the month with a lower inflation rate of 7.4 percent from 7.9 percent in April. The annual rate increase of alcoholic beverages and tobacco index, meanwhile, slowed down to 12.3 percent during the month.

We will likely see a further drop in the inflation rate in the coming months once the inter-agency committee I mentioned earlier begins its

Hey PSE! What’s your problem?

John Mangun

OuTSIDE THE BOX

BAck in the day, I was invited to have lunch with the President of the Philippine Stock exchange (PSe). He had held the position for two years and “confessed” to me that he was only now beginning to understand what the stock market was all about.

I replied that he should not feel bad. I told him that there were people that had been on the PSE for two decades that still didn’t know how and why a stock exchange functions successfully. Not much has changed since then.

The dismal price performance and trading volume of the Philippine Stock Exchange (PSE) is because of a global liquidity freeze to which the PSE is contributing. The “experts” attribute this on any given day to the policies and actions of—in alphabetical order—Philippine President Marcos, Federal Reserve Chair Jerome Powell, and Russian leader Vladimir Putin. That might be true in some respects but is actually unim- portant. It is what it is for whatever reason. But it is across all markets and not just for equities.

Global Bitcoin trading volume peaked in mid-November 2022. The 30-day moving average of daily volume has been consistently lower in 2023 than any time since January 2022.

Total global and New York Stock Exchange volume peaked in 2015 and has since then been in a downtrend. While the Dow Jones Industrial Average is trying for a historic high, it is basically unchanged since January 10, 2023.

The current liquidity freeze both here and abroad is transitory and will end. However, the PSE has some systemic issues that have never been properly addressed. Government has never been functionally supportive of the local stock market except when a sitting president would ring the opening bell when the PSE index was performing well.

One suggestion is that the trading volume problem could be solved with more companies going public.

The SET—Stock Exchange of Thailand—lists 822 companies. Bursa Malaysia (BM) trades 983 on two exchanges. The PSE has 286 listed issues. I am in favor of all Filipino companies going public as I have been called in to consult on IPOs. More money for me.

On the SET, the number of stock market trading accounts increased almost 10 times from 2008 to 2022, with the current total at 5.85 million.

The PSE reports, “The total stock market accounts registered in 2022 was at 1,712,734.” systematic job. The group, among other things, aims to put a coordinated and proactive monitoring system in place to keep food and energy prices within the target range.

But this idea of more companies is like Jollibee building a Jollibee next to an existing Jollibee assuming that will double the number of customers. Maybe the reason the SET and BM have three times as many listed companies is because they have three times as many investors, not the other way around.

The government, in my opinion, can once and for all neutralize inflation through an integrated approach by involving concerned government agencies in monitoring the primary drivers of inflation. The committee, per the statement of National Economic and Development Authority Secretary Arsenio Balisacan, will keep tabs on current trends and data on local and international prices and the level of domestic production, import arrivals, climate outlook and other relevant supply and demand information for key commodities.

The looming El Niño also poses a challenge to state planners. The Philippines may see lower production of rice and some crops once the prolonged dry spell kicks in. I am sure the inter-agency committee is keeping an eye on El Niño because of its inflationary impact.

Again, I am confident the Philippines will overcome El Niño and other inflationary factors through a comprehensive approach that requires the participation of local government units and concerned government agencies.

For comments, send e-mail to mbv_secretariat@vistaland.com.ph or visit www.mannyvillar.com.ph

Further, the PSE started trading a Real Estate Investment Trust (REIT) in 2020. The BM traded its first REIT in 2006 while the SET started in 2015. And short selling? Regulated short sales were introduced in Bursa Malaysia on September 30, 1996 and SET in 2001.

Also important, the BM has an exchange to trade “Futures and Options Exchange comprising commodity, financial and equity derivative products.” Thailand Futures Exchange (TFEX), a subsidiary of the SET, was established in 2004 as a derivatives exchange.

On the PSE, client trading is limited to “Buy a stock and pray the price goes up and does not go down. Amen.”

All markets want a bigger piece of the 25 to 45 aged investor. BM did a one-day “Bursa Marketplace Virtual Fair 2022” and had 8,000 attendees. But they also sponsor “Digital Literacy for Seniors Program.” Why is that last demographic important? At the PSE, those aged 60 and above account for only 10.8 percent of accounts and owned a miserable 5 percent of online accounts. “Digital Literacy” means learning to trade online.

By Lolita C. Baldor | The Associated Press

Last week, she raised her right hand and took the oath to join the US Army Reserves, thanks in part to a recruiter in Dallas who also is Nepalese and reached out to her through an online group.

Bidari, who heads to basic training in August, is just the latest in a growing number of legal migrants enlisting in the US military as it more aggressively seeks out immigrants, offering a fast track to citizenship to those who sign up.

Struggling to overcome recruiting shortfalls, the Army and the Air Force have bolstered their marketing to entice legal residents to enlist, putting out pamphlets, working social media and broadening their outreach, particularly in inner cities. One key element is the use of recruiters with similar backgrounds to these potential recruits.

“It is one thing to hear about the military from locals here, but it is something else when it’s from your fellow brother, from the country you’re from,” said Bidari, who was contacted by Army Staff Sgt. Kalden Lama, the Dallas recruiter, on a Facebook group that helps Nepalese people in America connect with one another. “That brother was in the group and he was recruiting and he told me about the military.”

The military has had success in recruiting legal immigrants, particularly among those seeking a job, education benefits and training as well as a quick route to becoming an American citizen. But they also require additional security screening and more help filling out forms, particularly those who are less proficient in English.

Both the Army and the Air Force say they will not meet their recruiting goals this year, and the Navy also expects to fall short. Pulling more from the legal immigrant population may not provide large numbers, but any small boosts will help. The Marine Corps is the only service on pace to meet its goal.

The shortfalls have led to a wide range of new recruiting programs, ad campaigns and other incentives to help the services compete with often higher-paying, less risky jobs in the private sector. Defense leaders say young people are less familiar with the military, are drawn more to corporate jobs that provide similar education and other benefits, and want to avoid the risk of injury and death that service in defense of the United States could bring. In addition, they say that little more than 20 percent meet the physical, mental and character requirements to join.

“We have large populations of legal US residents who are exceptionally patriotic, they’re exceptionally grateful for the opportunities that this country has provided,” said Air Force Maj. Gen. Ed Thomas, head of the service’s recruiting command.

The biggest challenges have been identifying geographic pockets of immigrant populations, finding ways to reach them and helping any of those interested navigate the complex military recruiting applications and procedures.

Last October, the Army reestablished a program for legal permanent residents to apply for accelerated naturalization once they get to basic training. Recruiters began to reach out on social media, using short videos in various languages to target the top 10 countries that recruits had come from during the previous year.

The Air Force effort began this year, and the first group of 14 graduated from basic training and were sworn in as new citizens in April. They included recruits from Cameroon, Jamaica, Kenya, the Philippines, Russia and South Africa. As of mid-May there were about 100 in basic training who had begun the citizenship process and about 40 who had completed it.

Thomas said the program required changes to Air Force policy, coordination with US Citizenship and Immigration Services and a careful screening process to ensure there are no security risks.

“We have to take exceptional measures to be able to thoroughly vet and go through the security clearance investigation,” he said, adding that in many cases the immigrants are not immediately put in jobs that require top secret clearance.

Under the new program, recruits are quickly enrolled in the citizenship system and when they start basic training, an expedited process kicks off, including all required paperwork and testing. By the time Air Force recruits finish their seven weeks of training, the process is complete and they are sworn in as American citizens.

The first group of 14 included several who are seeking various medical jobs, while another wants to be an air transportation specialist. Thomas said Airman 1st Class Natalia Laziuk, 31, emigrated from Russia nine years ago, has dreamed of being a US citizen since she was 11, and learned about the military by watching American movies and television.

“Talking to this young airman, she essentially said, ‘I just wanted to be useful to my country,’” he said. “And that’s a story that we see played over and over and over again. I’ve talked to a number of these folks around the country. They’re hungry to serve.” women, the wealthier, and older men and women with money are not in the stock market.

For Bidari, who arrived in the US in 2016 to attend college, the fast track to citizenship was important because it will make it easier for her to travel and bring her parents to the United States to visit. Speaking in a call from Chicago just a day after she was sworn in, she said she enlisted for six years and hopes that her future citizenship will help her become an officer.

In Chicago earlier this year, Army Secretary Christine Wormuth heard from a number of recruiters about the increased outreach to immigrant communities and how it helped them meet their numbers. In the 2022 budget year, they said, the Chicago recruiting battalion enlisted 70 legal permanent residents and already this year they have enlisted 62.