Upholding the BSP’s independence

It’s been a tough year for Bangko Sentral ng Pilipinas Governor Felipe Medalla. He took the helm of the country’s chief monetary authority at a time when the country was still dealing with the heavy blows of the pandemic and inflation was impossibly high.

But to his credit, Gov. Medalla, a technocrat and well-known economist, rose to the occasion and faced the challenging task of tempering demand that’s been stoking inflation.

Remember that surprise off-cycle jumbo rate hike of 75 basis points in July last year which came at a time when several central banks, including the US Federal Reserve, were aggressively raising rates to arrest inflation?

All these rate hikes successfully tamed inflation which slowed down for the third consecutive month in April this year to 6.6 percent from 7.6 percent in March. This has brought January to April inflation to 7.9 percent.

Even Finance Secretary Benjamin Diokno said in May: “The recent inflation numbers indicate that we are on track to managing inflation to within target sometime in the fourth quarter, if not sooner, and near the midpoint of the target range of 2.0 to 4.0 percent by next year.”

Gov. Medalla knew what had to be done.

“We have been very aggressive [in terms of tightening monetary policy].

So, what have we done? As you can see, initially, the peso was depreciating; it depreciated quite a bit [in 2022]. Indeed, by September to October of last year, the depreciation was around 14 percent.

“What happened was, partly because of the end of the strong dollar and our own [tightening] policies, it [the peso] has now actually appreciated,” he said in a speech in January during the Philippine Economic Briefing in London.

Seven months into his term, Gov. Medalla said that he “has had the pleasure or pain of raising the policy rate by 325 bps.”

“Of the 350 bps, 325 bps of that was mine [occurred under my term], and I have been governor for only seven months, but it worked,” he said in that London briefing.

Aside from taming inflation, Gov. Medalla also led a BSP that strengthened the banking system, including the digital payments space.

Gov. Medalla’s term ends next month and as of this writing, there’s no telling what happens next. The business community is waiting with bated breath on who will succeed him.

It is possible that by the time this piece comes out, there may already be an announcement on who the next BSP chief is. We’re hearing names including Gov. Medalla himself, but there’s really no telling at this point where the winds will blow.

President Marcos must decide well and must be wary of those who want the position so badly or are lobbying desperately for this or that.

I hope whoever is appointed as the next BSP chief will uphold the independence of the central bank and not be subservient to the appointing powers or to the whims of Malacañang.

One must remember the three pillars of Philippine central banking – price stability, financial stability and an efficient and safe payments and settlements system, and this can only be done successfully if we have an independent BSP.

Going electric

When a local businessman sold a car distributorship license to a tycoon some years back, it was because he knew that the future is in electric vehicles and that the era of cars that run on gas would soon come to an end.

And that future is indeed here. Car companies in the Philippines are catching up with most of the world, where most vehicles are already running on electricity.

Lexus has already unveiled its RZ 450e, Lexus’ first model to be developed as a BEV (battery electric vehicle) from the outset. The intention is not simply to deliver the benefits of zero emission, all-electric driving, but to capture the potential of BEVs to reinvent the driving experience.

It is not a vehicle that simply adopts battery electric power in place of a conventional engine; it goes much further to realize the exciting potential of new technologies that enhance performance and driving pleasure, Lexus said.

Congratulations, Lexus, and we hope to see more car companies follow suit.

Infrastructure

But for an EV industry to take off in this country, we also need to have a strong EV infrastructure.

Within the Southeast Asian region, it appears Filipinos are least interested in a hybrid or electric vehicle for their next automobile purchase, according to Deloitte’s 2023 Global Automotive Consumer Study.

The survey said the lack of public EV “charging infrastructure” is the most commonly cited concern among Filipinos regarding battery-powered EVs while for Singaporeans, “time required to charge” was the foremost concern.

“These results underscore the importance of ensuring that a robust infrastructure is in place to support EVs before we can expect consumers to make the switch en masse. And we’re not just talking about convenient charging sites. We have to consider if we have the right workforce to service these vehicles wherever the owners may need that assistance. It also helps situate the government’s efforts at messaging and designing incentives to encourage the use of EVs so they can better align these initiatives with what consumers actually want,” said Eric Landicho, managing partner & CEO of Deloitte Philippines, which released the study locally.

It’s good to know that we’re already seeing property developers of malls and residential condominiums install charging stations in their properties.

Moving forward, I hope there will be similar initiatives to help enable the country’s shift to electric vehicles, which would help us reduce our carbon emissions.

*   *   *

Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.