ECCP at Work

Metro Manila, nearly 200 other areas under Alert Level 1 until April 15

The national capital region will stay under the most lenient COVID-19 alert level for at least two more weeks, along with nearly 200 other areas nationwide, Malacañang announced on Thursday. Acting presidential spokesperson Martin Andanar said Metro Manila will keep its Alert Level 1 status until April 15.

Peza urges locators: Heed return to office

The Philippine Economic Zone Authority (Peza) on Tuesday urged business-process outsourcing (BPO) locators to abide by the return-to-office rule by April 1 to avoid any penalties as stipulated by existing laws. In a statement, Peza Director General Charito Plaza appealed to locators to “adhere” to the Fiscal Incentives Review Board’s (FIRB) decision to not extend the work-from-home (WFH) arrangement for BPO locators in the country beyond March 31.

BSP forecasts March ’22 inflation at 3.7%

Monetary authorities project an acceleration of domestic inflation rate for March 2022 to 3.7 percent from the previous month’s 3 percent due to an uptick in oil prices, among others. In a Viber message to journalists on Thursday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the forecast range for the month is between 3.3 to 4.1 percent. “The continued oil price hikes, along with high electricity rates in Meralco-serviced areas, higher meat prices, and the peso depreciation are the primary sources of inflationary pressures during the month,” he said.

Higher energy, commodity prices threaten PHL growth

The Philippines is one of the Asia-Pacific countries that would be most affected by the surge in energy and commodity prices due to the Russia-Ukraine war, S&P Global Ratings said. S&P earlier this month cut its gross domestic product (GDP) growth estimate for the Philippines this year to 6.5%, as it expects a wider current account deficit and higher inflation. Last week, the central bank raised its inflation forecast for 2022 to 4.3%. This is already above its 2-4% target range as it acknowledged the impact of the rising oil and commodity prices.

Philippines has 2nd largest pipeline of airport projects in Asia

The Philippines currently holds the second largest pipeline of airport infrastructure projects in terms of value, according to Fitch Solutions. In a report, Fitch Solutions said medium-to long-term opportunities abound in Asia, as majority of airport projects are currently at the pre-construction phase. It said the region hosts over $220 billion worth of airport infrastructure projects, accounting for over 46 percent of the global airport infrastructure project pipeline in terms of value. Leading the region are South Korea, the Philippines, and Vietnam.

P50B needed for nat’l fiber backbone

The Department of Information and Communications Technology (DICT) plans to spend about P50 billion for the construction of the national fiber backbone infrastructure in the next three years to further improve internet services specially in unserved and underserved areas in the country. In a virtual press briefing, Emmanuel Caintic, DICT acting secretary, said projects in the pipeline have to continue in the next administration to further improve internet services in the country. “Our estimate is about P50 billion (budget) over three years, most of it will go into the second component of the national fiber backbone, and also the accelerated fiber build through regional and provincial,” he said. Caintic is optimistic budget for the project will be approved by Congress.

Operational challenges to return-to-site cited

Compliance with the government's directive to go back on site poses a big challenge, even a risk, to information technology -business process management (IT-BPM) companies. This as the Philippine Economic Zone Authority (PEZA) urged for a review of existing laws to establish the legal framework that will allow PEZA registered business enterprises (RBEs) to implement a hybrid work model. In an interview, Dom Frederick Andaya, senior director and head of tenant representation at Colliers, said IT-BPM firms will likely buy time to comply with the directive of the Fiscal Incentives Review Board (FIRB) to be back on site by April 1 due to operational challenges such as securing office spaces and installing the technology solutions that would power up those spaces.

Passengers at NAIA Terminal 4 likely to hit 1.5M this year

Passengers at the newly reopened Ninoy Aquino International Airport (NAIA) Terminal 4 may likely reach 1.5 million annually should domestic carriers begin operating at full capacity, an executive of the Civil Aeronautics Board (CAB) said on Tuesday. According to the Manila International Airport Authority (MIAA), the NAIA Terminal 4 was designed to accommodate 3 million passengers annually. Upon Terminal 4's reopening on Monday after being closed for operations for almost two years due to the pandemic, carriers CebGo, AirAsia Philippines and AirSWIFT began mounting their flights at this domestic terminal.

World should brace for debt crises–World Bank

The world should brace itself for a spate of debt crises as a dozen developing countries could become unable to service their debts in the next 12 months, a World Bank expert has warned. In a blog, World Bank Macroeconomics, Trade & Investment Global Director Marcello Estevão said high inflation, slow growth, tightening financial conditions, and the invasion of Ukraine are a “combustible” mix that will lead to high debt. What is worrisome, Estevão said, is that the majority of these debts are owed to commercial creditors, making it likely for interest rates for these debts to rise as suddenly as in the case of credit-card debts.

Measures eyed to help airlines, shipping firms as fuel prices rise

 The Transportation department is preparing measures to help airlines and shipping firms cope with the continued spike in fuel prices. Transportation Secretary Arthur P. Tugade opposed the airlines’ collection of higher fuel surcharges, which will drive up airfares at a time when the travel industry is still recovering from the pandemic. “As much as possible, let’s avoid the fuel surcharge… The cost will be passed on to passengers. The cost of travel will go up. My position is that we maintain the cost of travel — no increase. Let’s study this carefully,” he told reporters at the Mactan-Cebu Airport.

DA wants P250 billion for 2023 to reduce import dependence

Agriculture Secretary William D. Dar said the industry will require a budget of P250 billion in 2023 if the Philippines is to develop crops that make it less vulnerable to volatile commodity prices “We need that if we want this country to… start building the commodity industries that we have (a comparative advantage) and start transforming those commodity industries that aren’t as competitive, but should be over time,” Mr. Dar said in a virtual briefing. The department’s 2022 budget is P85.5 billion.

PEZA sets deadline for onsite return to work

The Philippine Economic Zone Authority (PEZA) is urging Information Technology-Business Process Outsourcing (IT-BPO) companies registered with the investments promotion agency to comply with the order of the Fiscal Incentives Review Board (FIRB) to return to onsite work starting April 1 to avoid penalties. In a statement, PEZA director general Charito Plaza appealed anew to IT-BPOs registered with the agency to adhere to FIRB’s directive to return to office by April 1, to avoid penalties under governing laws. Under the PEZA law, all companies registered with the investment promotions agency have to operate within the ecozones for them to enjoy tax incentives from the government.

Conflict impact on economy ‘mild’

The impact of the Russia-Ukraine war on the economy will likely turn out mild amid heavy election spending in the first half of the year as well as growing business confidence and robust earnings, according to a report released yesterday. According to the latest issue of the Market Call, the conflict has exacerbated the crude oil and commodity price spiral and will likely bring domestic inflation above the two to four percent target of the Bangko Sentral ng Pilipinas.

P8.8B ADB loan to fund climate-resilient bridges

The Department of Finance (DOF) and the Asian Development Bank (ADB) held a ceremonial exchange of financing agreements for the construction of three Metro Manila bridges, which will begin in the final stretch of the Duterte administration. The three climate-resilient bridges are designed to decongest Metro Manila’s traffic-heavy areas and create more jobs. These bridges spanning over three kilometers across the Marikina River are among the 12 to be built under the Metro Manila Bridges Project.

Deadline for ITR filing moved to April 18 — BIR

The Bureau of Internal Revenue (BIR) moved the deadline for filing income tax returns (ITRs) to April 18, as the annual April 15 deadline falls on Good Friday this year. In a BIR bulletin, the tax collection agency also reminded authorized agent banks (AABs) to extend their banking hours until 5 p.m., from the original cut-off time of 3 p.m. for the April 1 to 18 period. BIR Commissioner Caesar R. Dulay also asked banks to accept payments on April 2, as two Saturdays before the tax deadline were declared as regular holidays. Araw ng Kagitingan falls on April 9, while Black Saturday is on April 16.

Diokno sees rate rise to 2.5%-2.75% as reasonable

Philippine Central Bank Governor Benjamin E. Diokno said raising the key policy rate to between 2.5% and 2.75% as part of an exit from pandemic-era accommodation would be “reasonable and consistent” with the nation’s economic growth and inflation targets. “We plan to start the normalization process in the second half of the year,” Mr. Diokno said in a mobile-phone message on Wednesday, when asked about the plan for rate hikes. “It is not date specific, but we will continue to be data dependent,” he said, adding that a 2.75% key policy rate “might be reached by next year.”

Shipping costs seen to drive inflation

The surge in global shipping costs will likely continue causing faster inflation in economies that are reliant on imports until the end of the year, according to the International Monetary Fund (IMF). “Our results suggest the inflationary impact of shipping costs will continue to build through the end of 2022. This will create complicated trade-offs for many central bankers facing increasing inflation and still ample slack in economic activity. Moreover, the war in Ukraine is likely to cause further disruptions to supply chains, which could keep global shipping costs — and their inflationary effects —higher for longer,” IMF said. Using data from 143 countries over the past 30 years, the IMF analysts found shipping costs are an important driver of inflation.

Philippines near-term outlook improving amid risks

The near-term outlook for the Philippine economy is improving, but the much anticipated recovery remains vulnerable amid developments on the global front, an international think tank said. In its latest chart book, Capital Economics noted an upside in the near-term outlook for the economy as COVID-19 cases in the country continue to drop, with fewer than 500 reported daily. This has allowed the government to place Metro Manila and several other cities under COVID Alert Level 1 for almost a month now. Senior Asia economist Gareth Leather noted that the mobility tracker showed that people’s movements are now above pre-pandemic level for the first time. The labor market also improved as the unemployment rate dropped to 6.4 percent in January.

NG debt hits P12.09T

The national government’s outstanding debt has reached P12.09 trillion as of end-February, data released by the Bureau of the Treasury (BTr) showed. According to the BTr, the total debt rose by 16.2 percent from the year ago level of P10.41 trillion, and 0.5 percent up from the month ago level of P12.03 trillion. The BTr said the month-on-month increase was due to currency fluctuations and net financing from both local and external sources. Of the total debt stock, 30.4 percent was sourced externally while 69.6 percent were domestic borrowings. The national government’s domestic debt amounted to P8.41 trillion, which was 14.3 percent up versus the previous year’s level of P7.36 trillion, and 0.5 percent higher compared to the end-January 2022 level of P8.37 trillion.

Budget deficit narrows to P106B in February

The national government’s budget deficit narrowed in February to P105.8 billion versus the year ago level of P116 billion, due to the contraction in public spending alongside a decline in revenue collection, the Bureau of the Treasury (BTr) said in a statement yesterday. According to data released by the BTr, this led to a year-to-date budget deficit of P129.2 billion for the two-month period, also slightly lower by 0.65 percent compared to the previous year’s total of P130 billion for the same period. The BTr reported that total expenditures for the month went down by 5.16 percent to P318.2 billion from the year ago level of P335.5 billion, mainly on account of the completion of the P45-billion equity infusion to government financial institutions in February last year, in line with the implementation of Bayanihan II.

Power spot market prices increase as demand surges
Average electricity spot market prices rose in March as margins thinned with power demand breaching the pre-pandemic level, the Independent Electricity Market Operator of the Philippines (IEMOP) said. EIn a virtual briefing yesterday, the IEMOP said average wholesale electricity spot market (WESM) prices increased from P6.19 per kilowatt-hour last February to P6.97 per kwh in March. The average margin for March decreased by 4.04 percent. The IEMOP observed increasing demand as the country officially entered the dry season mid-March and as more areas were placed under looser quarantine restrictions.

ADB supports VAT on digital transactions

 Imposing a value-added tax (VAT) on digital services can help expedite economic recovery, especially as the government faces fiscal challenges due to the pandemic. In its recent blog, Manila-based Asian Development Bank (ADB) said extending VAT on e-commerce and digital services has the potential to yield short-term revenue for Asia Pacific economies, including the Philippines. ADB consultant Richard Highfield and public management specialist Go Nagata said that VAT reform, as a response to the e-commerce boom, has remained below its true potential. This, even as VAT is the largest source of tax revenue on average, and the region  is the fastest growing e-commerce market in the world. 

Higher budget for transport sector sought

Increasing the government budget, not necessarily hiking fares, is the way to uplift the public transportation sector amid the double whammy from prolonged COVID-19 pandemic and fuel price surge, a transport group representative said. Jaime Aguilar of Move As One Coalition, during the People’s Budget Coalition (PBC)’s virtual event on Thursday, explained that fare hikes would ultimately burden the commuters.