ECCP at Work

Marcos econ team takes shape with BSP chief Diokno to helm DOF

The economic team of President-elect Ferdinand "Bongbong" Marcos Jr. is almost complete, with Bangko Sentral ng Pilipinas Governor Benjamin Diokno set to lead the Department of Finance (DOF). The central bank chief, who separately confirmed his acceptance, stressed the importance of policy continuity. Marcos said Felipe Medalla, a long-time member of the Monetary Board, will serve Diokno's unexpired term as BSP Governor. The President-elect also picked Arsenio Balisacan as head of the National Economic and Development Authority, a position the veteran economist also held during the presidency of the late Benigno Aquino II.

Duterte’s economic team trims 2022 growth forecast as external risks escalate

Metro Manila (CNN Philippines, May 24) — President Rodrigo Duterte’s economic managers have scaled down their growth estimates for 2022 a few weeks before he steps down from office, citing “heightened” risks outside the country.

The Development Budget Coordination Committee now forecasts economic growth to be within 7-8% this year, slightly slower than the prior 7-9% target band. It cited external developments like the war between Ukraine and Russia, China’s economic slowdown, and the United States’ monetary policy normalization. This is despite the economy's 8.3% expansion in the first three months of 2022, zooming past market forecasts.

Marcos Jr. officially proclaimed president-elect

Ferdinand "Bongbong" Marcos Jr. was officially proclaimed the next Philippine president, the same position his father and namesake occupied for 20 years before he himself was overthrown via a peaceful revolt in 1986. The official canvass of votes by the joint congressional canvassing committee on Wednesday showed that Marcos received 31,629,783 votes or 58.77% of the ballots cast. This translated to a landslide victory over his closest rival Vice President Leni Robredo, who garnered over 15 million votes. Marcos and his running mate Davao City Mayor and presidential daughter Sara Duterte will occupy the top two positions in the country for the next six years once their terms start on June 30.

It's official: Sara Duterte is the new vice president

Davao City Mayor Sara Duterte, daughter of outgoing President Rodrigo Duterte, has emerged as winner of the May 9 vice presidential election. Official canvass of votes by the joint congressional canvassing committee on Wednesday showed Mayor Duterte garnering 32,208,417 million votes, or 61.53% of the total votes cast in the vice presidential race. This is more than triple the 9.3 million votes received by her closest rival Sen. Kiko Pangilinan. The mayor is the running mate of presidential candidate former Sen. Ferdinand "Bongbong" Marcos Jr., who also won the highest post by a landslide against Vice President Leni Robredo. The late dictator's son and namesake garnered 31,629,783 million votes, more than double Robredo's 15 million votes.

DOF pushing new taxes, wider VAT, halt to income-tax deductions to pay high debt

The Department of Finance (DOF) is proposing to raise new taxes, defer personal income tax reductions, and expand Value-Added Tax (VAT) coverage, among a slew of measures, to help pay the country’s ballooning debt. As the administration of President Rodrigo Duterte prepares to turn over the reins of government to presumptive President Ferdinand “Bongbong” Marcos Jr, the DOF said these new measures are “critical.” In its "Proposed fiscal consolidation and resource mobilization plan", the DOF said the new tax measures aim to generate an average of at least P349.3 billion in new revenues from 2023 to 2027. Marcos is set to take over a country whose sovereign debt hit a record P12.68 trillion in March. The debt-to-GDP ratio meanwhile has risen to 63.5 percent, which is higher than the internationally prescribed best practice of 60 percent, the DOF noted. 

PSE put 11 companies on notice of possible suspension for deadline violations

The Philippine Stock Exchange [PSE 200.00] shared a list of 11 companies that still have yet to file their Q1 earnings reports.

According to the rules for corporate disclosures, any of the 11 companies that fail to file their earnings reports before June 1 will be automatically suspended starting on the morning of June 1. The list includes some notable companies like Dennis Uy’s DITO CME [DITO 4.80 2.04%], Virgilio Villar’s Medilines Distributors [MEDIC 0.74 1.37%], AbaCore Holdings [ABA 1.29 1.53%], and the recently-popular Araneta Properties [ARA 1.71 1.18%].

Corporate regulator to widen investment options for retirees

The Securities and Exchange Commission (SEC) is preparing more investment options for people saving for retirement. The SEC, chaired by Emilio Aquino, said on Tuesday it was seeking comments from the public ahead of the issuance of a list of stocks, bonds and other securities that would be covered by the Personal Equity and Retirement Account (Pera) Act of 2008.

Next admin urged to pursue nuke

President Duterte expressed hope his successor would pursue the use of nuclear energy not just to increase the country’s power supply but also to help wean the Philippines away from the use of the environment- harmful fossil fuel. He said the supply of oil and fuel is not infinite and “someday it will dry up”. “It would be good for any government to prepare for the possibility of making the transition earlier from oil, the fossil fuel to nuclear because nuclear is forever,” he said in mixed English and Filipino on Monday’s Talk to the People. 

PERA to ensure steady income stream to investors

The Securities and Exchange Commission (SEC) it will ensure securities under the Personal Equity and Retirement Account (PERA) are non-speculative, readily marketable, and provide regular income stream to investors. The agency said it is vetting securities that will qualify for the investment products that will be marketed under PERA, a tax-shielded investment account for people looking to put up a nest egg in time for retirement. These include newly-formed mutual funds, including any sub-fund of an umbrella fund and exchange traded funds whose fund managers have a track record of at least five years, and whose names contain the words “Personal Equity and Retirement Account” or “PERA”; real estate investment trust shares; corporate bonds with an investible rating issued by an accredited credit rating agency; and equity securities that form part of the Philippine Stock Exchange index (PSEi). “Government securities, securities issued by the Bangko Sentral ng Pilipinas (BSP), and corporate bonds issued by banks in compliance with BSP requirements will also be considered eligible PERA investment products,” it said. The SEC said it reserves the right to declare a security ineligible under PERA.

Developing Asia’s recovery to continue despite headwinds

The recovery of developing Asia, which includes the Philippines, continues despite global headwinds brought by Russia’s war on Ukraine, China’s economic slowdown and central banks’ aggressive policy tightening, the Asian Development Bank (ADB) said. “Asia still remains the most dynamic growth area of the world, and still is expected in all of the forecast, whether it’s our own or the IMF (International Monetary Fund) or other organizations, most of global growth is still going to come from Asia,” ADB Chief Economist Albert Park said in his keynote speech during the BusinessWorld Virtual Economic Forum on Wednesday.

Wind power seen as potential pathway for meeting net-zero goals

The Philippines has the potential to harness ample wind energy resources en route to meeting its net-zero goals, according Torbjørn Kirkeby-Garstad, general manager for Southeast Asia of Scatec, a renewable power producer. “The Philippines is blessed with lots of potential for offshore wind. Already now, we are looking at 7 to 8 gigawatts (GW) of concessions that have been granted. There is great potential for the Philippines when it comes to reaching those goals. Offshore wind (power) will be part of that solution,” Mr. Garstad said on the first day of the BusinessWorld Virtual Economic Forum on Wednesday.

Gov’t raises inflation forecast to 3.7%-4.7% in 2022

The Bangko Sentral ng Pilipinas (BSP) is expected to again raise its key policy rate in June, this time by as much as 50 basis points as the government’s team of economic managers raised their forecast for average inflation in 2022. The Development Budget Coordination Committee (DBCC) on Tuesday said inflation was now expected to be within the range of 3.7 percent to 4.7 percent, which breaches the upper end of the target band of 2 percent to 4 percent. The DBCC comprises the departments of budget and of finance, and the National Economic and Development Authority. The BSP is also represented as a resource of macroeconomic insight. Following a meeting on May 24, the DBCC said in a press briefing the inflation forecast range was raised considering the uptick in prices of food and energy caused by ongoing geopolitical tensions from the Russia-Ukraine conflict and disrupted supply chains. Even then, the inflation forecast for 2023 remained at 2 percent to 4 percent, and also applied to 2024 and 2025.

Neda chief urges passage of reform bills before 18th Congress ends

With just two weeks left before the current 18th Congress comes to a close, the country’s chief economist on Wednesday urged legislators to pass a number of reform bills still pending despite the Duterte administration’s push. “We did not finish all the reforms that we wanted to do, primarily because the pandemic hit us and we have to reprioritize our time, money and effort,” Socioeconomic Planning Secretary Karl Kendrick Chua told the Kapihan sa Manila Bay online forum. Chua said the remaining priority bills included the tax reform measures on property valuation and financial taxes, water sector reforms, as well as the proposed national land use act.

BSP chief hints at another rate hike

Monetary authorities are likely to deliver back-to-back rate hikes with another 25-basis-point increase next month after starting the interest rate liftoff last May 19, according to Bangko Sentral ng Pilipinas Governor Benjamin Diokno. In an interview with Bloomberg Television, Diokno said the Monetary Board is likely to pursue a gradual tightening of the country’s monetary policy stance next month. “Our next meeting will be on June 23. And it’s likely that there might be a follow up on the rate hike. Of course, we are always data dependent and so we look at the data as presented by our staff and then we will act accordingly,” Diokno said. The BSP delivered its first rate hike in more than three years or since November 2018 when it raised its key policy rates by 25-basis-points on May 19 to curb rising inflationary pressures.

4 rail projects a go

The Mindanao Railway Project (MRP) and three more rail projects in the pipeline will likely be pursued by the next administration, according to Department of Transportation. MRP’s first phase, the Tagum-Davao-Digos segment, was originally set to start partial operations in the first quarter this year or before the end of Duterte administration but construction has not started. China, which is funding the project through official development assistance (ODA), has not submitted the shortlist of design contractors, according to Timothy John Batan, DOTr undersecretary for railways. “As soon as we get the China loan arranged, construction works for Mindanao (rail) will progress,” he added. Other projects under China ODA are the Subic-Clark Railway Project and the Philippine National Railways’ South Long Haul project.

For next Finance chief, the top priority is debt management

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Thursday said he will prioritize debt management when he assumes his new post as Finance secretary in July. “Maybe the first item in the agenda will be the sustainability of our public debt,” Mr. Diokno said at a briefing on Thursday afternoon, hours after President-elect Ferdinand R. Marcos, Jr. announced his appointment.The National Government’s debt stood at a record P12.68 trillion as of end-March, equivalent to 63.5% of gross domestic product (GDP). The debt-to-GDP ratio exceeds the 60% threshold considered manageable by multilateral lenders for developing economies. “Our debt-to-GDP ratio is slightly above the 60% limit. I don’t think that is really a cause for concern because as long as we continue to grow at around 6-7% on a sustainable basis, we can easily outgrow our debt,” Mr. Diokno said. However, it is equally important to look at the sustainability of the debt, he added. “This is, of course, to assure everybody, the domestic audience and our international credit watchers that we are serious about consolidating our fiscal resources so that we are able to reduce our debt and deficit-to-GDP ratio over time,” Mr. Diokno said. In a recently published discussion paper by the Philippine Institute for Development Studies, the debt-to-GDP ratio is estimated to peak at 66.8% until 2024.

Gov’t to borrow P250 billion from domestic market in June

The National Government plans to borrow P250 billion from the domestic market in June, the Bureau of the Treasury (BTr) said on Wednesday. Next month’s borrowing plan is 25% higher than the P200-billion program for May. However, the government raised just P141.31 billion from domestic borrowings this month. The BTr will hold auctions for Treasury bills (T-bills) every week, which is projected to raise P75 billion. The auctions for Treasury bonds (T-bonds) are projected to generate P175 billion. According to the BTr, P5 billion worth of 91-day, 182-day, and 364-day T-bills will be offered on May 30, June 6, 13, 20, and 27.

Marcos wants to hold off on RCEP, but DTI warns vs it

President-elect Ferdinand “Bongbong” R. Marcos Jr. wants to hold off the ratification of the Regional Comprehensive Economic Partnership (RCEP) until he completes the study on its effects. Marcos said he wants to ensure the trade agreement will not be detrimental to local industries particularly, in agriculture. “I do not know if our agricultural sector is sufficiently robust to take on the competition that the opening of the markets will cause RCEP. So let us have a look at it again,” Marcos said in a televised interview on Thursday. Trade Secretary Ramon Lopez, however, warned against rejecting RCEP, saying the Philippines could lose foreign investments if it does not ratify the trade deal.Lopez also said the RCEP is “safe” for the agriculture sector, “mainly because no new sensitive agriculture products were included in RCEP.”

BBM to retain Duterte admin policies on illegal drugs, foreign relations  

President-elect Ferdinand “Bongbong” R. Marcos Jr. on Thursday said he will retain the policies of his predecessor, outgoing President Rodrigo R. Duterte, when it comes to illegal drugs and  foreign relations. Marcos said he fully appreciates Duterte’s appeal to him during their several conversations before the May 9, 2022 polls to continue the current’ administration campaign against illegal drugs. “He said do it your own way, but don’t abandon it since many youths will have their lives destroyed [by illegal drugs],” Marcos said in a televised interview. “I fully appreciate what he said. And of course the drug problem in the country continues to be a problem. So we must continue to look that way,” he added. 

The former lawmaker will also adopt Duterte’s “style” in foreign relations of not being exclusively aligned with any country. “When it comes to foreign policy, PRRD (President Rodrigo R. Duterte) has taken a slightly unorthodox way. But again balance is his thing and I agree with that,” Duterte said. He noted he will exercise such independent foreign policy when it comes on the country’s territorial dispute with China in the West Philippine Sea. 

Duterte OK’s strategic investment priority plan

President Rodrigo R. Duterte has approved a 2022 strategic investment plan that lists activities eligible for tax incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. The 2022 Strategic Investment Priority Plan was approved through a memorandum circular signed by Executive Secretary Salvador C. Medialdea on May 24. The plan included all activities listed in the 2020 Investment Priorities Plan’s Tier 1, such as those related to the containment of coronavirus disease 2019 (COVID-19) pandemic and production and manufacture of export products, services exports, and activities designed to support exporters.