ECCP at Work

Sotto: 197 Congress-approved bills endorsed to Palace signed into law

Senate President Vicente Sotto III confirmed on Wednesday that there were at least 197 Congress-approved bills already “signed into laws” by Malacañang under the Duterte administration during the 18th Congress. The senator also said that apart from the new laws, “there was one veto, but right now pending in the Office of the President are 182 bills passed by both houses of Congress.” The Senate leader’s office also listed some the 182 Congress-approved bills still pending in Malacañang, including the National Transportation Board, Special Protection Against Online Sexual Abuse, and the Vaporized Nicotine Products, the Expanded Anti-trafficking Act, the Permanent Validity of Live Birth, Death, and Marriage Act, the Strengthening of the Office of the Government Corporate Counsel and the Agriculture, Fisheries, and Rural Development Financing Enhancement Act.

Stricter implementation of health protocols seen in Metro Manila amid rising COVID cases – NCRPO

A stricter implementation of health protocols in Metro Manila can be expected with the uptick in COVID-19 infections, according to the National Capital Region Police Office (NCRPO). “Let us expect a stricter enforcement of health protocols from police officers on patrol,” NCRPO director Maj. Gen. Felipe Natividad said in a statement on Wednesday. Natividad issued the statement after recent DOH data showed that COVID-19 cases from June 13-19 — which was at 3,051 — was 82 percent higher than the previous week. Analytics firm OCTA Research said on Wednesday that the positivity rate in the country is already at 5.5 percent, which surpassed the World Health Organization (WHO) threshold of five percent.

Inflation may breach this year’s target

The incoming governor of the Bangko Sentral ng Pilipinas (BSP) sees inflation breaching the two to four percent target by 1.5 to 1.7 percent this year on soaring oil and commodity prices. Monetary Board member and incoming BSP chief Felipe Medalla told “The Chiefs” on Cignal’s TV’s One News/TV5 that private forecasters are expecting the consumer price index to accelerate to around 5.4 to 5.7 percent this year. Inflation accelerated to 5.4 percent in May from 4.9 percent in April, bringing the average to 4.1 percent and exceeding the BSP’s two to four percent target range. This was the highest inflation for more than three years or since the 6.1 percent average recorded in November 2018. Medalla said the elevated inflation and the stronger-than-expected gross domestic product (GDP) growth of 8.3 percent in the first quarter prompted the Monetary Board to kick off its interest rate liftoff.

PHL to reach ‘upper-middle’ status by 2024, Balisacan says

The Philippines is likely to achieve its goal of becoming an upper middle-income economy by 2024, incoming Socioeconomic Planning Secretary Arsenio M. Balisacan said. “It might take a while for us to reach that point. So, if we grow at 7% next year, maybe by 2024 we would probably be there,” he said in a roundtable with BusinessWorld editors on June 16. This is in contrast to Socioeconomic Planning Secretary Karl Kendrick T. Chua’s projection that the Philippines will become an upper middle-income economy by next year. The Philippines had originally targeted to attain upper middle-income status by 2022, but this was derailed by the coronavirus pandemic. 

Balisacan sees National ID target of 92 million achieved by end of 2022

The National Identification System will meet its target of 92 million registered by the end of the year, incoming Socioeconomic Planning Secretary Arsenio M. Balisacan said. The ID target is a component of a broader digitalization effort that hopes to facilitate the accelerated distribution of aid to the poor and vulnerable, he said. In an interview with CNN Philippines on Tuesday, Mr. Balisacan said: “The rapid increase in prices (is) already here, and are likely to get worse before it gets better… We must protect the poorest and vulnerable groups of our society.” He was conveying the instructions of President-elect Ferdinand R. Marcos, Jr., adding that ramping up digitalization effort would lead to more efficient targeting of the poor and reduce leakage of funds to undeserving recipients. He clarified that the effort to reach the poor will encompass rural areas as well as urban.

BIR e-receipt plan on track but BOC modernization delayed

Following next month’s pilot issuance of electronic receipts among 100 big corporations, e-commerce firms and exporters, the Bureau of Internal Revenue (BIR) expects small businesses to follow suit starting next year. The other top revenue collector, Bureau of Customs, is confronted with delays in its digital shift and modernization project due to lack of a qualified contractor, according to World Bank. At the launch on Tuesday (June 21) of the electronic invoicing/receipting and sales reporting system, Deputy Commissioner Ma. Rosario Charo Enriquez-Curiba, BIR officer-in-charge, said that after its pilot run on July 1, e-invoicing will be gradually expanded in 2023. The system involved businesses issuing e-receipts to their customers, then electronically transmitting their sales reports to the BIR, as mandated by the Tax Reform for Acceleration and Inclusion (TRAIN) Act. 

Infrastructure spending rises in April despite election ban

Infrastructure spending surprisingly picked up in April despite the ban on new projects ahead of the May elections, the Department of Budget and Management (DBM) said. In a report released on Monday, the DBM said infrastructure and other capital outlays rose 9.7% to P63.8 billion in April, from P58.2 billion in the same month a year ago. However, the figure is lower than infrastructure spending in March, when it reached P100.2 billion. “This is largely due to the settlement of accounts payables of the Department of Agriculture (DA) for the procurement of farm equipment and machineries under the Rice Competitiveness Enhancement Fund (RCEF) and the Department of Education (DepEd) for its Basic Education Facilities (BEF),” the DBM said. The higher spending was also attributed to the implementation of infrastructure projects by the Department of Public Works and Highways (DPWH) amid looser restrictions.

Philippine tourism industry seen to reach pre-pandemic levels by 2024

THE DOMESTIC tourism sector is expected to reach pre-pandemic levels by 2024, although near-term challenges such as high inflation may affect demand, according to industry stakeholders.  “We consulted our members, we also talked to some experts, reports coming from United Nations World Tourism Organization (UNWTO) and many of them are really looking at 2024 as the year that we can go back to pre-pandemic levels. So, the next year and a half will be crucial,” Philippine Hotel Owners Association (PHOA) Executive Director Benito C. Bengzon, Jr. said in an interview with BusinessWorld Live on One News television channel on Monday. Mr. Bengzon said he is optimistic that the tourism and hotel industry is heading towards recovery, after travel demand improves during the summer months.

Mass, sea & air transport

The planned Sangley Point International Airport (SPIA) in Cavite may finally happen, at least say sources in the business grapevine, pointing to the Remullas’ closeness to president-elect Ferdinand Marcos Jr. While the project has previously suffered numerous setbacks, industry sources say it’s now moving forward, with its proponents determined to really push through with the development. Last month, Cavite Gov. Jonvic Remulla said he is targeting to break ground on the massive development by the fourth quarter of this year. On Monday, the Yuchengco Group’s House of Investments said its board of directors already gave the company the “authority to enter into the joint venture and development agreement with the provincial government of Cavite in the development of the Sangley Point International Airport as one of the consortium partners in the event of award by the province.”

Oil to stay above P80; zero VAT on EVs pushed

With costs of world crude projected to be elevated until the yearend, local pump prices are expected to stay at above P80 per liter for the same period. This developed as the Department of Energy (DOE) said it will push for the temporary removal of value-added tax (VAT) on electric vehicles (EVs) to fully enjoy the technology’s benefits. Bong Suntay, an official of gasoline retailer CleanFuel and former president of the Independent Philippine Petroleum Companies Association, said all current indications show no cuts in fuel prices are expected soon. Suntay told a hearing of the Senate committee on energy yesterday the Organization of the Petroleum Exporting Countries (OPEC) and its allies have yet to increase production, with a big portion of the volume now supplied to the European Union which stopped buying from Russia. He said because of the embargo, supply from OPEC to Asia has decreased.

Banks’ real estate exposure rises to 23.3% in Q1

The exposure of Philippine banks to the volatile property segment grew further to 23.3 percent in the first quarter from 22.01 percent in the same period last year, with the industry’s non-performing loan (NPL) ratio to the property sector breaching five percent. Data from the Bangko Sentral ng Pilipinas (BSP) showed the industry’s real estate exposure was well within the 25 percent ceiling set by the regulator. The BSP raised the real estate loan limit of big banks to 25 from 20 percent in August 2020 as part of its COVID response measures to free up P1.2 trillion in additional liquidity for lending amid the uncertainties.

Profitability on the horizon for airlines, says IATA

Profitability appears to be on the horizon for airlines globally as the pace of recovery of the aviation industry speeds up, according to the International Air Transport Association (IATA). IATA said industry-wide profitability in 2023 appears within reach as strong pent-up demand, lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fueling a resurgence in demand. IATA is now expecting lower industry losses for the year at $9.7 billion compared to its October 2021 forecast of $11.6 billion loss. This represents a significant improvement from losses of $137.7 billion recorded in 2020 and $42.1 billion last year. IATA said efficiency gains and improving yields are helping airlines to reduce losses even with rising labor and fuel costs.

Food crisis, high costs to test Bongbong Marcos as agri chief

With just days before he sits as agriculture secretary, President-elect Ferdinand Marcos Jr. will have to contend with numerous challenges that threaten the country’s food supply and stymied the growth of the farm sector for decades. Outgoing Agriculture Secretary William Dar on Tuesday said the first order of business for the Marcos administration would be to ensure sufficient food supply amid the looming global food crisis. Dar said the country would feel the brunt of the impending food crisis in the last quarter of 2022 as the COVID-19 pandemic and the protracted Russia-Ukraine war continue to disrupt the delivery of food products across the globe. “More than 20 countries have made restrictions on the exports of their food products, and the lingering war in Ukraine continues. So there is really a major disruption of the food supply chain. And so this is a big, big problem. If I have to equate this, this is like a pandemic as well,” he pointed out.

DTI’s Lopez supports procurement preference for domestic manufacturers

The next administration should consider changing government procurement rules to favor domestic manufacturers in some cases, the Department of Trade and Industry (DTI) said. “Maybe in the next administration, what can be worked out is a refinement of this lowest-bidder rule to make sure that in certain projects, not necessarily in all government procurement programs, there will be a preference that only local manufacturers can participate in the bids, provided that the supply is available and the prices are competitive,” Mr. Lopez said during the Manufacturing Summit 2022 on Tuesday. “There can just be benchmarking with the prices from abroad just to make sure that the prices are within range. That is what we are trying to inject in the current policy,” he added. According to Mr. Lopez, the current rule in government procurement is awarding the contract to the lowest bidder, as spelled out in Republic Act No. 9184 or the Government Procurement Reform Act. Mr. Lopez said an amendment is needed to grant some preference for domestic manufacturers, in line with a resolution passed by the Task Group on Economic Recovery that is implementing the National Employment Recovery Strategy (NERS).

Fitch Solutions: PH debt to peak at 60.9% of economy in 2023 before 'gradual' drop

The country’s outstanding debt relative to the size of its economy could rise further next year before going down with the expected fiscal consolidation under the incoming government of Ferdinand “Bongbong” Marcos Jr., a unit of Fitch Group said. In its latest commentary, Fitch Solutions said it sees the Philippine debt-to-GDP (gross domestic product) ratio climbing to 60.2% by year-end and 60.9% in 2023 before “gradually declining from 2024 onwards.” Such easing of the debt-to-GDP ratio bodes well for the country’s fiscal stability, it said. The globally acceptable debt-to-GDP ratio ceiling is 60%. Fitch Solutions also noted the country is “still on track for a gradual fiscal consolidation over the coming years as strong revenue growth alongside a recovering economy and positive tax reforms will likely offset expansionary fiscal spending.” The president-elect’s economic team hopes to bring down the country’s deficit-to-GDP ratio to 3% by end of his term in 2028. As of end-2021, the ratio is at 8.6%.

DA’s Dar urges more investment in irrigation

The next administration must ramp up investment in irrigation, starting with the retrofitting of dams to boost their capacity to capture more rainwater, Agriculture Secretary William D. Dar said. “There are many dams that were put up by the National Irrigation Administration (NIA). The problem at present is not the dams, but the limited capacity. We have too much rainfall during the rainy season. What will happen? It always overflows because we don’t have enough capacity (to keep water in reservoirs). The water is wasted,” he said during a virtual briefing. “Let’s retrofit the existing irrigation dams so that we put up secondary or tertiary dams down there to collect the overflowing water so it can serve other purposes, like flood control, aquaculture or farm tourism,” he added. Mr. Dar said 1.1 million hectares of farmland remain unirrigated. “At the rate our NIA is doing development and construction of irrigation facilities, it will take 40 to 50 years before all that is fixed. The NIA has a (building) capacity of 25,000 hectares annually,” he said.

Index plunges to over 1-year low on inflation, interest rate worries

Local stocks plunged further into the depths of despair yesterday, with the benchmark Philippine Stock Exchange index (PSEi) sinking to the 6,100 level to end at its lowest in over a year. The PSEi lost 117.9 points or 1.86 percent to close at 6,168 while the broader All Shares index slipped by 40.32 points or 1.20 percent to end at 3,328.35. Investors continued to dump their shares due to increasing uncertainties such as skyrocketing oil prices and red-hot inflation, traders said. “The market is waiting for the Bangko Sentral ng Pilipinas (BSP) interest rate decision (today). In the meantime, the market is also bracing for higher inflation as fuel and other commodity prices continue to trek higher,” said Joseph Roxas, head of Eagle Equities.

Rising interest rates may hurt FDI inflows, says DOF

The Department of Finance (DOF) has warned that the twin troubles of surging inflation and the war in Europe will push interest rates up and disrupt foreign direct investments (FDI). DOF chief economist Gil Beltran yesterday said the next administration should brace for impact in case borrowing costs sustain their upward trend and interrupt business expansions. “The ongoing rise in global inflation that followed the war in Ukraine may result in a global rise in interest rates that can both disrupt economic activity and potentially derail economic recovery,” Beltran said.

BSP eyes guarantee fund for MSMEs

The Bangko Sentral ng Pilipinas (BSP) is looking at the establishment of a guarantee fund, as the regulator withdraws incentives extended to banks providing financing to micro, small, and medium enterprises (MSMEs) affected by the pandemic. In an interview with The Chiefs on Cignal TV’s OneNews/TV5, incoming BSP governor Felipe Medalla said the proposed fund would encourage banks and financial institutions to lend to MSMEs even without regulatory relief measures from the central bank. Just like in other countries affected by the pandemic, Medalla said money is available for lending, but banks are reluctant to take risks. “So the recommended measure there is to put up a guarantee for the medium small scale industry that will be funded by appropriations from the government. The lending will be done by banks,” he said.

Business process simplified

Business registrations will soon be made easier and more convenient with the upcoming update to the electronic payment tool of the Securities and Exchange Commission (SEC), the Department of Finance (DOF) said yesterday. In a statement, the DOF said this will be expanded to accept registration fee payments to the Bureau of Internal Revenue (BIR) as well. In a report to Finance Secretary Carlos Dominguez, the SEC said its Electronic Simplified Processing of Application for Registration of Company (eSPARC) launched in April last year presently allows online payment of SEC fees. This online payment feature will further be enhanced to facilitate one-time payment of both SEC and BIR registration fees by the third quarter of 2022. Javey Paul Francisco, SEC commissioner, said in his report during a recent DOF executive committee meeting that from January 1 to May 15 of this year, the commission has processed 25,685 online applications for business registrations. This brings the total number of applications processed through eSPARC to 69,350 since the digital tool was launched in the second quarter of 2021.

Rise in global inflation could derail PH recovery

The increase in worldwide inflation that could lead to a rise in interest rates may possibly derail the Philippine economy’s recovery from the coronavirus disease 2019 COVID-19 induced crisis, according to a statement released by the Department of Finance (DOF) yesterday. “The ongoing rise in global inflation that followed the war in Ukraine may result in a global rise in interest rates that can both disrupt economic activity and potentially derail economic recovery,” the DOF said in its latest economic bulletin. “The lingering threat of the COVID-19 virus indicate possible surges in the future. Sustaining the vaccination program and prudently re-opening the economy while maintaining good macroeconomic fundamentals will go a long way to protect economic recovery,” it added. 

Government raises P453 billion from fuel marking

Revenue collectors have raised more than P453 billion worth of taxes through the fuel marking program by reinforcing their combined efforts against potential oil smuggling. Finance Secretary Carlos Dominguez said yesterday the Bureau of Customs and the Bureau of Internal Revenue (BIR) added P453.43 billion to state coffers through fuel marking as of June 17. The BOC contributed the lion’s share of the amount at P423.62 billion while the BIR contributed the remaining P29.81 billion. In enforcing the program, Dominguez said the BIR and BOC have assessed a total of 43.05 billion liters of fuel. By segment, diesel comprised 61 percent of the volume at 26.11 billion liters, followed by gasoline (16.72 billion liters) and kerosene (218.15 million liters).

Moody’s Analytics hikes Philippine GDP growth forecast

Moody’s Analytics hiked the gross domestic product (GDP) growth estimate for the Philippines to above seven percent from 6.1 percent for this year after a stronger-than-expected expansion in the first quarter. The research arm of the Moody’s Group said that economies in the region continue to show resilience in the face of inflation caused by sanctions on Russia as well as goods and commodities shortages amid the invasion of Ukraine and the COVID shutdowns in China. Moody’s Analytics expects a GDP growth of about 7.2 percent for the Philippines after it slashed the projection to 6.1 percent from the original target of 6.4 percent. “The upward revision to the Philippines’ 2022 GDP growth forecast was mostly due to the stronger-than-expected first quarter growth,” Moody’s Analytics associate economist Sonia Zhu told The STAR.

Sen. Win expects dark clouds for energy sector

SEN. Sherwin Gatchalian, chairman of the Senate Committee on Energy, sees dark clouds ahead for the oil industry, as well as the transport sector. “It seems to me that the situation is quite dire,” Gatchalian said in TV interview on Wednesday, adding: “I was just talking to the transport sector yesterday at UE and some industry players, and they are saying in a common direction that this elevated price of oil will be protracted.” Gachalian took it to mean that the crisis from spiking oil prices will last until probably “end of the year” even as he had also earlier “heard from the CEO of Exxon Mobil” that it is looking at the next five years. He continued: “So, whether it’s at the end of the year or next five years, we are seeing a $120 per barrel, elevated prices in the medium term,” adding that “we have to be prepared to shield our transport sector from this elevated pricing. In an ANC Dateline Philippines inteview with Karmina Constantino, the senator, however hastened to clarify that, “I understand that we cannot raise fares right away because it’s a balancing act,” weighing both the need to ease the impact of inflation and consumer capability in paying transport fares.

Salceda pushes tax perks for agriculture sector

Albay Rep. Joey Salceda is urging the incoming Marcos administration to hasten tax perks for agricultural subsectors under the Strategic Investment Promotion Plan (SIPP) which will be the “country’s top instrument of industrial planning.” According to Salceda, agriculture is a leading sector needed for the country’s economic recovery and is covered by Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (Create) Act.

The Albay lawmaker and House ways and means committee chair, who authored and sponsored the Create Act, pointed out that he has been working closely with the Department of Trade and Industry (DTI) and the Department of Agriculture to include several agricultural subsectors in the SIPP.The SIPP is the list of industries eligible for tax perks under the Create Act, which President Rodrigo Duterte signed into law in March last year. It’s considered the largest fiscal stimulus for businesses in the country.

Tough economic choices face incoming Bongbong Marcos admin

When President-elect Ferdinand Marcos Jr. takes office at the end of the month, the problem of how to tackle high prices of consumer goods and services will be waiting for him and his economic team. With the war between Russia and Ukraine expected to drag on—dragging along with it the current oil price spike episode—ING Bank Manila senior economist Nicholas Mapa said that in the near term, inflation can be expected “to become more pervasive as price pressures spread to more items in the CPI (consumer price index) basket and firms begin to pass on higher costs.”

Duterte to gov’t agencies: Support National Strategy for Financial Inclusion

President Rodrigo Duterte has ordered all government departments, agencies, institutions and branches to support the implementation of the National Strategy for Financial Inclusion 2022-2028 (NSFI) to “harmonize” measures, policies, and other efforts on financial inclusion. The NSFI, which is spearheaded by the Bangko Sentral ng Pilipinas, aims for inclusive growth and financial resistance for all Filipinos. 

WB okays $178M loan to fight PH malnutrition

The World Bank yesterday approved a $178.1 million loan to support the Philippines’ efforts to combat malnutrition, the multilateral agency said in its latest statement. The World Bank said the Philippines Multisectoral Nutrition Project will support the delivery of nutrition and health care services at the primary care and community levels to help reduce stunting, characterized by prolonged nutritional deficiency among infants and young children, in 235 municipalities known to have high incidence of poverty and malnutrition. “The persistence of high levels of childhood undernutrition in the Philippines, exacerbated by the COVID-19 pandemic, could lead to a significant increase in inequality of opportunities in the country,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines and Thailand.

Gov’t budget deficit narrows to P147B in May

The national government’s budget deficit narrowed in May as revenues posted a double-digit hike while expenditures slightly contracted from the year ago level. According to the Bureau of the Treasury’s (BTr) report released yesterday, the national government registered a budget deficit of P146.8 billion in May, down by 26.72 percent from the P200.3 billion recorded a year ago. Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the narrower budget deficit could be attributed to the 45-day election ban on some public works, which could have led to the slowdown in government expenditures during the election month of May 2022.

Higher air fares loom as fuel cost surges

Local airline operators are seeking regulatory approval to impose higher fuel surcharge this July, but assured affordable seat sale offerings will continue to sustain the travel demand. The Civil Aeronautics Board (CAB) recently issued an advisory raising the fuel surcharge to be implemented on July 1 to 31 to level 11, from level 7 this June, for both passenger and cargo domestic and international flights, as jet fuel prices in the world market continue to rise. At level 7, the fuel surcharge in June ranges from P219 to P739 for domestic flights and P722.71 to P5,373.69 per kilometer per way for international flights. At level 11, this goes up to P355 to P1,038 per passenger per km for domestic flights and P1,172.07 up to P8,714.84 per passenger per way for international flights.