ECCP at Work

PHL current account deficit forecast raised to 4.7% of GDP in 2023 

THE current account deficit as a proportion of gross domestic product (GDP) is now projected at 4.7% this year from 4.5% previously, with easing commodity prices offset by strong imports of capital goods, Fitch Solutions Country Risk & Industry Research said in a report. The 2023 projection is lower than the expected percentage in 2022 due to cheaper oil, it said. “As a net importer of energy, the Philippines will benefit from lower energy prices in 2023, and we expect remittance inflows to remain resilient,” Fitch Solutions said. “That said, strong capital goods imports and a slowdown in export growth will keep the trade deficit elevated relatively to historical levels,” it added. Fitch Solutions’ current account deficit forecast for 2022 is 5% of GDP, due to the continuing threat of weakening global demand.

DoE expects 12 yellow alerts in Luzon grid 

Luzon's power grid is likely to experience deficient reserves for seven months this year which may result in 12 yellow alerts, the Department of Energy (DoE) said on Monday, as it ruled out red alerts that lead to rotating brownouts.DoE Undersecretary Rowena Cristina L. Guevara said at a virtual press briefing on Monday that some power plants in Luzon may experience forced outages that would reduce available capacity by 500-600 megawatts (MW) this year. The yellow alerts are anticipated to take place during the summer months — April to June, as well as during the September-to-November period. Data provided by the DoE showed that one yellow alert is expected to be raised in March, two in April, four in May, two in June, one in September, one in October and one in November.

Philippines: Data center hotspot in the making

A 2022 case study presented by law firm Quisumbing Torres, forecasted that the Philippine data center market will be worth $535 million by 2026, with a compound annual growth rate of 11.40 percent from 2021 to 2026. Formidable think tanks are seeing the Philippines as the next big thing when it comes to data centers, considered to be a flourishing industry in the future. This was according to the study “The Rise of Data Centers: Opportunities for 2023,” commissioned by the European Chamber of Commerce of the Philippines in partnership with Santos Knight Frank and Quisumbing Torres Law Firm.

FIRB approves perks for P412 billion projects

The Cabinet-level Fiscal Incentives Review Board (FIRB) has approved 16 projects worth P412 billion since its creation last year following the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law. According to the FIRB, it has granted incentives to 16 big-ticket projects with a combined investment capital of P412 billion which is expected to generate over 4,000 direct jobs.

Philippine wages, skill gaps remain top concerns this year

Philippine unemployment eased to 4.2% in November, the lowest in over 17 years, as firms hired more workers ahead of the holiday season. However, job quality deteriorated as underemployment, which shows Filipinos seeking more work, slightly rose to 14.4% in November from 14.2% in October. The government seeks to deploy more Filipino workers overseas as it explores more labor markets, said Migrant Workers Undersecretary Hans Leo J. Cacdac. “We are optimistic about next year since the number of deployments increased by 320% in 2022 compared with 2021,” he said in an interview on Zoom. His agency plans to set up more offices in China, Thailand and Eastern Europe to help Filipinos find work, he added.

Digital payment systems top BSP agenda in 2023

Bangko Sentral ng Pilipinas (BSP) said its work program for 2023 will focus on the launch of new digital payment streams, while undertaking preparatory measures ahead of the rollout of a Central Bank Digital Currency (CBDC), Governor Felipe M. Medalla said in his New Year’s message. “This year, we are targeting to launch other digital payment streams, such as InstaPay Debit Pull and Request to Pay. We also aim to issue a merchant acquiring and aggregation licensing framework and a cooperative oversight framework,” Mr. Medalla said.

More foreign pharma firms should be invited to Philippines

Inviting more foreign pharmaceutical companies to set up manufacturing facilities in the Philippines may help the country expand its science and technology base given the potential manpower training it will also bring in, according to a key stakeholder in the local pharmaceutical industry. Unilab Inc. senior vice president for business development Jose Maria Ochave said local drug manufacturers are seeking to improve government-to-government (G2G) engagement with countries that have a higher likelihood of forging technology transfer relationships.

Sugar industry laments government plan to import anew

The sugar industry was caught off guard with President Marcos’ directive to import sugar anew, according to industry experts. They said if there is really a need to control prices, importation should be through an order of the Sugar Regulatory Administration (SRA) Board rather than the Minimum Access Volume (MAV), which has lower tariff rates. The importation of 64,050 metric tons (MT) of refined sugar through the MAV is yet to be tabled for discussion with stakeholders and at the SRA board.

DOE plans to accelerate total electrification within H1

The Department of Energy (DOE) targets to come out with a strategic plan to accelerate total electrification in the country within the first half. The DOE said electrification at the household level in the country as of June last year stood at 95.8 percent, with 971,022 households nationwide still unserved. Luzon recorded the highest electrification at 98.8 percent followed by Visayas at 97.2 percent. Mindanao’s household electrification registered at 87.1 percent. DOE data showed that the number of unserved households in Mindanao was the highest at 681,092, followed by Luzon at 165,793 and Visayas at 124,137.

Philippines to see decline in debt burden in 2023 

The Philippines will likely see its debt decline this year amid continued economic growth, Moody’s Investors Service said. “For only a few sovereigns, including Fiji, Maldives and the Philippines, debt burdens will decline by several percentage points in 2023, driven by high nominal GDP (gross domestic product) growth,” Moody’s said in a Jan. 9 report. “But their debt burdens will still hover far above pre-pandemic levels.” The National Government’s outstanding debt rose by an annual 14% to a record-high of P13.644 trillion as of end-November.

Policy tightening seen to continue

The Bangko Sentral ng Pilipinas (BSP) will likely continue its monetary tightening this year as inflation is seen to remain above target until the second quarter of 2023, analysts said.  However, economic growth may slow significantly in the next two years, as a result of higher borrowing costs. BSP Governor Felipe M. Medalla said inflation may have peaked already in December and is expected to settle within the 2-4% target range by third quarter this year. Headline inflation rose to 8.1% in December, from 8% in November and 3.1% in December 2021, as food prices surged during the holiday season. This brought the average inflation in 2022 to 5.8%, the highest in 14 years. “From that point on, we see inflation slowing down in the first half of 2023 and settling between 2-4%, our target range, by the third quarter of 2023,” Mr. Medalla said during the central bank’s first flag-raising ceremony for the year.

DOE defers to DFA on joint oil, gas exploration

Negotiations on the possible joint oil and gas exploration of the West Philippine Sea (WPS)  with China will resume and will be led by the Department of Foreign Affairs (DFA), according to the Department of Energy (DOE). “We will have to be guided by the DFA in so far with the timing and the subject matter of the resumption of talks and even the venue of the talks,” said DOE Secretary Raphael Lotilla in a virtual briefing yesterday, when sought for comment on the outcome of the WPS issue during President Ferdinand Marcos Jr.’s state visit to China last week. Last year, the government terminated talks with China for a joint energy project in the disputed territory with former President  Duterte ordering an end to negotiations before the end of his term.

DICT eyes cooperation pact with Belgium 

The Department of Information and Communications Technology (DICT) is eyeing to advance digital cooperation with Belgium, particularly on cybersecurity, digital ID and satellites. In a statement, DICT said Anna Mae Yu Lamentillo, undersecretary for public affairs and foreign relations, met with Michel Parys, ambassador of the Kingdom of Belgium to the Philippines, to discuss areas for digital cooperation. “We want to learn from digitally-advanced nations in terms of building and improving digital infrastructure, improving the public’s access to and the government’s delivery of public services through digitalization, and strengthening measures against cyber threats,” Lamentillo said. Belgium has an eID, an electronic proof of identity that citizens can use for electronic transactions, such as signing electronic documents and securely logging in to online public services. One of the priorities of President Ferdinand Marcos Jr. is to fast-track the issuance of national IDs to make transactions with different government agencies seamless and more efficient.