FDI retreats in March as investors turn glum
Foreign direct investments retreated in March as external headwinds muddied the global economy’s prospects. Data released by the Bangko Sentral ng Pilipinas on Tuesday showed FDIs amounted to net inflows of $548 million in March, declining 30.7% year-on-year. Inflows in the first quarter plunged 19.6% to $2 billion compared to a year ago.
GDP growth may fall below 5% in H2
The Philippines’ average gross domestic product (GDP) growth may drop below five percent in the second half due to higher interest rates, according to Japanese financial giant Nomura. Nomura economist for ASEAN Euben Paracuelles and analyst Rangga Cipta said the Philippine economy may grow by an average of 4.9 percent in the second half, lower than the six percent expansion in the first half. Economic growth may drop to 5.6 percent in the second quarter and further to 4.8 percent in the third quarter before picking up slightly to 5.1 percent in the fourth quarter. “We continue to forecast a slowing of GDP growth to 5.5 percent year-on-year in 2023 from 7.6 percent in 2022, below the official six to seven percent range,” Paracuelles and Cipta said.
National Gov’t gross borrowings up 28% in April
The National Government’s gross borrowings rose 28.3% in April, the Bureau of the Treasury (BTr) said. The BTr reported gross borrowings of P129.9 billion in April, against P101.26 billion in the same month a year earlier. Month on month, gross borrowings declined 45.3%. In April, domestic debt accounted for 74% of government borrowings. Gross domestic borrowings increased 44.8% year on year to P96.127 billion during the month. The BTr raised P94.475 billion from fixed-rate Treasury bonds and P1.652 billion from Treasury bills. Meanwhile, external borrowings slipped 3.2% year on year to P33.779 billion in April. This consisted of P27.566 billion in program loans and P6.213 billion in new project loans.
PH losing out on tax collections from digital transactions, says PIDS
The Philippines is losing out on potentially significant tax revenues from digital transactions and foreign digital service providers and funding for its programs amid the digital commerce boom, according to the Philippine Institute for Development Studies (PIDS). University of the Philippines associate law professor Emerson Bañez said the complexity of the digital economy poses a challenge for tax agencies. “The national tax system is struggling to capture revenues from digital transactions due to the complexity of these transactions, the absence of physical presence, and the strong dependence on intangible assets,” Bañez said.
ICT Month seen to boost digital transformation
Senator Sherwin T. Gatchalian, moving to boost the nationwide observance of the Information and Communications Technology (ICT) month, sought to ramp up the digital transformation of the country’s basic education sector. Outlining his proposal for Congress to pass the Digital Transformation of Basic Education Act embodied in Senate Bill 383, the senator said the proposed law aligns with the mandate of Republic Act 10929 (Free Internet Access in Public Places Act). The proposed measure mandates the Department of Information and Communications Technology (DICT) to accelerate the installation, deployment and activation of free public Wi-Fi in all public basic education institutions.
DTI: RE projects to fill a third of BOI approvals
RENEWABLE Energy (RE) projects are seen to account for a third of the Board of Investments (BOI) P1.5-trillion investments approval target for 2023, according to Trade Secretary Alfredo E. Pascual. In line with this, the Trade chief explained that the process of investing in the country is a tedious one, noting, that the feasibility study lasts from half a year to one year. After this, he said the investor has to apply for registration with BOI or the Philippine Economic Zone Authority (PEZA), which he said would take another year. The country has allowed 100-percent foreign investments in renewable energy in its bid to attain a 35-percent share of renewable energy in the country’s energy mix by 2030 and 50 percent by 2040. From January to May 2023, investments approved by the BOI reached P532.27 billion, a 158.72-percent increase from the P205.73-billion investment approvals recorded in the same period in 2022. The investment promotion agency said the surge was mainly driven by foreign investments in the renewable energy sector.
PHL seen to import in 2023 record-high 3.9MMT rice
PHILIPPINE rice imports are expected to rise to a record-high of 3.9 million metric tons (MMT) this year, the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said, upgrading its previous forecast of 3.7 million MT. “The higher forecast,” international market watchers USDA-FAS said, owes “mainly” to the “higher-than-anticipated imports of Vietnam rice.” Meanwhile, the country’s imports forecast for 2024 is higher at 3.8 million MT than the 3.6 million MT. In the first week of May this year alone, rice imports amounted to 34,050 MT, a decline of 89.2 percent from 316,604.35 MT a year ago. The Department of Agriculture said the local rice supply would remain stable amid growing concerns over rice shortage and price increases because of the El Niño phenomenon. In April, the DA said the ending stock of palay stood at about 5.66 million MT in the first quarter of 2023, which is good for 51 days of consumption.
The Department of Transportation (DoTr) said the proposal to privatize the Ninoy Aquino International Airport (NAIA) currently with the National Economic and Development Authority (NEDA) will serve as the “baseline” for the levels of investment the government expects to be sunk into the international gateway. Transport Undersecretary for Aviation and Airports Roberto C.O. Lim said that the government could issue a bid invitation by September should NEDA approve, adding that an unsolicited proposal for NAIA submitted by a consortium has yet to be evaluated. In April, the Manila International Airport Consortium, consisting of six Philippine conglomerates and Global Infrastructure Partners (GIP), submitted an unsolicited proposal valued at P100 billion.
RCEP, IPEF expected to strengthen PHL-Japan bilateral relationship
The Department of Trade and Industry (DTI) said two trade deals are expected to strengthen the Philippines-Japan economic relationship. The DTI said in a statement on Wednesday that the Regional Comprehensive Economic Partnership (RCEP) and the Indo-Pacific Economic Framework (IPEF) are already producing agreements to deepen ties between the two countries. Trade Secretary Alfredo E. Pascual and the Japanese Economy, Trade, and Industry Minister Yasutoshi Nishimura agreed to explore investment in energy, critical minerals, carbon neutrality, innovation, and digital trade under RCEP, which the Philippines recently joined.
Transmission planning to be included in new Philippine Energy Plan
The Department of Energy (DOE) is including transmission planning in the Philippine Energy Plan that is expected to come out in September. “One of the new things that we do now at the DOE is to include the transmission plan in the Philippine Energy Plan. And that is one way to make sure that we will not have stranded power, especially from renewable energy,” DOE Undersecretary Rowena Cristina Guevara said. Guevara said there is a “mad rush” for renewable energy development to be put up in the country, with over 1,000 renewable energy service contracts totaling 80 gigawatts already awarded by the DOE.
PHL, South Korea could still sign FTA this year
A planned free trade agreement (FTA) between the Philippines and South Korea could still be signed this year after the initial timetable was called into doubt, according to the Department of Trade and Industry (DTI). “From what I see, feasible this year (in terms of the signing), so far, based on signals that I got when I was in Detroit, talking to my counterpart from South Korea,” Trade Secretary Alfredo E. Pascual told reporters in chance remarks last week. In March, the DTI said that the signing of the FTA could happen by June or July. In November, the DTI had set a signing target of the first quarter of 2023. Negotiations between the two countries began in June 2019 and ended in October 2021. Under the proposed FTA, Philippine products expected to benefit from the arrangement include banana, pineapple, and other tropical fruits, while South Korean vehicles and auto parts are projected to obtain expanded access to the Philippine market.
Over 10% bank lending growth seen after RRR cut
The reduction in banks’ reserve requirement ratio (RRR) by as much as 2.5 percentage points is expected to boost growth in bank lending to above 10 percent in the near term, an economist said. In a reply to emailed questions from the Philippine News Agency (PNA), Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the cut in RRR can infuse at least PHP350 billion in the economy, which can be used for additional borrowings both for businesses and households as well as investments in various assets, such as equities and bonds. The RRR cut was announced by the Bangko Sentral ng Pilipinas (BSP) on June 8, with the date of its effectiveness set on the same day as the expiration date of the alternative RRR compliance measures put in place during the pandemic. Specifically, the reduction in universal and commercial banks (U/KBs) and non-bank financial institutions with quasi-banking functions (NBQBs) RRR is 250 basis points (bps) to 9.5 percent; digital banks, 200 bps to 6 percent; thrift banks, 100 bps to 2 percent; and rural banks and cooperative banks, 100 bps to 1 percent.
Half of Filipinos optimistic about economic growth, 40% expect no changes –OCTA Survey
Half of adult Filipinos think the local economy will post an improvement in the next six months, while some 40% believe there will be no changes from the present, results of the Tugon ng Masa (TNM) survey conducted by OCTA Research released on Sunday showed. The survey, conducted March 24 to 28, 2023, found that 50% of respondents across the country think the economy will be better than the present, higher than the 46% recorded in October 2022. The highest optimism was recorded in the Visayas with 69%, followed by balance Luzon with 47%, the National Capital Region (NCR) with 46%, and Mindanao with 43%. In terms of socioeconomic classes, the highest optimism was seen in Class D with 51%, followed by Class E with 50%, and Class ABC with 44%. The economy expanded by 6.4% in the first quarter of the year, slower than the 8.0% growth in the first quarter of 2022, and the downward revised 7.1% in the fourth quarter of the previous year.
Philippines to drive global rice consumption – USDA
The United States Department of Agriculture (USDA) has identified the Philippines as a key contributor to the anticipated rise in global rice consumption next year. In a report, the USDA said it forecasts global rice consumption to increase in marketing year 2023-2024 to 523.772 million metric tons from the previous forecast of 523.022 million MT. “Global consumption is up with increases for India and the Philippines. Imports are forecast higher, mainly for Kenya and the Philippines,” it said. According to the latest forecast by the USDA, rice consumption in the Philippines is expected to increase to 16.5 million MT for the 2023-2024 period, surpassing the previous projection of 16.3 million MT. This consumption estimate exceeds the anticipated local rice production of 12.6 million MT.To address the shortfall, the USDA has raised its projection for Philippine rice imports to 3.8 million MT next year from 3.6 million MT.
PAL sees surge in Canada travel
Philippine Airlines (PAL) says the easing of visa requirements for Filipinos going to Canada can boost plane ticket sales for the long-haul flights. PAL spokesperson Cielo Villaluna, in an interview with the Inquirer, said that the “ease and convenience of travel that this new policy brings is a welcome development.” Currently, PAL operates the Manila-Toronto route twice a week and services daily flights between Manila and Vancouver. Operator PAL Holdings Inc. reported that its net income attributable to equity holders of the parent company grew by more than four times to P4.65 billion in the first quarter from P1.08 billion in the same period a year ago. The bottom line was lifted by passenger revenues, which surged by 119 percent to P37.62 billion in the first quarter.
DOE logs ₱6.8-B energy efficiency projects from 2021-2022
The Department of Energy (DOE) said it has recorded ₱6.8 billion worth of energy efficiency investments based on the report submitted by the designated establishments (DEs), or industries identified as energy-intensive, for the period of 2021 to 2022. Energy efficiency investments include projects that use energy-efficient technologies such as upgrading, installation, and retrofitting of equipment or devices to reduce energy use. "Industry has a crucial role to play in our quest towards achieving a low carbon-intensive economy and more importantly, integrating this in their business model," said Energy Secretary Raphael Lotilla.
Senate told: Pass bill reviving salt industry
The Senate must fast-track the approval of its counterpart measure that aims to revitalize the country’s salt industry to help create about 100,000 jobs in the agriculture sector, according to a lawmaker. Citing a statement from the Department of Labor and Employment, Bicol Saro Partylist Rep. Brian Raymund Yamsuan said crafting and implementing a roadmap for the development of the salt industry would create 20,000 direct jobs and another 80,000 indirect or related jobs in the agriculture sector. The House of Representatives has already approved on third and final reading House Bill (HB) 8278 or the proposed Philippine Salt Industry Development Act. HB 8278, of which Yamsuan is among the principal authors, aims to create a comprehensive plan for the salt industry to increase domestic production and boost investments in this sector. The Legislative Executive Development Advisory Council has included the bill among the priority measures of President Ferdinand R. Marcos Jr. On top of modernizing the industry, the lawmaker noted that salt producers also need to expand their market linkages to be able to promote Philippine salt not only as a food flavoring, but also as a key element in various industries.
Program to protect live stock in areas near Mayon pushed
The evacuation in areas affected by Mayon Volcano’s restiveness should consider, from the start, the need to find good shelter as well for the evacuee-families’ livestock, according to Senator Francis Tolentino. Speaking in his weekly radio program, Tolentino pushed for an “adopt a livestock” program in various localities in the province of Albay amid the increasing restiveness of Mayon Volcano. The senator, under the Duterte administration, was the overall onsite point person during the aftermath of the 2018 Mayon and 2020 Taal eruptions. Albay Governor Grex Lagman welcomed Tolentino’s recommendation for the “adopt a livestock” program as the provincial government will soon begin its evacuation for some 10,000 heads of livestock from the 6-kilometer permanent danger zone (PDZ) of Mayon Volcano and will be placed in a separate evacuation center. Tolentino lauded the swift response of the Albay’s provincial government following its declaration of a state of calamity to ensure the safety not only of its residents but also the existing livestock in the province.
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