ECCP at Work

Moody’s raises Philippines 2023 growth target to 6.1%

The research arm of the Moody’s Group has raised its 2023 growth forecast for the Philippines to 6.1 percent from the previous target of 5.7 percent, making the country the fastest growing economy in the region. Steven Cochrane, chief economist for Asia Pacific at Moody’s Analytics, said the Philippines, India, China and Indonesia would be the leaders of gross domestic product (GDP) growth in the region this year. The Philippine economy is expected to grow faster than India’s 5.5 percent, China’s 5.4 percent, Indonesia’s 5.2 percent and Vietnam’s five percent. The revised GDP growth forecast of Moody’s Analytics is well within the six to seven percent target set by government economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC).

Marcos certifies Public-Private Partnership bill as urgent

President Ferdinand “Bongbong” Marcos Jr. has certified as urgent the Senate bill proposing the Public-Private Partnership Act. In a letter dated May 31, Marcos, through Executive Secretary Lucas Bersamin, asked Senate President Juan Miguel Zubiri to certify the immediate passage of Senate Bill 2233. Congress is currently on break, meaning no action can be taken in the bill until after the State of the Nation Address in July. The proposed PPP Act stipulates guidelines for PPP projects that may be financed “partly from direct government appropriations or official development assistance of foreign governments or institutions.” 

World Bank OKs $750-M 'sustainable recovery' loan for PH

The World Bank approved a $750-million loan to support the Philippine government’s efforts to improve protection of the natural environment as well as resilience to the adverse effects of climate change. In particular, the facility dubbed Philippines First Sustainable Recovery Development Policy Loan will bolster ongoing government reforms to not only attract private investment in renewable energy but also to enhance plastic waste management through reduction, recovery and recycling; promote green transport, including the use of electric vehicles; and reduce climate-related fiscal risks from the agriculture sector. 

Tourist VAT refund seen adding up to P13 billion to GDP 

The plan to refund the value-added tax (VAT) of foreign tourists is expected to add up to P13 billion to the economy annually amid the propensity of travellers to consume more with such a reimbursement mechanism. The National Economic and Development Authority (NEDA) expressed support to implement a VAT refund for non-resident tourists as it can increase tourism receipts and attract more visitors. NEDA Undersecretary Rosemarie Edillon said based on the agency’s study, the additional spending per annum is estimated to be from P6 billion to P9 billion starting 2024. This is in comparison to the status quo, which means no VAT refund, that yields revenues of P3.4 billion to P5.1 billion. Considering multiplier effects on other sectors, particularly retail trade, such a mechanism could redound to P8.6 billion to P12.8 billion in additional gross value added (GVA) per year.

Q1 FDI inflows down nearly 20%

The country’s foreign direct investments (FDI) net inflows in the first quarter declined by nearly a fifth to $2.042 billion from $2.542 billion a year ago, the Bangko Sentral ng Pilipinas (BSP) said. BSP data showed that the $500-million drop was caused by the contraction across all major components of the FDI. In March alone, FDIs to the Philippines plunged 30.7 percent to $548 million from $792 million in the same month of last year, according to the BSP. “The said decline resulted from lower net inflows across all major FDI components amid investor concerns over subdued global growth prospects,” it said in a statement on Tuesday. BSP data showed that debt instruments accounted for the bulk of the March FDI. Net investments in debt instruments fell by 37.2 percent to $389 million from $620 million last year.

Economic managers rebut UPSE’s MIF paper

The Marcos Jr. administration’s economic managers issued an eight-page rebuttal to the paper published by the UP School of Economics (UPSE), maintaining that the Maharlika Investment Fund (MIF) is critical in the country’s economic development. In a joint statement, the economic managers answered point-by-point the arguments raised by some UPSE faculty members in their paper published last week. The economic managers asserted that the MIF and the proposed Military and Uniformed Personnel (MUP) pension reform would allow the country to reduce its reliance on foreign and domestic loans to fund the government’s annual budget. They noted that passage of the MIF bill and the MUP bill are legislative priorities of the current administration in providing “radical reforms” to improve the country’s economic and fiscal standing.

DOLE backs regulation of AI’s use, production

The labor chief made the pronouncement when asked about his position on House Bill (HB) No. 7396 or the Act Promoting the Development and Regulation of AI in the Philippines. Among the salient provisions of the bill is the creation of the Artificial Intelligence Development Authority (AIDA).Surigao del Norte 2nd District Rep. Robert “Ace” Barbers said he filed HB 7396 in response to reports of how AI can be used to spread misinformation and displace jobs. Bureau of Local Employment (BLE) Director Patrick P. Patriwirawan, Jr. said they are now preparing DOLE’s position paper on HB 7396. With the growing impact of artificial intelligence (AI) in the operations of more establishments, the Department of Labor and Employment (DOLE) backed the proposed legislation regulating the production and use of the new technology.

Herbosa cites hindrance in DOH’s bid to secure more bivalent vaccines

Registration requirements and high vaccine demand abroad hinder government attempts to secure more Covid-19 vaccines, according to the Department of Health (DOH).  Secretary Teodoro J. Herbosa said the DOH could no longer easily procure Covid-19 vaccines with the expiration of the national public health emergency this year. The state of public health emergency allowed the local use of Covid-19 jabs as long as the Food and Drug Administration (FDA) could issue the necessary emergency use authorization (EUA) for procurement. The DOH said it is aiming to purchase more vaccines since it currently has only 390,000 Covid-19 bivalent vaccine, which were donated by the COVID-19 Vaccine Global Access (COVAX).

Water-impounding infra eyed near NCR

To control flooding and ensure water supply in Luzon, President Ferdinand R. Marcos Jr. has ordered the construction of water-impounding facilities near Metro Manila. Marcos gave the instruction after being briefed by members of the Water Resources Management Office (WRMO) and other government agencies on the government’s comprehensive water management plan. The President said they are now eyeing several possible locations for the impounding facilities. During the meeting, the Department of Public Works and Highways (DPWH) gave updates on their P351-billion flood control programs, and the National Irrigation Administration (NIA) on their management of dammed rivers. Marcos ordered a review of the flood control projects of DPWH to determine if the agency need additional funds for the purpose.

PT&T inks partnership to sell Starlink to customers

Philippine Telegraph and Telephone Corp said on Wednesday it signed a partnership deal with Australian technology firm NetLinkz to bring SpaceX's Starlink satellite internet services to customers across the Philippines. NetLinkz has a partnership with Starlink to bring the satellite technology to large-scale enterprises globally. With the partnership, Filipinos can now purchase a Starlink kit directly through PT&T, the listed firm said in a disclosure to the stock exchange. "We are thrilled to bring Starlink to the Philippines and offer our customers with the need for connectivity with a reliable internet solution," said James Velasquez, PT&T President and CEO. "Our partnership with Netlinkz allows us to provide high-speed internet access to areas where traditional broadband services are limited or unavailable." PT&T said monthly plans vary for Enterprise and Maritime customers depending on their specific requirements. Plans include offers with 50GB to 6TB data caps, it added. 

‘Mega consortium’ sweetens Naia modernization pitch, commits P 210B

The proposed Ninoy Aquino International Airport (Naia) rehabilitation project by the Manila International Airport Consortium (MIAC) is projected to contribute $14.6 billion to the Philippine economy through direct investments and knock-on effects on trade and tourism. The “mega consortium” backed by six of the country’s largest conglomerates said its Naia upgrade bid would cost $3.8 billion in total or roughly P210 billion—which is double the P100-billion project cost it had announced in April. MIAC seeks to double passenger capacity of the congested international gateway to 62.5 million per annum by 2028 from 31 million currently. The new proposal also offers $1 billion in upfront concession payment.

Napocor in talks with major local developers, foreign firms

State-run National Power Corp. (Napocor) is in talks with major local energy developers and foreign firms to boost its bid to transition the operations of off-grid areas in the country to clean energy. Napocor president and CEO Fernando Martin Roxas said they have talked to 18 developers to support their hybridization program. “Majority, maybe 90 percent of them, are local companies. But we’re talking about the biggest, such as DMCI, Ayala, and Alternergy, among others,” Roxas said. “Out of the 18 developers, only two said they are not interested. And the reason is they have a lot on their plates. They have bigger projects that they want to focus into or their resources to be focused on,” he said. Roxas said Napocor is also in discussions with German and Swedish firms for renewable energy technologies, as well as Indonesian and Malaysian companies for biofuels.

WTTC: Tourism sector to inject $80 billion to PH economy in 2023

The World Travel and Tourism Council (WTTC) on Thursday said it is projecting that the Philippine tourism industry will inject $80 billion, or around ₱4 trillion, to the local economy, which represents 19.4% of the gross domestic product (GDP). While this is 9% behind the 2019 pre-pandemic data, the WTTC said 2023 projections still showed steady growth from 2022. “Travel and tourism has responded post the pandemic very strongly and particularly in Southeast Asia and the Philippines,” WTTC President and CEO Julia Simpson told CNN Philippines’ New Day. The council also said that tourism contributed almost $70 billion or over ₱3 trillion to the domestic economy last year. This represents 17% of the country’s GDP in 2022, it added. Simpson said their upward projections support the pent-up demand from travelers despite the impact of inflation globally. This is expected to continue in at least 10 years, with the industry contributing around $147 billion or over ₱ 8 trillion, which is 20.3% of the economy, the WTTC noted.

EV industry lobbying for incentives to support new-vehicle adoption

The electric vehicle (EV) industry plans to press the government to provide incentives that will encourage the broad adoption of EVs, the industry organization’s chairman said. Rommel T. Juan, who chairs the Electric Vehicle Association of the Philippines, said the industry will map out its strategy for a quick EV rollout in an October convention. The EV Summit, to be held at the SMX Convention Center on Oct. 19-21, will seek to push policymakers and regulators for “supportive policies and incentives that promote widespread EV adoption.” During his visit to the Periklindo EV show in May in Jakarta, Mr. Juan said international collaboration is needed to advance sustainable transportation solutions. EV adoption was given a boost by Executive Order (EO) No. 12 issued in January, which reduced the tariffs on certain EVs to zero for five years, effectively lowering vehicle prices.

Philippine biofuels consumption up this year

The Philippines will see higher biofuel consumption this year due to higher demand, according to the latest report of the United States Department of Agriculture (USDA). Fuel ethanol demand is seen growing by eight percent to 693 million liters.  Demand for biodiesel is also expected to increase by 14 percent to 230 million liters “driven by fuel pool increases and not higher blending.” “Both fuel ethanol and biodiesel programs have stagnated for years with no appreciable upward movement in blend rates despite higher aspirational goals,” the USDA said. The Biofuels Act of 2006 mandates that all liquid fuels for motors and engines sold in the Philippines shall be blended with biofuels.

Agricultural trade drops by 8.6% in Q1 

The Philippines saw a higher trade deficit even as the value of the country’s agricultural trade fell by 8.6 percent in the first quarter amid lower exports and imports, according to preliminary data from the Philippine Statistics Authority (PSA). The country’s total agricultural trade reached $5.9 billion in the January to March period this year, down from $6.46 billion in the same period last year. The first quarter figure compares with the 5.1 percent rise of agricultural trade in the previous quarter and the 30.7 percent growth a year ago. Agricultural imports accounted for 73.8 percent of total agricultural trade during the quarter,  down 3.3 percent to $4.36 billion. The value of agricultural imports represented a share of 13.9 percent in the country’s total imports.

OFW remittances growth slowing

The growth in remittances sent home by Filipinos living and working abroad is expected to slow down from 4 percent in 2022 to 2.5 percent in 2023 and 2024, in line with the global outlook for remittances. This is according to a report published by the World Bank (WB) in partnership with think tank Global Knowledge Partnership on Migration and Development or Knomad. The 47-page brief titled “Remittances Remain Resilient but are Slowing” estimates that remittances to the Philippines will grow from $38 billion in 2022 to $39 billion this year and $40 billion next year. In 2022, the Philippines received the fourth biggest amount of cross-border money transfers, trailing India ($111 billion), Mexico ($61 billion), and China ($51 billion). Remittance growth in the Philippines benefited from recent bilateral arrangements with governments of countries that host overseas-based Filipinos, the report said. Also, the Philippines— along with Cambodia—is distinct among the larger East Asian countries in terms of remittances representing more than 9 percent of gross domestic product.

Revival of pre-shipment inspection proposed to curb agri goods smuggling 

The Marcos administration is urged to reinstate pre-shipment and discharge port inspection systems to put an end to the proliferation of smuggled agricultural goods across the archipelago. In a statement on Wednesday, the Federation of Free Farmers (FFF) made the appeal to reintroduce these systems to stop large-scale agricultural smuggling, curb price manipulation and ensure the safety of food imports. The FFF also recommended the enactment of a law or issuance of an executive order to form an Inspectorate and Enforcement Service that run after alleged violators of the Anti-Agricultural Smuggling Act of 2016 and the Food Safety Act of 2013. Moreover, the FFF proposed the immediate amendment of the implementing rules and regulations of RA No. 10845 to lodge file complaints against suspected agricultural smugglers in court. Under the existing law, large-scale agricultural smuggling refers to shipments worth at least P1 million for most farm products and a minimum of P10 million for rice.

‘Fix traffic first’, Pimentel calls for halt to NLEX toll hike

Senate Minority Leader “Koko” Pimentel urged the Toll Regulatory Board (TRB) and the North Luzon Express (NLEX) Corporation on Tuesday to halt the increases in toll fees, citing worsening traffic on the expressway. “Any increase at this point would be unjustifiable and unfair to the motorists who have to deal with sometimes EDSA-like traffic on the expressway, specifically from Balintawak to Meycauayan,” Pimentel said in a statement. Pimentel also said holding off the toll hike will ease the burden of the public who are dealing with inflation. However, Finance Secretary Benjamin Diokno earlier said the toll fee increase must be implemented to make up for the authorized periodic adjustments due in previous years.