ECCP at Work

Trade deficit narrows to $4.4B in May

The Philippines’ trade deficit narrowed to a three-month low in May as exports expanded for the first time in six months while the decline in imports slowed, data from the Philippine Statistics Authority (PSA) showed. According to PSA data, the country’s balance of trade in goods stood at a $4.4-billion deficit in May, slimmer than the revised $4.84-billion gap in April and $5.56-billion deficit in May 2022. The Philippines has incurred a trade deficit for the last eight years or since the trade surplus of $64.95 million in May 2015.

Net FDI inflow shrank 14% to $876M in April

The net inflow of foreign direct investments (FDI) into the Philippines shrank by 14 percent to $876 million in April from $1 billion in the same month of 2022 as expectations of weaker economic growth continued to dampen the movement of capital. The April readout was a sharp reversal of a 53-percent growth seen in the same month of 2022. However, this may also be seen as an improvement from the 31-percent drop recorded a month earlier last March.

Philippines still projected to post fastest growth among ASEAN+3

The ASEAN+3 Macroeconomic Research Office (AMRO) still expects the Philippines to post the fastest economic growth in the region this year, despite external headwinds. In its latest ASEAN+3 Regional Economic Outlook Report, AMRO kept its 6.2% growth estimate for the Philippines this year, the same forecast it gave in April. This is also the fastest gross domestic product (GDP) growth projection among the ASEAN+3 economies for 2023, followed by Cambodia (5.7%) and China (5.5%). AMRO’s forecast for the Philippines is also above the 4.6% growth projection for ASEAN+3, and the 4.5% for ASEAN alone.

PHL vulnerable to inflationary pressures induced by El Niño

The Philippines is expected to be one of the most vulnerable economies to El Niño-induced inflationary pressures in Southeast Asia, according to BMI Country Risk & Industry Research. In the BMI Southeast Asia El Niño Exposure Index, the Philippines ranked sixth most vulnerable among 13 countries after Myanmar, Cambodia, Nepal, Laos and Malaysia.

Vehicle sales rise by 31percent in H1 

Vehicle sales in the country accelerated by 30.7 percent in the first half of the year, showing improved consumer spending. A joint report from the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and Truck Manufacturers Association (TMA) yesterday showed total vehicle sales reached 202,415 units from January to June, higher than the 154,874 units in the same period last year. The bulk of the total sales was accounted for by commercial vehicles (CV), with 151,567 units sold in the first semester, 30.8 percent higher than the 115,871 units sold in the previous year. Meanwhile, passenger car (PC) sales went up 30.4 percent to 50,848 units from 39,003 units a year ago.

Government agencies, GOCCs, SUCs, LGUs urged to tap energy from the sun 

Government agencies, including government-owned and controlled corporations (GOCCs), state universities and colleges (SUCs), and local government units (LGUs) are encouraged to tap solar energy in their government-owned buildings to help minimize the countrys exposure to fuel price fluctuations in the international markets.

Household consumption seen slowing 

The Philippine Economy may not meet the government’s 6-7% growth target this year, as household consumption is likely to further weaken despite slower inflation, analysts said. Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco gave a Philippine gross domestic product (GDP) growth forecast of 5.5% for this year, as he expects “much weaker” prints in the second half. In the first quarter, Philippine GDP expanded by 6.4%, slower than the revised 7.1% in the previous quarter, and the 8% in the first quarter of 2022, as elevated inflation and rising interest rates dampened consumer spending. 

Lifelong learning, job creation crucial–Neda 

Investing in lifelong learning and job creation, among others, are necessary to maximize the country’s demographic dividend, according to the National Economic and Development Authority (Neda). In a statement on Wednesday, Neda reported that during a high-level meeting on July 11 for this year’s World Population Day (WPD), Neda Undersecretary Rosemarie G. Edillon discussed how stakeholders can contribute to maximizing the Philippines’s demographic dividend. To align national and local development plans with the ongoing demographic transition, Edillon said the Neda has “outlined various plans, programs, and policies in the [Philippine Development Plan] PDP that will ensure that all Filipinos have access to social services, opportunities to improve their employability, and social protection.” Edillon stressed that this framework has been cascaded to the regional level. Neda added it is “crucial” to address various challenges arising from the demographic transition at the municipality and city levels.

$88-M investments from Marcos’ trips to materialize this year

Around $88 million (around P4.83 billion) in investment pledges secured during President Ferdinand R. Marcos, Jr.’s foreign trips are expected to materialize this year, according to Trade Secretary Alfredo E. Pascual. “The number that we expect to materialize in 2023 will total around $88 million — that is still small. That is only up to June this year and we expect some more to ripen and eventually add to the inflow of investments,” Mr. Pascual said at a Palace briefing, noting that six projects were already registered with the investment promotion agencies. The government earlier said the president’s foreign trips had generated $66.93 billion or P3.48 trillion worth of investment pledges. Carlson reiterated Washington’s call for Beijing to comply with international law, including the 2016 arbitral tribunal ruling that invalidated China’s expansive claims over the South China Sea. 

Food manufacturers urge gov’t to reconsider sweetened drinks tax hike 

A trade group of food manufacturers and distributors is urging the government to reconsider its plan to increase excise taxes on sweetened beverages, adding to the growing call from the private sector that warned of the negative impact of such a move. In a statement released on Tuesday, the Philippine Chamber of Food Manufacturers Inc. (PCFMI) called on the Marcos administration to review this plan, highlighting the potential negative repercussions of the tax policy and emphasizing the importance of exploring alternative interventions in its goal to promote health. PCFMI, which represents more than a hundred food products manufacturers and distributors, expressed concern, calling the move “regressive” and “discriminatory.” It added that the proposed tax changes might hinder sector competitiveness, reduce incomes, and negatively impact the national treasury.

Philippines told to be 'careful' in filing another arbitral case vs China

Senate Minority Leader Koko Pimentel is calling for caution should the Philippines plan to file another arbitration case against China's claim to nearly the entire South China Sea. Former Solicitor General Francis Jardeleza has urged the Marcos administration to bring Beijing to court once again over its refusal to recognize the 2016 arbitral ruling that invalidated its claims to the waterway. "When we file something, we're actually giving the other side a chance to bring up their planned original argument. If we get a negative result here, then although it maybe on another matter, it can be spin to mean that it is a reversal of the 2016 arbitral ruling," he told "Headstart". 

 

Farmers press gov’t on need for border inspection facilities 

The farm industry said the need for first border inspection facilities at ports remains urgent to deter smuggling or dangerous produce. Gregorio A. San Diego, Jr., chairman of the United Broiler Raisers Association (UBRA) and the Philippine Egg Board Association, said cold examination facilities for agriculture (CEFA) are “very long delayed.” Federation of Free Farmers National Manager Raul Q. Montemayor said such inspection facilities will check the container’s contents, determine their tariff classification, weight or volume, value, quarantine clearance, and other parameters. A first border inspection facility “will obviously be resisted by persons who are gaining from the current system” because they will be prevented from engaging in smuggling, misdeclaration and undervaluation of imports, he said. SINAG Executive Director Jayson H. Cainglet cited the need to amend the Anti-Agricultural Smuggling Law by allowing other parties to charge smugglers. Such amendments would also create a special court to handle these cases. “Under the agri-smuggling law, only the BoC (Bureau of Customs) can file cases against smugglers.” The amendments are pending in committee at both the House and Senate.

Tax perks for shipyards proposed in House 

A bill supporting the shipyard industry has been filed at the House of Representatives, featuring a program of incentives for companies that undertake shipbuilding and repair operations here.The measure would authorize value-added tax (VAT) exemptions on the purchase or import of capital equipment, spare parts, and raw materials such as steel plate for shipbuilding companies registered with the Maritime Industry Authority. Income tax breaks will be available for shipbuilders and repair companies that export 70% of their production. The eligibility criteria include four years as a registered entity and a workforce of at least 4,000. The company must also work on vessels of at least 700 gross tons. Shipbuilders and repair companies with a mainly domestic market are required to have been registered for four years, employ at least 1,000 workers, and do work on vessels of at least 250 gross tons. The bill also authorize an income tax deduction of 50% of its wage bill for the first five years.

World Bank says time is ripe for TVET reform in developing countries

The reform of technical and vocational education and training (TVET) in developing countries will help address barriers hindering employment and productivity, the World Bank said. “The current moment is ideal for reform, and it offers numerous opportunities to leapfrog barriers to progress. Technology — if accompanied by complementary investments — has the potential to transform TVET in low- and middle-income countries,” it said in a report issued jointly with the International Labor Organization and the United Nations Educational, Scientific and Cultural Organization. The World Bank cited the need to strengthen basic education, by providing accelerated remedial support for learners, among other methods. Other barriers to access to TVET must also be addressed, especially for disadvantaged groups, it said. Governments must improve the affordability of TVET programs via subsidies, scholarships and financing for vulnerable youths, the World Bank said.