ECCP at Work

‘Much better’ growth seen in 2nd half

In the second quarter, the Philippine economy grew by 4.3% — its slowest growth in over two years, due to weaker household consumption and a contraction in government spending. This brought first-half gross domestic product (GDP) to 5.3%, still below the government’s 6-7% target. “To help improve economic growth, the Philippine government is expediting its public spending, particularly on infrastructure projects, by directing its agencies to put into action their catch-up plans. These plans aim to enhance budget execution efficiency for the remainder of the year,” the DoF said. Finance Undersecretary Abenoja said that with the implementation of these catch-up plans, government spending is projected to improve by the end of the year.

PH budget deficit seen further narrowing in 2023, 2024

The Philippine government’s budget deficit is set to continue narrowing in 2023 and 2024 amid improving revenue turnouts, according to BMI Country Risk and Industry Research. “Our projections for 2023 are slightly narrower than the government’s projection of 6.1 percent, following an outperformance in revenue growth,” BMI. The research firm also expects the fiscal deficit to shrink further after this year as theP5.77-trillion proposed national budget for 2024 makes progress through the legislative process. “Accordingly, we expect the public debt-to-GDP ratio to fall to 59 percent in 2024,” it added.

‘More things must be done to make EPR law succeed’

Under the law, companies called OEs with total assets of over P100 million are required to adopt and enforce policies for the right handling of their plastic packaging waste, with auditing and yearly compliance reports to be submitted. For the first year of the EPR implementation, OEs need to divert 20 percent of their very own plastic waste by end of 2023. With 2023 on its final stretch, Leones conceded that some OEs will be delayed in meeting the target of diverting 20 percent of their very own plastic waste by the end of this year. With barely three months before the year ends, some firms are still not sure about what an EPR is all about, or if they are covered or not by the law. According to Leones, it is not very clear in the EPR law whether the delegation of responsibility goes to the industries and producers.

Unified system for freight forwarder accreditation in its final stage [mention]

The joint memorandum circular (JMC) to develop and implement a unified system for the accreditation of air and sea freight forwarders is in its final stage, according to Carmelo Arcilla, the executive director of the Civil Aeronautics Board (CAB). CAB has been collaborating with the Department of Trade and Industry (DTI) and are finalizing the JMC soon, Arcilla said. The draft JMC aims to streamline the accreditation of sea and air freight forwarders by creating a unified application form, streamlining processes, and establishing a single digital system for the accreditation of sea and air freight forwarders. Once approved, DTI and CAB should issue their respective guidelines, rules, and regulations implementing the JMC within 30 days of its effectivity.

Inflation unlikely to hit target range

In its weekly highlights and preview, the research arm of the Moody’s Group said inflation breached six percent to hit a five-month high of 6.1 percent in September after quickening to 5.3 percent in August from 4.7 percent in July, due to soaring rice prices and higher electricity rates. “It looks increasingly unlikely that headline inflation will reach the BSP’s two to four percent target before the end of 2023,” Moody’s Analytics said. Despite the government’s price ceiling on the food staple imposed through Executive Order 39 that took effect on Sept. 5, Moody’s Analytics said rice prices soared by 17.9 percent from a year ago. Adding to the pain, the research arm said major utility Manila Electric Co. (Meralco) hiked electricity prices in September and global energy prices climbed to year-ago levels.

NFA ready to borrow to buy 500K mt palay from farmers

High-ranking agriculture officials disclosed that the NFA plans to be more aggressive in procuring unmilled rice from farmers this harvest season after its buying price was raised to as much as P23 per kilogram. “The NFA was given an instruction by the President [Marcos Jr. to procure] as much as possible this season. They are targeting at least 500,000 MT and they plan to borrow [money] if need be, if [its] current funds [are] not enough,” Agriculture Undersecretary for Rice Leocadio S. Sebastian said. He pointed out that the NFA budget rose to such a level due to some carryover funds from last year. Sen. Risa Hontiveros asked why the NFA would borrow money if it has carryover funds, to which Sebastian responded that it is just a contingency plan.

September GIR hits 7-month low on debt payments

The Philippines’s gross international reserves (GIR) fell below $99 billion in end-September on a monthly basis as the state paid off some of its foreign currency debt, according to the Bangko Sentral ng Pilipinas (BSP). In its latest report, the BSP said the country’s GIR at the end of September stood at $98.7 billion, almost a billion dollars lower than the $99.6 billion recorded reserves in end-August. Likewise, the country’s net international reserves, which measures the difference between its reserve assets and reserve liabilities, decreased by $800 million to $98.7 billion in September from $99.5 billion in August. Despite the decline in GIR, the country’s import cover remains above seven months. “The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

Diokno says lifting of rice price cap ‘just right’

In a chat with members of the media, Diokno said the decision was timely since there is already “sufficient supply” of rice. Diokno added that the measure seemed to have tempered hoarding and smuggling. But when asked if the rice price cap was effective in bringing down the cost of the staple grain, Diokno said it was difficult to determine as the price control measure only covered regular and well-milled rice. Meanwhile, Diokno said they are also reviewing the possible extension of Executive Order No. 10 which set the lower tariff for rice, corn and pork. The measure will expire in December.

MIAA sees passenger volume surging by 46%

From January to September this year, passenger volume at NAIA in both domestic and international flights has reached a total of 33.8 million, up 59 percent from the same period last year and 9 percent higher than the full year of 2022 with a total of 30.9 million passengers. “With this consistent growth, MIAA remains on track to achieve our year-end projections of 45 million passengers and 275,000 flights by the end of 2023. These projected flight estimates are poised to surpass the pre-pandemic levels of 2019, reflecting the resilience and recovery of the aviation industry in the Philippines,” Bryan Co, MIAA officer-in-charge, said in a statement.

USDA says PH consumer food service sales to hit up to $13B this year

In a report dated October 4, the USDA said recovery in the service industry, restaurants and hotels is expected to become more profitable in 2023, although it is slower than the 26.6 percent growth recorded in 2022 when sales hit $10.42 billion from the previous $8.23 billion. Even if not as frequent as during the pandemic, use of online delivery platforms, drive-thru and curbside pickups will continue to appeal to customers, but elevated food inflation and higher fuel costs contributed to higher restaurant menu prices, the report added. The report said full-service restaurant sales this year may go up by 25 percent to $2.28 billion from $1.82 billion. Last year, pizza stores contributed the most with a 24 percent sales increase, followed by Asian restaurants led by Max’s. Meanwhile, limited-service restaurants will see slower growth compared to full-service restaurants in 2023 at 20 percent or from 2022’s $5.72 billion to this year’s $6.86 billion.

ERC: PH power sector to grow 12x by 2040

The local energy sector is set to become a P7.6 trillion industry by 2040 from its current value of P630 billion, according to the Energy Regulatory Commission (ERC). Still, that investment is a “bit conservative” as the Department of Energy (DOE) is updating its figures, Monalisa Dimalanta, ERC chairperson, said at an energy forum last week. For the period, the Philippines has 21,027 circuit kilometers of transmission lines and 48,081 megavolt amperes substation capacity, alongside 449 wholesale electricity spot market participants, the regulatory body added. ERC also said the country so far has 131 distribution utilities and electric cooperatives with a total value of P160.4 billion as well as 123 retail electricity suppliers which can offer as much as 4,118.4 MW of available capacity.

Oil firms to cut pump prices on October 10

Big-time oil price decrease will be seen by motorists on Tuesday, after oil companies announced a rollback on diesel and gasoline prices. In separate advisories, oil companies Shell, Seaoil, Petrogazz and Cleanfuel announced a huge price decrease. Companies Cleanfuel, Petrogazz and SeaOil’s gasoline prices will be slashed by P3, while Shell will implement a decrease of P3. Diesel prices for all companies will be reduced by P2.45. 

ECOP: Legislated wage hike to hurt more MSMEs

The proposed P150 legislated wage hike may result in 30 percent additional cost for employers and will hit micro, small and medium enterprises the hardest, according to an official of the Employers Confederation of the Philippines (ECOP). “Please note that any upward adjustment of the wage automatically carries a 30 percent additional cost due to the increases in the payroll for SSS and PhilHealth contributions, the overtime pay and the retirement pay of workers,” ECOP chairman Edgardo Lacson said in a forum in Makati City. The ECOP chairman warned that a legislated P150 wage increase would inflict incalculable damage on the Philippine economy as he called for more sustainable alternatives to help workers cope with the rising cost of living.

DENR tells ‘EPR-obliged’ firms to invest in resiliency programs

Under the law, these so-called “obliged companies” shall be responsible for allocating resources to support the collection, recovery, transportation, processing, recycling, and disposal of plastic packaging wastes in environmentally sound ways. “I call on our partners to include in their programs the improvement of livelihood of waste pickers in their communities through the development of alternative opportunities for livelihood and the incorporation into the evolving formal solid waste management industry,” DENR Secretary Maria Antonia Yulo-Loyzaga said in a statement. The DENR chief highlighted that solutions for waste management must be coupled with approaches that enable systems to become adaptable to climate change thus consider investing in resilience. This includes integrating risks into business value cycles and investing in prevention and preparedness for hazards beyond the fence lines of business operations.

‘Big-time rollback’: Oil firms slash diesel, gas, kerosene pump prices

Gasoline and diesel prices will be slashed by P3.05 per liter and P3 per liter, respectively. The per liter price of kerosene, meanwhile, will be reduced by P2.45 per liter. The downward price adjustment takes effect for most oil firms at 6 a.m. of October 10. This was announced by Seaoil, Shell, Caltex, Unioil, Total, Petron, Phoenix, and PTT. Cleanfuel, meanwhile, will implement the price rollback at 12:01 a.m. Based on DOE’s (Department of Energy) monitoring, last week’s trading level went down amid rising concerns on high interest rates, among others, that led to a drop in global fuel demand. The agency reminded the public to manage their expectations that the trend for oil prices will continue to go down, saying the world oil prices are volatile.

Philippine traders brace for Israel conflict fallout

Philippine Chamber of Commerce and Industry (PCCI), the country’s biggest business organization, said that while the main concern was the safety of overseas Filipino workers (OFWs) and Filipino students in Israel, they were likewise concerned about how the conflict would affect the country’s exports. The PCCI official said he was optimistic that the violence would not escalate further to wreak havoc on global supply chains, hoping that the armed conflict would be contained and settled in a reasonable amount of time. Meanwhile, the Foreign Buyers Association of the Philippines (FOBAP) expressed concern about the impact of the war on the garment trade between the Philippines and Israel.

Philippines posts $4.13 billion trade deficit in August

The Philippines posted a trade deficit of $4.13 billion for August, a slightly narrower gap versus the previous month after an increase in exports, preliminary official data showed on Tuesday. Imports fell 13.1% to $10.83 billion from a year earlier, marking the seventh straight month of decline. Exports increased 4.2% to $6.7 billion, the biggest growth in nine months, the Philippine Statistics Authority said. With the country’s trade deficit unlikely to narrow much into year-end, the Philippine peso will only get a reprieve when services trade surplus and inward remittance pick up in October and December, HSBC said in an Oct. 9 report.

Team formed to assess impact of attacks on Israel

The Department of Trade and Industry (DTI) has formed a team that will look into the impact of the attacks in Israel on the Philippines’ trade and investment transactions with that country, according to Undersecretary Kim Lokin. “These are all preliminary so we cannot say categorically if there is an impact on trade in goods and services,” Lokin said. Data from the Ministry of Economy and Industry of Israel, that country’s bilateral trade with the Philippines has increased in recent years with total volume in 2022 reaching $534 million, a 70 percent increase from 2021.Israel investments in the Philippines  are in tourism, real-estate and agriculture projects, while Filipino corporations invest in Israeli start-ups and leading innovation.