ECCP at Work

ECCP@Work Featured Articles | July 12, 2022

July 12, 2022

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ECCP at Work

FDI up 12.1% to $3.4 B in April

The Philippines registered foreign direct investment (FDI) net inflows of $3.43 billion as of end-April, 12.1 percent higher than the same period last year of $3.06 billion, Bangko Sentral ng Pilipinas (BSP) data showed. BSP, which registers FDIs as equity capital, reinvestment of earnings, and borrowings, reported on Monday, July 11, that for the month of April only, net inflows increased by 48.3 percent year-on-year to $989 million versus $667 million in 2021.

Marcos Jr. admin aims for robust growth in next 6 yrs

While high inflation will slightly dampen growth this year, expectations of robust domestic demand outweighing external risks will bolster the Philippine economy in the next six years, President Marcos’ economic managers said. Finance Secretary Benjamin Diokno on Friday said more aggressive interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) to rein in elevated consumer prices would slow economic growth in the second half of 2022. Even then, the Development Budget Coordination Committee (DBCC) had affirmed the Marcos administration’s 6.5- to 7.5-percent growth goal for this year, below the downscaled 7- to 8-percent target left behind by the Duterte administration.

Green recovery to bring in investments into Southeast Asia

Pursuing a green recovery from the pandemic in Southeast Asian countries can generate $172 billion worth of investment opportunities annually and create over 30 million jobs in the region by 2030, the Asian Development Bank (ADB) said. In a new report titled “Implementing a Green Recovery in Southeast Asia,” which has the Philippines, Cambodia, Indonesia, Myanmar and Thailand as its focus countries, the multilateral institution said a green recovery approach from the pandemic is crucial for the region to achieve an economically and environmentally resilient future. “While several countries in the region have begun to support a green recovery, more needs to be done,” ADB director general for Southeast Asia Ramesh Subramaniam said during a webinar organized by ADB and ISEAS – Yusof Ishak Institute for the report yesterday.

Marcos admin lists priority PPP projects

The Department of Public Works and Highways (DPWH) recently bared projects to be prioritized under public-private partnerships (PPP), including expressways in Cebu and Nueva Ecija, and a major roadway leading to Benguet province. The agency published an advisory in newspapers on Sunday, identifying the 10 PPP projects for implementation. According to DPWH's website, PPP is a "government service or private business venture which is funded, constructed and operated through a partnership between the government and the private sector."

DTI unveils report of legacy under Lopez

The Department of Trade and Industry (DTI) revealed its legacy report for the year of 2016-2022 as the agency transfers administrations. Former DTI secretary Ramon Lopez described their journey as harrowing one as It highlighted all the agency's achievements as it grew tremendously in the first three years, and how it became resilient during the pandemic: "In 2016, we were instructed by President Rodrigo Roa Duterte to increase the involvement of the Filipino MSMEs (micro, small, medium scale enterprises) in our economy's growth. He explained. "We at DTI took this to heart by focusing on three pillars: Trabaho, Negosyo, Konsyumer" (Jobs, Businesses, Consumer).

Marcos’ planned new taxes may have limited impact

Finance Secretary Benjamin E. Diokno last week said they are considering the imposition of new taxes as the Marcos administration looks for new sources of revenues to lower the fiscal deficit and repay the P3.2-trillion additional debt incurred during the COVID-19 pandemic. “New taxes on digital transactions, single-use plastics, carbon and online services will likely help deliver fresh revenue streams to government coffers. Estimates have been floated on projected collections although it may be difficult to say whether this will be enough to completely offset the current debt and deficit levels,” said ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa.

DTI pitches for e-vehicle investments

The Department of Trade and Industry (DTI), together with partners from the private sector, recently encouraged Chinese electric vehicle (EV) companies to invest in the Philippines in the light of the recent passage of the Electric Vehicle Industry Development Act (Evida), which paves the way for further government support for the development of this strategic investment priority sector. "The Philippine market is growing and will grow even bigger as the adaptation of EVs is expected to accelerate with the passage of Republic Act 11697, otherwise known as the "Evida," in May 2022, which provides for a national policy framework to develop the electric vehicle industry in the Philippines," DTI Foreign Trade Service Corps Assistant Secretary Glenn Peñaranda said in his opening address to the attendees of the 2022 International Summit on Lithium Battery Technology and Application for Light Electric Vehicles.

DPWH identifies more priority PPP projects

The Department of Public Works and Highways (DPWH) has identified more priority public-private partnership (PPP) projects for implementation, including expressways in Cebu and Central Luzon. In an advisory published in a newspaper over the weekend, the DPWH said it added 10 more to its list of priority PPP projects proposed for implementation. The list includes the P12.6-billion Central Luzon Link Expressway (CLLEX) Phase 11, which will link Cabanatuan City to San Jose City in Nueva Ecija and the P56.9-billion Metro Cebu Expressway. A PPP project is a service or business venture that is funded, constructed, and operated through a partnership between the government and the private sector. This financing mode is preferred if the government has limited resources to invest in important infrastructure projects.

Gov’t gross borrowings down 48%

The national government’s gross borrowings in the first five months of the year declined by 47.64 percent to P924.43 billion, data released by the Bureau of the Treasury (BTr) showed. In May alone, the government recorded a net redemption of P258.97 billion, versus the P112.19 billion in gross borrowings a year ago.  Gross external borrowings rose to P11.71 billion from the P7.79 billion posted in the same period in 2021.

Re-filed digital economy tax bill promises PHP226.5B

ALBAY Rep. Joey Salceda has re-filed the proposed Digital Economy VAT Law that, he said, could yield P154 billion in incremental revenues over five years. Together with Salceda’s proposed digital-economy taxation service, which could yield another P72.5 billion over five years, reforms in tax administration could yield up to P226.5 billion over the medium term. House Bill (HB) 372 seeks to close ambiguities in the value-added tax system that, Salceda said, have allowed some digital services and goods sold over the digital space to remain outside the coverage of VAT. The bill was approved on third and final reading in the lower house during the 18th Congress. According to Salceda, the measure seeks to level the playing field between traditional and digital businesses by clarifying the imposition of VAT on digital service providers (DSPs) like Apple Music, Spotify and Deezer.

DOE starts work on roadmap mandating 5% EV in fleet

The Department of Energy (DOE)  has started preliminary work on the Comprehensive Roadmap for the Electric Vehicle (EV) Industry (CREVI) which will provide the timeframe for the 5 percent mandatory share of EVs in corporate and government fleets in key sectors. CREVI will be presented for public consultations once finished. The 5 percent mandatory share of EVs on vehicle fleet aims to generate demand and develop the industry and is seen to provide the biggest motivation for the EV sector. Patrick Aquino, director of the DOE’s Energy Utilization Management Bureau, recently presented the entities which will be required to ensure 5 percent of their fleets are comprised of EVs.

Senators say they are open to amending Rice Tariffication Law

SENATORS have signaled their intent to amend the Rice Tariffication Law to address farmer complaints that the law has exposed them to unfair competition from imported rice, and to address more of the country’s food needs from domestic production. The law “should be reviewed with a view to amending and correcting some of the unintended effects on our rice farmers,” Senator Francis Joseph G. Escudero told BusinessWorld in a Viber message. “The only way to boost production and lower cost is for both the government and private sector to spend and invest more on agriculture,” he added. The Federation of Free Farmers (FFF) has said that farmer incomes have dropped significantly since the law passed in 2019 due to “excessive” rice imports alongside the rising cost of production.

Neda chief urges make up classes, training to regain school years lost to COVID-19

The country’s chief economist has urged the Department of Education (DepEd) to facilitate make-up classes for younger school children as well as training for college students to make up for the two years of subpar learning due to the prolonged COVID-19 pandemic. Socioeconomic Planning Secretary Arsenio Balisacan last week said “a learning catch-up plan is crucial [to] help secure better opportunities for future generations and ensure that our demographic dividend will not be wasted.”

Businesses push for human capital investments

Three business groups are recommending the use of investments in human capital as a strategy for economic recovery and inclusive growth in the country. In a statement, business group Philippine Business for Education (PBEd), Philippine Business for Social Progress (PBSP), and the Makati Business Club (MBC) said issues on education and nutrition, could affect the future workforce. They cited data from the World Bank and United Nations International Children’s Emergency Fund (UNICEF), which showed that one out of three children below five years old are stunted, and nine out of 10 10-year-olds cannot read simple text.

Govt bags P118B in taxes, duties from marking fuel

THE Bureau of Customs (BOC) collected P118 billion in duties and taxes through its fuel marking program in the first half of the year. In a statement over the weekend, the government’s second biggest collection agency said it marked nine billion liters of fuel from January to June this year under its fuel-marking program, which was aimed to raise revenues while curbing oil smuggling. Since the program was implemented from September 2019 to June this year under the Duterte administration, 43.65 billion liters of fuel have been marked equivalent to P432.3 billion in duties and taxes. Diesel cornered the biggest chunk of total volume marked at 60.59 percent, followed by gasoline (38.9 percent) and kerosene (0.51 percent).

Amended Public Service Act could boost FTA moves for US, PHL

The amendments to the eight-decade-old Public Service Act (PSA) could boost efforts of Manila and Washington to forge a free trade agreement (FTA), according to a nongovernment organization. “With the new amendment to the Public Service Act, there is a significant opening here where the Philippine economy is far more open on Telecoms and Digital trade than it is on most other issues which has further long been the barrier to a US-Philippine [free trade agreement] FTA,” said Gregory B. Poling, Senior Fellow and Director, Southeast Asia Program and Asia Maritime Transparency Initiative at the Center for Strategic and International Studies (CSIS). He spoke at Makati Business Club (MBC)’s Virtual Economic Briefing on the US-Indo Pacific Economic Framework (IPEF) recently.

Oil firms roll back prices

Oil players cut their prices for the second consecutive week mainly driven by investors’ fears on the possibility of a global recession which will effectively decrease demand for fuel products. According to the Department of Energy (DOE), as of July 5, latest average Manila price per liter of gasoline (RON95) stood at P86.30, diesel at P87.70 and kerosene at P90.52. The DOE said as of July 6, year-to-date adjustments on petroleum products stood at a total net increase of P30 per liter for gasoline, P42.90 per liter for diesel and P36.35 per liter for kerosene. Reuters reported as of Friday last week, Brent crude futures settled at $107.02 a barrel while US West Texas Intermediate crude ended at $104.79 per barrel. The report also quoted several banks’ warning of a possible global recession to be experienced soon.

Cost of imported sugar likely to rise–lawmaker

The chairman of the House Committee on Ways and Means has warned that elevated sugar prices could still rise by around 60 percent. “World sugar prices went as high as 29.3 cents per pound during the recovery period post-GFC [global financial crisis]. “World prices are currently at 18.5 (cents per pound). So, you still have an upside potential of around 58 percent to hit those levels.” Salceda said Congress will try to meet with sugar stakeholders as soon as session resumes and committees are organized. “The House leadership will probably deputize a team of members of Congress to look into solutions, and we will work very closely with the President’s economic managers,” he said.

BSP has room to raise rates — IMF

The Bangko Sentral ng Pilipinas (BSP) has room to raise rates without derailing economic recovery, the International Monetary Fund (IMF) said. “Considering the strength of GDP (gross domestic product) growth — as observed in the first quarter of 2022 — raising interest rates to contain inflationary pressures and thwart second-round effects on domestic prices is warranted,” IMF Representative to the Philippines Ragnar Gudmundsson said in an e-mail interview. “With a policy rate at 2.5% and yearly inflation projected to run at about 5%, there is room to raise interest rates without undermining credit growth and the ongoing economic recovery,” he added.

DepEd: New school year to start August 22

The academic year 2022-2023 is set to start on August 22 for public schools, with a deadline for the full rollout of face-to-face classes in both public and private schools in November, the Department of Education (DepEd) announced. In its Facebook page on Tuesday, the agency posted Department Order No.34 signed by Vice President and DepEd Sec. Sara Duterte which outlines the school calendar and activities for the new school year.

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