ECCP at Work

ECCP@Work Featured Articles | July 15, 2022

July 15, 2022

ECCP Online

ECCP at Work

Trade gap widens in May as imports rise

THE PHILIPPINES’ trade deficit widened to $5.7 billion in May as imports rose by the fastest pace in five months, according to data from the Philippine Statistics Authority (PSA). Imports climbed by 31.4% annually to $11.989 billion in May, which reflected the higher prices of goods, including oil. This was faster than the upwardly revised 29.4% in April, but eased from the 55.8% growth in May 2021.

Pascual bares 10 strategic priorities of DTI

Trade Secretary Alfredo Pascual has unveiled the 10 strategic priorities of the Department of Trade and Industry (DTI), with focus on areas such as exports, regional development and micro, small and medium enterprises (MSMEs), among others. In a presentation during the cabinet meeting yesterday, Pascual said the agency’s first priority is to upgrade and upsize MSMEs through digitalization and digital transformation in collaboration with the Department of Information and Communications Technology (DICT). This can also be achieved through science, technology and innovation (STI) in collaboration with the Department of Science and Technology and the National Economic and Development Authority as well as the graduation of micro enterprises to small, small to medium, and medium to large.

Marcos, Cabinet Tackle Budget, BBB, Transport Projects Via Teleconference

Press Secretary Trixie Cruz-Angeles said among those who made presentations during the meeting at Malacañang were officials from the Departments of Budget and Management, Public Works and Highways, and Transportation. Recovering from COVID-19, President Marcos met for the second time with his Cabinet on Tuesday, July 12, via teleconference, which focused on next year’s national budget as well as on priority transportation projects and on plans to continue the Build, Build, Build program of the Duterte administration. Press Secretary Trixie Cruz-Angeles said among those who made presentations during the meeting at Malacañang were officials from the Departments of Budget and Management, Public Works and Highways, and Transportation.

Amending income tax system too early

Finance Secretary Benjamin Diokno said the current tax system, particularly on personal and corporate income tax, should be given a chance to be fully implemented, as it is “too early” at this point to amend it again. Diokno made this comment yesterday after he was asked by reporters if it would be a good time to further slash personal income tax (PIT) rates amid proposals in Congress. “We just amended both PIT and CIT (corporate income tax). Let’s give the new tax system a chance to operate. Too early to tinker with it,” Diokno said. In Congress, Rep. France Castro of the Alliance of Concerned Teachers party-list recently filed a house bill entitled Tax Reform Act for the Masses and the Middle Class. “Rising prices and untamed inflation rates in the past few years all the more justify the need for a tax reform package that would reduce the income tax rates of the overburdened Filipino working-class families,” Castro said.

DOT says more airports, seaports, routes to ease travel

To allow tourists a hassle-free experience in exploring the country’s tourist spots, the Department of Tourism (DOT) will improve tourism-related infrastructure nationwide. Tourism Secretary Christina Garcia-Frasco, in one of her listening tours, told DOT regional heads that she is assessing the possibility of developing more airports and seaports as well as additional routes to create more convenient connections for domestic and international visitors. The heads from the Western, Central and Eastern Visayas; Zamboanga; Northern Mindanao; Davao; Soccsksargen and Caraga regions raised the issues on infrastructure and transportation as well as the availability and utilization of funds related to their respective tourism programs.

Ports agency studying ways to implement DoTr directive to cut shipping, travel costs

THE Philippine Ports Authority (PPA) is looking into reducing port costs by reviewing statutory and regulatory expenses paid by users, Officer-in-Charge General Manager Manuel A. Boholano said, noting that the agency is under orders to effect such reductions from the Department of Transportation (DoTr). “Our first order of business is to comply with the directive of (Transportation Secretary Jaime J. Bautista) to lower travel and shipping costs,” Mr. Boholano said.  Port users have been complaining about increasing shipping costs and the impact of higher fuel oil prices. Shipping companies have raised their freight charges by an average of 25% starting March, logistics companies said. “Fuel prices continued to increase with the Ukraine conflict and this pushed the group’s bunkering cost to P486 million, a 43% increase year on year. Consequently, cost of sales and services escalated to P1.22 billion,” Chelsea Logistics and Infrastructure Holdings Corp. said in its first quarter report.

Toni Yulo-Loyzaga named as new DENR Secretary

President Ferdinand Marcos Jr. has chosen Toni Yulo-Loyzaga as the next Secretary of the Department of Environment and Natural Resources, the Palace said on Tuesday. Press Secretary Trixie Cruz-Angeles said Loyzaga's nomination as the next DENR chief "will still be subject to the fulfillment of the required documents." Loyzaga was the executive director of the Manila Observatory, and the chairperson of its International Advisory Board. She also served as the technical adviser of the Philippine Disaster Resilience Foundation.

Vergeire named as DOH OIC

The Department of Health (DOH) confirmed on Thursday, July 14, that Undersecretary Maria Rosario Vergeire has been designated by Malacañang as the officer-in-charge (OIC) of the agency. In a statement, the state health agency expressed its gratitude to President Ferdinand “Bongbong” Marcos, Jr. for the designation of Vergeire as OIC. Vergeire is the current Undersecretary for the Public Health Services Team and Office of the Chief of Staff, the DOH said. “DOH appreciates the President’s confidence in one of its career executives, including the immense responsibility such trust brings,” the agency said. “Each and every member of the DOH family shall work together to continue the gains instituted by previous administrations,” it added.

Lotilla to return to DoE under Marcos

President Ferdinand R. Marcos, Jr. named former Energy Secretary Raphael P.M. Lotilla to lead the Department of Energy (DoE), according to the Presidential Palace. Mr. Lotilla served as Energy chief from 2005 to 2007 under the administration of former President Gloria Macapagal-Arroyo, Press Secretary Rose Beatrix Laviña Cruz-Angeles said in a statement on Monday. Prior to that, he was president of the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) and deputy director-general at the National Economic and Development Authority (NEDA). In a separate statement, Ms. Cruz-Angeles clarified that the designation of Mr. Lotilla is “right now a nomination” pending review of his employment status.

Senate panel to tackle education crisis

The Senate committee on basic education is set to hold an inquiry on the education crisis besetting the country when the 19th Congress opens on July 25, and at the same time review the K-12 program. The inquiry was prompted by a resolution filed by Sen. Sherwin Gatchalian, who is expected to continue to chair the committee in the incoming Congress, with the aim of enacting amendments to Republic Act 10533 otherwise known as the “Enhanced Basic Education Act of 2013” or the K-12 Law. “The implementation of an education reform as critical as the K-12 Law must be sustained to fully attain its benefits but not without addressing these pressing issues that could compromise the effectiveness of the program and pose as stumbling blocks in providing quality education and achieving global competitiveness,” Gatchalian said in his resolution.

Debt-to-GDP ratio still manageable

Amid concerns over the Philippines’ ballooning debt, Finance Secretary Benjamin E. Diokno said the debt-to-gross domestic product (GDP) ratio is “not the sole criterion that matters” in assessing the economy’s health. Mr. Diokno told reporters that the country’s debt-to-GDP ratio, which stood at 63.5% as of end-March, is still manageable. He made the statement after sharing Bloomberg’s Sovereign Debt Vulnerability Ranking, which included countries with debt-to-GDP ratios lower than the Philippines such as Nigeria (37.4%), Turkey (43.7%) and Mexico (58.4%). The Philippines was not on the list of 25 countries with the highest default risk this year.

DTI’s Pacual calls RCEP a Marcos priority

Participation in the Regional Comprehensive Economic Partnership (RCEP) is a government priority, Trade Secretary Alfredo E. Pascual said on Thursday. “RCEP is a priority of the administration. We have clarified this in one of our Cabinet meetings,” Mr. Pascual said during the general membership meeting of the Management Association of the Philippines (MAP) in Taguig City.  RCEP, a trade deal which started coming into force on Jan. 1, involves Australia, China, Japan, South Korea, New Zealand and the 10 members of the Association of Southeast Asian Nations (ASEAN). It is billed as the world’s largest trade agreement as it represents about 30% of global gross domestic product.

Bill proposes 30-year timeline for infrastructure projects

A bill seeking to create a 30-year planning horizon for infrastructure and establishing a National Infrastructure Program has been filed at the Senate, Senator Mark A. Villar said in a statement. “It is important that we advance the Build, Build, Build program in the Senate, because having a long-term plan for our infrastructure program can grow the economy… It will (make it easier to improve) roads, bridges, and other structures, (generating) thousands of jobs,” he added. Build, Build, Build was the former government’s P8.4-trillion flagship program designed to address the Philippines’ lack of competitiveness due to gaps in its infrastructure.

Investors optimistic about Bongbong Marcos presidency, but want policy 'specifics' during SONA

Local and foreign investors are optimistic about the new administration of President Ferdinand "Bongbong" Marcos Jr. and his cabinet secretaries, but said they look forward to details that would put his policy pronouncements into action. The Philippine Chamber of Commerce and Industry (PCCI) said the economy may grow anywhere between 6-6.5% from July to December, and may even be pushed to 8% for the semester if face-to-face classes are fully restored. Business leaders said it will boost consumer spending and investments further, stimulating faster growth.

BSP hikes borrowing rates by three-quarters of a point to 3.25% to arrest inflation

The Bangko Sentral ng Pilipinas has raised interest rates by three quarters of a percentage point, bringing its policy rate to 3.25% effective July 14 as it cracks down on surging inflation. BSP Governor Felipe Medalla announced the off-cycle hike on Thursday morning, also revealing the overnight deposit and lending rates have been increased to 2.75% and 3.75% respectively. “In raising the policy interest rate anew, the Monetary Board recognized that a significant further tightening of monetary policy was warranted by signs of sustained and broadening price pressures amid the ongoing normalization of monetary policy settings,” said Medalla. Several major central banks, including the United States Federal Reserve, have been aggressively hiking rates to arrest rising inflation in their countries.

Monetary Board raises policy interest rate to 3.25%

The Monetary Board (MB) on Thursday raised the key policy rate of the Bangko Sentral ng Pilipinas by 75 basis points to 3.25 percent effective immediately. The interest rate on the BSP’s overnight borrowings from banks was changed during a regular meeting of the MB. The next policy meeting of the MB, when such decisions are usually made, is set for August 18. Also, the MB raised the interest rates on the BSP’s overnight deposit and lending facilities to 2.75 percent and 3.75 percent, respectively. “In raising the policy interest rate anew, the Monetary Board recognized that a significant further tightening of monetary policy was warranted by signs of sustained and broadening price pressures amid the ongoing normalization of monetary policy settings,” said BSP Governor Felipe Medalla.

Asian markets fluctuate as oil, euro struggle on recession fears

Asian markets fought Wednesday to recover some of the losses suffered at the start of the week as recession alarms continue to ring loud and oil struggled to erase the previous day’s sharp drop owing to growing demand fears. The euro clawed its way back slightly after hitting parity with the dollar for the first time in two decades, though it remains under pressure from growing concerns about an energy crisis across the eurozone and the European Central Bank’s slower pace of monetary tightening. Traders are also awaiting the release of a series of key indicators this week, including the all-important consumer price index later Wednesday, with expectations for another increase to a fresh 41-year high. Another big spike in prices will reinforce the Federal Reserve’s determination to lift interest rates 75 basis points for a second successive month in July, adding to concerns that officials could go too far and tip the economy into recession.

Exporters scramble to cut costs to sustain operations

Export-oriented manufacturers have been ramping up technology investments and improving operational efficiency to cut down costs amid high fuel expenses and sustain operations to meet rising demand, according to an official of the Philippine Chamber of Commerce and Industry (PCCI). Ferdinand Ferrer, vice president for industry of PCCI, said on Tuesday in an event in Pasay that the “impact of high fuel charges has significantly increased the cost of manufacturing here in the Philippines.” High fuel prices, which have exacerbated inflation, stemmed from the disruptions brought about by Russia’s invasion of Ukraine.

Shares trade sideways

The benchmark Philippine Stock Exchange Index (PSEi) continued its sideways movement on Tuesday as investors brushed aside strong foreign investment inflows to focus on US inflation data to be released later today. The PSEi sank 0.61 percent, or 38.70 points, to 6,349.94 while the broader All Shares index shed 0.35 percent, or 11.87 points, to 3,409.91.Trading volume saw a modest improvement, with 955.85 million shares valued at P4.2 billion changing hands. Foreigners also provided relief on Tuesday as they made net purchases of P323.2 million, PSE data showed. Meanwhile, PSE subsectors ended mixed with the mining and oil, financial and industrial sectors advancing while holding firms, services and property pulled back.

8% growth attainable

The Philippine Chamber of Commerce and Industry (PCCI) sees the economy growing by as fast as 8 percent this year following a 6 to 6.5 percent expected growth in the second half of 2022. Ferdinand Ferrer, PCCI chair for industry made this robust projection on assumption that face to face classes will resume 100 percent. Ferrer, however, said PCCI remains concerned about the peso depreciation, rising fuel costs, inflation and the Russia-Ukraine crisis. Ferrer said manufacturers, especially exporters, are adjusting to the supply chain and logistical disruptions  as well as high transportation costs while saving on costs internally by sourcing locally  to meet orders from abroad. “It’s very taxing, very challenging for exporters… but the demand is there ,” Ferrer said, adding “the Philippines  has not had a full-blown localization program.”

DA urged to act quickly on corn import requests

The Philippine Association of Feed Millers Inc. (PAFMI)  has asked the  Department of Agriculture (DA) led by President Ferdinand Marcos Jr. to act urgently on their request on corn importation to help stabilize prices of meat. The group in a statement asked DA to prioritize end-users like themselves  in the allocation of imported feed corn  and  to finalize  plans to increase to 2 million metric tons (MMT) corn to be imported under the minimum access volume   from the current 217,000 MT. The group warned a delay in importation would push prices of chicken further. They said  giving them direct access to the imported raw material will allow them to immediately produce feeds to meet demand.

China EV makers urged to invest in ‘flourishing’ Philippine market

The Department of Trade and Industry (DTI) offices in China, together with partners from the private sector, are encouraging Chinese electric vehicle (EV) makers to invest in the Philippines DTI Foreign Trade Service Corps (FTSC) Assistant Secretary Glenn Peñaranda, in his opening address to the attendees of the 2022 International Summit on Lithium Battery Technology and Application for Light Electric Vehicles (BLEV2022), said, “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 (RA) No. 11697 otherwise known as the Electric Vehicle Industry Development Act (EVIDA) in May 2022, which provides for a national policy framework to develop the electric vehicle industry in the Philippines, particularly for the shift to EVs and for further attracting investments and creating high-value jobs.”

Oil prices tick down as inflation woes take center stage

Oil prices ticked down on Thursday as investors doubled down on the possibility of a rate hike by the U.S. Federal Reserve that would stem inflation and curb oil demand. Brent crude futures for September fell 20 cents, or 0.2%, to $99.37 a barrel by 00:10 GMT after gaining 8 cents on Wednesday. U.S. West Texas Intermediate crude for August delivery was at $95.93 a barrel, down 37 cents, or 0.4%, after rising 46 cents in the previous session. The Federal Reserve is seen ramping up its battle with 40-year high inflation with a supersized 100 basis points rate hike this month after a grim inflation report showed price pressures accelerating.

PH rice imports seen topping 3M metric tons

The Philippines may purchase more rice from abroad over the next two years with the United States Department of Agriculture expecting the total import volume to breach the 3 million metric ton (MT) mark. In a report, the foreign agency said the country’s rice importation volume for 2022 and 2023 will reach 3.1 million MT from its previous projection of 3 million MT. It also said the country will receive “large monthly imports from Vietnam” this year and will see “continued strong demand for rice from Vietnam” in the next. The country’s rice imports as of July 7 touched 1.9 million MT, with Vietnam accounting for more than half or 1.5 million MT of the total volume, data from the Bureau of Plant Industry showed.

PH teams up with Thailand, Vietnam for GSP renewal bid

The Philippines is working with fellow Asean countries Thailand and Vietnam in lobbying with US Congress for the renewal of the Generalized System of Preferences (GSP). Philippine ambassador to the US Jose Manuel Romualdez told the Kapihan sa Manila Bay yesterday while the country has been assured by the US Department of Commerce of the continuation of GSP, it is working closely with US Congress to have a law renewing the scheme passed. The Philippines is the fifth largest beneficiary of the US GSP which allowed about $1.6 billion worth of exports enter duty-free in 2020, the last year when the GSP was in effect. The GSP program expired on Dec. 31, 2020 despite legislative efforts to renew the program. Several bills have been proposed in the US 117th Congress to reauthorize the scheme. Philippine exports to US under GSP in 2020 represented 10 percent of total GSP imports of $16 billion.

Power spot prices elevated

The Independent Electricity Market Operator of the Philippines (IEMOP) said  average price of power prices in the wholesale electricity spot market (WESM) may remain elevated this month as secondary price caps continue to be triggered. The secondary price cap is being implemented to protect consumers from sustained high power rates with WESM’s inherent volatile market movements and lowers the clearing price of electricity to P6.245 per kilowatt hour (kWh) when average prices breach the threshold of P9 per kWh over a 72-hour period. IEMOP said in an online briefing yesterday the imposition of secondary price caps for the first few days of July is still “frequent” with the said mechanism triggered 35 percent of the time in the June billing month.

PHL vehicle sales accelerate in June

Vehicle sales in the Philippines accelerated by 27% in June, driven by increased demand for commercial vehicles. A joint report from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association, Inc. (TMA) showed total vehicle sales reached 28,601 units in June, up by 26.8% from 22,550 units sold in the same month last year. Month on month, total vehicle sales increased by 8.5% from May’s 26,370 units.

BSP rate hike boosts peso

The 75-basis-point (bp) increase to 3.25 percent of the Bangko Sentral ng Pilipinas’ (BSP) policy rate is expected to help quell or at least calm down the volatility of Philippine peso’s value against the US dollar, although the initial impact was subdued. The peso opened spot trading on Thursday at 56.30:$1 before the Monetary Board announced their off-cycle rate hike. For the second time this week, the local currency touched its all-time weakest position at 56.45:$1, before closing at 56.15 to gain from the previous trading day’s close of 56.26 against the greenback. On Thursday morning, the peso’s intraday strongest was 56.05. In the afternoon, this firmed up to 55.98:$1.

Global stocks mostly fall on latest troubling inflation figures

Stock markets mostly retreated Thursday as fresh evidence of runaway global inflation ramped up expectations of more aggressive interest rate hikes by central banks, while disappointing earnings revived recession fears. A day after data showing the biggest jump in US consumer prices in more than four decades, the Labor Department reported that US wholesale prices rose 1.1 percent, topping expectations, on a 10 percent surge in energy prices, more than double the increase in May. Market watchers are now wondering whether the Federal Reserve could hike US borrowing costs by a full percentage point at a scheduled policy meeting this month. Meanwhile, results from JPMorgan Chase lagged estimates as the banking giant reported a 28 percent drop in quarterly earnings and set aside additional funds in case of bad loans

Government urged to prioritize development of new power plants

The government must prioritize the development of new power generation projects to address the country’s inadequate power supply, according to an advocacy group. In a statement, Chie Umandap, chairman of Advocates and Keepers Organization of Overseas Filipino Workers (AKO-OFW), said inadequate supply is the root cause of high generation costs. Umandap said these costs are a result of lack of reliable generating capacity, as power plants, especially the aging ones, are prone to unscheduled shutdowns due to varying reasons.

Bank of Commerce ends maiden bond offer early

Institutional and retail investors gobbled up the peso bonds offered by Bank of Commerce, prompting the listed bank to end the offer period of its first foray into the domestic debt market a day after it started. Due to overwhelming demand, the banking arm of diversified conglomerate San Miguel Corp. (SMC) shortened the offer period to July 12 instead of the original schedule of July 11 to 22. The bank was eyeing at least P3 billion with an oversubscription option from the fund raising activity that is part of its P20-billion bond program. The Series A bonds, with a tenor of two years and a fixed rate of 5.0263 percent per annum, will be listed on the Philippine Dealing and Exchange Corp. (PDEx) on July 29. Proceeds of the fund raising activity would be used to manage the bank’s net interest margin by matching long-term assets with long-term funding to reduce interest rate risk, to diversify funding sources, and for general corporate purposes, the bank said.

Diokno: Economy can absorb sudden interest rate increase

The Philippine economy is in good standing, enough to weather the massive surprise rate hike by the central bank and still grow within the target this year even amid inflationary concerns, according to Finance Secretary Benjamin Diokno. Diokno said the economy is robust enough to absorb the 75-basis-point increase in policy rate by the Bangko Sentral ng Pilipinas (BSP) as part of measures to address elevated inflation and the peso’s continued depreciation. He noted that the expansion of economic activities in the country remained favorable. The gross domestic product (GDP) grew stronger than expected in the first quarter and a positive second quarter is already in the picture.

Biz groups push 24 bills

The country’s largest business groups are poised to submit their legislative agenda to incoming Congress, listing 24 measures that need urgent action from 10 committees. These are on agriculture and food; civil service, government reorganization and professional regulation; enterprise and privatization/public services; environment, natural resources and climate change/land use; health; labor, employment and human resources development; science and technology; trade, commerce and entrepreneurship; transportation and; ways and means. In a draft letter to be sent to Congress, leaders of the Philippine Chamber of Commerce and Industry (PCCI), Philippine Exporters Confederation Inc. (Philexport) and the Employers Confederation of the Philippines (ECOP) urged Congress to consider the 23 bills to be part of the 19th Congress priority agenda saying these measures, if expeditiously enacted, “will significantly help in our common objectives of economic recovery, progress and sustainability.”

‘Stop harassing MSMEs’

Following a call from the Management Association of the Philippines (MAP) to “substantially deregulate the micro, small and medium enterprises (MSMEs),” Secretary Alfredo Pascual of the Department of Trade and Industry (DTI said digitalization  could help lead to the possibility of waiving some of the reportorial requirements to small companies. In yesterday’s turnover rites of the MAP presidency from Pascual to Rogelio Singson,  the latter proposed to the former for the DTI   and other concerned government agencies both national and local to substantially deregulate MSMEs by doing away with some regulations that serve to harass these entities.

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