FDI Posts US$460 Million Net Inflows in July 2022; YTD Level Reaches US$5.1 Billion

Foreign direct investment (FDI) posted US$460 million net inflows in July 2022, bringing the cumulative net inflows to US$5.1 billion for the first seven months of 2022. These levels, however, were lower than the comparable net inflows posted a year-ago (US$1.3 billion and US$5.8 billion, respectively). All major FDI components yielded lower net inflows in January-July 2022 as foreign investors remained cautious amid continued adverse global conditions. In July 2022, FDI net inflows decreased largely due to the lower non-residents’ net investments in debt instruments of their local affiliates. This decrease more than offset the growth in their net investments in equity capital. Equity capital infusions during the month originated mainly from Singapore, Japan, and the United States. These were invested largely in the 1) construction, 2) manufacturing, and 3) real estate industries.

Congress vows to approve Marcos’ legislative priorities

Leaders of Congress agreed to approve 30 bills identified as priorities of the Marcos administration, including the amendments to the Build-Operate-Transfer (BOT) Law and the National Government rightsizing program.  The Legislative-Executive Development Advisory Council (LEDAC) listed 32 bills under the common legislative agenda, which includes 20 priority measures earlier mentioned by Mr. Marcos during his State of the Nation Address in July. In a statement, Senate President Juan Miguel F. Zubiri said the Senate and House agreed to approve six of the 30 measures by year end. In addition, the House and Senate identified their priority measures, which included the establishment of Regional Specialty Hospitals, the Magna Carta of Filipino Seafarers, establishing the Negros Island Region, New Philippine Passport Act, Waste-to-Energy Bill, the Apprenticeship Act, a bill providing free legal assistance for military and uniformed personnel, Magna Carta of Barangay Health Workers, creation of the Leyte Ecological Industrial Zone, and creation of the Eastern Visayas Development Authority.

Renewable energy investments seen to rise

Sherwin Gatchalian, vice chairman of the Senate committee on energy, explained that the increase in investments depends on amending the implementing rules and regulations of Republic Act 9513, or the Renewable Energy Act of 2008. He added that wider adoption of renewable energy in the country could progressively bring down power rates for the benefit of consumers and create more jobs within the communities concerned. The removal of foreign ownership limitation on renewable energy facilities augurs well with a recent decision of the Department of Energy to increase the percentage of renewable energy utilization for on-grid areas from one percent to 2.52 percent and in line with the DOE’s vision of powering up communities with clean and sustainable energy systems. 

Job quality likely to worsen amid soaring inflation — economists

In July,  the number of underemployed Filipinos reached 7.031 million—up by 488,000 from 6.543 million. According to  UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion,  the rising inflation slashed broad purchasing power. It raised the urgency for people to look for work to augment family income—even with the availability of jobs, the dissatisfaction among workers can be traced to higher wage demands as inflation surged. Meanwhile, the BSP raised interest rates by a total of 225 bps since May, bringing the benchmark policy rate to 4.25%; and increased its inflation forecasts to 5.6% from 5.4% for this year and to 4.1%, from 4% previously, for next year. It was done as a means to to anchor inflation expectations and prevent price pressures from becoming further entrenched. 

‘Infrastructure key to tourism revival, economic recovery

According to Camarines Sur Rep. LRay Villafuerte, infrastructure is the key to tourism development, citing the popular beaches in Thailand, Malaysia, Vietnam, and Indonesia that are more frequented by tourists “because they have better infrastructure going to these places. Hence the Marcos administration’s Build Better More (BBM) policy is considered to be very crucial in the country’s economic recovery, particularly in boosting local tourism. Meanwhile, the tourism chief, Christina Frasco, emphasized that in the absence of an infrastructure development budget, she has pushed for establishing a tourism infrastructure development fund so that the DOT can build facilities that other agencies cannot put up.

Term of coterminous officials under Office of the President extended until end of 2022

Executive Secretary Lucas P. Bersamin has extended the term of all the coterminous officials and personnel in the Office of the President (OP) until the end of the year. Bersamin issued Memorandum Order No. 7, which will allow those with “coterminous appointments” to continue performing their duties and functions until 31 Dec. 2022 unless their appointments are sooner revoked, resignations accepted, replacements appointed or reappointments issued. OP Human Resource Management Director Andrea Maila Ordanez lauded the new issuance since it addressed the concerns of coterminous personnel and officials, who were unsure of their employment status after the resignation of former Executive Secretary Victor D. Rodriguez last month.

Learn from lessons in Duterte infra program, experts urge Marcos

Experts from the academe and private sector have exhorted the administration of President Ferdinand R. Marcos Jr. to learn from the lessons of the Duterte administration’s Build, Build, Build program and ensure a more consumer-friendly and transparent infrastructure program. In his presentation, University of the Philippines-Virata School of Business Professor Emeritus Dr. Epictetus Patalinghug listed the challenges the previous administration faced that led to the inefficient implementation of the Duterte administration’s Build, Build, Build (BBB) program, which would be the weak strategic guidance, poor project appraisal, and poor project selection and budgeting. Patalinghug noted that the institutional problem of departments lacking absorptive capacity could not be solved within the next six years of the Marcos administration and recommended prioritizing consumer-friendly projects and streamlining the approval process of major infrastructure projects.

PH dismantling barriers to renewable energy boom

The government is banking on the private sector to harness cleaner sources of energy, and ultimately reduce reliance on fossil fuels. To get the ball rolling, it started overhauling the rules and policies governing renewable energy. Just recently, the Department of Energy (DOE) mandated distribution utilities, electric cooperatives, and retail electricity suppliers to tap more renewables in supplying electricity to their customers. Under the Renewable Portfolio Standards (RPS), the percentage of utilization of renewables for on-grid areas increases to 2.52 percent from the current 1 percent. The DOE says the adjustment annual percentage under the RPS, as encapsulated in Department Circular No. 2022-09-0030, will take effect in 2023. RPS is a market-based policy requiring suppliers to source or produce a fraction of their electricity from eligible RE plants. It is also a mechanism designed to provide a guaranteed market for RE. So far, about P270.8 million of investments have flowed into the local RE space. Based on the latest DOE tally, solar cornered almost half of the total investment at P130.4 million while wind came in next with P52.9 million, followed by hydropower, P38.7 million; biomass, P38.2 million and geothermal, P10.5 million. As of June this year, the DOE has awarded a total of 998 RE contracts with a total installed capacity of 5,460.59 MW and potential capacity of 61.

Business groups urge government to privatize EDSA Busway System

Nearly 30 business groups are urging the government to privatize the EDSA Busway System in a bid to ease the daily grind of commuters. In a statement yesterday, the groups said the EDSA Busway System is low-hanging fruit for public-private partnership (PPP). They cited data from the Department of Transportation (DOTr) showing that the busway system carried an average of 325,000 passengers daily last August, even with only 550 buses committed to its operations, compared with 3,300 units pre-pandemic. They explained that a busway with rapid bus service has proven to be the most cost-effective urban mass transit system in the world, adding that it is easy to implement and requires significantly less capital expenditures while it provides high efficiency and ridership capacity similar to rail trams with the introduction of the latest technology in commuter transport: high capacity, articulated trackless long bus-trains running on rubber wheels.

Philippines urged to lift foreign equity limit in renewable energy sector

Foreign investors are asking the government to lift the foreign ownership limit in renewable energy projects to attract more investments into the sector. The Department of Energy (DOE) said foreign ownership restrictions that hamper the flow of investments in the renewable energy sector may now be relaxed following the legal opinion provided by the Department of Justice (DOJ). The agency recently received a favorable development through a legal opinion provided by the DOJ, which it said would pave the way for the opening of foreign investments in renewable energy. The DOJ said that exploration, development, and utilization of inexhaustible renewable energy sources are not subject to the 60:40 foreign equity limitation as provided under Section 2, Article XII of the Constitution. The DOJ, however, said the implementing rules and regulations (IRR) of Republic Act 9513 or the Renewable Energy Act of 2008 must be amended to conform to the opinion. To address the 40-percent equity limit for foreign investors stipulated in the IRR, the DOE is preparing the necessary amendments to Rule 6, Section 19 of the IRR of the RE Law. From the current 22 percent, the DOE is targeting to increase renewable energy’s share in the country’s power generation mix to 35 percent by 2030 and 50 percent by 2040.

EPIRA amendments urged to allow government role in power auctions

The Department of Energy (DoE) requires all distribution utilities to procure power via a CSP, attracting bids to supply electricity from power generators.EPIRA sought to restructure the power industry by deregulation and privatizing most state-owned power generation and transmission assets. Mr. Gatchalian said his proposal will ensure fair auctions and his approach would reduce the likelihood of power outages because the government can determine the supply requirement. Energy Secretary Raphael P.M. Lotilla said at a Senate Committee on Finance hearing on Friday that the power supply is expected to be tight in the first quarter of 2023.

Marcos signs SIM card registration law

 President Ferdinand “Bongbong” Marcos Jr. on Monday signed a new law that aims to address the proliferation of text scams in the country. Under the new measure, which was vetoed by then-President Rodrigo Duterte, a system for the sale and registration of SIM (subscriber identification module) cards will be established. Mobile phone subscribers with prepaid SIM cards have 180 days from the time the law takes effect to register and verify their phone numbers with their respective public telecommunications entities (PTE). An extension of 120 days can be given upon a valid written request to the Department of Information and Communications Technology (DICT). Failure to comply will lead to the SIM card’s deactivation. The law also specifies provisions on confidentiality and data privacy. Information of any subscriber can only be provided upon subpoena or order from a court, or upon a written request from a law enforcement agency investigating the possible involvement of a mobile number in a malicious, fraudulent, or unlawful activity. The law sets penalties for failure to register a SIM, breach of confidentiality, breach of confidentiality due to negligence, providing false or fictitious information or using fictitious identities or fraudulent identification of documents to register, spoofing a registered SIM, for sale of stolen SIM, and sale or transfer of a registered SIM without complying with required registration.

PPP route seen suitable for irrigation projects

The commercial viability of irrigation projects will make them attractive to investors through the public-private partnership (PPP) model, the chief of the Public-Private Partnership Center of the Philippines said. The National Irrigation Administration (NIA) earlier said it wanted to hit the ground running to develop irrigation facilities using the PPP framework within the first 12 months of the Marcos administration. So far, the NIA has received investment pledges worth more than P1 trillion, mostly from Filipino companies, much higher than around the P800 billion it would need to bankroll 50 potential irrigation projects nationwide. The PPP is helping the national government prioritize, sort, and classify projects which are suitable for this long-term financing arrangement