ECCP at Work

ECCP@Work Featured Articles | November 22, 2022

November 22, 2022

ECCP Online

ECCP at Work

Marcos eyes nuclear energy partnership with France

On November 18, President Ferdinand "Bongbong" Marcos Jr. and French President Emmanuel Macron discussed economic challenges and opportunities emphasizing the energy sector, particularly nuclear energy. President Marcos is looking forward to strengthening its bilateral ties with France by establishing a partnership on nuclear energy seeing that France is well-known for its reliance on nuclear energy for its power production. Environmental groups, however, posit that a refocus on renewable energy should be pursued instead. 

S&P affirms PH’s ‘BBB+’ long-term, ‘A-2’ short-term credit ratings

According to S&P Global, the Philippines received a “BBB+” long-term credit rating and an “A-2” short-term credit rating, indicating a “stable” economic outlook. With a 7.6% GDP growth rate in the third quarter of 2022, S&P projects that the growth rates and fiscal performance of the national economy will remain stable and progress in the next 24 months. An emphasis on the Bangko Sentral ng Pilipinas’ (BSP) fiscal measures in controlling the country’s economic instability was applauded by the S&P as the Philippines was recognized as one of the fastest-growing economies in the ASEAN region. 

Inflation may push BSP to raise rate to 5.50 percent by yearend: Fitch Solutions

Fitch Solutions said that the Bangko Sentral ng Pilipinas may increase the benchmark interest rate to 5.50 percent, following a 75-basis-point increase last week due to continuing inflation. The BSP increased the overnight borrowing rate to 5% on November 17 to match the US Federal Reserve's 75 basis point increase on November 2. The new increase is also intended to reduce inflation, which in October reached a nearly 14-year high of 7.7 percent. Recent typhoons that damaged crops, according to National Statistician Dennis Mapa, could increase supply-side inflation in the coming months. Inflation is anticipated to remain above the target range of 2 to 4 percent for the remainder of this year and next, at 5.8 and 4.3 percent, respectively, before returning to target by 2024 at 3.1 percent.

Government urged to create more investment opportunities

According to the National Economic and Development Authority (NEDA), the government must prioritize expanding investment possibilities and fostering human capital in order to generate more and higher-quality jobs. The Philippine unemployment rate decreased to five percent in September, from 5.3 percent in August and 8.9 percent in September of last year, according to data from the Philippine Statistics Authority. According to the NEDA, the nation's unemployment rate in September remained comparable to that of other major Asian economies. It was reported that the country's unemployment rate in September was lower than India's (6.4%), China's (5.7%), and Indonesia's (5.8%) in the same month. The NEDA stated that the removal of quarantine regulations for unvaccinated or partially vaccinated travelers, as well as the acceptance of the voluntary wearing of face masks, will increase the country's appeal to international tourists, hence boosting employment. It was stated that private-public cooperation must be encouraged in order to increase chances for skill development and employment. In addition, NEDA stated that the prompt adoption of the 2023 budget would contribute to the creation of jobs through the implementation of infrastructure projects.

BSP sees slower growth until 2024

This year, the Philippines’ economic growth is expected to meet the government’s target, but the central bank anticipates a slower development through 2024 as a result of high interest rates. In its most recent monetary policy report, the Bangko Sentral ng Pilipinas (BSP) predicted that gross domestic product (GDP) growth will likely fall within the Development Budget Coordination Committee's target range of 6.5-7.5%. (DBCC). The Philippine economy grew 7.6% in the third quarter, bringing the average growth rate for the year to 7.7%. Since May, the Monetary Board has increased interest rates by 300 basis points (bps) to combat inflation and maintain the peso. The BSP reported that domestic economic activity had risen above its pre-pandemic level as a result of the removal of mobility restrictions and the resumption of in-person classes. According to the BSP, the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, the Financial Institutions Strategic Transfer (FIST) Act, and the second tranche of the reduction in personal income taxes will bolster the domestic outlook in 2023 and 2024.

Budget chief: Marcos gov’t on track to meeting deficit to GDP target

Amenah Pangandaman, the budget secretary, stated that the country is on track to fulfill its deficit-to-gross domestic product (GDP) goal for the year due to its fiscal performance in the first three quarters. The budget head, speaking on the sidelines of a session held by the research tank Stratbase ADR Institute, said she is "thrilled" with how agencies have been spending to implement programs and initiatives. In the three quarters ending in September, the budget deficit as a percentage of GDP was 6.5%, compared to the economic team's official target of 7.6% of total output.

BoI to miss ‘22 investment goal 

The unprecedented Russia-Ukraine conflict greatly affected the global economy as it fractured the confidence of foreign investments in the Philippines. Ceferino S. Rodolfo, Trade undersecretary and Board of Investments (BoI) managing head, reported that the total approved investments from January-November is only P644.4 billion which falls short of its Php1 trillion target of new investments this year. According to BoI, the majority of the investments are from domestic investors totaling 81% while the remaining came from foreign investors. While the target approved investment is not attained, Mr. Rodolfo is confident that the approved investments this year surpassed last year by 73.51% as the total investment approvals in 2021 are at Php 655.4 billion. Mr. Rodolfo said that there is currently Php 372.8 billion worth of investment leads expected in 2023. This is comprised of the information technology and business process management (IT-BPM) sector, real estate activities, and the agriculture, forestry, and fisheries sectors with P125.3 billion, P105.47 billion, and  P66.9 billion total investments, respectively. Following the economic reforms and digital transformation in the government, the BoI is confident that better management and significant growth from foreign investments are to be expected. 

DBM may slash budget of agencies with low utilization rates 

Department of Budget and Management (DBM) announced that it may cut the budget allocations of National Government agencies with low utilization rates “to instill discipline,” according to Budget Secretary Amenah F. Pangandaman. As of October, DBM’s data showed that the cash utilization rate of the government is at 94% with the Commission on Human Rights (CHR) recorded as the only department with a 100% budget usage rate and the Department of Information and Communications Technology (DICT) with the lowest budget utilization rate at 67%. The government's funding releases at the end of October totaled P5.08 trillion, above the P5.024 trillion annual budget. This was mostly caused by unprogrammed appropriations of P200.19 billion and other automatic allocations of P45.29 billion. Meanwhile, the budget deficit of the National Government was P179.8 billion in September, down from P180.9 billion in the same month last year and P72 billion in August. The deficit-to-GDP ratio for the nine-month period was 6.5%, which is still below the government's objective of 7.6% for the year. Aside from expanding growth targets, the DBM will also invest in digitizing its financial management system to be more efficient and responsive in delivering results to the public. 

Shipping dev’t plan to highlight increase in yard, repair capacity 

Last November 18, the Undersecretary for Planning and Project Development Timothy John R. Batan and the Maritime Industry Authority (Marina) discussed the 10-year Maritime Development Plan emphasizing increasing shipbuilding, repairing yard capacity, technology upgrades, developing and extending shipping and maritime tourism routes, improving maritime education and training, and upgrades to safety, security, and environmental protection practices, among others. According to the Department of Transportation (DoTr), this project aims to increase the industry's contribution to the gross domestic product from P720 billion to P1.44 trillion by the time it is fully executed in 2028. With the assistance of the French government, a maritime expert is expected to provide technical assistance, training, and consultancy services in the Philippines. 

Solar Wind projected to lead renewable energy expansion

Solar and wind energy projects will continue to drive the expansion of renewable energy (RE) in the Philippines over the next decade, with additional capacity anticipated at 6.8 gigawatts (GW). This is according to a report by Fitch Solutions Country Risk and Industry Research. In a research dated November 18, Fitch Solutions projected that wind and solar capacity would increase by 10.4% annually. According to Fitch Solutions, 86% of non-hydropower RE projects will be photovoltaic and 10% will be onshore wind power. The Energy Department has set a target for new RE capacity of more than 900 megawatts (MW) between 2021 and 2027. Solar contributed 489 MW, hydro 233 MW, geothermal 116 MW, and biomass 65 MW to this total. In the first round of the Green Energy Auction Program (GEAP) held by the Department of Energy in June 2021, 2,000 MW were committed for delivery between 2023 and 2025.

DOH logs 8,004 COVID-19 cases on Nov.14-20, down 12% from previous week

According to the DOH's COVID-19 tracker, the total number of cases in the United States as of November 20 is 4,025,917, with over 3.9 million recoveries and at least 64,000 fatalities. The current number of active cases is 18,647. More than 73.7 million individuals, or 94.38% of the target population, have been vaccinated against COVID-19, according to the Department of Health, while 20,8 million have had their booster injections.

Approximately 6.9 million seniors, or 79.46% of the target A2 group, have now gotten their initial COVID-19 vaccination.

Government willing to spend more this year

The government is willing to spend more than the P5.02 trillion budgeted for the year as the country earns more money with economic recovery, effectively reducing the budget deficit. Amenah Pangandaman, secretary of the Department of Budget and Management, stated yesterday, in conjunction with the Pilipinas Conference 2022 of the Stratbase ADR Institute, that the DBM could yet issue additional money to various government agencies. As of the end of October, according to data from the DBM, the adjusted program for the year stands at P5.269 trillion. This amount exceeds the planned P5.02 trillion budget for 2022 by P245,48 billion.

Digitalization to promote good governance

The Department of Budget and Management (DBM) underlined the importance of utilizing digital interventions to advance open, inclusive, and sustainable governance. The budget head outlined three strategic targets to foster digital transformation in the nation, namely energizing citizen participation in governance, investing in innovations to overcome the digital governance gap, and empowering an agile government. She also emphasized the importance of the Philippine Open Government Partnership in fostering citizen engagement. In investing in innovations, the budget secretary emphasized that the government must go beyond providing basic access to create real digital opportunities. Lastly, she stated that DBM promotes digitalization across the Public Financial Management process to enhance bureaucratic efficiency. She reaffirmed the DBM's determination to implement the Budget and Treasury Management System, which seeks to improve cash management, financial control, accountability, and supervision by integrating financial management systems across the bureaucracy.

US gives additional $5-M COVID funds for vaccine rollout in PH

US Second Gentleman Douglas Emhoff announced that an additional $5 million (approximately P286 million) will be funded by the United States Government through the American Rescue Plan in support of the COVID-19 vaccination efforts in the Philippines. Since the emergence of the pandemic, the US government has provided approximately $50 million in funds and has donated more than 33 million COVID-19 doses.

PEZA eyes 13 new ecozones

The Philippine Economic Zone Authority (Peza) anticipates government approval for 13 additional economic zones across the country, which is anticipated to attract investments worth about P18 billion. As of October of this year, according to Tereso Panga, Peza officer-in-charge and deputy director-general for policy and planning, the investment promotion agency had this amount of petitions on file. There are seven pending applications for manufacturing ecozones, four for IT (information technology) parks and centers, one for a knowledge, innovation, science and technology park, and another for an agro-industrial ecozone, according to the investment promotion agency. It is planned to establish all of these ecozones outside of Metro Manila. Currently, there are around 420 economic zones dispersed throughout the Philippines, of which 10%, or approximately 40, are located on Mindanao.

DOE seeks revision of foreign investment negative list

The Department of Energy (DOE) will seek a change of the foreign investment negative list to reflect the opening of the renewable energy industry to foreign ownership in its entirety. Lotilla signed Department Circular 2022-11-0034 on November 15, revising Section 19 of the implementing rules and regulations (IRR) of the 2008 Renewable Energy Act. The amendment allows foreign nationals and foreign-owned organizations to participate in the exploration, development, and usage of renewable energy resources such as solar, wind, biomass, ocean, and tidal energy. The circular will go into effect fifteen days after its publication in two newspapers of broad circulation and filing with the University of the Philippines Law Center-Office of the National Administrative Register. The Makati Business Club (MBC) recently applauded the Department of Energy (DOE) for issuing a department circular that effectively eliminates foreign ownership limits on the use of renewable energy. Given the global shift toward renewable energy in an effort to reduce dependence on the unpredictable oil market, the MBC deemed this a relevant adjustment.

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