May 05, 2023
ECCP at Work
Inflation in the Philippines slowed down for the third month in a row to 6.6 percent in April from 7.6 percent in March, according to the Philippine Statistics Authority. The April print is slower than expected, with analysts having penciled in a consensus forecast of 7 percent and the Bangko Sentral ng Pilipinas 6.7 percent.
The DTI said the inclusion of two-wheeled vehicles such as motorcycles under the executive order imposing zero tariffs on electric vehicles (EVs) would have to be reviewed a year after the EO’s implementation. In a virtual briefing with reporters, Trade Secretary Alfredo Pascual explained that the zero tariff for EVs under EO 12 applies to four-wheeled vehicles, which is good for five years. Section 2 of EO 12, which was issued in January, states that the most favored nation tariff rates under the issuance is subject to review after one year from the implementation of the order.
Despite the continuing increase in COVID cases, the Department of Health (DOH) has recommended to the Office of the President (OP) not to bring back the mandatory face mask policy. “We have recommended to the OP based on the agreement coming from the IATF that there is no need for mandatory wearing of face masks,” DOH officer-in-charge Maria Rosario Vergeire said, referring to the Inter-Agency Task Force for the Management of Emerging Infectious Diseases. Vergeire said there is a need to shift people’s mindset that a cycle of an increase and decrease in COVID-19 cases could happen because the virus is here to stay.
Philippine manufacturing growth eased to an eight-month low in April as softer demand and staff shortages affected production. In a report released yesterday, S&P Global said the Philippines Manufacturing Purchasing Managers’ Index (PMI) stood at 51.4 in April, down from 52.5 in March. This is the 15th consecutive month of growth in operating conditions across manufacturing firms in the country.
The entire Philippine airspace will shut down for six hours on May 17, from 12 a.m. to 6 a.m., to make way for the replacement of the uninterruptible power supply (UPS) system that failed on New Year’s Day and led to a massive disruption of operations at Ninoy Aquino International Airport (Naia), the country’s main gateway. Bryan Co, senior assistant general manager of the Manila International Airport Authority (MIAA), in a press briefing on Tuesday said the maintenance activity had been coordinated last week to give the airlines “lead time” in recalibrating flight schedules and informing their passengers.
The partnership between Ayala-led Integrated Micro-Electronics, Inc. (IMI) and California-based Zero Motorcycles for assembly of electric motorcycles and other related sub-assemblies positions the Philippines as an export manufacturing hub for electric batteries and vehicles in the region, according to the DTI. “With this investment, we will be better positioned as an export manufacturing hub for electric batteries and vehicles in the region. This partnership between IMI and Zero Motors is a testament to the expertise and capabilities of our local manufacturing sector,” Trade Secretary Alfredo Pascual said.
The Civil Aviation Authority of the Philippines said that all 42 commercial airports operated by CAAP are currently extending assistance to passengers affected by the power outage at Ninoy Aquino International Airport (NAIA) Terminal 3. In response to the incident, the CAAP has activated its Malasakit Help Desks, providing immediate assistance to stranded passengers bound for Manila. The Malasakit Help Desks are equipped with personnel, essential supplies, such as food, water, and first aid kits, to ensure the comfort and safety of affected travelers. Recovery flights are anticipated to accommodate stranded travelers, and airlines are already assisting passengers with rebooking and refunds. The CAAP is working closely with airlines to ensure that all affected passengers are taken care of.
THE revised guidelines for joint venture (JV) agreements between government and private entities risk dampening investor sentiment but will ensure better regulation, analysts said. “This is a positive development reestablishing a clear regulatory regime to govern public-private partnerships (PPPs). It sends a message that public utilities and services remain within the ambit of government’s regulatory powers to protect the public interest,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in an email. “This may reduce the private sector’s appetite to participate in PPPs, but the government is putting its foot down to ensure that the public will not be subjected to exorbitant fees and charges,” he added.
Household spending in the Philippines is likely to grow by 5.9% yearly in the next four years, Fitch Solutions BMI said putting the economy on track for faster growth. In a report, the research firm upgraded the 2024-2027 forecast from 5.1% in January, saying consumer income growth would probably outpace rising prices. It kept this year’s forecast at 5.5%. “Inflationary forces will remain elevated across 2023, but nominal income growth is still forecast to outpace inflation, which ensures real income growth for consumers, giving greater propensity for spending,” BMI said.
The Management Association of the Philippines (MAP) is pushing for the creation of a multisectoral body responsible for developing a national brand, citing the advantages of having a strong and unique Philippine value proposition to attract investors. On Wednesday, the MAP urged President Marcos to develop a country brand that would put the Philippines on the global map. “We believe that a well-crafted and well-executed country brand can drive our country forward—it will improve global competitiveness, foster economic growth, and unite the nation in a shared sense of pride and identity,” MAP president Benedicta Du-Baladad said in a statement.
The government should do a “complete checkup” of Ninoy Aquino International Airport (Naia) to come up with a “wellness package” to address its problems, House Deputy Speaker Rep. Ralph Recto said on Wednesday after the Manila International Airport Authority (MIAA) asked for P1 billion to buy power generators for the country’s international gateway. “The Department of Transportation said Naia will undergo an electrical system audit. If there are many ailments, why not a complete checkup so that it can be addressed properly?” Recto said in a statement. “Whatever work to be done should be submitted as one package, so the remedies will not be several band aid of cures, but a wellness package,” he added.
Industry group Electric Vehicle Association of the Philippines (EVAP) announced backing the removal of import duties for two-wheeled vehicles, saying the move would make electric vehicles (EVs) more affordable and help the country achieve its goal of reducing greenhouse gas emissions. EVAP President Edmund Araga said the association has been working “tirelessly” to promote and advance the adoption of EVs in the country. EVAP’s statement issued last Tuesday read that its advocacy has always been zero-tariff for all EVs, especially 2-wheeled vehicles. The group excludes e-Jeeps and e-Trikes as EVAP said these have local manufacturing and assembly.
The Philippine Ports Authority (PPA) leaned on the recovery of trade and travel to pre-pandemic levels to close the first quarter with a profit of more than P3 billion. The PPA sustained its recovery trend in the first quarter with net income growing by 10 percent to P3.25 billion from P2.96 billion a year ago. Broken down, revenue surged by 16 percent to P5.14 billion from P4.44 billion, while expenses rose by 28 percent to P1.89 billion from P1.48 billion. The PPA gained from the rebound of cargo and travel activities as shown by the 16-percent surge in service and business income to P5.13 billion. For the year, the agency expects port volumes to breach the pre-pandemic levels.
The national government’s (NG) budget deficit for March 2023 widened to P210.3 billion, 12.04 percent or P22.6 billion higher than last year’s shortfall of P187.7 billion, data showed on Tuesday. In a statement, the Bureau of Treasury (BTr) traced the higher fiscal gap to an 11.99-percent decrease in government receipts even as spending was lower by 2.62 percent.
Senators on Tuesday pressed for the creation of courts especially handling agricultural smuggling, expressing alarm over the impunity with which such crime is being committed and seeking more teeth to a 2016 law designating such type of smuggling as economic sabotage. In pushing for such distinct courts all over the country, Senator Cynthia Villar, chairperson of the Senate Committee on Agriculture, Food and Agrarian Reform, said the Anti-Agricultural Smuggling Law will be implemented effectively if there is a court dedicated to smuggling, hoarding, profiteering and cartel of agricultural products. Addressing Tuesday’s public hearing of the Senate Committee on Justice and Human Rights on proposed Senate Bill No. 1963 seeking to establish such courts, Villar lamented that even with a law against agricultural smuggling, no smugglers have been charged with economic sabotage.
The Philippines is eyeing to tap “asset recycling,” one of a dozen innovative financing models identified by the Asian Development Bank (ADB) that Manila can use to address infrastructure constraints. On the sidelines of the ADB Annual Meeting, Finance Undersecretary Mark Dennis Y.C. Joven told the BusinessMirror that the “era of cheap money is over” and countries like the Philippines should tap innovative financing mechanisms to continue undertaking key infrastructure projects. Joven said while it will take some time to go into asset recycling, efforts to work toward it will benefit not just the country’s financing needs for key infrastructure projects but also improve its balance sheet.
State weather forecasters yesterday issued an El Niño alert as the country faces the threat of the dry spell. Vicente Malano, administrator of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), said recent conditions and model forecasts indicate an 80 percent probability that El Niño will start in June, July and August and may persist until the first quarter of 2024. “With this development, the El Niño Southern Oscillation (ENSO) alert and warning system is now raised to El Niño alert,” Malano said.
The country is expecting delivery of 390,000 doses of bivalent COVID-19 vaccines by the end of the month, Department of Health (DOH) officer-in-charge Maria Rosario Vergeire said yesterday. At a press briefing yesterday, Vergeire said that this one country, the name withheld for the time being, is going to donate to the Philippines 390,000 doses of bivalent vaccines. “We have already started with the process and we were able to get emergency use authority from the Food and Drug Administration,” said Vergeire. “We are just finalizing the documents. Hopefully, by the end of May, we will be able to receive these 390,000 doses.”
Moderna will build a vaccination factory in the Philippines to service Asia-Pacific. Moderna officials informed President Ferdinand “Bongbong” Marcos Jr. that they would develop a “shared service facility for pharmacovigilance” to create additional health professional jobs, according to the Presidential Communications Office. It will be Moderna's sole Asian shared service center and third worldwide after Poland and Georgia, USA. The Presidential Communications Office expects to hire 50 health experts in Makati or Taguig. Moderna's first Asian and Philippine venture is the project.
The country’s budget shortfall eased in the first quarter after government receipts picked up while state spending declined largely due to lower interest payments during the period. Data from the Bureau of the Treasury showed that the budget deficit went down by 14.51 percent to P270.9 billion from January to March compared to last year’s P316.8 billion. This developed even as the budget gap in March expanded by 12 percent to P210.3 billion from P187.7 billion a year ago.
President Marcos is open to adopting “cutting-edge” micro nuclear fuel technology to address a power crisis in the country that has caused blackouts in some provinces, Malacañang said yesterday. Marcos expressed readiness to look into the technology during a meeting with officials of Ultra Safe Nuclear Corp. (USNC), a US-based vertical integrator of nuclear technologies and services.
The Department of Agriculture (DA) has issued guidelines to distribute hybrid rice seeds as part of efforts to raise the country’s rice production amid rising input costs and irrigation issues. DA Undersecretary for rice industry development Leocadio Sebastian signed memorandum order 31 to implement the guidelines for the provision of hybrid rice seeds under the National Rice Program. The agency said the use of hybrid seeds is seen as one of the important contributors to improving the rice yield, especially in irrigated areas.
The need to address the impact of climate change made the current administration allot about PHP2.39 billion for the National Greening Program of the Department of Environment and Natural Resources (DENR) this year. In a statement on Wednesday, Department of Budget and Management (DBM) Secretary Amenah Pangandaman said the fund will help the government “achieve a sustainable, green and climate-resilient economy.” Pangandaman said the fund will help the banner project of the DENR that will ensure “a massive forest rehabilitation initiative in pursuit of sustainable development for poverty alleviation, food security, biodiversity conservation, environmental stability and climate change adaptation and mitigation.”
The Philippines has mechanisms in place to cushion the impact of El Niño on food supply but the Bangko Sentral ng Pilipinas (BSP) says the extent of the impact, particularly on inflation, remains to be seen. In an interview with BusinessMirror on the sidelines of the Asian Development Bank (ADB) Annual Governor’s Meeting, BSP Governor Felipe M. Medalla said the severity of the El Niño, and not its timing, will be a greater factor to consider in terms of its impact on inflation.
The Climate Change Commission PH (CCC) underscored the role of women in climate action, particularly in mainstreaming gender-responsive adaptation and mitigation measures such as through increasing women’s participation in decision-making processes. In her keynote speech during the official launch of the Women's International Network on Disaster Risk Reduction-Philippines (WIN DRR PH), Senate President Pro Tempore Loren Legarda reiterated that climate change affects men and women differently, with women being more vulnerable due to cultural and societal roles and prevailing gender inequalities.
On Wednesday, the Bangko Sentral ng Pilipinas (BSP) term deposit facility (TDF) rates climbed and the seven- and 14-day tenors were oversubscribed. BSP records reveal that the average rate of the seven-day facility jumped to 6.5952 percent from 6.5898 percent during the April 26 auction.The 14-day facility rate rose to 6.6159 percent from 6.6095 percent last week. The BSP raised the one-week facility offer volume to PHP 190 billion from PHP 170 billion last week. Only PHP 187.453 billion was bid. The one-week TDF auction committee awarded PHP185.453 billion. The two-week TDF offer volume rose to PHP 140 billion from PHP 130 billion last week. The auction committee accepted PHP 130.196 billion from PHP 132.196 billion bids. Despite lower TDF auction tenders, BSP Deputy Governor Francisco Dakila Jr. said domestic liquidity remains ample.
The Department of Agriculture (DA) has issued guidelines to distribute hybrid rice seeds as part of efforts to raise the country’s rice production amid rising input costs and irrigation issues. DA Undersecretary for rice industry development Leocadio Sebastian signed memorandum order 31 to implement the guidelines for the provision of hybrid rice seeds under the National Rice Program. The National Rice Program aims to improve the productivity and income of rice farmers by expanding the distribution and utilization of hybrid rice seeds. The DA will focus the hybrid rice seed support in “rice-producing cities/municipalities with good irrigation facilities and favorable rainfed areas preferably with the presence of clustered farmers.” These include irrigator associations or farmer cooperatives and associations.
Marathon plenary deliberations and interpellations for the proposed Maharlika Investment Fund (MIF) will start by May 15, Senate President Juan Miguel Zubiri yesterday said. Zubiri said this was the timeline given to him by Sen. Mark Villar, chairperson of the Committee on Banks, Financial Institutions, and Currencies, who sponsored the proposed bill last March 20 after three weeks of committee hearings. Amid skepticisms against the proposal, Villar assured the public that all documents about the MIF and its transactions will be “open, available, and accessible to the public.”He likewise said an internal auditor will be tapped to provide interim financial and management reports and enjoin an internationally recognized auditing firm to serve as external auditor to audit MIF’s financial statements.Villar also said that a joint congressional panel will be created with five members each from the Senate and the House of Representatives to oversee, monitor, and evaluate the implementation of the MIF.
The Department of Environment and Natural Resources (DENR) pushed for a shift to “regenerative” tourism to boost the country’s ecotourism sector. In her speech during the International Ecotourism Forum held recently in Manila, Environment Secretary Maria Antonia Yulo-Loyzaga, who was represented by DENR Undersecretary for legal and administration Ernesto Adobo Jr., defined regenerative tourism as “leaving a place better than it was before.” “It (regenerative tourism) goes beyond the environment and looks at the social and economic development of communities, preservation of local cultures, and protection of biodiversity. It is the understanding that everything is connected and the interactions between every stakeholder throughout the tourism value chain have impacts on each other and our ecosystems,” Yulo-Loyzaga said
President Ferdinand Marcos Jr. on called for the reauthorization of the Generalized System of Preferences (GSP) program that will extend duty-free privileges to some Philippine products exported to the United States. The President made the call during a roundtable forum with the members of the US-Asean Business Council and US Chamber of Commerce where he also urged American businessmen to invest in the Philippines. The Presidential Communications Office said prior to the expiration of the US GSP in December 2022, around 5,000 Philippine products such as electronics and agricultural products enjoyed zero tariffs. The US Trade Department said among the factors being considered for the reauthorization are human rights and labor issues.
The United States and Philippine defense departments have adopted a set of guidelines that seek to “modernize” the alliance of the two countries, including in the disputed South China Sea. The US Department of Defense said the Bilateral Defense Guidelines were reached by US Defense Secretary Lloyd Austin and his Filipino counterpart, Carlito Galvez, on May 3. In a fact sheet, the DOD said: “The guidelines reaffirm that an armed attack in the Pacific, including anywhere in the South China Sea, on either of their public vessels, aircraft, or armed forces – which includes their Coast Guards – would invoke mutual defense commitments under Articles IV and V of the 1951 US-Philippines Mutual Defense Treaty.”
Article IV of the Mutual Defense Treaty (MDT) says each party recognizes that an armed attack in the Pacific region on either party “would be dangerous to its own peace and safety and declares that it would act to meet the common dangers in accordance with its constitutional processes.”
The Department of Trade and Industry (DTI) said the government has no plan to ban the export of nickel ore but is focused on attracting mineral processing investment. “There is no proposal to ban the export of nickel ore. We will encourage the processing of nickel ore in the Philippines. We always go by market mechanisms,” Trade Secretary Alfredo E. Pascual stated. EO 12 reduced tariffs on certain EVs to zero for five years. These include cars, buses, vans, trucks, kick scooters, self-balancing cycles, bicycles, and pocket motorcycles with auxiliary motors not exceeding 250 watts and with a maximum speed of 25 kilometers per hour. Those excluded from the EO, such as electric motorcycles, will be charged a 30% tariff.
The Supreme Court voided a circular issued by the Bureau of Internal Revenue (BIR) along with parts of the Bayanihan II law that imposed a 5% franchise tax on gross bets placed with Philippine Offshore Gaming Operators (POGOs). In a 10-page resolution dated Jan. 10 and made public on May 3, the tribunal said there was no law authorizing the BIR to impose the franchise tax on POGO firms when the circular was issued in 2017. The Supreme Court ruled that the BIR violated Congress's tax-lawmaking power. Former Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Ceasar R. Dulay lost their appeal. The BIR said that POGOs paid P4.4 billion in taxes from January to August 2021, up from P3.91 billion in 2020. Pre-pandemic predictions for 2021 were P32.1 billion. “All things considered, the court finds no compelling reason to reverse and set aside the assailed decision,” the High Court ruled. Thus, the reconsideration motion must be denied definitively.
Priority programs and projects to be implemented by the government under the Public Investment Program (PIP) 2023 to 2028 will require investments amounting to P20.2 trillion. In a statement, the Public-Private Partnership Center said the National Economic and Development Authority (NEDA) has released the PIP 2023 to 2028, a document accompanying the Philippine Development Plan (PDP) and containing priority programs and projects to be implemented by the government within the medium-term. The priority programs and projects under the PIP are those seen to contribute to meeting the targets in the PDP of promoting job creation and accelerating poverty reduction through high economic growth.
The Manila International Airport Authority on Thursday vowed to prevent a repeat of power failure in the country's main gateway. According to MIAA acting chief Bryan Co, their efforts include acquiring back-up electricity supply and pushing through with maintenance activities. A power outage hit the Ninoy Aquino International Airport Terminal 3, which cancelled several flights on Labor Day, Monday. "We can guarantee that we are doing everything together with the DOTr (Department of Transportation)," Co told ANC's "Headstart". "We would be doing everything including adding gen (generator) sets so that we can increase the resiliency and reliability of Terminal 3."
The International Monetary Fund (IMF) said the Bangko Sentral ng Pilipinas (BSP) should not reduce interest rates or pause rate increases until core inflation slows. On the sidelines of the IMF press briefing here, IMF Asia and Pacific Department Director Krishna Srinivasan said given that inflation remains elevated across the region, central banks, including the BSP “should stay the course” and keep monetary policy tight.
The lack of charging stations for electric vehicles (EVs) in the country is dampening the interest of Filipinos for this type of vehicle, according to a study by Deloitte. Based on results of Deloitte’s 2023 Global Automotive Consumer Study, Filipinos showed the least interest in the Southeast Asian region for EVs or hybrid vehicles for their next automobile purchase. According to the survey, 72 percent of Filipinos said they would like gas or diesel engine, also known as an internal combustion engine (ICE) for their next vehicle. This is a higher percentage compared to the 59 percent of Indonesians and 49 percent of Vietnamese.