ECCP at Work

ECCP@Work Featured Articles | July 28, 2023

July 28, 2023

ECCP Online

ECCP at Work

IMF raises Philippine growth forecast

The IMF raised its growth outlook for the Philippines to 6.2% this year from the 6% forecast it gave in April, as domestic demand is expected to remain robust. At the same time, NEDA SecretaryBalisacan said economic growth further slowed in the second quarter but is unlikely to miss the full-year target. IMF Representative to the Philippines Ragnar Gudmundsson said the Philippine growth forecast for this year was revised to reflect the strong first-quarter outturn. 

Pursue more FTAs, Euro chamber urges [mention]

As President “Bongbong” Marcos Jr. assured that his government will continue to forge more international partnerships during his second State of the Nation Address, the ECCP hopes that he will pursue more free trade deals. Under negotiations are the EU-PH FTA talks, as well as the retention of the EU GSP+ grant that is set to expire in December 2023. “As an organization representing European and Philippine businesses in the country, the ECCP appreciates the drive of the current administration to secure more trade deals. The Chamber expressed hopes to see the recommencement of the EU-PH FTA talks as well as the retention of the EU GSP+ grant soon,” the group said in a statement.

Power firms laud President's support for renewables [mention]

Power industry players lauded the Marcos administration for addressing the country’s growing energy needs through renewable energy and removal of transmission and other regulatory bottlenecks. President Ferdinand Marcos Jr. said during the SONA his administration switched on 17 power plants since last year, increasing  energy production by 1,174 megawatts. Layug, co-chairman of the Energy Committee of the ECCP, also recognized the rigorous efforts of the Marcos administration, led by Energy Secretary Raphael Lotilla and Energy Regulatory Commission chairperson Monalisa Dimalant to address the all-encompassing requirement for sustainable, reliable and optimally priced electricity supply from clean energy resources.

Maharlika fund to be operational next year 

The Maharlika Investment Fund (MIF) is expected to start operations early next year, Finance Secretary Diokno said. Diokno said the implementing rules and regulations (IRR) of the Maharlika Investment Fund Act is expected to be completed next month. President Ferdinand R. Marcos Jr. signed into law Republic Act 11954 last week, otherwise known as the MIF Act of 2023, establishing the Philippines’ first sovereign wealth fund. Diokno reiterated that the MIF will help widen the fiscal space and ease the burden on local funds.

Nat’l gov’t revenue collections up 7.7% in Jan-June

Revenue collections of the national government already reached PHP1.9 trillion in the first half of the year, Finance Secretary Diokno said. Diokno said the revenue collections from January to June were higher by PHP133 billion or 7.7 percent year on year. Tax collections went up by 7.5 percent while non-tax collections also grew by 9.1 percent. Under the government's medium-term fiscal program, the government is projecting revenues to reach PHP3.73 trillion this year. This is projected to increase to PHP4.20 trillion in 2024; PHP4.69 trillion in 2025; PHP5.25 trillion in 2026; PHP5.89 trillion in 2027; and PHP6.62 trillion in 2028.

PBBM seeks Malaysian synergies

President Marcos Jr. said that he is eyeing “new areas of synergies” – in particular in the halal and Islamic banking industries – as he arrived in Malaysia for a three-day state visit. The Malaysian government earlier said it was optimistic that the state visit of President Marcos would further strengthen bilateral ties and pave the way for more areas of cooperation.

BSP ready to resume tightening if necessary

The BSP is ready to resume its policy tightening if necessary, an official said, as inflation continues to be a challenge. “The BSP remains watchful and remains ready to resume monetary tightening as warranted by the data on the inflation outlook and domestic demand prospects,” BSP Deputy Governor Francisco G. Dakila, Jr. said. Inflation eased to a 14-month low of 5.4% in June. However, this is still above the BSP’s 2-4% target range for the 15th consecutive month.

PHL slips 3 spots in global ranking of destinations for outsourcing business services

The Philippines has dropped three spots in a global ranking that measures the attractiveness of countries as a destination for offshore and outsourcing services. In Kearney’s 2023 Global Services Location Index (GSLI), the Philippines slipped to 12th out of 78 countries in terms of attractiveness as an offshore location of business services, from 9th spot in the last index in 2021. “The Philippines continues to be the business process outsourcing (BPO) engine of Asia,” Kearney said, adding that it is home to over 1,000 BPO firms that employ over 1.2 million.

PH cautioned against premature rate cuts 

The Philippine financial market would do best to wait a few more months before pushing for interest rate reductions considering that factors turning up the pressure on prices of goods and services remain persistent, according to the IMF. Ragnar Gudmundsson, the IMF’s resident representative to the Philippines, said. After two policy meetings when the Monetary Board made no changes to its benchmark interest rate, keeping its overnight borrowing rate at 6.25 percent, market analysts are now guessing how soon this will be reduced to encourage more spending.

NGCP commits to PBBM’s call to deliver transmission projects

The NGCP has committed to expedite the completion of critical transmission projects across the country after President Marcos Jr. has called out NGCP for its delayed projects in his second SONA. Marcos cited an Energy Regulatory Commission’s report that the NGCP has 68 delayed projects, with special mention to deliver the Mindanao-Visayas Interconnection Project (MVIP) and the Stage 3 of the Cebu-Negros-Panay Interconnection Project (CNP3). The system operator also called on local government units (LGUs) for a timely granting of relevant permits for these projects and to provide necessary assistance in addressing right-of-way issues that have hindered the smooth implementation of the said projects.

BSP chief cites gains from banking sector reforms 

BSP Governor Eli Remolona Jr. underscored the importance of sustained policy improvement for the banking sector and its gains especially during the pandemic. Remolona said the economy registered a strong rebound from the virus-induced pandemic partly because of the strong banking system. Among the improvements that helped strengthen the domestic banking system include the increase in bank’s capitalization as well as the changes in the capital ratios. During the pandemic, the BSP also allowed banks’ borrowings to micro, small and medium enterprises (MSMEs) as alternative compliance to reserve requirement (RR) to boost economic activities and buoy domestic growth. While various measures are being implemented to help lift the economy after a slump, inflation, both here and overseas, hampered the moves that will allow faster economic recovery.

Market reactions to policy rate decisions now easier to manage 

Managing how markets react to key rate decisions of central banks and developments on inflation is now easier given the change in economic developments as well as the adjustments in the BSP policy instruments, a senior BSP official said. BSP Deputy Governor Dakila Jr. said the economic and financial environment has changed from last year. He said inflation is now on its downward path unlike last year when it was on upward trajectory due largely to the impact of Russia’s invasion of Ukraine. This geopolitical event has resulted in upticks in global oil and commodity prices and supply constraints. As the inflation rate has slowed, with the June 2023 level down to 5.4 percent and the Federal Reserve is expected to again pause during its July 25-26 meeting, Dakila said “the situation now is very different compared to what it was (last year).”

Bill reforming MUP pension to be approved before yearend 

The bill reforming the military and uniformed personnel (MUP) pension system is expected to be passed within the year, Finance Secretary Diokno said. "We are pushing for this. The military pension reform is part of the top priority legislative agenda of the President, concurred in by Congress and we expect this to be passed before the end of the year, and so it will have an impact as soon as January of next year," Diokno said during the post-SONA Philippine Economic Briefing. Part of the proposed reform is for MUP to contribute funds to make it sustainable. Under the proposed pension system, MUPs will be required to contribute a portion of their salaries as a form of savings, which will be supplemented by the government. Diokno said there are three types of beneficiaries from the reform.

NEDA optimistic on PH economy's growth prospects 

The expansion of the Philippine economy is expected to moderate in the second quarter of the year but the lower end of the government's 6 to 7 percent target will likely still be met, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said Tuesday. Economic managers earlier set a 6 to 7 percent economic growth target this year. For the first quarter of the year, the economy grew by 6.4 percent. Balisacan said for the second quarter, growth will likely be driven by consumption and investments. He said construction will also likely contribute to growth as the lifting of quarantine restrictions is expected to boost construction activities.However, Balisacan said exports likely slowed due to the continued uncertainties in the global environment.

Manufacturing sector hails PBBM's vow to pursue smugglers 

The leadership of the Federation of Philippine Industries (FPI) has lauded President Ferdinand R. Marcos Jr. for spotlighting the country’s smuggling problem and vowing to file charges against smugglers during his second State-of-the-Nation Address (SONA). FPI chairperson Jesus Arranza on Tuesday told the Philippine News Agency that Marcos is the only president in recent memory to highlight the economic damage caused by unmitigated smuggling during his SONA, and who has categorically committed to pursue smugglers.

Connectivity key to luring more RE projects, full electrification 

Department of Energy (DOE) Secretary Raphael Lotilla underscored the importance of energy infrastructure that will interconnect the power supply across the country to attract more investments in the renewable energy (RE) sector and full electrification. During the post-State of the Nation Address (SONA) discussion in Pasay City Tuesday, Lotilla said there is a need to fast-track transmission projects in the country to connect RE output from facilities to consumers. President Ferdinand R. Marcos Jr. said in his second SONA Monday that 126 RE contracts were awarded since last year, which have a combined potential capacity of 31,000 megawatts. Lotilla said these RE projects and future investments will help the administration’s goal of 100 percent electrification among households by 2028.

DBM exec cites priorities under proposed 2024 nat’l budget

Social protection, food security and key infrastructure projects will be the priorities under the 2024 national budget, an official of the Department of Budget and Management (DBM) said Tuesday. During the post-State of the Nation Address (SONA) Philippine Economic Briefing at the Philippine International Convention Center (PICC), DBM principal economist Joselito Basilio said the proposed PHP5.768 trillion national budget for next year, which will be submitted to Congress in the coming days, is about PHP500 billion higher than this year’s budget. Basilio said education remains to have the highest allocation, as mandated by the Constitution, at about 15 percent to 20 percent.

IMF turns more bullish on Philippine economy

The International Monetary Fund (IMF) has turned more optimistic on Philippine economic prospects for this year, but sees a different scenario for 2024 as the impacts of monetary policy tightening may take their toll on the economy. In its latest World Economic Outlook (WEO), the Washington-based multilateral lender raised its gross domestic product (GDP) growth assumption for the Philippines to 6.2 percent from the previous target of six percent. This is a slowdown from last year’s record-high 7.6 percent expansion, and it is still at the lower end of the six to seven percent growth target set by the Cabinet-level Development Budget Coordination Committee (DBCC).

SRA rules milling to start in Sept., rejects appeals from planters

The Sugar Regulatory Administration (SRA) said it will stick to plans for a September opening to milling season, rejecting appeals from planters to begin in August. SRA Acting Administrator Pablo Luis S. Azcona told reporters on Tuesday that the ultimate goal in raising output is to become self-sufficient in sugar. Three planter federations — the Confederation of Sugar Producers Associations, Inc., the National Federation of Sugarcane Planters, Inc. and the Panay Federation of Sugarcane Farmers, Inc. — appealed to the SRA to start the milling season in August, which was the start date set a year earlier. They said the August season start in 2022 was caused by the shortage of sugar. The groups claimed that delaying the start of milling operations may lead to overripe cane that had been planted in April this year rather than May.

CAAP seeking to shed its role as aircraft incident investigator 

The Civil Aviation Authority of the Philippines (CAAP) said it supports a new law that will transfer its aircraft incident investigation functions to a specialist agency. CAAP spokesman Eric B. Apolonio said by telephone that it is improper for the regulator to be in charge of Philippine airspace while also being responsible for investigating aircraft incidents. CAAP management has received an expression of support for its proposal from Senator Rafael T. Tulfo in its “desire to separate the aircraft investigation function from the rest of the Authority, as this is a continuing safety observation from the International Civil Aviation Organization (ICAO).” CAAP said Mr. Tulfo also pledged support for funding the regulator’s plans to procure rescue aircraft, firetrucks, and measures to address bird strike risk.

House panel approves tax provisions of Bulacan airport economic zone bill

A house committee has approved the tax and revenue provisions of a bill proposing to create the Bulacan Airport City Special Economic Zone. He said establishing an economic zone at Bulacan Airport City will link the ecozones of Manila and Clark. President Ferdinand R. Marcos, Jr. vetoed the measure in July 2022 as it may “pose substantial fiscal risks” and be in “conflict with other agencies’ mandates and authorities,” he said in the first veto message of his term. Mr. Salceda said House Bill No. 2228 includes specific limits on the territorial coverage of the ecozone; a “defined relationship” between government agencies and the ecozone; and a fiscal incentives framework following the Tax Code. The measure also includes cost-sharing for the zone’s defense and security costs; governance mechanisms in accordance with other ecozone laws; limits on the rule-making functions of the zone’s managers; and audit procedures.

Four rail projects granted P600 million in feasibility study funding 

Transportation Secretary Jaime J. Bautista said on Tuesday that P600 million in funding has been obtained for feasibility studies on four railway projects. The four projects, with a combined 1,024 kilometers of track, are the Philippine National Railway (PNR) North Long Haul line, the Panay Railway, the North Mindanao Railway, and the San Mateo Railway. According to Mr. Bautista, procurement is now ongoing for consultants that will prepare the feasibility studies. Mr. Bautista said preparing the studies “will take more than a year. It is not easy to do feasibility studies.”

Indian companies exploring PHL energy solutions tieups

Indian electronics and electrical equipment companies are exploring collaboration in energy solutions with their Philippine counterparts following a recent visit by an Indian trade mission, an Indian official said. Charu Mathur, director-general of the Indian Electrical & Electronics Manufacturers’ Association (IEEMA), told BusinessWorld by e-mail that the group’s representatives met with various Philippine government agencies and private sector representatives during a trade mission that ran between July 11 and 14. The IEEMA delegation consisted of 25 representatives from 22 Indian companies engaged in the electrical, industrial electronics, and related industries. The association’s members include public-sector enterprises and multinationals. “The aim was to explore future business potential for IEEMA members and meet the targeted stakeholders and also look for technology exchange between both countries. It would help both sides in exploring new areas in the field of off-grid and micro-grid solutions, such as energy storage systems and rural electrification enhancements,” Ms. Mathur said.

PHL dev’t plan needs to be operationalized with specific short-term strategies 

The government needs to make its development agenda more conducive to attracting investment by specifying “action plans” to flesh out the programs accompanying its medium-term roadmap, GlobalSource Partners said in a brief. Under the Philippine Development Plan, which covers the 2023-2028 period, the government hopes to achieve upper-middle income status by 2025. It also targets growth of 6-7% this year and 6.5-8% between 2024 and 2028. Other targets under the plan include reducing the poverty rate to 9% by 2028 and bringing unemployment to about 4-5%. GlobalSource said that the government should also improve the environment for infrastructure.

PAL, China Airlines expand code-share

Philippine Airlines (PAL) has expanded its codeshare agreement with China Airlines to further boost its international operations. PAL is expanding its international network with four times weekly codeshared services between Manila and Kaohsiung and five times weekly codeshared services between Cebu and Taipei. Both flights are operated by China Airlines utilizing Boeing 737-800 aircraft for Manila to Kaohsiung and Airbus A321neo aircraft for Cebu to Taipei.

Air travel normalizes, carriers lift face mask mandate

Local airlines yesterday have started to normalize air travel in compliance with the lifting of the face mask mandate, but they will continue to comply with coronavirus-related protocols imposed by specific countries. This follows the national government’s decision to lift the state of public health emergency under Presidential Proclamation 297, supported by the Department of Transportation’s (DOTr) Department Order 2023-017. As the DOTr order lifted coronavirus disease 2019 (COVID-19) protocols in all public transportation including aviation, passengers of Philippine Airlines (PAL), Cebu Pacific (CEB) and AirAsia Philippines are no longer required to wear face masks on their flights.

SRA pushes delayed milling season

Delaying the sugar milling season to September could mean an additional P700 million worth of income for sugarcane farmers, the Sugar Regulatory Administration (SRA) said on Tuesday, despite calls from farmers and planters to allow them to harvest a month earlier. In an interview with reporters, SRA acting administrator Pablo Luis Azcona explained that starting the milling season on Sept. 1 was “based on science, weather patterns, and the maturity of sugarcanes.” On Monday, the Sugar Council, a group composed of planters’ and farmers’ federations, urged the SRA to start the sugar milling season in August, saying that around 400,000 tons of ratoon plants were now mature and delaying their harvest to September could cause them to become overripe.

National Land Use measure remains on priority legislation list

The National Land Use Act remains a government priority measure, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said. “The Legislative-Executive Development Advisory Council (LEDAC) came out with a list of 20 priority measures for enactment by the end of December. In the longer list, the National Land Use Act is there,” Mr. Balisacan told reporters late Tuesday. In May, the House of Representatives approved on third reading the proposed National Land Use Act, which aims to “provide for a rational, holistic, and just allocation, utilization, management, and development of the country’s land.” It also seeks to “ensure their optimum use to promote sustainable socioeconomic development and ecological protection.” The bill proposes to form the National Land Use Commission (NLUC), which will be tasked with creating the National Physical Framework Plan (NPFP).

DTI seeks halt to new port fees, charges

The Department of Trade and Industry (DTI) on Tuesday said it was pushing for a moratorium on new port fees and charges, as well as the regulation of international shipping charges. Trade Undersecretary Ruth Castelo said these measures were in line with their thrust to reduce transport and logistics costs in the country, which is one of the six agendas that the department is pushing for to ensure food security. In a series of issuances, the ports regulator said it had approved a 10-percent increase in cranage rates being collected at MNHP, one of the country’s busiest ports that is operated by Razon-led International Container Terminal Services, Inc., effective Aug. 17. A 20-foot container and below will be charged P1,558.50 each if loaded and P1,310.50 if empty. Bigger containers will have a cranage fee of P2,180 for loaded and P1,689 for empty. Lorenzo Shipping Corp. president Reynold John Madamba, meanwhile, also said earlier that the shipping sector was likely to recover this year following the easing of mobility restrictions, adding that cargo volume could even return to prepandemic levels. This means hitting a cargo volume of at least 265.88 million metric tons, which was the level posted in 2019. Cargo throughput was at 261.62 million last year. 

Hontiveros: UN resolution could complement PH arbitral victory vs China

A UN General Assembly resolution calling out China's aggression in the West Philippines Sea would complement the Philippines' arbitral victory against Beijing, Sen. Risa Hontiveros said Thursday. Hontiveros has filed a Senate resolution seeking to urge the Department of Foreign Affairs to elevate to the UN China's continuous incursions in the West Philippine Sea, but it was blocked by her colleague, Sen. Alan Peter Cayetano. Sen. Ronald dela Rosa and Sen. Loren Legarda later registered their support in condemning China's incursions into the Philippines' exclusive economic zone, but sided with Cayetano in deferring the possible approval of Hontiveros' resolution. National Security Adviser Eduardo Año said there were other ways to address China's aggression in the West Philippine Sea without elevating it before the UN. 

PH, Malaysia eye more ‘ups’ in ties

President Ferdinand Marcos Jr. and Malaysian Prime Minister Anwar Ibrahim pledged on Wednesday to build on the “historical bond, long-standing relations, and strong economic linkages” that make Filipino-Malaysian friendship “easy.” The two leaders made the pledge after bilateral talks at Putrajaya, Malaysia’s official administrative complex. The talks focused on areas where the two neighboring countries already have strong cooperation. Marcos arrived in the Malaysian capital for a three-day state visit on Wednesday and held official talks a day after meeting with the Filipino community in Kuala Lumpur. Like genuine friendships, Anwar said Malaysian-Philippine relations have had its ups and downs. The Malaysian government has warmly offered its people’s expertise to train Philippine personnel and officials to strengthen our capabilities in these increasingly important sectors, Marcos said. Malaysia was the 10th largest trading partner of the Philippines last year, with trade totaling $8.84 billion. In the same period, Malaysia ranked as the country’s 11th export destination and 9th import source valued at $2.46 billion and $6.38 billion, respectively. 

DOLE, Tesda to focus on hiking employment of young workers

THE Department of Labor and Employment (DOLE) is currently working with Technical Education and Skills Development Authority (TESDA) in increasing employment, specifically youth employability, said Secretary Bienvenido Laguesma on Wednesday, during the 2023 Post Sona Discussions. This is in response to Marcos’ second Sona, where he reported that the employment rate as of May this year rose to 95.7 percent. The DOLE secretary also said that their plan is based on the help of social partners such as labor representatives and employee-representatives in the Labor and Employment Plan. In here are embodied the programs that will push for youth employability, and those that promote industrial peace, said Laguesma. Aside from the youth, DOLE also wanted employability among women, the elderly, among others. 

DTI sets action plan on food logistics

The Department of Trade and Industry (DT) is seeking approval of a six-point three-year plan that would manage the country’s food logistics challenges, including smuggling and hoarding. Ruth Castelo, DTI undersecretary, said the proposed food logistics action agenda that has been presented to the economic development group adopts a supply chain control tower  approach involving multiple stages from  farm gate to storage, distribution and retail. Castelo said the plan involves the  issuance of presidential directives creating an inter agency Committee on Food logistics, the institutionalization of the economic intelligence sub -task group and congressional action through legislation.The DTI acknowledges this would require significant investment in technology and infrastructure, data integration from multiple sources as well as coordination among numerous stakeholders in regulatory compliance.

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