ECCP at Work

ECCP@Work Featured Articles | September 19, 2023

September 19, 2023

ECCP Online

ECCP at Work

ECCP, AsBAA partner with DoTr for 2023 Aviation Summit

The Philippines’ tourism industry is steadily recovering with a growing number of international and domestic travelers. The surge in travel demand, coupled with the government’s commitment to tourism revival, underscores a need to establish a conducive environment for aviation stakeholders. Achieving sustainability in the aviation sector then necessitates collaborative efforts across all segments of society. To address persistent challenges that have hindered the industry’s growth and to pave the way for a more resilient aviation sector, the European Chamber of Commerce of the Philippines (ECCP) and the Asian Business Aviation Association (AsBAA) have joined forces with the Department of Transportation (DoTr) to present the inaugural Aviation Summit.

Energy dep’t preparing airlines for sustainable fuel phase-in by 2027

The Department of Energy (DoE) said it has taken the first steps towards getting airlines ready for the global adoption of sustainable aviation fuel (SAF) starting in 2027. “The use of SAF is intended to reduce the carbon footprint associated with aviation operations. This alternative fuel source, derived from renewable feedstock, holds the potential to lower greenhouse gas (GHG) emissions while ensuring the highest safety and performance standard,” Energy Undersecretary Alessandro O. Sales said in a statement. According to the DoE, SAF is an “environmentally sustainable and chemically identical alternative to fossil fuel-based aviation fuel.”

HSBC Global Research sees PHL rate hike in Q4

HSBC GLOBAL Research expects the Bangko Sentral ng Pilipinas (BSP) to raise its benchmark rate by another 25 basis points (bps) in the fourth quarter due to heightened global inflation risks. The projected policy move in the three months to December will depend on whether the planned tariff reduction on rice is sufficient, HSBC Global Research Association of Southeast Asian Nations economist Aris Dacanay said. 

External debt hits $118 billion

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed external debt increased by 9.5% to $117.918 billion at end-June from $107.692 billion in the same period a year ago. The BSP in a statement said the annual growth of the external debt stock was driven by net availments of the National Government (NG) worth $7.9 billion. It was also due to the change in the scope of the external debt, which now includes nonresidents’ peso-denominated debt securities issued onshore and other prior adjustments.

SRA probes low trading price of sugar

Administrator Pablo Luis Azcona considered the development a “bit surprising” and said the SRA is now determining what could have caused the price depression. “I was informed that trading of sugar went below the PHP3,000 mark that we had forecasted. Definitely, none of the farmers want the low price, so we will focus our investigation on the mills, traders, and importers to see if there is some abnormality in their dealings. Rest assured, we will get to the bottom of this,” he said in a statement on Monday. “We have been pushing for the PHP3,000 price as I feel it is the fair market price. This has been echoed by the administration, as well as an incentive for farmers to plant more and be more sustainable,” Azcona said.

BSP likely to maintain pause — poll

A BusinessWorld poll conducted last week showed 14 of 17 analysts expect the Monetary Board (MB) to maintain the policy rate at a near 16-year high of 6.25% despite the inflation uptick in August. On the other hand, three analysts see the BSP raising borrowing costs by 25 basis points (bps) at the Sept. 17 meeting to preemptively ward off inflationary pressures. If realized, this would bring the target reverse repurchase (RRP) rate to 6.5%. “We expect the BSP to keep its policy rate steady at 6.25%. Concerns on growth will likely be front and center,” HSBC Global Research Association of Southeast Asian Nations (ASEAN) economist Aris Dacanay said in an e-mail.

Travel industry confident in rebound despite inflation

“From what I can see in our travel agency, we are experiencing an increase in demand for… individual bookings and group bookings; I’m sure that airlines and hotels are also experiencing that,” Travel Sale Expo Chairperson Michelle Taylan said. Jagmohan Tamber, Director of online visa application center BLS International, said visa applications have also surpassed pre-pandemic levels. Marissa Dimaano, assistant vice-president for passenger sales at Philippine Airlines (PAL), said airlines achieved record results in the first half. United Airlines Philippine country manager for sales Pam C. Navarro said that the airline has been exceeding expectations.

DOF touts P2-T investment pledges yield from roadshows

Finance Secretary Benjamin E. Diokno said the international dialogues and roadshows held by the country abroad are effective in increasing the Philippines’s “visibility in the international arena.” The DOF enumerated the investment pledges that the country has received from the previous economic roadshows held by the current administration: P800 billion from Singapore and Indonesia, P708.2 billion in investment deals from Japan, and P229 billion from the United States of America.

Gross borrowings down 25% in July

In July, gross borrowings dropped by a fourth to P131.937 billion from P174.951 billion in the same month a year ago. The narrower budget deficit in July reflected higher government revenue collections, which meant less borrowings were needed, he added. The National Government’s fiscal deficit shrank by 44.89% to P47.8 billion in July. For the first seven months of the year, the budget gap narrowed by 21.22% to P599.5 billion.

Speaker, Lower House to explore solutions with DOE, fuel firms vs gas price stampede

Speaker Ferdinand Martin Romualdez is set to gather major oil players and the Department of Energy’s officials to explore “win-win” solutions that will address the seemingly endless series of oil price hikes. “No one is spared from the ill effects of the high cost of living due to oil price hikes. Everyone is struggling. [T]his is beyond anyone’s control,” said Romualdez. The solution, Romualdez said, can come from a united front of all stakeholders—oil companies and the government included.

AI could unlock growth opportunities for PHL

Moody’s Investors Service said that AI and other transformative technologies have the potential to “reshape entire industries” and “drive the emergence of new sectors, possibly in content generation, mobility, education, or healthcare fields.” AI is seen to boost Philippine growth by 12% in 2030, equivalent to $92 billion, according to a report by EDBI and Kearney. Economist Intelligence Unit analyst Laveena Iyer said the launch of ChatGPT in November 2022 spurred an intense debate about how AI will affect and benefit businesses and consumers.

Oil firms hike fuel prices by up to P2.50/liter effective Sept 19

In separate advisories, the oil firms said they would hike the prices of gasoline by P2 per liter and diesel by P2.50 per liter. The price of kerosene will likewise increase by P2 per liter. Rino Abad, director of the Department of Energy (DOE) Oil Industry Management Bureau, explained that this was still due mainly to the Organization of the Petroleum Exporting Countries’ (Opec) decision to extend voluntary production cuts until December this year.

PH agri trade deficit up slightly in June

In a report, the Philippine Statistics Authority (PSA) said the total balance of trade in agricultural goods went up by 0.2 percent to $2.71 billion in three months ending June from $2.703 billion in the same period a year ago. Michael Ricafort, Rizal Commercial Banking Corp.’s chief economist, said the tepid performance “could be attributed to slower global economic growth and trade amid risk of economic slowdown or even recession” in the United States and “mostly softer economic data in China.”

FTA with S. Korea makes PHL electronics competitive–Seipi

The Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) noted that around 5 to 6 percent of semiconductors and electronics produced in the Philippines are shipped to South Korea. Seipi President Danilo C. Lachica said FTAs are “always helpful” for exporters. Sans a trade deal with Seoul, he said electronics from the Philippines would have be less competitive than those shipped by countries that have an existing FTA with South Korea.

‘PUV modernization, Dyson investment will create jobs’

The Public Utility Vehicle (PUV) Modernization Program offers a “substantial” economic benefit as it is seen to generate over 3,000 jobs in the manufacturing industry, according to the Automotive Body Manufacturers Association of the Philippines (ABMAP). ABMAP said the job creation resulting from program is not limited to factory workers alone. It also involves various aspects of the supply chain, such as research and development, logistics, and quality control, which it said signifies further boosting the nation’s manufacturing ecosystem.

‘Expiry of anti-dumping duties on Turkish flour to hurt local industry’

“The expiration of the anti-dumping duties would enable Turkish firms which had exited the market due to an inability to compete at their normal prices to regain their foothold in the Philippines and regain market share to the detriment of fairly priced exporters and local producers,” according to the staff report of Pafmil presented at the hearing organized by the Tariff Commission last Friday. Local four millers claimed that there is a “well-established” trading relationship between the Philippines and Turkey. Moreover, they said there is increasing domestic demand for wheat flour end-products, such as bread and pastries, which means that competitively priced wheat flour from Turkey will remain “a strong option.”

DOE targets full commercial ops of electricity market’s ancillary services trading by Dec. ’23

In a draft circular, the agency said the Independent Electricity Market Operator of the Philippines (IEMOP), operator of the Wholesale Electricity Spot Market (WESM), will start with the final preparations and limited live-dispatch operations of the Reserve Market (RM) starting September 26 until December 25 this year. The ERC granted preliminary approval to the joint application of the Independent Electricity Market Operator of the Philippines (IEMOP) and the Philippine Electricity Market Corp. (PEMC) for the PDM, as well as for the implementation of the co-optimized energy and RM.

DOE: Power rates declining as demand, fuel prices fall

Based on data collected by the agency, the average power rates in the entire country stood at P13.61 per kilowatt hour (kWh) in March. This fell to P12.51 per kWh in April and further to P12.05 per kWh in May.  It then slightly went up to P12.26 per kWh in June but declined to P11.69 per kWh in July and dropped to P11.15 per kWh in August. “Summer is over so demand decreased,” said DOE Undersecretary Rowena Cristina Guevara. “It is also important to note the decreasing trend on electricity rates from the beginning of the year up to the previous month (August) was due to the lower price of fossil fuels such as coal and natural gas,” she added.

Price cap brings down rice cost in E. Visayas, says DA exec

DA-Eastern Visayas regional technical director for operations Larry Sultan said in a phone interview there were notable compliance of rice price cap in major markets of Catbalogan City in Samar, and partial compliance in the cities of Tacloban and Ormoc in Leyte and Calbayog City in Samar. The price of regular milled rice (RMR) went down to PHP41 per kg on Sept. 15 from PHP49 per kg on Sept. 8. For well-milled rice, the cost dropped to PHP45 from PHP52, based on the report of the DA-Agribusiness and Marketing Assistance Division. The official said the DA has been conducting regular monitoring of the major capital markets in the region to investigate the cause of the surging price changes during the weeks to the enforcement of the EO.

India’s GMR Group eyes to expand PHL investments

“GMR officials said they will provide a long-term solution to the Philippines especially in infrastructure and energy,” Presidential Communications Office Secretary Cheloy Velicaria-Garafil said in a statement issued last Friday. It is also one of the five potential bidders who bought bid documents as of September 13, for the P170.6-billion Ninoy Aquino International Airport (NAIA) Public-Private Partnership (PPP) project. The President welcomed the interest of GMR to increase its investments in more local airports and other sectors.

Air cargo demand in Asia Pacific posted gain in July

In a report, IATA noted the region registered a 0.9-percent annual growth in July, an improvement from the 7.2-percent drop in June. “Asia Pacific airlines experienced their first year-on-year growth in cargo traffic since March 2022, driven by increased trade with other regions and significant market improvements within Asia,” it said. IATA noted air cargo traffic was driven by movements across Europe-Asia, Middle East-Asia, Africa-Asia and intra-Asian routes. Globally, IATA said air cargo capacity has been showing improvement because of the “continued restoration of belly cargo capacity during the summer season.”

House OK’s mining fiscal regime bill

Under the bill, large-scale metallic mining operations within mineral reservations would be subject to a 4% royalty rate of the gross output of minerals or mineral products extracted. The bill also mandates “ring-fencing to prevent consolidation of income and expenses of all mining projects by the same taxpayer to ensure that losses from other mining projects could not be deducted from more profitable projects.” “With the structural changes to the mining fiscal regime proposed under House Bill No. 8937, the government is projected to collect an additional P1.93 billion in royalties and taxes every year,” House Ways and Means Committee Vice Chairperson and Nueva Ecija Rep. Mikaela Angela B. Suansing said in her sponsorship speech on Sept. 5. The proposed fiscal regime for the mining sector is expected to yield P12.4 billion in 2025, P12.9 billion in 2026, P13.4 billion in 2027, and P13.9 billion in 2028, according to Finance Secretary Benjamin E. Diokno.

OVER PAST TWO YEARS: Big garments exporters shed 9K jobs

Two of the country’s biggest garments exporters have laid off 9,000 workers over the past two years as part of the rationalization of their operations amid soft global demand post-pandemic, according to Marites Agoncillo,  executive director of the Confederation of Wearable Exporters of the Philippines (Conwep). Taiwanese-owned Mactan Group,  one of the country’s oldest exporters, has let go of some 15,000 workers after it started merging its companies in 2021. Agoncillo said garments manufacturer Luen Thai meanwhile has trimmed down its workers, laying off  2,000 workers in a factory in Pampanga in the middle of the year. According to Agoncillo, buyer pullout,  low productivity and wage increases have been cited by the companies in their decision to layoff workers. Agoncillo said Conwep intends to appeal to the government to reconsider a looming legislated wage increase.

NFA hikes buying price for palay

President Ferdinand R. Marcos, Jr. was quoted as saying the NFA Council set the purchasing price for dry palay to P23 per kilogram from the current P19, and for wet palay to P19 per kilogram from the current P16. With the new buying price of dry palay set at P23, the NFA said it would need a maximum of P15 billion for the procurement fund. National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said that NFA procurement will be focused in areas where there is excess supply. “In that case, it can help elevate farmgate price,” he said. Bantay Bigas spokesperson Cathy L. Estavillo said the new buying price will make up for farmers’ production costs, which have increased with the recent spike in fuel prices. Federation of Free Farmers National Manager Raul Q. Montemayor said the government should augment the buying funds of the NFA if needed.

DoF defends plan to cut import tariffs on rice 

The government’s proposal to reduce import tariffs on rice will “balance the interests” of farmers, consumers, and the poorest, Finance Secretary Benjamin E. Diokno said. Monetary Board member and rice expert Bruce J. Tolentino said cutting the tariff rates for rice imports to 0% would impact government revenues. “The tariff should be low, not zero. We need some tariff revenue to finance the RCEF (Rice Competitiveness Enhancement Fund),” he told BusinessWorld in a text message. “The current tariff of 35% on rice from ASEAN, and 50% on rice from non-ASEAN countries, is severely constraining and induces non competitiveness among domestic rice producers,” he said. Meanwhile, Foundation for Economic Freedom (FEF) President Calixto V. Chikiamco in a Viber message said the FEF supports the reduction of tariff rates to 0% if it’s “politically feasible,” as lower rice tariffs would be better for consumers. However, the tariff cut should only be treated as a temporary solution.

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