November 28, 2023
ECCP at Work
The ASEAN+3 Macroeconomic Research Office (AMRO) cut its Philippine gross domestic product (GDP) growth outlook for this year and for 2024 due to weak external demand and global headwinds. In its Annual Consultation Report, the think tank said it expects the Philippine economy to expand by 5.6% this year, lower than the 5.9% forecast it gave in its Regional Economic Outlook Update in October.
The Department of Trade and Industry (DTI) said that the free trade agreement (FTA) between the European Union (EU) and the Philippines is currently at the “scoping stage,” which is expected to be completed by the end of the year. “We are at the scoping stage. The target is it will be finished before the end of the year,” Trade Secretary Alfredo E. Pascual told reporters. He said that once the scoping is done, the two parties will then decide whether to pursue FTA negotiations, with both sides needing to come to a “meeting of minds.”
Amid its ongoing efforts to police counterfeit and unregistered health products, the Food and Drug Administration (FDA) is set to come out with guidelines on how to handle those that have been seized from the market. “A technical working group (TWG) is tasked to develop and implement guidelines in relation to proper handling, storage, and disposal of seized health products,” said the FDA. Dubbed as “Oplan Katharos,” the FDA said the TWG is mandated to set correct protocols for managing the transportation, receipt, handling, storage, and disposal of collected or seized health products.
Finance Secretary Benjamin Diokno said the full-year gross domestic product (GDP) is likely to align closely with the lower end of the target set by the Cabinet-level Development Budget Coordination Committee (DBCC), ranging between six and seven percent. “Our consistently strong economic performance is proof that despite a difficult global environment and domestic challenges, the Philippines remains to be one of the brightest spots in the region,” Diokno said.
The Philippine Economic Zone Authority (PEZA) said the proposed amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act contained in a bill approved by the House of Representatives last week addressed most of its concerns about the law. “Almost everything that was requested by PEZA was sustained by Rep. Jose Ma. Clemente S. Salceda. So, we are happy with the version of the House,” PEZA Director General Tereso O. Panga said.
The Department of Finance (DOF) is optimistic that the government will be able to exceed its full-year revenue target by generating around P1 trillion in the final three months of the year. Finance Secretary Diokno said he expects the national government's total revenue collection for 2023 to reach around P3.8 trillion to P3.9 trillion, exceeding the P3.7 trillion goal. “The emerging total revenue collection for 2023 is seen settling between P3.8 trillion to P3.9 trillion – well above the P3.7 trillion approved Development Budget Coordination Committee (DBCC) level for the year,” Diokno said.
The value of traded goods in the country during the third quarter shrank as the volume also decreased in the third quarter of the year, the Philippine Statistics Authority (PSA) reported. The value of goods traded from July to September posted a double-digit drop of 38.3 percent to P190.812 billion from P309.459 billion in the same period a year ago. The third quarter decline was a reversal of the 17 percent growth in the same period in 2022, and the 15.8 percent expansion in the previous quarter. Likewise, the volume of traded goods also fell 24.2 percent to 4.90 million tons from the 6.47 million tons recorded last year.
The semiconductor and electronics industry has revised this year’s forecasts from flat to a decline of up to 10 percent in exports due to inventory correction as well as global political and economic factors. Dan Lachica, president of the Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI), said the group sees a recovery in 2024, when exports are likely to be flat. This after nine-month exports fell 5.5 percent to $31 billion from $33 billion in the same period in 2022, figures from the Philippine Statistics Authority showed.
Jack Madrid, president and chief executive officer of the IT- Business Process Association of the Philippines, said this puts the group firmly on track to its roadmap goal of $59 billion revenues in 2028. Madrid said in his speech at the PEZA Investors Night last week growth of the industry this year, which is faster than the 7.7 percent projection for the global industry, will translate to $35.4 billion in revenues. Madrid said the industry will add 130,000 jobs this year to 1.7 million, an 8.7 percent increase from a year ago. “We are off to a great start, and we are committed to sustaining this trajectory as we accomplish the Philippine IT-BPM Roadmap 2028 goal of achieving 2.5M jobs and $59-billion revenue by 2028,” Madrid said.
Power supply seen tightening on lack of new energy sources“It’s still going to be tight because there is no new power plant except maybe the Excellent plant of San Miguel that’s scheduled to be completed by the end of next year. Its entry would even be in 2025,” said Manuel V. Pangilinan, chairman of the Manila Electric Co. (Meralco). Pangilinan was referring to the 1,750 megawatt (MW) LNG (liquefied natural gas) power plant of Excellent Energy Resources Inc. (EERI), a subsidiary of San Miguel Global Power, the power arm of conglomerate San Miguel Corp. Aboitiz Power Corp., for its part, said demand is also expected to grow, “maybe by 600 to 7000 megawatts.” “Although it’s El Niño, it’s still going to be tight especially during summer, but I think we will have ample supply,” said AboitizPower President Emmanuel Rubio.
“PPP is really the way we need to go,” Agriculture Undersecretary for Policy, Planning, and Regulations Mercedita Sombilla said during the recent PPP forum organized by the DA- Project Development Service (DA-PDS). While acknowledging that the private sector may not be enticed in agriculture because of its vulnerabilities especially with climate change, she challenged the forum participants to think of out of the box strategies and projects that are beneficial for both parties. “We have a PPP Unit in the DA and I hope that all our regional offices will also have a conscious effort to really look for projects that we can implement through PPP,” Sombilla said.
The government should continue with targeted subsidies to protect the most vulnerable even with inflation poised to slow down, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said. “Our food stamp programs, we have to strengthen. Our targeted subsidy programs, we also have to strengthen so that we can achieve more with less. That’s the objective. Achieve more with less,” Mr. Balisacan told reporters on the sidelines of an event last week. The Department of Social Welfare and Development (DSWD) has said it is studying ways to expand the reach of its cash transfer programs.
A bill seeking to impose zero tariffs on imports of completely-built electronic vehicles (EVs) has been filed in the House of Representatives, with the measure proposing to run until 2029. The measure proposes to amend Republic Act No. 11697 or the Electric Vehicle Industry Development Act (EVIDA). Under the current law, imports of completely-built EVs are eligible for incentives under the Tax Reform for Acceleration Inclusion (TRAIN) law. “Limited interpretations of the EVIDA have effectively denied two-wheeled electric vehicles access to fiscal incentives granted to electric vehicles,” Albay Representative Jose Ma. Clemente S. Salceda, who wrote the measure, said in its explanatory note. He said the measure would help the Philippines comply with the Paris Agreement, which seeks to to limit global warming to 1.5°C by cutting greenhouse gas emissions by 43% by 2030.
A delegation of 16 Philippine businesses engaged in food and beverages at the China International Import Expo (CIIE) secured $1.1 billion in overall sales in 2023, surpassing the $655-million sales booked last year, according to the Center for International Trade Expositions and Missions (Citem), the export promotions arm of the Department of Trade and Industry (DTI). In a statement issued last Saturday, the Citem said the amount included purchase agreements made prior to the opening of the 6th CIIE, tallying $876.63 million with ceremonial turnover and signing during the show. On top of this, the Citem said over $226 million was recorded under booked sales, sales under negotiation, retail sales and business matching activities after the 6-day trade exhibition.
The IT and Business Process Association of the Philippines (Ibpap) said it is banking on healthcare, financial services and contact center sectors as it eyes a 7-percent growth in jobs for 2024. Ibpap President Jack Madrid told reporters on the sidelines of the Philippine Economic Zone Authority’s (Peza) Investors’ Night last week, “We added 130,000 jobs this year. That’s year-end additional jobs so the total will be 1.7 million.” The Ibpap chief also reported that of the 1.1 additional jobs it aims to create by 2028, “So far we’ve done 300,000 so we have 800,000 to go.” The sectors that have contributed to the industry’s growth this year, Madrid said, are health care, banking and finance, and contact center. The same set of sectors is expected to drive the growth of the industry for 2024, he added.
The volume of rice imports as of mid-November went down by 16.7 percent compared to the same period last year, the Department of Agriculture (DA) reported. Data from the DA-Bureau of Plant Industry (BPI) showed that inbound shipments of the staple as of November 16 totaled 2.93 million metric tons (MT), down 16.7 percent from the 3.25 million MT of the same period in 2022. Vietnam remained the country's top source of rice, shipping 2.61 million MT and accounting for 89.17 percent of total imports. Thailand followed with 143,897.67 MT, Myanmar with 123,658 MT, and Pakistan with 30,325.21 MT. India also shipped 13,734.79 MT of rice to the country.