ECCP at Work

ECCP@Work Featured Articles | March 5, 2024

March 05, 2024

ECCP Online

ECCP at Work

Philippines hopes to launch EU free trade negotiations 'very soon' 

The Philippines said it hopes to launch formal free trade agreement negotiations with the European Union (EU) “very soon,” Foreign Affairs Secretary Enrique Manalo said Monday. In October 2023, Trade Secretary Alfredo Pascual said the Philippines is nearing the conclusion of initial discussions for a free trade agreement (FTA) with the EU, which is seen to bring greater market access and improved trade with the regional bloc.

Philippine inflation quickens for the first time in five months in February

Philippine annual inflation sped up for the first time in five months in February due to faster increases in food and transport costs, likely giving the central bank little reason to consider lowering interest rates. The consumer price index rose 3.4% in February from a year earlier, which was above the previous month’s 2.8%, but still within the central bank’s 2% to 4% target for the year.

P2 trillion worth of investment leads as of January — BoI

The Board of Investments (BoI) has around P2 trillion worth of investment leads, mostly in renewable energy, as of January, an official said. Ma. Corazon Halili-Dichosa, executive director of BoI’s Industry Development Services, said these investment leads comprise 331 projects, which are mostly in the renewable energy sector and include solar power projects and both offshore and onshore wind projects. 

AMLC expects more investigations into terrorism financing

The Anti-Money Laundering Council (AMLC) is optimistic that government agencies will be able to increase the number of investigations and prosecutions of cases related to dirty money, which could help the country exit the Financial Action Task Force’s “gray list.” AMLC Executive Director Matthew M. David said the Philippines is continuously improving its anti-money laundering and counter-terrorism financing regime through the efforts of government agencies and the private sector. 

PH welcomes progress in WTO but says more needs to be done

The Philippines said a lot of work has yet to be done in agriculture, dispute settlement reform, and fisheries subsidies in the World Trade Organization (WTO). Trade Secretary Alfredo Pascual who led the Philippine delegation to the 13th Ministerial Conference (MC) of the WTO in Abu Dhabi March 2 said the country welcomes the progress made that enabled the WTO members deliver on key outcomes, including the extension of moratorium on the imposition of customs duties on electronic transmission and finalization of the Investment Facilitation for Development Agreement, among others. 

‘Hot money’ net outflows in January at $76M–BSP

The Philippines recorded net outflows in foreign investments registered with the Bangko Sentral ng Pilipinas (BSP), through authorized agent banks (AABs) in January 2024. Data from the BSP showed net outflows reached $76 million, from the $1.3-billion gross outflows and the gross inflows of $1.2 billion for the month. The recorded net outflows, BSP said, are lower than the net outflows of $205 million posted in December 2023.

Compliance made more convenient: BoC updates and enhanced post-clearance audit

While there was a slowdown in customs post-clearance audits (PCAs) in 2021 and 2022 primarily due to the pandemic, the Bureau of Customs (BoC) Post-Clearance Audit Group ramped up its activities thereafter. The BOC issued a total of 932 Audit Notification Letters (ANLs) in 2022 and 2023, marking the audit commencement for hundreds of importers. With the BoC’s increased target collection of P959 billion this year, the BoC is expected to continue issuing more ANLs and conducting more PCAs.

PHL can’t afford free college tuition; Resources best focused on Basic Ed

The government cannot afford to expand the free tuition program for university students due to limited fiscal space and should instead focus on supporting basic education, De La Salle University economics professor Maria Ella Calaor-Oplas stressed. Finance Secretary Ralph G. Recto has said he supports the possible expansion of Republic Act No. 10931 or the Universal Access to Quality Tertiary Education Act of 2017 which offers tuition-free state-university education for eligible students.

New PCC rules seen unlocking M&A deal flow

More mergers and acquisitions (M&As) activity is expected to result from the raising of Philippine Competition Commission (PCC) notification thresholds, freeing up smaller deals from compulsory regulatory review, analysts said. China Bank Capital Corp. Managing Director Juan Paolo E. Colet said more transactions will be released from the review requirement in response to the changes. 

Manufacturing activity expands in February

Factory activity in the Philippines expanded for the sixth straight month in February amid a strong increase in new orders that boosted hiring, but shortages in raw materials continued to affect production, S&P Global said on Friday. The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 51.0 in February from 50.9 in January. A PMI reading above the 50 mark denotes improvement in operating conditions compared to the preceding month, while a reading below 50 signals deterioration.

Gross borrowings hit P2.19 trillion

The national government’s gross borrowings increased to P2.193 trillion in 2023 amid a rise in external debt, the Bureau of the Treasury (BTr) reported. Data from the BTr showed that total borrowings went up by 1.38% last year from P2.163 trillion in 2022. This was also slightly below the P2.207-trillion borrowing program for the year. External debt was composed of P204.279 billion in program loans, P163.607 billion in global bonds, P135.858 billion in new project loans and P55.291 billion in Islamic certificates.  

Inflation uptick seen in Feb. — poll

Headline inflation likely quickened in February amid higher prices of key commodities like food, electricity and fuel, analysts said. A BusinessWorld poll of 16 analysts yielded a median estimate of 3% for the consumer price index (CPI) in February, within the 2.8-3.6% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month. If realized, February inflation would be slightly faster than the 2.8% print in January but much slower than 8.6% in the same month a year ago. 

Erring online merchants to face fines, blacklisting

The Department of Trade and Industry (DTI) eyes the imposition of administrative penalties  anging from P20,000 to P1 million against online retailers found to have violated the Consumer Act and other trade and industry laws. The draft implementing rules and regulations (IRR) of the Internet Transactions Act (ITA) of 2023 lays down the liability of online selling platforms on such and other violations. 

US grant to fund study on PH vessel traffic management

The Department of Transportation (DOTr) and the US government, through the US Embassy in Manila, have signed an agreement providing a US grant for a feasibility study for the implementation of a Vessel Traffic Management System (VTMS) at 10 locations in the country last March 2. The VTMS is expected to address maritime safety issues by enabling increased awareness and coordination of maritime traffic.   

DOF leads G-24 technical meetings to tackle urgent global challenges 

The Philippines, which currently sits as chair of the Intergovernmental Group of Twenty-Four (G-24) Board of Governors, led the G-24 Technical Group Meetings (TGMs) through the leadership of the Department of Finance (DOF) from February 21-22, 2024 in Manila. This year, the Philippines hosted the two-day G-24 TGMs to discuss strategies to effectively address ongoing economic challenges including climate financing and changes in the global trade regime, among others. Formed in 1971, the G-24 helps coordinate the positions of developing countries on international monetary and development finance issues.

Maharlika Investment Corp eyes membership in global network of sovereign wealth funds to strengthen transparency and good governance 

The Maharlika Investment Corporation (MIC) is set to apply for Associate Membership in the International Forum of Sovereign Wealth Funds (IFSWF) to strengthen transparency and good governance, after the proposal was approved during the fourth MIC board meeting presided by Finance Secretary and MIC Chairperson Ralph G. Recto on February 29, 2024. An IFSWF Associate Membership is usually granted for three years, specifically for institutions that are in the early stages of forming their sovereign funds.

PHL must cut poverty rates before pursuing UMIC dream

Before fulfilling its dream of reaching Upper Middle Income Country (UMIC) status, the Philippines must first significantly bring down poverty, according to the French Development Agency (AFD). Using the World Bank threshold, the poverty rate in the country was still at 18.3 percent in 2019 although it is lower than the 35.3 percent in 2010, the AFD report noted. 

Manufacturer prices of food, drinks buck Jan downtrend 

Manufacturer prices overall contracted in January but those of beverages and food continued to increase, according to the latest data from the Philippine Statistics Authority. The Producer Price Index (PPI) for manufacturing contracted by 1 percent in January 2024. This is the steepest contraction in manufacturing PPI in at least 12 months. The manufacturer prices for beverages posted an increase of 7.6 percent while the manufacture of food posted a 1.1-percent growth in January 2024.

Hotels, restaurants now required to distribute service charge to contractuals, agency-hires

A large number of hospitality establishments are opposed to the new rules issued by the Department of Labor and Employment (DOLE), which now require hotels, restaurants and similar establishments to distribute service charges they’ve collected to even casual or contractual employees, non-regular and agency workers. The DOLE on February 19 started implementing its Department Order 242-2024, which revises the implementing rules and regulations of Republic Act 11360, the Service Charge Law, enacted on August 2019.

PHL manufacturing index better in February despite supply shortages

Amid material shortages, the country’s manufacturing sector continued to improve its performance in the S&P Global Manufacturing Purchasing Managers Index (PMI) in February 2024. The country’s PMI score improved at a score of 51, an improvement from the 50.9 it posted in January 2024, driven by a rise in new orders as demand for goods improved. This marks the sixth consecutive month that the country’s PMI score was above the 50 threshold score. 

DTI eyes completion of ITA IRR by March 19

The Department of Trade and Industry (DTI) is hoping to complete the implementing rules and regulations (IRR) of the Internet Transactions Act (ITA) by March 19, according to an official of the agency. “We are really hoping that we will be able to finish it on time,” Trade Undersecretary Mary Jean Pacheco told reporters, referring to the IRR deadline, which falls 90 days after the effectivity of the law.

Philippines hopes to launch EU free trade negotiations 'very soon'

The Philippines said it hopes to launch formal free trade agreement negotiations with the European Union (EU) “very soon,” Foreign Affairs Secretary Enrique Manalo said. The Southeast Asian nation, which has already been in preliminary talks with the 27-nation bloc, aims to create “greater economic resiliency” by tightening partnerships with other countries, he said.

PHL secures $1.5-B investment deals

Australian companies pledged $1.5 billion (around P86 billion) worth of investments to the Philippines, as President Ferdinand R. Marcos, Jr. sought to boost economic and security ties with Australia in the face of an increasingly aggressive China. The Presidential Palace said in a statement that the signed deals consist of 10 memoranda of understanding (MoU) and two letters of intent from Australian business leaders who plan to invest in the Philippines.

Emerging markets’ assets at risk as more governments clash with central banks

Central bank independence is becoming an increasingly key battleground in emerging markets (EM), and one that bodes ill for currency and bond investors. While conflict over central bank policy has been increasing in recent months, it has long been a part of the investment landscape.

Philippines ranks 2nd highest in legal, economic gender equality in SE Asia

In the World Bank’s Women, Business, and the Law (WBL) 2024 report, the Philippines got a score of 70 out of 100 under its expanded WBL 2.0 index. The WBL report assesses the laws and regulations that restrict economic opportunity and the gap between legal reforms and outcomes for women in 190 economies. A score of 100 indicates complete legal parity. Among Southeast Asian economies, the Philippines was second only to Vietnam, which scored 85.

BSP to cut rates by 25 bps in June — BofA Research

The BSP will likely begin its policy easing cycle with a 25-basis-point (bp) cut in June, Bank of America (BofA) Global Research said. In a report dated March 4, it said the BSP is expected to slash policy rates by a total of 100 bps this year, starting with a 25-bp cut in the second quarter. This would be followed by a reduction of 50 bps in the third quarter and 25 bps in the fourth quarter.BofA Global Research said the first policy cut will be delivered in June as this would be “in sync with the Fed.”

Air passenger volume surges 55%

Air passenger traffic volume surged by 55 percent to 50.2 million in the full year of 2023, from 32.3 million passengers recorded in the previous year, driven by the significant recovery of domestic travel, according to the Civil Aeronautics Board’s (CAB) latest data. The number of domestic air passengers grew by 29 percent to 28.97 million last year from 22.5 million in the previous year.

New SEC commissioner named

Hubert Dominic Guevara is the new Securities and Exchange Commission (SEC) commissioner. Guevara assumes the post vice Kelvin Lester Lee whose term in the SEC ended. Guevara’s appointment brings him back to the SEC more than a decade after having served as director of the former Compliance and Enforcement Department — now the Enforcement and Investor Protection Department.

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