Philippine Weekly Update

POLITICS

The House and Senate bicameral conference committee on House Bill 6132 or the 2016 General Appropriations Bill (GAB) has approved the bicameral report on the national budget, which reconciled the amendments of both chambers. The 2016 General Appropriations Bill (GAB) provides for a P3.002 trillion national budget for 2016.

The legislature has approved an P88.1-billion ($1.87 billion) budget for the police force next year, 13 % higher than this year. This includes P3.5 billion for modernization, a 75 % increase over this year. This will cover new patrol cars, surveillance equipment and a computerized crime reporting system, the first in the country.

The country’s largest business groups have joined foreign chambers of commerce in a final push for Congress to pass a legal resolution that seeks to ease constitutional restrictions on foreign investment, arguing that easing the 40% foreign investment restriction will be critical in light of the country’s aim to join the Trans-Pacific Partnership, honor commitments to the ASEAN Economic Community, and forge an advanced free trade agreement with the European Union.

BUSINESS

Exports continued to drop in October, but the pace of decline eased from the four-year high registered in September, according to the Philippine Statistics Authority (PSA). In October, exports fell 10.8 % to $4.59 billion, bringing the 10-month merchandise exports down 6.2 % to $48.87 billion from $52.124 billion in the same period last year. According to the PSA, October performance followed the steep 25 % plunge in September, the largest decline in export revenues since September 2011.

Vehicle makers are inching closer to their year-end growth target as sales improved nearly a quarter in the 11 months to November on the back of robust demand for both passenger cars and commercial vehicles. According to a joint report by the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and Trucks Manufacturers Association (TMA), vehicle sales surged 23 % in the January to November period this year to 261,930 units compared to 213,427 units sold in the same period last year. Sales for the month of November alone rose 25.9 % to 26,979 units from 21,422 units in the same month for 2014.

ECONOMY

The budget deficit widened at the start of the fourth quarter as public spending accelerated to its second highest growth in the year in October. The deficit reached P27.022 billion in October, up from merely P2.5 billion last year and P22.14 billion a month ago. This brought the year-to-date budget gap to P52.574 billion, the Bureau of the Treasury reported on Wednesday.

Dutch financial institution, ING Bank, sees Philippine inflation falling below the 2 to 4 % target set by the Bangko Sentral ng Pilipinas (BSP) for 2016. According to a senior economist at ING Bank Manila, inflation is seen accelerating toward the end of next year and averaging 1.6 % in 2016. According to latest data from the Philippine Statistics Authority (PSA) showed inflation kicked up to 1.1 % in November from a record low of 0.4 % in October due to a sharp increase in food prices. Inflation averaged 1.4 % in the first 11 months from 4.3 % in the same period last year. This was lower than the BSP inflation target of between two and 4 % this year.

INVESTMENTS

The Philippines got about P62.8 billion in additional investments with President Aquino’s weeklong trip to Europe following a meeting with top executives of five huge investors, mostly from France, when he attended the climate change summit for world leaders. President Aquino met with executives of Sanofi Pasteur, Airbus, Cement Roadstone Holdings-France (CRH), Jacobi Carbons and Usine IO.

PROJECT BIDS

The P27 billion proposal of Metro Pacific Tollways Development Corporation (MPTDC) to build and operate a third bridge connecting Mactan Island to mainland Cebu has not received any challenger. According to Cebu City Administrator Lucelle Mercado, no other private company has submitted an expression of interest (EOI) for the Swiss Challenge of MPTDC’s P27-billion proposal.

A Consortium led by an Indian technology firm emerged as the sole qualified bidder for the P298-million public-private partnership (PPP) deal to upgrade the information technology (IT) system of the Land Transportation Franchising and Regulatory Board (LTFRB), after its only rival backed out. The final concession agreement for the Davao Sasa Port Modernization (DSPM), a public-private partnership (PPP) project, is set to be released before the year ends. Submission of the bids of pre-qualified bidders is also set in mid-January next year and the project contract will be awarded to the winning group by March 2016.

INFRASTRUCTURE
Government infrastructure spending accelerated by almost a quarter in the first nine months, but remained below program during the review period. According to the Department of Budget and Management (DBM), a total of P243 billion was spent for infrastructure and other capital outlays from January to September, up 24.3 % year-on-year, but still 16 % behind the P289.3 billion target. This was despite a 50 % surge in infrastructure spending to P28.8 billion in September.

ENERGY

Bases Conversion and Development Authority (BCDA) has secured P11.75 billion in investments for Clark Green City that would provide a clean energy source to the country’s first disaster-resilient and green city. According to BCDA, a lease agreement has been signed with Sunray Power Inc. (SPI) for the lease of a 260-hectare area in Clark Green City to build a 100-megawatt (MW) solar power facility worth P11.75 billion.

36 countries, including the Philippines, have given the official start to an initiative to promote geothermal energy in developing economies as a cleaner alternative to oil, gas and coal. The Global Geothermal Alliance, launched on the sidelines of the UN climate talks in Le Bourget, Paris aims at a six-fold increase in geothermal electricity production and a tripling of geothermal-derived heating by 2030.

The National Power Corp. (Napocor) has assured there would be no power rate increase in off-grid areas being served by its Small Power Utilities Group (SPUG) this holiday season. According to Napocor president and CEO, Ma. Gladys Cruz-Sta. Rita, any power rate hike would take at least a year before being acted upon by the Energy Regulatory Commission (ERC) because the petitions have to undergo several public hearings,

AGRICULTURE

The Pilipino Banana Growers and Exporters Association (PBGEA) has urged the National Government to make a formal request to the Japanese government to start a negotiation on tariffs imposed on banana products shipped to Japan. This is to further secure the country’s position in Japan’s banana market. According to Alexander N. Valoria, chief executive officer (CEO) of Anflocor and president of Pbgea, counterparts from Japan need only a form request with regards to negotiation to lower down tariffs on bananas, if not put down to zero-tariff.

The Agriculture Department has started the P76.3-million concreting of Junction National Highway-Mamawan-Diculum-Milidan farm-to-market road in Baliguian, Zamboanga del Norte. The project is funded under the agency’s Philippine Rural Development Program (PRDP). According to Agriculture Secretary Alcala, PRDP is a platform for an inclusive, value-chain oriented and climate resilient agriculture and fisheries sector.

HEALTHCARE

Ayala Land, Inc. (ALI) is set to open two new hospitals next year while still on the process of cementing its foothold in the country’s healthcare industry. ALI is particularly planning to build 10 hospitals across the country until 2019 as part of its healthcare venture that started more than a year ago. According to ALI president and chief executive officer, Bobby Dy, he is confident the company can build all those 10 hospitals within its expected timetable, adding that the company is on track to opening two more Qualimed branches next year.

TOURISM

A new tourism office will be built in Dumaguete City next year with the implementation of Executive Order No. 183 creating the Negros Island Region (NIR), the Department of Tourism (DOT) said. According to DOT Region VII Director Rowena Montecillo, creation of the tourism office for the new region was the result of ongoing consultation being conducted by the DOT in preparation for the separation of Negros Oriental and Negros Occidental from Central and Western Visayas, respectively, to form the NIR.