July 16, 2021
ECCP at Work
The Philippines is eyeing to offer its first ever retail dollar bond (RDB) issuance, which will allow small- and mid-sized investors to mobilize their savings and earn while helping fund the government’s recovery and resilience programs, the Bureau of the Treasury (BTr) said. The bonds are set to be offered at a minimum placement of $300, equivalent to around P15,000, which the BTr said makes it far more accessible than the traditional US dollar bonds issued by the Republic of the Philippines that require a minimum subscription of $200,000.
President Rodrigo Duterte has approved the pandemic task force's recommendation to keep Metro Manila under General Community Quarantine until July 31 but additional restrictions will no longer be implemented, Malacañang announced. Some areas, however, will be under "GCQ with heightened restrictions" until July 22, presidential spokesman Harry Roque said.
Presidential adviser for entrepreneurship Joey Concepcion has suggested the implementation of safe spaces with an increased workforce capacity as soon as 80 percent vaccination or herd immunity in respective buildings is achieved. The safe spaces would enable businesses to stop the transmission of the virus and to optimize their operations, he added. Presidential spokesman Harry Roque said the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) has yet to discuss the proposal.
The Department of Education (DepEd) announced Friday that President Rodrigo Duterted has approved September 13, 2021 as the opening date for School Year 2021-2022. In a statement, the DepEd said the date was among the options recommended by DepEd Secretary Leonor Briones. The school calendar for SY 2021-2022 will be released soon.
Japanese firms are keen on investing $3 billion for expansion and diversification projects but are concerned about the operational and fiscal bottlenecks that could hamper their plans. In a recent dialogue with the Department of Trade and Industry (DTI), the 10 Japanese firms who were in the meeting raised concerns regarding the timely issuance of travel visas for their executives and engineers. They also expressed concern over the processing and release of permits and licenses by regulatory agencies, VAT and other additional taxes by LGUs, and access to Covid-19 vaccinations.
In an Ateneo School of Government (ASOG) working paper, titled “Review of the Philippine economic situation and analysis of the State of the Nation in 2021,” ADMU Department of Economics Professor Philip Arnold P. Tuaño underscored the need for the Duterte administration to address its shortcomings in its last year in office. Tuaño said the government should also focus on strengthening fiscal spending and ensuring that policies accommodate small and medium enterprises.
The Senate Committee on Ways and Means opened on Thursday deliberations on the third key plank of the multi-package tax reform program, this time focused on updating the real property valuation system to shore up revenue for both the national and local governments. The updated system comprises Package 3 of the Duterte administration’s Comprehensive Tax Reform Program.
The East Asia and Pacific region, excluding China, is expected to grow 4 percent this year, World Bank President David Malpass said on Thursday, down from a 4.4 percent forecast in March and with the pace of the rollout of COVID-19 vaccines a risk to the outlook. Including China, the World Bank expects the region to grow 7.7 percent this year, above a 7.4 percent projection made in March, Malpass said in a streamed news conference.
In a joint press briefing Tuesday, Information Technology and Business Process Association of the Philippines (IBPAP) president Rey Untal said the new BIR regulation is “hurtful and harmful to businesses” since additional tax will be passed on to export-oriented firms. Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) president Dan Lachica added that with the new policy, it would be cheaper to source raw materials and packaging supplies from foreign sources than from domestic suppliers.
The OCTA Research Group is worried about the Philippines' fate if it experiences the same surge Indonesia is battling due to the Delta coronavirus variant. OCTA fellow Dr. Guido David said Indonesia had a better daily attack rate and vaccination rate compared to the Philippines before the surge. But Indonesia is now in shambles as the most feared variant tears through the Southeast Asian nation. Medical experts say Delta is 40% to 60% more transmissible than the Alpha variant. The Philippines has so far recorded 19 Delta variant cases from incoming travelers, but they were immediately isolated and quarantined upon arrival.
First Metro Investment Corp. (FMIC), the investment banking arm of the Metrobank Group, said the economy can grow 5 to 6 percent this year, a recovery from the 9.6 percent contraction experienced last year. Jose Patricio Dumlao, FMIC president, said the rebound in the economy is supported by “the faster global economic recovery, accelerated vaccine mobilization, sustained supportive fiscal and monetary policies, and the government’s commitment to push infrastructure projects.”
National Task Force (NTF) against Covid-19 deputy chief implementer and testing czar, Secretary Vince Dizon, said there is still no change of plan on the target timeline for population protection as long as the country continues to receive Covid-19 vaccines from different pharmaceutical companies. Citing that population protection is still achievable by the end of the year, Dizon, however, said it will still depend on the vaccine supply. To date, the Philippines has received 21,779,910 total anti-Covid-19 vaccine doses, of which 13,817,358 doses have been administered to healthcare workers, senior citizens, persons with co-morbidities, economic workers, and indigents, across the country.
Finance Undersecretary and Chief Economist Gil Beltran said, “Food price inflation is expected to peak this month as imports rise to boost domestic supply. Bolstering food productivity is necessary for long-term food price stability,” Food price inflation maintained its pace in June at 4.88 percent, unchanged from May’s 4.87 percent. Beltran also said average prices of rice, fruits, and vegetables declined by 1.10 percent, 0.64 percent, and 2.71 percent, respectively, muting the higher-than-average inflation in the prices of meat (19.24 percent) and fish (8.66 percent).
The Mindanao Development Authority (MinDa) has lined up for completion this year at least five major infrastructure projects worth P18.49 billion under President Duterte’s Build, Build, Build (BBB) program, a MinDa official told lawmakers. MinDa Deputy Executive Director Romeo “Yo” Montenegro said these five projects, which include coastal roads and flood control systems, represent 52.44 percent out of the total P35.26-billion BBB projects targeted for completion within the year.
Education Secretary Leonor Briones said she is hoping President Rodrigo Duterte will consider this time her request to pilot face-to-face classes in select areas in August, in time for the new school year. Lockdowns forced over 20 million students into online and module-based learning since March last year. Children ages 5 and older have been allowed to head out and visit open air spaces just last week, after more than a year of being cooped up inside their homes.
More Filipinos are now willing to get vaccinated against COVID-19, according to the latest Social Weather Stations (SWS) survey. The poll conducted from June 23 to 26 showed 45% of Filipinos are willing to receive coronavirus shots - 13 points higher than the 32% recorded in May. The survey also showed 21% of respondents are unwilling to get vaccinated while 24% are still undecided.
Dutch financial giant ING sees a “challenging and complicated” path to economic recovery for the Philippines due to the less optimistic outlook of credit-rating agencies on the country’s ballooning debt, wider fiscal deficit and the return to a current-account deficit. On top of rising debt-to-GDP, ING Philippines senior economist Nicholas Mapa said the return of “twin deficits”—the bigger budget deficit and the revert to a current-account deficit will slow economic growth this year to a dismal 4.7 percent, below the government’s downscaled 6-7 percent target range.
Amid the threat of the feared Delta variant of COVID-19, the Philippines extended travel restrictions imposed on inbound travelers from India and six other countries until July 31, 2021, Malacañang said. The travel ban covers India, Pakistan, Bangladesh, Sri Lanka, Nepal, the United Arab Emirates, and Oman.
The Philippines would be among the last countries in the region, together with Vietnam and Taiwan, to vaccinate 70 percent of its population and achieve the so-called herd immunity, UK-based think tank Oxford Economics said. Oxford Economics projected that it would take up to the middle of next year for the Philippines to inoculate some 78 million people or 70 percent of its population of 111 million.
Fitch Ratings on Monday affirmed the Philippines’ credit rating at “BBB,” which is one notch above the minimum investment grade, but gave a negative outlook as it cited economic risks from the pandemic. Investors appeared to have a knee-jerk reaction to the news. On Tuesday, the Philippine Stock Exchange index shed 118.74 points or 1.71% to close at 6,795.13, with all sectors in the red. The peso closed stronger at P50 per dollar on Tuesday from its P50.12 finish on Monday. During the session, the peso fell to P50.30, the weakest since June 2020.
Exporters and foreign chambers are calling for the repeal of the Bureau of Internal Revenue’s (BIR) tax refund scheme for raw materials shipped outside the country, which they said would cost Philippine jobs. Industry leaders said Revenue Regulations (RR) No. 9-2021, which imposed a 12% value-added tax (VAT) on previously exempt raw materials and packaging supplies sold by local manufacturers to exporters, would weaken investor interest and cause multinational transfer to foreign suppliers.
The OCTA Research Group on Tuesday urged the government to continue its prioritization of the National Capital Region (NCR) Plus 8 in its coronavirus disease 2019 (Covid-19) vaccination program. OCTA fellow Prof. Ranjit Rye made the appeal in reaction to the government's plan to distribute more than three million doses of the single-shot Janssen vaccines, developed by Johnson & Johnson, to island provinces, including those in Visayas and Mindanao.
Electronics companies are poised to shift to imported raw materials due to the additional cost caused by the imposition of the 12-percent value-added tax (VAT) on purchases from domestic constructive exporters Dan Lachica, president of the Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI) in a press conference said this means P10 billion to P28 billion worth of purchases and would cause the displacement of some 10,000 to 50,000 workers.
Octa Research group urged the government to maintain general community quarantine (GCQ) in Metro Manila until the end of July." In NCR (National Capital Region), we should continue with GCQ. We can just ease restrictions on business establishments. We say this because there is still the threat of the Delta variant," Octa Research fellow Ranjit Rye said in a mix of English and Filipino. The country has so far reported 19 cases of the Delta variant, which is believed to be driving the surge in infections in India and a number of other countries.
Despite a credit rating agency issuing a negative outlook on the country, the government’s economic managers say the drag to the economy due to the coronavirus disease 2019 (COVID-19) pandemic will only be temporary. International debt watcher Fitch Ratings said it affirmed the Philippines’ credit rating at “BBB” which is one notch above the minimum investment grade. Fitch’s outlook on the rating was adjusted from stable to negative, “reflecting downside risks to the Philippines’ medium-term growth prospects and possible challenges associated with unwinding the exceptional policy response to the health crisis and restoring sound public finances as the pandemic recedes.”