July 23, 2021
ECCP at Work
The Anti-Red Tape Authority (ARTA) is considering proposing new rules that would speed up the issuing of permits for telecommunications underground works. The proposed circular will add to the telecommunications permit-streamlining guidelines currently in force. ARTA has been releasing guidelines on streamlining pending and new applications for the construction, repair, and maintenance of telco infrastructure since last year.
The Meat Importers and Traders Association (MITA) wrote Agriculture Secretary William D. Dar with a request to extend the validity of both sanitary and phytosanitary import clearance (SPS-IC), and minimum access volume import certificate (MAVIC), by 30 days, to accommodate the delays experienced both in shipping and arrival. This means that the validity of the SPS-IC would be extended to 90 days from 60, while MAVIC would be valid for 120 days from the current 90.
In a virtual briefing for the 2021 second quarter inflation report, Diokno said average inflation in April to June, although still above the government’s 2 percent to 4 percent target band, decelerated to 4.3 percent from the previous three months’ 4.5 percent. He attributed this to the impact of non-monetary interventions to address domestic supply constraints on pork, among others, which was hit by the African swine fever.
The government’s bid to further push digitalization of the financial system, among others, will be closely coordinated with the private sector to fully achieve the goals for financial inclusion. The need to hasten the government's digitalization program was enhanced by the pandemic after the government implemented movement restrictions to address the spread of infections. Dominguez said the government did not fail to collect revenues even after the pandemic hit last year because the Bureau of the Internal Revenue (BIR), among others, had already started its electronic tax collections some years back.
The Department of Finance (DOF) clarified on Thursday that the controversial Revenue Regulations (RR) 9-2021 will be repealed and replaced with a new one that will allow exporters to keep enjoying zero-percent value-added tax (VAT) on their local purchases of goods and services “directly and exclusively used” in a registered project or activity. Finance Undersecretary Antonette C. Tionko, who heads the DOF’s Revenue Operations Group, said on Thursday the new RR that is targeted to be issued this month will now be in line with the provisions of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
The Philippines will have a “steady supply” of Covid-19 vaccines in the next six months as the national government has secured 164 million doses through procurement while sourcing additional shots from the COVAX Facility and bilateral donations. As of July 21, a total of 28,485,130 doses have been delivered out of the 164 million doses secured by the country. The 164 million doses are composed of 26 million government-procured Sinovac doses, 40 million Pfizer-BioNTech doses, 13 million Moderna doses, and 10 million Sputnik V doses.
In a report, Pantheon Macroeconomics senior Asia economist Miguel Chanco said the economic impact of the Delta strain would likely be felt by the fourth quarter of this year. Chanco, nonetheless, said that with or without the heightened risk coming from the Delta variant, domestic demand would be “extremely challenging” as uncertainty due to the prolonged pandemic tempered consumer spending.
In its latest monitoring report, the OCTA Research Group said coronavirus infection rates remain high in the capital city of Manila at 1.21, and Makati, a central business district, at 1.24. Coronavirus infections in Manila increased to 109 from 82 in the previous week, it said. Similarly, cases in Makati rose to 74 from 55 and it has been tagged as a “high risk” area as well as the adjacent city of Taguig. Overall, OCTA said the Philippines and the National Capital Region remain under “moderate” risk for the coronavirus.
Moody’s Investors Service slashed its 2021 growth forecast for the Philippines to 5.8%, saying the pandemic remains an “acute challenge” for the economy. Economic managers, on the other hand, expressed optimism the Philippines will hit the full-year gross domestic product (GDP) growth target of 6-7%, after seeing indications of a “pretty good” second quarter. For Moody’s, the reimposition of strict lockdown measures to curb a spike in coronavirus disease 2019 (COVID-19) infections from late March to April hurt the Philippines’ recovery prospects.
The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) have agreed to suspend the implementation of Revenue Regulation 9-2021, which imposed 12-percent value-added tax (VAT) on certain exporter transactions previously taxed at zero percent. Asked if the review being done may be considered a deferment of the RR, DOF Secretary Dominguez said this was “technically correct” given the implementation of the tax. He added that the review may be completed by the end of the month.
International credit watcher Moody’s Investor Service said the country’s credit growth is headed for a rebound this year, as the central bank’s decision to cut rates to record lows will pay off. In an analysis, Moody’s said it forecasts credit in the country to rebound to about 5-percent in 2021 and continue further to 15 percent in 2022.
The foreign business groups reiterated their call for the government to approve a bill aimed at improving the broadband infrastructure in the country amid the accelerated shift to digital in the pandemic. The seven members of the Joint Foreign Chambers (JFC) said they were optimistic that Congress will greenlight at its third regular session the Open Access in Data Transmission bill. When passed into law, the Open Access bill will provide a competitive policy and regulatory framework that eases entry requirements to the data transmission market, the JFC said.
A report from the Institute for Energy Economics and Financial Analysis (IEEFA) said that the clean energy sector received record investment commitments totalling $501 billion (P25.4 trillion), a 9- percent increase from commitments made in 2019. From the committed $501 billion, 60 percent or $303 billion are allotted for renewable energy projects. IEEFA said apart from the inherent advantages such as relatively higher risk-adjusted returns and stable project cashflows of the renewable sector, new coronavirus disease 2019 stimulus packages of some governments, especially in Europe and South Korea pushed for green investments at the forefront of recovery plans.
The supplement to ADB’s flagship economic publication Asian Development Outlook 2021 released yesterday showed the multilateral agency’s growth projections for the Philippines this year and in 2022 remain at 4.5 percent and 5.5 percent, respectively. Both figures are well below the Development Budget Coordination Committee’s (DBCC) own projections of six to seven percent in 2021, seven to nine percent in 2022 and six to seven percent in 2023 and 2024. The ADB meanwhile sees the country’s inflation rate for the year to be at 4.1 percent, and 3.5 percent next year, same as the numbers released in its April report.
NTF chief implementer Carlito Galvez Jr. said the Philippines has so far received 10,464,550 vaccine doses this month and is expected to get an additional 9,353,340 doses. As such, Galvez expressed confidence that the Philippines will not have any shortage of COVID-19 vaccine until August 17 as the country has reached its desired stockpile level of above 10 million doses.
The Philippines is seen avoiding a slowdown in its economic rebound in the third quarter amid relatively lower COVID-19 infections compared to its neighbors suffering from surges and with mass vaccination picking up, UK-based think tank Pantheon Macroeconomics said. For the third quarter, Pantheon Macroeconomics sees GDP growing by 9.2 percent to reverse the 11.4-percent drop a year ago. But Chanco cautioned that “the picture in the archipelago [the Philippines] remains more fragile than in Asia’s largest democracy [India].”
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the passage of a so-called “Bayanihan 3” bill by Congress would not positively impact on the country’s international credit standing. Instead, the head of the central bank urged the government to focus on accelerating the rollout of anti-COVID-19 inoculations around the country instead of foisting the possibility of a third multi-billion spending package to combat the ill economic effects of the pandemic.
Additional Covid-19 vaccines will be deployed to areas where the more transmissible Delta variant of the coronavirus was detected. Secretary Carlito Galvez Jr., Chief Implementer of the National Task Force (NTF) Against Covid-19, said inoculation program in Northern Mindanao (Region 10), National Capital Region (NCR), Western Visayas (Region 6), and other areas of concern will be prioritized.
The Bangko Sentral ng Pilipinas (BSP) said another option they and the Philippine Guarantee Corp. are looking into is subsidizing the surety fees of all loans endorsed through the Credit Surety Fund. Authorities recognize the importance of helping small businesses, especially during the pandemic, as they account for about 99 percent of businesses in the country. Amid this volume, some small business owners still find it difficult to get a boost from financial institutions due partly to such requirements as identification cards of owners and lack of assets that could be used as collateral. The sector is also considered a risky segment to lend to because of the lack of information about its credit score
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort is projecting the economy to return to pre-pandemic growth levels by 2022 due partly to the impact of the May 2022 national polls.Ricafort said he expects government spending, especially on infrastructure, to increase a few months before the national polls so as not to violate the election spending ban. He said some incumbent officials rush to complete various government projects before the election ban.