August 27, 2021
The House Committee on Public Works and Highways approved a substitute bill Wednesday that seeks to adopt a 30-year national infrastructure plan. The unnumbered substitute bill that will replace House Bill 8151 or the 30-Year National Infrastructure Program Act of 2021 covers major infrastructure projects by the National Government in transport, energy, water resources, information and communications technology, and social infrastructure. Among the amendments made to the approved bill were the inclusion of poverty alleviation, environmental sustainability, and financial viability among the criteria for project selection, along with risk management measures to adapt to large-impact disruptive events.
The Government should introduce reforms to revive the labor market, after the Philippines posted the highest increase in unemployment rate and the second-largest decline in labor force participation rate among its peers last year, the Asian Development Bank (ADB) said. In its Key Indicators for Asia and the Pacific 2021, the multilateral bank noted that the Philippines saw a 5.2-percentage-point rise in its jobless rate in 2020, the steepest increase in unemployment among 21 ADB member countries in the study. The Philippines also reported a 1.77-percentage-point drop in the labor force participation last year from its pre-crisis level in 2019, the second highest among 18 economies with available data, and just below Vietnam’s 2.17-percentage-point decline.
Economic losses due to lockdown measures in Metro Manila and nearby provinces have gone down to P74 billion per week and may decline further to as low as P8 billion if restrictions are fully relaxed. Socioeconomic Planning Secretary Karl Chua raised the scenario during Congress deliberation on the P5.024-trillion national budget for 2022. He said the impact of community quarantine in Metro Manila and the neighboring provinces of Bulacan, Cavite, Laguna and Rizal has decreased with the downgrade of lockdown measures.
Presidential adviser for entrepreneurship and Go Negosyo founder Joey Concepcion wants unvaccinated individuals allowed mobility provided they present negative COVID-19 test result upon entry in establishments. Concepcion said restaurants, cafés, salons and gyms would be implementing the so-called bakuna bubble by asking vaccinated individuals to present a vaccination card and for unvaccinated persons, a negative antigen or RT-PCR (reverse transcription - polymerase chain reaction) test result prior to entry. He said the scheme is being proposed for the NCR, which is seen to have 50 percent of the population fully vaccinated by the end of this month.
The threat posed by the more infectious Delta variant of the SARS-CoV-2 coronavirus that causes COVID-19 may delay the Philippines’ return to pre-pandemic output to early 2023, the country’s chief economist said.. Socioeconomic Planning Secretary Karl Kendrick Chua told legislators at the start of deliberations on the proposed P5.02-trillion 2022 national budget that since the Development Budget Coordination Committee slashed this year’s economic growth forecast to 4-5 percent, gross domestic product needed to expand by over 9 percent next year so that nominal GDP could return to over P19 trillion.
The latest economic forecasts compiled by Barcelona-based FocusEconomics have shown a less optimistic 2021 growth outlook for the Philippines averaging 4.7 percent after parts of the country reverted to the most stringent lockdown level this month. While the updated average forecast of FocusEconomics’ economist-panelists was within the government’s downgraded 4-5 percent gross domestic product growth target, it was below the 5.2-percent projection they had in July. FocusEconomics’ panelists expect the Philippines’ GDP to grow by 7 percent next year. The government targets 7-9 percent GDP growth in 2022.
With faster economic growth seen next year, coupled with the quick shift to digitalization, government revenue collections will revert to prepandemic levels in 2022 after a two-year slump, Finance Secretary Carlos Dominguez III. During the Congressional hearing on the proposed P5.02-trillion 2022 national budget, Dominguez said total tax and nontax revenues were projected to hit P3.29 trillion next year, up from this year’s P2.88-trillion program and actual collections of P2.86 trillion amid the pandemic-induced recession in 2020. Gross domestic product (GDP) shrank by 9.6 percent last year, the worst annual postwar economic contraction. In 2019 or before the COVID-19 crisis, the tax and nontax revenue collection of the government hit a record-high P3.14 trillion.
The Bangko Sentral ng Pilipinas (BSP) yesterday said the latest set of foreign exchange (FX) reforms are aligned with prevailing market conditions and will further promote an environment conducive to businesses and investments. The most recent FX reforms were issued under Circular No. 1124 dated August 10, 2021. The revised rules under said Circular will be effective on September 13, 2021. Circular No. 1124 aims to promote greater ease in the use of FX resources of the banking system, and further streamline and simplify procedures and documentary requirements for FX transactions by allowing, among others, electronic submission of documents and use of electronic/digital signatures.
Improvements in the Philippine foreign direct investment (FDI) restrictiveness ranking would depend on the passage of laws further opening up the economy, business and government leaders said. The Philippines ranked third most restrictive out of 83 economies on the FDI Regulatory Restrictiveness Index compiled by the Organization for Economic Cooperation and Development (OECD), based on 2020 data. On a scale of 0 (open) to 1 (closed), the Philippines scored 0.374, behind just Palestine and Libya. Most FDI restrictions came from the primary, telecommunications, media, business services, and transport sectors.
The Bureau of Internal Revenue (BIR) has moved to keep exporters’ transactions zero-rated for value-added tax (VAT) by releasing its draft revenue regulation (RR) on the subject and holding consultations with stakeholders. The draft RR came after the suspension of the implementation of RR No. 9-2021 issued in June, which slapped a 12-percent VAT on local purchases of exporters operating within economic zones.
The Department of Transportation (DOTr) is set to unveil today two transport infrastructure projects in Visayas that are expected to help boost tourism in the region. DOTr said the first to be inaugurated is the upgraded Siquijor Airport with a new passenger terminal building (PTB), powerhouse and vehicular parking area. Siquijor Airport’s new PTB can accommodate 60 passengers at any given time. However, due to the Inter-Agency Task Force on Emerging Infectious Diseases’ strict protocol on social distancing to contain the spread of the coronavirus, only 40 passengers will be served by the new PTB. Prior to the upgrade, the PTB of the airport can only accommodate 10 passengers. The airport upgrade was started in March 2018 and completed last month.
The country’s transactions with the rest of the world yielded dollar earnings for the country in July this year, contrasting the two-month dollar deficit in May and June, data from the Bangko Sentral ng Pilipinas (BSP) showed. BSP Governor Benjamin Diokno said that the country’s Balance of Payments (BOP) posted a surplus of $642 million in July this year, significantly higher than the $8-million surplus in the same month last year.
Over 90,000 workers were displaced during the two-week enhanced community quarantine (ECQ) in the National Capital Region (NCR), according to the Department of Labor and Employment (DOLE). This was lower than DOLE’s initial projection that around 300,000 to 400,000 workers will be displaced due to the lockdown from August 6 to 20, 2021. In an online press briefing, Labor Assistant Secretary Dominique R. Tutay said the affected workers were permanently or temporarily displaced by 3,000 companies, when NCR was placed under ECQ.
The Philippines may incur losses of over 5 percent of GDP annually, or the country’s annual infrastructure budget, due to climate change, according to the latest Asia Pacific Disaster Report 2021 released by the United Nations (UN). The report said the poor in the Philippines are among the most vulnerable in Southeast Asia based on estimates using representative concentration pathways (RCPs). The data showed that RCP 4.5 stands for moderate climate change scenarios while RCP 8.5 are severe climate change scenarios.
BSP Governor Benjamin Diokno confirmed that the Philippines' share in the SDR allocation amounting to SDR 1,958,027,771.00 was credited to the country’s SDR account. The IMF advised member-country authorities that the SDR allocation can be used to boost foreign exchange reserves and reduce reliance on debt, create space for countries to step up efforts against the crisis and support reforms to the economy. The BSP also said IMF member-countries can exchange their SDRs for hard currencies with other IMF members. The newly allocated SDRs are reflected in the GIR until the national government determines its use.
Presidential adviser for entrepreneurship and Go Negosyo founder Joey Concepcion said the government and private sector should start preparing for booster shots now to ensure that these are available when needed. Addressing the Kapihan sa Manila Bay virtual media forum, Concepcion said that while AstraZeneca is not taking orders now, it is asking his group to plan out booster shots.
The Duterte administration continues to prioritize its flagship Build Build Build program in its final year, pouring yet another trillion pesos into infrastructure projects for 2022. In the 2022 National Expenditure Program (NEP) submitted to Congress, the executive branch has sought a total appropriation of P1.18 trillion for public works and transport programs or about a quarter of the proposed P5-trillion national budget for next year. This is the second time the budget for infrastructure projects reached the P1-trillion mark. For this year, P1.1 trillion or 4.5% of the country’s GDP is allocated for the program.
Lars Wittig, newly-elected president of the European Chamber of Commerce of the Philippines, said European businessmen found some local industries like manufacturing and garment “maybe obsolete” amid the health crisis. Manufacturing, for the most part, suffered at the onset of the pandemic, owing to supply chain disruptions and restricted mobility that constrains workers' movements. Central bank data shows net foreign direct investments from European countries fell 15.3% year-on-year in 2020 to $323.9 million, tracking a broader 24.6% annual decline in overall FDIs to the Philippines last year after the pandemic threw the economy into its longest recession since the 1980s.
Mobility will be the next benchmark that foreign investors will consider when coming into the Philippines, but the current process is “painful” for those planning to scout opportunities in the country, the European Chamber of Commerce of the Philippines (ECCP) said. According to newly-elected ECCP president Lars Wittig, foreign businesses are now looking at the vaccination program, and mobility of the population moving forward.
The Joint Foreign Chambers (JFC) is backing local business groups in opposing recommendations to retain the telecommunications sector as a public utility, saying this would prevent investments that foster greater competition and improved services. With other Southeast Asian countries having better telecommunications services than those offered in the Philippines, JFC is of the view that opening the sector to more foreign investments would bring improvements. Moreover, JFC said the approval of the PSA amendments would help the Philippines become better qualified for trade and investment agreements such as the Comprehensive and Progressive Trans-Pacific Partnership.
Southeast Asia’s stunted growth momentum due to the severity of its lockdowns will be temporary because of its critical role in global supply chains, which will allow it to eventually close the gap with regions that remained relatively open like Latin America, Moody’s Analytics said. The firm downgraded its growth outlook for the Philippines to 4% in August, from the previous estimate of 4.9%, citing the new lockdowns. Gross domestic product (GDP) rose 11.8% in the second quarter, ending a 15-month recession. However, GDP dropped 1.3% quarter on quarter, reflecting the impact of the lockdown in March and April.
Asia’s robust economic recovery from last year’s coronavirus low is losing momentum as a surge in COVID-19 cases sees shops empty again and factories close, dimming prospects for corporate profit growth after a blockbuster half year. In Southeast Asia, soaring COVID-19 cases and subsequent lockdown measures have hit economic activity in both the services and manufacturing sectors. Factory activity in the region contracted in July at the fastest pace since June last year, IHS Markit data showed.
The IMF said in a statement it distributed around $650 billion in SDRs — the largest in its history — to its members. Data from the IMF website showed the Philippines gained 1.958 billion in newly allocated SDRs on Monday. This is equivalent to about $2.777 billion, based on a social media post by the IMF Asia and Pacific. Prior to the new allocation, the Philippines already has 837.964 million in SDRs with the IMF, bringing the cumulative total to $2.795 billion.
The coronavirus pandemic may have pushed as many as 80 million people in developing Asia into extreme poverty last year, threatening to derail progress on global goals to tackle poverty and hunger by 2030, the Asian Development Bank (ADB) said. Developing Asia’s extreme poverty rate — or the proportion of its people living on less than $1.90 a day — would have fallen to 2.6% in 2020 from 5.2% in 2017 without the coronavirus disease 2019 (COVID-19), but the crisis likely pushed last year’s projected rate higher by about two percentage points, ADB simulations showed.
For 2022, the Tax Reform for Acceleration and Inclusion (TRAIN) law is seen to generate P169.85 billion, up by 7.5 percent from P157.94 billion program this year. On top of this, “sin” tax laws will also give the government P52.33 billion in revenues, a 21.4-percent jump from this year’s P43.1-billion program. However, these revenue gains will be offset by the losses from the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) and the Financial Institutions Strategic Transfer (FIST) Act amounting to P118.79 billion and P1.97 billion, respectively.
Galvez earlier revealed that three countries have pledged to donate millions of COVID-19 vaccine doses to the country. These countries, which he did not identify, would donate 1.5 million and one million doses of Pfizer and AstraZeneca vaccines, respectively, while the third might share three million doses. Since the country began its mass inoculation campaign on March 1, 30 million vaccine doses have been administered, with 13 million Filipinos fully vaccinated against COVID-19. The government aims to vaccinate up to 70 million people before year-end to achieve herd immunity.