November 12, 2021
ECCP at Work
Malacañang says unvaccinated employees may not be terminated but shall be required to undergo regular RT-PCR testing, or antigen tests, at their own expense. The Philippine government's coronavirus task force has required the COVID-19 vaccination of employees doing on-site work, both public and private, in areas where there are enough supplies of COVID-19 vaccines, effective December 1.
President Rodrigo Duterte has formally approved the nationwide implementation of the COVID-19 alert level system, according to Executive Order No. 151 issued by the Palace. The first phase of the program is ongoing in Metro Manila, Central Luzon, Calabarzon, Western Visayas, Central Visayas, Northern Mindanao, and Davao Region. It states Ilocos Region, Eastern Visayas, and Soccsksargen should adopt the alert level system before the end of November for the second phase. The succeeding phases will be carried out every week thereafter until the full nationwide implementation in December.
Fitch Solutions has hiked its growth forecast for the Philippine economy this 2021 after it performed better than expected in the third quarter. The global think tank now projects national economic output will expand by 4.5% this year, up from its prior 4.2% forecast with growth in July to September defying expectations. Gross domestic product grew by 7.1% during the period, swinging from the 11.6% contraction in the third quarter last year. Surpassing average forecasts by economists, the recent outturn yielded a 3.8% quarter-on-quarter acceleration — succeeding the 1.4% contraction in the second quarter.
The Philippine Economic Zone Authority (PEZA) reported a 13.7% decline in approved investments in the first 10 months of 2021, reflecting the impact of the coronavirus pandemic on investor sentiment. In a statement, PEZA said it approved 215 projects worth P62.72 billion in the January to October period, lower than the P72.64-billion worth of projects during the same period in 2020.
The economy is sufficiently insulated in the event the post-pandemic trade recovery falters due to supply chain disruptions and China’s slowing growth, the central bank governor said. The Philippine Statistics Authority said the trade deficit in September stood at $4 billion, widening from the $2.27 billion deficit a year earlier and the $3.51 billion deficit in August. Exports rose 6.3% year on year to $6.68 billion, while imports rose by about a quarter to $10.67 billion.
The House Committee on Ways and Means approved a bill that would temporarily suspend or lower the excise tax on some fuel products for six months, a move that is estimated to cost the government around P45 billion in foregone revenues. The committee approved a substitute bill that would temporarily scrap the excise taxes on diesel, kerosene, and liquefied petroleum gas (LPG). The excise tax on low-octane gasoline will be lowered to P4.35 per liter (/L), while the tax on premium gasoline will remain in place.
The Department of Budget and Management (DBM) has released 97.4 percent of the full-year 2021 budget as of end-October, the agency’s data showed. According to data posted on its website, the DBM has released P4.39 trillion of the P4.5 trillion 2021 obligation program as of October 31. The remaining balance for the year is P115.57 billion.
Further opening the economy to foreign capital will help the Philippines recover faster from the scarring inflicted by the prolonged COVID-19 pandemic on economic growth and jobs, a World Bank economist said. Local banks, meanwhile, were fast-tracking their digitalization efforts in order to adapt to the new normal wrought by COVID-19 despite challenges posed by risk-aversion among borrowers at the start of the year.
Foreign business groups, including ECCP, industry associations and advocacy organizations pressed for the immediate ratification of the bill establishing the Philippine Transportation Safety Board (PTSB). In a joint statement issued on November 10, the signatories said that the PTSB bill “is ready for immediate passage.” The parties said that the measure has been pending before Congress for over two decades already, noting that it was only during the 18th Congress when significant strides were made.
Trade Secretary Ramon Lopez said employers have the prerogative to hire only vaccinated people but that it should be a preference not a requirement. But Lopez noted employers cannot fire workers who are not vaccinated but they can give incentives to those who have been inoculated to encourage co-workers to get the vaccine. Incentives include positive and better merits for promotion, leave credits or extra points in employee ratings or more benefits for the vaccinated.
Foreign Direct Investments (FDI) jumped by 20% in August, although investors remained cautious as seen in the lower reinvestment of earnings and higher equity capital withdrawals. Data released by the Bangko Sentral ng Pilipinas (BSP) showed net inflows of FDI rose by 19.8% year on year to $812 million from $677 million in the same month in 2020. However, FDI dropped by 35% from the $1.263 billion inflow seen in July.
A number of economists lost no time upgrading their economic growth outlook on the Philippines for this year, and even for next year, after the country performed way better than expected in the third quarter despite the reimposition of tougher lockdown protocols at some point. The 7.1 percent year-on-year gross domestic product (GDP) growth in the third quarter was a welcome surprise as market consensus was expecting a growth of only 4.9 percent.
Over 70% of workers in the tourism sector have already completed their COVID-19 shots to date, the Tourism department said. Puyat said even when Metro Manila was under Alert Level 4 a few months ago, 99% of all hotel employees in the region were already fully-vaccinated. She added that tourism workers in Baguio, Davao Region, and San Vicente in Palawan have already reached 100% vaccination rate, while Boracay will likely complete vaccination for its target eligible population in two weeks.
Trade Secretary Ramon Lopez is hopeful the economic growth could reach or even surpass its pre-pandemic level by 2022, when it could grow 6 to 7 percent. Lopez said full-year GDP could hit 5 to 5.5 percent for the year Lopez’ prognosis for 2021 touches the high side of the target set by the Development Budget Coordination Committee (DBCC) of 4 to 5 percent.
The Philippines has the lowest digital consumer penetration in Southeast Asia despite the increase in the number of digital consumers the past 18 months. The e-Conomy SEA Report 2021 released by Google ,Temasek and Bain & Company said overall, the Philippines remains the fastest growing in the region with gross merchandise value (GMV) seen reaching $40 billion by 2025, growing at 24 percent compounded annual growth rate.
Manila has called for the end to the debate and the start of climate action as countries like the Philippines are already sinking and experiencing more violent typhoons. In his address to world leaders at the 26th United Nations (UN) Climate Change Conference of the Parties (COP26), Finance Secretary Carlos G. Dominguez III said climate change is very real for the Philippines.
The central bank said interest rates would remain at their low levels—despite the stronger-than-expected third quarter growth figures announced by the government —until it sees clearer evidence that the economic recovery is on firmer footing. In a statement following the release of the latest gross domestic product numbers, Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno said the agency “will continue to be patient with its accommodative monetary policy stance to support the economy’s full recovery.”
The Asian Development Bank (ADB) said Wednesday that it is developing a climate-risk insurance project for micro-, small-, and medium-sized enterprises (MSMEs) in the Philippines. The project aims to come up with a sustainable business case and model for climate disaster insurance by studying the risk management needs of local MSMEs.
China’s Asian Infrastructure Investment Bank (AIIB) is assessing a proposed $250-million loan to support Philippine coronavirus disease 2019 (COVID-19) vaccine procurement. In a document released on Wednesday, AIIB said the Philippines’ project to procure more vaccines will be under the COVID-19 Crisis Recovery Facility. The total project cost of $553.66 million is expected to be co-financed by the Asian Development Bank (ADB), with its own $250-million loan. The Philippine government covers the rest of the funds.
The government aims to vaccinate 15 million individuals during the three-day COVID-19 vaccination drive dubbed "Bayanihan, Bakunahan." Vaccine czar Carlito Galvez Jr. said other regions will extend help to those still struggling to administer shots during the event slated from Nov. 29 to Dec. 1. Schools, gymnasiums, fast food chains, malls, and workplaces will be transformed into vaccination sites to ensure there is enough space to entertain all vaccinees.
In the midst of unresolved issues on the sale of the Malampaya stake, the chairman of Shell companies in the Philippines is stepping down. “Cesar G. Romero will step down as Executive Director, President and Chief Executive Officer, and Chairperson of the Nomination Committee of the Corporation effective November 30, 2021,” Pilipinas Shell Petroleum Corporation (PSPC) said in a disclosure to the stock exchange.
The Fiscal Incentives Review Board (FIRB) maintained its resolution that allows registered business enterprises of the Information Technology and Business Process Management (IT-BPM) sector to continue implementing work from home (WFH) arrangements without adversely affecting their fiscal incentives until the end of the first quarter in 2022, the Department of Finance (DOF) said in a statement.
Factory output growth moderated to a still strong 124 percent year-on-year in September on the back of the expansion posted in 13 industries, the Philippine Statistics Authority (PSA) reported. The PSA’s monthly integrated survey of selected industries report for September showed the increase in volume of production index (VoPI)—a proxy for factory output—slowed compared to August’s 533.6 percent. In September last year, VoPI declined by 56.7 percent.
The Senate should realign over P1 trillion of the proposed 2022 budget, taking away from the government’s infrastructure projects and putting money into programs that would address the pandemic, like cash aid during quarantine and support for health-care workers, a multi-sectoral coalition said. The People’s Budget Coalition proposed a P1.16-trillion recast budget that would address the country’s needs during the pandemic, particularly in social protection, health, labor and employment, education and public transportation.
Metro Manila may ease to Alert Level 1 if the country's COVID-19 cases recorded per day drop to below 1,000, Health Secretary Francisco Duque III said. Under the Alert Level 1 guidelines as of Nov. 4, interzonal and intrazonal movement of all people is allowed, while all establishments may operate at full capacity as long as they comply with the minimum health standards.
Government negotiators assuaged concerns raised by advocates on the possible negative effects of the Regional Comprehensive Economic Cooperation (RCEP) on the country’s labor, health and agriculture sectors. Emerging issues in trade such as labor can be discussed by the Committee on Sustainable Growth once the RCEP agreement is implemented.
The Department of Agriculture (DA) is hoping to see modest growth in the agriculture sector in the remaining months of the year, after the 2.6% contraction seen in the third quarter. Agriculture Undersecretary Fermin D. Adriano said at a virtual briefing that the department is now targeting 1% growth for the agriculture sector this year. This is below the DA’s already downgraded full-year growth target of 2%.
The Senate raised the allocation for health insurance and public hospitals in its version of the 2022 budget bill, known as the National Expenditure Program, citing the need to support the recovery from the coronavirus disease 2019 (COVID-19) pandemic. According to the committee report on the Senate’s budget bill, the Department of Health (DoH), the Philippine Health Insurance Corp. (PhilHealth), and government hospitals, will see their allocations raised to P312.3 billion from the current P242 billion.