ECCP at Work

ECCP@Work Featured News Articles | March 11, 2022

March 11, 2022

ECCP Online

ECCP at Work

Energy dep’t floats possible suspension of Biofuels Law

The government could suspend the Biofuels Law to cushion the public from soaring fuel prices, the Energy department said, following proposals made to the Cabinet to raise the fuel subsidy for public transport drivers and to suspend the 7% tariff on thermal coal. “(The suspension of the Biofuels Law) is a possibility if the problem escalates,” Energy Secretary Alfonso G. Cusi said in a virtual briefing on Tuesday. Republic Act 9637, or the Biofuels Act of 2006, requires fuel companies to offer biofuel blends, the proportions of which are currently set at 10% ethanol for gasoline and 5% biofuel for diesel. Ethanol is made from sugar while the feedstock for biodiesel is coconut oil.

Slow recovery seen for consumer goods industry

The country’s country’s fast moving consumer goods (FMCG) industry is projected to have a slow return to pre-pandemic levels, according to data and consulting company Kantar. Kantar said in a statement on Tuesday that the country’s FMCG industry declined 4% year on year during the first nine months of 2021. “Total beverages only saw a 1% growth, while dairy experienced a -11% growth in year-to-date September 2021 compared to the same period the year before. Moreover, breakfast categories like total coffee, coffee creamer, cereal and oatmeal further declined in the last two years since the pandemic started,” Kantar said.

Surging oil a key risk to PHL — Diokno

Russia’s invasion of Ukraine may continue to drive oil prices even higher, which could push inflation beyond the target range for a second straight year, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said. “The main channel through which the Russia-Ukraine war could affect the Philippines is higher oil prices,” Mr. Diokno said in a Viber message to reporters late Sunday evening. “Based on the BSP’s oil price simulation, inflation could settle above the target range of 2% to 4%, only if crude oil prices average higher than $95.00 per barrel in 2022 and 2023,” he added.

PHL moves to cushion oil shock impact

Economic managers approved the implementation of several measures to cushion the impact of the Russia-Ukraine crisis on the Philippine economy, such as temporarily allowing more imports of rice, pork and fish, increasing coal supply, and raising fuel subsidies for public transport drivers. In a televised Palace briefing on Monday evening, Finance Secretary Carlos G. Dominguez III said he does not expect the Russia-Ukraine crisis to “last very long,” adding the Philippine economy will only be affected because oil and food prices will continue to rise.

DOE: Fuel unbundling, strategic oil reserve plan eyed to cushion impact of price hikes

Apart from additional subsidy, the Department of Energy (DOE) is looking at measures that can be taken amid non-stop fuel price hikes, including a call to amend the Oil Deregulation Law and a review of the country's capability to have its own oil reserve. Speaking to CNN Philippines' The Source on Tuesday, Energy Undersecretary Gerardo Erguiza echoed the Cabinet's Economic Development Cluster proposal to double the budget of fuel subsidy for transport drivers to ₱5 billion and the fuel discount vouchers for farmers and fisherfolk to ₱1.1 billion.

Govt to consider PH-wide Alert Level 1 to secure economy amid Ukraine-Russia crisis

Officials will reevaluate the COVID-19 situation nationwide to check if the entire country can downgrade to the most relaxed Alert Level 1 following the recommendation of economic managers in order to cushion the blow of the Ukraine-Russia crisis.  National Task Force against COVID-19 Chief Implementer Carlito Galvez on Tuesday said they will look into the situation in the 146 areas nationwide to see if they meet the metrics for Alert Level 1, such as low cases and high vaccination rate.

Ban on ecozones in MM stays: FIRB

The Fiscal Incentives Review Board (FIRB) has denied the request of the Philippine Economic Zone Authority (PEZA) seeking the lifting of the moratorium on the declaration of ecozones in Metro Manila. The FIRB also rejected PEZA’s request for an extension of the work-from-home (WFH) arrangement to the information technology-business process management (IT-BPM) sector without affecting their incentives. In a letter to PEZA director-general Charito Plaza dated March 7, 2022, FIRB chair and Finance Secretary Carlos Dominguez warned of possible penalties on companies that do not comply to the WFH regulations of the body.

Forecast for PH: High growth, higher inflation, higher interest rates

Skyrocketing commodity prices amid the war in Ukraine may prompt the inflation-targeting local central bank to jack up interest rates by a sum of 75 basis points this year but Philippine economic growth is still likely to outperform regional peers, a senior economist from investment house CLSA said. In a regional media briefing on Wednesday, CLSA senior economist Anthony Nafte said a prolonged scenario of lofty global oil prices breaching $120 per barrel within the next six to nine months would jack up average inflation rates for Southeast Asian economies by an average of 2 percentage points this year. In the case of oil-importing Philippines, the inflation is seen to be the most volatile.

PHL moves to cushion oil shock impact

Economic managers approved the implementation of several measures to cushion the impact of the Russia-Ukraine crisis on the Philippine economy, such as temporarily allowing more imports of rice, pork and fish, increasing coal supply, and raising fuel subsidies for public transport drivers. In a televised Palace briefing on Monday evening, Finance Secretary Carlos G. Dominguez III said he does not expect the Russia-Ukraine crisis to “last very long,” adding the Philippine economy will only be affected because oil and food prices will continue to rise.

DTI proposes zero-tariff EV imports to encourage electric transport growth

The Department of Trade and Industry (DTI) is proposing a zero-tariff regime for imports of electric vehicles (EVs), which it pitched as a measure to accelerate their adoption. Trade Secretary Ramon M. Lopez said during the virtual Kapihan sa Manila Bay forum on Wednesday that the DTI is proposing zero tariffs for EVs in lieu of the current 30% rate. According to Mr. Lopez, the proposal seeks to provide options for consumers and encourage them to try EVs instead of vehicles powered by internal combustion, in the process helping protect the environment.

FIRB nixes PEZA plea for new NCR ecozones

The Fiscal Incentives Review Board (FIRB) thumbed down the Philippine Economic Zone Authority’s (PEZA) request to lift the moratorium on new ecozone development in Metro Manila. Chaired by Finance Secretary Carlos G. Dominguez III, the FIRB said their decision is aligned with the Duterte administration’s bid to increase investments outside the country’s capital. “The Board stood firm on the Duterte administration’s thrust to increase investments outside Metro Manila, and emphasized that Administrative Order [AO] No. 18 still complements the government’s strategies and policies on rural development, aligned with the objectives of the Corporate Recovery and Tax Incentives for Enterprises [CREATE] Act,” Dominguez said in a statement sent by the Department of Finance on Wednesday.

Zero duty on EVs, liberalization of RE pushed

The inter-agency Committee on Tariff and Related Matters (TRM) is looking into the possibility of eliminating tariffs on electric vehicles (EVs) from the current 30 percent to help populate the market with alternative energy-run mode of transportation in the light of rising fuel prices, according to Trade Secretary Ramon Lopez. Lopez said at present, inexhaustible energy sources like solar, wind and tidal energy projects are limited to 40 percent foreign ownership as provided in the implementing rules and regulations (IRR) of the RE Act. A revision of the IRR would open these to full foreign ownership and will align the law to the Public Services Act. Lopez said the government is also promoting energy conservation including the use of technology such as automatic light sensors particularly in public places, buildings and homes.

Tariff cuts on food imports pushed

The Department of Trade and Industry (DTI) said tariff reductions on rice, corn and pork should be extended until December while importation of sugar for industrial use must be allowed to temper the spike on prices of basic commodities. But DTI Secretary Ramon Lopez at the Kapihan sa Manila Bay forum yesterday clarified government’s priority is still local production augmented only by importation when shortages arise. “We should not panic, but we also have to be prepared,” said Lopez, describing these measures prepared by the economic development cluster (EDC) as interventions to “another pandemic.”

Next administration urged to fix LGU tax rules

The next administration should make more consistent taxation rules for local government units (LGUs) to address complications arising from the varying rates implemented by each unit, analysts said. Eleanor Lucas Roque, P&A GrantThornton tax advisory and compliance principal, included such changes to the organization’s list of priorities for the next administration. “Reforms in the local government taxation particularly in the deadline for filing and payment and uniformity in rules for computing the taxable receipts (are needed),” she said in an e-mail.

Despite delay, DTI hopes RCEP will be ratified

Over two months since the world’s biggest trade pact entered into force, the Department of Trade and Industry (DTI) remains hopeful that the Philippines will soon finish its ratification process to reap the benefits of the regional economic deal. Trade Secretary Ramon Lopez, at a virtual event on Thursday, said the Regional Comprehensive Economic Partnership (RCEP) agreement “remains to be a top priority of the Philippine government as it is an important tool  to sustain economic growth and attract investments in the country.”

Inflation still seen slower at 3.5% this year

Headline inflation is seen hitting 3.5 percent this year, still slower than the 2021 level despite increased pressure due to the ongoing Ukraine-Russia war. In its latest economic monitor, international think tank Pantheon Macroeconomics significantly raised its inflation forecast for 2022 to 3.5 percent from 2.8 percent. This as the conflict between Ukraine and Russia continues to escalate, resulting in soaring oil prices in the world market. “The spike in oil prices and consequent increase in futures look severe on the surface. But we’d still need to see bigger gains for transport inflation to flirt with the 2021 peak,” Pantheon senior Asia economist Miguel Chanco said.

‘MSME pandemic loan funds fully utilized as of end-2021’

Funds downloaded by the Department of Budget and Management (DBM) to the Small Business Corp. for lending to multi-sectoral micro, small and medium enterprises (MSMEs) adversely affected by the COVID-19 pandemic have been fully utilized as of end-2021, according to SBCorp, an attached agency of the Department of Trade and Industry (DTI). SBCorp president and CEO Luna Cacanando explained: “Of the P7.93-billion loan funds granted by the Bayanihan 2 Act to SBCorp for MSMEs, P4 billion was set aside for travel and tourism-related loans, and the rest or P3.93 billion was used for lending to multi-sectoral MSMEs or businesses in trading, manufacturing, services, agriculture and other sectors.”

$15M climate resiliency project launched

A $15-million climate resiliency project of the United States Agency for International Development (USAID) launched yesterday will benefit local governments in the climate-vulnerable cities of Batangas, Legazpi, Iloilo, Borongan, Cotabato and Zamboanga. The Department of Finance (DOF) said in a statement the five-year Climate Resilient Cities project will assist the local government units in using climate information for planning and decision-making; improving their capacity to access and manage climate finance; and increasing their climate resilience through natural climate solutions. “On behalf of the Philippine Government, let me thank the United States Government for supporting the Resilient Cities Project,” Carlos Dominguez, DOF secretary, said during the project launch held at the US Embassy in Manila.

Gov’t studying shift to ‘Alert Level 0’

With areas under Alert Level 1 doing well in terms of reduced COVID-19 infections, Health Secretary Francisco Duque III yesterday said government is looking at the possibility of having an “Alert Level 0” and downgrading the alert level of more areas. “So far so good. Even if we are allowing maximum capacity for establishments, cases have been dropping. For several days now, we have seen below 1,000 cases daily,” said Duque. “Hopefully, we can bring the number further down to 500 daily or even less. In such cases, maybe we can further deescalate to Alert Level 0,” he added.

64M Filipinos fully vaccinated vs. Covid-19: NVOC

About 64 million Filipinos are already fully vaccinated against Covid-19, a health official said Thursday. National Vaccinations Operations Center Chief Myrna Cabotaje said the government has administered some 137 million doses of Covid-19 vaccine, including 10.7 million booster shots, as of March 9. “We have set milestones. These include 70 million fully vaccinated by March. And then, 90 million Filipinos, fully vaccinated by the end of June 2022,” she said in a media forum. As for the booster shots, Cabotaje reiterated they can only be given to fully vaccinated individuals who are 18 years old and above.

DBM releases P3 billion for fuel subsidy, discount programs

The Department of Budget and Management (DBM) has released a total of PHP3 billion for the implementation of the Department of Transportation’s (DOTr) fuel subsidy program (PHP2.5 billion) and the Department of Agriculture’s (DA) fuel discount program (PHP500 million) to provide targeted assistance to affected sectors and cushion the impact of the consecutive oil price hikes in the past three months.  The funds were charged from the regular budgets of the DOTr and the DA under the fiscal year 2022 General Appropriations Act. Under the DOTr’s fuel subsidy program, financial aid amounting to PHP6,500 will be directly provided not only to affected jeepney drivers but also to qualified drivers of UV express, mini buses, buses, shuttle services, taxis, tricycles, and other full-time ride-hailing such as transport network vehicle service (TNVS) and motorcycle taxis, and delivery services nationwide.

PH logs record-high FDI inflows at $10.5-B in 2021

The Philippines recorded its highest foreign direct investment (FDI) net inflows in 2021 amounting to USD10.52 billion, increasing by 54.2 percent from USD6.82 billion the previous year, the Bangko Sentral ng Pilipinas (BSP) reported Thursday. FDIs continued to gain momentum last year despite two major lockdowns both in the first and second semesters of the year due to a surge in coronavirus disease 2019 (Covid-19) cases. “The growth in FDI reflected positive foreign investor sentiment on the country amid expectations of a rebound of domestic economic activity and declining Covid-19 reported cases, as well as the strengthening of the global economy,” the BSP said in a statement.

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