May 12, 2023
ECCP at Work
The Philippines’ GDP grew by 6.4 percent in the first quarter of 2023, the slowest pace in seven quarters since the 12 percent in the second quarter of 2021, according to the Philippine Statistics Authority. The first-quarter readout is better than the private sector economists’ median forecast of 6.2 percent. The main contributors to the first-quarter growth were wholesale/retail trade and repair of motor vehicles and motorcycles; financial and insurance activities; and “other services.
Foreign direct investment (FDI) net inflows rose by 13% in February to its highest level in 14 months, amid improving investor sentiment towards the Philippines. Data released by the Bangko Sentral ng Pilipinas (BSP) showed that FDI net inflows climbed to $1.05 billion in February from $926 million in the same month in 2022. Net inflows of FDIs in February was more than double the $448-million inflows seen in January.
The Philippines is on track to becoming an upper middle-income country in the next few years, the World Bank (WB) said. “With continued recovery and reform efforts, the country is getting back on track on its way from a lower middle-income country with a gross national income (GNI) per capita of $3,640 in 2021 to an upper middle-income country in the short term,” the multilateral lender said on its website.
The success of the Extended Producer Responsibility (EPR) law, or Republic Act 11898, will depend on behavioral change accompany the broader effort to curb plastic packaging waste, the DENR said. “The biggest challenge is education and in changing the behaviors of people. At the end of the day, that’s what will determine the success of the EPR law and it’s not solely on the large producers,” Environment Secretary Maria Antonia Yulo-Loyzaga said in a briefing.
The value of the Philippine agricultural and fisheries sector bounced back in the first quarter of the year following the positive performance of all subsectors, according to the PSA. The latest PSA reading showed agriculture and fisheries production grew 2.1 percent to P426.69 billion in the first quarter. This is a reversal from the 0.3 percent contraction in the first quarter and the one percent decline in the fourth quarter of last year.
The government has released P4.5 trillion of the 2023 budget or roughly 86 percent of the record P5.268-trillion allocation for this year, as agencies ramp up their various programs. The latest data from the Department of Budget and Management (DBM) showed that it has issued a total of P4.52 trillion of the 2023 budget as of end-April. This represents 85.8 percent of the national budget allocated for the year, barely moving from the 85.6 percent in April 2022. This year’s budget is expected to help the government hit its six to seven-percent growth target for 2023. For 2024, the national budget is pegged at another record P5.569 trillion, up 5.7 percent.
The Philippines urged fellow Asean member-states to take into consideration the different levels of development in advancing other sustainability initiatives in the region, especially in the reduction of greenhouse gas emissions, accelerating the energy transition, and decarbonizing the land transport sector in the region. The 22nd Asean Economic Ministers welcomed the implementation of the initial phase of the Circular Economy Implementation Plan, which focuses on agriculture, energy, and transportation as high-value sectors relevant in reducing carbon emissions.
The House of Representatives approved on second reading a bill seeking to extend the estate tax amnesty for two years beyond its original expiry date of mid-June. Legislators on Tuesday passed House Bill (HB) No. 7909 by voice vote. The bill proposes a new estate tax amnesty deadline of June 14, 2025. The law currently allows taxpayers a one-time opportunity to settle unpaid tax obligations covering the estates of those who died on or before Dec. 31, 2017. A 6% tax rate is imposed on each decedent’s total net taxable estate at the time of death without penalty. “An extension of the estate tax amnesty program would allow more families to take advantage of the program to… settle outstanding estate taxes at an affordable 6% flat rate, in turn freeing up their assets and providing financial relief to families who were struggling in the wake of the pandemic,” Nueva Ecija Rep. Rosanna V. Vergara stated.
The public should not be complacent as the COVID-19 pandemic is not yet over, the Department of Health said Tuesday following the move of the World Health Organization to end the global emergency status for the coronavirus crisis. Last week, the WHO chief Tedros Adhanom Ghebreyesus said the COVID-19 pandemic no longer constitutes a “public health emergency of international concern.”. The threat, however, remains. COVID-19 cases in the Philippines are on the rise, with the DOH reporting 9,465 infections in the past week. There were 12,161 active COVID-19 cases as of Monday. “Although we have seen an increase in COVID-19 cases, this does not translate to an increase in hospital admissions, severe and critical cases remain low, and many of the cases are mild,” Vergeire said. Vergeire also adds that 96% of these cases were either mild, asymptomatic or moderate, and the country’s healthcare utilization rate remains at low risk.
The Department of Energy said that more yellow alerts — or when power reserves fall below the ideal levels — could be potentially raised throughout May. Energy Undersecretary Rowena Guevarra said they already assumed the worst-case scenario with the absence of the Ilijan natural gas plant, which is undergoing retrofitting works following the ceasing of gas supply deliveries from the Malampaya natural gas facility. The DOE earlier said 15 yellow alerts could be issued this year due to transmission constraints. The National Grid Corporation of the Philippines on Monday was forced to declare red and yellow alerts over the Luzon and Visayas grids due to plant shutdowns and low power production, but they were lifted later in the day. Guevarra added that the unfinished Mindanao-Visayas Interconnection Project, which will connect the Mindanao and Visayas power grids, could have transmitted additional power supply to Luzon as Mindanao only utilizes 70% of its power capacity.
The House of Representatives and the Senate of the Philippines on Thursday launched eCongress, an integrated digital legislative management system that will encourage citizen participation in lawmaking. TThe event also saw the ceremonial signing of the Memorandum of Agreement (MOA) between the two chambers on the specific actions to be taken to set up the eCongress. Senate President Pro Tempore Loren Legarda emphasized it is time for Congress to invest in resources that establish public digital infrastructure, articulate strategies, and integrate advances within the system of governance.
The House ways and means committee approved on Tuesday a measure imposing graver penalties on tax fraud, which includes selling counterfeit receipts to reduce income tax and VAT liabilities under the veil of fictitious transactions. Seen to strengthen the government’s existing tax evasion laws, House Bill No. 7653 aims to make the act of “coordinated” tax fraud a separate crime with graver penalties under the National Internal Revenue Code, with prison sentences ranging from 17 to 20 years.
The country’s factory output recorded a slower growth in March, according to the Philippine Statistics Authority (PSA).The PSA’s monthly integrated survey of selected industries showed that the Volume of Production Index (VoPI) for manufacturing registered a year-on-year increase of 2.2 percent in March 2023, but slower than the February 2023 annual growth of 5.2 percent. The VoPI recorded a faster annual acceleration of 346.2 percent, as the slower annual growth of VoPI in March 2023 was mainly brought about by the lower annual rates in the manufacture of beverages, 4.9 percent from 20.9 percent in the previous month; chemical and chemical products, -25.5 percent from -7.8 percent in the past month; and basic metals, 18.6 percent from 28.1 percent in February 2023.
President Marcos has stressed the need for a “new” code of conduct in the South China Sea to ensure stability and peace in the Southeast Asian region amid territorial conflicts long sparked by China’s expansive claims over disputed territory. “When we talk about the issues on the West Philippine Sea, [the] South China Sea, things won’t calm down until we have a code of conduct,”. Having one would “make things clearer” and eliminate the possibility for mistakes “because what’s indicated there is very clear.” Asean and China have been working toward a maritime code of conduct following a commitment they made in 2001, a set of rules that many analysts expect will, if they materialize, be non-binding and have no enforcement mechanism.
The Department of Energy is pushing for the reopening of the 1,200 MW Ilijan power plant, which can help stabilize the power supply in Luzon. "For as long as we have this Ilijan power plant, which is 1,200 megawatt and which has not been in operation since June of 2022, then for as long as it is not back in service then our reserves will necessarily be limited," Energy Secretary Raphael Lotilla told ANC's "Headstart" Wednesday. The Ilijan plant is currently undergoing retrofitting works following the ceasing of gas supply deliveries from the Malampaya Natural Gas facility, San Miguel Corp said in April. SMC has said that Ilijan has historically contributed up to 10 percent of Luzon's net reliable capacity and that it eyes reopening the plant this month. In the interview, Lotilla admitted he could not say if there would be no longer power interruptions in Luzon. But he said the DOE is doing what it could to minimize inconvenience, like requiring the NGCP to ensure the implementation of its protection system among generation plants.
Senator Alan Peter Cayetano on the Celebration of Israel’s Establishment reiterated his preference for diplomacy over military force as he attributed Israel’s economic progress in recent years to its friendly demeanor with other countries. In a short manifestation in support of Senate Resolution No. 552 commemorating the State of Israel’s 75th founding anniversary, Cayetano said Israel’s “excellence in diplomacy” opened opportunities for prosperity and collaboration. He stated that Israel’s economy was recently ranked 19th worldwide according to data from the International Monetary Fund, even surpassing the United Kingdom, Japan, and France as well as mentioning two agricultural model areas in the City of Taguig built in partnership with Israel through its former ambassador to the Philippines Rafael Harpaz. He expressed gratitude for the close ties between the two countries, which he said was maintained “regardless of the differences in religion” and the distance.
President Ferdinand R. Marcos Jr. is now eyeing to sign new trade and investment deals and bilateral agreements with the Lao People’s Democratic Republic (PDR). The President said he wants to explore business opportunities in PDR as it also undergoes pandemic recovery. The President said other areas, where both Philippines and PDR can benefit are tourism, health, education as well as expansion of “professional exchanges.” The Laotian Prime Minister invited the PH president for a state visit as well as enhancing more cooperation.
The Metropolitan Waterworks and Sewerage System (MWSS) and its distributors have signed the revised concession agreement (RCA) governing the supply of water in Metro Manila, the companies said on Thursday. In a separate stock exchange disclosure, Maynilad Water Services, Inc. and Manila Water Co., Inc. confirmed that the amended RCAs were signed on May 10, to retroactively take effect on July 1, 2022. Maynilad said that the amendments include the deletion of the composition and decisions of the regulatory office from the list of issues not subject to arbitration. The amendments are intended to align some of the RCA provisions with the revised implementing rules and regulations of the Build-Operate-Transfer Law.
The Department of Budget and Management is seeking to bring its Open Government Partnership, which seeks to broaden public participation in the budgeting process, to the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). Assistant Budget Secretary Rolando U. Toledo said that the open government approach provides “opportunities for citizens and the civil society to interact with government and enable collaborative partnerships.” Mr. Toledo noted that participatory budgeting promotes “genuine involvement of grassroots organizations and communities to (immerse) in participatory planning and budgeting processes.”
The peso dropped against the dollar on Thursday as economic growth slowed in the first quarter. The local currency closed at P55.75 versus the dollar on Thursday, down by eight centavos from Wednesday’s P55.67 finish, data from the Bankers Association of the Philippines’ website showed. The local unit opened Thursday’s session stronger at P55.58 per dollar. Its worst showing for the day was at P55.78, while its intraday best was at P55.54 versus the greenback. Dollars traded went down to $1.29 billion on Thursday from the $1.41 billion recorded on Wednesday. The peso weakened as gross domestic product (GDP) growth slowed in the first quarter, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort stated. The peso could depreciate further ahead of a potentially strong US producer inflation report set to be released overnight, Reuters reported.
Higher generation charges triggered an increase in Manila Electric Co.’s (Meralco) May electricity rate by P0.1761 per kilowatt-hour (kWh), the power distributor announced on Thursday. This brings up a typical household’s overall electricity rate to P11.4929 per kWh from P11.3168 per kWh in April. Residential customers consuming 200 kWh a month can expect an increase of about P35 in their total bill. Higher spot market and power supply agreement (PSA) costs were the main drivers of the increase in generation charge, which went up to P7.6697 per kWh from P7.3295 per kWh the previous month. eralco said its distribution charge has not moved since the P0.0360 per kWh reduction for a typical residential customer in August 2022.
The P7.37-billion Panguil Bay bridge, the longest sea-crossing bridge project in Northern Mindanao, is on track to be completed by June 2024, according to the Department of Public Works and Highways (DPWH). At present, the project is 69 percent complete. Emil Sadain, senior undersecretary in-charge of DPWH infrastructure flagship projects, conducted a project inspection on May 9. Sadain said weather permitting, the inter-island bridge project is targeted to attain 90 percent completion by December 2023, reach 95 percent by March 2024 and open to vehicles by June 2024.
Philippine Airlines (PAL) has signed a deal to purchase nine aircraft from Airbus that will be operated on non-stop services from Manila to North America, including to the East Coast of the US and Canada. PAL said it has signed a memorandum of understanding (MOU) with Airbus for the purchase of A350-1000s as part of the flag carrier’s ultra-long haul fleet project. The first of the nine aircraft is slated to be delivered to PAL by the fourth quarter of 2025, with deliveries continuing until 2027. The A350 is the world’s most modern and efficient widebody aircraft and has set new standards for intercontinental travel. It offers the longest range capability of any commercial airliner in production today and is capable of flying 8,700 nautical miles or 16,100 kilometers non-stop.
Metro Manila’s COVID-19 positivity rate slightly rose to 24.9 percent as of May 11, said Octa Research fellow David Guido on Thursday. As of May 11, based on the DOH’s online COVID-19 tracker, the country’s total caseload is at 4,108,914 with 13,964 active cases, 4,028,497 recoveries and 66,453 deaths. It should be noted, however, then even amid a relatively high positivity rate, DOH officer in charge Maria Rosario Vergeire during said that the positivity rate is not the sole criterion on the country’s COVID-19 situation, adding that the increase and decreases in the number of infections are expected due to the lower number of tests conducted, as well as the country’s increased mobility.