June 02, 2023
ECCP at Work
The Bureau of Customs (BOC) met with the European Union-Asean Business Council and the European Chamber of Commerce of the Philippines to strengthen trade and investment opportunities between the Philippines and European businesses, the agency said yesterday. In a statement, the BOC said that the meeting which was held last May 23, also had its focus on supporting the resumption of Free Trade Agreement negotiations between the Philippines and the European Union. During the meeting, the BOC underscored the vital importance of private sector support in promoting its modernization program. The BOC’s one-stop-shop solution was highlighted as a means to streamline the clearance process for receiving donations during calamities. Furthermore, the bureau expressed its firm intention to transition to a paperless transaction system, emphasizing the significant benefits of electronic exchanges for internal operations within the BOC.
President Ferdinand Marcos Jr. ordered a continued assessment and improvement of the country’s tax system amid the low value-added tax (VAT) collection. The President made the directive during the sectoral meeting in Malacañang where he was updated by the Department of Finance and the economic team on the comprehensive tax reform program or the Corporate Recovery and Tax Incentives for Enterprises (CREATE), the implementation of the VAT system as well policy trajectories and recommendations. Finance Secretary Benjamin Diokno in a press conference said while the Philippines has the highest VAT rate in Southeast Asia at 12 percent, it only has a 40 percent efficiency rate due to the multiple tax exemptions that the government has been granting. He said that under the present system, the country is now more focused on implementing the consumer tax system than the income-tax base as it provides income tax relief to the majority of the tax-paying community while generating revenues by increasing the tax on lifestyle products and services consumed by the top 1 percent of wealthiest individuals.
Opposition senators on Tuesday raised “grave concerns” over the impending passage of the law creating the Maharlika Investment Fund (MIF), alleging that this venture was not driven by the need to pump-prime the economy but by the interest of “crony capitalists.” In his turno en contra speech, Senate Minority Leader Aquilino Pimentel III detailed 12 grounds on why they should not approve Senate Bill No. 2020 that seeks to put up the MIF, flagging the measure for constitutional and procedural issues. The MIF was also not cited in the Marcos administration’s Medium-Term Fiscal Framework, or the initial list of the Legislative-Executive Development Advisory Council (Ledac), according to Pimentel. “We will hopefully know the identity of this big-time influencer in due time,” Pimentel added.
FINANCE Secretary Benjamin E. Diokno on Tuesday said the government is collaborating with the International Monetary Fund (IMF) on how to boost the country’s value added tax (VAT) collection, which currently stands at 40 percent, the lowest in Southeast Asia. Citing a World Bank study, Diokno explained that the government is losing some P539-billion revenues because of the country’s low VAT efficiency ratio. On an average, the national government collected P723 billion in VAT from 2016 to 2020, which is just half of the P1.307-trillion potential full revenue collections of the government, Diokno added.
THE Department of Finance (DOF) on Tuesday played down the concerns of some lawmakers on the potential risk to government financial institutions (GFI) and government-owned or -controlled corporations (GOCC) investing in the proposed Maharlika Investment Fund (MIF). In an interview with reporters in Malacañang, Finance Secretary Benjamin E. Diokno said there are existing safeguards that prevent GFIs and GOCCs from being ruined by poor investments. Among such measures, he said, is the restriction in the amount of their funds which they allocate for investments.In the case of the Land Bank of the Philippines (LBP), he said, the GFI can only invest 3 percent of its total “investable funds.” “Actually its [LBP] investable fund is more than 1 trillion [pesos]. But it can only contribute P50 billion of it [for investments],” Diokno said. Similar investment limits, he said, also apply to the Social Security System (SSS) and the Government Service Insurance System (GSIS).
The growth in producer prices of manufactured products eased in April from the previous month due mainly to the slower upticks in food products, according to the Philippine Statistics Authority (PSA). Preliminary data released by the PSA yesterday showed the Producer Price Index (PPI) for manufacturing posted a 2.3 percent increase in April, slower than the 2.5 percent growth in March. The PPI growth in April was also slower than the 6.3 percent upturn in the same month last year. “The deceleration of PPI in April 2023 was primarily brought about by the slowdown in the annual increase in manufacture of food products industry division at 4.4 percent in April 2023 from 5.5 percent annual increase in March 2023,” the PSA said. Other main contributors to the slower PPI growth in April are the faster drops posted in chemical and chemical products at -1.7 percent during the period from -0.05 percent in March, and basic metals at -4.9 percent in April 2023 from -3.4 percent in the previous month.
The Department of Agriculture (DAR) is expected to resolve at least half of its 2,400 “vintage” Agrarian Law Implementation (ALI) cases this year. During a news conference in Malacañang on Tuesday, DAR Secretary Conrado M. Estrella III announced he is set to sign the resolution for 200 cases on Wednesday bringing their total resolved ALI cases to 1,200. Among the recently resolved cases, he said, was the agrarian land issue in Hacienda Tinang in Concepcion, Tarlac, which involved a dispute between two farmers groups involving over 600 hectares of land. “Probably in a matter of two weeks we will be able to distribute land titles to prevent any more trouble,” Estrella said. “We will release the titles for 450 families,” he added.Aside from the ALI cases, Estrella said the Department of Agrarian Reform Adjudication Board also has another 2,300 pending cases.
The Governance Commission for Government-Owned or -Controlled Corporations (GCG) is striving to strengthen its mandates through proposed amendments to Republic Act No. 10149, commonly known as the GOCC Governance Act of 2011. “In order to efficiently operate as a regulatory body for the GOCC sector, RA 10149 is proposed to be amended to address issues and clarify and strengthen the powers and functions of the GCG,” Alex Quiroz, GCG chairperson, said in a statement yesterday. Throughout its years of operation, issues have been raised regarding the scope and legality of the commission’s authority as outlined in its charter. Last May 25, GCG officials met with House Speaker Ferdinand Romualdez to discuss the proposed amendments. Gideon Mortel, GCG commissioner, said draft bills were already prepared for submission to the House leadership, following his discussions with Parañaque First District Representative Edwin Olivarez, who serves as the chairperson of the House committee on government enterprises and privatization.
Passionate, digitally savvy, risk-taking warriors—this is what next-generation leaders must be, according to businessman Manuel V. Pangilinan. “More than the ability to manage the business, they must also be entrepreneurial. This country needs more entrepreneurs, more risk-takers,” Pangilinan said. “They should also be immersed in IT, be digitally savvy, and believe that tech deployed in the business will improve the business, eventually raise profitability and improve the lives of the customers that we serve.” A longtime sports patron, Pangilinan also highlighted the importance of having a winning mindset. “They must also be like warriors – determined to win, determined to achieve their goals.” The PLDT chairman also highlighted financial and intellectual integrity as among the important values for any leader. “What you communicate must not only be true, but complete,” he said. “Commitment, dedication and passion for the work—these are also important. Otherwise, it’s just a job. You can’t have that. You really have to have the passion.” Pangilinan also underscored the importance of being tough when the situation calls for it. “It’s tough being the bad guy. I don’t relish being critical, but somebody’s got to do it.”
While gross domestic product (GDP) data from the Philippines beat Oxford Economic’s expectations in the first quarter of 2023, the think tank said its tracker continues to soften, pointing to a significant weakening in growth due to poor export performance and delayed impact of a sharp monetary tightening. The UK-based think tank described growth within the Association of Southeast Asian Nations (Asean) region as “some steady, some softening.” For one, it said the “brighter spots'' of the region are Indonesia and Thailand. In Indonesia, Oxford said activity looks to be growing steadily, around the usual pre pandemic pace of 5 percent. In Thailand, Oxford said its model has “underestimated growth in the past few quarters, likely because it doesn’t fully account for the outsized importance of tourism.” In contrast, the UK-based think tank said, “Elsewhere the story is less upbeat” when it comes to the growth of the Philippines. In Oxford Economics’ forecast last February 2023, the UK-based think tank said the country’s economic growth will only reach 4.1 percent this year and 4.5 percent in 2024 on the back of sticky inflation which is expected to dampen demand.
The Department of Finance (DOF) on Tuesday played down the concerns of some lawmakers on the potential risk to government financial institutions (GFI) and government-owned or -controlled corporations (GOCC) investing in the proposed Maharlika Investment Fund (MIF). In an interview with reporters in Malacañang, Finance Secretary Benjamin E. Diokno said there are existing safeguards that prevent GFIs and GOCCs from being ruined by poor investments. Among such measures, he said, is the restriction in the amount of their funds which they allocate for investments. DOF made the pronouncements after Senate Minority Leader Aquilino Pimentel III warned in a television interview that the MIF can bankrupt financial institutions if it fails. Diokno, however, insisted such concern is “baseless” since GFIs and GOCCs also have boards and “risk committees” to protect their interests.
Fitch Ratings revised the credit rating outlook of five of the country’s biggest banks in terms of assets to stable from negative, reflecting a similar move on the sovereign rating of the Philippines. Fitch lifted the outlook for BDO Unibank Inc., the largest bank in the Philippines, to stable from negative and affirmed its credit rating of BBB- or a notch below the BBB rating of the Philippines. The affirmation of BDO’s investment grade rating took into account its high systemic importance as the largest bank in the country, with market share of around 18 percent of system assets and deposits, as well as the state’s moderate fiscal flexibility.
MANILA -The Bangko Sentral ng Pilipinas said inflation in May might be within the range of 5.8 percent to 6.6 percent, most likely receding for the fourth month in a row. The midpoint of forecast range — 6.2 percent — suggests that the BSP expects inflation to have eased further from the 6.6 percent print in April.The Philippine Statistics Authority will announce the official readout on June 6. “The cumulative rollback in domestic petroleum prices as well as lower poultry and fish prices and electricity rates of various regional power distributors could lead to lower inflation in May,” the BSP said. MANILA -The Bangko Sentral ng Pilipinas said inflation in May might be within the range of 5.8 percent to 6.6 percent, most likely receding for the fourth month in a row. The midpoint of forecast range — 6.2 percent — suggests that the BSP expects inflation to have eased further from the 6.6 percent print in April. Philippine inflation eased further to 6.6% in April, The Philippine Statistics Authority will announce the official readout on June 6. “The cumulative rollback in domestic petroleum prices as well as lower poultry and fish prices and electricity rates of various regional power distributors could lead to lower inflation in May,” the BSP said.On the other hand, higher prices of rice, vegetables, and other key food items as well as the increase in LPG and Meralco electricity rates are the primary sources of upward price pressures for the month.
THE HOUSE of Representatives has adopted the Senate version of the bill extending the estate tax amnesty in order to ensure it will be signed into law before it expires by mid-June. The House plenary adopted Senate Bill (SB) No. 2219, which extends the period of availment of the estate tax amnesty for another two years. The current amnesty period will expire on June 14. Under the bill, the new estate tax amnesty period will run from June 15, 2023 to June 14, 2025. “We will adopt the Senate version. Those are minor provisions especially dates, we’re talking about the extension of the estate tax amnesty plus they placed there the provisions on the manner of payments and documents so we will adopt the Senate version,” Majority Floor Leader and Zamboanga City Rep. Manuel Jose M. Dalipe said at a briefing before the plenary adopted the Senate version. House Ways and Means Committee chairman and Albay Rep. Jose Ma. Clemente S. Salceda earlier sent an aide memoire addressed to House Speaker Ferdinand Martin G. Romualdez and Mr. Dalipe recommended that the House adopt SB 2219. Both the House and Senate versions sought to expand the coverage of the amnesty, which currently only covers the estates of those who died on or before Dec. 31, 2017. Mr. Salceda said he has no objection in adopting the Senate version which includes unsettled estates of those who died on or before May 31, 2022.
Universal Robina Corp. (URC) is acquiring the idle sugar milling machinery and equipment of Central Azucarera Don Pedro Inc. (CADPI). The parties did not disclose the amount of the transaction. URC said in a statement yesterday these assets will be used to expand the capacity and improve the sugar recovery process at its sugar mill in Balayan, Batangas. The new machinery and equipment from CADPI, a subsidiary of listed firm Roxas Holdings Inc. that has permanently shut down its milling operations, will bring up the Balayan mill’s capacity from about 5,000 metric tons (MT) to 8,000 MT a day, the company added. URC said the move will also accommodate more sugarcane farmers at its Balayan mill to help secure a source of livelihood and ensure ample sugar supply for consumers while also cutting the time needed to expand its existing mill from four to two years. “The farmers are currently suffering from low sugar recovery on their sugarcane deliveries due to long waiting time in the truck yard… That negatively affects their profits and may drive some of them to either stop farming or shift to other low-value crops,” the company said. “The situation, if not immediately addressed, poses a grave threat to the livelihood of the farmers, as well as the entire sugarcane industry in Batangas and will aggravate the current sugar shortage in the country,” URC added.
Government agencies will issue a joint memorandum circular (JMC) that will expedite and prioritize the issuance of permits, licenses, clearances, and authorizations required for the 194 high-impact infrastructure flagship projects of the Marcos administration, according to Ernesto Perez, director-general of the Anti-Red Tape Authority (ARTA). In his state of the ARTA address celebrating the fifth anniversary of the agency on May 29 at the Manila Hotel, Perez also said the agency will ensure the timely execution of energy projects, make permanent a JMC fast tracking the construction of telecommunication infrastructure and to fully implement the Green Lane for Strategic Investments. “ARTA will embark on a bold path of innovation, digitalization, and strategic partnerships that will redefine the landscape of government service delivery,” Perez said in his speech. According to Perez, ARTA is closely collaborating with the Office of the President and other government agencies towards the issuance of an executive order (EO) that will make permanent provisions of the JMCs that reduced the complexity and costs associated with the construction of shared passive telecommunications tower infrastructure as well as fiber poles, ducts, cables, and facilities.He said with the JMCs, the number of permits required for the construction of these infrastructure projects has been reduced from 13 to just 8, documentary requirements have decreased from 86 to 35, and the average processing time has been slashed from 241 working days to a mere 16 working days.
The Philippine Energy Efficiency Alliance (PE2) has called on the government to expand the types of energy efficiency and conservation (EEC) projects that would qualify for tax incentives. PE2 said it has submitted a proposal to the Department of Energy (DOE) and the Board of Investments (BOI), asking both agencies to consider additional project types to be eligible for fiscal perks under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the Energy Efficiency and Conservation Act. Among those that the group is proposing that end-users, energy service companies (ESCO) and third-party project developers (TPPDs) include as eligible projects are energy efficiency and ESCO projects or EEC measures to improve energy efficiency of a system or consumption within a defined project boundary.
Despite electronics exports declining in the first half of the year, the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) remains optimistic that the industry will grow by five percent, driven by the continued demand for electronics products. In an interview with reporters, SEIPI president Dan Lachica said the group is keeping its five percent electronics export target for the year. Figures from SEIPI’s website showed that electronics exports fell by 15.3 percent to $9.97 billion, 15.29 percent lower than the $11.77 billion electronics exports in the same period last year. The decline was driven by the 74.8 percent decrease in automotive electronics exports to $9.27 million from $36.92 million in the first quarter of last year. The electronics industry remains a significant driver of the country’s economic growth. Electronic exports accounted for bulk or 62.27 percent of the country’s $78.84 billion worth of total outbound commodity shipments last year.
The Philippines should improve its value-added tax (VAT) collection as it continues to have the lowest efficiency level in Southeast Asia, Finance Secretary Benjamin E. Diokno said. “We asked the International Monetary Fund to conduct a study where we can improve on broadening the tax base. Maybe find areas where we can recover the exemptions,” he said. He noted the Philippines has the lowest VAT efficiency among its Association of Southeast Asian Nations (ASEAN) neighbors, despite having the region’s highest VAT rate at 12%. “While it has the highest VAT rate, compared to other countries in this part of the world, our VAT collection is the most inefficient,” Mr. Diokno said. Citing a study by the Organisation for Economic Co-operation and Development, Mr. Diokno noted that consumption taxes are also “less vulnerable to effects of globalization.” “VAT is the best tax in the world. It’s being imposed by 90% of the countries in the world. It’s our interest to improve the efficiency of the VAT in the Philippines,” he added.
The National Grid Corp. of the Philippines (NGCP) said it has significantly improved the performance of the power grid since taking over as the country’s transmission service provider, having increased transmission system availability, as well as reducing transmission outages and interruptions.Citing various performance indicators, NGCP claimed that its overall performance in running the grid from 2009 to 2022 was significantly better compared to when the grid was operated by the government from 2000 to 2008. The company said its performance shows a notable decline in tripping incidents across all three major island grids. NGCP said the capability of the grid to mitigate the impact of power interruptions to overall grid operations, which are measured by the system availability indicator and system interruption severity index, likewise improved.
President Ferdinand R. Marcos Jr. on Wednesday said pension funds should still be able to invest in the proposed Maharlika Investment Fund (MIF) despite the opposition of some lawmakers, who successfully excluded these, in the Senate version, from the list of entities initially mandated to contribute to the seed fund.
During his interview with reporters after the 86th Anniversary Celebration of the Government Service Insurance System (GSIS), Marcos said MIF can help pension funds generate more revenue for their members.
The state-owned Japan Bank for International Cooperation (JBIC) eyes partnerships with local firms for energy development, Malacañang said. The interest for energy tie-ups was discussed during JBIC Chairman of the Board Tadashi Maeda's courtesy call with President Ferdinand Marcos Jr. in Malacañang on May 31, the President Communications Office said. The areas of interest included liquified natural gas (LNG) as well other power sources like hydropower, solar and wind, Maeda said. There is a need to specify projects and determine how to switch to efficient energy, he added. Maeda also congratulated the Philippines for Congress' approval of its first sovereign wealth fund. Lawmakers on May 31 approved Senate Bill No. 2020, which would create the sovereign wealth fund. It will be sent to Marcos to be signed into law.