December 01, 2023
ECCP at Work
ECCP President, Mr. Paulo Duarte, in an interview with the ABS-CBN News Channel, expresses its views on recent developments regarding the extension of the EU GSP+. He also said that the ECCP appreciates the European Parliament supporting the European Commission’s proposal to renew the scheme for another four years, and talked about how EU investor sentiment, EU-PH trade can be further supported by this positive development.
The Philippine Senate approved on final reading its version of the bill on the proposed P5.768-trillion national budget. Senator Angara, who chairs the Senate Finance Committee, said the Senate’s version would significantly increase the allocations for the Department of National Defense, the Armed Forces of the Philippines, and the Philippine Coast Guard to bolster national security. Senators increased the Department of Science and Technology’s budget by P1 billion and gave the Department of Education (DepEd) an additional P50 million to boost local mental health programs in schools, Mr. Angara said.
The Philippines is unlikely to hit its growth target of 6-7% this year as economic activity may slow in the fourth quarter. The Bank of America (BofA) Global Research raised its Philippine gross domestic product (GDP) growth forecast to 5.4% this year from 4.8% previously. “We think the surge in government spending seen in the third quarter may not extend into the fourth quarter given the constraint posed by the budget and the fiscal deficit,” it added.
Diokno said the country’s headline inflation eased to 4.9 percent in October from 6.1 percent in September which is lower than the BSP forecast of 5.1 to 5.9 percent. He said among the measures the government has adopted are the close monitoring and assessment of market developments; the use of remote sensing technology, particularly satellite, for corn and rice production and; the implementation of the El Niño mitigation and adaptation plan.
Jonas Leones, DENR undersecretary for policy, planning and international affairs, said that the implementation of the policy is still experiencing “birth pains.” Leones said companies which violate EPR provisions face fines of at least P5 million for the first offense and around P10 to P15 million for the second offense and a fine equivalent to the cost of production of goods, if proven to be repeat violators.
The Philippines welcomed over 4.8 million international visitors as of late November, surpassing the target set by the Department of Tourism (DoT) for 2023. South Korea remained the top source of foreign arrivals, accounting for 1.27 million tourists or 26.37% of the total. Rounding up the top five were the US with 797,181 (16.53%), Japan 272,735 (5.66%), China 242,107 (5.02%), and Australia 225,464 (4.68%). Tourism Secretary Maria Esperanza Christina G. Frasco said that the visitors spent P404 billion, “underscoring the value of tourism to our economy.”
The Maharlika Investment Fund (MIF) has the potential to succeed if properly managed, but must address governance issues and the possible threat to fiscal stability, the ASEAN+3 Macroeconomic Research Office (AMRO) said. “However, the MIF’s success would also depend on the actual implementation of the law and whether the fund is operated with a robust risk management framework, taking cognizance of the potential risks and governance concerns addressed earlier,” it added. AMRO said that the MIF is more of a national investment fund as it will invest “mainly within the country to support national development strategies.”
The Department of Health yesterday said there is growing concern over the surge in influenza-like illnesses (ILI) in China, while noting similarities in circumstances prior to the detection of COVID-19 in late 2019. Health Undersecretary Eric Tayag said, “We are concerned about the cases in China because the WHO first heard about the news when it was reported as undiagnosed pneumonia.” Tayag also noted the Philippines has been seeing a rise in ILI cases, with over 119,000 recorded from January 1.
The Department of Agriculture (DA) is set to launch a massive modernization program that will increase rice recovery after milling from the current 62 percent and lessen post-harvest wastage. DA Secretary Francisco Tiu Laurel Jr., in a statement yesterday, said this will be pursued by the government “through science and technology” that would improve local rice production. Laurel said experts, scientists and the entire sector must implement “harmonized efforts” to attain food sufficiency, especially for rice.
US furniture company head Jordan England thinks his firm’s Chinese suppliers are among the best in the game, but geopolitics and a slowing economy have pushed him to source more products from Southeast Asia, Eastern Europe and Mexico. Foreign investors have been sour on China for most of this year, but data released over the past month has provided clear evidence of the negative impact de-risking strategies are having on the world’s second-largest economy. Activity surveys showed manufacturing unexpectedly contracted in October, while exports accelerated their decline. China recorded its first-ever quarterly deficit in foreign direct investment in July-September, suggesting capital outflow pressure.
Nomura Research Institute (NRI) Singapore Pte. Ltd. Manila Branch said of the 477 e-wallet users in Metro Manila who answered a survey it conducted, 41 percent have encountered issues in the last six months. Of those who encountered issues, 95 percent of them expressed trust on e-wallets. Technical challenges topped the issues encountered with 53 percent of respondents noting they have experienced multiple and unplanned downtimes, while 44 percent and 38 percent of the respondents expressed difficulty in receiving one-time passwords (OTP) and in opening the app, respectively.
While updated modules on programming are already being offered to students, access to these opportunities needs to be improved, Jay Pegarido, country manager at tech firm Sansan Global Development Center, Inc., said in an interview with BusinessWorld. A March report from the International Data Corp., a global market intelligence company, said around 60-80% of Asia Pacific organizations are seeing an information technology skills shortage, struggling to fill vacancies. In a July report, the Asian Development Bank said the Philippines should use education technology to bridge the skills gap or risk job losses due to rapid technological advancement. Emerging technologies, such as artificial intelligence (AI), also add to tech talent competition, but not to a worrying extent in the short- to medium-term, Mr. Pegarido said.
At a Palace briefing, Finance Secretary Benjamin E. Diokno said possible “elevated prices due to inadequate food supply” is a major domestic risk to the government’s 6.5%-8% gross domestic product (GDP) growth target for 2024. He noted that a stronger-than-expected El Niño, which may last until June 2024, and the spread of highly infectious animal diseases could tighten food supply. The “limited” absorptive capacity of local government units (LGU) and some government corporations is also a threat to the growth goal, he added.
The Philippines should create the right tax incentive system and properly mobilize tax revenues to achieve a more sustainable growth, the International Monetary Fund (IMF) said.Last week, a House of Representatives committee approved the amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which seeks to address conflicting provisions on tax incentives. The CREATE MORE (CREATE to Maximize Opportunities for Reinvigorating the Economy) bill would allow companies inside economic zones and freeports to enjoy duty-free privileges and value-added tax (VAT) exemptions on imports and local purchases.
The Asian Development Bank (ADB) has recommended extending the bid submission deadline for the rehabilitation of the Ninoy Aquino International Airport (NAIA) until January next year. To date, the Department of Transportation (DoTr) said NAIA’s rehabilitation had attracted eight potential bidders. In November, it announced that a Turkish airport operator had joined seven other entities that have bought bidding documents for the project that will upgrade the Philippines’ main gateway. The other potential bidders eyeing NAIA’s rehabilitation are Incheon International Airport Corp., San Miguel Holdings Corp., Manila International Airport Consortium, Cengiz Insaat Sanayi ve Ticaret A.S., GMR Airports International, Spark 888 Management, and Asia Airport Consortium.
The Philippine government’s budget deficit shrank in October as revenue growth outpaced spending, the Bureau of the Treasury (BTr) said, easing the pressure to borrow to pay for its debt. The fiscal gap narrowed by 65.27% to P34.4 billion from P99.1 billion a year ago, the Treasury said in its cash operations report. Tax revenues rose by more than a third to P354.7 billion, driven by a 46.94% surge in Bureau of Internal Revenue (BIR) collections to P274.4 billion and a 3.83% increase in Bureau of Customs (BoC) revenue to P77.9 billion. The Treasury bureau attributed the BIR’s revenue growth to the remittance of third-quarter value-added tax returns, which became due on Oct. 25.
THE Department of Agriculture (DA) said on Tuesday that it plans to build a network of agro-industrial and marine estates to ensure the adequacy of food supplies. In a statement, Agriculture Secretary Francisco T. Laurel, Jr. said he is planning to amend the charter of the Philippine Fisheries Development Authority (PFDA) to make it responsible for developing and managing the facilities. The estates will serve as “one-stop shops” with ports, cold-storage facilities, silos, and warehouses. “I’ve seen this model successfully implemented in South Korea and Japan. I hope the World Bank can help us realize this vision,” Mr. Laurel said.
Credit rating agency S&P Global Ratings yesterday affirmed its investment-grade rating of “BBB+” long-term and “A-2” short-term on the Philippines with the outlook remaining stable. Despite the pandemic and the economic lockdowns that went with it, the Philippines remains among a few of the countries around the world that were able to maintain its investment-grade rating. In a statement, S&P Global said the stable outlook “reflects our expectation that the Philippine economy will maintain healthy growth rates and the fiscal performance will materially improve over the next 24 months.”
The Private Sector Advisory Council (PSAC) has endorsed to the Marcos administration the approval of several bills that aim to fortify the country’s defense against cyber threats and help strengthen the digital infrastructure. The PSAC Digital Infrastructure is also pushing for an executive order mandating minimum information security standards for critical information infrastructure in alignment with the National Cybersecurity Plan to enhance the resilience of vital systems against potential cyber intrusions. Highlighting the urgency, the council stressed the certification of Senate Bill (SB) No. 1365, the Cybersecurity Act, and SB 2039 or the Anti-Mule Act as priority legislation.
In his keynote at the Ease of Doing Business (EODB) Convention, Secretary Ernesto Perez, ARTA director-general announced the agency will launch today the Phase 2 versions of the Philippine Business Regulation Information System (PBRIS) and the Anti-Red Tape Electronic Management Information System (ARTEMIS) which will enhance transparency, accessibility, and efficiency in regulatory procedures. He said ARTEMIS streamlines the submission and management of Citizen’s Charters, providing real-time data-based mapping of all government services. This online platform allows agencies to submit and update their Charters while enabling the public to view, download, and comment on them.
Disaster risk reduction expenditure declined by 52.4% in 2022, to P315.89 billion, the Philippine Statistics Authority (PSA) said. Disaster mitigation accounted for a little over a third of total expenditures, equivalent to P107.97 billion, 64.5% higher compared to a year earlier. Expenditure on disaster prevention dropped 50.4% to P77.98 billion. Disaster management expenditure — items related to preparedness and emergency management — fell 57.4% to P75.65 billion in 2022. Meanwhile, disaster recovery spending fell 79% to P54.29 billion.
A 79-page report by the Asean+3 Macroeconomic Research Office (Amro+3) released on November 27 pointed out that Maharlika has not clearly defined its role in infrastructure development which could lead to misuse of funds despite having a “strong legal framework” and a “potential to be successfully managed.” The think tank also highlighted the potential conflicts arising from different objectives within the MIF, which could pose challenges in certain investment scenarios. Amro+3 also noted that the MIF leans more towards being a "national investment" fund rather than a sovereign wealth fund.
In a report, Fitch said credit in the Philippines may grow by more than 10 percent if recent moves by the government to draw greater contribution from the private sector in infrastructure developments materialize. The debt watcher said the Marcos administration has identified about 197 flagship infrastructure projects, worth around P8.7 trillion for implementation over the medium term. Of the total, 39 projects have been earmarked for public-private partnerships (PPP). “We estimate that successful execution of these partnerships could potentially add about one to two percentage points to credit growth next year,” Fitch said.