Philippine Weekly Update

20 - 26 August 2016

September 06, 2016 Philippine Weekly Update

POLITICS

Republic Act 10911 or The Anti-Age Discrimination in Employment lapsed into law recently because it was not signed by former president Benigno Aquino III after it was approved by Congress. The law penalizes through fines and imprisonment employers who refuse to hire workers because of their advanced age. 

According to the Department of Finance (DOF), the exemption of senior citizens and persons with disabilities (PWD) from the payment of value added tax (VAT) on food, medicine and education is non-negotiable. DOF is eyeing the lifting of VAT exemptions, adjusting for inflation of the tax of fuel, and rationalization of fiscal incentives to compensate for the planned reduction in personal and corporate income tax rates. 

DOF sees a higher oil excise tax and proposes P10 levy for every liter of gas and diesel, as a major revenue source that will compensate for forgone revenues once income tax rates are slashed, as promised by President Duterte. 

The Duterte administration vowed to strictly observe fiscal discipline amid the intended increase in public spending particularly for much needed infrastructure, DOF reported. 

House Bill 2171 or the proposed Fast Business Permit Act aims to reduce the burdens on business from long waiting times for permits as well as their quick expirations. This means that business permits will be automatically approved after the lapse of 30days without action. 

Finance Secretary Carlos Dominguez mentioned that the government is mulling over the reorganization of government agencies with both regulatory and commercial functions such as the Philippine Amusement and Gaming Corporation (Pagcor) and the National Food Authority (NFA). Dominguez added that government should only be in the regulatory and not commercial functions and therefore, dispose of by sale or closing down the commercial functions. This should include the Philippine Port Authority (PPA) and the Civil Aviation Authority of the Philippines (CAAP).

Deputy Speaker Raneo Abu of Batangas confirmed that the House has named 12 deputy speakers to represent the 12 Philippine states to be created when the country shifts to federalism.

House Bill 292, which was approved by the House on third and final reading,  seeks to insert a section in Republic Act 8424, or the National Internal Revenue Code of the Philippines, that will impose a P10 excise tax - which will increase by 4% every year thereafter effective January 1, 2017 through revenue generations issued by the Finance chief - on sugar-sweetened beverages per liter of volume capacity. 

According to National Economic and Development Authority (NEDA) Director General Ernesto Pernia, moves to speed up approval of large-scale infrastructure projects deemed vital to expansion of economic activity are led the reactivation of  the Legislative-Executive Development Advisory Council (LEDAC). 

NEDA has raised the Investment Coordination Committee (ICC) project cost floor to P5-billion. This means that all projects amounting to below P5-billion will no longer be under purview of the ICC. The ICC has already approved 10 projects costing P320-billion that includes projects on rural development, regional hospitals, airport modernization and flood management.

The proposed tax revenue package of the Duterte Administration is seen yielding a net revenue gain of P41-billion, data presented by the DOF to lawmakers showed. 

Finance Undersecretary Gil Beltran mentioned that the DOF was looking at including additional taxes on luxury cars among the new revenue-generating measures under a comprehensive tax reform package it would pitch to Congress next month. 

Bureau of Internal Revenue (BIR) is set to resume field audits to pursue tax cheats, picking up where the previous administration left off after a two-month halt in investigations. 

BIR is crafting new rules to make it easier for foreigners earning money in the Philippines to pay taxes using a "preferential" rate under existing international tax treaties. A draft memorandum on BIR’s Website outlines a "simplified" procedure for non-residents to claim tax treaty benefits for dividend, interest and royalty incomes earned in the Philippines.

There is growing optimism for a surge in economic growth when the country shifts to a federal system, with many experts interviewed during the federalism forum at Marriott Hotel believing that truly autonomous regions will allow communities in the countryside to be more creative in generating income.

Senator Risa Hontiveros filed the alternative minerals-management bill seeking to ensure the protection of communities and environment by setting limits on mining operations, and through taxes and heavy fines. The bill also aims to rectify the failure of RA 7942 also known as the mining law. 

Fatty food, luxury items as well as casino and lotto winnings would be slapped taxes if the Duterte administration’s proposed tax policy reform program, which would result in a net revenue gain of P368.1 billion to the government by 2019, prospers in Congress.

RA  10816 or the Farm Tourism Development Act of 2016 seeks to develop the local farm tourism industry and is expected to raise the income of farmers and spur the growth of the agriculture sector in the country, DOT official discussed. 

BUSINESS

The corporate regulator, Securities and Exchange Commission (SEC), will likely finish reviewing the planned takeover of Philippine Dealing System Holdings Corp. (PDS) by The Philippine Stock Exchange, Inc. (PSE) by November 15 as expressed by SEC Chairperson Teresita Herbosa.

United States-based information governance and data modernization solutions provider BackOffice Associates announced the opening last week of its first facility in Manila, expected to contribute further to its regional operations. 

Ayala-led Bank of the Philippine Islands (BPI) has acquired a minority stake in Rizal Bank, Inc. (RBI) in a deal that is seen to expand its presence in the microfinance space and as part of efforts to push financial inclusion in the country.

Megaworld Corp. is spending P8.5-billion to build a portfolio of brand hotels in the country, with the first Savoy branch located in its Boracay development in Aklan to open later this year.

Philippine companies won the most number of awards among 80 competing companies in the ASEAN Business Awards (ABA) in Jakarta, Indonesia. Philippines dominated garnering a total of 11 awards.

Liberty Telecoms Holdings, Inc. (LTHI) has moved to formalize its bid to exit the stock market. The company submitted a petition for the voluntary delisting of its common shares from the Philippine Stock Exchange (PSE) after the company was taken over by industry giants PLDT, Inc. and Globe Telecom, Inc. in the disputed Telco Deal.

Security Bank is making its debut as a Philippine Stock Exchange index (PSEi) member on Sept. 12, replacing integrated gaming resort developer Bloomberry Resorts Corp.

Hong Kong firm SIICGM Development Limited is beefing up its presence in the country through its partnership with local steel trader Mannage Resources Trading Corp. (MRTC) seeking a slice of the lucrative market for reinforcing steel bars used for infrastructure projects such as buildings, roads and houses.

Japan’s NTT Group expects faster growth for its IT consulting firm and learning arm in the Philippines, following the acquisition of Filipino firm Wizardsgroup Inc. early this year. Wizardsgroup, renamed recently to NTT Data Philippines Inc., projected revenue to double in five years, as it expected business activity in the country to remain robust, increasing demand in the $6.7-billion IT services sector. 

ECONOMY

International Economic Research groups lauded the country’s strong growth in the second quarter, as they forecast brighter things ahead for the local economy. 

The World Bank expressed optimism for improvement in the Philippines’ financial inclusion-level - or the country’s ability to bring financial access to citizens, including low-level income groups and those in the advancement of created financial access nationwide. 

Philippine firms, despite having access to free trade agreements (FTAs) with a number of ASEAN nations, do not maximize the freedom from trade barriers, according to a recent study commissioned by the Board of Investments (BoI).

The Philippines and United Kingdom (UK) have expressed "mutual enthusiasm" over negotiating for a possible bilateral free trade agreement (FTA), once the Britain’s exit from the European Union has been completed. 

NEDA disclosed that imports sustained their growth trajectory for the fourth consecutive month in June on increased inbound shipment of capital and consumer goods.

INVESTMENTS

The International Finance Corp. (IFC), a member of the World Bank Group, announced an investment of $161-million for the construction of three biomass power-plant projects in Negros Occidental. This will generate 70 megawatts of clean renewable energy and is supported by the government of Canada and the Clean Technology Fund (CTF). 

INFRASTRUCTURE

PLDT and its wireless unit Smart Communications will be installing free high-speed Internet at 18 major airports and other public-transport hubs in the first 100 days of President Duterte, an official of the country’s leading telecommunications firm and multimedia services provider confirmed. 

The freight railway unit of Metro Pacific Investment Corp. is preparing its war chest for the possible approval of its proposal to revive the cargo-train system in the capital’s ports, even as it scouts for a partner or two to implement the P10-billion Manila-Calamba Cargo Rail Line project. 

Cement sales grew by 8.8% in the second quarter credited to the continued demand from public and private construction activities according to Ernesto Ordoñez, president of Cement Manufacturers’ Association of the Philippines (CEMAP).

NEDA-Davao is aiming to complete the feasibility study for the planned Mindanao Railway System (MRS) by end-September this year following an order to prioritize the project.

ENERGY

The Mindanao Development Authority (MinDA) wants to restore an energy mix of 50% renewable energy (RE) in Mindanao by 2030, amid recent gains by fossil-fuel power plants. 

SN ABOITIZ Power-Ifugao, Inc. confirmed its planned 390-megawatt (MW) hydroelectric power plant in Alimit Ifugao province has gone to a second round of consultations with indigenous peoples (IP) in the area. 

The access to Sustainable Energy Project (ASEP) grant agreement is supported by a $12.8-million worth of grant from the European Union and $3-miilion from the Global Partnership on Output Based Aid (GPOBA) to provide solar energy to 40,000 poor families nationwide.  The project targets remote areas and isolated islands that do not have access to electricity, particularly in Mindanao.

The partnership between Department of Energy (DOE) and Manila Electric Co. (MERALCO) to provide immediate electrification to remote areas has gained ground, with 5,263 of households in Bulacan, Laguna, some parts of Rizal and Tondo now enjoying the benefit of reliable electricity service. 

MERALCO recently inaugurated its Banawe 155kV/34.5kV Gas-Insulated Switchgear (GIS) substation facility in Quezon City. This will provide additional capacity to serve the growing power needs in Balintawak, Diliman, San Francisco del Monte. More than being safe and efficient, the facility has automation capabilities, making it more responsive during operational contingencies. 

ENVIRONMENT

The National Economic and Development Authority (NEDA) remains unfazed by the closure of mines under the Department of Environment and Natural Resources’ clampdown on violators of mining laws. NEDA Director Ernesto Pernia expressed that while there will workers affected by the closure of these mining companies, mining contributes only less than a percent to the gross domestic product (GDP). 

Department of Environment and Natural Resources (DENR) Secretary Gina Lopez has vowed to look into the adverse effects of aerial spraying on banana plantations in Mindanao. The move is in response to complaints on the alleged adverse impact of aerial spraying of pesticides to human health and the environment. 

Senator Cynthia Villar, chairman of the Senate Committee on Environment and Natural Resources, called for the development of more domestic processing facilities to boost mining’s contribution to the economy and generate more jobs in the countryside, as she doubts any ban will happen during President Duterte’s six-year term. 

DENR Secretary Gina Lopez will open a civic sector arm to strengthen civil society’s participation in environmental governance. Lopez added that civil society organizations (CSOs) would have an important role to play in ensuring the success of policies and programs of the DENR, including in the on-going review of all mining operations in the country. 

AGRICULTURE

Japan International Cooperation Agency (JICA) reported that agriculture infrastructure aid over P126-million worth of completed farm-to-market roads, communal irrigation systems and equipment to farmers is expected to benefit over 3,000 agrarian-reform beneficiaries (ARBs) in three areas in Western Visayas.

Agrarian Reform Secretary Rafael Mariano will push for the enactment of a new agrarian reform law to acquire more lands, public and private, for distribution for free or at the least cost to farmers. House Bill 555 known as Genuine Agrarian Reform Bill was refiled by Anakpawis Rep. Ariel Casilao to further push the demand for genuine agrarian reform and realization of the Filipino peasantry’s emancipation from the centuries-old feudal bondage of soil.

The Bureau of Fisheries and Aquatic Resources (BFAR) made an assurance that Philippine fishery products for export undergo all food-safety tests required by importing countries. This is after the following reports that scallops produced by Philippine-based De Oro Resources Inc. may have been the cause of the hepatitis A outbreak in Hawaii. 

The Department of Agriculture (DA) will partner with provincial governments to create rural-urban market linkages by organizing "agriculture festivals" in Metro Manila. 

Education Secretary Leonor Briones was mulling over a policy declaration that would urge companies involved in immersion programs for farming and agricultural students to give them allowances or some form of honorarium to make farming and agriculture sexier to the youth. 

More that P18-million worth of orders of coco-coir products were booked during the business matching conducted by the Department of Trade and Industry (DTI)-Export Marketing Bureau (EMB) during the Third Coco Coir Summit in Davao City on July 29. 

President Duterte has vowed to allocate an additional P4-billion to the National Irrigation Administration’s (NIA) 2017 allocation to subsidize the fees paid by small farmers for irrigation services, DA Secretary Piñol stressed.  

DA Secretary Emmanuel Piñol asked the House of Representatives to prioritize the passage of bills creating the Department of Fisheries and Aquatic Resources (DFAR) which seeks to increase its capacity to regulate the use of ocean, marine life, and other bodies of water within our jurisdiction, along the lines of marine and fisheries resources. 

DA officials are in talks with South Korean conglomerates that expressed interests in importing high-value products from the Philippines, Secretary Piñol revealed. 

Domestic output of abaca jumped by 6.8% year-on-year in the first semester of 2016 with a total of 30.9-million kilos, despite the effects of the El Nido phenomenon felt during the period. 

President Duterte has cut funding for agriculture by P3.4-billion, from P54-billion this year to P50.6-billion in the proposed 2017 budget. The lawmakers said the reduction is contrary to the President’s pronouncements that he would like agriculture sector to grow since farmers are among the poorest sectors of the population.

HEALTHCARE

Philippine Drug Enforcement Agency (PDEA) is fully supportive of a proposed measure extending affordable treatment and rehabilitation services to drug dependents under the healthcare benefits of the Philippine Health Insurance Corp. (PhilHealth). Senate Bill 8, An act Providing for Affordable Drug Rehabilitation Treatment for PhilHealth Beneficiaries, further amending Republic Act 7875, as amended. 

Four mega drug rehabilitation and treatment centers will soon rise in different parts of the country to accommodate the drugs suspects who have surrendered to authorities, Health Secretary Paulyn Ubial disclosed. 

TOURISM

Cebu Pacific is seeking over 2,000 additional seats for weekly flights between the Philippines and Hong Kong. A hearing for the application is scheduled on September 7 at the Civil Aeronautics Board (CAB).

The Department of Tourism (DOT) is targeting to attract some 6.5 million in foreign visitor arrivals and 73.3 million domestic tourists in 2017. This developed even as the Department of Budget and Management (DNM) has reduced the appropriations in 2017 by 26%. 

DOT sees an increase in the number of tourists to Mindanao, with the renewed interest in Davao due to the election of Rodrigo Duterte, the city’s erstwhile mayor, as President. DOT projects a 10% increase in tourist arrivals in Davao this year, or close to 1.9 million. 

The Department of Foreign Affairs (DFA) was urged recently to take over the chairmanship of the Philippine negotiation panel in air talks with other countries to ensure that the interests of the country are guarded, if not championed. Robert Lim Joseph, President of Save our Skies (SOS), pushed for the inclusion of representatives of Philippine carriers in the air talks to give them the same privilege that was extended to their foreign counterparts.

DOT is giving renewed focus to the 3.5-million Filipino-Americans living in the United States to boost visitor arrivals in the Philippines.

Airline companies have signaled willingness to integrate airport terminal fees into the cost of their airline tickets according to DOT.