How PSEi member stocks performed — December 17, 2024
Here’s a quick glance at how PSEi stocks fared on Tuesday, December 17, 2024.
Price increase of Noche Buena items remains steady in 2024
The overall increase in prices for Noche Buena items, as measured by the basket’s price index, fell by 0.2% annually this year, steeper than the 0.1% drop in 2023. This brought the average price increase for the basket to 2.3% from 2012 to the present. Since 2011, the Noche Buena price index rose by 25.1%. BusinessWorld has been monitoring the annual price changes of the Noche Buena items through a price index that gauges how faster (or slower) the price of this representative basket of goods has risen (or fallen) over the years. The prices of goods are based on the Department of Trade and Industry’s (DTI) list of suggested retail prices. Earliest available data date back to 2011.
CREATE MORE IRR sets rules for transfers of business registration
THE INTERIM implementing rules and regulations (IRR) for the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act were issued on Tuesday, laying down the rules for the transfer of registrations to other investment promotion agencies (IPAs).
The interim IRR allows “Pre-CREATE RBEs (registered business enterprises) with investment capital exceeding P15 billion… to transfer their registration… (if they have) started operating or (are) in the pre-operating stage” as long as they have not availed of any income tax-based incentives.
Qualified RBEs intending to transfer their registrations, if approved to do so, must surrender their Certificate of Registration or Certificate of Registration and Tax Exemption for cancellation, prior to the issuance of a new certificate.
Last week, President Ferdinand R. Marcos, Jr. signed the CREATE MORE Act into law. It further reduces the corporate income tax to 20% from 25% for RBEs.
CREATE MORE features income tax holidays, a 5% Special Corporate Income Tax, and duty exemptions on imports of capital equipment, raw materials, spare parts, and project accessories.
Additionally, RBEs will also enjoy local tax exemptions and VAT exemptions on imports and VAT zero-rating on local purchases of goods and services directly attributable to the registered project or activity.
“The reckoning period of the income tax-based incentive for operating RBEs issued with new Certificates of Registration shall be Jan. 1, 2025,” it added. — Aubrey Rose A. Inosante
Bill restoring NFA market powers being readied
By Adrian H. Halili, Reporter
THE Department of Agriculture (DA) said it has initiated the process of drafting legislation proposing to restore the National Food Authority’s (NFA) power to intervene in rice markets and regulate prices.
“We plan to submit our wish list to the Office of the President by Friday… I’m already asking our legal to draft the bill,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. told reporters late Monday.
He added that the DA will also urge President Ferdinand R. Marcos, Jr. to certify the impending bill as urgent.
At a House committee hearing on Tuesday last week, Mr. Laurel said that reinstating the NFA’s regulatory powers could help control rice prices.
Republic Act No. 11203 or the Rice Tariffication Law of 2019 stripped the power of the NFA to import and directly sell rice. The law instead implemented tariffs on imported rice at 35% initially, and 15% currently. The collected proceeds fund the Rice Competitiveness Enhancement Fund to modernize rice farming.
“The NFA used to have the power to tell all the retailers that you must sell NFA rice at this price… we don’t plan to control (the market), we just want to provide an option to buy rice at (the government) price,” he added.
The law had also limited the NFA’s functions to procuring domestically produced rice to hold in reserve for calamities. It is required to maintain a rice inventory equivalent to about nine days’ demand.
“With just the right budget and the right policy that allows the NFA to sell its rice to intervene, that will be enough (to tame prices),” Mr. Laurel said.
According to DA price monitors, as of Dec. 14, a kilo of well-milled rice sold for between P40 to P52 in Metro Manila public markets, while regular-milled rice fetched between P40 and P48.
Asked to comment, Federation of Free Farmers National Manager Raul Q. Montemayor said granting the DA or the NFA the authority to intervene by releasing cheap rice stocks could lead to a decline in farmgate prices.
“NFA intervention must be limited to situations where prices go beyond established thresholds or triggers, limited to areas where these price spikes occur, and targeted towards poor consumers only,” Mr. Montemayor said via Viber.
“Under normal circumstances, there should be no need for the NFA to intervene,” he added.
He cited the cost of intervention and the possibility of leakage, or the improper release of rice into the wrong hands, but also the risk of depressing palay prices due to the presence of cheap NFA rice on the open market.
Former Agriculture Secretary William D. Dar said that the NFA must be given the responsibility to maintain a one-month rice reserve instead of nine days demand, through a higher budget.
“With that level it can sell its aging stock to its network of retailers at about P35 per kilo. Another option is to sell to KADIWAs at P35. NFA intervention can provide relief to consumers in a big way,” Mr. Dar said via text.
The DA’s current program for distributing subsidized well-milled rice to the general public is known as Rice for All in KADIWA ng Pangulo outlets, since expanded to selected public markets and train stations.
The Rice for All program currently sells well-milled rice priced for P40 per kilo, with Mr. Laurel saying the DA is seeking to lower the price by January.
“I think we can make it P38-P39 by January. But we need (more) outlets,” he added.
House passes bill allowing foreigners 99-year leases
By Kenneth Christiane L. Basilio, Reporter
THE House of Representatives on Tuesday approved on third and final reading its version of a measure setting the maximum length of land leases for foreigners at 99 years from 75 previously, with the bill touted as a means of attracting more foreign investment.
By a 175-3-2 vote, legislators approved House Bill No. 10755, which also includes protections for foreign investors entering into lease agreements.
The Senate passed its version of the measure on Monday.
The 1987 Constitution prohibited foreigners from owning land in the country, but the 31-year-old Investors’ Lease Act allowed foreign investors to lease private land for an initial period of 50 years, renewable once for a maximum of 25 years.
The proposed law was declared a priority measure by President Ferdinand R. Marcos, Jr. It had been introduced in June by Senate President Francis G. Escudero, after efforts to amend economic provisions of the 1987 Constitution stalled in Congress.
A total of $8.9 billion in foreign direct investment flowed into the Philippines in 2023, well behind Singapore’s $159.6 billion, Indonesia’s $21.6 billion and Vietnam’s $18.5 billion.
The bill seeks to allow foreign investors to sublet properties, unless prohibited under the lease contract. Sublease contracts longer than 25 years or more are required to be registered with the Register of Deeds, while sublet contracts less than 25 years are exempt.
The measure listed the approved purposes of land leases by foreigners to include industry, agro-industrial, commercial, tourism, agriculture, agroforestry and ecological conservation.
The inclusion of agroforestry purposes was designed to “spur foreign investment in tree plantations and carbon farming on private land,” Calixto V. Chikiamco, president of Foundation for Economic Freedom, said via Viber before the bill’s approval.
The measure stipulates that Board of Investments approval is required for lease agreements outside economic zones or freeports.
George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry, said legislators should consider setting other conditions for such leases, such as the size of the investment, the jobs to be created, and the project’s contribution to the economy.
“We don’t want the land to be tied up for that long if they’re not putting in effort on the investments,” he said via phone before the bill’s approval.
Foreign investors that fail to initiate their planned investment projects on the leased sites within three years risk having the contract terminated by the Secretary of Trade or the heads of the economic zones or freeport areas, according to the bill.
The bill also imposes a prison term of up to six years and a fine of as much as P6 million for lessees and investors using the leased land in a manner contrary to Philippine law.
“While this reform would help improve the country’s investment climate, we believe additional reforms are needed to further promote investments and jobs in the Philippines,” American Chamber of Commerce of the Philippines Executive Director Ebb Hinchliffe told BusinessWorld via Viber before the bill’s approval.
“For example, we strongly support amendments to the Electric Power Industry Reform Act to help boost energy security and economic development; the rationalization of the mining fiscal regime; the International Maritime Trade Competitiveness Act; the Konektadong Pinoy bill to expand internet connectivity; and the creation of the Philippine Airports Authority to improve our airports and support aviation and tourism sectors,” he added.
British Chamber of Commerce of the Philippines Executive Director Chris Nelson told BusinessWorld by phone that “compared (to other countries that allow) direct ownership, it is not the same… While we would welcome the extension, we would actually say that they should also be looking at the possibility of having land ownership.”
The Philippines should also consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to entice more foreign investments into the country, he added, speaking to BusinessWorld before the bill’s approval.
The CPTPP is a trade pact comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The UK last week became its 12th member.
BIR confident it will hit downgraded P2.85-T target
THE Bureau of Internal Revenue (BIR) said it is on track to meet its downgraded P2.85 trillion collection target this year.
“As of November, the BIR is on track to meet its 2024 Emerging Goal (set by) the Development Budget Coordination Committee (DBCC) in March,” BIR Commissioner Romeo D. Lumagui, Jr. told BusinessWorld on the sidelines of a briefing at the House of Representatives. He noted that the target had been adjusted then to account for unpassed legislation and weaker-than-expected gross domestic product (GDP) growth.
In the first 11 months, the BIR collected P2.67 trillion, exceeding the P2.66 trillion goal for the period, it said in a Congressional hearing on Tuesday.
The total features a 36.67% increase in value-added tax collections to P622.24 billion.
The “other taxes” category posted 10.92% growth to P214.66 billion. Income tax grew 9.11% to P1.41 trillion.
Excise taxes totaled P284.53 billion, up 9.11%, with alcoholic beverages accounting for P103 billion and tobacco P130.83 billion.
Mr. Lumagui said excise performance reflects the shift in preference from cigarettes to vaping or electric cigarettes, and the impact of smuggling.
The P2.66 trillion collection for the 11 months would have failed to hit the earlier target of P2.84 trillion set in the Budget of Expenditures and Sources of Financing (BESF) issued in June 2023.
House Ways and Means Committee Chairman and Albay Rep. Jose Ma. Clemente S. Salceda said during the briefing: “If we did not (adjust) the BESF, then your performance would actually be negative.”
The economy expanded by a weaker-than-expected 5.2% in the third quarter, slowing from the revised 6.4% growth posted in the second quarter and 6% a year earlier.
This brought the nine-month growth average to 5.8%. Economic managers trimmed their GDP estimate for this year to 6-6.5% on Dec. 2.
“When the goal was set at P3 trillion, the forecast was that GDP would grow by 6-7%,” Mr. Lumagui said.
When the original target was set, it factored in revenue from unpassed legislation like the taxes on single-use plastics, pre-mixed alcoholic beverages, sweetened beverages and junk food, as well as the rationalization of the mining fiscal regime Mr. Lumagui said.
He called it “unfair” for the Bureau to be held to the original forecast when the new taxes did not happen.
“These are the laws that should have been passed for this year that could have or should have collected, that should have generated P107 billion. Shouldn’t that be removed from the goal because the law hasn’t been passed yet? You won’t be able to collect that for this year,” Mr. Lumagui said. — Aubrey Rose A. Inosante
Visitor arrivals hit 5.65 million at mid-December
INTERNATIONAL visitors to the Philippines totaled 5.65 million as of Dec. 15, according to the Department of Tourism (DoT), well behind the pace needed to achieve the 7.7 million target for the year.
“South Korea remains our top source market, followed by the US and Japan,” Tourism Secretary Christina G. Frasco said at a briefing on Tuesday.
“To further expand our reach, we have intensified efforts to engage emerging opportunity markets, sharing the unique story of the Filipino and showcasing the rich array of experiences our country has to offer,” Ms. Frasco added.
The mid-December total is equivalent to 73.4% of the target for the year.
The DoT said that South Korea accounted for 1.15 million or 20.3% of the total arrivals, followed by the US with 889,489 or 15.7%, and Japan 367,747 or 6.5%.
Rounding out the top five were China, which sent 306,549 visitors or 5.4%, and Australia with 249,140 or 4.4%.
The other leading sources of visitors were Canada, Taiwan, Singapore, the UK, and Malaysia.
“We have graduated from measuring tourism merely by the number of people arriving, but rather on the more important numbers” like spending, length of stay, and return visits, she added.
Ms. Frasco said tourism receipts as of Dec. 15 amounted to P712 billion, exceeding the P697 billion booked in 2023.
“Tourists are now spending an average of over 11 nights in the country, and over 70% are repeat visitors,” she added.
“We are focusing on the numbers that drive the economy. Therefore, we are looking to surpass our visitor receipts in 2025,” Ms. Frasco said. — Adrian H. Halili
27 ecozones proclaimed during Marcos gov’t
THE Philippine Economic Zone Authority (PEZA) said 27 economic zones (ecozones) have been proclaimed during the Marcos administration.
“11 ecozones were proclaimed in 2023 (involving investment of) P3.538 billion. In 2024, 16 more ecozones at P5.637 billion. The zones are a mix of (information technology) and manufacturing,” PEZA Director-General Tereso O. Panga said at a briefing.
The investment promotion agency (IPA) said that the top nine local government units outside of Metro Manila, except Batanes, host PEZA ecozones.
“We see a direct correlation between LGUs hosting ecozones and higher levels of progress. This means a lot to us,” Mr. Panga said.
PEZA projects investment approvals this year at P215 billion, exceeding its target of P200 billion.
Mr. Panga said PEZA dividends remitted to the National Government for 2024 amounted to P1.36 billion, up from P900.14 million a year earlier, and the highest since 2021. — Adrian H. Halili
Power market operator sees reduced likelihood of red, yellow alerts in 2025
RED AND YELLOW alerts will be less likely next year during the dry season, according to the Independent Electricity Market Operator of the Philippines (IEMOP).
“If you look at the weather now, according to (government weather service) PAGASA, La Niña has started,” Isidro E. Cacho, Jr., IEMOP’s head of trading operations, told reporters on Tuesday.
“Of course, its impact is different from last year’s El Niño. So, going into summer next year. Based on our latest projections, we don’t see any red and yellow alerts,” he added.
However, he does not rule out the possibility of unplanned or forced outages, leading to power interruptions.
PAGASA estimates a 74% probability of La Niña setting in by January, likely to persist through the rest of the first quarter.
“Next year, in terms of supply, we’re really seeing it to be quite stable,” Mr. Cacho said.
He cited the possibility of yellow alerts in the third quarter of 2025, particularly in the Visayas, due to the maintenance programs of some power plants.
“Compared to Luzon, the supply (in the Visayas) needs a bit of reinforcement,” he said.
Earlier this year, the Mindanao-Visayas Interconnection began full operations, enabling power sharing across all three main island grids.
The project allows excess power of up to 450 megawatts (MW) to be exported from the Mindanao grid to the Visayas.
This month, the market operator said power prices are low due to cooler weather and stable power supply.
IEMOP operates the Wholesale Electricity Spot Market (WESM), where energy companies can buy power when their long-term contracted power supply is insufficient for customer needs.
“Although there are outages — planned and unplanned — our demand has not been affected by the unplanned outages,” Mr. Cacho said.
According to the preliminary data from the IEMOP, spot prices system-wide fell 9.7% to P3.99 per kilowatt-hour (kWh) as of mid-December.
Between Nov. 26 and Dec. 15, the available supply increased 2.9% to 20,064 MW.
Demand, on the other hand, rose 0.2% to 13,692 MW.
On Luzon, the average price declined 10.6% to P3.79 per kWh.
Supply rose 4% to 14,191 MW, while demand rose 0.1% to 9,667 MW.
The WESM price in the Visayas dropped 8.9% month-on-month to P4.39 per kWh.
The grid’s supply during the period rose 2.3% to 2,449 MW. Demand grew 1.4% to 1,998 MW.
The average power price in Mindanao dropped 6.2% to P4.55 per kWh.
Available supply decreased 0.8% to 3,424 MW. Demand fell 0.2% to 2,026 MW. — Sheldeen Joy Talavera
China food expo yields P1.6B for PHL delegation
THE PHILIPPINES obtained about P1.6 billion worth of food sales and firm purchase agreements during the China International Import Expo (CIIE) in Shanghai, the Center for International Trade Expositions and Missions (CITEM) said.
“The amount was a combination of reported sales, purchase agreements or memoranda of understanding, and business matching results following the six-day import-oriented trade show,” CITEM said in a statement on Tuesday.
It added that the Philippine delegation included 16 food exhibitors during the China based expo, this was also in collaboration with the Department of Agriculture.
It said that small and medium enterprises in the delegation highlighted products featuring the Philippine durian variety known as Puyat.
“Together with our valued partners from various government agencies and the private sector, CITEM is thrilled with the success of our seventh participation in CIIE. The country’s participation is expected to create jobs, providing bigger opportunities for local agricultural communities across the Philippines,” CITEM Executive Director Leah Pulido Ocampo said.
CITEM said that a memorandum of understanding was signed by Lionheart Farms Corp. and a Jiangsu-based company valued at $415,000, while Treelife Coco Sugar obtained more than $400,000 from a Shanghai e-commerce firm.
Dole Philippines, Inc. and Good Farmer acquired purchase agreements for fresh fruit, while SQ Fresh Fruits signed an agreement with Shishi Songhe International Trade Co. Ltd. to export durian.
“Durian is our next high-potential export revenue fruit. It was very evident from the expo goers’ overwhelming reception of our Puyat durian during our taste testing sessions that generated a lot of interest and inquiries,” Agriculture Assistant Secretary Philip C. Young said.
A coconut oil trading agreement was also reached by New Asia Oil, Inc. and Namchow Food Group during the event, though no details were provided.
CITEM said Liwayway International Co. Ltd. is also set to explore potential collaboration with Chinese firms on supply wchain optimization and channel expansion. — Adrian H. Halili
Digital economy growth challenging for revenue collection, legislator says
THE GROWTH of digital marketplaces is posing challenges for the Bureau of Internal Revenue (BIR) in collecting taxes, a legislator said on Tuesday.
The Philippine digital economy was estimated at P2.05 trillion in 2023, accounting for 8.4% of gross domestic product, according to the Philippine Statistics Authority. The equivalent totals for 2022 were 7.7% and P1.9 trillion.
“The shift to the digital economy is making it difficult for the BIR to collect taxes on the domestic economy,” Albay Rep. Jose Ma. Clemente S. Salceda, said at a committee hearing.
The BIR is in the process of digitizing its internal processes, with a focus on training employees to be digitally savvy, upgrading technology infrastructure, and improving the taxpayer experience.
It has been transitioning to digital operations after adopting a 10-year digitalization roadmap in 2019.
“This isn’t a quick fix. This digital transformation is a long process. There’s a lot that needs to be done,” BIR Commissioner Romeo D. Lumagui, Jr. told BusinessWorld.
“As of now, we are on track in developing our digital (infrastructure)… with full implementation by 2028,” he added.
At the hearing, Mr. Salceda urged the government to collect digital value-added tax on goods sold through electronic platforms.
“I don’t know who is doing the IRR (Implementing Rules and Regulations), but goods over digital markets are not being included in the definition of the digital VAT,” he said. — Kenneth Christiane L. Basilio
Halal trade office established
THE Department of Trade and Industry (DTI) said it established the National Halal Industry and Development Office (NHIDO) to oversee the industry’s development.
“The NHIDO will act as the central coordinating body for all Halal development efforts to streamline initiatives and foster collaboration,” the DTI said in a statement on Tuesday.
“The establishment of NHIDO marks a turning point for the Philippine Halal industry. It will serve as a unifying force to transform our goals into reality, unlocking opportunities for businesses, creating jobs, and elevating the Philippines as a Halal-friendly destination globally,” Halal Industry and Trade Office Program Manager Dimnatang M. Radia said.
The Trade department said that among the office’s key priorities is to simplify Halal certification and standards, ensuring easier access for medium, small, and micro enterprises (MSMEs).
“This initiative will be supported by expanded capacity-building programs that offer specialized training, equipping MSMEs and other stakeholders with the knowledge and skills needed to thrive in the Halal sector,” it added.
The agency said the NHIDO will collaborate with local government units and other agencies to put up Halal-compliant infrastructure, including slaughterhouses and cold storage facilities.
“This initiative will also involve regional integration efforts to enhance supply chains across Luzon, the Visayas, and Mindanao, creating the foundation for efficient Halal trade hubs,” it added. — Adrian H. Halili