Warriors go for win

May 6, 2019 | 8:10 pm

The Warriors remained supremely confident of their chances heading into Game Four of their semifinal-round series against the Rockets. It didn’t matter that they lost their immediate past match in overtime, and that their rivals limited them to 44.2% shooting en route. As far as they’re concerned, they’re primed to win today, thus claiming the split they need to consider their trip to Houston a success; they’ll be having a commanding lead in the best-of-seven affair, with the next contest providing an opportunity to move on to the next postseason challenge.

To be sure, there is reason to deem the assessment on the mark. For all the proof of competitiveness the Rockets provided in their Game Three victory, they are compelled to keep pressing today. And even if they emerge triumphant, they will simply have done their job in the grand scheme of things. Absent homecourt advantage, they will need to prevail on the road at least once in order to advance past the Warriors. And the task won’t be easy; not for nothing are the latter Finals fixtures over the last four years, and, notwithstanding season-long travails, still the prohibitive favorites to retain the Larry O’Brien Trophy.

To comprehend the near-Sisyphean nature of the Rockets’ endeavor, fans need only consider the Warriors’ own decorum throughout the series to date. They own two wins and very nearly went three for three, and yet they haven’t come close to showing their best selves. In fact, two-time National Basketball Association Most Valuable Player Steph Curry and backcourt partner and fellow All-Star Klay Thompson have been mired in unprecedented shooting slumps. And given the aggressive defenses being thrown at them, it’s anybody’s guess as to when — or if — they’ll be able to find their touch with consistency.

Nonetheless, the series continues to be the Warriors’ to frame. After all, they have the most feared starting lineup in the league, likewise featuring yet another former MVP in Kevin Durant and all-world defenders Draymond Green and Andre Iguodala. And so formidable are they that the Rockets require offensive savant James Harden to be sharp from opening tip to final buzzer merely to keep in step. Which, in a nutshell, was why the defending champions shook off their Game Three setback as a blip in the radar, and why they’re keen on finally stamping their class today.

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994.

SM Supermalls and Tribal DDB show us the actual hardest part of being a mom with “It’s Time”

May 6, 2019 | 7:57 am

#SMoments presents “It’s Time”

When is the right time to hold on and let go?

Watch this video and share us your “moving on” stories below. ❤️ #CelebrateMomsDayAtSM

Posted by SM Supermalls on Tuesday, April 30, 2019

Ever since SM Supermalls launched its “SM Moments” video series in 2017, the brand started a tradition that celebrates real stories of its shoppers with insights anyone can relate to.

In partnership with Tribal DDB, SM continues the custom this Mother’s Day with “It’s Time” – a story of a mother who feels she’s being let go by her son as he finally becomes the man and husband she raised him to be. The video was directed by Ian Abaya of Rogue Monkey and released on the brand’s Facebook on May 1.

“Mother’s Day has always been a special season to us because it’s the best time to pay tribute to our loyal SuperMom shoppers who have been celebrating their memorable family moments at SM over the years,” said Jonjon L. San Agustin, SM Supermalls’ senior vice-president for Marketing.

“Through our video, we hope kids will get to appreciate their moms even more, reminisce about their fun childhood, and even possibly be excited on coming up with a surprise as their families celebrate Mom’s Day this May 12,” San Agustin continued.

BusinessWorld Analyst’s Polls

May 6, 2019 | 1:33 am

INFLATION likely slowed in April as food prices continued to drop, analysts said, even as they were divided on the central bank’s next policy move, with some expecting a steady stance despite room to ease and a cut in banks’ reserve requirement ratio (RRR) instead. Read the full story.

RRR could be cut should inflation slow

May 6, 2019 | 1:21 am

A BusinessWorld poll of 10 economists yielded a 3.1% median headline inflation estimate for the month, which if realized will be slower than the 3.3% pace recorded in March and the 4.5% posted in April last year. This will also be the slowest pace seen since December 2017’s 2.9% and will mark the sixth straight month of easing. The median likewise falls within the 2.7-3.5% estimate range given by the Bangko Sentral ng Pilipinas (BSP) last Tuesday.

The Philippine Statistics Authority (PSA) will release official inflation data tomorrow.

Headline inflation averaged 3.8% last quarter, still near the upper end of the government’s 2-4% target. The BSP sees inflation averaging three percent this year.

IHS Markit Asia Pacific Chief Economist Rajiv Biswas, who gave an estimate of 3.1%, said lower food prices — especially for rice — likely caused inflation to slow last month. “An important factor constraining inflation pressures in April has been lower retail rice prices, following the implementation of the rice import liberalization law. This has helped to mitigate the impact of rising retail petrol prices in April, which have been pushed up due to rising world oil prices,” Mr. Biswas said.

Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), noted that rice prices have dropped to as low as P34-35 per kilogram, down by more than P10 from prices in September-October 2018 or when inflation hit a 6.7% nine-month peak. Sugar prices have also declined to P45-50, down by at least P15 from last year, he said.

“Inflation would likely continue to ease in April 2019 as well as in the coming months, largely driven by lower food prices… more than offsetting any uptick in food/agriculture prices due to the expected mild El Niño drought that could last up to August 2019 and some increase in global oil prices at six-month highs recently,” Mr. Ricafort said.

“Other factors that may support the easing inflation trend include the stronger peso exchange rate recently… and slower global economic growth/outlook especially in developed countries that also fundamentally lead to lower global inflationary pressures.”

DIVIDED ON POLICY MOVE
With the anticipated downtrend in inflation, analysts in a separate BusinessWorld poll were divided on the central bank’s policy decision this week, with five out of 10 expecting the BSP to hold fire despite room to ease and the others penciling in a 25-basis-point (bp) cut in key rates.

Meanwhile, five analysts expect the BSP to slash big banks’ reserve requirement ratio (RRR) — currently at 18% — on Thursday, with three predicting a 100-bp cut.

The BSP’s Monetary Board will review policy settings anew on May 9. At its March meeting, the Monetary Board kept rates within the 4.25-5.25% range, with the key rate of 4.75% still at a decade-high after the BSP fired off a series of hikes worth 175 bps last year to rein in inflation expectations after price spikes surged to as high as a nine-month peak of 6.7% in September and October.

DBS Bank economist Masyita Crystallin said the BSP is likely to keep monetary policy settings steady this week and will consider easing only to boost the economy. “Given the steady inflation deceleration, we think BSP might have enough policy space to cut rate should growth disappoint. However, for [this] week’s policy meeting, BSP is likely to stand pat while keeping the powder dry should the economy need more stimulus,” Ms. Crystallin said.

Besides inflation, the PSA will be releasing a host of economic data leading to the first-quarter gross domestic product data on May 9, hours ahead of the MB’s third policy review for 2019.

For Robert Dan J. Roces, economist from Security Bank Corp., the BSP is expected to reduce universal and commercial banks’ RRR first — which he sees happening within in the first half — before it cuts policy rates, especially with liquidity growth continuing to slow in March.

“There is a higher probability of an RRR cut soonest, definitely within H1, after M3 was reported at its slowest growth [in March] at 4.2% and a ‘data-dependent’ BSP is surely considering this given that low liquidity number… Our preliminary view is that RRR will come first and then interest rates,” Mr. Roces said.

Meanwhile, RCBC’s Mr. Ricafort, who sees a 25-bp cut in key rates and/or a reduction in RRR this week, said slower inflation “may support more dovish/accommodative monetary policy that lead to lower interest rate benchmarks.”

IHS Markit’s Mr. Biswas, who is also penciling in a 25-bp rate cut and a 100-bp RRR cut this Thursday, cited a need to ease monetary policy as real interest rates are “extremely high” following last year’s cumulative hikes.

“As a data-driven central bank, we believe the time is ripe for the Bangko Sentral ng Pilipinas to begin monetary loosening given prevailing economic conditions and the lagged impact of monetary policy on the real economy,” HSBC Global Research economist Noelan Arbis said in a report.

While expecting the BSP to cut both its key rates and the RRR this meeting, Mr. Arbis said this would a be a departure from the central bank’s recent practice of tweaking the reserve ratio between policy meetings.

“We continue to believe that the order of monetary policy easing matters. We posit that RRR cuts should take precedence over policy rate cuts, given that the effectiveness of interest rate cuts to stimulate growth is limited due to tight liquidity in the banking system… [W]e believe it would be imprudent for the BSP to cut the policy rate without cutting the RRR,” Mr. Arbis added.

Last Friday, BSP Governor Benjamin E. Diokno said in an interview with ABS-CBN News Channel on the sidelines of the Asian Development Bank’s annual meeting in Nadi, Fiji that the central bank sees room to “move faster” in easing monetary policy given the sovereign credit rating upgrade the Philippines received from S&P Global Ratings last week.

“I think the (rating upgrade) is another factor that we can now move faster this time,” Mr. Diokno had said.

“It is inevitable that we will have to cut both the reserve requirement ratio and the interest rate,” Mr. Diokno noted. “We’re starting from the previous year’s 175-point increase. That’s not normal.” — R.J.N. Ignacio

Poll sees muted 1st quarter GDP growth on 2019 budget delay

May 6, 2019 | 1:20 am

By Mark T. Amoguis
Senior Researcher

ECONOMISTS expect gross domestic product (GDP) growth in the first quarter to be weighed down primarily by the impact of the delayed enactment of the 2019 national budget despite household spending and private sector investment picking up, according to results of a BusinessWorld poll.

A poll of 20 economists yielded a median GDP growth estimate of 6.1% for the first quarter, easing from the 6.3% uptick recorded in the fourth quarter of 2018 and the 6.5% expansion logged in last year’s first quarter.

If realized, this figure would be the lowest reading in two quarters or since clocking in six-percent growth in the third quarter of 2018. The Philippine Statistics Authority will report the official first-quarter GDP data on Thursday hours ahead of the central bank’s third monetary policy review for this year.

Last week, the country’s economic managers were “conservative” in estimating first-quarter GDP growth, with Socioeconomic Planning Secretary Ernesto M. Pernia penciling the pace at “above six percent” and Trade and Industry Secretary Ramon M. Lopez giving a 6.2-6.4% range.

The interagency Development Budget Coordination Committee, which sets official macroeconomic assumptions and fiscal program, slashed its 2019 GDP growth target last March to a range of 6-7% from 7-8% originally due to delays in signing the budget for this year.

GOV’T SPENDING DRAGS
Among many factors, many of the economists polled last week via e-mail attributed the expected GDP growth slowdown in the first quarter to the four-month delay in signing the P3.662-trillion national budget for the year.

“The main reason [for the slower reading in the first quarter] is that government spending growth ground to a halt as the government operated on a reenacted budget. Export and activity data also suggest growth slowed in other sectors of the economy in Q1,” said Alex Holmes, Asia economist at Capital Economics. He forecast a 5.4% growth in the first quarter.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. (UnionBank), likewise cited the budget delay despite improving conditions in domestic demand due to the declining inflation trend.

“Specifically, government spending in Q1 may fall by about P46 billion, which represents wasted opportunity to implement infrastructure projects. This means that the demand side of the economy in general has slightly slowed down compared to the same period last year,” said Mr. Asuncion, who estimated 6.1% GDP expansion in the first three months of the year.

For Standard Chartered Bank economist Chidu Narayanan, the budget delay “likely shaved 0.3-0.5 ppt (percentage point)” off GDP growth in the first quarter. He gave a 6.2% growth estimate.

The government operated on a reenacted 2018 budget from the start of the year until April 15, when President Rodrigo R. Duterte signed the latest general appropriations into law, but vetoed P95.3 billion in appropriations that he said were not in accordance with his administration’s priorities, slashing this year’s national budget to about P3.662 trillion.

Running on a reenacted budget had left new projects unfunded in the first semester, which would otherwise have been ideal for infrastructure work ahead of the 45-day public works ban starting March 29 ahead of the May 13 mid-term elections and the rains next semester.

State disbursements missed the program by 11% at P777.99 billion in the first quarter, although they edged up a percent from P771.964 billion year ago according to data from the Bureau of the Treasury.

In March alone, state spending fell by eight percent from a year ago and 16% short of the P287.327 billion programmed for that month.

Separate data from the Department of Budget and Management show infrastructure and capital outlays growing 26.3% to P118.4 billion in the first two months of the year from P93.8 billion a year ago.

EASING INFLATION, ELECTION BOOST
On the other hand, economists said that private consumption may have gotten a boost from easing inflation as well as election-related spending in the run-up to the May 13 legislative and local elections.

Emilio S. Neri, Jr., lead economist at Bank of the Philippine Islands, predicted a 6.2% growth as “our leading indicators for retail sales, business and consumer confidence, car sales, government construction projects support our forecast on upside. We think election spending helped bolster growth on most of these items.”

DBS Bank economist Masyita Crystallin gave a 6.1% forecast, noting that “decelerating inflation has helped maintain purchasing power and hence we believe that consumption growth will be stable.”

ING Bank NV Manila Branch senior economist Nicholas Antonio T. Mapa also expects household consumption to have picked up in the first quarter, giving a 5.9% GDP growth estimate.

At the same time, Mr. Mapa doubted the impact of the “election bump” on the economy.

“[A] closer inspection of the contributions to growth per sector [shows that] the main reason for faster growth during EY (election year) is a strong showing from capital formation in the [first half] of the year,” he said.

“[Household] spending does see an acceleration as more funds exchange hands but the 2019 EY is likely to see boost emanate only from the consumption side with capital formation likely taking a back seat as rate hikes do their damage.”

Headline inflation eased for the fifth straight month to 3.3% in March — the slowest pace in 15 months or since December 2017’s 2.9% — bringing the year-to-date average at 3.8%. March brought the year-to-date inflation back within the 2%-4% target range of the Bangko Sentral ng Pilipinas (BSP) for this year, but still above the its reduced three percent forecast average for 2019.

April inflation data will be released tomorrow.

OUTLOOK
Despite the first quarter hiccup, economists expect the economy to recover for the rest of the year now that the national budget for this year has been signed.

“The signing of the 2019 budget in mid-April should see growth rebound in the second quarter. For the year as a whole, growth is likely to come in at around 6.0%,” said Capital Economics’ Mr. Holmes.

ING’s Mr. Mapa said that growth “will likely remain challenged” in the first half of this year due to the “lingering effects of the budget backlog and elevated borrowing costs.”

On the other hand, he added that the possible easing of monetary policy from the BSP and the 2019 budget coming on line “should help [second-half] growth finish the year strong.”

BSP to take measured policy steps — S&P

May 6, 2019 | 1:18 am

By Reicelene Joy N. Ignacio
Reporter

THE PHILIPPINE ECONOMY is not overheating, but this does not mean the central bank will dial back the cumulative 175-basis-point interest rate hike it fired off last year to ease inflation pressures.

“There was no overheating seen within the economy of the Philippines. Some analysts covering the Philippines last year were worried of overheating because of the inflation we saw. What the inflation ended up doing was to cut… disposable incomes of households… and that weighed down consumption,” Vincent Conti, S&P Global Ratings Asia Pacific economist, said in a Friday webcast.

“Inflation has sharply fallen and is now back to target range,” he noted.

“We support the view that the Philippines is not overheating; [but] It does not mean for us that monetary policy settings, that policy rates, should go back to before inflation shocked last year.”

Overheating in an economy occurs when a country’s productive capacity cannot keep up with demand in a fast-growing economy, and rising inflation is a key overheating warning sign. Headline inflation had picked up for nine straight months to a nine-year-high 6.7% in September last year that was sustained in October, before slowing for five straight months to a 15-month-low 3.3% in March. The Bangko Sentral ng Pilipinas (BSP) increased policy interest rates by a total of 175 basis points in five meetings last year, leaving the key benchmark at a decade-high 4.75%.

“We think the BSP does have the preference to cut back on the overtightening they were forced into last year, but they will not go all the way back to the 175 basis points (bps) they had to raise last year,” Mr. Conti said.

He added that slowing global demand — as reflected in easing purchasing managers indices including for the Philippines — “is a bit of headwind, but I would not be so concerned about it.”

“The switch to cash-based budget system in the Philippines would be [followed by] an uptick in infrastructure spending in the second half of the year…” he said, adding that the country, “unlike many of its neighbors in Asia, also has a very strong domestic component of growth led by strong growth consumption by the middle class.”

Andrew Wood, S&P director for Sovereign and Internal Public Finance Ratings, said that gross domestic product “growth may slightly underperform in the first half of the year especially due to delay [of 2019 budget enactment and]… the reenacted budget,” but added: “We’re expecting it to pick up in second half of the year.”

Mr. Wood said S&P, which on April 30 gave the Philippines its highest credit rating yet at “BBB+”, is now watching for progress in the government’s remaining tax reforms, including one that will cut the 30% corporate income tax rate in a bid to attract more foreign direct investments.

Mindanao railway construction pushed to Q4 due to alignment issues

May 6, 2019 | 1:17 am

DAVAO CITY — Construction of the Mindanao Railway System (MRS) has been moved to the fourth quarter this year as the government reviews the alignment in Davao City following resistance from affected homeowners.

In August last year, Project Manager Patricia Melizza B. Ruivivar — after presenting the plan to the Davao City council — said the first phase of the MRS, covering the 102-kilometer Tagum-Davao-Digos (TDD) segment, was targeted to start by Jan. 2019.

Transport Secretary Arthur P. Tugade, in a press conference here Friday for the Tsuper Iskolar scholarship program launch, said that his department has already finalized the alignment and the downloading of funds for right-of-way acquisition, but residents of a gated subdivision in the city have appealed for reconsideration.

In February this year, members of the Monteritz Classic Estates Homeowners Association Inc. (MCEHAI) asked the Department of Transportation (DoTr) to review the railway’s alignment, particularly the viaduct that would hit their area with 40 homeowners and 67 lot owners affected.

Also in February, the South Pacific Golf and Leisure Estates Homeowners Association appealed for reconsideration. No house in the high-end subdivision will be directly hit by the train track, but it will traverse the 18-hole golf course, including its newly built clubhouse, which cost P550 million.

Eymard D. Eje, Department of Transportation assistant secretary for Project Implementation-Mindanao Cluster, said his office has been working to resolve the issues, emphasizing that the new transport system is being planned to cause the least public disturbance.

“When there is a development, especially if it is national(-funded), there will always be people that will be inconvenienced. There will always be difficulty because you are putting a new system,” Mr. Tugade said.

“I hope our approach here is not just personal concerns, let’s look at the benefit for the majority… That is why we are requesting for a fuller understanding and a wider patience,” he added, speaking in mixed Filipino and English.

Despite the delay, the Transport chief said the department is intent on having the railway at least partially operational by 2022.

“Our goal for the Mindanao railway is partial operability of the stations in Tagum City, Digos City, and Davao City,” Mr. Tugade said.

“It is our goal that there will be partial operability of these stations by first or second quarter of 2022. I am trying to fast-track and move forward… These will be constructed simultaneously.”

The Tagum-Davao-Digos segment is estimated to cost about P35 billion and will be partly funded by official development assistance from China.

It is planned to have eight stations, with three in Davao del Norte (Tagum City, Carmen, Panabo), three in Davao City (Mudiang, Davao central, Toril), and two in Davao del Sur (Sta. Cruz, Digos).

A 10-hectare depot will be built in Tagum. — Maya M. Padillo

BoI-approved investment projects rise 46.5% in first 4 months

May 6, 2019 | 1:14 am

INVESTMENT projects registered with the Board of Investments (BoI) in the four months to April rose 46.5% year on year to P286.7 billion, led by the power industry.

Investment by domestic entities rose 14% to P219.7 billion, the BoI said in a statement Friday.

Foreign-sourced investment proposals rose sharply to P66.9 billion from P2.9 billion a year earlier.

Power projects accounted for P185.4 billion in registered investments, up 78% from a year earlier.

The BoI is one of the government’s investment promotion agencies, and project proponents register with it in order to qualify for incentives.

Manufacturing accounted for P44.6 billion, from P15.9 billion a year earlier. This was followed by the information and communication sector where project registrations rose to P33.2 billion from P340 million a year earlier. Meanwhile, proposed investments in the accommodation and food service sector rose to P8.4 billion from P1 billion in 2018.

“With the government’s commitment to ‘clean and green’ infrastructure systems, successive renewable power projects were approved by the BoI,” Trade Undersecretary for Industry Development and Trade Promotion and BoI Managing Head Ceferino S. Rodolfo said.

The BoI said such renewable projects include the P35.2-billion 506-megawatt (MW) natural gas power plant of Vires Energy Corp. in Batangas City; the 15-MW biomass plant of Cagayan Biomass Energy Corp. in Isabela and the P1-billion geothermal source project of Philippine Geothermal Production Co., Inc. located in several towns in Albay and Camarines Sur.

Calabarzon was the proposed location for P198 billion in new investment. Central Luzon followed with P26.7 billion and the National Capital Region was third with P7.9 billion. Rounding the top five are the Central Visayas with P5.7 billion and Cagayan Valley with P4.3 billion.

Singapore was the biggest foreign investor in the year to date with P35.4 billion, up sharply from P38.7 million a year earlier. This was followed by the Netherlands with P9.1 billion; Thailand with P8.5 billion; Japan with P5.5 billion; and the United States with P2.2 billion.

“Foreign investors remain confident in the country’s business prospects as foreign capital continues to surge into the country while domestic investors remain upbeat as domestic capital continued its steady growth,” Trade Secretary and BoI Chairman Ramon M. Lopez said.

He added that the Philippines’ recent credit rating upgrade from S&P Global, as well as the Asian Development Bank’s view of the Philippines as the second fastest-growing economy in Southeast Asia, will continue to bring in investment.

“I join the economic managers in attributing all these very positive economic developments, including the continued surge of BoI investment approvals in priority and strategic sectors, to the steadfast implementation of the 10-point economic agenda of President Rodrigo R. Duterte,” Mr. Lopez added.

The BoI has a P1-trillion investment target for 2019.

The investment promotion agency posted a record P907 billion worth of project registrations, with most projects from the manufacturing, infrastructure, transport and utilities sectors. — J.C. Lim

DoF touts stronger BIR collections under Duterte

May 6, 2019 | 1:13 am

THE Department of Finance (DoF) said the Bureau of Internal Revenue (BIR) collections have grown sharply in the first two full years of the Duterte administration, while remaining just a few percentage points below target in each of the two years.

In a statement, the DoF said that the BIR collected P1.78 trillion, or 97.35% of its P1.83-trillion target, in 2017, and P1.96 trillion, or 96.04% of the P2.04-trillion target, in 2018.

In 2015, the last full year under the previous government, the BIR reported collections of P1.44 trillion, or 86.12% of its target of P1.67 trillion.

The current administration took over at the end of June 2016.

“To his credit, President Duterte has transcended all the political chatter and stayed focused on pursuing policy initiatives such as tax reform, trade liberalization and infrastructure modernization, that are necessary to sustain the growth momentum, attract investments and ensure financial inclusion for all Filipinos on his watch,” Carlos G. Dominguez III, Finance Secretary, said in the statement.

According to the DoF, tax effort, or the proportion of collections relative to the size of the economy, was recorded at 11.27% in 2017 and 11.26% in 2018, from 10.82% seen in 2015 and 10.56% in 2014.

“The 2018 tax effort of 14.7% to GDP (gross domestic product) is the highest in 20 years,” Mr. Dominguez said.

The DoF noted that the collection performance of the BIR averaged 96.7% in the first two full years of President Rodrigo R. Duterte’s term, as compared with the 94.5% in the full five years of the previous administration.

The DoF attributed the increase to the government’s tax reform program that “has led to the strong performance of revenue collection” wherein tax revenue increased by 14% to P2.565 trillion in 2018 from P2.250 trillion a year earlier.

The BIR has said it is expecting higher collections for this year from the tax amnesty program rollout.

The BIR generated total revenue of P468.2 billion in the first quarter of 2019, up 11% from a year earlier.

The BIR has been actively running after manufacturers of cigarettes and other commodities with fake tax stamps and charging them with tax evasion, as well as requiring Philippine Online Gaming Operators (POGOs) to register their companies with the BIR as a condition for the issue of operating licenses. — Reicelene Joy N. Ignacio

Goods trade up 10.5% amid large deficit with top partner China; electronics still top export

May 6, 2019 | 1:12 am

INTERNATIONAL trade in goods in 2018 totaled $182.15, up 10.5%, the Philippine Statistics Authority (PSA) said, with China, the top trading partner, accounting for 16.9% of total trade while enjoying a large surplus vis-a-vis the Philippines with exports of $22.01 billion and imports of $8.82 billion.

Electronics remained the top Philippine export, generating overseas shipments worth $38.18 billion, up 4.5% from a year earlier and accounting 55.1% of the total, the PSA said in its preliminary report on international trade for 2018. It added that the top 10 export commodities accounted for 80.7% of export receipts.

Other top exports were “other” manufactured goods, with a 6.3% share worth $4.3 billion, and machinery and transport equipment with a 4.8% share valued at $3.31 billion.

In addition, machinery and transport equipment exports declined 11.6% from a year earlier.

China accounted for $4.96 billion of the Philippines’ electronic products exports, or 56.3%.

Japan, the second-largest trading partner in 2018, accounted for 11.6% of total trade in 2018 or $21.14 billion. The trade balance with Japan is slightly in Japan’s favor, with the country taking in Philippine exports of $10.32 billion while shipping $10.82 billion worth of goods the other way.

The top export to Japan was electronic products worth $3.01 billion, followed by wiring sets for vehicles valued at $962.36 million.

The United States was the third-largest trading partner with a share of 10.3% or $18.70 billion. The trade balance favors the Philippines with exports to that country valued at $10.64 billion compared with imports worth $8.06 billion. The top export to the US was electronic products worth $5.13 billion, accounting for 48.2% of the total. The top US export to the Philippines was also electronics worth $2.55 billion or 31.6% of the total, followed animal feed (excluding unmilled cereals) valued at $1.01 billion, or a share of 12.6%.

Total trade with ASEAN amounted to $39.64 billion, with the Philippines incurring a trade deficit with exports worth $11.18 billion and imports valued at $28.46 billion. ASEAN as a bloc accounts for 21.8% of total trade.

Of other major economic blocs, the European Union accounted for $17.49 billion, or 9.6% of total trade. The Philippines enjoyed a surplus of $320.71 million vis-a-vis the EU on exports of $8.91 billion and imports of $8.59 billion.

Trade with APEC was $151.53 billion, with the Philippines also suffering from a deficit estimated at $36.52 billion, on exports of $57.50 billion and imports of $94.02 billion.

Wage hike petitions still being evaluated by NWPC, DoLE says

May 6, 2019 | 1:11 am

THE Department of Labor and Employment (DoLE) said it continues to study current settings for minimum wages after various wage hike petitions were filed before Labor Day last week.

Labor Secretary Silvestre H. Bello told reporters that the National Wages and Productivity Commission (NWPC) is still assessing the latest wage hike petitions filed by labor groups late last month.

“Ongoing, pinag-aaralan nila (they are studying it)…Every now and then there is that (kind of complaint) or (petition to) fix a new minimum wage so continuous pa rin ang pag-aaral (the evaluation is still continuing),” he said.

On April 29, the Trade Union Congress of the Philippines (TUCP) filed a petition for a wage hike of P710 to add to the Metro Manila minimum wage.

Other wage hike petitions filed before the NCR wage board are from Kilos Na Manggagawa (KnM), Metal Workers’ Alliance of the Philippines (MWAP), and BPO Industry Employees Network (BIEN), which asked for a P213 wage increase. The petition of the labor groups aim to make the National Capital Region (NCR) daily minimum wage rise to P750.

On April 30, Senator and Chair of the Committee on Labor, Employment and Human Resources Development Joel J. Villanueva said in a radio interview “Naniniwala tayo na hindi dapat kaagad-agad isinasara ang posibilidad na magkaroon ng (we believe that we shouldn’t rule out the possibility of a) second round of wage increase in less than a year.”

Only the Regional Tripartite Wages and Productivity Board (RTWPB) of each region has the authority to adjust wages, and only after 12 months lapse since the last wage order, subject to approval by the NWPC. Only “supervening conditions” warrant a wage adjustment less than a year since the last wage order.

For NCR, the last wage adjustment was issued on November 22, 2018 — less than six months ago. The wage order called for a daily minimum wage of P537 for non-agricultural private sector workers.

The wage setting system can only be amended through legislation.

Late last year, NWPC Director Maria Criselda R. Sy said that the NWPC has been tasked to conduct a third-party study on the current wage determination system.

“That is their mandate: to continuously assess the economic situation to assess and recommend a wage hike adjustment,” Mr. Bello said. — Gillian M. Cortez

ERC’s competitive selection rules expected in 30 days

May 6, 2019 | 1:10 am

THE Energy Regulatory Commission (ERC) expects to issue within 30 days its final rules on competitive selection process (CSP), a scheme that chooses the lowest-cost power for consumers, including a provision on replacement power that will require the generation companies to shoulder the cost of unscheduled plant outages.

“Hopefully, in 30 days,” ERC Commissioner Catherine P. Maceda told reporters when asked about how soon the regulator could issue the rules in the face of the continuing legislative hearings on the deficient power reserves in the Luzon grid ahead of the May 13 midterm elections.

She said the ERC has a draft of the CSP rules, which is in the final stage of completion.

Attached in the rules is a template for a power supply agreement (PSA), which has a provision on replacement power.

“It’s almost ready,” she added. “There’s a template contract already.”

Ms. Maceda said given the recent hearings and the inputs from stakeholders, the ERC will revisit its draft CSP rules, and possibly hold another round of public consultations.

At present, not all the PSAs that went through ERC approval have a provision on replacement power, an issue that was highlighted in the Senate hearings, with Senator Sherwin T. Gatchalian pointing out that there is no disincentive for power generation companies whose plants go on an unscheduled shutdown. He also questioned the slow pace at which the power plants go back online after an outage.

Some PSAs between generation companies and distribution utilities have a provision on replacement power. That provision calls for the utility to buy power from the wholesale electricity spot market when the generator is unable to deliver because of an outage. Market prices are driven by existing supply and demand, and could be higher than the contracted prices under PSAs. The additional cost may be passed on to consumers.

Ms. Maceda said the ERC might need one or two en banc meetings to finalize the CSP rules, plus another special commission meeting for the same purpose.

The urgency of coming up with the rules comes at a time when the ERC is in the thick of inspecting power plants that shut down in March and April, resulting in rotational brownouts in some areas in Luzon, including Metro Manila.

Ms. Maceda said the commission is awaiting the submission of data from the power generation companies on the plant shutdowns, which it will validate with its own data.

“We have our own data in-house. What we are doing is ibabangga ito sa data ng PEMC (validate this against the data of the Philippine Electricity Market Corp). Can anyone manipulate the data? No, because we have our own,” she said.

She said the ERC was awaiting the submission of complete data from PEMC, the governance arm of the electricity spot market.

“How can you regulate when you don’t know the state of affairs,” she said. “We impose the necessary sanctions, if necessary and after due process. The due process is always important.”

For now, she said the position of the commission is allegations that some market players made money out of the unscheduled plant shutdowns are “just allegations.”

“Those are just allegations and until we have the proof, which is essentially the data, hard data, then nobody can say that there was gaming in the market. It’s as simple as that,” she said. — Victor V. Saulon

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