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Peso expected to weaken vs dollar to ₱53 by Sept. — ANZ

By Melissa Luz T. Lopez
Senior Reporter

THE PESO could breach the P53 level against the dollar later this year given the central bank’s reluctance to raise policy rates, ANZ Research said.

ANZ sees the peso trading at P53 by September and P53.50 by year’s end.

“In the case of PHP, the deterioration in the external deficit and reluctance by the Bangko Sentral ng Pilipinas (BSP) to raise interest rates mean the peso will need to bear the burden of adjustment,” bank economist Sanjay Mathur said in its quarterly report published yesterday.

The peso closed at P52.30 yesterday, weaker than the P52.215 finish on Monday. The exchange rate averaged P51.1471 against the dollar in the first two months of the year, according to central bank data.

ANZ said a breach of the P54 level could come by late 2019.

The bank outlined the case for the peso’s depreciation by citing the BSP’s refusal to raise borrowing rates despite signs of rising inflation.

February inflation picked up to 3.9% from 3.4% in January under the rebased index using 2012 prices, according to the Philippine Statistics Authority. It was the highest level in over three years, which the BSP attributed to the “full pass-through cost” of additional levies under the Tax Reform for Acceleration and Inclusion law which took effect Jan. 1.

The Monetary Board kept benchmark rates unchanged during its March 22 review, noting that price pressures are temporary while domestic economic activity remains robust.

ANZ has withdrawn its forecast of two rate increases from the central bank within 2018, taking its cue from statements made by BSP officials that showed “no inclination” to tweak policy settings.

“Needless to say, the combination of high inflation and a weaker external position will be reflected in the performance of the PHP,” the bank said.

The current account deficit nearly doubled to $2.5 billion in 2017 from $1.2 billion a year earlier as import growth continued to outpace that of exports, according to the central bank.

The deficit has been cited as a major factor in the weakening of the peso, although central bank officials have said that the wider trade deficit simply reflects capital accumulation for the Philippines’ ambitious infrastructure spending plans.

Some analysts have said that the BSP risks falling behind as global yields move up, making the Philippines lose its competitiveness relative to regional peers.

BSP Governor Nestor A. Espenilla, Jr. said he does not see the need for fresh monetary stimulus as growth remains within potential. Faster and broader-based price movements, however, could finally trigger a rate hike.

Mr. Espenilla, however, said that the flexible exchange rate stand is an “appropriate response” to the emergence of a current deficit, as it helps keep the economy in balance. He added that the BSP conducts “tactical” interventions to temper any sharp swings of the currency during day-to-day trading.

The BSP’s last tightening move was in September 2014. However, procedural cuts to policy rates took effect in June 2016 during the shift to an interest rate corridor, resulting in a 2.5-3.5% spread.

ANZ sees the central bank remaining on hold until the end of 2019.

Congress expected to meet 2018 tax reform timetable

THE Department of Finance (DoF) is confident that Congress can meet the department’s timetable for approving four more tax reform packages within 2018, following the filing of the package reducing corporate tax rates last week.

“With the timely filing of the measure in the House, we are optimistic that this proposal, along with the remaining tax reform packages, will be approved by the Congress within the year,” Finance Secretary Carlos G. Dominguez III said in a statement yesterday.

The DoF plans to submit to the House of Representatives four more tax proposals this year, with a view to gaining its approval before the midterm elections in 2019.

These proposals include further increases to tobacco and alcohol taxes; reforms to the property tax and valuation system; restructuring taxes on capital and financial income; an overhaul of taxes in the mining sector; and higher tax rates on luxury goods such as jewelry and yachts.

House ways and means committee Chairman Representative Dakila Carlo E. Cua, along with Representatives Aurelio D. Gonzales, Jr., and Raneo E. Abu filed House Bill No. 7458 on March 21, before the session adjourned for a seven-week break.

The bill mainly proposed an annual 1% cut in corporate tax rates, from 30% to 20% starting 2019, while removing tax incentives in areas not included in the Strategic Investment Priorities Plan (SIPP).

The bill diverged from the DoF’s proposal to Congress, submitted on Jan. 16, which proposed 1% cuts to the corporate tax rate up to 25%, on the condition that tax collection agencies raise the equivalent of 0.15% of gross domestic product (GDP), or P26 billion from the rationalization of tax incentives.

Mr. Cua said that the committee removed the condition attached to lowering the corporate tax rate to remove potential uncertainty for investors.

“The bill we filed aims to decisively lower the corporate income tax rate thereby boosting the competitiveness of the Philippines. It gives a definite timeline and schedule of reduction of the business tax rate,” the legislator said in a mobile phone message.

“This sends a strong signal to the world that the Philippines is and will continue to be a top investment destination,” he added.

The bill also caps tax holidays at five years, designating a Fiscal Incentives Review Board to administer all incentives, provides for a 50% tax allowance for qualified capital expenditures, along with varied rates of tax deductions for research and development, training, labor expenses, infrastructure development, and reinvestment. It also simplifies the administration of allowable deductions and tax payment processes.

The bill follows the Tax Reform for Acceleration and Inclusion law, or Republic Act 10963 enacted on Dec. 19, which cuts personal income, estate and donor tax rates, removes some value-added tax exemptions, increases taxes for automobiles, fuel, tobacco, minerals, and imposes a new tax on sugar-sweetened beverages and cosmetic procedures. — Elijah Joseph C. Tubayan

DoE devolves bureau functions to regions

THE Department of Energy (DoE) said it devolved the functions of the bureaus in the central office to its three field offices in Luzon, the Visayas and Mindanao.

It called the reorganization an “institutional strengthening” to decentralize the implementation of its policies, plans, programs and regulations.

The DoE’s Department Order No. DO2018-03-004 has listed seven general functions of the department’s bureaus and service units to be exercised by the three field offices in their respective jurisdictions, including the conduct of regional-based monitoring activities, evaluations, surveys, profiling, site visits or inspections, and spot checks.

The DoE said there is a need to devolve its functions to the field offices “to optimize its operations and in order to synchronize and to eliminate redundant functions.”

In its order, the DoE also devolved the specific functions of the following bureaus: Energy Resource Development Bureau, Energy Utilization Management Bureau, Electric Power Industry Management Bureau, Oil Industry Management Bureau, Energy Policy and Planning Bureau, and Renewable Energy Management Bureau.

For energy resource development, for instance, the field offices have been given the authority to accept, evaluate and act on applications involving small-scale coal mining permits, mine safety inspector and mine safety engineer permits; and to cancel or terminate such permits for cause.

The field offices are also to inspect, evaluate and monitor small-scale coal mining operations, as well as investigate and validate illegal coal mining activities.

They are also authorized to accept, evaluate and act on applications for the issuance of coal trader permits and coal end-user registrations, and monitor their reportorial compliance pursuant to existing DoE circulars.

The bureau covering electric power management has devolved to the field offices its specific functions, such as the monitoring of plants, site visits for new power plants or those undergoing construction or expansion.

In case of an emergency such as forced outage, calamity, fire and sudden breakdown, the field offices are also mandated to perform the functions of the Manila-based bureau.

The field offices are also authorized to conduct performance audits or the audit of the actual capacity of power generation plants, transmission and distribution facilities.

The DoE undersecretary or assistant secretary in charge of the field offices are to oversee “the efficiency and effectivity of the performance of the general and specific functions” enumerated in the department order.

Also this month, the DoE issued an order, DO2018-03-0003, that created a centralized review and evaluation committee for the integration of the current committees administering the review and evaluation of renewable energy, petroleum, downstream natural gas, and coal service contract applications, as well as the award, amendment and termination of contracts.

The centralized review and evaluation committee is to be headed by Undersecretary Donato D. Marcos as chairman, with Assistant Secretary Caron Aicitel E. Lascano as vice-chairman. The members of the committee are assistant secretaries Redentor E. Delola, Leonido C. Pulido III and Gerardo D. Erguiza, Jr. — Victor V. Saulon

DENR touts ‘green infrastructure’ to boost resiliency

THE Department of Environment and Natural Resources (DENR) said it is hoping for more investment in so-called “green infrastructure” and added that measures like tree-planting have the potential to improve the country’s water management issues.

In a statement on Tuesday, Environment Secretary Roy A. Cimatu said green infrastructure is cost-effective and helps make communities more resilient.

“Countries highly vulnerable to natural disasters, like the Philippines, need to invest more in green infrastructure,” he added.

“Integrating green with grey or traditional infrastructure creates cost-effective, climate resilient communities.”

Mr. Cimatu also encouraged nature-based solutions such as tree planting, which will help resolve solid and water waste issues.

“Nature-based solutions have the potential to solve many water challenges. Nature can heal itself if abuses are mitigated before they become irreversible,” he added.

The DENR last week gave out awards to individuals, groups and programs that have developed nature-based solutions to address pollution.

Mr. Cimatu said that the awards were “timely,” given the environmental crisis in Boracay.

“Massive replanting will go far beyond creating new forests as carbon sinks to mitigate climate change; it will also create livelihood and reduce poverty, provide habitats for biodiversity, recharge watersheds, protect topsoil from erosion, and boost food security,” he added. — Anna Gabriela A. Mogato

PCCI backs phased closure of Boracay

THE Philippine Chamber of Commerce and Industry (PCCI) called on the government to address the concerns of business stakeholders before shutting down Boracay, and proposed a phased closure in order not to unduly disrupt the economy.

In a statement Tuesday, the industry association, which represents about 35,000 members, said the total closure will be “detrimental to the local economy of Boracay and the entire Philippine tourism industry.”

“PCCI appeals that those who are compliant should not be punished and suffer the same fate as those who have short-circuited the environmental laws,” the group added.

The shutdown of Boracay takes effect on April 26.

“While shutting down the island for at least six months appears to be the most practical option to urgently solve its current issues, we believe that it will create unnecessary disruption in many legitimate and law-abiding micro and small businesses and job losses for thousands of local residents of Boracay,” PCCI President Ma. Alegria Sibal-Limjoco said in the statement.

The group instead proposed that the government instead, close down the three major access points to Boracay, one at a time, “to gradually restore the island in phases.”

The island has three entry points: the Cagban jetty port; Punta Bunga near Shangri-La Resort at Punta Bunga; and the side of the island facing the Sibuyan Sea near Lapuz-Lapuz Beach.

“A three-phase closure of the island is the best win-win solution to minimize the impact to the economic well-being of the various stakeholders,” PCCI Director for Tourism Samie C. Lim said in the statement.

The group expressed confidence that President Rodrigo Duterte “will do what is right for the our country’s tourism industry.” — Janina C. Lim

Goldman Sachs says no need to fret yet about soft global growth

GOLDMAN Sachs Group, Inc. economists who are tracking weaker global growth this quarter say there’s no reason to fret that a deeper slowdown is coming.

While there has been some ebbing in the first three months of the year, world gross domestic product is still expanding slightly above Goldman Sachs’ full-year forecast of 4.1%, according to their research note published Monday.

The outlook is holding up despite tighter financial conditions and US President Donald Trump’s moves to impose tariffs on $50 billion worth of Chinese goods and imported steel and aluminum, Goldman Sachs chief economist Jan Hatzius co-wrote with colleagues. Also, weaker first-quarter growth estimates for the US and euro area reflect “seasonal and weather-related distortions,” they said.

“Assuming proportionate retaliation, the tariffs will boost inflation and weigh on growth both in the US and abroad, but our global economic model suggests that these effects will be too small to be distinguishable from the normal noise in the data,” the note stated.

Goldman’s economists indicated they’re sticking with their forecast for four Federal Reserve interest-rate hikes in 2018 and four more in 2019, a view that “remains clearly hawkish relative to market pricing, although the difference relative to the Fed’s view is now just one of timing.”

A tool Goldman Sachs uses to gauge global growth momentum has “slowed only marginally” since the end of 2017. — Bloomberg

SRA blocks export sugar inventory conversion from domestic market

THE Sugar Regulatory Authority (SRA) Board said it will not allow the conversion of D-class sugar, which is meant for export, into B-class meant for the domestic market for the current milling season.

In a statement released late Monday, SRA Board Member Roland B. Beltran said the decision reflects the agency’s view that the domestic market is not suffering from shortages.

“There is no reason for conversion from D to B sugar since there is sufficient supply for the domestic market and enough buffer stock for the next cropping season, [crop year] 2018-2019,” he added.

Separately, the agency said Pepsi Cola Products Philippines, Inc. (PCPPI) has applied for permission to dispose of its High Fructose Corn Syrup (HFCS) inventory amid a switch to domestically produced sugar in its products.

The SRA said the tax treatment of HFCS products is disadvantageous compared with those using domestic sugar.

In the same statement, the Sugar Board also said it issued Sugar Order 1-B, which amends the current crop year share to 6% for Class A or US quota sugar and the remaining 94% for Class B.

“This policy issuance was brought about in response to the recommendations of various planters organizations and the Sugar Alliance of the Philippines to eliminate the 1% [class] D allocation, thus, improve the composite price of sugar,” it said.

The agency also said in the memorandum that this ensures a “comfortable buffer” of Class B sugar by the end of the season to maintain a stable supply and prices.

The order will take effect after April 8. — Anna Gabriela A. Mogato

JICA appoints new chief PHL representative

THE Japan International Cooperation Agency (JICA) said it appointed Yoshio Wada to be its chief Philippine representative.

In a statement, JICA said Mr. Wada is the former director-general of the Credit Risk and Environment Review Department at JICA headquarters in Tokyo.

JICA said Mr. Wada will oversee JICA’s “more than 100 development cooperation projects in the Philippines focusing on helping the country achieve sustainable economic growth, overcome vulnerability and alleviate poverty, as well as peace and development in Mindanao.”

Mr. Wada has served as special advisor at JICA’s Industrial Development and Public Policy Department and was deputy director general for the bilateral aid agency’s Southeast Asia and Pacific Division, JICA said in the statement.

Mr. Wada served in various positions at the Overseas Economic Cooperation Fund (OECF), and was OECF representative in Manila from 1993 to 1996.

“I’d like to contribute to the trusted partnership and friendship between JICA and the Philippines. As we do that, I look forward to working with our Filipino and Japanese counterparts in the Philippines so more Filipinos will have the opportunity to improve their lives and benefit from inclusive development,” Mr. Wada was quoted as saying.

AEV, DA sign agreement for urban farming initiative

ABOITIZ Equity Ventures, Inc. (AEV) said it signed an agreement with the government for a program to set up small urban backyard farms.

In a statement on Tuesday, AEV said it signed a memorandum of agreement with the Department of Agriculture (DA), the DA’s Agricultural Training Institute (ATI), the Bureau of Plant Industry, the Bureau of Soils, the Bureau of Fisheries and Aquatic Resources to launch the Urban Agriculture Garden Project.

The program, which involves the distribution of seedlings, garden tools and kits, will also include seminars for beneficiaries to help them develop sustainable livelihoods.

Agriculture Undersecretary for Special Concerns Ranibai D. Dilangalen said that the partnership with AEV hopes to reduce the incidence of urban hunger.

“Through this project, we are able to help the residents have food for their household consumption and potentially earn.”

Currently, there are four urban backyard farms set up in Barangay Bahay Toro, Quezon City and at ATI sites in Cotabato, Davao and Quezon City. — Anna Gabriela A. Mogato

Presidential body wants DoJ lawyers in drug case suspended

THE Presidential Anti-Corruption Commission (PACC) on Tuesday, March 27, recommended to President Rodrigo R. Duterte the issuance of a preventive suspension order against Department of Justice (DoJ) prosecutors who dismissed the drug charges filed against alleged drug lord Peter Go Lim, confessed drug lord Rolan “Kerwin” Espinosa, convicted drug lord Peter Co, and more than 20 alleged accomplices.

“The PACC is recommending, for the approval of the President, that the recommendation be regarded as formal charge against the panel of prosecutors and CIDG (Criminal Investigation and Detection Group),” the commission said in a statement, referring as well to the police agency that charged the aforementioned accused.

The dismissal of the drug charges are “embodied in the DoJ Resolution dated 20 December 2017 issued by the panel of prosecutors namely: Assistant State Prosecutors Michael John M. Humarang, Aristotle M. Reyes, recommended for approval by Senior Deputy State Prosecutor Rassendell Rex F. Gingoyon, and approved by former Acting Prosecutor General Jorge G. Catalan,” the statement noted.

PACC also asked Mr. Duterte to “subject concerned officials to (a) lifestyle check.”

The commission said the prosecutors violated “the RA 9165 (Dangerous Drugs Act of 2002) rules, and regulations when it failed, if not refused, to set a clarificatory hearing in order to ascertain the truthfulness of the testimonies of the parties and the veracity of submitted documents.”

“Something is fishy. The dismissal of (the) Espinosa drug case will not be taken sitting down by the PACC,” the commission’s chairman, Dante L. Jimenez, said in the statement.

He added: “Our mandate is to assist the Office of the President to investigate corrupt and erring public officials in relation to the performance of their duties, and this is exactly what we will do.”

For his part, PACC Commissioner Greco Antonious Beda B. Belgica said the prosecutors’ decision “is very disturbing.”

“The prosecuting panel must and should have exerted all efforts to serve justice to the people and to our country,” he added.

Regarding the CIDG, the commission cited its failure “to submit relevant and vital documents to the case such as transcript of stenographic note of the Senate hearing (which) manifests gross inexcusable negligence, a betrayal on their sworn duty to monitor, investigate, and prosecute crimes of such magnitude and extent.”

“The incompetence in preparation of (a) complete and comprehensive complaint to stop illegal drugs brought a great deal to perpetuate (a) miscarriage of justice,” Mr. Belgica said. — Arjay L. Balinbin

PNP, PDEA also flag links between drugs, human rights

By Arjay L. Balinbin

THE Philippine National Police (PNP) and the Philippine Drug Enforcement Agency (PDEA) are investigating the alleged links between human rights organizations and drug syndicates, officials of those agencies said in a briefing at Malacañang on Tuesday.

“That is subject to further investigation by all law enforcement agencies. But seeing the trend of how they attack the anti-drug campaign, I guess we can only surmise that it might be unwitting to the human rights groups that they are being capitalized or made as leverage by drug groups,” PDEA Spokesperson Derrick Arnold Carreon said at the #RealNumbersPH media briefing at Malacañang on Tuesday, March 27.

For his part, PNP Spokesperson Chief Superintendent John C. Bulalacao said his agency is “validating” reports that human rights groups are being used by drug syndicates to “discredit the efforts of the government against drug trafficking.”

The said reports are a “recent finding,” Mr. Carreon for his part said, adding that PDEA is “cooperating closely” with the PNP and related agencies.

Presidential Spokesperson Herminio Harry L. Roque, Jr. and Foreign Affairs Secretary Alan Peter S. Cayetano have previously issued statements claiming that “some human rights groups have become unwitting tools of drug lords to hinder the strides made by the administration.”

Such allegations, according to Human Rights Watch (HRW) deputy director Phelim Kine, “are more than just gratuitous slurs aimed at undermining the integrity of already beleaguered Philippine human rights activists pushing back against the Duterte government’s systematic attack on rule of law and its instigation and incitement of possible crimes against humanity.”

“Publicly linking human rights groups with ‘drug lords’ constitutes a sinister veiled threat in a country in which government-compiled ‘watch lists’ of suspected drug users and drug dealers have been linked to many of the ‘drug wars’ thousands of victims. This is a familiar government tactic,” Mr. Kine added.

On Tuesday, Mr. Roque said he stood by his earlier remarks. “Such scenario, we reiterate, should not be discounted given the billion-peso losses of the drug lords.”

“Human Rights Watch (HRW) should therefore not feel alluded to, exaggerate and politicize the issue to get some media mileage and public attention,” he added.

For his part, Bayan Muna Party-list Representative Carlos Isagani T. Zarate said: “That is a very dangerous statement. It [puts] the lives ng ating (of our) human rights advocates in grave danger. Ang dami nang namamatay dahil lang sila’y napagkakamalan (Many have died already for being wrongly accused). Fake news ang sinasabi nilang pinopondohan ng drug lords ang human rights advocates (Saying that human rights advocates are being funded by drug lords is fake news).”

“Iresponsable ang statement na ’yan ni Harry Roque, who, tragically, galing pa naman dati sa human rights community (Harry Roque’s statement is irresponsible, [and] tragically, [he] came from the human rights community),” Mr. Zarate noted.

In its statement, the opposition Liberal Party quoted its vice-president, former congressman Lorenzo R. Tanada III, as saying: “The plot gets crazier by the day.”

“We also see the statement as an attempt to taint and damage the efforts of human rights groups, who have been courageous and untiring in monitoring the implementation of the government’s anti-drug efforts and the abuses that go with them,” he added. — with Minde Nyl R. dela Cruz

Coding scheme lifted by 10 a.m. Mar. 28; Police ready for deployment

AS THE largely Catholic Philippines observes the Holy Week, the vehicular number coding scheme will be suspended beginning 10 a.m. on Wednesday, March 28, for private vehicles, the Metropolitan Manila Development Authority announced today, March 27. For city and provincial buses, the suspension of the Unified Vehicular Volume Reduction Program (UVVRP) takes effect by 12 midnight. The UVVRP resumes on   April 2. Meanwhile, National Capital Region Police Office Director Oscar D. Albayalde said that some 11,801 policemen and 413 soldiers would be deployed around the capital to monitor the peace and order situation as well as provide assistance at multi-agency help desks. — Camille A. Aguinaldo

P2P buses
Point-to-point (P2P) bus services are taking a break this Holy Week. Here’s the schedule per company: