ASEAN manufacturing purchasing managers’ index, July

August 2, 2018 | 12:00 am

How PSEi member stocks performed — August 1, 2018

August 2, 2018 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Wednesday, August 1, 2018.

Davao new minimum wage rates to take effect Aug. 16

August 1, 2018 | 10:27 pm

By Carmelito Q. Francisco
Correspondent
DAVAO CITY — The approved P56 increase in Davao Region’s minimum daily wage will come in two tranches, with the first installment of P30 taking effect on Aug. 16.
The second tranche of P26 takes effect on Feb. 16, 2019.
The Regional Tripartite Wages and Productivity Board (RTWPB) released on Aug. 1 Wage Order Number 20, which was approved on July 27.
The wage board “has determined the need to restore lost purchasing power of minimum wage earners in Davao Region for them to cope with the rising cost of living without impairing the productivity and viability of business and industries,” the order states.
Davao City Chamber of Commerce and Industry, Inc. President Arturo M. Milan, however, said the increase will hurt micro and small enterprises that make up a majority of businesses in the region.
“I’m scared for the micro and small businesses which comprise about 95% of the total businesses in Davao. They will not only contend with the P56 per day increase or 16% increase in minimum wage but also the 10% increase in local business tax plus the impact of TRAIN (Tax Reform for Acceleration and Inclusion) on their businesses,” Mr. Milan said in a text message.
“I really hope this will not result in retrenchment just for businesses to survive,” he added.
Under the new wage order, companies in the non-agriculture sector, or commercial, industrial, retail, and service businesses with more than 10 workers, will pay a P370 daily minimum salary by Aug. 16 and P396 by Feb. 16, while those with up to 10 employees will have a rate of P355 then P381.
Those in the agricultural sector, on the other hand, will receive P365, then P391.
Last month, the Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) warned that the new wage order will inflict another blow on the industry.
PBGEA Executive Director Stephen A. Antig said the P56 increase was not “well thought out,” noting that the banana industry has been reeling from the impact of the TRAIN law and “market and production problems.”

Inflation for poor households hits 6.5%

August 1, 2018 | 10:26 pm

By Vann Marlo M. Villegas
SECOND-QUARTER inflation, as reflected in goods and services widely used by low-income households, rose to 6.5%, its highest level in almost four years, led by utilities and staple food items, according to the Philippine Statistics Authority (PSA).
The inflation rate for the consumer basket configured for items likely to be purchased by the bottom 30% income category accelerated from 5.3% in the first quarter and 2.7% a year earlier. The second-quarter reading was the highest since the 6.8% posted in the third quarter of 2014.
For all households, the PSA is scheduled to report July inflation data on Aug. 7.
The Consumer Price Index (CPI) for the bottom 30% income segment reflects a heavier weighting for food, beverages and tobacco (FBT), to more accurately capture the spending patterns of the poor.
The PSA noted that all prices in those commodity groups rose at a faster rate in the second quarter.

“Annual inflation picked up in the second quarter primarily because of rising fuel costs and higher taxes on some products such as sugar-sweetened beverages and cigarettes,” said Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (LANDBANK).
“Weather disturbances and a weaker peso also played a role in pushing inflation higher,” he added.
Mr. Dumalagan was referring to the inflationary effects brought by the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which slashed personal income tax rates but also introduced additional levies on consumer goods such as fuel, cars and sugar-sweetened drinks.
Security Bank Corp. economist Angelo B. Taningco added: “The CPI inflation for the bottom 30% spiked in second quarter because of sharper price increases in food and tobacco as well as fuel, light, and water.”
“Food supply disruptions, higher excise taxes on tobacco, rising global oil prices, and peso depreciation have all contributed to the Q2 inflation for the bottom 30%,” he added.
For the quarter, the fuel, light, and water index led the charge as inflation in this segment was 8.7%, against the 6.1% recorded in the first quarter and 4.8% a year earlier.
The FBT index rose 7.1% in the second quarter compared to 5.9% in the first quarter and 2.8% in the second quarter of 2017.
The index for food only accelerated to 6.2% from 5.3% in the first quarter and 2.7% a year earlier.
The PSA noted a 10.8% gain in corn prices during the period compared with the 8.5% year-on-year increase in the first quarter. Higher annual mark-ups were also recorded in fruits and vegetables (7.5% from 6.5%), cereals (6.0% from 4.1%), rice (4.9% from 3.1%), cereal preparations (2.3% from 2.1%), dairy products (2.1% from 1.6%), and “miscellaneous foods” (2% from 0.6%).
On the other hand, price growth slowed though inflation remained high in meat (6.4% from 7.3%) and fish (11.1% from 11.5%). Price growth in eggs, meanwhile, remained steady at 2.1%.
Inflation for the bottom 30% segment in the National Capital Region (NCR) was 6.6%, accelerating from the 5.9% posted in the first quarter. Those outside the NCR saw a price pickup of 6.5% from 5.3% in the previous quarter.
On a quarter-on-quarter basis, inflation for the bottom 30% slowed to 1.4% from 2.8% in the first quarter, with the PSA noting that all commodity groups recorded slower quarterly increases during the period except for services and miscellaneous goods.
“This reflects the easing impact of the TRAIN law. In particular, price adjustments were much less in the second quarter as majority of the planned price hikes were already implemented in the prior quarter,” said LANDBANK’s Mr. Dumalagan.
Still, the economist expects “a higher level of inflation” in the third quarter due to rising fuel prices, “elevated” food costs, and a depreciating peso.
“Inflation might peak in July or August,” Mr. Dumalagan said.
Security Bank’s Mr. Taningco added: “I continue to expect inflation for the bottom 30% to remain elevated in the third quarter given adverse weather conditions, food supply disruptions, peso depreciation, high oil prices, and hikes in minimum wages and transport fares.”

Clark airport O&M bid eligibility rules relaxed

August 1, 2018 | 10:25 pm

THE GOVERNMENT said it has relaxed the eligibility rules for companies seeking to participate in the auction for the operations and management (O&M) contract of the Clark International Airport.
The bidding qualifications released in May required prospective bidders to not have “a majority equity interest in a concession holder of an International Airport in the Philippines,” which would have eliminated a major construction company that runs the airport in Cebu as part of a consortium.
Bases Conversion and Development Authority (BCDA) President Vivencio B. Dizon said in a briefing on Wednesday that the eligibility terms have since been relaxed, which opens the door to companies such as Megawide Construction Corp., which operates the Mactan-Cebu International Airport.
“That was in the original terms of reference, but we have already adjusted that. And Megawide, if it wants to, can join the bid. They are not disqualified,” he said.
Mr. Dizon said the new terms of reference now rule out companies currently operating such airports within the same main island group.
“So meaning, if you’re operating an airport in Luzon, then you cannot have another major airport in the same island group. Obviously Cebu is not part of Luzon where Clark is, so Megawide can participate,” he added.
The Department of Transportation (DoTr) and BCDA are currently bidding out the 25-year, P5.61-billion contract for the O&M of the Clark International Airport. The development of the gateway in Pampanga aims to decongest the Ninoy Aquino International Airport (NAIA) in Metro Manila.
Megawide, along with its Indian consortium partner GMR Infrastructure Ltd. won the engineering, procurement and construction (EPC) contract for the Clark airport in December 2017. The hybrid public-private partnership structure being tested for the Clark airport separates the contracts for EPC and O&M.
BCDA said in May that eight companies bought bid documents for the O&M contract — Megawide-GMR; Metro Pacific Investments Corp.; Filinvest Development Corp.; San Miguel Holdings Corp.; Prime Asset Ventures, Inc.; the Central Luzon Infrastructure Consultancy, Inc. consortium; GVK Airport Developers Ltd.; and Groupe ADP.
Around 30 groups also attended the pre-bid conference for the project held on May 21, including Udenna Corp.; JG Summit Holdings, Inc.; Aboitiz InfraCapital, Inc.; PAL Express and AirAsia Group.
The preliminary timeline for the project indicates a target for contract awarding and signing on Aug. 30, but Mr. Dizon said on Wednesday the BCDA will accept bids until late August.
“Government will just accept whatever bids are finally submitted by the deadline (in late August),” he said.
The O&M concession is due to start on Dec. 1 for the current passenger terminal. The new terminal is scheduled to open in July 2020. — Denise A. Valdez

Infrastructure program seen creating 1.8M new jobs each year

August 1, 2018 | 10:24 pm

TRANSPORTATION Secretary Arthur P. Tugade said the government’s aggressive infrastructure program will create 1.8 million jobs a year, both directly and indirectly through related industries and suppliers.
In a briefing at Malacañang, Mr. Tugade of the Department of Transportation (DoTr) said that the extent of the job creation was due partly to critical projects being run in multiple shifts.
“The economic cluster is assuming that for projects to be completed within the term of the President, we can’t be doing one shift a day,” he added.
“We need 24-hour work in three shifts of eight hours each. In other words, if you have a project that needs masonry, you’ll need three masons, not one.”
Mr. Tugade also cited the employment to be created from the operation of trains and related service jobs, which the Department of Labor and Employment estimates at 1.8 million, which is sustained by the National Economic and Development Auhority (NEDA).
Labor Secretary Silvestre H. Bello III, also speaking at the briefing, also noted that “other businesses will grow as a consequence of these projects. So the impact is large. In some cases, as Secretary Tugade noted, it’s times three. It could be as high as times five” because of the job generation in business establishments that will operate in the buildings put up.
Mr. Bello also announced that the Department of Labor and Employment (DoLE) will seek to sustain the momentum in the creation of quality jobs.
“In order for us to sustain the growth momentum of the generation of not just jobs but decent jobs, we have put in place a number of interventions targeted at poor workers engaged in precarious and vulnerable work,” Mr. Bello said.
He estimated that in April, employment in construction was “4.012 million from 3.544 million during the same period in 2017. This is a 13.2% increase.” — Gillian M. Cortez

House debates under way for 2nd reading of rice tariff bill

August 1, 2018 | 10:23 pm

THE HOUSE of Representatives was working on the approval on second reading of a bill seeking to impose tariffs on rice imports, a scheme which has been estimated to cut retail prices by up to P7 per kilo.
As of early evening Wednesday, the House was debating provisions of House Bill 7735, the “Revised Agricultural Tarrification Act,” which is among the priority bills identified by the Legislative-Executive Development Advisory Council.
Its counterpart measure, Senate Bill 1839, authored by Senator Sherwin T. Gatchalian, is pending at the committee level.
If passed, the proposed measure will replace the current system for importing rice via government procurement. The new import arrangements will be opened up to private parties, while inbound shipments will be subject to tariffs, to protect local farmers and also to raise funds to improve their productivity and competitiveness.
The bill provides for the creation of the “Rice Competitiveness Enhancement Fund,” financed from the duties collected.
The tariffs will also finance an endowment fund for credit subsidies and crop financing, among others. — Camille A. Aguinaldo

Use it or lose it, Diokno tells agencies with job vacancies

August 1, 2018 | 10:22 pm

THE DEPARTMENT of Budget and Management (DBM) will eliminate government jobs that have remained chronically unfilled and warned agencies to fill any such vacancies by year’s end.
Budget Secretary Benjamin E. Diokno said on Wednesday that the job vacancies across the entire government amount to 264,000 positions, and called on the public to take up more jobs in public service.
“The DBM will be issuing a circular directing all agencies to fill all authorized positions available to them or risk abolition of positions left unfilled after five years from creation,” Mr. Diokno said in a media briefing yesterday.
He said that the circular will come “soon,” and an evaluation of which jobs will survive will happen “by the end of September.” Mr. Diokno also noted that the order to abolish positions left unfilled in the last five years will come “before the end of the year.”
As of July 30, Mr. Diokno said that about 125,000, or 47.4% of the vacancies are teaching-related positions.
Mr. Diokno noted that public school teachers’ salaries are about double that of their private sector counterparts.
There are also about 90,000 jobs in the general civil service, about 34,000 in the uniformed services, and 14,000 in medical and allied health care jobs.
“We cannot deliver our programs and services as efficiently and effectively as possible without our civil servants there doing the work. This vacuum is unacceptable,” Mr. Diokno said.
“We want qualified individuals to apply and help contribute to a better functioning bureaucracy. — Elijah Joseph C. Tubayan

DENR sees Boracay environmental rehab completed soon

August 1, 2018 | 10:22 pm

THE Department of Environment and Natural Resources (DENR) expects to conclude its rehabilitation efforts soon on the resort island of Boracay, noting the decline in water contamination levels along the main tourist strip on the western shoreline.
Environment Secretary Roy A. Cimatu said late Tuesday that the cleanup is “almost finished” due to the relocation of illegal settlers in the wetlands, who were blamed for fecal contamination in the water.
“The culprit, the cause of the high coliform content came from the wetlands where some people live in. And while they live there, the coliform is there,” he added.
“There’s a relocation site in the mainland. If the settlements on Boracay are gone, then slowly things will get better.”
Mr. Cimatu also said that despite the six-month timetable, the Boracay Inter-Agency Task Force (BIATF) is expected to be on the ground longer. The task force is composed of the DENR, the Department of Tourism and the Department of the Interior and Local Government.
“This is what is given to us — the rehabilitation aspect of six months. But we’ll stay there for a year and a half as an interagency task force,” he added.
“We’ll have to continue… especially with what else we can do for Boracay. There’s a lot of other things we can do there.”
Meanwhile, the Environment Management Bureau is continuing its evaluation of the island, monitoring business compliance with environmental laws and DENR regulations.
In a statement on Wednesday, the BIATF said it plans to set up a one-stop shop to assist business owners in meeting requirements needed to open their establishments once the Boracay shutdown ends on Oct. 26.
The DENR has its own one-stop shop to verify the status, classification and compliance of establishments with easement rules.
It also verifies whether business owners need an environmental compliance certificate or a certificate of non-coverage. The latter only applies to those establishments with five rooms or less. — Anna Gabriela A. Mogato

Corporation Code amendments hurdle Senate on 2nd reading

August 1, 2018 | 10:21 pm

THE SENATE on Wednesday approved on second reading a bill amending Batasang Pambansa No. 68, or the Corporation Code of the Philippines, introducing the concept of a one-man corporation.
In a statement, Senate Minority Leader Franklin M. Drilon, author and sponsor of Senate Bill 1280, said the amendments allow business owners and investors to do away with the need to name as incorporators persons who are not relevant to corporate operations, such as members of the company founder’s household.
“In general, the proposed amendments promote efficiency and encourage transparency in corporate dealings — from formation to daily operations,” he said.
“Having them in place will allow the Philippines to compete with other countries as a viable investment destination and small business-friendly jurisdiction,” he added.
The Corporation Code of the Philippines governs the establishment and operation of stock and non-stock corporations.
Mr. Drilon said the bill seeks to ease the process of doing business, prioritize corporate and shareholder protection, instill corporate and civic responsibility, and strengthen the country’s policy and regulatory corporate framework.
The proposed measure will also streamline the process of incorporation to better suit the Corporation Code to the changing business landscape.
It also simplify the name verification process for company founders, and offer as the default option a perpetual legal life for the corporation.
He said the bill also addresses issues with the current law requiring corporations to have at least five incorporators, which is viewed as a “stumbling block” for many investors.
Its counterpart version in the House of Representatives remain pending at committee level. — Camille A. Aguinaldo

Net labor turnover points to strength of economic growth

August 1, 2018 | 10:21 pm

By Christine Joyce S. Castañeda
Senior Researcher
MORE PEOPLE were hired than those who either resigned or were laid off in the first quarter, the Philippine Statistics Authority (PSA) said.
According to the PSA’s first nationwide Labor Turnover Survey, the labor turnover rate — the difference between those hired (reflected in the accession rate) and those who left or were terminated (as tallied in the separation rate) — was 1.94% in the first three months of 2018.
This means that for every 1,000 persons employed, 19 were added to the work force on a net basis during the quarter, with 95 new hires against 76 who were either laid off or resigned.
The rate of accession — which covers hiring to either replace former employees or expand the work force — was recorded at 9.53%. Broken down, 3.89% accounted for expansion-related hiring while 5.64% covered hiring to replace former employees.
Meanwhile, the separation rate was 7.59% during the quarter, of which 4.61% were employee-initiated separations or resignations and 2.99% were layoffs.
Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines (UnionBank) said that the “employment bump” was mainly due to the “unusually” strong economic growth in 2017, even though the election year of 2016 provided a high base.
“This somehow dictates an economic growth momentum for the economy and [the first quarter of 2018 labor turnover result] is obviously a result of that momentum,” he said.
The economy grew by 6.7% in 2017, against 6.9% growth in 2016.
Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort attributed the net job gains to “improved” economic fundamentals and favorable demographics, which made the investment case for the Philippines “compelling.”
“These positive factors have led to continued growth in local and foreign investments — especially the new record high in foreign direct investment (FDI) at $10 billion in 2017 which was still growing at the start of 2018 — creating more jobs and other employment opportunities,” Mr. Ricafort said.
The labor turnover rate was highest in the industry sector at 3.69% after a 12.28% accession rate and 8.58% separation rate.
The agriculture sector posted a 2.07% turnover rate with accession and separation rates of 6.97% and 4.90%, respectively.
The services sector posted the lowest turnover rate at 1.37% on accession and separation rates of 8.81% and 7.43%, respectively.
“The continued pick-up in manufacturing and the record-high FDIs have helped in creating more jobs/greater employment growth especially in the industry sectors as well as in other related industries,” RCBC’s Mr. Ricafort said.
UnionBank’s Mr. Asuncion said: “Industry, particularly the manufacturing sector, has experienced increased growth in the previous years, and employment in the sector in general will consequently experience an uptick as well.”
“Agriculture has not experienced any huge shocks in the last two years, and agriculture output has been relatively stable. Services has been slow because of external environment difficulties and uncertainties,” he added.
The highest net employment gains were seen in professional, scientific and technical activities (5.13%); manufacturing (4.43%); and financial and insurance activities (2.21%).
Meanwhile, subsectors that posted net losses in employment were real estate activities (-2.23%), education (-1.02%) and “other service activities” (-0.87%).
“I expect employment to grow and be robust this year with economic growth expected to be more than 6%,” UnionBank’s Mr. Asuncion said going forward.
RCBC’s Mr. Ricafort said that job prospects “could remain positive in the coming quarters” amid sustained growth in consumer-related industries and investments coupled with increased government spending on infrastructure, “all of which create new job and other business opportunities.”
The report covered 30,508 establishments with an estimated employment of around 4.7 million during the first quarter.

‘No reason’ Bangsamoro can’t match Shenzhen’s economic vibrancy — FEF

August 1, 2018 | 10:20 pm

RETIRED technocrats have urged the future Bangsamoro Autonomous Region government to manage the region’s economy efficiently along free market lines, and noted the potential for Bangsamoro to someday mirror the economic performance of some of Asia’s most economically vibrant regions.
“There’s no reason why the BAR cannot be like Hong Kong and Shenzhen in China for so long as free market principles are combined with good governance,” the Foundation for Economic Freedom (FEF) said in a statement Wednesday.
FEF, which counts among its members many retired economic managers, also encouraged Bangsamoro leaders to maintain a “competent, efficient and honest bureaucracy.”
“Only strong institutions accountable to the people will ensure that the mistakes of the failed Autonomous Region of Muslim Mindanao are not repeated,” the FEF also said.
The Bangsamoro Region will be governed by an 80-member parliament, headed by a Chief Minister. The assembly will be composed of political party (50%), district (40%) and sectoral representatives (10%).
The FEF also welcomed the efforts of President Rodrigo R. Duterte, Congress as well as the Bangsamoro people in ensuring the passage of the Bangsamoro Organic Law (BOL) as a means of ending decades-long conflict in the region.
“The BOL is a giant step toward peace and development in Mindanao,” the FEF added.
The Asian Development Bank (ADB) also commended the government for the enactment of the law, granting fiscal autonomy to the region.
Under the BOL, the region will be granted a 75% share of national taxes collected in the region. The Bangsamoro will also enjoy an annual block grant, which will be equivalent to 5% of the net internal revenue tax collection of the Bureau of Internal Revenue and the Bureau of Customs.
“The passage of the landmark law is a significant step toward achieving lasting peace, which will allow Mindanao to reach its full potential as a key driver of growth and development for the Philippines,” ADB Vice-President Mr. Stephen Groff said in a statement, Wednesday.
The ADB issued a $380 million loan in December to help improve the 280-kilometer national road and bridge network in Mindanao. The ADB said this was its first Mindanao-specific loan in 16 years.
The ADB’s Country Operations Business Plan for 2019 to 2021 as well as the Country Partnership Strategy for 2018 to 2023, aimed at developing several sectors in the region, are both underway.
“The government’s efforts to create stability in Mindanao will usher in more opportunities to end poverty in the region. ADB stands ready to assist the government in addressing socioeconomic inequalities in Mindanao and is preparing to roll out initiatives targeting this purpose,” ADB Country Director for the Philippines Kelly Bird said. — Charmaine A. Tadalan