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China factory growth stronger than expected in March

BEIJING — Growth in China’s manufacturing sector picked up more than expected in March as authorities lifted winter pollution restrictions and steel mills cranked up production as construction activity swings back into high gear.
The official Purchasing Managers’ Index (PMI) released on Saturday rose to 51.5 in March, from 50.3 in February, and was well above the 50-point mark that separates growth from contraction on a monthly basis. Analysts surveyed by Reuters had forecast the reading would pick up only slightly to 50.5.
The findings add to a growing amount of data which suggest that China’s economy has carried more momentum into the first quarter from last year than analysts had expected, which should keep synchronized global growth on track for a while longer even as trade tensions build.
February’s print had been the lowest in one-and-a-half years, but many analysts suspected it was due to disruptions related to the long Lunar New Year holidays, not a sharp drop in consumption.
Indeed, the March survey showed manufacturers shifted into higher gear as usual as seasonal demand picked up at home and abroad.
The sub-index for output jumped to 53.1 from 50.3 in February, while total new orders rose to 53.3 from 51.0 and export orders climbed to 51.3 from 49.0.
The China Logistics Information Center, in a commentary on the PMI figures, said it expected first-quarter economic growth to be about 6.8%. Early this year, economists polled by Reuters were penciling in a fade to around 6.6%.
Large companies saw a modest pickup in growth, while small firms’ activity expanded marginally after shrinking in February.
Helping drive positive sentiment, exports have been better than expected in the first two months of the year, particularly for tech products, the fastest-growing segment of China’s industrial sector. Though a sub PMI for hi-tech manufacturing eased in March, growth remained solid.
However, a sharp escalation in trade tensions with the US is clouding the outlook for both China’s “old economy” heavy industries and “new economy” tech firms.
The Trump administration slapped hefty tariffs on steel and aluminium imports last week and then targeted China specifically with plans for additional tariffs of up to $60 billion of its goods, likely focusing on tech and telecommunications products.
“Stress tests have shown the new US tariffs will have a relatively small impact on Chinese steel. Chinese steel firms should not be overly worried and should focus on guaranteeing demand from the domestic market and our major exporters,” the China Steel Logistics Professional Committee said.
“But it’s worth noting that the amount of steel products we supply to US consumers through the global supply chain may well exceed China’s direct exports to the United States,” it added.
“China should proactively oppose US unilateral trade protectionism to maintain the global supply chain.”
In the first quarter, China’s steel companies defied expectations for a winter lull and continued to ramp up output in response to strong sales, while boosting borrowing, capital expenditure and hiring, a survey from the China Beige Book showed on Wednesday.
Production increased further after winter smog controls expired on March 15 in many areas. A separate PMI on the steel sector rose to 50.6 in March from 49.5 in February, the China Logistics Information Center said. — Reuters

Stocks to move in tight range as it establishes base

By Arra B. Francia,
Reporter
LOCAL SHARES may trade in a tighter range this week, with investors setting their eyes on March inflation and the second package of the tax reform program.

The Philippine Stock Exchange index (PSEi) lost 0.83% or 67.20 points to 7,979.83 last Wednesday, but managed to gain 0.11% on a weekly basis. This was supported by a 1.8% increase in the financials sector alongside a 1.6% uptick from industrials.
Trading also thinned prior to the Lenten break, with turnover dipping 10% to P7.8 billion on average. Still, advancers outpaced losers last week, 109 to 95.
With the main index moving around the 7,900 area, Eagle Equities, Inc. Research Head Christopher John Mangun said investors may finally start coming back into the market.
“The index has held the 7,900 support area which to me may potentially be a bottom for this correction. If it continues to hold this area in the following week, this may signal investors that this is a good time to start buying into this market again after being on the sidelines for the past couple of months,” Mr. Mangun said in a weekly report.
Online brokerage 2TradeAsia.com, meanwhile, noted that the index would have to build a strong base at the 8,000 level in order to cement its run toward new highs. The company said leads for the week include expectations on March inflation.
“At home, attention will revert to March inflation and possibilities from monetary authorities to consider adjusting their policy stance in their next meeting. It should be noted however, there are tools available, including reserve requirement adjustment,” 2TradeAsia.com said in a weekly market note.
Investors are also expected to look at the second package of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which will put the spotlight on businesses. The second phase of the tax reform program, as per the draft by the Department of Finance, seeks to cut corporate income taxes (CIT) to 25% from 30%, while also calling to repeal around 30 special laws that grant incentives to investors.
TRAIN 2 likewise aims to rationalize tax incentives under the Philippine Economic Zone Authority.
“Investors will also heed for sequels to government’s (TRAIN 2), specifically on CIT and the Finance’s stance in present and subsequent investment incentives. This crucial package must be balanced carefully, to ensure continuity of long-term direct investments in the Philippines, especially for capital-intensive undertakings,” 2TradeAsia.com said.
For this week, Mr. Mangun placed the PSEi’s support at 7,792 up to 8,090, while resistance is at 8,360 to 8,465.

Are Filipino women having fewer children?

The recent decades saw developing countries experiencing the so-called “demographic transition” — a transition from high birth and death rates to lower birth and death rates that are seen in more developed countries.

This can be seen through the total fertility rate (TFR), a demographic indicator that estimates the average number of live children that a woman would have over her childbearing years of age 15-49 based on current birth trends.

data-fertility-rate-1950To illustrate, estimates by the United Nations put the TFR of the Philippines at 7.42 live births per woman in the 1950-1955 period, higher than the Southeast Asian average of 5.93 live births per woman.

While the Philippines managed to bring down TFR by 58.9% to 3.05 live births per woman in the 2010-2015 period, this is still above the regional average of 2.35 births per woman as other countries saw faster decelerations in their TFRs during those decades.

data-fertility-rate-2010The Philippine TFR is also above the 2.1 births per woman replacement rate i.e. the rate at which women give birth to babies just enough to sustain population levels (assuming normal boy-girl sex ratio and low levels of mortality). — BusinessWorld Research / Christine Joyce S. Castañeda

Data Source: World Population Prospects: The 2017 Revision (United Nations, Department of Economic and Social Affairs, Population Division 2017)

Q4 home price hike biggest in three quarters

HOUSE PRICES rose faster in 2017’s last three months from a year ago, marking the biggest increase in three quarters as duplex and condominium prices surged by double-digit pace, according to data the Bangko Sentral ng Pilipinas (BSP) released on Wednesday.

Prices rose by 5.7% year-on-year from October to December, clocking the fastest pace since a 6.5% climb in 2017’s first quarter, according to the latest BSP residential real estate price index (RREPI). The 2017 fourth-quarter pace compares to the preceding three months’ 1.8% and the year-ago 3.3% rise.

On average, housing prices rose by 3.6% for the entire 2017, roughly flat from 2016.

The RREPI measures the average change in home prices across building types and locations based on data from housing loans granted by universal, commercial, and thrift banks, helping the central bank monitor the real estate market and watch out for potential bubbles. The BSP has been monitoring the sector’s data since the fourth quarter of 2015.

By structure, duplex prices rose by 17.3% from a year ago, followed by condominiums’ 14.2%, townhouses’ 8.1% and single-detached or attached houses’ 0.3% drop.

For full-year 2017, however, duplex prices still dropped 2.7% overall, while condominium units led increases at 6.5%, followed by townhouses’ 4.7% and single-detached/attached houses’ 1.8%.

Costs to acquire homes shot up faster in Metro Manila than in the provinces in 2017’s final three months. Prices in the capital rose by 8.8%, while those outside the region went up by three percent, according to central bank data.

In Metro Manila, the prices of duplex units surged 138.1% year-on-year, while those of condominiums climbed 15.2%. At the same time, prices of single-detached/attached houses dropped 9.9%, while those of townhouses fell by 8.6%.

Full-year 2017 saw Metro Manila house prices climb 4.8% year-on-year, fueled by a 26.8% increase of duplex prices, as well as condominiums’ six-percent, single-detached/attached houses’ 1.5% and townhouses one-percent increments.

In the provinces, townhouses led prices increases with a 20.1% hike, followed by condominium units’ 8.4%, single-detached/attached houses’ 0.8% and duplexes’ 0.3%.

Overall house prices in the provinces grew 2.7% last year as condominium prices grew 10.5% and those of townhouses and of single-detached/attached houses rose 6.1% and two percent, respectively. These increases, however, were partly offset by a 5.9% drop in the prices of duplexes.

Roughly 80% of home loans granted by banks financed the purchase of new units, the BSP said, with more than half used to acquire condominium units.

Over a third of loans were used to buy single detached units, while townhouses accounted for 7.3%.

More than half of the loans were secured in Metro Manila, followed by the Cavite-Laguna-Batangas-Rizal-Quezon or Calabarzon region (23.6%), Central Luzon (6.4%), Central Visayas (4.7%) and Western Visayas (4.7%).

Central bank officials have noted sustained strong demand for commercial and living space in the Philippines, showing that price increases are driven by actual demand and allaying fears of a bubble.

A bubble forms as a perceived rising demand for houses drives developers to build more units, and is said to “burst” as consumption stagnates and causes an abrupt drop in prices that could jolt exposed banks.

The BSP limits a bank’s real estate exposure to 20% of its total loan portfolio.

Philippine banks handed out P1.801 trillion in real estate loans last year, with home loans accounting for a third at P608.142 billion, according to latest available BSP data. — Melissa Luz T. Lopez

Money supply growth picks up in February

GROWTH of money supply picked up in February as bank lending grew by nearly a fifth, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

More money circulated in the Philippine economy as liquidity grew by 13.5% last month, faster than the 12.8% clocked in January.

Domestic liquidity, or M3, is the broadest measure of money in an economy. It grew to P10.724 trillion in February, with the growth marking the fastest pace since November 2017. Month on month, money supply rose by 1.5%.

Funds drawn from local sources expanded by 13.8%, picking up from January’s 13.6% amid robust bank lending, the central bank said.

Net claims on the central government grew 3.7%, steady from the previous month’s 3.6%.

At the same time, net foreign assets grew by a slower 4.6% versus January’s 4.9% when expressed in peso terms. This came on the back of money sent home by overseas Filipino workers as well as revenues from the business process outsourcing industry.

Foreign assets maintained by banks also grew amid bigger loans and investments in debt papers.

Still, the BSP said the faster money supply growth remains “consistent” with its outlook for inflation and economic activity.

The current administration is targeting a 7-8% growth this year from 2017’s 6.7%, as increased state infrastructure spending adds to the impetus provided by robust household spending that accounts for about 70% of the economy.

CREDIT GROWTH
Bank lending also picked up at sustained double-digit pace in February, the central bank said.

Credit growth clocked 19.5% that month, coming from January’s downward-revised 19% climb.

Computed to include reverse repurchase agreements availed by banks, lending slowed to 17.6% from 18.4% a month prior.

Some 88.4% of loans went to firms in the production sector, with growth picking up to 18.6% last month compared to January’s 18% year-on-year increment.

Real estate accounted for bulk of loans at 17.3% of the total in February, growing 18.1% year-on-year.

The segment “wholesale & retail trade, repair of motor vehicles and motorcycles” came next with a 13.5% share, growing by 18.5%.

Manufacturing was third at 13% with 10.7% growth, while “electricity, gas, steam & air-conditioning supply” accounted for 11.7% and logged a 28.5% increase.

The biggest increase was recorded in the “professional, scientific and technical activities” at 54.6%, although this segment accounted for just 1.1% of the total, while mining and quarrying, which accounted for just 0.7% of total loans in February, increased by 53.2%.

Growth in consumer loans softened last month but remained relatively faster at 19.9% compared to January’s 20.2% year-on-year increase. The BSP said a slower rise in car loans and declines in other types of retail lending offset increases in credit card and salary-based borrowings that month.

The central bank keeps a close watch on liquidity and bank lending as part of its mandate of maintaining price and financial stability, at a time of planned cuts in bank reserves and as some watchers flag potential overheating in the economy due to rapid loan growth.

Monetary authorities maintained that credit growth isn’t alarming just yet, as it simply mirrors increased activity in the country. — Melissa Luz T. Lopez

Excise tax take surges, beats target on increased rates

EXCISE TAX collections surged by nearly three-fourths in the first two months of the year, driven by bigger taxes on cars, tobacco, alcohol and other products especially after a new law raised rates on various items as the year began, the Department of Finance (DoF) said in a statement on Wednesday.

“Total excise tax collections imposed on various products for the January-February period amounted to P44.49 billion as against the target for this period of P38.53 billion, or an excess of P5.95 billion,” the department said.

“Compared with actual collections of P25.53 billion in 2017 for the same period, this represented an increase of 74.23%.”

Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion (TRAIN) law — reduced personal income, estate and donors tax rates, but removed some value-added tax exemptions; hiked excise tax rates for automobiles, minerals, tobacco and fuel; as well as imposed new excise levies on sugar-sweetened beverages and cosmetic procedures.

Excise tax collections accounted for 15.85% of the overall Bureau of Internal Revenue (BIR) take in the first two months of the year that totaled some P280.69 billion, 10.8% more than the P253.25 billion recorded in the same period in 2017 and 16% more than a P242.137-billion target.

“At the moment, we are collecting more ’sin’ taxes than projected. This is a good sign,” Finance Secretary Carlos G. Dominguez III was quoted in the statement as saying.

Broken down, tobacco excise taxes reached P24.04 billion in January to February, a 74.3% increase from P13.79 billion last year, breaching a P14.93-billion target by 61%, according to the DoF.

Mr. Dominguez noted that the sale of Mighty Corp.’s assets to Japan Tobacco International — after the government caught the former evading taxes — enabled the BIR to collect P2-billion taxes more per month. He said that the international tobacco maker is expected to pay some P40 billion in excise taxes this year, or about a third of the P118 billion in projected annual revenue from tobacco products this year.

“Cigarette manufacturing has always been a troublesome sector as far as collecting proper taxes is concerned. With new tools for surveillance, documentation of tax payments, and cooperation between tax and customs authorities, this should be a smaller problem in the future,” he added.

Collections from alcohol excise taxes meanwhile reached P9.82 billion, surpassing its P8.31-billion goal by 18.17%.

From automobiles, the BIR raked in P810.31 million, 25.85% over the P643.86-million target, while taxes on minerals totaled P464.23 million, 50.9% more than the P307.64-million target.

Moreover, taxes on petroleum product sales generated P4.79 billion, sugar-sweetened beverage sales yielded P4.53 billion and non-essential goods, P15.65 million.

The Development Budget Coordinating Committee in its Dec. 22 meeting projected that the TRAIN law would contribute some P82.3-billion additional revenues this year.

“I look forward to more accomplishments similar to the case of Mighty Corp. These accomplishments highlight the vigilance and professionalism of our revenue agencies.”

The BIR is tasked to collect P2.039 trillion in taxes in 2018, 11.48% more than the P1.829-trillion goal it initially set early last year. If realized, this would also be 14.6% more than the P1.779 trillion collected in 2017. — Elijah Joseph C. Tubayan

Yields on term deposits end mixed

By Melissa Luz T. Lopez, Senior Reporter

YIELDS on term deposits saw mixed movements on Wednesday ahead of a break from trading, matching the reduced auction volume offered by the central bank.

Banks wanted to place as much as P90.705 billion under the term deposit facility (TDF) this week, slightly higher than the P90-billion offer made by the Bangko Sentral ng Pilipinas (BSP).

The figure declined from the P128.211 billion in offers made during the March 21 auction, which was also higher than the P110-billion auction size.

Reduced auction volumes for the two-week and one-month tenors led to a slight oversubscription.

Players wanted to park P46.485 billion under the seven-day tenor, which settled below the P50 billion placed on the auction block and slipping from the P72.293-billion demand seen a week ago. As a result, the average yield also slid to 3.1651% from 3.1768% previously.

Meanwhile, the BSP’s P30-billion offering for 14-day deposits was met by P32.133-billion tenders. This compares to the P35.955-billion bids the previous week, back when the auction amount stood at P40 billion.

Rates fetched moved higher to 3.2788% from 3.2451% a week ago.

The 28-day tenor saw the same results, with the P10-billion auction amount matched by offers worth P12.087 billion versus the P19.963 billion demand last week. This pushed yields to 3.4232% from 3.3416% during the previous auction.

The TDF is the central bank’s main tool to mop up excess funds in the financial system, especially after the regulator reduced the reserve requirement ratio imposed on universal and commercial banks to 19% of deposits which took effect this month.

BSP Governor Nestor A. Espenilla, Jr. has said that the adjusted volumes for term deposits is temporary, in anticipation of tepid demand for long-term placements ahead of this week’s Holy Week break. He noted that banks “want to hold more cash” over the holiday in order to service client withdrawals and purchases.

Financial markets will be closed on March 29-30 in observance of Maundy Thursday and Good Friday, as observed by Catholics. Trading resumes on April 2.

By next week, the BSP will be offering P50 billion in the seven-day tenor, P40 billion for the 14-day deposits, and P20 billion in P28-day papers, returning to the volumes seen during the March 21 week, which reflects the BSP’s expectations of a recovery in demand following the Lenten break.

Espinosa, others summoned as DoJ sets new hearing on drug case

THE Department of Justice (DoJ), in an order dated March 22 and released on Wednesday, has subpoenaed alleged drug lord Peter Go Lim, confessed drug trafficker Rolan “Kerwin” Espinosa, convicted drug lord Peter Co, and some 20 other co-accused in a drug complaint filed by the Philippine National Police (PNP) to appear at a hearing set on April 12.

Also tasked by Department Order No. 159 to take part in the hearing is the PNP’s Criminal Investigation and Detection Group (CIDG), which filed the complaint accusing the said respondents of violation of Republic Act 9165 (the Comprehensive Dangerous Drugs Act of 2002).

The order signed by Justice Secretary Vitaliano N. Aguirre II also said this case has been assigned to a new panel of prosecutors, made up of Senior Assistant State Prosecutor Juan Pedro C. Navera, Assistant State Prosecutor Anna Noreen T. Devanadera, and Prosecution Attorney Herbert Calvin D. Abugan.

DoJ has been under fire after a previous panel had dismissed the charges against Espinosa and company. This led to a recommendation by the Presidential Anti-Corruption Commission (PACC) on Tuesday to have members of that panel, Assistant State Prosecutors Michael John M. Humarang and Aristotle M. Reyes, suspended.

In their statement on Wednesday, Messrs. Humarang and Reyes noted in part, “The subject case against the respondents is not yet final as it is still undergoing review and further preliminary investigation by the new panel of prosecutors, and as it is, there is still no definite finding on whether the respondents would be absolved of the charges.”

“Given that the case under consideration has not yet attained finality, the recommendation of the PACC is somehow still premature,” they also said.

The statement noted further: “During the preliminary investigation, the complainant was given all the opportunity to present its case. Under the present rules, we have no authority to procure evidence on complainant’s behalf. We stress that we cannot just rely on the inconsistent and contradictory statements of complainant’s lone witness. Additional and credible evidence should have been submitted by the complainant to strengthen its case and justify the filing of criminal charges against the respondents in court.”

For his part, Mr. Aguirre said: “The complaint is without basis because they (PACC) do not know the workings and procedure of the DoJ when conducting preliminary investigation.” — D.A.M. Enerio

Office of Special Prosecutor files motion to block Napoles’ custody under witness protection

By Minde Nyl R. dela Cruz

THE Office of the Special Prosecutor (OSP) has moved to oppose for lack of merit a motion by alleged pork barrel scam mastermind Janet Lim Napoles for her transfer of custody to the Witness Protection Program (WPP) of the Department of Justice (DoJ).

In an eight-page comment/opposition filed before the anti-graft court Sandiganbayan on March 23, the OSP slammed Ms. Napoles for “believing that she is head and shoulder above the rest of the nameless and faceless detention prisoners.”

Her motion, dated March 15, came after she was placed under the WPP in February to testify on the P10- billion pork barrel scam which also tagged former senators Ramon Revilla, Jr., Jinggoy Estrada, and Juan Ponce F. Enrile.

The OSP noted that Ms. Napoles’ acceptance under the WPP “is merely provisional” and that she “is not a state witness in this case inasmuch as she hardly qualifies as such.”

“Thus, it is condescending for her to ask for her transfer, considering that she has yet to comply with the additional requirements in order for her admission to become regular,” the OSP comment read.

Under Article V of the implementing rules and regulations (IRR) on the WPP, a witness can be granted provisional admission when he or she “has complied with all indispensable requirements for admission, but lacks the additional requirements required by the Implementor,” and may be deemed regular only “upon submission of the Order of discharge by the Court.”

The OSP also noted the “confidential nature” of the application for coverage under the WPP.

“In this case, accused Napoles’ disclosure of her provisional coverage does not appear to be with a written order of the DOJ, more so of this Honorable Court,” the OSP comment read.

The OSP added: “This is a serious breach of the confidentiality of her coverage which opens herself not only to penal sanction but also to the termination of her provisional coverage….”

The OSP further noted that Ms. Napoles’ “fear of possible physical harm, unfounded at that, is not a valid and compelling reason to transfer accused Napoles to the custody of the WPP,” and added that the IRR of the WPP “forbids it from extending protective custody to person detained for a lawful cause.”

Ms. Napoles is currently detained at Camp Bagong Diwa in Taguig City.

FCDU loans up in 2017

FOREIGN CURRENCY loans granted by Philippine banks went up in 2017, latest central bank data showed, with bigger credit lines extended to logistics and export firms.

Banks lent out $15.374 billion under the foreign currency deposit units (FCDUs) as of end-December, up by 2.5% from the $14.992 billion worth of loans as of September 2017, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

The figure surged by 22.9% from the $12.51 billion worth of foreign currency borrowings in 2016.

FCDUs are bank units authorized by the central bank to conduct transactions involving foreign currencies, mainly by accepting deposits and handing out loans.

Total disbursements hit $15.8 billion as of end-December, up by a tenth from the previous quarter.

Firms engaged in the towing, tanker, trucking and forwarding business borrowed 23.5% more between October and December. Merchandise and service exporters also saw their loan lines increase by 21.4%, followed by public utility firms (11.1%); and producers/manufacturers, including oil companies (4.3%).

Bulk of FCDU loans came with medium to long-term maturities, with 75.9% due in more than one year. Only $3.712 billion are payable in less than a year, keeping the level manageable.

The increase in lending was partly offset by a 15% increase in settled debts.

Over two-thirds of the foreign currency loans were secured by Filipino companies at $10.396 billion, up 23.4% year-on-year. On the other hand, foreigners borrowed $4.978 billion, also 21.8% higher from end-2016.

By source, local commercial banks extended $13.388 billion while thrift banks granted $25-million loans. Foreign banks operating in the Philippines also provided $1.961-billion credit, according to central bank data.

Meanwhile, total foreign currency deposits reached $39.194 billion in 2017, up by a tenth from $35.869 billion the prior year.

Total loans-to-deposits ratio increased further to 39.2%, coming from the 38.4% share logged as of end-September and the 34.9% ratio in 2016.

A bigger stash of foreign currency deposits stood as additional buffers versus external shocks, and stands to support the BSP’s gross international reserves. — Melissa Luz T. Lopez

Camp Aguinaldo, military hospital redevelopment to fund pension reform

PENSION reform for the uniformed services will be funded in part by joint ventures to redevelop parts of Camp Aguinaldo and two major military hospitals in Quezon City, Budget Secretary Benjamin Diokno said.

“Part of Camp Aguinaldo will be developed jointly with the private sector,” he said, referring to the Armed Forces of the Philippines headquarters. He also cited the potential for development of the Armed Forces Medical Center on V. Luna Street in Quezon City and the Veterans Memorial Medical Center, also in Quezon City. So the military has lots of assets,” Mr. Diokno told reporters.

He added that pension reform for uniformed personnel will cost “slightly” less than expected, though the government continues to study how to implement the plan before year’s end.

Mr. Diokno said that the Bureau of the Treasury is currently studying the fiscal issues in connection with the plan to set up a contributory fund for uniformed personnel, to be run by the Government Service Insurance System (GSIS).

“It’s with the Treasury, they’re studying it,” Mr. Diokno said, noting that the review started “last month.”

Mr. Diokno has estimated that seed money for the new pension scheme will amount to P7-9 trillion, based on initial actuarial studies on police and military retirees.

“That’s the working number. I think will be slightly less, which is good news,” he said.

He added that the government may release the final estimate “after the Holy Week.”

Asked when the pension reform plans will be ready Mr. Diokno said: “It is our plan to… find a solution before the end of the year.”

“The longer the problem hangs, the bigger it gets. What’s important is that those serving in the Armed Forces should start contributing to the system,” he added.

The reforms will maintain the benefits enjoyed by current pensioners but those still serving will be made to pay monthly contributions. New members of the uniformed services will be placed under a new pension regime.

He said economic managers are negotiating with the GSIS on the initial capital for the new scheme, as well as its management fee.

Asked whether the government has the fiscal space to fund the new pension scheme, Mr. Diokno said: “We have to take a long-term view.”

He added that contribution system will probably be on par with rates paid by civil servants to the GSIS and private-sector workers who are members of the Social Security System (SSS).

Economic managers flagged military pensions in the Development Budget Coordination Committee 2017 Fiscal Risk Statement.

In 2017, payments for military pensions totaled P90 billion, equivalent to about two-thirds of the Department of National Defense’s P134.29 billion budget that year. — Elijah Joseph C. Tubayan

NFA to conduct open tender for 250,000 MT rice shipment

THE National Food Authority (NFA) said that it is preparing for an open tender to select suppliers for a pre-approved shipment of 250,000 metric tons (MT) of rice, which will help replenish its buffer stock.

In a statement, NFA Administrator Jason Laureano Y. Aquino was quoted as saying that the NFA Council, which exercises oversight over the agency, expressed a preference for an open tender even though it may take 45-50 days, longer than the 30 days under a government-to-government arrangement.

Mr. Aquino said the council believes open tender reduces opportunities for corruption.

President Rodrigo R. Duterte authorized the shipment in a meeting with the council on March 19.

According to the statement, Mr. Duterte prefers to take his chances with an oversupply of rice rather than a shortage.

The shipment is expected to arrive by late April or early May.

Mr. Aquino defended the government-to-government procurement method, calling the process “transparent” since it was equivalent to an open tender with supplier countries as the participants.

The corruption allegations are “unfair to those countries with Rice Trade Agreements with the Philippines because it is tantamount to accusing them of participation or connivance in an illegal act,” he added.

“There is competition in G-to-G,” he added. “There is no such thing as a negotiated contract as claimed by some individuals.”

The Philippines has Rice Trade Agreements with Vietnam and Thailand.

The open tender scheme is open to any qualified supplier, though the main risk is delay should potential suppliers be found noncompliant. — Anna Gabriela A. Mogato

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