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China’s central bank injects cash, lowers 14-day reverse repo rate

REUTERS

 – China’s central bank supplied 14-day cash to its banking system for the first time in months on Monday and at a lower interest rate, signaling its intent to further ease monetary conditions.

The People’s Bank of China (PBOC) injected 234.6 billion yuan ($33.29 billion) into the banking system through open market operations, saying it wanted to “keep quarter-end liquidity adequate at a reasonable level in the banking system”.

The PBOC added 160.1 billion yuan via 7-day reverse repos at 1.70%, it said in a statement. It also injected 74.5 billion yuan via 14-day reverse repos at 1.85%, compared with 1.95% during the previous injection.

Analysts said the funding operation in itself wasn’t a major policy easing. China has typically used 14-day repos to help the banking system tide over long holidays, and the last time it did so was ahead of a spring break in February.

Monday’s injection comes ahead of China’s National Day holidays starting Oct.1, and the cut in rates aligns the 14-day repo rate with the shorter 7-day repo rate which was cut in July.

“I wouldn’t take this rate cut as a signal that PBOC loosened monetary policy further,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

“Nonetheless, I do expect PBOC will cut 7 day repo rate as well as the reserve requirement ratio in the coming months. There is a press conference tomorrow when the financial regulators will shed light on their policy stance.”

The world’s second largest economy is battling deflationary pressures, and struggling to lift growth despite a series of policy measures aimed at spurring domestic spending. Speculation that it will hasten monetary easing perked up last week, after the U.S. Federal Reserve kicked off its easing cycle with a hefty half percentage point rate cut.

The PBOC last cut its short and long-term benchmark lending rates in July.

Faltering Chinese economic activity has prompted global brokerages to scale back their 2024 China growth forecasts to below the government’s official target of about 5%.

President Xi Jinping urged authorities to strive to achieve the country’s annual economic and social development goals, state media reported earlier this month. – Reuters

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RLC Residences shines at DOT Property Philippines Awards 2024, takes home country’s Best Developer recognition

RLC Residences continues its winning streak, dominating the DOT Property Philippines Awards 2024 with six prestigious accolades, solidifying its position as a leading real estate developer in the country.

RLC Residences was honored as Developer of the Year, a testament to its consistent excellence, innovation, and commitment to delivering high-quality residential projects across the Philippines. The company’s dedication to pushing the boundaries by offering relevant digital solutions to its customers also earned it the Special Recognition Award for Innovation from the award-giving body.

Two standout projects under the RLC Residences banner also received top honors. The Residences at The Westin Manila was recognized for its exceptional design, taking home the Best Condominium Architectural Design award, showcasing a balance of luxury and functionality that aligns with global standards. Meanwhile, Mantawi Residences clinched the Best Luxury Development award, a nod to its refined elegance and appeal to high-end property investors.

SYNC, a high-rise condominium designed for millennials’ need for modern urban living, was lauded as the Best Smart Home Condominium, while Le Pont Residences received the Best Sustainable Development award, underscoring RLC Residences’ commitment to green building practices and eco-conscious living.

“Winning this year’s Developer of the Year, along with our other awards, is an incredible honor for us at RLC Residences. We are proud to be recognized by the DOT Property Philippines Awards for our efforts in redefining the residential landscape. Thank you for affirming the hard work, passion, and dedication of Team RLC Residences as we continue to create spaces that not only meet the evolving needs of our customers but also contribute to a better, more sustainable future,” said Chad Sotelo, Senior Vice President and Business Unit General Manager of RLC Residences, and Chief Marketing Officer of Robinsons Land.

Organized by the Dot Property Group, the Dot Property Philippines Awards is an annual ceremony that celebrates excellence in real estate. Before the year ends, the Dot Property Southeast Asia Awards will be held in Bangkok, where developers across the region and their projects will be recognized on a regional stage.

For more information about RLC Residences and its award-winning developments, visit rlcresidences.com or follow their official Facebook and Instagram pages.

 


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Federal Land redefines urban living with award-winning developments

Federal Land bagged three more awards and recognitions at the 2024 Dot Property Philippines Awards.

Federal Land, Inc., one of the Philippines’ premier real estate developers, has once again demonstrated its dedication to innovation and quality with multiple wins at the Dot Property Philippines Awards 2024.

The company secured three major awards, underscoring its consistent commitment to creating innovative and high-quality communities that elevate urban living. These recognitions further affirm Federal Land’s growing influence in the real estate industry as it shapes the future of property development in the country.

Thomas Mirasol, president and chief operating officer of Federal Land, expressed the company’s pride in receiving these honors. “We are honored to receive these awards from Dot Property Philippines. These awards reflect our steady drive to provide exceptional living spaces that meet the evolving preferences of our residents. We will continue to push the envelope and raise the standards of property development to create homes and communities that enrich lives,” Mr. Mirasol stated.

Riverpark in General Trias, Cavite, Winner of Best Integrated Township Development. Artist’s Perspective.

Riverpark, which clinched the prestigious Best Integrated Township Development award, is Federal Land’s largest township development to date. The multi-use master-planned community development exemplifies the company’s vision of creating versatile and holistic living experiences.

Located in General Trias, Cavite, Riverpark covers 600 hectares that include residential neighborhoods, commercial areas, educational institutions, and recreational facilities. Notably, the community will host SM City General Trias, the new UNIQLO Logistics Facility and various retail outlets, supporting local economic growth.

Grand Hyatt Manila Residences in Bonifacio Global City, Winner of Best High-End Lifestyle Condominium Development. Artist’s Perspective.

Meanwhile, the Grand Hyatt Manila Residences South Tower was honored as the Best High-End Lifestyle Condominium Development. As the first residential project in Southeast Asia to bear the Grand Hyatt name, it stands out for its refined architecture, world-class amenities, and gracious concierge services, creating a modern-day icon that redefines true luxury living in the Philippines.

Quantum Residences, developed under its smart value brand Horizon Land, secured the title of Best Starter Home Condominium Development.

Quantum Residences in Pasay City, Winner of Best Starter Home Condominium Development. Artist’s Perspective.

The development boasts a prime location at the intersection of Taft Avenue and Sen. Gil Puyat (Buendia) Avenue. Quantum Residences is well-connected to various public transport options, including the LRT-1 Gil Puyat station and the PNR Buendia station, facilitating easy access to different parts of Metro Manila and nearby provinces.

Federal Land’s victory at the Dot Property Philippines Awards is not only a reason for celebration within the company but also a reassurance for homeowners and investors as developers in the Philippines are consistently delivering high-quality developments that adhere to the highest standards of design, functionality, and sustainability.

As the company continues to set new benchmarks in the real estate industry, the company will focus on expanding its presence by pursuing large-scale projects outside of Metro Manila to foster regional growth and create high-quality districts across the country.

About Federal Land, Inc.

Premier real estate developer Federal Land, Inc. is the property arm of GT Capital Holdings. Along with all its affiliates, Federal Land has received a multitude of local and international accolades, recognizing the quality and excellence of its developments. For over 52 years in the industry, Federal Land has continued its commitment to innovating residential homes, commercial spaces, premium office buildings, world-class hotels, and multi-use, master-planned communities that create a positive impact for generations.

 


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Central bank raises BoP projection

US dollar banknotes are seen in this illustration taken July 17, 2022. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) expects the country’s balance of payment (BoP) position to post a bigger surplus this year, but also anticipates a wider current account deficit. 

In a statement late on Friday, the central bank said it raised its BoP forecast amid “sustained positive global and domestic economic growth prospects, decelerating inflation, as well as the pickup in world trade activity.”

The BSP’s latest projections show the BoP will register a surplus of $2.3 billion, equivalent to 0.5% of gross domestic product (GDP) this year, higher than its earlier projection of $1.6 billion (0.3% of GDP).

Philippines: Balance of Payments (BoP) Position

The BoP provides a glimpse of the country’s transactions with the rest of the world. A surplus indicates that more money entered the economy, while a deficit indicates that more funds left.

“Based on the foregoing and the actual figures recorded in the first half of 2024, the overall BoP position is projected to register a higher surplus relative to the previous projection round for this year and the next,” the central bank said.

Latest BSP data showed that the country’s BoP level in the January-August period stood at a $1.6-billion surplus, lower than the $2.1-billion surplus a year ago.

“Meanwhile, the Philippine economy is seen to maintain its growth momentum, supported by resilient domestic demand, lower inflation trajectory, and timely enactment of the national budget,” the BSP said.

It also noted that the improved BoP outlook is driven by the government’s continued efforts to improve the business environment by ramping up infrastructure development and implementing reforms to boost investments.

The Philippine economy grew by 6.3% in the second quarter, the fastest since 6.4% in the first quarter of 2023.

For the first half of the year, GDP averaged 6%. The government is targeting 6-7% growth this year.

Meanwhile, the BSP said emerging risks to the BoP outlook “remain broadly balanced.”

“On the downside, commodity price volatility due to geopolitical and extreme weather events, trade tensions, as well as possible mobility risks from emergence/re-emergence of highly infectious diseases (e.g., mpox), weigh down on the country’s external sector prospects,” it said.

For next year, the BSP expects the BoP surplus to reach $1.7 billion, equivalent to 0.3% of GDP.

“For 2025, the overall BoP position is likely to settle at a higher surplus relative to the previous projection exercise, with net inflows from the financial account continuing to be a major contributor alongside a narrowing current account gap.”

Next year’s BoP outlook is driven by expectations of sustained global demand and trade activity, the BSP said.

“While there are reasons for optimism on the BoP outlook for next year, the assessment remains subject to downside risks from potential market instability and from escalations in geopolitical and geoeconomic risks including the brewing conflict in the Middle East and US-China trade tensions.”

CURRENT ACCOUNT DEFICIT
Meanwhile, the central bank now projects the current account deficit to reach $6.8 billion, equivalent to -1.5% of GDP.

This is wider than its earlier forecast of $4.7 billion (-1% of GDP). The current account covers transactions involving goods, services and income.

For 2025, the BSP expects the current account deficit to hit $5.5 billion (-1.1% of GDP), also bigger than $2 billion (-0.4% of GDP) previously.

In the first half, the current account deficit stood at $7.1 billion, accounting for 3.2% of GDP.

“The wider current account deficit in 2024 was due to the reduction in the growth forecasts for goods and services exports,” the BSP said.

It lowered its 2024 forecast for goods exports to 4% from 5% but retained its 6% projection for next year.

The central bank said merchandise exports are expected to show “subdued performance.”

“The local semiconductor industry, with its heavy reliance on legacy products and downstream assembly, does not appear to be benefiting from the AI-induced upturn in global electronics demand,” the BSP said.

“Compensating in part for the expected weakness in semiconductors are exports of other electronic products (e.g., electronic data processing, consumer electronics, telecommunications, medical/industrial instrumentation, and automotive electronics) which are seen to be driven by the tech replacement cycle and overall recovery in global demand.”

The central bank kept its growth forecasts for goods imports at 2% this year and 5% for 2025.

Meanwhile, the BSP anticipates service exports to expand by 13% this year, a tad lower than the earlier projection of 14%. It kept its forecast for service exports at 10% for 2025.

The central bank also maintained its projections for services imports at 13% this year and 6% next year.

“Growth in service exports is also likely to be modest following the weaker-than-expected performance of the BPO sector due to lower receipts from other business services, particularly contact centers,” it said.

“Nonetheless, the current account outlook continues to be supported by robust growth prospects for travel receipts, along with the steady inflows of overseas Filipino [worker] (OFW) remittances.”

The growth forecast for BPO receipts was trimmed to 6% this year from 7%. It maintained the 7% BPO revenue growth projection for next year.

Meanwhile, the central bank also kept its forecasts for cash remittances at 3% this year and the next.

For the first seven months, remittances from OFWs rose by 2.9% to $19.332 billion from $18.785 billion a year ago.

As for the financial account, it is expected that outflows may reach $10.5 billion this year, which is higher than the previous estimate of $7.7-billion outflows.

The financial account records transactions between residents and nonresidents involving financial assets and liabilities.

Financial account outflows stood at $10.5 billion in the first semester, latest data from the BSP showed.

“The higher net inflow in the financial account was due largely to the notable rise in portfolio investments driven, in turn, by stronger global and domestic growth prospects, which will also benefit from the indications of a shift in the monetary policy stance toward easing by the US Fed,” the BSP said.

“These factors should continue to shore up higher levels of both foreign direct investments (FDI) and foreign portfolio investments (FPI) for the remainder of the year,” it added.

The BSP also hiked its forecast for FDI net inflows to $10 billion this year from $9.5 billion.

The latest central bank data showed FDI net inflows increased by 7.9% year on year to $4.4 billion in the first half of the year.

The central bank also raised its FPI net inflow projection to $4.2 billion for this year, up from $3.1 billion. Short-term foreign investments yielded a net inflow of $1.46 billion in the first seven months, skyrocketing by 830.7% from a year ago.

Gross international reserves (GIR) are expected to reach $106 billion this year, higher than the previous forecast of $104 billion.

Dollar reserves has risen by an annual 7.39% to $106.92 billion as of end-August.

“Given prospects of continued foreign exchange inflows into the economy, there is scope to expect further buildup in the GIR for 2024-2025,” the BSP added.

Jumbo RRR cut seen to inject over P300 billion into economy

MARI GIMENEZ-UNSPLASH

By Luisa Maria Jacinta C. Jocson, Reporter

MORE THAN P300 billion could be released into the Philippine economy after the central bank slashed the reserve requirement ratio (RRR), analysts said.

“We estimate the impact of the 250-basis-point (bp) RRR cut to be a liquidity injection of around P310-330 billion (around 1.2% of full-year 2024 gross domestic product), which is relatively substantial,” Nomura Global Markets Research analysts Euben Paracuelles and Nabila Amani said in a commentary.

The Bangko Sentral ng Pilipinas (BSP) on Friday said it would reduce the RRR for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5%, effective Oct. 25.

It will also reduce the ratio for digital banks by 200 bps to 4%; thrift banks by 100 bps to 1%; and rural banks and cooperative banks by 100 bps to 0%.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that for every one-percentage-point (ppt) reduction in the RRR, at least P150 billion would be injected into the financial system.

The 250-bp or 2.5-ppt cut for big banks and nonbanks could lead to at least P375 billion released by large banks, he said. Accounting for all banks, a total of P400 billion could be injected into the financial system.

The RRR is the portion of reserves that banks must hold onto rather than lending out. When a bank is required to hold a lower reserve ratio, it has more funds to lend to borrowers.

Nomura said it expects the BSP to further cut the RRR next year.

“In our view, BSP’s goal is to reach 5% in 2025, so we would expect more RRR reductions next year, owing to our expectation that headline inflation remains within BSP’s target.”

BSP Governor Eli M. Remolona, Jr. earlier said they are eyeing to bring down the RRR to as low as 5% as the country’s reserve requirements are among the highest in the region.

“We also did not see any urgency for the adjustment based on limited signs of liquidity tightening,” Nomura said. “We believe the move is just BSP getting back to its longer-term commitment to reduce the RRR to low single-digit levels which was previously targeted by 2023 but was delayed due to rising inflation risks.”

The central bank has since brought down the RRR for universal and commercial banks to a single-digit level from a high of 20% in 2018.

In its statement, the BSP said the RRR cut is in line with efforts to “reduce distortions in the financial system.”

“The reductions will lower intermediation costs and promote better pricing for financial services,” it added.

Mr. Ricafort said the lower reserve requirement would spur demand for loans.

“Furthermore, there would be more pesos that could be invested in the financial markets such as bonds and other fixed-income investments, stocks, foreign currencies, property, among others that would help support price gains than otherwise,” he added.

RISKS
Meanwhile, Enrico P. Villanueva, a senior lecturer at the University of the Philippines Los Baños Economics Department, said the RRR cut has “serious repercussions on financial stability.”

“While the reduction of reserve requirements lowers intermediation costs, reserves remain a monetary tool for liquidity risk management and financial stability.”

Mr. Villanueva said that while there may be space to further slash the reserve requirements of big banks, this might not be the case for smaller banks.

“The very low RR for thrift, rural and cooperative banks is disconcerting given that most of the bank failure incidents in the Philippines are in this sector. Those RR levels might need a reassessment from a financial stability perspective,” he said.

With the BSP’s recent RRR reduction, rural and cooperative banks essentially do not need to keep any reserve requirements as their ratios were slashed to 0%.

“In the Philippine financial system where episodes of bank failures emanate mostly from  thrift and rural banks, what will help stabilize that fragile sector if their reserve ratio ranges from 0-1%?” he added.

Mr. Villanueva also noted that the RRR cut would not immediately translate to savings for consumers.

“A cut in the required reserve ratio will certainly lower banks’ cost of funds. However, there is no automatic and full transfer of rate cost savings to borrowers,” he said.

“The degree of past-through of savings to borrowers will depend on the level of bank competition, elasticity of demand for loans, and business clout of borrowers. Institutional clients will likely benefit most; high-risk retail clients probably the least.”

The RRR cut will have a “muted” impact on bank lending in the short term, Mr. Villanueva said, adding that loan demand and credit standards would “significantly improve” in the long term amid more certainty on the country’s economic outlook.

“The sooner the calibrated rate cuts are completed, the more certainty and confidence to do investment and loan planning,” he added.

“If reserve ratio reductions eventually lead to loanable funds far exceeding loan demand by creditworthy borrowers, banks may be enticed to relax credit standards and give in to too much subprime lending… Banks may be encouraged to invest in higher risk assets like lesser-rated corporate funds,” Mr. Villanueva said.

He said the BSP should be vigilant in “mopping up excess liquidity and preventing excessive risk-taking and asset bubbles.”

Meanwhile, Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that the RRR cut does not necessarily lead to increased investments despite expectations of higher loan demand.

“The caveat is that this positive development by itself will not guarantee that businessmen will start pouring investments into the Philippine economy,” he said via Facebook Messenger.

“The administration must address the prevailing policy uncertainty arising from other bad policies that for example have constricted fiscal space, intensified political conflict and abetted geopolitical tension,” he added.

Leonardo A. Lanzona, Jr., an economics professor at the Ateneo de Manila University, said this could attract short-term rather than long-term investments.”

“In other words, this can only push aggregate demand but leave aggregate supply constant, thus resulting in inflation,” he said in an e-mail.

For his part, Mr. Villanueva said the RRR cut’s impact on inflation would likely be minimal.

“While reduction in required reserves will initially release more funds into the money in circulation, they may eventually end up as more loans, higher bank placements with BSP, or more bond holdings. BSP may do mopping up operations if there is excessive money supply.”

“The RRR cut may be inflationary in the unlikely (but possible) event that banks channel the extra funds into conspicuous consumption loans or speculative real estate lending.”

Nomura said that the RRR reduction reflects the central bank’s “greater confidence” on easing inflation.

“With inflation remaining on a downward path, BSP has scope to further remove the restrictiveness of its monetary stance,” it said.

Nomura expects the BSP to cut by another 25 bps each at the Monetary Board’s remaining meetings this year on Oct. 17 and Dec. 19. It also forecasts 75 bps worth of cuts early next year, bringing the key rate to 5% by May 2025.

“The Fed’s cutting cycle should also support more BSP rate cuts ahead, in our view, but we see these RRR cuts as supportive of our view that BSP sticks to a measured approach, i.e. 25-bp clips, despite the Fed delivering an outsized 50 bps this week, in part because some of the easing is already done via the RRR reduction,” it added.

DoTr postpones penalties for motorists without RFID to 2025

Motorists pass through the toll booths at the South Luzon Expressway. — PHILIPPINE STAR/RUSSELL A. PALMA

THE DEPARTMENT of Transportation (DoTr) has deferred the implementation of new tollway rules, which impose fines on motorists with no radio frequency identification (RFID) tags or insufficient funds on their accounts, to 2025.

“The DoTr has pushed back to 2025 the imposition of fines on motorists violating rules in expressways in NCR (National Capital Region) and neighboring areas, including the installation and proper loading of RFID,” the Presidential Communications Office (PCO) said in a Facebook post in Filipino on Sunday.

The PCO said the implementation of penalties under Joint Memorandum Circular No. 2024-001 has been postponed “in accordance with President Ferdinand R. Marcos, Jr.’s goal to solve the traffic problem.”

The circular signed by Transportation Secretary Jaime J. Bautista, Toll Regulatory Board (TRB) Executive Director Alvin A. Carullo and Transport Assistant Secretary Vigor D. Mendoza, was initially set for implementation on Aug. 31.

The implementation was later moved to Oct. 1 to give time for tollway operators and concerned agencies to fine-tune their operations and to conduct a public information campaign.

Nigel Paul C. Villarete, senior adviser on public-private partnership at Libra Konsult, Inc. said postponing the implementation of the new tollway guidelines is valid as long as the agencies are fine-tuning the policy.

“Postponing the execution of a valid and legitimate policy action is okay if there are some adjustments to be made. But to keep on postponing it repeatedly speaks of a lapse in operational management and execution,” Mr. Villarete said in a Viber message.

Under the rules, all motorists passing through expressways without RFID tags or having insufficient balance on their accounts will face penalties.

Motorists entering an access highway without RFID tags or electronic toll collection (ETC) device will incur a fine of P1,000 for the first offense, P2,000 for the second offense and P5,000 for subsequent offenses, the TRB said.

Motorists exiting toll expressways with insufficient account balance will be fined P500 for the first offense, P1,000 for the second offense and P2,500 for subsequent offenses.

Mr. Villarete said all concerned agencies and tollway operators should not implement these new rules unless they are “completely certain of their applicability and operability.”

“Cashless, barrier-less tolling should be the norm in the future, as this makes travel more efficient, and brings out toll roads at par to global standards,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in a Viber message.

BusinessWorld sought comments from toll road operators Metro Pacific Tollways Corp. (MPTC) and San Miguel Corp. but had not received a response as of the deadline.

MPTC President and Chief Executive Officer Rogelio L. Singson has said the imposition of fines would ensure the full implementation of a cashless collection system.

The implementation of a cashless toll collection is a prerequisite for the eventual shift to electronic toll collection interoperability by October, MPTC said

The TRB is targeting to introduce a unified RFID wallet system or interoperability between Easytrip and Autosweep by October.

Easytrip is used on MPTC’s North Luzon Expressway, Subic–Clark–Tarlac Expressway, Manila-Cavite Expressway and Cavite-Laguna Expressway.

Meanwhile, Autosweep is used on the San Miguel group’s Skyway, South Luzon Expressway, NAIA Expressway, Southern Tagalog Arterial Road Tollway, and Tarlac-Pangasinan-La Union Expressway.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

PHL tourism in focus as private operator takes over main airport

Passengers are seen at the Ninoy Aquino International Airport Terminal 3 in Pasay City in this file photo. — PHILIPPINE STAR/RYAN BALDEMOR

By Brontë H. Lacsamana, Reporter

DAVE M. GUINO, a 27-year-old Filipino travel content creator, has visited an average of four countries yearly since pandemic restrictions were lifted in 2022. This year, he is set to travel to six.

“I’ve definitely witnessed how tourism has recovered,” he said in a Messenger call. “The airport has long lines at immigration, flights get fully booked whether domestic or international, and there are travel booking promotions everywhere.”

The post-pandemic reopening has given the Philippine tourism industry an opportunity to increase visitor spending, generate more jobs and boost the economy. There’s also optimism that the privatization of Manila’s international airport would improve service.

The Ninoy Aquino International Airport (NAIA) was the fourth-worst airport in Asia for business travelers, with an average rating of 2.78 out of 10, according to a study by BusinessFinancing.co.uk.

The airport has had a long list of bad raps — from the third-most stressful airport in Asia to downright being one of the world’s worst, with frequently delayed flights, brownouts, long lines and cash-gobbling security guards.

San Miguel Corp.-led New NAIA Infrastructure Corp. on Sept. 14 took over the operations of NAIA under a private-public partnership (PPP) that seeks to attract more tourists. San Miguel and South Korean partner Incheon International Airport seek to modernize NAIA’s aging facilities and almost double airport capacity to 62 million passengers yearly.

“We are finally doing what the government has wanted to do since the 1990s — to use PPP in enabling a private operator to manage the operations and maintenance of the Ninoy Aquino International Airport — and make it truly world-class,” Transportation Secretary Jaime J. Bautista said in a statement.

“A new system is something to look forward to because it may address woes that were not addressed by previous management,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies,

told  BusinessWorld in a Viber message.
“There is optimism with a change in management.”

But this optimism could be reinforced or dashed depending on the new systems and “interventions” that will be enforced. The privatization, for one, has sparked worries about job losses and higher travel costs.

“We hope for the best,” Mr. Rivera said. “A premier, world-class and efficient airport is key to attracting more foreign tourists and ensuring that visitors enjoy warm Filipino hospitality.”

Visitor arrivals rose by 10% to 4.03 million in the eight months to August, according to government data. Majority or 92% of these were foreigners and the rest were overseas Filipinos. The Tourism department is targeting 7.7 million tourist arrivals for the full year.

The tourism industry is expected to surpass its pre-pandemic performance with an over P5.4-trillion contribution to the economy this year — a 25% yearly growth and 7.1% above the 2019 peak — the World Travel and Tourism Council (WTTC) said in June.

Travel and tourism account for 21.3% of Philippine economic output.

Travel agencies, hotels, resorts and online booking platforms have been holding summits, expos and sales as they seek to match and even exceed pre-pandemic tourism activity.

In mid-July, the Philippine Travel Agencies Association held its first travel expo outside the main Luzon island — in Cagayan de Oro City in Mindanao — to connect Visayas and Mindanao travel agencies with clients and suppliers overseas.

The Tourism department has been building tourist rest areas nationwide, as well as introducing hop-on, hop-off buses in the National Capital Region.

It has built 10 rest areas with clean restrooms, information and gift centers featuring the products of small businesses. The hop-on, hop-off buses operate in designated hubs including Makati, Manila and Pasay, with more to be launched next year.

About three-quarters of Filipinos have considered traveling overseas this year, with Hong Kong, Singapore, Japan and Thailand in mind, according to a report by Klook Philippines in May. Nine of 10 Filipinos plan to travel domestically, with Tagaytay, Baguio, Boracay and Palawan as their preferred destinations.

But Fitch Solutions’ BMI is less optimistic. While international tourist arrivals are expected to rise by 33% this year, this won’t be enough to hit pre-pandemic levels by 2025, it said in June.

It expects arrivals to reach 6.6 million this year, citing the Philippines’ smaller share of intra-regional visitors compared with its peers.

Last year, the country attracted only 5.45 million international visitors, compared with Thailand’s 23 million, Vietnam’s 12.6 million and Indonesia’s 11.68 million visitors.

TOURISM DEVELOPMENT PLAN
“Our struggle emanates from strategies to outcompete neighboring economies rather than making the Philippines comparable and equally attractive,” Mr. Rivera said. “Infrastructure, technology, promotion are part of the issue.”

He cited the need to “effectively implement” the National Tourism Development Plan for 2023 to 2028.

The plan, approved in May 2023, seeks to transform the country into a tourism powerhouse “anchored on Filipino culture, heritage and identity which aims to be sustainable, resilient and competitive.”   

It targets to generate 34.7 million tourism-related jobs and post 51.9 million international tourist arrivals by 2028.

Leonardo A. Lanzona, an economist from the Ateneo de Manila University, said overdevelopment in coastal areas, pollution and degraded beaches, forests and coral reefs must be addressed to properly enforce the tourism plan.

“These things make the Philippines less appealing as an ecotourism destination,” he said in an e-mailed reply to questions. “These problems also need to be addressed to make even domestic tourism sustainable.”

The government should fix accessibility problems that contribute to the perception that the Philippines is a poor, unattractive country despite its natural and cultural appeal.

“With improved infrastructure, security, environmental protection and marketing, the tourism sector has great untapped potential to grow significantly,” Mr. Lanzona said. “The problem stems really from mismanagement.”

Mr. Guino, who is part of the Klook Kreator program that allows travel content creators to earn commissions by sharing promo codes on social media, cited Filipinos’ yearning to travel domestically.

But video content filmed in the Philippines pales in comparison to the vlogs featuring countries like South Korea or Taiwan. “As a native of Region VIII, I’ve vlogged in Kalanggaman Island, Kanigaw Island, and other white sand beaches in my province of Leyte. People comment that it’s refreshing to see underrated, beautiful destinations,” he said.

Mr. Guino cited the lack of tourism promotion and poor infrastructure in these places, making them undesirable to Filipino travelers, even more so to foreign visitors.

Neighboring countries like Vietnam, Thailand and Malaysia have better airports and transportation systems, he added.

“Aside from brand awareness for provincial tourist spots, our archipelagic geography means we should work on accessibility and connectivity,” he added.

Loleth G. So, president of the Hotel Sales and Marketing Association, said the industry is banking on the National Tourism Development Plan to upgrade the country’s tourism infrastructure, with tourist rest areas and tour buses being the first step.

“While the Department of Tourism is doing its job, our advocacy is to help the industry by connecting, uplifting and training our own [tourism workers],” Ms. So, who is also group commercial director at Megaworld Hotels & Resorts, told BusinessWorld.

She said MICE (meetings, incentives, conventions, events) are a key segment of the tourism industry because it brings in groups of people into hotels and destinations.”

The tourism sector employed more than 6.2 million Filipinos last year, according to the Tourism department. The MICE segment is crucial to creating more jobs, Ms. So said.

Mr. Rivera said the Filipino brand of service excellence is a major reason why tourists visit the Philippines. “The Tourism department is very active in training its tourism stakeholders both with soft and hard skills. They should keep that up.”

Mr. Guino, who continues to produce travel content as a side job, said he doesn’t doubt that tourism is recovering.

“Back in 2022, there were fewer airline and accommodation promos, and no one would post comments on my videos discussing travel plans of their own,” he said. “Now, that has completely turned around.”

Rate cut impact on manufacturing to lag as policy settings still ‘tight’

REUTERS

By Beatriz Marie D. Cruz, Reporter

THE IMPACT of lower rates may not be reflected in the results of manufacturers this year, with Bangko Sentral ng Pilipinas policy remaining “tight,” according to analysts.

“Given that the Philippines’ monetary policy remains tight and borrowing costs are still high after its policy rate cut in August and considering lags between changes in monetary policy before they affect economic activities, we expect the central bank policy rate cut and expected rate cuts to have positive effects on the manufacturing sector in 2025 rather than this year,” Harumi Taguchi, principal economist at S&P Global Market Intelligence, said in an e-mail. 

In August, the Philippines’ Manufacturing Purchasing Managers’ Index (PMI), which surveys around 400 manufacturers, was 51.2, unchanged from the July reading. 

A PMI reading above 50 means stronger purchasing of raw materials, a leading indicator of future manufacturing activity.  PMI of below 50 heralds a contraction.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said it may take a few years before rate cuts have any real bearing on factory output.

“For one, monetary policy moves tend to filter through with a long lag. And second, the policy setting in the Philippines is still quite tight, even though rate cuts have entered the picture,” Mr. Chanco said in an e-mail.

Between May 2022 to Oct. 2023, the Monetary Board (MB) hiked borrowing costs by 425 basis points (bps) to tame inflation.

In its Aug. 15 meeting, the MB eased interest rates by 25 bps to 6.25%. The previous setting of 6.5% had been an over 17-year high.

“The real rate of interest — i.e., adjusted for inflation — is still very elevated at the BSP’s current setting, and will remain so if the Board pursues only gradual 25 bp adjustments,” Mr. Chanco said.

BSP Governor Eli M. Remolona, Jr. has cited the possibility of another 25-bp cut in the fourth quarter. Only two MB meetings are left for this year — Oct. 17 and Dec. 19.

A less restrictive policy environment is expected to fuel demand and spending, which would benefit industries like manufacturing.

Manufacturing activity in the medium term will be driven by the global demand for electronics. However, external demand may remain muted, Ms. Taguchi said.

According to S&P Global, the Philippines’ export sales in August fell for the first time since the year began, signaling weak foreign demand.

The Philippine Statistics Authority reported that exports of electronic products grew 2.5% to $23.88 billion at the end of July. This accounted for 56% of total exports for the period.

In July, electronic exports fell 11.9% to $3.25 billion and accounted for 52.1% of total exports for the month.

Ms. Taguchi also cited the Global Manufacturing PMI, which came in at 49.5 in August from 49.7 in July.

“These indicators suggest a notable upturn in external demand in the coming months is unlikely,” she said.

Southeast and East Asia supply more than 80% of the world’s semiconductors, the Asian Development Bank said earlier this year.

Delays in landing imports also affecting shipments of meat

PHOTO COURTESY OF ICTSI

PORT CONGESTION is also delaying the unloading of frozen meat, an importers group said, potentially adding another imported commodity to the list of items that cannot be brought to market promptly to mitigate high prices.

“One of the reasons for port congestion is that the containers are not released and unloaded (immediately),” Meat Importers and Traders Association President Emeritus Jesus C. Cham said.

Last week, Agriculture Secretary Francisco P. Tiu Laurel, Jr. cited the need for more ports to fast-track the landing of imported farm goods.

Mr. Cham added that the requirement that shipments bear the seals of the National Meat Inspection Service, and the Bureau of Customs have also caused further delays.

“(Now) they are talking about pre-border inspection, cross-border electronic invoicing, and then you have the cold examination facilities in agriculture (CEFA), these are additional (requirements),” he said.

The CEFAs are intended to ensure that imports are disease-free, and to mitigate the risks from smuggled farm goods.

All imported agri-fishery products are to undergo a 100% examination by the various food regulators overseeing animal industry, plant industry, fisheries and aquatic resources, and meat.

Meat imports rose 9.64% by volume year on year in the first half, led by pork, chicken, and beef, the Bureau of Animal Industry (BAI) reported.

Shipments of imported meat amounted to 647.75 million kilograms during the first six months.

Mr. Laurel has cited the congested ports as delaying rice imports from reaching the market, blunting the intended impact of lower tariffs in containing rice prices.

Mr. Laurel had called for the Philippine Ports Authority to fast track the release of container vans stalled in Manila. About 888 shipping containers holding about 20,000 metric tons of rice have not yet been released.

“The delay in releasing the imported rice has raised concerns over food security, especially as the country faces ongoing inflation pressures,” the Department of Agriculture (DA) said in a statement.

In June, President Ferdinand R. Marcos, Jr. signed Executive Order No. 62 which lowered the tariff on imported rice to 15% from 35% until 2028, citing the need to stabilize rice prices. The order took effect in July.

“It is doubtful whether the 20 million kilos or 20,000 MT in the pier has any impact on prices. It is less than 4% of the 530,000 MT that arrived in the July-August at 15% tariff; 96% of the arrivals are already out in the market,” Federation of Free Farmers National Manager Raul Q. Montemayor said via Viber.

Rice imports have totaled 3.01 million MT as of Sept. 12, according to data from the Bureau of Plant Industry.

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila, said that the delay in landing goods is due partly to importers waiting for more favorable prices.

“Importers seem to have contributed little to the price decreases as their goods are stuck in ports. If the government subsidizes the farmers, instead of lowering tariffs and improving port infrastructure, the rice producers and consumers are protected from these importers who wish to manipulate prices,” he said via Messenger chat.

Mr. Laurel has said that the DA is studying developing 17 ports with private partners that will specialize in handling agricultural shipments.

Mr. Montemayor added that prices could drop with the influx of palay (unmilled rice) during the dry season harvest.

 “It doesn’t make sense why they will hold on to these stocks when prices will foreseeably go down when new harvests come in,” Mr. Montemayor added.

“By January, we will have a lot of stocks because of the fresh harvests in September-November, plus imports at 15% (tariff).Prices will go down even without the tariff cut, not because of it,” he said.

The DA has said that the lower tariffs on rice would lead to a P5 to P7 per kilogram drop in imported rice prices. The impact on prices is expected to start showing up in mid-October, but more significant effects could be seen by January. — Adrian H. Halili 

Initial work starts on preparing three ports to serve offshore wind farms

STOCK PHOTO | Image by Insung Yoon from Unsplash

THE Philippine Ports Authority (PPA) has kicked off the process of repurposing three ports to service the nascent offshore wind (OSW) industry, according to the Department of Energy (DoE).

“The PPA has formally expressed its full support to the DoE to initiate the detailed engineering designs and take immediate steps to repurpose three priority ports to ensure that they are fully equipped to handle the installation, commissioning, and operational requirements of OSW projects,” the DoE said in a statement on Sunday.

The DoE has identified the Port of Currimao in Ilocos Norte, Port of Batangas in Sta. Clara, Batangas City, and Port of Jose Panganiban in Camarines Norte as priority sites due to their proximity to high-potential offshore wind energy service contracts (OWESCs).

The Port of Currimao is located near 13 OWESCs with a potential capacity of 9,489 megawatts (MW). Of the total, three service contracts are in the “advanced pre-development stage.”

The port in Batangas is close to 29 OWESCs with a total capacity of 24,300 MW, with six contracts in the permitting, licensing, and data gathering stages.

Situated close to 14 OWESCs, the Port of Jose Panganiban is expected to service wind farms with estimated capacity of 8,150 MW. Two projects in the area are in the advanced pre-development phase.

“The modernization of port facilities will not only accelerate OSW projects but also play a critical role in securing the country’s clean energy future and promoting economic growth,” Energy Secretary Raphael P.M. Lotilla said.

Mr. Lotilla said that the ports will serve as “vital logistical hubs” throughout the lifecycle of the offshore wind projects — from installation to commissioning and decommissioning.

Upgrading these facilities will ensure that the Philippines is prepared to satisfy the increasing demands of OSW, which should yield “significant contributions to energy security and economic stability,” he said. 

“The PPA (is) committed to working closely with the DoE to ensure the completion of port infrastructure upgrades and to help usher in a cleaner, more sustainable energy future for the country,” PPA General Manager Jay Daniel R. Santiago said.

Mr. Santiago said that the PPA will be responsible for carrying out the feasibility study and infrastructure development at the three ports.

To date, the DoE has awarded 92 offshore wind energy service contracts to 38 renewable energy developers with a total potential capacity of 66.101 gigawatts (GW).

According to the Philippine Offshore Wind Roadmap, the Philippines has a potential capacity of about 63 GW if it taps offshore wind resources. — Sheldeen Joy Talavera

BCDA, S. Korean agency in Clark development tie-up

THE Bases Conversion and Development Authority (BCDA) has entered a partnership agreement with South Korea’s National Agency for Administrative City Construction (NAACC) to develop New Clark City in Capas, Tarlac.

Under the partnership, BCDA and NAACC will collaborate in urban planning, smart city development, green energy, and smart administrative systems for the 9,450-hectare project.

“We at BCDA are very fortunate to have NAACC as our partner to facilitate knowledge exchange and link us with experts who can help us transform New Clark City as the Philippines’ alternative National Government hub,” BCDA President and Chief Executive Officer Joshua M. Bingcang said in a statement sent over the weekend. 

“Through this memorandum of understanding, we wish to replicate the successes and apply the lessons learned by Korea in relocating administrative agencies and national research and development (R&D) institutes to its administrative capital, Sejong City,” he added.

South Korea, through NAACC, set up satellite government administrative centers outside the capital to help ease congestion and overpopulation in metropolitan areas, which the BCDA hopes to emulate in New Clark City. 

“We hope that Korea’s experience in building the Administrative City will be helpful in transforming your former military base into a dynamic and vibrant new city,” NAACC Administrator Hyeong Ryeol Kim said.

Sejong is home to 40 central administrative agencies and 15 national research and development institutes.

The BCDA plans to host government agencies, housing projects, and sports facilities in its National Government Administrative Center (NGAC) in New Clark City.

In particular, the BCDA has engaged the Philippine Space Agency, the Bangko Sentral ng Pilipinas, the National Academy of Sports, and the Department of Science and Technology to put offices and key infrastructure in NGAC.

The signing of the agreement between BCDA and NAACC was conducted on the sidelines of the Global Infrastructure Cooperation Conference in Korea, in which the BCDA pitched investment opportunities in renewable energy, clean transportation, and smart city development. — Justine Irish D. Tabile