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CREATE MORE may improve Philippines’ credit rating and investment outlook

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By Kenneth Christiane L. Basilio, Reporter

THE PHILIPPINES is expected to receive an “A-level” credit rating and improved investment outlook from credit rating agencies by 2028 once “pro-investment” policies, such as the measure seeking to lower taxes on domestic and foreign companies, take effect, a congressman said on Monday.

“The global environment is challenging. High energy and food prices persist – and overall sentiment is gloomy, especially with China’s slowdown and continuing challenges in Europe,” Albay Rep. Jose Ma. Clemente S. Salceda said in a statement.

“And yet, the country’s prospects remain strong. This is in large part due to the President’s decisively pro-investment and fiscally responsible policies,” he added, citing the Corporate Recovery and Tax Incentives for Enterprises Maximize Opportunities Reinvigorating the Economy (CREATE MORE) bill.

The bill, as ratified by both Houses of Congress, lowers taxes on domestic and foreign firms to 20% from 25%. It will also allow fuel suppliers serving tax-exempt entities to be eligible for tax refunds; and local government units to set the local tax for registered business enterprises at up to 2% of gross income.

Mr. Salceda, who chairs the House Committee on Ways and Means, added he is working with President Ferdinand “Bongbong” R. Marcos, Jr. and Congress to push for “reforms to boost the capital and investment markets. That will grow our base further.”

“I’m sure we will get an upgrade in rating or outlook from one of the Big Three next year,” he said, referring to S&P Global Ratings, Moody’s Ratings and Fitch Ratings.

Mr. Salceda’s outlook is also supported by the country’s growing balance of payments surplus, which stood at $88 million in July from $62 million in June, tamed inflation, and timely approval of the 2025 budget.

“I think, before the end of PBBM’s term in 2028, the country will be at the A-level ratings,” he added.

In August, Moody’s affirmed the Philippines’ investment grade rating of “Baa2” and outlook as “stable;” while Japan-based credit watcher Rating and Investment Information Inc. last month upgraded the Philippines’ credit rating to “A-” from last year’s rating of “BBB+” with a positive outlook.

“As our biggest lender, investor, and trading partner, Japan understands this country’s fundamentals better than any other country in the world. And I’m sure the Big Three will follow, especially if growth tracks targets this year,” he said.

While the CREATE MORE could boost foreign investment and stimulate economic growth, the government should also address its national debt management and look at further developing the country’s financial sector, Security Bank Corp. Chief Economist Dan J. Roces said in a Viber message.

“A comprehensive approach that addresses various factors, including debt management, financial sector development, and sustainable practices, is essential for long-term success,” he said.

The government would also need to support its manufacturing and agriculture industries to boost the country’s per capita income, improving efforts to achieve a higher credit rating, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mpox poses low risk to SE Asia

AN ILLUSTRATION of mpox virus particles. — FRED HUTCH CANCER CENTER/HANDOUT VIA REUTERS

THE MPOX outbreak in Central and Eastern Africa poses low risks to Southeast Asian economies, but a major outbreak could hamper international travel, Fitch Solutions’ unit BMI said.

“Our view for Southeast Asia is that the risk is very low, for reasons including mpox being less contagious than other rapidly spreading infectious diseases, and availability of vaccines and other medical countermeasures,” Ben Yau, Pharmaceuticals & Healthcare Analyst at BMI, said in an e-mail.

World Health Organization Director-General Tedros Adhanom Ghebreyesus called mpox a “public health emergency of international concern” amid the recent surge of mpox cases in African countries.

Mpox can be transmitted through close contact, contaminated materials, or through infected animals.

Despite this, BMI noted that mpox is less contagious than diseases that spread globally like the coronavirus or the severe acute respiratory syndrome or SARS.

The mpox outbreak is also mainly contained in rural areas in Africa that are rarely traveled, it said.

“Travel to and from these regions is difficult and rare at the best of times, and local medical authorities have already launched screening efforts to prevent the spread of the disease to major urban centers (such as Kinshasa) or across international borders, BMI said in a report.

Further, policy makers now have access to vaccines and non-pharmaceutical interventions, decreasing risks of an mpox transmission, it added.

“Governments elsewhere in the world are in a much better starting position than they have been for previous health emergencies.”

However, a high-profile outbreak in major tourist destinations may still pose “greater economic costs,” BMI said, citing Morocco, Turkey, and the Gulf states as the most exposed.

“While widespread transmission outside of the currently affected areas is unlikely, it remains possible that a small but widely-publicized outbreak could cause some economic disruption by deterring international travel,” Mr. Yau said.

BMI noted that a large-scale outbreak in Qatar or the United Arab Emirates, which have direct flights to Rwanda and Uganda, may pose significant risk for economies dependent on international travel tourism, BMI said.

Other countries at risk of mpox exposure due to direct flights from African countries include France, Belgium, Egypt, United Arab Emirates, Netherlands, and India.

Local authorities’ response to a possible outbreak, as well as preexisting views on safety, would help prevent the transmission of mpox through travel, BMI said.

John Paolo R. Rivera, Senior Research Fellow at the Philippine Institute for Development Studies, said the Philippine government must bolster its information campaigns and review safety and hygiene protocols to prevent the spread of mpox.

“It (mpox) may hamper travel preferences and propensity as a reaction to the possibility of contracting the virus due to physical interaction,” he said in a Viber message.

The Philippines recorded 18 mpox cases as of Aug. 18, the Health Secretary Teodoro J. Herbosa said last week. — Beatriz Marie D. Cruz

RFID maintaining balance scrapped

PHILIPPINE STAR/MIGUEL DE GUZMAN

THE Toll Regulatory Board (TRB) on Monday said it had scrapped a policy mandating motorists to keep a P100 maintaining balance in their radio frequency identification (RFID) accounts.

The move would enable them to reload their toll accounts on a per-trip basis, TRB Executive Director Alvin A. Carullo said at a Palace briefing.

There were about 100,000 vehicles without RFID tags as of May 2024, accounting for 4.8% of motorists in the country, according to the TRB.

It said 3.6% of those who have installed RFIDs nationwide were not properly reloading their accounts, exacerbating queues at toll gates.

The Transport department on Sunday postponed the implementation of new tollway guidelines, including the imposition of fines on motorists with RFID and insufficient amount on their account, to 2025. — Kyle Aristophere T. Atienza

2% more drivers join new PUV plan

PHILIPPINE STAR/WALTER BOLLOZOS

THE RATE of industry consolidation under the Philippines’ transport modernization program saw a 2% increase since May, the government said, as jeepney drivers and operators held a nationwide strike.

Transport groups Manila and Piston on Monday said they were expecting 90,000 drivers and operators to join their two-day nationwide strike against the costly and long-delayed Public Utility Vehicle (PUV) modernization program, in a move that transport officials downplayed.

Separate photos from Manibela showed commuters in Pasig, Las Piñas, and Quezon City in Metro Manila and Dasmariñas City in Cavite province flocking to street sides to wait for a jeepney ride.

“The passengers are really miserable because of the abuses of the Department of Transportation (DoTR) and the Land Transportation Franchising and Regulatory Board (LTFRB),” Manibela said in its photo caption in Filipino.

LTFRB Chairperson Teofilo E. Guadiz III said at a Palace briefing on Monday that 83% of jeepney drivers and operators have consolidated or joined cooperatives under the modernization program.

“So, we have 17% [left],” he said, noting that such a figure does not necessarily represent drivers and operators who are against the consolidation policy. 

“We are talking of the groups, that’s more or less mga 5%.”

The Transport department in May reported an 81% consolidation rate, 61% of which or 30,561 jeepney units were in Metro Manila. The agency had said such a nationwide rate was enough to transit commuters in Metro Manila and other areas.

“On the ongoing transportation strike, we cannot turn our back to the vast majority of transport groups who understand and subscribe to the public transport modernization program,” Transport Secretary Jaime J. Bautista said at the briefing.

“The call of PISTON and Manibela to scrap the program is non-negotiable,” he said. “These two groups cannot be allowed to derail the program.”

He said the Transport department was working on instruction of Senate President Francis “Chiz” G. Escudero that “no one gets left behind.”

The senator advised the Department of Transportation earlier this month to keep reaching out to drivers and operators who did not heed its requirement for them to consolidate into cooperatives or corporations by April 30.

The agency “should continue to reach out to these groups and not close the door on them completely.”

At the 11 a.m. briefing, Mr. Guadiz downplayed the impact of the transport strike, saying reports of stranded people only showed ‘’regular traffic’’ situation on a Monday.

“I am glad to tell you that there were no stranded passengers due to the transport strike,”’ he said in Filipino, adding that only a few joined the transport strike.

A report by a commuter network showed police personnel barricading Monumento Circle in Caloocan City with their motorcycles and mobiles.

There were 11 strike centers in Metro Manila.

Mr. Guadiz said the government was prepared to provide free rides and that the Philippine police forces were ready to “ensure peace and order.”

“So as of this time, no one got stranded.” — Kyle Aristophere T. Atienza

CoA to draft revised auditing code

PHILIPPINE STAR/ MICHAEL VARCAS

THE COMMISSION on Audit (CoA) on Monday said it plans on wrapping up consultations with senators on a proposal to revise the government auditing code with the aim to boost transparency in state procurement before Congress goes on break on Sept. 28.

“Before the break we will come up with the final draft of the bill,” CoA Chairperson Gamaliel A. Cordoba told a Senate finance committee hearing on the agency’s proposed P13.42 billion budget next year.

“We are putting it together so that the other parts of the Procurement Act may be part of our scope,” he added in mixed English and Filipino.

He said his agency and the Senate committee on constitutional amendments and revision of codes would ensure the new auditing code would complement the recently signed New Government Procurement Act, which streamlines government procurement to 27 days from 120 days.

It will also establish new modes of procurement that will allow the direct purchase of goods from suppliers with a good track record, and the direct purchase of goods used for research and development.

Senate Bill No. 2764, the Revised Government Auditing Act, bars cash transfers between government agencies unless specified under a memorandum of agreement. It also seeks to set up a program allowing civil society organizations to assist state auditors in evaluating and monitoring government projects in remote and critical areas. — John Victor D. Ordoñez

SEC opens Koronadal office

THE Securities and Exchange Commission (SEC) recently inaugurated a new extension office in Koronadal City, South Cotabato to strengthen its services in Mindanao.

The extension office, opened on Sept. 20, is on the second floor of the South Cotabato Gymnasium and Cultural Center along Alunan Avenue, the corporate regulator said in an e-mailed statement on Monday.

“The inauguration of the SEC Koronadal extension office marks our fifth extension office in the Mindanao region, bringing us closer to our goal of expanding our services to growing business hubs in the country,” SEC Chairperson Emilio B. Aquino said.

“The commission recognizes the need for our services to be more accessible and convenient to encourage entrepreneurs to take advantage of the corporate vehicle in setting up their business, so that they be contributors to overall economic growth,” he added.

According to the SEC, the new extension office will provide easier access to services such as company registration and compliance monitoring, and investor education activities.

Businesses and investors in Soccsksargen (South Cotabato, Cotabato, Sultan Kudarat, Sarangani, and General Santos) can now head to the Koronadal extension office instead of going to Davao City for their transactions.

Other SEC extension offices can be found in Baguio, Tarlac, Legazpi, Cebu, Bacolod, Iloilo, Tacloban, Zamboanga, Davao, and Cagayan de Oro. — Revin Mikhael D. Ochave

21 Blaan families get pigs, feeds

REUTERS

KORONADAL CITY — Blaan chieftains were elated with the inclusion of 21 more families in nearby Tampakan, South Cotabato as beneficiaries of a joint pig-raising project of their tribal council, local officials and a private company.

Radio reports here on Monday quoted the Blaan leader Domingo N. Collado, an appointed indigenous people’s mandatory representative to the Tampakan Sangguniang Bayan, as saying that the families were given piglets vaccinated against African Swine Fever and feeds under the joint livelihood program of tribal leaders, municipal officials and the Sagittarius Mines, Inc. (SMI).

The project is part of efforts of tribal leaders, municipal officials and the SMI to generate livelihood for marginalized families in ancestral lands in Tampakan and in three other towns nearby, Columbio in Sultan Kudarat, Malungon in Sarangani, and Kiblawan in Davao del Sur.

The SMI was contracted by the national government to operate the Tampakan Copper-Gold Project starting 2025. It will cover Blaan domains in Tampakan and in Columbio, Malungon, and Kiblawan. Experts in the central office of the Department of Environment and Natural Resources and mining engineers from Europe had placed at no less than US$ 200 billion their least estimate of the value of copper and gold deposits in Tampakan, awaiting exploration.

The project, supported by the multi-sector, interagency Regional Development Council 12, has written permission from Blaan tribal councils in South Cotabato and from the National Commission on Indigenous Peoples. — John Felix M. Unson

Cannabis couriers seized in Kalinga

ELSA OLOFSSON-UNSPLASH

BAGUIO CITY — Two alleged couriers attempting to smuggle out P6 million worth of marijuana were flagged by authorities on Sunday at a checkpoint in Lubuagan, Kalinga.

Policemen said the two suspects were flagged down during regular peace and order operations in the area and noticed suspicious bags at the passenger side of the vehicle.

Fifty marijuana bricks were found inside the duo’s vehicle, prompting the arrest. It also included a tubular form of dried marijuana leaves and stalks wrapped with transparent plastic, weighing 51 kilos.

The marijuana seized from the suspects has a combined value of P6,120,000.

The duo, whose identities were not disclosed by authorities, will be slapped with illegal drug charges. — Artemio A. Dumlao

Rice buildup in port could mean holdout for better prices — PPA

BW FILE PHOTO

By Kyle Aristophere T. Atienza, Reporter

HUNDREDS of containers bearing rice remain unclaimed in port, with the port regulator saying that importers may be awaiting better market prices or trying to save on warehousing costs.

Speaking at a Palace briefing, Philippine Ports Authority (PPA) General Manager Jay Daniel Santiago acknowledged the possibility that importers were timing their withdrawals of rice from the Manila International Container Terminal with an eye towards market prices and storage costs.

Market conditions are at the moment not favorable to importers because of government efforts to lower rice prices, including the reduction in tariffs, he noted.

Mr. Santiago said the shipments that had been overstaying totaled 888 containers, of which 300 were claimed this weekend after the authorities warned that shipments were building up.

Mr. Santiago added that the ports are not congested. He was addressing claims that the slow unloading of imported rice shipments is delaying the expected fall of rice retail prices, foiling government plans to contain inflation.

Mr. Santiago noted that keeping containers in port is cheaper than holding shipments in private warehouses.

“Because of our exposition of overstaying containers of rice, 300 containers were pulled out by their consignees at the weekend,” Mr. Santiago said.

He said options for the disposal of the shipments deemed abandoned by the Bureau of Customs include auction or donation to government agencies like the Department of Social Welfare and Development.

Some of the shipments will be declared abandoned starting Oct. 1, he said.

Agriculture Undersecretary Arnel V. de Mesa said the 888 containers held about 23,000 metric tons (MT) of imported rice, equivalent to 0.75% of all imports so far this year.

Imports in the year to date amounted to 3,093,000 MT.

“This is just a small amount, but if we look at the absolute value, this is still 23,000 metric tons,” Mr. De Mesa said.

The Bureau of Customs at the weekend said only 630 containers of rice remained at the port, noting that none of the shipments still unclaimed were staying in excess of 30 days.

Mr. Santiago cited instances of containers remaining in port for as long as 275 days.

The government will monitor other commodities like pork, chicken, and onions to ensure they are not overstaying, Mr. De Mesa said. 

Agriculture Secretary Francisco Tiu Laurel, Jr., has said that the delayed release of rice imports from ports was a factor in the delayed fall in rice prices.

The government aims to reduce rice prices by P5 to P7, in part by bringing in cheaper imports.

Inflation eased to 3.3% last month from 4.4% in July, as food price growth moderated while transport costs declined.

The share of rice in inflation fell to 14.7% from 20.9% in July and 22.5% in June.  It remained the largest component of inflation in August.

House to adopt Senate version of VAT refunds for tourists measure

PHILSTAR FILE PHOTO

THE House of Representatives will adopt the Senate’s version of a measure allowing tourists to claim value-added tax (VAT) refunds, with a legislator citing “direct instructions” from President Ferdinand R. Marcos, Jr. to expedite the bill’s approval.

The House’s version was deemed to contain “no substantial or fundamental differences with the House version,” Albay Rep. Jose Ma. Clemente S. Salceda said.

Both House Bill No. 7292 and Senate Bill No. 2415 allow a VAT refund on P3,000 worth of goods provided they are taken out of the country within 60 days.

The Senate version adds that the P3,000 threshold is subject to a review every three years by the Finance department, with the department required to employ the services of “reputable, globally recognized, and experienced VAT refund operators” to establish the refund system.

“We are very amenable to the Senate version, which doesn’t really deviate much from the House version,” he said in a statement. 

As such, the measure will no longer require a bicameral conference committee to convene to harmonize both chambers’ versions.

Mr. Salceda, who heads the House ways and means panel, said he will recommend to Speaker and Leyte Rep. Ferdinand Martin G. Romualdez for the chamber to adopt the measure in plenary.

The measure’s approval is expected to spur tourist spending, according to Mr. Salceda.

“Together with more modern airports and investments in the hospitality sector, we hope that the VAT refund for tourists will boost the country’s bid for more tourist dollars,” he said.

“It’s part of a comprehensive strategy to bolster tourism. We are anticipating NAIA (Ninoy Aquino International Airport) improvements with the privatization, as well as the new Bulacan Airport,” Mr. Salceda said.

The government could apply the tourist VAT refund system to other taxes, should the chosen provider do a “great job,” he said. He raised the prospect of helping the government improve its performance in VAT refunds overall. — Kenneth Christiane L. Basilio

PSEi rallies to 7,400 level after jumbo RRR cut

BW FILE PHOTO

THE MAIN INDEX surged to the 7,400 level on Monday, notching its best finish since February 2022 and marking its return to bull market territory, after the Bangko Sentral ng Pilipinas (BSP) announced a jumbo cut in banks’ reserve ratios.

The Philippine Stock Exchange index (PSEi) rose by 2.27% or 164.93 points to end at 7,417.25 on Monday, while the broader all shares index gained by 1.6% or 62.40 points to finish at 3,958.02.

This was the PSEi’s best close in 31 months or since it finished at 7,440.91 close on Feb. 22, 2022. It was also the first time the index ended above the 7,400 mark since March 2022.

“The benchmark index continued its very bullish momentum to close at its highest level since February 2022 on the back of the BSP’s significant reduction of the reserve requirement ratio (RRR) and strong foreign fund flows,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

He added that the PSEi is now in bull market territory as it is now up by more than 20% from the 52-week low of 6,158.48 logged on June 21, 2024.

“The market is technically overbought and we expect a pullback very soon,” Mr. Colet said.

The BSP on Friday said it will reduce the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 basis points (bps) to 7% effective on Oct. 25.

It will also cut the RRR for digital banks by 200 bps to 4%, while the ratio for thrift lenders will be reduced by 100 bps to 1%. Rural and cooperative banks’ RRR will likewise go down by 100 bps to 0%.

“The local bourse opened the week above 7,400 ahead of key data releases. In the US, the durable goods report on Thursday and the core personal consumption expenditures inflation report on Friday will be closely monitored for inflation signals,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Several Federal Reserve officials are also set to speak, potentially providing insights into monetary policy,” he said.

Almost all sectoral indices closed higher on Monday. Financials climbed by 3.68% or 84.05 points to 2,362.18; services surged by 2.01% or 44.72 points to 2,264.75; holding firms increased by 1.95% or 120.65 points to 6,297.69; property went up by 1.71% or 50.02 points to 2,961.74; and industrials inched up by 1.06% or 102.93 points to 9,747.52.

Meanwhile, mining and oil inched down by 0.01% or 1.04 points to 8,527.22.

Value turnover declined to P8.72 billion on Monday with 698.15 million issues changing hands from the P16.98 billion with 1.09 billion shares traded on Friday.

Advancers outnumbered decliners, 121 versus 93, while 52 names were unchanged.

Net foreign buying went up to P1.77 billion on Monday from P1.28 billion on Friday. — Revin Mikhael D. Ochave

Peso slumps on fresh geopolitical concerns

BW FILE PHOTO

THE PESO slumped against the dollar on Monday to end near the P56 level due to renewed geopolitical concerns as the conflict between Israel and Hezbollah continued.

The local unit closed at P55.97 per dollar on Monday, falling by 28 centavos from its P55.69 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened stronger at P55.67 against the dollar, which was already its intraday best. Its worst showing was at its closing level of P55.97 versus the greenback.

Dollars exchanged went down to $1.39 billion on Monday from $1.67 billion on Friday.

“The dollar-peso pair traded higher on towering risk sentiment over geopolitical tensions after Hezbollah launched rockets into Israel on Sunday and ahead of the US PCE (personal consumption expenditures) report later this week,” a trader said by phone.

Higher global crude oil prices and US Treasury yields also dragged the peso down on Monday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Tuesday, the trader sees the peso moving between P55.60 and P56.10 per dollar, while Mr. Ricafort expects it to range from P55.85 to P56.05.

Israeli Defense Minister Yoav Gallant said the public must be calm after the military launched its most widespread wave of air strikes against Iran-backed Hezbollah, targeting Lebanon’s south, eastern Bekaa valley and northern region near Syria, Reuters reported.

Earlier, Israeli army spokesperson Avichay Adraee said that air strikes on houses in Lebanon, in which “Hezbollah-hid weapons” are imminent.

The latest attacks came amid some of the heaviest cross-border exchanges of fire in almost a year of conflict raging alongside the war between Israel and Hamas in Gaza.

Israeli warplanes carried out an intense wave of air strikes on towns along Lebanon’s southern border and even further north on Monday morning, according to Reuters witnesses.

A rocket hit an uninhabited mountainside east of the Lebanese port city of Byblos on Monday, a resident and Lebanese state media said, in an area that has not previously been hit by airstrikes. The area falls between Christian and Shi’ite villages.

Hezbollah’s al-Manar television reported Israeli airstrikes targeting the outskirts of many towns and villages in the south and the Bekaa Valley in eastern Lebanon. Footage showed columns of smoke rising over the south.

In addition to striking the Bekaa Valley region of eastern Lebanon, warplanes also carried out airstrikes on the Hermel area in northern Lebanon, Hezbollah’s al-Manar reported.

Hezbollah and Israel exchanged heavy fire into Sunday, as the Lebanese militant group sent rockets deep into northern Israeli territory after facing intense bombardment.

Hezbollah has come under intense pressure since thousands of pagers and walkie-talkies used by Hezbollah members exploded on Tuesday and Wednesday.

The attack, an unprecedented breach of security, was widely blamed on Israel, which has not confirmed or denied responsibility. — A.M.C. Sy with Reuters

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