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Philippines, Japan foreign and defence ministers to meet July 8 in Manila

PHILSTAR FILE PHOTO

MANILA – The Philippines and Japan will hold a 2+2 foreign and defense ministerial meeting in Manila on July 8 to discuss regional defense and security matters, Manila’s foreign ministry said on Friday, amid increasing tensions in the South China Sea.

Japanese Foreign Minister Yoko Kamikawa and Defense Minister Minoru Kihara will meet with their Philippine counterparts, Enrique Manalo and Gilberto Teodoro Jr, the foreign ministry said in a statement.

“The four ministers are expected to discuss bilateral and defense and security issues affecting the region, and exchange views on regional and international issues,” the ministry said.

The 2+2 Foreign and Defense Ministers Meeting is the highest consultative mechanism between the Philippines and Japan. The first 2+2 meeting was held in 2022 in Tokyo.

The meeting comes as the Philippines and Japan are negotiating a reciprocal access agreement (RAA) that would allow their respective militaries to visit each other’s soil.

The Philippines has been ramping up its ties with neighbors and other countries to counter what it describes as China’s growing aggression in the South China.

In February 2023, Philippine President Ferdinand Marcos Jr. and Japanese Prime Minister Fumio Kishida agreed in Tokyo that their militaries would cooperate on disaster relief, a deal that paved the way for RAA negotiations with Japan. – Reuters

Fujifilm once struggled to sell cameras. Now, it can’t keep up with demand

STOCK PHOTO | Image by Annie Spratt from Pixabay

TOKYO – For years, Japan’s Fujifilm pivoted away from its legacy camera business to focus on healthcare. But thanks in large part to the TikTok crowd, its retro-themed X100 digital cameras are now a roaring success, boosting its bottom line.

Fujifilm is struggling to meet demand for the $1,599 camera, prized by young 20-something social media fans for its looks and high-end functions.

The X100V model was so popular that in the fiscal year ended in March, it was the imaging division, which includes cameras, that was the biggest contributor to the company’s record-high profit – the unit accounted for 37% of operating profit in fiscal 2023, versus 27% the year before.

After it sold out last year, the company increased production in China to double the launch volume for the VI that debuted in March, said Yujiro Igarashi, manager of Fujifilm’s professional imaging group. He declined to give details about the production increase, or unit sales.

“We found that the orders far exceeded our forecast,” Mr. Igarashi said. “In that sense, I was surprised that although we doubled our preparations, it still came up short.”

Founded 90 years ago, Fujifilm competed against film industry leader Kodak for decades before finally overtaking it in sales in 2001. But the triumph proved short-lived, as the film industry soon collapsed and digital cameras became a standard feature in mobile phones.

To survive, Fujifilm tapped its expertise in film chemicals to shift into healthcare applications, a strategy also adopted by domestic competitors Canon and Olympus. Fujifilm didn’t give up on its cameras, but it cut 5,000 jobs in its film division and moved most production to China the following year.

During the COVID years, Fujifilm doubled down on antiviral pills and vaccine operations, but now the cameras have put it back into the spotlight.

The company projects imaging sales growth to slow to 2.2% in fiscal 2024 from 14.5%, while operating profits in the segment are expected to dip 1.9%, estimates analysts say are conservative at best.

“We see downside risk to guidance for healthcare and business innovation, but major upside for imaging,” wrote Jefferies analyst Masahiro Nakanomyo in June 6 report.

 

SAY CHEESE

The X100 was born in 2011 in an attempt to rescue Fujifilm’s professional grade camera division, but its appeal is rooted in nostalgia, camera enthusiasts say.

“The look of it was pretty revolutionary, which is ironic, because it’s just mimicking a film camera,” said Mark Condon, founder of the camera equipment site Shotkit.

A key concept in retro tech is “friction”, where the user is joined with the product through physical touch and interaction, according to Tokyo-based culture writer W. David Marx.

“Smartphones make it so easy to take photos that photos have been devalued,” said Mr. Marx, author of “Status and Culture”.

“By having physical cameras again, and having to develop film etc., it adds back friction, which adds back a sense of value to casual photo taking.”

As travel restarted after the pandemic, demand for cameras shot up, and influencers on Instagram, TikTok and other social media sites turned the X100 into a status symbol.

“It is important to have a good looking camera that inspires you to want to take it out and shoot with it,” said Benjamin Lee, who goes by @itchban on TikTok where he has more than 600,000 followers. “The X100 series is basically a fashion accessory you wear, on top of being a great camera.”

Availability remains a problem.

Second-hand X100s sell for multiples of their list price on auction sites and there are online message boards for fans waiting for orders.

Fujifilm chief executive Teiichi Goto hinted last month he was happy to keep supply tight, pointing to Germany’s Leica brand cameras as a model for maintaining premium value.

“It would be quite unfortunate to manufacture too much and lower the price,” Mr. Goto said at the company’s year-end earnings presentation on May 9.

But the long waitlists and steep prices may drive customers to competitors, such as Canon’s G7X and Ricoh’s GR series, influencer Lee said. This week, Ricoh also announced the launch of its first film camera in about 20 years, the Pentax 17.

Imaging group manager Mr. Igarashi acknowledged that production volumes were a hurdle, but the design and complexity of the X100 make it hard to manufacture at scale.

“We’re trying really hard to increase the number of people, the number of production lines, and so on, but it’s not taking off as quickly as you would think,” he said. – Reuters

Evaluating current prospects of the Philippine economy

Photo from Freepik / storyset

By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor

Though the Philippine economy remained robust in the face of global headwinds last year, for many, expectations had been tempered regarding its prospects. For the whole year, gross domestic product (GDP) growth was recorded at 5.6%, failing to meet the lower end of the government’s annual target of 6%. If the historic decline of 9.5% in 2020-pandemic year were to be discounted, 2023 was the slowest growth the economy has had since 2011.

The sentiment bled up to the first quarter of 2024, with the Bangko Sentral ng Pilipinas (BSP) noting that business sentiment in the country turned less upbeat as the overall confidence index (CI) declined to 33.1% from 35.9% in Q4 2023.

“This is reflective of the combined decrease in the percentage of optimists and increase in the percentage of pessimists. The Q1 2024 CI turned less buoyant due mainly to the firms’ concerns over the: (a) post-holiday decline in demand for goods and services, and slowdown in business activities, (b) persistent inflationary pressures stemming from higher food and oil prices, and its impact on the economy, (c) stiff competition, and (d) adverse effects of a strong El Niño event in 2024 on the agriculture sector,” the central bank said in a statement in April.

Cautious optimism seems to be the play for many, as the BSP noted that in the second quarter of 2024, businesses are expecting better prospects in general as the confidence index jumped to 48.1% from 38.2% in the last survey of 2023. More demand for products and services, more project completions due to a better business environment, seasonal boosts in tourism and fisheries, expansions, and lower inflation are all reasons behind this confidence.

Looking further ahead to the next year, the outlook is also much brighter, with the confidence index rising to 60.8% from 54%. This upbeat sentiment is driven by expectations of steady high demand, favorable economic conditions, continued low inflation, business expansions, and lower interest rates.

For the financial industry, banks in particular, opportunities are simmering just below the surface. Global credit ratings agency Fitch Ratings has recently revised the Philippine banking sector’s outlook to improving from neutral, with the firm expecting banks to be able to preserve their record-high net interest margins for longer due to a delay in policy rate cuts.

“This, coupled with a sustained rise in higher-yielding consumer lending and rollout of key infrastructure projects, is likely to buoy banks’ revenue prospects for the rest of 2024. Meanwhile, we believe the extension in higher interest rates will have a manageable impact on the sector’s asset quality given the resilient economy, with Fitch projecting GDP growth of 5.8% in 2024,” the agency said.

Development Bank of the Philippines (DBP) President and Chief Executive Officer Michael O. de Jesus held the same sentiment, saying in an interview that the Marcos administration’s ambitious infrastructure spending plans for the year, including a significant allocation of P1.5 trillion for 2024, highlight the banking sector’s role in financing vital projects such as transportation networks and utilities.

“These investments not only stimulate economic growth but also drive demand for financial services, ranging from project financing to construction loans. Additionally, supporting the expanding manufacturing sector, which recorded robust growth drive by electronics and food products, allows banks to facilitate growth through tailored financial solutions like working capital and expansion loans,” he told BusinessWorld.

Other sectors are also emerging as promising investment opportunities for Philippine banks, such as renewable energy, manufacturing, and the time-tested IT-BPM industry.

“Initiatives in renewable energy, aiming for a substantial share in the power generation mix by 2030 and 2040, offer banks stable investment prospects in solar, wind, and hydroelectric projects, aligning with global trends towards sustainable finance,” he said.

“The dynamic IT-BPM sector, forecasted to grow annually by 7%-8%, presents banks with opportunities to finance technological advancements and expansion initiatives. By offering specialized financial products and services tailored to the sector’s needs, banks can harness this growth momentum to foster innovation and cater to evolving market demands.”

Digital-driven momentum

Another factor playing to the financial industry’s favor is the considerable momentum the Philippines has gathered with regards to its digitalization efforts. Driven by the significant mobile phone and internet penetration among the Filipino population, alongside the rise of digital payment and e-wallet platforms, financial services are more accessible than ever, allowing the unbanked and underbanked to conduct transactions without traditional bank accounts.

“Banks like DBP are actively leveraging digital innovation to expand reach and cater to underserved segments through mobile apps, partnerships with fintechs for solutions like e-wallets, digital lending, and remittances. However, the urban-rural digital divide persists, with many rural areas lacking reliable connectivity and infrastructure,” Mr. de Jesus said.

“Continued efforts in digital literacy, financial education, and collaboration between banks, fintechs, and government are needed to bridge gaps and ensure that inclusive financial services reach the remote communities. While progress has been made, further innovation is required for truly inclusive financial digitalization across the country,” he added, particularly regarding improvements to mobile internet and telecommunications infrastructure for the most remote and far-flung communities of the country.

Banking at a turning point

While significant challenges remain ahead of the Philippine financial industry, such as the sustained high interest rate of 6.5% to curb inflation, heightened geopolitical tensions, and weak growth in economies like China impacting global commodity prices and export-oriented industries, Mr. de Jesus pointed out that the industry itself is at a turning point.

“In the next five years, the Philippine financial industry is set to undergo significant evolution drive by technological advancements and changing consumer behaviors. Digital banking will emerge as a pivotal capability for financial institutions, enhancing customer experience and operational efficiency. As customers increasingly demand for seamless and accessible banking services, the industry will intensify its digital transformation efforts, leveraging technology to remain competitive and meet evolving expectations,” he said.

Technologies will continue to disrupt and leave lasting effects. Generative AI, for instance, can transform financial services by improving customer interactions and backend operations, personalizing customer experiences and streamlining processes like fraud detection and risk management in digital payments. Additionally, there is a growing focus on sustainable finance, driven by regulatory demands and increased consumer awareness. Banks are now incorporating environmental, social, and governance (ESG) criteria into their operations and products, aligning with global trends and creating opportunities for innovation through responsible investing and green financial products.

“Thus, the Philippine financial industry’s trajectory over the next five years will be defined by its embrace of digitalization, the transformative potential of AI technologies, and a commitment to sustainable finance. Banks that adeptly navigate these shifts will not only enhance their market position but also contribute positively to economic growth and societal development in the Philippines.”

DBCC proposes P6.35-trillion budget for 2025

PHILSTAR

THE Development Budget Coordination Committee (DBCC) is proposing a P6.352-trillion national budget for 2025, a 10% increase from this year’s P5.768-trillion budget.

The National Government’s (NG) spending plan for 2025 is equivalent to 22% of gross domestic product.

“We will present it to the full Cabinet on July 2 and to Congress on July 29. That’s one week after the State of the Nation Address (July 22),” Budget Secretary Amenah F. Pangandaman said in a media briefing.

In April, the DBCC had projected a P6.2-trillion budget for 2025.

The DBM said the government needs a bigger budget to fund the midterm elections in May, noting that the allowances for election volunteers.

The teaching allowance was also increased to P10,000 from P5,000 under the recently signed Republic Act No. 11997 or the Kabalikat sa Pagtuturo Act, hence the need to increase next year’s spending, Ms. Pangandaman said.

Also included in next year’s budget is the expansion of the Pantawid Pamilyang Pilipino Program (4Ps) to include a first 1,000-day grant for beneficiaries who are pregnant, lactating with two-year old children.

Ms. Pangandaman attributed the increase in the budget to the higher National Tax Allotment (NTA) collections after the pandemic.

NTAs are the 40% share of the NG from three years back, which means collections for next year are based on government revenues in 2022.

Local government units are expected to receive P1.034 trillion in NTAs for next year, the DBM said earlier.

Sectors that are expected to receive higher allocations include education, health, social protection, agriculture, infrastructure, digitalization, and climate-related projects, the Budget chief said.

“In evaluating the agencies’ budget proposals for fiscal year 2025, DBM considered several factors such as the availability of fiscal space, implementation-readiness of programs and projects, agency absorptive capacity, and alignment with expenditure directions,” the DBCC said in a separate statement.

Programs under the three-year Rolling Infrastructure Program, Information Systems Strategic Plan, and the Program Convergence Budgeting were also given budget priority, it added. –– BMDC

BSP stands pat, signals rate cut in Aug.

Workers unload vegetables at a street market in Manila. The Philippine central bank lowered its average baseline inflation forecast for 2024 to 3.3% from 3.5% previously. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) kept interest rates steady for a sixth straight meeting on Thursday but signaled that a rate cut at its next meeting in August is “somewhat more likely than before,” with up to 50 basis points (bps) in easing likely this year.

The Monetary Board on Thursday left its target reverse repurchase rate unchanged at 6.5%, the highest in over 17 years. This was in line with the expectations of all 15 analysts in a BusinessWorld poll last week.

Interest rates on the overnight deposit and lending facilities were also maintained at 6% and 7%, respectively.

Mr. Remolona said he expects inflation to further ease in the second semester with the implementation of lower tariffs on rice. 

“The balance of risks to the inflation outlook has shifted to the downside for 2024 and 2025 due largely to the impact of lower import tariffs on rice under Executive Order (EO) No. 62,” he said at a press briefing.

“If sustained, an improvement in the inflation outlook would allow more scope to consider a less restrictive monetary policy stance.”

President Ferdinand R. Marcos, Jr. earlier this month signed EO 62 which slashed tariffs on rice imports to 15% until 2028 to tame rice prices.

Mr. Remolona said that inflation is “moving closer” to the midpoint of its 2-4% target, adding that expectations are still well-anchored.

The central bank slashed its risk-adjusted inflation forecast for this year to 3.1% from 3.8% previously. It also cut its risk-adjusted estimate for 2025 to 3.1% from 3.7% earlier.

Meanwhile, it lowered its average baseline inflation forecast for 2024 and 2025 to 3.3% and 3.1%, respectively, from 3.5% and 3.3%, previously.

“Nonetheless, higher prices of food items other than rice, transport charges, and electricity rates continue to pose upside risks to inflation,” Mr. Remolona said. “Meanwhile, prospects for domestic output growth remain in line with medium-term trends amid favorable labor market conditions and strong net exports.”

He said the Monetary Board is “on track” to cut rates when it next meets on Aug. 15. This will likely be ahead of the US Federal Reserve which earlier signaled it may start easing in December.

“Last time I said we’re still hawkish, but less so. We’re basically in the same position now. Somewhat more dovish than before,” Mr. Remolona said.

The BSP could cut rates by 25 basis points (bps) in the third quarter and by another 25 bps in the fourth quarter, he added.

The Monetary Board’s Aug. 15 review is its only meeting in the third quarter. Meanwhile, its last two reviews for the year will be held in the fourth quarter and are scheduled on Oct. 17 and Dec. 19.

TOO EARLY TO CUT?
Analysts noted the more dovish signals from the BSP compared with its previous meetings.

“Tellingly, the read-out this time didn’t contain any language about how policy needs to be ‘sufficiently tight,’ saying instead that an improvement in the inflation outlook going forward would allow for some scope for policy to be ‘less restrictive,’” Pantheon Chief Emerging Asia Economist Miguel Chanco said in an e-mail note.

HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay in a note said that the BSP’s tone is “perhaps slightly more dovish, not closing the possibility of it cutting ahead of the Fed.”

“We even think the BSP was even more confident than last time, reflecting the fact that monetary policy in the Philippines may be becoming more independent from the Fed, even if partially,” he added.

However, Mr. Dacanay said that August may still be too soon to loosen policy reins.

“We do not think inflation will be soft enough by the August meeting with the rice tariff rate cut needing time to work its way in reducing prices,” Mr. Dacanay said.

ANZ Research said in a report that it may be too early to cut rates as inflation is still hovering near the upper bound of the 2-4% target as “upside risks from food prices continue to linger.”

ANZ said it expects the central bank to start cutting rates in early 2025, “if inflation consistently moves towards the midpoint of the official target range in the first quarter of 2024.”

Meanwhile, Mr. Chanco still expects that the BSP will cut by 25 bps in August, in line with the BSP’s outlook.

“Our core view still is that the Board will start a gradual normalization of policy in August with a 25-bp rate cut, following this on with similar-sized reductions in the October and December meetings,” he added.

PESO INTERVENTION
Meanwhile, Mr. Remolona said the central bank is “occasionally” intervening in the peso.

“We’ve been watching the peso. We don’t want it to depreciate too sharply. We occasionally intervene. I think today (Thursday) we did intervene. We don’t want it to depreciate too sharply,” Mr. Remolona said.

The peso closed at P58.75 per dollar on Thursday, strengthening by 11 centavos from its P58.86 finish on Wednesday. Its close on Wednesday was its weakest finish in over 20 months.

However, Mr. Remolona said that the peso’s effect on inflation is “not very large.”

“We think the pass-through, which is what we call the effect of depreciation on inflation, is estimated at 0.036 percentage points (ppt) per one percent depreciation (of the) peso. Since the beginning of the year, the peso has depreciated by 5.7%. So, 5.7% against 0.036 ppt, that adds up to a total of about 0.2% in inflation.”

Mr. Remolona said that the central bank is active in intervening when it “senses stress in the market.”

“But mostly we come in to slow down the tendency of the peso to depreciate sharply. We don’t come in every day,” he added.

The Development Budget Coordination Committee on Thursday raised its foreign exchange rate assumption to a range of P56-P58 this year, a higher band than its P55-P57 range previously.

NG budget gap widens in May

BW FILE PHOTO

THE NATIONAL Government’s (NG) budget deficit widened in May as spending growth outpaced revenues, the Bureau of the Treasury (BTr) said.

The NG’s budget gap ballooned by 43.1% to P174.9 billion in May from P122.2 billion in the same month a year ago.

Month on month, this was a reversal of the P42.728-billion surplus in April.   

National Government Fiscal Performance“The higher deficit resulted from an acceleration in government spending, pushing disbursement growth for the month to 22.24%, as against revenue expansion of 14.59%,” the BTr said.

In May, state expenditures jumped by 22.24% to P557 billion from P455.7 billion a year ago.

The BTr said this was due to the implementation of capital outlay projects of the departments of Public Works and Highways and National Defense and the social and health programs of the departments of Social Welfare and Development and Health.

“The higher National Tax Allotment shares of LGUs and increased budgetary support to GOCCs (government-owned and -controlled corporations) also contributed to the notable growth of disbursements in May,” it added.

Broken down, interest payments climbed by 47.78% year on year to P61.1 billion due to “additional debt incurred last year and higher interest rates of both domestic and foreign borrowings.”

Primary spending — which refers to total expenditures minus interest payments — rose by 19.69% year on year to P495.9 billion.

Meanwhile, revenues jumped by 14.59% to P382.1 billion in May from P333.4 billion in the same month in 2023.

“The robust outturn for the month was underpinned by higher nontax collections,” the BTr said.

Nontax revenues nearly doubled to P78.2 billion in May from P39.4 billion a year prior.

BTr income surged by 181% to P70.2 billion “due to higher collections from interest on advances from GOCCs, guarantee fees, and the NG share from Philippine Amusement and Gaming Corp. (PAGCOR) income.”

On the other hand, revenue from other offices declined by 44.38% to P8 billion in May.

“The collections from other offices (nontax) including privatization proceeds and fees and charges for May dropped by 44.38% due to the reclassification of accounts from the previous months’ transactions,” it added.

Meanwhile, tax revenues went up by 3.35% to P303.9 billion in May from P294 billion a year ago.

The Bureau of Internal Revenues (BIR) collections increased by 2.79% to P219.2 billion “due to higher tax collections on value-added tax (VAT), taxes on net income and profit (withholding at source and on wages of personal income tax), and miscellaneous tax,” the BTr said.

The Bureau of Customs (BoC) revenues rose by 4.33% to P81.3 billion, amid “improved revenue collection performance (due to) the continued monitoring of the values and classifications of imported commodities, as well as intensified border control and improved trade facilitation.”

FIVE-MONTH DEFICIT
Meanwhile, the budget deficit in the January-May period widened by 24.06% to P404.8 billion from P326.3 billion a year ago.

Government spending rose by 17.65% to P2.26 trillion as of end-May from P1.92 trillion in the same period a year ago.

Interest payments surged by 40.08% to P321.6 billion while primary spending went up by 14.6% to P1.94 trillion.

Meanwhile, five-month revenues stood at P1.85 trillion, up by 16.34% from P1.59 trillion a year earlier.

Tax revenues increased by 11.18% to P1.59 trillion as BIR revenues rose by 12.81% to P1.19 trillion while BoC collections went up by 6.01% to P380.9 billion.

Nontax revenues jumped by 60.58% to P267 billion as BTr income rose by 151.09% to P206.5 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the wider budget deficit may be due to higher inflation that bloated government expenditures.

Inflation picked up to a six-month high of 3.9% in May from 3.8% in April. This brought average inflation to 3.5% in the January-May period.

“Wider deficits would increase the urgency for tax reform measures and other fiscal reform measures, at least intensified tax collections from existing tax laws, among others,” he said.

“At some point, if inflation stabilizes further, there could be some need for higher taxes and new taxes, as a final option,” he added. — Luisa Maria Jacinta C. Jocson

DA to allow 200,000 MT of refined sugar imports

GRANULATED WHITE SUGAR and sugar cubes are seen in this picture illustration taken on Dec. 16, 2018. — REUTERS

By Adrian H. Halili, Reporter

THE Department of Agriculture (DA) said it is planning to allow imports of around 200,000 metric tons (MT) of refined sugar to fill a projected supply gap during the off-milling season.

“We will have an importation of sugar by September. We will have an arrival of at least 200,000 MT of refined sugar,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. told reporters late on Wednesday.

He said the amount of imports “can be a little bit more” to address the expected supply deficit before the harvest and refining season.

Mr. Tiu Laurel said the Sugar Regulatory Administration (SRA) is expected to issue a sugar order by next month.

“The current stocks will decrease by August or September. We have a gap for 200,000 MT by September or October, then milling will continue again,” he added.

SRA data as of June 9 showed the national sugar inventory rose by 29.3% for raw sugar during the 2023-2024 crop year to 436,229 MT from 337,286 MT in the previous crop year. Stocks of refined sugar jumped by 14.1% to 492,985 MT during the current crop year from 432,215 MT in the previous crop year.

Separately, SRA Administrator Pablo Luis S. Azcona said in a Viber message that Sugar Order No. 2 (SO2) allowed stakeholders to pre-qualify for importation if they had purchased local sugar.

The program called for the voluntary purchase of domestically produced sugar to stabilize farmgate and retail prices. Participants were eligible to avail themselves of an allocation for a future import program.

Mr. Azcona said the agency had already pre-qualified and pre-allocated participants based on their support for local sugar farmers.

Last year, farmgate prices for raw sugar dropped to about P2,300-P2,500 per 50-kilogram (kg) bag, well below the SRA’s trading estimate of P3,000 per 50-kg bag.

Mr. Azcona said that after SO2 was issued, farmgate prices rose to around P2,700-P2,800 per 50-kg bag, which drove retail prices to P73-P100 per kilo of sugar.

As of June 26, the retail price of refined sugar in Metro Manila markets stood at P74 to P92 per kilo, while brown sugar was between P62 and P92 per kilo, according to the DA’s price monitoring bulletin.

“We will activate an import plan should the trigger stock level be reached to ensure a stable supply and stable price for our retail and industrial consumers, as well as to ensure that our farmers will not be affected,” Mr. Azcona said.

President Ferdinand R. Marcos, Jr. had recommended maintaining sugar stocks at 185,000 MT to 200,000 MT, equivalent to a two-month buffer.

Mr. Azcona said the SRA will meet with the Agriculture secretary by the first week of July to determine the need to activate the importation plan.

“We also have to bear in mind that the five million farmers, farm workers, their families, and people dependent on the sugarcane industry are also 100% retail consumers,” Mr. Azcona said.

Manuel R. Lamata, president of the United Sugar Producers Federation of the Philippines, said that the sugar imports could potentially plug any shortages before the harvest season.

“Harvest this coming crop year will be delayed due to El Niño and when we were consulted about this matter, we approved the proposal,” Mr. Lamata said in a Viber message.

Ateneo de Manila economics professor Leonardo A. Lanzona said sugar production was affected by the El Niño weather event, which necessitated the importation of refined sugar.

“However, the overall policy of plugging supply gaps and taming prices through imports is fundamentally unsustainable. Unless we can export other products, we may not have enough foreign currency to pay for these imports,” Mr. Lanzona said in a Facebook Messenger chat.

The US Department of Agriculture projected that Philippines’ raw sugar production would be flat this year at 1.85 million MT due to the effects of El Niño.

The regulator had said that El Niño has greatly damaged the sugarcane crops for the October 2024 season.

It added that the areas of Batangas, Southern Negros, and Mindanao have reported extensive sugarcane damage due to the dry conditions.

Federation of Free Farmers National Manager Raul Q. Montemayor said that agencies should validate the needed volume, timing, and manner of distribution for sugar imports through consultations with stakeholders.

DBCC keeps growth targets until 2028 despite external headwinds

A ferry passes through Pasig River at sunset in Manila, Philippines, July 6, 2023. — REUTERS

ECONOMIC MANAGERS on Thursday retained their growth targets for this year until 2028 despite external headwinds.

The Development Budget Coordination Committee (DBCC), which sets official macroeconomic assumptions and fiscal program, maintained its Philippine gross domestic product (GDP) growth target at 6-7% this year, and at 6.5-7.5% in 2025.

“Despite external headwinds, we are expected to continue surpassing most emerging economies,” Budget Secretary Amenah F. Pangandaman, who heads the DBCC, told the briefing.

“This robust growth momentum is expected to continue over the medium term, with GDP growth reaching 6.5-8% from 2026 to 2028 while considering anticipated domestic and external risks and the latest monetary and trade assumptions of the Bangko Sentral ng Pilipinas (BSP),” she added.

The DBCC also revised the fiscal targets, which Ms. Pangandaman said were “realistic, practical, and adaptive to external and domestic developments.”

Economic managers raised the deficit-to-GDP ceiling for 2025 to 5.3% from 5.2% previously.

The DBCC kept its deficit ceilings for 2026 to 2028, but revised its revenue and expenditure programs.

“The new deficit path will decline more realistically and sustainably, from 5.6% of GDP in 2024 to 3.7% of GDP in 2028, allowing sufficient fiscal space for the government to invest in infrastructure development and other growth-enhancing programs and projects,” the DBM chief said.

Revenue targets were raised to P4.644 trillion (from P4.583 trillion previously) for 2025; to P5.063 trillion (from P4.957 trillion) for 2026; to P5.627 trillion (from P5.487 trillion) for 2027; and to P6.25 trillion (from P6.078 trillion) for 2028.

“On average, revenues are expected to grow by 10.3% every year from 2024 to 2028, reaching P6.25 trillion (16.9% of GDP) by the end of the administration,” Ms. Pangandaman said.

The revised revenue targets will be supported by “enhanced tax administration reforms” and improved collection efficiency, she added.

Finance Undersecretary and Chief Economist Domini S. Velasquez said there is no need to introduce new taxes to meet the revised revenue targets.

“For the rest of the medium term, we actually expect tax revenues to increase…this is largely due to the double-digit increase in the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC),” she said.

“We’re currently doing a lot of tax efficiency improvements in both the BIR and the BoC. This includes digitalization, regulations to capture e-commerce transactions, and also Customs modernization.”

DBCC also expects expenditures to remain at an average of about 21% of the GDP from 2024 until 2028.

The 2025 spending target was increased to P6.182 trillion (from P6.074 trillion); while spending for 2026 was set at P6.54 trillion (from P6.433 trillion). Expenditures for 2027 were raised to P7.027 trillion (from P6.887 trillion), and for 2028 to P7.621 trillion (from P7.45 trillion).

“We will maintain high investments in infrastructure, which will be between 5% and 6% of GDP from 2024 to 2028. This is expected to create a multiplier effect on the economy, reduce the cost of doing business, support the creation of quality jobs, and ultimately transform the economy,” Ms. Pangandaman said.

The DBCC said it expects the debt-to-GDP ratio to decline from 60.6% this year to 56% in 2028.  The threshold considered by multilateral lenders to be manageable for developing economies is 60%.

Economic managers also expect inflation to settle at 3-4% by end-2024, and return to the 2-4% target range from 2025 to 2028.

Foreign exchange assumptions were adjusted to P56-P58 per US dollar this year from P55-P57 previously. The peso is still expected to stabilize to P65-P85 a dollar from 2025-2028.

The DBCC upgraded its exports growth estimate to 5% for this year from 3% previously. Import growth assumption was lowered to 2% from 4% earlier.

It also revised its Dubai crude oil price assumptions to $70-$85 per barrel for this year, from $70-%90 per barrel previously. For 2025 until 2028, the Dubai crude oil assumptions were kept at $55-58 a barrel. — B.M.D.Cruz

Condominium living further on the rise

Photo from Freepik

Condos are redefining modern living, becoming the new favorite among Filipinos living in the urban jungles of Metro Manila. Much of the reason can be attributed to the rise of mixed-use developments that offer a balanced lifestyle of live, work, and play that is well-suited to the demands of daily life today.

As urban centers grow more congested and land prices soar, developers are responding to the increasing demand for residential spaces that offer not just a place to live, but a lifestyle. This trend is especially evident in major cities like Metro Manila, Cebu, and Davao, where high-rise condominiums are becoming a prominent feature of the skyline.

Leading real estate developers are developing condo projects within townships, providing a complete package of retail shops, hospitals, churches, and offices right near home. Moreover, these developers are elevating the game with resort-themed, smart homes, and eco-friendly buildings, offering high-quality living spaces in bustling cities.

According to professional services firm Colliers, an additional 9,620 new condominium units will complete construction in 2024, marking the largest completion in five years. Approximately two-thirds of these new units will be located in Metro Manila’s Bay Area.

“Given the delivery of sizable number of new condominium units in Metro Manila this year, Colliers encourages developers to continue offering attractive leasing promos especially for local employees that are returning to traditional office setup,” Colliers advised in their Property Market Report in February.

Interestingly, this has also been accompanied by an increase in interest for leisure condominiums outside the metro.

“An increasing number of Filipinos expressed a heightened interest in acquiring second homes, particularly in residential leisure condominiums in Metro Luzon,” property experts Santos Knight Frank wrote in their Philippine Real Estate Outlook for 2024.

“Tagaytay emerged as the favored location for second homes, with Pampanga and Batangas (Laiya and Nasugbu) tailing behind. In April 2023, San Juan, Batangas saw 689,000 domestic travelers, Nasugbu had 268,022, and Tagaytay welcomed 436,508 tourists. These figures emphasize thriving tourism and widespread appeal, but residential selling rates reveal more evident demand, with 42% of units sold in Metro Luzon classified under residential-leisure.”

Meanwhile, Pampanga leads in the Metro Luzon with a selling rate of P126,374/square meter (sq.m.), followed by Tagaytay at P122,500/sq.m. and Laguna at P117,269/sq.m. Bulacan, Cavite, and Laguna exhibit the lowest average unit prices: P3.7 million for Laguna, P2.9 million for Bulacan, and P2.8 million for Cavite.

“The residential real estate sector in the Philippines has demonstrated consistent growth in recent years, and all signs point towards further advancement in 2024. This growth is attributed to several key factors, including the ongoing process of gentrification in nearby provinces, a recalibrated transportation system, and the turnover of new infrastructures, which will greatly improve interconnectivity between provinces and cities,” Anjo Sumait, manager of Residential Services at Santos Knight Frank, said in the report.

“The idea of gentrification in nearby provinces is influencing the real estate landscape, providing opportunities for development and investment outside of traditional urban centers. This presents a promising prospect for both developers and potential homeowners, as it offers the potential for new urban centers to emerge, thereby spreading economic activities and real estate development.”

Convenience at the forefront

One of the primary reasons for the surge in condominium living is the convenience it offers. Modern condominiums, particularly those designed as a mixed-use development, are designed with the needs of urban dwellers in mind, providing amenities that make day-to-day life more comfortable and efficient. These include fitness centers, swimming pools, co-working spaces, and even retail outlets within the building, offering a self-contained lifestyle all without the need of a commute.

Accessibility is another key factor driving the popularity of condominium living. The mixed-use platform is the most practical choice for real estate developers in Metro Manila particularly because of several factors: the problems of traffic congestion, uneven transportation links and facilities, an excessive concentration of economic activity in traditional central business districts, and the cutthroat competition for real estate.

Stand-alone residential developments or commercial operations have inherent disadvantages, particularly if they are not connected to main thoroughfares or train stations. Hence, developers are strategically making their projects in locations that are well-connected to major thoroughfares, business districts, and transportation hubs. This proximity to key areas reduces the daily commute time for residents, allowing them to spend more time on productive and recreational activities.

There is also the matter of the growing preference for homes that require minimal maintenance, as more and more Filipinos enter into the workforce. Condominiums, often with their professional property management services, cater to this need by taking care of upkeep and security, allowing residents to focus on their careers and personal lives.

The pandemic, of course, also played a part in this shift. According to management consultants McKinsey & Company, the hybrid lifestyle — one where remote working and working from home are staple models for many office jobs — is here to stay.

“If we look at neighborhoods which were very office-dominated, the first main impact is simply fewer people in those offices. That, in turn, means fewer people on those streets, fewer people in the shops or just anywhere in the neighborhood. That, combined with the rise of online commerce, is creating a big challenge for those downtown retail spaces and public spaces in those office-intensive areas,” McKinsey Senior Partner Jonathan Woetzel said.

“The other obvious impact is on residential usage. As people are closer to home, we’re seeing demand for those homes rise. And then around those homes there’s a minor resurgence of retail. So we see the shopping and commerce patterns shifting as the people shift.”

Mr. Woetzel added that the residential mixed-use neighborhood is “alive and thriving,” as people have generally kept innovations from the pandemic that proved successful. “That’s a tribute to what people want: this notion of a walkable, livable environment.”

Aditya Sanghvi, senior partner at McKinsey, said, “The neighborhoods that are performing better are the ones that are pedestrian-friendly, that have great green spaces, and have a mix of office, retail, and experiences. They’re sort of an ecosystem of everything that one might want in their life all sort of in one place.”

As urbanization continues to accelerate, the demand for convenient, accessible, and well-designed residential spaces is expected to rise. Condominium living, with its myriad benefits, is well-positioned to meet this demand, reshaping the way Filipinos live in the urban jungle. — Bjorn Biel M. Beltran

Key trends reshaping the condominium segment

Photo by Gerd Altmann from Pixabay

The urban landscape is evolving, and living spaces have become magnets for work, leisure and lifestyle. Condominiums, for instance, are redefining modern living by seamlessly blending convenience and style into living spaces.

Real estate players and companies share the trend and innovation seen in condominiums, highlighting how it is embracing inclusivity, modernity, and sustainability within communities.

In recent years, condominiums have become extremely popular, especially for homebuyers; since living in a condo brings many benefits, providing a secure living environment, convenient locations, cost-effectiveness, less maintenance to worry about, and enhanced security features, among others.

Thus, more urban dwellers are opting for condominium living as it provides a more comfortable, secure, and sustainable living environment.

Smart home technology

When talking about convenience, condos are becoming a top choice, especially with most condos centering living spaces with smart home technologies. Such technologies are connected to a network that can be managed remotely using smartphones, tablets, or other devices. With technology being essential in daily life, it is upgrading living spaces as well. For instance, having a personalized voice assistant that can adjust your lighting or play your favorite show on the television.

Integrating smart home technology and appliances is all about modernity, making daily routines much easier, and curating experiences that align with people’s dynamic lifestyles, with time to spare to do your hobbies or relax and spend the rest of the day with your loved ones. From light automation to washing machines, residents can control everything within the tip of their fingers easily and more conveniently.

Lifestyle amenities

Beyond modern design and technology, another trend in condominium living is the lifestyle-centric amenities that turn into a resort-style experience. With condominiums now designed to seamlessly integrate work, life, and improve well-being, it’s all about finding the perfect balance.

As more people look for ways to improve their health and well-being, having wellness amenities within the reach of condominiums has become more essential. Today, most condominiums offer wellness amenities, including fitness gyms, jogging paths, swimming pools, clubhouses, and playgrounds for residents to enjoy. Most condominiums are centered in supporting an active and healthy lifestyle, providing residents with simple access to a wide range of health and wellness services.

Alongside wellness amenities, condominiums also boast rooftop decks and sky gardens with beautiful scenery. These decks are designed with lush greenery and a picturesque view, perfect for unwinding, watching the sunset, or even stargazing.

Flexible workspaces

Adapting co-living and flexible workspaces in residential properties has driven significant transformations, even in the post-pandemic era. Behind the continued rise of remote work, demand for co-living spaces and workspaces increased in condominiums. Adapting to this demand, flexible home office setups, ergonomic workspaces, and communal workspaces are among the features commonly seen in modern condominiums.

Working from a condo not only offers a convenient workspace for remote workers but also easy access to amenities that enhance the remote work setup. Today, many condos feature work-conducive amenities and workspaces equipped with essential resources like internet connectivity, printers, scanners, private meeting rooms, and quiet study lounges.

With these, condominium living is becoming a game-changer when it comes to work productivity and better work-life balance. Residents get the best of both worlds with convenient workspaces and easy access to lifestyle amenities that can help remote workers relax and de-stress.

Sustainable features

With the environment at the tipping point, sustainability has become an essential feature in the living condominium lifestyle. Sustainability begins in living spaces, and condominiums are maximizing such opportunities. One feature is using solar energy, which promotes green energy within condominiums. Other features, including LED lighting and energy-efficient appliances for heating and air-conditioning, tend to have long-term durability and sustainability.

By utilizing renewable energy sources like solar panels, condominiums, not only lessen dependence on harmful sources, but also reduce carbon footprints, which aligns to decarbonization efforts of the real estate sector.

Also, bringing a touch of nature into condominiums are green roofs, building rooftops covered in plants and vegetations. The use of green roofs serves multiple purposes, like reducing carbon emissions, improving air quality, mitigating urban heat, and water management efficiency. By incorporating green roofs, condominium living promotes a more sustainable and eco-friendly lifestyle.

Another rising feature is incorporating sustainable designs such as the use of eco-friendly materials and putting a touch of modernity to unit designs. For example, many condominium designs focus on bringing sustainable furniture. Bamboo, for instance, is a great option for flooring and furniture because they are durable and long-lasting. It also brings a natural charm inside the condos.

From technological innovation, sustainable design features, and access to many lifestyle services and amenities, these trends make condominium living a worthwhile investment for homeowners and families alike. After all, condominiums are transforming urban lifestyle by blending comfort and modernity within a single living space. — Angela Kiara S. Brillantes

The Philippine condominium market in review

Photo by vectorjuice on Freepik

Over the past decade, condominiums have grown in popularity among Filipinos seeking new homes partly because of their versatility as a residential property and as a potential source of income. As more Filipinos move to Greater Manila and as developers build more projects vertically, the condominium market presents golden opportunities for developers and investors alike.

According to the Bangko Sentral ng Pilipinas (BSP), while real estate prices of various types of new housing units in the Philippines contracted by 3.6% in the fourth quarter of 2023, the market did rise by 6.5% year on year. Although condominium prices also declined by 8.6% in the fourth quarter of 2023, it saw a massive increase of 15.6% in the said quarter and saw a modest 4.1% growth overall for the whole year.

There is also an indication of the steady preference of Filipinos for condominiums as residential property. Data from the BSP suggests that 42.6% of Filipinos utilized their residential real estate loans (RREL) to purchase condominiums, the same percentage as those who bought single houses. Additionally, 14.7% opted for townhouses, while duplexes accounted for a meager 0.1% of the transactions.

Condominiums as second homes near tourist destinations are becoming a trend among homebuyers too. Real estate agency Santos Knight Frank mentions that a growing number of Filipinos are showing heightened interest in acquiring leisure condos outside of Metro Manila with the favored locations for these second homes including areas like Tagaytay, Pampanga, and Batangas.

Colliers’ Property Market Update for 2024 shows that the condominium markets in urban centers in Laguna, Cebu, and Cavite are improving as well with selling rates of P129,700 per square meter (sq.m.), P150,300/sq.m., and P150,400/sq.m., respectively. The same report says that the compound annual growth rate of condominium prices in those areas grew by 11.1% in Laguna, 6.9% in Cebu, and 12.4% in Cavite.

Additionally, Colliers’ Q1 2024 Metro Manila Residential Report suggests that close to 3,000 condo units were purchased in the region’s pre-selling market. This growth in demand was fueled by buyers from the lower and upper mid-income brackets, who collectively comprised nearly half of the total units sold during this timeframe, in areas like Mandaluyong, Quezon City, and Alabang-Las Piñas.

Meanwhile, the same report says that the number of pre-selling condominium launches in Q1 2024 totaled 2,600 units, a 59% decrease compared to the same period in the previous year. A potential reason for this cautiousness by developers may be due to “elevated mortgage rates, continued increase in prices of construction materials, surging land values in Metro Manila, and lengthened remaining inventory life.”

The Philippine condominium market is still a cornerstone for urban living amongst Filipinos looking to move to the metro. As the market ​​adapts to evolving consumer demands and market conditions, developers innovate and expand their portfolios to accommodate more Filipinos and investors. The condominium’s role in Metro Manila as a symbol of urban life is set to endure and shape the future landscape of Philippine real estate. — Jomarc Angelo M. Corpuz

Unveiling Banyan Tree Manila Bay

Luxury living redefined with sustainability at heart

With the recovery and rising prices of units in the real estate market, there is an opportunity for further growth and investment not only for those seeking homes but also for those seeking profitable ventures in the property market. Luxury housing, in particular, is rapidly emerging as a lucrative business for many developers who are eager to capitalize on the demand for high-end properties and the potential for substantial returns on investment.

Known for its fusion of elegant luxury residences and sustainable practices, the Banyan Group is set to debut its first residence in the Philippines with Banyan Tree Manila Bay. Overlooking the beautiful basin of the country’s capital, the first phase of the group’s first venture will be located in Parañaque City, ensuring easy access to major business districts, cultural attractions, and entertainment hubs.

Residences social room phase 1

In an interview with BusinessWorld, Banyan Tree Manila Bay Chief Operating Officer Martin Taylor revealed that the initial discussions to develop the Banyan Tree Manila Bay Development Project happened more than five years ago and resulted in the construction of the project. Development commenced even before their grand launch at the Cove Manila in Parañaque last June 25.

“We actually purchased the land towards the end of 2018, quite a while before the pandemic. We started looking at how we could develop it, who we could partner with, and who we could talk to. We were actually very fortunate that Banyan Tree showed an interest in coming to the Philippines, so we were able to make the connection. And they liked the location because of the famous Manila Bay Sunset,” Banyan Tree Manila Bay Technical Director Anthony James added.

Bar and pool view for hotel phase 1

With luxury units offering panoramic views of the bay and the city’s skyline, Banyan Tree Manila Bay will also feature sustainable high-end finishes as well as modern and luxurious amenities such as 24-hour concierge services, a rooftop garden with stunning views, infinity pools, and water features, state-of-the-art fitness center, and children’s play areas, among others.

True to the Banyan Tree’s brand, the residence will be constructed using where possible Indigenous local-purchased materials along with energy-efficient designs. Mr. James noted that most of the materials used in the development will be locally sourced to help other Filipino brands.

“Everything we do inside the units to the comfort rooms will be brought in such a way that everything is bought in the Philippines and supports the Philippines. Even the doors will be made with patterns on them by local artists. Within the corridor spaces, for example, we would make sure that there are designs and artwork designed by local artists.”

Mr. James also noted that the residence exhibits eco-friendly features such as high-efficiency air-conditioning, wastewater recycling, rainwater harvesting, greenery planted inside the development, environmentally friendly cleaning materials, energy-efficient lights, and many more sustainable practices.

He hopes that these initiatives will allow Banyan Tree Manila Bay to attain a platinum certification from the Banyan Tree’s Manila Bay partner for sustainable design certification, EarthCheck, which adopts the most relevant and rigorous global framework for benchmarking and certifying sustainable operations.

Future owners of residential units in the development will also experience Banyan Tree’s renowned hospitality and service, diverse dining options including signature Banyan Tree restaurants, and the Philippines’ first Banyan Tree Spa and Gallery.

Hotel roof top bar

Ownership at Banyan Tree Manila Bay will also come with exclusive benefits and privileges through the Sanctuary Club which includes streamlined access to a global network of Banyan Tree resorts and spas.

“We realized that providing the City Hotel is for those who enjoy staying and enjoy the comfort of the Banyan Tree brand… but you can actually own a residence. So that attraction is certainly something that is expanding around the world with regards to Banyan Tree. Their residential developments are increasing, and that combination is a big positive factor with regards to residents and those wanting to enjoy the brand around the world,” Mr. Taylor said.

Banyan Tree Manila Bay is also expected to have commercial units for its residents’ convenience. Like other high-end mixed-use developments in the country, the residence will have upscale retail spaces featuring premium brands and lifestyle concepts, along with spaces for dining, entertainment, supermarkets, and other services. With its meeting rooms and ballroom, the residence will also have Meetings, Incentives, Conferences, and Exhibitions features in their hotel segment.

The Banyan Tree Manila Bay will offer a wide range of unit sizes suitable for a Filipino family’s needs, from two- and three-bedroom units ranging from 140 to 260 square meters (sq.m.) to spacious penthouses with a size of around 900 sq.m.

“We are very confident with regards to [completing] the project. With regards to other developers here at the moment, they are moving towards the higher end of the residential spectrum. With that, we are confident that with the Banyan Tree brand, we can deliver something more,” Mr. Taylor said.

Bedroom living and dining area suite phase 1

Given its status being a prestigious brand with a global chain of luxurious hotels and resorts, Banyan Tree Manila Bay offers an exceptional investment opportunity, promising strong potential for capital appreciation and rental income with the safety and stability associated with one of the world’s most renowned hospitality brands.

Banyan Tree Manila Bay has even partnered with luxury residential and commercial brokerage firm Nest Seekers International to market its brand’s residential towers to a wider international network. Nest Seekers International’s Chief Marketing Officer and Regional Director — Asia Andy Regalado expressed his excitement to work with the residence, in a press release for the grand launch of the property.

“As Manila has become the hottest market globally for prime residential properties, it’s high time that a project like this rises in the city. Not only will it satisfy our clients’ demand for true luxury, such a project will also pave the way for more branded luxury properties to invest in the Philippines, making for a more vibrant luxury real estate market,” Mr. Regalado shared.

Concerning their next ventures in the Philippines, Mr. James said that their focus, for now, is to finish the Banyan Tree Manila Bay. However, he also said that there are already discussions with different parties regarding potential future projects.

The luxury hospitality brand’s debut venture in the country figures to be one of the premier luxury real estate developments in the Philippines. With its commitment to local craftsmanship and eco-friendly practices, the residence promises to be a model of responsible development that supports local communities and ecosystems while still offering world-class features and amenities.

As the project continues its development, Banyan Tree Manila Bay is set to symbolize a compelling investment opportunity bolstered by the prestige and global recognition of the Banyan Tree brand.

 

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