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PSEi extends slide on weak economic outlook

BW FILE PHOTO

THE MAIN INDEX ended lower for the seventh straight session on Thursday after a global think tank said the Philippine economy is expected to grow slower than the government’s targets from 2024 to 2028.

The Philippine Stock Exchange index (PSEi) fell by 0.33% or 21.47 points to end at 6,344.56 on Thursday, while the broader all shares index rose by 0.05% or 1.85 points to close at 3,440.31.

“Economist Impact Asia Pacific’s projection that the Philippine economy will grow below the government’s target until 2028 weighed on sentiment,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

Andrew J. Staples, Asia-Pacific head of thought leadership and public policy at global think tank the Economist Impact, on Wednesday said they expect the Philippine economy to expand by 5.4% this year, below the government’s 6-7% gross domestic product (GDP) growth target for the year. It will also be a tad lower than the revised 5.5% GDP expansion in 2023.

For 2025, Mr. Staples said Philippine GDP is expected to expand by 6.4%, slightly lower than the government’s 6.5-7.5% target. He expects GDP growth to ease to 5.6% in 2026 and 5.9% in 2027 and 2028, also below the 6.5-8% goal through 2028.

“The local stock market lost its early momentum, ending in negative territory for the seventh consecutive session. The lack of catalysts to boost investor sentiment contributed to the benchmark index’s decline,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The local bourse dropped amid a lack of fresh leads to drive the market upwards… Investors are seeking clear direction on interest rates amid mixed signals, making them wait for the next policy meeting despite expectations that the BSP (Bangko Sentral ng Pilipinas) won’t cut rates,” Ms. Alviar added.

The BSP will next meet to review policy on June 27.

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023 following increases worth 450 basis points to bring down inflation.

Majority of sectoral indices closed lower on Thursday. Services dropped by 0.68% or 13.34 points to 1,945.59; financials declined by 0.68% or 13.33 points to 1,921.53; property retreated by 0.48% or 11.93 points to 2,426.32; and industrials went down by 0.3% or 27.48 points to 8,939.10.

Meanwhile, mining and oil rose by 1.6% or 140.48 points to 8,889.54, and holding firms increased by 0.37% or 21.19 points to 5,619.52.

Value turnover dropped to P3.94 billion on Thursday with 328.28 million shares changing hands from the P4.07 billion with 363.03 million issues traded on Wednesday.

Advancers beat decliners, 92 against 86, while 58 names closed unchanged.

Net foreign selling declined to P552.19 million on Thursday from P594.67 million on Wednesday. — R.M.D. Ochave

Peso inches lower on broad dollar strength

THE PESO declined slightly as the dollar was broadly stronger on Thursday amid signals from China’s central bank regarding the yuan.

The local unit closed at P58.78 a dollar on Thursday, inching down by 2.5 centavos from the previous day’s finish of P58.755.

The peso opened Thursday’s session weaker at P58.79 against the dollar. Its worst showing was at P58.83, while its intraday best was at P58.70 versus the greenback.

Dollars exchanged increased to $1.28 billion on Thursday from $930 million on Wednesday.

“Emerging market currencies, including the Philippine peso, experienced a decline after China’s central bank indicated a more relaxed stance on the yuan by setting its daily reference rate at the weakest level since November,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

“The peso’s drop… suggests a broader downturn in Asian currencies, driven by anticipations of interest rate cuts by policy makers preceding actions from the US Federal Reserve,” Mr. Roces added.

China set the yuan’s daily reference rate at its weakest since November in a sign policy makers are loosening their grip on the currency, Bloomberg reported.

The People’s Bank of China set the so-called fixing at 7.1192 per dollar, an increase of 33 ticks, the most in about two months. The move comes as the dollar inches closer to this year’s peak, with traders betting on higher-for-longer interest rates in the US.

The onshore yuan was little changed around the 7.26 level, while the offshore currency slipped to its weakest this year. The fixing came as Chinese banks maintained their benchmark lending rate for a 10th straight month, as pressure on the yuan restricts policy makers’ space for easing.

The weakness in China’s currency is symptomatic of deteriorating sentiment toward the world’s second-largest economy, which is also experiencing a bond market rally as investors seek out haven assets. Yields have tumbled to or toward record lows amid mixed economic data and expectations of further stimulus.

Worsening capital outflows, seen in a surge in local firms’ purchase of foreign exchange and exporters’ hoarding of the dollar, have also added to the yuan’s woes. And from the dollar’s side, any delay to Federal Reserve rate cuts would likely add more pressure on the yuan as China’s wide interest-rate gap with the US favors the greenback.

China has maintained a strong hold on the yuan using its daily reference rate for most of the year. However, it has been gradually weakening its so-called currency fixing amid calls from former officials for relaxing its control over the yuan in order to open the room for more easing.

Higher global crude prices recently also caused the peso to weaken, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

For Friday, Mr. Ricafort said the local unit could move between P58.65 and P58.80 per dollar. — AMCS with Bloomberg

Initial demand estimate for P29 rice at 69,000 MT/month

PHILSTAR FILE PHOTO

THE Department of Agriculture (DA) said it initially estimates demand for subsidized P29 rice at 69,000 metric tons (MT) per month, though this total is expected to fluctuate depending on consumer response.

“Of course it will change, it not exact. It will really depend on how many will avail of the program. We will not force them to buy,” Agriculture Assistant Secretary and Spokesperson Arnel V. de Mesa told reporters on Thursday.

The National Food Authority (NFA) council on Wednesday approved the sale of ageing rice stocks to individuals classified as poor or otherwise vulnerable.

“We want to reach to as many members of our vulnerable sectors. We will be needing about 69,000 MT of rice every month,” he added.

The DA proposed to import about 363,697 MT to replace the ageing stocks that will be disposed of under the “Bigas 29” program.

“The priority is still to use the NFA stocks, because we don’t have the clearance to import yet,” Mr. De Mesa said.

The DA’s plan is estimated to cost the government between P1.39 billion and P1.53 billion per month.

Beneficiaries of the rice subsidy program are estimated at more than 34 million vulnerable individuals, which include persons with disabilities, solo parents, and senior citizens, apart from those below the poverty line. Each beneficiary is entitled to purchase about 10 kilograms per month. — Adrian H. Halili

ARTA: LGUs with automated permit systems now at 44

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THE Anti-Red Tape Authority (ARTA) said local government units (LGUs) with fully automated business permit processes now number 44, with seven awaiting commendation.

ARTA reported that the most recent LGU to be issued a commendation for full compliance was Pulilan, Bulacan on June 13.

Meanwhile, the LGUs awaiting commendations are Himamaylan, Negros Occidental, Tagbilaran and Ubay, Bohol, Valencia, Bukidnon, and Alubijid, Laguindingan and Manticao, Misamis Oriental.

ARTA reported that five more LGUs have declared they are compliant, which is subject to validation, and that 635 LGUs are partly compliant.

Some 606 LGUs have not implemented the electronic Business One-Stop Shop (eBOSS) system, while 344 LGUs have not reported.

ARTA Deputy Director General for Operations Gerald G. Divinagracia told reporters on Tuesday that the agency is confident of hitting the target of enrolling 200 LGUs in the eBOSS program.

“We are still on track. It is more about continuously validating, calling the LGUs out. But our target really for this year is for the seven remaining LGUs in the National Capital Region to be fully compliant,” Mr. Divinagracia said.

Metro Manila is composed of 17 LGUs, Caloocan, Malabon, Navotas, Valenzuela, Quezon City, Marikina, Pasig, Taguig, Makati, Manila, Mandaluyong, San Juan, Pasay, Parañaque, Las Piñas, Muntinlupa, and Pateros.

The onboarding of Caloocan, Pasig, Taguig, Makati, San Juan, Las Piñas, and Pateros is pending, he said.

“We want them to be fully compliant this year. And they promised,” he said.

“Meaning, in terms of trustworthiness and getting away from the old way of doing things, people still want the hard copy rather than the electronic version. So, they cannot move or transition to the digital world,” he added.

However, he said that ARTA is not asking LGUs to operate solely digitally and that they can still accept non-electronic submissions. — Justine Irish D. Tabile

IT-BPMs back amendments to CREATE, Cybercrime law

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THE information technology and business process management (IT-BPM) industry said it expects to benefit from amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) and Cybercrime Prevention laws.

Jack Madrid, president of the IT and Business Process Association of the Philippines (IBPAP), told reporters on Wednesday that the proposed amendments to CREATE will help clarify uncertainties in the law.

“You know, until we see the final version, we will not really be able to make any definitive comments,” Mr. Madrid said at an online briefing. “But from all indications, the amendments of CREATE in CREATE MORE (to Maximize Opportunities for Reinvigorating the Economy) will certainly clarify some of the ambiguity of CREATE,” he added.

The CREATE MORE bill, which seeks to cut the corporate income tax to 20% from 25%, was approved by the House of Representatives on final reading in March and has been passed on to the Senate.

“We are quite optimistic and confident that the amendments that will be proposed in the latest draft of CREATE MORE will provide clarity and stability in the incentive regime for our investors and for our industry,” said Mr. Madrid.

“It will also provide more clarity as to remote work and work from home privileges across the investment promotion agencies. So while we have not seen the final version, all indications are that this will be a net positive for the IT-BPM industry,” he added.

Under CREATE MORE, registered business enterprises in the IT-BPM industry can enjoy the incentives under the law while implementing hybrid work arrangements as long as they are compliant with the on-site work requirements set by their respective investment promotion agencies.

This sets a ceiling for alternative work arrangements at 50% of the total workforce or total work hours.

“Aside from CREATE MORE, one of the priorities for the industry is really to amend, working together with the Department of Justice, some badly needed adjustments to the cybercrime law,” Mr. Madrid said.

“The law is still constraining our industry from taking action against specific employees who are performing certain actions,” he added.

In particular, he said the industry wants to adjust the Cybercrime Prevention Act of 2012 to make it easier for employers to take action against such employees.

“And once we can establish that the Philippines is serious about deterring cybercrime, then we are hopeful that this actually becomes a competitive advantage for the Philippine industry compared to other countries,” he added.

According to Mr. Madrid, the amendments to the Cybercrime Law are also important in protecting IT-BPM companies bottom line against fraud. — Justine Irish D. Tabile

BIR allows companies to use up ORs even after Dec. 31 deadline

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THE Bureau of Internal Revenue (BIR) is allowing the use of official receipts (ORs) until these are fully consumed extending their permissible issuance beyond the initial Dec. 31 deadline.

BIR Commissioner Romeo D. Lumagui, Jr. said in a statement: “All remaining official receipts can be used, until fully consumed. Inventory reports and notices can be submitted through e-mail. The BIR is committed to making the transition to Ease of Paying Taxes Act (EoPT) as convenient to taxpayers as possible.”

“Further, the submission of inventory reports and/or notice required in compliance with the transitory provisions of Revenue Regulation No. 7-2024 can now be done through e-mail,” he added.

The BIR has been working to harmonize its various regulations, systems, and processes with the requirements of EoPT.

In January, President Ferdinand R. Marcos, Jr. signed EoPT, which seeks to streamline the tax system. The act amends sections of the National Internal Revenue Code of 1997 and introduces various reforms.

For example, Revenue Regulations No. 7 implements amendments on registration procedures and invoicing requirements.

Under EoPT, the VAT official receipt has been removed as a requirement for substantiating refund claims and input and output taxes, making the VAT invoice the sole supporting document required in declaring output taxes and claiming input taxes for both sale of goods and services. — Luisa Maria Jacinta C. Jocson

PEZA locators account for bulk of special investor visas issued 

THE Philippine Economic Zone Authority (PEZA) said its locators were issued 17,592 special residency visas between November 2021 and April 2024, accounting for the overwhelming majority of the visas endorsed by investment promotion agencies (IPAs).

Jenny Romero, PEZA legal affairs group manager, said in a radio interview: “The top nationalities that we have issued PEZA visas to are Japanese, Indians, and then South Koreans. Our issuance to Chinese (nationals) is very small — only 1,812.”

On Tuesday, Party-list Rep. Erwin T. Tulfo filed House Resolution (HR) No. 1771, calling for an investigation into the issuance of Special Resident Retiree Visas and the Special Investor Resident Visas (SIRV).

He said that the resolution aims to address reports of excessive issuance of special visas to foreigners, particularly Chinese nationals.

In an online briefing, Ryan Ramos, director of the Incentives Administration Service at the Board of Investments (BoI), said that the BoI endorsed around 3,000 SIRVs since 1988. 

“On average, around 50% of the SIRVs we endorsed from 2020–2024 are for Chinese nationals,” Mr. Ramos said.

The BoI endorsed 18 SIRVs in 2020, 29 in 2021, 42 in 2022, 80 in 2023, and 71 in 2024.

According to Mr. Ramos, to make the issuance of the special visas easier to monitor, the Department of Justice has created a technical working group to address the need to compile data from the various agencies.

“That is still ongoing, and its purpose is really to have a database shared with immigration so that immigration would know how many visas have been issued by each IPA,” he said.

“This will also allow immigration to monitor if the foreign nationals granted special visas are staying in the Philippines or not,” he added. — Justine Irish D. Tabile

Gov’t cash utilization rate hits 94% at end-May

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GOVERNMENT agencies’ cash utilization rate hit 94% at the end of May, the Department of Budget and Management (DBM) said in a report. 

The DBM said that national agencies and local governments, as well as state-owned corporations, utilized P1.78 trillion out of P1.89 trillion worth of notices of cash allocation (NCAs) issued as of the end of May, leaving P115.55 billion unused.

The year-earlier utilization rate was 91%.

NCAs are a quarterly disbursement authority that the DBM issues to government offices, allowing them to withdraw funds from the Treasury bureau for the spending needs.

In May, utilization was P477.19 billion out of P494.15 billion, the DBM said.

The Commission on Human Rights posted the highest budget usage at 100%, followed by the Department of Foreign Affairs and the Commission on Audit (both 97%).

During last month’s Philippine Economic Briefing, Budget Secretary Amenah F. Pangandaman said early procurement and digitization of government transactions will help the government avoid underspending this year. — Beatriz Marie D. Cruz

Incentives may be key to EPR compliance

PHILIPPINE STAR/EDD GUMBAN

THE proper incentives will encourage more businesses to comply with the Extended Producers Responsibility (EPR) Act, which holds companies responsible for plastic waste over the full life cycle of their products.

National Solid Waste Management Commission Vice-Chairman Crispian Lao said in a forum: “It is important for us to use incentives to drive the markets towards circularity.”

He was referring to the circular economy, a sustainability strategy that seeks to maximize the recycling or repurposing of existing products while minimizing extraction of new raw materials. “If we want to go circular, alternative materials may be available but may not necessarily be price competitive,” he added.

Republic Act No. 11898 or the EPR Act of 2022 requires producers, manufacturers, and other companies to move away from single-use plastics and establish their own waste recovery schemes in partnership with communities, local governments, and others.

Current incentives for EPR compliance include tax breaks, subsidies, or reduced fees for those that adopt sustainable practices.

“I think it is important to look into other alternatives that promote circularity such as design (optimized for) recycling, refillable content and even education,” Mr. Lao said.

Enterprises that fail to register for EPR programs will face fines of between P5 million and P20 million. Those that fail to comply and meet targeted recovery rates will also be fined.

“When we want actual transformation, more things have to converge, (like) technology, business models, public policy, and (community)… that is the promise of EPR for the Philippines,” according to Philippine Business for Social Progress Executive Director Elvin Ivan Y. Uy.

The Department of Environment and Natural Resources reported that 917 businesses have registered for programs to comply with the EPR law as of June, including 129 obligated enterprises which are required to implement an EPR program.

Industries that generate plastic packaging include agriculture, manufacturing, energy, retail, transportation, accommodations and food services, and information and communication. — Adrian H. Halili

Cigarette, vape seizures valued at P7.2 billion in foregone taxes

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THE Bureau of Internal Revenue (BIR) said seized  tobacco and vapor products this year would have generated P7.2 billion in revenue had they entered the market through regular channels.

“What we have caught so far for this year is quite a lot. For cigarettes, we’ve confiscated more than 500,000 packets. For vape products, we have confiscated 170,000 units. For all of these, the estimated tax liability is at P7.2 billion,” BIR Commissioner Romeo D. Lumagui, Jr. said in a television interview.

The BIR urged vape manufacturers to mark their products with revenue stamps to signify tax compliance.

The BIR said that all vape products sold in the country were required to bear the revenue stamps starting June 1.

“There were no stamps for vape products before. That’s why we couldn’t tell if the excise tax for these products were paid. Now, we can easily find this out,” Mr. Lumagui said.

“If you go to a store and see that your vape products don’t have stamps, it means that the excise tax for these products was not paid.”

The BIR is seeking to collect P152.404 billion in excise tax from tobacco products this year.

In March, the BIR seized illicit vape products from a warehouse in Laguna on which an estimated P75.7 million in tax was not paid. — Luisa Maria Jacinta C. Jocson

UNCTAD sees possibility of modest growth in FDI this year

MODEST GROWTH in foreign direct investment (FDI) is possible this year on the back of increased greenfield project announcements, according to the United Nations Conference on Trade and Development (UNCTAD).

In its World Investment Report, UNCTAD said it remained positive for the full year despite weakness in global FDI for a second straight year.

Weak prospects for trade, geopolitical tensions, industrial policy, and supply chain diversification are reshaping FDI patterns and causing multinational enterprises to be cautious in investment, UNCTAD said.

“However, multinational profit levels remain high, financing conditions are easing and increased greenfield project announcements in 2023 will positively affect FDI,” it added.

Global FDI decreased 2% to $1.3 trillion, affected by wild swings in financial flows in a small number of European conduit economies.

“The decline for the second consecutive year is driven by increasing trade and geopolitical tensions in a slowing global economy. So this is a very challenging trend for the developing nations,” Rebecca Grynspan, secretary general of UNCTAD, said in a briefing on Thursday.

The report showed that FDI in developing countries declined 7% last year, led by an 8% decline in FDI in developing Asia.

According to UNCTAD, the decline in FDI in developing Asia was due to a rare decline in inflows into China and sizable declines in India and West and Central Asia.

“Only Southeast Asia held steady. Industrial investment in Asia remains buoyant, as shown by greenfield announcements, but the global downturn in project finance also affected the region,” it added.

Developing Asia saw a 25% decline in international project finance and a 22% increase in greenfield projects.

On prospects for 2024, Ms. Grynspan said: “We are optimistic about 2024. If there is an extra effort to ease the financial conditions and for investment facilitation, if we could have these two things combined, that will support our more optimistic view for 2024.”

“If we can support the efforts of countries on investment facilitation, maybe that can unblock obstacles that the developing countries, especially, are facing in terms of attracting FDI,” she added. — Justine Irish D. Tabile

Blinken discusses China’s aggression at sea with Philippine counterpart

AN AERIAL VIEW of the BRP Sierra Madre at the contested Second Thomas Shoal on March 9, 2023. — REUTERS

US SECRETARY of State Antony Blinken on Wednesday spoke with Philippine Foreign Affairs Secretary Enrique A. Manalo on the phone to discuss Chinese actions in the South China Sea, which Manila and Washington have called escalatory.

Their call followed China’s “dangerous and irresponsible actions to deny the Philippines from executing a lawful maritime operation in the South China Sea on June 17,” State Department spokesman Matthew Miller said in a statement posted on the agency’s website.

“Secretary Blinken emphasized that the PRC’s (People’s Republic of China) actions undermine regional peace and stability and underscored the United States’ ironclad commitments to the Philippines under our Mutual Defense Treaty,” he said.

Both officials also exchanged views on how to build on momentum from recent high-level bilateral engagements on issues of shared concern, he added.

The Philippine military chief on Wednesday said bolo-wielding Chinese Coast Guard (CCG) men were behind the aborted resupply mission for Filipino troops stationed at Second Thomas Shoal in the South China Sea.

Combined forces from China’s People’s Liberation Army Navy, coast guard and maritime militia worked together to stop the delivery of food and other supplies, with Chinese rigid hull inflatable boats ramming the rubber boats of the Armed Forces of the Philippines (AFP), chief Romeo S. Brawner, Jr. told reporters.

He said Chinese forces aboard the inflatable boats were holding bolos while they were going after two AFP rubber boats trying to deliver supplies to BRP Sierra Madre, a World War II-era ship that Manila grounded at the shoal in 1999 to bolster its maritime claim.

A navy officer who was on board one of the Philippine military’s rubber boats lost his right thumb after a collision with a Chinese inflatable boat, Mr. Brawner said.

Britain, Canada and the United States have condemned China’s actions, which occurred as Beijing’s new coast guard rules allowing it to detain trespassers without trial took effect on June 15.

China’s coast guard has said the Philippine Navy vessel deliberately and dangerously approached a Chinese ship in an unprofessional manner, forcing it to take control measures such as “warnings and blockades, boarding inspections and forced evictions.”

Second Thomas Shoal has been a flashpoint in recent months between the countries. The atoll lies within the Philippines’ 200-nautical mile maritime zone, which China also claims as its own.

China claims almost the entire South China Sea, including parts claimed by the Philippines, Vietnam, Malaysia and Brunei. A United Nations-backed tribunal in the Hague in 2016 voided China’s sweeping claims for being illegal.

Relations between Manila and Beijing have soured under Philippine President Ferdinand R. Marcos, Jr., who has pursued closer security ties with the US and other allies amid China’s growing assertiveness at sea.

Washington’s own ties with Beijing have been tense for years over issues like Taiwan, trade tariffs, the origins of the COVID-19 pandemic, the war in Ukraine, technology disputes and intellectual property.

The US State Department has called the Second Thomas Shoal incident the latest in a series of Chinese “provocations” to impede supplies from reaching Philippine soldiers stationed at BRP Sierra Madre.

Manila has filed 163 diplomatic protests against China under Mr. Marcos, according to the Department of Foreign Affairs. Thirty protests were filed this year.

“We reiterate our call for China to adhere to international law, especially the United Nations Convention on the Law of the Sea and the 2016 arbitral award, and respect the Philippines’ sovereignty, sovereign rights and jurisdiction in our own waters,” the agency said on Wednesday. — Norman P. Aquino with Reuters

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