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PHL stocks track Wall Street’s drop on Fed cut bets

BW FILE PHOTO

PHILIPPINE STOCKS fell for the second consecutive session on Wednesday to track Wall Street’s decline as new US data raised inflation concerns, which could affect the Federal Reserve’s rate-cut cycle.

The Philippine Stock Exchange index went down by 0.74% or 48.66 points to close at 6,496.72 on Wednesday, while the broader all shares index slipped by 0.02% or 0.84 point to 3,749.85.

“The local market extended its decline this Wednesday amid the negative spillovers from Wall Street as US Treasury yields rose,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Philippine shares continued to slide following the sentiment in the overseas equities market… US stocks fell on Tuesday as strong economic data raised doubts about potential Federal Reserve rate cuts, driving Treasury yields higher and dragging tech stocks lower,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

US stocks tumbled on Tuesday after a batch of upbeat economic data raised concerns that an inflation rebound could slow down the Federal Reserve’s pace of monetary policy easing, Reuters reported.

The Dow Jones Industrial Average fell 178.20 points or 0.42% to 42,528.36; the S&P 500  lost 66.35 points or 1.11% to 5,909.03; and the Nasdaq Composite lost 375.30 points or 1.89% to 19,489.68.

Stocks gave up early gains after a Labor Department report showed job openings unexpectedly increased in November, while a separate report said services sector activity accelerated in December with a measure tracking input prices surging to a near two-year high.

Signs of continued resilience in the economy have pushed back expectations on when the central bank can deliver its first interest rate reduction this year. Traders now see the next cut more likely in June and the Fed staying on hold for the rest of 2025, according to the CME Group’s FedWatch tool.

“Investors also dealt with the further rise of our National Government’s outstanding debt,” Mr. Tantiangco added. The Philippine government’s outstanding debt rose by 0.4% or P70.7 billion to a record P16.09 trillion as of end-November from P16.02 trillion as of end-October, Bureau of the Treasury data showed. Debt climbed by 10.9% year on year.

Almost all sectoral indices ended lower on Wednesday. Holding firms dropped by 1.31% or 73.85 points to 5,546.25; property went down by 0.77% or 18.35 points to 2,341.65; services retreated by 0.57% or 12.30 points to 2,110.89; industrials decreased by 0.46% or 42.76 points to 9,212.40; and financials declined by 0.36% or 8 points to 2,200.71. Meanwhile, mining and oil rose by 1.53% or 118.97 points to 7,850.38.

Value turnover went up to P4.69 billion on Wednesday with 921.83 million issues traded from P4.51 billion with 1.51 billion shares exchanged on Tuesday.

Advancers narrowly beat decliners, 110 versus 106, while 44 names were unchanged.

Net foreign selling dropped to P501.53 million on Wednesday from P894.32 million on Tuesday. — Revin Mikhael D. Ochave with Reuters

Rice price ceiling could be expanded to other produce

PHILIPPINE STAR/MIGUEL DE GUZMAN

By Justine Irish D. Tabile, Reporter

THE Department of Agriculture (DA) said on Wednesday that it is planning to set a maximum suggested retail price (MSRP) for other imported food commodities, expanding on the MSRP scheme for imported rice, which is expected to launch by the end of the month.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. said: “Imported rice is just the beginning. We plan to cast the price net wider to include other imported food commodities like vegetables and meat.”

In a statement, the DA said it is working with the Department of Trade and Industry (DTI) to explore ways to alleviate the financial burden on consumers.

Trade Secretary Ma. Cristina A. Roque said she will soon convene the National Price Coordinating Council to review strategies for stabilizing food prices.

“We aim to strike a balance between business sustainability and consumer protection … We want the public to know that we are leaving no stone unturned in our efforts to ease the burden on consumers,” Ms. Roque said.

According to the DA, it and the DTI are in the process of determining an MSRP for rice with the goal of allowing rice importers and retailers to operate profitably without subjecting consumers to excessively high prices.

Meanwhile, the DA said that it is also considering the declaration of a national food security emergency, which would grant the Secretary the authority to release rice stocks held in reserve by the National Food Authority, helping to increase supply and bring down retail prices.

On DTI’s part, it said that it will review the prevailing regulations governing the sale and labeling of manufactured goods and adapt them to agricultural commodities. 

The Secretaries have agreed to draft and sign a memorandum of understanding to expedite efforts to address the persistently high price of rice and, eventually, other essential commodities, the DA said. 

“By tackling both supply and pricing issues, the government aims to stabilize the rice market and make it more affordable for consumers nationwide,” it added.

In a separate statement, the Philippine Competition Commission (PCC) said it is exploring possible collaboration with the DA to address anti-competitive practices in agricultural.

“The discussion focused on tackling issues such as price fixing, abuses of dominant market position, and the smuggling of agricultural products, which undermine competition and can lead to higher prices,” the PCC said.

“The dialogue marked an important step in enhancing collaboration between the two agencies as they work towards safeguarding the interests of farmers, fisherfolk, and consumers,” it added.

“Through this collaborative approach, the PCC and DA aim to foster a competitive market environment that benefits all stakeholders in the agricultural sector,” the PCC said.

In a briefing on Wednesday, Agriculture Assistant Secretary and Spokesperson Arnel V. de Mesa said that rice imports amounted to 4.68 million metric tons (MMT) in 2024, up from 3.8 MMT a year earlier.

“Since the tariffs are now lower along with our efforts to combat smuggling, we have reduced the incentive to smuggle,” he added.

He said the import levels could reflect the limited supply of smuggled rice.

For 2025, he said imports will depend on how domestic producers perform.

“We are hoping and we are still expecting that the rice sub-sector can recover this year because there’s no El Niño and the rain that we’re experiencing in the first part of the year because of La Niña is beneficial for our dams and for the areas that need water,” he said.

“We are still hoping that our production will be good, and if it is good, and that will correspondingly reduce the volume of imports later on. But it is still early to tell,” he added.

For 2025, the DA projects domestic rice production to return to the 20 million metric-ton level.

Projected P6.79-T 2026 budget could be adjusted after Q1 revenue review

BUDGET SECRETARY AMENAH F. PANGANDAMAN — COURTESY OF DEPARTMENT OF BUDGET AND MANAGEMENT FACEBOOK PAGE

THE Department of Budget and Management (DBM) said an initial assessment in the first quarter of the government’s revenue prospects will determine any adjustments to the 2026 budget estimate of over P6.79 trillion.

“The budget really increases because of increasing revenue collections. That’s why we have to review the targets in the first quarter to determine the level of the budget in 2026,” Budget Assistant Secretary Rolando U. Toledo told reporters on the sidelines of a briefing on Wednesday. He was responding to a query on the size of the 2026 budget and whether the projection contained in the Budget of Expenditures and Sources of Financing (BESF) remains valid.

According to the National Government’s fiscal program, the expenditure program for 2026 is P6.793 trillion.

“If you look at the medium-term fiscal framework (MTFF), there is an amount already, but we will still review this in the first quarter. It’s still up for review because I know Finance Secretary (Ralph G. Recto) is lining up new revenue measures,” Budget Secretary Amenah F. Pangandaman said at the same briefing.

Mr. Toledo said the Development Budget Coordination Committee (DBCC) will still review the 2026 expenditure program to consider macroeconomic factors such as economic growth, inflation, the exchange rate, and fuel prices.

Meanwhile, Ms. Pangandaman assured that the 2025 budget was constitutional and will not be used for electioneering.

“It is not an election budget. It is the budget of the people. We can use the budget to make sure that it contributes to the overall macroeconomic targets of the National Government,” she said when asked whether 2025 budget will play a role in election campaigning.

The government’s expenditure plan for 2025 was fixed at P6.326 trillion, up 10.1% from 2023.

She added the budget will help the Philippines achieve upper-middle income status this year, as well as reduce poverty and earn the country an “A” credit rating.

She added that the Ayuda sa Kapos ang Kita Program (AKAP), a social-assistance program for low income persons, will also help the government hit its economic growth and expenditure targets. AKAP faced calls to remove the program from the 2025 budget, amid allegations that the program could be used for electioneering.

“There is a provision in the draft that politicians are prohibited from putting tarpaulins, faces on stickers, and T-shirts if they give cash assistance or social protection programs… Social Welfare Secretary Rexlon T. Gatchalian (will) also ensure that it will not be used by those running in the coming election. I support his pronouncement,” Ms. Pangandaman said.

She added that the departments of Labor and Employment, Social Welfare and Development, and National Economic and Development Authority (NEDA) are drafting guidelines for the conditional implementation of the program to ensure proper targeting of beneficiaries.

Ms. Pangandaman also noted NEDA Secretary Arsenio M. Balisacan’s proposal to use the national ID to ensure no duplication in AKAP disbursements. 

“One of the provisions that they added is to make sure that the client is indeed affected by the effects of inflation. At the same time, they will apply a ceiling on the number of household members that can avail of AKAP to minimize instances of duplication. I think that is around P5,000 for every family,” she said.

“According to the COMELEC (Commission on Elections) chair, AKAP can be implemented as long as there is no politicizing,” Mr. Toledo added. — Aaron Michael C. Sy

PPP waste-to-energy project in Clark studied

REUTERS

THE Bases Conversion and Development Authority (BCDA) said it commissioned a study on a waste-to-energy project in the Clark Freeport and Special Economic Zone.

According to the BCDA, the proposed facility will rise in Tarlac, supplying locators and taking in some of their waste.

“The BCDA is committed to adopting smart and green innovations to push for the sustainable development of our properties,” BCDA President and Chief Executive Officer Joshua M. Bingcang said.

“Utilizing waste-to-energy technology, in particular, will modernize solid waste management and promote green energy, helping usher Clark’s transition towards a circular economy,” he added.

The BCDA has tapped the Public-Private Partnership  (PPP) Center to put together the study, noting that the timeline is yet to be determined.

The study will contain technical, environmental, social, legal, financial, and economic analyses for the design, construction, operation, and maintenance of the facility at the still undetermined site.

“Once the study is completed, the BCDA will open the project for public bidding. The project is intended to be structured and undertaken pursuant to Republic Act 11966, or the Public-Private Partnership Code of the Philippines, and its implementing rules and regulations,” BCDA said.

Waste-to-energy solutions have been identified as a sustainable alternative to landfills.

Citing a study conducted by the World Bank, the BCDA said that global waste is expected to hit 3.4 billion tons by 2050, while carbon dioxide emissions from solid waste treatment are estimated at 2.6 billion tons.

“With waste-to-energy technology, the BCDA can do its part in reducing greenhouse gas emissions, while also addressing the energy requirements of our community,” Mr. Bingcang said. — Justine Irish D. Tabile

Greenhills mall remains on US ‘counterfeit markets’ list

PHILIPPINE STAR/JONATHAN ASUNCION

THE Greenhills Shopping Center in San Juan City remained listed as a “notorious market for counterfeit goods,” according to the 2024 report issued by the Office of the US Trade Representative (USTR).

“Greenhills Shopping Center remains popular on social media as a destination for purchasing counterfeit goods, and rights holders report high volumes of counterfeit goods in secret showrooms,” according to the USTR 2024 Review of Notorious Markets for Counterfeiting and Piracy published on Jan. 8.

It noted an ongoing transition program of the Intellectual Property Office of the Philippines to transform the shopping center into a high-end mall with legitimate sellers.  

“This program includes efforts at rezoning the mall and shifting sellers to local products through incentives and premium locations in the mall,” it said.

“Rights holders continue to wait and see if the transition program will result in addressing the volume of counterfeit goods,” it added.

The report identified the shopping center as a large mall with many storefronts selling electronics, perfumes, watches, shoes, accessories, and fashion items.

“Law enforcement authorities, in collaboration with rights holders, have conducted raids at the mall, and the management at Greenhills Shopping Center has applied a three-strikes rule to take action against counterfeit sellers,” it said.

Also cited was the e-commerce platform Shopee.

According to the USTR, the availability of counterfeit goods on Shopee varies widely from country to country, with the Taiwan platform identified as a positive example.

However, it noted serious concerns “with the amount of counterfeit goods on Shopee’s platforms in Indonesia, Malaysia, the Philippines, Vietnam, and across Latin America.”

The 2024 Notorious Markets List identified 38 online markets and 33 physical markets that are reported to facilitate substantial trademark counterfeiting or copyright policy. — Justine Irish D. Tabile

BDO sees PHL as global economic outperformer

BW FILE PHOTO

THE  ECONOMY is expected to stand out as a global outperformer due to strong domestic consumption and a young demographic, a BDO Unibank, Inc. official said.

BDO Investor Relations Group Senior Vice-President Dante Tinga, Jr. said in a statement on Wednesday that he is optimistic about the economic outlook despite global headwinds.

“The young, fast-growing population underpins its economic resilience. With half of its citizens aged 25 or younger and an annual population growth rate of 1.6%, domestic consumption has remained strong,” he said.

Household spending has surpassed pre-pandemic levels due to the recovery of overseas labor employment, leading to a stable flow of remittances.

“These inflows continue to strengthen the purchasing power of families, driving consumption-led growth,” BDO said.

Household consumption rose 5.1% in the third quarter, improving from 4.7% in the second quarter. Consumption accounts for over 70% of the economy.

BDO also sees economic growth bolstered by the easing cycle of central banks, including the Bangko Sentral ng Pilipinas (BSP).

With inflation settling within the central bank’s 2-4% target range, BDO sees the Monetary Board continuing to cut borrowing costs cautiously.

Headline inflation picked up to 2.9% in December from 2.5% in November due to higher utility and transport costs, still below the year-earlier 3.9% and within the central bank’s 2.3%-3.1% forecast.

As a result, full-year 2024 inflation averaged 3.2%, slowing from 6% in 2023 and marking the first time since 2021 that the consumer price index settled within the BSP’s 2-4% annual target. This also matched the central bank’s baseline forecast for the year.

“Stabilized rice prices, supported by government measures such as reduced import tariffs, have contributed to price stability. As a result, the BSP is expected to lower interest rates cautiously, creating a favorable environment for business investments and improved consumer confidence,” he said.

The Monetary Board has slashed benchmark borrowing costs by a total of 75 basis points (bps) since it began its easing cycle in August, bringing its policy rate to 5.75%.

Last month, BSP Governor Eli M. Remolona, Jr. said that while the BSP remains in an easing cycle, 100 bps worth of cuts this year may be “too much” amid inflation concerns. He added that the authorities will continue to bring down benchmark interest rates in “baby steps.”

Mr. Remolona added that the central bank is “neither more dovish nor less dovish” and is open to delivering another cut in its first policy meeting for this year, which is scheduled on Feb. 20.

The Federal Reserve’s own easing cycle is also expected to boost Philippine private-sector investment and business sentiment.

“Private capital expenditures remain subdued due to previously high interest rates, but with inflation now under control and rates set to decline, the outlook for private sector investment is improving,” the bank said.

However, economic growth may slow due to worries about US President-elect Donald J. Trump’s fiscal policies, which have also resulted in a stronger dollar, the bank said.

A stronger dollar would weigh on the peso and make imports costlier.

“Moreover, while the Philippines excels in services exports and benefits from significant remittance inflows, there is an urgent need to upskill the workforce to stay competitive in an increasingly digital global economy,” BDO said. — Aaron Michael C. Sy

Vehicles will be required to display fuel economy ratings, DoE says

PHILSTAR FILE PHOTO

VEHICLES will be required to display their fuel efficiency ratings starting this quarter, according to the Department of Energy (DoE).

Manufacturers, importers, distributors, dealers, and rebuilders of all public and private road vehicles will be subject to the rules of the Vehicle Fuel Economy Labeling Program (VFELP), it said.

“The purpose of the program is to provide our public information as to the fuel efficiency of the vehicles that they’re producing,” Patrick T. Aquino, director of the Energy Utilization Management Bureau, said in a briefing on Wednesday.

Authorized by Section 17 of the Energy Efficiency and Conservation Act, VFELP aims to help consumers make informed decisions about vehicle purchases.

The program ensures that fuel economy data, including the engine fuel economy ratings, are readily accessible and verified through the performance labeling requirements set by the DoE with the assistance of the Department of Environment and Natural Resources and the Department of Transportation.

Companies in the industry will be required to undergo registration, covering their head offices and all branches. The registration is valid for three years.

Each vehicle unit must also be registered, with a validity period of six years.

The processing of registrations and label are to be completed within seven working days for company and vehicle registrations and three working days for the fuel economy label and fuel economy sticker, provided submissions are complete and accurate.

Separately, the DoE said it will move to terminate inactive renewable energy contracts to clear the way for “more serious” investments. 

“If they are not able to move then the others who have the technical, the legal, and the financial capability should be given an opportunity to develop the same,” Energy Secretary Raphael P.M. Lotilla said.

“They become idle assets insofar as our people are concerned if they are not developed,” he added.

Last year, the DoE said at least 105 renewable energy projects are being processed for termination due to non-compliance with project timelines. 

Out of the total 105 projects, 88 are either stalled in pre-development or not progressing at all.

“For the first 105, we have almost finished sending out the letters. But you know that some of them might request reconsideration,” Energy Undersecretary Rowena Cristina L. Guevara said.

There are currently over 1,400 renewable energy service contracts, she said.

“We want to make sure that those that are not moving can be removed. And therefore, others can actually apply for those areas but we cannot open those areas unless you terminate the projects that have been assigned to those areas,” Ms. Guevara said. 

These renewable energy projects are expected to provide additional supply to the grid.

For 2025, Mr. Lotilla is seeing a “much better situation” due to fresh capacity generated by new power projects and delivered by energized transmission lines.

“While it is election year, it is also not an El Niño year; in fact it is seen as a La Niña year and therefore the constraints that we saw last year will not be as great as this year in 2025,” Mr. Lotilla said. — Sheldeen Joy Talavera

DoE put in charge of EV, hybrid vehicle classifications for excise tax purposes

REUTERS

THE Bureau of Internal Revenue (BIR) has transferred to the Department of Energy (DoE) the authority to classify automobiles as electric vehicles (EVs) or hybrids, which will determine eligibility for an excise tax exemption. 

“During the inter-agency consultation called by the Department of Finance (DoF) with representatives from Department of Energy, Department of Environment and Natural Resources-Environmental Management Bureau (DENR-EMB), and the BIR, the DoE proposed that the determination of whether an automobile is hybrid or purely electric be reverted to the DoE as originally assigned by RR No. 5-2018,” the BIR said in a Revenue Regulations 001-2025.

Currently, the determination of whether an automobile is hybrid or purely electric is the responsibility of the EMB, which issues Certificates of Conformity and Certificates of Non-Coverage.

Under the Tax Reform for Acceleration and Inclusion law, or Republic Act No. 10963, electric vehicles are fully exempt from the excise tax on vehicles, while hybrid automobiles are 50% exempt.

Under the new setup, the BIR will collect the appropriate excise based on the electric vehicle recognition list published by the DoE.

The list contains the information and classifications for battery electric vehicles, or purely electric vehicles, plug-in hybrid electric vehicles, and hybrid electric vehicles. — Aaron Michael C. Sy

Las Piñas IT park attracts P500-M investment

AN information technology and business process management (IT-BPM) company is set to invest P500 million in One Townsquare Place, a recently proclaimed IT Center in Las Piñas City, the Philippine Economic Zone Authority (PEZA) said.

“The fully built IT Center will host companies in various IT-BPM services, with one prospective locator expected to employ more than 500 Filipinos and invest more than P500 million,” PEZA said in a statement on Wednesday.

On Dec. 20, President Ferdinand R. Marcos, Jr. issued Proclamation No. 765, which designated around 3,729 square meters of land in barangay Almanza Uno, Las Piñas City, as an IT Center.

“The approval of this new ecozone will boost Las Piñas City’s growth and employment in the National Capital Region,” PEZA said.

According to PEZA, the construction of the IT Center cost P1 billion. It has been fully developed since 2017.

Including IT Center, 28 economic zones (ecozones) have been proclaimed during the administration of Mr. Marcos.

Eleven ecozones were proclaimed in 2023, while 17 were proclaimed last year.

Last month, PEZA Director General Tereso O. Panga said he is hoping to increase the number of new ecozone proclamations to 30 in 2025.

He said that the growth areas for economic zones include Calabarzon, Region III, Cebu, and Mindanao.

He added that the investment promotion agency is also looking to expand its portfolio of IT parks.

According to PEZA, it currently regulates 427 ecozones hosting 4,382 locators.

Of the total, 304 are IT parks and centers, 78 are manufacturing hubs, 24 are agro-industrial parks, 17 are tourism hubs, and three are medical tourism hubs. — Justine Irish D. Tabile

Aligning MORE with BEPS

The New Year is a time of renewal and fresh beginnings. For businesses, it is a time to revisit existing policies, and keep abreast of new developments.

In the spirit of new opportunities and progress, the government recently passed Republic Act No. 12066 or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE), with the goal of making the Philippines a more attractive destination for foreign investors wishing to set up their businesses. CREATE MORE builds on the foundations of the CREATE law by introducing, among others, additional enhanced deductions and tax incentives. The new tax law also lowered the corporate income tax (CIT) rate of registered enterprises availing of the enhanced deductions regime to 20%.

From a global tax perspective, I wonder if this is a step for the Philippines to slowly align with the adoption of Base Erosion and Profit Shifting (BEPS), specifically Pillar 2.

Pillar 2 aims to introduce a global minimum 15% tax rate to help ensure that multinational companies with a global annual revenue of 750 million euros or more pay a minimum level of tax on income generated in each jurisdiction where they operate. These rules hope to reduce the instances of profit shifting to low-tax jurisdictions.

While the Philippines signed on to the OECD’s Inclusive Framework on BEPS, we have yet to put in place clear rules on Pillar 2. There are certain intricacies in the adoption of the Pillar 2 rules, as the Philippines would still want to keep a competitive edge in attracting foreign investment. From a regional perspective, neighboring countries have begun adopting Pillar 2 rules. Vietnam and Thailand currently both offer a standard CIT rate of 20%; whereas Malaysia has a standard CIT rate of 24%. Nonetheless, while these countries are also adopting Pillar 2, they continue to offer incentives to qualified projects or enterprises.

Further delving into the incentives in line with Pillar 2, Vietnam adopted Pillar 2 rules effective Jan. 1, 2024. It still offers tax incentives, but if the effective tax rate of the Vietnamese entity falls below 15%, the Qualified Domestic Minimum Top-Up Tax (QDMTT) ensures that the difference is collected domestically rather than by foreign jurisdictions. This allows Vietnam to retain the additional tax revenue (which may otherwise be collected by other jurisdictions) and reinvest it into its own economic and industry development. Malaysia is expected to implement the same in 2025.

On the other hand, Thailand has taken significant steps towards adopting Pillar 2. Currently, the necessary legislation is being drafted and is expected to be effective in 2025. Among its priorities are ensuring that a top-up tax will be applied to ensure that multinational companies operating in Thailand pay a minimum effective tax rate of 15%; and the Thai Board of Investment will propose measures to mitigate the impact of the new tax rules on existing tax incentive programs and to support the country’s competitiveness.

The recently passed CREATE MORE Act appears to be a significant step in the same direction, offering competitive tax incentives similar to those in neighboring ASEAN countries. One of the salient provisions of CREATE MORE is the reduction of the CIT rate to 20% under the Enhanced Deductions Regime (EDR). Specifically for businesses in energy-intensive industries, the EDR may be more attractive because the deduction for power expenses increased from 50% to 100%. The CREATE MORE Act also introduced new deductible expense items related to trade fairs and exhibitions. In addition to these, the incentive period has also been extended to a maximum of 24 to 27 years for entities registered with the Fiscal Incentives Review Board.

Taxpayers also have the option of forgoing the Income Tax Holiday (ITH) and directly availing of the 5% special CIT or EDR. The new law also amended the reckoning period to carry over net operating losses as a deduction for registered enterprises to the last year of the ITH period (previously from the year of loss) to maximize the recovery period.

With the expanded list of enhanced deductions offered by CREATE MORE and lower CIT rate of 20%, qualified entities forming part of a multinational group of companies may be in a better position to still enjoy incentives without paying top-up tax in another jurisdiction. However, as the 15% minimum tax under Pillar 2 is based on financial reporting income, this will need to be validated by crunching the numbers. On the other hand, entities which are not bound to observe Pillar 2 rules might still find the reduced tax rates, enhanced deductions, and longer availment of incentives beneficial. This dual advantage is poised to attract increased investments and stimulate economic activity within the Philippines, reinforcing its position as a prime destination for global business.

In conclusion, as we embrace the New Year with optimism and a forward-looking mindset, the CREATE MORE Act represents a significant step forward in the Philippines’ efforts to create a more favorable investment climate yet still align with global tax standards. By lowering corporate tax rates and offering enhanced incentives, the Philippines is positioning itself as a competitive destination for foreign investment. While promising, careful implementation and monitoring are essential to ensure that these incentives are appropriately targeted and that the country continues to progress towards a fair and transparent tax system yet adopting global tax trends.

The government may also need to take a closer look at how we could properly and effectively integrate Pillar 2 in our taxing environment, maybe following the footsteps of our neighbors. It would need to find the right balance to capture top-up tax from entities which would not meet the minimum 15% effective tax rate (ETR), rather than allowing foreign jurisdictions to collect this, without sacrificing the attractiveness of the incentives being offered to foreign investors. Ultimately, as the global tax landscape evolves, the Philippines must remain vigilant and adaptable to maintain its competitive edge and attract sustainable investments. Here’s to a prosperous and transformative year ahead!

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Ruthie Mae G. Clemente is a manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.

ruthie.mae.clemente@pwc.com

Wildfire rages in Los Angeles, forcing 30,000 to evacuate

SMOKE rises from a wildfire burning near Pacific Palisades on the west side of Los Angeles during a weather driven windstorm, in Los Angeles, California, Jan. 7, 2025. — REUTERS

LOS ANGELES — A rapidly growing wildfire raged across an upscale section of Los Angeles on Tuesday, destroying homes and creating traffic jams as 30,000 people evacuated beneath huge plumes of smoke that covered much of the metropolitan area.

At least 2,921 acres (1,182 hectares) of the Pacific Palisades area between the coastal settlements of Santa Monica and Malibu had burned, officials said, after they had already warned of extreme fire danger from powerful winds that arrived following extended dry weather.

The fire spread as officials warned the worst wind conditions were expected to come overnight, leading to concerns that more neighborhoods could be forced to flee. The city of Santa Monica later ordered evacuations in the northern fringe of town.

Witnesses reported a number homes on fire with flames nearly scorching their cars when people fled the hills of Topanga Canyon, as the fire spread from there down to the Pacific Ocean.

“We feel very blessed at this point that there’s no injuries that are reported,” Los Angeles Fire Chief Kristin Crowley told a press conference, adding that more than 25,000 people in 10,000 homes were threatened.

Firefighters in aircraft scooped water from the sea to drop it on the nearby flames. Flames engulfed homes and bulldozers cleared abandoned vehicles from roads so emergency vehicles could pass, television images showed.

As the sun sets over Los Angeles, towering orange flames illuminated the hills leading to Topanga Canyon.

The fire singed some trees on the grounds of the Getty Villa, a museum loaded with priceless works of art, but the collection remained safe largely because of preventive efforts to trim brush surrounding the buildings, the museum said.

With only one major road leading from the canyon to the coast, and only one coastal highway leading to safety, traffic crawled to a halt, leading people to flee on foot.

Cindy Festa, a Pacific Palisades resident, said that as she evacuated out of the canyon, fires were “this close to the cars,” demonstrating with her thumb and forefinger.

“People left their cars on Palisades Drive. Burning up the hillside. The palm trees — everything is going,” Ms. Festa said from her car.

Before the fire started, the National Weather Service had issued its highest alert for extreme fire conditions for much of Los Angeles County from Tuesday through Thursday, predicting wind gusts of 50 to 80 mph (80 to 130 kph).

With low humidity and dry vegetation due to a lack of rain, the conditions were “about as bad as it gets in terms of fire weather,” the Los Angeles office of the National Weather Service said on X.

Governor Gavin Newsom, who declared a state of emergency, said the state positioned personnel, firetrucks and aircraft elsewhere in Southern California because of the fire danger to the wider region, he added.

“Hopefully, we’re wrong, but we’re anticipating other fires happening concurrently,” Mr. Newsom told the press conference.

A second blaze dubbed the Eaton Fire later broke out some 30 miles (50 km) inland in the foothills above Pasadena, consuming 200 acres (80 hectares), Cal Fire said.

The powerful winds changed President Joseph R. Biden’s travel plans, grounding Air Force One in Los Angeles. He had planned to make a short flight inland to the Coachella Valley for a ceremony to create two new national monuments in California but the event was rescheduled for a later date at the White House.

“I have offered any federal assistance that is needed to help suppress the terrible Pacific Palisades fire,” Mr. Biden said in statement. A federal grant had already been approved to help reimburse the state of California for its fire response, Mr. Biden said.

Pacific Palisades is home to several Hollywood stars. Actor James Woods said on X he was able to evacuate but added, “I do not know at this moment if our home is still standing.”

Actor Steve Guttenberg told KTLA television that friends of his were impeded from evacuating because others had abandoned their cars in the road.

“It’s really important for everybody to band together and don’t worry about your personal property. Just get out,” Mr. Guttenberg said. “Get your loved ones and get out.” — Reuters

US trade deficit with Vietnam soars beyond $110 billion, as weak dong boosts exports

A VIETNAM DONG note is seen in this illustration photo May 31, 2017. — REUTERS

HANOI — The US trade deficit with Vietnam exceeded $110 billion in the first 11 months of 2024, latest US figures show, as exports from the Southeast Asian industrial hub grew amid a record fall of its currency against the dollar.

The latest reading, released on Tuesday by the US statistics agency, showed a nearly 18% rise in the deficit compared with the same period the previous year. The data confirms the Communist-run country has the fourth highest commercial surplus with the United States, topped only by China, the European Union and Mexico.

The large gap is seen by analysts as a major risk for the export-reliant nation amid threats from President-elect Donald Trump to impose tariffs of up to 20% on all US imports.

That risk has been compounded by a sharp fall of Vietnam’s dong in recent months, with the dong trading near its lowest ever levels against the dollar. The trend is closely watched in Washington as Vietnam is one of the countries under scrutiny for potential currency manipulation.

Vietnam, which counts the US as its biggest market, is home to big export-focussed industrial operations of US multinationals such as Apple , Google, Nike  and Intel.

Latest seasonally adjusted trade figures show that in the January-November period Vietnam accumulated a commercial surplus with the US of $111.6 billion, up from $94.8 billion in the same period in 2023. Unadjusted data pointed to a larger gap of $113.1 billion.

In November, the trade gap expanded by another $11.3 billion, accelerating from October, as Vietnam’s exports to the US rose, the adjusted data show, possibly supported by the weak dong.

“If the US perceives that Vietnam is deliberately keeping the dong weak to gain an unfair trade advantage, it could trigger renewed accusations of currency manipulation,” said Leif Schneider, head of international law firm Luther in Vietnam.

Mr. Trump ended his first term in the White House with Treasury declarations of Vietnam and Switzerland as currency manipulators over their market interventions to weaken the value of their currencies.

Vietnam’s central bank has said it was ready to intervene in the foreign exchange market in case of adverse economic impacts from currency moves, and has sold dollars in the past to strengthen the dong.

On Tuesday, before new trade figures were released, the bank said it would monitor Mr. Trump’s policies and adjust accordingly.

The dong’s most recent depreciation against the dollar is broadly in line with other major currencies. — Reuters