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SC affirms arbitral ruling against CJH DevCo in John Hay ecozone dispute

WIKIMEDIA/PATRICKROQUE01

THE Supreme Court (SC) has upheld an arbitral ruling directing CJH Development Corp. (CJH DevCo) to vacate the 247-hectare portion of the John Hay Special Economic Zone (John Hay SEZ) that it rented from the Bases Conversion and Development Authority (BCDA).

The SC en banc, throughJustice Japar B. Dimaampao, upheld a decision from the Philippine Dispute Resolution Center, Inc. (PDRCI) that found CJH DevCo and BCDA to have breached their obligations under their agreement. 

The decision ordered “mutual restitution where parties revert to their original position prior to the execution of the agreement as far as practicable.”

It added that CJH DevCo should return the leased property with the improvements to BCDA.

BCDA should refund to CJH DevCo the rent it paid, amounting to more than P1.42 billion, the SC said.

The SC also said that the Commission on Audit did not commit “grave abuse of discretion” when it dismissed CJH DevCo’s money claim “pending resolution of the BCDA petition before the court.”

BCDA, which holds and administers former US military bases for alternative productive uses, and CJH DevCo had entered into a lease agreement where the latter was awarded a 247-hectare portion following the transformation of Camp John Hay into the 625-hectare John Hay SEZ. — Chloe Mari A. Hufana

Net Foreign Direct Investments

NET INFLOWS of foreign direct investments (FDIs) into the Philippines nearly doubled in January, amid strong demand for local debt instruments, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday. Read the full story.

 

Net Foreign Direct Investment

PEZA projects 5% export growth for its locators

A worker operates the die attach machine at a semiconductor manufacturing plant in Manila, Dec. 10, 2008. — REUTERS

By Justine Irish D. Tabile, Reporter

THE Philippine Economic Zone Authority (PEZA), whose locators account for more than half of the country’s exports, said that it is projecting export growth of 5% this year from companies it oversees, on the expected recovery of the electronics industry.

Tereso O. Panga, director general of PEZA, told BusinessWorld that electronics and semiconductors will still be driving export receipts this year.

“Our best exports this year are IT-BPM (information technology and business process management) services, electronics and semiconductors, metals, and automotive products. While semiconductors saw a decline last year, I expect this to rebound,” Mr. Panga said in a Viber message.

“Investments in green power, manufacturing, and agro-industrial sectors will contribute to PEZA growth in particular and the economy in general, while expansion projects from current locators continue to contribute to overall growth,” he added.

PEZA estimates that its locators’ exports last year hit $63.71 billion, or 61.5% of total exports. It said that it is hoping for such exports to grow 5% this year to around $67 billion.

Exports of IT services were among the top contributors to PEZA exports, accounting for $17.83 billion. IT services performed in ecozones accounted for 50.2% of the total Philippine IT services exports last year, which were valued at $35.5 billion.

Revised data from the Philippine Statistics Authority indicate that the top commodity export last year remained electronic products ($41.91 billion), which accounted for more than half of total exports, even though shipments from the industry declined 9.2%. 

Asked to identify potential risks to the projection, he cited “the global shortage in chips, contraction in the electronics sector due to global slowdown in product demand, and disruption in the global supply chain due to the worsening trade war between the US and China.” 

He also cited the war between Russia and Ukraine, economic tensions in the region due to the West Philippine Sea (WPS) territorial dispute, and the reshoring policy of the US government.

“The WPS has been a long-standing issue even before the current administration. Currently, we have seen more interest from US companies based on recent geopolitical developments,” Mr. Panga said. 

“Chinese companies also continue to look into the Philippines as an optional extended manufacturing base for products meant for the western hemisphere,” he added.

However, he said that the tensions rising in the WPS issue did not have any substantial effect on foreign direct investment (FDI) from China.

“In the US, Australia, South Korea, the EU, and Japan, we expect more FDI as part of the closer economic ties established by the President,” he said.

“We are batting to adjust certain provisions in the laws to create a level playing field with other investment destination countries to further attract these investments and see them locate in the Philippines,” he added.

For this year, he said South Korea and India will be among the top export markets following the signing of a free trade agreement (FTA) with South Korea and calls to develop pharmaceutical economic zones.

“The Philippine-Korean FTA will bode well for the Philippines. We expect a higher level of tech-based companies to invest in the country. As you know, South Korea, like Japan, has been evolving towards high technology exports,” he said.

“This will enhance our workforce knowledge base and improve the skills of our workforce. It will also boost our agricultural product exports,” he added.

PEZA has reported that investments from South Korea hit P51.39 billion as of last year, across for 212 locator companies that exported $1.65 billion in 2023.

“We have also seen an increased interest in India, specifically in the field of medicine production. This is a direct match to the pharma zones we are currently developing,” Mr. Panga said. 

“We see these pharma zones as a base not only for manufacturing but also for research and development, where new medicines may be created,” he added.

Earlier this year, PEZA said that it plans to build pharmaceutical parks in Bulacan and Laguna.

US, Japan infra coordination in PHL expected out of Washington summit

PHILIPPINE STAR/MIGUEL DE GUZMAN

THE WASHINGTON, DC summit bringing together the leaders of the US, Japan and the Philippines is expected to result in more coordinated infrastructure investment in the Philippines by the two other partners, the US National Security Council (NSC) said.

“What I can say is there will be some particularly important announcements related to infrastructure in particular whereby the US and Japan will agree to cooperate on their investments in the Philippines,” Mira Rapp-Hooper, senior director for East Asia and Oceania at the NSC, said at a briefing on Wednesday.

“We do believe that together and working closely with the Government of the Philippines we will be able to deliver for the Filipino people by helping to work together on high-quality, high-standards infrastructure that makes a difference in the lives of everyday people.”

US President Joseph R. Biden is set to host Japanese Prime Minister Fumio Kishida and President Ferdinand R. Marcos, Jr. at the White House on April 11 to discuss economic ties and Indo-Pacific security.

Last month in Tokyo, Foreign Affairs Undersecretary Maria Theresa P. Lazaro met with Japanese Foreign Affairs Senior Deputy Minister Funakoshi Takehiro and US Deputy Secretary of State Kurt Campbell on the advance work for the summit, discussing potential cooperation in critical minerals and cybersecurity.

Ms. Rapp-Hooper said the summit will also tackle energy security, digital connectivity and maritime security.

A US Trade and Investment Mission last month committed to invest over $1 billion in the Philippines, including a deal involving the construction of a $400-million (P22.16 billion) hydrogen and electric refueling station in the Philippines.

The Japan International Cooperation Agency (JICA) has reported that the Philippines received P109 billion in official development assistance (ODA) from Japan between April 2021 and March 2022, the biggest such Japanese commitment in Southeast Asia.

Last month, the Philippines and JICA signed loan deals worth 250 billion yen (P93 billion) for the construction of the Metro Manila Subway and the Dalton Pass East Alignment, which will link San Jose City in Nueva Ecija to Aritao in Nueva Vizcaya, both in the northern Philippines.

The leaders will meet amid heightened tensions between the Philippines and China in the South China Sea.

China has repeatedly sought to obstruct resupply missions to a Philippine outpost in the latter’s exclusive economic zone.

During his visit to Manila last month, US Secretary of State Antony Blinken said Washington’s trilateral cooperation was “a very important platform” for peace. “(It) is not designed against anyone, but in service of realizing a common vision for the future to the benefit of people in all of our countries.”

“If we can more effectively hone our trilateral cooperation, will make the Philippine economy stronger and will affect the everyday lives of the Philippine people,” Ms. Rapp-Hooper said. — John Victor D. Ordoñez

DC trilaterals seen as opening to tap new investment

REUTERS

THE Department of Trade and Industry (DTI) said it is looking to explore new trade and investment opportunities at the Trilateral Economic Ministers Meeting on Thursday in Washington, DC.

In a statement, the DTI said that the meeting will bring together Trade Secretary Alfredo E. Pascual, US Commerce Secretary Gina M. Raimondo, and Japanese Economy, Trade, and Industry Minister Ken Saito.

“The upcoming trilateral meeting is expected to unlock further trade and investment opportunities, in alignment with the government’s objectives to improve infrastructure, upskill workers, ensure environmental sustainability, and invigorate the private sector with meaningful initiatives,” the DTI said.

It added that the meeting could result in agreements that will help create jobs.

Citing the Bangko Sentral ng Pilipinas, the DTI said that foreign direct investment (FDI) rose to $907 million in January, up 89.9%.

“The surge in FDI reflects the unwavering confidence and steadfast trust the global business community places in the Philippines’ economic potential,” Mr. Pascual said.

“This only strengthens our commitment to further improve the country’s business environment to attract even more foreign investment, which in turn will create more jobs and sustain our economic growth,” he added. 

He said that the DTI will continue to focus on manufacturing, real estate, construction, and wholesale and retail trade, which were the industries that drove investments in January.

“The DTI remains focused on further attracting significant investments in these essential sectors and other high-growth industries. By bolstering these foundational industries, the Philippines can create a more robust and resilient economy,” he added. — Justine Irish D. Tabile

World merchandise trade to rise 2.6% in 2024 — WTO

PHOTO COURTESY OF ICTSI

THE World Trade Organization (WTO) said that it projects world merchandise trade volume to grow 2.6% in 2024 and by 3.3% in 2025, with Asia being a major driver.

“WTO economists note that inflationary pressures are expected to abate this year, allowing real incomes to grow again — particularly in advanced economies — thus providing a boost to the consumption of manufactured goods,” it said.

“A recovery of demand for tradable goods in 2024 is already evident, with indices of new export orders pointing to improving conditions for trade at the start of the year,” it added.

Trade volume fell 1.2% in 2023 due to high energy prices and inflation. A recovery is expected over the next two years “as inflationary pressures ease and household incomes improve,” the WTO said.

In particular, the WTO said that imports in Asia remained flat last year as weak demand prevented a stronger recovery in Asia.

“If the forecast is realized, Asia will make a bigger contribution to trade volume growth in 2024 and 2025,” it added.

The WTO projects Asia to add around 1.3 percentage points to the projected 2.9% growth in global exports in 2024 and 1.9 percentage points to the 2.3% growth projection for imports.

Exports from Asian countries are expected to rise 3.4% in 2024 and 2025, while imports are expected to increase 5.6% and 4.7% in 2024 and 2025, respectively.

These projections put Asia among the regions to register the fastest growth in exports and the top region for import growth in the next two years.

According to the WTO, lower inflation in 2024 will support a rebound in consumption and boost merchandise trade volume in 2024 and 2025.

“If recent declines in inflation prove to be durable, policymakers will eventually cut interest rates. This should stimulate investment spending (albeit with a lag), which is intensive in capital goods trade,” it said.

“As cost pressures ease and business confidence improves in the European Union, consumption and investment should stabilize in 2024 and strengthen further in 2025,” it added.

However, the organization said that geopolitical tensions and policy uncertainties could limit the global trade rebound.

“While export growth should improve in many economies as external demand for goods picks up, food and energy prices could again be subject to price spikes linked to geopolitical events,” it said.

“Choosing an appropriate pace of interest rate cuts will also be challenging for central banks in advanced economies, and any miscalculation could lead to financial volatility later in 2024,” it added.

WTO Chief Economist Ralph Ossa said that some governments have become more skeptical of trade, causing them to take steps “in re-shoring production and shifting trade towards friendly nations.”

“The resilience of trade is also being tested by disruptions in two of the world’s main shipping routes: the Panama Canal, which is affected by freshwater shortages, and the diversion of traffic away from the Red Sea,” Mr. Ossa said.

“Under these conditions of sustained disruptions, geopolitical tensions, and policy uncertainty, risks to the trade outlook are tilted to the downside,” he added.

Meanwhile, the WTO’s Global Trade Outlook and Statistics put the Philippines at 24th in terms of imports in world merchandise trade, excluding intra-European Union (EU) trade, last year, accounting for $133 billion.

The Philippines was among the leading exporters and importers of commercial services, excluding intra-EU trade, in 2023. It ranked 21st in terms of commercial service exports ($48 billion), and 26th in terms of imports ($29 billion).

The Philippines was also among the leading exporters of digitally delivered services last year, with exports amounting to $29 billion, or 0.7% of the digitally delivered services exports. — Justine Irish D. Tabile

PHL shares to take cues from US CPI, PPI data

PHILIPPINE SHARES may move sideways when trading resumes on Thursday as the market turns its focus to the release of US consumer and producer inflation data.

On Monday, the bellwether Philippine Stock Exchange index (PSEi) fell by 0.06% or 4.39 points to close at 6,741.07. Meanwhile, the broader all shares index climbed by 0.12% or 4.41 points to finish at 3,559.59.

Philippine financial markets were closed for nonworking days on Tuesday, April 9 (Day of Valor) and Wednesday, April 10 (Eid’l Fitr).

“With the Bangko Sentral ng Pilipinas (BSP) holding its policy rate as expected, market direction for the rest of the week will be driven mainly by US March consumer price index (CPI) and producer price index (PPI) data releases,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“A benign inflation print could keep the local index above the 6,700 level. On the other hand, if the data paints a challenging inflation picture that raises the risk of a further delay in US Federal Reserve rate cuts, then investors should prepare for volatility with a downward bias,” he added.

March US CPI data were scheduled for release overnight, while the PPI report will come out on Thursday.

Meanwhile, there could be an “upward correction” in Philippine shares following the BSP policy decision on Monday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The local stock market would also price in and digest the latest BSP monetary policy-setting meeting and decision after trading on April 8 when BSP Governor Eli M. Remolona, Jr. signaled a possible local policy rate cut in third quarter of 2024,” Mr. Ricafort said.

The BSP on Monday left its key rate unchanged at 6.5% for a fourth straight meeting and signaled a possible delay in rate cuts due to inflation risks.

The Monetary Board maintained its target reverse repurchase rate at a near 17-year high, as expected by 16 economists in a BusinessWorld poll. Interest rates on the overnight deposit and lending facilities were also left unchanged at 6% and 7%.

This is the fourth straight meeting that the BSP stood pat since its 25-basis-point (bp) off-cycle hike in October.

The BSP raised its risk-adjusted inflation forecast this year to 4% from 3.9%. However, it kept its risk-adjusted forecast for 2025 at 3.5%.

The central bank likewise hiked its baseline inflation forecast to 3.8% for 2024 from 3.6% but maintained its 3.2% forecast for next year.

“The BSP [rate cut] projection was still within almost everyone’s projection. For the next two days, volumes may pick up with some spillover from the price action movement in the US,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Meanwhile, Mr. Ricafort put the PSEi’s minor support at 6,630-6,700 and major support levels at 6,360-6,500. — R.M.D. Ochave

Exporters continue opposition to storage fee hikes at ports

THE Philippine Exporters Confederation, Inc. (Philexport) said its members continue to oppose the increase in storage fees imposed by the Philippine Ports Authority (PPA).

“We are still protesting against it. The problem is, every time there is a problem in the ports, they increase the rates,” Philexport President Sergio R. Ortiz-Luis, Jr., told reporters on Friday.

The exporters are proposing a one-time grant of amnesty by the Bureau of Customs to resolve the dispute, as well as weekly auctions of confiscated goods.

“Customs is unlike BIR (Bureau of Internal Revenue), which every time there is a change of administration, declares an amnesty,” Mr. Ortiz-Luis said.

“Customs doesn’t have the power to declare an amnesty, so from the time it was set up, there has been no declaration of amnesty. So what we are suggesting is to declare a one-time amnesty (in Customs) for them to be able to clean out all the (backlog),” he added.

Aside from the one-time amnesty, Mr. Ortiz-Luis also called for a weekly auction of confiscated goods to help decongest PPA facilities.

“The auction of the confiscated goods should be done every week so that (congestion) will decrease… What is important is for us to dispatch the confiscated goods,” he said.

The PPA implemented a 32% hike in storage fees for foreign container cargo on Jan. 6, despite calls from the business sector to defer or reconsider the increase.

In particular, the British Chamber of Commerce of the Philippines called for the increase to be deferred to mid-2024.

Other chambers that opposed the proposal include the American Chamber of Commerce of the Philippines, Inc., the German-Philippine Chamber of Commerce and Industry, and the European Chamber of Commerce of the Philippines.

Asked to comment, the PPA said that the port charges, including cargo handling charges, are based on the terms of concession agreements entered into by the government.

“These adjustments are based on established and accepted metrics and are subjected to thorough scrutiny through public consultations,” it said in a Viber message.

In a public consultation in October, the PPA said that the increase in storage charges will ensure optimal use of the yards and encourage immediate withdrawal of containers, thereby minimizing congestion.

The Department of Transportation added that the increase is meant to “discourage” overstaying cargoes.

“The problem with high logistics costs is the unregulated charges being charged primarily by shipping lines, private container yards, trucking companies, and other service providers that are part of the logistics chain,” the PPA said.

“These charges are all unregulated and are increased arbitrarily without the benefit of any consultation. In the meantime, port charges, including cargo handling charges, account for only less than 5% of the logistics cost,” it said. — Justine Irish D. Tabile

Australian $3-M waste-to-energy project to be operational this year

REUTERS

THE Department of Trade and Industry (DTI) said on Wednesday that an Australian waste-to-energy project is projected to start operations by the end of 2024. 

In a statement, the DTI said that Australian startup Cyclion Pty. Ltd. signed a memorandum of understanding with the National Development Co. (NDC) last month for an investment of $3 million in the waste-to-energy project.

NDC General Manager Antonilo DC Mauricio said: “Our joint efforts will advance waste management solutions, contributing to the national agenda on energy security and environmental sustainability.”

“We are excited to work on this partnership and contribute to the country’s sustainable future with our innovative and sustainable solutions,” Cyclion Founder and Chief Executive Officer Philip Major said.

Under the agreement, Cyclion will build a processing plant in Manila employing the Australian company’s technology for converting bio waste into green fuel.

“The facility’s modular design will enable the processing of 900 tons of waste daily, highlighting the project’s scalability and adaptability to varying waste volumes,” the DTI said.

Trade Secretary Alfredo E. Pascual said that the partnership between the NDC and Cyclion highlights opportunities for Australia and the Philippines to collaborate.

“By strengthening the collaboration between our public and private sectors, we can unlock new avenues for growth and innovation in key sectors like agriculture, education, critical minerals, and clean energy,” Mr. Pascual said. 

Aside from the partnership with NDC, Cyclion also signed a letter of intent with Murdoch University’s Algae Harvest Pty. Ltd. for a research collaboration last year.

The DTI said that the collaboration aims to study new ways of using algae to turn waste into “high-value” products which will be used in the Australian firm’s projects in the Philippines. — Justine Irish D. Tabile

Reducing rice imports to require larger farms, more mechanization

PHILSTAR FILE PHOTO

LARGER farm sizes and mechanization will help reduce dependence on rice imports, an economist said at an Asian Development Bank (ADB) forum on Wednesday.

“(The) Philippines has been increasing imports of rice. Indonesia has a problem of high production costs of rice, so they restrict imports. That is going to continue, unless we expand farm size, facilitate mechanization, and facilitate labor saving technology,” Keijiro Otsura, a development economics professor at the Kobe University Graduate School of Economics, said at the ADB’s Food Security Forum. 

Milled rice imports to the Philippines totaled 886,963.11 metric tons (MT) as of March, running ahead of the pace for imports in the first quarter of 2023.

El Niño is expected to weigh on rice production this year. The US Department of Agriculture forecasts that Philippine rice imports could hit up to 4 million MT this year.

Food security experts also noted the importance of extending financing to small-scale farmers and food producers, who supply 80% of the Asia-Pacific region’s food, according to the United Nations Food and Agriculture Organization. 

Paul Winters, executive director of the Innovation Commission for Climate Change, Food Security, and Agriculture at the University of Chicago, noted that around 2-3% of climate financing goes to small-scale farmers, who are deemed most vulnerable to climate change impacts.

“We need to explore opportunities, not just working with governments, but working directly with farm cooperatives, farm organizations, and direct funding (to increase small-scale farmers’ allocations),” he told the forum.

Jyotsna Puri, associate vice-president of the International Food for Agricultural Development, said inputs from small-scale farmers are essential, as they are “more likely to be incorporating biodiverse methods, agro-ecology, agro-forestry.

Meanwhile, André Zandstra, global director for Innovative Finance & Resource Mobilization at the Consortium of International Agricultural Research Centers, noted that financial institutions should be more precise in their agendas for agricultural and food systems funding.

“Obviously, there’s been a very clear interest and importance in agriculture and food systems… but it’s also creating competition and fragmentation that we need to resist,” he said. — Beatriz Marie D. Cruz

MWSS: Angat can support water allocation of 50 cms

THE Metropolitan Waterworks and Sewerage System (MWSS) said Angat Dam water levels have not dropped below 195 meters, arguing for a water allocation of 50 cubic meters per second (cms), which it said was needed to ensure uninterrupted water supply.

“(The Angat Dam water level) did not drop below 195 meters,” which can accommodate a water allocation of 50 cms, Patrick James B. Dizon, a manager with the MWSS water and sewerage management department, said in a Viber message.

The National Water Resources Board set the raw water allocation for Metro Manila at 50 cms for March and early April.

“For MWSS, we want to provide a continuous 50 cms to avoid water interruption for our users,” Mr. Dizon said.

Angat Dam is the main source of water for the National Capital Region, accounting for about 90% of its potable water supply.

As of Wednesday morning, the water level in Angat Dam was 195.85 meters, against the 196.15-meter reading a day earlier, according to the government weather service, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration). 

The current level is 16.15 meters below the dam’s normal high level of 212 meters. The minimum operating level is 180 meters and critical level 160 meters.

The MWSS water concessionaires have prepared more than 130 static tanks to be deployed if needed, Mr. Dizon said. — Sheldeen Joy Talavera

El Niño impact to worsen, Greenpeace says

REUTERS

THE effects of El Niño are likely to worsen in the next few years, causing more  damage to the livelihoods of farmers and fisherfolk, Greenpeace Philippines said.

“We are seeing a trend that El Niño is getting worse…there’s a worrying trend in the past few years that its effects are increasing,” Jefferson M. Chua, a campaigner for Greenpeace Philippines told BusinessWorld.

He added that with human-induced or anthropogenic climate change causing temperatures to rise, the effects of El Niño are magnified.

The weather phenomenon has started weakening but will persist until May, according to the government weather service, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration).

Its effects, however, are expected to last until August, with rains brought about by La Niña taking over.

PAGASA said there is a 62% probability that La Niña will develop between June and August.

“What is happening now is that there are a lot of farmers and fisherfolk being affected, and the social safety mechanisms implemented to not make the impact too hard for them are failing,” Mr. Chua said.

He said that the government should implement proactive policies to support “the most vulnerable in society.”

“The problem is that (the government) has been reactive… the key feature with our systems here is that we can only access emergency funds when a calamity is declared,” he added.

Agricultural damage caused by El Niño has been reckoned at P2.63 billion, affecting 54,203 farmers and 53,879 hectares of farmland, according to a Department of Agriculture (DA) bulletin.

Rice was the most affected crop with 72,733 metric tons (MT) of damage, equivalent to P1.7 billion or about 65% of all agricultural losses.

This was followed by corn with 35,885 MT of damage, valued at P591.74 million.

“What complicates matters is that kahit walang El Niño (even without El Niño) the effects of climate change will invariably affect food security either way,” he said.

PAGASA has reported that 19 provinces in Luzon, 14 in the Visayas, and eight in Mindanao are experiencing meteorological drought; 23 provinces are undergoing dry spells; and eight have reported dry conditions.

In a report last week, the National Disaster Risk Reduction and Management Council said that 18 local government units have declared states of calamity due to El Niño. — Adrian H. Halili

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