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Knight Frank: Manila 3rd cheapest prime office cost in Asia Pacific in Q1

THE Philippine capital region was the third-cheapest prime office market of 23 countries in the Asia-Pacific region during the first quarter of 2024, according to real estate consultancy Knight Frank. Read the full story.

 

Knight Frank: Manila 3<sup>rd</sup> cheapest prime office Cost in Asia Pacific in Q1

Clark Airport sees recovery in passenger numbers by 2026

THE operator of Clark International Airport, Luzon International Premier Airport Development Corp. (LIPAD), said it expects passenger numbers to return to pre-pandemic levels by 2026, though the recovery could take place as early as 2025.

“So, hopefully, 2025 will probably be the earliest, and 2026 the latest year that we will be able to do 100% recovery of our pre-pandemic numbers,” LIPAD President and Chief Executive Officer Noel Manankil said at the One Clark Forum on Friday.

“We’d like to do the recovery faster… But in reality, and I think everybody’s aware, there are some challenges also in the industry,” Mr. Manankil said.

These challenges, he said, include the grounding of some aircraft for engine problems involving the Airbus A320/321 NEO fleet, which is in wide use among Philippine carriers.

Last year, engine supplier Pratt & Whitney announced the need to inspect the aircraft type’s engines, which has disrupted flights.

Visitor numbers from China have also not recovered due to travel restrictions, he added.

“If you look at the mix of travelers and airlines that are present in Clark, a big chunk of that is actually coming from the Chinese market. So, that has not recovered fully,” Mr. Manankil said.

Last year, passenger traffic, including domestic and international, at Clark airport hit 2 million, or about 50% of 2019 levels. 

The number of flights at the airport totaled 14,867 last year, equivalent to 42% of 2019 levels, with domestic flights at 24% recovery.

“This year we are looking at anywhere from 2.4 million passengers to 2.7 million passengers, and we are reviewing our traffic projections with (operations concession holder Changi Airports International),” Mr. Manankil said.

The airport’s capacity as designed is 8 million passengers per annum, but as built, capacity is only at 4 million.

Meanwhile, Bases Conversion and Development Authority (BCDA) President and Chief Executive Officer Joshua M. Bingcang said that to support LIPAD in achieving its targets, the BCDA, together with Clark International Airport Corp., will be embarking on infrastructure upgrades.

“The thing about Clark (airport) is that it’s government infrastructure. So definitely, the government will provide the needed support,” Mr. Bingcang said.

These projects include the P1.1-billion CRK Direct Access Link to the airport and the P21-billion Clark Entertainment and Events Center.

“These infrastructure projects will ensure that the objective of achieving those numbers is realized,” he said.

The BCDA is also hoping to build a second runway to attract more airlines and provide redundancy for Clark operations in the event of shutdowns or maintenance. — Justine Irish D. Tabile

Manila prime office 3rd cheapest in Asia-Pacific in Q1

ALEXES GERARD-UNSPLASH

THE Philippine capital region was the third-cheapest prime office market of 23 countries in the Asia-Pacific region during the first quarter of 2024, according to real estate consultancy Knight Frank.

According to the Knight Frank Asia-Pacific Office Markets report, Metro Manila prime office costs averaged $28.28 per square foot during the quarter.

Kuala Lumpur ($17.91) was the cheapest, followed by Jakarta ($26.18). Rounding out the bottom six were Phnom Penh ($34.13), Bengaluru (35.99) and Auckland (41.94).

Knight Frank: Manila 3<sup>rd</sup> cheapest prime office Cost in Asia Pacific in Q1Meanwhile, the most expensive were Hong Kong ($159.63), Singapore, ($114.18), and Sydney ($93.47).

“Despite elevated vacancies of close to 25% in Southeast Asia’s emerging markets, prime rents rose by an average of over 2% quarter on quarter mainly on the strength of Manila’s market,” Knight Frank said in the report.

Rents in Manila declined 5.4% year on year, steeper than the 3.2% average drop in the region.

Fifteen of the 23 cities monitored in the region reported stable-to-increasing rents year on year, up from 13 in the fourth quarter of 2023, Knight Frank said.

Manila also recorded a 12.9% vacancy rate in the first quarter, which is projected to rise in the 12-month forecast, the consultancy said.

Seoul recorded the lowest vacancy rate at 1.3% and Kuala Lumpur has the highest at 29.7% in the first quarter.

“Vacancies in the Philippine capital tightened by close to 4% points during the quarter from 16.4% in Q4 2023. A year ago, vacancies were threatening to breach 20%,” it said.

Meanwhile, Manila office space in the pipeline this year is expected to double and exceed 100,000 square meters.

Manila pipeline supply is estimated at 3.5% of the current stock with flight to quality to new projects expected as new stock in 2024 “hits a cyclical high.”

Despite the expected rise in vacancy levels, Knight Frank noted that Philippine outsourcing has experienced a “robust recovery” in the second half of 2023, with rapid take up, especially from existing tenants expanding in top-rated buildings.

Across the region, average prime rents registered their seventh consecutive quarterly decline to 3.2% year on year in the first quarter of 2024, compared with the 2.4% year-on-year fall in the fourth quarter of 2023.

It added that the regional vacancies marginally rose to 14.9%, sustaining a trend that have seen the metric continually breach record highs since the fourth quarter of 2022.

Knight Frank said it is cautious about the expectations for the office market in the region but on the whole, the prime office segment will remain tenant-favorable in 2024 with the vacancy rate expected to stay on an upward trend.

It said occupiers in the region are signaling more return-to-office work arrangements and registered significant gains in sentiment pointing to a return to pre-pandemic levels of occupancy.

“A consistent theme across the region is the strength of demand for space at the higher end. These conditions were particularly acute in Australia and New Zealand but also observed in Tokyo as well as Southeast Asia’s emerging markets,” Knight Frank Global Head of Occupier Strategy and Solutions Tim Armstrong said.

Mr. Armstrong added that the firm expects a flight to quality to intensify as occupiers optimize portfolios, experiment and evolve their hybrid work plans and hit environmental, social, and governance targets. — Aubrey Rose A. Inosante

Three months’ supply set as sugar import trigger

BOC - PUBLIC INFORMATION AND ASSISTANCE DIVISION (BOC-PIAD)

THE Sugar Regulatory Administration (SRA) said on Monday that it has set the decline of sugar inventories to the equivalent of three months’ demand as the trigger event for allowing sugar imports.

SRA Administrator Pablo Luis S. Azcona told reporters: “When we need to import is actually at the moment still undergoing study. We are looking at it,” he said.

“What the SRA and the Department of Agriculture (DA) did was identify a trigger point in stock levels, that if we hit that point that’s when we will activate our importation plan,” Mr. Azcona added.

He said that the three-month trigger point accounts for the shipping time of raw sugar imports and the time they take to clear from the Bureau of Customs.

“If we need to import it will need to arrive in the country in July, August up to the beginning of September before milling season (if the demand continues as is),” he added.

The increase in demand was due to the early end of the milling season, which caused large industrial consumers to stock up.

“If the current demand continues, we will need the sugar by sometimes September to October, which is the start of the milling season,” he said.

He added that President Ferdinand R. Marcos, Jr. had recommended maintain stocks at 185 thousand metric tons (MT) to 200 thousand MT, equivalent to a two-month buffer.

Mr. Azcona said that despite an increase in production during the crop year, demand remained the same.

“We have a lot of stock on hand. So, that’s why regarding imports, we’re just waiting for trigger points. We’re studying it, but it’s not that urgent yet. If demand continues, we might need to import our buffer stock,” he added.

Raw sugar production hit 1.92 million MT as of May 5, 9% higher from a year earlier.

According to the SRA, the national raw sugar inventory was 568,734 MT, while demand was estimated at 1.3 million MT.

“As of now, there are a few mills still producing or harvesting,” he said.

Mr. Azcona said that the imports will help prevent a surge in prices and allow industrial users to build up ample stock.

“What we are preventing is a drop in supply to a level that the market will become insecure… Number two, our industrial or manufacturing market… needs to be secure knowing that their factories will always have a supply of sugar,” he added. — Adrian H. Halili

JICA announces Sumitomo, Hankyu tie-up to enhance LRT-1 operations

PHILIPPINE STAR/EDD GUMBAN

THE Japan International Cooperation Agency (JICA) said the tie-up of Sumitomo Corp. and Hankyu Corp. have agreed to enhance the operations and maintenance of Light Rail Transit Line 1 (LRT-1).

“This project is the first overseas investment in railroad operation and maintenance for Hankyu Corp. and JICA, encouraging Japanese companies to expand their high-quality infrastructure business overseas,” JICA said in a statement. 

The agreement was finalized on April 25.

JICA cited the need to improve transportation infrastructure in the capital region to maximize the Philippines’ growth potential.

“However, Metro Manila is considered one of ASEAN’s (Association of Southeast Asian Nations) most congested metropolitan areas, highlighting the pressing need for improving the public transportation network, including the development of new railroad infrastructure,” JICA said.

Ongoing construction will extend LRT-1 to Cavite.

The LRT-1 Cavite Extension project seeks to add 11 kilometers to the current line, serving 800,000 passengers a day. It would also increase the number of LRT-1 stations from 20 to 28, linking Quezon City to Bacoor, Cavite.

Phase one of the project, which covers an additional 6.2 kilometers to the rail line, is 97% completed as of March, its private operator Light Rail Manila Corp. (LRMC) said. It is expected to be operational by the fourth quarter of 2024.

Sumitomo Corp. began investing in LRT-1 in 2020, supporting the LRMC’s procurement of spare parts.

“From now on, the company will collaborate with Hankyu and JICA, its new partners, to help further increase the value of the business undertaken by LRMC,” it said in a separate statement.

Hankyu Corp. operates urban transportation and real estate businesses in Japan’s Kansai region.

“In collaboration with LRMC and its other shareholders, Sumitomo Corp., Hankyu and JICA will harness their respective strengths and expertise to make LRT-1 even safer and more convenient, thereby contributing to reinforcing the transportation network of Metro Manila,” Sumitomo Corp. said. — Beatriz Marie D. Cruz

EEI Corp. awarded P1.79-B contract for Cavitex-Calax link 4 project

EEI Corp. said it has been awarded the P1.79-billion contract for the construction of Cavitex-Calax link segment 4.

In a regulatory filing on Monday, EEI said it received the letter of acceptance issued by CAVITEX Infrastructure Corp. (CIC) for the construction of the 1.2 kilometer, 2×2 lanes expressway connecting CAVITEX and CALAX.

“The Company received the Letter of Acceptance issued by the CAVITEX Infrastructure Corp. for the Construction of the CAVITEX-CALAX Link (Segment 4 Extension) Project for a total contract price of P1,791,542,140.01,” EEI told the stock exchange.

According to CIC, a unit of Metro Pacific Tollways Corp. (MPTC), the segment four project will connect Cavitex or the Manila-Cavite Expressway and Calax or the Cavite-Laguna Expressway.

Established in 1931, EEI has business interests in construction services and the distribution of industrial and machinery systems.

EEI is primarily engaged in the construction of power-generating facilities, oil refineries, chemical production plants, rails, ports, expressways, and high-rise towers.

Its subsidiaries include EEI Ltd., EEI Construction and Marine, Inc., and EEI Power Corp.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

DTI trading company backed to oversee rice imports

AN AGENCY of the Department of Trade and Industry (DTI) should oversee rice imports to comply with the implementing rules and regulations of the Rice Tariffication Law of 2019, the Foundation for Economic Freedom, Inc. (FEF) said.

In a statement on Monday, FEF said the Philippine International Trading Corp. (PITC) has a mandate to import rice “if there is an urgent justification for importing rice.”

“This is a better option because the public perception of the Department of Agriculture is that it should promote the interests of the cultivators rather than the consumers, and DTI is legally mandated to perform the latter,” the organization said.

Congress is currently amending the law to restore the power of the National Food Authority (NFA) to import rice and engage in rice retailing.

The law, or Republic Act No. 11203, privatized the function of importing rice formerly carried out by the NFA. It allowed private traders to bring in their own shipments provided they pay a tariff of 35% on Southeast Asian grain. The rules have since been tweaked to allow such tariffs for rice from any source.

The NFA had been reduced to maintaining an emergency inventory from domestically grown rice.

“The law is being amended because of the perception among our selected policymakers and officials that it has not arrested rising prices,” said the FEF.

“What is not being said is that the soaring rice prices were brought about by exogenous factors that are … beyond the control of the law,” it added.

The factors include the Ukraine-Russian conflict, which resulted in higher fuel, fertilizer, and grain prices; the export ban on non-basmati rice by the Indian government; and the conflict in the Middle East, which put pressure on fuel prices.

“Ironically, the law is being blamed as the culprit behind the rising rice prices. Some legislators and senior officials are offering the solution to bring (the NFA) back to its previous role by granting it again the power to import rice and regulate rice retail trading,” the FEF said.

“This proposal will reverse all the beneficial reforms in the rice policy framework and will reinstate, for the wrong reasons, the previous framework, which was historically prone to governance vulnerabilities and fiscal unsustainability,” it added.

Aside from giving importing duties to the PITC, the FEF said that the government should consider its proposal last year of temporarily reducing the rice import duty to 10% to lower the landed cost of imported rice, which may result in lower wholesale and retail prices.

It added that instead of giving back NFA’s other functions, the agency should instead ramp up its “integral function,” which is to procure palay and build a “buffer stock” for emergency situations.

“Unfortunately, NFA’s previous performance in this role leaves much room for improvement. No one is telling the reason why, though the agency persistently claims that its prize stabilization function should be restored,” the FEF said.

The FEF also asked the Congress to look into the results of studies on how the Rice Competitiveness Enhancement Fund was implemented and how the National Rice Program performed before proposing amendments to the law.

“They should be able to distill lessons and insights learned from these evaluation studies, adopting rigorous methodologies in analyzing empirical data and evidence,” the FEF said.

“Only then can we have a rational and scientific approach to addressing the challenges hounding our rice sector,” it added. — Justine Irish D. Tabile

Rice imports seen undershooting US Agri dep’t estimate for 2025

REUTERS

THE Department of Agriculture (DA) said that it is expecting rice imports in 2025 to come in under the US Department of Agriculture’s (USDA) estimates of 4.2 million metric tons (MT).

“It’s possible that the projections of the USDA would change… we are expecting them to change,” Agriculture Assistant Secretary and Spokesperson Arnel V. de Mesa told reporters.

The USDA forecast Philippine rice imports for 2025 to exceed its revised estimate of 3.9 million MT for this year.

“Last year they projected 3.9 million MT, while we only imported 3.6 million MT. Early this year they projected 4.1 million MT, then they lowered it again to 3.9 million MT,” he added.

As of May 2, the Philippines had imported 1.6 million MT of rice, according to the Bureau of Plant Industry.

The USDA said that the import forecast for 2025 was based on an assumption of continued growth in consumption.

“The Philippines is expected to again be the largest global rice importer,” it said.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. has described the USDA estimate as a “worst case scenario,” as the DA expects domestic production to increase.

The DA is projecting that palay or unmilled rice production to exceed 0 million MT.

The DA is also expecting a “more destructive” La Niña, which will follow an El Niño, which is thought to be weakening.

PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration), the government weather service, said that there is a 62% chance of La Niña occurring during June to August.

“It is possible that (La Niña) would occur towards the end of the year, where there will be stronger storms. By that time, we will have harvested for the wet season,” Mr. De Mesa said.

He added that once La Niña sets in later this year, the dry season planting for rice will be affected.

“It starts in October-November… So, it might have an impact later,” he said.

The La Niña phenomenon typically brings cooler average sea temperatures and above-normal rainfall.

He added that the average loss to agriculture during typhoons is about 500 to 600 thousand MT.

“Palay is typically affected by flooding, because losses are greater if flooding and typhoons are severe,” he said

The DA said it’s for La Niña focus on areas historically affected by the weather phenomenon. — Adrian H. Halili

German companies report positive sentiment in next 12 months

PHILSTAR FILE PHOTO

MOST German businesses in the Philippines expressed optimism about business conditions in the next 12 months as the economy, investment, and employment improve.

In the German-Philippine Chamber Commerce and Industry (GPCCI) Spring 2024 survey, 61% of the 70 participants said that they are confident in business developments for the next 12 months, while 35 participants said they remain confident about current business conditions.

“It’s encouraging to see such confidence from businesses involved in German-Philippine relations, forecasting a bullish local economy,” GPCCI President Marie Antoniette Mariano said in a statement on Monday.

“This optimism surely points to a thriving environment in the Philippines for both investment and job creation over the next 12 months,” Ms. Mariano added.

In the survey, 55% of the companies said that they expect the economy to improve over the next 12 months, while 61% and 44% said that they expect employment and investment, respectively, to improve.

However, the results of the Spring 2024 survey showed a decline in business sentiment, as the Fall 2023 survey had returned a 68% rate of optimism for business conditions in the next 12 months.

Meanwhile, German businesses in the Philippines have identified the country’s economic policy conditions as the primary challenge in doing business in the Philippines.

“(This is) due to complex regulations, frequent policy changes, and extensive bureaucracy creating an unpredictable environment,” the GPCCI said.

Rounding up the top three risks identified by the participants are high energy prices and supply chain disruptions and inadequate infrastructure, as these impact profit margins, operating costs, and operational efficiency.

“To capitalize on the current economic optimism, it’s imperative that the Philippine government work closely with businesses to resolve these identified challenges,” says GPCCI Board Director and Policy and Advocacy Chairperson Marian Norbert Majer.

“Addressing these issues can help create a more predictable and favorable business environment and ensure that this bullish momentum translates into substantial outcomes that will help the Philippines attain sustained economic growth,” Mr. Majer added.

Asked what makes it hard for companies to diversify, the German businesses cited increased legal and regulatory issues, difficulties in finding suppliers and business partners, and high costs.

Despite this, more than half, or 55%, of the companies said that they are prepared to handle international crises and geopolitical risks.

“Our network continuously assesses the resilience of German companies’ supply chains at their international locations, aiming to significantly mitigate the risk of future disruptions, such as transport interruptions or the sudden loss of production facilities,” said GPCCI Executive Director Christopher Zimmer.

“We see that our respondents in the Philippines are actively enhancing the resilience of their operations by expanding supplier networks and venturing into new markets,” he added. — Justine Irish D. Tabile

Invoicing requirements under EoPT Act

In our earlier article, “Removal of the 5-Year Validity of Receipts and Invoices,” I explained that the Philippine tax system is mostly driven by supporting documents and that the deductibility of allowable expenses and claiming of input value-added tax (VAT) rely heavily on valid invoices. With the implementation of the Ease of Paying Taxes (EoPT) Act, changes are now in effect in the way taxpayers provide proof for their sales and purchases.

One of the many changes under the EoPT Act is that the invoice takes the place of the official receipt as the primary document to evidence the sale of services. An invoice shall now be the primary supporting document for both sales of goods and services. Taxpayers, especially service providers, should adapt to these changes.

The Bureau of Internal Revenue (BIR), through Revenue Regulations (RR) No. 7-2024, which took effect on April 27, laid down the new rules of invoicing brought about by the EoPT Act.

VALIDITY OF MANUAL AND LOOSE-LEAF OFFICIAL RECEIPTS
Taxpayers, especially service providers, can no longer issue manual or loose-leaf official receipts to support their sales of services upon the effectivity of RR No. 7-2024. Issuance of official receipts for the sale of services starting April 27 will not be considered evidence of sales of services; taxpayers who issued the same as the primary supporting document will be penalized.

Now what shall be done with the existing official receipts? Taxpayers have two options in this case.

The first option is to use the existing official receipts as a supplementary document that will be issued to customers upon the collection of the sale of services. Taxpayers opting for this should, however, stamp the words “THIS DOCUMENT IS NOT VALID FOR CLAIMING OF INPUT TAX” on the face of the OR. This is proof that taxpayers cannot and should not use an official receipt as the primary supporting document for claiming input VAT on purchases of services.

Alternatively, taxpayers may convert the remaining official receipts to Invoices. If this option is chosen, taxpayers should strike through the word “Official Receipt” on the face of the printed receipt and stamp the words “Invoice,” “Cash invoice,” “Charge invoice,” “Credit invoice,” “Billing invoice,” “Service invoice,” or any name describing the transaction, so long as the word “Invoice” is indicated. Converted official receipts are valid for claiming input VAT until Dec. 31, 2024, and thereafter may be used only as supplementary documents. The conversion of official receipts to invoices does not require approval from the BIR, but taxpayers doing this should submit an inventory of unused official receipts, indicating the number of booklets and corresponding serial numbers, within thirty (30) days from the effectivity of RR No. 7-2024, or until May 27, 2024.

VALIDITY OF ORS ISSUED BY CASH REGISTER MACHINES (CRMS), POINT-OF-SALE (POS) MACHINES, AND E-RECEIPTING OR ELECTRONIC INVOICING SOFTWARE
Like taxpayers issuing manual official receipts, those taxpayers using CRMs, PoS machines, and e-receipting/electronic invoicing software may also change the word “Official Receipt” to any name describing the transaction, so long as the word “Invoice” is indicated. This reconfiguration is only considered a minor system enhancement; hence, taxpayers need not notify the BIR and they do not need to reaccredit their sales software or system or reapply for a new Permit to Use (PTU). However, the serial number of the renamed invoice should just continue the last series of the previously approved official receipt; hence, taxpayers should notify the BIR office which has jurisdiction over the place where machines are used, indicating the starting serial number of the converted invoice.

Since the reconfiguration of the software is considered a minor system enhancement, the BIR only gave taxpayers employing CRM, PoS machines, and e-receipting/electronic invoicing software until the effectivity of RR No. 7-2024 to comply with the changes. Hence, if you now purchase from a seller that uses CRM, PoS machines, or e-receipting/electronic invoicing, make sure that you are issued an “invoice,” otherwise you cannot claim the input VAT on your purchase of services.

VALIDITY OF ORS ISSUED BY COMPUTERIZED ACCOUNTING SYSTEMS (CAS)
The system reconfiguration of CAS, or computerized books of account (CBA), unlike CRM, PoS, and e-receipting/electronic invoicing software, is considered a major system enhancement. The reconfiguration will affect not just the invoicing system but the whole timing of reporting of output VAT on sale of services; hence, there is a need to surrender the previously issued acknowledgement certificate (AC) or PTU, which will require the taxpayers to apply for a new AC. The required annex of the AC should indicate all branches (if applicable) that are using the system and the sets of series of invoices to be used by each of the branches.

Since the reconfiguration is regarded as a major system enhancement, the BIR gave taxpayers until June 30, 2024, to effect these system enhancements. As early as now, the taxpayers should start reconfiguring their CAS/CBA to reflect the changes in the timing of reporting revenue — upon rendition of services and not upon collection — especially for service-oriented taxpayers. Taxpayers should be in the process of collating the necessary documentation required to secure a new AC. If the taxpayers find that the needed enhancements cannot be made by June 30, they can request an extension by seeking approval from the Regional Director or Assistant Commissioner for Large Taxpayers. Those taxpayers who obtain such approval have six months from the date of the effectivity of RR No. 7-2024, or until Oct. 27, 2024, to make the necessary enhancements.

INVOICES UNDER RR NO. 3-2024 TRANSITORY PROVISIONS
In all cases above, if the taxpayer collects on the services it rendered prior to the effectivity of the regulations, a corresponding invoice must be issued in order for the purchasers to validly claim the input VAT on their purchase of services.

DIFFERENCES IN THE TRANSITORY PROVISIONS OF THE EOPT ACT AND RR NO. 7-2024
The transitory provisions of the EoPT Act provided taxpayers with six months from the effectivity of the implementing rules and regulations (IRRs) or until Oct. 27, 2024, to comply with the changes particular to VAT and percentage taxes; this covers the invoicing requirements. This leaves lingering questions.

Did the issuance of RR No. 7-2024 shorten the period provided under the EoPT Act for taxpayers to comply with these changes in the VAT and percentage taxes? Should the manual/loose-leaf official receipts and those issued by CRM, PoS machines, and e-receipting/electronic invoicing software still be valid until six months from the effectivity of the IRR and not upon the effectivity of RR No. 7-2024? Should taxpayers using CAS/CBA be given more time to comply with the system enhancements required, not just until June 30, 2024?

I surely hope the BIR will release an issuance on the alignment of the transitory provisions of RR No. 7-2024 and the EoPT Act. I believe that our taxpayers are willing to comply with the provisions of the EoPT Act, but they need more time to effect these changes. I know and I believe that the BIR is one of the supporters of the Ease of Doing Business Act, and alignment is truly in line with easing the taxpayers’ transition to the new law.

Overall, RR No. 7-2024, among others, sheds light on the taxpayers’ questions about the major changes brought about by the EoPT Act, albeit with hanging questions still. Valid supporting documents really play a pivotal role in the Philippine tax system. With the implementation of the EoPT Act, taxpayers substantiate their sales and purchases a little differently. As we navigate these changes, it becomes imperative for taxpayers to adapt swiftly and ensure compliance with the evolving regulations to avoid paying unnecessary penalties.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Runell Alvyn V. Sarmiento is a senior in charge from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

PSEi rises on bargain-hunting, BSP policy bets

BW FILE PHOTO

PHILIPPINE SHARES rose on Monday on bargain hunting, the latest foreign direct investments (FDIs) data and expectations that the central bank will extend its policy pause for a fifth straight meeting this week.

The benchmark Philippine Stock Exchange index (PSEi) went up by 1.41% or 92.32 points to end at 6,604.25 on Monday, while the broader all shares index climbed by 0.88% or 30.63 points to close at 3,507.76.

“The local bourse jumped by 92.32 points (1.41%) to 6,604.25, attributed to bargain hunting following two consecutive days of market decline,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message. “Additionally, strong February FDI data bolstered sentiment.”

FDI inflows climbed by 29.3% to $1.364 billion in February from $1.055 billion in the same month a year ago, Bangko Sentral ng Pilipinas (BSP) data showed.

This was its highest level in 26 months or since the $2.662-billion net inflows recorded in December 2021.

“The market’s resilience and subsequent upward trajectory can be attributed to the prevailing sentiment that the BSP would opt to leave its benchmark rates unchanged. This provided a sense of stability and reassurance to investors and traders alike,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan added in a Viber message.

“Market sentiment was further bolstered by speculation that the BSP’s may potentially shift towards a dovish monetary policy stance. This speculation gained traction primarily due to the disappointing household consumer spending data unveiled in the first-quarter GDP (gross domestic product) results,” he added.

A BusinessWorld poll conducted last week showed 17 out of 19 analysts expect the BSP to maintain its policy rate at a 17-year high of 6.5% for a fifth straight meeting at its May 16 review.

Meanwhile, Philippine GDP expanded by 5.7% in the first quarter, faster than the 5.5% expansion logged in October-December 2023.

However, this was slower than the 6.4% growth seen in the first quarter of 2023 and was below the 5.9% median forecast of 20 economists in a BusinessWorld poll.

This also fell short of the government’s 6-7% full-year economic growth target.

All sectoral indices ended higher. Services rose by 3.19% or 61.84 points to 1,999.14; financials surged by 2.7% or 54.26 points to 2,060.78; property went up by 0.91% or 22.10 points to 2,437.62; mining and oil climbed by 0.63% or 57.90 points to 9,153.47; industrials added 0.25% or 23.32 points to end at 9,100.80; and holding firms increased by 0.1% or 5.92 points to 5,844.97.

Value turnover rose to P11.04 billion on Monday with 949.4 million shares changing hands from the P3.67 billion with 424.84 million issues traded on Friday.

Advancers beat decliners, 118 versus 74, while 49 issues were unchanged.

Net foreign buying stood at P3.33 billion on Monday versus the P348.64 million in net foreign outflows seen on Friday. — R.M.D. Ochave

Peso sinks to over 18-month low before key US data, BSP meeting

BW FILE PHOTO

THE PESO sank to an over 18-month low against the dollar on Monday, inching closer to the P58 level, before the release of US producer inflation data and expectations of dovish comments from the Bangko Sentral ng Pilipinas (BSP) at their policy meeting this week.

The local unit closed at P57.86 per dollar on Monday, weakening by 44 centavos from its P57.42 finish on Friday, Bankers Association of the Philippines data showed.

This was the peso’s worst finish since its P58.19-per-dollar close on Nov. 10, 2022.

The peso opened Monday’s session at P57.63 against the dollar. Its intraday best was at P57.59, while its weakest showing was at P57.87 versus the greenback.

Dollars exchanged rose to $1.13 billion on Monday from $1.03 billion on Friday.

“The peso depreciated significantly amid expectations of a strong US producer inflation report [on Tuesday],” a trader said in an e-mail.

The dollar consolidated against other major currencies on Monday as traders waited for US inflation data that could help determine whether the Federal Reserve could lower borrowing costs in 2024 and by how much, Reuters reported.

Recent softer-than-expected US labor market data and a Federal Reserve that ruled out further interest rate rises saw traders price in more easing from the Fed this year.

Markets are pricing in around an 80% chance of a rate cut by the Fed’s September meeting, with about 40 basis points (bps) of cuts in total expected in 2024, LSEG data showed.

Comments by Fed officials last week varied as some rate-setters debated whether interest rates were high enough. A jump in consumers’ inflation expectations, revealed in a survey on Friday, could further complicate the conversation.

With recent data indicating an economy that is slowing slightly from the robust growth seen in 2023, investors are looking to confirm how sticky inflation is.

The market will have a chance this week, with US inflation readings in the form of the producer price index on Tuesday followed by the consumer price index on Wednesday.

The dollar index, which measures the US currency against a basket of six others, was little changed at 105.30, following its first weekly rise in three weeks last week.

Meanwhile, the dollar has crept up again against the yen after a 3% decline at the start of the month, its steepest weekly percentage drop since early December 2022, after two bouts of suspected intervention by Japanese authorities to strengthen its currency.

The peso was also dragged down by expectations of dovish comments from the BSP at its rate-setting meeting on Thursday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

A BusinessWorld poll conducted last week showed 17 of 19 analysts expect the Monetary Board to maintain its policy rate at a 17-year high of 6.5% for a fifth straight meeting on Thursday.

On the other hand, one analyst expects the BSP to cut rates by 25 bps, while another sees the central bank raising rates amid elevated inflation.

The BSP hiked borrowing costs by 450 bps from May 2022 to October 2023.

For Tuesday, the peso will likely remain weak ahead of the US inflation reports, the trader said.

The trader sees the peso moving between P57.75 and P57.80 per dollar, while Mr. Ricafort expects it to range from P57.75 to P57.95. — A.M.C. Sy with Reuters