March rice inflation soars to 15-year high
Headline inflation quickened for a second straight month in March as prices of rice continued to surge, the Philippine Statistics Authority (PSA) reported. Read the full story.
SSS targets to grow investible funds
SOCIAL Security System (SSS) is looking to grow its investibles this year as market conditions stabilize and amid a strong economic outlook.
The state-run pension fund is also looking to tap more banks to manage funds worth P1 billion each this year, its officials told reporters on Thursday.
“There are two sources of growth. We’re very optimistic on new contributions and there haven’t been any calamities so far. We expect to grow on that front. We’re also optimistic on investments. The stock market is strong and stable. We have investments there already, so we expect to grow with the Philippine economy and the stock market,” SSS Fund Management Group Senior Vice-President Ernesto D. Francisco, Jr. said.
The investible fund of the SSS stands around P750 billion to P800 billion, depending on market value, he said. Of the total, about 15% or more than P130 billion is invested in the stock market.
“It’s (the market) now up and was very promising in the first quarter. We expect a good recovery year for the stock market,” Mr. Francisco said.
He said the SSS will continuously invest 15-20% of its equity returns into the Worker’s Investment and Savings Program (WISP).
“We expect roughly P60 billion coming from there. So, on a regular basis, we’re just investing the equity fund there,” he added.
Meanwhile, government securities make up almost 50% of SSS’ investments, Mr. Francisco said. SSS also invests in corporate bonds and real estate investment trusts (REIT).
The pension fund will continue to watch interest rate movements as it is reliant on fixed-income investments, he said.
“It’s an opportunity for us to accumulate while rates are higher for longer. We continue to monitor the movement of interest rates… We take advantage since it’s long term. We keep on locking in,” Mr. Francisco said.
SSS will also continue to outsource the management of its funds, he added, noting they could tap five to six more banks this year.
SSS previously tapped the Land Bank of the Philippines, the Development Bank of the Philippines, Rizal Commercial Banking Corp., Bank of the Philippine Islands, Security Bank Corp., and ATRAM Trust Corp, to manage its funds.
“We outsource on a very competitive process. Normally, we give out two- to three-year mandates. I think we like giving mandates as big as 9-10 mandates depending on the type of mandate, whether it be a balanced fund, fixed-income mandate, or pure equity mandate,” Mr. Francisco said.
“After that, we’re also looking at outsourcing overseas. We have to get the legal backing and basis and we have a lot of requirements to get such as global custodians, and we’re doing that. So, maybe it will be clearer later in the year how we’ll outsource abroad,” he added.
Only about 2% of SSS’ investible fund is being handled externally, he noted.
CONTRIBUTION HIKE
Meanwhile, SSS Senior Vice-President and Chief Actuary Edgar B. Cruz said he expects the scheduled contribution hike in 2025 to push through as its fund life is currently only expected to last until 2054.
Under Republic Act No. 11199 or the Social Security Act of 2018, SSS members’ contribution rate will increase by one percentage point to 15% in 2025.
“Our unfunded liability is expected to grow because our demographic is shifting. That’s just the nature of social insurance schemes. Because of the aging population, our unfunded population is expected to grow,” Mr. Cruz said.
SSS also expects benefit payouts to outpace contributions by 2039, he said.
“Right now, there are more people contributing than the money that we’re paying out, which is why our reserve funds increase every year,” Mr. Cruz said. “There will now be more benefits going out than contributions coming in, so the reserve fund will slowly go down until it reaches zero. That’s when the fund life ends.”
Higher contributions will also mean increased benefits for SSS members, he added. — A.M.C. Sy
Capital One recognized as one of the Best Workplaces in 2024
Great Place To Work™ honored Capital One Philippines by naming the organization among the Philippines Best Workplaces (Large)™ last March 19, 2024.
This is another first for Capital One Philippines, who came in at No. 6 on the list, just on the heels of receiving its first Great Place To Work certification in August 2023. Being included in this list meant that Capital One Philippines has surpassed rigorous benchmarks, establishing itself as one of the best places to work in the country.
“Earning this certification was truly a team victory,” said Capital One Philippines President and Head of Global Operations Sara Murphy. “It validated all the hard work our teams put in every day to create a culture where people feel engaged, valued, and heard.”
Joseph Paperman, who recently stepped in as Capital One Philippines’ Head of Country adds, “This recognition inspires us to further step up our efforts to create a workplace that nurtures an open environment and where our associates can thrive and make a positive impact in our communities.”
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Armani company put in receivership amid labor exploitation probe
MILAN — An Italian court placed under judicial administration a company owned by Italian fashion group Armani accused of indirectly subcontracting production to Chinese companies that exploited workers.
The judges in Milan ordered a one-year receivership for Giorgio Armani Operations, described as an industrial arm of the Armani Group, according to a 31-page ruling seen by Reuters on Friday.
During this period, the company will continue operating, but under a court-appointed administrator.
According to the ruling, Giorgio Armani Operations had outsourced the production of bags, belts, and leather goods to two firms which in turn subcontracted the work to four Chinese companies whose workshops were based on the outskirts of Milan.
These companies paid people €2-3 euros ($2.16-3.25) per hour to work 10 hours per day on average, in some cases seven days a week, to make bags that were sold to Armani’s subcontractors for €93, re-sold to Armani for €250, and put on the market for about €1,800, investigators said.
Armani Group said in a statement it had “always had control and prevention measures in place to minimize abuses in the supply chain,” adding it would work with the authorities to clarify its position.
The Milan public prosecutors’ office has for years been investigating the outsourcing of production by large groups in fashion and other sectors to subcontractors who allegedly exploit workers.
Fashion company Alviero Martini, which had its bags made in Chinese workshops, was recently also placed under judicial supervision.
Italy is home to thousands of small manufacturers that cover 50-55% of the global production of luxury clothing and leather goods, consultancy Bain calculates, against 20-25% for the rest of Europe.
WORKERS FORCED TO EAT AND SLEEP IN FACTORIES
The Armani subcontracting went on from 2017 at least until February 2024, when police last raided the workshops, Milan judges wrote, noting that labor code breaches were an example of unfair business practices.
“The investigations uncovered irregular practices so deeply rooted and established, that they can be considered part of a wider business growth strategy,” judges said.
Police found Chinese and Pakistani migrants, often with no legal papers, forced to eat and sleep in the factories in degrading conditions, and employed without any work contracts, they said.
Workers used machinery with safety devices “purposely and maliciously removed,” were exposed to potentially dangerous chemical substances, and were denied medical examinations or training, the court ruling added.
The owners of the contracting and subcontracting companies are under investigation for exploiting workers and employing people off the books, while Armani Operations is not facing any probe.
The Armani unit was nevertheless placed under administration “for culpably failing to check the production chain and remaining inactive despite being aware of the outsourcing of production by the supplying companies.”
Judicial papers indicated that the Chinese-owned workshops also produced goods for other fashion brands.
“This is the second measure of this kind against a fashion company. We need to sit down and discuss with authorities and the operational problems of this market sector, which is so relevant for Italy,” Milan Court President Fabio Roia said. — Reuters
PhilRice eyes inbred rice yields of 5 MT/ha
THE Philippine Rice Research Institute (PhilRice) said it is seeking to increase the average yield of the inbred rice seed handed out to farmers.
Flordeliza H. Bordey, PhilRice director for the Rice Competitiveness Enhancement Fund (RCEF) Program Management Office, said the agency is planning to improve the yield of the rice seed variety to beyond 5 metric tons (MT) per hectare (/ha).
“We started with 3.6 (MT per hectare). So we have seen improvements over the years. Pero medyo baka mabitin tayo dun sa 5 (MT per hectare) (But we might fall short of the stretch target of 5 MT)” Ms. Bordey said in an interview.
RCEF Seed and Rice Extension Services programs are components of Republic Act 11203, or the Rice Tariffication Law, which sets aside P10 billion a year from rice import tariffs to make rice farmers more competitive.
The program’s target is to increase yields to 5 MT per hectare by 2025.
“So that’s what we’ll try to do in the next phase… we’ll definitely set a new target,” she added.
PhiRice said that the average yield of inbred seeds provided by RCEF increased to 4.36 MT per hectare last year, from 3.63 MT per hectare in 2022.
Among the government’s goals is to increase self-sufficiency for rice to 95% by 2028.
Ms. Bordey said that this could be attained through the distribution of both inbred and hybrid seed to production areas where they are best suited.
She added that under RCEF, inbred seed is distributed to 42 provinces with low to medium yields, while hybrid seed is given to 25 high-yielding areas.
The inbred seed is distributed to Negros Occidental, Leyte, Samar and Panay, while hybrid seed varieties are sent to 15 provinces, including Nueva Ecija, Isabela and Pangasinan.
“According to the Philippine Statistics Authority (PSA), rice harvest (is set to) increase slightly for the first quarter compared to the previous year… so prospects are good. We are hoping that the harvest would improve or at least not be lower than 2023,” she said.
The PSA is projecting the palay or unmilled harvest to increase 1.1% to 4.83 million MT.
The Department of Agriculture is projecting a palay harvest of above 20 million MT this year. The harvest in 2023 was 20.05 million MT, equivalent to about 13 million MT in milled rice. — Adrian H. Halili
We stand for integrity
The Philippine government has achieved milestones when it comes to the campaign for integrity in the healthcare community. In 2011, the Mexico City Principles for Voluntary Codes of Business Ethics for the Biopharmaceutical Sector was endorsed by Asia-Pacific Economic Cooperation (APEC) member economies, including the Philippines.
The Philippine Food and Drug Administration also adopted and implemented the Mexico City Principles in September 2013. The Department of Health (DoH), meanwhile, created a Committee for the Creation and Adoption of the Mexico City Principles (MCP) and Kuala Lumpur Principles for Medical Device Sector Codes of Business Ethics. In enforcing the MCP, the DoH has put in effect Administrative Order No. 2015-0053 relating to the Implementing Guidelines on the Promotion and Marketing of Prescription Pharmaceutical Products and Medical Devices.
All these have been put in place due to the recognition that ethical interactions between the pharmaceutical industry and the healthcare community benefit the patients as well as propel the advancement of science and medical information.
Prior to the adoption of the APEC Mexico City Principles, the Pharmaceutical and Healthcare Association of the Philippines (PHAP) adopted its own Code of Practice in the early 1990s. As a member of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), PHAP fully subscribes to the rigid international code.
The Code is a requirement for PHAP membership, a non-negotiable component to be part of our roster. Previous members who could not comply with the Code for various reasons, including their failure to understand the importance of being bound by a stringent code of conduct, left the association. Our current members, composed of 40 pharmaceutical companies, are those that have been at the forefront of the research and development of medicines and vaccines for COVID-19, among others.
Among the principles that the Code espouses are trust, care, quality, innovation, quality, fairness, and integrity.
Specifically, “trust” is where all PHAP members are expected to act with integrity and honesty to improve patient care and build trust with those they serve. Also crucial in promoting this principle is respecting the independence of healthcare providers, patients, and other stakeholders.
Another principle is “care” where PHAP members must protect the safety of those who use their medicines and vaccines — from the conduct of clinical trials and throughout the product life cycle. The next principle is “quality” which is about the commitment to providing high quality medicines and vaccines that have proven clinical efficacy and have a reliable safety profile. Also crucial is “fairness” which supports and respects fair trade practices and open competition.
“Integrity,” on the other hand, is acting responsibly, ethically, and professionally. This refers to not offering, promising, providing, or accepting anything of value in order to inappropriately influence a decision, or gain an unfair advantage.
These principles are backed by specific provisions and rigid enforcement mechanisms. The Code of Practice is implemented through an independent Ethics Committee comprised of leading ethicists and health luminaries.
For example, Section 11.2 of the Code states that venues that are considered as beach resorts as well as those that primarily offer leisure or recreational facilities and those that operate casino and or golf courses within their premises are considered inappropriate venues for events. The PHAP has time and again been asked to comment on a venue’s appropriateness by various groups, including medical societies, and our stance has always been to refer to said Section 11.2.
Meanwhile, Section 12 of the Code, titled “Independence of Healthcare Professionals,” states that PHAP member companies’ relationships with healthcare professionals and other stakeholders are intended to benefit patients and to enhance the practice of medicine. Interactions should be focused on informing healthcare professionals about medicines, providing scientific and educational information, and supporting medical research and education.
The said provision adds that no financial benefit or benefit-in-kind may be provided or offered to a healthcare professional in exchange for prescribing, recommending, purchasing, supplying, or administering products or for a commitment to continue to do so. Gifts of any kind for the personal benefit of healthcare professionals are not allowed, irrespective of value, kind, or occasion.
The Code is cascaded to PHAP members through a pioneering module called the Integrity and Proficiency Program for the Pharmaceutical Sector (IPPS). The IPPS, registered under the Professional Regulation Commission, offers not just science-related information. It also provides modules on various laws and codes that must guide all interactions with healthcare professionals, the government, and patients among others.
In the healthcare community, unethical behavior hurts not just businesses. It also brings harm to patients and deprives them of the quality and appropriate healthcare they deserve. Ethical interactions, meanwhile, help ensure that medical decisions are made in the best interests of patients. They also level the playing field and encourage robust competition in the industry.
Due to the unique role of ethical behavior in positively affecting the health and lives of patients, the pharmaceutical industry must always be committed to ethical behavior. For this reason, we are, we will, and we continue to stand for integrity.
Teodoro B. Padilla is the executive director of Pharmaceutical and Healthcare Association of the Philippines (PHAP). PHAP represents the biopharmaceutical medicines and vaccines industry in the country. Its members are in the forefront of research and development efforts for COVID-19 and other diseases that affect Filipinos.
Jollibee shares fall despite investment expansion
SHARES in the Tony Tan Caktiong-led food company fell last week due to overall negative sentiments amid investment expansion in a private equity fund that owns the Tim Ho Wan brand.
Data from the Philippine Stock Exchange showed a total of 6.68 million shares worth P1.61 billion were traded from April 1 to 5, making Jollibee Foods Corp. (JFC) the fourth most active stock in the local market last week.
Shares in JFC dropped by 8.9% week on week, with the stock finishing at P230 per share from its closing of P252.60 on March 27.
Year to date, the stock’s price has also decreased by 8.5%.
Mark V. Santarina, senior trader at Globalinks Securities and Stocks, Inc., attributed the decline to heavy foreign selling.
“I think this is due to overall negative sentiment since the market is sensitive to any indicators hinting at impending inflationary pressure especially that JFC is a consumer stock,” Mr. Santarina said in a Viber message.
Inflation in March increased to 3.7% year on year from 3.4% in February, making it the fourth straight month that inflation settled within the Bangko Sentral ng Pilipinas’ 2-4% target range.
Meanwhile, Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said consumers are wary of the company despite its additional investment in Titan Dining Partners Ltd.
“Following its subsidiary’s increased participating stake in Titan Fund II, investors seem to be cautious given that JFC’s overseas acquisitions have not performed well immediately. Concerns regarding its acquisition and participation in foreign quick-service restaurants could be the reason why investors sold shares of the stock,” he said in an e-mail.
The Caktiong-led food company announced in a disclosure last week an additional capital investment in Titan Dining II LP, amounting to S$90 million.
“The fund… will be used (for) strategic investments in food and beverage concepts with the objective to further grow Asia-Pacific food service brands and/or bring strong global food service brands to Asia-Pacific,” JFC said.
Titan Dining LP is a private equity fund that owns the Tim Ho Wan brand.
Mr. Santarina expressed optimism towards the stock company based on its robust earnings report but also noted for investors to observe economic indicators.
“If you’re thinking of investing, be cautious during the current downtrend. Waiting for a consolidation phase before buying JFC might be a smart move,” he added.
JFC’s attributable net income in 2023 amounted to P8.77 billion, up by 16% from P7.56 billion in 2022.
Its revenues increased by 13.3% to P246.55 billion in 2023 from P217.58 billion previously.
Mr. Santarina expects the company to record its first-quarter net income at P2.44 billion and P9.97 billion for the full year.
For the week, he pegged the stock’s support at P215, while resistance was at P254.
Mr. Plopenio placed the support level at P220.80 and the resistance at P240.
As of the end of February, JFC has 6,902 stores worldwide, with 3,336 of them located in the Philippines. — Mariedel Irish U. Catilogo
How PSEi member stocks performed — April 5, 2024
Here’s a quick glance at how PSEi stocks fared on Friday, April 5, 2024.
Stocks may drop as BSP holds policy meeting
PHILIPPINE STOCKS could decline further this shortened trading week as the Philippine central bank is set to hold its policy meeting on Monday and amid a lack of fresh catalysts.
On Friday, the benchmark Philippine Stock Exchange index (PSEi) dropped by 1.19% or 81.60 points to close at 6,745.46, while the broader all shares index fell by 0.7% or 25.14 points to end at 3,555.18.
Week on week, the PSEi fell by 2.29% or 158.07 points from the 6,903.53 close on March 27.
“The local bourse started the week strong, hitting above 7,000, but sentiment quickly soured after the release of US Federal Reserve comments plus the Philippine inflation print for March,” online brokerage firm 2TradeAsia.com said in a market note.
Federal Reserve officials including US central bank chief Jerome H. Powell on Wednesday continued focusing on the need for more debate and data before interest rates are cut, a move financial markets expect to occur in June, Reuters reported.
“Recent readings on both job gains and inflation have come in higher than expected,” Mr. Powell said in a speech to the Stanford Graduate School of Business. While policy makers generally agree that rates can fall later this year, he said this will happen only when they “have greater confidence that inflation is moving sustainably down” to the Fed’s 2% target.
Meanwhile, Philippine headline inflation quickened to 3.7% year on year in March from 3.4% in February. This was slower than the 7.6% clip in the same month last year.
March inflation was within the Bangko Sentral ng Pilipinas’ (BSP) 3.4-4.2% forecast for the month. This was also slightly below the 3.8% median estimate in a BusinessWorld poll of 17 analysts and marked the fourth straight month that inflation was within the BSP’s 2-4% target range.
For the first three months, inflation averaged 3.3%, below the BSP’s 3.6% forecast for this year.
This week, the PSEi could take cues from the BSP’s policy meeting on Monday, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
“While policy rates will most likely be held at current levels, investors are expected to watch out for the BSP’s cues on their policy outlook. Cues of prolonged monetary tightening are expected to dampen sentiment, while cues of rate cuts are expected to do the opposite,” Mr. Tantiangco said.
“With last week’s decline, bargain hunting opportunities are seen. However, with the bearish factors at play, and the lack of a positive catalyst, we may not see a strong rally yet from the market. A further decline for the bourse is still possible,” he added.
Mr. Tantiangco put the PSEi’s major support at the 6,700 level.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed the PSEi’s immediate minor support at 6,630-6,700 and immediate major support at 6,360-6,500.
2TradeAsia.com put immediate support at the 6,800 level and resistance at the 7,000 level. — R.M.D. Ochave with Reuters
BSP decision to drive peso-dollar trading this week
THE PESO could move sideways against the dollar this week, with trading to be mostly driven by the Bangko Sentral ng Pilipinas’ (BSP) policy decision on Monday.
The local unit closed at P56.50 per dollar on Friday, weakening by 14.5 centavos from its P56.355 finish on Thursday, Bankers Association of the Philippines data showed.
This was the peso’s weakest close in more than two months or since its P56.53-per-dollar finish on Jan. 25.
Week on week, the peso depreciated by 26 centavos from its P56.24 close on March 27.
The peso slumped against the dollar on Friday after inflation picked up in March, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Headline inflation quickened for a second straight month in March to 3.7% year on year from 3.4% in February. Still, this was slower than the 7.6% clip in the same month last year.
The March consumer price index (CPI) was also slightly below the 3.8% median estimate in a BusinessWorld poll conducted last week but was within the BSP’s 3.4-4.2% forecast for the month. It also marked the fourth straight month that the CPI was within the central bank’s 2-4% annual target.
For the first quarter, headline inflation averaged 3.3%, below the BSP’s 3.6% forecast for the year.
The peso was also dragged down by mixed comments from US Federal Reserve officials, Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
Comments last week from Fed Chair Jerome H. Powell had reinforced the view that rate cuts were likely to commence in 2024, Reuters reported. But on Thursday, Minneapolis Fed President Neel Kashkari said rate cuts might not be required this year.
For this week, peso-dollar trading will depend on the BSP’s policy decision on Monday, Mr. Ricafort said.
The BSP is widely expected to keep benchmark interest rates steady this week amid lingering inflation risks, analysts said.
All 16 analysts in a BusinessWorld poll conducted last week expect the Monetary Board to maintain the target reverse repurchase rate at a near 17-year high of 6.5% at its policy meeting on April 8.
If realized, it would be the fourth straight meeting the BSP kept its policy rate unchanged since the 25-basis-point (bp) off-cycle hike on Oct. 26, 2023.
The Monetary Board raised borrowing costs by 450 bps from May 2022 to October 2023 to help bring down elevated inflation. BSP Governor Eli M. Remolona, Jr. has said that they could consider cutting rates by the second semester if inflation is firmly within their 2-4% annual goal.
Mr. Roces added that the market could take cues from US nonfarm payrolls data released on Friday.
The US Labor department reported that nonfarm payrolls increased by 303,000 in March, far ahead of a forecast rise of 200,000 from economists polled by Reuters.
Mr. Ricafort sees the peso moving between P56.20 and P56.70 per dollar this week, while Mr. Roces expects it to range from P56.35 to P56.80. — A.M.C. Sy with Reuters
World Bank cites upside to GDP view with enhanced investment
PHILIPPINE gross domestic product (GDP) is expected to rise around 5.5% to 6% this year, with possible upside provided by accelerated investment and productivity reforms, according to the World Bank (WB).
“Over the past few years, what you see is that the economy has been very close to that potential output growth,” Gonzalo Varela, lead economist and program leader of the Equitable Growth, Finance and Institutions Practice Group for Brunei, Malaysia, the Philippines, and Thailand, said at a briefing at the World Bank office in Taguig City last week.
In its April update, the bank estimated Philippine economic growth at 5.8% this year and 5.9% next year.
If realized, this would fall within the Development Budget Coordination Committee’s revised 6-7% growth target for 2024.
The economy grew by a revised 5.5% in 2023, weaker than the World Bank’s 6% forecast at the time. It also failed to meet the government’s 6-7% target for the year.
“The important thing is that you get investment acceleration, you get reforms that stimulate productivity growth, so that potential output growth keeps rising and the economy can grow accordingly, sustainably, in a way that creates good quality jobs,” Mr. Varela said.
Growth in emerging markets and developing economies, which includes the Philippines and excludes China, is expected to accelerate this year, with average GDP growth estimated at 4%.
“There is growth, but that growth is somewhat subdued if you put it in a historical context and compare with the growth average prior to the pandemic,” according to Ayhan Kose, World Bank deputy chief economist and director of the Prospects Group.
Mr. Kose also noted that the US, one of the Philippines’ major export markets, will stay resilient this year.
Meanwhile, the global economy is expected to slow for a third consecutive year due to post-pandemic effects and ongoing geopolitical turmoil.
Other downside risks affecting the growth outlook include continued high interest rates, fragmented trade, disruptions in food and energy markets, climate change, and financial stress.
Possible inflation shocks, as well as “weaker-than-expected” near-term growth in major economies may also limit global growth, according to the WB.
“Global growth over the period 2020 (to) 2024 on average, in the first half of this decade, will be the lowest we have seen since the early 1990s,” Mr. Kose said at the briefing.
The World Bank expects the global economy to slow to 2.4% this year from 2.6% in 2023.
“That, in turn, could again, fuel inflation and will lead to a more protracted period of elevated real interest rates,” Mr. Kose said.
The WB expects major central banks to cut interest rates by the second half of the year if inflation cools further.
In the Philippines, headline inflation accelerated for a second consecutive month to 3.7% in February, due to surging prices of rice and other basic commodities.
Weakening trade, as well as a contraction in goods trade, also hampered global growth, Mr. Kose said.
“Excessive inventory accumulation, still challenges associated with geopolitical tensions, weak manufacturing activity… they all together led to the weak trade performance last year.”
“This year, we are expecting trade growth to be north of 2%, but still much lower than what we saw over the period 2010 (to) 2019 on average,” he added.
The WB called for greater global cooperation to address food security issues, climate change, debt distress, and trade fragmentation. — Beatriz Marie D. Cruz
Exporters warned of new EU rules on deforestation
EXPORTERS of cattle, soy, coffee, palm oil, rubber and wood will be subject to new European Union (EU) deforestation regulations restricting access to products that benefited from the clearing of forest cover, according to the Department of Trade and Industry (DTI).
“Exporting products to the EU has become increasingly challenging with its new and emerging regulations as part of the EU Green Deal,” the Philippine Exporters Confederation, Inc. said, citing Bianca Pearl Sykimte, director of the DTI’s Export Management Bureau at a seminar.
“These regulations aim to make the EU the first climate-neutral continent by 2050,” it added.
Under the EU Green Deal, exporters of the seven products are required to demonstrate that their products are deforestation-free and not linked to forest degradation or risk not being admitted into the EU.
The deal was first adopted in June to curb forest loss and land degradation, giving companies until Dec. 30 to be compliant, except for micro and small companies which have until June 30, 2025.
The deforestation regulation will cover products derived from the seven commodities, like meat products, leather, chocolate, coffee, palm nuts, and palm oil derivatives, among others.
The regulation takes effect on goods produced after June 29, except for timber and timber products.
Commodities covered by the regulation are required to be deforestation-free and produced in a country with relevant legislation on environment protection. Their producers must also provide a due diligence statement.
Aside from blocked market access, non-compliance could also result in penalties such as fines amounting to up to 4% of the company’s EU turnover, confiscation, or exclusion from public funding or contracts.
The EU was the Philippines’ sixth largest export market in 2023 with $8.4-billion total export sales. — Justine Irish D. Tabile