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Inflation further eases to 3.9% in December

A vendor arranges fruits at a market in Malate, Dec. 19, 2023. -- Edd Gumban/ The Philippine Star

By Keisha B. Ta-asan, Reporter

Inflation slowed to 3.9% in December, settling within the central bank’s 2-4% target range for the first time in nearly two years, amid easing prices of food and utilities.

Preliminary data from the Philippine Statistics Authority (PSA) showed the overall year on year increase in prices of widely used goods and services eased to 3.9% in December, from 4.1% in November and 8.1% a year ago.

December’s inflation print was the slowest reading in 22 months or since the 3% reading in February 2022.

The latest consumer price index (CPI) is a tad lower than the 4% median estimate in a BusinessWorld poll last week. It also settled within the 3.6% to 4.4% forecast for the month given by the Bangko Sentral ng Pilipinas (BSP).

However, inflation averaged 6% for 2023, slightly higher than the 5.8% in 2022. This marked the second straight year that inflation breached the BSP’s 2-4% target band.

The 6% print was the highest in 14 years or since the 8.2% full-year average in 2008, at the height of the global financial crisis.

“The latest inflation outturn is consistent with the BSP’s projections that inflation will likely moderate in the near term due to easing supply-side price pressures and negative base effects,” the BSP said in a statement.

Core inflation, which discounted volatile prices of food and fuel, stood at 4.4% percent in December — slower than the previous month’s 4.7% and the 6.9% a year earlier.

For the entire year, core inflation averaged 6.6%, much faster than the 3.9% print in 2022.

At a press briefing, National Statistician Claire Dennis S. Mapa said December inflation print was due mainly the 1.5% growth in prices of housing, water, electricity, gas and other fuels, which was slower than the 2.5% in November.

This was followed by the 5.4% rise in the food and non-alcoholic beverages index, easing from 5.7% in November.

Food inflation alone went down to 5.5% in December, from 5.8% in November and 10.6% a year ago.

However, rice inflation quickened to 19.6% in December from 15.8% in November. It was also the most significant contributor to December inflation, adding 1.7 percentage points (ppt) to the headline print.

At 19.6%, rice inflation was the highest since the 22.9% recorded in March 2009.

Mr. Mapa said the average price of regular milled rice last month went up to P48.50 per kilo from P46.73 per kilo in November. The average price of well-milled rice also rose to P53.82 per kilo in December from an average of P51.99 per kilo a month earlier.

Year on year, prices of regular milled rice and well-milled rice grew by 22.3% and 22.4%, respectively.

In a statement, the National Economic and Development Authority (NEDA) said the extension of the Executive Order (EO) No. 50, which extended the Most Favored Nation (MFN) reduced tariff rates for key agricultural commodities like pork, corn, and rice, is crucial to ensure a stable food supply in the Philippines.

“Amid an uptrend in international rice prices and the expected negative impact of the El Niño phenomenon, the Interagency Committee on Inflation and Market Outlook will closely monitor the situation and propose further temporary tariff adjustments, if necessary,” NEDA Secretary Arsenio M. Balisacan said.

“We will also push for trade facilitation measures to reduce other non-tariff barriers. While our medium-term objective to boost agricultural productivity remains, it is important to augment domestic supply to ease inflationary pressures on consumers, particularly those in low-income households,” he added.

Meanwhile, transport inflation inched up 0.4% in December, reversal from the 0.8% contraction in November.

PSA’s Mr. Mapa said passenger transport by road such as jeepney and tricycle fares increased 2.9% in December from 2.4% a month prior.

Prices of diesel decreased by 13% year on year, but lower than the 18.4% decline in November. Gasoline also recorded a -3.9% inflation rate from the -4.8% seen in the previous month.

In December alone, pump price adjustments stood at a net increase of P0.3 per liter for gasoline. Diesel and kerosene prices had a net decrease of P0.35 and P0.51 respectively.

Meanwhile, inflation for the bottom 30% income households edged higher to 5% in December from 4.9% in a month prior. Year to date, the inflation rate for this income group stood at 6.7%.

Inflation in the National Capital Region (NCR) decelerated to 3.5% in December from the 4.2% print in November and 7.6% a year ago.

Outside of NCR, consumer prices slowed to 4% from 4.1% in November and 8.2% in December 2022.

STILL HAWKISH OUTLOOK

The BSP said risks to the inflation outlook remains significantly on the upside, citing possible inflationary pressures from higher transport charges, increased electricity rates, rising oil prices, and elevated food prices due to strong El Niño conditions.

“Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,” the BSP said.

“The BSP will continue to monitor inflation expectations and second-round effects and take appropriate action as needed to bring inflation back to the target, in keeping with the BSP’s price stability mandate,” it added.

HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris Dacanay in a note said export prices of rice increased to $659 per metric ton amid lingering El Niño risks to supply.

“Not only is this the highest since 2008, but we have yet to see global rice prices peak. And with rice being a heavy component of the Philippines’ CPI basket, elevated export prices will likely put a floor under how much inflation can moderate,” he said.

Inflation may also quicken to above the 2-4% target in the second quarter due to unfavorable base effects.

“But once these base effects wear off, we expect headline CPI to immediately ease on a year-on-year basis and average within 3-3.5% in the second half,” he said.

“Keeping inflation more manageable is the extension of EO 50, which rolls over the low tariff rates for key food items such as rice and pork. The BSP’s tight monetary stance will also continue to stem any price pressures coming from core items such as rent and housing,” he said.

HSBC lowered its full-year headline inflation forecast to 3.5% in 2024 from 4.1% previously.

“The BSP now has more leg room to adjust monetary policy with the inflation outlook more benign. The larger concern now is the differential between BSP and Fed rates,” Mr. Dacanay said.

Mr. Dacanay said he expects the BSP to cut policy rates alongside the US Fed starting second quarter this year.

“We then expect the BSP to clock a similar pace as the Fed by cutting its policy rate by 25bp in each quarter until the benchmark rate reaches 5% in the third quarter of 2025,” he added.

The BSP has kept its benchmark interest rate unchanged at a 16-year high of 6.5% during its December policy meeting. This was after it hiked 450 basis points (bps) from May 2022 to October 2023 to tame inflation.

On the other hand, the US Federal Reserve kept borrowing costs unchanged at 5.25-5.5% in December, following the 525-bp rate hikes it did from March 2022 to July 2023.

Citi Economist for the Philippines Nalin Chutchotitham said even though upside risks remain, inflation expectations are now better anchored.

“We expect the BSP to maintain its policy rate through the first half of 2024, to help anchor inflation at around the mid-point of the policy target. We expect gradual rate cuts from third quarter onwards as inflation shows a steady declining trend,” she said.

Ms. Chutchotitham also noted that the BSP will likely maintain at least a 50-bp interest rate gap with the Fed to help ensure the peso’s stability against the dollar.

“We forecast the key rate at 5.5% at end-2024, and at 4.5% at end-2025,” she said.

The Monetary Board is scheduled to have its first policy review this year on Feb. 15.

ESPN, NCAA agree to new eight-year, $920 million deal for media rights

ESPN and the National Collegiate Athletic Association (NCAA) have agreed to a $920 million, eight-year extension to their media rights deal that covers 40 championships including international rights to the “March Madness” college basketball tournament.

The deal has an annual average value of $115 million, which more than triples the amount ESPN paid on average each year to the association under the previous 14-year agreement, the NCAA said.

The agreement deepens ESPN’s commitment to college sports, which have been part of the network’s DNA since its launch in 1979. The new NCAA deal includes domestic rights to 21 women’s and 19 men’s championship events, including the high-profile women’s basketball championship game, which last year drew 9.9 million viewers. It adds coverage of Division I men’s and women’s tennis team championships and the collegiate men’s gymnastic championship.

In total, the deal encompasses 24,000 college games spanning more than 20 conferences – enough to provide content across a portfolio of media properties, including the ABC network, ESPN and the ESPN+ streaming service.

Live sports have proven a resilient audience draw, even at a time when television audiences are shrinking. In October, ESPN clinched the U.S. broadcast rights for TGL – a new prime-time golf league created by Tiger Woods and Rory McIlroy.

The new NCAA agreement expands ESPN’s digital rights, setting the stage for the network’s eventual transition to streaming. Disney has said it is seeking minority partners, as the marquee sports network makes its digital leap.

“The NCAA has worked in earnest over the past year to ensure that this new broadcast agreement provides the best possible outcome for all NCAA championships, and in particular women’s championships,” said NCAA President Charlie Baker.

With the increase in value of the agreement, the association will explore revenue distribution units for the women’s basketball tournament, the NCAA said.

The tie-up between the association and ESPN began in 1979, the year of ESPN’s original network launch. – Reuters

German budget savings shrink as farm subsidy cuts delayed

REUTERS

BERLIN – Chancellor Olaf Scholz’s coalition, racing to finalize a 2024 budget draft that was delayed by a court ruling, has made unexpected changes, including modifying plans to cut subsidies for agriculture after a backlash from farmers.

The changes will result in 2.5 billion euros ($2.7 billion) less in savings than initially anticipated, but will not affect plans to adopt the budget at the start of February, a government spokesperson said.

The revisions follow weeks of haggling over how to fill a 17 billion euro gap in the budget after a November court ruling threw the government’s financing framework into turmoil.

The gradual phase-out of agricultural diesel subsidies, the postponement of a plastic levy and additional funds for the national railway were among the changes the government announced on Thursday following an agreement between Scholz, Economy Minister Robert Habeck and Finance Minister Christian Lindner.

“We have been talking to each other intensively again in the last few days because we can see the burden on farmers,” Mr. Habeck said.

“Counter-financing has been found” for the amended plan, he added.

Rather than abruptly ending the farmers’ tax break on agricultural diesel, the subsidy will be reduced by 40% this year, by 30% in 2025, and will end from 2026.

The abolition of preferential treatment in vehicle tax for forestry and agriculture is also no longer planned, the government spokesperson said.

“Together we have found a solution that avoids a disproportionate burden being put on the agricultural and forestry industry,” Agriculture Minister Cem Oezdemir said.

Hundreds of farmers protested in central Berlin last month at the prospect of losing the tax break and the president of the German Farmers’ Association (DBV) said the changes were not enough.

“This can only be a first step. Our position remains unchanged: both proposals for cuts must be taken off the table,” said Joachim Rukwied. “This is clearly also about the future viability of our industry and the question of whether domestic food production is still desirable at all.”

Nearly a third of the remaining spending gap from Thursday’s proposed changes is to be compensated for by making proceeds from 2023 off-shore wind projects available for the 2024 budget.

Additional cuts at the agriculture ministry and the “leeway resulting from updated economic and budgetary data in the federal budget” will cover the rest, the statement said. – Reuters

Weekly US jobless claims fall to two-month low; labor market steadily cooling

FREEPIK

WASHINGTON – The number of Americans filing new claims for jobless benefits dropped to a two-month low last week, pointing to underlying labor market strength even as demand for workers is easing.

With the report from the Labor Department on Thursday also showing the number of people on unemployment rolls remained elevated towards the end of December, financial markets continued to anticipate that the Federal Reserve would start cutting interest rates in March.

The government reported on Wednesday that job openings fell to a near three-year low in November. Labor market resilience is expected to again shield the economy from recession this year.

“The labor market is not too hot and not too cold at the moment,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The total number of Americans on the jobless rolls receiving benefits remains elevated relative to prior year levels, but at the moment there is not enough unemployment to say the economy is on the downward slope to recession.”

Initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 202,000 for the week ended Dec. 30, the lowest level since mid-October. Economists polled by Reuters had forecast 216,000 claims for the latest week.

Claims data tend to be volatile around this time of year because of holidays. They have largely bounced around in the lower end of their 194,000-265,000 range for 2023.

Unadjusted claims fell 6,820 to 268,020 last week. Claims plunged by an estimated 7,572 in California and tumbled 6,080 in Texas. That helped to more than offset notable increases in Pennsylvania, New Jersey, Michigan, Massachusetts and Connecticut.

The labor market is steadily cooling following 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022. The unemployment rate, however, has remained below 4% as companies hoard workers following difficulties finding labor in the aftermath of the COVID-19 pandemic.

“The labor market is nowhere near a tipping point lower. That’s excellent news for consumption and the economy at large,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. “Recession calls get trampled by a strong, employed consumer and that’s currently where things stand.”

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. US Treasury yields rose.

 

LAYOFFS LOW IN DECEMBER

Low layoffs were underscored by a separate report from global outplacement firm Challenger, Gray & Christmas on Thursday that showed job cuts announced by U.S.-based employers dropped 24% to 34,817 in December.

Planned layoffs, however, jumped 98% to 721,677 in 2023, the highest annual count since 2020. That largely reflected cuts earlier in the year, with most of them in the technology, retail, healthcare and media sectors. Excluding the pandemic, it was the highest tally since 2009.

Financial markets are betting the Fed will begin cutting interest rates as early as March. Minutes of the U.S. central bank’s Dec. 12–13 policy meeting published on Wednesday showed officials viewed the labor market as remaining tight, but also continuing to “come into better balance.”

They also showed that “several participants noted the risk that, if labor demand were to weaken substantially further, the labor market could transition quickly from a gradual easing to a more abrupt downshift in conditions.”

The US central bank held its policy rate steady in the current 5.25%-5.50% range at last month’s meeting and policymakers signaled in new economic projections that the historic monetary policy tightening engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 31,000 to 1.855 million during the week ending Dec. 23, the claims report showed. The so-called continuing claims have mostly increased since mid-September, a trend blamed largely on difficulties adjusting the data for seasonal fluctuations after an unprecedented surge in filings early in the pandemic.

Economists expect the distortion will be smoothed out when the government revises the data this year.

The claims data have no bearing on the Labor Department’s employment report for December, which is scheduled to be released on Friday, as they fall outside the survey period. Nonfarm payrolls likely increased by 170,000 jobs in December, according to a Reuters survey of economists, after rising by 199,000 jobs in November.

The unemployment rate is forecast to rise to 3.8% from 3.7% in November.

Another report on Thursday showed private payrolls increased by 164,000 jobs in December, the biggest gain in four months, after a rise of 101,000 in November.

The ADP National Employment Report, however, has been unreliable in predicting the private payrolls count in the Labor Department’s monthly employment report. It showed wage growth continuing to slow, with salaries for workers staying at their current jobs rising 5.4% year-on-year in December after increasing 5.6% in November.

“The labor market is becoming less tight but not collapsing,” said Nancy Vanden Houten, lead US economist at Oxford Economics in New York. – Reuters

BSP to limit its forex intervention

BW FILE PHOTO

By Keisha B. Ta-asan, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to limit its foreign exchange intervention on markets by finalizing a new framework this year, its chief said on Thursday.

In his first public event this year at the Rotary Club’s weekly meeting, BSP Governor Eli M. Remolona, Jr. said the central bank aims to make the peso more competitive and reduce restrictions in the foreign exchange market.

“We’re developing a framework for intervention… We think intervention should only happen during times of stress. It’s meant to contain stress,” he said.

Mr. Remolona told reporters that BSP Senior Assistant Governor Edna C. Villa will head the central bank’s Financial Markets department, replacing retired Ma. Ramona Gertrudes D.T. Santiago. 

The foreign exchange framework will also be implemented this year, he said.

The BSP chief has instructed Ms. Villa to identify the Philippines’ peers in the region when it comes to movements against the dollar.

“We want to do things in the right way. We want to do things based on fundamentals and also based on what we know is going on in the markets,” he said.

Meanwhile, Mr. Remolona noted that October 2022 was a stressful episode for the central bank and the foreign exchange market. 

“Those are the events in which we want to intervene,” he said. “I think we’ve been intervening a bit too much. If it’s about containing stress, that also means intervention should be infrequent.”

In October 2022, the peso reached its record low of P59 against the dollar. This also caused the peso to add to inflationary pressures during that time, which prompted the BSP to intervene in the foreign exchange market and raise interest rates. 

The peso has since rebounded to the P55 level, closing at P55.50 against the dollar on Thursday.

To tame inflation, the Monetary Board hiked borrowing costs by 450 basis points (bps) from May 2022 to October 2023. This has brought the key interest rate to 6.5%, its highest in 16 years.

Mr. Remolona said the current 6.5% policy rate is still appropriate to ensure growth and tame inflation at the same time. 

“People say we’ve been tightening too much… that’s a very difficult challenge because we want to make sure that we don’t tighten unnecessarily,” he said.

However, the BSP chief said there are still upside risks to inflation, but he is hoping that inflation will settle within the 2-4% target range for most of 2024.

BSP sees inflation settling at an average of 6% in 2023, before easing to 3.7% in 2024 and 3.2% in 2025.

A BusinessWorld poll last week yielded a median estimate of 4% for December headline inflation, within the BSP’s 3.6-4.4% forecast for the month. This is slightly slower than 4.1% in November but significantly below 8.1% in December 2022.

If realized, December could mark the first time that inflation met the central bank’s 2-4% target after 20 straight months. It would also be the slowest since the 3% print in February 2022.

This would bring the 2023 inflation average to 6%, matching the BSP’s baseline forecast.

The Philippine Statistics Authority will release December consumer price index data on Friday.

PHL firms seen to hike salaries by 6.2% this year

Workers are seen installing steel at a construction site in Santa Cruz, Manila. — PHILIPPINE STAR/EDD GUMBAN

SALARY INCREASES are expected to be higher in the Philippines this year, amid growing demand for professionals and elevated inflation, according to global professional services firm Mercer.

In its Total Remuneration Survey conducted last year, Mercer said Philippine-based organizations projected a median salary hike of 6.2% in 2024, slightly higher than the actual 6% salary increase last year. 

It is also above the projected average median salary increase of 5.2% in Asia for 2024.

“The projected hike in median salary increment can be attributed to factors such as the rising demand for skilled professionals, the need to attract and retain top talent in a fiercely competitive job market, and persistent inflationary pressures,” Mercer said in a statement.

The expected median salary increase in the Philippines is the fourth highest in the region, just behind India (9.3%), Vietnam (7%), and Indonesia (6.5%).

The country surpassed the projected median salary increments in Mainland China (5.2%), Malaysia (5.1%), Thailand (4.7%), South Korea (4.4%), and Singapore (4.2%).

Meanwhile, Hong Kong SAR (2.6%), Taiwan (3.8%) and Japan (3.9%) reported the lowest projected median salary increments in the region.

Floriza I. Molon, business leader at Mercer Philippines, said that most industries are seen to ramp up hiring as businesses expand this year.

“The Philippines is poised for economic growth despite some global headwinds. Some industries will continue to hire as businesses, particularly in shared services and outsourcing industry, retail and consumer sectors expand,” Ms. Molon said.

Mercer said salary increases will likely be consistent in most industries this year, as firms seek to retain talent.

The energy sector is seen to raise salaries by 7% this year, the highest among industries in the Philippines, data from Mercer showed. This is the same as the 7% hike implemented in 2023.

The high-technology industry is expected to hike salaries by 6.8%, a tad higher than the actual 6.5% increase last year.

Firms in retail and wholesale will increase wages by 6.7%, slightly higher than last year’s 6.5%.

Consumer goods firms will hike wages by 6.5%, faster than the 6% implemented last year.

“Besides compensation, companies would need to reassess their total rewards programs focusing on the employee benefits and work experience,” Ms. Molon said.

Citing Mercer Global Talent Trends 2023 report, Ms. Molon said that employees prefer to stay with organizations that offer job security, work flexibility and high pay.

“Employees are also expecting benefits and career opportunities within their organizations. The ability to provide these creates a more holistic and strategic management on talent in the workplace,” she added.

China Banking Corp. Chief Economist Domini S. Velasquez said businesses will likely provide higher salary increases as inflation remains elevated.

The Bangko Sentral ng Pilipinas (BSP) expected inflation to have averaged 6% in 2023. It sees inflation averaging 3.7% in 2024.

“The rise in inflation could prompt businesses to provide higher compensation to offset the increased cost of living for Filipinos,” Ms. Velasquez said in a Viber message.

“Moreover, the approved minimum wage hikes in 2023 would further contribute to the upward trend in average wages for individuals earning above the minimum wage,” she added.

Ms. Velasquez said the wage increases should not “exacerbate” inflation and be balanced out by improving worker productivity.

“One key factor in achieving this balance is the improvement of worker productivity. As businesses recover from the impact of the pandemic and economic activities gradually increase, it is anticipated that Filipino workers will demonstrate higher productivity levels,” she said.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that implementing salary increases will not only allow businesses to be competitive but also allow the Philippines to catch up with its regional peers in terms of per capita income.

“Given the fact that the Philippines is still among the fastest-growing economies in Asia, it still has relatively lower per capita incomes and is yet to catch up with other neighboring countries,” he said.

“Essentially the demand-supply balance of talent is a major determinant for wage growth in view of local or overseas employment choices for local talents,” he added. — Justine Irish D. Tabile

MIC identifies possible areas for investments

PHILIPPINE STAR/MIGUEL DE GUZMAN

THE MAHARLIKA Investment Corp. (MIC), which is tasked to oversee the Philippines’ first sovereign wealth fund, is looking at potential investments in key sectors such as infrastructure, energy and transportation.

The MIC held its first board meeting on Wednesday, as it seeks to fully operationalize the Maharlika Investment Fund (MIF), according to a statement from the Department of Finance (DoF).

MIC President and Chief Executive Officer (CEO) Rafael Jose D. Consing, Jr. said that the wealth fund could potentially invest in the power, agroforestry industrial urbanization, mineral processing, tourism, transportation, and aviation sectors.

The MIC, which was established under Republic Act (RA) No. 11954, is responsible for mobilizing and utilizing the country’s first sovereign wealth fund for investments in transactions that would generate optimal returns.

“I look forward to your cooperation and support as we work together in mobilizing greater investments in the country’s growth-enhancing sectors, while upholding the highest standards of accountability, fiscal responsibility, and good governance,” Finance Secretary Benjamin E. Diokno told the MIC board during the meeting. He sits as the board’s chairperson in an ex-officio capacity.

“The enactment of the Maharlika Investment Fund complements recent policy initiatives, such as the new public-private partnership policy framework, the approval of 197 high-impact infrastructure flagship projects, and liberalization policies that have further opened the Philippines to foreign investments in key sectors,” Mr. Diokno added.

During the meeting, the board approved the presented MIC’s capitalization scheme amounting to P125 billion.

Under the law, state banks Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP) are required to contribute P50 billion and P25 billion, respectively, to the initial capital of the fund.

The National Government is also being counted on to contribute P50 billion. The MIC has an authorized capital stock of P500 billion.

President Ferdinand R. Marcos, Jr. signed the Maharlika fund bill into law in July despite concerns raised by economists, including questions on the possible negative impact on the operations of state banks.

Mr. Marcos had said last year that the fund would be fully operational by the end of 2023.

“Usually, a day or two does not really matter. However, given the enormous opportunity cost of this fund, every second counts,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in a Facebook Messenger chat.

“So, the three to four days of delay is already weighing heavily on people,” he added.

During the meeting, Mr. Consing was quoted by a Palace statement as saying the investment body will operate with “utmost” openness and “rigorous” accountability.

Mr. Lanzona said these statements are “not enough to convince people about the need” of the wealth fund.

“For one thing, there has been no accounting done as to the negative effects of this fund on the operations of the LANDBANK and DBP,” he added, noting that the fund has significant effects on farmers and small-scale entrepreneurs who rely on the two state banks.

Last year the two banks sought regulatory relief from the Bangko Sentral ng Pilipinas for their contributions to the Maharlika fund.

Also during the meeting, Mr. Consing updated the board on the MIC’s startup activities such as staffing and recruitment and the hiring of its management team.

Aside from Mr. Diokno and Mr. Consing, the MIC board members include LANDBANK President and CEO Ma. Lynette V. Ortiz, DBP President and CEO Michael O. de Jesus, and MIC directors Vicky Castillo L. Tan, Andrew Jerome T. Gan, German Q. Lichauco II, and Roman Felipe S. Reyes.

The board also appointed the Bureau of the Treasury as the interim fund manager of the MIC. 

“I am confident that we have a formidable team to steer the fund effectively towards transformative investments for the Philippine economy,” Mr. Diokno said.

The MIC’s next board meeting is scheduled in the fourth week of January. — Keisha B. Ta-asan and Kyle Aristophere T. Atienza

DoF says CREATE incentives benefited P1T worth of projects

REUTERS

PROJECTS BENEFITING from incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law have reached P1.02 trillion in investment capital as of October, the Department of Finance (DoF) said. 

In a social media post, the DoF said this reflects the efforts of the Marcos administration to promote the Philippines as a good investment destination. 

“This landmark milestone also gained P572.98 billion worth of foreign direct investment (FDI) pledges, with 910 CREATE-approved projects varying across priority sectors listed in the Strategic Investment Priority Plan,” it said.

Of the 910 CREATE-approved projects, around 49 big-ticket tax incentive applications with a total investment capital of P817 billion were approved by the Fiscal Incentives Review Board.

The remaining 861 projects — with a combined investment capital of P203 billion — were from investment promotion agencies (IPAs).

“These projects are expected to accumulate a committed employment count of around 99,400 jobs within its incentivized period, with the labor-intensive manufacturing sector having the highest number of approved projects among the priority sectors,” the DoF said.

“This underscores the employability of the country’s workforce in high-quality jobs that will contribute to long-term economic growth,” it added.

CREATE was signed into law in 2021 to aid enterprises that have yet to recover from the coronavirus pandemic. It reduced corporate income tax rates, provided tax relief measures, and rationalized fiscal incentives.

“As CREATE establishes a performance-based, time-bound, targeted, and transparent tax incentives regime in the country, incentivized projects or activities under the key structural tax reform are to achieve performance metrics to ensure that the grant of fiscal support to registered business enterprises leads to higher economic returns,” the DoF said. 

In August, Albay Rep. Jose Ma. Clemente S. Salceda filed the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, which seeks to reconcile disparities between the CREATE Act and its implementing rules, primarily on value-added tax (VAT)-related transactions. 

Under CREATE MORE, local and export companies, even those inside ecozones and freeports, would continue to enjoy duty exemptions, VAT exemption on importation, and the VAT zero-rating of local purchases as provided in their respective IPA registrations.

Registered export enterprises would also enjoy non-income tax incentives, VAT exemption on importation and VAT zero-rating on local purchases, as long as the registered firm maintains 70% of the total annual production as export sale and continues to be registered in good standing with the IPA.

The measure also proposes to lower corporate income tax to 20% for those under the enhanced deduction regime from 20-25%.

The bill is currently being taken up in the House of Representatives. — Keisha B. Ta-asan

Meralco eyes bids for 660-MW power capacity

EVENING_TAO-FREEPIK

MANILA Electric Co. (Meralco) has started seeking bidders for 660 megawatts (MW) of capacity as it expects power demand to increase in the summer months.

In a statement on Thursday, the power distributor said the capacities up for bidding will cover its 260-MW peaking requirement and 400-MW baseload requirement this year.

Meralco’s share price rose by 0.76% or P3 to close at P397 each.

The Department of Energy has issued a certificate of conformity for the interim power supply deals.

Meralco said the competitive selection process “considers the need for additional available capacities to augment supply to customers.”

Under the setup, distribution utilities must choose the cheapest electricity supply through bidding. Bidders have until Jan. 15 to submit expressions of interest.

A pre-bid conference will be held on Jan. 22, while the deadline to submit bids for the 260-MW and 400-MW capacities was set for Feb. 26 and 27, respectively.

Last year, Meralco started seeking bidders for 1,800-MW and 1,200-MW baseload capacities.  The 1,800-MW competitive selection process aims to find new suppliers for electricity that was supposed to be supplied by the two units of San Miguel Power Global Holdings Corp. — Excellent Energy Resources, Inc. and Masinloc Power Partners Co. Ltd.

Their contracts with Meralco were terminated in March after their power supply agreement  application went past the deadline.

Excellent Energy and Masinloc Power were supposed to start delivering electricity by 2024 and 2025 after securing the supply contracts in 2021.

Six entities expressed interest in the bidding for the 1,800-MW capacity — GNPower Dinginin Ltd. Co., First NatGas Power Corp., SP New Energy Corp., Mariveles Power Generation Corp., Excellent Energy, and Masinloc Power.

Meanwhile, the 1,200-MW capacity is meant to replace the terminated power supply deals with South Premiere Power Corp., Solar Philippines Batangas Baseload Corp., and Sual Power, Inc., used to be called San Miguel Energy Corp.

The bid deadline for the 1,800-MW capacity was on Dec. 26, and Jan. 23 for the 1,200-MW supply.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

A Brown unit to start P700-M e-beam facility in March

A UNIT of listed A Brown Co. is expected to finish the construction of the country’s first electron beam (e-beam) cold storage facility in Tanay, Rizal in March.   

In a statement on Thursday, the company said unit Irradiation Solutions, Inc. would start commercial operations in March with the launch of the P700-million e-beam cold storage facility.

The facility is in the equipment installation and commission phase. Once completed, it has the capacity to decontaminate and sterilize 20,000 tons of food products and medical devices annually.   

E-beam technology offers a cost-effective and safe method for treating goods, according to A Brown.

“E-beam technology is recognized for its environmental friendliness, leaving no chemical residues, and is scientifically proven effective in decontaminating food and sterilizing medical equipment,” it said.

“The technology ensures high product throughput and stands as a sustainable alternative to traditional heat and chemical treatments,” it added.

The construction of the facility is in line with Irradiation Solutions’ vision of becoming a cornerstone for the Philippine economy, A Brown said. “It is designed to enhance the operations of local businesses and ensure product compliance with international export requirements.”

Irradiation Solutions President Paul B. Juat remains optimistic despite delays in the facility’s completion due to weather and supply chain disruptions, it said.

The facility started construction in April 2022, with commercial operations initially expected to begin by the third quarter of last year.   

“Our team’s resilience has kept us on track,” Mr. Juat said. “We are confident that the completion of this project will significantly improve the Philippines’ export capabilities. This is significant for the Philippine fruit and fisheries sector, which faces challenges in adhering to stringent international standards of product quality and safety.”

A Brown Chairman Walter Brown said the facility would empower local businesses and help them tap foreign markets.   

“We’re looking forward to the operational phase of our facility,” he said. “Our goal is to empower local businesses, helping them reach international markets more effectively. This facility is not just an investment in technology; it’s an investment in the Philippine economy and its people.”

Shares of A Brown, a real estate company with mixed-use, nature-themed developments in Mindanao and Luzon, gained 4.62% or three centavos to 68 centavos each. — Revin Mikhael D. Ochave

SEC warns public vs investing in OKPB and Goldia

SEC.GOV.PH

THE Securities and Exchange Commission (SEC) has warned the public against investing in two entities that it said are not authorized to issue and sell securities in the Philippines.

In separate advisories posted on its website, the corporate regulator flagged One 1Key Progress Booster, Inc. (OKPB) and Goldia by Shine, which are both registered with the commission.   

The certificates of registration of the two entities only grant juridical personality but do not empower them to sell securities without an approved registration statement, the SEC said.

It added that people or groups claiming to represent Power Apps under the registration of OKPB were urging the public to invest by paying a P1,000 membership fee.   

“Once registered, the member becomes part of the second business of OKPB which they refer to as ‘quest,’ whereby an investment of P5,000 will guarantee a return of 50% in just 15 days,” it said. “There is no proof of the invested money. However, the names are written on the logbook with the corresponding amount invested.”

The SEC said OKPB uses a scheme where investors could also invest P100,000 and earn 300% to 400% interest after five to 10 days.   

“Investors were advised that the operation will only last until the end of this year, but assured the members that their shares will be transferred to a new company and that it will still earn but not as much as 50% of the investment made,” the regulator said.

“Allegedly, this is to get away from paying big taxes to the Bureau of Internal Revenue,” it added.

Meanwhile, the SEC said Goldia by Shine, which is under the registered license of Fujesan Distribution Corp., claims to be selling jewelry from Hong Kong and Bangkok at low prices.   

The entity allegedly offers compensation plans with investments ranging from P20,000 to P300,000 with a promise of return of 5-8% monthly interest.    

“The public is made aware that an investment contract, which is a kind of security, exists when there is an investment or placement of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others, which is prominent in the scheme of Goldia by Shine,” the SEC said. — Revin Mikhael D. Ochave

Perfetti Van Melle inks partnership with PCX to exceed plastic goals

US.CHUPACHUPS.COM

CONFECTIONERY maker Perfetti Van Melle Philippines has partnered with PCX Markets for an initiative that seeks to exceed the required plastic reduction goals of large companies under the Extended Producer Responsibility Act.

Perfetti Van Melle Philippines Managing Director David Roos on Thursday said the company, which produces brands like Mentos, Chupa Chups, and Fruit-tella, is on track to hit 50% more than the required target under the law.

“We want to continue exceeding these targets in the coming years,” he said in a statement.

Under the law, big companies must recover or divert at least 20% of their plastic packaging footprint by end-2023, 40% by 2024 and increasing by 10% yearly until at least 80% is recovered by 2028.   

“At Perfetti Van Melle Philippines, we believe that small moments and actions, when added up, can create a big, positive impact on people’s lives,” Mr. Roos said. “This goes beyond the sweet treats we are known and loved for and includes taking action to help tackle large societal challenges like plastic pollution.”

Perfetti Van Melle Philippines has a plastic diversion program consisting of community impact, co-processing, recycling, upcycling, and other projects. It also seeks to help build a circular economy through social impact.

“Together with these plastic diversion initiatives, the company is focused on innovating its packaging materials to reduce plastic usage and find proper alternatives, creating even more value for Filipinos and safeguarding a better future,” Mr. Roos said.   

PCX Markets is a global marketplace for audited and traceable plastic waste recovery and responsible processing.

It activates an ecosystem of partners who collect, transport and responsibly process plastic waste, tracked and verified through the power of blockchain technology, while supporting communities on the ground with programs that improve livelihoods and scale up social impact.

PCX is working to clean up 80 years’ worth of plastic waste, according to its website. “We encourage the elimination of unnecessary plastic and enable responsible production and waste management for any plastic that remains, so that it doesn’t wind up in nature.” — Revin Mikhael D. Ochave

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