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Billie Eilish performing live in Manila

crommelincklars/CC BY 2.0/Wikimedia Commons

After her first scheduled performance in the Philippines was stymied by the coronavirus disease 2019 (COVID-19) pandemic, seven-time Grammy Award-winning American singer-songwriter Billie Eilish takes her Happier Than Ever, The World Tour to Manila. The concert will be on Aug. 13 at the SM Mall of Asia Arena in Paranaque.

Ms. Eilish was scheduled to perform in Manila in September 2020 as part of the Where Do We Go? World Tour which was canceled due to the coronavirus pandemic.

Born Billie Eilish Pirate Baird O’Connell, the singer-songwriter first gained recognition in 2015 for the song “Ocean Eyes.” In 2020, her album When We All Fall Asleep, Where Do We Go? won the Grammy Album of the Year award, making her the youngest artist to win the award at the age of 18. In 2022, Ms. Eilish won an Academy Award for Best Original Song for “No Time to Die” — the theme song of the James Bond film of the same title.

Her concert at the Mall of Asia Arena will have a standing section open to adults and minors 13 to 17 years old accompanied by a guardian. The seated section will be open to patrons aged 10 and above. Only fully vaccinated patrons will be allowed at the venue.

Ticket prices range from P3,081 to P14,93.

Tickets are available for Fan Club pre-sale on June 24, Live Nation Philippines pre-sale on June 25 (10 a.m.) and public sale on June 27 (10 a.m.), via smtickets.com and its outlets. — MAPS

 

Duterte signs memo to boost financial inclusion

LANDBANK

Philippine President Rodrigo R. Duterte’s office on Friday released a memorandum circular directing government bodies to support the implementation of a national strategy boosting access to financial services, which are mostly offered by the private sector.

The memorandum directs all departments, agencies, and instrumentalities of the Philippine government to adopt initiatives under the National Strategy for Financial Inclusion (NSFI), launched in 2015 and updated earlier this year to cope with the changing technological landscape.

“All regional development councils (RDCs) and equivalent bodies are enjoined to adopt financial inclusion as a development agenda,” the memorandum, signed by Executive Secretary Salvador C. Medialdea on June 23, read.

“All local government units (LGUs) are likewise encouraged to promote financial inclusion within their respective jurisdictions,” it added.

The NSFI provided strategic objectives and guiding principles that would promote financial inclusion.

To implement the circular effectively, the Financial Inclusion Steering Committee (FISC), chaired by central bank governor Benjamin E. Diokno, is tasked to coordinate with and provide technical assistance to RDCs and LGUs.

“The FISC shall also conduct information, education and communication activities towards building public understanding on the NSFI,” it added.

Funds necessary for the implementation of the circular will be charged against the appropriations of concerned government agencies with respect to their NSFI-related projects and activities, “subject to the usual accounting and auditing requirements, rules and regulations.”

“As a shared blueprint that aspires to achieve financial inclusion towards broad-based financial resilience, the adoption and implementation of the National Strategy for Financial Inclusion demands cooperation and support from the whole-of-government,” the circular read.

The proportion of Filipino adults with bank accounts reached 53% in the first quarter of 2021 from 29% in 2019. These comprised basic deposit and e-money accounts.

Data from the Philippine central bank showed that bank deposit accounts rose by 19% to 7.9 million in the last quarter of 2021, from 6.6 million in the same period a year earlier.

The Philippine government considers financial inclusion as a key driver of economic recovery towards a post-pandemic world.

The central bank is aiming to transform 50% of the total volume of retail payments into digital and bring 70% of Filipino adults into the banked population by 2023 under its Digital Payments Transformation Roadmap. — Kyle Aristophere T. Atienza

Duterte orders dissolution of NDC-owned Cavite industrial estate

PRESIDENT Rodrigo R. Duterte has ordered the dissolution of an industrial estate in Cavite after a follow-on project to be developed by the estate operator failed to materialize.

The dissolution order was contained in a memorandum signed by Executive Secretary Salvador C. Medialdea on June 23, ending the corporate life of First Cavite Industrial Estate, Inc., (FCIEI), which was registered with the Securities and Exchange Commission in 1990.

The estate was originally a joint venture of the National Development Co. (NDC) and partners. NDC became the sole owner in 1999.

“After completion of the development of the NDC property, which served as the FCIEI’s sole industrial estate project, the Board of Directors of the NDC deferred the dissolution of FCIEI considering that it may be used to develop another property of the NDC,” according to the memorandum.

The abolition of the company was recommended given that the intention for the FCIEI to undertake another development project did not materialize, the memorandum read. “[It] was approved in principle in 2015, with the condition that the FCIEI’s liabilities, particularly to the Philippine Economic Zone Authority (PEZA), are settled.”

It said that through a Memorandum of Agreement dated March 7, 2016, the FCIEI and PEZA agreed on the partial settlement of the former’s obligations to the latter.

The Governance Commission for Government-Owned or -Controlled Corporations (GCG) recommended the abolition of the FCIEI after determining that “its original purpose is no longer relevant to the State and it is no longer achieving the objectives and purposes for which it was originally designed and implemented,” according to the memorandum.

The GCG added that the FCIEI was not cost efficient and is involved in an activity “best carried out by the private sector.”

“The assets of the FCIEI shall be liquidated to settle the outstanding liabilities of the corporation,” according to the memorandum. “The remaining assets and/or liabilities of the FCIEI shall be assumed by its parent company, the NDC.”

In the memorandum, Mr. Duterte ordered the creation of a technical working group to oversee the settling of liabilities, liquidate of its assets, and assist in the winding-up of its corporate affairs. — Kyle Aristophere T. Atienza

Home Credit releases 2021 Sustainability Report

The Report outlines Home Credit’s strong progress in delivering digital-led financial inclusion benefits, building on company’s history of responsible operations, with highlights of its Philippine ESG performance

Home Credit released its Sustainability Report last June 15 detailing Home Credit’s progress in delivering against Environmental, Social and Governance (ESG) principles – a framework used globally, to measure non-financial factors anchored on sustainability and ethical impact of a company or business.

The report aligns with the United Nations’ Sustainable Development Goals and covers all the company’s markets across the globe.

“This sustainability report marks an important milestone in our journey as a responsible, inclusive business, that has ESG principles firmly embedded in its values and DNA,” said Jean-Pascal Duvieusart, Chief Executive Officer, Home Credit Group.

Home Credit has been working to support customers and communities in 2021 as they navigated the continued challenging global environment.

The report highlights key themes and trends that impact the business, based on a materiality assessment.

Key 2021 report highlights at a glance:

  • Serving the underserved

23% of Home Credit customers were first-time borrowers

  • Financial literacy

109 million people benefited from Home Credit financial literacy initiatives in 2021

  • Equitable lending

43% of Home Credit customers are women

  • Zero interest

44% of our consumer loans have 0% interest, thanks to partnerships with retailers and manufacturers

  • Payment holidays

2.2 million customers were given the option of payment holidays and deferred payments to help them better cope with the pandemic in 2021

  • Giving back to communities

USD1.3 million dedicated to community direct aid in one of over 50 projects across the markets

  • Carbon footprint

12k tCO2 equivalent in scope 1 & 2

  • Circular economy

4.5k phased out office devices refurbished and resold or donated

The materiality assessment sets out the most significant themes for Home Credit. It was compiled with reference to industry leading benchmarks such as the Standards and Practices for Responsible Inclusive Finance by the Social Performance Task Force (SPTF), Principles for Responsible Banking by the United Nations Environment Programme Finance Initiative (UNEPFI) and Materiality Finder by the Sustainable Accounting Standards Board (SASB).

In addition, the Home Credit Sustainability Report was prepared with reference to the Global Reporting Initiative (GRI) Standards.

Spotlight on the Philippines

In the Philippines, Home Credit has been the pioneer of financial inclusion since 2013, providing access to useful, affordable and responsible financial products and services to over 8 million Filipinos.

“Our mission at Home Credit is to empower every Filipino to be financially capable. Our robust network of over 10,000 POS locations and expanding online presence presents us whenever and wherever our customers need us. With our strong brand partnerships and community across the country, we have become a one-stop ally for every Filipino,” said David Minol, Home Credit Philippines’ Chief Executive Officer. “We have provided over 178 billion pesos in loans to our customers over the past 8 years, those loans have become a lifeline for most Filipinos, especially for those without access to bank or credit.”

Home Credit Philippines has been at the forefront of financial inclusion and innovation. Its Home Credit Marketplace app has evolved into a vibrant hub where customers can browse products, compare prices, and buy from local retailer. As part of our efforts to further to provide options for our customers, we have also expanded our partnerships from major retailers to specialist and medium to small brick and mortar stores- majority of which are based in smaller, underserved cities. By end of 2021, our marketplace now feature products from over 70 merchants across the Philippines expanding availability of products beyond consumer electronics and gadgets to furniture, home appliance, and even sports and lifestyle equipment.

At the height of the global pandemic, HCPH also partnered with BPI/MS Insurance Corporation, one of the Philippines major insurance providers to address the growing demand for insurance services in the country and provide value-added services to Home Credit’s customers, to help become more financially resilient despite the uncertainties.

Building on the learnings of the pandemic, Home Credit has also created its enhanced Safe Lender Toolkit, which aims to help customers resolve unexpected financial difficulties. The toolkit provides a range of support options from short-term through deferred payments and collection exclusion to long-term with debt resolution support, dynamic repayments and settlements.

“Financial inclusion has always been at the heart of our business approach. Affordability assessment sits at the core of this approach. We understand the importance of not over-debting customers and working with them to ensure the right product fit for their particular circumstances,” said Zdenek Jankovsky, Home Credit Philippine’s Director and Treasurer. “Taking this approach allows our customers to build a more financially resilient future, despite rising global uncertainties.” he added.

ESG principles have long driven Home Credit’s portfolio development- whether it’s a 0% interest product that helps someone buy their first smartphone, a revolving loan that provides more resilient cash flow or a payment holiday that helps a customer whose financial circumstances have suddenly changed.

Linked to this solid ESG performance are ESG-linked loans that have been granted to Home Credit Philippines to further its mission.

In December 2021, HCPH closed it first ESG-linked credit facility with Deutsche Bank noted as a groundbreaking transaction with focus on expanding credit access to underserved communities in the Philippines, including female and first-time borrowers, and increased provision of financial literacy programs in the country

As of June 20, Home Credit Philippines in partnership with Praxis, and the Manila Broadcasting Corporation has launched a financial literacy radio segment named “Payo para sa Life: Pera Wais Tips” aired daily across DZRH radio stations nationwide, to expand HCPH’s flagship “Wais sa Home” financial literacy program.

In May 2022, HCPH and Citi pioneered a Php 420 social finance facility with a first of its kind support for mobile device purchases for Filipinos. Half of the loan is devoted for women to aid purchase of basic digital devices to empower them to connect to the internet, access essential services such as digital banking, financial literacy, and for running their own online businesses or avail of online education.

“With more ESG-linked loans, we’re even better placed to continue to deliver equitable and transparent access to financial services for our communities,” said Jean Lafontaine, Home Credit Group’s Head of Funding and Investor Relations.

 


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The development journey of the country’s capital

Rizal Monument at Rizal Park

Today, June 24, the people of Manila celebrate the 451st founding anniversary of the historical city. Malacañang declared this day a special non-working holiday in the capital to give residents and tourists a chance to step into the beat of a city steeped in history.

During a month-long celebration, with mega job fairs, a running marathon, inauguration of newly-restored historical markers, float parade, gala concert and street dance competition, the city invites everyone to see the sights of its landmarks, listen to its music, and feel the hospitality of its people.

Nilad (Scyphiphora hydrophylacea)

Originally named Maynilad, Manila is derived from the plant “Nilad” (Scyphiphora Hydrophyllacea), a flowering shrub adapted to marshy conditions which once grew abundantly along the riverbanks. In a Facebook post, the National Museum shared that this is the most popular theory of the etymology of the city’s name. But for some, the nilad plant is not just a cultural icon but a representation of Manila’s journey from a budding plant that traces its roots to once again bloom and be visible to the rest of the world.

The city serves as a melting pot of cultures as it displays the best of Filipino traditions and mixes it with Spanish, American and Asian influences brought by colonizers. One of East Asia’s oldest cities, Manila traces its written history to 1571 when Spanish conquistadors, led by Miguel Lopez de Legazpi, fought for control over the city from its pre-Hispanic ruler, Rajah Sulayman.

According to Encyclopedia Britannica, Legazpi found a Muslim community in Manila and had it destroyed and replaced it with Intramuros, a walled city. Outside the city walls stood some scattered villages, each ruled by a local chieftain and each centered on a marketplace. As Spanish colonial rule became established, churches were built near the marketplaces, where the concentration of population was greatest. Manila spread beyond its walls, expanding north, east, and south, linking together the market–church complexes.

Centuries later, Spain and the United States fight over the Philippines, and it fell into the hands of the latter who help the country on social and economic improvement. The US policy established the first public schools in Manila and later throughout the archipelago.

San Agustin Church

However, after decades, Manila underwent the horrors of World War II. Under the Japanese Occupation, the city laid in ruins and the only building left intact was the San Agustin church.

Britannica describes Manila in a state of total disorder when it became the country’s capital in 1946. Yet, it managed to rebuild with the help of the United States. However, in 1948, Quezon City was declared the new capital and held the post for nearly three decades. But in 1976, Manila again became the capital and the permanent seat of the national government.

With freedom in effect, the sprawling metropolis of booming businesses, arts and culture is now poised to once again reclaim its position as one of the preeminent cities of Asia.

According to the Philippine Statistics Authority, it had a population of 1.84 million in 2020; second to the list of highly urbanized cities (HUCs) in the National Capital Region.

On top of that, Manila attracts over one million tourists each year. Some of the most visited destinations are the walled city of Intramuros, Rizal Park, Manila Zoo, Chinatown, the Minor Basilica of the Black Nazarene, and a diverse set of museums.

Intramuros

Tourism is a major industry in the district. The walled city of Intramuros houses several well-known universities and some of the most historic structures in the country, such as Fort Bonifacio, San Agustin Church and Manila Cathedral. The oldest Chinatown in the world can also be found in Manila, where Filipino-Chinese entrepreneurs set up their homes and businesses.

As a major economic center home to many commercial establishments, Manila serves as the headquarters of industry leaders, including major publishing companies and maritime terminals.

Port of Manila, the largest seaport not only in Luzon but in the entire Philippines, is located in northwestern part of the city’s bay area. United Kingdom’s leading experts in shipping tagged it as the oldest, busiest and one of the most important ports in the entire southeast Asian region for its vital trade link between the Far East and South America, making it the premier international shipping gateway of the country.

In the Cities and Municipalities Competitive Index 2021, the City of Manila continued to dominate the rankings of the most competitive local government unit in the country after Quezon City, in terms of dynamism, government efficiency, infrastructure and resilience.

On the commemoration of the establishment of Manila, city officials inspire all Manileños to trace their roots back on the valor of Filipinos that flourished despite the darkness of times, for new seeds of generation to uphold lasting progress and peace in the country. — Allyana A. Almonte

The current pulse on consumer credit in the Philippines

The CIC Credit Report and breaking the stigma of ‘utang

Understanding the concept of credit or “utang” in the Philippines has yet to reach its maturity as reflected by the stigma surrounding it. The word “utang” is still perceived to be synonymous with financial hardship, mismanagement, and vulnerability. This shouldn’t be the case as credit is a tool for financial upliftment that is essential for daily life.

Based on data, the strongest reason why Filipinos are hesitant to acquire financial products and services is the fear of getting into more debt or losing control of their finances. Despite this mindset, there is still a large dependence on informal loans rather than on formal sources, based on the 2019 Financial Inclusion Survey of the Bangko Sentral ng Pilipinas.

To break this stigma associated with credit and to promote a healthy credit culture in the country, the Credit Information Corp. (CIC) has been promoting information-based and risk-based lending, as well as incentivizing borrowers and lenders to act responsibly for their own best interests through CIC Academy webinars and direct availability of CIC Credit Reports through select financial institutions.

As the agency has the mandate to receive and consolidate basic credit data from financial institutions providing credit facilities, it can provide comprehensive information on the credit history and payment behavior of borrowers. Currently housing 34 million unique data subjects, the CIC database is the largest and most comprehensive credit database in the country with the most diverse set of credit data contributors. With all this data, lenders and borrowers alike can access crucial financial information from the CIC to aid them in their credit decision-making.

CIC’s mandate is quite relevant to lenders who are reluctant to extend loans due to the COVID-19 pandemic which has already caused delays in repayment and even defaults. Borrowers, on the other hand, can use their good credit standing, which is recorded in the CIC database, as their reputational collateral and unlock access to better financial products.

The CIC Credit Report and potential for MSME growth amid the pandemic

Among the business owners who benefitted from the CIC Credit Report during the pandemic are clients from Toyota Financial Services and UnionBank — two of the top Accessing Entities (AEs) who harness the CIC database in assessing the creditworthiness of its borrowers.

Due to the good credit history of these entrepreneurs, their credit application process dispensed with the posting of collateral and the eventual approval was solely based on their healthy financial standing — making it easier for these financial institutions to support the growth of their businesses.

“Needless to say, through the CIC Credit Report System, borrowers with good credit standing have better chances of getting their applications for loans approved. While those with bad credit standing are informed and guided towards improvement,” the CIC President and CEO (PCEO) Ben Joshua Baltazar shared.

Initiatives and plans moving forward

To provide Filipino borrowers with ready and immediate access to credit information, the CIC recently rolled out its “Direct to Consumer through AE (D2C) Program” where borrowers may conveniently access their CIC Credit Report through select Accessing Entities (AEs), such as banks and other lending institutions. This program is also set to be launched through digital channels and mobile applications of participating lenders starting Q3 of this year for added convenience to their borrowing clients.

Credit Information Corp. office

The CIC is also working with its accredited credit bureau, CRIF Philippines, to provide CIC Credit Reports to overseas Filipino workers (OFWs) in Hong Kong through Nova Credit. The CIC Credit Report should improve OFWs’ employment checks and facilitate in applying loans in Hong Kong while assisting financial institutions in credit risk management. The CIC has previously launched similar programs with CRIF in the USA through Nova Credit, the United Arab Emirates through CRIF Gulf, and is currently exploring a partnership through Quad-fi in Canada to improve OFW’s access to their credit information. This helps OFWs with their life in a foreign country by facilitating their applications for loans, credit cards, rent, and insurance among other uses.

Furthermore, the CIC is currently working with the Philippine Statistics Authority on the full compatibility of the National ID into its database, which will further enhance the reliability and accuracy of its credit data.

Alongside this implementation is the issuance mandating all digital banks to submit their basic credit data to the CIC. As emphasized by the PCEO, registration of digital banks with the CIC will be a valuable addition to its database as it has the potential of penetrating the unbanked sectors and spur broad-based financial inclusion with improved access to credit.

The CIC also continuously conducts its nationwide educational program, dubbed as CIC Academy, in an effort to further educate the public on credit and proper handling of their finances. These webinars are held twice monthly and attendance is free of charge.

“Through this financial literacy program of the agency, we strive to promote the benefits of the CIC to the economy, improve the overall availability of credit, and end the stigma against credit so Filipinos can reap the benefits of having access to formal loans and further improve their lives,” PCEO Baltazar ended.

 


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PAGCOR releases P30.09 million aid to three beneficiaries

The PAGCOR Board led by Chairman and CEO Andrea Domingo (center) turns to over to Marinduque Governor Presbitero Jose Velasco Jr. (2nd from right) the P28 million financial grant be used for the construction of four covered courts.

Three new beneficiaries received funding for their respective community development projects after the Philippine Amusement and Gaming Corporation (PAGCOR) released a total of P30.09 million in financial grants on June 21, 2022 at the agency’s Executive Office in Manila.

The provincial governments of Marinduque and Ilocos Sur as well as the Nueva Vizcaya Police Provincial Office received their cash grants from PAGCOR Chairman and CEO Andrea Domingo, who was joined in the distribution of checks by President and COO Alfredo Lim and Directors Gabriel Claudio and James Patrick Bondoc.

Acting Provincial Treasurer of Ilocos Sur Ronnette Victa (3rd from right) receives from PAGCOR’s Board of Directors the P1.89 million grant for the procurement of 55 computer sets to be distributed to ten municipalities and one city in Ilocos Sur. Also in photo is Ilocos Sur’s Local Revenue Collection Officer 3 Lorna Luczon (extreme right).

Marinduque was granted P28 million, which Provincial Governor Presbitero Jose Velasco. Jr. said will be used for the construction of four covered courts in different barangays.

“Napakalaking bagay nitong donasyon sa amin ng PAGCOR dahil maraming tao ang makikinabang sa itatayong covered courts sa apat na barangay sa Marinduque,” he explained. Said structures, Velasco added, can be used as evacuation centers during calamities and venues for various sports and livelihood programs.

Ilocos Sur, meanwhile, received P1.89 million for the procurement of 55 computer sets that will be distributed to ten municipalities and one city in the first legislative district of the province. Acting Provincial Treasurer Ronnette Victa, who represented Governor Ryan Luis Singson received the donation.

The PAGCOR Board turns over P199,833 financial grant to Nueva Vizcaya’s Provincial Police Office. Police Colonel Ranser Evasco (2nd from right) received the the donation.

The state-run gaming firm also turned over P199,833 to the Nueva Vizcaya Police Provincial Office Director Police Colonel Ranser Evasco to finance the purchase of a laptop with printer and a TV set.

“Napakahalaga po ng mga kagamitang aming bibilhin sapagkat halos lahat ng aming conference ngayon eh virtual na. Kaya’t lubos po kaming nagpapasalamat sa PAGCOR sa tulong-pinansyal na kanilang ipinagkaloob sa amin,” Evasco noted.

 


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Leisure & Resorts World Corp. announces annual stockholders’ meeting on July 29

 


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Standard Chartered hosts investor roundtable with the BSP in Singapore

In photo (L-R): Standard Chartered Bank (SCB) ASEAN and South Asia Head of Public Sector Jason Ving, SCB Philippines CEO Lynette Ortiz, Bangko Sentral ng Pilipinas (BSP) Assistant Governor Amenah Pangandaman, BSP Governor Benjamin E. Diokno, SCB Asia Regional Co-Head, Client Coverage Heidi Echtermann-Toribio and SCB ASEAN Head of Capital Markets Aaron Gwak

The Bangko Sentral ng Pilipinas (BSP) put the spotlight on investment opportunities for investors in Singapore in a roundtable organized by Standard Chartered Bank. BSP Governor Benjamin E. Diokno highlighted key economic liberalization reforms, such as the recently amended Public Service Act (PSA), the amended Foreign Investments Act (FIA), and the amended Retail Trade Liberalization Act (RTLA), which will further open up the Philippine economy to foreign investments.

The meeting was attended by 17 Singapore-based fixed-income and private equity investors, and global corporates from various industries, such as telecommunication, digital infrastructure, real estate, and education, with strategic interests in the Philippines.

During the discussion, the Governor also provided comprehensive updates on the monetary, external and financial sectors. He also addressed questions related to fiscal policy initiatives as the Finance Secretary-designate under the Marcos administration.

“As the incoming Secretary of Finance, I can assure you that the transition will be smooth as the incoming administration pledges continuity of key reforms that the outgoing administration started. With a resounding vote of confidence, the new administration will continue to work for reforms that will further help the country achieve its long-term development objectives.”

As the oldest international bank in the Philippines, Standard Chartered has hosted previous international investment roadshows for the Republic to support its efforts in promoting the country’s improved investment climate and pleased to organize another roundtable discussion to engage with key investors and stakeholders.

Heidi Echtermann-Toribio, managing director and regional co-head, Client Coverage for Asia, Standard Chartered, said, “The Philippines continues to attract interest from a wide range of investors and impactful engagements like these are only possible with a strong commitment from the authorities to keep stakeholders updated. We are delighted to work with the Philippine government to leverage our global footprint and bring together our clients for these exchanges.”

Lynette V. Ortiz, CEO Philippines, Standard Chartered, said, “It was our privilege to showcase the country’s economic agenda and be a part of an interactive exchange of insights with clients, partners and investors. We will continue to support and work closely with the government to build investors’ confidence and promote the Philippines’ competitiveness as a leading investment destination.”

 


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BSP hikes key rate on inflation risks

Prices of vegetables are displayed at the Marikina public market, June 17. — PHILIPPINE STAR/ WALTER BOLLOZOS

By Keisha B. Ta-asan

THE BANGKO SENTRAL ng Pilipinas (BSP) on Thursday raised its key interest rate for a second straight meeting to cool inflation, which is now seen to quicken to 5% this year.

The central bank also continued to signal gradual policy normalization despite the Philippine peso weakening against the US dollar to a more than 16-year low.

The Monetary Board on Thursday increased the benchmark rate by 25 basis points (bps) to 2.5%, as expected by nine out of 16 analysts in a BusinessWorld poll last week.

Interest rates on the overnight deposit and lending facilities were also hiked by 25 bps to 2% and 3%, respectively.

“The Monetary Board believes that a follow-through increase in the policy rate enables the BSP to withdraw its stimulus measures while safeguarding macroeconomic stability amid rising global commodity prices and strong external headwinds to domestic economic growth,” BSP Governor Benjamin E. Diokno said during a media briefing.

Mr. Diokno said that upside risks continue to cloud the inflation outlook with pressures arising from the “potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, as well as pending petitions for transport fare hikes due to elevated oil prices.”

He said the BSP raised its average inflation forecast for this year to 5%, from 4.6% previously, exceeding its 2%-4% target band.

For 2023, the BSP’s inflation forecast was revised upward to 4.2% from 3.9% previously. Average inflation is expected to decline to 3.3% in 2024.

“In line with the ongoing normalization of its monetary policy settings, the BSP is prepared to take all necessary policy action to bring inflation toward a target-consistent path over the medium term and deliver on its primary mandate of price stability,” Mr. Diokno said.

After the BSP’s announcement, the Philippine peso sank to P54.70 versus the US dollar, the peso’s worst finish since Nov. 21. 2005’s P54.74.

The Philippine Stock Exchange index also closed 1.66% down to 6,065.23 on Thursday, before the BSP decision.

HIGHER INFLATION
BSP Deputy Governor Francisco G. Dakila, Jr. said inflation is expected to average 5.6% in the second half of the year, citing May inflation and higher assumptions for global oil and non-oil prices as well as the approved provisional jeepney fare hike.

“Given the most recent developments, we see inflation averaging at about 5.6% in the second half of the year and this is attributable to continued rise in global commodity prices as well as more pronounced second-round effects on domestic goods and services,” Mr. Dakila said.

Inflation rose to 5.4% in May, the highest in three and a half years, amid the continued rise in food and fuel prices.

The implementation of a daily minimum wage hike in 14 regions and a P1 increase in fares for public utility jeepneys in Metro Manila, Central Luzon, Calabarzon and Mimaropa earlier this month will likely add to inflationary pressures.

Mr. Dakila said the BSP now expects the price of Dubai crude to average about $106.30 per barrel this year from the $104.04 per barrel projection given in May. The central bank also expects crude oil to average $95.30 per barrel for 2023 and $84.10 per barrel for 2024.

“The Monetary Board also reiterates its support for the carefully coordinated efforts of other government agencies as part of a whole-of-government approach in implementing non-monetary interventions to mitigate the impact of persistent supply-side factors on inflation,” said Mr. Diokno, who is set to take over the Finance department next month.

Mr. Dakila said targeted subsidies to the most affected sectors will help mitigate any second-round effects.

“The current problem now is supply so maybe in the longer term we can improve productivity to add to the supply because this is the basic reason why food prices are going up. Government could also look at, in the short term, while we are working on increasing productive capacity, we can probably revisit our non-tariff barriers to enable more supply coming outside the Philippines to come in,” BSP Senior Assistant Governor Iluminada T. Sicat added.

Meanwhile, Capital Economics Senior Asia Economist Gareth Leather said the BSP is unlikely to embark on a more aggressive tightening cycle.

“Given the BSP’s comments in the press conference, our previous forecast that the policy rate would end the year at 2.75% looks too dovish. We are changing this to 3.25%, but this is still less than is being priced in by financial markets,” Mr. Leather said.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail the Philippines can expect faster inflation and a weaker peso for the rest of the year with the BSP’s dovish stance.

“(Philippine peso) recently tumbled to multi-year weakness in reaction to dovish rhetoric from BSP and we could see the currency come under added pressure especially with the Fed signaling as much as 75 bps worth of tightening at the July meeting,” Mr. Mapa said.

As of Thursday, the peso has declined by P3.7 or 7.26% versus the dollar from its Dec. 31, 2021 finish of P51. For this month so far, the peso has dropped by P2.33 or 4.45% from the May 31 close of P52.37.

According to ANZ Southeast Asia and India Chief Economist Sanjay Mathur and economist Debalika Sarkar, they may revisit their forecasts if inflation continues to surge.

“Our current forecast is for the hiking cycle to conclude in Q1 23 when a terminal policy rate of 4.00% is reached — this was predicated on inflation coming back into the target range by then. Indeed, should inflation prove to be more stubborn, we will need to reassess this forecast,” they said.

The BSP will have its next policy review on Aug. 18.

NG budget deficit narrows in May

PHILIPPINE STAR/ MICHAEL VARCAS

THE NATIONAL Government’s (NG) budget deficit narrowed in May as revenues grew by double digits and spending contracted during the height of the election period, the Bureau of the Treasury (BTr) reported on Thursday.

In a statement, the BTr said the budget gap fell by 26.72% to P146.8 billion in May, from P200.3 billion in the same period last year.

Month on month, the May fiscal balance swung to a deficit from April’s P4.9-billion surplus.

National government fiscal performanceTotal revenues rose by 18.91% to P304.9 billion in May, from P256.4 billion in the same period last year. This was driven by a 21.8% increase in tax revenues to P285.6 billion, but this was offset by a 12.24% drop in nontax revenues to P19.4 billion.

Tax revenues were fueled by double-digit growth in collections by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC). BIR collected P216.6 billion, up by 17.91% year on year, while the BoC collected P66.3 billion, up by 36.35%.

The BTr’s revenues dropped by 28.22% to P8.9 billion due to lower dividend remittances, while collections from other offices went up by 8.35% to P10.4 billion.

Security Bank Corp. Chief Economist Robert Dan J. Roces attributed the higher revenues to increased economic activity as restrictions remained at the most lenient level.

“Attribution may be through increased revenue with looser alert levels aiding the economic reopening, allowing the government to garner better tax uptake… There’s also the weaker peso’s factor channeling through import taxes,” he said via e-mail.

The peso closed at P54.70 against the US dollar on Thursday, the lowest since Nov. 21, 2005.

Nicholas Antonio T. Mapa, senior economist at the Manila branch of Dutch bank ING Bank N.V., said Customs collections may have gotten a boost from the more expensive fuel imports.

At the same time, government expenditures contracted by 1.1% year on year to P451.7 billion in May, as an election ban on public works projects was in place until May 8 or a day before the May 9 national elections.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the contraction in spending was expected as this is usually seen in election months.

“It should serve as a warning shot for the Q2 GDP report, which we think will be tarnished quite significantly by the natural pause in government spending during periods of political transition,” Mr. Chanco said.

Primary expenditures, or spending net of interest payments, slipped by 2.32% to P417.9 billion in May.

Interest payments for May increased by 16.93% to P33.8 billion.

Meanwhile, the year-to-date budget deficit declined by 18.99% to P458.7 billion, as revenue growth outpaced spending.

Total revenues jumped by 15.46% to P1.43 trillion in the first five months of 2022, while expenditures rose by 4.69% to P1.9 trillion.

The bulk of revenues came from tax collections, which grew by 14.15% to P1.28 trillion. BIR collections rose by 9.92% to P959 billion, while BoC collections went up by 28.42% to P320.5 billion.

Nontax revenues, on the other hand, increased by 28.32% to P147.6 billion, thanks to a 37% rise in BTr revenues to P83.4 billion.

“Certainly, the punchy revenue numbers year to date are an encouraging sign of the economy’s recovery, though I’d be wary of overly praising any substantial rise in indirect taxes in the current inflationary environment,” said Mr. Chanco.

Inflation was 5.4% in May, the highest in three and a half years, exceeding the Bangko Sentral ng Pilipinas’ 2-4% target range.

Primary expenditures stood at P1.67 trillion in the five months to May, up 2.64% year on year. Interest payments jumped by 23.43% to P220 billion.

“For the period January-May, interest payments accounted for 15.34% of revenues and 11.63% of expenditures, up from last year’s 14.35% and 9.86%, respectively,” the BTr said.

The government expects the budget deficit to hit P1.65 trillion this year, slightly lower than the actual deficit of P1.67 trillion in 2021.

“Going forward, the incoming administration must continue to push increased revenue collections to bring the deficit within the program of P1.6 trillion for the year,” said Mr. Mapa. “Improved revenue collection will be crucial all the more given [President-elect Marcos’] directive to spend and invigorate the economy.”

As of the first quarter, the budget deficit as a ratio of the gross domestic product (GDP) stood at 6.4%.

The government aims to reduce the deficit to 7.6% of GDP this year, and further to 6.1% in 2023, 5.1% in 2024 and 4.1% in 2025. — Diego Gabriel C. Robles

Ex-PAL president tapped to head Transport dep’t

BW FILE PHOTO/ LSDAVALJR

FORMER Philippine Airlines (PAL) President and Chief Operating Officer Jaime J. Bautista has been tapped by President-elect Ferdinand R. Marcos, Jr. to head the Department of Transportation (DoTr).

In a statement, Mr. Marcos said he named Mr. Bautista as DoTr secretary-designate and Cesar B. Chavez as DoTr undersecretary for railways.

Mr. Bautista worked at PAL for more than 25 years, and was president from 2004 to 2012, and from 2014 to 2019. At the flag carrier, he served various posts such as vice-president for finance and chief finance officer.

On the other hand, Mr. Chavez will return to the DoTr, where he was appointed as undersecretary by President Rodrigo R. Duterte in 2017. He left the agency after issues involving the Metro Rail Transit Line 3 (MRT 3). 

Mr. Chavez was “instrumental in securing” the National Economic and Development Authority’s (NEDA) approval for the Metro Manila subway and other rail projects, according to the Marcos camp. He also served as deputy administrator of the Light Rail Transit Authority (LRTA).

Meanwhile, lawyer and former journalist Cheloy E. Garafil was chosen by Mr. Marcos to be the next chairman of the Land Transportation Franchising and Regulatory Board (LTFRB).

Ms. Garafil currently serves as service director at the House of Representatives Committee on Rules, and was formerly a prosecutor for the Department of Justice and State Solicitor for the Office of the Solicitor General.

Mr. Marcos also tapped businessman Christopher S. Pastrana to serve as general manager of the Philippine Ports Authority (PPA).

“(Mr.) Pastrana, a successful businessman in the transportation field, brings with him decades of experience in various aspects of aviation, logistics, and public maritime transport,” it said.

Mr. Pastrana currently serves as president and chief executive officer of the supply and logistics conglomerate CAPP Industries, Inc. He also chairs the Archipelago Philippines Ferries Corp. (APFC), which operates ferries under the brand name FastCat.

Experts have said that Mr. Duterte’s successor will have a hard time addressing the problems confronting the transport sector, which has been hit by supply and demand shocks worsened by rising fuel prices.

Senator Mary Grace Natividad Poe-Llamanzares, who chairs the Senate Committee on Public Services, said “much is expected” from the next Transport chief, who will have to address mass transportation problems and unfinished infrastructure projects.

The Move as One Coalition said the public transport sector is now in a “deadly spiral” and is now “collapsing.”

Meanwhile, Mr. Marcos has chosen more people from the Duterte government to serve under his administration.

In a separate statement, the Marcos team said outgoing Labor Secretary Silvestre H. Bello III will chair the Manila Economic and Cultural Office, which is the Philippines’ representative office in Taiwan.

Mr. Bello also served as Cabinet secretary under the administration of former President Gloria Macapagal-Arroyo.

Mr. Duterte’s former Cabinet chief, Karlo Alexei B. Nograles, will be the chair the Civil Service Commission, the Marcos team said.

Mr. Nograles was among the Duterte ad-interim appointees that were bypassed by the Commission on Appointments due to lack of quorum. — Kyle Aristophere T. Atienza