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Peso inches higher vs dollar as bank concerns ease

STOCK PHOTO | Image by iiijaoyingiii from Pixabay

THE PESO edged higher against the dollar on Thursday on easing worries over the global banking sector and amid the smaller month-on-month increase in the National Government’s debt. 

The local unit closed at P54.415 per dollar on Thursday, gaining 3.5 centavos from its P54.45 finish on Wednesday, based on Bankers Association of the Philippines data.

The peso opened Thursday’s session at P54.39 per dollar, which was also its intraday best. Its weakest showing was at P54.495 against the greenback.

Dollars exchanged inched down to $1.009 billion on Thursday from $1.112 billion on Wednesday.

“The peso appreciated amid improving optimism on the global banking sector after the recent US Congress hearing on Silicon Valley Bank’s (SVB) fall,” a trader said in an e-mail.

Officials from the US Federal Reserve and other regulators told US lawmakers on Wednesday that the scope for blame for SVB’s failure stretches across bank executives. 

Michael Barr, Fed Vice Chair for Supervision criticized SVB for going months without a chief risk officer and for how it modeled interest rate risk, Reuters reported. 

The peso strengthened following the release of data showing a smaller month-on-month increase in the government’s outstanding debt, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The National Government’s total debt hit a fresh record-high of P13.75 trillion at the end of February amid the increase in domestic borrowings, the Bureau of the Treasury (BTr) said on Thursday.

Preliminary data from the BTr showed outstanding debt inched up by 0.4% or P54.26 billion from the P13.698 trillion as of end-January “primarily due to the net issuance of domestic securities.”

For Friday, the trader said the peso could strengthen further ahead the release of data showing potentially lower US personal consumption expenditures (PCE) inflation.

Mr. Ricafort said the PCE data could give a clue on the US Federal Reserve’s next policy move.

The trader sees the peso moving between P54.25 and P54.50 on Friday, while Mr. Ricafort gave a slightly wider forecast range of P54.30 to P54.50 per dollar. — K.B. Ta-asan with Reuters

PHL stocks rise on easing banking sector fears

PHILIPPINE STAR/KRIZ JOHN ROSALES

PHILIPPINE STOCKS rose further on Thursday in thin trade amid easing banking fears and positive data.

The Philippine Stock Exchange index (PSEi) rose by 13.78 points or 0.2% to close at 6,644.75 on Thursday, while the broader all shares index went up by 9.07 points or 0.25% to end at 3,538.73.

“Despite trading in sideways, the local bourse managed to gain 13.78 points or 0.2%, closing at 6,644.75, thanks to the continued easing of banking fears. Furthermore, the release of strong economic data domestically helped to ease investors’ concerns and contributed to the market’s positive momentum,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said.

“BSP (Bangko Sentral ng Pilipinas) Governor Felipe M. Medalla has reassured investors that the local banks remain robust and that the recent monetary tightening measures do not pose any significant risks to the overall financial stability of the Philippines. Additionally, the market was boosted by the news of higher approved investments by the PEZA (Philippine Economic Zone Authority) in the first quarter of 2023 and the strong performance of domestic travel,” Ms. Alviar added.

The PEZA on Wednesday said it approved P12.54 billion worth of investments in January to March from P8.14 billion in the same period last year.

China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail that trading volume remained tepid, “which could indicate continuing investor disinterest.”

Value turnover decreased to P4.03 billion on Thursday with 573.95 million shares changing hands from the P13.01 billion with 2.29 billion issues on Wednesday.

“We also remain wary of possible weakness in the coming days as we expect investors to trim market exposures ahead of the March inflation report (due out next week) and next week’s long weekend,” Mr. Mercado said.

“The market managed to close higher in today’s session as likely driven by: (1) positive sentiment spillover from offshore markets, (2) and improving business optimism according to the BSP’s Business Expectations Survey,” he added.

The majority of sectoral indices closed higher on Thursday, except for property, which went down by 23.54 points or 0.84% to 2,773.63.

Meanwhile, services gained 13.29 points or 0.8% to end at 1,662.60; industrials increased by 63.74 points or 0.67% to 9,556.22; financials rose by 11.50 points or 0.63% to 1,811.82; mining and oil climbed by 50.75 points or 0.46% to 11,021.22; and holding firms went up by 10.06 points or 0.15% to 6,459.79.

Advancers outnumbered decliners, 98 versus 72, while 53 names closed unchanged.

Net foreign buying went down to P557.39 thousand on Thursday from the P2.70 billion seen on Wednesday.

China Bank Securities’ Mr. Mercado put the PSEi’s support at 6,400-6,420 and main resistance at 6,650. — AHH

Danish fund awarded first 100%-foreign RE contracts

REUTERS

By Sheldeen Joy Talavera

DENMARK’s Copenhagen Infrastructure New Markets Fund (CINMF) on Thursday signed agreements to develop three offshore wind sites, becoming the first company to obtain concessions after the renewable energy (RE) industry was opened up to full foreign ownership.

The sites, each covered by a Service Contract, are in Camarines Norte and Camarines Sur, with capacity projected at 1,000 megawatts (MW); Northern Samar (650 MW); and Pangasinan and La Union (350 MW).

Przermek Lupa, associate partner in Copenhagen Infrastructure Partners (CIP), which manages the fund, said the investment involved is $5 billion, with each service contract running for 25 years.

“As the first fully foreign entity to the renewable energy sector in the Philippines, we want to grow with the country. We want to be a catalyst for deploying large volumes of capital in sustainable projects,” Mr. Lupa said at the signing ceremony.

The projects are targeted to be completed within the tenure of President Ferdinand R. Marcos, Jr.

“If we can look at achieving COD (commercial operations date) by 2028, (it) means starting construction a couple of years earlier. That is the goal,” he said.

He said that the company will seek to conduct its dealings with the Department of Energy as a “one-stop shop,” and indicated the need to collaborate with the National Grid Corp. of the Philippines and other stakeholders.

“CIP believes that bold moves, scale, and speed (are critical in mitigating) the impacts of climate change. Of course, we know how the Philippines is particularly vulnerable to the effects of climate change,” he said.

Energy Secretary Raphael P.M. Lotilla said the projects will help accelerate the Philippines’ shift to indigenous and renewable sources of energy.

“These agreements represent an additional strategic investment and a firm commitment to strengthen the renewable energy sector, particularly the development of offshore wind,” he said. 

“They provide a significant contribution towards a low carbon future as well as encourage the development of the local supply chain,” he added.

Danish Ambassador to the Philippines Franz-Michael Melbin said foreign investors “are more comfortable taking 100% control of projects.”

He said that the Philippines’ target capacity of 40 gigawatts will depend on the availability of sites investors are interested in.

Mr. Melbin added that red tape has been a challenge for foreign investors. “Cut the red tape and we can cut the red ribbons,” he said, referring to the ribbon-cutting ceremonies at the launch of projects.

“The government can do a lot more for foreign investment by cutting red tape,” he said.

Niels Holst, a CIP partner and head of the CINMF, was quoted as saying in a statement that the removal of foreign ownership restrictions on renewable energy projects was a “positive signal” for entry of investments.

“We believe the Philippines holds great potential for low-cost power delivery from high-quality renewable energy projects that would deliver local employment and skills,” he said.

PHL-Korea FTA signing target set for June or July

REUTERS

THE signing of the free trade agreement (FTA) between the Philippines and South Korea is expected by June or July, according to the Department of Trade and Industry (DTI).

“Our target is June/July for the signing (of the FTA),” Trade Assistant Secretary Allan B. Gepty told reporters via Viber on Thursday in response to a request for updates on the FTA.

In November, the DTI had set a signing target of the first quarter of 2023.

According to Mr. Gepty, the legal groundwork to clear the way for signing has been completed, and lacks only a few more steps prior to signing.

“Before the signing, Trade Secretary Alfredo E. Pascual needs authority from President Ferdinand R. Marcos, Jr. We will coordinate with the Department of Foreign Affairs on this. In support of the request, we will attach the text of the agreement, advantages, benefits, and other salient points of the agreement,” he added.

The FTA negotiations between the Philippines and South Korea began in June 2019 and ended in October 2021.

Some of the Philippine products expected to benefit from the FTA are banana, pineapple, and other tropical fruits, while South Korean vehicles and auto parts are expected to gain more access to the Philippine market.

The DTI said October 2021 that Philippine banana exports to South Korea will go to zero tariffs in five years while processed pineapple exports will be duty-free in seven. Currently, Philippine banana exports to South Korea are charged a 30% tariff.

The tariff on some South Korean auto parts will also be removed in five years under the FTA.

Mr. Gepty said that the Philippines is also working on other trade deals, such as the Philippines-United Arab Emirates comprehensive economic partnership agreement and upgrades to the Association of Southeast Asian Nations (ASEAN)+1 trade agreements such as the ASEAN-China free trade area and ASEAN-Canada FTA.

He said negotiations have concluded for the ASEAN-Australia-New Zealand FTA, which was finalized in November and is also expected to be signed this year.

“The other FTAs also in the ASEAN… are now being studied and evaluated for possible upgrades. In other words, for the ASEAN region and the Philippines as far as trade policy direction is concerned, it is very clear that we want to expand our FTA network.  — Revin Mikhael D. Ochave

Coconut, ube products proposed for export diversification push

ANY EFFORT to diversify exports starts with agricultural products, preferably those unique to the Philippines, an official with the exporters’ association said.

Senen M. Perlada, Philippine Exporters Confederation, Inc. executive vice-president, said at a BusinessWorld Insights forum on trade on Wednesday that “when it comes to exports, (the opportunities are in) products that have high local content… These are really agriculture-based.”

Mr. Perlada said products based on coconut, purple yam (ube), cacao, banana and fisheries have untapped export potential, especially if processed into high-value products like coconut water, banana flour, chocolate, and virgin coconut oil.

“Diversification, innovation, and creativity are very important. But even with the basic commodities where we are strong in, we really have to take advantage of any innovation in these products,” Mr. Perlada said.

He said focusing on agri-marine products “will help us address a lot of the trade deficit.”

According to the Philippine Statistics Authority, the trade deficit widened to $58.3 billion last year compared to $42.2 billion in 2021 as import growth outpaced that of exports. Exports grew 5.6% to $78.8 billion while imports rose 17.3% to $137.2 billion.

At the end of January, the trade deficit had expanded to $5.74 billion from $4.51 billion a year earlier.

Ruben Carlo O. Asuncion, Union Bank of the Philippines, Inc. chief economist, said at the forum that focusing on agricultural exports would also improve food security.

“It actually can hit two birds with one stone. We’re having problems with food security and how technology and innovation can come in and advance food security at the same time increase our food production so that we can export specific products that can only be found in the Philippines,” Mr. Asuncion said.

Mr. Asuncion cited the need to “retool” the workforce in order to explore more export and trade opportunities.

Clifford Academia, Aboitiz InfraCapital Economic Estates vice-president for operations, called for improvements in trade and business regulation to boost exports.

“We need to do something for our leap to be exponential. We need to work on the basics of regulation, making it easier to open business here, (lower the) cost of doing business, and all the related regulations,” Mr. Academia said.

Mr. Academia added that ecozones could also help upskill workers across the country as industrial parks branch out into the various regions.

“Industrial parks can undertake some interventions on talent development since we are not in the city centers. We can develop talent in these locations so that we can cater to companies that offer higher-value jobs,” Mr. Academia said. — Revin Mikhael D. Ochave

PHL touted as potential hub for EV battery production

Image via Ivan Radic/CC BY 2.0

THE Department of Trade and Industry (DTI) said it is seeking to establish the Philippines as a production hub for battery manufacturing for electric vehicles (EV), to tap the country’s mineral reserves.

“Aside from our commitment to combat climate change through the use of EVs, the DTI also aims to aggressively position the Philippines in the battery segment of the global market,” Trade Secretary Alfredo E. Pascual said during his speech at the lease signing ceremony between Envirotech Vehicles and Berthaphil in Taguig City on March 28.

“Given the presence of abundant nickel and cobalt reserves, the Philippine government is consistently promoting the country as a potential manufacturing hub for battery production,” he added.

The Mines and Geosciences Bureau estimates that the value of metallic output rose 31.7% to P238.05 billion in 2022 as production rose.

According to Mr. Pascual, the EV industry is vital in generating more investment and employment.

“The growth and development of the EV industry is crucial in making green investments and jobs happen in the Philippines as we aim to generate stable, high-quality, and better-paying jobs for Filipinos, while achieving shared prosperity for all,” Mr. Pascual said.

“We seek to create an end-to-end value chain from the mining and processing of green metals to the local manufacture of batteries, charging stations or units, and EVs,” he added.

Under the EV Industry Development Act, the government and private sector are required to maintain vehicle fleets with EVs accounting for 5%.

The DTI will also recommend an EV incentive strategy for the approval of the Fiscal Incentives Review Board, akin to the Comprehensive Automotive Resurgence Strategy (CARS) program, to create an enabling business environment for the EV industry.

The CARS program, signed in 2015, seeks to improve domestic vehicle manufacturing by providing incentives. The program participants are Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. — Revin Mikhael D. Ochave

Well-milled rice prices rise in mid-March

PHILSTAR FILE PHOTO

THE average retail price of well-milled rice increased in six trading centers in the middle of March, the Philippine Statistics Authority (PSA) said.

Prices rose in March 15-17 period, which the PSA refers to as the second phase of March, compared with the prices from March 1-5, or the first phase of the month.

Higher prices were recorded in Cebu City, where they rose by P2.13 to P52.38 per kilogram. In Baguio City they rose by P0.66 to P45.50, in Pagadian City by P0.59 to P41.59, in Cabanatuan City by P0.50 to P38.50, in Iloilo City by P0.39 to P48.27, and in the National Capital Region (NCR) by P0.19 to P43.14.

Prices fell in Legazpi City by P1.88 to P41.68, in Tacloban City by P1.50 to P48, and in Kidapawan City by P0.77 to P40.53.

The average retail price of pork kasim (shoulder) per kilogram also rose in nine trading centers during the period.

Prices increased in Calapan City by P12.50 to P350, in Butuan City by P10 to P340, in Pagadian City by P10 to P362.50, and in the NCR by P4.73 to 320.41.

Increases of P5 were reported in the following markets: Tuguegarao City to P275, Cabanatuan City to P325.00, Cebu City to P290, Digos City to P330, and Kidapawan City to P342.50.

Baguio City registered a decrease of P5 to P274.

During the period, the PSA reported decreases in the average retail price of bangus (milkfish) in six trading centers.

They fell by P10 to P200 in Cabanatuan City, by P10 to P190 in Butuan City, by P5 to P190 in Tuguegarao City, and by P5 to P230 in Cebu City.

Price declines were reported in the NCR and Baguio City of P0.35 to P208.70 and P2.50 to P222.50, respectively.

Milkfish prices rose by P15 to P225 in Kidapawan City and by P7.50 to P240 in Iloilo City. — Sheldeen Joy Talavera

China proposes new joint exploration talks

BW FILE PHOTO

THE PHILIPPINES is expected to embark on a new series of talks for jointly exploring the South China Sea for oil and gas, following proposals from Beijing.

When asked about joint exploration activities, Foreign Affairs Secretary Enrique A. Manalo said: “They were proposing that we begin talks again on oil and gas.”

“I think we will begin in maybe around six weeks, but as I said at a technical level,” he added. “There’s no document yet.”

Maritime officers from both countries will meet, with discussions likely to revolve around the terms of reference, Mr. Manalo said.

“You will probably call it… exploratory or scoping, or setting the scope of the discussion. We’ll see where it goes,” he said.

“Definitely we’re open to talks but as I said, we’ll always be guided by the requirements of the Constitution,” he added.

At a House of Representatives hearing last year, Mr. Manalo said China was pushing for a 50-50% or 51-49% division rather than a 60-40% sharing agreement in favor of the Philippines.

It also sought to apply conditions in accordance with Chinese domestic law that were unacceptable to the Philippines.

For these reasons, “negotiations ended, and no agreement was reached,” Mr. Manalo said.

The South China Sea is subject to overlapping territorial claims involving China, Brunei, Malaysia, the Philippines, Taiwan and Vietnam. — Alyssa Nicole O. Tan

Palace flags program to boost domestic pharma manufacturing, build up drug stockpile

Apotheca Integrative Pharmacy

THE GOVERNMENT said it is seeking to boost domestic drug manufacturing and establish a stockpile of medicine to address potential emergencies.

The Department of Health (DoH) and Food and Drug Administration (FDA) will be working with the private sector to identify medicine that can be produced domestically, the Presidential Communications Office  (PCO) said in a statement late Thursday following President Ferdinand R. Marcos, Jr.’s meeting with the Private Sector Advisory Council’s (PSAC) healthcare group.

The private and public sectors will seek to boost the capacity of domestic drugmakers to increase the supply of basic medicines, including anti-tuberculosis drugs, it added.

“It was agreed on during the meeting for the PSAC to monitor new technologies in healthcare that can be used for geographically isolated and disadvantaged areas and recommend those to the DoH and PhilHealth,” the PCO said.

It said the PSAC will also study the feasibility of establishing remote diagnostics centers.

“Let’s maximize the local production. The initial reason why this came up is the supply problems that we encountered during the lockdowns so we need to be prepared. We should be able to produce the local supply of essential medicines,” Mr. Marcos was quoted as telling the PSAC by the PCO.

The Palace said the PSAC pushed for the digitalization of the Food and Drug Administration’s information systems.

“This project includes the upgrading of… the electronic certificate of the product registration information system,” it said. “The overall digitalization rate is 72.5%, and the target for full digitalization is August.”

The Palace said once digitalized, other systems such as new chemical entity renewal, certificate of listing of the identical drug product (CLIDP) and post-marketing surveillance will follow.

The Palace said Mr. Marcos also asked the Commission on Higher Education (CHED) during the meeting to “immediately” address the shortage of nurses due to migration.

CHED Chairperson Prospero de Vera III said it is currently seeking ways to bring those that did not pass the board into the workforce, adopting a nursing curriculum with exit credentials, and encouraging non-practicing nurses to return to the profession.

“Under the nursing curriculum with exit credentials, students could have several options: exit at the end of Level I or II, obtain the certificate or diploma in Nursing, or choose to continue and finish the four-year nursing program to become a registered nurse,” Mr. De Vera told the PSAC Health Sector group.

He said CHED was also working on a flexible short-term master’s program, which would address the lack of instructors in nursing and medical schools.

Acting Health Secretary Maria Rosario S. Vergeire said the DoH is also assessing the status of proposed legislation on the Magna Carta for Public Health Care Workers and Philippine Nursing Act while conducting a study on the standardization of salaries of nurses, doctors and healthcare workers.

During the meeting, a target was set to implement Universal Health Care (UHC) by 2028 by strengthening the Philippine Health Insurance Corp. (PhilHealth).

“The ultimate goal is for Filipinos to be able to take advantage of a fully-implemented universal healthcare (UHC) system by 2028,” the PSAC said in a separate statement.

The PSAC said it is engaging third-party consultants to assess the performance of the PhilHealth leadership team. — Kyle Aristophere T. Atienza

Price growth of manufactured products slows in Feb.

BW FILE PHOTO

PRICE GROWTH in manufactured products slowed in February, according to the Philippine Statistics Authority (PSA).

Citing preliminary data, the PSA said the producer price index for manufacturing rose 3.6% year on year during the month, after posting a 4.4% rise in January.

The index shifted its base year to 2018 from 2000 previously.

Price growth in coke and refined petroleum products declined to 4.2% from 7.8% in the previous month.

Slowdowns were also recorded in transport equipment, where prices contracted by 1.7%, deepening the contraction from 0.7% in the previous month.

On the other hand, price growth accelerated for beverages to 5.1% from 4.9% in January.

Posting an unchanged price growth rate of 5.5% was fabricated metal products, except machinery and equipment.

Also posting unchanged price growth were tobacco products (3.9%) and wood, bamboo, cane, rattan articles and related products (3.9%). — Sheldeen Joy Talavera

PPP Center to help package irrigation projects

EMBASSY OF JAPAN HANDOUT PHOTO

THE National Irrigation Administration (NIA) said it signed a partnership with the Public-Private Partnership (PPP) Center to structure irrigation projects for offering to investors.

In a statement, the NIA and PPP signed a memorandum of agreement on Wednesday to explore various modalities for implementing irrigation projects.

The PPP Center was also engaged to seek other revenue opportunities to make the agency more viable as a government-owned and -controlled corporation.

NIA irrigation facilities water 65.28% of the 3.12 million hectares of Philippine farmland.

PPP projects will “fast-track irrigation development which will sustain needs of farmers and ultimately answer the President’s call to strengthen food security,” the NIA said.

As of March 29, the NIA had identified 50 potential projects for PPP implementation, including those involving hydroelectric power, solar power, aquaculture, wind energy, bulk water supply, water treatment, and carbon credits.

Among the PPPs implemented by the NIA was the Casecnan Multipurpose Irrigation and Power Project, in Pantabangan, Nueva Ecija.

It generates electricity via a 150-megawatt hydroelectric power plant and sends water through a 2.67-kilometer underground tunnel into the Pantabangan Reservoir.

The NIA recently has collaborated with the Department of Public Works and Highways (DPWH) on flood mitigation and irrigation projects.

“Convergence efforts” are currently being pursued on the Palace’s orders to leverage the NIA’s limited funds by partnering with the DPWH, which is well-funded. — Sheldeen Joy Talavera

Contact center industry sees 60% onsite, 40% WFH ratio ‘balancing out’ eventually

BW FILE PHOTO

THE Contact Center Association of the Philippines (CCAP) said it expects work arrangements to be more weighted towards hybrid models in the future, “balancing out” from the current ratio of 60% onsite and 40% work from home (WFH).

Tonichi Achurra-Parekh, a CCAP board member, told reporters during a forum in Taguig City on Thursday that “It really comes down to identifying what kind of work is needed… I think the future is hybrid work.”

Ms. Achurra-Parekh said she is aware of some industries conducting 100% WFH, including tech support and travel companies.

She added that the current 60:40 ratio is expected to “balance out” in the future as the industry configures operations more towards hybrid work.

In September last year, the government allowed registered IT and business process outsourcing companies to conduct 100% WFH and still avail of fiscal incentives as long as they shift their registration to the Board of Investments from the Philippine Economic Zone Authority.

Ms. Achurra-Parekh said CCAP is expecting continued growth in 2023 despite economic headwinds.

“I think we will continue to grow… We’re still in the learning stage, we’re still traversing new terrain, but we have so much more experience (compared with) two years ago. In that respect, the confidence level of our current partners and potential partners is still there,” she said.

“With the challenges that the global economy is experiencing, (clients) have really nowhere else to go but in the Philippines. And I think it really now is on us to make sure that the supply will be available,” she added. — Revin Mikhael D. Ochave

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