THE PHILIPPINES’ trade deficit stood at $3.31 billion in October, the narrowest gap in 17 months, as exports growth continued to outpace imports, the Philippine Statistics Authority (PSA) reported on Tuesday. Read the full story.
Here’s a quick glance at how PSEi stocks fared on Tuesday, December 13, 2022.
STOCKS inched lower on Tuesday as investors wait for the release of latest US consumer inflation data and the US Federal Reserve’s policy meeting, as these could affect the Bangko Sentral ng Pilipinas’ (BSP) decision this week.
The bellwether Philippine Stock Exchange index (PSEi) inched down by 2.82 points or 0.04% to close at 6,582.38 on Tuesday, while the broader all shares index lost 5.34 points or 0.15% to 3,431.65.
“The market was steady and on a wait-and-see as it tries to digest forthcoming US monthly inflation data and Fed policy hike, whether both will be above expectations at 7.3% and 50 bps (basis points), respectively, and which will sequentially partly determine the extent of next BSP policy hike and messaging,” First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said in a Viber message.
“The PSEi inched down … on profit taking after two consecutive days of gains. Investors also await the November US inflation report. Investors are waiting for the decision of the Federal Reserve on its interest rates to anticipate the next move of the Bangko Sentral ng Pilipinas at their meeting this month,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.
The US Bureau of Labor Statistics was set to release November consumer price index data overnight, which markets expect to be a key consideration at the Fed’s policy meeting on Dec. 13-14.
The Fed is seen to hike rates by just 50 bps this week following four straight 75-bp increases.
Meanwhile, the BSP is set to hold its own policy meeting on Dec. 15, Thursday, where it is also expected to hike rates by 50 bps.
Ms. Alviar said data showing lower foreign direct investment (FDI) net inflows in September also weighed on sentiment.
Data released by the BSP on Monday showed FDI net inflows declined by 7.9% to $626 million in September from $680 in the same month in 2021.
For the first nine months of the year, FDI net inflows dropped by 10% to $6.7 billion from $7.5 billion in the comparable year-ago period.
Sectoral indices were split on Tuesday. Mining and oil lost 138.57 points or 1.31% to close at 10,438.53; holding firms decreased by 56.76 points or 0.88% to 6,334.35; and industrials went down by 17.13 points or 0.18% to 9,266.52.
Property rose by 28.07 points or 0.98% to 2,882.82; financials increased by 6.03 points or 0.36% to 1,664.71; and services added 2.77 points or 0.16% to end at 1,707.45.
Value turnover declined to P5.42 billion on Tuesday with 705.24 million shares changing hands from the P5.51 billion with 570.19 million issues traded on Monday.
Decliners outnumbered advancers, 113 to 68, while 43 names closed unchanged.
Net foreign selling dropped to P431.38 million from the P685.2 million seen the previous day.
FMIC’s Ms. Ulang placed the PSEi’s support at 6,500 and resistance at 6,900, while Philstocks Financial’s Ms. Alviar put support at 6,400 and resistance at 6,800. — J.I.D. Tabile
THE PESO weakened further against the dollar ahead of the release of November US consumer inflation data, which could affect the US Federal Reserve’s policy decision this week.
The local currency ended at P55.90 against the greenback on Tuesday, dropping by 25 centavos from Monday’s P55.65 close, data from the Bankers Association of the Philippines’ website showed.
The peso opened Tuesday’s session at P55.64 per dollar, a tad stronger than its Monday close. Its weakest showing for the day was at P55.92, while its intraday best was at P55.60 versus the greenback.
Dollars traded jumped to $1.12 billion on Tuesday from $683.95 million on Monday.
The trader said in a Viber message that the peso declined as the dollar rose against most Asian currencies on Tuesday ahead of the release of November US consumer price index (CPI) data overnight.
“Looks like this is just an unwinding of bearish dollar bets ahead of key data,” the trader said.
The dollar was firm on Tuesday leading in to the release of US CPI data and the final Fed meeting of the year, with investors waiting to update interest rate outlooks, Reuters reported.
The dollar gained 0.8% on the yen on Monday and was steady at 137.70 yen through the Asia session on Tuesday.
The Fed is seen to hike rates by just 50 basis points (bps) at their Dec. 13-14 meeting following four straight 75-bp increases.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso dropped as the dollar gained after oil prices settled up about $2 a barrel on Monday on supply jitters.
On Wednesday, Mr. Ricafort expects the local unit to move from P55.80 to P56 per dollar. — AMCS with Reuters
THE Energy Regulatory Commission (ERC) said it hopes to release a regulatory framework for emerging energy technologies like storage next year.
“By the first quarter of 2023, we are hoping we can do the framework for the energy storage system (ESS),” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta told reporters on the sidelines of Energy Investment Forum on Tuesday.
Battery energy storage systems are expected to make intermittent energy sources like wind and solar suitable for providing a continuous supply of energy.
Ms. Dimalanta said that the ERC is also targeting to issue a regulatory framework by 2023 for micro-grid systems and electric vehicles.
“After the energy storage, we are hoping we can do microgrid following that. Towards the end of the year for the e-vehicle program,” Ms. Dimalanta said.
The Department of Energy (DoE) has cited the need to tap emerging technologies en route to achieving energy security.
Separately, Energy Undersecretary Felix William B. Fuentebella said the DoE is preparing for tight power supply conditions next year.
In October, Energy Secretary Raphael P.M. Lotilla projected at least 17 yellow and three red alerts on the power grid. The red alerts are expected in May and June.
“The worst-case scenario is no power. Sometimes, it happens because of no fuel and (during calamities). That is the worst-case scenario that we are looking at,” Mr. Fuentebella told reporters.
Mr. Fuentebella said the DoE is working on fast-tracking power plants under construction.
“We have a lot of renewables coming in; we are also working to rush the liquefied natural gas (LNG) that is coming in considering that Malampaya is nearing depletion,” Mr. Fuentebella said.
The Malampaya gas field supplies up to 20% of Luzon’s total electricity requirements. However, it is expected to be depleted by 2027.
In 2023, at least two LNG projects are expected to start operations, the projects of Atlantic Gulf & Pacific Co. and First Gen Corp., through its subsidiary FGEN LNG Corp.
Mr. Fuentebella said that for the period where tight supply is seen next year, “it is always the second quarter, this period is where we typically experience tight supply, where demand surges.” — Ashley Erika O. Jose
THE Philippine Rural Electric Cooperatives Association, Inc. (Philreca) has declared its support for amending the Electric Power Industry Reform Act (EPIRA) of 2001, citing the need to once more allow government entities, including local government units (LGUs), to generate power.
In a statement on Tuesday, Philreca said: “Continuing a deregulated generation sector will only result in imbalance in the power industry, the opportunities of each to bring down the electricity cost being impeded.”
The EPIRA law sought to restructure the power industry via deregulation and privatizing most state-owned power generation and transmission assets.
According to Philreca, the National Government and LGUs should be allowed to generate power, not only the private sector.
“True competition may be achieved only with the presence in the market of a price neutralizing factor, the government,” it said.
Separately, Philreca also said that it supports the decision of the Energy Regulatory Commission (ERC) to investigate the power supply agreements of private utilities and electric cooperatives after numerous complaints from consumers.
Last week, the ERC said it will review the “accuracy” of the generation rates being passed on by DUs to consumers.
The generation charge accounts for about 61% of the consumer power bill, on average.
Philreca said power rates have risen following the global surge in fuel prices in the wake of the Russia-Ukraine war, the peso’s depreciation, and the difficulty of sourcing coal.
Generation companies are authorized to pass these charges on to consumers by EPIRA. — Ashley Erika O. Jose
GROWTH of the Philippine economy will likely slow to 6.3% next year from a 2022 rate of at least 7%, Singapore’s DBS Bank said, noting the impact of high inflation, interest rates, and fading pent-up demand.
In a report written by DBS economists Chua Han Teng, Radhika Rao, and Irvin Seah, the bank said the Philippines is on track to meet the government’s gross domestic product (GDP) targets of 6.5-7.5% this year and 6-7% in 2023.
“Economic opening from the pandemic has been a key support, despite multiple challenges from rising domestic inflation and interest rates, as well as global headwinds,” DBS Bank said.
The economy expanded by 7.6% in the third quarter on the strength of the economy’s reopening. This has brought year-to-date average growth to 7.7%.
“Even as we expect 2022 growth to register above 7%, we see the expansion cooling to 6.3% in 2023 given mounting headwinds,” DBS Bank said.
“In our view, domestic demand in 2023 is likely to be hit by still-elevated inflation, the lagged impact of aggressive monetary tightening in 2022, and the fading of pent-up demand and reopening gains,” it said, adding that private consumption may grow at a slower pace next year.
Headline inflation at the national level rose to 8% year on year in November from 7.7% in October. It was the eighth straight month that inflation exceeded the central bank’s 2-4% target.
DBS Bank expects inflation in the Philippines to average 4.4% in 2023 due to the impact of the central bank’s monetary tightening and easing commodity prices.
“Philippine households are already seen dipping into their savings and tapping loans given the high inflation environment, despite improving labor market conditions. Inflation has surged to multiple-year highs, undercutting real purchasing power and firms’ margins,” DBS Bank said.
The Bangko Sentral ng Pilipinas (BSP) has raised benchmark interest rates by 300 basis points (bps) so far this year, bringing the key policy rate to 5%, in a tightening cycle billed as an effort to contain inflation.
A BusinessWorld poll last week indicated that 14 out of 15 analysts expect the Monetary Board to continue hiking borrowing costs at its Dec. 15 meeting. Thirteen analysts expect the central bank to deliver a 50-bp rate increase, while one forecast a 25-bp hike.
“We think the tightening cycle will extend into early 2023 but is nearing its end, with the policy rate reaching 6%. It would enter an extended pause to anchor inflation expectations, while Fed pressures on the Philippine peso vs. the dollar also ease,” DBS Bank said.
As the peso weakened to a record low of P59 against the dollar in October, the BSP intervened to smooth out the currency’s volatility. The peso has since bounced back to the P55-to-the-dollar level, closing at P55.90 on Tuesday.
The Federal Reserve has raised policy rates by 375 bps since March, and is expected to continue tightening to cool inflation at its Dec. 13-14 meeting.
“After a sharp increase in the Philippines’ public debt to more than 60% of GDP in 2022 from 40% pre-pandemic to cushion the impact of the unprecedented health crisis, we expect the National Government to stay on a modest fiscal consolidation path,” DBS Bank said.
It also noted that the National Government is aiming to bring down its fiscal deficit gradually to 3% of GDP by 2028, with debt targeted to fall to less than 60% of GDP by 2025.
“Fiscal impulse in 2023 will be negative and widen from 2022. Government consumption is likely to provide little support to headline growth in 2023,” it added.
The government’s budget deficit stood at P1.11 trillion in the 10 months to October, equivalent to 67% of the P1.7-trillion deficit projected for the full year.
Outstanding debt hit a record P13.52 trillion at the end of September, bringing the debt-to-GDP ratio to a 17-year high of 63.7%. — Keisha B. Ta-asan
THE PHILIPPINES needs to budget more effectively and tap more financing for its climate-change mitigation efforts, given the limited internal resources available to meet its international commitments, the Asian Development Bank (ADB) said.
“With only 2.7% of the 75% (emissions reduction) target to be financed through the public budget, turning ambition into delivery will depend on how the country’s climate program is financed,” the ADB said in a blog post on Tuesday.
“Effective government budgeting is key to building institutions, as well as the teams of people needed to convert climate ambition into action… maintaining and increasing budget allocations — from the 6.27% of the annual budget allocated for climate resilience in 2021 — will be critical,” it added.
In 2021, the Philippines committed to reduce 75% of its emissions by 2030, one of the more ambitious targets in Southeast Asia.
“Not surprisingly, addressing climate change is a consistent priority across the country’s leadership, whether in government or management of large companies,” the ADB added.
“Living in one of the world’s most vulnerable countries to climate change, people in the Philippines face an increasing barrage of cyclones, floods, drought and heatwaves. The country is hit with an average of 20 typhoons per year, and over 3 million people are affected by extreme floods,” the ADB said.
On the prospects for tapping international financing, the ADB said: “The Philippines’ climate ambitions will not be met without support from development partners and philanthropies.”
Between 2018 and 2020, donor governments and multilateral institutions provided $2.4 billion in climate-related development finance.
“More of these funds are needed, and fast. A pipeline of projects needs to be built, and project sponsors need more capacity to mobilize funds, design projects and engage investors,” it added.
Banks will also play a key role in financing the bulk of climate initiatives within the country, the ADB said.
“The central bank and other financial regulators have put in place a suite of policies to integrate environmental, social and governance issues into banking practice; encourage green lending; and support banks considering how climate risks affect their lending. Banks and financial institutions need greater capacity to take on this agenda,” it added.
The ADB also cited private investment in clean energy and mobilizing local governments as key to implementing more climate-resilient projects.
“The clock is ticking for the Philippines, and the money needed for climate action cannot be mobilized fast enough,” it added. — Luisa Maria Jacinta C. Jocson
THE House committee on micro, small, and medium enterprise (MSME) development approved a substitute bill positioning the Small Business Corp. (SBCorp.) as a possible alternative to usurers typically resorted to by small businesses.
The unnumbered substitute bill authorizes SBCorp. to directly lend to MSMEs 40% of its Pondo sa Pagbabago at Pag-asenso Fund, and the remaining 60% indirectly via accredited partner financial institutions (PFIs).
Representative Christian S. Unabia, who chairs the committee, said at the hearing: “Our target is to give 1% interest rate directly to our borrowers (and a) 2.5% interest rate for the borrowers from our PFIs,” he said, referring to the cap on lending rates set at 1% per month for direct lending and 2.5% per month rate via PFIs.
Angelito B. Acupan, head of SBCorp.’s Planning and Policy Management Group, requested a three-year transition period “in order for (SBCorp.) to meet the 60-40 ratio given that it would really take time to build up a considerable portfolio of direct lending for micro and small enterprise loans.”
Underserved and unserved enterprises will enjoy priority access to the fund, subject to review and approval of the Micro, Small, and Medium Enterprise Development Council.
PFIs include rural banks, thrift banks, development banks, cooperative banks, non-stock savings and loan associations, microfinance non-government organizations, and lending companies.
The bill must also clear the committee on appropriations.
The MSME committee also conducted initial deliberations on House Bill 3632, which proposes to make the Mentor Me Program a function of the Go Negosyo center, while also classifying business counsellors of the Go Negosyo centers as full employees of the Department and Trade Industry (DTI).
The counsellors provide business registration assistance, advisory, and business information and advocacy to MSMEs at Negosyo Centers.
“It is hoped that service delivery to MSMEs in the regions will be improved through the 1,334 (Go) Negosyo centers that have been established as of June 30, 2022,” Mr. Unabia said in his sponsorship speech.
The committee deferred approval of the bill to await position papers from the DTI and Department of Budget and Management. — Beatriz Marie D. Cruz
By Maya M. Padillo, Reporter
AUSTRALIAN educational institutions and private companies are being encouraged to pursue opportunities in Davao City and other parts of the southern Philippines, according to Australian Ambassador to the Philippines Hae Kyung Yu.
In an interview during a visit to Davao last week, Ms. Yu said some linkages that can be built on, citing Australian scholarship programs and ties with the durian and cacao industries.
“I met with the president of the Davao City Chamber of Commerce and we talked about how wonderful it would be to have some Australian universities and providers coming into Davao City… and also to invite education services,” she said.
She noted that there are 300 Filipinos from Davao City and another 300 from other parts of Mindanao who have either studied in Australia or received scholarship grants for in-country programs.
The people-to-people link is the biggest pillar of cooperation between Davao City and Australia, she said.
In agriculture, Ms. Yu said durian exports to Australia have growth potential due to the high demand.
“The one that goes to Australia is the Puyat variety and I think it is just a matter of slowly looking up other types as well,” she said.
“That is a very long process in Australia as well as in other countries because of biodiversity and quarantine, market processes can be a bit time-consuming but once you pass that then it’s a new market to new types of durian,” Ms. Yu added.
One of her stops during her visit was the Malagos Chocolate Farm House owned by the Puentespinas, noting that “the family are among the Australia-supported program grantees.”
Ms. Yu was in Davao City for the Gather22: People and Planet for Sustainable Futures, an exhibit of enterprises and projects on sustainability organized by the Australian Embassy and the Australian Global Alumni in the Philippines.
“Perfect time because Christmas time is upon us and they are selling amazing products that are really innovative and environmentally friendly that can achieve profitability and sustainability,” she said.
Ms. Yu said the Philippines is the fifth biggest recipient of Australia’s development programs, with Mindanao getting the biggest share. These are in the areas of education, humanitarian response, disaster resilience, peace initiatives, and health services, among others.
THE Department of Budget and Management (DBM) said budget funds released to national agencies and local government units hit P5.15 trillion at the end of November, for a release rate of 97.4% against an adjusted budget of P5.29 trillion.
Releases at the end of October had totaled P5.08 trillion, exceeding the original 2022 budget of P5.024 trillion.
The DBM said the budget blew out because of unprogrammed and other appropriations.
At the end of November, releases to government agencies and departments amounted to P2.83 trillion for a utilization rate of 98.2%.
Special Purpose funds released totaled P400.71 billion, or 87.7% utilization.
Meanwhile, Automatic Appropriation releases were at P1.6 trillion, representing 95.3% of the total.
These appropriations include P10 billion for the Rice Competitiveness Enhancement Fund and P2.35 billion for retirement and life insurance premiums of various government agencies.
The 2022 budget is expected to account for 21.8% of projected gross domestic product.
The proposed budget for 2023 is P5.268 trillion. — Luisa Maria Jacinta C. Jocson
THE Philippine Space Agency (PhilSA) said on Tuesday that it has signed a research and development agreement with the United Arab Emirates Space Agency (UAESA), with a focus on employing space technology for disaster mobilization and food security.
PhilSA said it signed a memorandum of understanding (MoU) with UAESA on Dec. 5.
The MoU “promotes joint space research and development, capacity-building, people-to-people exchange, and space industry-building,” PhilSA Director General Joel Joseph S. Marciano, Jr. said in a statement.
“It is a pioneering agreement involving our countries and ushers Philippine-UAE relations into a new and exciting frontier,” he added.
He noted that the UAE has been undertaking groundbreaking and ambitious space missions, referring to the launch this week of the Rashid moon rover using the SpaceX Falcon 9 rocket.
“These inspire us in our efforts to unlock the benefits of space and bring space capabilities to the fore in addressing present and future sustainability challenges we face on Earth. As we bring our peoples together in these endeavors, we can build a stronger foundation for our domestic space ecosystems,” Mr. Marciano said.
Areas of cooperation also include the application of data gathered from space to the study of climate change, disaster management, emergency response, food security, and agriculture.
Separately, the Japan International Cooperation Agency (JICA) said it is helping young Filipinos pursue a career in space technology through a scholarship program together with the Japan Aerospace Exploration Agency.
“There is potential in developing young talent in space technology development to address disaster management, industry development, and other sustainable development challenges of emerging economies like the Philippines,” JICA said.
The program targets to graduate 20 students in the next five years from the Philippines, Vietnam, Indonesia, Thailand, and Rwanda. — Arjay L. Balinbin
