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One-stop company registration portal relaunched as Philippine Business Hub

THE Philippine Business Hub (PBH), the government’s online business registration portal, was relaunched by the Department of Information and Communications Technology (DICT) and various other agencies on Monday.

“Through the establishment of the PBH, the (number of) days for registering businesses was reduced from 33 and 13 steps to only seven with only one step,” the Bureau of Internal Revenue said in a statement on Monday.

At the launch, Anti-Red Tape Authority (ARTA) Officer-in-Charge Ernesto V. Perez said the ultimate target is to bring down processing time to just one day.

“It is our hope what we are doing today will serve as a model for all other local government units to follow,” Mr. Perez said, following an initial rollout in Quezon City. He added that the new process aims to rid registration of corruption and red tape.

“The end goal is not just to register a business. The dream is for the PBH to be the only place you go to as a business, to register, to pay taxes, pay social services for your employees, and the like,” DICT Acting Secretary Emmanuel Rey R. Caintic said. “The Quezon City integration is an important thing. The Quezon City government has the largest number of businesses nationwide.”

“I told the mayor, if we hit Quezon City, everyone else will follow. Because the biggest, largest (LGU) is already integrated, there’s no more reason for other cities not to integrate,” he added.

Initially the Central Business Portal, it was rebranded as the PBH.

Mr. Caintic told BusinessWorld by phone that the rebranding was resorted to after the pandemic stalled the portal’s momentum after earlier launches in 2020 and 2021.

“This is (a) one-pass through for everyone. Apply at PBH now, and you automatically have SSS, Pag-IBIG, PhilHealth, etc.,” he added. “This is just phase one. How often do you register a business? Once in a blue moon. The recurring things are paying taxes, the renewal of applications.”

Republic Act 11032, or the Ease of Doing Business and Efficient Delivery of Government Services Act, provides for the creation of an online portal to streamline the process of applying for business permits and other applications, which the DICT is tasked with operating.

The relaunch is headed by the DICT, ARTA, the Department of Trade and Industry, and the Securities and Exchange Commission. This iteration will involve localizing the program and refreshing the website.

President Rodrigo R. Duterte urged subsequent administrations to continue using the PBH at his last State of the Nation Address on July 26, 2021.

“We have this legacy, and we hope to pass on this establishment of the Central Business Portal, a single site for all business-related transactions, such as securing business permits, licenses, and clearances,” he said. “This shall certainly elevate our global business standing in the doing business arena and improve our country’s competitiveness.”

ARTA plans to further improve the PBH over the years through its Business Process Mapping project, which includes mapping all permits and licenses involved in the business cycle, right up to business closures, and integrating them into the PBH. — Tobias Jared Tomas

Tax court declines to review geothermal company’s P30.43-M refund claim

THE Court of Tax Appeals (CTA) has affirmed a division ruling which had rejected Philippine Geothermal Production Company, Inc.’s (PGPCI) refund claim worth P30.43 million representing excess input value-added tax (VAT) paid on zero-rated sales dating back to 2013.

In an 11-page decision on June 14 and made public on June 17, the full CTA court said the company had failed to present a certificate of endorsement from the Department of Energy (DoE) to avail of tax incentives provided to renewable energy developers.

“In this case, petitioner (PGPCI) failed to produce the DoE certificate of endorsement relative to its alleged sales of renewable energy for the second and third quarters of the taxable year 2013 as mandated by the DoE,” according to the ruling, written by Associate Justice Marian Ivy F. Reyes-Fajardo. “Therefore, the court in division is correct in denying the petitioner’s refund of alleged excess and unutilized input VAT.”

PCPCI had argued that its certification as a renewable energy developer of geothermal sources proved its entitlement to VAT zero-rating on its sales.

The tax court ruled that despite its registration as a developer, the company failed to comply with the requirements set forth by the Energy department.

“A claim for unutilized input value-added tax is in the nature of a tax exemption,” the court said. “Thus, strict adherence to the conditions prescribed by the law is required of the taxpayer and petitioner failed in this regard.”

Under the DoE’s rules and regulations, renewable energy developers may avail of tax incentives only after securing a certificate of endorsement from the department.

In a dissenting opinion, Associate Justice Jean Marie A. Bacorro-Villena argued that the company did not need to secure the endorsement to apply for a refund.

“It is clear from the foregoing that the DoE certificate of endorsement is only required in order for the petitioner to enjoy the income tax holiday and the duty-free incentives; however, such requirement is not needed for VAT zero-rating purposes,” she said. “Hence, the non-presentation of the same should not bar petitioner from applying for a refund of its excess input VAT.”

Ms. Villena voted to remand the case to another division of the CTA for proper calculation of the excess input VAT due to the company. — John Victor D. Ordoñez

Sugar industry: Diverting imports from manufacturers to consumers will cause prices to fall

UNSPLASH

THE sugar industry said prices will fall if imports are diverted to the end-user market instead of their current role servicing manufacturer demand.

“If you want sugar prices to go down, flood the market. Oversupply it. If you put 200,000 metric tons (MT) on the market, then prices will go down,” United Sugar Producers Federation President Manuel R. Lamata said in a televised radio briefing over DZBB.

He was responding to a question about the Sugar Regulatory Administration’s (SRA) Sugar Order (SO) No. 3, which authorized the import of 200,000 MT of refined sugar to serve as a supply buffer.

“The premise of the SO is to bring down sugar prices to help consumers. The problem when you read it is that it’s exclusive for industrials, meaning that all that sugar is for soft drink makers. How will that bring down prices?,” he said.

Mr. Lamata said that the government should survey sugar mills to forecast supply and production.

“We need to find out how much sugar was left in warehouses, if it will tide over to the next milling season. We need data like that,” he said.

The SRA has said that sugar production for the current crop year was 1.8 million MT.

“The unusual decline in sugar production was explicitly observed in Negros from March to May production data. The aberrant decline during these months was due to the residual effect on the damaged leaves of sugarcane caused by strong winds during the onslaught of Super Typhoon Odette,” the SRA said. — Luisa Maria Jacinta C. Jocson

Fuel marking program collections top P453 billion

TAXES collected from marked fuel products amounted to P453.43 billion as of mid-June, counting back to when the program started in September 2019, the Department of Finance said.

This total includes P423.615 billion from customs duties as of June 16, and P29.81 billion in excise taxes collected as of Oct. 28, 2021, according to Finance Secretary Carlos G. Dominguez III in a Viber message.

The volume of marked fuel totaled 43.048 billion liters as of June 17.

Luzon accounted for nearly 74% of all marked fuel, or 31.8 billion liters, followed by Mindanao at roughly 20%, or 8.8 billion liters. The Visayas accounted for 5.4% of the total at 2.3 billion liters.

Diesel made up the bulk of marked fuel at 60.65%, while gasoline and kerosene consisted of 38.85% and 0.51%, respectively.

Twenty-eight oil companies are currently participating in the government’s fuel marking program.

Petron Corp. accounted for 10.46 billion liters or marked fuel, or 24.31% of the total, followed by Pilipinas Shell Petroleum Corp. at 7.69 billion liters or 17.86%.

Unioil Petroleum Philippines, Inc. came in at 4.47 billion liters of marked fuel, while Insular Oil Corp. and Seaoil Philippines, Inc. posted 3.71 billion and 3.57 billion, respectively.

The fuel marking program started on Sept. 4, 2019. Fuel is marked with a special dye in order to signify tax compliance, while the absence of the dye is considered an indication that the fuel may be smuggled. The program is authorized by Republic Act 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Last year, P158.44 billion was collected via duties. In 2022 so far, collections have totaled P154.40 billion, while the volume of marked fuel for the period was 12.97 billion liters.

Mr. Dominguez has said that the government expects to collect P147.1 billion in fuel excise tax and VAT in 2022.

In its 2021 Annual Report, the Bureau of Customs said it seized P6.7 billion worth of smuggled fuel and oil. — Tobias Jared Tomas

The 2022 SIPP: What’s next for registered enterprises

Four hundred and twenty-five days after the effectivity of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act or Republic Act (RA) No. 11534 on April 11, 2021, one question still lingers among the registered business enterprises (RBEs) doing business with the country’s 19 Investment Promotion Agencies (IPAs): How can RBEs maximize their fiscal and non-fiscal incentives under the new tax rules and evolving market environment?

The key lies in the 2022 Strategic Investment Priority Plan (SIPP). Following the provisions of the CREATE Act, the SIPP refers to the priority projects or activities, including the scope and coverage of location and industry tiers, determined by the Board of Investments (BoI), in coordination with the private sector, Fiscal Incentives Review Board (FIRB), IPAs, and other government agencies administering tax incentives.

Prior to the effectivity of the CREATE Act and the 2022 SIPP, the 2020 Investment Priorities Plan (IPP) issued on Nov. 18, 2020, lists the industries and activities that may be subject to fiscal and non-fiscal incentives.

The newly formulated 2022 SIPP is aligned with the goals, priorities, and strategies of the  revised Philippine Development Plan 2017-2022 and the development agenda and strategy of the DTI and DoST. It continues to adopt the projects or activities in the 2020 IPP, while expanding the priority list to address the growing concern on climate change, economic and medical challenges in managing the COVID-19 pandemic, international and local security relations, and lack of innovation and technological advancements.

PROJECTS OR ACTIVITIES UNDER THE 2022 SIPP
The CREATE Act introduced fiscal and non-fiscal incentives in tiers such that the qualified projects or activities are also categorized in industry tiers. Tier 1 covers all activities listed in the 2020 IPP, unless specifically listed under Tiers 2 or 3. Tier 2 covers all activities that address value chain gaps and promote green ecosystems, dependable health systems, and self-reliant defense. Tier 3 covers all activities that focus on the application of research and development and attracting technology investments. The table below summarizes the projects or activities.

The 2022 SIPP excluded RBEs engaged in customs brokerage, trucking or forwarding services, janitorial services, security services, insurance, banking and other financial services, consumers’ cooperatives, credit unions, consultancy services, retail enterprises, restaurants, public administration, or such other similar services. Further, it is projected that at least 30% of the gross domestic product earned in the National Capital Region (NCR) will be reallocated to provincial areas.

The list of priority projects or activities detailed in the 2022 SIPP is not entirely new. Similarities can be found in the IPPs from prior years. The 2014-2016 IPP included regional dispersal of industries and locational restriction in NCR, creation of specialty hospitals, and manufacture of alternative fuel vehicles, while the 2017-2019 IPP emphasized research and development activities, commercialization of new and emerging technologies, and climate change–related projects.

The 2022 SIPP is effective June 11, 2022, or 15 days after the date of publication in a newspaper of general circulation, and is valid for three years until June 10, 2025, subject to review and amendment every three years thereafter, unless a supervening event necessitates an earlier review.

WHAT DO RBES STAND TO GAIN UNDER THE 2022 SIPP?
RBEs can either be export market enterprise or domestic market enterprise, depending on its total export commitment. Export market enterprises refer to RBEs that export at least 70% of its total revenue or production output while domestic market enterprises refer to RBEs that export below the minimum threshold for export enterprises.

Regardless of which IPA the RBEs will apply, the period of availment of incentives is based on the combination of location and industry summarized as shown above.

In addition, qualified RBEs enjoy duty exemption on imports of capital equipment, raw materials, spare parts or accessories, and value-added tax (VAT) exemption on imports and VAT zero-rating on local purchases that are directly and exclusively used in the registered activity of the RBEs.

As such, the farther the RBEs are located from metropolitan areas and the more the projects or activities involve research and development applications and highly advanced technologies, the greater the incentives.

MAXIMIZING INCENTIVES UNDER THE NEW RULES
It is prudent for the RBEs to weigh the pros and cons on whether to continue with the status quo, restructure their business model, or transfer their registration to another IPA or location. A carefully laid out tax study may prove beneficial in assessing the best option that is most suitable to the RBE in the long run.

WHAT’S NEXT FOR RBES?
Investment prospects in the Philippines remain robust. According to the Philippine Statistics Authority, total approved foreign and Filipino investments in the first quarter of 2022 increased to P190.87 billion as compared to P164.9 billion in the same quarter of 2021. The BoI approved 95% of the total investments, representing a 32% increase from the first quarter of 2021. On the other hand, investments approved by PEZA decreased by 68% from 25 billion in the first quarter of 2021 to P8 billion in the first quarter of 2022.

The top three projects or activities pertain to electricity and gas, real estate activities, and manufacturing while the top three investing countries are Japan, South Korea, and Singapore.

With the effectivity of the 2022 SIPP, the issuance of synchronized implementing regulations from various concerned government agencies is necessary in addressing gray areas. These include the criteria and guidelines on green ecosystems and artificial intelligence projects. Priority must also be given to expediting the setting up and conduct of registered projects or activities, anchored on the principles of the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. One of the salient features under the amended Foreign Investment Act (RA No. 11647) is the creation of an Inter-Agency Investment Promotion Coordination Committee among the IPAs. This Committee will promote a unified and efficient approach on evaluation of investments and granting of incentives for RBEs.

So, to all the RBEs, stay vigilant as interesting developments will be rolled out in the foreseeable future.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Sheena Marie D. Daño is a senior manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Philippines’ weekly COVID infections jump by 82%

FILIPINOS in face masks visit a market in Marikina City. — PHILIPPINE STAR/ WALTER BOLLOZOS

By Kyle Aristophere T. Atienza, Reporter

CORONAVIRUS infections in the Philippines rose by 82% to 3,051 in the past week from a week earlier, according to health authorities.

Of the total for June 13 to 19, less than 1% or 15 were critical, the Department of Health (DoH) said in a bulletin on Monday. Six more patients died.

The agency said 385 or 14.6% of the country’s intensive care unit (ICU) beds had been used as of June 19, while 4,033 or 18.2% of non-ICU beds were occupied.

It added that 554 severe and critical coronavirus patients or 10.2% of total admissions were staying in hospitals.

DoH said 70.03 million people had been fully vaccinated against the coronavirus as of June 19, while 14.85 million people have received booster shots.

Manila, the capital and nearby cities would unlikely be placed under a moderate risk classification for coronavirus disease 2019 (COVID-19) soon despite rising infections, Edsel T. Salvana, a member of a DoH-led technical advisory group, told a televised news briefing.

“We’re still far from the parameters used by DoH in terms of moving from low risk to moderate risk,” he added.

The daily attack rate in Metro Manila was “a little bit above” one out of 100,000 cases, Mr. Salvana said. Under a moderate risk classification, the attack rate must be at least six out of 100,000, he added. 

The hospitalization rate in Metro Manila was still in the low 20s, when it should be 50% or above for it to be considered under a moderate risk classification.

“The actual number of cases is still manageable in terms of our healthcare capacity,” he added.

Metro Manila must post at least 800 coronavirus infections daily in the next two weeks before it can be placed under a moderate risk classification, Mr. Salvana said, citing the World Health Organization.

There is no indication that the government would be raising the alert in Metro Manila to Level 2 soon.

“There is really no indication that we should move to Alert Level 2 because, again, the ultimate objective of our alert level system is really to preserve the healthcare system.”

He noted that even as cases in the capital region have been steadily increasing, “the number of people who need urgent medical care, acute medical care in the hospitals is very, very low.”

Mr. Salvana partly traced the low hospitalization rate in Metro Manila to its high vaccination rate. 

Meanwhile, the government adviser said giving Filipinos a second COVID-19 booster shot now “does not make sense” because it would not benefit them.

“It is better for us to wait for newer formulated vaccines that target the Omicron variant,” he said. “So far, a second booster shot for the general population did not show significant benefits compared with the immunocompromised and the elderly.”

“For the general population, the benefit is not that big yet. Vaccines in the works may actually be more beneficial than giving a second booster to the general population,” he added.

“It will not make sense to give it to them just because the vaccines are about to expire.”

Mr. Salvana said the government should focus on ensuring that the fully vaccinated get their first top-up shot. “It is the first booster which has incremental, big benefits.”

“The vaccines are doing what they’re supposed to do,” the doctor said. “The uptick in cases is expected because of these new Omicron lineages that are entering the country, but it all remains manageable at this time because our healthcare utilization remains low.”

Physical distancing in schools may be relaxed in August

PHILIPPINE STAR/ MICHAEL VARCAS

THE GOVERNMENT might ease physical distancing rules in schools holding limited face-to-face classes this school year in areas under the lowest coronavirus alert level, according to Philippine health authorities.

This would allow educational institutions to admit more students attending schools physically, Education Undersecretary Nepomuceno Malaluan told a televised news briefing on Monday.

“There’s a limitation now on the number of students that we can accommodate in a classroom so they can observe the physical distancing requirement,” he said in Filipino. “In the next school year, physical distancing can be relaxed if a school is in an area under Alert Level 1, according to the new protocol issued by the Department of Health (DoH).”

Mr. Malaluan said the Department of Education (DepEd) is crafting guidelines for learning in the next school year, including blended learning.

“The extent [of blended learning] will be contained in the guidelines — how many days will be face-to-face and how many will be allowed for remote learning,” he added.

Schools now know how to deal with a potential surge in coronavirus infections and a higher alert level that goes with it, Mr. Malaluan said.

Only schools under Alert Levels 1 and 2 may hold physical classes in basic education.

“It really works like our storm signal,” he said. “Our schools know the protocols for each of these alert levels.”

Schools will open on Aug. 22.

Meanwhile, incoming Vice-President Sara Duterte-Carpio said President-elect Ferdinand R. Marcos, Jr. had asked her to review the country’s K-12 educational system.

“He already gave instructions with regard to the review of the implementation of the K-12 program of the Department of Education,” she separately told a televised news briefing. K-12, enacted in 2012, cannot be decided overnight, she added.

Some civic groups pushing for the abolition of K-12 earlier said the “congested curriculum” was a failure.

Ms. Duterte-Carpio also expressed hope that policymakers would push the revival of a mandatory training program for Filipino students.

“The Executive and legislative agenda will be decided between the president and Congress so I hope that will be included since there are many pending bills in Congress with regard to that,” she said.

The program was abolished in 2002 after the death of a university student who exposed the anomalies in the training corps.

Investigations led by Congress showed that the program had enabled implementers to commit abuses in schools.

Raymond Basilio, secretary-general of the Alliance of Concerned Teachers, urged Ms. Duterte-Carpio to address the “problem of learning loss, learning poverty and the quality of and access to education” instead of reviving the mandatory military training for students. — Norman P. Aquino and Kyle Aristophere T. Atienza

Typhoon-prone households in 2 provinces to get pre-disaster aid under DSWD-UNICEF program

HOMES built with light materials at a coastal community in Catanduanes were destroyed during Typhoon Goni, known locally as super typhoon Rolly, which made its first landfall on the island province on Nov. 2, 2020. — LGU PANDAN-MAYOR’S OFFICE 

THE PHILIPPINE Social Welfare department and the United Nations Children’s Fund (UNICEF) have launched a program that will provide financial assistance to vulnerable households on the path of an incoming typhoon to help them prepare better for the disaster’s impact.    

Around 22,000 households have been identified as beneficiaries of the unconditional cash transfer, which will be distributed three days before a predicted landfall of a Category 4 typhoon, UNICEF said in a statement on Monday.  

Tropical cyclones under this category have winds of 118 to 184 kilometers per hour (km/h) within 12 hours.  

“This is the first time that we will test the concept of anticipatory action through a shock responsive social protection model,” UNICEF Philippines Deputy Representative Behzad Noubary said in a statement.  

The support for typhoon-vulnerable areas was finalized after the Department of Social Welfare and Development (DSWD) and UNICEF sealed the agreement on June 14 under the United Nations Central Emergency Response Fund for Anticipatory Action for predictable hazards.  

“Through this intervention, the most at-risk communities will have better financial resources to bounce back after a typhoon,” Mr. Noubary said.   

“Traditional disaster response, when complemented with anticipatory actions, can significantly reduce the impact of disasters and allow for a faster recovery.”  

Every family will receive P1,000, which was calculated based on a child’s minimum expenditure needs for nutrition, education, water, sanitation, hygiene and protection services.  

The cash assistance will be provided through the LANDBANK of the Philippines, the government’s depository bank.  

UNICEF will test the provision of the anticipatory multi-purpose cash transfers using existing national government social protection systems. It aims to contribute to DSWD policy development for improved humanitarian and disaster response.  

Beneficiaries are those listed under the DSWD’s Pantawid Pamilyang Pilipino Program in Catanduanes, including the municipalities of Baras, Bato, San Andres and Virac; and Northern Samar, specifically the municipalities of Catarman, Catubig, Gamay, Mondragon, and San Roque.   

The provinces of Catanduanes and Northern Samar, both located on the eastern side of the country facing the Pacific Ocean, are often on the path of typhoons.   

The Philippines, situated within the typhoon belt, is struck by an average of 20 typhoons per year. — Alyssa Nicole O. Tan 

De Lima undergoes major surgery 

OFFICE OF SEN. LEILA DE LIMA/RELEASE

SENATOR Leila M. De Lima arrived on Monday at the Manila Doctors Hospital for a major surgery after being granted a five-day medical furlough by a Muntinlupa Regional Trial Court.  

Ms. De Lima was advised by her personal doctor, Errol Rhett A. Santelices, to undergo the surgery “at the soonest possible time.” 

The doctor also suggested that at least 120 hours be given to observe the status of her health, noting the need to evaluate her heart condition since her hospital confinement in April due to suspected mild stroke.  

The outgoing senator has promised the court that “she will not be staying in the hospital longer than what is called for or necessary.”   

Officers from the Philippine National Police Custodial Service Unit escorted Ms. De Lima to the hospital.   

Ms. De Lima, who has been jailed at the Philippine National Police Custodial Center since 2017, is on trial for allegedly allowing the illegal drug trade in the country’s jails when she was still Justice secretary.     

At least four key witnesses have retracted their allegations relating to her supposed crime. — Alyssa Nicole O. Tan 

2 Abu Sayyaf members surrender in Basilan 

TWO Abu Sayyaf group members surrendered in Basilan on Sunday, according to the military. 

In a statement on Monday, the Western Mindanao Command (WestMinCom) said the two were under the Abu Sayyaf faction of the late Furuji Indama, who replaced Isnilon Hapilon, a long-time leader of the Islamic State-affiliated group who was killed during the Marawi siege in 2017.  

Indama, who took over command of the Basilan-based Abu Sayyaf members, was killed in an encounter with government forces in 2020.  

Since then, the kidnap-for-ransom and terrorist group has weakened, WestMinCom said. 

“We continuously encourage those who are still hiding in the hinterlands of Basilan to come out,” WestMinCom commander Alfredo V. Rosario, Jr. said in the statement.

“The armed forces and the local government units will never cease to provide all necessary assistance during their reintegration into mainstream society. We will guide them during the process to ensure that they will not be lured to join any lawless group again,” he said.

Earlier this month, 12 members of the Abu Sayyaf in Sulu, another island province southwest of the Philippines, also turned themselves. 

The military’s Sulu Task Force said it has recorded 823 Abu Sayyaf returnees since 2017. — MSJ

Comelec starts returning ballot boxes used for random manual audit

PHILIPPINE STAR/EDD GUMBAN

THE COMMISSION on Elections (Comelec) on Monday started returning the ballot boxes used for the random manual audit to the respective districts of origin.  

In a video streamed live on the Comelec Facebook page, Helen Maureen V. Graido, a policy consultant for election watchdog Legal Network for Truthful Elections, said members of the media, citizens’ arm group representatives, and other stakeholders were invited to the kick-off ceremony for transparency.  

“While these ballot boxes were being taken care of during the random manual audit teams, it can be assured that these were carefully handled and taken note of in our inventory,” she said. 

The election body had partnered with civil society organizations and the Philippine Statistics Authority for the vote verification process.  

Ms. Graido noted that as of Monday, they had verified 746 out of 757 ballot boxes from randomly chosen clustered precincts.   

She added that some ballot boxes no longer need to be audited, while some had also been mislabeled. 

The random manual audit process, which started on May 10, verifies if vote-counting machines had tallied votes correctly. Comelec said the accuracy rate of the audited votes was 99.9%.  

Ms. Graido earlier said the process checks for over-voting or under-voting during the elections, since some people vote for more or less than the required number of positions. — John Victor D. Ordoñez 

France’s Macron hunts for way to salvage majority, reforms

French President Emmanuel Macron delivers a speech at the Elysee Palace in Paris, France, February 1, 2022. — REUTERS

PARIS — President Emmanuel Macron on Monday was faced with trying to salvage a ruling majority and with it, his economic reform agenda after voters punished his centrist ‘Ensemble’ alliance in France’s parliamentary election.

While Ensemble secured the largest number of lawmakers in the 577-seat National Assembly, it fell comfortably short of the threshold required for an absolute majority in a vote that saw a leftwing alliance and the far-right perform strongly.

Final figures showed Mr. Macron’s centrist camp got 245 seats — short of the 289 needed for an absolute majority.

The vote was a painful setback for Mr. Macron, 44, who was re-elected in April and wants to deepen European Union integration, raise the retirement age and inject new life into France’s nuclear industry.

There is no set script in France for how things will unfold.

Mr. Macron’s options include forming a ruling coalition or presiding over a minority government that has to enter into negotiations with opponents on a bill-by-bill basis. The alternative, if no agreement can be found, is for the euro zone’s second biggest economy to be plunged into paralysis.

“We will be working from tomorrow towards forming a majority of action … to guarantee stability for our country and carry out the necessary reforms,” Prime Minister Elisabeth Borne said as results filtered through late on Sunday.

Mr. Macron became in April the first French president in two decades to win a second term, as voters rallied to keep the far-right out of power.

But, seen as out of touch by many voters, he presides over a deeply disenchanted and divided country where support for populist parties on the right and left has surged.

Marine Le Pen’s far-right National Rally party won its largest ever representation in the lower house while a resurgent left-wing bloc, Nupes, headed by the hard-left Jean-Luc Melenchon will form the largest opposition force.

“The rout of the presidential party is complete,” Mr. Melenchon told supporters.

Even so, his own unlikely alliance may now fsind holding together harder than winning votes.

After a first presidential mandate marked by a top-down government style that Mr. Macron himself compared to that of Jupiter, the almighty Roman god, the president will now have to learn the art of consensus-building.

“This culture of compromise is one we will have to adopt but we must do so around clear values, ideas and political projects for France,” Finance Minister Bruno Le Maire said. — Reuters

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