Analysts remain bullish on banks as borrowing costs rise

May 31, 2022 | 12:01 am

close-up-education-economy-objects — FREEPIK

THE LISTED BANKS were more resilient in the first quarter despite rising inflation environment worsened by the ongoing Russia’s invasion of Ukraine.

After the central bank hiked borrowing costs, these lenders could see a boost in profitability this year, analysts said.

The Philippine Stock Exchange index (PSEi) ended the first quarter at 7,203.47, increasing by 1.1% on a quarter-on-quarter basis from 7,122.63 in the last quarter of 2021.

The financial subindex, which included banks, rose by 5.5% to 1,694.89, lower than the 14.4% growth recorded in the fourth quarter.

The first quarter saw six out of 16 listed banks’ share prices increase on a quarter-on-quarter basis. BDO Unibank, Inc. led with 9.9% growth, followed by Bank of the Philippine Islands (BPI, 8.1%); China Banking Corp. (CHIB, 3.8%), Rizal Commercial Banking Corp. (RCBC, 2.5%), Metropolitan Bank & Trust Co. (MBT, 2.3%); and Asia United Bank (AUB, 1.3%).

Meanwhile, share price of Philippine Business Bank (PBB) dropped the most by 13.4%, followed by East West Banking Corp. (EW, -12.2%); Philippine Trust Co. (-8.5%); and Security Bank Corp. (-8.4%).

“In terms of stock price performance, BDO and BPI stood out as they returned 9.9% and 8.1%, respectively in the first quarter, which may be attributed to investors’ bullishness in the sector given that BPI and BDO are the heaviest weighted bank stocks in the PSEi and the financial subindex,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.

“This may also be reflective of investors’ continuing interest in the digital initiatives of these two banks, which continue to gain more visibility,” he said.

Mr. Mercado said BPI and Security Bank Corp. (SECB) stood out the most in terms attributable net income for the first three months of the year, growing by 60% and 66%, respectively.

“Despite the positive industry outlook for 2022, lingering pandemic-related obstacles, geopolitical tensions, US rate hikes and tapering, global inflation, and a new Philippine president by mid-year all weighed on the banking sector over [first-quarter] 2022,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in an e-mail.

Philippine National Bank (PNB) Research Senior Equity Research Analyst Wendy Estacio said the market is uncertain in the first quarter on the impact of rising interest rates and high inflation environment worsened by the ongoing Russia-Ukraine war.

“While stock prices across the board were adversely affected by geopolitical and inflation concerns, bank stocks were notably more resilient,” China Bank’s Mr. Mercado said.

Central bank data showed total net income of the big banks increased by 26.7% year on year to P61.38 billion in the first quarter.

Meanwhile, provision for credit losses by universal and commercial banks fell by 8.8% as of end-March to P18.79 billion from P20.61 billion in 2021, the BSP data showed.

Total loan portfolio of the big lenders went up 8.6% as of March to P10.20 trillion from P9.39 trillion last year.

Gross nonperforming loans ratio of universal and commercial banks improved to 3.73% as of March from 3.87% in February.

After the Philippine gross domestic product rose 8.3% in the first quarter, the central bank hiked interest rates by 25 basis points (bps) last May to contain fast-rising inflation.

However, analysts see the rate hike as a “benefit” for banks as their profitability would also increase but also warned the risks on other aspects of the economy.

“In theory, it would buoy the bank’s profitability this year. However, since the pandemic still lingers, the timing of rate hikes is crucial, as lenders would gauge how fast they can pass through the hike to their clients,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in an e-mail.

“If improperly timed, borrowers might be pushed on the verge of default. Hence, we see that the banks would be able to absorb a marginal climb in the rates, albeit with a slight lag,” he said.

“The liftoff by the central bank may likely dent demand and employment recovery, especially in the absence of fiscal support to cushion the economy from higher borrowing costs,” Mr. Arce said.

“Inflation is tilting the outlook towards the downside as higher prices for food and fuel challenge the central bank’s accommodative monetary policy settings, and there is increasing pressure to arrest inflation pressures by hiking interest rates as early as this month. Households are likely to face stronger headwinds as softer property price growth and higher living costs add pressure to household budgets,” he added.

Ms. Estacio said that the rate hikes could improve the banks’ net interest margins (NIMs) this year, adding that they are looking at 10-20 bps addition in NIMs if the central bank hikes by 50 bps.

Latest data by the BSP showed net interest margin — the ratio that measure banks’ efficiency in investing their funds by dividing annualized net interest income to average earning asset — slightly increased to 3.23% as of end-March from 3.21% in end-December. However, this was lower than the 3.49% recorded in end-March last year.

OUTLOOK
For the rest of the year, analysts see a favorable time for banks and investing in bank stocks as the country continues to lower down the quarantine levels, and the economy slowly picking up again after the bumps in the first quarter.

“Philippine banks are seen getting back its pre-pandemic profitability levels this year with a recovering economy and imminent resumption of business activity,” Mr. Arce said.

“The industry’s comfortable capitalization and stable funding profiles will underpin banks’ credit profiles. Overall credit conditions are expected to provide ample support to economic activity. Bank lending appears to have turned the corner in recent months. Lending activity continues to gain traction amid businesses’ optimistic outlook due to the continued rollout of vaccines and easing restrictions,” he added.

Both PNB’s Ms. Estacio and China Bank’s Mr. Mercado estimate growths in loans and NIMs as the central bank started to raise borrowing costs.

Ms. Estacio expects an average loan growth of 8% this year for banks under their coverage, and their NIMs to increase by 15 bps. She also see banks’ earnings to rise by an average of 17% year on year on lower loan loss provisions.

“For 2022, investors should factor in a recovery in loan portfolios as banks start to become less conservative in lending attributable to better economic growth. Wider margins from the possible policy rate hikes could also improve banks’ profitability,” Ms. Estacio said.

“Investors should look into a possible rise in operating expenses of banks given the initiatives to improve their digital operations,” she added.

However, Mr. Arce also reminded risks that could affect the glowing outlook for the year, such as another COVID-19 resurgence, and rapid rise of interest rates that could affect the credit demand and put pressure on small and medium enterprises (SMEs) who are still recovering from the pandemic.

“While we continue to be generally bullish on bank stocks, we think investors will continue to pay attention to banks: (1) that continue to post stronger [year-on-year] bottom line performance, (2) that have made larger strides in expanding their loan books, (3) that continue to improve their asset qualities (as evidenced by declining non-performing loan ratios) and book more normalized loan loss provisions, and; (4) that continue to invest and provide better visibility to digital initiatives. It is also worthy to note that [Philippine] banks remain well-capitalized and have ample buffers to weather any further shocks,” Mr. Mercado said. — Bernadette Therese M. Gadon

AbaCore incurs P13-M net loss

May 31, 2022 | 12:01 am

ABACORE Capital Holdings, Inc. incurred a net loss of P13.24 million in the first quarter, reversing its P74.8 million net income attributable to owners a year ago, after a decline in its revenues during the period.

“The company posted a gross income of P2.09 million or 98% lower compared to the gross income of P104.07 million for the comparative period last year. This is due mainly to that bulk amount in previous year’s came from the trading gain of P103.79 million which comprises nearly 100% of gross income,” the company said in a disclosure on Monday.

The company also reported that in 2021, it returned to profitability with a comprehensive net income of P5 billion, turning around from a net loss of P101 million the year before.

The firm said in a statement that its financial results for 2021 reflect a more “stable operating environment and the strength of the company’s franchise.”

“ABA’s (AbaCore’s stock symbol) financial results for 2021 were positively impacted by secular trends involving the Batangas economy, with more businesses expanding their operations into the province given its attractive proposition as an economic powerhouse,” Chairman Raul B. De Mesa said.

The holdings company said that of its earnings, around P580 million is regular income while the rest was a fair value adjustment on its properties as a result of the various partnerships it entered with investors.

“As such, the value of land in Batangas has significantly appreciated in recent years, therefore increasing ABA’s bottom line and boosting our shareholders’ return on their investments,” Mr. De Mesa said.

In 2021, ABA entered into a $100-million joint venture with Starfleet Innotech to provide land to the New Zealand-based asset management company for a resort-like condotel development.

It is also continuing to pursue its plans to build ABA Energy Hub, a 103-hectare energy facility in the province. The company also agreed to provide land to a subsidiary of A. Brown & Co., Inc. for the development of a liquefied natural gas facility.

“ABA has a land bank of about 330 hectares, which grants us the flexibility and capacity to partner with various entities that are interested in investing in Batangas,” Mr. De Mesa said.

“Our 2021 financial results demonstrate we have been successful in pursuing partnerships that fully take advantage of Batangas’ potential, and we expect this success to continue in 2022 as more investors and businesses recognize the economic viability of the province,” he added.

ABA is a holding company with interests in real estate, tourism, financial services, and energy.

At the stock exchange on Monday, ABA shares went up by 7.63% or ten centavos to finish at P1.41.

Super Trouper: ABBA returns to stage as virtual avatars for London gigs

May 31, 2022 | 12:01 am

LONDON — Performing their much-loved hits like “Mamma Mia!” and “Dancing Queen,” Swedish supergroup ABBA returned to the stage on Thursday, albeit as digital avatars, for a new London concert residency.

The band — Bjorn Ulvaeus, Benny Andersson, Agnetha Faltskog and Anni-Frid Lyngstad — have been brought to virtual life as digital versions of themselves from their 1970s heyday, thanks to motion-capture technology. Their last performance together was some 40 years ago.

The foursome, all now in their seventies, posed for pictures together at the concerts’ red carpet premiere on Thursday at a purpose-built venue, dubbed ABBA Arena.

“I think we all are very happy to be back in London because I haven’t been here for I don’t know how many years,” Ms. Faltskog told Reuters. “It is so nice to see all the faces and all the expectations and everything. It goes right into your heart.”

ABBA worked with an 850-strong team from Industrial Light & Magic, founded by Star Wars creator George Lucas, for the project.

Accompanied by a live band, the avatars, or ABBA-tars, perform some 20 songs during the 90-minute show, called Voyage. During the show, they made jokes and even had costume changes.

The real ABBA watched among the audience and came on stage at the end, hugging each other and waving to the crowd.

The concerts, which officially began on Friday, are part of a hugely successful comeback for the band, who topped charts last November with Voyage, their first album in 40 years.

Formed in 1972, ABBA won legions of fans around the world and has sold an estimated 385 million records.

They split in the early 1980s, with rumors swirling for years they would reunite on stage.

“ABBA has never left us,” Ms. Faltskog told one reporter.

Asked if this was it for the band, Ms. Lyngstad told Reuters: “Depends how long we stay alive… If we are lucky.”

“I don’t think we’ll do another one… Definitely no but never say never,” Mr. Andersson added.

“The avatars go on living,” Ulvaeus said. — Reuters

Big banks’ loans expand, assets ease in Q1 2022

May 31, 2022 | 12:01 am

THE first quarter saw the country’s largest banks expand their loan portfolio at the fastest pace since the start of the coronavirus disease 2019 (COVID-19) pandemic two years ago. Read the full story.

Philippine office market occupancy stabilizes (part 2)

May 31, 2022 | 12:01 am

(Part 2 of 2)

IN the first part of this article, we highlighted an initiative of Colliers’ Office Services – Tenant Representation called The New Normal Paper Series, which sought to guide office market stakeholders how to survive the challenges of the coronavirus disease 2019 (COVID-19) pandemic.

In this series, our hope was to encourage our clients and partners to continuously swim through murky waters so as not to stagnate, since inaction and paralysis could be worse for all of us.

When we were tallying the results of the first quarter performance of the office market, we were so glad to see that the office market occupancy has stabilized as we recorded the net take-up to be positive.

VACANCY TO INCREASE, THEN PLATEAU BEFORE FALLING
While the net office take-up turned a corner already in the first quarter of 2022, vacancy is still expected to increase to the 18% level within 2022 as Colliers projects an annual office addition of 822,000 square meters (sq.m.).

Based on the first quarter results, Colliers maintained the projected year-end vacancy of 18% despite the high level of supply as the project annual net take-up was adjusted upwards in view of the increasing demand from the traditional occupiers and business process outsourcing (BPOs) companies.

The 2.3 million sq.m. of available spaces are expected to be absorbed in three to four years’ time considering the demand level and office market size of between 500,000 to 600,000 sq.m. before the POGOs entered the Philippine office market.

This means that vacancy and rental recovery to pre-pandemic level will be gradual, so our advice is for both tenants and landlords to continue working very closely during this period.

The POGOs remained to quiet in the first quarter as Colliers did not record any transaction from this industry. As of the first quarter this year, approximately 640,000 sq.m. of office space has been shed by POGOs in Metro Manila, which reduced its share to just 5%.

The issues hounding the industry are being addressed one-by-one like the tax system and the inbound flights. It remains to be seen though if the POGOs will grow again, but a POGO return will certainly help the office market recover faster.

The first chart shows a simulation of a POGO comeback which can help reduce the office vacancy close to 10%, instead of 15% without the POGOs.

OUTLOOK
As COVID-19 restrictions are quickly loosening and workers are now returning to office, Colliers sees that the Metro Manila office market is set improve further for the latter part of the year.

In our view, the return-to-office and expansion plans of companies, coupled with greater resiliency to COVID-19 and economic stimulus legislations should accelerate take-up for the remainder of 2022.

Given this backdrop, Colliers recommends that occupiers who plan to expand, relocate, or set up a new office to streamline their site selection timelines.

With the ongoing rental corrections and tenant-favorable market conditions, companies who are in a wait-and-see may want to implement flight-to-quality or flight-to-cost measures as soon as possible to secure office spaces at more competitive terms before the market rebound increases occupancy in highly sought-after properties in prime locations, such as Ortigas central business district, Bay Area, Quezon City and Alabang.

With the recent passage of key investment-related legislation, Colliers also suggests that landlords proactively capture demand from incoming foreign players as their entry should improve the country’s investment climate. The relaxed regulations on foreign ownership and taxation will likely translate to multiplier effects on the economy and increased demand for office space in the country.

Lastly, landlords are encouraged to remain flexible and accommodate the requests of their existing tenants (both commercial and operational in nature) to aid in the business recovery of companies and maintain their occupancy.

Dom Fredrick Andaya is the senior director and head of Office Services, Tenant Representation, Colliers Philippines

Inflation fight, monsoon may take pressure off RBI, former official says

May 31, 2022 | 12:01 am

COORDINATED fiscal and monetary efforts may take the pressure off India’s central bank to aggressively hike interest rates. — REUTERS

INDIA’S coordinated fiscal and monetary efforts to tame inflation, plus a good agricultural production outlook, may take pressure off the central bank to aggressively raise interest rates later in the year, according to a former Reserve Bank of India (RBI) official.

Interest rate increases by the RBI “should be very moderate” after an expected 50-basis-point rise at its next meeting in June, Rama Subramaniam Gandhi, who was a deputy governor from 2014 to 2017, said in a Bloomberg Television interview on Monday.

The government’s recent $26-billion fiscal package, which includes tax cuts and subsidies, as well as the RBI’s rate increase earlier this month, should be able to cool inflation to 6%, which is the top end of the central bank’s target range, he said. Gandhi also expects that a forecast normal monsoon rainfall could bring food prices “well under control.”

India’s central bank is struggling to contain surging prices as war and supply chain disruptions pushed retail inflation to the highest in eight years, and producer price inflation to over a three-decade high. The RBI governor, Shaktikanta Das, signaled last week that a rate hike is coming at the next meeting in an interview.

Gandhi sees the RBI likely raising the benchmark repurchase rate by an additional 25 basis points during the current fiscal year through March, depending on inflation. That would take the rate higher by a cumulative 75 basis points to 5.15%, its pre-pandemic level.

The former deputy governor’s rate expectations compares with a forecast for peak interest rate of 6% in the current cycle by economists such as Pranjul Bhandari from HSBC Holdings Plc. and Samiran Chakraborty Citigroup, Inc. — Bloomberg

Ayo, Escueta shortlisted as San Beda head coach

May 31, 2022 | 12:01 am

ANY day now, San Beda will have a new coach in either Aldin Ayo or Yuri Escueta.

Sources told The STAR that the coaching search has now been trimmed down to just between Messrs. Ayo and Escueta after Boyet Fernandez bids farewell to a proud Benedictine school he steered to four National Collegiate Athletic Association (NCAA) championships.

“Down to (Aldin) Ayo and Yuri (Escueta),” said an insider.

Mr. Ayo has proven his mettle by winning a title for Letran in the NCAA and La Salle in the University Athletic Association of the Philippines (UAAP) while steering University of Santo Tomas to the UAAP finals before losing to Ateneo not so long ago.

Mr. Escueta, for his part, is a former Ateneo stalwart and served as an assistant both at Ateneo and TnT in the Philippine Basketball Association.

Mr. Fernandez’s exit was a result of the Lions not making the NCAA finals in Season 97, a first in the last 15 seasons spanning 17 years.

Originally, Mr. Fernandez and former Letran and Phoenix coach Louie Alas were part of the shortlist for the coaching search.

Now, the much-sought job will be between a tried and tested mentor or a greenhorn seeking a chance to prove his worth. — Joey Villar

General retail price index in the National Capital Region

May 31, 2022 | 12:00 am

THE growth in Metro Manila retail goods prices was 2.2% in February, the highest in three months as countries recover from the coronavirus disease 2019 (COVID-19) pandemic and economies reopen. Read the full story.

How PSEi member stocks performed — May 30, 2022

May 31, 2022 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Monday, May 30, 2022.

PHL stocks rise on Wall St. gains, China reopening

May 30, 2022 | 9:00 pm

STOCKS continued to improve on Monday amid Wall Street’s rebound amid easing economic concerns and with China loosening mobility restrictions.

The benchmark Philippine Stock Exchange index (PSEi) climbed by 96.18 points or 1.43% to close at 6,822.32 on Monday, while the broader all shares index went up by 36.94 points or 1.02% to 3,633.07.

“Local shares opened the week on an upbeat note as share prices rallied for the fourth straight day. The local stock market gained, taking its cue from the sustained rally on Wall Street,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a Viber message.

“The local bourse rose this Monday as global economic concerns ease. The market took cues from Wall Street’s positive performance last Friday backed by the growth slowdown of the US’ core personal consumption expenditures price index from March’s 5.2% to April’s 4.9%,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

Although Wall Street will be shut for Memorial Day, US futures were trading. S&P 500 e-minis rose 0.9%, having rallied 6.6% last week in their best run so far this year, while Nasdaq e-minis added another 1.3%, Reuters reported.

With the Dow Jones snapping out of its longest weekly losing streak in nearly a century and scoring its best week since 2020 on Friday, the narrative across stock markets has swiftly moved from meltdown fears to hopes of a rebound.

Mr. Tantiangco added that investors also cheered the easing of restrictions in China.

“Positive sentiment was [impacted] by major Chinese cities like Beijing and Shanghai starting to relax pandemic measures as the local case count declined significantly. Major shopping centers in Beijing have announced that they had reopened already last weekend,” Papa Securities’ Mr. Cruz said.

Authorities in China’s commercial hub of Shanghai will cancel many conditions for businesses to resume work from Wednesday, easing a city-wide coronavirus disease 2019 (COVID-19) lockdown, Reuters reported.

At home, the majority of the sectoral indices ended in the green on Monday except for services, which declined by 0.91 point or 0.04% to 1,906.21.

Meanwhile, holding firms advanced by 154.26 points or 2.50% to 6,306.99; mining and oil gained 243.49 points or 2.08% to 11,897.99; financials rose by 31.40 points or 1.95% to 1,638.33; property added 32.91 points or 1.07% to end at 3,093.52; and industrials closed higher by 17.17 points or 0.18% to 9,452.46.

Advancers outnumbered decliners, 114 against 76, while 51 names ended unchanged.

Value turnover increased to P7 billion with 890.17 million shares changing hands from the P5.96 billion with 917.39 million issues seen on Friday.

Net foreign buying dropped to P69.01 million on Monday from the P160.15 million seen the previous trading day. — Luisa Maria Jacinta C. Jocson with Reuters

Peso inches up vs dollar on BSP signals

May 30, 2022 | 9:00 pm

THE PESO inched higher against the dollar on Monday after the Bangko Sentral ng Pilipinas (BSP) chief hinted at another rate increase next month.

The local unit closed at P52.31 per dollar on Monday, moving sideways from its P52.32 finish on Friday, based on data from the Bankers Association of the Philippines.

The peso opened Monday’s session at P52.20 versus the dollar. Its weakest showing was at P52.33, while its intraday best was at P52.16 against the greenback.

Dollars exchanged rose to $1.19 billion on Monday from $1.05 billion on Friday.

“The peso appreciated after the BSP hinted at a potentially stronger rate hike in its upcoming June policy meeting,” a trader said in an e-mail.

The BSP is likely to raise key interest rates by another 25 basis points (bps) at its next policy review on June 23, its chief said last week.

“We are probably inclined to have another 25-basis-point adjustment on our next Monetary Board meeting which is on June 23,” BSP Governor Benjamin E. Diokno said.

The BSP raised benchmark interest rates by 25 bps on May 19, marking its first hike since November 2018, as it tries to temper rising inflationary pressures.

The Monetary Board increased the key policy rate by 25 bps to 2.25%. Interest rates on the overnight deposit and lending facilities were also hiked by 25 bps to 1.75% and 2.75%, respectively.

At that meeting, the central bank upwardly revised its average inflation forecast for 2022 to 4.6% from the previous forecast of 4.3%, exceeding the 2-4% target band. For 2023, the BSP’s inflation forecast was hiked to 3.9% from 3.6% previously.

Inflation climbed to 4.9% in April, the highest in more than three years.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the peso rose slightly after the market factored in gains in the local stock market.

Stocks continued to improve on Monday amid Wall Street’s rebound amid easing economic concerns and with China loosening mobility restrictions.

The benchmark Philippine Stock Exchange index climbed by 96.18 points or 1.43% to close at 6,822.32 on Monday, while the broader all shares index went up by 36.94 points or 1.02% to 3,633.07.

Mr. Ricafort said lower US yields also reduced demand for the dollar.

The dollar was pinned near five-week lows on hopes of an eventual slowdown in US monetary tightening following sharp interest rate hikes in June and July, Reuters reported.

Investors have seized on hints that the US Federal Reserve, once it has hiked aggressively over the next two months, might then slow its tightening.

The chance of a less hawkish Fed was enough to see Treasuries rebound, with 10-year note yields above a six-week low at 2.743%. That is down from a peak of 3.203% on May 9.

“Peso also slightly stronger after Metro Manila and 62 other areas were placed at the lower at Alert Level 1 from June 1-15, 2022,” Mr. Ricafort added.

The trader said the peso might weaken anew against the dollar on Tuesday due to Federal Reserve Board Governor Christopher J. Waller’s speaking engagement overnight.

The trader and Mr. Ricafort both expect the peso to move within P52.20 to P52.40 versus the dollar on Tuesday. — KBT with Reuters

DTI nominee Pascual to focus on digitalization, tech investment

May 30, 2022 | 8:46 pm

INCOMING Trade Secretary Alfredo E. Pascual said his focus will be to promote the economy’s digital transformation, adding that he expects to redirect the effort to attract foreign direct investment (FDI) towards technology industries, particularly data centers.

Mr. Pascual said the digitalization effort will begin with his own future agency, the Department of Trade and Industry (DTI).

“One of my priorities is to promote digital transformation of the DTI and all our functions as well as (the transformation of) micro, small, and medium enterprises (MSMEs) and other enterprises,” Mr. Pascual said in a television interview on Monday.

“Government agencies like DTI that do both regulation and development work will be more efficient and effective (with digitalization),” he added.

Mr. Pascual added: “Bringing in FDI is one of my priorities given that we need the capital to support economic growth and provide jobs. We will try to give priority to investors that are in high-tech industries. There is the growing need for data center(s) in various cases outside, for example, the US. Since we are connected by fiber optic cable to important countries, then we could be a logical location,” Mr. Pascual said.

He said one of the consequences of digitalization is to enhance consumer protection by providing “information on suggested retail prices (SRPs) of practically any commodity. That is the way to approach it. Provide the consumers with the information to serve as the basis for their decision so that there will be no retailer or seller who takes advantage of their lack of knowledge,” he added.

Mr. Pascual said he is also studying on a “recovery package” targeted at MSMEs that have suffered from the coronavirus disease 2019 (COVID-19) pandemic.

“Most of those… are actually in frontline businesses like restaurants, tourism, (and) entertainment. We’ll see whether a recovery package is in order. I have to look closely at the situation before deciding on this. But there are tools that we can use… It’s a matter of matching the need with the right instrument,” Mr. Pascual said.

The current Trade Secretary, Ramon M. Lopez, said in a statement on Monday that the 2022 Strategic Investment Priority Plan (SIPP), which was approved by President Rodrigo R. Duterte on May 24, will spur a revival of industry.

“The approval by the President of the SIPP is opportune, as the country is heading towards economic recovery. This will catalyze industrial development,” Mr. Lopez said in his statement.

“The SIPP serves as an engine toward the national industrial revolution to beef up industries and yield more diversified, complex, and sophisticated products and services,” he added.

Ceferino S. Rodolfo, Trade Undersecretary and Board of Investments (BoI) managing head, said that the SIPP will help the economic recovery continue.

“The SIPP has an enormous role in our goal of bouncing back from the economic ramifications brought about by the pandemic. The SIPP will sustain the momentum towards economic recovery, as it will urgently create and recover jobs,” Mr. Rodolfo said.

The 2022 SIPP outlines the economic and business activities that will be preferred for investment incentives under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. SIPP takes effect 15 days upon publication in a newspaper of general circulation.

“Particularly, the SIPP adopts the 2020 Investment Priorities Plan (IPP) as Tier I — the base structure for Philippine development; it (identifies) products or services which are not locally produced, for consideration for Tier II; and identifies high technology activities critical to the transformation of the economy and attracting technology investments for Tier III,” the DTI said.

“The SIPP supersedes the 2020 IPP which served as the transitional SIPP to ensure the continued promotion of investment and processing of qualified projects,” it added.

Under the new SIPP, Tier 1 consists of preferred activities listed by the 2020 IPP, which include all qualified activities related to the COVID-19 pandemic containment effort.

Tier 2 refers to activities that will plug gaps in the industrial value chains such as those related in promoting green ecosystems, develop a dependable health system, attain self-reliance in defense systems, and transform agriculture.

In Tier 3 are activities that will boost the transformation of the economy and use technologies such as automation, smart machines, industrial internet of things (IIOT), cloud computing, cognitive computing, advanced robotics, artificial intelligence, and 3D printing.

“We are truly making it happen in the Philippines, as the SIPP aims to hasten the transformation of the economy into a modern and efficient one with highly-developed infrastructure,” Mr. Rodolfo said. — Revin MIkhael D. Ochave