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PHL shares up on bargain hunting after Fed hike

REUTERS

SHARES climbed on Thursday on bargain hunting and as Wall Street cheered the US Federal Reserve’s decision to hike interest rates by 75 basis points (bps), bigger than increases made at previous meetings, to fight rising inflation.

The benchmark Philippine Stock Exchange index (PSEi) rose by 73.59 points or 1.16% to close at 6,393.01 on Thursday, while the broader all shares index ended higher by 25.54 points or 0.74% to 3,435.24.

“Philippine shares rebounded following the Federal Open Market Committee’s rate hike announcement. The Fed announced a 75-bp rate hike to conclude its two-day policy-setting meeting, which had been widely anticipated by the market, but it was Fed Chair Jerome Powell’s willingness to do another hike of that size to tamp down inflation back to its 2% objective that surprised markets,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The local market bounced back this Thursday as investors hunted for bargains from the preceding day’s losses… The positive spillovers from Wall Street’s overnight performance also helped in the rebound. This is as Federal Reserve Chairman Jerome Powell said that it is still possible for the US economy to avoid a recession amid their monetary tightening,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

The Fed on Wednesday approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation, Reuters reported.

Officials also envision steady rate increases through the rest of this year, perhaps including additional 75-bp hikes.

Wall Street rallied on Wednesday after the Fed’s announcement. The Dow Jones Industrial Average rose 303.70 points or 1% to 30,668.53; the S&P 500 gained 54.51 points or 1.46% to 3,789.99; and the Nasdaq Composite added 270.81 points or 2.50% to end at 11,099.16.

Back home, Regina Capital’s Mr. Limlingan said the April remittances report also helped buoy the market. Cash remittances sent home by overseas Filipino workers surged by 3.9% in April. The growth was the fastest since the 5.1% print seen in November last year.

The majority of sectoral indices ended in the green, except for services, which declined by 35.05 points or 2.04% to 11,681.98.

Meanwhile, property rose by 69.51 points or 2.36% to 3,005.79; holding firms gained by 99.93 points or 1.72% to 5,900.30; financials went up by 25.31 points or 1.63% to 1,573.04; industrials climbed by 79.67 points or 0.90% to 8,932.97; and mining and oil added 93.63 points or 0.80% to end at 11,681.98.

Decliners narrowly beat advancers, 107 versus 103, while 48 names ended unchanged.

Value turnover decreased to P5.60 billion on Thursday with 647.17 million shares changing hands from P11.03 billion with 3.65 billion issues seen the previous trading day.

Net foreign selling dropped to P295.08 million from P1.22 billion on Wednesday. — Luisa Maria Jacinta C. Jocson with Reuters

Peso weakens further after Fed hikes rates by 75 bps

BW FILE PHOTO

THE PESO weakened further against the dollar on Thursday after the US Federal Reserve delivered its biggest rate hike since 1994.

The local unit closed at P53.47 versus the greenback, down by 3.5 centavos from its P53.435 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s session at P53.30 against the dollar. Its intraday best was at P53.29, while its worst showing for the day was at P53.495 versus the greenback.

Dollars exchanged went down to $1.141 billion on Thursday from $1.164 billion on Wednesday.

The local unit declined after the Fed hiked its benchmark interest rates by 75 basis points (bp), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. The bigger hike came after US inflation hit a 40-year high in May.

The Fed on Wednesday said officials also expect to raise rates steadily this year, with more 75-bp hikes still on the table.

The US central bank has hiked borrowing costs by a total of 150 bps since starting its tightening cycle in March.

For today, a trader said the peso may drop further on expectations of a dovish statement from the Bank of Japan (BoJ). The BoJ is widely expected to keep its ultra-low interest rate targets unchanged at its two-day review that ends on Friday.

Mr. Ricafort gave a forecast range of P53.35 to P53.50, while the trader expects the peso to move from P53.30 to P53.50 per dollar. — KBT

LRT-MRT-Subway Common Station expected to be complete this month

DEPARTMENT OF TRANSPORTATION

THE Transportation department said on Thursday that the Unified Grand Central Station, or Common Station, in North EDSA, Quezon City, is set to be completed this month, before President Rodrigo R. Duterte leaves office.

The construction of the project, which will interconnect Light Rail Transit Line 1 (LRT-1), Manila Metro Rail Transit System Line 3 (MRT-3), Metro Rail Transit Line 7 (MRT-7), and Metro Manila Subway, is currently being “accelerated,” the department said in a statement.

“After eight years of delay, the Common Station is expected to be completed this June with the remainder of the project now in full swing,” it added.

The project features an intermodal integrated system, allowing departing passengers of the Common Station to catch buses, jeepneys, and taxis.

Once completed and opened, the Common Station, which features a 13,700-square meter concourse area, is expected accommodate up to 500,000 passengers daily, the department said.

In January 2017, the government and private companies involved in the project signed a memorandum of agreement after years of deadlock on the matter of the project’s location.

The agreement was signed by Transportation Secretary Arthur P. Tugade; Public Works Secretary Mark A. Villar; Metro Pacific Investments Corp. Chairman Manuel V. Pangilinan; SM Prime Holdings, Inc. Director Hans T. Sy; Ayala Corp. Chief Executive Officer Jaime Zobel de Ayala; and San Miguel Corp. President and Chief Executive Officer Ramon S. Ang.

Under the agreement, the project was built at a compromise site near the original 2009 site in front of SM Annex (North EDSA) and the 2014 location near Ayala-owned TriNoma Mall.

“Within the remaining 15 days of the Duterte administration, more projects across the archipelago will be completed and initiatives to be implemented to achieve unprecedented heights of connectivity and mobility to make the Filipino life more convenient and comfortable,” the Transportation department said. — Arjay L. Balinbin

Angara says PHL debt of P12.7 trillion still ‘reasonable’

PHILSTAR FILE PHOTO

THE PHILIPPINES’ debt of P12.7 trillion is still “reasonable,” a ranking Senator said, in the context of increased global borrowing during the pandemic.

The government was “responsible” in its borrowing, according to Senator Juan Edgardo M. Angara, who chairs the Senate Finance Committee, speaking in an interview with One News on Thursday. He said the administration did a “fair job” as it did not overstep the country’s bounds by borrowing “too much.”

“I think we’re still on the side of reasonable, a little bit over our predicted 60% (of gross domestic product)… but in times of pandemic, the boundaries move as well,” he added, noting that borrowing was inevitable considering the need to provide subsidies and implement stimulus programs.

The debt-to-GDP ratio was 63.5% as of the end of the first quarter, exceeding the 60% threshold considered by multilateral lenders to be manageable for developing economies.

The pre-pandemic level was 39.6% of GDP at the end of 2019.

Finance Secretary Carlos G. Dominguez III has said that the Philippines may need at least 10 years before its debt-to-GDP ratio returns to about 40%.

The senator said that with the right mix of policy and economic incentives for the private sector, recovery is assured and revenue increased.

As the budget grows every year, Mr. Angara said the challenge is to make revenue grow proportionally.

However, Mr. Angara said increasing taxes may not be the solution as the people are still suffering from the after-effects of the pandemic. “You want to grow your economy in this period. You want it to recover,” he said, “and increased taxation might be sending the wrong message during this time.”

Instead, he recommended making adjustments to government spending, noting that Congress will focus on funding essentials during the deliberations for the 2023 General Appropriations Act.

“I think that one way of looking at it is attacking the spending side, but you have to be more judicious I suppose in your expenditure so that those debts can be paid (to bring) public debt (to manageable levels),” Mr. Angara said. The Philippines should spend “on things which really benefit the people and which will pay dividends over the long term, so things like education, health, infrastructure. Those are the things which should not be compromised.”

“What matters more is how you spend that debt and whether it’s sustainable,” he added.

Economic managers target GDP growth of 7-8% this year.

Mr. Dominguez has said the Philippines needs to grow an average of 6% annually in the next six years to effectively reduce debt. — Alyssa Nicole O. Tan

Power consumers pay only 12% VAT overall, ‘no double taxation’ — DoF

BW FILE PHOTO

THE Department of Finance (DoF) said on Thursday that power consumers pay 12% value-added tax (VAT) only once, following remarks by the head of the Energy Regulatory Commission (ERC) that VAT should only be collected from power distributors.

“There is no double taxation in the electric power industry. Because the EPIRA (the Electric Power Industry Reform Act) Law has unbundled the pricing at each stage of the electricity production, the VAT is imposed separately in each stage of production,” Finance Secretary Carlos G. Dominguez III said in a statement. “But at the end of the day, if you look at the total bill, the entire electricity service is charged 12% VAT on the side of the consumer.”

ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said last month that VAT should only be imposed on distribution utilities, instead of on power generation, transmission, and distribution.

Ms. Devanadera also proposed to remove the 12% VAT imposed on the generation charge.

Mr. Dominguez said that for double taxation to occur, the tax must be imposed twice for the same goods, for the same purpose, by the same taxing authority, and within the same jurisdiction.

Under EPIRA, the pricing of electricity has been unbundled, Mr. Dominguez said.

“With this unbundled pricing mechanism, VAT is imposed on every level of the value chain and not integrated vertically like other sectors,” Mr. Dominguez said. This means that “the VAT paid on the distribution charge only accounts for the value-added in distributing the electricity, and does not include the generation and transmission of power.”

He added that a VAT exemption on electricity is not the solution for reducing power bills.

“If the intention is to unburden consumers, the next administration needs to review the existing policies on power generation pricing,” Mr. Dominguez said, adding that removing the 12% VAT would not translate to a 12% reduction in prices.

He said that VAT-exempt businesses do not charge output VAT, and are unable to recover the VAT they pay on their inputs.

“Thus, this input VAT becomes an additional cost for them, and to recover this, it is passed on to the consumers.”

The DoF said that electricity costs in the Philippines are higher compared to its neighbors in the Association of Southeast Asian Nations (ASEAN), due to the higher cost of power generation.

Manila Electric Co. said last week that power rates will rise in June, with households consuming 200 kilowatt-hours (kWh) getting billed expecting to pay about P80 more. 

It said prices are climbing due to the higher usage of liquid fuel and coal prices that have risen by an average of 23%.

“We cannot afford to give another VAT exemption as this leads to distortionary and less equitable tax systems,” Mr. Dominguez said. “VAT exemption creates discrimination among similar businesses. Thus, it should remain broad-based and allow for few exemptions.”

The DoF also reiterated its opposition to the suspension of excise taxes, maintaining its view that the best way to respond to rising fuel prices is to continue with targeted subsidies to vulnerable sectors.

Ms. Devanadera said last month that the suspension of excise taxes on coal and petroleum would translate into a reduction of overall electricity costs.

The DoF said that suspending the excise tax on petroleum would mean reducing government revenue by P105.9 billion, equivalent to 0.5% of GDP. It added that this would result in higher debt and deficit levels, resulting in a potential rise in interest rates at a time when the economy is still recovering from the pandemic and the war in Ukraine.

“The suspension of excise taxes on petroleum is also extremely regressive and primarily benefits higher-income households,” the DoF said. “We will just be subsidizing the top 10% of Filipino households who consume about 50% of total fuel consumption in 2022. This means that the larger financial benefits of the suspension will not go to the poor, but to higher income households.” — Tobias Jared Tomas

BoI approves registration of P118.5-million chicken project

DA.GOV.PH

THE Board of Investments (BoI) said it approved the registration of a P118.5-million broiler chicken farm in South Cotabato.

In a statement on Thursday, the BoI said it approved the application of RCB Poultry Farm. The project has an annual capacity of 3.36 million kilograms of broiler chicken.

“The operation of the farm is seen as a significant project to ward off the threat of supply disruption should Region 12 (Soccsksargen) and its nearby regions were to be affected by the avian flu… as the localized source of chicken or chicken meat entails less biosecurity risk,” the BoI said.

The BoI said that the project will use modern methods to grow poultry at reduced cost in feed, water, and energy.

It added that the project was endorsed by the Department of Agriculture (DA).

Trade Secretary Ramon M. Lopez called the project “innovative.”

According to the BoI, the operator will enter into a contract growing agreement with a large food corporation, reducing the need to import chicken at a time of massive disruption in the global supply of food.

It added that the approved project will raise Soccsksargen’s chicken production by up to 2.71%.

 “Chicken meat is… the second most-consumed meat-type after pork, based on the Supply Utilization Accounts of the Philippine Statistics Authority on Livestock and Poultry,” the BoI said.

“While there is no expected shortage of chicken meat this year, according to the DA, local production needs to reach at least 1.34 million metric tons to achieve at least 90% self-sufficiency,” it added. — Revin Mikhael D. Ochave

Maynilad customers to receive rebates on March-June water bills

BW FILE PHOTO

MAYNILAD Water Services, Inc. customers in selected areas of Metro Manila will receive minor corrections in their water bills in the form of rebates, after Maynilad implemented tax rates that diverged from the approved rates.

These include customers in the Business Areas of Muntinlupa-Las Piñas, Malabon-Valenzuela, and Quezon City, according to the Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS RO).

In March, the MWSS RO recommended the approval of a petition of Maynilad to collect taxes from customers after the grant of a legislative franchise to Maynilad. 

The tax collections include a 2% national franchise tax and local franchise taxes (LFT) charged by local government units, which are reflected in the statements of account of Maynilad customers. 

“Upon monitoring and evaluation of the rates being implemented by Maynilad in its Service Areas, it has come to the attention of the MWSS RO that Maynilad has been charging customers in the aforementioned Business Areas the actual LFT rates of the relevant local government units instead of the rates approved,” the regulatory office said.

The MWSS RO said that it recognizes that Maynilad implemented these rates in “good faith” as the rates that it previously used were outdated. 

“Nevertheless, the concessionaire implemented such rates without prior recommendation by the MWSS RO and subsequent approval of the MWSS Board of Trustees, which are part of the procedural requirements as provided under relevant laws,” the MWSS said.

The regulator said it directed Maynilad to return the collections to bring all charges in line with approved levels. The rebates will be reflected in billing for March to June. — Luisa Maria Jacinta C. Jocson

PHL backs continued freeze on some e-commerce duties

REUTERS

THE PHILIPPINES declared its support for extending a moratorium on customs duties imposed on media goods ordered via electronic commerce (e-commerce).

In a statement on Thursday, Trade Assistant Secretary Allan B. Gepty said during the 12th World Trade Organization (WTO) Ministerial Conference that e-commerce is crucial to the post-pandemic recovery.

“There is a need to maintain a stable and predictable digital trading environment not only for big businesses but especially for micro, small, and medium enterprises (MSMEs) and women entrepreneurs to boost economic growth,” Mr. Gepty said.

The Philippines also noted that e-commerce helps integrate MSMEs into the global value chain and facilitates cross-border trade in goods and services.

The Philippines co-sponsored a draft Ministerial Decision aiming to strengthen the WTO’s e-commerce work program, which “will have significant impact on members, including developing and least developed countries,” Mr. Gepty said.

Separately, Trade Undersecretary Ceferino S. Rodolfo said an advantage of a stable and predictable online environment is that it would help boost the Philippines’ position as an innovation hub and an attractive location for hyperscale data centers.

“The Philippines has a robust e-commerce industry and to boost the same, the government has released the e-commerce roadmap 2022 to create an integrated ecosystem that would become the foundation of all industries’ developments, long-term employment, and inclusive growth throughout the country,” the DTI said.  

WTO members agreed on the moratorium in 1998 but it was never made permanent and legally binding. It has been renewed several times during Ministerial Conferences. It affects products such as photographic film, cinematographic film, printed matter, music, media, software, and video games.

The 12th WTO Ministerial Conference was held from June 12 to 15 in Geneva. — Revin Mikhael D. Ochave 

Metro far from COVID threshold for Alert Level 2

PHILIPPINE STAR/ MIGUEL ANTONIO DE GUZMAN

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE STAR/ MIGUEL ANTONIO DE GUZMAN

THE GOVERNMENT is unlikely to tighten the lockdown in the Philippine capital and nearby cities this month despite rising coronavirus infections, researchers from the country’s premier university said on Thursday. 

Daily infections could only go as high as 500 in the capital region by end-June, while cases nationwide could hit 2,000 — far below the 6,000 threshold that would spur a higher alert level, OCTA Research fellow Fredegusto P. David told One News Channel.

“It is farfetched for nationwide cases to hit 6,000 per day, but we are monitoring them because the trajectory can change,” he added.

He said the virus reproduction and positivity rates — 1.56 and 3.3% — in Metro Manila have yet to increase significantly.

Mr. David said the health use rate in Metro Manila was still low at 23.%.

The capital region has been under Alert Level 1 — the most relaxed in a five-tier system — since March after a drop in daily coronavirus infections. An inter-agency task force has recommended to extend this until June 30.

The OCTA fellow traced the recent increase in infections to new Omicron subvariants and the waning immunity among vaccinated Filipinos, among other things.

Most people admitted to private hospitals suffer from non-coronavirus conditions, Private Hospitals Association of the Philippines President Jose Rene de Grano told a televised news briefing. Member hospitals have yet to see a significant increase in COVID-19 admissions, he added.

“The hospital utilization rate for COVID-19 patients among our members is not that high yet,” he said. “Our non-COVID admissions have been increasing.”

He said sick people have started visiting hospitals amid relaxed quarantine restrictions. Mr. De Grano said about 600 member hospitals would have a hard time dealing with a potential infection surge if they can’t boost their nursing staff.

About half of their nurses have left, he said. “If we would be able to double the present number, that would be enough.”

Mr. De Grano said majority of their members have yet to receive state-funded allowance for health workers and support staff. “That’s what saddens our healthcare workers.”

“The Department of Health always says ‘It’s already OK, we’ve released it,’” he said. “The Department of Budget and Management says the P7.9 billion had been released, but where is it?” “The majority of our hospitals have not received their One COVID-19 Allowance up to now.”

Meanwhile, Mr. De Grano said the deployment cap for Filipino health workers should be lowered to 5,000 from 7,000 yearly.

He noted that 11,000 nurses passed the licensure exams in 2021 and 6,000 more this year. “More or less, we can gauge how many health workers we can allow out of the country.”

President-elect Ferdinand R. Marcos, Jr. has yet to lay down his pandemic recovery plan and has not named his Health chief.

Mr. De Grano said they have endorsed former Health Undersecretary Teodoro J. Herbosa for the post. 

Mr. Herbosa was a Health undersecretary from 2010 to 2015. He also served as executive vice-president of the University of the Philippines from 2017 to 2021.

Meanwhile, the Philippine Chamber of Commerce and Industry (PCCI) said talks about raising the alert level in Metro Manila was premature.

“If we stick to our basis of the severity of the infection, it is really regarding the flattening of the curve,” PCCI President George T. Barcelon told BusinessWorld Live on One News channel. “We’re far from it.”

The Health department should remind people to be careful instead warning of a potential lockdown, which will hurt the economy, he added. — with Revin Mikhael D. Ochave

DILG talking to its lawyers on ‘rogue’ LGUs that violate pandemic rules

SHOPPERS are seen in Divisoria, Manila. — PHILIPPINE STAR/ RUSSELL PALMA

THE DEPARTMENT of Interior and Local Government (DILG) on Thursday said it was consulting with its lawyers on how to stop local governments from going against the National Government’s pandemic policies.

“We are consulting our legal team about our next move to ensure this practice would end since this should really not be the case,”  Interior Secretary Eduardo M. Año told ABS-CBN Teleradyo.

The agency on Monday said it would consider asking Cebu Governor Gwendolyn F. Garcia to explain her policy of making face masks optional outdoors, which contradicts the guidelines of the country’s pandemic task force.

Mr. Año said police would arrest people who violate health protocols approved by President Rodrigo R. Duterte.

“The most important thing here is the health and well-being of our citizens,” he said. “We are still under a state of calamity, which will remain in effect until September 2022.”

DILG earlier said it would not recognize the optional face mask policy and would follow the national guidelines set by Mr. Duterte.

Ms. Garcia told the ABS-CBN News Channel on Monday there was no legal basis to arrest people who did not wear face masks outdoors.

She said the country’s pandemic task force should respect the autonomy of local governments, adding that forcing people to wear face masks outside is unimplementable.

“We do not want to set a precedent for other local government units,” Mr. Año said in a separate statement. “We are still in a pandemic and more transmissible variants are still arising, hence, we must abide by the minimum public health protocols, including wearing face masks in order to finally defeat this pandemic.”

Justice Secretary Menardo I. Guevarra earlier said guidelines and resolutions issued by the national pandemic task force and approved by Mr. Duterte should prevail.

Under the 1987 Constitution, the president exercises general supervision over local government units. — John Victor D. Ordoñez

Quality of life of 3 of 10 Filipinos worsened — SWS

PHILIPPINE STAR/ MICHAEL VARCAS

THREE of 10 Filipinos said their quality of life had worsened in the past 12 months, according to a Social Weather Stations (SWS) poll.

In a statement posted on its website, SWS said 34% of adult Filipinos said they were worse off (losers), 32% said it got better (gainers), while another 34% said it was the same (unchanged).

This resulted in a net gainer score of -2% (gainers minus losers) in the April poll that SWS classified as fair.

The April net gainer score was 14 points up from the mediocre -16 in December, but still 20 points below the pre-pandemic level of the very high +18 in December 2019.

The poll question has been fielded 144 times since April 1983. The net gainer score was generally negative until 2015, when it rose to positive numbers until the coronavirus pandemic started, SWS said.

“It has since trended back upwards but still has not reached the positive range,” it added.

SWS interviewed 1,440 adults on April 19 to 27  for the poll, which had an error margin of ±2.6 points. — Norman P. Aquino

PHL wins seat in UN continental shelf commission with NAMRIA’s Carandang as rep

NAMRIA.GOV.PH

THE PHILIPPINES has won a seat in an international commission tasked to facilitate the implementation of the United Nations Convention on the Law of the Sea (UNCLOS) concerning the outer limits of a state’s continental shelf.  

The country will hold the position in the Commission on the Limits of the Continental Shelf (CLCS) from 2023 to 2028, according to a tweet by the Philippine Mission to the UN.  

With 113 votes from 164 state parties, the Philippines reached the required majority after four rounds of voting during the 32nd UNCLOS meeting held in New York on Wednesday.  

The Philippines competed with eight other candidates under the Asia-Pacific Group. 

“To the countries that voted for the candidate of the Philippines which is the only one that studies to fight and win, on the merits, the rights of countries with continental shelfs, I thank you,” Foreign Affairs Secretary Teodoro L. Locsin, Jr. said in a tweet on Thursday.  

He said this was “yet another victory” as it was “the end of cartelized choices in a universal institution.”   

“This is not a job but a mission.” 

Efren P. Carandang, deputy administrator of the National Mapping and Resource Information Authority (NAMRIA), will be representing the Philippines at the CLCS.   

Mr. Locsin described Mr. Carandang as “the Philippines’ foremost authority on the technical intricacies of the law of the sea, which is to say that he is one of the very best in the world.”  

He has served in NAMRIA and its precursor agency for 38 years.  

He was also part of the Philippine delegation that successfully submitted the relevant charts and coordinates of the outer limits of the Philippines’ continental shelf with the International Seabed Authority. 

This is the first time that the Philippines, an archipelagic state, will serve in the commission.   

Permanent Representative of the Philippines to the UN Enrique A. Manalo has said that “the Philippine candidature to the CLCS is a demonstration of our consistent adherence to international law-based regime in maritime governance and the peaceful use of the world’s seas and oceans.”   

“The outer limits established through this process become the fixed boundaries between the seabed areas within national jurisdictions and the international seabed areas, which are reserved for common heritage,” the Permanent Mission of the Republic of the Philippines to the UN said in an earlier statement. — Alyssa Nicole O. Tan

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