China expects sharp drop in holiday travel due to COVID outbreaks

April 4, 2022 | 1:42 pm

1024px-Beijing_Capital_International_Airport_Terminal_2_Baggage_Claim_Hall_20140502 — Beijing Capital International Airport. — Wikimedia Commons

BEIJING — China’s transport ministry expects a 20% drop in road traffic and a 55% fall in flights during the three-day Qingming holiday due to a flare-up of coronavirus disease 2019 (COVID-19) cases in the country.

More than 27 Chinese provinces and regions have recently reported coronavirus cases, mostly the highly transmissible Omicron variant, forcing the authorities to impose stringent mobility restrictions or even city-wide lockdowns.

Chinese typically travel back to their hometowns to worship their ancestors during the tomb-sweeping festival.

The average daily number of vehicles on the roads are estimated to reach 39–40 million during the holiday, which kicked off on April 3, down 21% from the same period last year, according to a statement from the Ministry of Transport.

The number of planned flights was forecast to decrease by 55% this holiday from the year before, with air travelers also at only 20% of last year’s levels, the ministry said.

China on Sunday reported a total of 13,287 new daily cases for April 2, the highest level since February 2020.

The country’s “dynamic clearance” COVID policy has dampened consumption of transportation fuels in China. The two-stage lockdown in financial hub of Shanghai, starting from March 28, could reduce fuel demand by 200,000 barrels per day.

Authorities across China have also implemented anti-COVID measures at entertainment sites during the Qingming holiday, including limiting the number of tourists and requesting for negative nucleic testing results from inter-provincial travelers. — Reuters

Taiwan says new COVID cases won’t affect reopening plans

April 4, 2022 | 12:31 pm

KAOHSIUNG, Taiwan — A recent rise in Taiwan’s domestic coronavirus disease 2019 (COVID-19) cases will not affect plans to gradually reopen as hardly any of the new infections have caused serious illness, Premier Su Tseng-chang said on Sunday.

Unlike large parts of the rest of the world, Taiwan has kept the pandemic well under control due to strict and early control measures, including an efficient contact and tracing system and largely closing its borders.

In the first quarter of this year Taiwan reported 1,266 domestic cases, and only one death, though the government has been on alert as infections spiked over the past week or so, while remaining at comparatively low numbers, with 183 new cases on Sunday.

Speaking to reporters in the southern city of Kaohsiung, Mr. Su said the “new Taiwan model” in combating COVID-19 was a “normal life, active epidemic prevention and steady opening.”

“Although the number of confirmed cases will increase, more than 99.7% of them are mild or asymptomatic, so don’t worry, we can open up step by step steadily and live a normal life,” he added.

The government has not raised its alert level despite the new cases and only tweaked existing rules, confident its measures already in place will be effective and unconcerned about health facilities being overwhelmed.

Taiwan has maintained mandatory mask wearing, including while people are outside, and almost 80% of the population have had two vaccine shots while more than 50% have had three.

Taiwan is gradually relaxing quarantine rules for all arrivals on the island. In March, the government lowered the amount of time to be spent in isolation from 14 days to 10, and hopes to reduce it further in the months ahead.

However, Taiwan has not reopened to most foreign visitors, generally limiting those who can come in to citizens and residents.

Taiwan has reported only around 24,000 COVID cases since the pandemic began and 853 deaths. — Reuters

[B-SIDE Podcast] Cancel culture

April 4, 2022 | 10:06 am

The social media hive mind is as fast as it is vicious. Say or do something triggering and you could find yourself going viral and getting canceled.

“The common definition of cancel culture is that it’s a form of public shaming. Sociologically, it’s society’s way of regulating itself. When we cancel somebody, you’re making a moral judgment,” says Nicole C. Curato, a Professor of Political Sociology at Centre for Deliberative Democracy and Global Governance at the University of Canberra. “The key to understanding cancel culture is that there’s an element of unmet expectation.”

In this B-Side episode, Ms. Curato tells former BusinessWorld reporter Marielle C. Lucenio what it means to get canceled and whether businesses should risk taking a political stand knowing that they could face backlash.

Nina Ellaine Dizon-Cabrera, founder and chief executive officer of Colourette Cosmetics, also shares what it was like when Twitter tried to cancel her in November 2020, after she used the hashtag #NasaanAngPangulo.

Recorded remotely in February 2022. Produced by Earl R. Lagundino and Sam L. Marcelo.

Philippines’ progress in fighting financial crimes

April 4, 2022 | 9:15 am

To keep the integrity of financial institutions and the economy in general, activities that lead to the diversion of resources away from economically- and socially-productive uses must be prevented from thriving. Fighting and preventing these activities, particularly money laundering and the financing of terrorism, have been regarded as essential in keeping economies stable.

With global institutions like the Financial Action Task Force (FATF) taking the lead in these areas, the Philippines has likewise been active in anti-money laundering and combating the financing of terrorism (AML/CFT), although the FATF’s latest evaluation reveals that much more needs to be achieved.

In the Philippines, the Anti-Money Laundering Act (AMLA) of 2001 serves as the framework by which efforts AML/CFT efforts are pushed. In efforts to improve its the country’s AML/CFT drive, the AMLA was amended several times, the latest of which was signed by President Rodrigo R. Duterte in January 2021. The Anti-Money Laundering Council (AMLC), the country’s financial intelligence unit (FIU), is tasked to implement AMLA, along with the “Terrorism Financing Prevention and Suppression Act of 2012.”

Republic Act No. 11521, which is said to further strengthen AMLA, gives additional powers to the AMLC, namely: applying before a competent court for a search and seizure warrant and a subpoena; preserving, managing or disposing of assets pursuant to a freeze order, preservation order or judgment of forfeiture; and implementing targeted financial sanctions against the proliferation of weapons of mass destruction and its financing. The amendment also expands the list of covered persons, which now includes real estate developers and brokers and Philippine offshore gaming operators (POGOs) and their service providers.

For over two decades now, AMLC has been steadfast in pushing AML/CFT in the Philippines. Its current chairman, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, recalled the council’s recent initiatives last year at an annual AML/CFT summit.

“The AMLC is closely coordinating with law enforcers, such as the National Bureau of Investigation and the Philippine National Police, as they are the primary investigators for predicate crimes. For the first eight months of 2021, the AMLC has filed a total of 85 cases, varying from civil and criminal cases and involving over P1.31 billion and other assets,” Mr. Diokno started sharing in a message during the summit.

The BSP governor also noted the continued progress in the National Anti-Money Laundering and Countering the Financing of Terrorism Strategy (NACS) for 2018 to 2022, which is aimed at coordinating efforts of relevant agencies in AML/CTF.

“The NACS has also integrated the International Co-Operation Review Group (ICRG) Action Plan to ensure a whole-of-nation approach in addressing our country’s shortcomings in its AML/CTF system,” he added.

AMLC, Mr. Diokno continued, is sharing its risk assessments, strategic studies, and typologies with law enforcement agencies and covered persons to increase awareness of money laundering and terrorism financing typologies and red flags.

FATF, in a statement last month, recognized the country’s progress in AML/CTF. “Since June 2021, when the Philippines made a high-level political commitment to work with the FATF and APG (Asia/Pacific Group on Money Laundering) to strengthen the effectiveness of its AML/CFT regime, the Philippines has taken steps towards improving its AML/CFT regime, including by increasing the resources of its FIU and utilizing its targeted financial sanction framework for terrorism financing, ahead of any relevant deadlines expiring,” the global financial crime watchdog said on its website.

Additionally, AMLC Executive Director Mel Georgie B. Racela said in a recent BusinessWorld report that more financial intelligence analysts, investigators, and lawyers were hired to boost the operational capabilities of their units on compliance as well as litigation and evaluation. “Relevant Philippine authorities continue to work together in strengthening the country’s AML/CFT measures and in showing progress toward effectiveness,” Mr. Racela added.

In spite of these efforts, however, the Philippines is yet to get out of FATF’s “gray list” of jurisdictions subjected to increased monitoring for “dirty money” risks.

In the same statement, FATF calls for the Philippines to keep working on implementing its action plan by demonstrating that effective risk-based supervision of designated non-financial business and professions is occurring, as well as that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets.

Among several organizations actively collaborating in combatting financial crimes, the Philippine Amusement and Gaming Corp. (PAGCOR) is expected to play an important role in mitigating risks associated with casino junkets.

Aside from creating the PAGCOR Anti-Money Laundering Supervision and Enforcement Department (PASED), PAGCOR signed a memorandum of agreement with AMLC in 2020, enjoining both parties to cooperate in the area of capacity building to enhance both of their capabilities in addressing AML/CTF issues and concerns. Last January, PAGCOR was recognized by AMLC for its invaluable contribution AML/CFT efforts.

Furthermore, FATF also seeks progress on how the Philippines implements new registration requirements for money or value transfer services and applies sanctions to unregistered and illegal remittance operators, as well as on how it implements measures with respect to non-profit organizations without disrupting their legitimate activities.

The watchdog also sees the need to ensure that beneficial ownership information is accurate and up-to-date and that its access is streamlined for law enforcement agencies.

Moreover, the task force said it will keep checking for increases in the use of financial intelligence; in money laundering investigations and prosecutions; and in the identification, investigation, and prosecution of terrorism financing cases. It will also monitor for enhancements in the effectiveness of the country’s targeted financial sanctions framework for both terrorism financing and proliferation financing. — Adrian Paul B. Conoza

Towards strengthening anti-money laundering in the country

April 4, 2022 | 9:10 am

The Philippines has been deemed to be vulnerable to money laundering and terrorism funding. This, according to the Philippinest AML (Anti-Money Laundering) Report, is due to its growing economy and geographic positioning within major trafficking routes. Strengthening AML laws and regulations is therefore crucial to address the risk and fight financial crimes.

Money laundering is an illegal process of making assets or cash obtained from criminal activities appear to have come from legitimate sources. Simply put, from the word itself, money laundering makes dirty money look clean.

Back in 2000, lacking basic legal AML framework, the Philippines was blacklisted by the global money laundering and terrorist financing watchdog Financial Action Task Force (FATF), falling under its list of Non-Cooperative Countries and Territories (NCCT).

It was on Sept. 29, 2001 when the Republic Act (RA) No. 9160, otherwise known as the Anti-Money Laundering Act of 2001 (AMLA), was signed into law.

It declared the policy of the State “to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity.”

Under the AMLA, the State should also “extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed.”

The law also created the Anti-Money Laundering Council (AMLC), which is tasked to implement the AMLA. AMLC is composed of the Bangko Sentral ng Pilipinas Governor as chairman, and the commissioner of the Insurance Commission and the chairman of the Securities and Exchange Commission as members, acting unanimously in the discharge of its functions.

But despite the RA 9160, the country remained on the NCCT list. The AMLA was then first amended through RA 9194 signed in March 2003. The amendments included the reporting of suspicious transactions, among others. The country was removed from the NCCT list in February 2005.

However, due to the lack of laws on counter-terrorism financing (CTF) and other required regulations, the Philippines was placed on the grey list in February 2010. It had to address the identified AML/CTF deficiencies until December 2011, which it failed to meet and was downgraded to the dark grey list in February 2012.

AMLA was further amended through RA 10167, and RA 10168 or the Terrorism Financing Prevention and Suppression Act of 2012 was signed, bringing the country back to the grey list yet urged to fully address the remaining deficiencies.

In February 2013, through the signing of RA 10365, AMLA utnderwent its third amendment. That year, the country exited the grey list but remained on the watchlist. The FATF still expressed concerns about the casino sector risk and the lack of coverage under the AMLA. Casino operatzions were later covered under the AMLA through the passage of RA 10927 signed in July 2017. The country was then removed from the watchlist.

Looking to further strengthen anti-money laundering regulations, AMLA was amended through RA 11521 signed in January 2021 and took effect on Feb. 8 last year. Part of such amendments, among others, include additional powers to AMLC and new covered persons.

Among the powers granted to AMLC are to apply for the issuance of a search and seizure order and subpoena before a competent court and the authority to “preserve, manage or dispose assets pursuant to a freeze order, asset preservation order, or judgment of forfeiture.”

The law also added “real estate developers and brokers” and “offshore gaming operators, as well as their service providers” as covered persons. It also required real estate developers and brokers to report single cash transactions that exceed P7.5 million to AMLC.

Furthermore, under the RA 11521, “the implementation of targeted financial sanctions related to the financing of the proliferation of weapons of mass destruction, terrorism, and financing of terrorism, pursuant to the resolutions of the United Nations Security Council” is added in the declared policy of the State.

The Philippines has returned to FATF’s list of “Jurisdictions Under Increased Monitoring” or the grey list in June 2021.

The watchdog, in a statement last month, said the country should continue to implement measures concerning casino junkets, beneficial ownership, non-profit organizations.

It nonetheless recognized the country’s progress since June last year, when it made “a high-level commitment to work with the FATF and APG (Asia/Pacific Group on Money Laundering) to strengthen the effectiveness of its AML/CFT regime.” — Chelsey Keith P. Ignacio

IHAP in the new normal

April 4, 2022 | 9:00 am

Further driven to boost Philippine capital markets

By Adrian Paul B. Conoza, Special Features Assistant Editor

Investment houses, while appearing to be rarely mentioned compared to commercial or universal banks and other financial institutions, play significant roles in the Philippine economy. As institutions that work primarily for corporations and the government, the country’s investment houses have grown into essential developers and drivers of the Philippine capital market, and they have also been playing a part in shaping the direction of the Philippine economy.

These values are what the Investment House Association of the Philippines (IHAP) continues to uphold for over four decades. IHAP President Robert M. Lehmann recognized that the association, through its member institutions, provides a major impetus to the Philippine economy by suggesting reforms and improvements in the financial markets and by forming innovative financial packages — all with the aim of efficiently harnessing capital into productive endeavors and investments.

“These endeavors and investments in return result in improving the lives of our countrymen, creating jobs, generating taxes for our government, and creating wealth for our people,” Mr. Lehmann told BusinessWorld in an e-mail. “Ultimately, our hope is that these endeavors and investments… result in the formation of more capital that would fuel a continuous cycle of economic growth.”

Mr. Lehmann, who is also the president and chief executive officer of Amalgamated Investment Bancorporation, noted that the numbers speak for how the IHAP has been fulfilling its mission “to catalyze and nurture reforms in the Philippine financial markets for our stakeholders.”

“Over a 10-year period the total outstanding bonds have grown from P277.53 billion in 2012 to P1.38 trillion in 2022. Volumes have grown almost fivefold. In terms of the number of issuers, there are 53 companies with bonds listed in the Philippine Dealing Exchange Corp., up from just 17 companies in 2012,” the IHAP president shared.

Growth was also shown in the number of listed companies, Mr. Lehmann added. From 230 in December 2012, the number increased to 281 in February this year. IHAP members, in particular, have underwritten a total of P394.52 billion in initial public offerings (IPOs) over the past 10 years.

Mr. Lehmann also shared that the total market capitalization in the Philippine Stock Exchange (PSE) stands at P18.251 trillion as of February 2022, compared to only P9.314 trillion 10 years ago. Average daily trading volumes in stocks in 2021 stand at 26.46 billion with an average amount of P12.35 billion, versus 2.68 billion with an average amount of P4.42 billion in 2011.

Moreover, Mr. Lehmann noted as well that in spite of the massive economic impacts of the coronavirus disease 2019 (COVID-19) pandemic, many IHAP members experienced a “pretty good” 2021 as they were found to be fulfilling the projection of capital markets leading the country’s economic recovery.

To recall, Finance Secretary Carlos G. Dominguez III said in a statement last year that “the reforms being initiated and pushed by the Duterte administration to further deepen the Philippines’ capital markets will let the economy emerge stronger and more resilient in the aftermath of the prolonged COVID-19 pandemic.”

Noting that boost in Philippine capital markets, Mr. Lehmann cited a record number of 11 IPOs, totaling P127.377 billion, that were listed in the PSE and underwritten by IHAP member institutions between March 2020 and end-2021. These IPOs included five real estate investment trusts (REITs) totaling P61.024 billion. In addition, member institutions of IHAP underwrote approximately P182 billion in bonds and preferred shares in 2021.

With a newly-inducted board of directors and officers for this year, including Mr. Lehmann, IHAP aims to further drive the growth of capital markets — in time with further eased restrictions and a more reopened economy in the “new normal.”

“The vision has always been to work for the continued growth of the capital markets with the goal of making the Philippines a major global capital market center,” the IHAP president stressed.

Achieving this vision, he continued, will entail active participation in the Capital Market Development Council; as well as close cooperation with the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas, Department of Finance, PSE, and legislators in pushing for reforms; improving current practices and procedures; and ensuring strict adherence to rules, regulations, and laws pertinent to the capital markets.

“[W]e shall work with the SEC to try and find ways to further streamline present procedures and processes in registration without sacrificing safeguards and controls. We shall work on reforms on how to make the capital markets more accessible and inclusive,” Mr. Lehmann said.

Sustaining capital market growth, the IHAP president added, also means pursuing inclusivity and sustainability by making the capital markets accessible to as many enterprises and investors as possible.

By upskilling employees of IHAP member institutions through informative and value formation seminars and workshops, the association also envisions that investment house professionals “would not only be the best and the brightest but also the most honest, fair and upright.”

IHAP also looks forward to guiding its members in quickly adapting to the challenges investment houses are facing. These challenges, Mr. Lehmann notes, include a faster shift to digital transactions, climate change, shifts in geopolitics that have major global implications, shortages in food and vital resources, possible new pandemics, and major disruptive technological breakthroughs.

“IHAP will assist its members by initiating and encouraging regular exchange of ideas and information to keep all our members abreast of the changes happening in the world and maintain a spirit of cooperation and coordination among our members,” Mr. Lehmann said.

With the elections coming near, while other organizations have expressed hopes for the next administration specific to their concerns, the IHAP president shares his hopes for the electorate.

“For the coming elections, we are hoping that… the Filipino voter would seriously study the platforms and background of all the candidates and come out with an intelligent choice on the right candidate that would truly fulfill his promises and work solely for the greater good of the Philippines,” Mr. Lehmann said.

PAGCOR fulfills nation-building functions amidst the pandemic

April 4, 2022 | 9:00 am

Despite suffering a sharp decline in its revenues due to the suspension of gaming operations, the Philippine Amusement and Gaming Corporation (PAGCOR) still managed to make significant contributions to national coffers and to nation-building amidst the global health crisis.

From a high of P81.97 billion in 2019, the state-run gaming firm’s earnings from gaming operations, regulatory fees and other income dipped to P36 billion in 2020 and P35.48 billion in 2021. This did not prevent the agency, however, from fulfilling its vital obligations and instead ramped up its provision of necessary aid to the government and other beneficiaries.

At the height of strict community quarantine restrictions in 2020 and 2021, PAGCOR remitted a total of P44.53 billion (P21.61 billion in 2020 and P22.91 billion in 2021) to the government through its mandated contributions and other corporate social responsibility programs.

Of these contributions, P29.74 billion went to the Bureau of the Treasury, representing the 50% government share.

The agency’s remittances to the National Treasury include the P60 million annual contributions to the Dangerous Drugs Board (DOB), an agency tasked to create policies and strategies on drug prevention and control.

Half of PAGCOR’s remittances to the National Treasury are also being channeled to the Philippine Health Insurance Corporation (PhilHealth) to help fund the Universal Health Care (UHC) Law or Republic Act No. 11223. Aside from funding the UHC law, PAGCOR released a total of P990.982 million worth of grants to the health sector during the height of the pandemic.

Apart from the 50% nation al government share, the state run gaming firm’s remittances in 2020 to 2021 to the Bureau of Internal Revenue (in the form of franchise tax) totaled to P3.13 billion; P7.64 billion to the Socio-Civic Project Fund of the Office of the President; P1.48 billion to the Philippine Sports Commission (PSC); P22.02 million to the Board of Claims and P147.57 million for cities and local government units hosting a Casino Filipino branch.

PAGCOR likewise paid P289.34 million in Corporate Income Tax, while its cash dividends for 2019 and 2020, released in 2020 and 2021, respectively, reached a total of P23 billion. Said amount comprised the P18 billion cash dividends for 2019; P811.28 million cash dividends for 2020 and P4.18 billion advanced cash dividends that may be applied against future dividends obligations.

The agency also tapped its casino licensees to help fund the government’s fight against COVID-19. Licensed casinos are required to establish foundations for the protection, conservation and restoration of Philippine cultural heritage, improvement of public schools in the country and provision of quality healthcare services.

Hence, through their foundations, the integrated resorts and casinos joined hands with PAGCOR and contributed over P1.1 billion aid to various hospitals, local government units, government offices and communities in 2020. In 2021, these foundations also allocated P902.57 million to COVID response.

Another major project related to infrastructure that PAGCOR prominently undertook amidst the pandemic was the construction of Multi-Purpose Evacuation Centers (MPECs) nationwide.

Since the MPEC project was launched in November 2020, the state-run gaming firm has already released a total of Pl.87 billion to kickstart the construction of 73 evacuation centers in various parts of the country.

PAGCOR also unveiled in 2021 the “PAGCOR Village”, a charitable project that seeks to safeguard the living conditions of families displaced by the the eruption of Taal Volcano in Batangas in 2020.

A brainchild project of Chairman and CEO Andrea Domingo, the PAGCOR Village — which has a funding of P150 million — was launched on February 18, 2021 and are undergoing construction in the towns of Agoncillo, Lemery, Balete, Mataas na Kahoy and Taal.

The strict lockdowns and temporary suspension of its gaming operations likewise failed to stop PAGCOR from remitting P712.38 million to the PSC in 2020 and P774.99 million in 2021 as part of the government sports agency’s 5% mandated income share from the state-run gaming firm.

On top of these remittances, PAGCOR released a total of P45.19 million in 2021 up to March 2022 for the retirement benefits and cash incentives of athletes and their coaches who brought honor to the country after participating in major international sports competitions. One of these notable remittances was the P38.50 million cash incentives released by the agency to the athletes who made history after clinching medals in the 2020 Tokyo Olympics.

PAGCOR also extended aid to other government agencies, non-government organizations, law enforcement agencies, and casino host communities, among others, as part of its COVID-19 response. From 2020 to 2022, the agency released a total of P356.24 million in financial grants to various local government units, state colleges and national government agencies.

The state-run gaming firm likewise released a total P161.30 million at the onset of the pandemic up to the present for the purchase of food and non-food items, which were distributed to calamity victims, community and healthcare frontliners and marginalized communities gravely affected by the lockdowns.

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BDO Network Bank, Inc. to conduct annual stockholders’ meeting virtually on April 29

April 4, 2022 | 8:02 am

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Semirara Mining and Power Corp. to hold annual stockholders’ meeting via remote communication on May 2

April 4, 2022 | 8:00 am

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SM Investments Corp. sets schedule of annual stockholders’ meeting on April 27

April 4, 2022 | 7:59 am

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Inflation likely accelerated in March

April 4, 2022 | 12:33 am

A worker changes the price of liquefied petroleum gas (LPG) at a gas station in Tondo, Manila, April 1. — PHILIPPINE STAR/ RUSSEL PALMA

By Luz Wendy T. Noble, Reporter

HEADLINE INFLATION likely accelerated in March as the spike in global crude oil prices probably caused a faster increase in food and transport costs, according to analysts.

A BusinessWorld poll of 18 analysts yielded a median estimate of 4% for last month’s inflation, nearer the upper end of the Philippine central bank’s 3.3% to 4.1% projection.

If realized, this would be much quicker than the 3% in February and matches the high end of the 2-4% target range by the Bangko Sentral ng Pilipinas (BSP). However, it will still be slower than the 4.5% seen a year earlier.

The Philippine Statistics Authority will release the March inflation data on April 5.

Analysts said the surge in pump prices was a major inflation driver in March.

Crude oil prices have become more volatile since Russia’s invasion of Ukraine in late February. There were fears over disruption in oil supply as Russia is a major oil exporter.

Since the start of 2022, prices of gasoline, diesel, and kerosene increased by P18.30, P27.85, and P25.75 per liter, respectively.

“As a net oil importer, Philippines is highly exposed to the surge in commodity prices directly through higher fuel prices and subsequently higher electricity prices,” said Makoto Tsuchiya, an economist at Oxford Economics.

Concerns over global supply of grains and wheat also drove their prices higher as Ukraine and Russia are major exporters.

“Upward pressure will likely emanate from private vehicle transport costs (pump prices) on top of utilities,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said.

Mr. Tsuchiya also pointed out there are several petitions to raise minimum daily wages and transport fares, which are being reviewed by the government.

“Second-round effects [are] likely amid growing calls for transport fare hikes and an increase in the minimum wage which has been unchanged for three years,” he added.

China Banking Corp. Chief Economist Domini S. Velasquez said inflation could already surpass the BSP’s target from April to June due to the continued rise in commodity prices.

As mobility curbs have been further relaxed, ING’s Mr. Mapa said higher demand may have contributed to quicker inflation in March. Metro Manila has been under the most lenient Alert Level 1 since March.

“We cannot rule out the emergence of demand-side pressures as the economy, as described by the BSP, has turned the corner and is on the mend. This suggests that demand has returned, albeit not quite at pre-pandemic levels just yet,” Mr. Mapa said.

At its policy review on March 24, the Monetary Board acknowledged that economic activity has already gained traction as mobility restrictions were relaxed but the outlook remains clouded due to the Russia-Ukraine war and the pandemic.

At the same meeting, the central bank raised its inflation forecast for 2022 to 4.3% from 3.7% previously, citing the impact of higher oil and commodity prices.

While the BSP kept rates at record lows, it vowed that it will be ready to respond when needed to tame inflation and to keep its price and financial stability objectives.

The central bank will likely remain patient in keeping rates low to support recovery, said Sonia Zhu, an analyst at Moody’s Analytics.

“We maintain our expectation that monetary policy will begin normalizing in the September quarter as BSP looks past inflation risks arising from the Russian-Ukraine military conflict to focus on domestic economic growth,” she said.

BSP Governor Benjamin E. Diokno has earlier said they would remain patient and would only assess the possible rate hike in the second half of the year to ensure a more sustainable recovery. He told Bloomberg last month that a 2.75% key rate “might be reached by next year.”

The BSP chief also said they would not need to move in lockstep with the US Federal Reserve, which started to increase interest rates in March. He noted the BSP only takes into account external developments to the extent it affects growth and inflation outlook.

However, analysts have warned that BSP’s space to remain accommodative is narrowing if inflation remains elevated.

“The possibility of raising rates earlier than planned is increasing and a rate hike in the second quarter is now in the horizon,” China Bank’s Ms. Velasquez said.

“Paramount to the BSP’s decision is the effectiveness of the government’s non-monetary measures in preventing inflation from becoming more broad-based and preventing a de-anchoring of inflationary expectations,” she added.

For Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr., a continued accommodative policy could result to unintended effects like mispricing of risk and de-anchoring of inflation expectations that may be difficult to reverse.

“These side effects may already be slowing the pace of our much-needed recovery as allocation of the financial system resources have likely favored less productive sectors instead of the more productive ones like startups and future-proofed businesses,” Mr. Neri said.

The Monetary Board will have its next policy review on May 19.

PEZA official says more investments to enter PHL after May nat’l elections

April 4, 2022 | 12:32 am

skyline-building — PHILIPPINE STAR/ MICHAEL VARCAS

By Revin Mikhael D. Ochave, Reporter

MORE INVESTMENTS are expected to enter the country after the May election as investors await the new administration, according to the top Philippine Economic Zone Authority (PEZA) official.

“We’re not yet off from the coronavirus disease 2019 (COVID-19) pandemic, plus the Ukraine war… then we are now in the election period. Investors have that wait-and-see attitude on the result of the election. Investors’ enthusiasm and heightened hopes come after election,” PEZA Director-General Charito B. Plaza told BusinessWorld via mobile phone message.

The Philippines is holding its national elections on May 9. Investors typically seek more clarity on the possible policies by the incoming President before making any investment decisions.

“Investors are watching the change of policies by the new administration affecting investments,” Ms. Plaza said.

Last month, a Bloomberg survey of 28 investors and analysts showed Vice-President Maria Leonor G. Robredo was their top pick, while frontrunner Ferdinand R. Marcos, Jr. was second to the last.

However, recent data from the Trade department showed combined investment pledges approved by the PEZA and the Board of Investments (BoI) plunged by 90% to P12.82 billion in the first two months of 2022, from the P133.24 billion recorded in the same period last year.

Broken down, PEZA investment pledges dropped by 53% to P5.27 billion in the January to February period, while BoI investment pledges fell by 94% year on year to P7.55 billion.

Despite the lackluster start to 2022, PEZA is now targeting a 7-8% growth in investment approvals for 2022. This is higher than the agency’s previous target of 6% growth.

Ms. Plaza said the PEZA revised its investment target after the passage of the three economic liberalization measures that are aimed at boosting foreign investments.

“With the three landmark laws (amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act), we’re seeing high investments after (the) election,” Ms. Plaza said. “When we target, we also have to double our marketing efforts to reach the goal.”

The government has said these three measures will help the economy recover faster from the coronavirus pandemic. Economic managers are targeting a 7-9% gross domestic product (GDP) growth this year, faster than the 5.6% GDP expansion in 2021.

Under the amended Public Service Act, foreigners can now fully own public services such as telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports after being excluded from the definition of a public utility.

Before the amendment, these services were previously categorized under public utilities and were covered by the 40% foreign ownership cap provided for under the 1987 Constitution.

The amended Foreign Investments Act lets foreign investors invest in a domestic enterprise up to 100% of its capital, and allows foreigners to set up 100%.

The amended Retail Trade Liberalization Act lowered the minimum paid-up capital of foreign retailers to P25 million from $2.5 million.

In 2021, PEZA approved a total of P69.30 billion worth of investments. Some of the investments came from the manufacturing industry, which generated P25.51 billion worth of investments and the information technology (IT) industry at P7.322 billion worth of investments.

Further, the agency reported that its export income for 2021 rose by 14% to $63.061 billion from $55.309 billion in 2020.