BoP 2021 estimate raised on better economic landscape

June 18, 2021 | 7:13 pm

The Philippine central bank raised its balance of payment (BoP) projection for this year on expectations of an improved economic landscape here and overseas.

It now expects the payment position to post a $7.1 billion surplus by year-end, which is lower than the $16-billion surplus last year but higher than the $6.2-billion surplus projection made in March.

“The better-than-expected global economic outlook for the year is driven by upward revisions in the growth prospects of major advanced economies such as the US and Japan, the country’s major trading partners,” the Bangko Sentral ng Pilipinas (BSP) said in a statement on Friday.

On the local front, government efforts to fast-track, the recovery and the faster rollout of coronavirus vaccines are expected to “boost market confidence and encourage further expansion of domestic economic activities.”

The BoP which measures the country’s transactions with the rest of the world. A surplus means more funds entered the economy.

Cash remittances from migrant Filipino workers are expected to grow by 4% this year, unchanged from the previous estimate.

“This is supported by expectations of improved labor mobility following rising vaccination levels in the country and in major destination countries, easing of travel restrictions and reopening of borders to foreign workers,” the BSP said.

It expects the payment position to decline to a $2.7-billion surplus next year, driven mainly by the anticipated narrower current account surplus of $6.7 billion. This is lower than the $3.8-billion surplus estimate given in March.

The outlook depends on the sustained performance of both exports, which should grow by 6% and imports, which should rise by 10%, the central bank said.

Meanwhile, foreign direct investment and hot money inflows are projected to reach $8.5 billion and $7.4 billion, respectively, as the investment climate improves further.

The emerging gross international reserves in 2022 is estimated to reach $117 billion in anticipation of continued foreign currency deposits by the National Government to address the coronavirus pandemic and fast-track its infrastructure program.

The estimates considered potential renewed coronavirus lockdowns, Zeno Ronald R. Abenoja, senior director at the central bank’s Department of Economic Research told an online news briefing.

The country posted a BoP deficit of $2.8 billion in the first quarter, higher than the $68-million deficit a year earlier after an uptick in net outflows in the financial account, coupled with the reversal of the current account from a surplus to a deficit during the period.

The current account posted a $614-million deficit as the merchandise trade gap widened on import growth amid the gradual reopening of the domestic economy, the BSP said. Lower net receipts of primary income also contributed to the deficit.

The country had a $225-million current account surplus a year earlier.

“An expected economic recovery that would lead to a corresponding pickup and rebound in imports plus remittance growth means the current account may not post a substantial surplus,” Robert Dan J. Roces, chief economist Security Bank Corp. said in a Viber message. — BML

BSP fully awards 28-day bills

June 18, 2021 | 7:11 pm

The Philippine central bank raised P100 billion from its auction of short-term securities on Friday even as rates rose on hints by the US central bank of a looming interest rate increase in 2023.

The Bangko Sentral ng Pilipinas (BSP) fully awarded the 28-day bills from total bids worth P140.525 billion. The auction was 1.4 times oversubscribed, but the demand was 14% lower than P162.69 billion in the previous auction.

The debt paper fetched an average 1.811%, up by 1.4 basis points (bps) from 1.797% last week.

Yields sought by banks ranged from 1.78% to 1.845%, narrower than 1.755-1.87% a week earlier.

The continued uptick in local yields may be traced to the US Federal Reserve’s hints that two 25-bp rate increases are likely to happen toward the end of 2023, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

The possibility of the Fed soon unwinding its bond purchases as the US economy recovers may also have contributed to rising local bond yields.

At its latest two-day meeting, majority of the Federal Open Market Committee members said they expected the Fed to raise its benchmark interest rates twice in 2023.

The Fed also increased its forecast for inflation to 3.4% from 2.4% this year amid a bigger-than-expected impact of supply chain disruptions.

Investors are also becoming more cautious about when the Fed will taper its bond purchases, a measure that many central banks adopted to boost market liquidity amid a coronavirus pandemic. — Beatrice M. Laforga

Q1 external debt declines

June 18, 2021 | 7:10 pm

US-dollar-currency-bills — KSTUDIO-FREEPIK

The country’s outstanding foreign debt fell by 1.5% or $1.4 billion to $97 billion at the end of March from end-December, after the National Government redeemed maturing bonds and local banks settled their obligations, according to the Philippine central bank.

Year-on-year, the country’s debt stock rose by $15.6 billion after borrowings worth $13.5 billion by the government and private nonbanks, it said in a statement.

External debt refers to all types of borrowings by Philippine residents from nonresidents.

The country’s external debt stock remained at “prudent levels,” the central bank said. Gross international reserves stood at $104.5 billion as of end-March and represented 7.7 times cover for short-term debt based on the original maturity. — Beatrice M. Laforga

COVID-19 cases hit 1.35M

June 18, 2021 | 7:08 pm

vaccine-health-worker-guard — PHILIPPINE STAR/ MICHAEL VARCAS

The Department of Health (DoH) reported 6,833 coronavirus infections on Friday, bringing the total to 1.35 million.

The death toll rose by 110 to 23,385, while recoveries improved by 3,441 to 1.26 million, it said in a bulletin.

There were 61,776 active cases, 1.2% of which were critical, 92.2% were mild, 3.7% did not show symptoms, 1.7% were severe and 1.22% were moderate.

The agency said 14 duplicates had been removed from the tally, 10 of which were tagged as recoveries and one was tagged as a death.

A total of 30 recoveries were reclassified as active cases, while 60 cases previously tagged as recoveries were reclassified as deaths. Five laboratories failed to submit data on June 16, the agency said.

About 13.4 million Filipinos have been tested for the coronavirus as of June 16, according to DoH’s tracker website.

The coronavirus has sickened about 178.2 million and killed 3.9 million people worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization.

About 162.7 million people have recovered, it said.

Meanwhile, Health Undersecretary Maria Rosario S. Vergeire urged Filipinos to get vaccinated against the coronavirus to prevent infections and hospitalizations.

This was after reports of infections among vaccinated health workers in Indonesia.

“Let’s get the vaccine,” she said. “Let us not be doubtful,” she told an online news briefing in mixed English and Filipino.

“The vaccines are one of the keys in fighting the pandemic,” she added.

Ms. Vergeire cited “breakthrough infections” that occur after getting complete doses.

Reuters reported on Thursday that more than 350 doctors and medical workers got infected with the coronavirus despite being vaccinated with CoronaVac, with dozens hospitalized.

Most of them did not have symptoms and were self-isolating at home, Reuters said, citing Badai Ismoyo, head of the health office in the district of Kudus in central Java.

Ms. Vergeire cautioned against interpreting incomplete data, noting that the number of health workers there was unknown.

She also said that they would recommend a shortened quarantine and no testing for returning Filipinos who have been fully vaccinated overseas.

The government on June 4 approved the rules cutting the quarantine requirements for fully vaccinated foreign travelers to seven days.

Presidential spokesman Herminio L. Roque, Jr. earlier said the relaxed rules apply to people who got vaccinated in the Philippines.

Returning Filipinos who got vaccinated overseas must still undergo a 10-day quarantine at a facility and four days at home.

A person is considered fully vaccinated two or more weeks after completing his dose, Mr. Roque said.

SC seeks to unclog dockets

June 18, 2021 | 7:05 pm

The Supreme Court (SC) on Friday released an order amending its rules to unclog case dockets and speed up the judicial system.

Under the order dated May 4, the fully court will now act only on administrative cases penalized with more than two years of suspension or a fine of more than P100,000.

It used to hear cases involving a suspension of more than a year or a fine of more than P40,000.

The en banc will also now only act on cases involving the lifting of judges’ or lawyers’ suspension if the suspension period is more than two years.

Meanwhile, court spokesman Brian Keith F. Hosaka released the Judicial Bar and Council’s (JBC) list of shortlisted candidates for the tribunal’s associate Justice position vacated by now-Chief Justice Alexander G. Gesmundo.

The 15 nominees were down to nine, with candidates Amparo M. Cabotaje-Tang, Sedfrey M. Candelaria, Ramon A. Cruz, Japar B. Dimaampao, Geraldine Faith A. Econg, Rafael R. Lagos, Jose Midas P. Marquez, Maria Filomena D. Singh and Raul B. Villanueva still in the running. — Bianca Angelica D. Añago

Prisoners allowed to attend wake

June 18, 2021 | 7:04 pm

The Justice department has approved the request of the imprisoned wife and son of a farmer who had been a political prisoner for 16 years and who died of cardiac arrest on Sunday to attend his wake on Friday.

In a statement, Fides Lim, spokesperson of Kapatid, a support group for families and friends of political prisoners, asked the government to let them “grieve in peace and pay our last respects to a good father, a good husband and a kind, helpful and brave political prisoner whom his fellow inmates called Tatay.”

“He’s been in prison for 16 years and the only thing he wished for is to walk free and live with his family,” she said, referring to the deceased Jesus Alegre.

After months of illness, Mr. Alegre, a farmer from Negros Occidental, died of cardiac arrest on June 13 at 75 years.

Kapatid earlier said Mr. Alegre and his family had been “wrongfully incarcerated for 16 years.”

He, his 74-year-old wife and 47-year-old son were arrested in 2005 and were convicted of murdering a bodyguard in a land dispute case. — Bianca Angelica D. Añago

PAL share trading halted on audit disclaimer

June 18, 2021 | 7:00 pm

The Philippine Stock Exchange (PSE) suspended the trading of PAL Holdings, Inc. shares beginning Friday after the exchange noted a disclaimer of opinion of the company’s independent auditor on the listed company’s annual report.

“We do not express an opinion on the accompanying consolidated financial statements,” SyCip, Gorres, Velayo & Co. said in the company’s annual report, which was disclosed Thursday.

“Because of the significance of the matters described in the Basis for Disclaimer of Opinion on the 2020 Consolidated Financial Statements section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated financial statements,” it added.

The local bourse put the company’s stocks on a trading halt at 9:30 a.m. on Thursday after taking note of the disclaimer.

SyCip, Gorres, Velayo said its basis for the disclaimer is that it had “not been able to obtain sufficient appropriate audit evidence to conclude as to whether the use of the going concern assumption in preparing these consolidated financial statements is appropriate.”

The company’s deals with lessors and creditors have yet to be concluded, it said.

It also noted that PAL Holdings is going on a financial restructuring plan to ensure its business continuity. The company is said to be considering filing a pre-negotiated court-rehabilitation in an overseas jurisdiction.

The listed operator of flag carrier Philippine Airlines widened its net loss after tax to P73.08 billion in 2020 due to the impact of the pandemic on the airlines’ operations. Its net loss attributable to equity holders of the parent company also surged to P71.91 billion in 2020 from P10.31 billion the previous year.

“After a review of PAL’s 2020 Annual Report, the exchange deems that the said report is not in compliance with Rule 68, as amended, of the SRC (Securities

Regulation Code),” the PSE said on Friday, resulting in the trading suspension.

The rule states that “(t)he AFS (audited financial statement) of companies covered by Part II of this Rule with an auditor’s opinion other than unqualified because of deviation(s) from the required financial reporting framework or due to a scope limitation imposed by the company, shall be considered a violation of this Rule.”

PAL Holdings has yet to respond to BusinessWorld’s request for comment.

Shares of PAL Holdings at the local bourse were last traded on Wednesday for P6.05 each.

AC Energy divests in three biomass projects

June 18, 2021 | 6:56 pm

NEGROS ISLAND Biomass Holdings Inc. has forged binding agreements to divest its shareholdings in three biomass-fired power plants in the Visayas, its part owner Ayala-led AC Energy Corp. said on Friday.

In a stock exchange disclosure, AC Energy said Negros Island Biomass will sell its equity stake to Singapore-based ThomasLloyd CTI Asia Holdings Pte. Ltd., subject to certain conditions.

As a result, ThomasLloyd will have full control over the 20-megawatt (MW) San Carlos BioPower, 25-MW North Negros BioPower, and 25-MW South Negros BioPower.

Negros Island Biomass is a joint venture development holding company between AC Energy and the Zabaleta group. Terms of the sale were not specified in the disclosure.

ThomasLloyd already indirectly owns more than 90% economic equity ownership in the biomass-fired power plants.

“The acquisition by ThomasLloyd allows it to fully consolidate and further expand the biopower business, moving beyond just the power business and into complementary and ancillary businesses,” AC Energy said in the disclosure.

Meanwhile, AC Energy said the divestment of its indirect minority interest will allow it to concentrate efforts on expanding its core solar and wind businesses in an effort to reach 5 gigawatts of renewable capacity by 2025.

It added that the Zabaleta group is still invested in the solar and wind sectors and continues to operate Bronzeoak Clean Energy.

“Bronzeoak Clean Energy continues to provide management services to ThomasLloyd for the three plants, and continues as a bioenergy development and management company,” AC Energy said.

During the first quarter, AC Energy posted a 54% increase in its attributable net income to P829.32 million on the back of higher revenues from electricity sales.

On Friday, shares of AC Energy at the stock exchange rose 4.17% or 34 centavos to finish at P8.50 apiece. — Revin Mikhael D. Ochave

San Miguel airport project’s launch seen in 45-60 days

June 18, 2021 | 6:53 pm

Transportation Secretary Arthur P. Tugade said Friday San Miguel Corp. has been quietly working on the P735-billion New Manila International Airport project in Bulacan.

“Kailan magagawa ang groundbreaking, gustong gusto ko rin itulak ‘yan pero mahalaga na alam natin na may ginagawa ang San Miguel at si Ramon Ang,” Mr. Tugade said at a televised press briefing.

(As for when the groundbreaking will take place, I also really want to push for it, but it is important that we know San Miguel and [President and Chief Operating Officer] Ramon S. Ang are already working on it.)

“Wala po akong rason o dahilan na pagdudahan na ‘yung groundbreaking magagawa at magagawa ‘yan in the next 45 to 60 days,” he added.

(I have no reason to doubt that they can do the groundbreaking in the next 45 to 60 days.)

San Miguel’s airport project is expected to be completed in four to six years. It is projected to accommodate 100 million to 200 million passengers annually.

The company has selected Dutch firm Royal Boskalis Westminster N.V., through its local unit Boskalis Philippines, Inc., to undertake land development work for the project, which will be built in the coastal areas of Bulakan town in Bulacan province.

It has tapped Groupe ADP (Aeroports de Paris), Meinhardt Group and Jacobs Engineering Group for the construction of the airport. These firms are behind Singapore’s Changi airport, France’s Charles de Gaulle airport, and the United States’ Hartsfield-Jackson Atlanta International airport.

The project will include four to six parallel runways, eight taxiways, and three passenger terminal buildings.

San Miguel hopes the project will generate more than a million direct and indirect jobs, and once completed, create up to as much as 30 million tourism jobs nationwide.

San Miguel will also build an expressway that will link the airport to North Luzon Expressway and a rail link through Metro Rail Transit-7.

The government hopes the Bulacan airport will help decongest Ninoy Aquino International Airport in Pasay City. — Arjay L. Balinbin

Megaworld: 21 projects to boost rent income

June 18, 2021 | 6:52 pm

Megaworld Corp. is looking to expand its rental income portfolio by developing its project pipeline in the next five years, the company said on Friday.

“We have numerous opportunities to explore in our growth pipeline, and we are prepared to take them on,” Andrew L. Tan, chairman and chief executive officer of Megaworld, said during the company’s stockholders’ meeting.

The company aims to develop new office and commercial projects on top of its plans to complete 19 ongoing projects this year.

“These are all big-ticket projects that we want to pursue as we look forward to full recovery in our economy, and the return of consumer confidence to normalcy,” Megaworld Chief Strategy Officer Kevin Andrew L. Tan said.

The majority of the new projects are office developments, which make up 70% or 15 developments in the list: Uptown Bonifacio and McKinley West in Taguig City, Arcovia City in Pasig, Iloilo Business Park, The Upper East in Bacolod City, Pampanga-based Capital Town, The Mactan Newtown in Cebu, and Davao Park District.

Megaworld is eyeing to develop five lifestyle malls in Bacolod’s The Upper East and Northill Gateway, Pampanga’s Capital Town, Maple Grove in Cavite, and Highland City in Rizal.

The listed property company also said it plans to open a hotel in Mactan Newtown.

In total, Megaworld aims to develop 21 new projects in 11 of its townships in the country, which will be funded through proceeds generated from its real estate investment trust (REIT) offer, MREIT, Inc.

Megaworld is putting 10 key office assets into MREIT. The offer will consist of secondary shares of up to 1.239 billion common shares priced at P22 each at most.

“Our ultimate goal is to make MREIT not only the largest office REIT in the

Philippines, but to eventually be one of the largest in Southeast Asia,” said Chief Strategy Officer Mr. Tan.

“Right now, we are very bullish in Iloilo where we continue to see our property prices appreciate and where we continue to sell out our projects despite the pandemic,” he said, adding that the company’s projects in Cavite, Pampanga, and Bacolod also reported strong sales take-up.

For future residential projects, the company said it plans to focus its new launches in key areas outside of Metro Manila.

On Friday, shares of Megaworld at the stock market declined by 2.51% or eight centavos to close at P3.11 each. — Keren Concepcion G. Valmonte

CLI to build condo for Cebu City informal settlers

June 18, 2021 | 6:50 pm

Cebu Landmasters, Inc. (CLI) is donating a P115-million condominium to Cebu City to offer in-city housing for informal settlers in Cebu City’s Barangay Lorega-San Miguel.

“CLI’s goal to help the VisMin (Visayas-Mindanao) housing gap includes well-planned projects for the marginalized,” Jose R. Soberano III, president and chief executive officer of Cebu Landmasters, said in a statement on Friday.

The company said it signed an agreement with the local city government for the development, which will be the first and tallest government-owned socialized housing project in the VisMin region.

It was planned in collaboration with the Department of Human Settlements and Urban Development.

Cebu Landmasters broke ground for the project on Friday, where Mr. Soberano was joined by Cebu City Vice Mayor Michael L. Rama and Housing Secretary Eduardo D. del Rosario.

The medium-rise building tenement housing project will stand five-storey high on a 1,350 square meter (sq.m.) property. It is said to be accessible to employment opportunities, being within walking and biking distance from the city’s business areas.

“Beneficiaries will be selected by the Department of Welfare for the Urban Poor and Local Housing Board in compliance with the city’s Local Shelter Ordinance,” CLI said.

The socialized housing condo will feature 100 units, each with a gross floor area of 25 sq.m. Units will have sun baffles on balconies and planters will be provided.

Open spaces, parking areas, a chapel, and a multi-purpose training hall will be included in the project. Cebu Landmasters said it will also provide ramps to cater to persons with disabilities and senior citizens.

Meanwhile, the project’s common areas will be powered by renewable energy

using solar panels and it will also have a sewage treatment plant for liquid waste management.

On Friday, shares of Cebu Landmasters at the stock exchange rose by 4.09% or 15 centavos to close at P3.82 each. — Keren Concepcion G. Valmonte

Fitch sees peso trading in range around P48/dollar this year

June 18, 2021 | 6:47 pm

3-peso-dollar-currency-021820 — PHILIPPINE STAR/ MIGUEL DE GUZMAN

The peso is expected to trade in a narrow range during the year around the P48-to-the-dollar level before weakening in 2022 as the economy recover, Fitch Solutions said.

In a note Friday, Fitch Solutions revised its exchange rate forecast for the year to P48.10 to the dollar from P48.40 previously, noting that the current account is expected to swing to a deficit in the next few quarters.

“As the current account flips from surplus to deficit over the coming quarters, we expect the peso to modestly depreciate, with downside pressures somewhat offset by central bank policies and rebounding growth,” it said.

It forecast the current account surplus to narrow to 1.1% of gross domestic product (GDP) by year’s end from 3.6% in 2020.

In the next three to six months, Fitch Solutions sees the peso’s range at between P47.50 and P49.15, with the persistence of the coronavirus outbreak threatening economic recovery.

It said foreign investment flows may not return over the near term as infection levels remain elevated at around 6,500 new cases each day and the pace of vaccination program still slow.

The trade deficit continued to widen with the pandemic dampening import demand and trading partners impose restrictions.

Fitch Solutions expects import demand to gradually recover in the next few quarters as domestic activity picks up, while remittance flows and demand for export goods will also improve as global economic prospects improve.

“The Bangko Sentral Ng Pilipinas (BSP)’s dovish monetary policy stance will also somewhat weigh on the peso. Despite headline inflation rising sharply through H121, the BSP has kept its key policy rate on hold at 2% citing weak demand-side pressures,” it said, noting that it expects the central bank to keep its policy rate unchanged for the rest of the year.

For next year, Fitch Solutions upgraded its forecast for the peso to P49 to the dollar from P50 previously.

It said the current account could come in at a deficit equivalent to 1.2% of GDP in 2022 and 1.5% in 2023 in the next six to 24 months.

The expected tightening of monetary policy could temper the effects of a current account deficit, it said.

“We forecast the BSP to begin its monetary tightening cycle in 2022, hiking its key policy rate 50 basis points (bps) to 2.5% in 2022 (revised down from 75 bps) as the economy strengthens. This will come before the Fed’s tightening cycle providing some support for the peso,” it said.

The central bank could also tap its reserves to further ease the impact on the peso. It expects the volume of foreign exchange reserves to remain sufficient to cover 10.6 months’ worth of imports this year.

Fitch Solutions also expects the dollar to remain weak over the medium term, while foreign investment could pick up further when the economy rebounds.

“The peso could strengthen more in the near term if commodity prices begin to cool and the dollar trades weaker. Indeed, our Global and Commodities teams both see these trends playing out over the coming quarters but a more aggressive and sooner turn could see appetite for the peso bolster,” Fitch Solutions said. — Beatrice M. Laforga