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DoE to endorse 75 RE plants for feed-in tariff program

The Department of Energy (DoE) said Friday that 75 renewable energy (RE) plants with capacity of 1,323.01 megawatts (MW) of capacity will be endorsed to the Energy Regulatory Commission (ERC) for feed-in tariff (FiT) eligibility.

In a document posted on its website Friday, the DoE said it issued certificates of endorsement (CoEs) to 31 biomass facilities, 23 solar projects, 15 hydro plants and six wind projects. No ocean projects that were issued a CoE. The numbers are based on DoE totals as of the end of December.

The DoE said in its latest FiT monitoring board summary that it hopes to meet its installation target capacity of 1,410 MW, leaving it 86.99 MW short.

The FiT program is a fixed subsidy paid by the government to RE developers to partially offset the risks in taking on new technology. The program is designed to encourage RE development.

In a department circular issued eight years ago, the department said that only RE developers that hold certificates of confirmation of commerciality can be issued a CoE for FiT eligibility. Firms that hold a CoE are endorsed to the ERC for the processing of a certificate of compliance under the FiT system.

“(However), the DoE nomination to the ERC shall not be construed as giving right to the RE Developer to be included in the FiT-eligible projects,” the DoE said in its guidelines for selecting RE projects under the FiT system and the awarding of certificates for FiT eligibility.

In December, the DoE extended the deadline for FIT applications by developers of run-of-river hydropower projects until the 250-MW installation target is reached.

Based on the department’s estimates, endorsed hydro projects have a total capacity of 145.11 MW.

On Friday, the DoE said there are 932 RE projects covered by the Renewable Energy Act of 2008, with 870 commercial facilities and 62 facilities for own use, as of the end of 2020. The listed RE projects include those related to hydro, ocean energy, geothermal, wind, solar and biomass. — Angelica Y. Yang

Better rice yields raise farmer income by P7,000 per hectare

RICE farmers earned an additional P7,000 pesos per hectare two years after the implementation of Republic Act No. 11203 or the Rice Tariffication Law, the Agriculture department said.

Agriculture Secretary William D. Dar in a statement Friday credited increased harvests to the P10 billion-a-year Rice Competitiveness Enhancement Fund (RCEF), which was created under the law.

“Farmers are… averaging 400 kilograms per hectare or roughly eight cavans at 50kg each which is equivalent to an additional income of P7,000 per hectare,” Mr. Dar said.

“This shows that with the use of certified seed, adoption of modern technology, and mechanizing land preparation, crop establishment and harvesting, farmers can attain incremental yields. At least two million rice farmers are now reaping and enjoying the initial benefits of the law,” he added.

Dionisio G. Alvindia, director of the National Integrated Rice program, said the RCEF budget for 2021 is currently scheduled for release.

“To date, the Department of Agriculture (DA) and other implementing agencies have obligated P16.2 billion and disbursed over P7.1 billion from the P20-billion allocation from 2019 to 2020,”Mr. Alvindia said in the statement.

According to Mr. Alvindia, rice farmers using traditional home-saved seed recorded lower yields compared to those using certified inbred seeds.

He said traditional seed produced an average of 3.6 metric tons (MT) per hectare while inbred seed yielded 4 MT per hectare.

“To date, 674,400 farmers have received 1.68 million bags of free certified inbred rice seed. These were planted to 843,000 hectares in 948 RCEF municipalities nationwide, or 98.5% of the targeted 962 towns for seed distribution,” Mr. Alvindia said.

Baldwin G. Jallorina, Philippine Center for Postharvest Development and Mechanization (PhilMech) director, said in a statement that 15,046 units of farm equipment have been procured out of the targeted 23,378 units.

Mr. Jallorina said 13,499 of the procured units have been distributed.

Meanwhile, the DA said P1.58 billion worth of RCEF loans have been disbursed to farmers’ cooperatives and associations. Some P968 million was released by the Land Bank of the Philippines (LANDBANK) and P616 million by the Development Bank of the Philippines (DBP).

It added that 90 farm schools have been established, while 43 were upgraded since the law’s passage.

Passed in 2019, the law allows rice to be imported more freely but the commodity is charged tariffs of 35% on imports from Southeast Asia. Under the law, the tariffs provide P10 billion a year to RCEF to help modernize the rice industry. — Revin Mikhael D. Ochave

Meat industry backs imports from bird flu-free regions of countries reporting outbreaks

MEAT importers are lobbying to allow the entry of poultry imports from regions within a producer country unaffected by highly pathogenic avian influenza (bird flu).

Jesus C. Cham, president of the Meat Importers and Traders Association (MITA), said in a letter to the Agriculture department that poultry imports must be allowed if they are not from the part of the source country reporting outbreaks.

Mr. Cham added that imports should be allowed subject to tests conducted on each container load.

He added that the international health certificate that comes with any imports should declare that testing was performed with no traces of bird flu detected.

“The supply situation has become very tight as a result of the numerous bans. We recall that this procedure was last adopted in 2017. The approval will go a long way in ensuring the continuous supply of poultry,” Mr. Cham said.

The most recent ban implemented by the Agriculture department was issued on March 5, with the suspension of the entry of poultry imports from the UK.

Agriculture Secretary William D. Dar banned UK poultry imports after bird flu was detected in Scotland, Northern Ireland, and Wales. Previously, the ban only covered imports from England.

Some of the other countries that have outstanding poultry import bans include the Netherlands, Germany, and Poland.

Asked for additional comment, Mr. Cham told BusinessWorld in a mobile phone message that the industry is counting on the DA to follow the science-based guidelines of the World Organisation for Animal Health (OIE).

“There are quite a few (bans) – almost all origin countries from Europe are banned. The government should not allow the producers to dominate the narrative. Producers constantly use animal disease as a cover for their protectionist agenda to block competition,” Mr. Cham said.

Felix O. Tiukinhoy, Jr., president of the Philippine Association of Meat Processors, Inc. (PAMPI), said in a mobile phone message that the group also prefers a zonal ban instead of countrywide bans.

Mr. Tiukinhoy said the recent ban on UK poultry imports, together with the other bans, is affecting poultry supply to meat processors.

“The UK, together with the Netherlands and Germany – which have been banned for several months now, comprise about 60% of our mechanically deboned meat (MDM) chicken supply. This is a major source of animal protein for processors,” Mr. Tiukinhoy said.

“Supply has been severely affected and prices from other countries have increased more than 100%. Our inventories are running out and if supply does not stabilize, prices of processed meat like canned meat loaf, hotdogs, siomai, etc. will increase around 20% to 25%,” he added.

In a virtual briefing Friday, Mr. Dar said the Department of Agriculture (DA) is currently studying the possibility of allowing imports from unaffected regions of a country with an ongoing outbreak.

“We are looking at the possibility of giving permits as long as we confirm that there is no incidence of the virus in these areas,” Mr. Dar said.

As of Jan. 31, chicken imports have totaled 16.94 million kilograms, according to the Bureau of Animal Industry (BAI). — Revin Mikhael D. Ochave

DoTr, DoE, DA pledge support for agriculture cold storage

The Departments of Agriculture (DA), Energy (DoE) and Transportation (DoTr) have signed an agreement to expand the “Palamigan ng Bayan” program to improve access to cold storage in farming and fishing communities.

In a statement Friday, the DoE said that the memorandum of agreement (MoA) ensures that “farm-fresh produce, fish and seafood are safely and properly stored in cold storage units before they are transported to other areas.”

Cold storage allows farming and fishing community to preserve their produce and smooth out the supply of such commodities, allowing them to ride out shortages or episodes of price volatility.

The DoE said that the agriculture department sees the agreement as an “opportunity to mitigate the contraction of supply in Metro Manila, while providing new markets for products offered by ‘neglected’ producers from rural communities.”

The expansion of program will allow farmers from Benguet and Bukidnon ready access to markets in Luzon, Agriculture Secretary William D. Dar said.

The agreement was signed Friday by Mr. Dar, Energy Secretary Alfonso G. Cusi and Transportation Secretary Arthur P. Tugade at the DoE headquarters in Taguig.

“This is a testament to the whole-of-government approach, where the administration is determined to make sure that no Filipino will go hungry, and progress will reach not just the urban areas, but more so, the countryside,” Mr. Cusi said.

He believes the project will help the agricultural sector “prepare for the new normal as the demand for food and prime commodities grows.”

Mr. Cusi added that access to cold storage technology will also help preventing farmers from being taken advantage of by middlemen and traders.

The program was launched by the DoTr in 2018. According to community newspaper The Bohol Chronicle, the DoTr first unveiled the program in Tagbilaran City pier to improve the distribution of perishable products, including fish, in the area. — Angelica Y. Yang

Senate bill proposes to raise PDIC coverage to P1 million

Senator Juan Edgardo M. Angara has filed a bill to increase the insurance coverage provided by the Philippine Deposit Insurance Corp. (PDIC) to P1 million per depositor from P500,000.

On March 9 Mr. Angara filed Senate Bill No. 2089 which will amend provisions of Republic Act No. 3591 or the PDIC charter “to make it more responsive to the constantly changing financial landscape.”

“In order to further boost their confidence in the banking system, especially during these very challenging times, we are proposing to increase by 100% the deposit insurance coverage,” he said in a statement Friday.

Mr. Angara added that the amendments “further strengthen the mandate of PDIC, not only as the insurer of deposits but as liquidator of troubled banks.”

Mr. Angara said the number of fully-insured deposit accounts rose to 76.1 million in the first nine months of 2020 from 68.1 million a year earlier, citing data from the PDIC. About 96.7% of the 78.7 million total deposit accounts are fully insured.

Under the proposed measure, the maximum deposit insurance coverage will be subject to review by the PDIC’s board of directors every three years and may be increased depending on inflation or other economic indicators.

It also modifies some powers of the state deposit insurer to avoid overlap of functions with the central bank.

The modifications include powers of the PDIC in relation to bank resolution, including the grant of consent to mergers and acquisitions, and the issuance of cease and desist orders for deposit-related unsafe and/or unsound banking. These powers will be consolidated in the Bangko Sentral ng Pilipinas (BSP).

The PDIC will also be transferred from the Department of Finance to become a corporation attached to the BSP.

The measure also seeks to remove the PDIC’s exemption from the salary standardization scheme for government employees, aligning its pay structure with other government owned and controlled corporations (GOCCs) and other agencies. — Vann Marlo M. Villegas

SSS 2020 contributions fall 7.1% to P204.75 billion

THE Social Security System’s (SSS) contributions collected from members fell 7.1% in 2020 to P204.75 billion, reflecting the job losses caused by the pandemic.

Citing preliminary data from the SSS, the Department of Finance (DoF) said in a statement Friday that contributions missed the P246.83-billion target set for the year by 17%.

“The drop was the result of 1.5 million members unable to pay their contributions because of COVID-related job losses,” the DoF said.

The SSS released P192.84 billion in benefits last year, down 2%.

The pension fund’s contribution-benefit surplus fell 81% to P11.92 billion.

Loans released to members rose 53.6% to P62.35 billion, while loan payments fell 17.6% to P32.44 billion due to the debt moratoriums imposed during the public health crisis.

Calamity loans disbursements hit P31.69 billion last year, salary loans amounted totaled P30.47 billion and pension loans amounted to P3.4 billion.

Operating expenses fell 17.7% to P8.18 billion.

In a separate statement Friday, the SSS said it earned P32.47 billion from its investments in 2020, down 20.7% after the economic crisis dampened returns from the stock market and from interest-bearing securities.

The pension fund said its return on investment was 5.89%, well below the average of 8.07% recorded in the past decade.

It closed the year with a P589 billion investment portfolio last year, with government securities accounting for 41.9%, member loans 19.1%, equities 16.7%, property 10.1%, corporate notes and bonds 5.8%, bank deposits 2.8%, external funds 2.2%, and housing and development loans 1.5%.

“SSS investment performance has consistently outperformed major investment benchmarks. Whatever are the prevailing market conditions, we continue to perform well in our investment activities. As guided by our charter, we adhere to the principles of safety, good yield, and liquidity,” SSS President and CEO Aurora C. Ignacio in the statement.

The government is now working to suspend the scheduled increase in contributions of members to the pension fund. The Senate last month approved on third and final reading a bill granting the President the authority to suspend the contribution rate hike for up to a year.

Under Republic Act No. 11199 or the Social Security Act of 2018, the SSS is scheduled to raise its contribution rate to 13% from 12% this year. A one percentage point increase in contributions is scheduled every other year starting 2019 until the rate hits 15%. — Beatrice M. Laforga

RCBC to offer fixed-rate ASEAN Sustainability peso bonds

Rizal Commercial Banking Corp. (RCBC) said Friday that it will issue fixed-rate ASEAN Sustainability bonds denominated in pesos to fund projects qualifying under its sustainable finance framework.

In a disclosure Friday, RCBC said that the securities have tenors of either 2.5 years or 5.25 years.

“The bonds will have a minimum issue size of P3 billion, with an option to upsize…(They) will be offered at a fixed interest rate of 3.20% per annum for the 2.5-year tenor and 4.18% per annum for the 5.25 year tenor,” RCBC said.

The bank said that the public offering will run until March 19, but the time frame can be extended or shortened by RCBC after consultation with the sole lead arranger and financial advisor. It added that it expects to list the peso bonds on the Philippine Dealing and Exchange Corp. (PDEx) debt market by the end of March.

Standard Chartered Bank’s Philippine branch (SCB) is the issue’s sole lead arranger and bookrunner, while RCBC Capital Corp. stood as the financial advisor for the issue. Both SCB and RCBC Capital are selling agents.

Proceeds from the ASEAN Sustainability bonds will go to “supporting asset growth, re-financing maturing liabilities, general funding purposes and eligible loans defined in the bank’s sustainable finance framework.”

RCBC’s sustainable finance framework is certified by independent research firm Sustainalytics, an environmental, social, and governance, and corporate governance research and ratings company.

The ASEAN Capital Markets’ Forum said that the proceeds from ASEAN Sustainability bonds will be “exclusively used to finance or refinance a combination of green and social projects that offer environmental and social benefits, respectively.”

RCBC’s latest bond issue is the sixth drawdown of its P100-billion bond and commercial paper program. In the past two years, it has tapped the domestic bond market for P15 billion worth of ASEAN green bonds; P8 billion in ASEAN Sustainability Bonds; and a combined P31.15 billion worth of other bonds.

In 2019, the bank launched the first peso-denominated ASEAN green bond on PDEx, according to the PDS Group. PDEx is the trading services arm of the PDS Group.

On Friday, RCBC shares fell 1.71% or 0.3 centavos to P17.20. — Angelica Y. Yang

Diokno sees financial inclusion boost from satellite liberalization

AN executive order (EO) liberalizing entry into the satellite industry may improve financial inclusion by increasing access to online financial services, according to the Bangko Sentral ng Pilipinas (BSP).

“This will be a big push for financial inclusion toward a more resilient and truly inclusive digitally-enabled new economy,” BSP Governor Benjamin E. Diokno said in a statement Friday. Mr. Diokno chairs the Financial Inclusion Steering Committee (FISC), an interagency body.

President Rodrigo R. Duterte signed EO 127 Thursday allowing registered internet service providers (ISPs) and value-added service providers (VASP) the use of all satellite systems to provide internet services

Prior to the EO, only telecommunications companies with legislative franchises were permitted to do so.

Mr. Diokno said the measure will promote competition and attract investment in satellite broadband services, as well as fill in the infrastructure gap in connectivity for remote areas.

The EO was endorsed by the 20-member FISC to the president in November, according to the central bank, as it was considered crucial in promoting financial and economic inclusion by providing more people with fast internet.

“In combination with the roll-out of the Philippine National Identification System (PhilSys) and its electronic know-your-customer facility, greater internet access will allow more unbanked rural clients and low-income communities to use digital financial services and meaningfully benefit from digital innovation,” the FISC said.

The central bank has been pushing for the acceleration of financial inclusion, including the Open Access in Data Transmission bill which removes the need to secure congressional franchises for broadband.

The BSP has set a target of 70% of the adult population having at least one bank account by 2023. As of 2019, that indicator stood at 29% of adults. An estimated 51.2 million remain unbanked.

The central bank wants 50% of financial transactions by volume and value to be performed digitally by 2023. — Beatrice M. Laforga

BSP bill issue raises P77.45-B, undersubscribed

The Bangko Sentral ng Pilipinas (BSP) said it raised P77.45 billion via the issue of short-term securities Friday, with the auction undersubscribed as rates continued to increase.

The BSP accepted all bids for the 28-day bill offer but fell short of its target to issue P80 billion. Demand declined from the bids of P106.674 billion recorded during the previous auction.

The average rate rose 14.4 basis points (bps) to 1.944% from the previous auction.

Investors sought yields of between 1.84% and 2.15%, against the range of 1.725-1.95% last week.

The increase in rates was within expectations due to high inflation, BSP Deputy Governor Francisco G. Dakila said in a statement.

“Nevertheless, financial system liquidity remains ample. Up ahead, the BSP’s monetary operations will continue to be guided by its assessment of the latest liquidity condition and market developments,” Mr. Dakila said.

The Philippine Statistics Authority (PSA) reported headline inflation of 4.7% last month, picking up from 4.2% in January and 2.6% a year earlier. Last month’s inflation was the highest reading since 5.1% in December 2018.

This brought the two-month average to 4.5%, above the central bank’s 2-4% annual target.

Both the BSP securities and term deposits are used by the central bank to mop up excess liquidity in the financial system and to better guide short-term market rates.

The lower-than-target proceeds could be due to the issue of three-year retail Treasury bonds (RTBs) on March 9, which sapped demand for securities, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message Friday.

Mr. Asuncion said the lack of demand drove rates higher in order to attract buyers seeking yield.

The government raised P463.3 billion worth of RTBs last week, consisting of P411.8 billion in fresh funds and P51.5 billion from switch subscriptions.

This was the Treasury’s second-biggest RTB sale in history, following the record P516.3 billion in five-year bonds issued last year. — Beatrice M. Laforga

Peso strengthens on import slump

The peso finished stronger Friday following the release of data pointing to the acceleration of the decline in imports in January.

The peso closed at P48.455 against its P48.50 finish on Thursday, according to the Bankers Association of the Philippines.

The peso opened at P48.44, hitting a high of P48.38 and a low of P48.50.

Week on week, the peso was little changed from its P48.56 close on March 5.

Dollar volume rose to $913.73 million from $792.65 million Thursday.

“The peso closed stronger after the latest trade data that showed declines in imports, thereby reflecting a softer economic recovery as well as a softer recovery in imports,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippine Statistics Authority reported that merchandise imports fell 14.9% year on year to $7.911 billion in January, accelerating from the 8.2% decline in December and the 2.8% contraction a year earlier.

Other factors that pushed the peso higher were the correction in global oil prices and the continued increase in 10-year US Treasury yields after the signing of the $1.9-trillion stimulus bill in the US.

US President Joseph R. Biden, Jr. signed the stimulus package Thursday to inject more funds into the US economy.

A trader said profit-taking in the dollar was expected ahead of the US producer price data due Friday. — Beatrice M. Laforga

Shares inch up as investors assess updates on COVID-19

Philippine shares inched up on Friday as investors tried to figure out how to position themselves following developments in the coronavirus disease 2019 (COVID-19) situation in the country.

The Philippine Stock Exchange index (PSEi) inched up by 9.37 points or 0.13% to close at 6,728.55, while the all shares index went up by 9.15 points or 0.22% to 4,059.58.

“The market ended marginally up [on Friday] as the investors grappled on how to best position themselves in light of current information,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

“Reports of increasing numbers of new COVID-19 cases and the resultant call for renewed curfews signalled many investors to move to the sidelines. Confidence was slightly buoyed by government pronouncements that the economy will be reopened,” Mr. Lisbona added.

COVID-19 cases in the country have been surging in the past weeks, with over 2,000 new infections reported daily. An 11.4% positivity rate was recorded on Wednesday, March 10, the highest infection rate the country reported since August 2020.

Metro Manila mayors have imposed a 10 p.m. to 5 a.m. curfew in an attempt to curb the spread of the disease. It will be implemented starting on Monday, March 15, and will last for two weeks.

“Plus, the fact that there’s a fear of inflation and that the interest rate may slightly go up,” Summit Securities, Inc. President Harry G. Liu said in a phone interview.

The sectoral indices were split on Friday. Holding firms increased by 27.64 points or 0.39% to finish at 6,948.59; industrials improved by 22.13 points or 0.25% to end at 8,589.96; and property inched up by 3.04 points or 0.09% to 3,380.

Meanwhile, mining and oil declined by 56.63 points or 0.64% to 8,761.45; financials decreased by 4.39 points or 0.31% to close at 1,410.28; and services went down by 2.02 points or 0.13% to 1,456.22.

Value turnover went down to P6.87 billion on Friday with 3.41 billion shares switching hands, from the P8.58 billion with 5.05 billion issues traded on Thursday.

Advancers outnumbered decliners, 108 against 99, while 60 names closed unchanged.

Net foreign selling declined to P602.86 million on Friday from the P808.82 million seen on Thursday.

“What would be the prime fundamental, I suppose here in the Philippines [is an] improvement of [COVID-19 cases] and that the vaccination increases, [then] there is a chance that we would be rolling upward,” Mr. Liu said.

PNB Securities’ Mr. Lisbona said he expects the market support at 6,612, with a possibility of retesting the 6,500 level, and placed its resistance at 7,000.

“I think the market will consolidate but if it should trend, it will be downward barring any surprises over the weekend,” Mr. Lisbona said. — Keren Concepcion G. Valmonte

‘Don’t chase returns’ — financial consultant

Recessions are cyclical, but so are recoveries. “Your future is not about waiting for the economy to get better,” said Marvin P. Germo, financial consultant, stock market trader, and president of Stock Smarts Learning Publishing Inc., which publishes books on finance. “It’s about you being faithful with what you have right now and being better at investing so you can determine your future.” 

At a recent webinar organized by insurance company Manulife Philippines, Mr. Germo advised investing in financial instruments that give growth or long-term capital appreciation, cash flow or predictability of income, and hedge or additional protection in case things don’t go as planned. “The younger you are, the more you should focus on investments that are growth-oriented,”  he added. “The older you are, the more you should focus on investments that give predictability.” 

Based on a 2020 Manulife Asia Care study, 87% of Filipinos are considering purchasing an insurance product this year, with 90% saying that retirement planning has become more important since the coronavirus disease 2019 (COVID-19) pandemic began—this is above the region-wide average of 73%.

This year is a recovery year, but there are risks to consider, according to Zed J. Matubis, vice-president and head of wealth sales of Manulife Asset Management. “While the rolling out of the vaccines provides optimism for the re-opening of economies, resulting in higher gross domestic product (GDP) growth and corporate earnings, we still have to be cautious of the increasing COVID-19 cases, which will have a great impact,” he said. “It would be best for investors to have a long-term investment horizon and diversify their portfolios.”

Investing is about hitting a goal, and investment earnings are a byproduct of how a goal is structured, Mr. Germo said. The sooner individuals prepare for the next recession, the better prepared they are to structure their investments well. “Don’t chase returns. Returns are a byproduct of how you plan. You invest to meet a need so that when the market drops, you don’t get rattled, because you have a plan.” 

Variable universal life (VUL), a type of life insurance policy with a built-in savings component that allows for the investment of the cash value, was mentioned by Mr. Germo as a way to get one’s feet wet and own a piece of the country’s largest companies. It’s an instrument that offers a hedge of protection as well as an investment component, he said.

“A VUL allows me to go all in [on riskier investments] because I protected all the bases already,” he added. 

Another important piece of advice by the financial consultant was to only invest in one’s excess money. “Never put in money you need today,” Mr. Germo said. “It has to be an amount that—even if the value drops to zero—you can still sleep soundly at night.”

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