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Peso inches lower vs the dollar as pandemic clouds US outlook

THE PESO weakened slightly versus the dollar on Monday following the release of latest remittances data and amid worries over the long-term impact of the coronavirus disease 2019 (COVID-19) pandemic on the United States economy.

The local unit closed at P48.225 versus the dollar on Monday, declining by 1.5 centavos from its P48.21 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session stronger at P48.16 versus the greenback and peaked at P48.14 before closing at its weakest point for the day.

Dollars traded declined to $565 million on Monday from $669.1 million on Friday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso inched down following the release of latest remittances data.

“Faster growth in OFW remittances back to pre-COVID-19 levels could fundamentally lead to pick up in consumer spending (which accounts for at least 70% of the economy) and in the overall economy,” Mr. Ricafort said in an e-mail.

Money sent home by overseas Filipino workers (OFWs) rebounded in September to log its fastest growth in more than two years as they remitted more funds to support their families back home amid the coronavirus crisis.

Cash remittances coursed through banks jumped 9.3% to $2.601 billion in September from $2.379 billion a year ago following the 4.1% decline in August, data released by the Bangko Sentral ng Pilipinas on Monday showed.

September’s year-on-year increase was the quickest since the 12.7% pace logged in April 2018.

Month on month, cash remittances also went up 4.7% from the $2.483 billion seen in August.

Meanwhile, a trader said the peso weakened versus the dollar after US Federal Reserve Chairman Jerome Powell said he is worried about the long-term impact of COVID-19 on the world’s largest economy.

The rising likelihood of an effective coronavirus vaccine is good news for the economy in coming months, Mr. Powell said on Thursday, but near-term risks remain as the COVID-19 disease continues to spread unchecked, Reuters reported.

“That is certainly good and welcome news for the medium term,” Mr. Powell said in remarks to a virtual European Central Bank forum. But “from our standpoint it is too soon to assess with any confidence the implications of the news for the path of the economy especially for the near term…The next few months could be challenging.”

And as he has for months, Mr. Powell repeated his view that more action from both the Federal Reserve and from Congress, in the form of further fiscal stimulus, will likely be needed.

Even after the unemployment rate falls further, he said, some workers will continue to need help finding jobs in what will be a changed economy. And, he said, he worries that when all is said and done, the pandemic will have damaged the economy’s long-term productive capacity.

For today, both Mr. Ricafort and the trader see the peso moving from P48.17 to P48.27 versus the dollar. — KKTJ with Reuters

Russia can make vaccine by January

RUSSIA could start producing coronavirus vaccines for the Philippines as early as January, according to the Philippine ambassador there.

“It is subject to doing our own due diligence on it, but they can start producing for us,” Philippine Ambassador to Russia Carlos D. Sorreta told an online news briefing on Monday.

He added that Russia was looking at co-production agreements with other countries. The Department of Health (DOH) and Department of Science and Technology (DoST) are in talks with the Russian government about vaccine development, he added.

Coronavirus disease 2019 (COVID-19) vaccines in Russia were being used during emergencies, Mr. Sorreta said, adding that the vaccines were under third stage trials and have 40,000 participants.

There have been no reports of any adverse effects in patients who got their first and second shots of the vaccine, he said.

Meanwhile, a senator on Monday said Congress should allot at least P100 billion in next year’s national budget to fund vaccine orders for the coronavirus.

The government’s P4.-5-trillion spending plan only provides for an P18-billion budget for the vaccines.

“Shouldn’t we provide the appropriation, if not in the program, in the unprogrammed fund of at least P100 to 150 billion because that should provide confidence to the people?” Senator Ralph G. Recto said during Monday’s session.

The lawmaker said the government would need about P50 billion for the vaccines, which would cost more if cold chain facilities are included.

“The distribution cost will probably be twice more than the cost of the vaccine,” Mr. Recto said. “If we appropriate less, the Executive will go back to us and then it might too late again,” he said in Filipino.

Senator Juan Edgardo M. Angara, who heads the Finance committee chairman, said he agrees with the proposal “subject to the amount.” “We must provide that flexibility given the highly uncertain nature of the times.”

Mr. Recto also proposed to extend the validity of the appropriations provision under the Bayanihan to Recover as One Act, and some items under the 2020 national budget. The government has released P82.4 billion out of the P140-billion funding under the law, which will expire on Dec. 19. Mr. Angara agreed in response.

“We extended the validity of 2018 and 2019 budgets and we are in a much worse shape today,” he said. “I would definitely be agreeable to something like that.”

Mr. Recto also raised the need to pass a third Bayanihan law to help typhoon victims. Mr. Angara agreed with the proposal but said there might not be enough time to pass the measure unless a special session is called.

CASE TALLY
The Department of Health reported 1,738 coronavirus infections on Monday, bringing the total to 409,574.

The death toll rose by seven to 7,839, while recoveries increased by 45 to 374,366, it said in a bulletin.

There were, 27,369 active cases, 83% of which were mild, 8.5% did not show symptoms, 5.3% were critical, 3% were severe and 0.2% were moderate.

Davao City reported the highest number of new cases at 140, followed by Cavite at 117, Rizal at 89, Laguna at 87 and Batangas at 79.

DoH said two duplicates had been removed from the tally, while six cases previously tagged as recovered were reclassified as deaths. Nine laboratories failed to submit their data on Nov. 15, it said.

The Philippine government earlier said it was considering orders for 24 million units of coronavirus vaccines and may start inoculating Filipinos by May.

The vaccines might be ordered in the first quarter, said Carlito Galvez, Jr., who is in charge of the state’s vaccine import and distribution program.

The inoculation program might start as late as the end of next year if vaccine development and manufacturing are delayed, he said.

President Rodrigo R. Duterte last month said the government had funds to buy coronavirus vaccines, but it needs more so the entire population of more than 100 million could be inoculated.

He said he would look for more funds so all Filipinos could be vaccinated. The President said he was okay with vaccines developed either by Russia or China. 

Mr. Duterte said he had spoken with outgoing Russian Ambassador Igor A. Khovaev and was told that Russia intends to set up a pharmaceutical company in the Philippines that will make the vaccines available here.

He said soldiers and the police will be among the first ones to be vaccinated, along with poor Filipinos.

The coronavirus has sickened about 54.9 million and killed 1.3 million people worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization (WHO).

About 38.2 million people have recovered, it said. — Gillian M. Cortez, Charmaine A. Tadalan and Vann Marlo M. Villegas

Agriculture damage from typhoon now at P2.5 billion, says DA

CROP damage from Typhoon Vamco has reached P2.53 billion, with the rice sector taking the biggest hit, according to the Department of Agriculture (DA).

About 44% of rice worth P1.11 billion was affected by the typhoon, while 28% of high-value crops worth P702.64 million were damaged, it said in a bulletin. About 23% of fisheries worth P585 million was lost, it added.

Other affected commodities were livestock and poultry, irrigation facilities, machinery and equipment, and agricultural infrastructure in Luzon.

The agency said the typhoon, locally named Ulysses, had affected about 71,400 hectares of agricultural land, with a production loss volume of 109,117 metric tons.

About 73,000 farmers and fisherfolk were affected by the typhoon, which submerged many parts of Luzon island last week.

The agency would make crop reserves from regional offices available to affected farmers and fishers, drugs and biologics for livestock and poultry, and loans for survival and recovery. It would also offer an indemnification fund under the Philippine Crop Insurance Corp.

Meanwhile, the estimated cost of damage on power facilities has risen to P107.52 million, the National Electrification Administration (NEA) said on Sunday evening.

About 97 areas still didn’t have electricity and were undergoing restoration works, the agency said in a statement.

Electricity had been fully restored in 195 cities and municipalities in Ilocos, Cagayan Valley, Central Luzon, Calabarzon, MIMAROPA, Bicol and the Cordillera Administrative Region. Power had been partially restored in 184 areas.

In a separate advisory, the National Grid Corporation of the Philippines said two Luzon-based transmission lines were still unavailable as of Monday morning.

These are the Carig-Solana-Tabuk 69-kilovolt (kV) line in North Luzon and the Real-Infanta 69-kV line in South Luzon, it said. — Angelica Y. Yang

Medical frontliners to to get more benefits under 2 palace orders

PRESIDENT Rodrigo R. Duterte on Monday issued an administrative order giving a special risk allowance to health workers handling coronavirus patients.

The President ordered public and private sectors employing health workers directly catering to coronavirus disease 2019 (COVID-19) patients to pay a special risk allowance worth  as much as P5,000 a month.

Mr. Duterte also signed a separate order giving frontline medical workers an additional monthly pay of as much as P3,000 on top of their hazard pay and similar benefits. The funding under both orders will come from the P13.5 billion allotted by the Bayanihan to Recover as One Act.

Meanwhile, the Trade department has allotted P100 million in loans to help small businesses affected by Typhoon Vamco, locally named Ulysses.

The agency will distribute both the loans and a P10-million livelihood support grant to micro and small enterprises (MSEs), Trade Secretary Ramon M. Lopez told the ABS-CBN News Channel on Monday.

He said funds for pandemic-hit businesses were being extended to small companies affected by the typhoon.

Under the Bayanihan to Recover as One Act, the Small Business Corp. has P10 billion to expand its COVID-19 loan program for micro, small and medium-sized enterprises (MSMEs).

The Trade department would continue to monitor the implementation of a price freeze on basic goods and necessities in areas placed under a state of calamity, Mr. Lopez added. “We’ve been doing that for the past three weeks.”

The most recent typhoon battered parts of Luzon after first making landfall in Quezon province on Nov. 11. Before this, two other typhoons hit Southern Luzon, especially the Bicol region. — Gillian M. Cortez and JPI

Nationwide round-up (11/16/20)

Business groups call for better disaster management, better public-private coordination

BUSINESS groups on Monday made an “urgent” call to improve the country’s disaster management system in the wake of the recent major floodings across Luzon triggered by a series of typhoons. In a joint statement released by the the Management Association of the Philippines and signed by 19 organizations, the private sector groups said steps must be taken to improve the preparedness aspect as well as emergency response. “We express serious concern about the state of our country’s disaster preparedness that could have minimized the untimely deaths of our countrymen, and avoided massive damage and destruction of property,” they said, “But even as we express this concern, we urge our countrymen to move forward in a coordinated and efficient fashion to mitigate the ill-effects of the recent typhoons.” Among their recommended course of action include better public-private partnerships, especially at the local government level, and a nationwide effort to address environment and climate issues.

PROBE
Vice President Maria Leonor G. Robredo, meanwhile, urged authorities to look into the deadly flooding in Cagayan province, citing that there was “definitely an oversight” given the extent of the damage. “Were they warned enough that there was really danger of heavy floods of this magnitude? We really need an investigation because if we wouldn’t have a formal investigation, the danger that it would happen again, sooner or later, is really there,” Ms. Robredo said in an interview with ABS-CBN News Channel. The Palace, on the other hand, asserted that the government did not have any shortcomings in its preparations. “There were no shortcomings but  we will always strive to be better,” Palace Spokesperson Harry L. Roque said in a briefing on Monday. He did acknowledge that while the floods and landslides were triggered heavy rains brought by the series of recent typhoons, other factors such as “climate change, deforestation, and illegal mining” are to blame for the disaster.

EMERGENCY EMPLOYMENT
In a related development, thousands of workers in areas devastated by typhoons will be given emergency employment, according to the Department of Labor and Employment (DoLE). In a virtual briefing on Monday, Labor Assistant Secretary Dominique R. Tutay said they expect to help “between 30,000 to 40,000” workers in the disaster-hit areas. The period of employment will be for 15 days and workers will be paid based on the current daily minimum wage rate of the region they reside in. — Gillian M. Cortez and Kyle Aristophere T. Atienza 

Marikina representative pushes for another stimulus package

A LAWMAKER on Monday urged Congress to pass another stimulus package in response to the economic impact of the coronavirus crisis. “I urge this August chamber, our counterparts in the Senate, and the executive department to come together anew and enact a Bayanihan III,” Marikina 2nd District Rep. Stella Luz A. Quimbo said in her privilege speech during Monday’s session. Ms. Quimbo, an economist who previously taught at the University of the Philippines School of Economics and was a commissioner at the Philippine Competition Commission, said a P413 billion response to a P3.4 trillion economic loss “is clearly not enough,” referring to the funds provided under the first two Bayanihan laws, which cover the government’s coronavirus emergency measures. Ms. Quimbo acknowledged the government’s efforts to gradually ease restrictions to open the economy in the third quarter, but said small businesses continue to struggle. “After months without revenues, while continuing to shoulder operating costs, many businesses are cash strapped. Public transportation has also been severely lacking in urban areas, making it difficult for workers to return to work,” she said. “Hence, the third quarter economic contraction announced last week, the largest.” The Philippine Statistics Authority reported that the Philippine economy contracted by 11.5% in the third quarter, with the industry and services sectors dropping by 17.2% and 10.6%, respectively. Agriculture posted a modest growth of 1.2%. “In my computation, to attain a 5.5% contraction in 2020, our gross domestic product should increase in the fourth quarter… Moving from 5.5% contraction of gross domestic product (GDP) to a 10% contraction means losing an additional 900 billion pesos. So from an expected 2.4-trillion-peso loss, we now stand to lose P3.3 trillion,” Ms. Quimbo said. The solon said a Bayanihan III must incentivize businesses to preserve and restore jobs, provide worker subsidies to pay for coronavirus testing and sick leaves of those who contract the virus, and ensure adequate funding for vaccines. — Kyle Aristophere T. Atienza

Entry of foreign investors still limited to specific visas, BI clarifies

THE Bureau of Immigration (BI) on Monday clarified that foreign investors who are  allowed entry into the country need to hold specific visas. Only foreigners holding visas granted based on Executive Order No. 226 or the Omnibus Investments Code, and those with Special Investor’s Resident Visa (SIRV) issued based on EO 226 may enter the Philippines, Commissioner Jaime H. Morente said in a statement. “Those who will be entering the country under visa types not yet allowed by the IATF (inter-agency task force) will still be restricted,” he said.  SIRVs issued under Executive Order No. 63 in tourist-related projects and tourist establishments are still restricted, Mr. Morente said. — Vann Marlo M. Villegas

Health department issues warning on danger of carbon monoxide poisoning from generators

THE Department of Health (DoH) on Monday reminded the public not to use generators indoors to avoid carbon monoxide poisoning. The warning was made following reports of such deaths in the Bicol region, where some areas remain without power supply after infrastructure were damaged by the recent series of typhoons. Health Undersecretary Maria Rosario S. Vergeire, in a briefing, pointed out that generators emit carbon monoxide, a deadly gas that is odorless and cannot be noticed until symptoms are felt after inhaling. She said generators should be positioned at least 20 feet away from the household and not placed indoors. Typhoon Ulysses (international name: Vamco), the latest to hit the country, affected a large part of the norther island of Luzon, including Metro Manila, Bulacan, Cavite, Rizal, Laguna, and Quezon province. The National Electrification Administration reported that as of Nov. 15, power supply has been either partially or fully restored in 195 out of 476 affected cities and municipalities across several regions in Luzon. — Vann Marlo M. Villegas

VP again chides President over dirty joke at calamity briefing

THE President should focus on things that are “really urgent,” Vice President Maria Leonor G. Robredo said on Monday, after the country’s leader made a dirty joke at a calamity briefing. “When we give attention to other things, we tend to communicate the wrong things… If we’re going through something really serious, it is also very important for us to communicate how urgent a particular matter is,” said Ms. Robredo, who heads the opposition. During a briefing in Pili, Camariñes Norte, Mr. Duterte poked fun at a local official — whom he described as a “friend” — for having a lot of women. This was not the first time Mr. Duterte made a sexual innuendo behind his presidential podium. — Kyle Aristophere T. Atienza

Regional Updates (11/16/20)

Magnitude 6 earthquake shakes Surigao del Sur, surrounding areas

A MAGNITUDE 6 earthquake shook Surigao del Sur at around 6:30 a.m. Monday, with the epicenter located in San Agustin town. The tremor was initially reported at magnitude 6.4 and later adjusted by the Philippine Institute of Volcanology and Seismoloy (Phivolcs).  Intensity 5 was reported in the coastal city of Bislig and the town of Rosario in Agusan del Sur province. Cagayan de Oro City and several towns in Misamis Oriental felt intensity 4. Phivolcs said damage and aftershocks were expected. Among the first reported impacts was on the water distribution system in the coastal town of Hinatuan, where supply was temporarily cut off. Hinatuan is about 73 kilometers from the epicenter. A no-tsunami threat advisory was also issued after the earthquake.

Iloilo city resto-bars ordered to close until end-Nov.

ILOILO City Mayor Jerry P. Treñas has ordered all restaurant-bars to temporarily stop operating until the end of the month following reports of violations of health protocols and the liquor ban. “We will close all resto bars starting today up to the end of the month in deference to the rules of the national IATF (inter-agency task force). We cannot police all the bars in the city,” Mr. Treñas said in a statement issued on Nov. 16. Prior to Monday’s directive, the city government imposed a closure order against at least 24 establishments for serving alcoholic beverages, failure to install the required plastic barriers, or operating without a business permit. “I am very disappointed because I personally took time to explain to the restaurant groups and associations the need to stop serving alcoholic drinks,” the mayor said on Nov. 14, “When we allowed the serving of alcoholic drinks months ago, we found out that the cases went up. Drinking session with a group has become a mode of transmission. In one case, we traced up to 20 plus positive cases in one area because they were drinking together.” He added, “If we will have a spike in cases because of these violators, we will then be forced to lockdown our city again.” As of Nov. 15, the city had 4,215 total coronavirus cases, with 204 active, 3,903 recoveries and 108 deaths.

Transport dep’t signs deal with 3 firms for EDSA Busway bridges with concourse

SM Prime Holdings, Inc., D.M. Wenceslao and Associates, Inc., and Double Dragon Properties Corp. signed on Monday an agreement with the Transportation department for the construction of EDSA Busway bridges with concourse. The three private firms will be donating the structures, the Transportation department said in a statement. The bridges with concourse are “indispensable components of the new EDSA Busway to further provide safer, more convenient, and PWD (persons with disabilities)-friendly walkways for the riding public using the EDSA Busway stations, and for pedestrians crossing EDSA from one side to the other,” it added. The structures will be located at the following sites: SM Mall of Asia, SM North EDSA, SM Megamall, President D. Macapagal Boulevard in Aseana City, and at EDSA near the corner of President D. Macapagal Avenue. The EDSA Busway is a system that utilizes a dedicated median lane for public utility buses. It runs from Monumento in Caloocan City to the SM Mall of Asia in Pasay City. “Since its launch, the EDSA Busway has effectively reduced travel time from the previous 3-3.5 hours from Monumento to PITX, to just 50 minutes to 1 hour,” it said. — Arjay L. Balinbin

RCEP perks seen advantageous but PHL exporters still hampered

THE benefits of improved market access brought about by the newly-signed Regional Comprehensive Economic Partnership (RCEP) will outweigh any disruption that less-competitive economies might experience, Fitch Solutions Country Risk and Industry Research said.

Fitch Solutions, in a report issued Monday, said that the long-term consequences of the agreement will improve market access and increase the variety of goods and services made available to treaty signatories.

The RCEP counts as its members China, Australia, New Zealand, Japan, South Korea and all 10 ASEAN member countries. The members account for around a third of the global economy and population.

Fitch Solutions said that the agreement will also strengthen regional supply chains as manufacturing firms relocate out of China.

“ASEAN economies can also stand to gain from increased technical cooperation with advanced economies in the bloc to improve their competitiveness,” it said.

Citing issues specific to the Philippines, Fitch Solutions said exporters continue to be hindered by ease-of-doing-business and logistical issues.

“While the RCEP agreement provides the Philippines with greater access to the larger consumer markets of China, Japan, South Korea and Australia, we at Fitch Solutions highlight that red tape restrictions are only part of the barriers businesses face exporting from the Philippines,” Fitch Solutions Senior Asia Country Risk Analyst Michael Langham said in an e-mail.

“Logistical issues, energy security and domestic bureaucracy will hamper the potential to build out a greater manufacturing base in the Philippines. Indeed, the Philippines lags its ASEAN peers in its ability to attract diversifying supply-chains away from China, with Vietnam and Thailand better placed in the near term,” he said, adding that the trade deal could still be advantageous for the Philippine outsourcing industry.

Trade Secretary Ramon M. Lopez said the deal will incrementally increase the Philippines’ trade ties and market access within APEC. The Philippines has active free trade agreements with several APEC countries.

“The RCEP basically covers now a lot more areas, not only in trade in goods — it now has trade in services, investments, discussions on intellectual property protection as well as micro-SME, e-Commerce,” he said in an interview with ANC Monday, adding that the agreement will broaden the country’s sourcing of raw materials.

According to Trade Justice Pilipinas, which advocates for equitable trade, the agreement will deepen inequality as it does not grant sufficient flexibility for less-developed ASEAN member states, noting that it could threaten the jobs of worker in the Philippines.

ANZ Research in a report also released Monday said economic benefits will not be immediate, as member-countries go through a ratification process of about two years.

“But the strong signal that it sends about the region’s commitment to integration cannot be underestimated, especially given recent concerns about de-globalization,” it said. — Jenina P. Ibañez

Economic team studying typhoon’s budget implications

PHILIPPINE STAR/MICHAEL VARCAS

THE government’s economic team is studying whether this year’s P4.1-trillion budget will need to be augmented to fund the rehabilitation effort after major typhoons hit Luzon.

“We are in the process of evaluating the damage of the series of typhoons and the amounts required to address these, and will determine whether or not the current budget will be sufficient,” Finance Secretary Carlos G. Domiguez III said in a Viber message Monday.

Officials dealing with the economy are currently reassessing the government’s macroeconomic assumptions and fiscal program after gross domestic product contracted by a deeper-than-expected 11.5% in the third quarter, rendering the earlier full-year forecast of a 4.5-6.6% contraction no longer viable.

Crop damage caused by Typhoon Ulysses (international name: Vamco) hit P2.11 billion as of Sunday after it caused widespread flooding in Northern and Central Luzon and parts of Metro Manila.

Ulysses was among five typhoons that struck the Philippines this quarter, causing P38 billion in damage so far.

Damage inflicted on the agriculture sector could push food prices higher, but early harvests may have limited the damage, according to a senior government economist.

“It will (push prices up) but last year, the same thing (Typhoon Ursula, known internationally as Phanfone) happened so we don’t expect the year-on-year level to be significantly different. Besides, the rice harvest is over. The only price impact will be on vegetables,” Finance Undersecretary and the department’s Chief Economist Gil S. Beltran said in a text message Monday.

The impact on inflation will also be minimal as long as the supply of food continues to flow, Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a Viber message.

Inflation rose 2.5% in October from 2.3% in September, driven by higher prices of food and non-alcoholic beverages. This brought the 10-month average to 2.5%, well within the central bank’s target of 2-4%.

In a report, the National Economic and Development Authority (NEDA) said programs for the agriculture sector should also contain measures that will improve its ability to resist and rebound from natural disasters.

“Hence, we underscore the need for increased investment in climate-resilient technologies and infrastructure. While the DA’s (Department of Agriculture’s) Plant, Plant, Plant program and RCEF (Rice Competitiveness Enhancement Fund) aim to boost productivity, disaster resilience may need to be integrated in these measures to improve the agriculture sector’s adaptability to changing weather conditions,” the NEDA said.

More cold storage facilities and warehouses are also needed to extend the shelf life of produce.

It said disaster management systems of the national and local governments should be improved and backed the creation of the Department of Disaster Resilience to improve coordination, monitoring and implementation of programs across various agencies.

“Proposed legislation will provide a clear operational framework to address the fragmented institutional functions and actions among concerned agencies for all possible calamities in the future, including public health emergencies such as pandemics,” it said.

The World Bank estimated that the Philippines sustains typhoon and earthquake damage of P177 billion each year on average to public and private assets. — Beatrice M. Laforga

Business groups warn about loss of incentives under CREATE measure

INDUSTRY ASSOCIATIONS are warning that the loss of fiscal incentives under a proposed tax reform bill could worsen employment conditions, which are already under pressure due to the coronavirus disease 2019 (COVID-19) pandemic.

Business groups last year said that the then-current version of the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) could likely result in 700,000 lost jobs. The bill proposes to reduce corporate income tax while rationalizing tax incentives.

The loss of tax incentives, coupled with the slowdown caused by the pandemic, will drive unemployment numbers higher, the groups said in a virtual news conference Monday.

“The numbers I gave are pre-COVID,” Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) President Danilo C. Lachica said.

“As far as the electronics industry is concerned, it may have got worse. In fact, you know, certain government agencies don’t believe that this is real but already I’ve seen the start — the tip of the iceberg. There are two companies that have announced their shut down.”

The electronics industry recently upgraded its 2020 growth projection to a contraction of 5%, from the earlier forecast of a 15% decline, after demand for industrial, consumer, mobility, and medical electronics spiked. The industry expects 7% growth next year, “assuming favorable CREATE outcome.”

John Forbes, senior adviser to the American Chamber of Commerce of the Philippines (AMCHAM), said the lockdown had caused some companies to shift production to their other sites in Southeast Asia.

Philippine Ecozones Association (PHILEA) President Felix Francisco Zaldarriaga said the industry is seeing workforce reductions even without an outright locator exodus.

“It really doesn’t make any sense (to tamper) with the one ingredient that’s keeping these guys here,” he said. 

Mr. Lachica added that investors could stay during a transition period included in the bill.

“But what happens after? If our incentives are not going to be competitive with our neighbors, it’s open season. But the danger is, even during the transition period… there’s no guarantee that expansions (involving) new technologies and new businesses will come. That’s the risk,” he said.

The industry groups agreed that they prefer one of the options proposed by Senator Ralph G. Recto, which would distinguish export enterprises from domestic companies. After an income tax holiday period, a Special Corporate Income Tax based on gross income earned will remain in perpetuity for export enterprises under this proposal.

“We believe Senator Recto’s proposal for grandfathering incentives will ensure that existing investors will continue to invest in the country in the long term,” they said in a statement.

A study commissioned by the Labor department indicates that CREATE will increase jobs and reduce poverty by improving foreign direct investment and reducing the prices of consumer goods.

The industry groups represented in the news conference include SEIPI, PHILEA, the Information Technology and Business Process Association of the Philippines, AMCHAM, the Confederation of Wearable Exporters of the Philippines, and Philippine Association of Multinational Companies Regional Headquarters, Inc. — Jenina P. Ibañez

DoubleDragon to seek approval for P14.7-B REIT offer

DOUBLEDRAGON Properties Corp. hopes to file its application for a P14.7-billion real estate investment trust (REIT) offering within the week in order to raise funds to expand its portfolio of leasable properties.

In a statement Monday, the property developer said it has a pending application to change the corporate name of its subsidiary DD-Meridian Park Development Corp. to DDMP REIT, Inc., and to amend its articles of incorporation to prepare for the REIT initial public offering (IPO).

“The company expects to file its REIT IPO application with the SEC (Securities and Exchange Commission) and PSE (Philippine Stock Exchange) within the week,” it said.

Proceeds from the REIT listing will support the company’s plan to build about 425,000 square meters of floor area, which will expand the share of its recurring-revenue businesses, it said.

“The DDMP basket is seen to be a compelling REIT offering since it will include the land, a premier corner lot located along the main thoroughfares of Macapagal Avenue, EDSA Extension and Roxas Boulevard, where the first six completed buildings sit on,” DoubleDragon Chairman and CEO Edgar J. Sia II said in the statement.

“The value of the prime double corner 4.75 hectare block of land with titled land ownership to be held in perpetuity should keep on appreciating decade after decade, a very important inclusion for both domestic and foreign investors,” he added.

DoubleDragon is planning REIT offerings every year until 2025, which will involve about 200,000 square meters of leasable assets each year. This will help the company complete 1.2 million square meters of leasable property by 2022 and increase its total equity to P120 billion by 2030.

In the first nine months, DoubleDragon reported a net profit of P5.03 billion, up 61% from a year earlier. Revenue grew 41% to P9.79 billion.

Excluding unrealized fair-value gains, core profit rose 15% to P1.19 billion, while core revenue increased 9% to P4.31 billion.

Growth was driven by the increase in net completed leasable space and improved retail sales by tenants, which it linked to the relaxation of coronavirus-related quarantine rules. Rental income rose 25% to P2.96 billion, while recurring revenue improved 16% to P3.33 billion.

Separately, Mr. Sia’s other listed business, grocery operator MerryMart Consumer Corp., reported a 26% rise in net profit to P14.5 million in the nine months to September.

Consolidated revenue rose 28% to P2.42 billion after the period ended with 18 operational branches. The company hopes to open seven more branches before the year ends.

“MerryMart is in a business where a certain level of volume and branch network coverage is needed to achieve optimum operational efficiency and effective consumer brand pull. For that reason, during the second half of this year, we continued to ramp up our team and equip and enhance the backend support of the company as it prepares to soon reach its desired execution velocity,” Mr. Sia said in a statement.

“2020 is a reset year, 2021 a recovery year, and 2022 to 2030 should be highly promising growth years. Our team will continue to strive hard with vigor to cause both DoubleDragon and MerryMart to, in time, be in a position where it can efficiently and significantly capture that next great cycle ahead,” he added.

On Monday, DoubleDragon rose 16 centavos or 1.11% to P14.60, while MerryMart picked up 40 centavos or 9.03% to P4.83. — Denise A. Valdez

APEC economies seen contracting 2.5% due to pandemic

THE Asia-Pacific Economic Cooperation (APEC) bloc said its member economies are expected to post contractions of 2.5% this year on average, equivalent to about $1.8 trillion worth of lost output, as a result of the economic disruption caused by the pandemic.

“Prolonged stay-at-home measures, mandatory or voluntary, to safeguard health amid an ongoing pandemic, have translated into significant cutbacks in consumption and investments. As a result, the APEC region is expected to contract in 2020 by 2.5%,” the APEC Policy Support Unit said in its Regional Trends Analysis report issued Monday.

The new forecast represents an upgrade from the previous estimate of a 2.7% contraction issued in May, but if the forecast is borne out, it will be the first annual contraction among the member economies in three decades, it said.

APEC has 21 members: the Philippines, Australia, Brunei, Canada, Chile. China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Russia, Singapore, Chinese Taipei, Thailand, the United States and Vietnam.

APEC economies contracted 3.7% in the first half after growing 3.4% a year earlier due to the lockdowns imposed on both sides of the Pacific.

Domestic household spending, which has consistently been a growth driver for the bloc, declined 7.1% in those six months while investment fell 11.2%.

Trading activity was also severely affected by the travel bans and border closures imposed to curb the spread of coronavirus disease 2019 (COVID-19), while factory activity was also weighed down by lockdowns and weak demand.

“COVID-19 has been hardest on the poorest and most vulnerable in our societies: the people who can least afford healthcare, have the least access to infrastructure and technology and with the most precarious hold on jobs,” it said.

APEC’s policy support unit said member-economies should be supported by fiscal and monetary policy actions to help bring back confidence and stimulate growth.

However, it said countries struggling to contain the spread of the virus will likely lag the recovery since the business environment will not improve as rapidly.

It expects APEC members to grow 5.2% next year, lower than the earlier projection of 6.3%.

“GDP growth projections for 2021 reflect an economic rebound for the APEC region and the world at 5.2%, although lower compared to earlier forecasts. The lower projection reflects uneven growth across economies, with those that have managed to rein in the pandemic and reopened earlier expected to turn in better output outturns, while other economies, particularly where COVID-19 cases are either rising or resurging, are projected to grow at a slower pace,” it said.

The Philippines is among the economies struggling to bring down case numbers. There were 1,530 new COVID-19 cases reported Sunday, which brought the total to 407,838, according to the official count.

APEC said a resurgence of coronavirus will remain the “most dominant and dangerous” downside risk to the growth outlook as this threatens the capacity of health systems and may result in new rounds of lockdowns.

Moving forward, APEC said members should also push forward with their structural reforms and learn to adopt new technologies to ensure their post-crisis economies are resilient.

“Much work is also needed in the medium term to ensure a firmer recovery. What is imperative and appropriate could vary among economies at different stages of economic and technological development, but structural reforms need to be introduced, implemented and enforced now,” it said.

Senator backs NEDA view that OFW dep’t is secondary priority

THE AUTHOR of the Senate bill creating a department for overseas Filipino workers (OFWs) expressed support for the position adopted by economic planners that creating the agency is low on the government’s priority list.

The proposed Department of OFWs, declared a priority measure by President Rodrigo R. Duterte, is facing headwinds in the Senate as legislators take the position that the government should be right-sized.

As such, Senator Juan Edgardo M. Angara also raised the possibility during Monday’s session that the proposed department have an expiration date.

“The OFW department… shouldn’t be permanent. There must be an exit strategy,” Mr. Angara said, citing Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua, who heads the National Economic and Development Authority (NEDA).

Mr. Angara was speaking as a sponsor of the bill creating the department during the plenary deliberations for the P4.5-trillion national budget for 2021.

NEDA has also called for a cost-benefit analysis before the new department is established, which will help improve proposed measures identified during Mr. Duterte’s fifth State of the Nation Address.

“The NEDA secretary is of the view that perhaps right at this moment or in the near future, we should focus on COVID response; when we get out of these dire straits, then we can focus on the creation of that department,” he said.

Mr. Angara was responding to queries from Sen. Emmanuel Joel J. Villanueva, who chairs the chamber’s labor committee, about the NEDA position on the new department.

Some 8,831 more overseas Filipinos returned last week, bringing the total beneficiaries of the Department of Foreign Affairs’ repatriation program to 254,785 since February.

The Department of Finance supports the measure with reservations, citing the ongoing push to right-size the government; while the Department of Budget and Management raised concerns about government functions being devolved to local government units (LGUs).

“The DBM noted that in light of the implementation of the Mandanas decision by fiscal year 2022, the creation may impact the overall personnel services level considering the functions need to be devolved to the LGUs,” Mr. Angara said, referring to a Supreme Court ruling granting a greater share of national government revenue to LGUs.

Majority Leader Juan Miguel F. Zubiri, for his part, stumped for the passage of the right-sizing bill to allow the chamber to proceed with the creation of new departments, particularly the DDR (Department of Disaster Resilience).

Mr. Zubiri pointed out the need for a DDR in light of Typhoons Quinta, Rolly, and Ulysses that recently hit the country. — Charmaine A. Tadalan

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