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Shares may dip further on dim economic outlook

LOCAL SHARES are expected to continue declining this week as the outlook for economic recovery remains gloomy here and abroad.

The 30-member Philippine Stock Exchange index (PSEi) closed at 5,838.66 on Friday, down 7.14 points or 0.12% from the last session. The PSEi was also lower by 70.24 points or 1.19% on a weekly basis, marking its second straight week of decline.

Value turnover for the week slumped 28% to an average of P4.21 billion, while net foreign selling dropped 41% to an average of P444.73 million.

“Dreary trades characterized the week, given a dearth of new catalysts to push the PSEi above higher ground,” online brokerage 2TradeAsia.com said in a market note.

Most of last week’s market activity was driven by international events: rising coronavirus cases in Europe, increasing tensions between North and South Korea, and the appeal for a new stimulus package by the US Federal Reserve.

For this week, 2TradeAsia.com said attention will be on the next quarantine measures to be implemented in October and the earnings reports of companies for the third quarter as September ends this Wednesday.

If last week was any indication of how the market will perform this week, the cautious sentiment of investors will likely continue to pull the PSEi lower in the coming days, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said.

“The PSEi is just a few points away from its support at 5,800 and we may see it continue lower to test its major support level at 5,690… The sentiment needs to improve significantly before we could see the market make progress,” he said in a market note.

Mr. Mangun noted the sideways movement of the market may last for several weeks, and only move significantly towards the end of the year. “Consumer spending and business activity in the fourth quarter will have a major impact on where stock prices will go,” he said.

The 9.5% decline that S&P Global Ratings expects for the Philippine economy will also be a blow to investor sentiment, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said. This weakness is likely to extend this week as investors remain cautious in trading.

“Trading could remain anemic as many stay on the edge amid the market uncertainties,” Mr. Tantiangco said in a text message. Investors will look at upcoming bank lending and money supply data, manufacturing data, and the policy rate decision by the central bank, he added.

2TradeAsia.com is putting immediate support at 5,700 and resistance within 6,000-6,150. AAA Southeast Equities’s Mr. Mangun anticipates support within 5,800-5,690 and resistance within 6,000-6,165.

Meanwhile, Philstocks’ Mr. Tantiangco expects the PSEi to trade between its 5,700 support and its 50-day exponential moving average. — Denise A. Valdez

Duterte stance on China too late, analysts say

By Gillian M. Cortez, Reporter

PRESIDENT Rodrigo R. Duterte’s tougher stance on China might be a case of being too little, too late, according to political analysts.

It took the tough-talking Mr. Duterte four years to give his most forceful defense of a 2016 United Nations (UN) ruling favoring the Philippines in a sea dispute with China, which is unlikely to be enforced with only two years before he steps down, they said.

“We don’t have the strength to assert the position,” Ramon C. Casiple, executive director at Institute for Political and Electoral Reform, said by telephone on Sunday. “We can’t resolve this within the next two years.”

In a speech before the UN General Assembly last week —  his first since since coming to power four years ago — Mr. Duterte said the arbitral award was now “part of international law, beyond compromise and beyond the reach of passing governments to dilute, diminish or abandon.”

“We firmly reject attempts to undermine it,” he said of the arbitration ruling that rejected China’s claim to more than 80% of the South China Sea, without naming China. His predecessor, Benigno SC. Aquino III, started the lawsuit.

Mr. Duterte had sought closer trade and investment ties with China since he came to power in 2016, including potential joint explorations for oil and gas in the South China Sea.

The Philippine leader had years to push a tougher policy on China, but he probably has run out of time, said Maria Ela L. Atienza, a political science professor from the University of the Philippines.

“It’s only lip service,” she said in a phone interview. “We waited four years for this to happen. We can’t expect any changes now in how the Philippines deals with China.”

Presidential spokesman Harry L. Roque did not immediately reply to a text message seeking comments.

The presidential palace last week said there was no need to enforce the Hague ruling because it’s now part of international law.

“You do not enforce an arbitral ruling,” Mr. Roque told an online news briefing. “The assumption in international law is that all countries will comply with their international obligations particularly with the arbitral award because it freely consented to the jurisdiction of the arbitral tribunal,” he added.

“We will move on matters that we could move forward on including trade and investments,” he said. “We will, for the time being, set this aside because I don’t think the resolution of the territorial dispute is forthcoming in our lifetime.”

Burt Ms. Atienza said the UN ruling is not self-executory and must be observed through diplomatic negotiations.

The world is also too busy dealing with a coronavirus pandemic that has sickened more than 33 million and killed almost a million people, she said. “We can’t expect much within the next two years because the pandemic would probably continue until a vaccine is found.”

Renato C. De Castro, an International Studies professor from De la Salle University, noted that unlike the Philippines, countries such as Indonesia and Malaysia have used the 2016 ruling to defend their sovereignty against China.

“You should put your money where your mouth is,” he said by telephone, referring to Mr. Duterte. Having announced what seemed to be a tougher stance on the sea dispute with China, the President must now follow through with concrete actions, he added.

The first step is for the Philippines to submit its baseline map of the West Philippine Sea — areas of the South China Sea within its exclusive economic zone — to the United Nations, Mr. de Castro said.

“This is similar to what Malaysia and Indonesia did,” he said. “With that, you are submitting your claim to the United Nations Convention on the Law of the Sea and defining your baseline.”

The UN tribunal in 2016 ruled that China’s claim of historic rights to resources within the sea falling within the ‘nine-dash line’ was illegal.

The court said the Philippines could declare certain areas of the sea as part of its exclusive economic zone because these areas do not overlap with any entitlements claimed by China.

Certain Chinese actions within the Philippines’ exclusive zone violated its sovereign rights and were unlawful, the court said. It added that China’s island-building activities in the disputed waterway had caused severe environmental harm in violation of international conventions.

Activists last week said Mr. Duterte’s 360-degree turn was a big victory for international law and Philippine sovereignty against his own defeatist policy on China.

Albert del Rosario, the country’s top diplomat when the Aquino government filed the lawsuit in 2013, has said Mr. Duterte should strive to get the support of more countries in getting the award enforced.

COVID-19 infections hit 304,226; more Filipinos come home

THE Department of Health DoH) reported 2,995 coronavirus disease 2019 (COVID-19)  infections on Sunday, bringing the total to 304,226.

The death toll rose by 60 to 5,344, while recoveries increased by 19,630 to 252,510, it said in a bulletin.

There were 46,372 active cases, 86% of which were mild, 8.8% did not show symptoms, 1.6% were severe and 3.7% were critical.

Metro Manila reported the highest number of new cases with 1,065, followed by Cavite with 297, Bulacan with 180, Batangas with 157 and Laguna with 143, the agency said.

Of the new deaths, 29 came from Metro Manila, six from the Calabarzon region, five from the Caraga region, four from Northern Mindanao, and three each from Central Luzon, Central Visayas and the Davao region, DoH said.

Bicol and Soccsksargen reported two each while Western Visayas, Zamboanga Peninsula, and Mimaropa reported one each. More than 3.4 million individuals have been tested for COVID-19, DOH said.

Meanwhile, 317 migrant Filipinos workers from Lebanon arrived at the weekend amid a coronavirus pandemic, the Department of Foreign Affairs (DFA) said.

This was the fifth DFA-chartered repatriation flight from Lebanon since June 2020 and the 50th chartered flight since it began its repatriation efforts in February 2020, it said in a statement on Saturday night.

The returning workers would undergo a 14-day quarantine, it said..

This brings the total beneficiaries of the repatriation program in Lebanon to about 2,600 since December last year, DFA said.

More than 185,000 Filipinos have come home during the pandemic, based on the agency’s Sept. 20 report.

DFA said 10,400 migrant workers have been infected with the coronavirus, 2,900 of whom were being treated, 6,600 have recovered and 790 have died. — Charmaine A. Tadalan

SWS says 7.6M Pinoy families went hungry amid COVID-19 crisis

MORE THAN 7.6 million Filipino households went hungry at least once in the past three months amid a coronavirus disease 2019 (COVID-19) pandemic, according to a September poll by the Social Weather Stations (SWS).

Hunger reached a record 30.7% or about 7.6 million families, exceeding the 23.8% in March 2012. It also rose by 9.8 points from 20.9% in July.

“The hunger trend has been rising since May 2020, upsetting a previous favorable trend when hunger steadily declined from 23.8% in March 2012 to 9.3% in December 2019,” SWS said in a statement on Sunday.

About 22% or 5.5 million families said they experienced moderate hunger or at least once while 8.7% or about 2.2 million families experienced severe hunger, meaning they went hungry often in the past three months.

The hunger rate also reached record-highs in Metro Manila, the Visayas and Mindanao, the polling firm said.

The rate in Metro Manila rose to 28.2% or about 941,000 families from 16.3%, to 40.7% or 1.9 million families in the Visayas from 27.2%, and to 37.5% or 2.1 million families in Mindanao from 24.2%.

Those who experienced hunger in the rest of Luzon also rose to 23.8% or 2.6 million from 17.8%, SWS said.

The hunger rate was also higher among households of people who did not finish elementary school.

SWS spoke by mobile phone with 1,249 adult Filipinos from Sept. 17 to 20 for the poll, which had an error margin of ±3%.

President Rodrigo R. Duterte kept Metro Manila under a general community quarantine until the end of the month, along with the provinces of Bulacan and Batangas and the cities of Tacloban and Bacolod amid the pandemic. — Vann Marlo M. Villegas

No fare increase for 12 provincial bus routes

THE LAND Transportation Franchising and Regulatory Board (LTFRB) on Sunday said there would be no fare increase for provincial buses once the 12 identified routes open on Sept. 30 amid a coronavirus disease 2019 (COVID-19) pandemic.

“We will implement the same fare rates initially,” Joel D. Bolano, head of LTFRB’s Central Office Technical Division, said at a virtual briefing on Sunday.

On Saturday, the transport regulator said that starting Sept. 30, public utility buses with valid certifications and  insurance policies may ply the following routes: San Fernando, Pampanga to Araneta Center, Cubao in Quezon City; Batangas City to Parañaque Integrated Terminal Exchange (PITx); Lemery, Batangas to PITx; Lipa City to PITx; Nasugbu to PITx; Indang, Cavite to PITx; Mendez to PITx; Tagaytay City to PITx; Ternate to PITx; Calamba City, Laguna to PITx; Siniloan, Laguna to PITx; and Sta. Cruz, Laguna to PITx.

The regulator said passengers must get their trip tickets at least 48 hours before the trip. “No on-the day or walk-in ticket shall be sold except for emergency purposes,” it said.

The regulator said the one-meter physical distancing must be observed inside buses. Standing passengers are not allowed. — Arjay L. Balinbin

Regional Updates (09/27/20)

P6.5-M illegal cigarettes seized in Malabon warehouse

THE BUREAU of Customs (BoC) confiscated an estimated P6.5 million worth of illegal cigarettes at a warehouse in Malabon City that was raided Sept. 23. In a statement on Sunday, BoC said a team busted the facility with assistance from barangay officials. “Further investigation is being conducted to identify the owner of the products as well as the owner of the warehouse,” the agency said. Once identified, they will be facing charges for violation of the Customs Modernization and Tariff Act and the National Internal Revenue Code of the Philippines for falsification and lack of tax stamps on the tobacco products.

GenSan’s expanded airport terminal to open before yearend

THE EXPANDED terminal of the General Santos City International Airport will finally open before the end of this year after further delays caused by restrictions due to the coronavirus outbreak. The city government released photos on Friday for a “peek” of the renovated parts, including the main lobby and boarding areas. “Currently, the construction of the modern airport is 90% complete,” the local government said. The P452 million building project is part of the P1 billion budget allocated in 2015 by the Department of Transportation for the airport’s improvement. Work on the project started in June 2017 and was originally targeted for completion within two years.

Nationwide round-up

Tax court approves PBA, BIR compromise deal

THE COURT of Tax Appeals (CTA) approved the compromise agreement between the Philippine Basketball Association (PBA) and the Bureau of Internal Revenue (BIR) over deficiencies from 1988 to 2000. In a 12-page decision dated Sept. 21, the court’s second division allowed the P48.5 million settlement reached by the professional league and tax agency. “Judicial Compromise Agreement is hereby approved and this Judgement Based on Compromise Agreement is hereby rendered in accordance therewith. The parties are hereby enjoined to faithfully comply with all the terms and conditions of the aforesaid Judicial Compromise Agreement,” the ruling read. “Accordingly, this case is now deemed closed and terminated,” it said. Under the compromise agreement, BIR accepted in July 2019 PBA’s payment offer of P48.5 million, the net amount of 40% of all deficiency percentage taxes and 100% of all withholding taxes less than the more than P23.2 million previously paid in 2002 and 2003. The BIR issued formal assessment notices and letters of demand in January 2003 for the years 1988-1998, 1999 and 2000 over tax deficiencies worth more than P532.7 million inclusive of interests and surcharges, according to the agreement. The PBA availed of the voluntary assessment and abatement program in 2002 and paid P3 million in advance. The association also offered a compromise settlement of 15% of basic deficiency taxes in 2003 and paid the amount of P20.2 million. The tax bureau denied the offer and  PBA then raised the case before the tax court. According to the court, the basic tax was P164.9 million and when the compromise rate is applied, the amount is P71.8 million. The judicial compromise agreement is reduced to P48.5 million with the previously paid amount of P23.2 million deducted. — Vann Marlo M. Villegas

Overseas workers seen to benefit from Qatar’s new minimum wage

THE QATAR government is implementing a new minimum basic salary for foreign workers, a policy that will benefit overseas Filipino workers (OFWs) there. The Department of Labor and Employment (DoLE), in a statement on Sunday, said the Qatar government issued Law No. 17 series of 2020 setting the minimum wage of workers regardless of nationality to 1,000 Qatari Riyal (QR), equivalent to P13,325. “In addition to the minimum basic wage, employers are directed to ensure that workers are provided adequate food and accommodation, or allocation of additional 500 QR for accommodation and 200 QR for food, bringing the minimum total gross salary to 1,800 QR equivalent to $494 or Php 24,000.00,” the Labor department said. Workers already earning wages higher than the minimum will not be affected. Law No. 17 is part of the Qatar government’s labor reforms introduced to protect the rights of migrant workers. Based on the Human Rights Watch World Report 2020, over two million workers in Qatar are from overseas, which make up 95% of the country’s total labor force. As of 2018 Philippine data, there are about 119,600 Filipino workers in Qatar, representing 5.2% of the total OFWs. — Gillian M. Cortez 

Cayetano meets with Davao City Representative Duterte amid budget, speakership issues

TWO RANKING congressmen, considered as main figures of two separate camps, met over the weekend after the House of Representatives was hounded last week by a speakership row that was triggered by an alleged unfair distribution of funds among congressional districts under the proposed 2021 budget of the Public works department. House Speaker Alan Peter S. Cayetano met with House Deputy Speaker and presidential son Paolo Z. Duterte in Davao  City, where the latter is a representative for the 1st District. Photos of the visit were posted by ACT-CIS Partylist Rep. Eric G. Yap, an ally of both Mr. Duterte and Mr. Cayetano, on Instagram with a caption ‘Chillax night.’ Mr. Go, as of this writing, has yet to respond to a request for details of the meeting. Other lawmakers who joined them were Taguig City-Pateros 2nd District Rep. Lani L. Cayetano, wife of the speaker, and House Deputy Secretary-General Brian Yamsuan. Mr. Duterte is seen as a main backer in the speakership race. Under a term-sharing agreement brokered by President Rodrigo R. Duterte in 2019, Mr. Cayetano will hold the House top post for half the three-year term up to October this year, then Marinduque Rep. Lord Allan Q. Velasco will take over until the end of the 18th Congress in 2022. Negros Oriental 3rd District Rep. Arnolfo A. Teves, Jr., a known ally of Mr. Velasco, questioned in a recent budget hearing the P8 billion and P11.8 billion worth of infrastructure funds allocated to Taguig City and Camarines Sur, respectively. — Kyle Aristophere T. Atienza

House bill filed to institutionalize digitized system for gov’t aid, other financial distribution

A BILL has been filed in the House of Representatives seeking to establish a digital system for the distribution of government aid and other financial benefits such as tax refunds and pensions. House Bill No. 7714, titled the  Philippine Public Payment System Act, will create a “OneAccount” for all beneficiaries. “If we have already digitized the government payments, we can easily monitor red tape and corruption because we have digital records or paper trails. There will be no more repacking of cash subsidies,” said the bill’s author, Surigao del Norte Rep. Robert Ace S. Barbers. Under the measure, all Filipinos 18 years old and above who are registered under the new Philippine Identification System will be given a free OneAccount, or a government bank account with an ATM card. — Kyle Aristophere T. Atienza

Solon pushes for law on prevention of teenage pregnancy

RIZAL 2 nd District Rep. Juan Fidel F. Nograles on Sunday reiterated his call to fast-track the measure that will create a national policy on teenage pregnancy prevention, citing a population report that about 40 to 50 Filipino children aged 10 to 14 years old give birth every week amid the community quarantine. House Bill No. 5516, the Prevention of Adolescent Pregnancy Act of 2019, aims to give teenagers comprehensive information that could help them prevent unintended pregnancies. The proposed law mandates the government to develop an evidence-based, medium-term National Program of Action for the Prevention of Teenage Pregnancies, which will serve as the national framework for inter-sectoral and inter-agency collaboration. It also proposed that adolescent parents who would continue their education will receive government support and incentives. The Commission on Population and Development earlier cited a study conducted by the University of the Philippines’ Population Institute projecting more than two million births in the country next year. Of these births, 200,000 or 11% would come from the age group of 20 years old and below. “The numbers are staggering, and Congress must do its part to help address this urgent issue,” Mr. Nograles said. — Kyle Aristophere T. Atienza

Finance dep’t sticks with policy of keeping budget deficit at bay

MAINTAINING “manageable” fiscal deficits and the balance of payments while keeping interest rates conducive to investment will help safeguard the economic recovery, the Department of Finance (DoF) said in an economic bulletin.

The DoF said the current account BoP (balance of payments), which swung to a P4.4-billion surplus in the first half, shows that the domestic economy “is back to net lender status” despite expanded government borrowing, which hit P2.5 trillion in August. It said a manageable BoP and budget deficit, which is expected to hit 9.6% of gross domestic product (GDP), will aid in the economy’s bounce back.

It said other factors that will also help fuel economic recovery are interest rates that support investment, inflation within the 2-4% target band and a competitive valuation for the peso.

The DoF’s official position doubles down on a broader strategy to conserve resources in the event of a long pandemic, which includes tapping the country’s strong credit rating while keeping stimulus spending much lower than Congress would wish. The approach has drawn negative comparison to the rest of the region, which is spending much more aggressively on post-pandemic stimulus.

“Maintaining good fundamentals by keeping both the budget deficit and balance of payments manageable, keeping interest rates at the level that sustains investments, keeping inflation at the lower end of the inflation target and allowing the exchange rate to maintain its competitive level will allow the country to recover promptly as the lockdowns set up to battle the pandemic are eased,” according to the bulletin.

Benchmark interest rates are at record lows after the central bank slashed rates by a total of 175 basis points (bps) this year. Inflation eased further to 2.4% in August, taking the year-to-date average to 2.5%.

The central bank projects the peso to range between P50-52 against the dollar this year. The peso closed at P48.46 on Friday.

Think tank Capital Economics warned Friday of a possible weak economic recovery for the Philippines if fiscal support remains “lackluster” at about 3% of GDP.

“Inadequate fiscal support is holding back growth in the Philippines and, unless this improves, the recovery will continue to underwhelm,” it said in a report, “Philippines: weak recovery, new currency forecasts.”

It said state spending rose 0.38% to P283 billion in August.

“Even if spending starts to pick up over the coming months, the government’s slow response has caused lasting damage to the economy in the form of higher unemployment and increased bankruptcies. Although we think that output bottomed out around April, we estimate that GDP in the Philippines is still around 10% below its pre-crisis level — one of the biggest gaps in the region,” it said.

Capital Economics said the “poor response” to the crisis has put more pressure on the central bank to stimulate the economy.

It expects the Monetary Board to again reduce the benchmark interest rates by 25 bps at its meeting Thursday, to be followed by another cut before the year ends to bring the key policy rate to 1.75%.

The economy is expected to contract by 4.5-6.6% in 2020. — Beatrice M. Laforga

Bottoming out in services could herald recovery

GLOBAL SERVICES may have bottomed out in June, signaling the possibility of the sector’s outsized role in economic recovery for services-dependent countries like the Philippines, the World Trade Organization (WTO) said.

The WTO said its services trade barometer for June fell to a record low, raising the possibility of an early recovery, though analysts seem to agree that for the Philippines, the recovery will be slow.

The index also declined 4.3% year on year in the first quarter, which the WTO says reflects slowing economic activity and the early effects of the pandemic.

“While substantial, this decline is smaller than those seen during the financial crisis over a decade ago, when services trade fell by 5.1% in the first quarter of 2009 compared to the previous year before registering an even bigger 8.9% slump in the second quarter,” WTO said.

The organization said that while the index is expected to remain below trend for the second half of 2020, recovery in passenger air transport could contribute to a “powerful” turnaround.

“The barometer’s measures are in aggregate outperforming recent trends in actual services trade, a gap that in the past has preceded a positive shift in trade momentum,” WTO said.

Rizal Commercial Banking Corp. Economist Michael L. Ricafort said that the services sector could drive a Philippine economic turnaround.

“Services account for at least 60% of the Philippine economy and would be a key driver in the economic recovery prospects as the economies further re-open from lockdowns, thereby also supporting the pick up in consumer spending, which accounts for at least 70% of the economy,” he said in an e-mail Friday.

University of Asia and the Pacific Senior Economist Cid Terosa said such an improvement could be more gradual than that of other economies.

“The Philippines will experience recovery in overall services trade but it won’t be as quick as many countries around the world because of the more urgent need to resuscitate domestic business and economic activities,” he said in an e-mail Monday.

“Domestic production of goods and services have to be revived first before the Philippines can fully benefit from possible early recovery in overall services trade.”

Union Bank of the Philippines Chief Economist Ruben Carlo Asuncion in an e-mail said that consumption related to services is still sluggish.

“Aviation and traditional retail were hit hard and may take time to recover. I do agree that there are incremental improvements in passenger air travel worldwide, but, for the Philippines, this may be initially concentrated on local travel and international travel will have to wait,” he said.

WTO’s services trade indices remain mostly below trend, especially passenger air transport, which the organization said had bottomed out.

The container shipping, construction, and global services purchasing managers’ indices also point to a possible turnaround while information and communications technology services continued to fall.

The financial services index was the exception, showing growth in line with medium-term trends.

Mr. Ricafort said that this resilience could be due to rapid digitalization in the industry in recent years. The stay-at-home and social distancing measures during the pandemic, he said, accelerated the use of online banking transactions.

He added that financial services trade is integral to the digitalizing global economy, with online payments facilitating a surge in e-commerce activities.

“The resilience of the Financial Services Trade may also be attributed to the increased preparedness by industry for any contingency/emergency/scenario including extreme ones as also required and encouraged by regulators worldwide the required business continuity plans, stress tests, recovery plans, contingency plans, and the adoption of risk management systems that are aligned with global best practices,” he said.

Mr. Ricafort added that financial institutions made trading and investment gains amid record low interest rates and bond yields that sent prices of bonds to record levels.

“Record low interest rates and increased funds/liquidity in the financial system also supported further gains in many parts of the global financial markets amid the search for higher returns to riskier investments such as equities amid liquidity-driven gains.” — Jenina P. Ibañez

Gov’t to prioritize local suppliers, small firms in purchase of goods amid COVID-19 crisis

THE Government Procurement Policy Board (GPPB) issued new guidelines Saturday ordering preference for domestic bidders and small businesses when possible to ensure rapid procurement under Republic Act (RA) 11494, or the Bayanihan to Recover As One Act (Bayanihan II).

The GPPB issued Resolution No. 18-2020 dated Sept. 16, asking procuring entities (PEs) to “exert all efforts to secure the most advantageous price,” and reminded them to buy agricultural and fisheries products directly from farmers and fisherfolk.

It said the procedure and requirements under Circular No. 01-2020 issued April 6 are once again in force to expedite the procurement of critical supplies, materials, equipment, utilities, telecommunications and other services.

PEs will still have to publish required documents and information on the GPPB Online Portal, it said.

It released Resolution No. 19-2020 to direct agencies to give preference to domestic manufacturers and micro, small and medium enterprises when buying goods and services needed to contain the coronavirus disease 2019 (COVID-19) pandemic.

“Section 43 of RA No. 9184 provides that goods may be obtained from domestic or foreign sources and the procurement thereof shall be open to all eligible suppliers, manufacturers, and distributors consistent with the country’s obligations under international treaties or agreements. However, in the interest of availability, efficiency, and timely delivery of goods, the PE may give preference to the purchase of domestically-produced and manufactured goods, supplies, and materials that meet the specified or desired quality,” according to the document.

It said the decision will remain subject to certification from the Trade department stating the items are substantially composed of articles, materials, or supplies grown, produced, or manufactured in the country; and the award of contract will be given to the lowest domestic bidder even if its bid is 15% in excess of the lowest foreign bid.

The resolutions were issued to serve as the implementing rules and regulations (IRR) of the procurement provisions under Bayanihan II.

The rules will only be valid during the effectiveness of Bayanihan II, or until Dec. 19.

The GPPB also released Resolutions No. 15-2020 and 16-2020 on the simplified versions of bid documents for goods and infrastructure projects. These are intended to streamline procurement and can be used for online bid submissions through the GPPB Online Portal.

The simplified documents are expected to minimize contested interpretations of rules that may cause eligible bidders to be disqualified; inconsistencies due to repetitive clauses; delays in delivery or implementation of procurement projects because of long processing times; and to cut down on the “voluminous nature of Philippine bidding documents.”

It said bidders and PEs are encouraged to use the online bid submission portal to ensure safety during the pandemic. — Beatrice M. Laforga

BoC to audit imports of products widely used during pandemic

PHILSTAR/MICHAEL VARCAS

THE Bureau of Customs (BoC) said it hopes to complete by year’s end an audit of products that saw a dramatic surge in demand due to the pandemic to check on whether importers are eligible to claim tax exemptions.

Vincent Philip C. Maronilla, Customs assistant commissioner heading the Post Clearance Audit Group, told BusinessWorld Sunday that the audit will cover goods that saw an increase in demand in the six months to June. The investigation will finish at the end of 2020, he said.

“(We audit mainly) for compliance (since) a lot of them are tax-exempt, but just want to make sure that they have proper permits kasi in demand goods naman ngayon mostly (because most of the in-demand goods) are the ones exempted by law in Bayanihan I and II,” Mr. Maronilla, who is also the bureau’s spokesperson, said over the phone Sunday.

He was referring to the two items of legislation passed to facilitate the containment of the pandemic and the economic recovery, formally known as the Bayanihan to Heal as One Act and the Bayanihan to Recover as One.

“(For the) compliance audit, (we will check) whether or not they were able to meet the requirements para ma-ensure din natin (to ensure) that even if we are granting tax exemptions, they are also complying with the rules,” he added.

He said the exempt goods that saw a surge in demand during the pandemic include medical supplies and equipment and personal protective equipment (PPE). He said the bureau will also look into compliance of importers of non-exempt goods like food and steel.

Republic Act (RA) No. 11469 (Bayanihan I) and RA 11494 (Bayanihan II) provide tax exemptions to crucial supplies and equipment imported during the coronavirus disease 2019 (COVID-19) pandemic.

Meanwhile, he said the bureau expects to raise at least P1 billion from this year’s round of audits on rice shipments between the third quarter of 2019 and June 2020.

Last week, Mr. Maronilla said the BoC found P1.4 billion worth of deficiencies in customs duties, penalties, surcharges, and interest by rice importers due to undervaluation of cargoes.

He said 47 out of 55 audited were found to have committed violations of Customs regulations.

The BoC launched the inquiry in August 2019 after the Federation of Free Farmers (FFF) warned the government may not meet its target collections since imported rice were being undervalued by traders to evade tariffs.

Tariffs imposed on imported rice were set at 35% for Southeast Asian grain value under Republic Act 11203 or the Rice Tariffication Law.

Rice tariff collections hit P11.036 billion in the seven months to July, up 4% from a year earlier.

Rice tariffs go towards funding the P10-billion annual budget of the Rice Competitiveness Enhancement Fund (RCEF), which was created by the Rice Tariffication Law. RCEF supports mechanization and other measures to allow farmers to better compete against imports. — Beatrice M. Laforga

Regulators to expedite permit process for small renewable projects

ENERGY REGULATORS said they are preparing to expedite the permit process for developers of small-scale renewable projects in off-grid areas.

To support electrification efforts, the National Renewable Energy Board (NREB) said it is working with the Energy Regulatory Commission (ERC) to make policy more investor-friendly.

“We’ve been working with ERC in developing a special set of rules for smaller-capacity RE (renewable energy) for off-grid (areas). At the minimum, a fast-track process for approval, (and) at best, maybe, just a reporting or a notice process. The low-hanging fruit there is a fast-track process with less documentation required,” NREB Chairperson Monalisa C. Dimalanta said in a recent webinar.

Small and large renewable power developers are both required to undergo the same process of acquiring permits from various government agencies to construct their generation facilities, which should not be the case, she said.

“Hopefully, we get to work at it at the ERC level, (and) there’s no need for legislation,” Ms. Dimalanta said in a virtual discussion with the German-Philippine Chamber of Commerce and Industry.

Two months ago, the Energy Virtual One-Stop Shop (EVOSS) went online. It was a platform created under Republic Act No. 11234 or the EVOSS Act, which streamlines the permitting process of all energy-related projects.

The platform specifically favors large renewable builders whose projects usually take two to seven years before approvals are granted. “For RE in particular, if the agency doesn’t approve your project within the permitted timeline under the regulations, then your permit is deemed approved,” Ms. Dimalanta said.

In June, the Energy and Interior and Local Government Departments issued a joint circular which requires all local government units to implement the EVOSS law, as well as to establish their own energy codes, energy sector committees that will implement policies and programs under their development blueprints, and local energy efficiency and conservation offices. They are also tasked to develop an incentive scheme for energy-efficiency project developers.

The National Electrification Administration (NEA),which is tasked to energize the countryside, has brought power to 123,726 rural villages, or 84% of its targeted 147,989 households, as of June. This equates to 13.85 million consumer connections to date.

This year, it has cut its electrification target to 635 sitios from 964 under its Sitio Electrification Program, as some of its funds were reallocated to the government’s pandemic containment effort. In the first half of 2020, it connected 209,781 households, 15% lower from a year earlier.

NEA said some 12,000 sitios or 1.7 million households remain without power.

For 2021, the government is setting aside P1.6 billion for the electrification program, good for connecting 1,085 villages. The amount is P5.9 billion less than the agency’s proposal. It is appealing for higher funds. — Adam J. Ang

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