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Super typhoon Goni slams into Philippines, makes two landfalls

A super typhoon barrelled into the southern part of the Philippines’ main island of Luzon on Sunday, bringing “catastrophic” violent winds and intense rains with two landfalls so far, the weather bureau said. 

Typhoon Goni is the world’s strongest storm so far this year, gaining further strength with 225 kph (140 miles per hour) sustained winds and gusts of up to 310 kph (190 mph).

Philippine authorities evacuated nearly a million people to safer ground before Goni approached the eastern provinces and made landfall in Catanduanes and Albay in the Bicol region.

The weather bureau said “catastrophic violent winds and intense to torrential rainfall” were expected to prevail over Bicol provinces as well as portions of Quezon, Laguna and Batangas, south of the capital Manila.

“This a particularly dangerous situation for these areas,” it said in a bulletin at 0000 GMT.

The capital Manila was also in the projected path of Goni, the 18th tropical storm in the country.

A third landfall was expected to hit Quezon province later in the day, weather forecaster Lorie dela Cruz told a radio station.

Between 19 million and 31 million people could be affected, including those in danger zones, the disaster management agency said.

Storm surge alerts have been issued, while officials have also reminded those in evacuation centers to observe social distancing as the coronavirus spread is also a concern.

Dozens of international and domestic flights have been canceled as the civil aviation authority ordered a one-day closure of Manila’s main gateway, the Ninoy Aquino International Airport.

Goni is among the strongest typhoons to hit the Philippines since Haiyan, which killed more than 6,300 people in 2013.

It follows Typhoon Molave, which hit the Philippines last month killing 22 people, mostly through drowning in provinces south of Manila. — Reuters

October inflation likely at 2.3% — central bank

The rise in consumer prices is expected to fall within 1.9% to 2.7% this month as lower fuel prices and water rates temper rising electricity costs, according to the Philippine central bank.

Inflation would probably settle at 2.3%, the same rate as in September, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno told reporters in a Viber group message on Friday.

Inflation eased for the second straight month in September due to a slower increase in food prices. This brought the nine-month average to 2.5%, which was within the central bank’s 2-4% target for the year.

“Higher electricity rates in Meralco-serviced areas, increases in LPG and kerosene prices and the impact of weather disturbances on selected food items contributed to upward price pressures for the month,” Mr. Diokno said.

These could be partly offset by lower prices of gasoline, diesel and rice, as well as lower water rates for customers of Manila Water Co. and Maynilad Water Services, Inc., he added.

“Looking ahead, the BSP will remain watchful of economic and financial developments to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” Mr. Dikno said.

The Philippine Statistics Authority will announce October inflation figures on Nov. 5.

Manila Electric Co. (Meralco) earlier said the power rate in Metro Manila rose by P0.1212 a kilowatt-hour (kWh) to P8.55 a kWh in October from the previous months. This was still lower by P0.5362 per kWh than year-ago rates, it added.

Diesel and kerosene prices fell on Oct. 27, while gasoline prices were unchanged, according to the Energy department. This brought year-to-date adjustments to a net decrease of P4.67 a liter for gasoline, P10.26 a liter for diesel and P13.59 a liter for kerosene.

Water rates are expected to decline this quarter after the regulator in September approved the foreign currency differential adjustment for the two water concessionaires.

East Zone water provider Manila Water will cut rates by 1.17% or P0.33 a cubic meter (cu.m.) of its average basic charge of P28.52/cu.m, while Maynilad will cut its rate by 0.26% or P0.09/cu.m. of its average basic charge of P36.24/cu.m.

Meanwhile, the palay farmgate price fell by 4.1% to P15.79 a kilo in the first week of October from weeks before, according to the Philippine Statistics Authority (PSA). Year on year, the rate inched up by 0.2%.

Monthly inflation could fall below 2% for the rest of the year and in early 2021 mainly due to base effects, central bank Deputy Governor Francisco G. Dakila, Jr. said on Thursday. This won’t be a factor in setting monetary policy, he added.

The central bank has cut benchmark interest rates by 175 basis points this year, taking overnight reverse repurchase, lending, and deposit rates to record lows of 2.25%, 2.75% and 1.75%, respectively. — Beatrice M. Laforga

Filipinos to spend more in 2021

Filipinos are expected to spend more next year especially on recreation amid government stimulus measures for sectors badly hit by the coronavirus pandemic, and as more people return to work, according to Fitch Ratings.

Household spending will probably grow by 5.7% in 2021 after shrinking by 8% by year-end, the global research firm said in a report on Friday.

Household spending on recreation and culture is expected to grow by 15.3% next year — the fastest among all sectors — after shrinking by 17.8% this year, Fitch analysts said.

Filipino spending on furniture and homes is also expected to increase by 13.7% after contracting by 15.2% this year, while spending on hotels and restaurants will probably grow by 10.5% after shrinking by 16.8% this year, Fitch said.

Spending on alcoholic drinks and tobacco is expected to rise by 10.4% from a contraction of 16.7% by year-end.

Spending on clothing and footwear would probably grow by 8.9% next year after shrinking by 15.6% this year, while food and nonalcoholic drink expenditures could rise by 5.3% next year after growth of 9.3% this year, according to the report.

“Food and nonalcoholic drink spending was prioritized in household budgets in 2020, and so growth in spending on these items, while remaining positive, will be slightly lower in 2021,” Fitch said.

The research firm traced the household spending growth next year to half-a-trillion worth of government fiscal stimulus equivalent to 3.1% of Philippine economic output, including cash aid, tax cuts and wage subsidies to sectors affected by the coronavirus.

The jobless rate could fall to 9% next year from a 16% estimate this year as the economy grows by 6.2% after shrinking by 9.1% this year, Fitch said.

“This is still double the 4.5% unemployment rate we estimate for the pre-COVID-19 environment in 2019, suggesting that household spending will still face elevated pressure from higher than normal rates of unemployment,” it added.

Fitch cited the risk of increased underemployment, with more people returning to work but working fewer hours than before the health crisis, or taking lower-paying jobs that could cut disposable incomes.

“With the recovery forecast for 2021, demand-side pressure will push up prices over 2021 to an average of 3% over the year,” it added.

Household spending growth can be kept as long as the government can curb the spread of the coronavirus and allow greater mobility under relaxed quarantine measures, Fitch said.

Further progress on the development of vaccines that health experts predict to be distributed in the first half of 2021 will fast-track household spending among Filipinos, it added. — Kathryn Kristina T. Jose

BSP raises P70B in 28-day bills

By Beatrice M. Laforga, Reporter

The Philippine central bank raised P70 billion in short-term securities on Friday due to strong liquidity.

The Bangko Sentral ng Pilipinas (BSP) fully awarded the 28-day bills it had auctioned off out of P120.55 billion worth of total bids, making the offer nearly twice oversubscribed.

This was the seventh straight week the central bank had fully awarded the bills since it started selling its own securities on Sept. 18.

Yields sought ranged from 1.99% to 2.075%, narrower than 1.9-2.125% in the previous auction. The debt paper fetched an average rate of 2.0367%, up by 0.94 basis point from a week earlier.

“The auction results for the 28-day bill show that liquidity in the financial system remains ample,” BSP Deputy Governor Francisco Dakila, Jr. said in a statement. “The BSP monetary operations will remain guided by its assessment of market developments and liquidity conditions.”

The recent uptick in US bond yields might have pushed up local rates, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a mobile phone message.

The benchmark rate of 10-year US Treasury bonds inched up to 0.82% on Friday, according to Bloomberg data.

Mr. Ricafort said the increase was driven by market expectations ahead of the US presidential election on Nov. 3.
He said rates of BSP’s securities have been rising in the past few weeks after its lending cap to the National Government was raised to P850 billion.

This increased the central bank’s lending to the National Government and increased the weekly mopping up operations of excess liquidity from the financial system, he added.

The Monetary Board approved earlier this month a new tranche of provisional advance to the government worth P540 billion, after the latter repaid P300 billion in maturing debt.

Yields on the central bank’s term deposit facility offered this week also increased before US elections.

DoF’s Dominguez backs gov’t energy policy pivot to green sources

Finance Secretary Carlos G. Dominguez III said he supports the government’s recent policy shift favoring more sustainable and “green” energy sources.

“The ongoing pandemic has forced us to rethink our way of economic life, which makes this an opportune moment to intensify our action on the climate crisis,” Mr. Dominguez said in his speech at the 7th Asia Pacific Adaptation Network webinar Thursday.

“The Philippines is turning the contagion into an opportunity to begin building sustainable and safer cities. We aim to shift our investments to clean energy resources and green technologies,” he said.

The Energy department earlier this week imposed a moratorium on new coal-fired power projects and allowed foreign investors to take 100% ownership of geothermal projects.

Energy Secretary Alfonso G. Cusi said the shift will facilitate more investment in sustainable power production and make the power mix flexible.

The department is currently reviewing its Philippine Energy Plan for the next two decades.

As of August, there were 3,436 megawatts (MW) of planned coal-fired power projects in Luzon, 135 MW in the Visayas, and 420 MW in Mindanao.

The moratorium on new projects will not affect those that have been endorsed, the department said.

President Rodrigo R. Duterte last year said the government will press on with developing renewable energy to diversify the power mix.

Mr. Dominguez said the Philippines is highly exposed to natural disasters such as typhoons and earthquakes, making it the ninth most disaster-prone country in the world, according to the 2020 World Risk Index.

Mr. Dominguez said the government is also ramping up its capacity to respond to and reduce the risks of future disasters to mitigate their impact on the economy. — Beatrice M. Laforga

PHL seeks $300-M loan from WB for community-based pandemic measures

The Philippine government has applied to the World Bank for a loan of $300 million to help local governments deal with the pandemic at community level, according to loan documents seen by BusinessWorld.

According to the World Bank’s documentation, the proceeds will provide additional funding for the $530.47-million National Community-Driven Development program of the Department of Social Welfare and Development (DSWD).

The bank expects its Board to act on the proposed agreement on Dec. 15.

The World Bank previously lent $479 million for the program launched in February 2014 .

“The proposed additional loan will scale up the impact (of the program) in particular by supporting the government in implementing a community-based response to the impact of the COVID-19 pandemic in 676 poor municipalities. The AF (additional financing) operation will support 676 poor municipalities and facilitate the institutionalization of (community-driven development) in local development planning,” according to a summary of the application provided by the bank.

It said the loan will also give the DSWD more time and resources to promote community-driven development and post-disaster management in the municipalities.

“The proposed (loan) is fully aligned with the bank’s twin goals of eradicating extreme poverty and promoting shared prosperity by enabling poor and vulnerable communities to identify and manage their responses to the impact of COVID-19 pandemic through participatory and transparent mechanisms,” it said.

The bank expects the program to boost the capacity of local government units to implement programs and deliver key public services.

The loan is broken down into three parts: $231 million to provide planning and investment grants to 676 poor municipalities hit hard by the pandemic; $44 million for the training of staff, officials and volunteers in community-driven development and disaster response; and $25 million to fund managers for the program at the regional and national levels.

The Philippines’ vulnerability to natural disasters and climate change, specifically to typhoons, flooding, drought, rising sea levels. and landslides, have been affecting its economic development, it said.

“Communities, especially those in the poorer rural and remote areas, rely on natural resources and resilient infrastructure for their livelihood and access to markets as well as to basic social services. It is critical to provide support for strengthened adaptation and social resilience at the community level to ensure communities are better protected from and prepared to deal with climate variability,” the bank said.

The World Bank has extended $1.2 billion worth of budget loans and $470 million in project financing to help the government respond to the pandemic. — Beatrice M. Laforga

Household spending expected to rise 5.7% in 2021 on rebound in leisure activities

Fitch Ratings projected 2021 household spending growth at 5.7% on pent-up demand for recreational and cultural activities that had been shut down by the pandemic, with th government also continuing to deploy stimulus packages and as more people return to work.

Fitch Ratings said in a report Friday that the projection, if borne out, would represent a rebound from its 2020 forecast of an 8.8% contraction in household spending. In 2019, spending grew 5.5% in 2019.

Fitch Ratings said that in 2021, spending on recreation and culture will rise 15.3% after an expected contraction of 17.8% this year. Spending on furniture and household goods will rise 13.7% next year after a forecast contraction of 15.2% in 2020. Restaurant and hotel spending will grow 10.5% next year after an expected decline of 16.8% in 2020. Spending on alcoholic drinks and tobacco will rebound to growth of 10.4% next year after a contraction of 16.7% this year.

It expects spending growth on clothing and footwear of 8.9% in 2021 after a projected decline of 15.6 this year. Spending growth for food and non-alcoholic beverages is expected to ease to 5.3% from forecast 2020 growth of 9.3%.

“Food and non-alcoholic drink spending were prioritized in household budgets in 2020, and so growth in spending on these items, while remaining positive, will be slightly lower in 2021,” Fitch Ratings said.

It noted the effects of government stimulus measures amounting to P595.6 billion or 3.1% of gross domestic product (GDP) which is going into cash aid, tax reductions, and wage subsidies for workplaces affected by the lockdown.

The government allocated P205 billion for two months’ worth of cash aid of at least P5,000 per month to 18 million low-income households and subsidized companies that retained their employees, making payouts sufficient to keep 3.4 million at work.

It projected GDP growth of 6.2% next year, with unemployment declining to 9% from 16% in 2020. It expects GDP to contract by 9.1% in 2020.

It said unemployment next year will remain high compared to pre-pandemic levels.

“This is still double the 4.5% unemployment rate we estimate for the pre-COVID-19 environment in 2019, suggesting that household spending will still face elevated pressures from higher-than-normal rates of unemployment,” Fitch Ratings said.

It also expects a deterioration in work conditions and a potential rise in prices to slow household spending over the next year.

“We also note that there is a risk of increased underemployment. People returning to work, but working fewer hours than pre-COVID-19, or taking lower paying jobs will put downside pressure on disposable incomes,” Fitch Ratings said.

“With the recovery forecast for 2021, demand-side pressure will push up prices, to an average of 3.0% over the year,” it added.

Fitch Ratings said growth in household spending will be maintained as long as the government curbs the spread of COVID-19 and allows greater mobility under relaxed quarantine measures.

It added that further progress in vaccine development, which could lead to mass vaccinations by the first half of 2021, will serve to accelerate household spending. — Kathryn Kristina T. Jose

P5 billion worth of DoLE Bayanihan II aid budgeted for nearly 1 million displaced workers

The Labor department said its P5 billion worth of aid programs for displaced workers under the Bayanihan II stimulus package will benefit nearly one million displaced workers will benefit under the Department of Labor and Employment’s (DoLE) financial aid from its Bayanihan II funds.

The Department of Labor and Employment’s (DoLE) overall funding under Bayanihan II, formally known as the Bayanihan to Recover as One Act (Republic Act 11494) totals P13 billion.

In a briefing Friday, Undersecretary Joji V. Aragon said the aid to displaced workers will be coursed through the department’s COVID-19 Adjustment Measures Program (CAMP) which provides one-time cash assistance to private-sector workers affected by the lockdown.

“Sila ay makakatanggap out of the 13 billion ng limang bilyong piso at ito ay mabibenepisyuhan ang 993,432 workers (They will receive five billion out of the P13 billion, benefiting 993,432 workers),” she said.

Ms. Aragon also said hundreds of thousands more workers from the informal sector will also benefit from Bayanihan II funding via an allocation for the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) program. This represents the DoLE’s 15-day emergency employment program for displaced informal-sector workers, who will be paid the daily minimum wage for the period.

“Ang mabibenepisyuhan naman po ay around 863,867 workers (Those who will benefit are estimated ate around 863,867 workers),” she said.

The department has allocated P2 billion to provide P10,000 worth of one-time assistance to displaced overseas workers.

In a separate briefing Friday, DoLE Financial and Management Service (FMS) Director Warren M. Miclat said beneficiaries identified from Bayanihan I, known as the Bayanihan to Heal as One Act (RA 11469), but received no aid will be first in line for Bayanihan II funding.
“By Monday, Nov. 1 magrorollout na…Nag-start na ang mga regional offices sa mga preliminary documents (The program will be rolled out by Monday…the regional offices have started preparing preliminary documents),” he said.

DoLE will also distribute P3 billion worth of aid to displaced tourism workers starting next week, Mr. Miclat said. Ms. Aragon estimated the number of beneficiaries at 616,000. — Gillian M. Cortez

Cagayan Valley leads gains in 2019 agriculture output by value, volume – PSA

CAGAYAN VALLEY recorded the highest increase in agricultural output by value in 2019 with growth of 6.6%, according to the Philippine Statistics Authority (PSA).

In a statement Friday, the PSA said the valley’s gains were followed by those of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) at 5.3%, followed by Ilocos Region with 4.4%, the Cordillera Administrative Region (CAR) with 3.6%, and Eastern Visayas 2.1%.

By volume, Cagayan Valley was also the top gainer in the crop segment with growth of 8.8%.

The region produced 2.64 million metric tons of palay, or unmilled rice, 1.87 million metric tons of corn, and 350.18 thousand metric tons of sugarcane.

The SOCCSKSARGEN region posted thetop growth in livestock output by volume with 4.2%.

SOCCSKSARGEN produced 124.59 thousand MT worth of hogs, 16.50 thousand MT worth of cattle, 10.45 thousand MT worth of carabao, and 5.28 thousand MT worth of goats.

The top-growing poultry-producing region was Bicol with volume gains of 14%.

In 2019, the region produced 54.88 thousand MT worth of chicken, 1.12 thousand MT worth of duck, 14.84 thousand MT of chicken eggs, and 1.67 MT of duck eggs.

Eastern Visayas was the top region for fisheries output growth at 13.3%.

It accounted for seaweed amounting to 18.86 thousand MT and 6.96 thousand MT of milkfish, or bangus.

Among regions, PSA said Northern Mindanao took up the largest share of crop production at 11.2%.

Central Luzon led the regions with 14.8% of all agricultural output, 17.6% of livestock, 29.6% of poultry and 14.7% of fisheries. — Revin Mikhael D. Ochave

Damage to rural utilities from typhoon Quinta initially estimated at P51-M

Electric cooperatives sustained P50.92 million worth of damage from Typhoon Quinta (international name: Molave) according to initial estimates released by the National Electrification Administration (NEA) Friday.

Oriental Mindoro Electric Cooperative (Ormeco) was assessed losses of P14.659 million, while estimates for Camarines Sur IV Electric Cooperative (Casureco IV) totaled P9.479 million. Damage to Marinduque Electric Cooperative (Marelco) was reported at P8.476 million.

Camarines Sur III Electric Cooperative (Casureco III) sustained damage worth P5.523 million and Camarines Sur II Electric Cooperative (Casureco II) P4.585 million.

As of Thursday, power was restored to 1.39 million or 62% of the 2.22 million affected households, leaving 830,981 households still without power in the coverage areas of 19 rural utilities along the typhoon’s track.

Separately, National Grid Corp. of the Philippines (NGCP) said it completed on Friday the restoration of transmission lines damaged by the typhoon. — Adam J. Ang

First Gen plans LNG distribution expansion

Lopez-led First Gen Corp. is preparing a distribution plan to deliver liquefied natural gas (LNG) throughout the country ahead of the construction of its offshore terminal in Batangas.

The listed energy company is now building a short-term LNG terminal that is expected to bring in imported natural gas to the Philippines as early as the third quarter of 2022.

“We are excited to democratize the use of natural gas in the Philippines using new technology to create small-scale LNG opportunities in the Philippines,” said First Gen Chief Commercial Officer Jonathan C. Russell in a press release.

The company targets new industrial, commercial, and remote customers who are not able to access natural gas given the heavy investment needed in building infrastructures such as transmission lines.

First Gen said it is taking the first step to realize the nationwide distribution of natural gas with a plan to install a remote, small-scale gas receiving, storage, and regasification facility in First Philippine Industrial Park (FPIP), one of the country’s largest industrial sites located in the Calabarzon region.

The 457-hectare industrial property will be connected to the import terminal, approximately 50 kilometers apart, through a “virtual pipeline” using ISO-certified containers and trucks to supply LNG, according to Mr. Russell. FPIP is a joint venture between First Gen’s parent First Philippine Holdings Corp. and Japan’s Sumitomo Corp.

“Several existing and potential new locators have expressed keen interest in using LNG and natural gas directly for various manufacturing process applications, and indirectly in the form of reliable, flexible, environmentally-responsible power,” said Francis Giles B. Puno, president of FPIP and chief operating officer of First Philippine Holdings, in the same release.

The company is still examining how it can distribute LNG across the country through small-scale LNG carriers.

Citing a recent report of the International Gas Union, First Gen said there is a “growing” interest in small-scale LNG around the world as its transportation to satellite regasification units is projected to “increase” due to economic development in areas unserved with natural gas pipelines.

A flexible supply of LNG to isolated communities can cut emissions and generate more demand for natural gas, it claimed.

Earlier this month, First Gen awarded a construction contract to the Philippine unit of Australia- based McConnell Dowell Group to build its interim LNG terminal.

It has also sent out bid invitations to three of its preferred providers of a floating storage and regasification unit (FSRU) to be constructed as part of its terminal project. The bidders are BW Gas Ltd. of global gas shipping company BW Group, New York-listed GasLog’s unit GasLog LNG Services Ltd., and Hoegh LNG Asia Pte Ltd., owned by the Norwegian LNG carrier provider Hoegh LNG Holdings. It expects to have their offers submitted in mid-November.

The LNG terminal project came out of the joint development deal between First Gen and Tokyo Gas Co., Ltd. two years ago.

On Oct. 7, the two companies advanced their partnership after signing a joint cooperation deal to pursue the design, development, testing, commissioning, construction, ownership, and operations and maintenance of the project. This gives the Japanese firm a 20% interest in the project.

Once Tokyo Gas can make a final investment decision, it will enter into a definitive agreement with the local company.

Shares in First Gen fell by 1.04% to close at P28.50 each on Friday. — Adam J. Ang

Wilcon profit slips 3% on store closures

Quarantine restrictions still weighed down on Wilcon Depot, Inc. as it earned P533.21 million in the third quarter, lower by 2.92% from a year ago.

In the nine months to September, the company’s net income fell by 42.6% to P886 million, mainly due to the temporary closure of most stores between mid-March to mid-May, based on its regulatory filing, Friday.

The company booked P6.75 billion in net sales in July-September, increasing by 7.9% year-on- year. However, year-to-date, its net sales are lower by 12.5% to P15.79 billion against last year’s record.

“We are very encouraged by the ramp up of our sales in the third quarter and we are hopeful that the growth trajectory will continue in the fourth,” Wilcon Chief Executive Officer Lorraine Belo-Cincochan said in a separate statement.

Sales from depot-format stores, accounting for most of the net sales, were down by 11.5% to P1.98 billion between January and September. Same-store sales contracted by 17.6%.

Its smaller concept called Home Essentials, contributing 2.3% of the net sales, also recorded a 26.9% sales decline to P132 million. Same-store sales fell by 26.9%.

Project sales and sales to major developers were at P129 million, down by half from last year. As of September, the company grew its store count to 61, adding four new depots since the start of 2020.

“We are continuously studying ways by which we can improve efficiencies given our results amid this pandemic, but we are also trying to balance this vis-à-vis our long-term goals and our obligations and commitments to all our stakeholders – including our customers, suppliers, employees and communities,” Ms. Belo-Cincochan said.

Shares in Wilcon inched down 0.28% to close at P14.30 each on Friday. — Adam J. Ang

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