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Commerzbank cuts outlook on Wirecard losses

COMMERZBANK AG abandoned its goal for a full-year profit after losses tied to the failure of Wirecard AG added to surging costs to cover bad loans, underscoring the challenges as the lender seeks to emerge from a leadership crisis.

Commerzbank stashed away €469 million in the second quarter to deal with an expected mountain of bad debt, according to a statement Wednesday. That’s the highest since 2013. For the full year, the bank now expects to set aside as much as €1.5 billion, up from €1.4 billion previously.

The outlook revision was driven by a single case, it said in its quarterly report. That exposure was Wirecard, according to a person familiar with the matter who asked not to be identified.

Commerzbank was plunged into disarray when Chief Executive Officer (CEO) Martin Zielke and Chairman Stefan Schmittmann last month announced their resignations amid mounting calls from shareholders for deeper cost cuts. Hans-Joerg Vetter, who succeeded Schmittmann on Monday, will now have to find a CEO who can navigate the conflicting demands of stakeholders and put the lender on a more sustainable footing during the country’s worst crisis since World War II.

Commerzbank said bad loan provisions could reach between €1.3 billion and €1.5 billion this year. The firm is among the lenders hit worst by the collapse of Wirecard, which filed for insolvency after saying that €1.9 billion previously reported as cash on its balance sheet didn’t exist.

That hit is now likely to push Commerzbank into the red for the full year. But even before it cut the profit outlook, analysts were expecting the bank to post a full-year loss of about €300 million.

The outlook revisions makes it “all the more important that we reduce our costs in order to be able to cushion future burdens,” Chief Financial Officer Bettina Orlopp said in a press release. “We are working on this and have stepped up the cost target for this year.”

As a first step, the bank said it plans to bring costs down this year, after earlier targeting a level in line with last year.

Before Mr. Zielke announced his resignation last month, he was working on a radical overhaul that he was planing to present on the day he reported second-quarter results. That plan would have cut about a quarter of the workforce, closed as many as 80% of the branches, and shrunk its foreign presence while financing the restructuring by drawing down the capital cushion, Bloomberg has reported.

The appointment of Mr. Vetter, a former CEO of the regional lender Landesbank Baden-Württemberg, was opposed by Cerberus Capital Management, the most vocal critic of the bank’s leadership as of late. But with a stake of just around 5%, the US private equity firm has a limited say in a company still controlled by the government following a bailout. — Bloomberg

How PSEi member stocks performed — August 5, 2020

Here’s a quick glance at how PSEi stocks fared on Wednesday, August 5, 2020.

PHL shares rally ahead of 2nd quarter GDP report

PHILIPPINE SHARES extended their rally on Wednesday as investors decided to buy before the government released the second-quarter gross domestic product (GDP) report.   

The benchmark Philippine Stock Exchange index (PSEi) increased 58.08 points or 1% to 5,833.58 on Wednesday. The broader all shares index added 29.32 points or 0.85% to 3,456.29.

“Local shares closed higher as investors bought ahead of the second-quarter GDP release,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

The Philippine Statistics Authority is scheduled to release the second-quarter GDP data on Thursday, which majority are expecting to show the deepest economic contraction as most of the country was under strict lockdown in the period.

A BusinessWorld poll of 17 economists showed a median GDP contraction of 11%, deeper than the downward-revised 0.7% recorded in the first quarter.

While others chose to buy ahead of the data report, some investors started selling their shares at the last minute on Wednesday, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an e-mail.

“We saw selling pressure pick up towards the close as investors remain cautious ahead of the second-quarter GDP report,” he said.

The robust activity at the earlier part of trading can be linked to confidence in business resilience despite the stricter quarantine measures, Mr. Mangun said.

“Most businesses remain operational amid the lockdown. Public transport has been limited to inhibit non-essential travel, but essential goods and businesses remain functional,” Mr. Mangun said.

Metro Manila and key urban provinces are under strict quarantine measures again for two weeks to help stem rising coronavirus infections.

All sectoral indices ended Wednesday’s session higher than the previous day’s levels: mining and oil by 185.73 points or 3.31% to 5,786.63; financials by 28.87 points or 2.6% to 1,138.67; property by 34.52 points or 1.23% to 2,827.19; services by 15.53 points or 1.13% to 1,384.50; industrials by 60.21 points or 0.8% to 7,534.15; and holding firms by 8.66 points or 0.14% to 5,980.76.

Value turnover slid to P5.38 billion with 2.04 billion issues switching hands from Tuesday’s P5.74 billion, which Philstocks Financial, Inc. Research Associate Claire T. Alviar said is an indication the current rally may be unsustainable.

Advancers outpaced decliners, 128 against 75, while 27 names ended unchanged.

Net foreign selling dropped to P257.50 million on Wednesday from the P837.17 million logged on Tuesday.

Meanwhile, Wall Street ended higher after a choppy session on Tuesday, lifted by Apple and energy stocks but limited by declines in AIG and Microsoft while investors awaited more US government stimulus to fight the economic fallout from the COVID-19 pandemic. — Denise A. Valdez

Peso climbs to fresh high on positive economic data

THE PESO climbed to a new three-year high versus the greenback on Wednesday following the release of data showing a narrower June trade deficit and faster inflation in July.

The local unit closed at P49.075 per dollar on Wednesday, appreciating by two centavos from its P49.095 finish on Tuesday, data from the Bankers Association of the Philippines showed.

Wednesday’s close is also the peso’s strongest showing in more than three years or since its P48.95-per-dollar finish on Nov. 11, 2016.

The peso started yesterday’s session at P49.05 against the greenback. Its weakest showing was at P49.08 while its strongest showing was at P49.01 per dollar.

The volume of dollars traded rose to $699.71 million from the $470.35 million  seen on Tuesday.

The peso strengthened “after the narrower trade deficit data,” said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

The country’s trade deficit stood at $1.3 billion in June, lower than the $2.64-billion gap a year ago. the Philippine Statistics Authority (PSA) reported on Wednesday. This, as exports dropped 13.3% to $5.33 billion while imports declined 24.5% to $6.63 billion.

Another factor that affected sentiment on the peso was July inflation data, a trader said.

“The peso strengthened near the P49 level amid the stronger-than-expected Philippine inflation report for July,” the trader said in an e-mail.

Headline inflation picked up to 2.7% in July from the 2.5% in June and the 2.4% seen in the same month last year, separate data released by the PSA on Wednesday showed. This was mainly due to higher transport costs.

Last month’s headline print was closer to the upper end of the 2.2-3% estimate given by the BSP and a tad faster than the 2.6% median in a BusinessWorld poll of 16 analysts last week.

The July rate put the year-to-date average at 2.5%, within the central bank’s 2% to 4% target and 2.3% forecast for 2020.

Today, the peso is expected to decline anew on expectations of a deeper contraction in second-quarter gross domestic product (GDP).

“The local currency is likely to depreciate from expectations of a sudden contraction in Philippine economic growth report for the second quarter due to be released this Thursday,” the trader said.

A BusinessWorld poll last week among 17 analysts yielded a median estimate of a 11% contraction in the country’s second-quarter GDP. This is worse than the downward-revised 0.7% contraction seen in the first three months of the year.

Mr. Ricafort gave a forecast range of P48.95 to P49.15 per dollar today while the trader expects the local unit to move around the P49.00 and P49.20 levels. — L.W.T. Noble

Commuters told to wear face shields as cases near 116,000

COMMUTERS must wear face shields and masks starting Aug. 15 as protection against the coronavirus, the Transportation department said on Wednesday, as infections soared to almost 116,000.

“The initiative aims to further reduce the risk of transmitting the coronavirus disease 2019 in public transport facilities,” the agency said in a statement, noting that face shields and masks cut exposure to respiratory droplets.

The government order covers all public transportation sectors nationwide including air, rail, road and sea.

The Department of Health reported 3,462 new coronavirus infections on Wednesday, bringing the total to 115,980.

The death toll rose to 2,123 after nine more patients died, while recoveries increased by 222 to 66,270, it said in a bulletin.

Of the new cases, 2,434 were from Metro Manila, 105 were from Laguna, 101 were from Rizal, 73 were from Cavite and 62 were from Cebu.

There were 47,587 active cases, 91% of which were mild, 7.3% did not show symptoms and less 1% each were severe, and critical, the agency said.

Four of the new patients who died came from Central Visayas, four from Cebu and one from the Davao region.

More than 1.5 million people have been tested for the virus, DoH said.

The Asian Development Bank on July 24 said public transport has played a central role in the spread of the virus.

But the government can also promote a “more sustainable transport mode balance” by making sure public vehicles are clean, providing quality travel alternatives and encouraging walking and cycling to enhance overall health and well-being, ADB said.

Public transport in Metro Manila and other parts of the country resumed in June when the government eased quarantine restrictions to revive the economy.

But  infections topped 100,000 on Aug. 2, prompting the government to put back Manila and nearby cities and provinces under a strict lockdown.

Health workers had also warned that the nation would lose its battle against the coronavirus if President Rodrigo R. Duterte failed to impose the strict quarantine.

The Transportation department said other restrictions aside from wearing face shields and masks remained in effect.

“These include strict enforcement of social distancing and handwashing or hand sanitizing,” it said. “Talking and using mobile phones are likewise discouraged inside all public transportation.”

People should not treat the added restrictions as an unnecessary cost or hassle,” Transportation Secretary Arthur P. Tugade said in the statement.

“No amount of protection is too much when it comes to health and safety, especially that we are battling an invisible enemy,” he said. “What we are addressing is not a transport issue but rather a health issue.” 

Public transportation was suspended in Metro Manila and 4 nearby provinces under a modified enhanced community quarantine — the second strictest level lockdown level until Aug. 18.

Meanwhile, the presidential palace said the government would distribute modules on how to create face shields.

It would tap the Technical Education and Skills Development Authority in helping the public make the shields themselves, Cabinet Secretary Karlo Laexei B. Nograles said at an online news briefing. The instructions will be made available online, he added.

President Rodrigo R. Duterte last week said he would give out free face masks to the people. — Arjay L. Balinbin, Vann Marlo M. Villegas and Gillian M. Cortez

Gov’t told to focus on new infections

THE government should focus on new coronavirus cases to prevent further transmission, a former Health secretary said on Wednesday.

The focus should shift away from the total cases because a big proportion had either recovered or died, said Manuel M. Dayrit, a former Health secretary under then President Gloria Macapagal Arroyo.

“What are the new cases that are occurring everyday because that is where we can intervene in the here and now,” he said at an online forum.

“When local governments and the private sector work together and identify those new cases and clamp down on the clusters, you will stop your epidemic or slow it down,” he said.

Mr. Dayrit noted that while the country has built up its laboratory capacity, testing and isolation capacities have not grown. The lack of contact tracers and failure to isolate cases “will bring you down,” he added.

The country is also building the health system while confronting the coronavirus pandemic, he said.

“That’s why we have to grow our capacity in a balanced way,” Mr. Dayrit said. “And that’s the story of how our epidemic has continued to grow despite the fact that we were working very hard to expand a number of our capacities.”

Contact tracing should also be done within a day or two to prevent clustering of cases in cities and municipalities.

“That’s the secret to control — we have to do the fundamental things well, the testing, the contact tracing, the isolation and we have to do these all very well,” he said.

President Rodrigo R. Duterte placed Metro Manila, Bulacan, Laguna, Cavite, and Rizal back under a strict lockdown after coronavirus infections surged, heeding the call of the medical community that warned the country could lose its battle against the pandemic. — Vann Marlo M. Villegas

DFA says 2 Filipinos died in Beirut blast

TWO MIGRANT Filipino workers died and eight more were hurt after an explosion rocked Beirut on Aug. 4, according to the Department of Foreign Affairs (DFA).

Twelve more Filipinos were still missing, the agency said in a statement on Wednesday.

The Filipinos were in their employers’ homes during the explosion, Foreign Affairs Assistant Secretary Eduardo Martin R. Meñez told reporters by teleconference.

The explosion occurred at a port warehouse that stored 2,750 tons of ammonium nitrate, a substance used for fertilizers and explosives, according to reports.

Two of the workers who were injured were part of a group of 13 Filipino seafarers of MV Orient Queen, docked 400 meters from the explosion, Foreign Affairs Undersecretary Sarah Lou Y. Arriola said.

Eleven of the seafarers who jumped off the ship went missing, while another household worker was also reported missing.

Ms. Arriola said the impact was so strong it was felt at the Philippine Embassy in the Lebanese capital.

“The embassy is 20 minutes from the port and we were told they also felt the shockwave,” she said at an online briefing.

“We will be giving all kinds of assistance that’s going to be needed,” she said, adding that the government would help bring home the bodies of those who died.

About 32,000 Filipinos are in Lebanon, down from 33,000 in December after some of them came home amid a global coronavirus pandemic.

“We’ve been repatriating Filipinos due to economic problems in Lebanon and most of the Filipinos already lost their income and their jobs,” she said. — CAT

Regional Updates (08/05/20)

Power utilities warned against billing woes during strict lockdown

POWER DISTRIBUTION utilities were warned against issuing bills that may spur another shock from customers in areas reverted to a strict lockdown, a senator said on Monday. In a statement, Sen. Sherwin T. Gatchalian said “consumers cannot afford another round of bill shock in their electricity bills,” which happened in May when distributors charged them based on compounded estimated and actual consumption. “(B)aka magkaproblema na naman sa computation ng darating nilang billing statement ngayong MECQ (There might be problems again in the computation of upcoming bills in areas under modified enhanced community quarantine),” said the lawmaker, who also heads the Senate energy committee. He singled out Manila Electric Co. (Meralco) for alleged overestimation and underestimation of bills between March and May. The government has again placed Metro Manila, and the surrounding provinces of Bulacan, Cavite, Rizal, and Laguna under strict quarantine from August 4 to 18 due to the continued uptick in coronavirus infections. Mr. Gatchalian made the warning given a possible suspension of meter readings in these locked-down areas.

METER READING
In response, Meralco told reporters that it would not stop meter reading activities in these areas, while its business centers will remain open for various transactions. The listed company appealed to local government officials to allow its meter readers to conduct work in customers’ residences, ensuring that they will be billed based on actual consumption. “Rest assured this will be unobtrusive and the deployed meter readers will be in complete personal protective equipment, bearing in mind safety procedures,” Meralco Spokesperson Joe R. Zaldarriaga said. Mr. Gatchalian, meanwhile, expects the Energy Regulatory Commission (ERC) to issue a new order deferring utility payments in those areas. The commission, however, has yet to discuss the matter. “No discussion yet on this,” ERC Commissioner Floresindo B. Digal said. Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Adam J. Ang

Baguio City halts travel pass issuance, distribution area closed after 3 positive cases

THE BAGUIO City government has temporarily stopped the issuance of permits for essential travel starting August 5 after three city hall personnel assigned at the distribution area tested positive for coronavirus. The PFVR Gym, where the travel passes were being issued, has been closed until further notice. The city hall is also closed to the public on Aug. 5–6 “as a safety precaution,” Mayor Benjamin B. Magalong said in a post on his Facebook page. “Contact tracing is underway. Those who visited PFVR and City Hall from July 29 to present are requested to go on self-quarantine and to seek medical attention at the onset of symptoms,” he said. As of August 4, the city has 79 active cases, 62 recoveries, and three deaths.

Manila partners with Clean Air Asia, 3M for better air quality program

THE LOCAL government of Manila has teamed up with non-governmental organization Clean Air Asia and private firm 3M Philippines for a five-year program aimed at improving air quality in the highly-urbanized city of 1.8 million people. The project, under the Asia Blue Skies Program, will develop a science-based Clean Air Action Plan, 3M said in a statement. The project is planned for expansion in other cities in the capital region of Metro Manila. “Over the next five years, 3M will assist Clean Air Asia in its efforts to assess baseline air quality conditions, design capacity-building programs for air quality management, implement awareness and education campaigns, develop Clean Air Action Plans with selected city and district governments, and measure the resulting impact on air pollution levels,” the company. “As one of the densest cities in the region, the City of Manila recognizes the need to improve air quality, and we are dedicated to enhancing the quality of life of our people by eliminating the imminent risks that air pollution poses. By doing so, we are not only preserving the rich culture and strong heritage of the city, but also ensuring that it will thrive for the generations to come,” Mayor Francisco M. Domagoso is quoted in the statement. “And I’m hopeful that other cities will follow suit,” he added. Three air quality sensors were already installed in Manila earlier this year to gather baseline data.

Nationwide round-up

Senate to ask PACC, CoA participation in PhilHealth investigation

THE PRESIDENTIAL Anti-Corruption Commission (PACC) and the Commission on Audit (CoA) will be tapped by the Senate for its ongoing investigation on the alleged corrupt practices within the Philippine Health Insurance Corp. (PhilHealth), lawmakers said on Wednesday. Senator Panfilo M. Lacson said he will recommend inviting PACC Commissioner Greco B. Belgica to complement the Senate committee of the whole’s probe on the “widespread corruption” in PhilHealth. The PACC is conducting a separate investigation on the government insurance agency. Mr. Belgica, in an interview over One News, said the PACC has recommended to dismiss more than 30 PhilHealth officials who have been linked to fraudulent schemes. He also urged the Office of the Ombudsman to prioritize cases involving PhilHealth, considering the coming budget deliberations in Congress, which will appropriate funding to the agency for Universal Health Care (UHC) programs. “I-resolve muna natin ‘yung issue ng corruption. Bubuhusan mo na naman ng pondo, pagkatapos makakakita ka ng overpricing (Let’s first resolve the issue of corruption before we start pouring funds, then we see overpricing),” Mr. Belgica said. This comes after Tuesday’s Senate hearing where PhilHealth executives were accused of stealing some P15 billion through fraudulent schemes. The same hearing also found that PhilHealth is at risk of collapsing by 2022 due to the impact of the coronavirus pandemic.

SPECIAL AUDIT
Senator Juan Edgardo M. Angara, meanwhile, said CoA can conduct a special audit on PhilHealth’s finances, which is provided for under the UHC Act and the law governing government-owned and -controlled corporations. “PhilHealth is losing money because of collusion between corrupt officials and hospitals/clinics who pay,” he said in a social media post on Wednesday. Palace Spokesperson Harry L. Roque gave assurance that the President will take appropriate action after the PACC and Senate investigations are completed. “I think after the evidence are unearthed, the President will move and do the correct thing,” he said in an interview with CNN on Wednesday. — Charmaine A. Tadalan and Gillian M. Cortez

Gov’t recruiting over 3,000 more health workers

THE GOVERNMENT is looking to recruit another 3,000 healthcare workers as the country’s coronavirus cases continue to increase. In a virtual briefing on Wednesday, Cabinet Secretary Karlo Alexei B. Nograles said out of the 9,365 open positions in government hospitals for medical frontliners, “6,510 or 69.51%” have been filled. “Currently we are still recruiting more health workers targeted for deployment,” he said. Over the weekend, various medical groups called for a “timeout” through the imposition of a strict lockdown in the capital, citing that the unabated hike in coronavirus disease 2019 (COVID-19) has overwhelmed frontliners. The country has recorded over 112,000 COVID-19 cases as of Tuesday. President Rodrigo R. Duterte has placed Metro Manila and the surrounding provinces of Rizal, Bulacan, Cavite, and Laguna under lockdown from August 4 to 18. The national task force handling the COVID-19 response is set to meet with the medical sector on Thursday to discuss the needs of health care workers. — Gillian M. Cortez 

SWS survey indicates about 3.5M Filipinos still locally stranded

ABOUT 3.5 million Filipinos remain locally stranded due to government restrictions to contain the coronavirus outbreak, a Social Weather Stations (SWS) survey shows. The SWS said its Mobile Survey conducted from July 3 to July 6 revealed that “5.1% of adult Filipinos were stranded by community quarantines.” This is equal to an estimated 3.5 million people based on the projected population for 2020 of 69.5 million adults. The non-commissioned survey was conducted on 1,555 adult Filipinos nationwide through mobile phone and computer-assisted telephone interviewing. The sampling error margin is ±2% for national percentages. The survey indicates that Mindanao residents were the highest in terms of stranding rate at 8%, followed by  those from the Visayas at 5.9%. Those whose permanent homes are in Luzon but outside Metro Manila had a 4.1% rate, and 2.1% for those permanently based in Metro Manila. — Gillian M. Cortez 

ARTA to deem telco tower permits approved after 7 days

PERMITS for telecommunications towers will be automatically approved seven days after all requirements are completed, the Anti-Red Tape Authority (ARTA) said, applying the rules of the ease of doing business law to undo the bottleneck in the tower permit process.

The seven-day deadline complies with the law’s time limit for “complex transactions.” The law requires government agencies to observe three types of deadline: Three working days for simple transactions, seven working days for complex transactions, and 20 working days for highly technical applications.

ARTA said the automatic approval after seven days applies to all tower permit transactions pending with local and national government agencies.

“We required the Telco Companies and Tower Companies to furnish ARTA a list of all their pending applications,” ARTA Director General Jeremiah B. Belgica said in a message to reporters Tuesday.

Applications not acted on by local legislative councils after 20 days will also be deemed automatically approved.

Local government units and national agencies are required to release all necessary documents and permits to the private applicants, under threat of administrative charges to be filed by ARTA.

“If there are illegal fixers and fixing involved then a Criminal Case will be pursued as well,” Mr. Belgica said.

ARTA derives its authority from Republic Act 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018.

A joint task force including ARTA, the Department of Interior and Local Government (DILG), and the Department of Information and Communications Technology is being formed to carry out administrative and criminal prosecutions against officials obstructing permits.

President Rodrigo R. Duterte has threatened to file corruption charges against local government officials if they do not release updates to the DILG by Thursday.

Nine government agencies in July signed a memorandum circular fast-tracking permit approval for the building of shared telecommunications towers by reducing the required number of permits.

Mr. Duterte in his recent State of the Nation Address threatened to shut down telecommunication companies if they fail to improve their service by December. — Jenina P. Ibañez

BoC collections in seven months to July top P303B, miss target

THE Bureau of Customs (BoC) collected P303.132 billion in the seven months to July, down 16.3% year on year because of the disruptions to trade caused by the pandemic and lockdown.

The BoC reported that it missed its P314.3-billion target by 3.6%.

In July, the bureau collected P50.072 billion, exceeding its P47.674 billion goal, after collecting P42.54 billion in June, beating the target by more than 4%. Collections were below target in April and May, the height of the lockdown.

Vincent Philip C. Maronilla, assistant commissioner heading the Post Clearance Audit Group and the BoC’s spokesman, said in a Viber message that the “shortfalls” were due to the lack of trade activity during the quarantine months.

In July, the BoC said 10 out of seventeen collection districts hit their targets: the ports of Aparri, Tacloban, Limay, Zamboanga, Cagayan de Oro, Davao, Clark, Cebu, Batangas, and Subic.

“The BoC’s positive revenue collection performance (in July) is attributed to the improved valuation and volume of importation, coupled with the intensified collective effort of all ports,” the bureau said in a statement Wednesday.

Metro Manila and other key cities were under strict lockdown between the second half of March and May in an effort to slow the spread of coronavirus disease 2019 (COVID-19). The capital region moved to a more relaxed form of lockdown in June and July.

The BoC has a collection target of P542 billion this year, which was trimmed from the original pre-pandemic goal of P730 billion. — Beatrice M. Laforga

Rice tariffication deprived farmers of P27.1B in revenue but gave consumers cheaper rice — BSP

RICE TARIFFICATION took away from farmers P27.1 billion in revenue, with the trade-off being cheaper rice for consumers, the Bangko Sentral ng Pilipinas (BSP) said, citing the results of a study.

The BSP working paper is known as “Deregulation and Tariffication At Last: The Saga of the Rice Sector Reform in the Philippines.”

“Farmers have not experienced the liberalized policy regime in full, and the production side of the rice industry has not had a chance to adjust to the new regime,” it said, referring to a component of the law requiring the funding of measures to make farmers more competitive.

It said the law, also known as Republic Act 11203, was passed in March 2019.

“Recognizing the adjustment difficulties among farmers, the Philippine government is now implementing catch-up adjustment and transition support measures for the most badly-affected farmers, including cash payments, highly-subsidized loans, and grants of seed, farm machinery, and training support,” it said.

The paper cited data from the Department of Finance indicating that the farmer income losses from the lower price of palay, or unmilled rice — the form in which they sell their grain to traders — was P27.1 billion between April 2019 and February 2020. These losses were not offset by the gains they reaped from lower consumer prices overall and a decline in inflation, estimated at P4.2 billion.

“The losers due to rice tariffication appear to be the rice farmers. Farmgate prices for fresh and unmilled palay have fallen significantly, and have fallen faster and deeper than milled rice prices,” it said.

“So far, the clearest gainers are Filipino consumers, who are now experiencing lower domestic rice prices,” it said.

Tariffs collected from rice imports totaled P12.1 billion in 2019, according to the Bureau of Customs.

Some P10 billion worth of tariffs each year will finance the Rice Competitiveness Enhancement Fund.

The paper said the agriculture industry will take time to adjust to the law.

“It will take a year or two — two to four planting cycles, for the transition in trade to be substantially in place,” it said. — Luz Wendy T. Noble

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