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Rice inventory declines 4.5% in early March

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Rice inventory declines 4.5% in early March
PHILSTAR

THE rice inventory as of March 1 fell 4.5% year on year to 2.08 million metric tons (MT), the Philippine Statistics Authority (PSA) said.

In its rice and corn stocks inventory report, the PSA said rice stocks held by households rose 25.4% year on year to 1.23 million MT, while inventory in commercial warehouses fell 18.3% to 584.66 thousand MT.

Rice stored in National Food Authority (NFA) depositories fell 44.9% to 265.32 thousand MT.

“Of this month’s total rice inventory, 59.1 percent were in households, 28.1 percent were in commercial warehouses, and 12.8 percent were in NFA depositories,” the PSA said in the report.

Compared to the previous month, the PSA said the rice inventory fell 5.2%.

Household rice stocks as of March 1 rose 4.1% from a month earlier.

Rice inventories stored in commercial warehouses fell 17.5% month on month, while NFA holdings fell 12.3%.

Meanwhile, the PSA said the corn inventory as of March 1 fell 20.8% year on year to 628.37 thousand MT.

Household corn fell 0.8% to 201.21 thousand MT, while commercial corn inventory fell 27.7% to 427.16 thousand MT.

NFA held no corn during the period.

Compared to the previous month, the PSA said corn stocks fell 18.9%.

Household corn fell 10.3%, while corn held by commercial warehouses fell 22.4%.

The breakdown for corn was 32% held by households and 68% by commercial warehouses, the PSA said. — Revin Mikhael D. Ochave

Investors sell URC amid lowered tariffs for imported pork

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Investors sell URC amid lowered tariffs for imported pork

By Jobo E. Hernandez, Researcher

INVESTORS continued to sell Universal Robina Corp. (URC) last week as lowered imported pork tariff rates were seen to hit its agro-industrial unit that contributes historically nearly a tenth of the food manufacturer’s sales.

A total of 6.19 million URC shares worth P818.22 million were traded last week, data from the Philippine Stock Exchange showed.

Shares in the Gokongwei-led company ended at P128.50 apiece on Friday, 9.5% lower than the previous week’s P142-per-share finish. Year to date, the stock fell 15.6%.

“URC has been mostly affected by the reduction in tariff rate cuts on imported pork — denting its agro-industrial group segment, the transition of National Capital Region (NCR) Plus to Modified Enhanced Community Quarantine (MECQ), and of course, the resurgence in virus cases,” Regina Capital Development Corp. Equity Analyst Arielle Anne D. Santos said in an e-mail interview.

She expects URC to move sideways with a downward bias in the short- to midterm as the market keeps on showing increased bearishness towards the stock.

Stephen Gabriel Y. Oliveros, research analyst at China Bank Securities Corp., said URC declined on a week-on-week basis last Friday due to sustained selling from foreign funds.

He noted that URC also underperformed the PSE index as well as other consumer manufacturing stocks.

“We don’t see any recent negative news flow/developments regarding the company, and the sell-off was likely a pullback following the rally over the prior weeks,” Mr. Oliveros said in a separate e-mail interview.

To address the pork supply shortage due to the African swine fever, President Rodrigo R. Duterte on April 7 signed Executive Order (EO) No. 128, temporarily slashing the tariffs on imported pork for a year.

For three months, the EO will lower the tariffs on pork to 5% from 30% under the minimum access volume quota. This will be hiked to 10% for the succeeding nine months.

However, the Senate urged Mr. Duterte to recall the executive order as the new set of tariff rates would end up killing the domestic hog industry and reduce government revenue.

Meanwhile, Metro Manila and other areas such as Bulacan, Cavite, Laguna, and Rizal were placed under the strictest lockdown measures March 29 and extended until April 11 to address the increasing new COVID-19 new cases. After the two-week strict lockdown, the government decided to ease restrictions under a modified ECQ starting April 12 up to April 30.

Ms. Santos said the market anticipated URC’s stellar performance in 2020.

“So what basically happened was the market sold upon the release of the earnings,” she said.

URC’s consolidated revenues inched down by 0.8% last year to P133.14 billion. Meanwhile, its attributable net income increased by a tenth to P10.75 billion.

Broken down, the branded consumer food group remained the largest contributor to URC’s revenues last year at 77.8%. Commodity food and agro-industrial segments chipped in 13.3% and 8.9%, respectively.

“Following the assumption that URC’s profitability momentum would be sustained through this year, we project its first-quarter 2021 net income to be around P2.8 billion and estimate its full-year 2021 bottom line to be roughly P10.6 billion,” Ms. Santos said.

For this week, Mr. Oliveros pegged the stock’s major support and major resistance levels at P122.20 and P140.00 apiece, respectively.

“URC’s support at P128.10 has a high possibility to be tested any time soon. Meanwhile, the bulls have to charge really hard forward to breach its resistance at P133.00, at least, for a sustainable uptrend,” Ms. Santos said.

How PSEi member stocks performed — April 16, 2021

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How PSEi member stocks performed — April 16, 2021

Here’s a quick glance at how PSEi stocks fared on Friday, April 16, 2021.

Manila moves up in list of top financial centers

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Manila moves up in list of top financial centers

Manila moves up in list of top financial centers

Peso to rise on flows from tax payments

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Peso to rise on flows from tax payments
BW FILE PHOTO

THE PESO is likely to appreciate against the greenback this week amid flows from tax payments and improved sentiment due to better global corporate earnings.

The peso finished at P48.38 a dollar on Friday, gaining six centavos from its P48.44 close on Thursday, based on data from the Bankers Association of the Philippines.

It also strengthened by 16 centavos against its P48.54 finish on April 8. The market was closed on April 9 for the Day of Valor.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s strength last week to positive sentiment after the announcement of a new priority group for vaccination that includes economic frontliners.

Risk appetite also improved last week on the back of upbeat remittances data, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said. 

Cash remittances rose 5.1% to $2.477 billion in February from $2.358 billion a year earlier, data released by the Bangko Sentral ng Pilipinas on Thursday showed. This was the quickest monthly pace of growth in inflows since the 9.3% seen in September and ended two straight months of annual contractions.

For this week, Mr. Ricafort said the expected seasonal increase in volume due to the April 15 income tax payment deadline could affect peso-dollar trading.

Meanwhile, Mr. Asuncion said better-than-expected earnings of global firms could support the peso this week.

Mr. Ricafort sees the peso trading within P48.25 to P48.55 per dollar while Mr. Asuncion expects the local unit to move within the P48.30 to P48.60 levels. — LWTN

PSE index to move sideways on income reports

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PSE index to move sideways on income reports
COURTESY OF PHILIPPINE STOCK EXCHANGE, INC.

SHARES are expected to move sideways this week as earnings reports from companies at home and abroad are released and as investors continue to monitor the government’s coronavirus disease 2019 (COVID-19) vaccination program.

The Philippine Stock Exchange index (PSEi) went down by 45.15 points or 0.69% to end at 6,494.81 on Friday. Week on week, the PSEi lost 50.36 points from its 6,545.17 close on April 8.

The previous week saw an average of 3.43 billion shares switching hands, with Tuesday recording the lowest at 1.93 billion issues traded. Friday saw the most number of trades at 6.77 billion.

“This week’s market move is likely due to persistent investor disinterest in the local market, as evidenced by soft trading volumes,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail on Sunday.

“One bright spot in the last trading week was the energetic activity in mining stocks following the surprise gov’t announcement on the easing of mining restrictions,” Mr. Mercado said. “We expect this development to drive fund flows into the sector in the near term, buoying further rallies.”

Mining stocks improved last week after President Rodrigo R. Duterte finally lifted the nine-year moratorium on new mineral agreements, in a bid to boost revenues as the country recovers from the pandemic.

Executive Order (EO) No. 130, signed by Mr. Duterte on April 14, allows the government to enter into new mineral agreements and review existing mining deals for possible renegotiation.

The new EO amends the one issued by then-President Benigno S. Aquino III in 2012 which prohibited the grant of new mining deals in several protected areas, while awaiting the passage of a law that would increase the government’s share in mining revenues.

Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act doubled the excise tax on minerals, mineral products and quarry resources to 4%, starting 2018.

Timson Securities, Inc. Trader Darren Blaine T. Pangan, meanwhile, said the market could continue trading sideways this week.

“Investors across the globe [will] continue to monitor the upcoming earnings and guidance reports from companies both local and abroad, to somehow get a sense of the pace of recovery of the economy,” Mr. Pangan said in a Viber message on Sunday.

“Lack of catalysts will keep PSEi on a tight volatility band,” Ms. Cristina S. Ulang, head of research at First Metro Investment Corp., said in a Viber message on Friday.

China Bank Securities’ Mr. Mercado said he expects the PSEi to trade within the 6,440 to 6,650 range.

“We do see some opportunity in accumulating index issues at prevailing prices, especially as the recovery story picks up over the coming weeks as more COVID-19 vaccines arrive,” Mr. Mercado said.

Meanwhile, Timson Securities’ Mr. Pangan pegged 7,300 as a major resistance for the index. — Keren Concepcion G. Valmonte

AFP dismisses rumors of military discontent

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AFP dismisses rumors of military discontent

THE PHILIPPINE military on Sunday dismissed rumors that retired and active soldiers have withdrawn support for  President Rodrigo R. Duterte due to his inaction on Chinese incursions in the South China Sea.

AFP Chief Cirilito E. Sobejana dismissed the existence of a Viber group whose members include both active and retired senior and junior officers and who are reportedly unhappy with the President.

Mr. Sobejana said he “disavows the presence or association of officers and enlisted personnel” to such a group if it will be formed in the future.

“The Armed Forces of the Philippines (AFP) is a professional organization committed to safeguard democracy and protect its democratic institutions,” he said in a statement posted on AFP’s twitter account.

“We will focus on our mission and continue to perform our constitutional mandates. We will veer away, as we appeal to all quarters to spare your AFP from partisan politics.”

The AFP also refuted the circulation of a message online about various foreign “warplanes” taking off and landing in Clark Airbase, dismissing it as fake.

“No such landings or taking off of aircraft from other countries are taking place. The AFP is on normal alert as opposed to the claim of that spurious sender,” the AFP chief said, adding that the malicious posts were meant to “create panic and confusion.”

The AFP said it would focus on its constitutional mandate and said all soldiers, airmen, sailors and marines are “firmly behind the chain-of-command.”

Meanwhile, Defense Secretary Delfin N. Lorenzana also denounced the rumor.

“This is fake news,” he said in a statement sent by his spokesman on Viber. “I am not, and will never be, a part of any such group — neither are the officials at the Department of National Defense, many of whom are also retired military officers.”

“We call on these destabilizers to cease from propagating malicious statements especially at a time when our people should all be coming together in the face of the challenges that we are all currently facing. You are not helping our country and people at all,” he added.

The Philippines through the Department of Foreign Affairs (DFA)  last week fired off another diplomatic protest against China after authorities spotted a swarm of Chinese vessels, including six war ships within its waters in the South China Sea.

The Philippine task force also said more than 200 Chinese ships were scattered in waters within its exclusive economic zone. About 15 vessels either manned by Chinese militia, the People’s Liberation Army Navy or the Chinese Coast Guard had also been spotted at the Scarborough Shoal.

The Philippines last month and early this month filed diplomatic protests against China over the presence of fishing boats, suspected to be manned by Chinese maritime militia, at a Philippine-claimed reef in the South China Sea.

Mr. Duterte sees no need to use force against the Chinese vessels occupying Whitsun Reef, his spokesperson Herminio “Harry” L. Roque, Jr. told an online briefing early this month.

Mr. Duterte thinks the sea dispute could be resolved through peaceful means, he said. The Philippines would continue to assert its legal victory at an international tribunal in 2016, he added.

DFA this month also summoned China’s ambassador to convey its “utmost displeasure” over the continued presence of the Chinese vessels at the reef.

Whitsun Reef, which the Philippines calls Julian Felipe, is within its exclusive economic zone, Foreign Affairs acting Undersecretary Elizabeth P. Buensuceso had told Chinese Ambassador Huang Xilian, the Department of Foreign Affairs (DFA) said in a statement on Tuesday.

FISHERFOLK
Meanwhile, a group of  farmers joined calls for China to leave areas in the waterway within the Philippines’ exclusive economic zone.

“Our call is based on the principles of sovereignty, food security and livelihood that are critical to our agriculture and fisheries sectors,” the Agrifisheries Alliance said in a statement on Sunday.

The group said the country’s fish supply is threatened by Chinese illegal fishing, adding that about three million metric tons (MT) of fish worth P300 billion a year are being lost.

“This severely depletes our fish supply, which we need for our own food security,” the group said.

They also said China had used water cannons, ramming small boats and allowing its Coast Guard to fire on Filipino vessels within the Philippines’ exclusive economic zone. 

“The stakeholders across the different sectors of agriculture vehemently protest the illegal and threatening presence of the Chinese maritime militia in our seas. Our cherished principles of sovereignty, food security and livelihood are violated by their continued illegal stay.”

Mr. Lorenzana on April 3 urged the remaining 44 Chinese vessels to leave. He said the Chinese had no reason to stay there since the weather had improved.

The Chinese Embassy reiterated the reef is part of China’s Nansha Island, adding that the waters around the reef had been “a traditional fishing ground for Chinese fishermen for many years.”

It also said it hopes authorities would make constructive efforts and avoid “unprofessional remarks which may further fan irrational emotions.”

Mr. Lorenzana last week discussed the situation in the South China Sea and regional security developments with his US counterpart, his spokesman said..

He and US Secretary of Defense Lloyd J. Austin III are both looking forward to war games that got canceled last year because of a coronavirus pandemic, military spokesman Arsenio R. Andolong said.

During the teleconference, Mr. Austin also reiterated the importance of the visiting forces agreement “and hopes that it would be continued.” Mr. Lorenzana committed to discuss the matter with President Rodrigo R. Duterte. — Vann Marlo M. Villegas and Revin Mikhael D. Ochave

DoH reports 10,000 more virus infections and 150 more deaths

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DoH reports 10,000 more virus infections and 150 more deaths
PHILSTAR

By Vann Marlo M. Villegas and Kyle Aristophere T. Atienza, Reporters

THE DEPARTMENT of Health (DoH) reported 10,098 coronavirus infections on Sunday, bringing the total to 936,133.

The death toll rose by 150 to 15,960, while recoveries increased by 72,607 to 779,084, it said in a bulletin.

There were 141,089 active cases, 96.7% of which were mild, 1.7% did not show symptoms, 0.5% were critical, 0.7% were severe and 0.43% were moderate.

The Health department on April 2 reported the highest daily tally at 15,310 cases since the pandemic  started last year.

The agency said 17 duplicates had been removed from the tally and 48 recovered cases were reclassified as deaths. Seven laboratories failed to submit data on April 17.

About 10.4 million Filipinos have been tested for the coronavirus as of April 16, according to DoH’s tracker website.

The coronavirus has sickened about 141.3 million and killed three million people  worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization.

About 120 million people have recovered, it said.

Meanwhile, DoH reported 617 cases infected with the more contagious variants first detected in South Africa and the United Kingdom.

In a statement, the agency  said 351 more people had gotten the variant first detected in South Africa, bringing the total to 695.

A total of 266 more people got  infected with the variant first found in the United Kingdom, raising the total to 658.

It also said 25 people had been infected with the variant first detected in the Philippines, bringing the total to 148.

DoH, the University of the Philippines-Philippine Genome Center and UP National Institutes of Health reiterated that the variant from the Philippines was still not a variant of concern, “since current data is insufficient to determine whether the variant will have significant public health implications.”

Meanwhile, the state health insurer’s new payment method that facilitates the settlement of only about 60% of accounts payable to healthcare facilities could force hospitals to cut their resources and manpower amid a fresh spike in coronavirus cases, according to a group of private hospitals.

The presidential palace on April 15 said the Philippine Health Insurance Corp. (PhilHealth) had created a debit-credit payment method in line with President Rodrigo R. Duterte’s order to fast-track the payment of hospital claims in relation to the health crisis.

In a circular released on April 8, the state health insurer said it “shall pay 60% of the total amount of applicable healthcare facility receivables subject to 2% expanded withholding tax.”

“The debit-credit payment scheme for 60% of good claims in the National Capital Region is only an inadequate response to boost the participation of more hospitals,” Jaime A. Almora, president of the Philippine Hospitals Association, said in an email.

“The possible denial of 40% of the claims only strengthen the mistrust of hospitals in Philhealth,” he added.

“It can create apathy and discouragement of hospital managers in expanding their capability. It can cause closure of hospitals that will further aggravate the present crisis.”

The DoH earlier said hospitals in Metro Manila and nearby provinces had failed to increase their beds for coronavirus patients due to late payments from the state insurer.

With the new order, the agency said it was able to secure more than 1,000 private and public hospital beds for coronavirus patients. About 142 ward beds that could be used for patients with severe cases were also secured.

“We would like to expect the government to pay the private hospitals for services rendered to COVID patients so that hospitals can expand their capability and help more patients,” Mr. Almora said. “It should instruct PhilHealth evaluators to stop arbitrary reasons in denying claims.

“The hospitals are also sick and anemic. They need their life blood back.”

Nationwide round-up (04/18/21)

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Nationwide round-up (04/18/21)
QUEZON City residents wait to receive their cash aid. — @QCGOV

Senator wants law that will give each Filipino a financial account

A SENATOR plans to file a bill that will give every Filipino a bank account or an online payment access that can be used for a more efficient distribution of cash aid from the government. Senator Sherwin T. Gatchalian said the government should provide the account, which can be tied up with the national ID system. “I call this the ‘One Filipino, One Bank Account.’ It should be mandatory for the government to give all Philippine residents a bank account. It is important that we start tapping technology,” Mr. Gatchalian said in Filipino. The senator, who chairs the committee on banks, financial institutions, and currencies, also noted that contactless and cashless payments is another option with over 74 million Filipinos owning smartphones as of 2019. He said owning a bank account should be considered as a “basic requirement among Filipinos, regardless of the individual’s socio-economic class.” He noted the problems that have surfaced in the distribution of financial subsidy for those most affected by the coronavirus pandemic, with both beneficiaries and government agents put at risk. “In situations such as now where there is a pandemic, government can simply remit (the cash aid) to the bank account,” he said. Mr. Gatchalian also noted that records from the Philippine Statistics Authority show that 82% of the 10.5 million initial registrants for the national ID system stated that they do not have bank accounts. He also cited a financial inclusion survey conducted by the Philippine central bank in 2019 indicating that 51.2 million adult Filipinos do not have a bank account due to lack of enough money to open one as primary reason, followed by perceived lack of need for an account, and lack of documentary requirements. — Vann Marlo M. Villegas

Judges to get P5,000 monthly communications allowance for videoconference hearings

JUDGES and clerks of court nationwide will get a P5,000 monthly communication allowance starting May to pay for stable internet services that will ensure the smooth conduct of online hearings. Supreme Court Chief Justice Alexander G. Gesmundo, in a resolution released on April 16, granted the allowance that will not be subject to liquidation rules. “Judges and the Clerks of Court of the Office of the Clerk of Court shall ensure that the internet service procured has sufficient bandwidth to enable them to conduct videoconferencing hearings and electronically receive and transmit court documents,” the resolution states. The resolution is in line with the implementation of the Guidelines on the Conduct of Videoconferencing authorized by former Chief Justice Diosdado M. Peralta “in order to avoid any further delay of court action on pending cases before them” amid restrictions due to the coronavirus pandemic. First level courts refer to Municipal and Metropolitan Trial Courts  while second level trial courts are Regional Trial Courts. The Supreme Court reported last week that it recorded an 87.75% success rate in hearings held by courts nationwide via videoconference from May 5, 2020 to April 9, 2021. — Bianca Angelica D. Añago

Filipino workers in South Korea given 1-year permit extension

FILIPINO workers in South Korea with work permits expiring within this year have been granted a one-year automatic extension by the Labor department in line with the Republic of Korea’s (ROK) recent policy allowing the continuation of foreign workers’ stay in the region in consideration of the coronavirus pandemic. The Department of Labor and Employment (DoLE) said on Sunday that overseas Filipino workers (OFWs) under the Employment Permit System (EPS) are qualified for the extension. “The issuance provides that the stay and employment period of foreign workers (E-9 and H-2) under the EPS and whose employment period (3 years or 4 years and 10 months) expires from 13 April 2021 to 31 December 2021, is extended for one (1) year,” DoLE said in a statement. The extension will also apply to EPS workers who were given a 50-day visa extension by the government as long as the 50-day period falls within the year starting April 13. Labor Secretary Silvestre H. Bello III welcomed the South Korean government’s issuance, saying, “The preservation of jobs of our OFWs everywhere in the world is our primordial concern, and this development highlights the value of our 15 years of continuing bilateral cooperation on labor with the ROK.”— Gillian M. Cortez

Regional Updates (04/18/21)

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Regional Updates (04/18/21)
REP. LOREN LEGARDA FB PAGE

Antique gets 4 sea ambulances to serve far-flung island communities

FOUR sea ambulances were delivered last week to Antique and will soon be turned over to four government hospitals across the province. The fiberglass boats, funded under the Department of Health’s (DoH) Health Facilities Enhancement Program, have a speed of up to 18 knots. Antique Rep. Loren B. Legarda, in a post on her Facebook page, said the vessels will enable “faster and more efficient delivery of medical services,” especially in the island communities. She cited as an example that travel between the island village of Mararison to the mainland town of Culasi will be only five minutes. The Culasi District Hospital is one of the recipients of the boats. Ms. Legarda also said that the medical vessel is crucial amid the coronavirus pandemic. DoH Provincial Team Leader Feman Rene M. Autajay, in an interview with government news agency PNA, said the boats are also useful as majority of the province’s 18 towns are coastal areas. The boats are currently in basic transportation form, but Mr. Autajay said it would eventually be fitted with medical equipment through DoH funding.

BFAR lifts red tide warning in Cancabato Bay

THE BUREAU of Fisheries and Aquatic Resources (BFAR) declared the area of Cancabato Bay in Leyte province as officially free from red tide contamination.

In its 10th shellfish bulletin, BFAR said all types of shellfish harvested from the area are now safe for human consumption after testing negative for red tide toxins. However, red tide warnings are still implemented in the areas of Dauis and Tagbilaran City, Bohol; Tambobo Bay, Negros Oriental; Calubian, Leyte; Dumanquillas Bay, Zamboanga del Sur; Balite Bay, Davao Oriental; and Lianga Bay and Hinatuan in Surigao del Sur. All types of shellfish and Acetes sp. or alamang sourced from the red tide affected areas are unfit for human consumption. However, other marine species can be eaten with proper handling. Red tide happens due to high concentrations of algae in the water. Human consumption of contaminated shellfish may result in paralytic shellfish poisoning, which affects the nervous system. Usual symptoms of paralytic shellfish poisoning include headaches, dizziness, and nausea. Severe cases may include muscular paralysis and respiratory issues. — Revin Mikhael D. Ochave

Typhoon Bising weakens on Sunday afternoon, but heavy rains still expected until Monday

SOME residents of coastal areas in Catanduanes take temporary shelter at the provincial capitol building on April 18 after preemptive evacuation was ordered by the local government in preparation for typhoon Bising. Storm signal #2 was up in Catanduanes on Sunday.
— @PLGUCATANDUANES

TYPHOON Bising, with international name Surigae, weakened and slowed down on Sunday afternoon, but storm signals 1 and 2 in a five-level warning system remained up in several provinces on the eastern side of the country. State weather bureau PAGASA, in its 5 p.m. bulletin, said Bising’s maximum sustained winds dropped to 205 kilometers per hour (km/h) near the center and gustiness of up to 250 km/h from 215 km/h and 265 km/h, respectively earlier in the day. As of 4 p.m., the typhoon’s eye was located 290 km east of Virac, Catanduanes, which was among the provinces under storm signal #2. “Tomorrow (19 April), moderate to heavy with at times intense rains will be experienced over Bicol Region and Northern Samar,” PAGASA said. “By Wednesday early morning, the typhoon is forecast to turn northeastward or east northeastward away from the landmass of Luzon,” it said. Local governments along the typhoon’s wide radius braced for strong winds and rains, with provinces like Catanduanes ordering preemptive evacuation in high-risk areas. Presidential Spokesperson Herminio “Harry” L. Roque, Jr., in a statement on Sunday, said the Office of Civil Defense has been conducting pre-disaster risk assessments at the national level since Wednesday and has issued guidance and advisories to regional councils and local government units. The typhoon is seen to remain within the Philippine area until Friday. — with a report from Kyle Aristophere T. Atienza

Outsourcing industry recovery could be starting, survey indicates

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Outsourcing industry recovery could be starting, survey indicates
BW FILE PHOTO

OPERATIONS of outsourcing companies have started to stabilize as companies bounce back from the lockdown-induced slump of 2020, advisory firm Outsource Accelerator (OA) said in a report.

The company, in a survey of 25 firms representing almost 40,000 employees, found that the shift to remote work caused a “huge operational challenge” for the respondents, which lost 20-30% of revenue or clients during the strictest phase of the lockdown last year.

“After three months, operations stabilized and clients’ businesses stabilized,” OA said, with respondents reporting that they have received new inquiries.

Around 84% of the respondents saw revenue growth in the 12 months to February, while 8% reported flat revenue and another 8% experienced declines.

In terms of profits, 72% reported growth, 20% had flat profits while 8% contracted.

“Some old clients have left, or have been questioning the pricing model or costs, but overall these have been outweighed by new growth and new revenue,” OA said, noting that the survey does not represent a comprehensive picture of the industry.

Meanwhile, 76% of respondents grew their headcount, while 16% retained the same number of employees and 8% posted declines. The 25 firms created 9,000 jobs over the 12-month period, growing their headcount 30%.

While 73% of firms have high expectations for growth in the next 12 months, 92% said their expectations are high over the next five years.

The outsourcing industry association in November reduced its 2022 employment compound annual growth rate projection to 2.7-5%, which translates to 1.37-1.43 million full-time employees, lower than the previous goal of 3-7%.

The Information Technology and Business Process Association of the Philippines (IBPAP) also cut its revenue projection to a 3.2-5.5% compound annual growth rate to between $27.88 billion and $29.09 billion for 2022, compared to the already lowered 3.5-7.5% set in 2019.

Overall industry revenue was flat in 2020, IBPAP Chairman Manolito T. Tayag said. — Jenina P. Ibañez

FIRB targets May 17 to pass CREATE IRR

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FIRB targets May 17 to pass CREATE IRR

THE FISCAL Incentives Review Board (FIRB) aims to sign by May 17 the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the Department of Finance (DoF) said Sunday.

In a statement, the DoF said the FIRB agreed during its first meeting last week, April 14, that it will sign the IRR covering the expanded functions of the board on the target date.

The board also discussed the possible industries eligible to apply for the new tax incentive system.

Republic Act No. 11534 or the CREATE Act took effect on April 11. It lowered the corporate income tax and reformed the fiscal incentives system.

Government agencies have 90 days from a law’s effectivity to release IRRs.

The draft IRR for provisions covering the FIRB and revised tax incentives should be done by May 10, the DoF said.

Consultation among the DoF and the Trade department, which co-chairs the FIRB, and investment promotion agencies (IPA), will take place on April 26.

IPAs involved are the Aurora Pacific Economic Zone and Freeport Authority (APECO), Authority of the Freeport Area of Bataan (AFAB), Bases Conversion and Development Authority (BCDA), Board of Investments (BoI), Subic Bay Metropolitan Authority (SBMA), Cagayan Economic Zone Authority (CEZA), Clark Development Corporation (CDC), John Hay Management Corporation (JHMC), Philippine Economic Zone Authority (PEZA), Phividec Industrial Authority (PIA), Poro Point Management Corporation (PPMC), Regional Board of Investments – Autonomous Region in Muslim Mindanao (RBoI-ARMM), Tourism Infrastructure and Enterprise Zone Authority (TIEZA) and Zamboanga City Special Economic Zone Authority (ZCSEZA).

The 2020 Investments Priorities Plan (IPP), signed in December, will serve as the temporary list of priority sectors eligible for tax perks while the new SIPP is being finalized, the DoF said.

Activities and sectors currently eligible for perks under the IPP include those related to the pandemic response; investment activities identified by the BoI; those that spur jobs outside urban areas; qualified manufacturing activities such as agro-processing, fishery, and forestry; and other strategic services like integrated circuit design, creative industries, and the maintenance, repair and overhaul of aircraft.

The list also includes healthcare and disaster risk reduction management services; mass housing; infrastructure and logistics; innovation drivers; inclusive business models; environment or climate change-related projects; energy; export activities; those covered by special laws and the list from the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

The FIRB is tasked to set the target performance metrics that businesses have to hit to avail of tax incentives and ensure these are met. It must also monitor and assess the economic impact of investments enjoying incentives.

Its members also include Executive Secretary (ES), the Secretary of the Department of Budget and Management (DBM), and the Director-General of the National Economic and Development Authority (NEDA). 

CREATE is projected to result in P251 billion in foregone revenue for the government in the first two years of implementation, providing a combined P1 trillion worth of tax relief to companies over the next 10 years. — Beatrice M. Laforga

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