PSE index fails to return to 6,000 at week’s end

July 30, 2020 | 9:00 pm

By Denise A. Valdez, Senior Reporter

PHILIPPINE SHARES dropped on Thursday, leaving the main index below the 6,000 level ahead of the long weekend, as investors anticipated the government’s announcement on quarantine restrictions come August.

The benchmark Philippine Stock Exchange index (PSEi) shed 37.82 points or 0.63% to close at 5,928.45 on Thursday. The broader all shares index removed 7.97 points or 0.22% to end at 3,500.27.

This put an end to the PSEi’s two-day climb and erased hopes it would return to the 6,000 level before the week closed.

“The market shrugged off news reports that the US Federal Reserve would (use) all of the tools in their arsenal to provide a backstop for their markets,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

“There were also some lingering concerns on the rising number of local COVID-19 (coronavirus disease 2019) cases… A recent government pronouncement (said) that if the number of cases reaches 85,000, a return to a more restrictive quarantine scenario may come into play,” he added.

The number of local COVID-19 cases reached 85,486 on Wednesday, breaching the government’s previously announced threshold before reimposing stricter quarantine measures.

President Rodrigo R. Duterte was scheduled to make announcements on Thursday night, which worried investors of the situation next week.

US stocks closed higher on Wednesday, adding to gains after the Federal Reserve repeated a pledge to use its “full range of tools” to support the economy but cautioned that the outlook “will depend significantly on the course of the virus.”

But despite the PSEi’s decline, AAA Southeast Equities, Inc. Research Head Christopher John Mangun noted the decline is still its smallest weekly loss in the last four weeks.

“The PSEi ends the week down 1.25%. This…tells us that selling pressure is waning and buyers can start coming back into the market with less resistance,” he said in an e-mail.

The market is closed on Friday in observance of Eid’l Adha.

Sectoral indices were divided equally among gainers and losers at the end of Thursday’s trading. Mining and oil rose 154.32 points or 2.89% to 5,489.77; services improved 8.62 points or 0.62% to 1,379.39; and industrials added 23.80 points or 0.32% to 7,472.09.

On the other hand, financials gave up 16.50 points or 1.42% to 1,139.13; holding firms lost 48.32 points or 0.77% to 6,151.38; and property dropped 21.36 points or 0.72% to 2,913.03.

Some 1.34 billion issues valued at P5.09 billion switched hands on Thursday, slightly higher from the previous day’s 1.18 billion issues worth P3.57 billion. Advancers outpaced decliners, 114 against 78, while 47 names ended unchanged.

Net foreign selling climbed to P563.91 million from the P86.74 million seen the previous day.

Philippines, Malaysia spar online over Sabah

July 30, 2020 | 8:31 pm

THE PHILIPPINES and Malaysia revived a long-standing territorial dispute after their top diplomats sparred on Twitter over ownership of the Malaysian state of Sabah.

Malaysian Foreign Minister Hishamuddin Hussein on Wednesday tweeted that he would summon the Philippine ambassador over his Philippine counterpart’s July 27 tweet that Sabah is not in Malaysia.

“This is an irresponsible statement that affects bilateral ties,” Mr. Hussein said. Sabah is, and will always be, part of Malaysia,” he said, adding that he would ask the Philippine ambassador to explain.

Mr. Locsin on Thursday fired back by tweeting that he would also summon the Malaysian ambassador in Manila.

“Sabah is not in Malaysia if you want to have anything to do with the Philippines,” the top Philippine envoy tweeted on July 27, reacting to a US Embassy post describing the area between the Southeast Asian nations as part of Malaysia.

Mr. Locsin on Thursday stood by his statement. “No country can tell another what it can and cannot say about what the latter regards as rightfully its own,” he said.

“I don’t insist China say only what we want to hear about the arbitral award,” he said, referring to a 2016 UN ruling rejecting China’s claim to more than 80% of the South China Sea. “It is free to say what it wants while we say and do what needs doing. That holds for Sabah,” he added.

“And that’s China we’re talking about — the second biggest economy and military power in the 21^st century,” Mr. Locsin said. “I am summoning the Malaysian ambassador.”

Mr. Locsin cited previous meeting with two Chinese ambassadors “time and again to talk about our differences, sometimes heatedly but always forthrightly.” He added that he had “never objected to China making contrary claims, nor China to me doing the same with our uncompromising stand.”

“That’s diplomacy,” he said.

He also said in a separate post he would take the issue up with the US Department of State.

The oil-rich state of Sabah, a territory that is part of Malaysia’s northern Borneo, has been a thorny issue between the Philippines and Malaysia for decades. About 200 armed followers of a self-proclaimed sultan of Sulu in southern Philippines invaded Sabah state in February 2013, leading to clashes that killed several dozens.

The Sulu Sultanate claims to have leased Sabah to the British North Borneo Company in 1878, a deal that Kuala Lumpur sees as an act of abandonment.

The sultans of Sulu once ruled over Sabah and the Sulu islands. Sabah fell under British control after World War II and joined Malaysia in 1963, shortly after the sultanate ceded sovereignty to the Philippines.

Sabah has abundant natural resources. Its primary exports include oil, gas, timber and palm oil and its other major industries are agriculture and ecotourism.

Mr. Locsin said the Philippines would continue to assert its rights over Sabah and in the South China Sea.

“We have and continue to assert our rights,” he said in a tweet. “I am doing that with regard to Sabah. There have been repeated attempts to sell that claim but no Philippine president has succumbed. You’re really stupid,” he said, addressing a netizen.

‘FRIENDLY TIES’
“He was already summoned, it was about to happen,” Mr. Locsin said in another tweet. “They are always trying to sneak in an attempt to implicitly abandon our claim. But I warned our diplomats: ‘Never.’”

Philippine Senate President Vicente C. Sotto III backed Mr. Locsin on social media, noting that “even until recently, the heirs of the Sultanate of Sulu had been receiving rental payments for the occupancy of Sabah.”

Malaysia has stopped paying cession money worth RM5,300 or about P61,300 a year since 2013, Malaysian news agency Bermara said in a July 22 report, citing Mr. Hussein.

The Philippines will pursue friendly ties with Malaysia despite maintaining its claim over the Sabah state, Presidential Spokesman Harry L. Roque said at an online news briefing. He said Sabah was given by the Sultanate of Brunei to the Philippines.

He added that the territorial dispute won’t get resolved soon, and the Philippine government would continue its diplomatic relations with Malaysia.

“This matter should not affect our ongoing bilateral ties with Malaysia,” Mr. Roque said. “It has not affected it in recent years and we will continue to have healthy bilateral relations with Malaysia despite the conflict on Sabah.”

President Rodrigo R. Duterte said during his election campaign in 2016 he would pursue the Philippines’ territorial claim over one of Malaysia’s 13 states.

In 2016, the Philippines, Malaysia and Indonesia signed a cooperation deal where their navies would work together in fighting Islamic militants in the Sulu Sea. Mr. Duterte and former Malaysian Prime Minister Najib Razak also agreed to set aside the Sabah dispute.

The Philippines has been transporting Filipinos from Sabah back to their home provinces as part of measures to help undocumented Filipinos affected by the global coronavirus pandemic.

This was the subject of Mr. Locsin’s tweet on Monday, in which he reacted to the US Embassy post on aid it had given to “returning Filipino repatriates from Sabah, Malaysia.”

The US Embassy had not deleted or changed the tweet even if Mr. Locsin had urged the embassy to edit the announcement if it knows “what’s good for you.” — Charmaine A. Tadalan and Gillian M. Cortez

Gov’t targets to hit 2 million COVID-19 tests by next month

July 30, 2020 | 8:31 pm

THE GOVERNMENT is targeting to do two million coronavirus tests by August after exceeding its daily testing capacity goal for July to 33,000 tests daily.

About 1.4 million tests have been conducted so far, Vivencio B. Dizon, deputy chief enforcer of the government’s anti-COVID-19 efforts, said at an online news briefing on Thursday.

He said the government had started a dry run of pooled testing involving the Research Institute for Tropical Medicine in Muntinlupa City and the private sector. This would boost testing capacity and allow the state to use testing kits more efficiently, he added.

The Department of Health (DoH) reported 3,954 new coronavirus infections on Thursday, bringing the total to 89,374.

The death toll rose to 1,983 after 23 more patients died, while recoveries rose by a record 38,075 to 65,064, it said in a bulletin.

DoH traced the spike in cases and recoveries to the “enhanced data reconciliation efforts” with local government units.

The agency said 1,320 new cases were reported in the past three days, while 2,634 were reported late.

Of the new cases, 1,703 were from Metro Manila, 958 from Cebu, 177 from Laguna, 90 from Rizal and 87 from Cavite.

Active cases fell to 22,327, 88% of which were mild, 9.6% did not show symptoms, 1.4% were severe and 1% were critical, it said.

Meanwhile, the government said the country had less than 1% efficiency in contact-tracing, Baguio City Mayor and contact-tracing czar Benjamin Magalong told the briefing. The country has more than 65,000 contact tracers, he said.

“It’s sad that our contact-tracing efficiency is low — only 0.68%,” he said in Filipino. He added that of the more than 1,800 local governments asked to respond to a poll on tracing capability, only 614 answered.

Mr. Magalong said contact tracers would be trained in interviewing and using analytical tools and technologies. — Gillian M. Cortez and Vann Marlo M. Villegas

Regulator cited for failing to enforce law on speed limits

July 30, 2020 | 8:31 pm

LAWMAKERS on Thursday flagged the Land Transportation Office (LTO) for failing to enforce a law that limits the speed of public utility vehicles due to supposed technical difficulties.

The agency had encountered problems in determining the specifications of the speed limiter to be used in public transportation, LTO Assistant Secretary Edgar C. Galvante told an online hearing of the House of Representatives committee on transportation on Thursday.

“It took a while,” he told congressmen in Filipino when asked about the compliance rate, adding that the agency had tried to look for different models of the speed limiting equipment.

He also said they have to consider the varying speed limits on various national roads.

Muntinlupa Rep. Rozzano Rufino B. Biazon said he found it “worrisome” since the law has been in effect for four years.

“The situation is quite worrisome because we have this law, but it is not properly implemented,” he said.

He said Congress passed the law to penalize overspeeding public utility vehicles “and this is just a big concern.”

Under the law, public vehicles may only register with the LTO and apply for a franchise from the Land Transportation Franchising and Regulatory Board once they have installed a speed limiter.

“I think there should be something done to compel the LTO and other agencies to properly implement this law,” Mr. Biazon said.

LTFRB Chairman Martin B. Delgra III said the lack of a fixed speed limit was among the concerns of operators.

He also failed to answer when asked how many of the bus companies that had been granted a franchise were compliant with the law. — Charmaine A. Tadalan

Regional Updates (07/30/20)

July 30, 2020 | 8:28 pm

MWSS directs Maynilad, Manila Water to extend grace period for bills

THE METROPOLITAN Waterworks and Sewerage System (MWSS) Regulatory Office has ordered Maynilad Water Services, Inc. and Manila Water Company, Inc. to extend the grace period for customers to pay their bills until the third quarter this year. In a statement Thursday, MWSS Chief Regulator Patrick Lester N. Ty said the extension will cover bills during the strict lockdown periods tagged as enhanced community quarantine (ECQ) and modified enhanced community quarantine (MECQ). Further, Mr. Ty said the concessionaires have been directed to suspend all water service disconnection activities, resolve billing inquiries and complaints, and give enough time for customers to update payments for accumulated water bills. “The directive was initiated on the basis of humanitarian and public health considerations; and with the intention of providing further economic relief to customers, in addition to the staggered and installment payment schemes currently in effect for ECQ and MECQ water bills,” he said. Manila Water Corporate Strategic Affairs Head Nestor Jeric T. Sevilla, in a mobile phone message, said they will comply with the latest directive of the MWSS. “We will implement the latest directive of the MWSS, as we always have, extending payment and no disconnection until September 30 to help alleviate the current plight of our customers,” Mr. Sevilla said. Maynilad Corporate Communications Head Jennifer C. Rufo said they have already extended the payment deadline for its customers. “We acknowledge that our residential customers need more elbow room for the settling of bills that may have accumulated during the ECQ, so we agreed to the extension of the grace period for payments to the end of the third quarter,” Ms. Rufo said in a mobile phone message. On Wednesday, the MWSS served a show-cause order to the two concessionaires after it received over 400 billing complaints from customers. Maynilad and Manila Water have been given until the end of the week to submit an official explanation. — Revin Mikhael D. Ochave

Emirates to resume flights to Clark on Aug. 1

DUBAI-BASED Emirates airline announced that it is resuming commercial passenger flights to Clark International Airport on Aug. 1. The airline said it will have six weekly flights to Clark, located in Pampanga north of Manila, starting next month as it aims to boost its global network to 68 destinations. “With the resumption of flights to Clark, Emirates will now operate with scheduled services to two gateways in the Philippines, with services to Manila being in operation since June 11 with daily flights,” Emirates said in a statement e-mailed to reporters on Wednesday. The company currently flies to 13 destinations in southeast and east Asia. Emirates noted that Dubai is now open for business and leisure visitors. It said its government has set air travel protocols for all visitors. The flag carrier of United Arab Emirates said it will cover all medical expenses of its customers if they get diagnosed with the coronavirus disease 2019 during their travel. “This cover is offered by Emirates free of cost to its customers regardless of class of travel or destination. It is immediately effective for customers flying on Emirates until October 31 (first flight to be completed on or before October 31, 2020), and is valid for 31 days from the moment they fly the first sector of their journey,” it said. “This means Emirates customers can continue to benefit from the added assurance of this cover, even if they travel onwards to another city after arriving at their Emirates destination,” it added. — Arjay L. Balinbin

400-room Bohol 9° hotel breaks ground in Panglao as province readies ‘travel bubbles’ plan

THE BOHOL-PANGLAO airport, which opened in November 2018, is the main international gateway in the province.

THE 400-room Bohol 9° hotel in Panglao broke ground on Tuesday, as the province’s tourism sector met to discuss the development of “travel bubbles” to revive the industry, a major contributor to the local economy. Panglao, an island off mainland Bohol, is the main beach destination of the province. Panglao Mayor Leonila P. Montero led the groundbreaking for the hotel, owned by Chinese nationals Jeff Tung and Jessie Hu. The municipal government, in a statement, said Messrs. Tung and Hu’s realty business is headquartered in Beijing, with a satellite office in Florida, USA. The hotel will be built on a 2.6-hectare area in Barangay Danao.

PLAN
Meanwhile, Bohol’s tourism stakeholders will present its “Bohol bubbles” plan to Tourism Secretary Bernadette Romulo-Puyat, who is scheduled to visit Friday, July 28. Travel bubbles, also referred to as travel corridors, involve country-level partnerships for direct flights to and from areas that have shown considerable success in containing and managing the coronavirus pandemic. Ms. Puyat has previously said the government is looking at Bohol as a model for such scheme. Bohol Governor Arthur C. Yap, in a statement posted on his Facebook page Wednesday, said while he fully supports the national government’s plan, he “wants to be certain on the two thresholds to cross in reopening Bohol to visitors — to convince visitors that it is safe to come to Bohol and to convince the people of Bohol that it is safe to welcome visitors.” — MSJ

Mati City pitches P150M fish port project to PFDA

THE PHILIPPINE Fisheries Development Authority (PFDA) is now evaluating the P150-million fish port proposed by the city government of Mati, capital of Davao Oriental province. Mayor Michelle N. Rabat said the agency’s top officials visited on July 28 to discuss the project, which may possibly be implemented through two P75-million programs under the 2021 and 2022 budgets. “The bays of Mati have been known as part of the tuna highway. In fact fishermen pass through Mati before going to GenSan (General Santos City) to unload their catch. So once Mati would have a new and modern fish port, then instead of traveling all the way to GenSan they can do it here in Mati City,” she said through Facebook messenger. The port, to be developed on a five-hectare area in Barangay Central, will include a cold storage facility. Ms. Rabat said PFDA suggested private sector participation in the project for the development of a complementary food processing and packing facility. — Maya M. Padillo

Cimatu lobbies for law creating Boracay Island Development Authority

ENVIRONMENT SECRETARY Roy A. Cimatu called on lawmakers to pass the measure creating a permanent agency that will sustain developments under the Boracay rehabilitation program. “This is the opportune time to pass a law creating the Boracay Island Development Authority (BIDA) to sustain the gains achieved by the Boracay Inter-Agency Task Force (BIATF), which term has been extended for only one year or until April 2021,” Mr. Cimatu said. On May 11, President Rodrigo R. Duterte issued Executive Order 115 extending the term of the BIATF by one year. The task force was originally set to end on May 8, two years after it was created in 2018. “It is the tacit duty of the task force to ensure that Boracay does not backslide and slip to a state of environmental degradation especially with all the hard work, cooperation and concern shown by all stakeholders,” Mr. Cimatu said. The BIATF approved on June 11 its own draft of the BIDA bill and endorsed it to Congress. Under the BIATF’s proposal, BIDA is mandated to formulate policies, plans, programs, and projects for the rehabilitation, preservation, and enhancement of Boracay, one of the country’s major tourist destinations. “The proposed framework is focused on developing Boracay as a self-sustaining commercial, financial, investment and tourism center to generate employment opportunities, attract local and foreign tourists and promote productive investments,” the BIATF said.

NOT A GOCC
Boracay Inter-Agency Rehabilitation Management Group General Manager Natividad Y. Bernardino said the BIATF’s version of the bill makes the BIDA a regulatory body while the local government retains its taxing authority. “BIDA will not be a government-owned and controlled corporation akin to the Subic Bay Metropolitan Authority,” Ms. Bernardino said. The BIDA board will be composed of 11 members and chaired by the Environment secretary, while the Interior and Tourism secretaries will serve as vice-chairs. Mr. Duterte, in his 5^th State of the Nation Address on Monday, urged Congress to pass the BIDA measure. “For the rest of my term, I hope to see concerted efforts in protecting the environment. The rehabilitation of Boracay island showcased our reserve to safeguard the environment,” Mr. Duterte said. — Revin Mikhael D. Ochave

DTI small business loan program obtains P1B from state banks

July 30, 2020 | 7:42 pm

THE Department of Trade and Industry (DTI) said it will be accepting new applications for its small business loan program after obtaining additional funding from state banks.

Its financing arm, the Small Business Corp. (SB Corp.), had received loan applications from under-pressure businesses that were worth more than triple its P1-billion initial funding.

SB Corp.’s COVID-19 Assistance to Restart Enterprises (CARES) program targets businesses affected by the coronavirus disease 2019 (COVID-19) pandemic.

SB Corp. obtained an additional P1 billion from the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP), Trade Secretary Ramon M. Lopez confirmed in a mobile message Thursday.

“We are just completing documentation from the SB Corp. side,” he said.

The new funding could be available starting next week.

The terms of the loan, Mr. Lopez said, are still being finalized. Loans offered under the CARES program are no-interest but feature a service fee.

Mr. Lopez did not discuss whether funding from the state banks would have the same terms.

The department may be able to borrow up to P3 billion more from state banks if needed, Mr. Lopez told a television reporter Wednesday.

“Hopefully before that happens, may masama tayo dito sa stimulus package na may bagong pondo na ‘yun mas mabilis na, hindi na kami hihiram sa LANDBANK, DBP — may pondo na for SB Corp. to use (I am hoping this program is funded by the stimulus, which will be released faster and not need to be borrowed from LANDBANK and DBP),” he said.

Mr. Lopez said that the department may tap for funds its P3 (Pondo sa Pagbabago at Pag-asenso) portfolio, the economic stimulus package, and the 2021 budget.

Loan applications received by the CARES program now total 23,477 and are worth P3.38 billion.

Micro, small, and medium-sized enterprises make up 99.5% of all establishments operating in the Philippines, based on 2018 data. The businesses employ 63% of all workers.

In June, a DTI survey found that a quarter of businesses remained permanently or temporarily shut despite easing lockdowns. — Jenina P. Ibañez

Moody’s backs PHL sovereign rating if reforms pass Congress

July 30, 2020 | 7:40 pm

THE Philippine credit profile will remain intact despite the pandemic, provided that Congress manages to avoid political distractions and passes reforms urgently needed for recovery, according to Moody’s Investors Service.

The Philippines’ Baa2 sovereign rating and stable outlook, which was affirmed earlier this month, is deemed likely to withstand the risks posed by the pandemic, due to the manageable and affordable debt burden, with the government also improving its revenue potential, according to Christian de Guzman, a Moody’s senior vice-president with its Sovereign Risk Group.

“The progress in terms of increasing revenue by this administration and the past administration over time, it really is remarkable in terms of how much they’ve improved revenue as compared to other Baa2 peers that have seen declining revenue,” he said in an online briefing Thursday.

Mr. De Guzman said despite seeing a 10 percentage-point rise in the debt to gross domestic product (GDP) ratio this year due to pandemic-related borrowing, debt levels remain “comparatively mild” compared to other Baa2-rated sovereigns. The debt-to-GDP ratio in 2019 was a record low 39.6%.

The Baa2 rating is a notch above investment-grade while the “stable” outlook suggests the rating is likely to be maintained over the next six months to two years.

“The other part of our assessment was that we saw that the Philippines’ external strengths remain intact so there is no worsening of external vulnerability in our estimation,” Mr. De Guzman said.

He added their ratings review also considered the country’s institutional strengths and political risk.

Mr. De Guzman said legislators are prone to a “great deal of distraction” as shown “by the fact that they are focusing on other issues such as the Anti-Terrorism bill and the ABS-CBN franchise.”

“The challenge for Congress is to really move forward with meaningful economic and fiscal reform,” he said.

In June, Moody’s forecast that Philippine GDP in 2020 will contract by 4.5%, much worse than its view of a 2% contraction issued in May. Its pre-pandemic outlook for the year before the pandemic hit was for growth of 6.2%.

It upgraded its view on 2021 to 6.5% growth from 6.4%, citing base effects from a weak 2020. — Luz Wendy T. Noble

BIR registers more than 3,000 online sellers

July 30, 2020 | 7:39 pm

AROUND 3,254 online sellers have registered with the Bureau of Internal Revenue (BIR) by the end of July, with the enrolment deadline extended by a month.

BIR Deputy Commissioner for Operations Arnel SD. Guballa said in a text message that the businesses registered after the bureau issued Revenue Memorandum Circular (RMC) No. 60-2020 in June, making enrolment mandatory.

Mr. Guballa said roughly 97% or 3,148 were registered as individual online vendors while the remaining 3% or some 106 businesses were corporations.

The bureau issued RMC No. 75-2020 on Wednesday extending the last day of registration to Aug. 31.

The BIR said in the new circular that there will be no penalty for businesses that voluntarily declare and pay taxes on past transactions.

“All those who will be found later doing business without complying with the registration/update requirements, and those who failed to declare past due taxes/unpaid taxes shall be imposed with the applicable penalties under the law, and existing revenue rules and regulations,” according to the circular.

Due to the surge in online transactions during the lockdown, the BIR reminded businesses selling goods and services through online platforms of their tax obligations.

The Department of Finance (DoF) said in May it is working with the BIR on measures that will capture the potential value-added tax (VAT) leakages in the digital economy. The DoF estimates up to P17 billion in fresh VAT collections from online transactions.

On Wednesday, the House Ways and Means Committee approved a bill imposing 12% VAT on digital services provided by companies such as Facebook and Netflix, Inc.

The government’s move to tax e-commerce proved controversial, but officials stuck to their guns and cited the Tax Reform for Acceleration and Inclusion Act, which sets the ceiling for tax-exempt annual income at P250,000. Other laws exempt from VAT entities with gross sales below P3 million. — Beatrice M. Laforga

PHL remittance-decline forecast revised to 15% from 10% — IIF

July 30, 2020 | 7:39 pm

THE forecast decline in 2020 Philippine remittances has been revised to 15% from 10% as overseas workers lose their jobs or see their wages reduced, the Institute of International Finance (IIF) said.

In its latest Macro Notes edition issued Wednesday, the IIF said inflows have dropped significantly in remittance-dependent countries like the Philippines, Bangladesh, Sri Lanka and Vietnam, but detected traces of a “moderate pickup” in May.

“The outlook for the full year remains bleak — in the Philippines, for example, a country with remittances reaching 10% of GDP, we project a 15% decline,” it said in the report, which carries the title “EM Asia: COVID-Induced External Adjustment.”

“As a result of lower remittances inflows, domestic demand, and consequentially imports, will remain under significant pressure for the rest of the year,” it added.

The study “analyzed the external adjustments in emerging markets” in Asia given the impact of the coronavirus pandemic, noting that the slowing global economy has dampened exports with weak domestic demand expected to drag down imports.

Meanwhile, other sources of foreign exchange inflows “have come under significant pressure as well” in the first six months, including income from foreign tourism and remittances.

Cash remittances dropped 16.2% from a year earlier in April to $2.046 billion, the sharpest decline since a 33.5% slump in January 2001.

The World Bank expects global remittances to decline 20% this year, while Moody’s Investors Service sees Philippine remittance inflows falling 5-10%.

“The economic disruption brought about by the pandemic is unprecedented in both its severity and scope, and we are observing a global synchronized recession amidst widespread government-imposed restrictions. In this context, it is not surprising that international trade — including in services has dropped sharply,” the IIF said.

It said the more stringent lockdowns in the Philippines and India caused exports to decline sharply, while the prolonged restrictive measures to curb the spread of the virus weakened domestic demand.

It said these “dramatic changes in international trade” will result in “significant current account adjustments” in the region.

The Philippine current account deficit hit $464 million in 2019 or 0.1% of gross domestic product (GDP), narrower than the $8.773-billion gap seen in 2018.

“The dramatic shift in cross-border flows could accelerate structural changes in the region, such as the shifting and upgrading of industrial capacities and shortening of supply chains. Countries in EM Asia are also attempting to strengthen domestic tourism and reduce their overall dependence on external demand,” it added.

The Philippines projects a 2-3.4% GDP contraction this year. — Beatrice M. Laforga

PAGCOR swings to net loss in half as lockdown hits gaming revenue

July 30, 2020 | 7:39 pm

THE Philippine Amusement and Gaming Corp. (PAGCOR) said it booked a net loss in the first half after a sharp decline in its gaming revenue with casinos forced to close due to the lockdown.

In financial statements released Thursday, PAGCOR said its net loss was P1.596 billion in the six months to June, after reporting a year-earlier profit of P3.079 billion. It missed its P2.835-billion profit target for the half as gaming venues unable to operate and overseas gamblers unable to visit due to travel restrictions.

The regulator’s income from gaming operations fell 49.56% year on year to P18.443 billion.

Less gaming taxes and contributions, net gaming earnings totaled P8.76 billion, down 49.56% year on year.

The regulator paid some P922 million for the 5% franchise tax and contributed P30 million to the Dangerous Drugs Board.

As a government-owned and controlled corporation, it also remitted P8.73 billion to the national government, down 49.65% year on year.

Income from related services and other activities totaled P316.01 million and P655.62 million, down 51.92% and 58.67%, respectively.

PAGCOR booked expenses of P11.317 billion in the six months, down 31.53% from a year earlier.

Starting mid-March, casinos were shut down after being deemed non-essential and also a risk because they depended on mass gatherings.

PAGCOR Chairman and Chief Executive Officer Andrea D. Domingo has said the regulator has submitted its recommendations to the Inter-Agency Task Force on Emerging Infectious Disease for the reopening of casinos.

Philippine Offshore Gaming Operation businesses have been allowed to resume partial operations provided they settle their tax arrears.

Ms. Domingo said the regulator lost revenue of about P5-6 billion due to the lockdown. — Beatrice M. Laforga

Renewables industry touts ‘untapped’ potential, superior safety vs nuclear

July 30, 2020 | 7:39 pm

THE renewables industry said its potential for providing energy is “untapped” while its safety record is superior to that of nuclear energy, which the government is considering adding to the power generation mix.

“If we need more power, the renewable energy potential of our country is already at 250 gigawatts, and that excludes solar energy. It is an untapped resource (that) is safe, reliable, and perfect for scaling from small communities to big cities,” Gerard C. Arances, the convenor of the Power for People Coalition, said in an e-mail.

Malacañang said Wednesday that Executive Order (EO) No.116 authorized a study on the feasibility of nuclear energy and called for the development of a national policy on nuclear energy.

The order indicates that a nuclear energy program is at hand which will aid in achieving energy security and shield consumers from price volatility, Energy Secretary Alfonso G. Cusi said.

The inclusion of nuclear energy in the generation mix “may add problems,” according to Bayan Muna Partylist.

“The government should instead concentrate on renewable energy rather than dangerous sources of power like the long-mothballed Bataan Nuclear Power Plant,” Representative Carlo Isagani T. Zarate said in a statement.

The EO, which President Rodrigo R. Duterte signed on July 24, constitutes the Nuclear Energy Program Inter-Agency Committee, which will be conducting the review on nuclear adoption. The committee will be led by the Department of Energy (DoE) and the Department of Science and Technology (DoST).

It will evaluate the viability of the 620-megawatt BNPP.

Mr. Zarate said the “dangers and disadvantages far outweigh the presumptive benefit” of the potential reopening of the nuclear facility.

According to the DoE, nuclear generation will be beneficial if the Philippines manages to address infrastructure gaps and meet other requirements set by the International Atomic Energy Agency (IAEA).

“(N)uclear energy is one of the cheapest sources of electricity and the cleanest, with near-zero emissions,” said Dr. Carlo A. Arcilla, director of the DoST’s Philippine Nuclear Research Institute.

However, Mr. Zarate disputed the claim that nuclear power is cheap and a low-carbon source.

“(W)hen all the energy-intensive stages of the nuclear fuel chain are considered — from uranium mining to nuclear decommissioning — nuclear power is not a low-carbon electricity source. Nor is it cheap,” he said.

Senator Sherwin T. Gatchalian said in a statement said the study must be done with “utmost transparency” and that the public should be “well-informed on the inherent risks and potential of nuclear power.”

The government will work closely with the IAEA and other experts in introducing nuclear power into the generation mix, Mr. Cusi said. — Adam J. Ang

Sept. deadline set for reporting all related-party transactions

July 30, 2020 | 7:38 pm

THE Bureau of Internal Revenue (BIR) has set the end of September as the deadline for taxpayers to report and submit documentation on related-party transactions (RPTs) of any size, with no reporting threshold determined yet.

Commissioner Caesar R. Dulay signed Revenue Memorandum Circular No. 76-2020 Wednesday giving taxpayers until Sept. 30 to report such transactions in the form of attachments to income tax returns for the period ending March 31.

All such transactions, regardless of size, will need to be reported since no threshold has been set, BIR Deputy Commissioner Marissa O. Cabreros said in a text message Thursday.

According to the circular the deadline was extended due to the pandemic.

The bureau issued Revenue Regulations (RR) No. 19-2020 early this month to require reporting of RPT via the new Form 1709, along with supporting documents.

The rule aims to ensure that transactions between related parties are made at arm’s-length. The new form is now among the required attachments taxpayers have to submit along with their annual income tax returns.

“Ultimately, it is aimed at improving and strengthening the BIR’s transfer pricing risk assessment and audit. With the information gathered in the RPT Form and its attachments, the BIR will be able to perform transfer pricing risk assessment and make an informed decision, at the early stage, whether or not to conduct a thorough review/audit of a particular entity or transaction. In this way, and given its limited resources, the BIR will be able to focus its audit and commit its resources only on the most important transfer pricing issues,” the bureau said.

It said non-profit corporations and organizations are also required to comply with the directive since they are allowed to participate in activities “conducted for profit without losing their tax-exempt status for their not-for-profit activities.”

RR No. 19-2020 defines RPTs as the “transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.” — Beatrice M. Laforga

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