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Hot money posts net inflow of $97.92-M in January

Foreign portfolio investment (FPI) posted a net inflow of $97.92 million in January, as overall sentiment improved due to the swearing in of the new US government, the Bangko Sentral ng Pilipinas said.

In January, the net inflow in FPI, otherwise known as hot money because such funds are deemed less permanent than direct investment and are prone to fleeing at short notice, reversed the year-earlier net outflow of $486.1 million, the BSP said Friday. It also represented a turnaround from the $1.607 billion net outflow posted in December.

Overall inflows in January fell 23% year-on-year to $951.61 million and were down 12% from a month earlier.

Overal outflows declined more sharply, falling 102% year-on-year and 88% from December.

The central bank said possible catalysts to investor sentiment include the oathtaking of Joseph R. Biden as the 46th US president.

Top FPI sources in January were the UK, Singapore, the US, Luxembourg and Hong Kong.

Some 62.1% of FPI went into securities, mainly in banks, holding firms, property companies, food, beverage and tobacco companies, and transportation services firms.

In 2020, the financial system lost a net $4.24 billion in hot money in a rush to safe havens during the pandemic. The central bank expects FPI to post a net inflow of $3.5 billion this year as the global economy recovers.

Market optimism was fueled recently by the lower daily infections and vaccine rollouts in developed markets such as the US and parts of Europe, according to ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa.

More than 66 million vaccine doses have been administered in the US, according to National Public Radio.

Vacine deliveries to the Philippines continue to lag, with the Palace announcing the arrival of the first batch of vaccines from China on Sunday. The Philippines became the last country in ASEAN without vaccines after 117,000 doses of the AstraZeneca vaccine landed in Vietnam on Feb. 25.

“These (factors) lower the attractiveness of emerging markets like the Philippines as an investment destination for portfolio investment, and we’ve already seen the reversal in direction for trading in February,” he said in an email.

The peso has been depreciating due to the continued pickup in global oil prices as well as some demand recovery.

Meanwhile, the Philippine Stock Exchange index (PSEi) has revisited the 6,000-point level after trading above 7,000 in January. The bellwether PSEi closed at 6,794.86 on Friday, up 0.58%. — Luz Wendy T. Noble

China Bank 2020 net profit up 19.8% led by net interest income

China Banking Corp. said it booked a 19.8% increase in net profit in 2020, with the low-interest environment driving solid growth in net interest income by reducing the payout to depositors, and with strong trading gains also boosting the bottom line.

Net profit came in at P12.071 billion for the year, from P10.074 billion in 2019, according to the bank’s audited financial statements filed with the bourse Friday.

Net interest income – the difference in the interest a bank earns from assets such as loans and the interst it pays out in liabilities like deposits – increased 30% to P33.842 billion, despite an overall decline of 1.1% in interest income to P47.137 billion, which the bank said was due to a decline in loans and receivables. The 39% decline in interest expenses more than offset the modest decline in interest income.

Operating income rose 27.5% to P43.853 billion after trading and securities gains rose 266% to P3.23 billion.

Operating expenses rose 32.7% to P30.391 billion as provisioning for likely loan losses rose 244% to P8.86 billion.

The bank’s capital stood at P96.736 billion, up 11%. The capital adequacy ratio was 14.73% while its common equity Tier 1 ratio was 13.82%, both exceeding the regulatory minimums.

Last week, China Bank raised P20 billion from an issue of three-year bonds, which will fund its expansion program and other strategic initiatives.

China Bank closed at P24.10 on Friday, up 25 centavos or 1.05%. — Luz Wendy T. Noble

DBP backs legislation amending bank charter

The Development Bank of the Philippines (DBP) said it supports the passage of a measure that will improve its ability to finance countryside development projects.

“The proposed amendments to the DBP Charter would be a boon to our efforts to undertake more developmental projects especially in the countryside, where these types of economic interventions are most sorely needed,” DBP President and Chief Executive Officer Emmanuel G. Herbosa said in a statement Friday.

Mr. Herbosa said the pending legislation that will amend its charter is House Bill 8454, introduced in January by Quirino Representative and Chairman of the House Committee on Banks and Financial Intermediaries Junie E. Cua. It is being discussed at committee level.

The charter amendments will enable the bank to expand its offering of financial products and services and authorize it to engage in non-traditional modes of financing businesses while enhancing its ability to comply with risk-based banking regulations.

Mr. Herbosa said the measure will allow the bank to expand its assistance to those in need due to the economic downturn.

DBP Senior Vice President for Legal Services Soraya F. Adiong said tweaks to the bank’s charter will “bolster existing governance mechanisms, tighten sanctions and penalties for specific violations and provide greater operational and organizational flexibility.”

Mr. Herbosa said he is hoping a counterpart bill will be filed soon in the Senate.

Earlier this month, House Bill 7749 or the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act was approved on final reading in the House. The bill provides for an increase in the DBP’s capital stock to P100 billion.

The DBP’s authorized capital is currently at P35 billion. It was last raised in 1998 from P5 billion previously by Republic Act No. 8523.

DBP in December issued P21 billion in two-year peso bonds at a coupon of 2.5%.

The bank’s net profit at the end of September was down 27% at P3.24 billion.

The DBP was the ninth-largest bank with assets of P761.5 billion in 2019. — Luz Wendy T. Noble

BPI merger with savings unit effective by 2022

The Bank of the Philippine Islands (BPI) said it expects to complete its all-share merger with thrift unit BPI Family Savings Bank by 2022.

BPI will be the surviving entity on Jan. 1, 2022, after the issuance of the Certificate of Merger by the Securities and Exchange Commission, the bank said in a regulatory filing Friday.

“Fees and costs related to the merger shall be borne by BPI,” it said.

BPI Family’s net asset value as of Dec. 29 will be the pricing benchmark determining how many BPI shares will be issued to effect the merger.

The merger plan needs to be approved by at least two-thirds of BPI shareholders at the annual meeting on April 22. The plan will then be submitted to the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, and other regulators for approval.

“The customers of the combined (banks) will have access to all the products, via all the digital and physical channels, of both entities. The employees of the merged entity will have the ability to work across a larger, more varied bank; and potential synergies will create shareholder value,” the bank said.

BPI first announced its intention to absorb its thrift unit in January.

BPI Family has P278 billion in assets, making it the country’s largest thrift bank. It has 3,000 employees with a portfolio focused on housing and auto loans.

BPI Family raised P9.6 billion from its maiden bond issue consisting of 2.5-year paper in 2019.

In 2020, BPI’s net income fell 25.7% to P21.4 billion as it had to make more loan-loss provisions amid the pandemic.

BPI shares closed at P89 on Friday, up 5.83%. — Luz Wendy T. Noble

Peso strengthens on imminent arrival of vaccines

The peso closed stronger on Friday, receiving a boost from the government’s announcement of the first vaccines due to arrive in the country this weekend, as well as positive hot money data for January.

The peso closed at P48.59 against the dollar, against its P48.605 finish Wednesday, according to data provided by the Bankers Association of the Philippines. The currency market was closed Thursday for a public holiday.

The peso declined against its week-earlier closing level of P48.451.

The currency opened at its low of P48.75. The intraday high was P48.49.

Dollar volume increased to $1.33 billion from $1.187 billion previously.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the peso appreciated due to the announcement that vaccine shipments were imminent.

The President’s Spokesman Herminio L. Roque said 600,000 doses of donated Chinese vaccine made by Sinovac donated will arrive on Feb. 28, with priority recipients to start getting shots the next day.

January hot money data released by the central bank on Friday also supported the peso, Mr. Ricafort added.

Foreign portfolio investments posted a net inflow of $97.92 million last month, reversing the year-earlier net outflow of $486.1 million and the $1.607 billion net outflows in December. — Luz Wendy T. Noble

Cyber firm expands, aims to safeguard banks and business

Bluedog Security Monitoring, a UK cybersecurity firm, plans to open a second center in Makati City and create at least 20 new jobs in the year ahead to meet growing demand. The company employs more than 30 staff at its operations center, also in Makati. 

It also signed a new distribution agreement with IT Security Distribution Inc (ITDSI), a local cybersecurity solutions firm, to expand its customer base. ITSDI has offices in Manila and Cebu City and supplies products and services from over 20 vendors throughout the country. 

Phishing e-mails, attempted log-ins, and office network breach attempts are the most common cybersecurity problems for businesses worldwide, said Paul Lomax, co-founder of Bluedog.  “Cybersecurity is a growing problem for businesses in the Philippines, particularly those in financial services,” he said in a press statement. “We are aware that there are numerous small banks struggling with compliance, and hundreds of outsourcing firms which need to reassure overseas customers that they can meet international standards.” 

Working from home, he added, poses a challenge as it makes it hard for companies to monitor employees’ devices. “Criminals are aware of this and are taking advantage of the situation,” he said. “An additional problem in the Philippines is employees downloading pirated software and films that contain trojans or viruses which then go on to infect the company’s system.”

Since the lockdown, there has been an increase in the number of people using Bluedog’s Microsoft 365 monitoring service—backed by a 24/7 live team—which allows the same level of data protection for both remote users and those working within the office network. 

“The number of accounts we monitor is growing by around 20% per month. The [Microsoft 365 monitoring] service—which can be activated remotely—effectively brings remote devices into the company’s network, allowing companies to detect risks ranging from suspicious account log-ins to phishing emails arriving in an employee’s inbox,” Mr. Lomax said. 

Apart from Microsoft 365 monitoring, Bluedog also offers managed detection and response (a 24-hour cybersecurity monitoring service), Azure monitoring, virtual CISO (Chief Information Security Officer) service, Microsoft 365 endpoint detection and response, and vulnerability assessment and penetration testing (VAPT). 

According to the cyber firm, its location in Manila allows it to be more competitive than its rivals in the US and Europe, and makes its professional cybersecurity services accessible to a wider audience. “At just a few dollars per month per user and no minimum number of users, our Microsoft 365 monitoring service is affordable by almost any small firm,” Mr. Lomax said. “The managed detection and response service is aimed at small local banks and medium-sized businesses, as are our other services, but again are far more affordable than those offered by overseas competitors.”

Bluedog is also expanding its training academy and taking on more graduates with information technology (IT)-related degrees to train in cybersecurity. More than 20 analysts are part of its ongoing training program. — Patricia B. Mirasol

South Korea kicks off COVID-19 vaccination campaign

SEOUL – South Korea launched its COVID-19 inoculation campaign on Friday, with shots to be administered in some 200 nursing homes, in an effort that officials call the first step in returning the country to more normal life.

The first doses of AstraZeneca’s vaccine began to be given at 9 a.m.(0000 GMT) to nursing home workers and some patients at facilities across the country of about 52 million.

On Saturday, authorities plan to start giving 117,000 doses of the vaccine developed by Pfizer Inc and BioNTech SE supplied through COVAX, an international COVID-19 vaccine-sharing programme, to about 55,000 healthcare workers in coronavirus treatment facilities.

The national pharmaceutical panel on Friday recommended the government approve that vaccine. Authorities will wait, however, for a final review committee before deciding whether to grant approval, which would allow the country to start using doses beyond those supplied by COVAX.

Despite complaints over a slow start, and debate over the efficacy of AstraZeneca’s vaccine for older people, surveys show wide interest among South Koreans in being vaccinated.

Some health experts have raised doubts about the country’s ability to stick to its ambitious goal of protecting 10 million high-risk people by July, on its way to reaching herd immunity, defined as at least a 70% vaccine take-up, by November.

On Friday, shots will be administered to 5,266 nursing home staffers and patients in 213 facilities, and those in 292 nursing hospitals, within five days, the Korea Disease Control and Prevention Agency (KDCA) said, although authorities have excluded people aged 65 and older from AstraZeneca’s vaccine, citing a lack of data on efficacy in the elderly.

President Moon Jae-in visited one of the vaccination centres in Seoul and oversaw the inoculation process.

Despite the concern, a government poll showed on Thursday that 94% of 367,000 healthcare workers aged 64 or younger in priority groups said they were ready to take the AstraZeneca vaccine.

Prime Minister Chung Sye-kyun said authorities would extend social distancing rules by two weeks nationwide, including a ban on private gatherings larger than four people, to blunt coronavirus surge.

Chung warned against large outbreaks before the general public begins to receive the vaccine.

“Sporadic cluster infections continue in our everyday life, such as in workplaces, hospitals, and family gatherings,” Chung told a government meeting on Friday. “We have a long way to go to herd immunity.”

South Korea reported 406 new virus infections by Thursday. The country has so far recorded 88,922 infections and a death toll of 1,585. – Reuters

GLOBAL MARKETS | Asian markets roiled as bond rout turns ‘lethal’

SYDNEY/MIAMI – Asian stocks skidded to one-month lows on Friday as a rout in global bond markets sent yields flying and spooked investors amid fears the heavy losses suffered could trigger distressed selling in other assets.

The scale of the selloff prompted Australia’s central bank to launch a surprise bond buying operation to try and staunch the bleeding, helping yields there come off early peaks.

Yields on the 10-year Treasury note eased back to 1.494% from a one-year high of 1.614%, but were still up a startling 40 basis points for the month in the biggest move since 2016.

“The fixed income rout is shifting into a more lethal phase for risky assets,” says Damien McColough, Westpac’s head of rates strategy.

“The rise in yields has long been mostly seen as a story of improving growth expectations, if anything padding risky assets, but the overnight move notably included a steep lift in real rates and a bringing forward of Fed lift-off expectations.”

Markets were hedging the risk of an earlier rate hike from the Federal Reserve, even though officials this week vowed any move was long in the future.

Fed fund futures are now almost fully priced for a rise to 0.25% by January 2023, while Eurodollars have it discounted for June 2022.

Even the thought of an eventual end to super-cheap money sent shivers through global stock markets which have been regularly hitting record highs and stretching valuations.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 2.4% to a one-month low, while Japan’s Nikkei shed 2.5%.

Chinese blue chips joined the retreat with a drop of 2.5%.

NASDAQ futures fell 0.5% after a sharp drop overnight, while S&P 500 futures eased 0.1%. EUROSTOXX 50 futures lost 1.2% and FTSE futures 1.1%.

 

EMERGING STRAINS

Overnight, the Dow had shed 1.75%, while the S&P 500 lost 2.45% and the Nasdaq 3.52%, the biggest decline in almost four months for the tech-heavy index.

Tech darlings all suffered, with Apple Inc, Tesla Inc, Amazon.com Inc, NVIDIA Corp and Microsoft Corp the biggest drags.

All of that elevated the importance of U.S. personal consumption data due later on Friday, which includes one of the Fed’s favoured inflation measures.

Core inflation is actually expected to dip to 1.4% in January which could help calm market angst, but any upside surprise would likely accelerate the bond rout.

The surge in Treasury yields also caused ructions in emerging markets, which feared the better returns on offer in the United States might attract funds away.

Currencies favoured for leveraged carry trades all suffered, including the Brazil real, Turkish lira and South African rand.

The flows helped nudge the U.S. dollar up more broadly, with the dollar index rising to 90.360. It also gained on the low-yielding yen, briefly reaching the highest since September at 106.42. The euro eased a touch to $1.2152.

The jump in yields has tarnished gold, which offers no fixed return, and dragged it down to $1,767 an ounce from the week’s high around $1,815.

However, analysts at ANZ were more bullish on the outlook.

“We now expect U.S. inflation to hit 2.5% this year,” they said in a note. “Combined with further depreciation in the U.S. dollar, we see gold’s fair value at $2,000/oz in the second half of the year.”

Oil prices held near 13-month highs, with profit-taking limited by a sharp drop in U.S. crude output last week due to the winter storm in Texas.

U.S. crude fell 44 cents to $63.08 per barrel and Brent lost 33 cents to $66.55. – Reuters

Pru Life UK offers health protection against dengue with PRUDengue MedCare and PRUDengue MedCare Pro

Leading life insurer Pru Life UK now offers Filipinos wider health coverage against the risks brought by dengue, with two variants of its insurance product, PRUDengue MedCare and PRUDengue MedCare Pro, available for purchase through its all-in-one app Pulse.

“While the country continues to take safety measures against COVID-19, dengue remains a threat to many Filipinos. Pru Life UK aims to give our customers greater peace of mind with dengue coverage that can be purchased with a few clicks through our mobile app Pulse,” shares Pru Life UK Chief Customer Marketing Officer Allan Tumbaga. In 2019, over 400,000 cases of Dengue was reported in the Philippines based from a study released by the Department of Health.[1]

Covering the events of dengue diagnosis only and diagnosis followed by death, both PRUDengue MedCare and PRUDengue MedCare Pro insurance products come in two packages that offer protection for 6 months and 12 months, respectively, for as low as Php 200.

Upon diagnosis of dengue, both PRUDengueMedCare and PRUDengueMedCare Pro offer a lump sum benefit of Php 10,000 for the life assured under both the 6 months and 12 months packages. PRUDengue MedCare Pro, on the other hand, also provides a lump sum benefit of Php 100,000 in the unfortunate event of death of the life assured owing to dengue.

In line with its “We DO Health” commitment, Pru Life UK is making these protection products available on the Pulse app to help Filipinos protect, prevent and postpone the onset of diseases, including dengue. Through the digital app, Filipinos will be able to purchase the plans conveniently anytime, anywhere.

PRUDengue MedCare and PRUDengue MedCare Pro are available for purchase through Pulse, which can be downloaded for free on any Android or iOS mobile device. For detailed product information, visit https://www.prulifeuk.com.ph/en/health-insurance/prudengue-medcare-and-medcare-pro

[1]Philippines dengue cases down 66% in 2020. http://outbreaknewstoday.com/. August 15, 2020

Should Filipinos invest in the global market?

One of the best ways to get a return on your investment is through investing in the stock market. When done right, your money can grow more than what you initially put in. However, the opposite can happen as well if mismanaged.

The Philippine Stock Exchange (PSE)reported during the pandemic, more Filipinos have been inclined to investing. In fact, a 70% increase in the PSE index was observed to date, coming from the March 2020 crash when the lockdown started.[1]

While there is no doubt many are now more knowledgeable when it comes to investing, there are still those who are hesitant to take their money globally because they might find investing outside the country daunting and difficult given the complexities of the international markets.

However, what many Filipino investors may not know is that the benefits can outweigh risks when done correctly. Here are three reasons to invest in foreign markets, according to top Fund Managers across the globe:

  1. Improved portfolio diversification

When asked, financial advisers would always say portfolio diversification is one of the most notable benefits for those who are looking into investing globally. According to BlackRock, an American multinational investment management corporation founded in 1988, “Portfolios are now able to spread exposure across many economies, potentially reduce risk and volatility associated with a single economy.”

Portfolio diversification allows investors to “spread their eggs into different baskets” which means they get to distribute their investments to different stocks, economies, and markets. This helps to manage the level of risk associated with their portfolio and results in potentially more stable long-term returns.

  1. Access to compelling stocks outside of your home country

The stock market in the Philippines has become extremely competitive and saturated with investors over the years. International markets can offer a significantly larger marketplace with thousands of available stocks, giving the investor a wide selection of stocks not available in their home market.

As advised by Wellington Management, a private and independent investment management firm founded in Philadelphia, it is more beneficial to explore global markets because “investing beyond one’s borders opens up a world of opportunities.” Indeed, investing globally provides investors with more investment options and higher potential for significant returns.

  1. Growth on an international level

When it comes to household incomes, free-market policies and economic growth, investing in foreign markets provides more potential for growth than investing in local markets alone. “Companies increasingly operate in a global environment, so it is not sufficient to consider investment opportunities in isolation,” says Baillie Gifford, one of United Kingdom’s largest and oldest investment management firms.

If you’re invested globally, you get the chance to benefit from the economic growth of the markets you invested in overseas. So, even if your local stock market is down, you can still enjoy the increase in return from your international investments. Because of this, fund managers are always finding ways and strategizing toward global investments in the best economic climates all over the world.

Luckily for Filipino investors who want to go global, AIA Philam Life expanded its offerings with the launch of AIA Philam Life Elite Funds. Through these new funds, Filipinos now have access to global stock markets, and will be managed by Best-In-Class asset managers across the world namely, Baillie Gifford, Wellington Management, and BlackRock.

The new AIA Philam Life Elite Funds are designed to maximize the earning potential of common Filipinos’ hard-earned money through global funds. Policyholders may choose from different fund types depending on how much risk they are willing to take for the growth they would like their investment to achieve.

It will be available through its existing unit-linked insurance products, Family Provider and MoneyWorks. This expands the options policyholders can choose from to grow the account value of their life insurance plans. They may transfer to or add the peso-denominated AIA Philam Life Elite Funds in their portfolio.  With access to a global portfolio of professionally-managed funds, customers will have the opportunity to grow their investment to meet their long-term savings objectives.

The AIA Philam Life Elite Funds are curated based on the customers’ risk profile and investment objectives. The Elite Adventurous Fund matches investors comfortable with higher risk in pursuit of higher return while the Elite Balanced Fund is perfect for those ready to take moderate risk for capital growth. For those with a low-risk profile but still seeking long-term total return, the Elite Conservative Fund is available.  Each of these funds is uniquely created for AIA and managed by Best-in-Class asset managers.

AIA Philam Life has partnered with AIA Investment Management Pte. Ltd. (AIA IM) in the development of these funds. AIA IM is an AIA-affiliated company incorporated in 2016 as the hub for regional investment management that solely manages the assets of the AIA entities within the AIA Group. Through this collaboration, AIA Philam Life is able to open to Filipinos the opportunity to invest in global investments.

AIA Group manages more than US$244 billion in assets across 18 markets in Asia. It has a team of more than 150 investment professionals and access to the world’s finest global institutional asset managers. This partnership approach with external asset managers will help ensure the Elite Funds will deliver consistent long-term results.

Ready to grow your investment and take it to the next level? You can achieve your long-term investment goals whichever type of investor you may be with AIA Philam Life Elite Funds.

Click here to know more about AIA Philam Life’s Elite Funds or visit AIA Philam Life’s Facebook page, email philamlife@aia.com or call (02)8528-2000.

[1]The Rapid Rise of the Retail Investor. Business World. Published Jan 29, 2021.

BoP posts $752-M deficit in January

THE Philippines’ balance of payments swung to a $752-million deficit in January after 11 straight months of surfeit, the central bank said. — REUTERS

MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.

The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.

“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.

Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.

Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.

The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.

The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.

It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.

The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.

The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.

“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.

The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.

Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.

Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.

Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.

In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble

COVID vaccine imports to be exempted from taxes, says DoF

A health worker prepares a syringe during a coronavirus disease 2019 (COVID-19) vaccine rollout simulation at The Medical City in Pasig City, Feb. 18. — PHILIPPINE STAR/ MICHAEL VARCAS

THE Department of Finance (DoF) on Thursday said imports of coronavirus disease 2019 (COVID-19) vaccines will be exempted from taxes and duties, as the government is set to take delivery of the first batch of vaccines on Sunday.

Finance Secretary Carlos G. Dominguez III in a statement said the importation of COVID-19 vaccines will be included in the department’s express lane or “Mabuhay Lane” where the tax and duty exemption applications will be processed within 24 hours.

This would be faster than the current processing time of three days, he added.

Mr. Dominguez said the department is also waiving the filing fees for COVID-19 vaccine applications with the Mabuhay Lane, and allowed the use of the Tax Exemption System Online Filing Module to fast-track the rollout of the vaccination program.

The tax exemption policies will be included in guidelines on the implementation of a One-Stop Shop for International Donations and Government-procured COVID-19 vaccines that is currently being drafted by the Departments of Finance, Health and Foreign Affairs, Bureau of Customs and the Food and Drug Administration.

Finance Assistant Secretary Maria Teresa S. Habitan told BusinessWorld the tax perks will result in around P14 billion in foregone revenues from value-added tax (VAT), based on 75 million doses of vaccines priced at P1,545 each.

Importers applying for the Mabuhay Lane perks would have to pay a filing fee of at least P200 for imports worth at least P100,000 and up to P1,000 for imports valued at more than P1 million.

Finance Undersecretary Antonette C. Tionko, head of the Revenue Operations Group, recommended the inclusion of COVID-19 vaccine imports in the Mabuhay Lane, “regardless of the applicable legal basis… to allow for the expedited processing of the tax and exemption of such applications.”

The Finance secretary is allowed to include more sectors that may be processed at the Mabuhay Lane under a Department Order No. 54-2000, issued in December 2000.

“We add that the Mabuhay Lane currently processes all Relief Consignment under Section 120 in relation to 121 of the Customs Modernization and Tariff Act (CMTA). The Lane is expected to process all COVID-19 vaccines which may qualify as relief consignment,” she said, referring to goods donated to the government.

Under CMTA’s Section 121, relief consignment imported during a state of calamity and intended for the use of calamity victims will be exempted from the payment of duties and taxes.

Presidential Spokesperson Herminio “Harry” L. Roque, Jr. on Thursday said 600,000 doses of Sinovac Biotech’s vaccines will arrive on Sunday, paving the way for the rollout of the government’s vaccination program the next day (Read related story  “COVID-19 vaccination drive may start next week”).

The Philippines is the last country in Southeast Asia to take initial delivery of COVID-19 vaccines, even as it has the second-highest number of cases.

Economists warned that the slow vaccine rollout and continued quarantine restrictions will hurt the Philippines’ recovery this year.

President Rodrigo R. Duterte on Monday rejected the proposal of the economic team to ease further the lockdown restrictions until the vaccination program starts.

In light of this, Acting Socioeconomic Planning Secretary Kendrick Karl T. Chua said the Development Budget Coordination Committee will be reviewing its current economic forecasts and targets.   

The government aims to grow by 6.5-7.5% this year from last year’s 9.5% contraction which was the worst on record. — Beatrice M. Laforga

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