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PSEi declines for second straight month in August

THE LOCAL BOURSE continued declining in August, but the drop was at a much slower pace than the previous month’s, as the market lacked strong catalysts besides the rising number of coronavirus cases.

The benchmark Philippine Stock Exchange index (PSEi) shed 37.37 points or 0.63% to close at 5,884.18 on Friday.

On a monthly basis, the PSEi was down 44.27 points or 0.75%. August was its second straight month of posting a loss. However, the market started to improve compared to how it performed in July when the PSEi dropped 279.27 points or 4.7% month on month.

“The benchmark index fell by 44 points during the month of August — pleasantly surprising performance versus July, considering the historical dryness of trading during the ‘Ghost Month,” online brokerage 2TradeAsia.com said.

August is called a “ghost month” by many investors, which is believed by some as a period of bad luck — hence, they avoid big moves in the market.

But the brokerage said there were still investors that went on with trading last week to secure profits ahead of the long weekend.

“Profit-taking dominated the week, ahead of a shorter yet data-heavy week ahead: inflation data will be reported plus decision to extend or ease current (quarantine restrictions) in Metro Manila and nearby areas,” 2TradeAsia.com said.

Value turnover went up 71% to an average of P9.09 billion last week. Net foreign selling also extended and grew more than double to an average of P972.41 million.

The local bourse is closed on Monday in observance of the National Heroes’ Day.

“The week’s headlines saw reaffirmation from listed firms on capital plans that are restarting/continuing despite headwinds from the coronavirus… To this effect, we further see elevated transaction activity and cash flow strengthening,” the brokerage said.

As with the past months, sentiment also continues to be driven by data on the coronavirus infections. Total cases in the Philippines stood at 213,131 as of Saturday, of which 74,611 are active cases.

Across the world, the virus has infected nearly 25 million people and has killed 842,499, based on records from Johns Hopkins University.

For the coming week, one of the primary drivers will be the release of headline core inflation data on Sept. 4, which is expected to reflect the impact of the stricter quarantine from Aug. 4 to 18.

Global equity markets rose to a new high on Friday as US consumer spending in July suggested a strong economic rebound lies ahead, while the Japanese yen surged on safe-haven buying after Prime Minister Shinzo Abe resigned for health reasons.

The dollar neared lows last seen in May 2018, retreating from Thursday when the Federal Reserve said it will allow inflation to run faster for longer, a stance that will likely lead to a period of prolonged low interest rates. — Denise A. Valdez with Reuters

IIHS safety group gives highest ratings to 2020 Audi A6, Q8

THE INSURANCE Institute for Highway Safety (IIHS) in the United States awarded the 2020 Audi A6 the highest Top Safety Pick+ and the 2020 Audi Q8 the Top Safety Pick awards as these excelled in the safety group’s testing. The two vehicles obtained top “Good” ratings in all six IIHS crashworthiness performance evaluations, and achieved “Superior” grades for front-crash prevention tests.

In August last year, the Audi E-tron became the first pure battery-electric vehicle to be named an IIHS Top Safety Pick+.

The independent, nonprofit organization ultimately aims to “reduce losses from crashes by determining the safety level of vehicles, then rating these.” Two aspects of a vehicle’s safety are tested: Crashworthiness, or how well a vehicle protects its occupants in a crash; and crash avoidance and mitigation, which considers the technologies in a vehicle that can prevent or lessen the severity of a crash.

Six crash tests are performed: moderate overlap front, driver-side small overlap front, passenger-side small overlap front, side, roof strength, and head restraints and seats. When doing its front crash prevention ratings, the IIHS conducts low- and moderate-speed track tests of vehicles with automatic braking systems.

Audi reported that the 2020 Audi A6 and Audi Q8 performed well in the IIHS tests owing to the vehicles’ “full suite of standard and available driver assistance features” such as the Audi Pre-Sense, which can prepare the cars for impact. This closes side windows and panoramic sunroof (in the case of the Audi Q8), pre-tensions front seatbelts, and provides visual and acoustic warnings to help alert the driver to potentially hazardous situations or an imminent crash. “Another feature contributing to the models’ top safety ratings is the rear cross-traffic assist, which helps drivers when they are reversing out of a perpendicular parking space,” continued the release.

The 2020 Audi A6 is powered by a 2.0-liter TFSI, inline-four, turbocharged, gasoline engine fitted with a mild hybrid system composed of a belt alternator starter (BAS) and lithium-ion batteries. The system delivers 245hp and 370Nm, realized through an Audi S tronic seven-speed dual-clutch transmission.

Meanwhile, a turbocharged, 3.0-liter, six-cylinder TFSI gasoline engine serving up 340hp and 500Nm motivates the 2020 Audi Q8. It is similarly fitted with a mild hybrid system. The driver accesses the performance through an eight-speed Tiptronic transmission; and the vehicle features a Quattro permanent all-wheel drive unit.

The 2020 Audi A6 and Audi Q8 are available at Audi dealerships on EDSA Greenhills; in Bonifacio Global City; Westgate, Alabang; and SM City Seaside Cebu. For more information, call 0917-813-9064, 0917-806-2946, or 0917-935-4111.

Yields on gov’t debt go up

YIELDS ON government securities (GS) edged higher last week after the Treasury rejected all bids for the 20-year papers and following investors’ reaction to its borrowing plan next month. 

GS yields, which move opposite to prices, went up by an average of 7.3 basis points (bps) week on week, according to the PHP Bloomberg Valuation Service Reference Rates as of Aug. 28 published on the Philippine Dealing System’s website.

ATRAM Trust Corp. Head of Fixed Income Jose Miguel B. Liboro said market sentiment was “defensive” at the start of the week, with investors asking for higher yields during the Bureau of the Treasury’s (BTr) reissued 20-year debt auction last Tuesday.

“Although BTr opted to reject all bids at the auction, rates adjusted higher on the back of a combination of less dovish rhetoric from the BSP (Bangko Sentral ng Pilipinas) on further policy action over the short term and speculation on possible adjustments to the BSP’s bond-buying program,” Mr. Liboro said in an e-mail.

“Local bond yields experienced some upward pressure week on week as the market reacted to the government’s borrowing plan for the year ahead where 85% of the planned funding will be sourced onshore,” Robinsons Bank Corp. peso sovereign debt trader Kevin S. Palma said in a Viber message.

“The rise in domestic yields was further compounded by higher US Treasury yields after the US Federal Reserve unveiled a major policy shift where it will consent inflation to glide higher and employment to run a little bit hotter to support the economy,” he added.

On Tuesday, The Bureau of the Treasury (BTr) rejected P46.921 billion in tenders for the reissued 20-year papers even as this was more than its plan to borrow P30 billion as market participants asked for higher yields after the central bank held benchmark rates steady on Aug. 20.

Had it made a full P30-billion award, the average rate of the notes, which have a remaining life of 12 years and seven months and carry a coupon rate of 3.635%, would have been at 3.501%, higher than the 5.341% fetched last Nov. 25 when it was last offered.

The Treasury expected the bonds to be quoted below three percent, National Treasurer Rosalia V. de Leon said.

Meanwhile, the BTr announced on Thursday a P160-billion borrowing plan for September, lower than this month’s P170-billion program.

It plans to raise P100 billion in Treasury bills (T-bills) in September via its weekly auctions of 91- and 182-day papers worth P5 billion each and one-year T-bills worth P10 billion.

The BTr will also borrow P30 billion from three-year Treasury bonds (T-bond) on Sept. 11 and another P30 billion from 10-year papers on Sept. 4.

Mr. Palma said these offerings are “relatively attractive” to dealers looking for yields.

“In terms of the issue size, it did not veer much from its usual monthly volume except that the 35-day T-bill was out of the equation,” he said.

The 35-day papers, which the Treasury had reintroduced since April to accommodate demand for shorter-termed debt, will no longer be offered in September due to the planned bond issuance of the central bank within the third quarter.

Offhand, Mr. Liboro said the announcement of three- and 10-year papers is “not particularly impactful” since the offer volumes are consistent with regular offerings, “so it’s not an increase in supply.”

“Likely see some price action around the 10-year [paper], potentially yields adjust higher prior to auction on speculation on whether the BTr will opt to award there after rejecting at the 20-year [debt] this month,” he said.

US Federal Reserve Chair Jerome Powell on Thursday also introduced a fresh strategy to allow inflation to go above the two percent target to spur economic recovery and employment before hiking rates, Reuters reported.

At the secondary market last Friday, the 91-, 182-, and 364-day T-bills saw their yields go up by 1.2 bps, 0.3 bp, and 2.8 bps, respectively, to 1.203%, 1.44%, and 1.815%.

At the belly of the yield curve, rates of the two-, three-, four-, five-, and seven-year T-bonds went up by 10.6 bps (2.118%), 13.4 bps (2.284%), 15.3 bps (2.426%), 15.5 bps (2.544%) and 13.3 bps (2.704%), respectively.

The long end of the curve ended mixed as the yield on the 10-year paper increased by 15.8 bps to 2.797%, while 20- and 25-year debt dropped by 5.8 bps (3.52%) and 2.3 bps (3.63%), respectively.

“For [this week], market may continue to be defensive given the lack of concrete direction to justify major movements,” Mr. Palma said.

“We expect the ‘lower for longer’ trend for rates to continue but see more scope for a gradual adjustment higher in the short-term,” Mr. Liboro said.

“Investors will likely be cautious [this] week and looking towards the August inflation print for more clarity,” he added.

The Philippine Statistics Authority will release the latest inflation report on Sept. 4. — Lourdes O. Pilar

How PSEi member stocks performed — August 28, 2020

Here’s a quick glance at how PSEi stocks fared on Friday, August 28, 2020.

Guidelines set for regulation of drug retail, wholesale prices

THE COUNCIL that will provide technical advice on the price regulation of certain medicines, which took effect June 2, is expected to get to work soon following Sunday’s issuance of guidelines by the Health department.

Under Administrative Order No. 2020-0039 dated Aug. 20 and published Aug. 30, the Department of Health (DoH) outlined the rules for implementing the maximum prices for both retail and wholesale of drugs listed in a presidential order.

A total of 133 drug formulas are covered by Executive Order No. 104, titled Improving the access to healthcare through the regulation of prices in the retail of drugs and medicines, which was signed by President Rodrigo R. Duterte on Feb. 17 and came into effect June 2.

Under the DoH guidelines, the Drug Advisory Council will be created to provide technical assistance and guidance to the government in implementing measures for affordable  drugs and medicines.

It will be composed of experts on public health, epidemiology, pharmaceutical, policy, law, clinical, and economy.

The group is tasked to draft procedures for the selection of medicines that will be placed under regulation, conduct drug price evaluations, and recommend the maximum prices.

It is also mandated to consult with health professional organizations, patient and consumer groups, as well as civil society organizations, among others.

A separate expert panel will also be formed to provide technical guidance to the council.

The Pharmaceutical and Healthcare Association of the Philippines (PHAP) appealed to the government in late May to recall the price control policy, citing a potential P28 billion in foregone public revenues with a P57 billion decrease in sales.

The DoH is mandated to conduct a regulatory impact assessment, through a third-party research firm, after a year of the policy’s implementation.

“The said assessment considers whether or not the MRP (maximum retail price) has led to (1) improved patient compliance  adherence to medication, (2) reduce out-of-pocket health expenses; and (3) patient satisfaction,” the DoH guidelines say.

The existing list of medicines, on the other hand, will be reviewed after three to six months of implementation.

With the policy in effect, the DoH Pharmaceutical Division together with the Food and Drug Administration (FDA) and the Department of Trade and Industry (DTI) are authorized to monitor and penalize violators.

The MRP order applies to “all those who manufacture, trade, distribute, import, export, and wholesale or retail FDA-registered drugs and medicines, including medical and allied health practitioners, and to all persons, juridical or natural, involved in the provision of healthcare,” according to the guidelines.

Penalties range from P50,000 to P500,000 for the first violation, depending on the gravity and extent, and up to P5 million on the 5th and succeeding offenses. — Vann Marlo M. Villegas

Economic, political legacy of Japan’s Abe seen strong

By Charmaine A. Tadalan, Reporter

THE RESIGNATION of Shinzo Abe as Japan’s prime minister may affect the Philippines’ foreign policy towards the United States and China as well as its loan availment in the long term, analysts said separately at the weekend.

But in the immediate future, the ties developed between Mr. Abe and Philippine President Rodrigo R. Duterte are seen to keep political and economic relations strong.

Renato C. de Castro, international studies professor at De La Salle University,  said Mr. Abe, Japan’s longest-serving prime minister, served as a “bulwark of stability” that convinced Mr. Duterte to decide against severing ties with the United States and leaning towards China and Russia at the beginning of his term.

“That would be a great loss in terms of providing a sort of bulwark or at least a balancer in terms of the efforts of President to effect the dramatic change in Philippine foreign policy,” Mr. De Castro said by telephone on Saturday.

Mr. Duterte, in a statement on Saturday following Mr. Abe’s announcement on Friday that he is stepping down due to a chronic illness, said the bilateral relations between the two countries, “now a Strategic Partnership, greatly flourished during his (Mr. Abe’s) tenure.”

“What we have worked for and achieved together lays the foundation for an even closer friendship and cooperation between our countries in the future,” the Philippine leader said.

Mr. De Castro said Mr. Abe had talked to Mr. Duterte about the Philippines’ continued alliance with the US during a visit to Tokyo in 2016, and reiterated that message during the former’s visit to the latter’s hometown Davao in 2017.

He also noted that Mr. Abe’s administration provided 10 multi-purpose patrol vessels, intended to be deployed in the West Philippine Sea to strengthen the Philippine Coast Guard’s response to China’s threat in the disputed waters.

The former prime minister also strengthened financial assistance to the Philippines in the face of significant commitments offered by China.

“Prime Minister Abe made it a point for the president and for the Philippines to take Japanese into account,” Mr. De Castro said.

China in 2016 committed $24 billion to the Philippines, but “they (Japan) don’t have that amount of money, so they did everything that was possible to prevent us from making that dramatic change towards falling into the Chinese orbit.”

Maria Ela L. Atienza, a political science professor at the University of the Philippines, said the change in Japan’s leadership is not expected to dramatically shift foreign policy in the short term.

Ms. Atienza said changes may come later depending on developments in public dissatisfaction over Japan’s response to the coronavirus pandemic, the aging population, its relations with China and the US, and its pacifist constitution.

“Any change in Japanese foreign policy can have implications in the security of the Asia Pacific region,” she said in an emailed response on Sunday.

ODA
Mr. Abe’s successor will keep the post until the end of his term in September 2021, during which Ms. Atienza said Japan’s loans and grants will not likely be affected.

Japan has been the country’s top source of official development assistance (ODA), accounting for 42.66% in the first quarter this year with $8.537 billion in grants and loans.

“ODA  commitments will likely continue in the near future although COVID-19 (coronavirus disease 2019) has affected the economies of many countries in the world, even developed countries,” she said.

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said Japan-Philippine ties will likely be sustained, citing the good relations between Messrs. Abe and Duterte as well as the Philippines’ improved credit rating.

“The resignation of Japan Prime Minister Abe would definitely require some adjustments for the Philippines to also further develop good diplomatic and business ties with the new Prime Minister of Japan, though continuation of good ties between Japan and the Philippines would likely remain/sustain as seen in many years/decades,” he said over email on Saturday.

He also pointed out that Japan Credit Ratings Agency’s upgrade of the Philippines’ rating in June, despite the impact of the COVID-19 pandemic, is a sign of “improved international investor confidence.”

P2.5-B aid released to OFWs — DoLE

ALMOST P2.5 billion in aid has been distributed to overseas Filipino workers (OFWs) displaced by the global coronavirus pandemic, according to the Labor department.

“So far, P2.492 billion had already been disbursed benefiting 243,326 displaced OFWs who were either still on-site or those already repatriated,” the Department of Labor and Employment (DoLE) said on Sunday.

Beneficiaries receive a one-time cash assistance of P10,000.

Meanwhile, DoLE reported that 173,088 OFWs have been assisted for their return to their home provinces as of August 29.

The Department of Foreign Affairs, for its part, said another 700 Filipinos arrived from abroad last week, bringing the total number of repatriated to more than 153,000.

This includes 57,595 seafarers and 95,529 land-based workers who have come home since February. — Gillian M. Cortez and Charmaine A. Tadalan

Regional Updates (08/30/20)

Baguio eases restrictions for locals, eyes reopening for tourists mid-Oct.

SEVERAL QUARANTINE restrictions in Baguio City are lifted effective Monday, Aug. 31, as the local government takes steps towards “learning to live with the virus” while reviving the economy. Among the regulations that will be eased are the use of quarantine pass to enter shopping malls and other commercial establishments, liquor ban, and movement of senior citizens. “I understand that one needs food for sustenance, but we cannot count out the positive effects of physical activity and the company of friends and family. Which is why, once again, we will try to ease up on restrictions within the city,” Mayor Benjamin B. Magalong said in an advisory released Saturday. “With these eased restrictions, I remind everyone: keep your guards up, and apply minimum health standards in every instance,” he added. Meanwhile, City Tourism Officer Aloysius C. Mapalo announced that the mountain city’s public parks, except the Botanical Garden, will be reopened to residents by September. Mr. Mapalo said this is part of the local government’s efforts “to gradually open the tourism industry” to help revive the economy. “Activities in the parks such as boating, biking, horseback riding, among other related activities, will be allowed, but the public will have to abide by the stringent health and safety protocols, particularly the mandatory wearing of face mask, the observance of physical distancing, and the practice of personal hygiene,” he said in a statement. For tourists, Mr. Mapalo said they moved the planned reopening of the city to mid-October from September as they are still finalizing the Baguio Visitors Information and Travel Assistance (VISITA) online platform. VISITA is a digital registration system that will be used by the city government to regulate the entry of visitors as well as for overall monitoring of the tourism industry’s compliance to health safety standards. As of Aug. 29, the city had 334 coronavirus cases, with 87 active, 239 recoveries, and eight deaths.

P16-M aid given to sugarcane workers in Western Visayas—DoLE

THE DEPARTMENT of Labor and Employment (DoLE) reported that it has released P16 million in aid to sugarcane workers affected by the coronavirus crisis. In a statement on Saturday, DoLE said its regional office in Western Visayas distributed P1,000 per worker under the Bayanihan to Heal as One Law and assistance is continuing with the available budget. “We wanted to reach out to our sugarcane workers because they are one of the most vulnerable and marginalized workers in the country and the COVID-19 (coronavirus disease) pandemic had added to their hardships,” DoLE Regional Director Mary Agnes Capigon said. — Gillian M. Cortez

Whale shark count in Bicol up by 19

THE NUMBER of whale sharks in Bicol’s protected seascape is up to 69 since the start of the year after 19 new individuals were spotted in addition to 50 identified as returning, the World Wide Fund for Nature (WWF) Philippines reported on Friday. The whale sharks, the largest living fish and known locally as butanding, are in the Ticao-Burias Pass Protected Seascape (TBPPS), a critical ecosystem that is monitored by the organization. It is a popular tourism site with the town of Donsol as jump-off point. “It’s important that we continue our whale shark monitoring efforts despite the lockdown. It’s our obligation as WWF-Philippines to continue monitoring activities, and to let the world know of the whale sharks of Donsol and their importance to their ecosystem,” WWF-Philippines Donsol Project Manager Jun E. Narvadez said in a statement. “Our Butanding Interaction Officers, our spotters, they all help us monitor the whale sharks. This is a community effort that helps both the whale sharks and the people of Donsol. Hopefully by November, we’ll be able to restart our tourism activities again,” Mr. Narvadez said. A total of 733 whale sharks have been documented in the region since monitoring began in 2007. Butandings are listed as endangered by the International Union for Conservation of Nature.

Red tide warning up in Siaton, Negros Oriental

THE BUREAU OF Fisheries and Aquatic Resources (BFAR) has warned consumers against eating shellfish collected in Siit Bay in the town of Siaton, Negros Oriental after it tested positive for red ride contamination. In its latest shellfish bulletin, BFAR said Siit Bay joins other red tide positive areas such as Puerto Princesa Bay in Palawan; the coastal waters of Dauis and Tagbilaran City in Bohol; Tambobo Bay and Bais Bay in Negros Oriental; Cancabato Bay, Tacloban City in Leyte; Balite Bay in Davao Oriental; and Lianga Bay and the coastal waters of Hinatuan in Surigao del Sur. All types of shellfish and Acetes sp. or alamang harvested from these areas are not safe for human consumption. However, other types of marine species are safe to eat provided these are fresh, washed thoroughly, and internal organs such as gills and intestines are removed before cooking. — Revin Mikhael D. Ochave

Nationwide round-up

4,284 new COVID-19 cases reported on Sunday

THE DEPARTMENT of Health reported 4,284 new coronavirus disease 2019 (COVID-19) cases on August 30, bringing the total to 217,396.

The death toll rose by 102 to 3,520 while recoveries increased by 22,319 to 157,403, according to Sunday’s bulletin.

There were 56,473 active cases, 91.3% of which were mild, 6.1% did not show symptoms, 1.1% were severe, and 1.6% critical.

Metro Manila had the highest number of newly-confirmed cases with 2,207, followed by Laguna with 327, Cavite with 191, Batangas with 161, and Rizal with 147.

Of the new reported deaths, 52 came from Metro Manila; 14 from the region of Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon); 10, Western Visayas; 9, Central Luzon; 8, Central Visayas; 2 each from Cagayan Valley, Bicol and Davao regions; 1, Caraga; and two were still an unidentified location.

The new cases came from tests done by 100 out of 110 licensed laboratories.

More than 2.3 million individuals have been tested, the Health department said.

The agency reported “time-based” recoveries by reconciling their data with those of local government units.

Patients with mild symptoms or don’t show them at all will be tagged as recoveries after 14 days from the onset of the illness or from the time of swabbing, based on the protocol.

The patients should be cleared by physicians before being tagged as recovered. — Vann Marlo M. Villegas

Foreigners allowed to exit without I-Card

THE BUREAU of Immigration has eased the requirement for foreigners leaving the country to avoid crowding in immigration offices and prevent the spread of the coronavirus disease.

Immigration Commissioner Jaime H. Morente issued a directive allowing foreigners with approved visas to leave the country before they could claim their alien certificate of registration identity card (ARC I-Card).

The policy will be in effect until December 31, but can be revoked or extended based on the state of the pandemic.

“By allowing these aliens to leave pending release of their I-Cards, the number of people going to our offices will be lessened and physical distancing will be achieved, thus preventing the further spread of the virus among our frontline personnel and clients,” Mr. Morente said.

More than 70 employees of the bureau have so far contracted the virus. — Vann Marlo M. Villegas

Business registration portal to launch in Sept.

THE government’s central portal streamlining the process of establishing a business is due for public launch next month, the Anti-Red Tape Authority (ARTA) said.

The central business portal aims to reduce business registration to an eight-step process lasting less than a week. Registration took 13 steps and 33 days in 2019, ARTA said in a statement Saturday.

ARTA last week met with the Department of Information and Communications Technology (DICT), Securities and Exchange Commission (SEC), Bureau of Internal Revenue (BIR), Social Security System (SSS), Philippine Health Insurance System (Philhealth), and the Home Development Mutual Fund (Pag-IBIG) to finalize the date the portal will go live for public use.

“ARTA and the agencies will be continuously coordinating the developments of the portal to make it ready for launch in September,” the authority said.

Authorized by the Ease of Doing Business Law, ARTA is in charge of implementing the system developed by the DICT. The online platform captures data on business transactions and provides links to online registration services of national government agencies and local government units.

Under this law, government agencies are tasked to “eliminate red tape, avert graft and corrupt practices and promote transparency and sustain ease of doing business.”

The DICT made changes to adapt to the pandemic, ARTA said. The closed beta testing of the platform by selected business registrants was done last week.

“Apart from adhering to the whole-of-government approach in streamlining, this CBP, in collaboration with DICT and the national government agencies, is a huge step in our push towards incorporating e-governance in our ease of doing business initiatives,” ARTA Director General Jeremiah B. Belgica said.

The portal will have a virtual national business one-stop-shop (NBOSS) for the registration of one-person corporations.

The NBOSS project consolidates the business-registration requirements of the SEC, BIR, SSS, Philhealth, and Pag-IBIG.

The first phase of the central business portal was initially launched in October last year. — Jenina P. Ibañez

South Korea free trade deal still expected before end of 2020 — DTI

FREE TRADE agreement (FTA) negotiations between the Philippines and South Korea are still due to conclude this year despite delays caused by the pandemic, the Department of Trade and Industry (DTI) said.

The DTI, before the lockdown, had aimed to conclude negotiations after April, to coincide with President Rodrigo R. Duterte’s invitation to South Korean President Moon Jae-in for a state visit. The negotiating teams missed their initial November 2019 deadline.

Negotiations stalled last year because the countries had not agreed on reduced tariffs for Philippine banana exports and South Korean auto exports. Both countries have since replaced their negotiating teams.

Trade Undersecretary Ceferino S. Rodolfo, who now leads the Philippine team, said that representatives of the two countries have been meeting online during the pandemic and will have another discussion in the second week of September.

He said in an online news conference on Aug. 21 that negotiations were again delayed this year after a change in leadership in South Korea’s negotiating team, as well as some travel restrictions due to the pandemic.

“We were initially looking at me going to Korea. Kaya lang… ang hirap ngayon lumabas from our side — lumabas at saka bumalik. So may mga practical difficulties. Because of that, na-delay ng konti ‘yung sa Korea (The South Korea trade deal was delayed because it was difficult to leave and to go back),” he said.

“Pero target pa rin natin this year matapos ‘yung FTA with Korea (The target for completing an FTA remains this year).”

Trade Secretary Ramon M. Lopez in February said that the banana and auto trade are “being worked out” and negotiations have improved.

Through the FTA, the Philippines aims to increase its exports of agricultural products, auto parts, organic and natural products, and design-driven products like garments and furnishings.

South Korea is one of the Philippines’ largest trading partners, according to the Philippine Statistics Authority. It was the Philippines’ sixth-largest export destination in 2019, with exports valued at $3.2 billion accounting for 4.6% of the value of total Philippine exports.

Top exports to South Korea include bananas as well as electrical and semiconductor products, while top imports include petroleum and integrated circuits. — Jenina P. Ibañez

Consumer group calls for abolition of electricity cross-subsidy for poor

THE government should stop enforcing a scheme that subsidizes parts of some poor power users’ bills, a consumer group said.

A proposed measure by the Senate Energy committee seeks to extend for another 20 years the implementation of the lifeline rate, a subsidized rate benefiting poor consumers provided under the Electric Power Industry Reform Act (EPIRA).

In a comment, Laban Konsyumer proposed “to repeal and terminate” the cross-subsidy scheme, which is “is fair and reasonable to all consumers.”

“At the moment non-lifeline consumers subsidize the amount of Php 0.0604 per kilowatt-hour as a lifeline subsidy in their bill(s),” the group noted.

The Energy Regulatory Commission may remove such a mechanism after introducing a new universal charge which replaces it, according to Section 74 of Republic Act No. 9136, or the EPIRA.

By 2021, “there should be no more authorized cross-subsidy,” Laban Konsyumer said. EPIRA will be turning 20 next year.

In June, Senator Sherwin T. Gatchalian proposed Senate Bill No. 1583 extending the subsidy.

“With the expiration of the lifeline rate and thus higher electricity rates for marginalized end-users looming next year, this measure is filed,” Mr. Gatchalian said.

Section 73 of the EPIRA provides for this mechanism and the continuation of its enforcement. The imposition of the present subsidized rate will end next year after it was extended in 2011.  In 2019, 2.41 million poor customers of Manila Electric Co. (Meralco) each saved P1,567 annually from the lifeline rate.

“This bill extends the lifeline rate for an additional 20 years or up to 2041 in order to continue the much-needed assistance to low-income electricity consumers, which in turn enables them to access electricity and improve their lives,” Mr. Gatchalian said. The measure remains pending at the committee level. — Adam J. Ang

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