Local airlines seen to post mixed results for 2024

November 25, 2024 | 12:06 am

By Ashley Erika O. Jose, Reporter

LISTED airline companies are expected to deliver mixed results for 2024, primarily due to the anticipated recovery in the sector, which may be counterbalanced by the volatility of the airline industry, according to analysts.

“Lots of factors influenced profitability, such as fuel costs, passengers, and competition. The third quarter is traditionally the weakest because of the typhoons and off-peak season. Hopefully, the fourth quarter sees a turnaround,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a Viber message on Sunday.

For the third quarter, both listed airlines saw their third-quarter attributable net income decline. Cebu Air, Inc., the operator of Cebu Pacific, incurred an attributable net loss of P173.19 million from an attributable net income of P1.28 billion in the same period last year as higher expenses put pressure on the company’s profit for the period.

PAL Holdings, Inc. saw its third-quarter attributable net income plunge to P789.79 million, more than fivefold lower than last year’s P4.28 billion due to lower passenger revenue during the period.

“The first nine months for both airlines showed a mixed picture. Both experienced fluctuations in their quarterly revenues,” First Grade Finance, Inc. Managing Director Astro C. del Castillo said in a Viber message.

The outlook remains cautiously optimistic for airline companies as the industry continues to face rising operating costs, increased competition, and fragile economic conditions, Mr. Del Castillo said.

“The overall profitability of PAL and CEB will depend on how effectively they can manage these dynamics as they navigate through the final months of the year,” he said.

For the flag carrier, PAL President and Chief Operating Officer Stanley K. Ng said the company is expecting to end the year with lower profit than last year.

“Definitely lower than last year,” he told reporters on the sidelines of an event last week.

For December, air passengers may see steady airfares after the Civil Aeronautics Board kept the fuel surcharge for December unchanged at Level 4, marking the third time this year the fuel surcharge was set at this level.

Air passenger volume at the Ninoy Aquino International Airport continues to increase for the first nine months of the year after surpassing pre-pandemic levels, driven by growth in domestic travel, according to the Manila International Airport Authority (MIAA).

Data from MIAA showed that air passenger volume totaled 37.38 million for the nine months ending September, 10.7% higher than the 33.75 million in the comparable period last year and 4.2% higher than the 35.87 million in the January-to-September period in 2019.

For Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce, the profitability of airlines will be influenced by many factors.

He said the potential drivers for growth will be the holiday and peak travel seasons and the expected recovery in tourism.

“Any rebound in local and international travel demand can contribute significantly to earnings. Effective fuel-hedging strategies and operational efficiency improvements could offset revenue dips,” he said.

Cebu Pacific, the budget carrier, is optimistic about its growth prospects for next year. The company anticipates that its recent route launches will begin to contribute positively, driven by its ongoing expansion plans.

“We are quite positive for next year. We think the height of the leverage, the early investments in the aircraft are already done. It has made our capex (capital expenditure) heavy this year, but this is it, by next year, we will feel the contributions of these as the revenue grows,” Cebu Pacific Vice-President for Controllership and Investor Relations Trina E. Asuncion said in a virtual briefing last week.

Buskowitz Energy eyes 30 MW in new solar projects

November 25, 2024 | 12:05 am

SOLAR POWER provider Buskowitz Energy, Inc. (BEI) is targeting to expand its portfolio by building solar rooftop projects with a capacity of 30 megawatts (MW).

“We’re doing 30 MW of projects simultaneously. There are 12 different sites for 12 different customers,” BEI Founder and Chief Executive Officer James Buskowitz told reporters last week.

BEI recently sealed an investment agreement with global real asset investment manager PATRIZIA MBK Fund Management Pty Ltd. (PMBK) worth up to $100 million.

“It’s a perfect synergy between having someone who can provide the financial capital and for us to focus on execution and delivering as many megawatts to the Philippine market as possible,” Mr. Buskowitz said.

The company is targeting to have solar projects with up to nine MW of capacity partially commissioned by the end of the year and an additional 20 MW two months later.

“Overall, our goal is sustainability and developing renewable energy. Solar has been the path of least resistance as the solar rooftop segment alone is a huge market that is already underserved,” Mr. Buskowitz said.

BEI is involved in rooftop solar development, engineering, procurement, construction, and financing in the Philippines. It has installed and commissioned over 300 projects for residential, commercial, and industrial facilities.

Meanwhile, PMBK is a joint venture between Germany’s PATRIZIA SE and Japan’s Mitsui & Co., Ltd.

“I think the reality is that there’s so much potential in the solar market… as the business grows, we’re looking at additional land,” said Saji Anantakrishnan, head of Australia and Asia Infrastructure at PATRIZIA. — Sheldeen Joy Talavera

New investor joins IDC with P187.93-M deal

November 25, 2024 | 12:04 am

LISTED Italpinas Development Corp. (IDC) has secured a new investor via a private placement deal worth P187.93 million.

On Friday, IDC signed an agreement with businessman Benjamin Tan Co, who purchased 15% of the company’s primary shares at P1.99 each, totaling P187.93 million, through a private placement.

In 2022, IDC secured stakeholders’ approval for a transaction to issue up to 20% of primary new shares to an incoming investor, which will be used for the acquisition of properties for future projects.

“It has taken us over two years to find the ideal strategic investor. A key decision such as this demands that we decide carefully and deliberately. With his years of experience, and his prominence and reputation in the business community, Mr. Co will be a great partner to IDC as it continues to grow,” IDC Chairman and Chief Executive Officer Romolo V. Nati said in a statement over the weekend.

According to IDC, Mr. Co has interests in various businesses such as petrochemicals, polyvinyl chloride resins and products, and steel manufacturing.

Mr. Co and his family and associates control land holdings in Palawan, Cavite, Boracay, Pampanga, Quezon Province, and Quezon City.

In June, IDC and Mr. Co signed a co-development joint venture for a property in Puerto Princesa, Palawan.

“I believe that this synergy between the two groups will allow IDC to unlock its full potential in becoming the leading developer of sustainable properties in the country,” IDC President Jose D. Leviste III said.

IDC is a developer of sustainable properties. The company has real estate projects in the provinces of Misamis Oriental, Batangas, Bukidnon, and Bataan. It has plans to expand into multiple locations nationwide.

Some of IDC’s projects include Primavera Residences, Miramonti Green Residences, Verona Green Residences, and Firenze Residences.

The company also plans to develop assets in the tourism and hospitality market, following through on a partnership signed with the Ascott group last year.

“The Philippine economy has a bright and dynamic future, and this includes real estate, especially in areas outside Metro Manila that are still relatively underserved,” Mr. Co said.

“With a track record of 15 years in the industry, its proven capabilities, outstanding Italian green architecture, and full commitment to sustainable development, IDC is a perfect strategic partner for me to join and develop my property portfolio,” he added.

For the first nine months, IDC saw a 64.5% drop in net income to P4.37 million as net sales fell by 40.5% to P180.72 million.

IDC shares were last traded on Nov. 22 at P1.39 per share. — Revin Mikhael D. Ochave

The Art of the Deal: Zero tariff in exchange for US bases

November 25, 2024 | 12:04 am

As US President-elect Donald Trump prepares to impose a 20% tariff on imports (and 60% across the board on China), the Philippines should demand zero tariffs in exchange for hosting nine US military bases. This deal would offer the Philippines a minimum economic benefit of $12 billion annually and, even more crucially, jump-start the country’s laggard manufacturing sector and eventually strengthen its economy and defense capabilities. A strong Philippines economy is in the interest of the US.

The art of the deal is asking what the US is willing to pay to keep their bases in the Philippines. For instance, the US and its Japanese and South Korean allies spent $34 billion from 2016-2019 according to official figures. The US has also committed over $175 billion in military and humanitarian aid to Ukraine. These sums illustrate the extent to which the US values its strategic alliances and the lengths to which it is willing to go to support them financially. For all its trouble, the Philippines is getting peanuts. The strategic value of Enhanced Defense Cooperation Agreement (EDCA) for the US is certainly worth far more than the zero tariff the Philippines should demand.

Since the Philippines is stuck with the Mutual Defense Treaty and EDCA, it should leverage them for tangible economic gains, not empty and petty promises. This approach isn’t new: in the 1970s, President Ferdinand Marcos, Sr. negotiated substantial US funding for the Philippines’ national electrification program as compensation for hosting American military installations. With the US now focused on countering China’s influence in the Asia-Pacific region, the Philippines is in a strong position to insist on returns that strengthen its industries — especially since these lag behind ASEAN neighbors.
In fact, the Philippines has significant ground to cover compared to its peers. Its electronics exports, for example, reached $39 billion in 2023, while Vietnam’s electronics exports exceeded $100 billion, powered by massive US investments. In automotive parts, the Philippines exported about $1.5 billion, while Thailand exported $14 billion. The textile and apparel sector tell a similar story: Philippine textile exports to the US are around $1 billion, while Vietnam ships over $18 billion. By securing a zero tariff on exports to the US, the Philippines could close these gaps, attract investment, and scale up its production capacities. Combined with recent tax reforms, a tariff-free status would make these industries competitive on a global level.

The sectors positioned to benefit the most from zero-tariff access to the US market begin with electronics and semiconductors, which currently make up more than half of the Philippines’ exports. By securing zero tariff, Philippine electronics manufacturers could see a 25% increase in exports to the US, adding around $9.9 billion annually. This growth would not only drive revenue but also attract new investments in advanced manufacturing and create skilled jobs.

The textile and apparel industry, while smaller than electronics, could also gain considerably. Currently exporting around $1 billion to the US, Philippine textile manufacturers could see a 40% increase in demand with zero tariffs, bringing an additional $400 million. As higher tariffs push US retailers to reconsider suppliers in China and other ASEAN countries, the Philippines could position itself as a cost-effective alternative, generating employment and invigorating the garment sector.

The automotive parts and assembly industry, too, stands to benefit. While still modest, the sector has been expanding and could capture approximately $450 million in new revenue as companies look for alternatives to China and ASEAN neighbors facing tariffs. A zero tariff would position the Philippines as an attractive automotive manufacturing hub in Southeast Asia, creating jobs and expanding the industrial base.

The agriculture and agri-food processing sectors, vital to the Philippine economy, would also gain. The US already imports a range of agricultural products from the Philippines, including tropical fruits, coconut products, and seafood. Zero tariffs would likely increase demand for these exports by 25%, adding around $500 million to the Philippine economy, supporting rural employment, and enhancing food security.

Exports of machinery and equipment, currently valued at $2.5 billion, could see a 25% boost from zero tariffs, yielding an additional $625 million. As global manufacturing supply chains shift, the Philippines could emerge as a competitive producer in this sector, attracting investments, and further integrating into global markets.

The pharmaceuticals and medical devices industry, though still emerging, has the potential for rapid growth. With zero tariffs, Philippine manufacturers could capture a larger share of the US market, generating an estimated $250 million in additional revenue and help bring down exorbitant drug prices in the country. This expansion would support health infrastructure development and create high-skill employment within the country.

As a key ally in Southeast Asia and host of US military facilities, the Philippines deserves tangible economic benefits — not empty, petty, and symbolic promises — in exchange for the access it grants to American forces. A permanent zero-tariff status on Philippine exports to the US is not only justified, it is overdue. This deal would strengthen the Philippines economically, enhance its industries, and better position it as a leading trade partner to the US.

This is a moment for the Philippines to negotiate assertively, securing a deal that truly reflects the value of its alliance with the US. Such an arrangement would not only support the mutual security interests of both countries but would also restart the Philippines manufacturing sector and eventually strengthen its economy. A strong Philippines economy is in the national security interest of the US.

President Trump would understand this deal.

Eduardo Araral, PhD, is an associate professor at the Lee Kuan Yew School of Public Policy, National University of Singapore. This piece is written in his personal capacity.

T-bills may fall ahead of Fed meet

November 25, 2024 | 12:04 am

By Aubrey Rose A. Inosante, Reporter

TREASURY bill (T-bill) rates may decline amid the worsening Russia-Ukraine conflict and as markets await further policy signals from the US Federal Reserve.

“The government securities market was just quiet today as most just stayed on the sidelines amid the Ukraine-Russia geopolitical tension and while awaiting developments for a clearer policy path,” a trader said in an e-mail on Friday.

Russia fired a hypersonic intermediate-range ballistic missile at the Ukrainian city of Dnipro on Thursday in response to the US and UK’s allowing Kyiv to strike Russian territory with advanced Western weapons, in a further escalation of the 33-month-old war, Reuters reported.

The Bureau of the Treasury (BTr) will auction P15 billion in T-bills on Monday — P5 billion each in 91-, 182- and 364-day debt.

On Tuesday, the BTr will also sell P15 billion in reissued five-year Treasury bonds (T-bonds) with a remaining life of four years and five months.

The average T-bill yields could fall amid uncertainty about President-elect Donald J. Trump’s economic policies, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

“The markets priced in possible protectionist policies by Trump that could lead to some increase in US inflation,” he said in a Viber message.

At the secondary market, the 91-, 182- and 364-day T-bills fell across the board, based on PHP Bloomberg Valuation Service Reference Rates data as of Nov. 22 posted on the Philippine Dealing System website.

Last week, the BTr raised P22.6 billion in T-bills as bids reached P51.665 billion, more than twice the amount on offer but lower than the P59.425 billion in tenders a week earlier.

It borrowed P9.1 billion as planned in 91-day T-bills, higher than the programmed P6.5 billion, as tenders reached P20.095 billion. For the 182-day debt, the government fully awarded P6.5 billion, as bids reached P12.76 billion.

The Treasury also raised P7 billion from 364-day bills as demand hit P18.81 billion.

Economists have warned that Mr. Trump’s proposed policies could stoke inflation and lead to fewer Fed rate cuts.

The US Federal Reserve would trim interest rates next month but make shallower cuts in 2025 than expected just a month ago due to the risk of higher inflation from Mr. Trump’s proposed policies, according to most economists in a Reuters poll.

Prospects for a price resurgence based on his planned policies, including higher tariffs and tax reductions, led markets to nearly halve rate cut pricing to about 75 basis points by end-2025 over the past few weeks.

Relentless economic strength, stubborn inflation and stock markets flirting with record highs have become barriers against hasty rate cuts.

Fed Chairman Jerome H. Powell last week said “the economy is not sending any signals that we need to be in a hurry to lower rates.”

The government seeks to raise P90 billion from the domestic market in December — P60 billion in T-bills and P30 billion in T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product this year.

Happy Andrada’s girly Filipiniana has a steel backbone

November 25, 2024 | 12:04 am

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Her latest collection features a plethora of local fabrics in her signature style

FILIPINOS have certain associations when it comes to Filipiniana clothing: that it is stiff, strictly for formals, quite old. In a fashion show on Nov. 16, Happy Andrada subverted all these with a thoroughly wearable Filipiniana collection that was Pinoy without all the kitsch.

The show started quite early (when she said 6 p.m. on the invite, she was not kidding), Ms. Andrada’s show was one segment at the Pinoy Playlist Music Festival 2024, held at the BGC Art Center in Taguig. This being part of a music festival, Ms. Andrada’s clothing presentation was accompanied onstage by Dyandi Percussion Djembe Ph and Anima Tierra.

Not 15 seconds after we were seated, actress Glaiza de Castro flounced onto the stage in a puffy Filipiniana look.

The show also showed amazingly youthful looking menswear pieces such as a bomber barong with pinilian (an indigenous fabric resembling a cotton brocade) stretch pants. Other menswear looks we saw included a hybrid barong-guayabera (a Latin American shirt), worn with a stylish salakot (gourd or woven hat), a pinilian jacket for men, binakol pants (a fabric whose pattern has an op-art effect) with an embroidered piña (pineapple fabric) jacket embroidered with Filipino symbols like palms and Jose Rizal’s silhouette.

A baro (a woman’s blouse) was shown on the runway, its sleeves flouncy and soft, worn with a very now woven visor. Another look was a cream jacket with extra-wide lapels worn over a barong (a traditional embroidered shirt, usually formal) topped with a luxurious straw hat, and then a barong with a large bow. A baro’t saya (a traditional blouse-skirt combo) was made with several layers of cloth, creating an effect like book pages. A find we envy was a chore jacket-barong hybrid, paired with a glittery dress.

Beauty queen Nicole Cordoves closed the show with a pageant-ready blue gown dyed to look like waves.

While using fabrics like t’nalak, piña silk, knotted piña, inaul, abel Iloco, Yakan, jusi, and piña calado, Ms. Andrada’s imprimatur is still evident. Think a preppy girlish cleanliness with just a hint of editorial excess, reflected in sheen and iridescence. In an interview backstage, Ms. Andrada said, “It was so much fun just collecting the fabrics.”

Make no mistake, however: Ms. Andrada is no softie, and despite the girlishness of her clothes, there’s some steel there. The finale dress is named “West Philippine Sea,” alluding to the Philippine territory that China is claiming as its own. The dress was featured in the Fashion Art Biennale in Seoul last September. “I was the only representative of the Philippines,” she said.

“I got inspired by our country, and I think we should be proud (to be) Filipino.

“And we own the Philippines.” — Joseph L. Garcia

Lower real estate sales drag Sta. Lucia Land net income

November 25, 2024 | 12:03 am

LISTED Sta. Lucia Land, Inc. saw a 10.1% drop in its third-quarter net income to P906.78 million from P1.01 billion a year ago on lower revenue.

Third-quarter revenue fell by 5.6% to P2.75 billion from P2.91 billion in 2023, Sta. Lucia Land said in a stock exchange disclosure last week.

Real estate sales dipped by 24.5% to P1.79 billion while rental income increased by 4.8% to P193.19 million.

For the first nine months, Sta. Lucia Land grew its net income by 4.4% to P3.3 billion from P3.16 billion last year.

Revenue rose by 7.4% to P9.37 billion as real estate sales during the period climbed by 0.92% to P7.09 billion.

“This growth stemmed from the successful launch of new projects for sale, which were well-received in the market and reinforced the group’s position in the real estate sector,” Sta. Lucia Land said.

Rental income fell by 3% to P555.45 million amid the 9% increase in cost of rental income due to higher maintenance and operational expenses to ensure the quality and appeal of the company’s rental properties.

“Overall, the group’s financial performance highlights a strong growth trajectory, driven by its diversified revenue streams and strategic introduction of new real estate projects,” Sta. Lucia Land said.

Sta. Lucia Land’s portfolio consists of developments with residential, commercial, leisure, and retail assets.

Some of its projects include the Alta Vista Tagaytay residential estate in Cavite, Centro Verde Calamba residential estate in Laguna, Sta. Lucia Mall in Cainta, Lakewood City Cabanatuan Golf and Country Club, South Pacific Golf and Country Club in Davao City, and the SotoGrande Palawan residential tower in Puerto Princesa City.

Sta. Lucia Land shares were last traded on Nov. 22 at P2.87 per share. — Revin Mikhael D. Ochave

Economic effects of corruption

November 25, 2024 | 12:03 am

By Benjamin R. Punongbayan

In recent weeks, there appear to be a welling up of commentaries, particularly on social media, about corruption in our government. There seems to be a growing perception that this disastrous practice is getting worse in terms of both its widening spread and the increasing scale of the amounts involved. This observation aroused an interest in me to analyze and try to portray in an understandable way the broad effects of corruption in the Philippine economy.

Indeed, corruption in government has been prevalent in the Philippines for so long and appears to continue undiminished in the foreseeable future. I will not consider, though, that this lamentable practice is a part of Philippine culture, as others would do, for the simple reason that it is practiced by only a “few”. I mean “few” in relation to the number of perpetrators as compared to the entire Philippine population. Corruption is actually a crime that regrettably goes generally unpunished. I recognize, though, that others may claim that for the fact that a much greater part of the Philippine population tolerates the perpetration of this criminal practice makes the practice of corruption a part of Philippine culture. I would agree if such toleration is unforced. But it is not. The perpetrators hold considerable power. This power exudes intimidation and threat of retribution that greatly inhibits the concerned but unorganized citizens from taking appropriate action to challenge the perpetrators.

Estimate of amount of corruption

In the latest Corruption Perception Index released in September 2023 by the Berlin-based Transparency International, the Philippines is ranked 115 among 180 countries as being perceived to have a higher prevalence of corruption. While the country is not the most corrupt, it is more corrupt than 114 other countries out of 180.

In a paper presented by an officer of the Department of Justice at the 13th Regional Seminar on Good Governance for Southeast Asian Countries in Tokyo in 2019, he stated that the amount of corruption in the Philippines at the national level was then estimated at 20% of the annual national budget. He applied that proportion to the 2015 and 2016 national budgets to show the magnitude of the resulting amounts. If we apply the same proportion on the current 2024 national budget, the amount of corruption at the national level currently translates to an estimated amount of about ₱1.6 trillion. And that estimated amount relates only to corruption at the national government level. If we include estimates of similar corruption at the level of the LGUs and bribery amounts at both national and local levels, the overall total will certainly be gargantuan.

Types of corruption

Corruption in government may be classified in a number of ways. For purposes of this commentary, I will classify them based on their nature, namely: overpricing; unrestricted appropriated funds; and bribery at both the national and local government levels.

Overpricing relates to infrastructure and other construction contracts; purchases of equipment, materials, and supplies; and procurement of labor for the use of the national and local governments, including that of the various institutions under their respective jurisdictions. I define unrestricted appropriated funds or, simply, unrestricted appropriations as composed of what are commonly known as pork barrel, intelligence funds, and other intentionally mislabelled funds appropriated in both the national budget and local government budgets.

Overpricing results in a complete loss of government funds equivalent to the amount of the overprice, while unrestricted appropriations result in a partial loss of government funds to the extent of the amount not used for the benefit of the Filipino people plus the overpricing of those goods procured for the benefit of the citizens.

Bribery is different in the sense that these are in the form of money or valuable goods owned by citizens, private businesses, and other organizations and given to government officers and personnel, under coercion or not, to facilitate or expedite the release of required government permits, licenses, and other documentary requirements and approvals of all kinds. It also includes awarding of franchises and rights for exploitation and use of national resources and privileges; and favorable court decisions and regulatory rulings to deserved or undeserved persons, activities, and pending cases. While these corrupt practices do not result in direct loss of existing government funds, some of these practices may result in loss of government revenue in the form of exemption from or reduced amounts of legally collectible taxes, duties, and fees in exchange for the bribe money.

Economic effects of corruption on government programs and activities

In sum, corruption in government results in loss of government funds in the cases of overpricing and portions of unrestricted appropriations, and loss of revenue in some cases of bribery. On the basis of the estimated rate of corruption mentioned earlier, the total amount of these losses of government funds and revenue on an annual basis is huge. When put together, the recurring total annual amount could have been deployed in large-scale programs that have long-term and wide beneficial effects on the nation’s economic growth and development, such as in large infrastructures that provide connectivity within and among the country’s various islands (roads, railways, bridges, sea ports, airports, and similar others); rehabilitation of the education system; substantial reduction of poverty; a more expansive health care system; and other urgently needed economic and social development programs.

When broadening the base estimate of losses from corruption referred to earlier for reasons explained thereafter, the expanded annual estimate would be significantly higher than the ₱1.6 trillion current annual estimate mentioned before. By multiplying whatever higher amount that may come to mind by any number of years, it provides a result that gives us a picture of the enormity of the opportunities for continuous economic growth that we lost during the past many years. And much more than this, we continue to suffer such losses annually, and there seems to be no end in sight.

There is an additional unfavorable economic effect in the case of overpricing, especially in infrastructure contracts. To enable the corruption, some or much of the completed constructions will generally be of a quality level lower than what is specified in the contract. As a result, the completed infrastructure would provide benefits only for a much shorter period of time than planned and will necessarily entail large amounts of opportunity cost during the period of necessary repairs and replacements. Moreover, such early repairs and replacements will necessitate a premature round of sourcing the required funding. As a result, this premature funding crowds out new economic development initiatives, which clearly further delays in no small measure Philippine economic growth. In addition, this condition creates a cycle that goes on indefinitely under present circumstances.

There are similar effects in the case of overpricing in the government procurement of equipment, materials, supplies and labor if the level of quality of the procured goods and services is not in accordance with specified quality levels.

In the case of unrestricted appropriations, whatever portion is spent for the benefit of the Filipino people, it is spent in a scattered way in relatively small amounts. The power of using that money in the aggregate to fund large-scale economic development programs that provide much wider and longer-term benefits to the nation is forever lost.

Economic effects of using corrupt money

On the part of the corrupt persons, they obtain additional wealth for their own personal benefit and disposal. To the extent that they deploy this additional wealth in consumption, investments, and savings in the Philippines, such deployment would offset to some extent the harmful effects of the loss of government funds and revenue. However, based on general observations, much of this corrupt money is not spent in the Philippines but instead is used to purchase foreign, especially expensive, goods and to transfer some portion abroad in the form of foreign currency. In those cases, no benefit accrues to the Philippine economy at all, except maybe for some retail sale markups and applicable payment of local taxes and fees, which sum up to a relatively small amount.

Other effects on the national economy

The huge fund losses resulting from corruption have required the Philippine government to borrow much more than would have been necessary. Such additional borrowings result in a higher debt ratio (to GDP) that in turn results in a lower international credit rating than would otherwise be and consequently entails a higher interest cost.

Of course, the government may choose to retain that level of borrowings and, without corruption, spend the additional borrowings for expenditures on large-scale programs that have long-term and wide beneficial effects on the nation’s economic growth and development, as explained earlier.

Conclusion

Clearly, widespread corruption has caused the Philippines to lose great opportunities continuously over a long period of time to become a more economically developed country. Equally sadly, the country will continue to lose such great opportunities in the foreseeable future.

I purposely confined myself to analyzing the economic effects of corruption in government, except for a few comments in passing that corruption, in my opinion, is not a part of Philippine culture.

I avoided commenting on the underlying issue of righteousness regarding the practice of corruption. I do not think I have the right to suggest to anyone to be like Mother Teresa.

_________
Ben Punongbayan is the Founder of Punongbayan & Araullo. He is currently a member of the Board of Governors of the Management Association of the Philippines.

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Meat imports up 12.65% at end of September

November 25, 2024 | 12:03 am

MEAT IMPORTS by volume rose 12.65% year on year in the first nine months, led by beef and pork, according to the Bureau of Animal Industry.

Meat imports rose to 1.03 billion kilograms from 923.16 million a year earlier.

Meat Importers and Traders Association President Emeritus Jesus C. Cham said that the Philippines is likely to exceed the 1.2-billion-kilo total of 2023.

“The record imports are worrisome as signs of port congestion are appearing. As well the (weak peso) is increasing the landed cost of products,” Mr. Cham said via Viber.

On Friday, the peso closed at P58.87 against the dollar, recovering from the record low P59 posted Thursday.

He added that the successive typhoons have also “hurt” demand and consumption.

“Importers may not be able to raise prices enough to cover the added costs,” he said.

Imports of beef increased 35.01% during the period to 144.02 million kilos. Shipments of beef accounted for 13.9% of all meat imports.

Beef from Brazil amounted to 57.92 million kilos, followed by Australia (38.56 million), and Ireland (12.6 million).

“More consumers and users apparently now see beef as a viable alternative to high-priced pork and chicken,” Mr. Cham added.

Shipments of pork rose 12.9% to 517.86 million kilos during the nine months, accounting for about 49.8% of all meat imports during the period.

Spain supplied around 129.07 million kilos of pork, followed by Brazil (121.67 million) and Canada (77.43 million).

He said importers are of the view that the shortage of pork will continue, despite the introduction of the African Swine Fever vaccine in limited trials.

Shipments of chicken totaled 345.86 million kilos in the nine months, up 6.43%. They accounted for 33.26% of meat imports.

Brazil remained the top supplier of chicken with 176.39 million kilos, followed by the US (108.13 million) and Canada (13.04 million).

Turkey imports more than tripled to 1.09 million kilos during the period, accounting for 0.10% of the total.

Shipments of buffalo, duck, and lamb declined during the nine months.

Shipments of duck fell 42.01% to 132,963 kilos, those of lamb fell 11.91% to 132,963 kilos, and buffalo dropped 4.06% to 30.37 million. — Adrian H. Halili

Defunding social health insurance in favor of medical ayuda

November 25, 2024 | 12:03 am

Do we want patients consulting trapos (traditional politicians) for health assistance? It might become the norm as social health insurance (the Philippine Health Insurance Corp., better known as PhilHealth) gets defunded in favor of a medical assistance program that reeks of patronage politics.

We hear politicians singing hosannas for the Medical Assistance to Indigent Patients (MAIP) run by the Department of Health (DoH), which allows politicos to dole out Guarantee Letters (GLs) from their share of MAIP funds. MAIP only had a budget of P1.8 billion when it was created in 2015, but it is now the fastest growing item in the DoH budget. By fiscal year 2025, it will grow over 40 times its original budget when Congress soon approves a P74-billion MAIP budget.

On the other hand, the budget for indigents (the premiums of indirect contributors) in PhilHealth has declined from P79 billion in 2023 to P40 billion this year and will stay below its budget level in 2023, with the Senate contemplating a budget of P47 billion for indigent premiums in 2025.

This situation is not a new development, as politicians have always curried favor with constituents through ayuda (assistance) programs since COVID-19 hit in 2020. But this time the scale of health patronage is clearly exceeding the public health system’s regular funding. PhilHealth’s Social Health Insurance Program for indigents has suffered the most under this unwritten policy. The health system embodied in Universal Health Care is being gutted to fund MAIP.

Indigent patients have always been intimidated by large public hospitals, which they can only go to if they have money in their pocket. Political patronage through MAIP may now mean indigents going to the politicians first before they even think of entering an emergency room or consulting a primary care physician.

COMPARING PHILHEALTH AND MAIP
PhilHealth serves 17 times more patients than MAIP.

In 2023 the number of patients assisted by PhilHealth was 12,675,634. In comparison, based on available data from the DoH website, MAIP served 737,280 patients, in a similar period from July 2022 to June 2023.

On average, PhilHealth paid out an average of P4,900 per patient claim in 2023. In comparison, using Region 12 (Soccsksargen) as example, where data are publicly available, we note that DoH’s MAIP provided P3 billion to private hospitals and assisted 140,200 patients with an average of P21,398 per claim in the first nine months of 2024. In short, given the limited data available to us, we can estimate that PhilHealth was able to serve 17 patients for every patient under MAIP (with Region 12 as comparator) with roughly the same amount of funds.

GOODWILL OPPORTUNITY
Unregulated MAIP funds provide an opportunity for politicians to gain goodwill to the detriment of the health system.

MAIP fund support is entirely discretionary on the part of the approving authority (politicians and government executives). The goodwill generated by the generous persons in authority is highly valued, and this translates to political support or votes from the beneficiary who now has a feeling of utang na loob (debt of gratitude) for the political benefactor.

This type of political patronage in health is probably more appealing to politicians who want to avoid the “share of percentage” from pork barrel projects paid back to them by favored contractors out of fear of a paper trail of corruption. The politician can exert influence through an apparently “corruption-free” manner through this type of health ayuda. But it is still essentially corruption, for it is a form of bribing voters.

MAIP started as an exclusive program for indigents who would have to show proof of indigency from the barangay captain where the beneficiary resided to be covered by the program. However, since mid-2023, the DoH has loosened this requirement to allow financially incapable patients to avail themselves of MAIP (now renamed Medical Assistance to Indigent and Financially Incapacitated Patients or MAIFIP).

This expansion of MAIP to non-indigents allows political patronage to reach an even broader segment of the population, something that is most important during election seasons.

TWO SYSTEMS
Two systems of financing healthcare are emerging.

While PhilHealth provides a similar package of assistance to all its 91 million registered members (as of June 2024) in need regardless of financial capacity, MAIFIP provides assistance to 17 times fewer beneficiaries without regulatory constraint and dependent only on what the approving authority will allow.

The emergence of two systems of health financing in the country is more than worrisome, primarily because one system feeds off the other and may end up with the health sector being saddled by two competing programs which increases inefficiency.

The DoH has noted that benchmark indicators of population health have yielded poor results:

• Infant mortality went up to 22/1,000 live births in 2022 (from 21/1,000 the previous year);

• Maternal mortality rate increased to 154/100,000 in 2021 (from 149/100,000 in 2021; and,

• Neonatal mortality is now 15/1,000 live births (increasing since 2013).

The recent decline in the above health indicators is evidence that our primary and secondary levels of health provision (mainly under local government control) have been severely tested by the pandemic and continue to underperform. Such weakness will put a heavy strain on higher levels of care run by provincial, regional, and National Governments and providers in the private sector.

The alarm bells are ringing for our healthcare system. The poor and underserved Filipinos feel the crisis. Our highest authorities have remained deaf. It is high time civil society raised a hue and cry about the dismantling of Universal Health Care.

Jeepy Perez, a doctor of Medicine, specializes in public health administration, primary healthcare, and has worked with nine Health Secretaries and three National Economic and Development Authority Secretaries since 1992. He was undersecretary for Population and Development and executive director of the country’s Commission on Population and Development up to Sept. 8, 2022, when he retired. He occasionally writes for Action for Economic Reforms.

Philippine central bank eyes expanded pawnshop services

November 25, 2024 | 12:03 am

THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to amend its rules on pawnshops, which will allow them to offer more services such as money changing and gold trading.

In a draft circular posted on its website, the central bank said it is seeking to revise sections of the Manual of Regulations for Nonbank Financial Institutions related to pawnshops.

These amendments aim to “define the scope of pawning business and the allowable corollary business activities of pawnshops to support their dynamic industry landscape and importance in the delivery of financial services.”

Pawnshops lend money on personal property that is surrendered to the pawnshop operator as loan collateral. They can also buy goods that are accepted as collateral in a pawning transaction on condition that the goods are redeemed or repurchased by the seller within a fixed period.

The BSP said pawnshops can engage in corollary businesses provided they keep records and start internal control measures that will distinguish these from the main pawnshop operation and to protect consumers.

Allowable corollary business activities include operating as a remittance agent, money changer, foreign exchange dealer, operator of a payment system or gold trader, subject to registration and accreditation by the BSP.

It said pawnshops may buy gold from registered small-scale miners and eventually sell it to the central bank.

“Pawnshops may also act as financial access touchpoints for the delivery of financial services,” the BSP added.

These include acting as a remittance sub-agent, serving as cash agents of banks, bill payment or top-up partners of utility and other companies, cash collection services and corporate payout partner.

The BSP said pawnshops are barred from facilitating or encouraging any activity related to gambling. If the draft rules are approved, pawnshops have one year from the effectivity of the circular to comply with the amended guidelines.

Stakeholders have until Dec. 6 to give their feedback on the proposed circular. — Luisa Maria Jacinta C. Jocson

Dispensing — and enabling — dreams

November 25, 2024 | 12:03 am

VELO_PAGE1_KAP_image1 — Carlos Yulo poses with Toyota Motor Philippines (TMP) President Masando Hashimoto during the Start Your Impossible Gymnastics Camp at the Gymnastics Association of the Philippines (GAP) MVPSF Gym in Manila. — PHOTO FROM TOYOTA MOTOR PHILIPPINES

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Two-time Olympic gold medalist Carlos Yulo is in giving-back mode

WHAT A YEAR it has been for Carlos “Caloy” Yulo. He did the incredible and carry an entire country’s hopes on his shoulders — on the way to notching an unprecedented two golds in the Paris Olympics — and reap a resulting well-deserved windfall.

But even before he shot to greater prominence through his Olympic feat, Mr. Yulo was already a proud Global Team Toyota Athlete (GTTA) — under the mobility brand’s Start Your Impossible (SYI) program. This is Toyota’s first-ever global corporate initiative — inspired by Olympic and Paralympic athletes “who are constantly challenging their impossible.” SYI supports some 250 athletes from 49 markets worldwide. Caloy is one of two Filipino GTTAs, with champion para swimmer Ernie Gawilan being the other. Incidentally, in Asia, Toyota calls its GTTAs “dual heroes” because they are not only sports heroes but champions for doing social good as well.

When we were in Paris to catch the tail end of the Paralympics, we got to talk to both Caloy and Ernie. Even then, Mr. Yulo expressed how he envisioned giving budding athletes much-needed coaching, motivation, and support. Recently, he collaborated with Toyota Motor Philippines (TMP) for the Start Your Impossible Gymnastics Camp held over the course of two days at the Gymnastics Association of the Philippines (GAP) MVPSF Gym in Manila. The camp is part of the embodiment of this commitment to give back to the community, “aiming to inspire and empower young gymnasts by providing opportunities to help them become better athletes.”

Caloy enlisted the help of his own team, led by coach Aldrin Castañeda of GAP, not only to vet the participants but also to manage the warmup exercises and subsequent training of the 30 youngsters aged seven to 16 from Metro Manila, Davao, and Cebu. Caloy also sought the assistance of his own sports nutritionist Jeanette Aro to advise the kids and their parents on what constitutes a proper diet for these gymnasts.

So what’s next? I asked Caloy at a subsequent question-and-answer session. “We’re looking for those with potential, and we plan for them to continue training here more intensively,” he said in Filipino. “This clinic won’t mean anything without a next step for them. Even if I don’t get to train them myself, I look forward to training with them — to at least give them a program of training.”