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Fuel retailers support move to suspend ethanol blending

THE Independent Philippine Petroleum Companies Association (IPPCA) on Monday said it supports the possible suspension of bioethanol blending with gasoline products for the production of much needed rubbing alcohol.

Last week, Energy Secretary Alfonso G. Cusi disclosed in an ANC interview that the Department of Energy is considering diverting the local biofuel production into the creation of ethyl alcohol.

“Now we need alcohol to disinfect and we are short of alcohol,” Mr. Cusi said.

Asked for their position on this, IPPCA said: “The Association believes that diverting it [biofuels] to ethyl alcohol, or even as alcohol beverage, will be more beneficial for the economy.”

Currently, the Philippines mandates a mixing of 10% bioethanol on all gasoline products sold across the country through Republic Act No. 9367 or the Biofuels Act of 2006.

Since oil prices are low, the Energy secretary said that refiners can just use 100% gasoline and that bioethanol will be used for producing ethyl alcohol instead.

“Let’s use the ethanol to produce alcohol and since the price of oil is low, we can use 100% gasoline,” he said.

“We can suspend biofuel [blending], but there is a law. So, we need to make some amendments, and we are preparing for that,” he added.

Mr. Cusi might be referring to the Biofuels Act, but he did not respond to a request for clarification as of press time.

Among provisions, the law prohibits the “diversion of biofuels, whether locally produced or imported, to purposes other than those envisioned in the Act.”

The IPPCA has been pushing to scrap ethanol blending as it was deemed unnecessary now given the higher grade of gasoline being implemented in the country. — Adam J. Ang

RCBC net income rises 77% in the first quarter

RIZAL COMMERCIAL Banking Corp.’s net income climbed in the first quarter. — BW FILE PHOTO

RIZAL COMMERCIAL Banking Corp. (RCBC) saw a surge in its net income in the first quarter backed by its strong core business and trading gains despite headwinds due to the coronavirus disease 2019 (COVID-19) pandemic.

RCBC’s net earnings climbed 77% year on year to P2.3 billion from January to March, the bank said in a filing with the local bourse on Monday.

“The robust performance of the core business and trading gains boosted the bottom line to reach P2.3 billion,” it said.

RCBC’s annualized return on equity stood at 11.1%, while annualized return on assets was at 1.28% during the first quarter.

During the period, gross revenues of the bank rose 23% to P10 billion, bolstered by net interest income and non-interest income, which grew 19% and 29%, respectively.

Interest income from loans and receivables increased by 12%, supported by higher volumes and sustained margins across all customer segments. Meanwhile, cost of funds declined by 71 basis points due to normalizing market interest rates during the first three months of the year.

The bank’s non-interest income also jumped by 29% on the back of higher trading and foreign exchange gains.

Meanwhile, RCBC said its operating efficiency improved as its cost-to-income ratio stood at 55.6%, better than the 64.2% registered last year.

RCBC’s loans to small and medium enterprises (SMEs) as well as its consumer loan segment logged a “pre-COVID” growth of 26% and 20%, respectively.

Likewise, credit card receivables also surged by 42%, with its card base climbing by 25% year on year to 914,000.

The bank’s net nonperforming loan (NPL) ratio improved to 2.2% from the 2.6% seen a year ago. NPL coverage ratio likewise rose to 76.2% as of March compared to the 67.3% seen a year ago.

RCBC said it allotted P1.6 billion in provisions for loan losses as of the first quarter of the year “as the bank aims to build sufficient buffers for COVID-related losses.”

The bank’s capital adequacy ratio settled at 13.8%, while common equity Tier 1 ratio was at 12.9%, both above the regulatory minimum.

Its total assets hit P715.3 billion while its capital stood at P84.7 billion as of end-March, the lender said.

The Yuchengco-led bank’s shares ended trading at P16.50 apiece, down by 0.60% or by 10 centavos from its previous close. — L.W.T. Noble

Thai developer cuts prices to stress sales over profit in crisis

THAI property developer Sansiri Pcl is placing sales ahead of profitability as it looks to generate cashflow to survive the coronavirus pandemic.

The Bangkok-based group, which builds high-end condominiums in cities around the Southeast Asian nation, is offering aggressive discounts and other promotional campaigns in an attempt to lure buyers. It expects to revise its annual sales target after a strong start to the second quarter, President Srettha Thavisin said.

“During times of crisis, profitability comes second,” Mr. Srettha said in an interview. “Cash is king and brand strength is big. The coronavirus crisis is bigger than 9/11 and the Asian financial crisis combined, bigger than anything we’ve ever encountered,” he said, referring to the September 2001 terrorist attacks against the US.

Thai housing developer Sansiri cuts prices to generate cash

Sansiri last month increased its second-quarter sales target to 12 billion baht ($371 million) after generating 4.2 billion baht from home sales in the first three weeks of April. That puts the company on track for record first-half revenue, Mr. Srettha said.

Analysts don’t appear as confident. The company’s stock has nine sell ratings, five holds and one buy, according to data compiled by Bloomberg. Its shares are down 36% since January versus an 18% decline in the country’s benchmark stock index.

“While we see its earnings outlook turning ugly over the next few years, we fully endorse management’s view that cash flow, not profitability, should be the company’s key focus in the near term,” Kasikorn Securities Pcl said in a report that downgraded the stock on April 24.

The sole buy rating came in an upgrade on April 30 by Krungsri Securities Pcl analyst Ratasak Piriyanont, who said Sansiri “was a first-mover in the price war to divest inventory units and managed to book solid presales in the first quarter.” Although its debt-to-equity ratio of 1.9 times is “inferior” to domestic peers, the company “has sufficient financial resources to weather the COVID-19 impact under the worst-case scenario,” he said.

Thai condominium developer underperforms regional, domestic peers

Thailand’s tourist-dependent economy has been ravaged by the coronavirus and the full impact won’t be apparent until this quarter, Deputy Prime Minister Somkid Jatusripitak said earlier this week. The government is trying to re-balance its economic structure to rely less on exports and tourism, and more on domestic demand.

Fortunately for Sansiri, most of its customers are local, accounting for around 95% of sales, Mr. Srettha said. Its main source of foreign buyers is China.

Mr. Srettha said the fact that coronavirus case numbers are coming down, combined with Thailand’s good health care system, should be a draw for international investors once the crisis abates.

“Assuming we don’t see a second wave, the Thai real estate industry will become better,” Mr. Srettha said. “But now we have to keep our eyes on who will survive through this.” — Bloomberg

Stuff to do at home (05/05/20)

PETA Theater Online

Ang Mga Kwento ni Lola Basyang is currently streaming on PETA Theater’s YouTube channel: www.youtube.com/results?search_query=peta+theater+online.

Open House

The actresses in the play Call Me Tita — Cherry Pie Picache, Agot Isidro, Mylene Dizon, and Joanna Ampil — collide with the actresses of The Kundiman Party — Shamaine Centera-Buencamino, Missy Maramara, Stella Canete-Mendoza, and Frances Makil-Ignacio — in a virtual script swap on May 6, 4 p.m., at iWant (https://www.facebook.com/iWant/videos/690061401769379).

Upstart 10 for 10

Upstart Productions presents Upstart 10 for 10, an online mini-concert fundraiser on May 9, 8 p.m., on its Facebook page (https://www.facebook.com/upstartproductionsinc). It will feature the following artists: Topper Fabregas, Rony Fortich, Jenny Jamora, Carla Guevara-Laforteza, Lorenz Martinez, Shiela Valderrama-Martinez, Jill Pena, Felix Rivera, Ice Seguerra, and Reuben Uy. The show is for the benefit of theater professionals affected by the COVID-19 crisis. To donate, visit bit.ly/Upstart10for10.

POC’s Crescendo

Philippine Opera Company presents Crescendo, an online fundraising concert featuring classical music on May 9, 8 p.m. This online concert features some of the country’s top and upcoming classical singers: Alexa Kaufman, Andrea Manuel, Renz Nathaniel Cruz, Lawrence Jatayna, Cloi Sugano, Jack Salud, Jennifer Uy, Miguel Lobato, Stefanie Quintin-Avila, Arthur Espiritu, Andion Fernandez-Ching, and Gerphil Flores. The concert is part of the Open House fundraising campaign for the benefit of displaced performing arts workers who were affected by the ECQ. To donate, visit http://bit.ly/DonateOpenHouse. Watch the concert at https://www.facebook.com/lovephilstage/.

Ang Huling El Bimbo: The Musical online

Full House Theater Company’s Ang Huling El Bimbo: The Musical will be streaming for free on May 8 and 9. The show will be on view for 48 hours. Watch the show at https://www.facebook.com/ABSCBNnetwork/ or at https://www.youtube.com/abs-cbnentertainment.

Guggenheim artbooks


The Solomon R. Guggenheim Museum offers downloadable items from its archives for free. Titles include modern and contemporary art books about Vincent Van Gogh, Pablo Picasso, Vassily Kandinsky, Gustav Klimt and more. The archive is searchable by artist, year, medium and artistic style or movement. Visit the archives, https://archive.org/details/guggenheimmuseum.

CCP Online

The following shows are premiering online this week: Ballet Philippines in Firebird and Other Ballets on May 5, 3 p.m.; Kung Paano Ako Naging Leading Lady, written by Carlo Vergara and directed by Chris Martinez for Virgin Labfest 9, on May 7, 3 p.m.; and actress-singer Bituin Escalante belts out well-loved Filipino songs in Triple Threats: Everything in Bituin on May 9, 3 p.m. Access the shows through bit.ly/CCPOnlineYT.

PETA Theater Online

Ang Mga Kwento ni Lola Basyang is currently streaming at PETA Theater’s YouTube channel: www.youtube.com/results?search_query=peta+theater+online.

National Museum of the Philippines

The National Museum of the Philippines has released a new coloring set featuring Aissa Domingo’s illustrations of endemic butterflies, moths, and land snails. To download, visit www.facebook.com/nationalmuseumofthephilippines/photos/a.195151237175869/3190207877670175/?type=3&theater and www.facebook.com/nationalmuseumofthephilippines/photos/a.195151237175869/3202762456414717/?type=3&theater.

Silverlens Galleries’ At Home With series

To keep in touch with art lovers, Silverlens presents Art Boost, an online drive to maintain engagement with art through social media, exhibition catalogues, and videos. The current At Home With series features Bernardo Pacquing, Hanna Pettyjohn, and Chati Coronel. Revisit contemporary artist Gary-Ross Pastrana’s notes on collage making; and Mit Jai Inn’s use of light, color, and structure in his Actantis exhibit. Visit Silverlens’ official social media accounts and its website (https://www.silverlensgalleries.com/) to view the exhibitions.

BenCab Museum online

Azor Pazcoguin’s solo exhibition, TAYP. RAYT. ER, which features oil paintings of items such as typewriters, phones, cameras, is now online from the BenCab Museum’s Facebook page at www.facebook.com/pg/bencabmuseum/photos/?tab=album&album_id=3024306460961023&__tn__=-UC-R.

BioBalance Wellness consultation

The BioBalance Wellness Institute offers the following services and features: free online consultation with its clinical nutritionist and nurse practitioners, wellness expert psychologist; online health and immunity risk assessment; and more payment options for availed services and products. For more information, contact 0917-521-4860 or concierge@biobalanceinstitute.com.

IkotMNL tour from home

The Museo de Intramuros, Ayala Museum, and Presidential Museum and Library in Malacañang Palace have partnered with Google to put their works online. Learn new things at home and visit the museums through a virtual tour: https://artsandculture.google.com/partner/malacanang-presidential-museum-and-library; https://artsandculture.google.com/partner/ayala-museum; and https://artsandculture.google.com/partner/intramuros-administration.

MegaMoveTunaMax

To keep its promise of encouraging a healthy lifestyle, Mega Tuna launches #MegaMoveTunaMax, a series of Facebook Live events featuring fitness classes. The fitness sessions will run all Mondays of May via the official Facebook page (https://www.facebook.com/megapuretuna/). Week 1: HIIT; Week 2: Pop Dance (tentative); Week 3: Total Body Workout; and Week 4: Hip Hop Dance (tentative).

CAST recordings on Spotify

CAST PH offers CAST Recording, a collection of one act plays, recorded online and released as radio/audio drama. The first recordings are A Matter of Husbands by Ferenc Molnár, featuring Pinky Amador and Giannina Ocampo-Van Hoven; and Enemies by Neith Boyce and Hutchins Hapgood, featuring David Bianco and Jennifer Blair-Bianco. Listen at https://open.spotify.com/show/5bLSOsJPkZnlaEFDfSSHbl?si=fDsW-kNpT6iP89En-dWbog.

National Bookstore delivery

National Book Store has reopened its branch in Cubao, Quezon City and now offers delivery services for its supplies to selected areas around Metro Manila. For orders from Marikina, San Juan, and Quezon City, contact 0917-631-1374; Mandaluyong, Pasig, Pateros, and Taguig contact 0917-834-3224; Caloocan, Manila, Navotas, and Valenzuela, contact 0917-302-7475; Makati, Muntinlupa, Parañaque, Pasay, and Las Piñas, contact 0917-791-0916. Orders are accepted on weekdays from 9 a.m. to 4 p.m.

Film masterclasses

Learn film concepts through interviews and film retrospectives from more than 60 directors, producers, writers, and actors including Bong Joon-Ho, Abbas Kiarostami, Agnès Varda, Spike Lee, Werner Herzog (with Roger Ebert), Jane Campion, Jodie Foster, Todd Haynes, Ang Lee, Jessica Lange, and Clint Eastwood. To watch, visit https://walkerart.org/magazine/series/dialogues-film-retrospectives.

National Theatre online

LONDON’S National Theatre launched National Theatre at Home on YouTube (https://www.youtube.com/user/ntdiscovertheatre). Every Thursday (7 p.m. BST, 2 p.m. EST) they will release free to watch shows which will be online for one week. Danny Boyle’s adaptation of Frankenstein, starring Benedict Cumberbatch and Jonny Lee Miller, premiered on April 30. Shakespeare’s Anthony and Cleopatra, starring Ralph Fiennes, premieres on May 8.

Fully Booked delivery

FULLY BOOKED is back in business for book orders (https://www.fullybookedonline.com/). In a Facebook post, Fully Book stated: “[O]ur Lazada and Shopee stores will be back online, too. Please do expect some delays and changes in our processes.” For advisories, visit bit.ly/fb-ecq-advisory.

English National Ballet shows online

ENGLISH National Ballet launched ENB at Home, releasing one show weekly for its Wednesday Watch Parties. The first in the lineup is Broken Wings, a Frida Kahlo-inspired production starring lead principal and ENB artistic director Tamara Rojo as Frida. It is available to stream for free for 48 hours. Watch at https://www.youtube.com/user/enballet or https://www.facebook.com/EnglishNationalBallet/.

The Royal House shows online

THE Royal House in London launched its #OurHouseToYourHouse series where shows can be streamed through its official Facebook page https://www.facebook.com/royaloperahouse/. Watch Arthur Pita’s dance-theater adaptation of Franz Kafka’s Metamorphosis at https://www.facebook.com/royaloperahouse/videos/217068512883588.

Radiohead Concerts

BRITISH rock band Radiohead has been uploading some of its concerts via its official YouTube page (https://www.youtube.com/user/radiohead). Fans of the Rock and Roll Hall of Fame band, known for songs like “Creep” (1992) and “Fake Plastic Trees” (1995), can watch the concerts Live from a Tent in Dublin (2000) and Live in Berlin (2006).

David Guetta: United at Home

FRENCH DJ David Guetta, the man behind the song “Titanium” (2011) featuring singer SIA, held a live concert fundraiser inside his Miami home benefitting the World Health Organization and other charities. The two-hour concert is currently available on his YouTube page (https://www.youtube.com/user/davidguettavevo).

Josh Groban concerts

JOSH Groban brings his concerts to your home via online, streaming every Thursday on YouTube (https://www.youtube.com/user/joshgroban). The second concert in the series, Stages: Live (2016), premiered on April 30. The singer has also includes commentary throughout each film. For more information, visit https://www.facebook.com/JoshGroban/.

Worldwide Concert for Our Culture

JAZZ at Lincoln Center’s annual Spring Gala: Worldwide Concert for Our Culture is now available to stream online. The honorees of the event are Clarence Otis and Jacqueline L. Bradley (Ed Bradley Award for Leadership in Jazz) and Phil Schaap (Jazz at Lincoln Center Award for Artistic Excellence). Performers at the gala include: Wynton Marsalis, Cecile McLorin Salvant and Sullivan Fortner, Chucho Valdes, Nduduzo Makhathini, and Baqir Abbas. For more information, visit jazz.org/gala2020. Watch on YouTube: https://youtu.be/IjJbZetCvGw.

Dior’s Designer of Dreams exhibition

DIOR’S exhibition titled Christian Dior: Designer of Dreams is now available to view online. Originally held at Paris’ Musée des Arts Décoratifs from 2017 to 2018, the exhibition traces the evolution of the house of Dior from post-war Paris to the present through a behind-the-scenes in-the-making of the exhibition, plus a virtual tour of its rooms. Visit Dior’s YouTube channel to watch the documentary (https://www.youtube.com/watch?time_continue=1521&v=FLWDWzMrkBE&feature=emb_title).

Frank Lloyd Wright virtual tours

THE Frank Lloyd Wright Building Conservancy, in partnership with the Frank Lloyd Wright Foundation and Unity Temple Restoration Foundation is offering #WrightVirtualVisits every Thursdays (1 p.m. Eastern/10 a.m. Pacific time) in participating sites. Check the participating sites at https://savewright.org/news/public-wright-sites-swap-virtual-visits/.

Movie night with Jamie Lee Curtis

EVERY Saturday (in the Philippines) until May 8, Lionsgate and Fandango’s Movie Clips YouTube channels will be streaming films. On May 2, watch La La Land (2016) by Damien Chazelle, and John Wick (2014) by Chad Stahelski. Aside from the screening, Ms. Lee Curtis will also engage with the online audience via real-time chats and movie trivia.

Color Tolkien characters

THE official Facebook page of the late author J.R.R. Tolkien has uploaded an illustration of Smaug the Magnificent from The Hobbit Movie Trilogy Colouring Book. Download the coloring sheet at https://bit.ly/2wKY3lp.

MoMA free courses online

After offering virtual tours, the Museum of Modern Art (MoMA) is now offering free online courses. The courses include a series of five free classes for contemporary art, fashion, and photography. It includes readings and exercises which can be completed within 12 to 38 hours. For details, visit https://www.coursera.org/moma.

Print & Play activities for kids

Keep kids entertained with new curated Print & Play activities from HP. The activities from craft making, mazes, dot-to-dot drawing and puzzles are suitable for ages 2 to 12. With HP Print & Play, parents can choose from a range of activities that are best suited to their children’s needs to achieve the best possible learning outcomes. To try the activities, visit https://www8.hp.com/ph/en/printers/printandplay/index.html?jumpid=va_u19mhncewr.

Harry Potter exhibit online

The British Library’s Harry Potter: A History of Magic exhibition is available online through Google Arts and Culture. Its features include video clips and sketches, a Q&A with exhibit curator Julian Harrison. To view, visit https://artsandculture.google.com/project/harry-potter-a-history-of-magic.

The Nanny’s Pandemic Table Read

The cast of the ‘90s comedy sitcom The Nanny reunites for The Pandemic Table Read of the show’s pilot episode. It stars Fran Drescher as Fran Fine who finds a job as a nanny to the three children of wealthy widower and theater producer Maxwell Sheffield (played by Charles Shaughnessy). To watch, visit Sony Pictures Entertainment’s YouTube channel at https://www.youtube.com/watch?v=C3a6KuP1X14&feature=youtu.be&fbclid=IwAR1eEwvK0A7lrLMnt2GTXBPoDR7y8_Q5TXMexTLIo9es9Gei4W1Yi-asITM.

Science experiments at home

Enjoy 44 science experiments with the kids at home with the James Dyson Foundation Challenge cards. To download the challenge cards, visit https://www.jamesdysonfoundation.co.uk/resources/challenge-cards.html.

Hogwarts online

Hogwarts Is Here, an online version of the Harry Potter series’ magical school by Harry Potter fans that allows visitors to take courses like the characters from J.K. Rowling’s book series. Various courses include Astronomy, Herbology, History of Magic, and Transfiguration. The website also includes a forum, groups, and library feature. Visit http://www.hogwartsishere.com/.

Color Manolo Blahnik designs

Manolo Blahnik shares a selection of his original sketches for coloring. The shoe designs are downloadable at https://www.manoloblahnik.com/gb/smile.html.

Podcasts on Philippine crime

Stories After Dark features podcasts on Philippine true crime and mystery stories. It currently has 14 episodes including The Maguindanao Massacre (2009), The Ozone Disco Fire (1996), and Pepsi Paloma: Rape or Publicity Stunt? Suicide or Murder? (1982/1985). To listen, visit https://www.facebook.com/storiesafterdarkph/.

Palacio de Memoria virtual tour

Art and history enthusiasts can now go on a virtual tour of Palacio de Memoria, the resplendent Colonial Revival mansion, and marvel at its luxurious facilities and hundreds of Euro-Filipino paintings, sculptures, art displays, and historical pieces online. It features the showroom of Palacio de Memoria’s auction house, Casa de Memoria or the Casa, which houses the Lhuilliers’ unrivalled collection of antiques, the Mosphil Lounge, and a passenger plane that that was refitted to be a lounge for special occasions. To view the complete Palacio de Memoria’s virtual tour, visit https://www.palaciodememoria.com/tours. For more updates, follow @thepalaciodememoria on Facebook and @palacio.de.memoria on Instagram.

E-coloring books

The Getty Museum and the Getty Research Institute of Los Angeles offers the Color Our Collections edition for 2020. To view, visit http://library.nyam.org/colorourcollections/page/11/.

Fruitas reopens more stores, food park

FRUITAS Holdings, Inc. continues to reopen more stores and has resumed operations of its food park in Quezon City after the easing of the government’s quarantine regulations.

In a statement Monday, the listed operator of food and beverage kiosks said its Le Village Lifestyle Food Park in Quezon City is now back in business, and its active store count is set to reach 100 by the end of the week.

“We are encouraged by the positive reception of our reopened stores, with several stores already reverting to pre-quarantine sales levels. We look forward to reopening a significant majority of our stores to fulfill Filipinos’ demand for fresh and healthy products,” Fruitas President and Chief Executive Officer Lester C. Yu said in the statement.

Le Village Lifestyle Food Park is now available for takeout and delivery, but the operating stalls are limited to Fruitas-owned brands, namely: Sabroso Lechon, Kuxina, Heat Stroke Grill, Shou La Mien Hand-Pulled Noodles, Munifico Pizzeria, Tea Rex, 7,107 Halo Halo Islands and The Pub (only for non-alcoholic beverages).

The company also said it exceeded its initial target of reopening a total of 60 stores last week as it now has 80 active stores. It is continually looking to resume operations in more stores in Metro Manila and the provinces, especially in areas that have been put under general community quarantine starting May 1.

Fruitas has 1,068 stores as of end-2019. Aside from those mentioned above, other brands under Fruitas are Fruitas Fresh from Babot’s Farm, Buko Loco, Buko ni Fruitas, De Original Jamaican Pattie, Johnn Lemon, Juice Avenue, Black Pearl, Friends Fries and The Mango Farm.

Since the implementation of an enhanced community quarantine in Luzon in mid-March, the company has ramped up its delivery network and forged new partnerships to boost revenue streams.

Fruitas’ consolidated revenues stood at P1.58 billion in 2018, up 37% from the previous year. Its earnings in 2019 have not been reported yet.

Shares in Fruitas at the stock exchange slid two centavos or 1.39% to P1.42 each on Monday. — Denise A. Valdez

How PSEi member stocks performed — May 4, 2020

Here’s a quick glance at how PSEi stocks fared on Monday, May 4, 2020.

Stimulus spending seen producing 6.5% deficit

PROPOSED spending measures laid out in the stimulus bill currently in Congress will increase the budget deficit as a proportion of Gross Domestic Product (GDP) to about 6.5%, more than double the level considered prudent, a former socioeconomic planning secretary said.

“The new House Bill being proposed also plans to expand the budget deficit and fatten the public debt. The safe zone of 3.2% as the deficit to GDP ratio has been exceeded and current estimates from technical papers backing the bill estimate (the deficit at) about 6.5%. Such a number breeches the traditional stability standards set by the economic managers and we don’t really want more macroeconomic shocks that could be really harmful for the economy,” according to economist Dante B. Canlas, who headed the National Economic and development Authority (NEDA) for part of the former president Gloria Macapagal Arroyo administration.

He was speaking Monday at a webinar hosted by the University of the Philippines, Ateneo de Manila University and the Philippine Economic Society.

Mr. Canlas called on the Department of Finance, Bureau of Treasury and the Bangko Sentral ng Pilipinas to “play a big role in formulating the strategy” for financing the budget deficit and in “exiting post-COVID from the increasing public debt.”

In a Viber message to BusinessWorld, Marikina Representative Stella Luz A. Quimbo, who co-chairs the House’s Defeat COVID-19 committee economic stimulus cluster, said many countries are currently accommodating higher deficits to fund measures to revive their economies, citing the United States with a deficit equivalent to 10.3% of GDP; Malaysia with 15.9%; and Thailand with 5.9%.

Ms. Quimbo said that the bill’s proposed interventions through increased government spending will translate to expanded output with a multiplier effect of “at least 1.5.”

“We are trying our best to anticipate implementation challenges so all planned assistance can be actualized, including identifying innovative ways of disbursing assistance to workers and firms using digital solutions. This way, as spending is increased, output expands more, so the deficit-to-GDP ratio can be controlled,” she said.

Meanwhile, Ateneo School of Economics professor Alvin P. Ang urged legislators to allocate some of the funds to support business retrofitting and repurposing.

“In the offices and the factories, even if you open up everything…how do you make sure the new normal allows for work to be continuous and unhampered (while) ensuring health standards. In that particular context, retrofitting and repurposing might be necessary,” he said adding that financing needs to be directed to micro, small and medium enterprises “to help them readjust and repurpose.”

First Pacific Company Ltd. Managing Director and Chief Executive Officer Manuel V. Pangilinan recommended creating a national supply chain blueprint to address food security concerns encountered during the pandemic.

“We don’t have a national supply chain blueprint. We have to understand where the food is coming from… the raw materials and the logistics that bring the food to the marketplace. So in case something does happen, the government is able to track. It is very interesting to know that most of our food is actually imported. In a crisis like this, aside from health, food is the next most important thing,” he said. — Genshen L. Espedido

Declining inflation provides room for further easing — Diokno

THE DOWNTREND in inflation will give the central bank room for further monetary easing to support to the economy during the pandemic emergency, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said.

“Clearly, the more benign inflation provides the Monetary Board greater room for easing,” Mr. Diokno said in a text message.

A BusinessWorld poll of 14 analysts yielded a median inflation estimate of 2.1% for April, which, if realized, will mark the third successive month of declining inflation. The indicator had come in at 2.5% in March. In April 2019, inflation was 3.1%.

The BSP now sees inflation averaging 2% this year, down from the 2.2% estimate issued in March but still within the 2-4% inflation range targeted by the BSP for 2020 and 2021.

The Philippine Statistics Authority will report April inflation data today, May 5.

The continued decline in global oil prices remained the major downside risk to inflation for April. Most analysts said this will offset upside risk from higher prices of rice and vegetables.

In a bid to curtail the impact of the pandemic on the economy, the central bank resorted to an off-cycle 50 basis-point (bp) rate cut on April 16. This lowered lending and deposit rates to 3.25% and 2.25%, respectively.

After cutting 125 bps this year following the 75 bps worth of reductions in 2019, Mr. Diokno said the BSP will assess how lenders are responding to the easing.

“[S]ince monetary policy works with a lag, it would be prudent on the part of the MB (Monetary Board) to see how the aggressive policy measures it has adopted have been absorbed by the financial system,” Mr. Diokno said.

The BSP has completely unwound the 175 bps worth of rate hikes imposed in 2018 when inflation was at a multi-year high.

Security Bank Corp. Chief Economist Robert Dan J. Roces said that the BSP should weigh the timing of the next easing.

“It is prudent on the part of the BSP to assess effects of prior policy moves, since it has ample space for both policy and RRR (reserve requirement ratio) cuts,” Mr. Roces said in a text message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said low inflation allows for the possibility of another off-cycle rate cut.

“Local policy rates could still be cut by at least 25 bps anytime soon (off-cycle easing) as fundamentally supported by the easing inflation trend,” he said in a text message, adding that a 200 bps RRR reduction soon cannot be completely ruled out.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said further easing “may have to wait” in order for the BSP to conserve ammunition in case the global economy weakens further.

“If BSP cut more rates nearer the annual inflation forecast (of 2.2%), this would not be an ideal position to be in. There should be enough space,” Mr. Asuncion said in a text message.

He said that the BSP should also take into account inflationary pressures associated with the recovery emerging as early as 2021.

“There is a distinct possibility that the recovery, not just domestically but globally, will be much more inflationary especially when demand starts to pick up everywhere,” he said.

Mr. Diokno said he expects gross domestic product to contract by up to 0.8%, citing the impact of the two-month lockdown on areas important to the economy. If realized, this would be a major climbdown from the 6% revised growth recorded in 2019 based on 2018 prices, as well as the 6.5% to 7.5% target set by the government before the pandemic.

The next rate-setting meeting is set for June 25, after the Monetary Board canceled its scheduled policy meeting on May 21 following the off-cycle rate cut in April. — Luz Wendy T. Noble

Fitch Solutions cuts 2020 PHL growth outlook to 0.5%, contraction possible if Q1 weak

FITCH SOLUTIONS Country Risk and Industry Research reduced its economic growth forecast for the Philippines to 0.5% in 2020 due to the impact of the lockdown, and warned that a full-year contraction is possible if first-quarter gross domestic product (GDP) comes in lower than expected.

In a commentary issued Monday, Fitch Solutions said the downgrade follows an estimate given in March of 4%.

It said a “weak” performance for first-quarter GDP, which will be released May 7, “could prompt us to revise our forecast into contraction.” It did not say what first-quarter GDP result would trigger a full-year downgrade.

It added that the second-quarter GDP performance is also “almost certain to be negative” after the Luzon lockdown carried over into April and May.

“Our outlook for the Philippine economy has become increasingly bearish as the government’s extension of lockdown measures and global growth headwinds prove significant drags,” it said.

Fitch Solutions added that with the second quarter expected to be negative, the Philippine economy is “on the cusp of recession,” defined as a contraction in economic activity for two consecutive quarters.

It said the lockdown in Metro Manila, which was originally one month long but was extended to two months, has brought domestic activity to a “near standstill.”

It said it expects mobility restrictions to remain in place in other forms into the third quarter of the year, while a slow recovery throughout the July-September period is expected as safety measures are gradually relaxed.

Among the downside risks for the economy this year are subdued the dampened manufacturing activity, with Fitch Solutions expecting gross capital formation (GCF) to post a steeper contraction of 1.4% this year from the 0.6% drop in 2019.

It said “household consumption will falter amid lost income and deteriorating confidence,” alongside reduced employment, dampened demand and a slump in remittances.

“We now forecast private consumption to contract 2.5% in 2020. This reflects our view for the present crisis to have a larger impact on private consumption than even the global financial crisis in 2008 and the Asian financial crisis, which saw Philippines avoid a contraction in this area,” the note read.

It said manufacturers were forced to adopt cost-cutting measures by reducing workforce or wages.

“The same will play out in the services sector, with businesses in the tourism and travel sector — which indirectly account for around 25% of the economy and 26% of employment — particularly suffering, given travel restrictions,” it added.

Job cuts and the return of laid off overseas Filipino Workers led Fitch Solutions to raise its unemployment rate projection to 8% this year, from the previous forecast of 6.5% and the 5.1% recorded in 2019. — Beatrice M. Laforga

Remittance, BPO revenue declines seen widening current account deficit

THE current account (CA) deficit could widen due to declining overseas worker remittances and business process outsourcing (BPO) revenue, according to Mitsubishi UFJ Group (MUFG) Global Research.

Such factors could offset the impact of a narrower trade deficit brought on by the collapse in oil prices, it added.

“Even as trade deficits narrow on a drop in imports of oil and consumer goods, the decline in BPO revenue and remittances would result in a wider current account deficit,” MUFG Global Research said in a note issued Monday.

In 2019, the current account deficit narrowed to $464 million, significantly lower than the $8.7 billion deficit seen in 2018. The Bangko Sentral ng Pilipinas (BSP) cited the lower trade in goods deficit, as well as higher net receipts from trade in services and in the primary and secondary income accounts.

Before the pandemic hit, the BSP projected the 2020 current account deficit at $8.4 billion, to reflect the government’s infrastructure spending.

The current account represents what a country takes in from exports as against what it pays out for imports. Its components include trade in goods and services; remittances from overseas Filipino workers (OFWs); profit from Philippine investments abroad; interest payments to foreign creditors; as well as gifts, grants and donations to and from overseas.

Cash remittances in 2019 rose 4.1% to a record $30.133 billion. In January, when the impact of the pandemic was yet to be fully felt, cash remittances rose 6.6% year-on-year to $2.648 billion.

However, with some OFWs repatriated while many more face possible layoffs, the BSP expects cash remittance to drop by 0.2% to 0.8% this year, after having earlier downgraded the projection to 2% growth last month from an initial forecast of 3% before the outbreak started.

A study by Ateneo De Manila University in mid-April has a much grimmer outlook for remittances — a drop of 20–40%, due to the outsize impact of the pandemic on oil prices and the knock-on effect on jobs in the Middle East, a major destination for Overseas Filipino Workers.

MUFG said it also sees lower revenues for the BPO industry amid falling demand during this crisis.

A wider current account deficit could also weaken the peso, MUFG added.

“This would then add downward pressure on the peso,” it said, noting that the currency showed signs of resiliency in April.

According to MUFG, the peso could range between P50 and P53 against the dollar in the second quarter. — Luz Wendy T. Noble

LANDBANK distributes over P308-M subsidy to rice farmers

THE Land Bank of the Philippines (LANDBANK) has distributed over P308 million to farmer beneficiaries eligible for the Department of Agriculture’s (DA) financial subsidy for rice farmers.

As of April 22, a total of 61,564 rice farmers across 26 provinces received financial assistance, LANDBANK said. The farmers were largely affected by quarantine measures imposed as a result of the coronavirus disease 2019 (COVID-19) pandemic.

“We are in close coordination with the DA to supplement the income of our small rice farmers and their families the soonest possible time,” LANDBANK President Cecilia C. Borromeo said.

Farmers cultivating one hectare or less have received P5,000 each through the Expanded Survival And Recovery Assistance Program for Rice Farmers via Rice Financial Assistance Cash Cards.

LANDBANK is also preparing to give cash grants to more rice farmers over 34 provinces, pending the release of the list of additional beneficiaries from the DA.

The beneficiaries can claim their financial assistance over the counter from designated LANDBANK branches.

The financial aid distribution program is in support of the national government’s Social Amelioration Program (SAP) as authorized by Republic Act (RA) 11469 or the Bayanihan to Heal as One Act. — Revin Mikhael D. Ochave

On relief packs and tax relief

Establishments have been looking forward to the lifting of the enhanced community quarantine (ECQ), especially as most economic activity ground to a halt after March 16. For more than six weeks, the COVID-19 pandemic and the resulting ECQ have crippled some businesses and the economy. The most vulnerable have been reduced to relying on emergency relief goods after being denied the opportunity to work. The government’s revenue-collecting agencies have missed their targets for the first quarter of this year, mainly due to the lockdown, which runs until May 15.

In addition, taxpayers were prevented by the lockdown from filing their returns and paying taxes while they were juggling with the unexpected challenges. The government has taken notice and extended tax deadlines and waived penalties for taxpayers unable to file because of the quarantine.

EXTENSION OF TAX DEADLINES
Bureau of Internal Revenue (BIR) Revenue Regulations (RR) No. 11-2020 issued on April 30 further extends the statutory deadlines for filing tax returns, paying related tax dues, and submitting documents. RR No. 11-2020 amends RR No. 10-2020 in consideration of the extension of the quarantine.

For the filing of annual income tax returns for the calendar year ended Dec. 31, 2019, the deadline is now June 14, 2020. For tax assessments, the filing of position papers, protest letters, transmittal letters, appeals, and correspondence is due 30 days from the lifting of the quarantine.

The deadline for availing of tax amnesty on delinquencies is now June 22.

For the other types of tax returns and other filings, a table in RR No. 11-2020 indicates the new deadlines for the guidance of the taxpayers which apply nationwide. RR No. 11-2020 also clarified that the term “quarantine” means any announcement by the national government resulting in limited operations and mobility including, but not limited to, community quarantine, ECQ, modified community quarantine, and general community quarantine.

Additionally, the Department of Finance (DoF) issued on April 23 Department Circular (DC) No. 002-2020, which extends the deadlines for paying taxes, fees, and charges to local government units (LGUs) pursuant to Republic Act (RA) No. 11469, otherwise known as the Bayanihan to Heal as One Act.

EXEMPTION FROM DOCUMENTARY STAMP TAX
The Implementing Rules and Regulations (IRR) of Section 4(aa) of RA No. 11469 is a relief to borrowers who were given a 30-day grace period for all loans and/or interest falling within the ECQ period.

The BIR, in its RR No. 8-2020 and Revenue Memorandum Circular Nos. 35-2020 and 36-2020, also provided an exemption from documentary stamp tax (DST) on certain debt instruments resulting from credit extensions, microlending, including those obtained from pawnshops, and extensions thereof during the ECQ.

In effect, these instruments with extended maturity periods due to the grace periods, whether the maturity periods originally fall due within the ECQ and from resulting credit restructuring, exempts taxpayers from paying DST. This relief, however, is not stretched to apply to those availing of a new loan or top-up to existing loans and new loan drawdowns during the ECQ period and the collateral documentation, which remains subject to DST.

WAGE SUBSIDY FOR SMALL BUSINESSES
The DoF has a relief program for qualified small businesses, known as the Small Business Wage Subsidy (SBWS). Under the SBWS program, the national government provides a wage subsidy for up to two months to affected employees of small businesses to help mitigate the impact of the ECQ. “Small businesses” refer to corporations, partnerships, or sole proprietorships that are not overseen by the BIR’s Large Taxpayers Service.

The program, through the Social Security System (SSS), provides a wage subsidy of between P5,000 to P8,000 per month to eligible employees of qualified small businesses. Employers may verify on the BIR website whether their small business is eligible. If qualified, the employers can apply through the SSS website between April 16 and May 8.

‘POSSIBLE’ EXTENSION OF NET OPERATING LOSS CARRYOVER
Another possible form of relief is a “proposal” by the DoF to extend the deductibility period for the net operating loss carryover (NOLCO) for small businesses up to five years. Under the present tax laws, net operating losses can be carried over as a deduction from gross income over the next three taxable years immediately following the year the loss was recorded.

If the DoF’s proposal is approved, the government will absorb the foregone tax payments, giving small businesses two more years to recover their losses resulting from the economic fallout triggered by the pandemic.

The change proposed by the DoF would require an amendment to tax laws, which will require an act of Congress.

As the country gradually moves towards an economic reopening after the COVID-19 crisis, the relief provided represent the government’s efforts to aid taxpayers through these turbulent times. Let us hope that this crisis ends soonest, as the resilience of businesses is being heavily tested.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Glenda Jay Gee T. Calagui is a tax associate of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

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