The clock ran out on the Senate to approve a measure that will immediately reduce the corporate income tax to 25% from 30%, with Senators entering the adjournment promising to pass the legislation in August.

In a joint statement issued by the Senators late Thursday, the chamber said it will resume in July deliberations on the revised version of Senate Bill No. 1375, now known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

“You also have our word that we will take up the bill upon the resumption of the session in July and work to pass it by the month of August,” they said.

The bill was among the chamber’s priorities along with the proposed Bayanihan 2 Act, which extends the special powers granted to President Rodrigo R. Duterte to address the coronavirus crisis.

The bill, however, failed to obtain Senate approval before Congress adjourned on June 5.

“We endeavored to pass CREATE with a mind for urgency,” the senators said.

“We regret, however, that we were unable to tackle this before the sine die adjournment… given the lack of material time, along with the pressing need to deliberate a plethora of other equally important national measures.”

The bill is the revised version of the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA). The new version accelerates the reduction in CIT to 25%.

This will further be reduced by 1 percentage point annually beginning 2023 until 2027. The CITIRA version of the bill proposed to gradually reduce the rate until it reaches 20% in 2029.

The new version will also extend the sunset period for enterprises enjoying incentives to four years from the 2-7 year period under CITIRA.

House Ways and Means Committee chair and Albay-2nd district Representative Jose Ma. Clemente S. Salceda has renewed his call for a special session to tackle CREATE as well as the proposed Accelerated Recovery and Investments Stimulus for the Economy bill, in light of the increasing job losses.

Mr. Salceda said the stimulus package is expected to generate 1.5 million jobs, while the proposed tax measure will create 1.1 million jobs over the next five years.

“We will also need to pass CREATE soon. I asked the President to call for a special session of Congress to get these bills passed, and I reiterate that request,” he said in a statement.

Finance Secretary Carlos G. Dominguez III and Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua are both considering recommending a special session to tackle COVID-19 measures.

“We are in discussions with the Office of the President,” Mr. Dominguez told reporters in a phone message Friday.

Mr. Chua said the economic team will seek guidance from the President as it prepares its recommendations on the stimulus package. — Charmaine A. Tadalan

Moody’s Analytics said it expects the Philippine economy to contract 1.8% in 2020, assuming no coronavirus second wave late in the year.

“[I]n our judgment the peak of the last economic expansion was January 2020, with the nadir of the recession in May 2020,” Mark Zandi, chief economist at Moody’s Analytics said in a report, “Handicapping the Paths for the Pandemic Economy” issued Friday.

The report contained an updated outlook for the Philippine economy in 2020 to a contraction of 1.8%, against a growth estimate of 4.9% issued in March. Before the outbreak, Moody’s Analytics had a base-case forecast of 6.9% growth in January.

The revised forecast is more upbeat than the 2% to 3.2% contraction in GDP expected by the government’s economic managers. First quarter GDP came in at minus 0.2%, the first contraction since the 3% drop in 1998 during the Asian Financial Crisis.

In 2019, the economy grew 6%.

According to Mr. Zandi, near-term recovery will depend on how quickly demand returns.

“This in turn depends on the collective psyche of businesses and consumers, and their willingness to invest and spend,” he said.

The Philippines is slowly easing restrictions, with parts of the country transitioning to more permissive forms of quarantine starting June.

Mr. Zandi warned that the pandemic may have caused long-term damage to the global economy.

“Even when the pandemic is over – after an effective vaccine or therapy for the virus is widely distributed and adopted – the global economic recovery will not be a straight line forward. There has already been too much structural damage to the economy,” he said. — Luz Wendy T. Noble

The government remains on track to hit its target poverty rate of 11% by 2022 despite “temporary” setbacks in poverty-reduction efforts due to the economic fallout of the pandemic.

National Economic and Development Authority (NEDA) Acting Secretary Karl Kendrick T. Chua said Friday that the poverty rate is expected to increase due to the pandemic but there remains a “strong chance” poverty will hit target levels in the next two years.

“Given the virus, and the pandemic, (poverty) is expected to go up but there are many indications that this is only temporary, and we have a strong chance to still hit the targets that NEDA has set forth, the new targets, around 11%,” Mr. Chua said at an online briefing.

The government’s economic team adopted in January a more ambitous poverty-rate target of 11% by 2022, after actual poverty incidence dropped to 16.6% in 2018 from the revised 23.3% in 2015. The recent poverty gains mean 5.9 million Filipinos have recently emerged out of poverty.

He said more parts of the country have relaxed their lockdowns to more premissive general community quarantine, indicating that more local economies are opening up.

He said poor in the rural areas were not severely affected by the pandemic and farmers continued to plant and sell their produce as markets for food remained active, supply chains were “not disrupted” and inflation remained low.

“So there is no supply problem… and I think, that is a good sign,” he said.

The poor segment of the population in the National Capital Region is estimated at 1.8% of the total, significantly lower than 30.15% in the rest of Luzon, 23% in Visayas and 45.1% in Mindanao, according to the 2018 Family Income and Expenditure Survey.

He said the increase in underemployment to 18% was not significant and still relatively low due to the subsidy programs rolled out by the government.

Underemployment is defined as those holding jobs who are seeking more work

“The combination of all these factors suggest that there might be a temprorary deterioration of poverty but I think given the policies in place, we are on track to still further improve our poverty numbers,” Mr. Chua added.

The jobless rate surged to 17.7% in April, equivalent to 7.25 million unemployed, against 5.1% a year earlier, when around 2.27 million were unemployed. This meant roughly five million lost their jobs when the lockdowns were in full force.

NEDA Undersecretary Rosemarie G. Edillon said at the briefing that despite the setbacks, measures are in place to gradually restore the five million jobs lost.

“We are coming up with concrete measures at the very least to get back, hopefully, 5 million (jobs),” Ms. Edillon said.

She said there are short-term opportunities for the jobless once the global supply chains normalize, pointing to more work becoming available in the electronics sector. — Beatrice M. Laforga

THE Philippine economic recovery is expected to lag the region due to its poor performance in containing the coronavirus outbreak, Oxford Economics said.

In a Research Briefing issued Friday, Oxford Economics said some Asia- Pacific countries are “moving in the right direction” while others like the Philippines are in a “more precarious” situation.

“We expect other APAC countries, that have made less progress with COVID-19 containment, to lag the upturn,” according to the briefing note, “Asia Pacific: Mixed progress towards recovery from COVID-19.”

It said the Philippines “has been struggling” after recording a growing number of cases.

The note updates a May 12 report in which Oxford Economics concluded that countries that had “convincingly contained” the COVID-19 outbreak could see workplace mobility bouncing back close to normal levels, or would “move in that direction.”

“We expected these economies to lead the economic recovery,” it said, noting that economies where workplace mobility is picking up as restrictions eased include China, South Korea, Taiwan, Hong Kong and Vietnam while those “moving in that direction” are Australia and Thailand.

“The situation is more precarious elsewhere. After having reported a relatively low number of new daily cases for a long time, the Philippines has been struggling with sharply rising caseloads since late May,” it said.

It said the “200-300” daily cases were “relatively modest” laregly due to the strict lockdown in Luzon while the spike in new cases reported by the end of May could be partly due to easing lockdown restrictions earlier that month in some parts of the country.

“The government has also ramped up both its testing capacity and the actual number of tests carried out,” it said.

“The path to sustainable economic recovery is thus more challenging and exposed to risks in these four countries,” it said, saying that the outbreak has not yet been contained in Singapore and Indonesia while infections continue to rise in India as well as in the Philippines. — Beatrice M. laforga

The automobile industry said auto sales by volume fell 66% year-on-year in March after the Luzon lockdown shuttered car dealerships over the second half of the month.

According to the joint report of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) issued Friday, sales volume in March was 11,029 vehicles, against the year-earlier total of 32,173 units.

Month-on-month, sales volume fell 63%.

Dealerships were shut down startingy mid-March after the government imposed enhanced community quarantine (ECQ) over Luzon, CAMPI President Rommel Gutierrez said in a statement.

“The impact of the COVID-19 pandemic was felt as early as March. We will continue to assess further effects as the community quarantine continues to be in place,” he added.

Volumes recorded in March volume brought year-to-date sales to 64,542 units, down 24%.

Commercial vehicles sold in March totaled 7,879, down 64% from February.

Toyota Motors Philippines, Inc., which had a posted a 39% market share in March, reported a 23% year-on-year decline in volume to 25,696 units.

“Indeed, challenging times ahead for the industry. For now, the industry remains hopeful for the containment of the virus at the soonest possible time while being resilient amid this crisis,” Mr. Gutierrez said. — Adam J. Ang

The National Electrification Administration (NEA) said it released around P293 million worth of loans to utilities operating in the countryside during the first five months of 2020.

Some P135.53 million suported capital expenditure projects and working capital requirements of electric cooperatives.

Meanwhile, calamity loans extended to 12 power cooperatives totaled P103.08 million.

These were used to rehabilitate distribution lines and facilities of utilities in Mimaropa (Mindoro, Marinduque, Romblon, and Palawan), Bicol, and Eastern and Western Visayas Regions hit by typhoons Tisoy and Ursula in 2019.

Northern Samar Electric Cooperative, Inc. availed of the largest calamity loan worth P20.51 million, followed by Sorsogon I Electric Cooperative, Inc., which borrowed P18.35 million.

The loans run over 10 years with a one-year grace period and interest of 3.25%. — Adam J. Ang