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House considering COVID-19 relief via CITIRA

A KEY legislator said that the House of Representatives plans to include coronavirus disease 2019 (COVID-19) relief via incentives contained in the Corporate Income Tax and Incentives Rationalization Act (CITIRA).

“We intend to insert at the bicameral conference committee level COVID (relief) as eligible (for incentives),” Albay Representative and House Ways and Means Committee chairman Jose Maria Clemente S. Salceda told reporters via Viber Thursday.

Asked how companies can avail of CITIRA incentives after having been set back by COVID-19 and the associated quarantine, Mr. Salceda told BusinessWorld via text message: “We will easily assess the damages.”

Finance Secretary Carlos G. Dominguez III has said that the department is reviewing the proposed bill to provide “tailored” relief programs for firms hit by COVID-19.

The CITIRA bill, which aims to gradually lower the corporate income tax to 20% from the current 30% and rationalize the tax incentive system, is still pending before Congress, which is scheduled to resume on May 4.

Companies that qualify for incentives under CITIRA may avail of up to 50% additional deductions on direct labor expenses, up to 100% additional deductions on training and development expenses, and up to an additional 50% on top of the 100% deduction now allowed on the purchase and use of inputs from domestic suppliers, which will benefit domestic industries and producers.

Senator Juan Edgardo M. Angara, vice chairman of the Senate ways and means committee, said that the Philippines lost potential foreign investors due to the “uncertainty” over CITIRA.

“We have to put some certainty into the future because you’re talking about people who are deciding on one billion dollars worth of investment. Companies have to know what their bottom line will be for the next 10 years if they come to the Philippines,” he said in a virtual briefing hosted by the Foreign Correspondents Association of the Philippines Thursday.

The administration has passed three tax laws so far: the Tax Reform for Acceleration and Inclusion law (TRAIN) and the two consecutive increases in sin taxes — Republic Act (RA) No. 11346, which raised excise taxes on tobacco products, and RA No. 11467, which raised excise taxes on electronic cigarettes and alcohol products.

Other pending measures under the tax reform program include the Passive Income and Financial Intermediary Taxation Act; the proposal to provide a uniform framework for real property valuation and assessment; and the bill increasing the government’s share from mining revenue. — Genshen L. Espedido, Charmaine A. Tadalan

OFWs in essential jobs seen mitigating remittance drop

THE government’s estimate of the decline in remittances from overseas workers is 2-3%, far more optimistic than the World Bank’s own view of a 13% average drop in funds sent home to low and middle income countries (LMICs) in East Asia and the Pacific.

Citing Bangko Sentral ng Pilipinas (BSP) estimates, Finance Undersecretary and Chief Economist Gil S. Betran told BusinessWorld that OFWs remittances could contract by 2-3% this year.

“BSP has an estimate — 2 to 3% decline. The reason is that most of OFWs are in socially necessary industries including health and education,” Mr. Beltran said in a mobile phone message Thursday.

“The forecast is negative 2 to negative 3% year-on-year, lower contraction than World Bank forecast for global remittances,” he said.

Cash remittances to the Philippines were at a record $30.133 billion in 2019, up 4.1%. As recently as early April, the BSP projected OFW remittances to grow by 3% this year.

Nicholas Antonio T. Mapa, senior economist at ING Bank Philippines, expects OFW remittances to post a year-on-year contraction of 2.5% in 2020 as Filipinos working abroad “may not have enough income” to send cash to their families here with lockdowns imposed in several countries, forcing businesses to suspend operations.

“Remittances from abroad will likely experience a 2.5% contraction due to COVID-19 which could affect both growth prospects and the external position of the Philippines. Impaired remittance flows in 2020 forced us to drop our growth estimates while we believe that peso will come under pressure once remittance support fades when lockdown measures are relaxed,” Mr. Mapa said in a note Thursday.

He projects the Philippine economy to contract by 2.2% this year in the worst-case scenario following the expected decline in remittance flows, which support domestic consumption, and the Luzon-wide lockdown which was extended until April 30.

In a report, “COVID-19 Crisis Through a Migration Lens,” the World Bank projected remittances to LMICs worldwide to decline 19.7% to $445 billion this year. The lost remittances could spell “loss of a crucial financing lifeline for many vulnerable households.”

Growth is expected to bounce back to 5.6% to $470 billion next year.

For LMICs in the East Asia and Pacific, including the Philippines, the World Bank projects remittance flows to drop 13% to $128 billion this year before bouncing back in 2021, growing 7.5% to $138 billion.

“This is not so much due to a decline in the stock of international migrants, but largely due to a fall in wages and the employment of migrant workers in host nations due to COVID-19,” the World Bank said.

The bank said if the country of origin is in crisis, migrants tend to increase the money they send back home; if the host country is in crisis, remittances can decline.

It said lockdowns and travel bans have a direct effect on employment and wages of foreign workers due to business closures and disrupted travel.

“The outlook for remittances for 2020 remains as uncertain as the impact of COVID-19 on global growth and may depend to a large extent on the measures taken to restrain the spread of the disease. In the past, remittances have been countercyclical during times of disaster in the recipient economy. This time, however, the pandemic has affected all countries, and the economic fallout is likely to vary due to country-specific characteristics,” it said. — Beatrice M. Laforga

Electricity market prices expected to increase post-ECQ

THE market operator of the Wholesale Electricity Spot Market (WESM) is expecting spot prices of electricity to increase in May, as demand is also projected to gradually rise soon after the enhanced community quarantine (ECQ) is lifted on April 30.

In a market report released Thursday, the Independent Electricity Market Operator of the Philippines (IEMOP) said spot prices are projected to average of P6.68 per kilowatt-hour (kWh) in May, while generation capacity is deemed adequate.

The operator noted that the “significant” drop in power demand during the ECQ brought down the effective spot settlement price (ESSP) to P2.47 per kilowatt-hour (kWh) in March from P3.45/kWh in February.

The ESSP is the rate paid by customers for their WESM transactions each billing month.

The National Grid Corp. of the Philippines (NGCP) earlier noted a decrease in demand for electricity of around 20%-30% during the quarantine period.

With industries and commercial businesses shut down during the ECQ, the system energy requirement of Luzon and Visayas grids decreased by around 19.8% compared to pre-quarantine levels to an average of 2,350 megawatts (MW).

In the first half of April, market prices ranged from P0.0/kWh to P2.973/kWh with an over 4,300 MW supply margin. Spot market volumes also fell to an estimated 10.98% of the total energy requirement.

“A new trend in the demand profile was even observed wherein spot prices were mostly higher during the night as opposed to the afternoon,” IEMOP said.

The continued drop in spot market prices since March is expected to persist until the end of April. The market operator expected spot prices to settle at an average of P1.83/kWh this month.

Should the ECQ period be extended to May 10, IEMOP said that generation supply will still be adequate, bringing down prices slightly around P4.30/kWh for the month. — Adam J. Ang

DA assures checkpoint snags for food cargoes resolved

AGRICULTURE Secretary William D. Dar said he has resolved the issue of food cargoes that were held up at local government-run checkpoints, after conferring with the Department of Interior and Local Government (DILG).

In a virtual news conference Thursday, Mr. Dar said he now expects food shipments, which have been halted at some checkpoints run by local government units (LGUs), to proceed unhampered.

“Food supply will always be fundamental during a crisis like the coronavirus disease 2019 (COVID-19) pandemic,” Mr. Dar said.

The Department of Agriculture (DA) has issued 99,948 food passes to vehicles carrying basic food commodities, which allow them to pass checkpoints thrown up to enforce national and local quarantines.

His updates of the Department’s food supply estimates include 84 days’ worth of consumption for rice, 147 days for corn, 28 days for vegetables, 12 days for fish, 111 days for poultry, 21 days for garlic and onion, and eight days for pork.

However, Mr. Dar warned that food passes issued to vehicles carrying produce may only be used for the transport of such cargoes.

“Distribution of relief goods is not included in the mandated use of the DA food pass,” Mr. Dar said. — Revin Mikhael D. Ochave

Infrastructure faces further delays due to ECQ, redirected funds

THE government’s infrastructure program faces further delays due to the quarantines imposed by the coronavirus disease 2019 (COVID-19) outbreak, as well as the repurposing of funds to contain the pandemic, according to Oxford Economics.

In a research note Thursday, it said the government’s original 7% economic growth target will require an increase in the project implementation rate of at least 50% from the current 30% “before infrastructure spending provides the necessary boost,” with weak private investment expected to further dampen overall investment.

“Boosting growth via increased infrastructure spending is a priority for the Philippine and Indonesian governments, but progress has been slow in both. For the Philippines, a key issue is the limited capacity of major government departments to fully implement their allocated infrastructure budgets,” it said.

Oxford Economics noted that progress in infrastructure projects “has been slow” despite the P8-trillion spending plan for the flagship infrastructure program.

It said this “is likely to be hurt further by the coronavirus outbreak this year” despite government’s efforts to continue with the projects since the government budget is expected to prioritize programs geared at containing the pandemInfrastructureic, boost health care and cushion the economic fallout.

According to its Global Economic Model, Oxford Economics estimated that infrastructure spending accounted for 1.2 percentage points of gross domestic product (GDP) growth over 2017-2019, using an investment multiplier of 0.85%.

“Nonetheless, we expect public capex to pick up as normalcy is gradually restored. Although falling short of the governments’ targets, we expect infrastructure spending to remain a key fuel for growth in both countries over the medium term,” it said.

It said spending by the major infrastructure-implementing agencies, the Departments of Public Works and Highways (DPWH) and Transportation (DoTr), increased at average rates of 34.9% and 6.1%, respectively, over the 2016-2018 period.

However, it said higher budgets have “kept average implementation rates for both departments relatively stagnant at 34.2% and 12.5%, respectively,” or an estimated weighted average implementation rate of 30% for the two agencies.

“Although both departments are spending more, their absorptive capacity hasn’t kept up with the rapidly rising budgeted amounts, resulting in stagnant implementation rates,” it said.

The Luzon-wide lockdown, which was extended until April 30, limited movement to essential workers and shipments only, suspended public transportation and halted non-essential business operations.

Work on many public infrastructure projects was also stopped in Luzon due to the lockdown, while 13 rail projects were allowed to carry on with limited work. — Beatrice M. Laforga

Transport GOCC dividends rise 74% to P19.3 billion

THE Department of Transportation (DoTr) said state firms which it oversees remitted P19.3 billion worth of dividends to the national government this year, up 73.87%, after government-owned and -controlled corporations (GOCCs) were tapped to provide advance funding to help contain the coronavirus disease 2019 (COVID-19) outbreak.

Transportation Assistant Secretary Goddes Hope O. Libiran told BusinessWorld in a phone message that the higher dividends represent the DoTr’s “response to the call of President Rodrigo R. Duterte to support the government spending measures” in response to the pandemic.

In a statement, the department said that it turned over a total of P52.7 billion in dividends from transport GOCCs between 2017 and 2020: P10.1 billion in 2017, P12.2 billion in 2018, P11.1 billion in 2019, and P19.3 billion in 2020.

The DoTr said the P19.3 billion total dividends that it handed over in advance to the Bureau of the Treasury were supplied by eight GOCCs.

The department said P6 billion was provided by the Civil Aviation Authority of the Philippines, P6 billion by the Manila International Airport Authority, P5 billion by the Philippine Ports Authority, P1 billion by the Light Rail Transit Authority, P500 million by the Cebu Ports Authority, P500 million by the Mactan-Cebu International Airports Authority, P140 million by the North Luzon Railways Corp., and P130 million by Clark International Airport Corp.

“Under the law, all Government Owned and Controlled Corporations (GOCCs) are mandated to remit in full their respective minimum dividends to the Treasury on or before 15 May of each year,” the DoTr said.

Transportation Secretary Arthur P. Tugade said: “It’s important for us to realize the urgency of turning over in advance our respective dividends. The President has directed his administration to generate funds to help the country cope with the pandemic. And this is our way of showing how eager we are to help by doing our obligations.” — Arjay L. Balinbin

Exporters advised to tap domestic market via e-commerce

THE Department of Trade and Industry’s Export Marketing Bureau (DTI-EMB) is urging exporters to reach out to domestic markets via e-commerce as their traditional markets could face disruptions due to the coronavirus disease 2019 (COVID-19) pandemic.

DTI-EMB Director Senen M. Perlada said only 40% of Philippine exporters have websites, which he said must be searchable and scalable.

“The digital space is very wide open. If there’s anything that this ECQ (enhanced community quarantine) has taught us, it is possible for us to get more active and explore the opportunities in the digital space,” he said in a web conference Wednesday.

He said companies should look to serving the domestic market.

“Gamitin natin mga possibilities dito sa local (We should explore the possibility of selling local) because that’s one big option for our exporters and manufacturers habang medyo hindi pa nagse-settle ang dust internationally (while international markets remain uncertain),” he said.

“Realistically speaking, there’s enough I think… under the constraints that we have now, to really look at the Philippines as a priority,” he added.

Mr. Perlada said e-commerce can be explored for both the domestic and export markets, adding that small businesses may partner with larger companies to help reach international buyers.

“We are going all the way to recommending the government to be actively involved in getting our products already in our geographic markets so that they are available there for e-commerce.”

Mr. Perlada said companies can also focus on exporting to recovering nearby countries including China and South Korea.

Exports for the US market are seeing the biggest declines, he said. — Jenina P. Ibañez

PEZA allows deferred rent, utilities for public ecozones

THE Philippine Economic Zone Authority (PEZA) said it is deferring the collection of rent, utilities, and processing fees in its public economic zones to cushion the impact of the enhanced community quarantine (ECQ) on locators.

PEZA in a statement Thursday said a memorandum circular 2020-023 issued on April 18 authorizes the deferment of rent for locators in public ecozones for April and May. The deferment period is 90 days from the due date. PEZA will not charge interest or penalties during the grace period.

Payment for public ecozone utilities, including electricity, water, and wastewater treatment, will be deferred for 30 days with no interest or penalties.

Unpaid 2020 accounts up to the portion of March before the ECQ was implemented, have a payment grace period of 90 days.

PEZA processing fees have also been deferred by 15 days after the ECQ is lifted. This includes letters of authority (LoAs), building permits, and visa processing, among others.

This only applies to LoA and visa transactions paid at the PEZA headquarters in Taguig City, since applicants at private ecozones may pay for these transactions within their ecozone locations.

PEZA said the measures comply with its Assistance and Reprieves Planning Group’s business continuity scheme for after the ECQ. The ECQ is expected to end on April 30.

The Department of Trade and Industry had issued a memorandum implementing a minimum 30 days’ grace period for residential rent and commercial rent for micro, small, and medium-sized (MSME) enterprises that ceased operations during the ECQ. This applies to rent due within the extended ECQ.

“There are various ways in which we can start anew after the ECQ period. My PEZA team and I are already looking into various plans for PEZA to take once the ECQ is lifted,” PEZA Director General Charito B. Plaza said.

“For now, we are doing our best to attend to the needs of our registered enterprises and to help the government and our people as we find a solution to this problem.” — Jenina P. Ibañez

Palay output estimate for first quarter downgraded 0.8%

PRODUCTION estimates for palay, or unmilled rice, in the first quarter were downgraded 0.8% from earlier projections to 4.25 million metric tons (MT), the Philippine Statistics Authority (PSA) said.

In its updated Palay and Corn Estimates, the PSA said the previous estimate was 4.28 million MT issued on Jan. 1.

If realized, the new projection represents a 3.8% year on year decline from the first quarter of 2019, when output was 4.42 million MT.

The PSA said the land area from which rice was harvested could have declined 4.8% year on year during the quarter from 1,153.19 thousand hectares previously.

The yield per hectare is now estimated to increase to 3.87 MT from 3.83 MT a year earlier.

Meanwhile, corn production was estimated at 2.40 million MT during the quarter, 1.1% lower than the previous estimate of 2.43 million MT issued on Jan. 1.

The projection, if realized, would mean 0.9% year on year decline from the output of 2.43 million MT in the first quarter of 2019.

“Harvest area may reduce to 698.97 thousand hectares, from 706.26 thousand hectares in 2019. Yield per hectare may slightly increase to 3.44 metric tons from the 3.43 metric tons level in the previous year,” the PSA said.

Around 466.20 thousand hectares of updated standing crop have been harvested while farmers declared their intention to plant on 264.71 thousand hectares. — Revin Mikhael D. Ochave

Philippines accuses Beijing of pointing naval radar gun at sea

REUTERS

THE Philippine military on Thursday accused China of pointing a radar gun at one of its navy ships that prompted the government of President Rodrigo R. Duterte to protest the aggression.

“This hostile act on the part of Chinese Government and encroachment within the Philippines’ exclusive economic zone is perceived as a clear violation of international law and Philippine sovereignty,” the military’s Western Command said in a statement.

The Joint Task Force West reported that on Feb. 17, a Chinese-owned PLAN vessel had pointed a radar gun toward them, citing the commanding officer of BRP Conrado Yap.

The Chinese ship’s naval gun director — a mechanical or electronic computer that continuously calculates trigonometric firing solutions for use against a moving target, and transmits targeting data to direct the weapon firing crew — was allegedly pointed at the Philippine boat.

“This gun control director can be used to designate and track targets and makes all the main guns ready to fire in under a second,” according to the task force report.

The Philippine crew also said that when they challenged the vessel during the incident, it responded that China has “imputable sovereignty” over the South China Sea, its islands and adjacent waters.

Foreign Affairs Secretary Teodoro L. Locsin, Jr. on Wednesday filed a diplomatic protest to the Chinese Embassy in Manila for the gun-pointing incident and another one for its plan to set up two districts in Paracel and Spratly Islands.

The two administrative units are under the control of Sansha City, the Chinese People’s Liberation Army said on its news website on April 17.

Meanwhile, Senator Risa N. Hontiveros-Baraquel said the Philippines should sue China for its reclamation activities in the past six years that damage reefs in the South China Sea.

She earlier said China should pay about $200 billion in damages, which the Philippine can use in its battle against the coronavirus disease 2019, which was first detected in China’s Wuhan City.

“If they refuse to pay those amounts, the Philippine government could consider filing a case before the international tribunal,” Ms. Baraquel told the ABS-CBN News Channel yesterday.

“There are remedies, especially now that the Department of Foreign Affairs has taken the first step in making that diplomatic protest.”

She also said China should be made liable for failing to immediately notify the World Health Organization about the virus that has sickened 2.6 million and killed more than 184,000 people worldwide. — Charmaine A. Tadalan

National penitentiary reports first infection

AN INMATE at the national penitentiary in Muntinlupa City has been infected with the coronavirus, the Bureau of Corrections (BuCor) said on Thursday, adding to concerns among activists about contagion risks in some of the world’s most overcrowded jails.

The male inmate from the New Bilibid Prison’s medium security compound had been confined at the Research Institute for Tropical Medicine on Friday, bureau said in a social media post.

“As a precautionary measure, contact tracing was started on the day he was admitted at the RITM,” it added.

Forty inmates identified as close contacts of the patient had been isolated and transferred to a quarantine area. The medical staff member who attended to him was also quarantined.

Nineteen inmates and one prison staff at the Correctional Institute for Women earlier tested positive for COVID-19.

The Quezon City Jail has also reported 18 infections — nine inmates and nine staff members, while the Cebu City Jail in central Philippines reported that 123 inmates had been infected.

The mayor of Cebu City said a new building in the prison capable of handling 3,000 people would be used as an isolation facility to contain an outbreak that accounts for 40% of cases in the Philippines’ second biggest city.

New York-based Human Rights Watch (HRW) was among several groups that called for inmates held for minor, non-violent offences, or those with health conditions, to be freed from Philippine prisons to create more space.

Activists globally have been urging governments to free political prisoners.

HRW this month warned of the likelihood of a serious coronavirus outbreak in the Philippines “threatening the lives of prisoners whose health the authorities have a duty to protect.”

The Cebu jail outbreak is among the biggest known coronavirus clusters in the Philippines, which as of Thursday had 6,981 infections and 462 deaths.

The Department of Health reported 271 new coronavirus infections and 16 ore deaths on Thursday.

Twenty-nine more patients have gotten well, bringing the total recoveries to 722, it added.

Ms. Vergeire told a separate news briefing it was too early to tell whether the infection curve has flattened, even if the rate has slowed.

She noted that before, it took only three days for cases to double compared with five days now.

The country was headed toward flattening the curve if the doubling time extends to 30 days or more, Ms. Vergeire said, citing experts.

Philippine prisons are notoriously overcrowded due to a combination of poverty, high crime rates and a judicial system unable to cope with a huge case volume.

A shortage of public defenders, overwhelmed judges and insufficient funds to post bail means suspects typically spend long periods — sometimes years — in detention awaiting court hearings that often end up with acquittals.

As of December, nearly 90,000 people in the Philippines were detained awaiting trial, corrections bureau data showed.

President Rodrigo R. Duterte’s war on drugs has exacerbated the problem, each year adding tens of thousands to jails, with 71% of inmates held on drug-related charges.

The Supreme Court urged trial judges on Monday to free prisoners eligible for temporary or early release.

Also yesterday, Health Undersecretary Maria Rosario S. Vergeire said at least 15,000 health workers were needed for emergency hiring for the government’s COVID-19 response.

The Budget department has approved the budget for the hiring, she told a news briefing, adding that seven health facilities have sought additional workforce. — Vann Marlo M. Villegas

DoH amends rules on classification of COVID-19 patients

THE Department of Health has amended an administrative order by including the new classifications of the coronavirus disease 2019 patients and providing for standards on detection and monitoring of cases.

The new order will amend a directive that laid out guidelines on the inclusion of COVID-19 among the list of diseases that should be reported to the Health department.

Under the new rules, the COVID-19 patients are now classified as suspect, probable, and confirmed. Before, the patients were either under investigation or monitoring.

The establishment of a standard system of case detection, investigation, laboratory confirmation and notification include DoH’s Epidemiology Bureau leading the COVID-19 surveillance system.

Under the system, cases will be detected through the expanded Severe Acute Respiratory Infection and enhanced Influenza-like illness sentinel surveillance system, notification from health and laboratory facilities, and event-based surveillance and response. — Vann Marlo M. Villegas

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