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Malaysia raises export tax for crude palm oil for first time in over a year

SINGAPORE — Malaysia has raised its export tax for crude palm oil for January, for the first time in one-and-a-half years, the Malaysian Palm Oil Board’s website said on Friday, citing the national customs department.

The world’s second-largest producer and exporter of palm oil had last imposed an export tax of 4.5% in August 2018 before lowering it to zero. It then placed a tax-free exemption on crude palm oil from May to December 2019 in a move to boost palm oil exports and expand into new markets.

Malaysia had calculated a palm oil reference price of 2,571.16 ringgit ($616.59) per tonne for January 2020.

Traders said Indonesia may follow in Malaysia’s footsteps to impose a similar tax on exports.

“The Indonesian export levy decision is keenly waited which would throw light on the 30% biodiesel implementation as well,” said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

“Malaysia will export more refined products as crude palm oil will now have 5% tax,” said one Kuala Lumpur-based trader.

Malaysian benchmark palm oil futures were up 1% at 2,913 ringgit per tonne in early trade on Friday. — Reuters

PVL’s BanKo-Perlas Spikers gives back to Romblon kids

GIVING back to the sport that they love, the BanKo-Perlas Spikers conducted a volleyball outreach workshop to kids at Odiongan, Romblon over the weekend.

The club has been working since its inception as one of the pioneer Premier Volleyball League teams in 2017 to promote the sport to children in various grassroots communities in the Philippines through these volleyball camps.

“Ever since its inception, BanKo-Perlas’ program has always included grassroots development clinics and workshops in our annual activities. It’s our way of giving sustainability to the sport that we love by ensuring that we bequeath our knowledge to the future generations,” said team manager Charo Soriano.

“The grassroots program hopes to inspire the Filipino underprivileged youth through volleyball, as it elicits joy and ignites hope for these young kids,” she added.

The day-long clinic, which was participated by more than hundred of kids across Romblon, is backed by Nicole Tiamzon’s Spike and Serve program, Globe and Liberty Insurance in cooperation with the Municipality of Odiongan and its Sangguniang Kabataan federation.

“It’s kinda overwhelming because I didn’t expect din na babalik ako this year because my mindset is we are going back here for next year pa. Then super saya pa kasi kasama pa namin ang Perlas with Spike and Serve team,” said Tiamzon, who is also the Perlas Spikers’ team captain.

Among those BanKo-Perlas standouts who took part in the outreach program were Southeast Asian Games beach volleyball bronze medalist Dzi Gervacio, Sue Roces, Jem Ferrer, Ana Gopico, Roma Joy Doromal and Chi Sindayen.

Gervacio enjoyed taking part of every activity.

“I’m very grateful that BanKo-Perlas is also a platform for reaching out to the generation of next athletes. After the victory we have achieved in the recent SEA Games, it was clear that it was also time to give back to the community that molded me to become the person that I am today,” said Gervacio.

“During that time, I was with the company of people whose lives have drastically changed because of volleyball and I wanted to share the kids that no dream is too big so long as you put your heart and mind on it,” she added.

The Perlas Spikers received a reception like no other in the island province to grow the game.

“Warm welcome every time whenever I go here and grabe sila mag-alaga. At the same time, we already build a relationship before and the players we’re responsive not just inside the court but also outside volleyball. Even the volunteer coaches and players were so great because willing silang matuto and they’re super hungry to learn more and improve volleyball here sa province,” said Tiamzon.

With the help of BanKo-Perlas, Spike and Serve has good plans for 2020 to sustain its advocacy to invest and advocate grassroots volleyball.

“My plan for Spike and Serve next year is to continue to support existing communities and strengthen more the culture of Spike and Serve to the beneficiaries. We wanted to expand also to other communities of Rizal and I really wanted to back to other communities sa provinces kasi doon ako excited na makita ‘yung small changes or impact to the community,” said Tiamzon.

“And lastly, we wanted din sana to involve more athletes din to join us in reaching out to the younger generations.”

For more updates about the Perlas Spikers, please check its social media accounts @PerlasSpikers on Instagram, Twitter and Facebook.

Solar industry seeks clarity on future of microgrid subsidy

LEGISLATORS need to decide on continued subsidies for off-grid power generation and distribution systems under the proposed microgrid law, the head of the Philippine Solar and Storage Energy Alliance said.

“The challenge there is really, number one, there should be certainty on the subsidy of microgrid. The position of government is still unclear on whether the UCME (universal charge for missionary electrification) is going to be removed or not,” Ma. Theresa C. Capellan, who chairs the alliance, said in an interview.

“In any missionary area you need subsidy,” she said. “You have a situation where your island is only as small as 20 kilowatts (kW), 40 kW, these are small islands, small grids” she said. “I’m not saying they will forever be at 20 (kW), but you’re starting at 20 (kW).”

Ms. Capellan is a member of the technical working group evaluating the proposed law on microgrids. A microgrid is a single controllable grid and can connect and disconnect from the national grid, the country’s interconnected network of power transmission towers, lines and substations.

The National Power Corp. (Napocor) has a mandate to provide power in areas that are not connected to the transmission grid. The UCME is collected from all on-grid electricity end users as determined by the Energy Regulatory Commission (ERC) and as called for under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2011. The collected funds are then used for rural electrification, among others.

“Your investment in a small island like that will be substantial and so your returns may not be as attractive. Now having said that, you can make it attractive if you rationalize the subsidy,” Ms. Capellan said.

“There has to be certainty on that in order for the private sector to really aggressively help the government in addressing total electrification,” she added.

The Department of Energy (DoE) has been saying that it wants to do away with the subsidy through a gradual phase out to reflect the true cost of electricity even in areas where private companies are reluctant to enter.

“It’s okay if there is a phase-out, but they have to rationalize it. I think their (DoE) main concern is that the resorts are really enjoying the subsidies, which should not be the case because the subsidy is there for energy-poor communities,” Ms. Capellan said.

“They have to find a way to make the UCME available targeting only the energy-poor islands. Unless they are able to resolve that then they cannot have the inflow of capital and investments in off-grid areas,” she added.

Ms. Capellan said the proposed law should further streamline the permitting process for off-grid energy companies.

“The permits that are required for a 1 megawatt (project) is the same permit that is required for the 10 kW,” she said, adding that developers would thus opt for big projects that offer bigger returns and more efficient deployment of time and people.

“They have to simplify it further. I think they have done a lot already. They have the new guidelines. But the challenge is really whether this kind of simplification will make (the) private sector jump into that missionary area because that is the objective of the DoE — to finish during this term the target, the last mile,” she said.

Ms. Capellan said the proposed law should also be clear on who is in charge of “missionary” areas, or remote islands where electricity remains non-existent. She said it is unclear whether it should be Napocor or the National Electrification Administration. — Victor V. Saulon

Gov’t securities rally on expectations of BSP cut

LAST WEEK saw yields on government securities (GS) move south almost across-the-board, with investors taking their cue from a statement by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno saying the central bank may consider cutting rates by about 50 basis points (bps) next year.

At the secondary market, GS debt yields dropped by an average of 5.3 bps, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates as of Dec. 13 published on the Philippine Dealing System’s website.

At the short end of the yield curve, only the 364-day Treasury bills (T-bills) saw a decline in yields, albeit at a flat 0.1 bp to 3.471%. On the other hand, rates of the 91- and 182-day T-bills went up by 7.5 bps (3.254%) and 0.2 bp (3.347%), respectively.

At the belly, rates of the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) saw declines, giving up 6.4 bps (3.725%), 6.5 bps (3.857%), 6.9 bps (3.998%), 7.5 bps (4.143%), and 9.2 bps (4.381%).

Debt papers at the long end of the curve likewise rallied. The yield on the 10-year debt paper went down 14.8 bps (4.536%), followed by the 25-year T-bond’s 7.8-bp dip (5.158%) and the 20-year’s 6.6 bps (5.165%).

“The lower yields since the start of [last] week were because of two factors: one, the anticipation on the year-end rally… [with investors] buying ahead of next year; and second, the BSP Governor announcing an additional 50-bp cut next year,” said Security Bank Corp.’s Chief Investment Officer for Trust and Asset Management Group Noel S. Reyes in a phone interview.

A bond trader also attributed the yield movements to investors mainly pricing in a possible rate cut: “[BSP Governor] Diokno mentioned that there is probably going to be a total of 50-bp cut for 2020, so I think markets are factoring in that rate cut possibility.”

In an interview with Bloomberg TV on Friday, Mr. Diokno said the BSP will be “considering” a 50-bp cut in 2020. This was the day after the Monetary Board’s decision to hold key interest rates on its eighth and final meeting in 2019.

If realized, a total of 125 bps will have been dialed back by 2020 from the BSP’s 175-bp rate hike in 2018 in the face of surging inflation that averaged a near-decade-high of 5.2% that year.

Benchmark rates for the overnight reverse repurchase facility, as well as overnight deposit and lending, currently stand at four percent, 3.5%, and 4.5%, respectively, following 75 bps worth of cuts this year.

Prior to Mr. Diokno’s statement, analysts were already expecting the BSP to resume monetary policy easing in the first quarter of 2020.

“I think we will continue to be in a downward trend in terms of yields…,” said Security Bank’s Mr. Reyes moving forward. — E.C. Aruta

Ryan Barshop: Making the move to healthy living

“PER ASPERA AD ASTRA.”

This Latin phrase, which translates to “through hardships to the stars,” is how United States immigration lawyer Ryan Barshop describes his health transformation journey.

A lifestyle shift that started two years ago, the 40-year-old New York native said that while the change has not been easy, it has however made a huge difference in his life that has seen him transform from being “morbidly obese” to be in “incredible shape” right now.

It is something that Mr. Barshop, in hindsight, said he is very thankful of being able to do before it was too late.

Mr. Barshop originally came to the Philippines 16 years ago as a volunteer for the US Peace Corps, returning for good in 2012 and has since been a practicing immigration lawyer, focusing on consular processing, a specialized type of immigration law dealing with embassies and consuls.

His expertise is the embassy here in Manila and the US consul in Ho Chi Minh City, work that requires him to alternate between Manila (he resides in a condominium unit at the Bonifacio Global City area when here) and Vietnam every other week.

Mr. Barshop said that he was a very active individual when he was in his 20s, engaging in muay thai and kickboxing and was then in tiptop shape.

A sedentary life caught up with him when he started law school and went on to practice. The days that he would exercise and be active dwindled, and his eating habits were anything but ideal.

And the “damage” of such neglect grew through the years — the once active and vibrant Barshop gaining over 100 pounds in a span of 10 years and grew very depressed, which he said affected not only his personal life but also his work.

It all came to a halt three years ago when Mr. Barshop said he hit “rock bottom.”

“I started to hit rock bottom in November 2016, and I was kicked very hard because of work reasons. May 30 the following year was when I took the plunge to change my ways,” said Mr. Barshop, who said that at his biggest he tipped the scales at 260 pounds.

“I was just unhappy with myself, with my life, and it was affecting my work. I was just not a happy person at all. I literally felt I was going to die. I felt I had 10 years before I die. It was that bad.

“So on my 38th birthday I realized I have nothing else to lose but if I don’t get healthy now it’s gonna be too late. So I made a lifestyle change and the rest is history,” said Mr. Barshop.

Mr. Barshop intimated that his health and wellness transformation journey has been a roller-coaster with its ups and downs but the reason he is doing it is not lost to him, which serves as the motor that keeps him going.

NUTRITION
He said that change for him came largely through nutrition — eating the right food — coupled with the needed exercise.

“The change is 70 to 80 percent nutrition. I started realizing that whatever I consume in my body has consequences. They say abs (abdominal muscles) is made in the kitchen because if you don’t have a healthy lifestyle, you don’t focus on good nutrition, going to the gym means nothing,” the lawyer said.

“You have to constantly focus on nutrition. I saw a weight change within weeks and I started developing muscles and so on,” he added.

Work also has not gotten in the way of his lifestyle shift.

While eating the right food, Mr. Barshop makes sure he follows his workout regimen both here and in Vietnam.

“I have two workouts, here and in Vietnam. I prefer working out after work. So here, three days a week, I have personal training which I do in my condo gym. I frequently do circuit classes at Saddle Row and most recently have become active in adidas Runners Manila, and then I train by myself,” he said.

He went on to say that since embracing a fit and healthy lifestyle, the impact on him has been thorough.

“It helps me to be a better person. Being healthy allows me to do many things. Physically, mentally and emotionally I feel better. I have more fun doing things — shopping, travelling and others. People come up to me and be amazed and I love sharing my experience,” Mr. Barshop said.

CELEBRATION
As a form of “celebration” of the gains he has made in his fitness journey, Mr. Barshop went on a two-week trek to the Base Camp of Mount Everest in September, joining a group of hikers.

He said that making the trek was on his bucket list and being able to survive and do it made him more determined to continue the fitness path he has chosen to go on.

“Everest is a pinnacle of success, symbolic for someone who thought he would die. It was my way of saying I survived,” said Mr. Barshop, who described the trek as the toughest he has had to do, both physically and psychologically, so far.

He drew parallel as well between his move to healthy living and his Everest trek, saying, “Anybody can do it. You don’t have to settle with what you have. It’s not going to be comfortable and it takes self-control. Anything is possible. It’s realistic.”

Two years since his shift towards fitness, Mr. Barshop said the challenge continues but he is undeterred, just as he encourages others to go on their own journey of health transformation.

“One of the quotes I live by now is ‘Per aspera ad astra,’ which translates to ‘hardships to the stars.’ Getting to where I am right now was not easy. I had to undo 10 years of hard damage in my life. It’s going to be a process, so give it time,” he advised.

“You start when you are ready, and you’ll know when you are ready. I did it when I was ready. People were telling me about being healthy and all, but I had to realize it for myself. You don’t have to hit rock bottom though like I did. Some people would be content with what they have, but I wasn’t,” Mr. Barshop added. — Michael Angelo S. Murillo

Former Health chief says Dengvaxia charges were recycled

FORMER Health Secretary and Iloilo Rep. Janette L. Garin has accused the Public Attorney’s Office of recycling charges in connection with Dengvaxia deaths.

“These charges are recycled,” the congresswoman said in a statement at the weekend, referring to two more charges filed by Chief Public Attorney Persida V. Rueda-Acosta against her on Dec. 13 over the deaths of children who received shots of the Dengvaxia vaccine.

“As for her intentions behind it, I do not know but it is certainly not for the truth nor for the families,” Ms. Garin said. “What they are doing is mere exploitation of grieving parents. They are using public funds for this ambulance chase of nonsensical proportions for selfish interests.”

She said most of the cases filed by the chief public attorney had been dismissed for “lack of basis and substance.”

“For the sake of the public health and the public in general, I urge the media not to give her and other anti-vaxxers the platform to spread lies about medical and scientific issues,” Ms. Garin said.

“Firstly because they know nothing about medicine and secondly, we have been through this before. They were given the air time to talk and spread lies and disinformation, they caused hysteria and ultimately, we all paid the price with the return of Japanese encephalitis, measles and polio.”

The two latest complaints adds to the 55 charges that have been filed by the Public Attorney’s Office (PAO) before the Department of Justice on behalf of the families of alleged Dengvaxia victims.

The two charges concern the deaths of 10-year old Levon Zirine Santos and 13-year old Shekina Venice Arciaga. Each of them received three shots of Dengvaxia.

Aside from Ms. Garin, the other respondents include officials from the Department of Health, Food and Drug Administration, Philippine Children’s Medical Center and executives of Zuellig Pharma Corp. and Sanofi Pasteur, Inc.

They were accused of reckless imprudence resulting in homicide, torture resulting in the death of a person and torture committed against children and violation of the Consumer Act of the Philippines on mislabeled drugs and defective products. — Genshen L. Espedido

EDC keeps top rating for P7-B bonds

ENERGY Development Corp. (EDC) was again given the top credit rating by local debt watcher Philippine Rating Services Corp. (PhilRatings) for its P7-billion outstanding bonds.

In a statement over the weekend, PhilRatings said the energy firm maintained its issue credit rating of “PRS Aaa” for the bonds. It has also been assigned a stable outlook for the rating.

This means EDC is expected to have an “extremely strong” capacity to meet its financial commitments, and that the credit rating will hold until the next 12 months.

EDC’s P7-billion outstanding bonds is composed of P3-billion retail bonds scheduled to mature in May 2020 and P4-billion retail bonds due on May 3, 2023.

“The assigned issue credit rating and outlook reflect the following key considerations: (i) leading position as a renewable energy company, both domestically and globally; (ii) strong parent company support and highly-experienced management team; (iii) adequate cash flows to cover debt payments; (iv) conservative capital structure, with a well-managed foreign currency exposure; and (v) a supportive economic and regulatory environment,” PhilRatings said.

The debt watcher noted EDC’s standing as the largest vertically integrated geothermal developer in the world and as a leading renewable energy firm with footprint across geothermal, wind, hydroelectric and solar energy.

It said the company has an installed capacity of 1,473.3 megawatts (MW) and a combined geothermal capacity of 1,179.3 MW as of end-September, making it a leading player in the energy sector.

“From 2017 to end-September 2019, EDC consistently posted positive operating cash flows and net cash flow levels. The company’s current ratio and debt service coverage ratio (DSCR) also remained above 1.0x throughout the period,” PhilRatings said.

It added cash flows of the firm is expected to keep growing until 2021 and its liquidity and debt servicing capacity to be kept at bay.

“With the Philippine Gross Domestic Product (GDP) expected to grow at around 6% in 2019, power demand is anticipated to follow the same trajectory, thus pointing to a positive outlook for the country’s power industry,” the debt watcher said.

EDC is a subsidiary of Lopez-led First Gen Corp. and contributed $67 million (up 28.8% year-on-year) to its earnings in the nine months to September. Attributable net income of First Gen expanded 45.9% to $220.3 million during the nine-month period.

Shares in First Gen at the stock exchange climbed 0.95 points or 3.88% to P25.45 apiece on Friday. EDC delisted from the local bourse last year. — Denise A. Valdez

Toyota Motor PHL president announces end of 4-year term

By Manny N. de los Reyes

INDUSTRY LEADER Toyota Motor Philippines’ President Satoru Suzuki recently bid farewell to members of the media as he concludes his four-year term as president of the local automotive.

Mr. Suzuki’s term lasted from January 2016 to December 2019, and was marked by a strong resurgence of local parts manufacturing, grassroots motorsports and environmental initiatives, as well as the introduction of key global models to the Philippine market.

The formal press announcement of his departure, held last week at the Grand Hyatt Hotel in Bonifacio Global City during the company’s annual media Thanksgiving luncheon, was attended by TMP Chairman Alfred Ty, who led the farewell toast that was joined by over 120 guests from the media.

“His hands-on leadership approach propelled Toyota to rebound from last year’s tough market conditions, and we are fortunate to have a President who truly led by example,” said Mr. Ty before raising his glass to Mr. Suzuki.

Mr. Suzuki oversaw the CARS Program participation of TMP with the Philippine government, through the all-new Vios. In 2019 alone, Toyota enjoyed three major launches under his leadership: the Hiace world premiere, Toyota GR Supra, and all-new Corolla Altis with the Hybrid Electric Vehicle (HEV) variant.

Upcoming projects initiated by Mr. Suzuki include the P4.5-billion Luzon Hub, which will revolutionize Toyota’s logistic operations; the Toyota Mobile App to better connect customers with dealers; and expansion to a new business model to explore long-term leasing of vehicles.

“This is not a final goodbye, but a new beginning. I am sure I will see you all again very soon,” said Mr. Suzuki as he takes the final bow in front of the local media, with whom he has spent numerous launch events and drive activities, among others. His most recent passion project outside of work is playing football with dealers and the media.

The next president of Toyota Motor Philippines will be publicly announced early next year.

Follow-through key to avoid turning New Clark City facilities into a white elephant

By Michael Angelo S. Murillo
Senior Reporter

IN the lead-up to the just-concluded 30th Southeast Asian Games, concerns were floated around over facilities built for it, particularly those in the New Clark City complex in Capas, Tarlac, ending up as white elephants.

A valid argument considering history is littered with venues going to waste after major sporting events, one local economist said, hence, the need for “follow-through” from all concerned.

In the aftermath of those that happened in the 2004 Olympics in Greece and, more recently, in 2016 in Rio, Brazil, where venues were left with sparse use, if at all, after, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said all concerned should guard against such thing from happening here.

“There are many risks associated with hosting events such as the SEA Games and one of them is having the facilities ending up as a white elephant and just wither away without people using these facilities again ever,” said Mr. Asuncion in an interview.

He spoke particularly of those found in the NCC complex, which includes a world-class athletic stadium, aquatics center and athletes village.

The sports complex is part of the big-ticket NCC project of the Bases Conversion Development Authority (BCDA) under the “Build, Build, Build” infrastructure program of the government, aimed at providing an alternative center for Metro Manila and to be the next growth driver in Luzon.

Its construction cost P9.5 billion and it is hoped that with such major sports facilities in place, real estate values would rise in said area.

“Follow-through is key. The government should be able to use these facilities for our national athletes and continuously support athlete development; successfully luring investors and/or locators to NCC. The government should continue to help develop the area and continue to push for the NCC to become what it was initially planned to be,” said Mr. Asuncion.

In allaying fears that the facilities built for the SEA Games would be laid to waste, proponents of the hosting said these could have commercial purposes like having it rented out to local teams as well as foreign for their training in next year’s Tokyo Olympics and other major sporting events.

Plans have been put forward as well to have the NCC sports complex house the proposed National Sports High School for students, which aims to help deserving student athletes get the needed training and preparation to be champions in their respective disciplines.

Recently, the BCDA and the Philippine Swimming, Inc. signed an agreement with the Asian Swimming Federation for the country to host the 2020 Asian Swimming Championships at the New Clark City Aquatics Center.

Apart from the facilities found in New Clark City, venues like the Rizal Memorial Sports Complex and Ninoy Aquino Stadium in Manila and PhilSports Arena in Pasig were renovated for the 30th SEA Games which the country hosted from Nov. 30 to Dec. 11.

Argentina’s new gov’t hikes export taxes on disgruntled farmers

BUENOS AIRES — Argentina’s new government has hiked export levies on soy, wheat and corn, according to an official decree on Saturday, hitting farmers in the grains exporting nation to raise revenue needed to avoid default on a mountain of looming sovereign debt.

Center-left Peronist Alberto Fernandez, who took office on Tuesday, boosted the rate for soybeans, soyoil and soymeal to 30% from about 25% and lifted the levy on corn and wheat to 12% from around 7%.

The decree also raised beef export taxes to 9% from 7%.

Argentina’s farmers, already hit by high financing costs, inflation and a dry spell, had widely expected their profits to take a hit from some sort of tax hike, with the government facing restructuring talks on about $100 billion in debt.

“Given the serious situation that public finances are going through, urgent adoption is necessary to meet, at least in part, budget expenditures with new resources,” the decree said.

The government office that registers grains exports will be closed on Monday while the new tax structure is put in place.

Argentina is the world’s No. 3 corn and soybean exporter and top supplier of soymeal livestock feed.

Farmers said they were disappointed to hear about the new taxes by way of a decree. They said Fernandez had promised during the campaign to work with them in developing policies.

“This way of letting us know about government policy changes really sends a message,” said Carlos Achetone, president of the Argentine Agrarian Association, one of the country’s main farming bodies. “Our member are calling us obviously upset.”

Carlos Iannizzotto, head of farm group Coninagro, told Reuters the decree “was not a good start” for the Fernandez administration in its relationship with the agriculture sector.

The new agriculture minister, former congressman Luis Basterra, was sworn in on Tuesday in the cabinet of Fernandez, who beat free-markets advocate Mauricio Macri, whose painful austerity measures hurt his re-election bid.

Farmers met Basterra’s appointment with scepticism and worries about increased state intervention and higher taxes, as had happened during the 2007-2015 administration of Cristina Fernandez de Kirchner, who is now Vice President.

Argentina has large maturing debts in 2020 and tough fiscal targets agreed with the International Monetary Fund as part of a $57 billion standby loan deal agreed with Macri in 2018. Fernandez has said that the IMF deal will have to be revamped. — Reuters

GOCC subsidies rise to over P7.2B in Oct.

GOVERNMENT subsidies to state firms rose to P7.238 billion in October from P1.55 billion a year earlier, according to the Bureau of the Treasury (BTr).

The October total took the year-to-date total to P158.73 billion worth of subsidies extended to government-owned and -controlled corporations (GOCCs) by the national government.

The National Food Authority captured 38.27% or P2.77 billion worth of budgetary assistance while the Philippine Health Insurance Corp. took in 36.61% or P2.65 billion during the month. The two state firms did not receive any subsidies a year earlier.

Around 6% of the total or P483 million went to the National Irrigation Administration while the Local Water Utilities Administration and National Power Corp. received P276 million and P253 million worth of subsidies, respectively.

Philippine Heart Center received P110 million in October, up 52.77% from a year earlier, while the National Electrification Administration (NEA) received P109 million.

The government extends subsidies to state corporations to cover their operational expenses that are not supported by the revenue they generate.

This year, the government allotted P187.1 billion for subsidies to GOCCs.

Meanwhile, the state firms that did not receive any subsidies during the month were the National Home Mortgage Finance Corp., Land Bank of the Philippines, National Housing Authority, Cagayan Economic Zone Authority, Development Academy of the Philippines, Philippine Center for Economic Development, Philippine Crop Insurance Corp., Philippine Fisheries Development Authority, Philippine Postal Corp., Small Business Corp., and the Social Housing Finance Corp. — Beatrice M. Laforga

Peso to rise further on OFW remittances

THE PESO is expected to further strengthen this week as more remittances come in, with the Christmas season coming closer.

The local unit finished trading at P50.64 against the greenback on Friday, strengthening by 7.1 centavos from its 50.711 close on Thursday, according to data from the Bankers Association of the Philippines.

Week on week, it strengthened by 12.5 centavos from its P50.765 close on Dec. 6.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort and a trader said the trade negotiations between the United States and China were the major factors behind the local unit’s climb on Friday.

“The peso strengthened when the market took in the news that [US President Donald J.] Trump has finally done an in principle phase one deal with their counterpart even after the mixed signals before that,” a trader said in a phone call.

“The peso closed stronger after US President Trump signed off the phase one US-China trade deal…thereby improving global market risk appetite especially on some emerging market stock markets and currency markets, such as the peso,” Mr. Ricafort said in a text message.

Reuters reported that a source knowledgeable about the bilateral negotiations of the US and China said the former will suspend tariffs on $160 billion worth of Chinese goods expected to take effect by Sunday and roll back existing tariffs.

Additionally, the source said Beijing accepted purchasing $50 billion worth of agricultural goods from the US in 2020 which is twice what it bought in 2017 when the trade war has yet to explode.

Two people familiar with the negotiations had said earlier on Thursday that Washington offered to cut existing tariffs on Chinese goods by as much as 50% and suspend the new tariffs scheduled for Sunday in order to secure a “Phase 1” deal first promised in October.

For this week, the trader said the market will be anticipating key local data which could guide currency trading.

“This week, we’ll be on the lookout for the release of remittance and hot money data,” the trader said.

Meanwhile, Mr. Ricafort thinks the continued influx of remittance from overseas Filipino workers (OFW) amid the upcoming holidays will also affect peso trading.

“One of the most important catalysts next week remains to be the seasonal spike in OFW remittances and conversion to pesos to finance Christmas holiday-related spending that could culminate especially within a week before Christmas,” he said.

The Bangko Sentral ng Pilipinas (BSP) is set to release October remittances data today while the report on foreign portfolio investments in November will be out on Thursday.

Central bank data showed foreign portfolio investments saw a net inflow of $104.53 million in October, reversing the $231.71 million net outflow in September as well as the net $67.83 million that left the country in October last year.

Meanwhile, cash remittances jumped to $2.379 billion in September, 6.24% higher than the $2.237 billion in the same month a year ago

The trader expects the peso to trade at a range of P50.25-50.70, while Mr. Ricafort forecasts the exchange rate to end around the P50.30-50.80 level. — L.W.T. Noble with Reuters

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