STA. LUCIA Land, Inc. (SLI) is postponing its planned P8.4-billion follow-on offering (FOO), which was scheduled next month, as it assesses the current market conditions.
In a letter dated Oct. 28, the listed property developer informed the Securities and Exchange Commission of its decision to defer the follow-on offering.
“Upon further consideration and extensive discussions between the company and China Bank Capital Corp…, the parties agreed that it would be in the best interest of the issuer and its stakeholders to defer the FOO,” SLI said.
“The decision to defer the (follow-on offering) is primarily due to the current market conditions which has been recently volatile,” the company added.
China Bank Capital is the issue manager, underwriter and bookrunner for SLI’s planned offering.
SLI filed the registration statement for its FOO with the SEC in August. It was looking to issue up to 3 billion common shares to the public, composed of 2.7 billion primary offer shares with an over-allotment option of 300 million shares.
Price per share would range between P2.26 and P2.80, which will generate about P6.78 billion to P8.4 billion for the company.
Based on its earlier timetable, SLI would set the issue price by Nov. 12, conduct the offer from Nov. 18 to 29 and list on Dec. 9.
At that time, SLI said it was expecting to net P8.12 billion from the follow-on offering, provided it maximizes the over-allotment option and sells at the high end of the share price range.
From the proceeds, it said P6.78 billion will be allotted to beef up the company’s capital expenditures, P820 million for acquisition of land and P517.79 million for general corporate purposes.
SLI is allocating P20 billion in the next three years for capital expenditures. It is expecting to generate P20 billion in reservation sales from its pipeline of 28 residential and commercial projects and five condominium and hotel projects.
The company booked an attributable net income of P883.74 million in the 1st semester, 104% up from a year ago, as gross revenues grew 70% to P3.5 billion. — Denise A. Valdez
ORIX METRO Leasing and Finance Corp., a unit of Metropolitan Bank & Trust Co. (Metrobank), said its P2-billion maiden bond offering was oversubscribed 2.2 times when it was launched last week to raise more than double its initial offer size.
A statement by Metrobank’s First Metro Investment Corp. yesterday said Orix Metro was able to raise P4.16 billion from its offer of two-year fixed-rate peso bonds due to high market demand.
The offer period opened on Oct. 24 and was supposed to last until Nov. 6 but was cut short due to the oversubscription as early as day one.
“We are very happy with the overwhelming reception on this landmark transaction, Orix Metro’s debut in the public debt capital markets. This is a testament to the investing public’s trust and confidence in Orix Metro’s financial strength and ability to meet financial obligations,” First Metro Executive Vice-President Daniel D. Camacho was quoted as saying.
Metrobank said in a regulatory filing last week the bond offering of Orix Metro initially had an offer size of P2 billion with an interest rate of 4.55% per annum. It is scheduled to be listed at the Philippine Dealing and Exchange on Nov. 15.
The offer is the first tranche of the company’s P10-billion peso-denominated debt securities program, which its board of directors approved on Sept. 6. It will have one or more tranches with a tenor of two years.
First Metro was the financial adviser of the company for the offering. It was joined by Metrobank in acting as selling agents for the bond issuance.
The company attributed the success of Orix Metro’s bond market debut to Metrobank’s wide network, saying in the statement: “Metrobank and First Metro worked hand-in-hand in identifying the right market/investors-a key component in a maiden public offering such as this.”
Local debt watcher Philippine Rating Services Corp. (PhilRatings) gave Orix Metro a “PRS Aa plus (corp.)” credit rating for the bond offer, which means it has a strong capacity to meet its financial obligations.
“We at First Metro have always been an advocate of capital markets development and having introduced a new name like Orix Metro in the capital markets is another reason we are very proud of this deal,” Mr. Camacho said.
Orix Metro is the joint venture of Metrobank, First Metro and Japan’s Orix Corp., which is primarily engaged in providing leasing and financing services across different sectors. It has more than 100 branches nationwide. — Denise A. Valdez
THE Cultural Center of the Philippines (CCP), in cooperation with the Embassy of the Republic of Poland, presents leading Polish jazz pianist and composer Artur Dutkiewicz in a solo concert on Nov. 12, at 7:30 p.m. and a Piano Improvisation Workshop on Nov. 13 from 10 a.m. to noon. Both events will be held at the Tanghalang Aurelio Tolentino (CCP Little Theater). Called the “Ambassador of Polish jazz” by the Jazz Forum Magazine in 2012, Dutkiewicz has appeared in more than 60 countries around the world from the USA through Europe, Africa, Asia and Australia. Besides playing in solo recitals, he is leader of the Artur Dutkiewicz Trio which plays modern jazz. His last albums Mazurki/solo, Prana, Traveller/trio, have been well received by audiences and critics alike. His CCP program, entitled ImproMazurka, includes: Antonin Dvorak’s Theme from the 2nd part of the New World Symphony; Dutkiewicz’s Africa Mazurka, Polish Mazurka, Chased Mazurka, Morning Mazurka, Mazurka Oberka; the Polish Christian song “The Lord is my Shepherd”; Ignacy Paderewski’s Nocturne in C Major, Op. 16 No. 4 and Minuet in G Major, Op. 14 No.1; and Alexander Tansman’s Les Iles Philippines. Ticket prices for the concert are P1,000 and P800 with a 50% discount for students and a 20% discount for senior citizens. For details contact the CCP Box Office at 8832-3704. For information regarding the Piano Improvisation Workshop call 8832-1125 loc. 1604/1605 or e-mail ccp.artist.training@gmail.com.
Jessica Zafra’s latest book out
FROM THE author of the Twisted series comes a collection of 27 stories from the last 27 years. The Collected Stories of Jessica Zafra contains award-winning fiction from Manananggal Terrorizes Manila (1992) and The Stories So Far (2014), plus new stories and an introduction by Don Jaucian. There will be a book launch on Nov. 2, 4-6 p.m., at the Lobby of the Nexus Center, 1010 Metropolitan Ave., Makati (near the Makati Post Office and fire sttion). Zafra will be giving a talk, do a Q&A, and sign books at the event. The Collected Stories of Jessica Zafra is published by Ateneo University Press and is now available at Fully Booked stores, Solidaridad, Popular Bookstores, the Ateneo University Press bookshop, Loyola Bookshop, and on Shopee. It wil soon be available at Mt. Cloud Bookshop in Baguio and other outlets.
Origami workshop with a master origami artist
DR. JUN MITANI, who is a professor in the Department of Computer Science, Graduate School of System Information Engineering, University of Tsukuba, and holds a PhD in Engineering from The University of Tokyo, is a master origami artist. His research focuses on computer graphics, and includes computer-aided origami design techniques. He is the author of the books Spherical Origami, 3D Magic Origami, and 3D Origami Art. Mr. Mitani will be conducting an origami workshop on Nov. 4, 2 p.m., at the Multi- Purpose Hall of the Japan Information and Culture Center, Embassy of Japan, 2627 Roxas Blvd., Pasay City. He will also be holding a workshop on Nov. 7, 1-3:30 p.m., at the Metropolitan Museum of Manila, Banko Sentral Complex, Roxas Blvd., Malate, Manila. This event is free and open to the public. Materials will be provided for all participants. Since there are limited slots only, RSVP is required. call 88708-7828 or e-mail info@metmuseum.ph for details.
International expressive arts symposium
DUYAN: Cradling Diversity in the Expressive Arts will be held on Nov. 30 and Dec. 1 at MAGIS (Make Art that Gives Inspires and Shapes the World) Creative Spaces, located at 111 Cordillera Street, in Ayala Alabang Village, Muntinlupa City. Duyan brings together national and international thought leaders in the arts and healing practices. The symposium opens on Nov. 30 with panel discussion on the topic “How does art contribute to well-being,” to be followed by plenary workshops and discussions. On Dec. 1, there are talks on the practice of the expressive arts, as well as plenary workshops to be led by expressive arts therapy pioneer Dr. Paolo J. Knill and poet/writer/author Dr. Margo Fuchs Knill. Among the speakers are art therapist and mental health clinician Dr. Gina Alfonso, dance and movement therapist Joey Atayde of the American Dance Therapy Association, psychiatric nurse and psychological care specialist Thelma Singson Barrera, Fr. Loreto Jaque who is trained in therapeutic play, psychologist Marisa Marin, art therapist Krupa Jhaveri, special education professor Amos Manlangit, and artist and community organizer Sarah Queblatin. To register, log on to magiscreative.net. For more information, visit MAGIS Creative Spaces on Facebook, or call 850-4852 local 220, 0927-950-5745, or e-mail hello@magiscreative.net.
Two exhibits at Silverlens
TWO EXHIBITS have opened at Silverlens Manila and are on view until Nov. 23. The Garden, Maya Muñoz’ third solo show with the gallery, presents new paintings with neon garden and volcanic landscapes. Meanwhile, Christina Quisumbing Ramilo and Pinky Ibarra Urmaza have a two-man exhibit called Dead Horse Bay which highlights the artists’ similarities — they both lived in New York City for two decades and their work are involved with the assembly of found objects and discarded fragments imbued with history. An Artist Talk with Ms. Ramilo and Ms. Urmaza, moderated by Stephanie Frondoso, will be held today from 4-6 p.m. They will be discussing how they came about with Dead Horse Bay and details about their work. Admission is free but slots are limited. RSVP at deadhorsebay.rsvpify.com to secure a seat. For inquiries, contact info@silverlensgalleries.com. Silverlens, 2263 Don Chino Roces Ave. Ext., Makati.
From Nakanojo Biennale to the CCP
ON Nov. 14, 6 p.m., the Cultural Center of the Philippines (CCP) unveils the work of visual artists Mervy Pueblo and Atsuko Yamagata from the recently concluded 7th Nakanojo Biennale in Japan. Pueblo and Yamagata, visual artists based in Manila, met, created and exhibited their works at the biennale last September. Working both individually during their residencies in the biennale, Pueblo and Yamagata created projects that respond to the physical and nonphysical realm. Pueblo’s installation is filled with coded references, creating socially charged mysterious draperies that function as a portrait of our contemporary reality. Yamagata playfully explores animist processes and presents materialistic definitions of the immaterial. The exhibit, Transcendental, will be at the CCP’s Bulwagang Carlos V. Francisco (Little Theater Lobby) and will run until Feb. 9. For details contact the Visual Arts and Museum Division, Production and Exhibition Department at 8832-1125 loc. 1504/1505 and 8832-3702, 0917-603-3809, e-mail ccp.exhibits@gmail.com or visit www.culturalcenter.gov.ph.
THE ALCANTARA-led Alsons Consolidated Resources, Inc. (ACR) has obtained an above-average credit rating for its P1.5-billion commercial papers, it told the stock exchange on Tuesday.
Publicly listed ACR said it was assigned a rating of “PRS A plus” with a stable outlook in relation to the first tranche of its commercial paper program of up to P2.5 billion that it registered with the Securities and Exchange Commission.
The rating given by Philippine Rating Services Corp. (PhilRatings) means the company has an above-average capacity to meet its financial commitments relative to other Philippine corporations.
Among the factors cited by the rating firm as basis were “the positive growth prospects for Mindanao which will bring about an increasing demand for power.” It also pointed to ACR’s “ability to establish joint ventures with strong partners for particular projects.”
The “stable outlook” given to ACR is assigned when a rating is likely to be maintained or to remain unchanged in the next 12 months.
ACR has started commercial operations of the second 105-megawatt (MW) section of its 210-MW Sarangani Energy Corp. baseload coal-fired power plant in Maasim, Sarangani province. The $570-million power plant is said to be the single largest power investment in the province and the entire Region 12.
Also in Sarangani province, a P4.5 billion, 14-5 MW run-of-river hydroelectric power plant at the Siguil River basis in Maasim is on its preliminary work. The plant is scheduled to begin commercial operations in 2022 and will provide power to Sarangani, General Santos City and municipalities of South Cotabato.
The hydro power plant is ACR’s first venture in renewable energy. It is the first of eight run-of-river hydro power projects that the company plans to build in Zamboanga del Norte, other parts of Mindanao, and Negros Oriental in Western Visayas.
At present, the company run four power facilities in Mindanao that generate a combined 468 MW. The plants serve more than 8 million people in 13 cities and eight provinces including urban centers Davao City, Cagayan de Oro, General Santos, Iligan, and Zamboanga City.
On Tuesday, shares in ACR slipped by 0.77% to P1.29 each. — Victor V. Saulon
THE US FEDERAL Reserve looks set to nudge the economy with a third consecutive rate cut at its policy review this week. — REUTERS
WASHINGTON — In the midst of what became a golden decade for the US Federal Reserve, central bankers twice in the 1990s cut interest rates in short bursts that managed to help the US economy continue growing despite slowing investment and weak growth overseas.
Today’s Fed hopes a third time proves just as charmed.
In their latest two-day policy meeting this week, Fed officials look set to nudge the economy along in similar fashion with their third consecutive rate cut. That would match the moves made by then-Fed Chairman Alan Greenspan in 1995 and 1998 during an era known as “the Great Moderation” for its steady growth, falling unemployment and tempered inflation.
There’s been no clear commitment to another reduction in borrowing costs from Fed policy makers, though a failure to lower rates on Wednesday could risk upending financial markets that are confident another cut is coming. With billions of dollars in bets on futures markets tied to anticipated Fed actions, any deviation by the US central bank from the expected course typically leads to sharp swings in bond and stock markets.
A rate cut on Wednesday, which would be the Fed’s third this year, would lower the overnight benchmark lending rate to a new range of between 1.5% and 1.75%. Policy makers may emphasize that “the three cuts cumulatively have served to balance the risks to the outlook,” and will likely keep the economy on track, JP Morgan economist Michael Feroli wrote last week.
The Fed is scheduled to announce its latest policy decision at 2 p.m. EDT on Wednesday (1800 GMT). Fed Chair Jerome Powell will hold a news conference half an hour later.
Policy makers likely won’t shut the door to further action, but may “communicate patience in deciding future policy moves,” TD Securities analysts wrote last week.
GAINING LEEWAY
Investors have no firm opinion on when the Fed will move again after Wednesday, a signal to Powell and his colleagues that if they deliver the expected cut this week they will have room to shape market expectations moving forward.
According to CME Group’s FedWatch tool here the probability of a rate reduction on Wednesday stands at 94%. After that, however, it’s a coin toss whether there will be any further change for at least a year.
That in itself is a success for Powell. Beginning last fall, the Fed confronted a widening gap between what policy makers at that point thought would be continued rate hikes, and the expectations of investors who began factoring rate cuts into their outlook as a global economic slowdown took hold around the intensifying US-China trade war.
The Fed, under pressure to lower rates from President Donald Trump but also watching US investment and manufacturing data weaken, reversed course early this year.
Financial markets have responded with largely easier borrowing conditions, and lower rates on important benchmarks like 30-year home mortgages. Key aspects of the bond market, watched by some Fed officials as evidence of faith or lack of it in near-term economic growth, have been looking steadily healthier.
Some of the ongoing problems like the trade war with China and the prospect of a disorderly British exit from the European Union also have lightened, at least a bit.
That has helped narrow the gap between the Fed and global market expectations.
It may have helped narrow gaps within the US central bank as well. Even those Fed officials who have been most eager to cut rates now feel that one more quarter-percentage-point reduction should be adequate for the year.
THEN AND NOW
Today’s circumstances share a number of similarities with those confronting the Fed roughly a quarter of a century ago.
In July 1995, Fed officials, as now, debated whether slower-than-expected growth would impair business investment, spilling over into hiring plans and, ultimately, household spending.
Just as weak growth in Europe is seen as a risk for US companies today, a weak outlook for Canada and Japan was a concern then, according to minutes of the meeting at which the Fed adopted the first of three rate cuts in six months.
“During the last six weeks my optimism has diminished,” said former Fed Chair Janet Yellen, who was president of the San Francisco Fed at the time. Without action by the Fed “we could easily end up, I think, in an extended growth recession.”
Fast-forward to the present, and again the economic data has not been great.
The most recent jobs and retail sales reports were both weak. Economists polled by Reuters expect economic growth slowed in the third quarter to an annual rate of 1.7%, from a 2% pace in the second quarter. The advance estimate of gross domestic product is due to be released on Wednesday, before the Fed concludes its policy meeting.
As the 1990s proceeded, it took two such rounds of “mid-cycle adjustment,” about two years apart and each involving three rate cuts of a quarter of a percentage point each, to keep that recovery on track. It was derailed by the bursting of the dot-com stock market bubble, with a recession starting in March, 2001.
The expansion since the 2007-2009 financial crisis and recession has already eclipsed the 1990s to become the most prolonged period of sustained growth in US history.
While the pace has sometimes been tepid, Powell and his colleagues argue there is no reason it can’t keep going, and have pledged to act “as appropriate” to try to make it so.
At a speech in Denver earlier this month, Powell nodded to both the risks facing the US economy, but also to its ongoing growth.
On balance, “this feels very sustainable,” he said. — Reuters
MEAT processors said they will not purchase pork from domestic farmers to assure the public about their products’ safety amid an outbreak of African Swine Fever (ASF) in hog farms around Luzon.
“We believe that it is safer for the meat processing industry not to buy local pork until they are able to assure government authorities and the consuming public that local pork is ASF-free,” Philippine Association of Meat Processors, Inc. (PAMPI) Rex B. Agarrado said in a statement.
The industry is currently battling against local government restrictions on the movements of its products, with provinces and towns reluctant to risk infection of their own farms.
PAMPI generally imports 95% of its pork and will switch entirely to 100%, sourcing from countries not affected by ASF. It expects to lose P40 billion in sales if its products do not regain freedom of movement in time for the year-end holidays, the peak sales period for products like hams.
“Repeated assurances by health authorities that ASF does not pose any risk to the health of humans will have no value and meaning for the meat processing industry and consumers as well if its products are intercepted and confiscated on the way to market or sent back to the factories,” Mr. Agarrado added.
PAMPI is the country’s largest group of meat processors. It has 88 member-companies, generating about P300 billion in sales and directly employing 150,000 workers.
Samahang Industriya ng Agrikultura (SINAG) Chairman Rosendo O. So said in a text message that the domestic pork boycott will have “no effect at all,” adding that 80% of processors in the country are not members of PAMPI.
SINAG reiterated that domestic pork is safe and that its supports other meat processors who support hog farmers.
National Federation of Hog Farmers, Inc. (NFHFI) Chairman and President Chester Warren Y. Tan said that the group also considers pork from Philippine farms to be safe.
“Hindi namin alam kung bakit nila (PAMPI) nabanggit iyan. Basta sa amin, local pork is safe, (We do not know why PAMPI made that statement. As far as we are concerned, local pork is safe)” he told reporters. — Vincent Mariel P. Galang
THE government will save nearly P800 billion yearly by investing in the prevention of non-communicable diseases (NCD), factoring in the economic growth boost over the next 15 years.
The finding was outlined in a joint statement Monday issued by the Department of Health (DoH), World Health Organization (WHO), United Nations Development Programme (UNDP) and the United Nations Interagency Task Force (UNIATF).
The organizations called for more investment in preventing NCDs, adding that it sees significant economic impact from preventing 350,000 premature deaths due to NCDs.
“NCDs, which include diseases such as cancer, heart disease, diabetes, stroke and chronic respiratory diseases, account for 68% of all deaths in the Philippines. These diseases have been shown to negatively impact on the population’s health, as well as the economy. NCDs cost the national economy an estimated P756.5 billion per year, equivalent to 4.8% of the country’s annual GDP,” the Joint Statement said.
NCDs are usually caused by unhealthy habits such as smoking, drinking, and eating oily and salty food. It is also a result of not having enough exercise.
Acting WHO Representative in the Philippines Rabindra Abeyasinghe said in a statement that the findings are a reminder that the Philippines should address the direct and indirect cost of NCDs.
“The health and economic cost of NCDs is a sobering reminder for us that we need to do more to prevent and control NCDs in the Philippines… Major progress in the prevention and control of NCDs is within reach, but we need to act now and we must involve all sectors including health, education, finance, planning, environment and sports,” he said.
The DoH, WHO, UNIATF, and UNDP released Tuesday the Philippine NCDs Case Report which evaluated the economic impact of NCDs.
“The report found that investing in ‘Best Buys’ — cost-effective interventions targeting tobacco use, harmful use of alcohol, excessive salt consumption, and physical inactivity — will have a significant positive impact on the economy and population health. The return on investment for implementing these “Best Buys” is estimated to be P377.7 billion over the next 15 years while the cost of implementation is much less, at P28.9 billion over the same period. Investing in ‘Best Buys’ will also reduce the premature deaths of 350,000 people over the next 15 years,” the organizations said.
The salt reduction package is expected to prevent 164,251 deaths in the 15 year time frame while the physical activity package will save 58,397 lives. The tobacco control package will prevent 71,130 deaths and the alcohol control package could save 57,872 lives.
The study also estimated the returns of investing in clinical interventions for cardiovascular diseases and diabetes, which are both the top diseases in he Philippines. Even if the initial investment is expensive at P530 billion, the report said it will prevent 43,327 deaths in the next 15 years.
Health Secretary Francisco T. Duque III said in a statement Tuesday said a national strategy to address NCDs is in line with the Universal Health Care (UHC) Program next year which will utilize the proposed increases in Sin Taxes for funding.
“Our country’s efforts on tobacco control and sin taxes will jumpstart our NCD prevention and control strategies,” he said. — Gillian M. Cortez
THE Department of Agriculture (DA) said it will impose “stricter” rules for the issuance of sanitary and phytosanitary import clearances (SPSICs), signaling its intent to manage the inflows of imported rice during harvest season, when farmers are vulnerable to price swings when additional volumes enter the market.
“We are issuing a new stricter set of guidelines. We have to mention that all along these (have been in place), just to remind ourselves that we have these rules and we need to reiterate them,” Agriculture Secretary William D. Dar said in a news conference Tuesday.
The guidelines will be released by next week.
“That has been our strategy, (as) we were entering the main harvest (in) October and November, and we implemented strictly the guidelines before any SPSIC is issued. Of course, naintindihan din yan ng importers na wag muna mag-angkat dito sa panahon na yung ating mga magsasaka ay nasa harvest season (we have an understanding with importers not to import during the harvest),” he said.
SPSICs are issued by the Bureau of Plant Industry. BPI granted 3,115 permits to 228 entities starting March, when rice tariffication began, until August. The permits cover 2.776 million metric tons (MMT) of rice, exceeding the Philippines’ 7% import requirement, which is equivalent to 1.5 MMT to 2.4 MMT.
The Philippines can meet about 97% of domestic demand from its farmers’ output, and needs to import the rest.
Asked if the measures will slow down the volume of imports, Mr. Dar said it will depend on how ready importers are to comply.
Separately, Senator Cynthia A. Villar, the head of the chamber’s Committee on Agriculture and Food, said on the sidelines of an event in Manila that rice cartels use imports to control supply and influence the price they need to pay to domestic farmers for their palay, or unmilled rice.
She said she backed the strategy of local government units (LGUs) making direct purchases of palay at fair prices to prop up farmer incomes.
“Kaya parang nagkakagulo dahil yung cartel parang nakokontrol nila ang supply so ngayon ine-encourage na natin yung mga governors na umutang sila sa Land Bank (of the Philippines) [LANDBANK], sila na bumili nung rice at sila na rin maghanap ng market for the rice para matulungan yung ating mga rice farmers” (The market is being disrupted by cartels that control the supply which is why we are encouraging governors to borrow money from LANDBANK so LGUs can buy and find markets for rice to help the farmers), she told reporters.
She said the alleged cartels, based in Central Luzon, are also importing rice to influence the supply.
“Kailangang mag-compete tayo sa kanila kasi parang nakokontrol yung supply of rice. Ngayon naman nag-iimport sila, so medyo i-try natin na i-lessen ang importation,” (We need to compete with the cartels because they can control the supply of rice. Now they’re importing, so we need to try to reduce imports), she said.
Ms. Villar added that in two years, farmers will be in a better situation as the Rice Competitiveness Enhancement Fund (RCEF) helps them increase their productivity.
RCEF, a component of the rice tariffication law, receives P10 billion a year in funding for six years from the proceeds of rice import tariffs, with the fund supporting farm mechanization, credit, seed, training and other measures to improve the industry’s competitiveness. — Vincent Mariel P. Galang
INCREASING the excise tax on alcohol products is expected to reduce consumption by as much as 20% in four years with possibly life-saving consequences, “save lives,” a public health consultancy said.
According to a simulation conducted by Alliance for Improving Health Outcomes (AIHO), the joint proposal of the finance and health departments to increase the excise tax on alcohol products will likely reduce consumption of spirits by 18.3%, beer by 20.5% and wine by 4.68% after a four years of implementation.
The study evaluated the Department of Health-Department of Finance’s (DoH-DoF) proposals in Senate Bill No. 383, which imposes higher specific taxes on alcohol products and a 10% annual indexation rate.
The DoH-DoF tax structure will “result in a greater reduction of consumption across all alcohol types” compared with House Bill No. 1026, which was passed on third and final reading in the House, due to “deterrent effects of higher prices brought about by higher taxes,” it said.
Both proposals are projected to “save lives” after four years of implementation but the DoF-DoH’s will save 57,020 lives, compared with 22,152 for the House version.
“In both simulations, the tax intervention will result in more lives saved for males, demonstrating that the intervention greatly benefits the male population due to the greater prevalence of alcohol consumption among males,” it added.
It said higher tax rates will yield higher revenue for the government “since the price elasticity of alcohol is less than one.”
Elasticity refers to how price fluctuations affect demand. If the percentage change in demand is the same as the percentage change in price, the commodity is said to demonstrate a price elasticity of demand (PED) of 1. Items with PEDs of less than 1 are said to be price inelastic.
“We recommend that the government push for higher alcohol tax rates in light of this new evidence. To further strengthen the current evidence base, we recommend that impact on alcohol-related morbidity and its implications on health expenditure be modelled alongside mortality effects,” AIHO added.
In a statement, the DoF estimated that alcohol products have an annual economic cost worth 1.7% of gross domestic product or a “third of the country’s annual health expenditure.”
“Beyond the personal health costs, the socioeconomic costs of alcohol need to be mitigated. The massive economic costs of alcohol abuse justify significantly higher rates. For behavior to change meaningfully, the tax rates have to be high enough,” Finance Undersecretary Karl Kendrick T. Chua said was quoted as saying.
Mr. Chua also said that increasing taxes on alcohol products is the “most cost-effective way to discourage excessive consumption” and that the DoF will continue supporting the higher rates as adopted in the Senate. — Beatrice M. Laforga
THE TAX REFORM program’s fuel excise tax produced a “minimal increase” in poverty incidence while increasing economic activity, the Philippine Institute for Development Studies (PIDS) said, citing the results of its research studies.
The government think tank said it studied the impact on employment and poverty of the higher excise tax, which was authorized by the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which took effect in January last year.
The tax law faced stiff opposition, including from legislators who claimed the increase in fuel prices will make everyday commodities more costly for the poor.
“The results show that although excise taxes on fuel products entailed a minimal increase in poverty incidence, the first package of TRAIN increased poverty among households and individuals and across all sectors considered. This was due to the increase in commodity prices that offset the increase in factor incomes,” according to the study, “Impacts of TRAIN fuel excise taxes on employment and poverty.”
The study evaluated the impact on households, individuals, women, fisherfolk, transport workers and farmers. It found that the “most affected were farmers and transport workers where poverty incidence rose by 0.26 and 0.32 percentage points, respectively.
“The increase in commodity prices offset the increase in factor prices causing losses in the real value of household incomes. This resulted in more members of the sectors falling into poverty, although the most affected were the fisherfolk and farmers,” it explained.
However, it noted that the unconditional cash transfers mitigated the poverty-inducing impact of the law especially in the case of transport workers.
The “net effect of TRAIN 1” had a positive impact on employment as job numbers grew, while the decline in jobs in industrial activities was offset by the higher employment in agriculture activities, it said.
“Although overall employment may still increase, the transition from one (form of) work to another may become costly for some workers. This makes active labor market policies (more critical), such as direct employment creation, as in infrastructure, and passive labor market policies especially those that link workers to available work useful in minimizing the welfare loss of workers,” it added.
“Employment and poverty are among the most important development issues and keeping track of how these indicators react to economic shocks is imperative in policy discussions,” it said.
In a separate study, PIDS said that higher taxes on petroleum and coal boosted domestic output in most industries which increased economic activity overall.
“This is due to the increased economic activity following increased consumption brought about by lower income tax rates, especially among the highest income deciles,” according to the study, “Effects of TRAIN fuel excise taxes on goods and prices.”
However, it came at the “expense of the marginalized groups” and raised energy and carbon emissions across the country.
“The increased economic activity, however, would come at the expense of the welfare of marginalized groups and increased energy and carbon emissions… Given that the contribution of non-fossil fuel sources of power is significantly low, any short-term increase in economic activity would favor the growth of sources of electricity that are based on oil, gas, and coal,” it said.
The study also proposed that the government further consider the impact of policy reform on low-income segments.
“While the goal of the TRAIN as a tax reform law is very commendable, which is to raise public revenue to improve the delivery of basic services and improve social and economic outcomes in the future, there are considerations that the government should make in designing tax policy. One would be the impact of the policy reform on the welfare of the poorer sectors in the country and the other would be to be able to take into consideration the impact on the targets that the Philippines must observe in terms of emissions,” it added. — Beatrice M. Laforga
