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Peso drops vs dollar on local data

THE PESO succumbed to the dollar’s strength on Friday on data showing a higher unemployment rate and lower-than-expected inflation and the prolonged spread of the coronavirus disease 2019 (COVID-19).

The local unit ended trading at P50.64 versus the dollar, shedding 5.5 centavos from its P50.585 close on Thursday, according to data from the website of the Bankers’ Association of the Philippines.

Week-on-week, however, the local currency climbed 33 centavos from the P50.97-to-a-dollar performance seen on Mar. 2.

The peso opened Friday’s session at P50.65 versus the dollar. Its weakest showing for the day was at P50.77, while its strongest was at P50.61 against the greenback.

Dollars traded rose to $1.389 billion from $945.45 million on Thursday.

According to a trader, the peso’s weakness on Friday was a “delayed reaction” after some weak data released on Thursday.

“Kasi ‘di ba on Thursday, may data na bumagsak ‘yung employment natin (Data released Thursday showed the unemployment rate went up), at saka (and also a) lower-than-expected inflation rate, so theoretically that would mean weak peso, stronger dollar but we stayed on a minimal range on Thursday,” a trader said in a phone call.

The Philippine Statistics Authority (PSA) reported on Thursday that headline inflation in February slowed to 2.6% from the 2.9% pace in January, on the back of easing food, transport, and utility prices. This headline inflation print is closer to the lower end of the 2.4-3.2% inflation forecast range penciled by the central bank last week.

This also compares to the three percent inflation estimate from a BusinessWorld poll of 17 economists held last week.

Also on Thursday, preliminary data from the Labor Force Survey (LFS) showed the country’s unemployment rate as of January was unchanged at 5.3% from the same period of 2019.

A closer look at the data, however, showed the number of jobless in the country went up by 106,651 to 2.39 million in January from 2.28 million in the same LFS round last year.

Meanwhile, another trader said the peso’s close on Friday came on the back of risk-off sentiment due to the virus spread.

“The local currency weakened from safe-haven demand on renewed coronavirus concerns in the US following newly-reported cases in New York and San Francisco,” the second trader said in an email.

COVID-19 has killed more than 3,330 people and infected over 97,000 around the world. — L.W.T. Noble

Shares back in the red as PHL reports new coronavirus cases

LOCAL shares slumped back into red territory amid renewed worries as the Department of Health (DoH) on Friday reported a Filipino male with no history of travel abroad has tested positive for the coronavirus disease (COVID-19).

The bellwether Philippine Stock Exchange index (PSEi) gave up 114.39 points or 1.66% to 6,770.38 on Friday, while the broader all shares index slipped 55.32 points or 1.35% to 4,039.55.

This puts an end to the main index’s three-day winning streak, pulling it back to the 6,700 level at the end of the trading week.

“Shares in the local equities market closed sharply lower as anxieties about the worldwide spread of COVID-19 lingered and concerns about the ability of governments to control the impact of the disease on their economies sent the benchmark U.S. Treasury note yield to a fresh all-time low,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

As the number of coronavirus cases rose around the world, the DoH reported two new cases — a 48-year-old male that came back from Tokyo, Japan, and a 62-year-old male with no known out-of-country travel history.

Despite concerns about the local transmission of COVID-19, the DoH said it is confident it “can still contain the spread of the virus in the country.”

The PSEi joined other regional markets in the red on Friday, which Diversified Securities, Inc. Equity Trader Aniceto K. Pangan attributed to COVID-19 worries.

“Market was down today as…(COVID-19) continued to spook and create fear among investors as it continues to spread in other US states and the rest of the world,” he said in a text message.

He added that as containment remains a problem, investors across the world are unable to shake their fears, resulting in highly volatile markets.

In Asia Pacific, Japan’s Nikkei 225 and Topix indices lost 2.72% and 2.92%, respectively. China’s Shanghai Shenzhen CSI 300 and Shanghai SE Composite indices dropped 1.62% and 1.21%, respectively. Australia’s S&P/ASX 200 index fell 2.81% and South Korea’s Kospi index shed 2.16%.

Back home, all six sectoral indices closed lower on Friday. Property was the biggest loser at 3,684.87, down 77.92 points or 2.07% from the previous session.

Financials gave up 32.29 points or 1.98% to 1,596.23; mining and oil slumped 102.97 points or 1.61% to 6,281.71; industrial lost 115.25 points or 1.40% to 8,114.07; holding firms dipped 93.40 points or 1.39% to 6,612.26; and services fell 13 points or 0.97% to 1,330.54.

Value turnover stood at P5.88 billion with 632.65 million issues switching hands, down from Thursday’s P6.02 billion with 978.55 million issues.

Decliners outnumbered gainers, 138 to 45, while those unchanged stood at 38.

Net foreign selling reached P271.03 million on Friday, from net foreign buying of P940.79 million on Thursday. — Denise A. Valdez

World no. 6 Tsitsipas in his element in Davis Cup match versus Philippines; Greeks up, 2-0, after Day One

STEFANOS TSITSIPAS of Greece gave Filipino fans a dazzling show of world-class tennis as he overwhelmed the Philippines’ AJ Lim, 6-2, 6-1, on Friday to give his team the opening win in their Davis Cup World Group II playoff tie at the Philippine Columbian Association’s Plaza Dilao courts in Paco, Manila.

The 6-4 Tsitsipas, ranked No. 6 in the Association of Tennis Professionals rankings, towered above the 5-7 Lim, whom he pummeled with an array of shots — from crisp backhands to powerful volleys — to carve out the win that lasted 53 minutes.

Mr. Tsitsipas showed the same form that had gotten him a runner-up finish to Novak Djokovic in the Dubai Championship less than a week ago and made life difficult for Mr. Lim, the country’s No. 2 netter.

It gave the heavily favored Greeks a 1-0 lead while avenging an almost long-forgotten defeat by the 21-year-old Tsitsipas to the 20-year-old Lim in a doubles showdown in their junior days years back.

And more impressive was Mr. Tsitsipas’ admission after the game that he struggled adjusting to the surface of the court as well as the heat.

“I had a difficult time adjusting to the court. It felt like a sauna here, but I still found ways to adjust,” said Mr. Tsitsipas.

Mr. Lim, for his part, was just star-struck by how Mr. Tsitsipas played.

“Unreal,” said Mr. Lim on Mr. Tsitsipas.

Meanwhile, Mr. Tsitsipas’ younger sibling, Petros, made it back-to-back wins for the Greeks later in the day after defeating the Philippines’ top player Jeson Patrombon, 6-2, 6-1.

Francis Casey Alcantara and Ruben Gonzales are scheduled to play Petros and Markos Kalovelonis in the doubles on Saturday followed by the reverse singles pitting Messrs Stefanos and Patrombon and Messrs. Petros and Lim.

Pag-IBIG Fund resolves all 8888 hotline calls, complaints reduced by 78%

Pag-IBIG Fund executives on Wednesday (Mar 4) announced that all concerns received through the 8888 citizen’s hotline last year have been resolved as the agency continues to heed the President’s call for government institutions to improve the delivery of their services.

“In line with President Rodrigo Roa Duterte’s directive that all government agencies must be efficient and responsive to the people’s needs, we are happy to report that we have resolved all 2,196 calls from the 8888 hotline in 2019.  Rest assured that we will continuously provide even better and more efficient service to our members as the months go by,” said Eduardo D. del Rosario, Chairperson of the 11-member Pag-IBIG Fund Board of Trustees and Secretary of the Department of Human Settlements and Urban Development (DHSUD).

He emphasized that out of the 2,196 concerns received in 2019, only 26% or 575 were actual complaints. That number is 78% lower compared to the 2,582 actual complaints received by the agency in 2018.  Del Rosario further noted that the number is even more impressive when related to the more than 27.71 million transactions received by the agency in 2019.

This drop in the number of complaints and the service improvements made by the agency were further affirmed by customer satisfaction surveys conducted in June 2019 and October 2019 by the Philippine Survey and Research Center (PSRC), which showed that 91% of Pag-IBIG members and employers were satisfied with the service provided by Pag-IBIG Fund.

Meanwhile, Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti said that the agency also received fewer 8888 calls last year, from 5,075 in 2018 down to 2,196 in 2019.

“If we look at the numbers, we can see a 57% decline in the number of calls. Meaning, there was a vast improvement of service in a span of just one year. And, as we look deeper, we can see that the type of calls also improved.  In 2018, 51% of the calls were complaints. But in 2019, only 26% of the calls were complaints,” Moti said.

He added that numbers are expected to improve further in 2020. In January, the agency received 120 calls from the 8888 hotline. Out of the 120 concerns, only 29 or 24.17% were complaints while 88 or 73.33% of the calls were requests for assistance and simple inquiries. The rest of the calls were commendations.

“It’s still early but we are confident that calls made through the 8888 hotline will continue to drop, especially with the availability of the Virtual Pag-IBIG, our online service portal which is basically a Pag-IBIG Fund branch that never closes and is always accessible. Members can now check their records and loans status, and do their transactions online, anytime, anywhere via the Virtual Pag-IBIG. And with our new and improved system, we can now process cash loans in less than 2 days. So, whether you are online or offline, you can expect better service from Pag-IBIG Fund,” Moti said.

Aliwan Fiesta canceled because of virus concerns

THIS year’s Aliwan Fiesta, which was scheduled on April 23 to 25, has been canceled because of COVID-19, Manila Broadcasting Company (MBC) said in a statement.

“Following the series of advisories issued by various government agencies with regard to health precautions for public events, we regret to inform that we are constrained to cancel this year’s Aliwan Fiesta celebrations,” MBC said in a statement emailed to BusinessWorld on Friday.

The Aliwan Fiesta started in 2003 and is organized by the MBC and the Cultural Center of the Philippines (CCP). Dubbed as the “Philippines’ Grandest Fiesta,” the event aims to showcase different Filipino cultures and heritage.

Contingents from different provinces compete in three categories: the float parade, the Reyna ng Aliwan pageant, and the main competition, the cultural street dance competition where contestants perform dances from their province’s own festivals including Iloilo’s Dinagyang Festival, Cebu’s Sinulog, and Baguio’s Panagbenga and less well-known festivals such as Shariff Kabunsuan’s Padang-Padang and Rodriguez, Rizal’s Pamitinan.

The festival features a four-kilometer parade from Quirino Grandstand to the Aliw Theater grounds at the CCP area.

Last year’s street dance champion was the Pasaka Festival which is part of the Pintados Kasadyaan festival of Leyte.

“We have been closely monitoring the situation globally, and there continues to be growing anxiety about this new pandemic. We don’t know how far this will go, and the organizing committee has felt it prudent to consider public safety, and relieve children, parents, teachers, and local officials of any anxiety when the contingents travel to Manila,” the statement read.

MBC also stated that knowing that participants invest “substantial time and resources to prepare for Aliwan Fiesta,” they decided to cancel the event early because they do not want local governments, schools, and students to “make major expenditures” only to cancel the event at a later date.

“And given that Aliwan Fiesta is held during vacation time to make it conducive for students and faculty to participate, we are forced to look at the only possible window to hold it, which would be April 2021,” MBC said.

“We wish to emphasize that Manila Broadcasting Company remains fully committed to the tradition of gathering the best of the best in a grand national championship among festivals throughout the country, and we hope we can count on the continuous support of various sectors in the future staging of Aliwan Fiesta,” the company added. — ZBC

Ovaltine says choose health and happiness over winning

The “Bigay Na Bigay” campaign of well-loved brand Ovaltinechallenges the norm. It emboldens parents to encourage and prepare kids to be willing to take on the journey of life and enjoy it, rather than pressuring them to always win. Millennial parents acknowledge that when asked, their wish for their children is for them to be healthy and happy. The fathers of this generation are found to be spending more time with their kids.

The campaign highlights that for a parent and child, the effort and journey of parenting is more important than the end-goal. “It appeals to parents, whose worldviews have been shaped by their generation. They believe in focusing on empathy and that teaching it to their children helps the latter understand the world better.” said Michael Fajardo,Country Managerof Ovaltine.

“We at Ovaltine believe that the Millennial mom isn’t necessarily raising her kid to be a full scholar, or a prodigy, or the next Olympian. The Millennial mom is raising her child to be willing to face life’s challenges, obstacles, and yes, opportunities. She knows that the happiness and health of her child is her priority,” JP Villa-Real, Ovaltine Brand Manager shared.

The material features a young boy who is excited about an upcoming musical performance. His excitement is so obvious to people around him, making audience think that he probably has a lead role. In the end, it shows that attitude matters more than what we as a society was taught to hold important.

Ovaltine All-in-One is a nutrient-fortified malt-chocolate drink that can be enjoyed hot or cold. It contains no artificial sweeteners and is high in 10 vitamins and minerals. 2 tablespoons of Ovaltine All-in-One meet 12-44% percent of the recommended daily intake of 10 vitamins and minerals needed by the body, which helps protect cells and contribute to the normal immune system function.

Globe offers free data access to DOH, PHIVOLCS, NDRRMC websites

To provide its customers with reliable updates on COVID-19 and Taal volcano status, Globe Telecom is offering free data access to websites of the Department of Health (DOH), Philippine Institute of Volcanology and Seismology (PHIVOLCS) and the National Disaster Risk Reduction and Management Council (NDRRMC).

At present, there are numerous conflicting reports about the origin, effects, and reach of COVID-19 ranging from the absurd to the plausible.  Likewise, there are varying information on the status of Taal volcano and the affected cities and barangays.  The situation often leaves people confused and sometimes, in panic.

This prompted Globe  to act by making data access to the websites of DOH, PHIVOLCS and NDRRMC available for free to its mobile and prepaid home WiFi customers.

“As a public service, we want to direct our customers to the proper sources of information about COVID-19 and Taal volcano status so that they won’t be misled by fake news which may only cause unwarranted fear. Hopefully, this will encourage them to visit the right websites and not rely on data that may not have been validated or recognized as true,” said Yoly Crisanto, Globe SVP for Corporate Communications.

Globe Prepaid/TM customers may access the three websites even if they have no load.  The websites, however,  will load faster if there is an existing data plan or promo but this will not incur any deduction in mobile data allowance.  Globe customers only need to turn on their smartphone’s mobile data and ensure that they are connected to a Globe 4G or LTE network. The same applies to Globe’s Home Prepaid WiFi.

To access the sites for free, customers may type the following on any internet browser:  PHIVOLCS – https://www.phivolcs.dost.gov.ph/ ; DOH – https://www.doh.gov.ph/; and NDRRMC – http://www.ndrrmc.gov.ph/

Philippine police probe chopper crash that almost killed their chief

PHILIPPINE police formed a team that will probe the helicopter crash that almost killed their chief and injured seven other officers in San Pedro, Laguna province on Thursday.

Videos posted on Facebook showed the chopper carrying General Archie Francisco Gamboa was engulfed by dust moments before it took off from the impounding area of the Highway Patrol Group in the village of San Antonio at about 8 a.m.

The two-year-old twin-engine chopper later spun out of control after hitting high-tension power cables. Mr. Gamboa and the others were taken out of the helicopter before it went up in flames.

“It was too dusty,” Major General Benigno Durana, Jr. a police spokesman, said in Filipino.

“I don’t know if that’s one of the factors but like I said, the full-blown investigation is ongoing,” he told reporters at the St. Luke’s Medical Center in Taguig City.

The police’s six remaining helicopters had been grounded pending the investigation, Mr. Durana said.

“All of them are now being attended to by doctors and we are hoping, as we are praying, for their swift recovery,” presidential spokesman Salvador S. Panelo said in a statement.

“We ask the public to refrain from making speculations relative to the circumstances as we wait for the official results of the probe,” he added.

Mr. Gamboa and five of the officers, including the pilot and his co-pilot, were being confined at Taguig hospital and were out of danger, Mr. Durana said. Two other military officers confined at different hospitals in Laguna, were in critical condition he added. — Gillian M. Cortez and Emmanuel Tupas, PhilStar

Inflation slows down in February

THE GENERAL INCREASE in the prices of widely used goods and services eased in February due to slower price adjustments in the heavily weighted food and non-alcoholic beverages and select nonfood commodities, the Philippine Statistics Authority (PSA) reported, lending support to the possibility of the central bank to cut policy rates soon.

Preliminary results from the PSA showed February inflation at 2.6%, slower than January’s annual rate of 2.9% and 3.8% in February 2019.

The February reading was slower than the three-percent median estimate in a BusinessWorld poll of 17 economists conducted late last week. It was, however, within the 2.4%-3.2% forecast range given by the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research for the month.

Headline inflation rates in the Philippines

Year to date, inflation settled at 2.8%, still within the BSP’s 2%-4% target band and below the revised three-percent forecast for the entire 2020.

Excluding volatile food and energy prices, core inflation slowed to 3.2% from January’s 3.3%. So far, it averaged 3.2% for the year.

“The downtrend in the inflation was mainly brought about by the slower annual increase in the heavily weighted food and non-alcoholic beverages index at 2.1% during the month [from 2.2% in January],” the PSA said in a statement.

The PSA also noted decelerations in the annual increases in alcoholic beverages (to 18.2% in February from 19.2% in January); housing, water, electricity, gas, and other fuels (1.7% from 2.5%); and transport (1.8% from 3%).

On the other hand, the index of furnishing, household equipment and routine home maintenance saw an uptick of 3.5% in February from 3.1% a month ago.

Other indices were steady during the month, namely: clothing and footwear (2.7%); health (2.9%); communication (0.4%); recreation and culture (1.5%); education (4.7%); and restaurant and miscellaneous goods and services (2.6%).

The food-alone index also remained steady at 2.1% from the previous month, albeit slower than the 4.2% posted a year ago.

In an e-mail to BusinessWorld, Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said the easing inflation in February was due to the coronavirus disease 2019 (COVID-19), which led to a slowdown in business activity.

In a report, ANZ Research economists Mustafa Arif and Sanjay Mathur said the February inflation result was a “downside surprise.”

“Inflationary pressures will likely remain modest amid lower global crude prices. The COVID-19 outbreak and its attendant impact on economic activity should also suppress price pressures, although in the near term it may enhance volatility across the components of the inflation basket,” they said.

“As such, the BSP has sufficient room to cut its policy rate further. Our current call is for the BSP to cut its policy rate by 25 bps (basis points) at the [May 21] meeting, although the continued spread of COVID-19 has increased the odds of a cut [on March 19]. A deeper rate cutting cycle is also feasible,” they added.

In a separate report, JPMorgan Chase Bank NA Singapore Branch Economist Nur Raisah Rasid said the Philippines’ inflation trajectory “looks to remain benign” as headline inflation is expected to remain at the lower end of the BSP’s 2%-4% target range this year.

Ms. Rasid added the broadening spread of COVID-19 beyond Asia last week “may pose downside risk” to its Philippine economic growth forecast of 6.2%, which was already below the government’s growth target of 6.5%-7.5%.

“Amid a well-behaved inflation trajectory, and with the [US Federal Reserve] projected to reduce the [federal funds rate] further… We recently added a 25-bp cut in the benchmark RRP (reverse repurchase rate)… in addition to our forecast for a 25-bp reduction in [the second quarter of 2020]…,” Ms. Rasid added.

The BSP’s Monetary Board will meet on March 19 to discuss policy, just hours after the US Fed’s Federal Open Market Committee is scheduled to release the decision on its monetary policy.

The rates on the BSP’s reverse repurchase, overnight lending and deposit facilities currently stand at 3.75%, 4.25%, and 3.25%, respectively.

In a statement, the BSP said risks to the inflation outlook “are expected to be weighted to the upside for 2020, but are… tilted toward the downside in 2021.”

“Adjustments in utility rates, petitions for transport fare hikes, and the impact of African Swine Fever (ASF) on meat prices are the main upside risks to inflation. The ongoing spread of COVID-19 could have an adverse impact on domestic economic activity and financial market sentiment in the coming months,” the BSP said.

In a separate statement, the National Economic and Development Authority (NEDA) underscored the need for the government to “remain vigilant and well-positioned against possible risks to inflation in the country.”

“While inflation is expected to remain well within the target for this year, government must not be complacent and ensure that strategies are well-positioned against risks brought by continuous spread of [ASF], tighter rice supply from Thailand, and the ongoing outbreak of [COVID-2019],” NEDA quoted Socioeconomic Planning Secretary Ernesto M. Pernia as saying in a statement. — Jobo E. Hernandez

January finds better quality of jobs although unemployed ranks grow

LATEST official labor data showed the ranks of Filipinos wanting more work to augment income declined in January, although those that were left without jobs increased, data from the government’s statistical agency showed.

At the same time, the period saw a rise in the number of employed Filipinos even as the ranks of the unemployed went up. This can be explained by the increase in the participation rate, which indicates more Filipinos have entered the labor force.

Preliminary results of the January 2020 round of the Labor Force Survey (LFS) conducted by the Philippine Statistics Authority (PSA) put the country’s unemployment rate unchanged at 5.3% from the same period last year.

A closer look at the data, however, showed the number of jobless Filipinos went up by 106,651 to 2.39 million in January from 2.28 million in the same LFS round last year.

Meanwhile, the underemployment rate — the proportion of those already working, but still looking for more work or longer working hours — improved to 14.8% from 15.4%.

This is equivalent to 6.32 million Filipinos, down by 8,785 from 6.33 million previously.

The latest unemployment and underemployment rates were the lowest among the January rounds of the LFS since the government adopted new definitions in 2005.

The size of the labor force was approximately 45.04 million out of the 73 million Filipinos aged at least 15 years old, yielding a labor force participation rate (LFPR) of 61.7%. This was higher than last year’s 60.3%.

The employment rate, which is the proportion of the employed to the total labor force, remained steady at 94.7% in January compared to the previous year.

In absolute terms, the country posted a net employment gain of 1.62 million to 42.65 million during the period from 41.03 million.

For ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa, the latest labor data results reflected more job opportunities becoming available as the economy grows.

“In general, an improvement in the (LFPR) signals improved labor market prospects as more and more job applicants return to the job market to look for work. We can say the number of discouraged workers decreases, which is usually because overall, the economic climate appears to be improving,” he said.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion pointed to the country’s sustained economic growth as one of the reasons for the increase in employment. “If and when the economy continues to grow, expect more improvements in employment,” he said.

Asked on the increasing number of unemployed, Mr. Asuncion surmised that this may have something to do with the weakness in the industry sector.

“I suspect [this weakness came] from the manufacturing sector that has been slumping since the beginning of 2019, not to mention that this has been a global phenomenon,” Mr. Asuncion said.

Industry accounted for 18.8% of employed Filipinos in January, down from last year’s 19.9%.

Meanwhile, the employment share in services inched up to 58.6% from 58.5%.

Agriculture employed 22.7% of the workers, up from 21.6%.

Wage and salary workers accounted for 65.2% of the work force in January from 66.1% in the same period last year. Self-employed individuals without any paid employees consisted of 26.2% (from 26%), unpaid family workers at 6.2% (from 4.6%), and employees in their own family-operated farm or business at 2.4% (from 3.3%).

Meanwhile, working hours averaged 41.3 per week in January, less than the average of 43.3 hours a year earlier.

Full-time workers — those who worked for at least 40 hours in a week — went down to 67.6% from 72.1%. Part-time workers accounted for 31.6% of employed persons from 27.3%.

YOUTH LABOR DATA
More youth entered the labor force in January as its LFPR increased to 37.4% from 35.9% in the same LFS round last year.

The employment rate among the youth — defined as those aged 15-24 years old, was 86.4% in January — up from 85.8% in January last year. This corresponds to an additional 354,000 youth population that were employed during the latest survey period, bringing the total to 6.42 million.

The unemployment and underemployment rates among this segment improved to 13.6% (from 14.2%) and 12.5% (from 14.6%), respectively. In absolute terms, however, the number of unemployed and underemployed youth went up to 1.014 million (from 1.006 million), and 803,760 (from 884,250).

Similarly, the proportion of youth not in employment, education and training (NEET) declined to 16.9% from the previous 19.5%, but saw its ranks increase to 990,252 from 984,808.

For UnionBank’s Mr. Asuncion, the impact of the COVID-19 (coronavirus disease 2019) and its repercussions on tourism and trade “will be felt” in the next survey round.

“There may be an uptick in unemployment as tourism-related firms and particularly export-related industries are challenged by the health care scare,” he said.

For ING’s Mr. Mapa, the employment trend is expected to continue “as the economy is able to provide more labor opportunities” despite the COVID-19 outbreak.

“Robust consumption and the government’s stimulus pledges should come in handy to battle the impending economic slowdown due to COVID-19,” Mr. Mapa said. — Lourdes O. Pilar

No off-cycle rate cut, says Diokno

BANGKO SENTRAL ng Pilipinas (BSP) Governor Benjamin E. Diokno said they will not go for an off-cycle rate cut following the US Federal Reserve’s surprise move to ease as part of efforts to boost the economy amid risks of a slowdown due to the coronavirus disease 2019 (COVID-19) outbreak.

“The emergency half-point cut by the Fed matters. The fast-spreading COVID-19 and its likelihood of slowing global growth matters,” Mr. Diokno said in a text message on Wednesday night.

“One thing is certain: there will be no off-cycle MB (Monetary Board) move to cut policy rates,” he added.

The Fed on Tuesday cut rates by 50 basis points (bps) to a target range of 1% to 1.25% in an unscheduled meeting as the spread of the virus led to a change in the US central bank’s growth outlook, even as Fed Chair Jerome Powell said the economy remains strong.

The Fed last implemented a 50-bp cut in 2008.

Meanwhile, the BSP Monetary Board on Feb. 6 — its first meeting for the year — already cut rates by 25 bps as a “preemptive move” as COVID-19 caused fears of a possible economic slowdown in financial markets. This followed the 75 bps worth of cuts done in 2019.

The rates on the BSP’s reverse repurchase, overnight lending and deposit facilities now stand at 3.75%, 4.25%, and 3.25%, respectively.

Mr. Diokno said earlier this week another 25-bp cut is still on the table for the year, adding that they will assess anew the impact of the virus on the economy during the Monetary Board’s next policy-setting meeting on March 19. He also said last week that the central bank is not ruling out reductions worth 50 to 75 bps.

“The February inflation matters and so with the inflation prospects for the year. All these and more will serve as inputs to the MB’s decision on March 19,” Mr. Diokno said yesterday.

The Philippine Statistics Authority reported on Thursday that headline inflation slowed to 2.6% in February from 2.9% the prior month on the back of easing food, transport, and utility prices.

This result is closer to the lower end of the 2.4-3.2% estimate range given by the BSP Department of Economic Research on Friday last week.

This also compares to the three percent inflation estimate from a BusinessWorld poll of 17 economists held last week, which matches the central bank’s forecast average for the year.

The BSP wants inflation to settle within 2-4% this year.

Socioeconomic Planning Secretary Ernesto M. Pernia has said the virus could shave as much as one percentage point off full-year gross domestic product (GDP) growth if the outbreak continues until the end of the year.

The government targets GDP growth of 6.5-7.5% this year. — L.W.T. Noble

House OK’s lower capital requirement for foreign retailers

By Genshen L. Espedido

A PRIORITY MEASURE that aims to further open up the retail sector to foreign companies was approved on second reading at the House of Representatives on Wednesday.

House Bill (HB) No. 59 amends Republic Act (RA) No. 8762 or the Retail Trade Liberalization Act of 2000 by lowering the required minimum paid-up capital for foreign retail investors to $200,000 (around P10 million). Under the present law, enterprises with a minimum capital of $2.5 million or more may be fully owned by foreigners.

HB 59 also reduced the required locally manufactured products of foreign retailers to 10% of the aggregate cost of their stock inventory, from the current 30%.

“This bill is a priority measure of Malacañang and has the support of both the DTI (Department of Trade and Industry) and the DOF (Department of Finance). We are of the assumption that it will be passed on 3rd reading by next (week),” Valenzuela Rep. Weslie T. Gatchalian, chairman of the House Committee on Trade and Industry, said in a text message to BusinessWorld.

Mr. Gatchalian in a separate statement said the Retail Trade Liberalization Act had to be amended since it had “failed to meet its objective.”

“Over the course of its 19-year life, only 43 foreign retail investments have been recorded by the DTI (Department of Trade and Industry) creating only 22,000 jobs. Despite opening retail to foreign establishments, the prohibitive minimum capital requirement of $2.5 million prevented foreign retailers from investing in the Philippines. Thus, the expected job generation did not materialize and local goods and services did not become globally competitive because there was a lack of competition,” Mr. Gatchalian said in a statement.

Mr. Gatchalian also defended the lowering of the minimum paid-up capital to $200,000, saying “this amount puts foreign retailers beyond the scope of micro businesses which, according to the DTI, are valued only up to P3 million.”

The approved measure also removes the requirements under RA 8762 for foreign investors to acquire shares of stock of local retailers and for a public stock offering to be conducted by foreign-owned retail companies.

HB 59 also eased qualifications for foreign retailers to enter the Philippines. It removed the current law’s required net worth, number of retailing branches and five-year retailing track record conditions for foreign firms to enter the country’s retail industry.

At the same time, the bill allows only nationals “from/or judicial entities formed or incorporated in countries which allow the entry of Filipino retailers, to engage in retail trade in the Philippines.”

“These amendments would open up the Philippine retail industry which would result in greater variety of products, more competitive players, inflow of new technology, and more importantly, more jobs for Filipinos,” Tarlac Rep. Victor A. Yap, HB 59’s author, said in the bill’s explanatory note.

The measure is among the bills pushed by the Cabinet economic cluster for approval in the first regular session of the 18th Congress, which closes on June 5.

Counterpart measures in the Senate are still pending at the committee level.

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