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Infrastructure Bond Issuance a Positive Sign for Resurgent Growth
According to the World Economic Forum’s most recent Global Competitiveness Report, the Philippines ranked 98 out of 144 in terms of infrastructure, lagging behind other large ASEAN economies. The Philippines ranked below Singapore, Malaysia, Thailand, and Indonesia, and only surpassed the Vietnamese infrastructure ecosystem by roughly 10 rankings. A breakdown of the country’s infrastructure by sector paints a bleak picture. The Philippines ranks 81 in mobile phone connectivity, its highest sector rating, and ranks 116 in port infrastructure, its lowest sector. Given such suboptimal results, these deficiencies have translated into a substantial loss for the country in terms of commercial productivity and efficiency, affecting travel times, pollution, congestion, and has led to poor access to public utilities. The Aquino government has come under criticism for the lack of infrastructure improvement in the country. However, policymakers have taken steps to introduce new projects. The government’s procurement reforms, combined with more efficient customs procedures, have led to larger fiscal savings, much of which is being funneled into upcoming infrastructure projects. Additionally, policymakers are working to further smoothen out kinks in the country’s public-private partnership (PPP) scheme in order to implement projects more efficiently. Ten PPP projects have been awarded to date with a cumulative value of P200 billion (U$ 4.2 billion), and the private companies contracted are expected to gain significant upsides on their investments. The Philippine government has expressed its intention for these projects to increasingly involve U.S. infrastructure firms. In a positive sign for local infrastructure, BNI Capital, a Philippine investment bank, plans to issue its first infrastructure bond by the end of 2015. Ayala Corporation, BNI Capital’s parent company, is also working on an infrastructure bond issuance. Securities and Exchange Commission Commissioner Ephyro B. Amatong has spoken of the significant opportunities for infrastructure financing in today’s climate. However, investors have tended to be reluctant to invest in infrastructure bonds due to uncertainties surrounding project completion. On the equities side, some financial analysts have expressed concern that the PSE index is under-representing Philippine economic growth. Increases in infrastructure financing are expected by some to increase the country’s GDP growth to 7.4 percent, and private investment to grow 9.4 percent.
Bangko Sentral ng Pilipinas Finalizes List of ‘Too-Big-To-Fail’ Banks
The Bangko Sentral ng Pilipinas (BSP) on July 6 said it had finalized its determination of “too-big-to-fail” banks. The BSP has declined to identify the so-called domestic systemically important banks (D-SIBs) to remove the moral hazard associated with government recapitalization, although a report earlier this year indicated that 14 lenders would be affected. Banks are designated D-SIBs on the basis of several pre-defined criteria, including operational complexity, substitutability, and exposure to other financial institutions. Depending on their precise classification, D-SIBs are required to hold additional loss absorbency equivalent to 1.5 percent or 2.5 percent of their risk-weighted assets. In annual compliance reports to the BSP, they must also outline “acceptable recovery plans” in the event of breaches in capital requirements. Implementation of the new rules will be staggered beginning January 2017, and should be fully complete by 2019. According to BSP Governor Amando Tetangco Jr., the country’s banking system remains resilient, and the new guidelines are “pro-active measures to sustain [its] strength.” In its most recent analysis of the Philippine financial sector, Fitch largely concurred with this assessment. The ratings agency cautioned, however, that core capital increases in conjunction with increased competition from foreign players could erode the profitability of major Philippine banks.
Pushing for a Balanced Power-Mix in the Philippines
Secretary Petilla officially left his post on June 30, naming Undersecretary Zenaida Monsada as the next Officer in Chief of the Department of Energy (DOE). She will hold this post until a new Secretary is named. The Philippines Department of Energy (DOE) continues to push for a balanced energy mix in the power sector of 1/3 coal, 1/3 gas, and 1/3 renewable energy. In order to better incentivize renewable energy players to invest in the more expensive, yet less lucrative renewable energy sector, the National Renewable Energy Board (NREB) has filed a new feed-in tariff (FIT) rate for wind in the second round of FIT allocation, from the current P8.53 per kilowatt-hour (kwh) to a lower rate of P7.93 per kwh. (Former) Secretary Petilla had already approved an increase in wind energy allocation targets under the FIT system, increasing it by 200 megawatts in a concentrated push for greater renewable energy levels. While these levels are still not on par with the considerable interest in the wind energy sector, they go some way to encouraging investment. The Energy Regulatory Commission will make the final decision on new feed-in tariff rates. Even though the Philippines currently maintains a balanced fuel mix, 23 new coal-fired power plants are lined up for commercial operation in the next 5 years, and without any intervention, the country will soon have the highest coal share in Asia. About 2,700 MW of renewable energy will need to be built in order to maintain power mix balances. Currently, renewable energy accounts for 23 percent of the Philippines power supply, with a target of 30 percent in the next few years. Feed-in tariffs guarantee all renewable energy developers a constant generation rate per kilowatt-hour for the next twenty years.
Philippines Increases Defense Spending
The Aquino administration has approved plans to significantly increase defense spending over the next 13 years. The US$22-billion blueprint divides the Philippines’ military modernization effort into three “horizons” or phases, the first of which (2015-2017) covers procurement of lead-in trainer fighter jets, frigates, helicopters, radars, drones and base upgrades. Planning is still underway for the second and third phases of the modernization program, but the military is reported to be considering shore-based missile systems as well as diesel-electric submarines. Funding for the program is provided under the Armed Forces of Philippines (AFP) Modernization Act (RA no. 10349), presidential approval for which had been pending since 2013. Defense spending has been relatively vigorous under the Aquino administration, but the Philippines is building from a low base. The AFP still lack an array of basic capabilities, including logistical support, battlefield domain awareness, and casualty evacuation capacity. Defense spending on a per capita and per soldier basis remains among the lowest in ASEAN.
Philippine Senate probes $44.33 million in questionable PhilHealth claims
On July 1, the Philippine Senate Blue Ribbon Committee - responsible for matters relating to the accountability of public officers and investigations - initiated a probe into dubious Philippines Health Insurance Corporation (PhilHealth) claims amounting to P2 billion ($44.33 million) after the discovery by officials of "highly suspicious" benefit payments to a number of PhilHealth-accredited healthcare facilities. A number of ambulatory surgery centers were found to have filed claims amounting to unusually large sums; one eye center filed claims worth P170 million ($3.77 million) in 2014, 143% than its claims in the previous year. The conspicuous rise in claims coincided with complaints from patients found to have undergone "unnecessary" laser procedures, in some cases resulting in irreparable damage to their eyesight. Senator Teofisto D. Guingona III, Chair of the Committee, expressed anger at what appeared to be "an orchestrated and systematic effort to take advantage of PhilHealth" and called for stricter law with harsher penalties for insurance fraud.
During the Council's meeting with officials from the Department of Health (DOH) on July 8, newly-appointed Undersecretary of Health Dr. Kenneth Hartigan-Go emphasized that the "new DOH" would focus on strengthening enforcement against the utilization of illicit medical products and regulatory alignment amongst government agencies, among other priorities. PhilHealth, for instance, plans to institute reforms such as a new monitoring division. Alignment between agencies and a whole-of-government approach were consistently emphasized during the meeting, and some ideas floated by the officials present included the formation of inter-agency committees on regulation and health technology assessment. Prior to the Mission, Undersecretary Hartigan-Go urged that the Council meet with the DOH, PhilHealth, Food and Drug Administration, Pharmaceutical Division and the Bureau of International Cooperation in an extended joint meeting rather than separately to ensure accountability, follow-up, and to allow the government agencies to talk to one another.
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| Regional Affairs
Philippines ‘Optimistic’ In Territorial Dispute with China Voice of America 14th Jul 2015
Last week an international panel opened long-anticipated hearings into the territorial dispute in the South China Sea between China and the Philippines. Beijing has refused to engage with the process, but it’s still going forward and Philippines officials say they are optimistic about their case arguing that international law allows them rights to exploit reefs, islands and shoals in their economic waters. The tribunal’s five judges have two key questions to decide. First is whether it has jurisdiction to resolve the dispute. If it does, it will then decide on Manila’s case to declare invalid China’s so-called “nine-dash line,” which Beijing uses to show its territorial claims. After last week’s proceedings, the panel in The Hague has asked both Beijing and Manila for more information. Philippine Foreign Affairs spokesman Charles Jose said the judges are “being thorough.” “We have prepared hard for this, for the arbitration case since the beginning,” he said. “And well, we are cautiously optimistic and of course we believe that the tribunal has jurisdiction over the case.”
No signing in sight for Taiwan-Philippines fisheries pact: Report AsiaOne 13th Jul 2015
There is still no signing date on the horizon for Taiwan's fisheries pact with the Philippines, despite two years of talks and claims that the agreement has reached final review, Chinese-language media reported yesterday. "At present, there is no timetable for the signing of the agreement," the United Evening News reported yesterday, citing an unnamed source closed to the negotiations. Since 2013, the two governments have been negotiating an agreement on law enforcement co-operation on fishing matters in their overlapping economic waters. Talks opened in 2013 and have since been managed by three different negotiation teams, according to the United Evening News.
National Affairs
BBL, economic measures top House agenda – Belmonte ABS-CBN News 7th Jul 2015
The passage of economic measures and the proposed Bangsamoro Basic Law (BBL) remain the top priority of the House of Representatives when the 16th Congress opens its third regular session on July 27, according to Speaker Feliciano Belmonte Jr. Belmonte said “efforts for a lasting and genuine peace in the country with the end goal of achieving sustained and inclusive growth continue to top the agenda” of the House. “We want to ensure a more meaningful autonomy while likewise paving the way towards a more effective provision of vital services to our people. We want a peace that is lasting and sustainable,” Belmonte said of the BBL. The BBL, which seeks to create a new autonomous region in Mindanao run by a parliamentary government, is being deliberated in plenary.
Lessening the negative: Balancing the nationalist foreign investment policy towards integration The Philippine Star 7th Jul 2015
Pursuant to the Foreign Investment Act (R.A. 7042, as amended by R.A.8179), the President of the Philippines promulgated the 10th Regular Foreign Investment Negative List (FINL) last May 29. The FINL covers the areas or activities reserved 100 percent to Filipino nationals as mandated by the Philippine Constitution and other laws, as well as those areas which are partly-nationalized wherein foreign investors are allowed to participate to a certain extent. The 10th FINL has substantially adopted the provisions of the 9th FINL. However, the most notable difference is that under the 10th FINL, the list of professions in which no foreign participation is allowed has been significantly reduced from 26 (with sub-categories) down to five. Under the 10th FINL, only pharmacy, radiologic and X-ray technology, criminology, forestry and law are reserved for Filipino citizens. Aside from this, other economic provisions are substantially unchanged.
Customs
Customs exceeds target in June Business World 14th Jul 2015
Total collections in June amounted to P31.23 billion, up 14.3% from the P27.33 billion recorded a year ago. The total was likewise 4.2% above the bureau’s P29.97-billion target for that month, marking the second time in 2015 it exceeded collection goals. The bureau last March also breached its target by 2%, collecting P35.72 billion against a P35.02-billion goal. Cash collections in June -- generated by actual customs operations like those at ports -- grew 14.3% annually to P31.23 billion from P27.23 billion, topping a P29.345-billion target. Tax expenditure fund -- a form of subsidy on paper that covers duties and taxes on importations by state agencies like those of the National Food Authority -- had a P625-million target in June but none was collected.
Customs chief grants special privileges to Clark investors The Philippine Star 14th Jul 2015
Customs commissioner Alberto Lina has granted special privileges to investors in this freeport, including exemption from profile registration and the conduct of x-ray of importations here instead of in Manila. This, even as Lina assured Clark investors of a “rationalized policy on bring in and bring out permits via full automation of processing.” The policy is to take effect by end of August although full automation would be done in 2016 yet. Lina said doing x-ray inspections of incoming shipments of Clark investors would decongest the Manila port.
PCCI warns of continued port congestion The Philippine Star 13th Jul 2015
The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, has warned of port congestion arising anew in Manila if no new roads are built in the medium term. In a statement over the weekend, PCCI expressed support for a proposal for an elevated expressway project that would ease port congestion at the port of Manila and help spare consumers, exporters and importers from high costs of deliveries. “Our membership is concerned over the repeat of the port congestion last 2014 resulting in business losses amounting to P70 billion if no new road infrastructures are put in place in the medium term,” PCCI president Alfredo Yao said. “From our point of view, the so-called port congestion is only the result of the real problem of road congestion,” he added.
Gov’t eases rules on ICC issuance Philippine Daily Inquirer 10th Jul 2015
The Department of Trade and Industry has issued an administrative order to facilitate the issuance of import commodity clearances (ICC), as part of the government’s efforts to further ease doing business in the country. “There are significant increases in the number of ICC applications and number of test reports received and evaluated by the Bureau of Philippine Standards (BPS). To expedite the process, I directed the BPS to adopt and implement stop-gap measures to facilitate ease in doing business which resulted to the issuance of Department Administrative Order (DAO) No. 15-01, S.2015,” Trade Secretary Gregory L. Domingo said in a statement. “With the new DAO, the processing time for ICC applications is now limited to three working days. This further enhances DTI’s performance in ensuring ease in doing business without compromising product safety,” Domingo added.
BOC gearing up for Asean single window system Business Mirror 10th Jul 2015
The Bureau of Customs (BOC) is gearing up for the country’s interconnection with the Association of Southeast Asian Nations’ (Asean) single window system as the Asean integration nears. “[We] continue with the final phase of the National Single Window and eventually Asean Single Window [ASW] interconnection as we prepare for the Asean Economic Community 2015,” Customs Commissioner Alberto Lina said in a speech during the general membership meeting of the Philippine Exporters Confederation Inc. The ASW aims to have a single customs portal for Asean by interconnecting the single window of member-economies for easier and more efficient import and export processing in the region.
Malacañang stands by BOC chief Lina Business Mirror 9th Jul 2015
Malacañang maintained that embattled Customs Commissioner Alberto Lina can stay in office, pending resolution of plunder and graft charges filed against him and two other former Bureau of Customs officials involving a P650-million computerization contract allegedly canceled to favor Lina’s company. Presidential Communications Secretary Herminio B. Coloma Jr. said the Palace expects Lina to follow the law, but has no immediate plans to replace the Customs chief despite allegations that the cancellation of the Bureau of Custom computer-upgrade contract could favor Lina’s company E-Konek, which also bid for the project. “Commissioner Lina is duty bound to comply with legal processes,” Coloma told the BusinessMirror.
DTI orders faster processing of import clearance certificates — Domingo Manila Standard Today 8th Jul 2015
The Trade Department said Wednesday it ordered the faster processing and issuance of import clearance certificates by the Bureau of Philippine Standards. “There are significant increases on the number of ICC applications and number of test reports received and evaluated by the Bureau of Philippine Standards. To expedite the process, I directed the BPS to adopt and implement stop-gap measures to facilitate ease in doing business. This further enhances DTI’s performance in ensuring ease in doing business without compromising product safety,” Trade Secretary Gregory Domingo said. The products in the BPS list of products under mandatory certification that are life threatening are retained to facilitate the issuance of ICC, while the rest of the products in the current list shall be transferred to products under mandatory labeling.
EFTA, Philippines Hold Second Round Of FTA Talks Tax-News 7th Jul 2015
The European Free Trade Association (EFTA) member states – Iceland, Liechtenstein, Norway, and Switzerland – and the Philippines held a second round of negotiations towards a free trade agreement from June 29 to July 3, 2015. Various working groups convened in Geneva, Switzerland, to discuss areas such as trade in goods (including technical barriers to trade, sanitary and phytosanitary measures, trade remedies, and trade facilitation), trade in services, investment, intellectual property rights, competition, trade and sustainable development, and legal and institutional issues. The meetings were said to have been held in a positive and efficient atmosphere, and good progress was achieved in several areas. The first round of negotiations took place in the Philippines in March 2015. The next round is scheduled to take place in September 2015.
BOC slashes penalties for late submission of sea manifests Port Calls Asia 7th Jul 2015
The Bureau of Customs (BOC) has reduced penalties for late submission of sea manifests in response to a longstanding request by the shipping industry. Customs Memorandum Order (CMO) No. 192015, signed by Customs commissioner Alberto Lina and dated June 30, revised procedures for mandatory submission of electronic sea manifests in all ports by shipping lines and freight forwarders/consolidators through value added service providers (VASPs) under the electronic-to-mobile (e2m) system.
Defense & Security
DND defends shelving of missile project Philippine Daily Inquirer 7th Jul 2015
The Department of National Defense said its decision to shelve the alleged “realignment” of the P6.5 billion shore-based missile system (SBMS) from Israel, an item that would have been useful to counter China’s threat in the West Philippine Sea (South China Sea) in favor of items for internal security operations, was only a “reprioritization.” In a statement on Tuesday, DND’s public affairs office chief Director Arsenio Andolong said the project was merely a “proposal.” “[T]here is no realignment but rather a reprioritization of the said project in favor of the urgent need of our [Philippine Army] troops for individual force protection equipment,” he said. The said reprioritization “was a collective decision by senior Defense leaders, which was submitted to the President after going through the required processes in the Defense System of Management that took into consideration the dynamics of the country’s ever developing security environment.”
Philippines ramps up military spending in face of China threat Channel NewsAsia 7th Jul 2015
The Philippines plans to ramp up military spending over the next 13 years, earmarking more than US$20 billion to modernise its forces in the face of Beijing's maritime ambitions in the disputed South China Sea, a top air force official told Reuters. Major-General Raul del Rosario, military chief of plans, said the blueprint includes installing radars and sensors, and buying equipment such as submarines, frigates, fighters, surveillance planes and missile systems. "By the time, we complete this plan, we will have complete coverage of the South China Sea," said del Rosario, a former fighter pilot, showing the military's detailed plan that was approved on Friday. "We will have 24/7 awareness of what is happening in the disputed area and we'll be able to respond quicker to any contingency in our own exclusive economic zone."
DND denies report of canceling missile deal with Israel Business Mirror 7th Jul 2015
The Philippines' Department of National Defense (DND) has denied a newspaper report which alleged that its top officials scrapped a government-to-government missile deal with Israel in place of buying individual gear for soldiers to receive kickbacks from the procurement project. On Tuesday, the DND issued a statement explaining why the Shore Based Missile System (SBMS), a military asset initially included in the military’s to-buy list in the modernization program of Armed Forces of the Philippines (AFP), was dropped. “The SBMS project is merely a proposal at this time, and as such, there is no ‘realignment’ but rather a reprioritization of the said project in favor of the urgent need of our PA (Philippine Army) troops for individual force protection equipment,” the DND said in a released statement on Tuesday afternoon.
President Aquino Proposed Php172 billion for DND in 2016 DefenseNews 7th Jul 2015
The Education, Public Works and Highways and the National Defense departments continue to have the biggest allocation in the proposed Php3.002 trillion 2016 national budget, which President Benigno Aquino III approved Monday. Presidential Communications Operations Office (PCOO) Secretary Herminio Coloma Jr., in a statement, said the planned national budget for next year is 15.2 percent higher than this year's Php2.606 trillion and accounts to about 19.5 percent of the country's total output. But while the Department of Education (DepEd) received the highest allocation, it is the Department of Public Works and Highways (DPWH) and the Department of Health (DOH) that were given big increases. DepEd's proposed budget for next year amounts to Php436.5 billion, or 18.9 percent higher than its Php367.1 billion budget this year.
US Navy's P3 Orion on PH Navy's Wishlist Rappler 15th Jul 2015
Take a peek inside one of the US Navy's spy plane —the P3 Orion aircraft. The P3 Orions were used during the Cuban missile crisis and the Cold War. But now, P3 Orions patrol the South China Sea to safeguard the United States' economic interest. Carmela Fonbuena reports. We’re inside one of the US Navy’s P3 Orion aircraft. It’s a rare opportunity to see inside this long-range maritime patrol aircraft that has been in the wish list of the Philippine Navy. Patrick Ronan, US Navy officer: We’ll take you for a quick tour through the P3 Orion This so-called “spy plane” is invaluable in maritime patrol. The US military used the P3 Orions during the Cuban Missile Crisis and the Cold War. It provided ground commanders instantaneous information on the location and movement of hostile troops.
Economics
OFW remittances up 5.8% in May The Philippine Star 15th Jul 2015
Money sent home by Filipinos living and working abroad grew 5.8 percent in May as global demand for skilled Filipino workers remained strong, the Bangko Senral ng Pilipinas (BSP) reported yesterday. In a statement, BSP Governor Amando Tetangco Jr. said cash remittances from overseas Filipinos amounted to $2.09 billion in May or $115 million higher compared to $1.985 billion in the same period last year. This brought to $9.9 billion the remittances for the five-month period, 5.4 percent higher versus the $9.39 billion remitted in the same period last year. Tetangco said major sources of cash remittances were from the US, Saudi Arabia, the United Arab Emirates, UK, Singapore, Japan, Hong Kong, and Canada.
Exports to hurt growth in Q2 Manila Standard Today 15th Jul 2015
Weak exports are expected to drag down gross domestic product growth in the second quarter, Economic Planning Secretary Arsenio Balisacan said Wednesday. Data showed merchandise exports sank 4.1 percent year-on-year in April and 17.4 percent in May, amid sluggish global demand. Balisacan said he was hoping exports would recover in June to help improve the second-quarter exports data. “In the first two months of the second quarter, exports growth was negative. We were hoping that June exports would be better,” Balisacan said at the sidelines of the signing of the joint memorandum circular on national evaluation policy framework that calls for the purposive conduct of independent evaluation of government programs and projects.
FDI inflow cut by half in 4 months The Philippine Star 12th Jul 2015
Foreign direct investments (FDIs) were cut by half in the first four months of the year after plunging 43 percent in April amid the negative global sentiment, data from the Bangko Sentral ng Pilipinas (BSP) showed. Net FDI inflows reached $1.23 billion from January to April this year or 48.3 percent lower than the $2.38 billion registered in the same period last year. Data showed net equity capital investments fell 50.5 percent to $279 million in the first four months from $564 million in the same period last year. Equity placements dropped 61.6 percent to $369 million from $961 million while withdrawals plunged 77.4 percent to $90 million from $397 million.
S&P cuts growth forecast as Philippines hits soft patch The Philippine Star 10th Jul 2015
The Philippines has hit a soft patch amid the slowdown in China and the potential negative effects of the normalizing interests rates in the US, prompting international credit watcher Standard & Poor’s (S&P) to slash the country’s growth forecasts for this year and next. In its recent economic research report titled “Asia Pacific could be entering a steady state of slower growth,” S&P lowered its gross domestic product (GDP) growth forecast for the Philippines to six percent this year and next year. Forecast was lower than the earlier projections of 6.2 percent for this year and 6.4 percent for 2016. For 2017, S&P sees the country’s GDP growing 6.1 percent.
Inflation hits 20-year low at 1.2% The Philippine Star 8th Jul 2015
Consumer prices rose at their slowest pace in two decades in June amid sufficient supply of food and moderate price pressures in energy and petroleum products. In a report, the Philippine Statistics Authority (PSA) said inflation eased further to 1.2 percent in June from 1.6 percent in May and 4.4 percent in June last year. For the first half of the year, headline inflation averaged at two percent while core inflation settled at 2.3 percent. Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the June inflation was well within the central bank forecast of 1.2 percent to two percent while the year-to-date average of two percent was within the lower end of the government target of two percent to four percent.
Energy
EU: Energy sector to receive P3-b aid Manila Standard Today 14th Jul 2015
The European Union is prepared to release a P3-billion grant to the Philippine energy sector for rural electrification, policy reforms and deployment of renewable technologies and innovative solutions for the poor. European Union Ambassador to the Philippines Guy Redoux said during the Energy Smart Philippines 2015 Conference the European Union committed a total of P12 billion grant in the energy sector between 2014 and 2020. “Our first program with DoE and energy agencies is currently being finalized. The program will provide policy reforms and will help government in reaching its 90 percent electrification target,” Redoux said. He said projects under the P3-billion grant were in an “advanced stage” and should be signed this year.
ERC, DOE set to craft rules on power supply deals The Philippine Star 13th Jul 2015
The Energy Regulatory Commission (ERC) will meet soon with the Department of Energy (DOE) to craft rules for the competitive selection process (CSP) to be undertaken by distribution utilities (DUs) in securing power supply deals. “We will start coordination meeting with DOE. We will have a draft out soon,” ERC executive director Francis Saturnino Juan said in a phone interview. Once the draft rules are done, the ERC official said the draft rules would be presented to industry stakeholders and the public for deliberation. “After drafting rules, we will be conducting public hearings for that,” Juan said.
Philippines urged to consider nuclear energy as future option The Philippine Star 13th Jul 2015
As the country faces power supply issues and high electricity costs, is the Philippines open to nuclear energy? The Philippines could still consider nuclear energy as a possible future option, the International Energy Agency said in its recent report, “Technology Roadmap: Nuclear Energy.” IEA is an autonomous organization based in Paris, which works to ensure reliable, affordable and clean energy. The Philippines, along with Vietnam and Thailand, are the countries in Southeast Asia that import majority of their energy needs.
Philippine solar industry pushes for more incentives, faster approvals Reuters 13th Jul 2015
Solar companies will push the Philippine government to quadruple the size of an incentive scheme for suppliers of the renewable energy and to speed up project approvals, as the country grapples with precarious electricity supply. Industry group the Philippine Solar Power Alliance (PSPA) said it would propose the steps to make it easier to develop projects worth an estimated $4 billion in the pipeline from local firms such as Aboitiz Power Corp and foreign companies like Thailand's Chow Steel Industries PCL. Located right above the equator, the Philippines is blessed with plenty of sunlight throughout the year that could be used to help meet soaring power demand as manufacturing grows and call centre businesses boom.
Gas deposits discovered in northern Philippines Gulf News 9th Jul 2015
The Department of Energy (DOE) has confirmed that Philippine National Oil Company–Exploration Corporation (PNOC-EC), a government-owned entity, has discovered natural gas deposits here not far from a field that used to supply fuel for the gas-fired power plant in the province. The find fans hopes that the country could push for more such exploration projects in its bid to achieve energy independence. Initial results from the Mangosteen-1 well, in Cagayan Basin in Santiago City, Isabela, show promising quantities of natural gas that can be harvested from the well. The state-owned corporation will now determine the commercial viability of the said find. The discovery was found in an area covered by Service Contract 737, an onshore block located in the southern part of the Cagayan Basin, covers an area of 360 square kilometer, and is fully owned and operated by state-run PNOC-EC. Gemiliano Lopez Jr, PNOC-EC chairman, told the Philippine media that the gas well, explored through the "Mangosteen" project under SC 737, may perhaps be the next major natural gas supply in the country next to Malampaya field. The official said the good news was relayed to President Benigno Aquino III. “We found natural gas within the president’s term, one that would complement the production of the Malampaya offshore project in Palawan and allow us to supply additional cheap and clean energy to our people.”
DOF backs adjustments in fuel taxes The Philippine Star 9th Jul 2015
The government should consider adjusting taxes on fuel prices while international oil prices remain weak, a senior Department of Finance official said yesterday. Finance Undersecretary Gil Beltran said the government should take advantage of the current low inflation environment. Inflation eased to a 20-year low of 1.2 percent in June from 1.6 percent in May amid lower increases in the prices of housing, utilities and food. The average rate for the first six months of the year stood at two percent, settling at the low end of the government’s two to four percent target range for 2015.
Meralco seeks lower distribution charge The Philippine Star 8th Jul 2015
The Manila Electric Co. (Meralco) is seeking the approval of the Energy Regulatory Commission (ERC) to lower its distribution charge to soften the impact of the widely expected hike in electricity rates this month. Meralco said in a statement generation charge is estimated to increase by P0.25 to P0.30 per kilowatt hour (kwh). The distribution utility attributed the increase to the higher prices at the Wholesale Electricity Spot Market (WESM) for the June supply month following numerous instances of forced outages by other power plants which triggered a number of yellow alerts. According to Meralco, the Malampaya gas restrictions last month also resulted in the use of more expensive alternative fuel, like condensate by some power plants.
Coal plants produce almost 70% of electricity The Philippine Star 7th Jul 2015
The Philippines is still heavily-reliant on coal in providing electricity for the country as nearly 70 percent of the committed power to come online until 2019 are coal-fired power plants, latest data from the Department of Energy (DOE) showed. This despite the DOE’s push for more renewable energy (RE) projects to balance the country’s source of energy mix. The private sector has committed 5,013.85-megawatts (MW) of additional capacity from 49 power projects over the next four years. Of the total committed capacity, 67.77 percent or 3,398 MW will come from 12 coal-fired power plants, according to DOE data.
Financial Services
PH banks unfazed by foreign lenders Manila Standard Today 12th Jul 2015
A top executive of one of the country’s most aggressive banks remains unfazed by the entry of more foreign banks, after the government further liberalized the industry last year to attract more foreign direct investments. In an event held at the Bangko Sentral ng Pilipinas recently, where the banker was one of the guests, he said he welcomed the influx of foreign lenders into the Philippines. “There’s nothing to worry about… the more, the merrier,” the banker said confidently. He said he knew it from the start that foreign lenders would be no match to domestic banks as far as retail banking was concerned.
Financial market volatility seen to continue Philippine Daily Inquirer 12th Jul 2015
Phippine monetary officials expect financial markets to stay volatile in the coming weeks, but assured that the real economy remained healthy. Governor Amando M. Tetangco Jr. of the Bangko Sentral ng Pilipinas (BSP) said both fiscal and monetary authorities had sufficient space to diffuse threats to the country’s economic stability. This comes amid separate crises overseas, namely Greece’s default earlier this month and the entry of China into “bear” market territory following the precipitous decline of equity benchmarks. “We may still see some further weakness in markets, but our macroeconomic fundamentals remain sound,” Tetangco said in a statement to reporters on Friday. “We have both monetary and fiscal space to help support the economy, should such be required.”
Debit card usage still low in Philippines The Philippine Star 10th Jul 2015
Debit card usage in the Philippines remains relatively low as most cardholders still prefer conventional cash withdrawals from automated teller machines (ATM), a Bank of the Philippine Islands executive said. BPI assistant vice president for debit and prepaid business product department head Ranj Basi said only four out of every 10 ATM cardholders actually use their cards for purchases. “There are still a lot of people who line up in ATM machines to get cash to make purchases when they can already use the card to make payments for the same purchases,” Basi said. ATM cards are debit cards whose value is based on cardholders’ existing accounts while prepaid debit cards are based on the amount “loaded” on the card. On the other hand, credit cards “borrowed” money, thus slapped with interest fees.
Rural lenders seen consolidating under new BSP mechanism Business Mirror 9th Jul 2015
The Bangko Sentral ng Pilipinas (BSP) is crafting a mechanism that will encourage small, but healthy, lenders to fuse their resources with peers or rivals, and achieve a certain scale that will allow them to compete more effectively down the line. The mechanism, BSP Deputy Governor Nestor A. Espenilla Jr. said, builds on the success of an earlier program called the Strengthening Program for Rural Banks (SPRB) that sought to cure the operating inadequacies of rural lenders before these become full-blown financial problems. At the swearing in ceremonies of the latest officers of the Rural Bankers Association of the Philippines, Espenilla said the proposed mechanism has gained preliminary approval by the policy-making Monetary Board.
PSE ready to tackle technical issues on new trading platform Business Mirror 9th Jul 2015
The Philippine Stock Exchange Inc. (PSE), which recently migrated its trading platform, on Thursday said it is ready to address technical issues, following the suspension of trading in the New York Stock Exchange (NYSE) on Wednesday. “The suspension of trading at the New York Stock Exchange, arising from technical issues, highlights the need for bourses to be prepared for any eventuality. At the PSE, we are very mindful of this, and we are always anticipating possible risks,” PSE President and CEO Hans Sicat said in a statement. A technical glitch at the NYSE, which accounts for about a fifth of the total trading stocks in the US, forced it to halt trading for four hours, the longest technology-related halt in its history. Since early this year, the PSE has been testing its new system, the PSEtrade XTS provided for by National Association of Securities Dealers Automated Quotations since early this year. It rolled out the system on June 22.
Fitch sees Philippine banks hurdling higher capital requirements The Philippine Star 9th Jul 2015
Fitch Ratings is convinced most Philippine banks could meet higher levels of capital for potential losses imposed by the Bangko Sentral ng Pilipinas (BSP) on banks deemed “too big to fail.” Fitch said most large and mid-sized banks in the Philippines have core equity Tier 1 (CET1) ratios comfortably above Basel 3 minimum. The banks identified by the BSP as domestic systematically important banks (D-SIBs) are required to maintain additional CET1 of between 150 and 250 basis points of the bank’s Risk-Weighted Assets beginning January 2017 until the same are fully in place by January 2019.
BSP finalizes list of ‘too big to fail’ banks The Philippine Star 8th Jul 2015
The Bangko Sentral ng Pilipinas (BSP) has completed its determination of domestic systemically important banks (D-SIBs) nine months after ordering banks deemed “too big to fail” to set aside higher levels of capital for potential losses. BSP Governor Amando Tetangco Jr. said the central bank has classified banks depending on the extent of their systemic importance using pre-defined indicators for size, interconnectedness, substitutability and market reliance as a financial market infrastructure as well as complexity. The D-SIBs framework is in line with the initiatives pursued under the Basel III reform agenda. D-SIBs are characterized as banks whose distress or disorderly failure would cause significant disruptions to the wider financial system and economy.
Three-year credit history rule insufficient to vet borrowers Business Mirror 7th Jul 2015
The Chamber of Thrift Banks (CTB) considers the three-year rule insufficient to establish the creditworthiness of bank borrowers and has asked this be lengthened to five years at the very least. According to CTB President Rommel Latinazo, who is also president at RCBC Savings Bank, allowing the various lenders to look into the credit history of borrowers and limiting the same to only three years is too short for purposes of establishing a reasonably credible credit history of potential borrowers. He told the BusinessMirror the CTB is seeking a longer period beyond the three years allowed under current guidelines of the Credit Information Corp. (CIC) to help them evaluate the creditworthiness of borrowers.
BSP welcomes more foreign banks The Philippine Star 7th Jul 2015
The Bangko Sentral ng Pilipinas (BSP) said there is more room to accommodate the entry of foreign banks in the country despite the green light given to five foreign banks to set up shop in the Philippines. BSP Deputy Governor Nestor Espenila Jr. told reporters on the sidelines of the Regional Social Dialogue organized by the UNI Apro Asean Bank Unions Council (ABUC) and the Asean Services Employees’ Trade Unions Council, the regulator sees more foreign banks filing their application to operate in the country. “To begin with, the foreign bank penetration in the country is actually very small,” he said. Espenilla said foreign banks operating in the Philippines currently account for only 11 percent of the total assets of the country’s banking industry compared to the 40 percent ceiling.
Food & Agriculture
Philippines food poisoning cases spark calls for expert panel Gulf News 13th Jul 2015
Smarting from a recent rash of food poisoning outbreaks, Philippine officials have called on the government to form a team of experts that could be immediately sent to places struck by such emergencies. “I think it is time to form quick reaction teams that can respond to food safety emergencies,” Senate President Pro-Tempore Ralph Recto said on Monday at the heels of reports of mass food poisoning in southern Philippines and other similar incidents in other parts of the country. Also on Monday, the Department of Health (DOH) reported that 1,925 people had been taken ill in Surigao del Sur, Surigao del Norte, and Agusan del Sur, after eating sweets made from the tropical fruit, durian. According to Health Secretary Janette Guarin, 66 out of the 1,925 patients are still in various hospitals three days after the incident.
Fake rice: NBI steps in Rappler 13th Jul 2015
Upon orders from President Benigno Aquino III, Justice Secretary Leila de Lima has directed the National Bureau of Investigation (NBI) to conduct a fact-finding probe into reports of fake rice being sold in stores. The NBI probe will "determine whether such fake rice has reached the public and, if so, what are the affected areas," De Lima told reporters. Investigators will also identify the source and file appropriate charges against them, she added. The National Food Authority (NFA) in Davao City earlier informed the head office of a report it received on June 26 regarding the alleged sale of fake rice in the city.
Rice smuggling persists due to failed PH agriculture Inquirer 12th Jul 2015
Mayor Rodrigo Duterte blamed the “failed agricultural programs” in the country as the reason for the persistence of rice smuggling. Duterte said that without a self-sufficient food production, the country would be plagued by smuggling and the reliance on rice imports.
Health & Life Sciences
WHO commends Philippines handling of imported MERS case, Malacanang welcomes comment Outbreak News Today 12th Jul 2015
The Palace welcomed the statement of the World Health Organization, which commended the Philippines for successfully handling the Middle East Respiratory Syndrome coronavirus (MERS CoV) cases in the country. There were two case of MERS-CoV in the Philippines—one when a Filipino nurse from the Middle East arrived in the country with the disease and recently a foreigner entering the Philippines was initially suspected to be infected with MERS CoV. “We have always stated that our Department of Health is ready to address all these issues including MERS-CoV and it clearly showed,” Deputy presidential spokesman Edwin Lacierda said in a radio interview on Saturday.
‘Make public funds scam-proof’ Manila Standard Today 13th Jul 2015
The Senate will look into the safety nets of the budget allocation for the Philippine Health Insurance Corporation, which receives one of the biggest chunks of public spending for health, to ensure it will not go to scammers, according to Senator Francis “Chiz” Escudero, chairman of the finance committee. “We will look at the check and balance, the safeguard mechanisms in PhilHealth because this has been happening for a long time even in other countries,” Escudero told reporters. “Even in the Medicare in America, they have been doing it for a long time, and they got out of it. This is one thing that PhilHealth should be aware and conscious,” he said.
PhilHealth told: Okay eye surgeries for now Manila Times 12th Jul 2015
Recent scams uncovered by the Philippine Health Insurance Corp. (PhilHealth) should not stop the agency from approving claims for cataract surgeries. Meanwhile, Sen. Francis Escudero on Sunday said, PhilHealth should come up with effective ways in validating claims. Escudero made the statement after learning that PhilHealth has temporarily suspended payment of claims for cataract surgeries filed by Pacific Eye Institute in Makati City and Quezon City Eye Center, both in Metro Manila, in wake of the discovery of the anomaly in claims it had filed.
Philhealth loses P2b in false claims — TG Manila Standard Today 9th Jul 2015
Subjecting a blind person to a laser operation he did not need was among the ‘modus operandi’ employed by unscrupulous doctors and institutions to defraud the state-run Philippine Health Insurance of billions of pesos paid by its members. Senate Blue Ribbon committee chairman Senator Teofisto Guingona said he wanted to look into the coordination between the DOH which issues and revokes the license of eye institutions to operate and PhilHealth which issues payments to doctors, clinics and hospitals.
ICT
No. 2 Philippine telco gaining ground Nikkei Asian Review 7th Jul 2015
Globe Telecom has won regulatory clearance that will afford it increased bandwidth to challenge Philippine Long Distance Telephone's market dominance. The Philippine National Telecommunications Commission, or NTC, approved last Thursday the conversion of Bayan Telecommunications debt into equity. Globe purchased most of Bayan's debt in 2012 and will own at least 54% of the cash-strapped company after the conversion. A court handling Bayan's corporate rehabilitation required the NTC clearance, saying the debt-to-equity conversion would change Bayan's controlling shareholder.
Infrastructure
Gov’t urged to focus on infra, cutting power cost Philippine Daily Inquirer 14th Jul 2015
A weakening peso would do little to boost the country’s stuttering export sector, according to a new central bank study, which stated that policymakers should focus on cutting power costs and improving infrastructure. The Bangko Sentral ng Pilipinas (BSP) said the country’s export sector’s failure to move up the value chain had little to do with currency dynamics. “Other factors that influence the trade balance are macroeconomic fundamentals, business climate, ease of doing business and productive capacity,” a working paper by the BSP’s Center for Monetary and Financial Stability showed. The study noted that supply-side factors might be putting a constraint on production and, subsequently, on export performance.
Infra, investments to support economy – DOF The Philippine Star 13th Jul 2015
Infrastructure and increased investments should support the Philippine economy amid weak global activity and waning exports, a senior official from the Department of Finance said. Finance Undersecretary and chief economist Gil Beltran said in an e-mail yesterday the Philippines should look for and develop new markets amid a decline in merchandise exports. “A slowdown in world growth adversely affects Philippine exports. However, the world market is huge and not all countries are affected by slowdown,” Beltran said. “The innovative exporter can look for relatively undeveloped markets which it can tap to offset losses from traditional markets,” he said.
MPIC plans to spend P1.5 billion to rehab SCTEx for three years Business Mirror 12th Jul 2015
Infrastructure holdings company Metro Pacific Investments Corp. (MPIC) will spend roughly P1.5 billion in the next three years to rehabilitate the Subic-Clark-Tarlac Expressway (SCTEx). Manila North Tollways Corp. President Rodrigo E. Franco said the amount will be mostly used to upgrade the main line of the thoroughfare in Central Luzon. “For the next three years, we are going to spend about P1.5 billion for SCTEx’s civil works and upgrades,” he said. “We have to do a lot of rehabilitation in many areas of the expressway.”
Philippines seeks fresh bids for $415 mln dam project Reuters 8th Jul 2015
The Philippine government on Friday launched a fresh round of bidding for a contract to design and build an 18.72 billion pesos ($415.17 million) dam that will be the second water source for the capital. The Metropolitan Waterworks and Sewerage System invited interested parties to bid for the New Centennial Water Source-Kaliwa Dam project, which is intended to increase Metro Manila's raw water supply. Only companies that purchased the invitation document from July 6 to Sept. 15 will be allowed to submit pre-qualification papers on Sept. 16. The timeline for the auction has yet to be finalised.
PH claws its way out of infrastructure doldrums Philippine Daily Inquirer 8th Jul 2015
It is no secret: The Philippines has one of the weakest infrastructure ecosystems among the six largest economies in the region. According to the World Economic Forum’s Global Competitiveness Report published last year, the Philippines ranked 98 out of 144 countries in terms of infrastructure, way behind Singapore, the most advanced country in the Association of Southeast Asian Nations (Asean), which ranked 5th globally. Other Asean nations which ranked ahead of the Philippines in the report were Malaysia (25th globally), Thailand (61st) and Indonesia (82nd). Among the 10-member countries of the economic-political bloc, the Philippines came ahead of Vietnam which was ranked 110th globally.
The Philippines' Dilemma on China's New Infrastructure Bank The Diplomat 9th Jul 2015
Earlier this year, China was painfully isolated during the Shangri-La Dialogue, Asia’s premier security forum, when it came under criticism from across all quarters for its expansive reclamation activities across disputed features in the South China Sea. Recent weeks, however, have been kind to China. China formally launched the Asian Infrastructure Investment Bank (AIIB), a promising rival to the Bretton Woods institutions of the World Bank and its regional derivative the Japanese-dominated Asian Development Bank (ADB). China’s national legislature also approved another major Chinese-backed global financial institution, the New Development Bank (NDB). On paper, the NDB symbolizes the emergence of the BRICS as active shapers of the international economic order. In reality, however, it will depend largely on Chinese contributions ($41 billion), which represents 39 percent of total shares.
Manufacturing
Toyota rides on CARS program The Philippine Star 13th Jul 2015
Toyota Motor Philippines Corp. (TMP) is planning to join the Comprehensive Automotive Resurgence Strategy (CARS) program to take advantage of the government’s tax incentives. In an interview Thursday night, TMP president Michinobu Sugata said the leading car company is looking to take on the challenge of the CARS program through its Vios model. For a vehicle model to be enrolled in the CARS program, the car manufacturer should have a planned volume of production of at least 200,000 units over a maximum period of six years. “Number of units required is 200,000 in six years according to the Executive Order. So that’s 33,333 units per year on the average so we’ll try to challenge that with the Vios. We produced 26,000 Vios last year, in the near future we probably have to increase that to 33,333 at least,” Sugata said.
PH factory production decreased 3.1% in May Manila Standard Today 10th Jul 2015
Factory production contracted 3.1 percent year-on-year in May, on weak global demand and prolonged dry spell, data from the Philippine Statistics Authority show. PSA said the drop in the volume of production index in May was the sharpest since the 7.7-percent decline in December 2011 and was a reversal of the 12.7-growth recorded in the same month last year. Data showed the value of production index also sank 7.3 percent in May, as both volume and prices registered negative growth. “Despite this slowdown in manufacturing, businesses remain optimistic. The low inflation environment, lower oil prices, continued inflow of remittances, expected strong demand from government expenditures, and the brisk business activity in the nearing election season, will all help improve the sector’s performance in the coming months,” said National Economic and Development Authority deputy director-general Emmanuel Esguerra.
Policy reforms urged for semiconductor industry The Philippine Star 8th Jul 2015
The Philippines needs to develop policy reforms for the local semiconductor industry to regain its competitive edge in the global market, a study done by the Economic Research Institute for Asean and East Asia (ERIA) said. The Philippines cornered a substantial share in the 1990s, capturing 7.5 percent of the global semiconductor market in 1999. The country, however, lost its strong position to China in the 2000s, with its share plunging to 2.5 percent in 2012. “There is a need to formulate a comprehensive policy and a long-term development plan to establish the Philippines as a major Asean center for chip design,” said Emily Christi A. Cabegin of the University of the Philippines-School of Labor and Industrial Relations in the discussion paper called “The Challenge of China and the Role of Deepening Asean Integration for the Philippine Semiconductor Industry.”
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