Philippines Update: March 29, 2018

Philippines Update | March 29, 2018
Authors: Riley Smith and Joyce Lin 
 
LOOKING AHEAD
 
 

April 5-6: Mission to the 2018 ASEAN Finance Ministers and Central Bank Governors Meeting

April 11: Private Sector Consultation with the ASEAN Coordinating Committee on Customs

April 26: US-ABC Annual Gala Dinner

May 8-10: Mission to the 2018 to the ASEAN Directors-General of Customs Meeting

 
THE COUNCIL'S TAKE
 
 

Philippines Senate Passes National ID System Bill
On March 19, the Senate approved on the third and final reading a bill creating the National Identification (ID) System in the country. The bill was passed with 17 votes in favor of it, two votes against, and no abstention. A Bicameral Conference Committee was called on the same day to reconcile conflicting provisions of the Senate Bill and the House of Representatives Bill. The House of Representatives approved its version of the Bill in September 2017, with 142 votes in favor and seven votes against.

One of the key differences between the Bills is that the House's version requires a much more comprehensive set of data for enrollment in the national identification system, including details such as parents' names; marriage certificate reference number, and voter identification number. The Senate Bill requires just basic information, such as name and date of birth, which Senator Panfilo Lacson, Chairman of the subcommittee on the National ID System, said is more in line with practices by other countries and makes it much easier for people to access government services.

The National ID System is intended to enhance administrative governance and reduce corruption and bureaucratic red tape, while strengthening financial inclusion and promoting ease of doing business. A new National ID system will have the key components of an identification number (PSN), a registry (PSA), and the PhilID, a non-transferable card issued to all citizens or resident aliens registered under the identification system. Currently there are 33 different forms of functional IDs issued by various government agencies. The most harmonized identification system that the Philippines currently has in place is the Unified Multi-purpose ID or UMID, which, since first being implemented in 2010, still covers less than 20% of the population. The Department of Budget and Management confirms that a budget of P2 billion (US$38.3 billion) has already been made available for the funding of the National ID System under the budget of the Philippine Statistics Authority (PSA). The PSA will be the primary implementing agency for the final version of the bill that comes out of the Bicameral Conference Committee. 

Philippines Bureau of Internal Revenue Releases Three More Revenue Regulations Containing IRRs of TRAIN Law
On March 15, the Philippines Bureau of Internal Revenue (BIR) issued Revenue Regulations 11, 12, and 13, which contain Implementing Rules and Regulations (IRRs) of the Tax Reform for Acceleration and Inclusion (TRAIN) Act. The recently released Revenue Regulations amend existing rules involving withholding of income tax, estate and donor taxes, and value-added tax (VAT). Revenue Regulation 11 introduces further amendments to Revenue Regulation 2-98 that was issued in 1998, and provide new guidelines on the withholding of income tax. Revenue Regulation 12 consolidates regulations on estate and donor's tax, and provides for a uniform estate tax and donor's tax rate of 6%. Revenue Regulation 13 prescribes the regulations implementing the VAT, as well as the guidelines for sectors still enjoying VAT zero-rating and exemptions. These three regulations bring the total count of Revenue Regulations issued since January to 13. The other Revenue Regulations that were passed recently in February include Revenue Regulation 8 which provides guidelines on the income tax provisions of the tax reform law, and Revenue Regulation 9, which provide the guidelines for the increase in the Stock Transfer Tax.

Deputy Commissioner for the BIR's Legal and Inspection Group, Marissa Cabreros said in February that the Bureau hopes to complete the IRRs for the TRAIN Act by March, and that the five remaining Revenue Regulations containing the IRRs will be issued within the first quarter. There now remain two more Revenue Regulations to be issued, pertaining to the excise tax on cosmetic procedures, and excise tax on sugar-sweetened beverages. Cabreros previously said that the Revenue Regulations are meant to organize or properly guide taxpayers on how to implement them, but even without the Revenue Regulations, interested parties can look to the Revenue Memorandum Circulars and advisories for guidance. 

TRAIN, the first of several tax reform packages that the administration of President Rodrigo Duterte is seeking to pass, aims to raise P130 billion (US$2.60 billion) in revenue to finance the administration's infrastructure development program. It includes income tax cuts and exemptions on the first P250,000 (US$4,790) of Filipinos' annual income to increase take-home pay, as well as reduces and simplifies the estate tax. To offset the tax cuts and exemptions, TRAIN adds levies on diesel, gasoline, liquefied petroleum gas, automobiles, mining, coal, and tobacco. 

Philippines to Continue to Be Eligible for Preferential Duty-Free Entry to the United States Through GSP
On March 26, the Department of Trade and Industry announced that the Philippines will continue to enjoy the incentives under the US Generalized System of Preferences (GSP) through December 31, 2020. The announcement follows President Donald Trump's signing of the Omnibus Spending Bill on March 23, which included GSP renewal language as well as a mechanism that refunds tariffs paid from January 1, 2018 through the reinstatement date of the program. Philippine Secretary of Trade and Industry Ramon Lopez said that GSP exports account for 18% of Philippines exports to the US, valued at an estimated US$1.59 billion.

The Trade Act of 1972, which authorized GSP in order to promote economic growth in developing countries, first took effect on January 1, 1976. GSP provides preferential duty-free treatment for products from a broad range of "designated beneficiary countries." More details on the program can be found here

The GSP periodically expires and must be renewed by Congress to remain in effect. Congress has in the past allowed GSP to expire prior to passing legislation to reauthorize GSP, resulting in a gap period wherein importers cannot claim GSP benefits. The program's last authorization expired on December 31, 2017, causing duty rates to revert to Most Favored Nation (MFN) rates. On February 8, the House Ways and Means Committee had proposed a bill to renew the GSP program for three years, setting the course for GSP renewal. The bill also contains a reform introduced by Representative Jackie Walorski (R-IN), which allows a Competitive Need Limitations waiver to be granted if there was no domestic production during the previous three years. Previously a waiver on the grounds of no domestic production could only be granted if there was no production on January 1, 1995.

Philippines Bureau of Customs Looks to Upgrade Systems
At the start of 2018, Bureau of Customs (BOC) Commissioner Isidro Lapeña said that he would prioritize fully automating BOC clearance processes by the end of the year, both to improve services and to reduce corruption. Part of this effort is to be facilitated by a development loan from the World Bank (WB). On January 25, the BOC concluded a workshop with the WB which marked the first of a series of stages leading to the WB-led customs modernization project. The US$200 million Philippines Customs and Trade Facilitation Project (PCTFP) loan aims to support export-led economic growth by helping the BOC reduce trade costs, improve transparency, and increase revenue collection. The WB project will support institutional development to build a more professional organization, trade facilitation efforts to improve cargo processing, and modernizing core ICT systems so they can support modern automated clearance platforms. The project is under review by both the WB Board and the Philippines government with board review set for July.

The BOC is already working to improve its existing procedures and previous Commissioners have also made efforts to upgrade BOC IT systems with varying levels of success. Some of the projects have recently been slowed by legal disputes with vendors. The Philippines is now testing its systems for the ASEAN Single Window, an initiative aimed at integrating ASEAN's customs clearance systems. Additionally, the Department of Finance (DOF) ordered the BOC to establish real time data-exchange arrangements with South Korea, Japan, China and the United States on March 26 to more accurately assess the value of traded goods.

 
ADVOCACY UPDATE
 
 
  • As a follow-up to the discussions on key provisions of TRAIN 2 during the 2018 Philippines Business Mission, the second package in the Government's Comprehensive Tax Reform Program, the Council is requesting member company input on the proposed TRAIN 2 (a presentation on which can be found here). This input will be used to draft a letter to the Ways and Means Committee in the House of Representatives conveying the private sector's feedback to the TRAIN 2 proposal. The Council has already received input from several companies, so if you have already submitted input there is no need to do so again. If you have not yet submitted input to the TRAIN 2 proposal, please provide your feedback to Riley Smith (rsmith@usasean.org) by COB Friday, April 6.
  • The Council is requesting member company input on deficiencies in current laws and regulations that are impeding U.S. companies from submitting bids and participating in the Philippine Government's Build, Build, Build (B3) infrastructure development initiative. Finding ways to help U.S. companies play a larger role in the B3 initiative was one of the themes of the 2018 Philippines Business Mission, and during our meetings several Philippine Government officials asked the delegation how they could make the Philippines a more attractive destination for U.S. investment in infrastructure projects. In particular, the Philippine Government is interested in learning how to encourage U.S. companies to submit unsolicited proposals for major infrastructure projects, as well as energy and ICT projects. The Council is currently working with the U.S. Embassy in Manila on potential engagement opportunities in follow-up to the business mission, and member company input on this topic will help with the planning of these engagements. Please provide your feedback to Riley Smith (rsmith@usasean.org) by COB Friday, April 13.
 
IN THIS UPDATE
 
 
Regional Affairs
US Generalized System of Preferences for Philippines extended for 3 years

National Affairs
Dureza: Executive action on Bangsamoro Basic Law eyed | Philstar.com
Start of recount for Marcos poll protest set after Holy Week
Tax reform package 2, focused on corporate tax, filed with House
BIR issues IRR on TRAIN Law
Senate OKs national ID system bill on final reading
Finance department moves to ease investor concerns about incentives
Cimatu’s decision: Close Boracay for up to 1 year | BusinessMirror

Customs
BOC signs MOA with Customs brokers to avoid delays
BoC ordered to expand data exchange program
DTI: PH to keep enjoying EU trade perk
Customs assigns new district collectors in 'major reshuffle'

Defense & Security
New Military Aircraft Puts Japan-Philippines Defense Ties in the Spotlight
Philippines plans marine base on island near Taiwan to deter poaching

Economics
Maiden ‘panda’ offer oversubscribed
Growth mainstays in focus for 2018
Rate hike creeps into policy expectations
Jan. remittances rise fastest in 10 months, dip from Dec.
Weak FDI pledges worry Amcham
Remittance growth to pick up as OFWs benefit from weaker peso -- HSBC
Yields on BSP’s term deposits climb as banks crowd offering
DOE Philippines partners with DOST to enhance energy sectors’ disaster resilience

Financial Services
OF Bank to ‘leapfrog’ to digital economy
Banks’ reserve ratio likely reduced to 18%
Project eyes affordable insurance for poor, disaster-prone municipalities
Philippines: 5 insurers cease business because of increased capital requirement

Food & Agriculture
3 new product categories eyed as export prospects
Department of Agriculture eyes over P200 billion budget for 2019
NFA Council pushes management audit

Health & Life Sciences
Prioritizing public and economic health, Philippines targets fake drugs
Philippines: Continuing the fight against TB in prisons
US vows to help combat tuberculosis in PH

ICT
PH takes small steps, as it aims for giant leaps in space technology
Entry of 3rd telco player ‘dim’
DICT Philippines to provide free Internet and online learning at DTI's Negosyo Centers for MSMEs
Crypto-powered PHL as next fintech hub

Infrastructure
Gov't to lease retail, dining spaces at Metro Manila Subway stations
WTO members press PHL to relax procurement rules
NGCP joins hands with DPWH for nation’s growth | BusinessMirror
Philippines, Japan sign loan deal for first Metro Manila subway | Philstar.com
 
Manufacturing
 
ARTICLE CLIPS
 
 
Regional Affairs

US Generalized System of Preferences for Philippines extended for 3 years philstar.com 26th Mar 2018
The Philippines will continue to enjoy the incentives under the US Generalized System of Preferences (GSP) for the next three years, the Department of Trade and Industry (DTI) announced yesterday. The DTI said the US GSP was reauthorized on March 23 after President Donald Trump signed the Omnibus Spending Bill which included GSP renewal language. The renewal authorizes the GSP through Dec. 31, 2020 and includes a mechanism that refunds tariffs paid from Jan. 1, 2018 through the reinstatement date of the program. The GSP program covers a total 5,057 products or tariff lines, or roughly 47.7 percent of the 10,600 total US tariff lines, 3,500 of which are open for all beneficiary developing countries, while an additional 1,500 products are given to the least-developed beneficiary developing countries. 

National Affairs

Dureza: Executive action on Bangsamoro Basic Law eyed | Philstar.com philstar.com 29th Mar 2018
President Duterte might resort to an executive action if Congress fails to pass the proposed Bangsamoro Basic Law (BBL), Presidential Adviser on the Peace Process Jesus Dureza said yesterday. “He said he would go to the extent of exercising his residual powers through administrative directives to fulfill this commitment,” Dureza said, referring to the President. Duterte assured officials of the Moro Islamic Liberation Front (MILF) during a meeting at the Matina Enclaves in Davao City on Tuesday night that the BBL would be passed before the end of the year.

Start of recount for Marcos poll protest set after Holy Week Business Mirror 28th Mar 2018
It’s all systems go for the revision of votes for former Senator Ferdinand “Bongbong” Marcos’ three pilot provinces for his poll protest against Vice-President Leni Robredo. The Supreme Court, sitting as the Presidential Electoral Tribunal (PET), accorded journalists an ocular tour of the Revision Hall, situated at the SC-Court of Appeals gymnasium, on Tuesday. The tour was supervised by SC en banc and PET clerk of court Atty. Edgar Aricheta, PET ad hoc committee officers Ma. Carina Cunanan and Atty. Jose Lemuel Arenas, and SC Public Information Office chief Atty. Theodore Te. The PET has retrieved around 1,400 ballot boxes from Camarines Sur, one of Marcos’ pilot provinces. The other two are Negros Oriental and Iloilo.

Tax reform package 2, focused on corporate tax, filed with House BusinessWorld 22nd Mar 2018
THE SECOND PACKAGE of the tax reform program was filed with the House of Representatives on Wednesday, according to the House Majority leader. The House has yet to release an official copy of the bill to the public, as it has not yet been read in the plenary as of Thursday afternoon. The measure — which was submitted as a proposal by the Department of Finance (DoF) to Congress on Jan. 16 — seeks to gradually cut corporate income tax rates to 25% from 30%, subject to a streamlining of tax holidays granted by 14 investment promotion agencies. The DoF said that the incentives given out should be “targeted, time-bound, transparent and performance-based.” Asked when he aims to have the bill approved by his panel, House ways and means committee chairperson Quirino Representative Dakila Carlo E. Cua said in a text message to BusinessWorld yesterday: “It is difficult to give a definite timeline given that this needs thorough discussion. The committee however, will give this top priority.”

BIR issues IRR on TRAIN Law philstar.com 21st Mar 2018
The Bureau of Internal Revenue (BIR) has released three revenue regulations containing implementing rules and regulations (IRR) of the recently enacted tax reform law. Posted on the BIR’s website, Internal Revenue commissioner Caesar Dulay said Revenue Regulations (RR) 11, 12 and 13 amended existing rules involving withholding of income tax, estate and donor taxes and value-added tax (VAT). The RRs form part of the series of issuances to be released by the BIR, which will contain the implementing rules and regulations of the Tax Reform for Acceleration and Inclusion Act (TRAIN). RR 11, for its part, prescribes the final withholding tax rates for the personal income of individuals. Under the new issuance, interest from any peso bank deposit trust funds, royalties, prizes and other winnings will have a final withholding tax rate of 20 percent.

Senate OKs national ID system bill on final reading cnn 19th Mar 2018
The Senate on Monday approved on third and final reading a bill creating a national identification system in the country to facilitate transactions with government agencies and the private sector. Senate Bill No. 1738, or the Philippine Identification System (PhilSys) Act of 2018, was passed with 17 votes in favor of the bill, two votes against, and no abstention. The proposed measure, sponsored by Sen. Panfilo Lacson, integrates and interconnects various government-issued identification cards (IDs) into a single official identification system for all citizens. Lacson said there are currently 33 different forms of functional IDs issued by various government agencies, which result in "duplication of efforts, wastage of resources, and uncoordinated identity approaches."

Finance department moves to ease investor concerns about incentives InterAksyon 19th Mar 2018
The Department of Finance (DoF) has sought to assuage investor concerns about the loss of incentives under the second tax reform package that could make it even harder for the Philippines to compete with neighbors for foreign direct investments. “That the government will put ‘a stop to current incentives’ is a misconception of the proposed modernization of fiscal incentives,” a DoF statement on Sunday quoted Finance Undersecretary Karl Kendrick T. Chua as saying. “This is simply not true. Incentives will remain to be granted, but more judiciously this time so that there is a better balance between the investment and fiscal sustainability goals,” he explained. “The DoF recognizes the role of incentives to encourage investments.” The measure, which the DoF submitted to Congress on Jan. 16, seeks to gradually cut corporate income tax rates to 25% by 2022 — when President Rodrigo R. Duterte ends his six-year term — from 30% currently, with the pace of reduction dependent on how much additional revenues the government rakes in from streamlining tax holidays granted by 14 investment promotion agencies. The department also inserted the removal of value-added tax (VAT) exemptions of coal and casinos in the second tax reform package. The bill has yet to be filed in both chambers of Congress, even as the DoF targets ratification of all remaining three to four tax reform packages by December before the election fever for the May 2019 mid-term polls sets in and delays action on reforms deemed controversial or unpopular.

Cimatu’s decision: Close Boracay for up to 1 year | BusinessMirror BusinessMirror 15th Mar 2018
THE interagency task force on Boracay will be recommending the declaration of a state of calamity for six months, and a closure of the popular resort island starting on April 26. This was revealed by Environment Secretary Roy A. Cimatu and other members of the task force during a news briefing at the Department of Tourism (DOT) on Thursday afternoon. “[For] public health, public interest and general welfare, I recommend to the President the closure of Boracay Island as a tourist destination for a maximum of one year, effective one month after the declaration,” he said in a prepared statement. He added this period of closure will give the national government “ample time for the undisrupted implementation” of several measures that will help restore and sustain the island as a major destination.

Customs

BOC signs MOA with Customs brokers to avoid delays BusinessMirror 21st Mar 2018
The Bureau of Customs (BOC) has signed a memorandum of agreement (MOA) with the Chamber of Customs Brokers Inc. (CCBI) to strengthen trade facilitation and minimize delays at the ports. This came about after consultations with port operators and the CCBI where issues on transaction delays, fraudulent valuation and enhanced trade facilitation, among others, were raised. “The absence of Customs brokers or importers often results in the delay of examination of alerted shipments,” Customs Commissioner Isidro S. Lapeña said.

BoC ordered to expand data exchange program The Manila Times 27th Mar 2018
The Department of Finance (DoF) has directed the Bureau of Customs (BoC) to exchange trade data with three more countries in a bid to address smuggling and tax evasion. Finance Secretary Carlos Dominguez 3rd ordered Customs Commissioner Isidro Lapeña to set up data exchange deals with South Korea, Japan and the United States, adding to a similar arrangement being finalized with China.

DTI: PH to keep enjoying EU trade perk DTI: PH to keep enjoying EU trade perk 20th Mar 2018
The Philippines would keep a trade perk extended by the European Union notwithstanding the latter’s request for the United Nations (UN) to look into President Duterte’s bloody war on drugs, Trade and Industry Secretary Ramon Lopez said. The EU had included the Philippines on the list of countries that required the attention of the UN Human Rights Council (UNHRC), citing the growing pile of dead bodies in Duterte’s campaign against illegal drugs. In spite of this, Lopez said the Philippines would still keep an incentive that had so far allowed the country to export more than 6,000 products into the bloc at zero tariff.

Customs assigns new district collectors in 'major reshuffle' Rappler 17th Mar 2018
In what it called a "major reshuffle," the Bureau of Customs (BOC) has assigned new district collectors in several major ports to replace officials who failed to meet the February collection target. The BOC said in a statement that Carmelita Talusan, formerly assigned to the Port of Subic, formally assumed her district collector role at the Ninoy Aquino International Airport (NAIA) on Friday, March 15. She replaced former district collector Vincent Philip Maronilla.

Defense & Security

New Military Aircraft Puts Japan-Philippines Defense Ties in the Spotlight The Diplomat 23rd Mar 2018
This week, the Philippines disclosed that it would receive three more aircraft from Japan next week. The anticipated delivery would conclude a deal that constitutes both a boost for Manila’s limited military capabilities as well as a gain for the bilateral defense relationship between the two countries that has broader regional implications as well. As I have noted before, Japan-Philippines defense ties under Rodrigo Duterte have continued strengthening amid some uncertainties and refocusing as part of their broader partnership (See: “Japan-Philippines Defense Relations Under Duterte: Full Steam Ahead?”). Despite the challenges the relationship has faced, the strategic rationale for both sides remains clear, with Japan looking to boost ties with Southeast Asian states including in the defense realm, and the Philippines eying ways to strengthen its limited military capabilities to address a series of threats ranging from terrorism to the South China Sea

Philippines plans marine base on island near Taiwan to deter poaching U.S. 22nd Mar 2018
The Philippines will start building a marine base next month on its northernmost uninhabited island, near Taiwan, to boost defense arrangements and discourage poachers from its fishing grounds, a military spokesman said on Thursday. The two nations’ coast guard ships have confronted each other in the rich fishing waters where their exclusive economic zones overlap, and the neighbors nearly cut ties in 2013, after a Philippine vessel fired on a Taiwanese fishing boat, killing a fisherman. “We need to have a presence there,” said Lieutenant-Colonel Isagani Nato, spokesman of the Northern Luzon Command of the Philippines, adding that building work on Mavulis island would start next month.

Economics

Maiden ‘panda’ offer oversubscribed BusinessWorld 21st Mar 2018
THE GOVERNMENT raised 1.46 billion renminbi (RMB) on Tuesday from its maiden “panda” bond sale amid “overwhelming demand” from both offshore and onshore investors, the Investor Relations Office (IRO) announced in a press statement on Tuesday.

Growth mainstays in focus for 2018 BusinessWorld 21st Mar 2018
STRONGER consumption coupled with the government’s infrastructure push will drive economic growth this year, S&P Global Ratings said, as exports are likely to normalize from last year’s record pace. “After strong export contributions in the middle of 2017, we expect the traditional pillars of growth — consumption and investment — to be in focus in 2018,” the international debt watcher said in its monthly report released yesterday.

Rate hike creeps into policy expectations BusinessWorld 19th Mar 2018
THE Bangko Sentral ng Pilipinas (BSP) could keep policy rates steady at the meeting this week of its Monetary Board, according to a BusinessWorld poll that nevertheless showed nearly half of respondents expecting a hike this time amid quickening inflation. Seven of 12 economists asked late last week see the central bank holding on to current borrowing rates, while the remaining five see a quarter-of-a-point increase in the face of faster inflation and another rate hike expected from the United States Federal Reserve this March 20-21.

Jan. remittances rise fastest in 10 months, dip from Dec. BusinessWorld 16th Mar 2018
CASH SENT HOME by overseas Filipino workers (OFWs) increased by the fastest year-on-year clip in 10 months in January even as the amount fell from December last year, according to data the central bank released on Thursday.

Weak FDI pledges worry Amcham Malay Business Insight 16th Mar 2018
The Philippines is now slowly catching up with its fast growing Asean neighbors in terms of foreign direct investments (FDIs) but American businesses believe the Philippines should be able to attract even higher levels of FDI in the future. The US businesses expressed concern that  new foreign investments may be weakening, as indicated by recent data from the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI) and that it this is not reversed, “could indicate a dark cloud on the horizon. In a comment on the recently-released Bangko Sentral Pilipinas (BSP) data which showed FDIs in 2017 hit a record of $10.5 billion, the American Chamber of Commerce of the Philippines (Amcham) said “the Philippines has attained a level close to those fast-growing Asean economies have enjoyed for many years.” According to the BSP, 60 percent of the 2018 total was comprised of “intercompany borrowings.” Amcham said this appears to indicate that existing investors familiar with the country are expanding operations. Another reform that would support increased foreign investment would be the lifting of the six-year old moratorium on new mining production projects to allow responsible mining activity.

Trade dep’t sees 10-15% hike in manufacturing FDIs in 2018 BusinessWorld 15th Mar 2018
FOREIGN direct investments (FDIs) in Philippine manufacturing will grow by a “reasonable” 10-15% in 2018 as investors remain bullish on the economy’s prospects, though this year’s pace will be a marked slowdown from 2017’s surge, the Department of Trade and Industry (DTI) said on Wednesday. In a statement and a Viber message to reporters, Trade and Industry Secretary Ramon M. Lopez said that FDIs in manufacturing grew more than threefold to $1.15 billion last year from 2016’s $334.35 million, accounting for 3.5% of the $3.263-billion equity capital placements — which excludes reinvested earnings — in 2017 that in turn contributed to a fresh record-high $10.049 billion.

Remittance growth to pick up as OFWs benefit from weaker peso -- HSBC BusinessWorld 15th Mar 2018
CASH REMITTANCES are expected to grow faster this year as overseas Filipino workers (OFWs) will likely take advantage of a weaker peso to send more funds to their families back home, analysts at a global bank said, even as they flagged risks from a deployment ban to Kuwait. HSBC Global Research said remittances likely grew by 5.1% in January from a year ago, although slower than the 7.1% year-on-year increment posted in December last year.

Yields on BSP’s term deposits climb as banks crowd offering BusinessWorld 15th Mar 2018
BANKS again swarmed the central bank’s term deposit facility (TDF) yesterday, although yields continued to climb as players sought higher yields amid some uncertainties in the market. Demand for the three tenors reached P145.828 billion during this week’s auction, shooting beyond the P110 billion the Bangko Sentral ng Pilipinas (BSP) placed on the auction block. Total bids, however, slipped by a tad from the previous week’s P146.856 billion, although all instruments remained oversubscribed.

Philippines now a net borrower philstar.com 19th Mar 2018
The Philippines has become a net borrower as of 2016, ending a 13-year streak of net lending to the rest of the world, the Bangko Sentral ng Pilipinas (BSP) said in a report released over the weekend. Based on the 2016 Philippine flow of funds, the BSP said the saving-investment deficit in the general government and household sectors outweighed the surplus in the financial and non-financial corporations sectors. As a result, the domestic economy’s net borrowing from the rest of the world amounted to P53.4 billion in 2016, reversing its net fund provision of P333 billion in 2015. “The domestic economy becomes a net borrower, financed by the rest of the world largely through loans, equity and investment fund shares,” the BSP said.

Bank lending fuels continued growth in money supply philstar.com 29th Mar 2018
Money supply continued to expand in February on the back of the sustained growth in bank lending, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. According to preliminary data from the BSP, domestic liquidity – also known as M3 – grew 13.5 percent to P10.72 trillion last February from the P9.45 trillion in the same month last year. This pace of growth is faster than the 12.8 percent expansion in domestic liquidity the previous month. The BSP maintained that the growth in money supply remains consistent with its prevailing outlook for inflation and economic activity.

Energy

Government starts review of 26 mining operations | Philstar.com philstar.com 27th Mar 2018
An interagency panel has begun its “fact-finding and science-based” review of 26 mine sites that were ordered either suspended or shut down last year by the previous leadership at the Department of Environment and Natural Resources. According to a statement sent to reporters Tuesday, the Mining Industry Coordinating Council started the review in March and will be completed in six months. The MICC initially targeted to finish the review by the end of last year. The first phase of the examination will look into the legal, technical and environmental concerns hounding the troubled mining operations, while the second part of the review will focus on the “social and economic aspects.” The evaluation should come up with recommendations on mining-related methodologies and procedures to maximize the benefits of mining and avoid damage.

Philippines set to develop 14 petroleum blocks Financial Times 25th Mar 2018
The Philippines, faced with an approaching energy crunch and a maritime dispute with China overshadowing one of its biggest offshore gasfields, has outlined plans to invite oil and gas companies to develop 14 petroleum blocks elsewhere in the archipelago nation. A Philippine official told the Financial Times that the government was planning a roadshow in the UK, the US and Singapore during the third quarter of this year to drum up investors’ interest in the blocks.The Philippine oil sector has been largely overlooked because of the reputation it has earned for saddling energy companies with red tape. An unresolved dispute with Beijing in the South China Sea has prevented development of some of the country’s largest offshore gas reserves.

China vows to have 'prudent' oil exploration with Philippines ABS-CBN News 21st Mar 2018
China will "prudently advance" cooperation with the Philippines on joint oil and gas exploration in the South China Sea, China's top diplomat State Councillor Wang Yi said on Wednesday after meeting his Philippine counterpart. Any potential deals between Manila and Beijing on energy exploration in the disputed waterway should be agreed with a company and not the Chinese government, a senior Philippine official said earlier this month.China claims most of the South China Sea, a key trade route and home to areas that are believed to hold large quantities of oil and natural gas. Along with China, parts of the South China Sea are subject to competing claims from Brunei, Malaysia, Taiwan, Vietnam and the Philippines.The two countries in February agreed to set up a special panel to work out how they can jointly explore offshore oil and gas in areas both sides claim, without needing to address the touchy issue of sovereignty.

Electric cooperatives bill awaiting Duterte’s signature philstar.com 26th Mar 2018
A measure that seeks to provide government funding for emergency and resiliency initiatives of 122 electric cooperatives providing power to tens of millions of Filipinos nationwide is now ready for President Duterte’s signature, Sen. Sherwin Gatchalian said yesterday. The Senate and the House of Representatives have ratified the final reconciled version of a measure that seeks to assist electric cooperatives during calamities. The bill will appropriate an initial amount of P750 million for the purpose, carved out from the P7-billion budget of the National Disaster Risk Reduction and Management Council for electric cooperatives (ECs) “The amount shall be immediately released to the National Electrification Administration Quick Response Fund for proper release to qualified electric cooperatives,” he said, noting that ECs would no longer have to pass on the reconstruction costs of damaged infrastructure due to natural calamities directly to their more than 11 million member-consumers.

DOE declares Cebu oil field commercially viable GMA News Online 16th Mar 2018
The Department of Energy (DOE) has declared that natural gas and oil resources in the Alegria Oil Field in southern Cebu are commercially viable and that supply may last for 19 years or until 2037. The announcement was made eight years after the service contractor, China International Mining Petroleum Company Limited (CIMP Co. Ltd.), started exploration and drilling activities. DOE Secretary Alfonso Cusi made this pronouncement on the government agency's website after signing a Joint Declaration of Commerciality (JDC) with CIMP Co. Ltd last March 14 at the Hyatt Hotel-BGC in Taguig City. CIMP Co. Ltd. holds Petroleum Service Contract (SC) No.49, which covers the Alegria Oil Field. Cusi and CIMP Co Ltd. Chair Lam Nam signed the declaration. DOE Undersecretary Donato D. Marcos and CIMP Co. Ltd. Chief Executive Officer Eric Lai served as witnesses. According to DOE, the JDC outlined the roles and responsibilities of CIMP Co. Ltd. particularly its compliance with all conditions stated in the approved "Plan of Development" dated 19 December 2017.

New Charter could pave way for joint exploration in WPS | BusinessMirror BusinessMirror 19th Mar 2018
The word “exclusively” in the 1987 Charter’s provision on national patrimony could be excluded in the proposed federal constitution, in the process removing obstacles to deals like the joint Manila-Beijing exploration in the West Philippine Sea (WPS) currently being hatched by the two countries. Arthur N. Aguilar, chairman of the Subcommittee on Economic Reforms of President Duterte’s consultative committee (Con-com), told the BusinessMirror they are studying “very carefully” various options for possible amendment of the current provision, as it “binds the hands of the government to come up with a compromise to peacefully settle the overlapping claims in the West Philippine Sea.”

DOE Philippines partners with DOST to enhance energy sectors’ disaster resilience OpenGovAsia 20th Mar 2018
The agreement outlines the development of a database on hazard, risk assessment and exposure to earthquake through the use of the DOST-PHIVOLCS’ REDAS software. The Department of Energy (DOE) in the Philippines signed an agreement with the Department of Science and Technology (DOST) on 16 March, 2018 for the use of a Filipino-made software to enhance the capacity of all stakeholders in earthquake readiness and improve the energy sector’s resiliency. Philippines is highly vulnerable to natural calamities, experiencing an average of 20 typhoons per year, flash floods, storm surges, earthquakes and landslides. The magnitude 6.5-earthquake that hit Visayas last year, affecting electricity supply delivery in Leyte, Samar and Bohol, revealed the vulnerability of the country’s energy systems to earthquakes.

Financial Services

OF Bank to ‘leapfrog’ to digital economy Manila Bulletin Business 27th Mar 2018
Finance Secretary Carlos G. Dominguez III said the launching of a bank catering to the needs of overseas-based Filipinos is the ideal vehicle for the Philippines to “leapfrog” to the digital economy. Dominguez said advancing significantly in the digital economy could be done in the Philippines because it has not yet fully embraced computer technologies, unlike in other countries that have already invested heavily in software and hardware that are now fast becoming obsolete. The Overseas Filipino Bank (OFB), which was launched last January, could be the starting point for the country’s jump into the data-based economy, the finance chief believes. Instead of setting up physical branches overseas, Dominguez said OFB would just rely on digital technology applications to serve as many overseas-based Filipinos as possible.

Banks’ reserve ratio likely reduced to 18% philstar.com 25th Mar 2018
Nomura Securities said the Bangko Sentral ng Pilipinas (BSP) is likely to further slash the level of deposits banks are required to maintain with the central bank soon. Euben Paraceulles, economist at the Japanese stock brokerage, said the central bank’s Monetary Board is likely to further trim the reserve requirement ratio (RRR) that currently stands at 19 percent. “We maintain our view that BSP plans another 100 basis point RRR cut within the next few weeks to 18 percent from 19 percent, which, in addition to inflation risks, provides an impetus for policy rate hikes later this year,” he said. Last March 2, the RRR was reduced to 19 percent from 20 percent, releasing about P90 billion in additional liquidity into the financial system.

Project eyes affordable insurance for poor, disaster-prone municipalities GMA News Online 23rd Mar 2018
A project seeking to come up with affordable insurance for disaster-prone and poor municipalities to help them recover from natural disasters faster was launched on Friday. UP-Center for Local and Regional Governance (UP-CLRG) and non-government organization Oxfam presented the Meso-scale Insurance for Disaster Readiness and Recovery (MINDER) Project, an endeavor that aims to design insurance model and revenue generation systems to allow poor municipalities to avail of disaster insurance.

Philippines: 5 insurers cease business because of increased capital requirement Asia Insurance Review 23rd Mar 2018
The Insurance Commission (IC) has suspended the operations of five non-life insurance companies due to their failure to comply with capital requirements stipulated in the insurance law. In a statement, Insurance commissioner Mr Dennis Funa said the five firms are First Integrated Bonding and Insurance, Investors Assurance, Metropolitan Insurance, Plaridel Surety and Insurance, and Premier Insurance and Surety.

Food & Agriculture

3 new product categories eyed as export prospects philstar.com 28th Mar 2018
The government has identified three product categories that could serve as new avenues for growth and expansion for Filipino exporters this year. The Philippine Exporters Confederation Inc. said organic, halal, and kosher products have been cited by the Department of Trade and Industry (DTI) as three consumer goods categories that would open up new opportunities for exporters whose goods have passed international certification bodies. DTI Export Marketing Bureau assistant director Agnes Legaspi said for organic products, the world consumer market continues to grow rapidly annually. Legaspi said exporters who label their products as organic could sell them at premium prices. She said among the top selling organic products globally are dairy products and eggs.

Department of Agriculture eyes over P200 billion budget for 2019 philstar.com 26th Mar 2018
The Department of Agriculture (DA) is looking at an unprecedented budget of over P200 billion next year as it expects positive results from its planned bond flotation and the possible return of four agencies now under the  Office of the Cabinet Secretary. Agriculture Secretary Emmanuel Pinol said the agency just had its internal budget hearing last week and it is proposing a P49-billion budget for Tier 1 only. DA has a total allocation of P60.6 billion for this year. But this could still increase if the department successfully undertakes its proposed bond flotation program this year to finance its farm-to-market roads (FMR) and farm mechanization projects.

NFA Council pushes management audit philstar.com 25th Mar 2018
The National Food Authority (NFA) Council is pushing for an audit of the operations of the grains agency’s management over recent criticisms on statements about an alleged rice supply lack that may have caused panic. Office of the Secretary to the Cabinet assistant secretary Jonas Soriano said an audit would improve the procurement and monitoring processes of the NFA, which is mandated to ensure the availability of cheap rice in the market. “The NFA Council favors the conduct of a special audit of NFA’s procurement and distribution operations. The audit shall be administered by the Commission on Audit so as to assess the current NFA operations to determine points for improvements and streamline bottlenecks in the agency’s procurement and distribution processes,” Soriano said in a press briefing in Malacañang. 

Health & Life Sciences

Prioritizing public and economic health, Philippines targets fake drugs Devdiscourse 28th Mar 2018
Philippines President Rodrigo Duterte has opened a new front in his war on drugs, targeting fake over-the-counter medicines to try to stem the spread of counterfeit paracetamol, his lawyer said on Wednesday. Salvador Panelo, chief presidential legal counsel, said Duterte had ordered police to arrest those responsible. "They do not only undermine or weaken the national economy by hitting a large-scale industry, they also threaten national security by endangering the health of a vast majority of the people," Panelo said in a statement.

Philippines: Continuing the fight against TB in prisons ReliefWeb 23rd Mar 2018
Manila (ICRC) –Tuberculosis (TB) is a major public health concern in the Philippines, which remains among the most affected countries in the world. The country’s overcrowded places of detention are particularly exposed to the disease. However, in New Bilibid Prison (NBP) in Muntinlupa City, some significant gains have been made in the fight to eliminate TB among inmates. In collaboration with the Bureau of Corrections (BuCor), the International Committee of the Red Cross (ICRC) launched a pilot project at NBP in 2013 aimed at improving TB control strategies. Through the project, more than 50,000 detainees were screened for TB. Around 2,800 of them with active TB, including 219 detainees with drug-resistant TB, were identified and enrolled for the treatment. Over 1,700 patients were cured, and the TB mortality rate dropped from 157 deaths to 112 per 100,000 people. The prison achieved the national and World Health Organization’s target of 90 percent success rate in treatment of drug-susceptible TB cases.

US vows to help combat tuberculosis in PH Manila Bulletin News 21st Mar 2018
The United States government has vowed to continue supporting the Philippines’ efforts to combat tuberculosis (TB) by assisting the Department of Health to scale up high-impact approaches and introduce promising interventions to prevent, detect, and cure the disease. This commitment was issued by US Ambassador to Manila Sung Y. Kim during a completion ceremony for the US Agency for International Development’s (USAID) five-year, P1.5 billion tuberculosis project–Innovations and Multi-Sectoral Partnerships to Achieve Control of Tuberculosis (IMPACT).

ICT

PH takes small steps, as it aims for giant leaps in space technology CNN 23rd Mar 2018
"Oscar November 4, India-Sierra-Sierra, this is Delta-X-Ray-1-India-Sierra-Sierra, Philippines, all copy. Over." It was a message repeated 27 times by Philippine space engineer Leo Almazan, as the International Space Station (ISS) passed over the Philippines late afternoon of February 17. A group of high school students tensely waited, as they looked at a little yellow blip on a blue radar screen indicating the location of the ISS. But all they got was silence.  "We only have a (communication) window of about 10 minutes, horizon to horizon," Almazan explained to the students. "Might be shorter, due to time delays, and other factors beyond our control." The attempted contact would have been the first for the children who were eager to ask NASA astronauts questions on space exploration and technology. Almazan said Philippine technology was adequate to contact the international satellite. But if what happened that day was any indication, it appears the country's ability to advance its space program has a long way to go, even as the country marks the second year since the launching of DIWATA-1, the first Philippine microsatellite and the first satellite built and designed by Filipinos.

Entry of 3rd telco player ‘dim’ philstar.com 27th Mar 2018
Chances of a successful entry of a third telecommunications player may be dim for now, according to an industry expert. ICT Davao president Samuel Matunog said the country’s search for a third telco player is “a very challenging project,” citing several barriers which make its entry difficult. ICT Davao is the umbrella organization of all information and communication technology groups in the Davao region. Among the barriers cited by Matunog include a high capital requirement and operating in an industry that is not easy to penetrate. “The third telco is afraid because, as the Department of Information and Communications Technology (DICT) said, you need at least P60 billion just to start. At the end of the day, maybe the total cost will range from P250 billion to P300 billion in investments to reach the level of Globe and PLDT,” Matunog said.

DICT Philippines to provide free Internet and online learning at DTI's Negosyo Centers for MSMEs OpenGovAsia 20th Mar 2018
DTI Secretary Ramon M. Lopez and DICT Secretary Eliseo M. Rio Jr sign a Memorandum of Agreement for free internet access and Tech4Ed in Negosyo Centers. Also in attendance were (from L to R): Tech4ED Assistant Project Manager Engr. Amelia S. Dean; DICT Assistant Secretary Alan A. Silor; DTI Undersecretary Zenaida C. Maglaya; DICT Undersecretary Monchito B. Ibrahim; DTI Undersecretary Rowel S. Barba; and DTI Assistant Regional Director Dorecita T. Delima/ Credit: Department of Trade and Industry, Philippines DICT will provide selected DTI Negosyo Centers with free Internet access, ICT equipment, and access to its Tech4ED project. Plans going forward include the merger existing Tech4ED Centers and Negosyo Centers since some of them are housed in the same local government units. The Department of Trade and Industry (DTI) and the Department of Information and Communications Technology (DICT) have entered into a collaboration to provide free Wi-Fi and learning modules to DTI’s Negosyo Centers. DTI Secretary Ramon M. Lopez and DICT Secretary Eliseo M. Rio Jr signed a Memorandum of Agreement on 15 March 2018.

Crypto-powered PHL as next fintech hub BusinessMirror 19th Mar 2018
Global experts in the field of cryptocurrency, blockchain technology and financial technology (fintech) believe that the Philippines is at the cusp of being crypto-powered and could soon be the next fintech hub in Southeast Asia. The first-ever Philippines-Japan Forum on Investments and Cryptocurrency held here recently and organized by the NOAH Foundation, gathered together thought leaders in these new technologies from the Philippines, Australia, the United States and Japan in an effort to make more people understand cryptocurrency, blockchain technology and fintech. Noah Foundation Director Josef Werker said the forum has become necessary in the light of heightened excitement on these new technologies and the need to educate the public about them. “We felt that this is the perfect opportunity to bring together experts to become our knowledge partners so they could best share how cryptocurrency, blockchain technology and fintech impact the way people live right now, and more important, how they could affect the way we do things in the future,” Werker said.

Infrastructure

Gov't to lease retail, dining spaces at Metro Manila Subway stations Rappler 29th Mar 2018
Philippine Finance Secretary Carlos Dominguez III says the revenues would help pay off Japan's loan for the construction of the subway. An underground shopping and dining experience will be part of the planned subway in Metro Manila. To help pay off the loan extended by the Japan International Cooperation Agency (JICA), Finance Secretary Carlos Dominguez III said the government will lease retail and dining spaces around the stations of the P356.96-billion Metro Manila Subway. Dominguez said in a statement on Sunday, March 25, that the retail concept will be similar to Japan's underground shopping experience, where shops and restaurants thrive around subway stations.

WTO members press PHL to relax procurement rules Business Mirror 28th Mar 2018
Several members of the World Trade Organization (WTO) are pressuring the Philippines to harmonize its government procurement regime with multilateral trading rules by acceding to the Agreement on Government Procurement (GPA). According to documents obtained by the BusinessMirror from a Geneva-based trade official, some WTO members even told Manila that liberalizing the country’s government procurement rules will boost the Duterte administration’s massive infrastructure program. The European Union, Switzerland, Ukraine and the United States sent separate papers to the WTO calling on the Philippines to participate in the WTO’s GPA. Parties to the GPA must implement a national treatment and nondiscriminatory policy for suppliers with respect to procurement of covered goods, services and construction providers. It also details procedural requirements framed to ensure a transparent and competitive procurement process that does not have a bias against products, services and suppliers of other parties. On the other hand, developing and least-developed countries are allowed to avail themselves of special and differential treatments under the procurement deal.

NGCP joins hands with DPWH for nation’s growth | BusinessMirror BusinessMirror 26th Mar 2018
THE National Grid Corp. of the Philippines (NGCP) and the Department of Public Works and Highways (DPWH) signed a memorandum of understanding (MOU) to forge a partnership to align and expedite current and future projects. The MOU was signed by NGCP OIC, President and CEO Anthony L. Almeda and Public Works Secretary Mark A. Villar on March 20. “As both the NGCP and DPWH are entities that spearhead nation-building and national economic growth through infrastructure projects, it is imperative we institutionalize our coordination efforts, align and synchronize our project planning and execution,” NGCP said. “With the signing of the MOU, transmission projects can co-locate with national highways, bridges and access-road projects of the DPWH,” the company added.

Philippines, Japan sign loan deal for first Metro Manila subway | Philstar.com philstar.com 16th Mar 2018
The Philippines and Japan on Friday signed a P51.3-billion loan agreement for the construction of the first Metro Manila subway, which is expected to ease traffic gridlock in the capital. At a ceremony, Philippine Finance Secretary Carlos Dominguez III and Japan International Cooperation Agency Chief Representative Yoshio Wada inked the first tranche of a loan deal for the initial phase of a 30-km underground railway, which is estimated to cost P356.96 billion. Officials said the funding agreement carries an interest rate of 0.1 percent per annum and a repayment period of 40 years, inclusive of a 12-year grace period. The big-ticket project has a total loan financing requirement of P259.6 billion, the biggest amount committed by JICA to a single country. The Japanese funding for the project will be sliced in three to four tranches.

Manufacturing

Trade dep’t sees 10-15% hike in manufacturing FDIs in 2018 BusinessWorld 15th Mar 2018
FOREIGN direct investments (FDIs) in Philippine manufacturing will grow by a “reasonable” 10-15% in 2018 as investors remain bullish on the economy’s prospects, though this year’s pace will be a marked slowdown from 2017’s surge, the Department of Trade and Industry (DTI) said on Wednesday. In a statement and a Viber message to reporters, Trade and Industry Secretary Ramon M. Lopez said that FDIs in manufacturing grew more than threefold to $1.15 billion last year from 2016’s $334.35 million, accounting for 3.5% of the $3.263-billion equity capital placements — which excludes reinvested earnings — in 2017 that in turn contributed to a fresh record-high $10.049 billion.