...the PH economic gain with China

Philippines reaping economic benefits from harmonious ties with China: Finance Chief

Xinhuanet.com
25 November 2019

MANILA, Nov. 25 (Xinhua) -- Philippine Finance Secretary Carlos Dominguez has said that the 
Philippines is reaping the benefits from building a harmonious relationship with China, reiterating 
the Philippines' full support for China's Belt and Road Initiative (BRI).

In a finance forum held in Guangzhou, China over the weekend, Dominguez pointed out that as a 
result of this warming of relations between the two countries on President Rodrigo Duterte's 
watch, China has become the Philippines' biggest trading partner and one of the largest 
tourism markets.

Since 2016, he said, the Philippines' total trade with China increased at an average of 15 percent 
annually. Last year, the total trade with China reached 52 billion U.S. dollars, which was 15 
percent higher than the 2017 level.

Chinese tourist arrivals in the Philippines, meanwhile, grew at an average of 27 percent per 
year since the start of the Duterte administration, he added. "It reached 1.63 million arrivals in 
2018, or 23 percent higher than the visits recorded in 2017."

Moreover, he said the Philippines obtained the best terms - a very tight spread of 32 basis points 
over  the benchmark - for its maiden and subsequent "Panda" bond issuances in the Chinese 
market.

The China Lianhe Credit Rating also rated the Philippines' Panda bond issuances as Triple A, 
which is its highest rating, he said.

"The synergy created by closer Philippines-China economic cooperation is true for all the rest 
of the region. This is the reason we see even closer economic integration between China and
 the ASEAN economies," Dominguez said.

During the forum, Dominguez reiterated the Philippines' full support for China's Belt and Road 
Initiative (BRI), which, he said, will open the vast economic potentials of all countries in the region.

"Improved infrastructure will enhance trade among our economies. Enhanced trade will encourage 
more efficient investment flows. Improved connectivity will enhance the inclusiveness of our 
growth patterns. We have everything to gain from this."

Dominguez noted that the Philippines also has its version of the BRI dubbed the 
"Build, Build, Build" program, which involves 100 highly strategic infrastructure projects as 
well as thousands of infrastructure and logistics improvements all over the country.

This infrastructure modernization strategy, aimed at lowering the Philippines' poverty incidence 
from 27.6 percent in the first half of 2015 to just 14 percent by 2022, will lower the costs of 
moving people and goods, bring remote communities closer to the economic mainstream, and 
"create numerous  investment opportunities that will unleash the latent strengths of our economy," 
he said.

"We are relying on this program to induce internally generated growth that will enable us to 
expand despite a challenging global environment brought about by protectionist policies 
in the West," Dominguez said.

...the PH GDP growth in Q3 2019

Philippine growth accelerates on public spending and rate cuts

But 6.2% expansion in Q3 means year-end pick up needed to hit 2019 growth target

CLIFF VENZON, Nikkei staff writer November 07, 2019 

MANILA -- The Philippine economy grew 6.2% in the third quarter, as government spending and lower interest rates contributed to a recovery from weak expansions in the first half of the year.

The expansion was faster than the median forecast in a Reuters survey of economists of 6%, and up from the previous quarter's pace of 5.5%. The data released Thursday puts growth for the first nine months of 2019 at 5.8% -- still below the government's 6%-7% target.

The data is a boost to the administration of President Rodrigo Duterte, as it seeks to safeguard the domestic economy from the impact of the U.S. -China trade war, which has dented the growth of other Southeast Asian countries. Indonesia, the largest economy in the region, announced a 5.02% expansion earlier this week.

Government spending, which jumped 9.6% was a big factor in the acceleration. President Rodrigo Duterte's 2019 budget was not signed until mid-April after congressional wrangling over pork barrel funds delayed its passage. This forced the government to operate based on the 2018 budget, crimping state spending by nearly 1 billion pesos (around $20 million) a day, according to Finance Secretary Carlos Dominguez.

On the supply side, services rose 6.9%, the industrial sector climbed 5.6%, while agriculture improved 3.1% despite an outbreak of African swine fever that killed tens of thousands of pigs.

The economy must grow 6.7% in the fourth quarter to achieve the full-year growth target. 

Socioeconomic Planning Secretary Ernesto Pernia said Thursday this was "very achievable."

"We have seen the economy surging and the momentum will continue for us to reach that," Pernia told reporters in Manila.

The Philippine economy historically sees faster growth in the final quarter, as remittances from 10 million overseas Filipino workers help power a Christmas spending splurge.

Yet, Pernia said external factors could imperil growth. "The trade war between the U.S. and China is the biggest threat not only to the Philippines, but to the whole global economy," he said.

The Philippine central bank has cut the benchmark interest rate by a total of 75 basis points to 4.0% this year amid stabilizing inflation. The central bank also reduced reserve requirements for banks by 400 basis points to 14% in an attempt to pump money into the financial system.

Central bank Benjamin Diokno has signaled that the monetary easing has ended, ahead of the next policy meeting on Nov. 14.

Asked to react to Diokno's stance, Finance Secretary Dominguez, who is also a member of the monetary board, said on Monday that rate cuts were "sufficient" and they "will do the job" for now.

...the PH economic optimism

Optimism amid dark global economic clouds highest in PH, says think tank


Daxim L. Lucas
INQUIRER.NET
24 October 2019

Global uncertainty may be on the rise but Philippine companies have kept an optimistic outlook on the domestic economy, according to a recent business survey by accounting and consulting firm Grant Thornton International.

In the Asia-Pacific region, emerging markets including the Philippines are holding up well, Grant Thornton’s International Business Report said.

The report was based on a quarterly global survey of nearly 5,000 mid-market companies in over 30 countries interviewed in May and June this year.

Data on the first half of 2019 showed that optimism, revenue expectations, and profitability forecasts were down in economies around the globe compared with second-half 2018 data, “with most of the main measures of growth at levels not seen since 2016,” the report said.

Yet pockets of resilience were seen across mid-sized companies, such as in export expectations, which are expected to fare well globally amid the threat of a US-China trade war.

The outlook continued to vary between emerging and developed economies in the Asia-Pacific, reflecting varying levels of exposure to the trade war. Optimism was generally down in the region, falling 8 percentage points since the second half of 2019 and more than 50 percent lower than the first half of 2018.

Less developed economies like the Philippines, however, had rosier prospects. Philippine businesses were more upbeat than anywhere else in the region, with 84 percent of those polled being optimistic about the domestic economy.

Expectations for revenue and profit growth in the ASEAN mid-market, too, rose and were now among the highest globally.

“It’s important to heed the signs of volatility and uncertainty in global financial markets, but it’s also worth highlighting that local business leaders choose not to be paralyzed or get sidetracked by the grim possibilities,” P&A Grant Thornton chair and CEO Maria Victoria Espano said.

She also cited bigger capital spending, especially by the government, and the steady flow of remittances from overseas Filipino workers that continued to boost overall economic growth and optimism.

In September, a slowdown in the global economy and domestic investment prompted the Asian Development Bank to offer a slightly lower economic growth forecast for the Philippines.

In an update of its flagship annual economic publication, the ADB changed its forecast for the country’s gross domestic product growth to 6 percent in 2019 and 6.2 percent in 2020, against earlier forecast of 6.4 percent for both years. The International Monetary Fund has a slightly lower projection of 5.7 percent GDP in 2019, 6.2 percent in 2020, and 6.5 percent by 2024. The World Bank’s updated projection for 2019 is at 5.8 percent GDP growth.

Investor sentiment in the country was generally positive paired with a pickup in business confidence, as reflected in the Bangko Sentral ng Pilipinas’ third-quarter consumer expectations survey./TSB

...the PH ranking in Ease of Doing Business

Philippines climbs to 95th spot in World Bank’s ‘Doing Business’ rankings

Ian Nicolas Cigaral
Philippine Star
24 October 2019

MANILA, Philippines — Ease of doing business in the Philippines improved over the past year, with the Southeast Asian country climbing 29 notches in World Bank’s “Doing Business 2020” report released Thursday.

Out of 190 economies, the Philippines advanced to the 95th spot from 124th place in 2019. The country’s score improved to 62.8 from 60.9 previously.

Compared to its peers in the East Asia Pacific, the Philippines ranked below Singapore (2nd), Hong Kong (3rd), Malaysia (12th), Taiwan (15th), Thailand (21st), China (31st), Brunei (66th), Vietnam (70th), Indonesia (73rd) and Mongolia (81st).

The Washington-based multilateral lender’s annual report looks into the regulations that enhance business activity and those that constrain it.

Quezon City was used as a benchmark for the Philippines.

According to World Bank, starting a business in the Philippines became easier following the abolition of the minimum capital requirement for domestic companies.

The country also made dealing with construction permits easier by improving coordination and streamlining the process for obtaining an occupancy certificate.

“The Philippines strengthened minority investor protections by requiring greater disclosure of transactions with interested parties and enhancing director liability for transactions with interested parties,” World Bank added.

Worldwide, 115 economies made it easier to do business, World Bank said, with New Zealand remaining the most business-friendly country in the world.

Somalia was the worst with a score of 20.

Meanwhile, the economies with the most notable improvement in Doing Business 2020 are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India and Nigeria.

“The Doing Business 2020 study shows that developing economies are catching up with developed economies in ease of doing business,” World Bank President David Malpass said.

“Still, the gap remains wide,” he added.

...the Philippines in Asian Century

The opportunity for the Philippines in the Asian century 

The Corner Oracle

Andrew J. Marasigan

Philippine Star 

23 October 2019

The 300-year reign of the west as the world’s economic epicenter is coming to a close.

By next year, the collective size of all Asian economies will eclipse that of the rest of the world combined. Thus, the year 2020 marks the official beginning of the Asian Century, declared the United Nations Conference for Trade and Development (UNCTAD).

Asia is now the new center of the world as it is home to more than half of the world’s population and half of the world’s middle class consumers. It is also where 21 out of the world’s 30 largest global cities are located. Experts agree that the average growth rate of Asian economies will be more than double that of the rest of the world in the next 20 years.

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Driving Asia is the phenomenal rise of China, India and ASEAN as economic powerhouses. To provide perspective on the phenomenal rise of the continent, Asia accounted for only one-third of global output in the year 2000. It now comprises 50 percent of the planet’s gross domestic product.

On a purchasing power parity (PPP) perspective, China’s economy is now bigger than that of the United States. India has overtaken Japan to become the 3rd largest economy. Within ASEAN, Indonesia is well on its way to becoming the 7th largest economy while Vietnam has overtaken 17 countries to take 32nd position. The Philippines, despite challenges in its manufacturing sector, has overtaken seven countries and it now has 26th largest economy. If the Philippines plays its cards right, it can be the 16th largest economy by the year 2050.

Prospects are promising for ASEAN. With China and India slowing down due to the trade war, ASEAN is in the position to take center stage as the world’s engine of growth. ASEAN’s economy is now bigger than that of Great Britain.

ASEAN’s development came in waves with Singapore and Brunei being the first to achieve high income status. Thailand and Malaysia achieved rapid growth in the 90’s and are now counted among upper middle income economies. In the last ten years, however, Indonesia, Vietnam and the Philippines have lead the way in as far as economic development is concerned. The three nations have clocked-in an average annual growth rate of between five and six percent since 2010. The Philippines is seen to graduate to upper-middle income status next year.

As I mentioned, China and India’s slowdown have made Indonesia, Vietnam and the Philippines the most dynamic global economies today. All three are in stiff competition to attract foreign investments. But to compete on an equal footing, the Philippines must resolve several structural weaknesses.

The gaping hole in the Philippines’ growth story is its manufacturing sector. It is weak, to say the least. For context, our merchandise exports revenues of $67 billion is less than a fourth of Vietnam’s $297 billion. We have become a nation dependent on imports – from simple ball pens to heavy equipment. This is why our budget deficit (and current account deficit) is growing at an alarming rate every year.

Deficits are covered by debt so it goes without saying that the country’s debt load is growing at an alarming rate too. Sure, it is still manageable today, but if government fails to balance the national budget soon, we could face a serious debt crisis.

To put it simply, we need to export more to pay for the debts government is amassing for its infrastructure program and for its massive importations of consumer goods.

The crux of our woes is our inability to attract foreign investments. Again, for context, the Philippines attracted $9.8 billion worth of investment last year while Vietnam attract $35.5 billion. Foreign investments are the silver bullet to our problems since they bring both capital and technologies needed to build factories. These factories export goods and provide the local market with what it needs, thus, making the country less import-dependent.

The structural weaknesses I referred to earlier are those that contribute in making the Philippines unattractive to foreign investors. They include the constitutional provisions that restrict foreign investments in certain industries, expensive power cost, insufficient infrastructure and difficulty to do business (due to bureaucratic red tape). Exacerbating matters is that corporate income tax in the Philippines is 30 percent, compared to only 20 percent in Vietnam and 25 percent in Indonesia.

The Philippines must address these structural weaknesses if it is to compete. Our economic managers have numerous reforms waiting to be approved by Congress.Whether our legislators have the political will to enact these reforms without watering them down is another story.

On corporate income tax, the CITIRA Law proposes to gradually reduce corporate income tax from 30 percent to 20 percent over a ten-year period. I reckon, however, that 10 years is too long. If we are to be a real contender, this should be accelerated to just three years. Indonesia just passed a law to reduce its rate to 20 percent next year. The CITIRA Law is now pending in the Senate.

As far as infrastructure is concerned, while construction of several roads, rails and ports are ongoing, it is still grossly insufficient. Only 9 out of the 75 projects in Build Build Build are under construction today. Government must work faster and with more urgency lest it fail to deliver its promise of a “golden age of infrastructure”.

Another reform we must undertake is to open up more industries in which foreigners can participate as a majority stakeholder. Unfortunately, the 1987 Constitution was written with a protectionist intent and it has been a great impediment to attracting investors. That said, only an amendment of the Constitution can fix this. Even if politically contentious, we must confront this issue eventually.

The transport and telecommunications backbone of the country needs to be strengthened if we are to be truly competitive, especially in the information and communication technology space. The Open Access in Data Transmission Act and the amendment to the Public Services Act will address this. Both bills are pending in Congress.

As for bureaucratic red tape goes, the Ease of Doing Business and Efficient Government Service Delivery Act has already been passed into law and is now awaiting implementation. When completely rolled out, it is envisioned that all front-line government services will be fully automated, making it easier to conduct business. Again, the devil is in the execution.

Apart from this, Congress must revisit the EPIRA Law which has proved ineffective to bring down power cost.

Conditions are right for the Philippines to break away economically. However, we must first get our house in order before investors come. It would be a shame if the Asian century happens and we are left behind.

...the land of believers

China has the most atheists, Indonesia and Philippines the most believers

Tanutam Thawan| The Thaiger.com

19 October 2019

“According to the survey there is a connection between religiosity, beliefs and socio-demographic characteristics like age, income and education level.”

China is the least believing country in the world but belief in a God gets 100% mention in countries like Indonesia, Bangladesh and Philippines, according to the survey by Gallup International.

According to the survey exploring religious tendencies of 66,000 people in 68 countries across the world, 62 per cent of people in the world define themselves as religious, 74% of people globally believe we have a ‘soul’ and 71% believe in a God. Another 56% believe in heaven, 54% in life after death and 49% in hell.

China has the highest percentage of atheists in the world with 67% not believing in any religion. Every seven out ten people are atheists, more than double than any other country. 23% consider themselves as non-religious. Less than 10% identify themselves as religious in China.

China’s atheist percentage is followed by Japan, a long way behind in second place at 29%, Slovenia (28%) and Chech Republic (25%). Despite rapid industrialisation and urbanisation religion has stayed relevant in the South Korean region with only 23% identifying as atheist.

European countries like Belgium (21 %), France (21%) , Sweden (18%) and Iceland (17%) also have a large percentage of believing population.

Bangladesh, Indonesia and Philippines are the most believing countries with entire population claiming to believe in God, soul, hell and heaven. Thailand and Pakistan have 99% believing population, followed by India, Vietnam and Mongolia.

The survey shows that the levels of religiosity diminish as income and education levels increase. While 66% of people with low income affirm to be religious, this percentage drops to 50% among people with higher incomes. The same trend is verified in relation to education levels: 83% of people with lower education level are religious against 49% of higher level.

According to the survey there is a connection between religiosity, beliefs and socio-demographic characteristics like age, income and education level. As education and income levels grow higher, religiosity levels tend to go down. Also, the expression of different beliefs is higher among young people.

The level of education has a considerable influence on the perception of religion by the society. Women and young children show higher percentage for spiritual forces.

...the PH new ports

New ports lure Asia’s biggest cruise ship to the Philippines


Bangkok Post | Bloomberg Asia
08 October 2019

MANILA: The Philippines, a country of more than 7,600 islands where you’re rarely more than a few miles from the sea, wants a bigger slice of Asia’s growing cruise-tourism industry.

Sun loungers sit on The Spectrum of the Seas cruise ship, operated by Royal Caribbean Cruises Ltd.'s cruise line brand Royal Caribbean International (RCI), as the ship sits berthed at the Marina Bay Cruise Center in Singapore, on May 21, 2019. (Bloomberg photo)

For years the Southeast Asian nation has lagged behind its neighbours in attracting cruise visitors, partly because of spotty infrastructure. That’s bound to change as more ports are built and officials look at cruise tourism as a key source of arrivals.

With the economy in danger of notching its slowest expansion since 2011, attracting tourists is a key focus of efforts to boost growth. Tourism accounted for 12.7% of the Philippines’ gross domestic product last year, already beating the government’s goal of 10% by 2022. Government officials are revising up the targets in the country’s tourism development plan.

“There is great potential in cruise tourism,” Tourism Undersecretary Benito Bengzon told Bloomberg by email. “While our Asian neighbours have the advantage of a regional land connectivity, our archipelago is ideal for cruise tourism.”

The Philippines’ cruise strategy focuses on Manila, Boracay and Puerto Princesa, as well as potential new destinations in the northern part of Luzon, the country’s main island. Salomague Port in Ilocos Sur province, scheduled to open this month, will receive Royal Caribbean Cruises Ltd’s biggest ship in Asia in December; the “Spectrum of the Seas” will return again in January and February.

In April 2021, Manila’s first cruise-dedicated port is scheduled to open at the Solaire Cruise Center.

“These cruise ports will allow more access to the Philippines and encourage more shorter itineraries from north Asian markets like China, Hong Kong, Taiwan, Korea and Japan,” Bengzon said.

Cruise tourism brings large numbers of people to concentrated areas for brief periods, multiplying and focusing the economic impact. At a recent trade show, government officials and representatives of major cruise lines discussed the possibility of adding the Philippines to Asian itineraries from 2020.

The private sector is on board for the infrastructure push.

“Cruise calls in Manila, and the Philippines in general, have been growing quite strongly,” said Enrique Razon, chairman of casino-resort operator Bloomberry Resorts Corp. “Aside from Manila, we’re looking for one cruise-ship facility in the north and possibly two in the south.”

International Container Terminal Services Inc, also owned by Razon, is looking to invest 8.7 billion pesos 5.1 billion baht) to upgrade a port in the central Philippine province of Iloilo, which the company says may eventually include a terminal for cruise-ship passengers.

Tourism has been growing steadily in the Philippines in recent years, reaching 7.2 million visitors last year and 4.85 million in the first seven months of 2019. The government’s target is about 8.2 million visitors for 2019 and 12 million by the end of 2022, but that still pales next to Thailand, which expects more than 40 million tourists this year.

Employment in tourism and related industries has been rising faster than overall job growth. Tourism accounted for 13.4% of Philippine jobs in 2018, projected to rise to 14.4% by 2022, according to the Department of Tourism.

Central bank Governor Benjamin Diokno said the amount of foreign currency tourism brings into the country should rise now that Boracay island, which was closed for six months last year for environmental rehabilitation, has reopened to tourists.

While cruise arrivals can spur development of new tourist spots, they have more environmental impact than land-based tourism, said Robert Dan Roces, chief economist at Security Bank Corp in Manila. Sometimes dubbed “floating cities,” cruise ships have a relatively large carbon footprint, dump fuel into the ocean and leave a lot of waste at their destinations.

Tourism Secretary Bernadette Romulo Puyat is urging more support for sustainable tourism to spread benefits throughout the country.

“After all, tourism is everybody’s business,” she said in a statement.