...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 future of ASEAN

South Korea's Moon says the Philippines is 'future of Asean'


Pathricia Ann Roxas
Inquirer.net
25 November 2019

BUSAN, South Korea — South Korean President Moon Jae-in has described the Philippines as “the future of Asean” as President Rodrigo Duterte met him in a bilateral meeting here Monday.

“The Philippines is the future of Asean as it continues to achieve an impressive growth rate of 6 percent each year thanks to your outstanding leadership,” Moon said in his opening speech.

“Through our meeting today I hope to strengthen my friendship with you and extend our bilateral cooperation to contribute further to the development of Asean,” he added.

For his part, Duterte expressed gratitude to the Korean government for their 70 years of cooperation in various areas like trade, industry, agriculture, infrastructure, and technology.

Duterte said the two nations “took diverging paths and fortunes,” with South Korea rising “as one of Asia’s economic and technological powerhouse.”

“Ours faltered, but with perseverance, the Philippines has since recovered and is now an emerging economy,” Duterte said.

He further noted that South Korea was the Philippines’ 4th largest trading partner in 2018 as well as a major source of foreign and direct investments.

“I assure you that the Philippines will find common cause and purpose with the Republic of Korea towards enhancing our bilateral engagement and promoting peace and stability in your region,” Duterte promised.

This bilateral meeting is anticipated to result in the two leaders’ signing of agreements on education, tourism, social security, and fisheries.

Edited by KGA

...the top foreign investment destination

Philippines a top foreign investment destination  with 613% surge in approved investments

PR  Newswire Asia
22 November 2019

BOI Figures Show +600% Rise by September 2019 with South Korea Topping Foreign Investments from East Asia

MANILA, Philippines, Nov. 22, 2019 /PRNewswire/ -- New data has unveiled a surge in BOI approved foreign investments which are expected to flow into the Philippines over the next 2-3 years.

These initiatives have made the Philippines a top investment destination, largely attributable to its continuing digital transformation and combined information and communications technology (ICT) and infrastructure efforts.



Approved foreign investments by the end of September 2019 reached USD4.7 billion, a 613% rise from USD659 million in the same period in 2018, BOI figures show. Investment approvals as of September 2019 totaled USD15 billion, a 105% jump from USD7.31 billion in the same period of the previous year. 

The tourism sector also continues to rise with USD186.3 million worth of hotel and accommodation projects, while manufacturing is seeing consistent growth of USD1.24 billion of approvals, a 190% increase on last year. 

Trade and Industry Secretary and BOI chairman Ramon M. Lopez applauded the results, commenting: "This data shows that big-ticket projects are now rolling in, proving the strength and resilience of the Philippines economy in attracting foreign investors despite the global slowdown. 

"The results are a testament to the Philippines as a great place for foreign investment where business can thrive."

Explore investment opportunities in the Philippines

Investors can explore business opportunities in the Philippines at Invest ASEAN 2019 in Busan, South Korea on November 25-26 where the BOI will represent the country considered by the US News and World Report in 2018 as the best to invest in.

At this event, BOI will showcase opportunities in specific priority sectors: manufacturing, specifically electric vehicle and auto parts; infrastructure and construction; and tourism

"This growth, together with a suite of incentives such as tax holidays and exemptions from duties on imported spare parts makes the Philippines an enviable investment destination and one-stop-shop for business within Asia and beyond," added Lopez. 

..the Philippine FDI 2019

Investments in Philippines double up in January -September 2019, hitting 15.14 bln dollars

Xinhuanet.com
08 November 2019

MANILA, Nov. 8 (Xinhua) -- The Philippine Board of Investments (BOI) said on Friday it has recorded cumulative investments worth 764.7 billion pesos (roughly 15.14 U.S. dollars) as of September 2019, a 105 percent increase from 327.9 billion pesos (roughly 6.50 billion U.S. dollars) approved in the same period of 2018.

"The sustained high growth of investments is a proof of the business sector's strong confidence in both the Philippines' economic fundamentals as further shown by the acceleration of the third-quarter gross domestic product (GDP) growth to 6.2 percent and the reform agenda of President Rodrigo Duterte," Philippine Trade Secretary and BOI Chairman Ramon Lopez said.

The BOI said approved investments from domestic sources topped 524.9 billion pesos (10.40 billion U.S. dollars), a 54.7 percent increase from 339.3 billion pesos (roughly 6.7 billion U.S. dollars) in the same period in 2018.

On the other hand, the BOI said approved projects by foreign investors amounted to 239.9 billion pesos (roughly 4.8 billion U.S. dollars) or 613 percent increase from just 33.6 billion pesos (roughly 665.7 million U.S. dollars) a year ago.

According to the BOI, Singapore continues to set the pace among all foreign entities with 170 billion pesos (roughly 3.37 billion U.S. dollars) in the capital. It added that South Korea is now second with 34.1 billion pesos (roughly 675.62 million U.S. dollars), while The Netherlands places third with 9.2 billion pesos (roughly 182.3 million U.S. dollars).

According to the BOI, all projects once operational will generate employment of 41,862, which is 38.5 percent higher than last year's figure of 30,218.

"We are particularly pleased to highlight that the share of foreign investments in BOI projects have increased from just eight percent during January to September 2018, to already 31.4 percent this year," Lopez added.

This is expected to continue as Lopez noted that Duterte's policy of furthering relations with non-traditional partners has been yielding results.

Philippine Trade Undersecretary and BOI Managing Head Ceferino Rodolfo said investments from the information and communications technology (ICT) and power sectors accounted for 85 percent of the total figure or 652.9 billion pesos (roughly 12.94 billion U.S. dollars).

"This massive infrastructure buildup for more power and connectivity across the archipelago is critical towards addressing binding constraints to the Philippines' competitiveness," he added.

...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 Hunger status

Hunger in Pinoy families lowest in 15 years — SWS 

Janvic Mateo

Philippine Star

25 October 2019

MANILA, Philippines — The number of Filipino families who said they have experienced hunger at least once in the past three months dropped to its lowest in the past 15 years, according to the third quarter survey conducted by Social Weather Stations (SWS).

The survey, conducted from Sept. 27 to 30 with the results released Wednesday, showed 9.1 percent of the 1,800 adult respondents said their families have experienced involuntary hunger due to lack of food to eat.

This translates to an estimated 2.3 million families, the lowest since the 7.4 percent hunger rate obtained in a similar survey conducted in March 2004.

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The SWS said the drop in hunger rate was due to decreasing number of families who experienced moderate hunger, or those who experienced involuntary hunger only once or a few times in the last three months.

Moderate hunger fell from 8.7 percent in June to 7.4 percent in September, also the lowest in 15 years.

Meanwhile, the number of people who said their families experienced severe hunger – or those who experienced it often or always – in the past three months have slightly increased from 1.3 percent to 1.7 percent.

Based on the survey, the hunger rate fell among those who classify their families as poor, from 16.2 percent in June to 14 percent in September.

Meanwhile, the number of families who do not consider themselves as poor but have experienced hunger increased from 4.9 percent to 5.6 percent.

By geographic location, the number of families who experienced hunger in Metro Manila and the rest of Luzon went down, from 15.7 percent to 8.3 percent and from 9.3 percent to 8.1 percent, respectively.

Meanwhile, it went up in Mindanao, from nine percent in June to 11.9 percent in September. It remained unchanged among respondents from the Visayas at 8.7 percent.

The country’s hunger rate has spiked to over 20 percent several times during the term of former presidents Gloria Macapagal Arroyo and Benigno Aquino III.

It reached the record-high 23.8 percent in 2012, before going down towards the end of the previous administration.

The hunger rate has stayed relatively low during the present administration, with its highest at 15.9 percent in December 2017.

The latest survey has 1,800 respondents and an error margin of +/- 2.3 percent for national percentages.

...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 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.