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BSP TIGHTENS WATCH OVER FOREX, REMITTANCE OPERATIONS
[RELATED: G20 countries pledge to boost growth, dampen Brexit shock]


JULY 18 -BSP Deputy Governor Nestor Espenilla Jr. said authorities are now looking at possible amendments to Circular 471 issued in 2005 covering the rules and regulations on the registration and operations of foreign exchange dealers, money changers, and remittance agents. Philstar.com/File photo
The Bangko Sentral ng Pilipinas (BSP) is set to tighten supervision of foreign exchange dealers, money changers and remittance agents in the aftermath of the $81-million bank heist in February. BSP Deputy Governor Nestor Espenilla Jr. said authorities are now looking at possible amendments to Circular 471 issued in 2005 covering the rules and regulations on the registration and operations of foreign exchange dealers, money changers, and remittance agents. “We are tightening the oversight over non-bank financial institutions such as remittance businesses, money changers, and foreign exchange dealers. And also reflecting the recent experience,” he said. The circular indicates all foreign exchange dealers, money changers, and remittance agents are subject to the provisions of Republic Act 7653 or the New Central Bank Act and RA 9160 as amended by RA 9194 or the Anti Money Laundering Act (AMLA). Espenilla said the BSP is upgrading the regulation to improve the supervision of foreign exchange dealers, money changers, and remittance agents and make it at par with banks. READ MORE...RELATED, G20 countries pledge to boost growth, dampen Brexit shock...

ALSO: Bigger trade w/ China eyed; US sets high-level visit to Beijing to call for calm
[RELATED: Indonesian businesses use ‘Pokémon Go’ to lure players]


JULY 24 -President Duterte has stressed that reaching a settlement with China despite the arbitral tribunal ruling on the South China Sea issue favoring the Philippines will bring more economic benefits for the country, including bigger trade. “If we can just have a settlement with them despite the arbitral (court’s) judgment, I think that marami tayong benefits na makukuha (we’ll get more benefits),” Duterte said in his remarks during a visit to a 6-megawatt biomass power plant project in Buluan, Maguindanao, last Friday.
Once a settlement is reached, Duterte revealed plans to establish industrial zones throughout the country, with market locators from China. “That they will come here and we are planning to establish economic zones, including farm-to-market roads,” he said, adding that China has the money. “So, I really pray that we are able to settle,” he added. To expedite the planned settlement, the President said he would tap former Department of the Interior and Local Government (DILG) secretary Rafael Alunan III to become the Philippines’ special envoy to China if former President Fidel V. Ramos turns down the offer. “Kung magsabi si President Ramos na ‘di na niya kaya, I’ll appoint Alunan. Mahusay ‘yon,” Duterte said in another event in Maguindanao, noting that Alunan is an Air Force reserve officer with the rank of colonel. “Yun na lang ang pampalit. He knows his business,” the President further said of the former DILG secretary. The President had earlier asked Ramos to go to China and “start the talks,” following the ruling of UN-backed Permanent Court of Arbitration favoring the Philippines in its maritime case against Beijing. He emphasized that “war is not an option.”  READ MORE...ALSO, Indonesian businesses use ‘Pokémon Go’ to lure players...

ALSO: Aquino admin leaves over P1 trillion budget to Duterte - economist
[RELATED: Govt should build on economic gains of Arroyo, Aquino]


JULY 18 -President Rodrigo Duterte, left, and former President Benigno Aquino III salute during the inauguration ceremony Thursday, June 30, 2016 at Malacañan Palace grounds in Manila, Philippines. The Aquino administration left a budget of more than P1 trillion for agencies and departments to the Duterte administration. AP/Bullit Marquez, File The Duterte administration was left with a budget of more than P1 trillion for agencies and departments when it took over last month, showing enough funds for planned higher spending later this year. A total of P1.02 trillion worth of notices of cash allocation (NCA) were issued to state offices in the first half, data from the Department of Budget and Management (DBM) showed. The figure accounted for 49.28 percent of the P2.07 trillion budget for departments and special purpose funds primarily used for support to local governments and state-run firms. This means a total of P1.05 trillion remains intact in national coffers. The 2016 budget is worth P3.002 trillion. The balance of P930.7 billion is in the form of automatic appropriations allocated for debt payments, pension and grants and donations. "Compared to 2010, they really have more money left now upon taking over. They should be proactive in disposing them," said Alvin Ang, economist at the Ateneo de Manila University. NCA allows agencies to secure checks from the Bureau of the Treasury to pay for contracted services. Once checks are encashed, funds are deemed disbursed. Of the P1.02 trillion NCA releases, 95.7 percent or P971.74 billion was actually converted into checks. Broken down, P940.97 billion represented those redeemed as cash and spent, while P30.77 billion remained as checks as of June, data showed. The balance of P47.33 billion remained with agencies which have not secured checks for their services. "The problem encountered by the previous administration was more of capacity by agencies to absorb the budget. That could be one reason why there is a lot of money remaining," Ang said by phone. Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, agreed but said there was already "big improvement" since January. READ MORE...RELATED, Govt should build on economic gains of Arroyo, Aquino...

ALSO: Duterte admin to usher in ‘golden age of infrastructure’ - Budget chief


JULY 20 -
The Duterte administration’s plan to jack up infrastructure spending to up to 7 percent of the economy by 2022 would bring about a “golden age of infrastructure” in the next six years, Budget Secretary Benjamin E. Diokno said Wednesday.
Diokno nonetheless told reporters that despite the planned spending boost, it may take a decade before the infrastructure gap in the country would be totally addressed. The Budget chief was also pitching more “hybrid” public-private partnership (PPP) projects to speed up infrastructure development. In a speech at the general membership meeting of the Financial Executives Institute of the Philippines (Finex), Diokno said the government will spend close to P900 billion on hard public infrastructure next year to make up for years of “neglect.” READ: Duterte admin to spend P890.9B on infra next year Diokno said they plan to rollout “simultaneously, not sequentially,” small, medium and large projects in all regions. The budget chief had said the Duterte administration will order non-stop or 24-hours-a-day, seven-days-a-week construction work on most urban-based projects to fast-track infrastructure buildup. From a share of 5.2 percent of the gross domestic product (GDP) next year, infrastructure spending will be hiked to 7 percent of GDP by the end of the Duterte administration, Diokno said. READ MORE...

ALSO: DA eyes P40.8-B budget for irrigation authority in 2017


JULY 23 -With a bigger budget, the National Irrigation Authority may no longer need to collect fees from farmers. File photo
Agriculture Secretary Emmanuel Piñol is proposing an additional P4 billion in the 2017 budget of the National Irrigation Administration (NIA) to fulfil the commitment of the Duterte administration of free irrigation starting next year.
The NIA has earlier suggested a budget of P36.8 billion for 2017 and if additional funding will be approved, the agency’s allocation will amount to P40.8 billion. "By providing an additional funding, NIA will no longer depend on the collections from irrigation fees of farmers for the salaries of its officials and employees and for its operations," Piñol said. NIA spokesperson Filipina Bermudez said the 2017 budget is allotted for the construction, restoration, and rehabilitation of irrigation projects and existing irrigation systems. "The GAA (General Appropriations Act) for 2017 is not for PS and MOOE (personal services and maintenance and other operating expenses). It should be explicitly stated that part of the P40 billion is for PS and MOOE," Bermudez told The STAR. Bermudez admitted that the irrigation service fees (ISF) collection has been difficult for the agency following pronouncements of the free irrigation. "Based on the assessment of NIA’s finances, our current status without incoming ISF collection will be good up to September only," she said. "This means that without assistance from the national government for the fourth quarter, NIA will not have enough funds for regular operation and maintenance of irrigation systems including salaries and allowance of employees," Bermudez said in a text message. NIA collects up to P2 billion in irrigation fees annually and relies on the fees for employees’ salaries and allowances, as well as funding for operations and maintenance of existing irrigation systems in the country. READ MORE...


READ FULL MEDIA REPORTS HERE:

BSP tightens watch over forex, remittance operations


BSP Deputy Governor Nestor Espenilla Jr. said authorities are now looking at possible amendments to Circular 471 issued in 2005 covering the rules and regulations on the registration and operations of foreign exchange dealers, money changers, and remittance agents. Philstar.com/File photo

MANILA, JULY 25, 2016 (PHILSTAR)  By Lawrence Agcaoili Updated July 18, 2016 - 12:00am - The Bangko Sentral ng Pilipinas (BSP) is set to tighten supervision of foreign exchange dealers, money changers and remittance agents in the aftermath of the $81-million bank heist in February.

BSP Deputy Governor Nestor Espenilla Jr. said authorities are now looking at possible amendments to Circular 471 issued in 2005 covering the rules and regulations on the registration and operations of foreign exchange dealers, money changers, and remittance agents.

“We are tightening the oversight over non-bank financial institutions such as remittance businesses, money changers, and foreign exchange dealers. And also reflecting the recent experience,” he said.

The circular indicates all foreign exchange dealers, money changers, and remittance agents are subject to the provisions of Republic Act 7653 or the New Central Bank Act and RA 9160 as amended by RA 9194 or the Anti Money Laundering Act (AMLA).

Espenilla said the BSP is upgrading the regulation to improve the supervision of foreign exchange dealers, money changers, and remittance agents and make it at par with banks.

READ MORE...

“It is under exposure right now so we are taking industry comments. So there will be clearer, well-defined obligations particularly on money laundering responsibilities. We want to basically make sure that everybody follows the same money laundering protocol. Same as banks, same as non banks,” he said.

Last month, the BSP revoked the certificate of registration and delisted Philrem Services Corp., Peso Remittance Express Inc., and Werquick Inc. due to various violations after playing a role in the $81 million cyber theft.

Last April, the BSP said it would go hard on banks violating the rules on transactions with foreign exchange dealers, money changers, and remittances companies.

The BSP issued Memorandum M-2016 – 004 reminding all banks on sound risk management practices when dealing with foreign exchange dealers, money changers, and remittance agents.

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RELATED FROM PHILSTAR

G20 countries pledge to boost growth, dampen Brexit shock (Associated Press) | Updated July 24, 2016 - 2:54pm 1 1 googleplus0 0


G20 Finance Ministers and Central Bank Governors pose for a group photo in Chengdu in Southwestern China's Sichuan province, Sunday, July 24, 2016. Finance Ministers and Central Bank Governors of the 20 most developed economies met in the southwestern city of Chengdu ahead of a G20 leaders meeting in September hosted by China. Participants in the front row are, from left: Britain's Chancellor of the Exchequer Philip Hammond, World Bank President Jim Yong Kim, an unidentified member, Turkey's Deputy Prime Minister Mehmet Simsek, China's Finance Minister Lou Jiwei, China's People's Bank of China Governor Zhou Xiaochuan, Germany's Federal Minister of Finance Wolfgang Schauble, International Monetary Fund Managing Director Christine Lagarde and OECD Secretary-General Angel Gurria. AP/Ng Han Guan, Pool

 BEIJING — Finance officials of major economies have pledged to boost sluggish global economic growth and defend against the shockwaves of Britain's exit from the European Union.

Envoys from the Group of 20 major economies ended a two-day meeting Sunday with a pledge to use government spending and regulatory reforms to strengthen growth but announced no joint action.

Governments at the meeting, which included Britain, called for a "close partnership" between that country and its European neighbors if the British government follows through on plans to leave the trade bloc.

They said the British vote to leave the EU has caused turmoil in global markets but that they have taken steps to limit its impact.


MANILA BULLETIN

Bigger trade with China eyed US sets high-level visit to Beijing to call for calm by Elena L. Aben July 24, 2016 Share7 Tweet6 Share3 Email1 Share86

President Duterte has stressed that reaching a settlement with China despite the arbitral tribunal ruling on the South China Sea issue favoring the Philippines will bring more economic benefits for the country, including bigger trade.

“If we can just have a settlement with them despite the arbitral (court’s) judgment, I think that marami tayong benefits na makukuha (we’ll get more benefits),” Duterte said in his remarks during a visit to a 6-megawatt biomass power plant project in Buluan, Maguindanao, last Friday.

Once a settlement is reached, Duterte revealed plans to establish industrial zones throughout the country, with market locators from China.

“That they will come here and we are planning to establish economic zones, including farm-to-market roads,” he said, adding that China has the money.

“So, I really pray that we are able to settle,” he added.

To expedite the planned settlement, the President said he would tap former Department of the Interior and Local Government (DILG) secretary Rafael Alunan III to become the Philippines’ special envoy to China if former President Fidel V. Ramos turns down the offer.

“Kung magsabi si President Ramos na ‘di na niya kaya, I’ll appoint Alunan. Mahusay ‘yon,” Duterte said in another event in Maguindanao, noting that Alunan is an Air Force reserve officer with the rank of colonel.

“Yun na lang ang pampalit. He knows his business,” the President further said of the former DILG secretary.

The President had earlier asked Ramos to go to China and “start the talks,” following the ruling of UN-backed Permanent Court of Arbitration favoring the Philippines in its maritime case against Beijing.

He emphasized that “war is not an option.”

READ MORE...

Ramos, however, has yet to decide if he will accept the offer. [JULY 25 NEWS HEADLINE -FVR ACCEPTED TO BE ENVOY TO CHINA -PHNO]

“Basta kung hindi pa ako about to conk out, tatanggapin ko,” reports quoted the former President as saying. Ramos added that he might be able to meet with Duterte this weekend.

HOW TO EASE TENSION

In order to ease tensions, China, the Philippines, and possibly other claimants must define what the ruling means for fishing, offshore oil and gas exploration, and military and other activities in the vast body of water that lies between the southern Chinese coast and the Philippine archipelago.

A major diplomatic test starts Sunday in Laos at a three-day meeting of Southeast Asian foreign ministers that will include sessions with their Chinese and US counterparts. Past ASEAN meetings have broken down over disagreements between those taking China’s side and those opposing it. The US, whose Navy patrols the waters, has called on China to abide by the ruling while also urging calm.

Longer-term, there are compelling reasons for China and the Philippines to talk, but also significant obstacles to that happening. Unless the two sides can find a way around their impasse, the ruling may simply prolong the South China Sea’s long-running territorial disputes, which also involve Vietnam, Taiwan, Malaysia and Brunei in a mesh of overlapping claims.

CHINA’S REACTION

In recent days, the military has staged live-firing exercises in the area and stated it would begin regular aerial patrols over the sea. It also has asserted that it will not be deterred from continuing construction of its man-made islands in the South China Sea.

In a veiled threat, a senior government official said that China has a right to declare an air defense identification zone over the area if its security is threatened. Under a so-called ADIZ, countries require that aircraft in the zone identify themselves and their routes and follow Chinese instructions. At least the US and Japan would almost certainly refuse to comply, creating new opportunities for confrontation.

While Beijing’s initial fury was widely foreseen, the controversy essentially disappeared from Chinese state media on Friday, a possible indication that China is preparing to tone it down.

The approach threatened to tarnish China’s global prestige by making it appear unwilling to play by the rules of international law. In particular, China’s relations with the 10-member Association of Southeast Asian Nations could suffer, further reducing its hopes of regaining its status as Asia’s dominant political and economic power.

Under such circumstances, Beijing might at least try to give the appearance of engagement on the issue. China is hosting the G20 meeting of major economies in September and doesn’t want the summit to turn into a “China-bashing fest,” said Yanmei Xie of the International Crisis Group think tank. However, it’s far from clear whether its neighbors will see any outreach from China as sincere. The Philippines already has turned down an offer for bilateral talks, saying China first must recognize the panel’s ruling.

CALL FOR CALM

As this developed, US National Security Adviser Susan Rice will urge Beijing next week to avoid escalation in the South China Sea when she makes the highest-level US visit to China since the international court rejected its sweeping claims to the strategic waterway.

Even as Washington has sought to keep a lid on the situation, Rice – in an interview with Reuters – vowed that the US military would continue to “sail and fly and operate” in the South China Sea, despite a Chinese warning that such patrols could end “in disaster.”

With less than six months remaining of President Barack Obama’s tenure, Rice’s broader mission in her July 24-27 trip is aimed at keeping overall ties between the world’s two largest economies, which she called “the most consequential relationship we have,” on track at a time of heightened tensions. “I’ll be there to advance our cooperation,” she said.

But the trip, due to be formally announced later on Friday, follows a July 12 ruling by the Permanent Court of Arbitration in The Hague that China has no historic title over the waters of the South China Sea. Beijing has angrily rejected the verdict and pledged to pursue claims that conflict with those of several smaller neighbors.

“I’ve been in communication with our Chinese counterparts over the last couple of weeks. We understand each other’s perspectives clearly,” Rice said when asked what message she would deliver to the Chinese. “We’ll urge restraint on all sides.”

Her trip, to include Beijing and Shanghai, will coincide with visits by U.S. Secretary of State John Kerry to Laos and the Philippines where he is expected to try to reassure Southeast Asian partners of Washington’s commitment.

The United States is also using quiet diplomacy to persuade claimants like the Philippines, Indonesia and Vietnam not to move aggressively to capitalize on The Hague ruling, US officials have said.

TEST OF US CREDIBILITY

How Washington handles the aftermath of the ruling is widely seen as a test of US credibility in a region where it has been the dominant security presence since World War Two but is now struggling to contain an increasingly assertive China.

China has responded to the ruling with sharp rhetoric. But a senior official said, “So far there has not been precipitous action” and Washington was hoping confrontation could be avoided.

“We are not looking to do things that are escalatory,” another senior US official said. “And at the same time we don’t expect that they (the Chinese) would deem it wise to do things that are escalatory.”

Despite that view, two Chinese civilian aircraft conducted test landings at two new military-length airstrips on reefs controlled by China in the Spratly Islands shortly after the arbitration ruling.

And signaling Beijing’s plans to further stake its claim to contested waters, a Chinese state-run newspaper said that up to eight Chinese ships will offer cruises to the South China Sea over the next five years.

China has blamed the United States for stirring up trouble in the South China Sea, a strategic waterway through which more than $5 trillion of trade moves annually.

Citing international rules, the United States has conducted freedom-of-navigation patrols close to Chinese-held islands where China has been bolstering its military presence.

Rice is expected to meet Chinese President Xi Jinping during her visit and her agenda will include North Korea, economic issues and human rights. She will also lay the groundwork for Obama’s talks with Xi at a G20 summit in China in September, US officials said.

But with the South China Sea issue looming large, Rice, who has led US policymaking on China, said the United States and China have “careful work to do to manage our differences.”

She also said the administration would not allow crises in other parts of the world, from Syria to Turkey to Ukraine, to distract from Obama’s signature policy of “rebalancing” toward Asia. “We don’t have the luxury as the world’s leading power to devote our attention to one region and ignore another,” she said. (With reports from AP and Reuters)

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ALSO FROM THE INQUIRER

Indonesian businesses use ‘Pokémon Go’ to lure players @inquirerdotnet The Jakarta Post/Asia News Network 03:10 PM July 18th, 2016


Pokemon frenzy: Members of Pokemon Go Indonesia gather to play the wildly popular mobile app at Bung Karno Stadium in Jakarta on Sunday. Pokemon Go players roam the real world looking for cartoon monsters.(Jakarta Post/Donny Fernando/Asia News Network)

On a cloudy Saturday afternoon at the National Monument (Monas) in Central Jakarta, Sukanto was parking his motorcycle to take a break after circling the nearby area for almost an hour to fulfill his latest passenger’s unfamiliar request.

“He told me to take him around Monas and Gambir Train Station as he wanted to catch Pokémon,” Sukanto, driver of app-based motorcycle taxi service Grab Bike told The Jakarta Post. “I accepted the job because he promised me extra money, but man, that was really an exhausting trip.”

Since its official launch in the US, Australia and New Zealand two weeks ago, the mobile game sensation Pokémon Go has turned millions of people around the world into Pokémon hunters and thousands of Jakartans have also caught the fever, although there has been no official release of the augmented reality game. As Pokémon Go users traverse the city to catch Pokémon, businesses have started using the app to attract customers.

Grab is one of the businesses that have noticed the tens of thousands of people using their phones to catch Pokémon in the capital. On Saturday, the app purchased several of the Pokémon Go in-game items known as “lures” and spread them in Monas. Each lure is able to attract Pokémon to it for 30 minutes.

The company also provided a 5,000 rupiah (P18) discount for each passenger using Grab Bike or its car taxi service Grab Car to Monas.

As the promotion circulated in social media and news outlets, that Saturday, the national landmark turned into Pokémon hunting grounds with hundreds or even thousands of people wandering around, eyes glued to their smartphones, ready to toss their Pokeballs once a monster popped up on their screen.

“The lure really helped me to develop my Pokémon; I caught many rare monsters and my feet have started to ache,” Rikang Soleh, who caught six Pokémon on Saturday, said, his gaze still fixed on his smartphone.

READ MORE...

Pokémon Go, which sets players on a real-world hunt for elusive digital monsters they can catch via their phones, offers the experience of being a real Pokémon hunter. While it has yet to be officially launched here, the fever has hit the capital as many people downloaded the game through a back door and turned the city into hunting grounds.

Major home-improvement retailer Ace Hardware has also jumped on the bandwagon. Between July 16 and 30, the company is offering a free voucher to anyone who catches a Pokémon in any Ace Hardware store throughout the country.

Pungkas Riandika, Digital Marketing head of Ace Hardware operator Kawan Lama Retail, said the company would like to see Pokemon hunters throng to Ace Hardware stores during their opening hours, adding that they will receive a voucher after posting their catch on Facebook, Twitter or Instagram.

“We are not concerned if many people show up to the stores without purchasing anything, only to catch Pokémon. We want to invite them to play inside,” he said.

While many businesses have started to ride the Pokémon craze, the latest digital innovation in civic duty, Qlue, has shown that Pokémon fever can also be used for the improvement of good governance.

Starting on Friday, the app is offering various prizes for residents who take pictures of particular areas in their neighborhood that need extra attention from the local administration, such as damaged roads or flooded areas. Qlue employees will then check the scene to make sure the filed report is valid.

“But don’t forget the picture should be sent along with Pokémon on the screen,” a Qlue official statement said.


PHILSTAR

Aquino admin leaves over P1 trillion budget to Duterte By Prinz Magtulis (philstar.com) | Updated July 19, 2016 - 9:51pm 10 174 googleplus0 0

 
President Rodrigo Duterte, left, and former President Benigno Aquino III salute during the inauguration ceremony Thursday, June 30, 2016 at Malacañan Palace grounds in Manila, Philippines. The Aquino administration left a budget of more than P1 trillion for agencies and departments to the Duterte administration. AP/Bullit Marquez, File

MANILA, Philippines — The Duterte administration was left with a budget of more than P1 trillion for agencies and departments when it took over last month, showing enough funds for planned higher spending later this year.

A total of P1.02 trillion worth of notices of cash allocation (NCA) were issued to state offices in the first half, data from the Department of Budget and Management (DBM) showed.

The figure accounted for 49.28 percent of the P2.07 trillion budget for departments and special purpose funds primarily used for support to local governments and state-run firms. This means a total of P1.05 trillion remains intact in national coffers.

The 2016 budget is worth P3.002 trillion. The balance of P930.7 billion is in the form of automatic appropriations allocated for debt payments, pension and grants and donations.

"Compared to 2010, they really have more money left now upon taking over. They should be proactive in disposing them," said Alvin Ang, economist at the Ateneo de Manila University.

NCA allows agencies to secure checks from the Bureau of the Treasury to pay for contracted services. Once checks are encashed, funds are deemed disbursed.

Of the P1.02 trillion NCA releases, 95.7 percent or P971.74 billion was actually converted into checks.

Broken down, P940.97 billion represented those redeemed as cash and spent, while P30.77 billion remained as checks as of June, data showed.

The balance of P47.33 billion remained with agencies which have not secured checks for their services.

"The problem encountered by the previous administration was more of capacity by agencies to absorb the budget. That could be one reason why there is a lot of money remaining," Ang said by phone.

Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, agreed but said there was already "big improvement" since January.

READ MORE...

According to DBM data, NCA utilization rate was at a much slower 74 percent in the first month of the year.

"This is positive, especially for economic growth in the second quarter. Although, we are still looking at a slowdown in the second half as the new government adjusts," Neri said by phone.

"There could be some review of projects and line agencies may have to deal with it," he added.

The Duterte government is targeting a higher budget deficit equivalent to 2.5 percent of economic output this year from 2 percent originally. But Budget Secretary Benjamin Diokno earlier said this would likely come more from a shortfall in revenues than bigger spending since the budget had already been programmed.

"They may still encounter the same problems in budget absorption," Ang said.

---------------------------------

RELATED FROM THE MANILA TIMES

Govt should build on economic gains of Arroyo, Aquino July 23, 2016 10:29 pm by MAYVELIN U. CARABALLO


FLASHBACK PHOTO Published January 12, 2012 -"IT'S THE ECONOMY, STUDENT!"

President Rodrigo Duterte has inherited an economy that has shifted to a higher growth trajectory, and sustaining or even surpassing it depends on the new government’s determination to build on previous socioeconomic reforms.

This is the consensus view among financial services firms Nomura and PT. RHB Securities Indonesia, London-based research consultancy Capital Economics, Fitch-owned BMI Research, and banking giants HSBC and DBS, ahead of Duterte’s first State of the Nation Address on Monday.

The previous Aquino administration claims it had turned over to the Duterte government a robustly growing and resilient Philippine economy, fuelled by a strong services sector and a reliable stream of overseas workers’ remittances.

The seeds of growth, however, were planted during the administration of former President Gloria Macapagal-Arroyo.

Arroyo’s tumultuous decade of governance from 2001 to 2010 undertook major fiscal recovery and consolidation efforts, including the passage of painful tax reforms such as the hike and expansion of the value-added tax.

As a result, the national government has generated new revenues and is now able to invest more on social protection mechanisms such as conditional cash transfers and public infrastructure.

“Once called the ‘Sick Man of Asia,’ the Southeast Asian economy of more than 100 million people is now commonly referred to as a ‘bright spot’ given its encouraging economic performance despite challenges hurled by the external environment,” according to the June 2016 issue of EconomyPH, the bi-monthly economic newsletter of the government’s Investor Relations Office (IRO).

In a summary of the Philippines’ economic achievements over the past six years, the IRO said that from 2010 to 2015, the country’s gross domestic product (GDP) grew by an average 6.2 percent—the fastest six-year average in the region and the world, and also the fastest average that the Philippines had registered in the last 40 years.

The share of investments to economic output expanded in 2015 to 23.8 percent from 20.8 percent in 2010, it added, indicating renewed investor confidence in the country.

The share of the industry sector, led by manufacturing, rose to 33.4 percent in 2015 from 32.6 percent in 2010, in what could be the beginning of a structural shift in the domestic economy, to become less dependent on services.

The IRO added that the country’s rankings in various global competitiveness surveys took a leap, jumping substantially since 2010.

These include Transparency International’s Corruption Perceptions Index, the World Bank’s Ease of Doing Business Report, Heritage Foundation’s Index of Economic Freedom and the World Economic Forum’s Human Capital Index.

All major credit rating agencies—Fitch Ratings, Moody’s Investors Service and Standard & Poor’s—finally assigned the Philippines the minimum investment grade in 2013, after fiscal reforms that began under Arroyo.

It was followed by succeeding credit-rating upgrades in the following years as the Aquino administration raised revenue collections and implemented budget reforms.

“Investment-grade sovereign credit ratings and the leap in global competitiveness, which are anchored on sound economic policies and improved macroeconomic fundamentals, helped place the Philippines in the radar screen of more investors,” the report stated.

The IRO said this was proven by the huge jump in foreign direct investments (FDIs) over the past six years. From a mere $1.07 billion in 2010, net inflow of FDIs reached $5.7 billion in 2015, marking an increase of over 400 percent.

The surge in investments created more jobs, it added, thereby cutting unemployment rate to 6.1 percent in April 2016 from 8 percent in April 2010.

Rising revenue collection, aided partly by administrative reforms that helped the Bureau of Internal Revenue plug tax leakages, and prudent debt management policies helped the government bring down the debt burden, or the percentage of government debt to GDP, to a more manageable level.

From 42.2 percent in 2010, general government debt as a percentage of GDP dropped and settled at 36.3 percent as of end-December 2015.

Duterte’s economic policies



Given this backdrop, the Duterte administration said existing sound economic policies will be maintained but reforms will be implemented through its 10-point socioeconomic agenda.

The Duterte agenda aims to translate high growth figures into better living standards for the majority of Filipinos.

In a summary, the agenda include the continuation of current macroeconomic policies; progressive tax reform; increasing competitiveness and the ease of doing business; accelerating annual infrastructure spending; promoting rural and value chain development; ensuring security of land tenure; investing in human capital development; promoting science,
technology and the creative arts; improving social protection programs; and strengthening the implementation of the Responsible Parenthood and Reproductive Health Law.

On July 5, official GDP growth targets were set at 6.5 percent to 7.5 percent next year and 7 percent to 8 percent annually from 2018 until the end of Duterte’s term in 2022.

This year, GDP is expected to grow between 6 percent to 7 percent, albeit a lower range compared with the 6.8 percent to 7.8 percent set by the previous government.

Nomura said the quality of growth in the Philippines should continue to improve with larger contributions from investment spending.

“Whether this can continue beyond this year will depend in large part on the new administration’s economic agenda,” it said, noting that its baseline view remains that President Duterte’s policy approach would be pragmatic and it would be unlikely the reform progress made in the last few years would be reversed.

“As a result, we are optimistic that the medium-term growth outlooks will stay solid,” it added.

Under the assumption of no sudden change in main policies, PT. RHB Securities Indonesia said it foresees the economy to continue to grow, led by private investments.

Capital Economics noted that Duterte seems content to leave the economy in the hands of more qualified people, like Finance Secretary Carlos Dominguez 3rd, which provides some reassurance that the quality of policymaking will not deteriorate overnight.

BMI Research said that should Duterte succeed in cutting crime rates without overstepping his executive privilege, while simultaneously bolstering fiscal efficiency, liberalizing foreign investment laws, and cutting through the country’s bloated bureaucracy, economic growth would continue.

HSBC said it was particularly encouraged by the strong pedigree of Duterte’s economic team, which includes leaders from the business community and academics with past policy experience.

DBS said Duterte’s game plan to continue economic reforms with the priority of accelerating infrastructure development and fiscal spending is positive for the longer-term growth outlook for the economy.

One Response to Govt should build on economic gains of Arroyo, Aquino
To the Max says:
July 24, 2016 at 9:46 am
The biggest question is did the previous 2 administration help the poor ? We are talking 14 years , 8 for Arroyo 6 for Aquino . In my opionon based from SWS surveys, there is no change to alleviate the standard of living by the poor. It usually takes at least 10 years to notice any change. That is what corruption affect any country, specially Catholic countries which is predomenently poor.


INQUIRER

Budget chief: Duterte admin to usher in ‘golden age of infrastructure’ By: Ben O. de Vera
@BenArnolddeVera Philippine Daily Inquirer 03:47 PM July 20th, 2016

The Duterte administration’s plan to jack up infrastructure spending to up to 7 percent of the economy by 2022 would bring about a “golden age of infrastructure” in the next six years, Budget Secretary Benjamin E. Diokno said Wednesday.

Diokno nonetheless told reporters that despite the planned spending boost, it may take a decade before the infrastructure gap in the country would be totally addressed.

The Budget chief was also pitching more “hybrid” public-private partnership (PPP) projects to speed up infrastructure development.

In a speech at the general membership meeting of the Financial Executives Institute of the Philippines (Finex), Diokno said the government will spend close to P900 billion on hard public infrastructure next year to make up for years of “neglect.”

READ: Duterte admin to spend P890.9B on infra next year

Diokno said they plan to rollout “simultaneously, not sequentially,” small, medium and large projects in all regions.

The budget chief had said the Duterte administration will order non-stop or 24-hours-a-day, seven-days-a-week construction work on most urban-based projects to fast-track infrastructure buildup.

From a share of 5.2 percent of the gross domestic product (GDP) next year, infrastructure spending will be hiked to 7 percent of GDP by the end of the Duterte administration, Diokno said.

READ MORE...

RELATED: Duterte admin to hike infrastructure spending to up to 7% of GDP

Three to four more railway lines in Metro Manila are needed to shuttle commuters in the metropolis alongside additional airports, he said.

Diokno said the Duterte administration would have to decide on where to build a new air transport hub—whether Sangley Point in Cavite or Clark in Pampanga—within the year.

President Rodrigo R. Duterte himself was also proposing a highway connecting Clark and Makati City, he added.

Th government will continue to enjoin private sector participation in the infrastructure buildup through PPP, although the Budget chief said he prefers “hybrid” PPP projects.

Under the hybrid PPP setup that Diokno was pushing for, the government will build the facility and later on tap a private firm for maintenance.

As such, the government could finance projects at a lower cost through official development assistance (ODA) from donor agencies while tapping private contractors, Diokno said.

Once the projects are finished, the government would have to bid out the maintenance contract. “The government is poor in maintenance, so we should give it to the private sector,” the Budget chief explained. JE


PHILSTAR

DA eyes P40.8-B budget for irrigation authority in 2017 By Louise Maureen Simeon (philstar.com) | Updated July 23, 2016 - 7:00pm 0 9 googleplus0 0


With a bigger budget, the National Irrigation Authority may no longer need to collect fees from farmers. File photo

MANILA, Philippines -- Agriculture Secretary Emmanuel Piñol is proposing an additional P4 billion in the 2017 budget of the National Irrigation Administration (NIA) to fulfil the commitment of the Duterte administration of free irrigation starting next year.

The NIA has earlier suggested a budget of P36.8 billion for 2017 and if additional funding will be approved, the agency’s allocation will amount to P40.8 billion.

"By providing an additional funding, NIA will no longer depend on the collections from irrigation fees of farmers for the salaries of its officials and employees and for its operations," Piñol said.

NIA spokesperson Filipina Bermudez said the 2017 budget is allotted for the construction, restoration, and rehabilitation of irrigation projects and existing irrigation systems.

"The GAA (General Appropriations Act) for 2017 is not for PS and MOOE (personal services and maintenance and other operating expenses). It should be explicitly stated that part of the P40 billion is for PS and MOOE," Bermudez told The STAR.

Bermudez admitted that the irrigation service fees (ISF) collection has been difficult for the agency following pronouncements of the free irrigation.

"Based on the assessment of NIA’s finances, our current status without incoming ISF collection will be good up to September only," she said.

"This means that without assistance from the national government for the fourth quarter, NIA will not have enough funds for regular operation and maintenance of irrigation systems including salaries and allowance of employees," Bermudez said in a text message.

NIA collects up to P2 billion in irrigation fees annually and relies on the fees for employees’ salaries and allowances, as well as funding for operations and maintenance of existing irrigation systems in the country.

READ MORE...

"This is the most ridiculous situation in Philippine agriculture where it is the farmers who are being made to pay for the salaries and wages of a government entity which is tasked for provide them with water so that they could produce food for the country," Piñol said.

Meanwhile, the agri chief has sought the support of the Senate to implement the plan and gained positive feedback from Senate President Franklin Drilon and senators Loren Legarda, Cynthia Villar, Koko Pimentel, Alan Peter Cayetano, Manny Pacquiao and Kiko Pangilinan.

Piñol said the free irrigation is also being supported by congressmen from different provinces including Leyte, Samar, Biliran and the Bicol region, among others.

"I expect the free irrigation commitment of the president will sail through both the Lower and Upper Houses of Congress smoothly," he said.

Piñol said he will visit the Senate next week to seek additional support from other legislators.

Aside from hiking the budget, Pinol is recommending amending the charter of NIA in the long run so that "providing free irrigation to farmers will no longer be just a political decision of a president who cares for the poor but a policy of government."

To recall, President Rodrigo Duterte issued his first executive order early this month that reorganized the Office of the President, and reverted the NIA and Fertilizer and Pesticide Authority to the DA.


Chief News Editor: Sol Jose Vanzi

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