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BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

INFRA SPENDING PICKS UP IN JUNE
[NEDA pushes infra projects to decongest Metro traffic]


AUGUST 23 -Expenditures totaled P46.6 billion in June, a 34.5 percent increase from a year ago, data from the Department of Budget and Management (DBM) showed. Up 34% to P46.6 B
Infrastructure spending rose sharply in June, but signs of agency underspending remained persistent in the last month of the previous administration. Expenditures totaled P46.6 billion in June, a 34.5 percent increase from a year ago, data from the Department of Budget and Management (DBM) showed. The figure brought the first half tally to P229 billion, a 52.3-percent improvement, but around 12 percent below the P260.8-billion program. “(This is) in view of low obligations of some implementing agencies arising from procurement difficulties and delays in program / project execution due to the election ban,” the DBM said in a statement. The broader capital outlay segment – which includes assistance to local governments and state corporations – went up 47.2 percent to P294.6 billion in the first semester. This, however, still fell below the P328.5-billion program. Budget Secretary Benjamin Diokno said efforts are being undertaken to address underspending by agencies, which fail to absorb huge budgets. Diokno said he ordered a study on agency absorptive capacity, results of which will be out by January in time for next year’s outlay with a 13-percent increase in infrastructure outlay. “I cannot fault the current (Cabinet) secretaries for the performance of their agencies in the previous months,” Diokno said in a recent interview. “Some of them even asked for higher budgets next year but because of absorption, not all were accommodated,” he added, without giving names of agencies. READ MORE..RELATED, NEDA pushes infra projects to decongest Metro traffic...

ALSO: Travelers now allowed to bring out up to P50K
[ALSO:
Pinoys in their 30s and 40s face heavy financial pressure - Study]


AUGUST 27 -Travelers to and from the Philippines would be allowed to bring in and out as much as P50,000 worth of legal tenders starting next month, the Bangko Sentral ng Pilipinas (BSP) said yesterday. STAR/File photo
Travelers to and from the Philippines would be allowed to bring in and out as much as P50,000 worth of legal tenders starting next month, the Bangko Sentral ng Pilipinas (BSP) said yesterday. BSP officer-in-charge Vicente Aquino issued Circular 922 series of 2016 announcing the amendment of the rules on cross-border transfer of local currency. “A person may import or export, or bring with him into or take out of the country, or electronically transfer, legal tender Philippine notes and coins, checks, money order and other bills of exchange drawn in pesos against banks operating in the Philippines in an amount not exceeding P50,000 without prior authorization from the BSP,” Aquino said. According to Aquino, amounts in excess of the limit would require prior written authorization from the BSP. The circular is set to take effect 15 days from publication in a newspaper of general circulation. The higher limit also applies to electronic transfer or the system where the authority to debit or credit an account whether bank, business or individual is provided by wire, with or without a source document being mailed to evidence the authority. Likewise, the peso amount of the International Passenger Service Charge (IPSC) refunded to outbound exempt passengers is not included in the limit during the implementation of the refund of travel, airport, and other trade related taxes. The BSP has been implementing a series of foreign exchange liberalization measures in an effort to bring the public back to the banking system. Aside from the increase in the limit for travellers, the central bank also raised the ceiling wherein Philippine residents could purchase up to $500,000 in foreign exchange instead of the previous limit of $120,000 without supporting documents. READ MORE...ALSO, Pinoys in their 30s and 40s face heavy financial pressure - Study...

ALSO: Duterte’s political will, capital to drive tax reforms much faster pace
[RELATED: DBM questioned at House hearing on lump-sum billions in 2017 budget bill]

AUGUST 27 -DOF logo President Rodrigo R. Duterte has the political will and capital to drive the proposed comprehensive tax reform plan at such a fast pace that the past administration failed to do, the Department of Finance (DOF) said. Finance Secretary Carlos G. Dominguez III said the Duterte government is seizing on an opportune convergence of growth-friendly factors to reconfigure its tax system, adding now is the best time to cut personal and corporate income taxes. image: http://www.mb.com.ph/wp-content/uploads/2016/01/dof.jpg “We will seize the opportune convergence of factors at this time: A dynamic growth rate, a robust growth potential, a stable currency, a stable fiscal profile and determined national leadership,” Dominguez said. “We will not waste this opportune convergence. We will make our society fairer for the sake of the next generations. We will make our communities stronger and protect our citizens. We will make our economic growth more sustainable and inclusive,” he added. Duterte has put in place a 10-point socio-economic agenda on inclusive growth to fulfill his electoral mandate of ensuring peace and public safety while spreading the benefits of economic growth to all sectors across all regions. Dominguez said tax reform, which was also one of Duterte’s campaign pledges, is necessary to realize the administration’s vision of inclusive growth without “courting a credit rating downgrade.” “Bringing down individual income tax rates will boost the spending power of wage earners. Bringing down corporate tax rates will encourage investment inflows to our economy. The prevailing tax rates have been a disincentive to investments coming into our economy,” he said. But while the new government wants personal and corporate income tax rates reduced, it also needs to generate more revenues to effectively implement its socio-economic agenda, Dominguez said. To make up for the revenue loss from lower income tax rates, Dominguez said the government would have to raise revenues from other sources “in order to invest in our infrastructure and our people, and make sure that everybody feels the economic growth.” READ MORE...RELATED, DBM questioned at House hearing on lump-sum billions in 2017 budget bill... 

ALSO: Dominguez prefers 'soft peso' to lift exports, OFW's purchasing power
[RELATED: IMF to raise Philippine growth forecast]


AUGUST 27 -Finance secretary carlos dominguez 3rd. PHOTO By RUy MARTINEZ
But HSBC expects the currency to grow stronger Secretary Carlos Dominguez 3rd prefers a “slightly weak” local currency, which could help boost ex-ports and enhance the purchasing power of overseas Filipino workers (OFWs). In a forum on Thursday, Dominguez recalled that the previous administration had always wanted a strong peso, but he noted that a strong currency would have a negative impact on exporters and OFWs buying power. “When you have a too strong peso, two things will happen. One, fewer exports cost more, so your exporters here earn less. Secondly, your OFWs who earn in dollars will get less pesos,” he explained. With this, the finance secretary said that the present administration is trying to find a balance that would give an advantage to 10-12 million OFWs and exporters.
“For me, I would prefer a peso that is slightly weak . . . P46-47 [to a dollar],” he said. Banking giant HSBC holds a different view: a stronger peso supported by the current government’s large-scale reforms, could ramp up foreign direct investments (FDI), it said in a report. The report said, the local currency could cap 2016 at a stronger level of P45 to a dollar. This new projection represents a significant departure from its year-end forecast of P48.50 to a dollar. “Back in February we had mentioned the Philippine elections and the Interest Rate Corridor as two sources of volatility and weakness for the PHP. With the PHP managing to escape these events relatively unscathed, we have turned more positive on the currency…,” it explained. One of HSBC’s reasons for turning more positive on the currency is the Duterte administration’s apparent willingness to push ahead with larg e-scale reforms. For instance, it said President Duterte’s Cabinet announcements have been widely perceived as being business friendly. “Carlos Dominquez, a businessman who has many leadership roles in a variety of major Philippine companies, has been appointed Finance Secretary. READ MORE... RELATED, IMF to raise Philippine growth forecast...

ALSO: 1,500 OFWs in Saudi seek repatriation
RELATED EDITORIAL - Jobs back home]


AUGUST 26 -At least 1,500 overseas Filipino workers (OFWs) in Saudi Arabia have expressed willingness to return home, the Department of Social Welfare and Development (DSWD) said yesterday. Philstar.com/File photo
At least 1,500 overseas Filipino workers (OFWs) in Saudi Arabia have expressed willingness to return home, the Department of Social Welfare and Development (DSWD) said yesterday. The agency’s humanitarian team is currently in the oil-rich kingdom to assist distressed OFWs and their families. The team said 1,575 of 3,193 OFWs in Saudi’s 21 campsites want to return to the Philippines. The number may still climb as the team, led by Undersecretary Vilma Cabrera, continued to reach out to other distressed OFWs located outside the campsites and in other parts of Saudi Arabia. The team had received reports that about 200 distressed OFWs living outside the Oger and Bin Laden camps need medical and relief assistance. More OFWs in Riyadh and Al Khobar who do not belong to the three major companies and subcontracting firms originally targeted by the inter-agency teams are seeking repatriation and assistance. The DSWD team left last week to join the month-long mission of the Department of Foreign Affairs in the Middle East. As of yesterday, the team was able to provide assistance and counseling as well as food and hygiene kits to 1,802 OFWs in Riyadh, 1,062 in Al Khobar and Dammam and 329 in Jeddah. RELATED, EDITORIAL - Jobs back home...


READ FULL MEDIA REPORTS HERE:

Infra spending picks up in June


Expenditures totaled P46.6 billion in June, a 34.5 percent increase from a year ago, data from the Department of Budget and Management (DBM) showed. Up 34% to P46.6 B

MANILA, AUGUST 29, 2016 (PHILSTAR)  By Prinz Magtulis August 23, 2016 - Infrastructure spending rose sharply in June, but signs of agency underspending remained persistent in the last month of the previous administration.

Expenditures totaled P46.6 billion in June, a 34.5 percent increase from a year ago, data from the Department of Budget and Management (DBM) showed.

The figure brought the first half tally to P229 billion, a 52.3-percent improvement, but around 12 percent below the P260.8-billion program.

“(This is) in view of low obligations of some implementing agencies arising from procurement difficulties and delays in program/project execution due to the election ban,” the DBM said in a statement.

The broader capital outlay segment – which includes assistance to local governments and state corporations – went up 47.2 percent to P294.6 billion in the first semester.

This, however, still fell below the P328.5-billion program.

Budget Secretary Benjamin Diokno said efforts are being undertaken to address underspending by agencies, which fail to absorb huge budgets.

Diokno said he ordered a study on agency absorptive capacity, results of which will be out by January in time for next year’s outlay with a 13-percent increase in infrastructure outlay.

“I cannot fault the current (Cabinet) secretaries for the performance of their agencies in the previous months,” Diokno said in a recent interview.

“Some of them even asked for higher budgets next year but because of absorption, not all were accommodated,” he added, without giving names of agencies.

READ MORE...

Absorptive capacity is measured by how much of the budget for agencies is actually spent. One gauge for this is the capacity of agencies to enter into contracts or obligate funds.

DBM said problems were also encountered on that particular budget process.

“Disbursements were also affected by payment and billing issues such as incomplete and/or non-submission of documentary requirements and progress billings of contractors or creditors,” it said.

An election ban on public spending that was still effective in June also affected the performance.

From January to June, DBM said most infrastructure funds were funneled for road projects of the Department of Public Works and Highways, military modernization and support to state colleges and universities.

For next year, the Duterte administration has allocated P860.65 billion for infrastructure, up 13.8 percent year-on-year.

Diokno said measures such as 24/7 public construction would be explored next year to fast track disbursements.

“We are exploring different and new ways to accelerate public spending,” he said.

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RELATED FROM PHILSTAR

NEDA pushes infra projects to decongest Metro traffic By Czeriza Valencia (The Philippine Star) | Updated August 24, 2016 - 12:00am 1 205 googleplus0 1


Socioeconomic Planning Secretary Enesto Pernia said economic managers would pursue solutions to Metro Manila traffic with or without the grant of emergency powers to President Duterte. Storm Crypt/CC BY-NC-ND

MANILA, Philippines – The Duterte administration will push for the immediate construction of a bridge that would connect Ortigas Center in Pasig to Bonifacio Global City in Taguig to decongest the flow of traffic along EDSA by about 25 percent, Socioeconomic Planning Secretary Enesto Pernia said yesterday.

In a briefing on the performance of the National Economic and Development Authority (NEDA) in the first 50 days of the new administration, Pernia said economic managers also placed high priority on the resolution of the LRT-MRT common station tussle, and the use of the Batangas and Subic ports to decongest Manila ports.

These projects and measures would be subject for approval by the NEDA Board in September.


PERNIA

The Bonifacio Global City-Ortigas link bridge needs to be constructed before the rehabilitation and retrofitting of the Guadalupe Bridge can be undertaken. It would create a diversionary route for traffic on the country’s busiest thoroughfare and lighten the flow of traffic on EDSA and C5.

The proposed bridge would traverse the Pasig River to link Ortigas and BGC. The first phase of the project would run from Sta. Monica Street in Kapitolyo, Pasig to Lawton Avenue in Makati, while the second phase would run from Lawton to BGC viaduct, then from Shaw Boulevard to the Sta. Monica viaduct.

Strong opposition from residents of Barangay Kapitolyo in Pasig has been delaying the implementation of the project. They claim that building the bridge would affect traffic in their community and put their security at risk.

READ MORE...

NEDA Deputy Director General for Investment Programming Rolando Tungpalan said it was agreed during the recent meeting of the NEDA Infrastructure Committee that modifications in the alignment of the bridge on the Pasig side would have to made to create a compromise between the affected homeowners and the need to provide a solution to the worsening traffic on EDSA.

Also high on the priority list for immediate implementation is breaking the impasse over the common station linking Light Rail Transit (LRT) 1, Metro Rail Transit (MRT) Line 3 and MRT 7.

The involved parties – the Light Rail Manila Corp. (LRMC), San Miguel Corp., SM Group, Ayala Land Inc. and the Department of Transportation – have agreed in principle to have a common station situated between SM and Trinoma malls in North EDSA.

Pernia said economic managers also slated for NEDA Board approval the use of the Batangas and Subic ports to decongest Manila ports.

He also announced that NEDA has raised the project cost floor from P1 to P5 billion in line with reforms on the Investment Coordination Committee (ICC) appraisal and approval process.

“This means projects (costing) below P5 billion can go faster. It does not have to go through the entire ICC and NEDA board approval process,” he said.

Pernia said economic managers would pursue solutions to Metro Manila traffic with or without the grant of emergency powers to President Duterte.

“Even without the emergency powers, our work on these projects would continue round-the clock,” he said.

President Duterte is seeking emergency powers from Congress to address traffic woes.

The emergency powers that the president would have for two years would allow the government to deal with a myriad of traffic-related problems such as right-of-way issues and doing away with bidding for some infrastructure projects in favor of direct procurement.


PHILSTAR

Travelers now allowed to bring out up to P50K By Lawrence Agcaoili (The Philippine Star) | Updated August 27, 2016 - 12:00am 0 0 googleplus0 0


Travelers to and from the Philippines would be allowed to bring in and out as much as P50,000 worth of legal tenders starting next month, the Bangko Sentral ng Pilipinas (BSP) said yesterday. STAR/File photo

MANILA, Philippines - Travelers to and from the Philippines would be allowed to bring in and out as much as P50,000 worth of legal tenders starting next month, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

BSP officer-in-charge Vicente Aquino issued Circular 922 series of 2016 announcing the amendment of the rules on cross-border transfer of local currency.

“A person may import or export, or bring with him into or take out of the country, or electronically transfer, legal tender Philippine notes and coins, checks, money order and other bills of exchange drawn in pesos against banks operating in the Philippines in an amount not exceeding P50,000 without prior authorization from the BSP,” Aquino said.

According to Aquino, amounts in excess of the limit would require prior written authorization from the BSP.

The circular is set to take effect 15 days from publication in a newspaper of general circulation.

The higher limit also applies to electronic transfer or the system where the authority to debit or credit an account whether bank, business or individual is provided by wire, with or without a source document being mailed to evidence the authority.

Likewise, the peso amount of the International Passenger Service Charge (IPSC) refunded to outbound exempt passengers is not included in the limit during the implementation of the refund of travel, airport, and other trade related taxes.

The BSP has been implementing a series of foreign exchange liberalization measures in an effort to bring the public back to the banking system.

Aside from the increase in the limit for travellers, the central bank also raised the ceiling wherein Philippine residents could purchase up to $500,000 in foreign exchange instead of the previous limit of $120,000 without supporting documents.

READ MORE...

For companies, the limit was higher at $1 million.

Likewise, the Monetary Board has approved the lifting of prior BSP approval and registration requirements for loans to be obtained by (NBQBs) from offshore sources, offshore banking units, and foreign currency deposit units (FCDUs) of banks.

BSP Deputy Governor Diwa Guinigundo earlier said the new policy would facilitate borrowing transactions of NBQBs to fund their operations and projects and better contribute to economic growth.

The BSP has been adopting measures to ease foreign exchange and documentary requirements on sending money abroad to lure depositors back to the banks.

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ALSO FROM PHILSTAR BUSINESS AS USUAL SECTION

Pinoys in their 30s and 40s face heavy financial pressure - Study By Lawrence Agcaoili (The Philippine Star) | Updated August 15, 2016 - 12:00am 0 17 googleplus0 0

MANILA, Philippines - People in their 30s and 40s face the biggest financial pressure of any age group, according to a study by the Hongkong and Shanghai Banking Corp. (HSBC).

The survey that covered over 18,000 working age people and retirees across 17 countries showed 91 percent of people in their 30s and 40s face household and personal living costs, while 69 percent are financially supporting others.

Furthermore, about 69 percent of people in this age bracket are putting money into longer-term savings while 63 percent are repaying loans.

Taken together, this shows that those aged between 30 and 49 are facing the greatest pressure on their money, creating a ‘sandwich generation’ of people with financial obligations to those both older and younger than themselves.

Wick Veloso, HSBC president and CEO, said the ‘sandwich generation’ is quite evident in the Philippines, with working men and women taking care of both their children and aging parents at the same time.

“This is brought about by the Filipinos’ close family ties where it is almost expected that once children start working, it comes natural to them to extend support to their parents somehow, even when they get married and have their own children; thus, reaching a point of having financial obligations for both the young and the old,” Veloso said.

Veloso pointed out the importance for people of all ages to be aware of their finances and to take a more active role in saving for later life as the ‘sandwich generation’ widens and financial pressures start building on even younger generations.

“Proper preparation will help younger people steer their way through the particularly challenging period of their 30s and 40s and help them avoid the worst of the financial struggles during this crucial time in their lives,” he added.

HSBC said people could improve their financial well-being in retirement by considering all their retirement expenses and by saving early.

The bank added people should seek information from many sources and should be prepared for financial ups and downs.

READ MORE...

The study said this pressure does not relent until people reach their 50s, when many experience a period of affluence.

As older children start to leave home, parents are able to reduce their expenditure on others, with significantly fewer or 57 percent of those aged 50 and above financially supporting others.

EMPTY NESTS

The benefits of the ‘empty nest’ can be seen in the rise in the proportion of people in their 50s and above choosing to spend their money on leisure and entertainment (76 percent) including holidays and trips (56 percent) as well as in the lower proportion who are repaying loans (50 percent).

The research also shows that the financial pressures traditionally faced by the sandwich generation of 30 and 40-year olds are now likely to extend to even younger people, with many in their late 20s committing to longer-term saving ( 63 percent) but also having to repay borrowing and financially support others (52 percent).

Crucially, younger people don’t appear to recognize the implications of these financial outgoings and the effect that they could have on their lifestyle in retirement. Nearly half (46 percent) of working-age people, aged 25 to 29, are spending on their hobbies, compared to just 36 percent of those in their 50s enjoying new-found affluence.

They also have higher leisure expenses than their older counterparts, with 77 percent spending money in this way. Attitudes toward finances play a part in this, with 42 percent of people in their late 20s saying that they prefer to enjoy life in the present and not worry about the impact this might have in the future.

This outlook suggests that this generation could be ill-prepared to cope with the financial burdens that they are likely to face over the coming decades.

The survey also reveals that under a quarter (24 percent) of people in their late 20s think that, being in control of their finances is one of the most important things in life, and many of this age public group give little thought to their later lives, with 44 percent believing that the distant future is too uncertain to plan for.


MANILA BULLETIN

Duterte’s political will, capital to drive tax reforms by Chino Leyco August 26, 2016 Share1 Tweet0 Share0 Email0 Share4


DOF logo

President Rodrigo R. Duterte has the political will and capital to drive the proposed comprehensive tax reform plan at such a fast pace that the past administration failed to do, the Department of Finance (DOF) said.

Finance Secretary Carlos G. Dominguez III said the Duterte government is seizing on an opportune convergence of growth-friendly factors to reconfigure its tax system, adding now is the best time to cut personal and corporate income taxes. image: http://www.mb.com.ph/wp-content/uploads/2016/01/dof.jpg

“We will seize the opportune convergence of factors at this time: A dynamic growth rate, a robust growth potential, a stable currency, a stable fiscal profile and determined national leadership,” Dominguez said.

“We will not waste this opportune convergence. We will make our society fairer for the sake of the next generations. We will make our communities stronger and protect our citizens. We will make our economic growth more sustainable and inclusive,” he added.

Duterte has put in place a 10-point socio-economic agenda on inclusive growth to fulfill his electoral mandate of ensuring peace and public safety while spreading the benefits of economic growth to all sectors across all regions.

Dominguez said tax reform, which was also one of Duterte’s campaign pledges, is necessary to realize the administration’s vision of inclusive growth without “courting a credit rating downgrade.”

“Bringing down individual income tax rates will boost the spending power of wage earners. Bringing down corporate tax rates will encourage investment inflows to our economy. The prevailing tax rates have been a disincentive to investments coming into our economy,” he said.

But while the new government wants personal and corporate income tax rates reduced, it also needs to generate more revenues to effectively implement its socio-economic agenda, Dominguez said.

To make up for the revenue loss from lower income tax rates, Dominguez said the government would have to raise revenues from other sources “in order to invest in our infrastructure and our people, and make sure that everybody feels the economic growth.”

READ MORE...

These measures include reviewing the tax perks for businesses and some exemptions to the value-added tax (VAT), indexing oil excise tax rates to inflation, and indexing and reforming property valuations, he said.

“We are reviewing the tax incentives that were so casually given out in the past. Many of the businesses are enjoying incentives they do not really need,” Dominguez said.

“We are, likewise, reviewing the exemptions to VAT. We hope our people will understand that it is preferable to withdraw certain exemptions than to raise the VAT rate,” he added, emphasizing that the exemptions enjoyed by the poor would not be removed.

Dominguez said the government is also considering taxes on unhealthy food items to help raise additional funds and promote public health.

Complementing these revenue-generating measures are the implementation of reforms at the Bureaus of Customs (BOC) and of Internal Revenue (BIR) to ensure transparency, reduce official corruption and expand the tax base.

Such reforms include the full computerization of transactions at the BOC “as well as (pegging the) valuation of goods to prevailing real time prices in the international market” to slowly phase out the need for brokers and the proliferation of fixers in the agency.

At the BIR, Dominguez said he has instructed the bureau to treat taxpayers better when they come to pay their taxes and to simplify the system to broaden the tax base.

Meanwhile, Dominguez assured Filipinos that while the Duterte administration plans to lower tax rates and continue with highly targeted subsidy programs for the poorest of the poor, the country’s fiscal stability would remain stable.

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RELATED FROM THE MANILA BULLETIN

DBM questioned at House hearing on lump-sum billions in 2017 budget bill by Charissa Luci August 23, 2016 Share11 Tweet0 Share0 Email0 Share118


DBM SECRETARY DIOKNO

Secretary Benjamin Diokno of the Department of Budget and Management (DBM) admitted yesterday that there are lump-sum funds in the proposed national budget for 2017, but assured that they will be used for the salary increases of military and police personnel and for the construction of 47,000 new school buildings.

He said the Duterte administration allotted P39.59 billion for uniformed personnel and a substantial amount for the infrastructure program for the Department of Education (DepEd).

“A big chunk of these funds will be used for the salary increases of military and uniformed personnel, and a part of that will be used as a calamity fund,” he told the House Committee on Appropriations, chaired by Davao City Rep. Karlo Alexei Nograles.

Among those who will benefit from the P39.59-billion lump-sum fund are the Armed Forces of the Philippines (AFP), the Philippine National Police (PNP), the Philippine Coast Guard (PCG), and the Bureau of Fire Protection (BFP), he said.

DIOKNO GRILLED

Kabataan partylist Rep. Sarah Elago grilled Diokno over a lump-sum P1.4 trillion listed as Special Purpose Funds (SPFs), which appeared to be discretionary in nature. The SPF, she noted, was P1.28 trillion in 2016.

“The SPFs have been subject of much scrutiny in the past years due to its lump sum and discretionary nature. So we have to ask why a third of the budget now belongs to such funds,” Elago said.

Programmed SPFs in the proposed budget for 2017 include Budgetary Support to Government Corporations, Allocation to LGUs, Contingent Fund, Miscellaneous Personnel Benefits Fund, National Disaster Risk Reduction Management Fund, Pension and Gratuity Fund, along with Customs, Duties, Tax Expenditures, and Debt Interest Payment.

There are also Unprogrammed SPFs, or items with no secured source of funding yet. These total P67.5 billion for 2017, the same level as that in 2016, she noted.

The total SPFs for 2017 increased by 4 percent, to P1.4 trillion from the current P1.35 trillion.

READ MORE...

“When we say lump sums in agencies, we mean funding for programs without a clear breakdown down to specific activities and projects.We stand firm in the belief that Congress should exorcise items in the budget that are lump-sum and discretionary in nature, as these funds are vulnerable to corruption and patronage politics,” Elago said.

She also noted the presence of “DAP-like provisions” in the proposed 2017 national budget, particularly Sections 55-59 of the General Provisions of the 2017 budget act.

“The fine print of the the P3.35-trillion national budget proposal reveals that the provisions on savings and augmentation that were first inserted in the 2015 General Appropriations Act have all been carried over to the 2017 budget proposal. This is not the real change we were expecting,” Elago said.

Section 59 provides that as a general rule, departments, bureaus, and offices of the national government, including constitutional offices enjoying fiscal autonomy and SUCs shall spend what is programmed in their respective appropriations in this Act. (With a report from Argyll Cyrus B. Geducos)


MANILA TIMES

Dominguez prefers soft peso to lift exports BY MAYVELIN U. CARABALLO ON AUGUST 26, 2016 BUSINESS


Finance secretary carlos dominguez 3rd. PHOTO By RUy MARTINEZ

But HSBC expects the currency to grow stronger

Secretary Carlos Dominguez 3rd prefers a “slightly weak” local currency, which could help boost ex-ports and enhance the purchasing power of overseas Filipino workers (OFWs).

In a forum on Thursday, Dominguez recalled that the previous administration had always wanted a strong peso, but he noted that a strong currency would have a negative impact on exporters and OFWs buying power.

“When you have a too strong peso, two things will happen. One, fewer exports cost more, so your exporters here earn less. Secondly, your OFWs who earn in dollars will get less pesos,” he explained.

With this, the finance secretary said that the present administration is trying to find a balance that would give an advantage to 10-12 million OFWs and exporters.

“For me, I would prefer a peso that is slightly weak . . . P46-47 [to a dollar],” he said.

Banking giant HSBC holds a different view: a stronger peso supported by the current government’s large-scale reforms, could ramp up foreign direct investments (FDI), it said in a report.

The report said, the local currency could cap 2016 at a stronger level of P45 to a dollar. This new projection represents a significant departure from its year-end forecast of P48.50 to a dollar.

“Back in February we had mentioned the Philippine elections and the Interest Rate Corridor as two sources of volatility and weakness for the PHP. With the PHP managing to escape these events relatively unscathed, we have turned more positive on the currency…,” it explained.

One of HSBC’s reasons for turning more positive on the currency is the Duterte administration’s apparent willingness to push ahead with larg e-scale reforms.

For instance, it said President Duterte’s Cabinet announcements have been widely perceived as being business friendly.

“Carlos Dominquez, a businessman who has many leadership roles in a variety of major Philippine companies, has been appointed Finance Secretary.

READ MORE...

Meanwhile, Benjamin Diokno, an economist who specializes in fiscal policy and was also Secretary of Budget and Management during Joseph Estrada’s rule, has also been named Head of the Budget and Management Department,” it noted.

HSBC said, additionally there have been discussions on the new government lifting caps on foreign ownership, simplifying the tax system, and hiking infrastructure spending up to 5.2 percent of gross domestic product (GDP) from 2.7 percent currently.

This reform story has already been gaining notable traction in the markets, it said, noting that foreign portfolio flows have surged over $1.5 billion following the election and if the Duterte government is successful in implementing its reform plans, then capital inflows will continue to be supportive of the peso.

“In our opinion, lifting caps on foreign ownership and significant infrastructure spending could have the most important implications for the PHP,” HSBC said.

The banking giant pointed out that both of these measures could spur FDI into the Philippines.

According to the Organization for Economic Co-operation and Development (OECD), restrictions on foreign ownerships have been the major cause for the Philippines lagging its regional peers in attracting FDI, it noted.
“For example, for many sectors, such as transport, telecom, media and electricity, foreign investment is restricted to 30 percent to 40 percent,” it added.

HSBC said FDI could also see a boost thanks to proposals for a big pick-up in infrastructure spending, noting that the announcement of a 3 percent budget deficit this year is both manageable and appropriate.

If the additional government spending is focused on necessary infrastructure products, then this would provide a large fiscal impulse to the economy, it said.

The lender stressed that addressing the infrastructure shortage and providing essentials, such as reliable access to power, will be imperative for attracting FDI.

“Of course the main question is whether the new government can succeed where previous governments have struggled. Over the last few years public spending has consistently been below target–undershooting on average by around 7 percent since 2010,” it pointed out.

“As such, it will be important for Mr Duterte to present a credible strategy to ensure that funds are spent efficiently,” it concluded.

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RELATED FROM PHILSTAR

IMF to raise Philippine growth forecast By Lawrence Agcaoili (The Philippine Star) | Updated August 24, 2016 - 12:00am 5 408 googleplus0 0


IMF resident representative Shanaka Jayanath Peiris said the multilateral lender is set to raise the Philippines’s gross domestic product (GDP) growth forecast. File photo

MANILA, Philippines – The International Monetary Fund (IMF) is set to raise the country’s economic growth projection for 2016 after a stronger than expected growth in the second quarter.

IMF resident representative Shanaka Jayanath Peiris said the multilateral lender is set to raise the country’s gross domestic product (GDP) growth forecast.

The economy grew seven percent in the second quarter from the revised 6.8 percent in the first quarter on the back of election-related spending.

This brought to 6.9 percent the GDP growth in the first half from 5.5 percent in the same period last year.

“The second quarter GDP outturn in the Philippines was somewhat faster than anticipated in our six percent growth forecast for 2016. Therefore, we will mostly likely be revising up our growth forecast for the Philippines in the next round of revisions,” Peiris said.

Last July, the IMF retained the country’s GDP growth forecast at six percent amid the external headwinds brought about by the volatile global financial markets.

IMF mission head Chikahisa Sumi earlier said the Philippines is likely to survive the impact of the volatility in the global financial markets.

Sumi said the Philippine economy has performed well but there is still room to do even better. “The Philippine economy is doing very strongly despite external headwind of the trade slowdown and the added market volatility and the recent Brexit,” Sumi said.

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Despite the strong growth, inflation remained manageable and is still below the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP). Inflation averaged 1.4 percent in the first seven months of the year after hitting 1.9 percent in July.

IMF welcomed the plan of Duterte administration to raise the budget ceiling to three percent of GDP instead of two percent of GDP to be able to increase infrastructure spending.

The 10-point reform agenda of President Rodrigo Duterte, according to IMF, would anchor policy formulation and structural transformation over the medium term.

“The continued solid growth in 2016, despite the external headwinds, is due in part to fiscal stimulus and supporting monetary conditions,” Sumi said.

The IMF mission said the seven to eight percent GDP growth would be attainable for the Philippines.

The Development Budget Coordination Committee (DBCC) recently lowered the GDP growth projection for the Philippines to a range of six to seven percent instead of 6.8 to 7.8 percent this year.


PHILSTAR

1,500 OFWs in Saudi seek repatriation By Rainier Allan Ronda (The Philippine Star) | Updated August 26, 2016 - 12:00am 0 1 googleplus0 0


At least 1,500 overseas Filipino workers (OFWs) in Saudi Arabia have expressed willingness to return home, the Department of Social Welfare and Development (DSWD) said yesterday. Philstar.com/File photo

MANILA, Philippines - At least 1,500 overseas Filipino workers (OFWs) in Saudi Arabia have expressed willingness to return home, the Department of Social Welfare and Development (DSWD) said yesterday.

The agency’s humanitarian team is currently in the oil-rich kingdom to assist distressed OFWs and their families.

The team said 1,575 of 3,193 OFWs in Saudi’s 21 campsites want to return to the Philippines.

The number may still climb as the team, led by Undersecretary Vilma Cabrera, continued to reach out to other distressed OFWs located outside the campsites and in other parts of Saudi Arabia.

The team had received reports that about 200 distressed OFWs living outside the Oger and Bin Laden camps need medical and relief assistance.

More OFWs in Riyadh and Al Khobar who do not belong to the three major companies and subcontracting firms originally targeted by the inter-agency teams are seeking repatriation and assistance.

The DSWD team left last week to join the month-long mission of the Department of Foreign Affairs in the Middle East.

As of yesterday, the team was able to provide assistance and counseling as well as food and hygiene kits to 1,802 OFWs in Riyadh, 1,062 in Al Khobar and Dammam and 329 in Jeddah.

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Other agencies such as the Public Attorney’s Office, Department of Health, Technical Education and Skills Development Authority are providing assistance to the OFWs.

Social Welfare Secretary Judy Taguiwalo has expressed her support to the team members in the kingdom.

“The members of our team are doing the best they can to analyze the situation of the OFWs in Saudi. We will provide them immediate assistance and ensure their reintegration after they return to the country,” Taguiwalo said.

She urged the families of the OFWs here in the Philippines to advise their relatives to coordinate with the Philippine embassy to ensure their safe return.

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RELATED FROM THE INQUIRER EDITORIAL

EDITORIAL: Jobs back home @inquirerdotnet Philippine Daily Inquirer 12:34 AM August 25th, 2016


Stranded OFWs in Saudi Arabia.

The sharp dive in global oil prices has left most Middle East countries foundering, the glut in supply all but drowning oil producing-countries in its wake.

Among hardest hit is Saudi Arabia, the preferred work destination of 24.7 percent of overseas Filipino workers (OFWs), according to 2015 figures from the Philippine Statistics Authority.

This shift in fortune has left at least 9,000 Saudi-based Filipino workers jobless, as the desert kingdom has suspended construction jobs and infrastructure projects since its oil revenues started drying up. As many as 20,000 Filipino workers could be in distress, according to the labor rights group Migrante, taking into account undocumented OFWs.

Despite offers of aid and free flights home from Saudi, retrenched OFWs choose to stay, holding on to hopes that they could collect long-delayed wages and benefits. In the meantime, they live on the streets where they sift through garbage for food and survive on the kindness of strangers.

Labor Secretary Silvestre Bello recently led a special mission to Saudi in an effort to convince the stranded and idled OFWs to return home. He has assured jobs, livelihood loans, relief assistance of P58.66 million for affected OFWs and their families from the Overseas Workers Welfare Administration, technical skills training from Technical Education and Skills Development Authority (Tesda), and inclusion in the social welfare department’s conditional cash transfer program.

While such offers are welcome and reassuring, they also represent momentary relief from the festering ills of overseas employment, a policy that needs to be reviewed and revisited. Over the years, the policy has shown how our OFWs are chronically held hostage by fluctuating oil prices, religious wars, and by the drug policies and criminal justice system of host countries.

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Flor Contemplacion and Mary Jane Veloso come to mind, and so do the frantic attempts of OFWs to exit Kuwait, Libya, Syria, Iraq and other countries on the verge of war.

Started during the 1970s at the height of the martial law regime, the labor export policy was President Marcos’ way of dealing with a moribund economy squeezed dry even more by the behest loans that his cronies had siphoned out of the country’s banking system. With little capital to pump prime the economy, the Marcos government turned to our biggest resource: surplus labor.

Soon enough, OFWs became the crutch propping up the country, with remittances making up 10 percent of the country’s gross domestic product as of 2014. According to the Bangko Sentral ng Pilipinas, OFW cash remittances from January to August 2015 alone have reached $16.21 billion (P764 billion).

Despite such rosy figures, National Economic and Development Authority chief Ernesto Pernia says the Philippines should aspire to be like South Korea and Thailand, countries that no longer need to send workers overseas, a “stop gap” measure used in the early stage of their development.

JOBS BACK HOME

The current administration, he said, would similarly strive to generate more jobs so OFWs need no longer work abroad. The push for development in the countryside in an effort to spread more inclusive growth should also mean more jobs in road construction and other government projects.

More incentives and a restructured tax system meanwhile should pour more spending money into circulation and encourage entrepreneurs to put up small businesses that offer more jobs in sales, marketing and production.

Agriculture and agri-ventures should also be encouraged, as ours is an agricultural country where cultivating idle lands is one viable alternative, and one that has yet to be fully mechanized and thus remains labor-intensive.

This being a consumerist economy, the manufacture of goods should be looked into as well, as this would again generate more jobs and find a ready domestic market.

The retraining OFWs who used to handle technical or highly-skilled jobs abroad should become a priority for Tesda, so that local jobs- and skills-matching would become a priority in schools and the workplace.

With government hospitals sorely lacking in medical staff who have become OFWs because of better pay abroad, it’s also time for government to allocate a bigger budget for our health system to entice our nurses and doctors to stay home.

The Saudi crisis should serve as a springboard for our labor department to take a second look at the skills and number of Filipinos that we lose to other countries every year. It’s a fresh start for this new government, and one that we all can use.


Chief News Editor: Sol Jose Vanzi

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