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2016 RECAP By Wilson Sy: SANTA ARRIVES LATE
[RELATED: Nickelodeon theme park construction to push through — developer]
JANUARY 9 -By Wilson Sy In 2016’s final Philequity Corner article, we asked – where is Santa? Was he stuck in traffic? Did he remove us from his list? Did he forsake the Philippine stock market? With the index down 19 percent from the high right before Christmas, it looked like this would be the year Santa skipped the Philippines. Fortunately for investors, it looks like Santa Claus was simply late. Back to the 7200 level Even though Santa missed the Philippines during noche buena, he made up for it by giving us a festive media noche. Starting from Dec. 27, the first trading day after Christmas, up to last Friday, the PSEi rose by 10.4 percent. This nearly 700-point rise brought the stock market to 7,248.20. For the year 2017, the index has gained 5.96 percent YTD. Instead of a “Merry Christmas,” Old Saint Nick gave us a “Happy New Year” instead! READ MORE...ALSO, RELATED, Nickelodeon theme park construction to push through — Developer...
ALSO: Japan PM Abe vows P434-B aid, drug rehab support
JANUARY 13 -A one-trillion-yen aid package for the Philippines (P434 billion at yesterday’s exchange rate) is one of the commitments made by visiting Japanese Prime Minister Shinzo Abe during his meeting with President Rodrigo Duterte yesterday. Issei Kato/Pool Photo via AP A one-trillion-yen aid package for the Philippines (P434 billion at yesterday’s exchange rate) is one of the commitments made by visiting Japanese Prime Minister Shinzo Abe during his meeting with President Duterte yesterday. Apart from this, Duterte and Abe witnessed the signing of five agreements on trade, infrastructure and low carbon growth partnership. Japan’s aid package covers a five-year period in official development assistance and private sector investments. Japanese Foreign Press Secretary Yasuhisa Kawamura said Tokyo had provided approximately $20 billion over the past 50 years. Japan is the biggest source of ODA for the Philippines. READ MORE...
ALSO: Duterte raises SSS pension, premiums; tax reforms can wait[RELATED: Drilon rejects hike; SSS refutes Drilon: Contribution hike is not ‘invalid and illegal’]
JANUARY 11 -President Duterte relaxes while waiting to accept the credentials of new ambassadors at the study room of Malacañang yesterday. Beginning this month, retired members of the Social Security System (SSS) will have P1,000 more in monthly pension. Malacañang announced yesterday President Duterte’s approval of the P1,000 hike, but with a corresponding 1.5 percent increase in members’ contribution. With the pension increase to benefit about two million pensioners, some 34 million contributors – along with employers – will have to shell out more in monthly contributions starting May. The President also approved another P1,000 hike effective 2022, or by the end of his term. READ MORE...RELATED, SSS refutes Drilon: Contribution hike is not ‘invalid and illegal’ ...
ALSO: Former DOF, NEDA chiefs back Duterte’s tax reform program[RELATED(2): S&P: Upgrade unlikely, may cut if reform stalls]
JANUARY 9 -Bureau of Internal Revenue (INQUIRER FILE PHOTO) A dozen of the country’s former chief economists and finance chiefs on Monday said the Department of Finance’s proposed tax policy reform program would help the country achieve inclusive growth as well as slash poverty en route to becoming a high middle-income country by 2040. In a joint statement released by the DOF, seven of its former secretaries, seven former undersecretaries, as well as five former director-generals of the state planning agency National Economic and Development Authority, said that they “fully endorse” the DOF’s tax reform packages. “We, the former secretaries and undersecretaries of the DOF and the NEDA fully support the DOF’s comprehensive tax reform program as a long needed corrective (measure) to our tax system’s structural weaknesses and as a tool to achieve inclusive growth and transformative poverty reduction in our country,” they said in a manifesto. READ MORE...RELATED,
ALSO: Pimentel - No ‘pork’ in P3.35-T budget
[RELATED: 2017 budget ‘cholesterol-free’—Palace; Senators, congressmen applaud, ty, boss!] [RELATED(2): P1B in budget to help get rid of loan sharks]
JANUARY 10 -Senate President Aquilino Pimentel III said yesterday funds allocated for projects initiated by lawmakers in this year’s P3.35-trillion national budget were not “pork.” Senate PRIB/Joseph Vidal Senate President Aquilino Pimentel III said yesterday funds allocated for projects initiated by lawmakers in this year’s P3.35-trillion national budget were not “pork.” Pimentel said the Supreme Court (SC) ruling on the Priority Development Assistance Fund in 2013 prohibits only lawmakers’ intervention in implementing their projects after the national budget is signed into law. “The essence of the decision of the SC is not about the label or the pork barrel, but the act which is unconstitutional – that is, the involvement of legislators in implementing the budget, in making the budget complete after the budget law has been enacted,” Pimentel said. “In this particular case, when a legislator helps in the budget process but it can be implemented after the enactment of the budget law without the legislator’s intervention, then that is no longer the act declared unconstitutional by the SC,” he added. READ MORE...RELATED, 2017 budget ‘cholesterol-free’—Palace... RELATED(2), P1B in budget to help get rid of loan sharks...
ALSO: Factory production quickens pace in November
[RELATED: Leyte - Agriculture cuts poverty rate]
JANUARY 11 -Factory output, as measured by the Volume of Production Index (VoPI), previously rose 8.4 percent in October 2016 and 4.4. percent in November 2015. Increased production was also seen from beverages, rubber and plastic products, tobacco products and textiles. File photo Manufacturing output grew at a faster 14.6 percent pace in November, boosted by increased production of petroleum products, transport equipment and food products, the Philippine Statistics Authority (PSA) reported yesterday. Factory output, as measured by the Volume of Production Index (VoPI), previously rose 8.4 percent in October 2016 and 4.4. percent in November 2015. Increased production was also seen from beverages, rubber and plastic products, tobacco products and textiles. The Value of Production Index (VaPI) for manufacturing also registered a steep increase of 10.6 percent in November from 4.3 percent in October and a 2.2 percent contraction in November 2015. READ MORE...RELATED, Leyte: Agriculture cuts poverty rate...
ALSO: WB sees higher 2017 global growth, uncertainty over US policy[RELATED: HSBC hikes Phl growth forecast]
JANUARY 11 -WASHINGTON - The World Bank on Tuesday said global growth would accelerate slightly as recovering oil and commodity prices ease pressures on emerging-market commodity exporters and painful recessions in Brazil and Russia come to an end. In its latest Global Economic Prospects report, the multilateral lender said it expected 2017 real gross domestic product growth to rebound to 2.7 percent from a post-financial crisis low of 2.3 percent last year. Growth in advanced economies is expected to edge up to 1.8 percent in 2017 from 1.6 percent in 2016, the World Bank said, while emerging and developing economies will see growth accelerate to 4.2 percent this year from 3.4 percent last year. "After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon," World Bank Group President Jim Yong Kim said in a statement. "Now is the time to take advantage of this momentum and increase investments in infrastructure and people." READ MORE...RELATED, HSBC hikes Phl growth forecast ...
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Santa arrives late
MANILA, JANUARY 16, 2016 (PHILSTAR) PHILEQUITY CORNER By Wilson Sy (The Philippine Star) | Updated January 9, 2017 - In 2016’s final Philequity Corner article, we asked – where is Santa? Was he stuck in traffic? Did he remove us from his list? Did he forsake the Philippine stock market?
With the index down 19 percent from the high right before Christmas, it looked like this would be the year Santa skipped the Philippines. Fortunately for investors, it looks like Santa Claus was simply late.
Back to the 7200 level Even though Santa missed the Philippines during noche buena, he made up for it by giving us a festive media noche.
Starting from Dec. 27, the first trading day after Christmas, up to last Friday, the PSEi rose by 10.4 percent. This nearly 700-point rise brought the stock market to 7,248.20. For the year 2017, the index has gained 5.96 percent YTD. Instead of a “Merry Christmas,” Old Saint Nick gave us a “Happy New Year” instead!
Statistics holds true On page 195 of our book, Opportunity of a Lifetime, one can see the average monthly returns of the PSEi since 1987. One will see that, among all the months, December has the highest probability of ending in the green.
Since our data started in 1987, December has a 70-percent chance of being positive with an average return of 3.8 percent. Thus, with the PSEi in the red for most of December 2016, it looked like statistics were not on our side. But lo and behold, the last three trading days of the year saw a gain of 4.2 percent, enough to bring the December return to 0.9 percent. Once again, even though Santa Claus was late, statistics held true.
January effect Just like December, January tends to be a good month for stocks as well. In the past 29 years, January has seen a positive return 18 times, or a 62-percent probability. The average return during this timeframe was 2.6 percent.
Fortunately, the first trading week of the year shows statistics may once again hold true. In fact, the PSEi’s six percent jump has far exceeded everyone’s expectations. Thus, unless the index experiences a major correction in the next 17 trading days, the January effect will likely be validated.
BANNER MONTH FOR US
Almost 20,000 January 2017 is a banner month for the US. The Dow Jones index reached 19,999.63 – a paltry 0.37 points away from reaching the 20,000 milestone. The S&P 500 gained 1.7 percent YTD, while the Nasdaq Composite, which includes technology stocks like Apple, Facebook and Google, broke the 5,500 level and is up 2.6 percent for the year.
One of the most important reasons behind the strength of the US stock market is the victory of Donald Trump. Previously touted as an “orange swan” event, equities instead made new all-time highs in the weeks after his victory.
In a previous article, we enumerated 14 reasons for the strength in US stocks after Trump’s victory (see The Trump Card, Dec. 12, 2016 and Year of the Underdogs, Nov. 14, 2016). Foremost of these are Trump’s pro-growth policies.
If Trumponomics is successfully implemented by the US, which is the leader of the global economy, then these may be followed by Europe and Japan. Economic growth in Europe and Japan may subsequently lift emerging markets (EM).
Global bull market
As the three main equity indices in the US are making new all-time highs, other countries have followed suit. In Europe, the FTSE 100 made a new all-time high, while other countries, such as Germany, are close to their historic highs.
Japan’s Nikkei is up 17 percent from its November low. Stock markets in countries such as Canada, Australia and many emerging markets are also performing strongly. Clearly, we are witnessing a global bull market.
New highs abroad means higher for us?
Many investors have been wondering why Philippine stocks surged all of a sudden. We enumerate some of the reasons in the succeeding paragraphs. One of the key reasons behind is the performance of developed markets. With developed markets making new highs and significantly outperforming EM in the past three months, EM valuations have become cheaper.
Foreign funds are now starting to look at EM in search of bargains. Thus, new highs abroad have lifted Philippine stocks as well.
Foreign selling abates
Since the middle of August last year, the Philippine stock market has seen very heavy foreign selling. However, it seems the practically uninterrupted daily foreign selling has abated for now. In fact, the last six trading days saw net foreign buying of about P2 billion. With foreign selling pressure reversing into buying momentum, our stock market was able to stage a dramatic reversal.
Peso holds below 50
Our currency also got a welcome respite from the dollar strength. After flirting with the crucial 50/$ level, the peso has since bounced back. At the height of the attack on EM currencies, we believe the BSP stalwartly defended the 50-level, which stabilized financial markets.
If it were not for their staunch defense of the 50-level, we may have seen runaway peso depreciation which could have rattled the financial markets even more. With the dollar strength abating as of late and foreign inflows going into stocks, the peso has now stabilized and strengthened to 49.47.
Technicals starting to improve
For those who follow technical analysis, one will notice that chart patterns are improving. Aside from being oversold, the short term downtrend line for many stocks has been broken.
Many traders take this as a buy signal. With locals now filling the void left by foreign funds recently, technicals indicate it is likely we have seen the bottom for Philippine stocks.
Forgetting the positives
In the latter part of 2016, investor sentiment for the Philippines turned sour. One of the reasons behind this are the repeated negative headlines in foreign dailies. This distracted investors and they forgot the positive things that are about to happen in our country, such as the lifting of foreign ownership limits, the tax reform package which includes corporate tax cuts, the boost in infrastructure spending, and other pro-growth policies that could bring GDP growth above seven percent in the years to come.
If negative headlines about the Philippines cease, local and foreign investors can now focus on the country’s macroeconomic fundamentals.
Voice of enlightenment from our economic managers
Lost amidst all the political noise are the enlightening and confident statements by the BSP and the government’s economic managers led by Finance Secretary Sonny Dominguez.
Their 10-point economic agenda is sound. In fact, the corporate tax cuts, fiscal stimulus and infrastructure spending program are very similar to Trump’s initiatives.
Last week, BSP Governor Tetangco and all three economic managers gave interviews. Secretary Dominiguez said that “we would continue to enjoy low interest rates for so long as the country’s macroeconomic fundamentals are kept intact.”
NEDA Director-General and Economic Planning Secretary Ernesto Pernia said the “Philippine economy can sustain seven percent economic growth this year and the next few years.”
Budget Secretary Ben Diokno echoed these statements, saying the country will “usher in a golden age of infrastructure with the largest infra spending in history” and that “we are the fastest-growing country in the fastest-growing region.” As we can see in the US, pro-growth policies are very strong catalysts for a country’s financial markets.
Given these, there seems to be a disconnect between the macrofundamentals of the country and our stock market performance.
Despite GDP growth of 7.1 percent, and pro-growth policies being implemented in the Philippines, as well as stock markets rising globally, the Philippine stock market still fell sharply from its high of 8,118. Over time, we believe this disconnect will eventually be corrected as the government’s economic program starts bearing fruit.
Investing for the long term
It is nearly impossible to predict what will happen in the short term. Global macroeconomic events, as well as political noise both here and in the US have created very high levels of volatility that have unnerved even the toughest of investors.
However, we know the Philippines will continue to grow and that companies here will be able to participate in this growth.
Though the market has risen quite sharply and may need a correction or consolidation, we may have seen the low in this correction phase at 6,499. Thus, if one can invest for the long term and ride out the volatility, then the investor can likewise ride on the Philippines’ exciting growth story.
Philequity Management is the fund manager of the leading mutual funds in the Philippines.
Visit www.philequity.net to learn more about Philequity’s managed funds or to view previous articles. For inquiries or to send feedback, please call (02) 689-8080 or email firstname.lastname@example.org .
RELATED FROM PHILSTAR
Nickelodeon theme park construction to push through — developer By Louise Maureen Simeon (philstar.com) | Updated January 12, 2017 - 4:35pm 2 301 googleplus1 1
Palawan is home to more than 300 coral species or about half of all coral species in the world, as well as breeding ground of more than 1,500 fish species in the country. File
MANILA, Philippines — The developer of the planned Nickelodeon theme park in Palawan has confirmed that the attraction will push through but clarified that this would not be "underwater" contrary to earlier reports.
Developer Coral World Park Undersea Resorts Inc. said the undersea-themed master planned development is not a theme park but a "resort and attraction."
"There has never been any form of communication from our side mentioning a theme park. Our plans are to build a resort and attraction, of which we are designing as an undersea attraction with an ocean conservation focus," Coral World Park Marketing and Communications director Susan Lee said in a statement.
"There will be no theme park development in Palawan," she added.
The company noted that the "undersea-themed" park is land-based but is designed to meet the international standards required as a global destination, especially environment-related standards advocating conservation tourism, renewable energy and category five proof architecture.
The developer also slammed international media outfit Agence France-Presse saying it did not clearly reflect the full details of the announcement of Coral World Park and Nickelodeon-owner Viacom International Media Networks.
After the announcement, several online petitions against the plan have been launched by various environmental groups.
"We take the petitions seriously but sad to say, information has been misunderstood. We hope these points clarify all matters concerning this development," the developer said.
The Department of Environment and Natural Resources (DENR) has already announced that it will not allow the construction of the theme park.
DENR opposes Nickelodeon underwater park in Palawan
"I will never allow our biodiversity to be killed for money that some people want to make," Environment Secretary Gina Lopez said.
Palawan is home to more than 300 coral species or about half of all coral species in the world, as well as breeding ground of more than 1,500 fish species in the country.
Coral World Park has also clarified reports that a full 400 hectares are to be developed under water is inaccurate.
"Only 100 hectares have been allocated for the Nickelodeon facility and up to 30 hectares is allocated for the attraction itself, which has not been finalized yet," it said.
The Coral World Park emphasized that the master planned development will not only help create jobs for local communities but will help provide the necessary funding to ensure on-going protection of the area.
"When completed, it will be the largest coral reef conservation program in Asia, with Asia’s largest marine sanctuary for five key species — dolphins, sea cows, sea horses, turtles and whale sharks," it said.
The facility will be on a private property and will be undergoing all the necessary approvals from the government before construction starts.
"This project is five years in the making and coordinated with the relevant officials of the Philippine government," Lee said.
The Coral World Park is funded by the Monaco-based Dr. AB Moñozca Foundation and its CWP Trust, which advocates ocean protection.
"We have our own strict adherence to the environment. We aim to create a large scale reef conservation program which is sustainable, together with sanctuaries for key species in the area — these are part of our blue-print besides the job creation opportunities," the company said.
"We aim to work with as many advocates as possible to create a world class destination for tourism with an undersea theme," it added.
Abe vows P434-B aid, drug rehab support By Christina Mendez (The Philippine Star) | Updated January 13, 2017 - 12:00am 0 3 googleplus0 0
A one-trillion-yen aid package for the Philippines (P434 billion at yesterday’s exchange rate) is one of the commitments made by visiting Japanese Prime Minister Shinzo Abe during his meeting with President Rodrigo Duterte yesterday. Issei Kato/Pool Photo via AP
MANILA, Philippines - A one-trillion-yen aid package for the Philippines (P434 billion at yesterday’s exchange rate) is one of the commitments made by visiting Japanese Prime Minister Shinzo Abe during his meeting with President Duterte yesterday.
Apart from this, Duterte and Abe witnessed the signing of five agreements on trade, infrastructure and low carbon growth partnership.
Japan’s aid package covers a five-year period in official development assistance and private sector investments.
Japanese Foreign Press Secretary Yasuhisa Kawamura said Tokyo had provided approximately $20 billion over the past 50 years. Japan is the biggest source of ODA for the Philippines.
Duterte, in his remarks at the banquet last night, underscored the importance of Japan as a partner for development of the Philippines. He also reiterated his regard for Japan as a “friend closer than a brother.”
“In Tokyo, I said that Japan deserves its own rightful place in the constellation of the Philippines’ friends. Tonight, let me reiterate that Japan is a friend closer than a brother. That means that Japan is a friend unlike any other,” Duterte said.
At the start of his remarks, Duterte said Abe’s presence in Manila “is proof positive that Japan and the Philippines are fully committed to bring this long-standing friendship and tried and tested partnership to even greater heights.”
“Our discussions earlier today moved us to a new level, closer to the achievement of common goals of ensuring a stable and more secure environment for our nations and our peoples to continue to grow,” Duterte added.
“We resolved to strengthen maritime and security cooperation, advance the cause of peace and development in Mindanao, intensify economic and trade cooperation, and to address the scourge of the illegal drug trade in a comprehensive manner,” the President added, before calling for a toast with Abe and the guests estimated at about 300.
Abe also committed to help President Duterte in his campaign against illegal drugs, which has received strong criticisms abroad for alleged human rights abuses.
In their joint statement, Duterte announced that he and Abe reached an agreement on how to deal with the drug problem in the country.
“Also, we both agreed to work together in pursuing a comprehensive approach in the war against the illegal drug trade,” Duterte said.
“As the Philippines pursues its campaign to destroy the illegal drugs apparatus, we welcome the expressed interest of Japan to support measures to address the tremendous social cost of drug addiction, this includes rehabilitation,” Duterte said.
In response, Abe said Japan will help in rehabilitation efforts of drug addicts and in provision of treatment programs.
Duterte raises SSS pension, premiums By Christina Mendez and Janvic Mateo (The Philippine Star) | Updated January 11, 2017 - 12:00am 0 5 googleplus0 0
President Duterte relaxes while waiting to accept the credentials of new ambassadors at the study room of Malacañang yesterday.
MANILA, Philippines – Beginning this month, retired members of the Social Security System (SSS) will have P1,000 more in monthly pension.
Malacañang announced yesterday President Duterte’s approval of the P1,000 hike, but with a corresponding 1.5 percent increase in members’ contribution.
With the pension increase to benefit about two million pensioners, some 34 million contributors – along with employers – will have to shell out more in monthly contributions starting May.
The President also approved another P1,000 hike effective 2022, or by the end of his term.
“The President has approved a P1,000 pension hike this month with a corresponding 1.5 percent contribution rate hike in May 2017, and increase in monthly salary credit to P20,000 from P16,000,” presidential spokesman Ernesto Abella said in a press briefing at Malacañang.
The Palace had advised media that Duterte would be presiding over the press briefing, but eventually only Abella, SSS president Emmanuel Dooc and SSS chairman Amado Valdez showed up to answer prepared questions from the media.
In approving the pension increase, Abella said the President “seeks to fulfill a social contract with the Filipino people, especially the elderly and the poor who gave the best years of their lives in service.”
Apparently to justify the increase in members’ contribution, he cited the need for SSS to exercise fiscal responsibility to ensure economic sustainability and protect the gains “made by those who have prudently invested in the nation’s future.”
“As the President has emphasized, he is the President of an entire nation and not a particular social class,” Abella said in his opening statement. The funds for the increase would be covered by current contributions and the investment reserve fund, officials added.
In an interview, Dooc said they had recommended a P500 increase but the P1,000 figure would turn out to be the compromise rate, with economic managers opposing moves for government subsidy. He said the increase would reflect in the February pension.
Asked why there was no prior consultation with SSS contributors, Dooc said the SSS is a tripartite body which has commissioners who represent members.
Tax reform can wait
Dooc said economic managers have deemed it necessary for the rate increase to be implemented by May, without waiting for the government to act on the proposed income tax reform package for employees that aims to reduce the income tax rate from 32 percent to 25 percent.
Budget Secretary Benjamin Diokno earlier said in a briefing that any increase in SSS contribution would be viable after Congress approves an income tax reform law possibly by 2018.
Valdez and Dooc also vowed to go after erring firms who fail to properly pay or remit the contributions of their employees. The SSS officials, however, did not say how many companies they would be going after, even as they urged Congress to help them in issuing condonation packages to delinquent employers.
The SSS is also proposing amendments to its charter.
By May 2017, the SSS will impose a 1.5 percent contribution rate increase or 12.5 percent from the current 11 percent contribution rate.
In peso value, the additional total contribution will range from P15 to P740, equally shared by the employer and the employee. The proper perspective is to view the SSS contribution as long-term savings, and not as an expense, officials added.
Earlier, three “leftist” members of the Cabinet called on President Duterte to implement as soon as possible the P2,000 increase in the monthly SSS pension.
Challenging the position of Duterte’s economic managers, secretaries Judy Taguiwalo of the Department of Social Welfare and Development, Rafael Mariano of the Department of Agrarian Reform and Liza Maza of the National Anti-Poverty Commission said the President should honor his promise to raise the SSS pension by P2,000.
In a position paper presented during a Cabinet meeting Monday night, the three secretaries said the commitment made by the “candidate” Duterte was a covenant with the public that he is bound to uphold.
The statement was in reference to a previous remark of Diokno that candidate Duterte is different from President Duterte.
Diokno and other economic managers earlier recommended that Duterte turn down proposals to raise the SSS pension.
Without an increase in contribution rates, the budget chief warned that SSS may face bankruptcy as more funds would end up as pension for retirees.
But in their position paper, the three secretaries maintained that the equation should not be limited between pension hikes and contribution rates.
“The SSS pension fund is not built only through membership contribution by its members. It is also built by prudent investment of the fund in financial instruments that bring yields which exceed at least the inflation rate and the true cost of living for the pensioners,” they said.
They said pensioners should not be held hostage by fear tactics “comprised mostly of the unfounded argument that the fund will go bankrupt if a benefit long due to them is given.”
“SSS fund managers over the years have demonstrated consistently their readiness to losing billions of pesos in taking bets on how their asset placements would perform, but express extreme pessimism whenever initiatives to improve the lot of the pensioners are considered,” they added.
The secretaries challenged the economic managers to have the political will to address the inefficiencies of SSS, stressing the need for other ways to raise funds to cover the pension hike without increasing the contribution of members.
In addition to the passage of the pension hike, they also pushed for a review and reform of the SSS governance and fund management program, citing a loss of placements amounting to P24.5 billion last year.
They urged Duterte to order the evaluation of the SSS loan and investment portfolio and enforce an effective asset recovery program.
“Inappropriately created loans should be paid by those who benefited from them and criminal charges should be filed and earnestly pursued,” they said.
“(He should also) order the SSS governing body to immediately undertake a program that will address collection efficiency, prudent but optimal fund investment program and earnest commitment to serve the pensioners’ welfare as social investors,” added the secretaries.
Citing a recent report of the Commission on Audit (COA), the secretaries cited the need to recover investments in closed, non-existing or unlisted companies worth P823 million; and to collect delinquent premium contributions amounting to P4.845 billion.
COA also noted the existence of idle assets amounting to P17.95 billion with foregone revenues of P198 million as of 2014, as well as net understatement of total assets by P9.94 billion and of reserves by P11.34 billion in 2015.
“A change in perspective is a prerequisite to fulfill President Duterte’s promise to SSS pensioners,” said the three Cabinet members.
“Let this government continuously show its care for the elderly and the poor. They who have cared for us in our formative and dependent years should be accorded our full support. This is our time to pay forward,” they added.
RELATED FROM PHILSTAR
SSS refutes Drilon: Contribution hike is not ‘invalid and illegal’ By: Ed Margareth Barahan - @inquirerdotnet INQUIRER.net / 07:28 PM January 12, 2017
SSS Building on East Avenue in Quezon City The Social Security System (SSS) Building on East Avenue, Quezon City. (Photo by RAFFY LERMA/Philippine Daily Inquirer)
The planned increase in contributions to the Social Security System (SSS) pension is not, as Senate President Franklin Drilon, “invalid and illegal.”
In a statement issued on Thursday, SSS Chairman Dean Amado Valdez said that the pension hike, which takes effect January 2017, would be be financed by current contributions and investment income.
On Tuesday, Drilon rejected the plan of the Duterte administration to raise the rate of the monthly contribution of SSS members.
He said it would be against the law for the SSS to impose a 1.5 percent increase on the monthly premium of its members starting in May to finance the additional P1,000 pension hike for its retirees this January was against the law.
READ: SSS premium hike against the law, says Drilon
Valdez said that the contribution hike by May of this year would be used to “expand the Investment Reserve Fund, to generate higher yields for investments, and to further strengthen the viability of the pension fund for future obligations.”
“SSS is mandated to promote social justice by providing meaningful benefits to its members when they retire,” Valdez added. /ATM
Former DOF, NEDA chiefs back Duterte’s tax reform program By: Ben O. de Vera - @inquirerdotnet Philippine Daily Inquirer / 04:42 PM January 09, 2017
Bureau of Internal Revenue (INQUIRER FILE PHOTO)
MANILA — A dozen of the country’s former chief economists and finance chiefs on Monday said the Department of Finance’s proposed tax policy reform program would help the country achieve inclusive growth as well as slash poverty en route to becoming a high middle-income country by 2040.
In a joint statement released by the DOF, seven of its former secretaries, seven former undersecretaries, as well as five former director-generals of the state planning agency National Economic and Development Authority, said that they “fully endorse” the DOF’s tax reform packages.
“We, the former secretaries and undersecretaries of the DOF and the NEDA fully support the DOF’s comprehensive tax reform program as a long needed corrective (measure) to our tax system’s structural weaknesses and as a tool to achieve inclusive growth and transformative poverty reduction in our country,” they said in a manifesto.
“The DOF’s proposed comprehensive tax reform is progressive, timely, and well-crafted to achieve the vision of a prosperous Philippines free of poverty. For these reasons we strongly support the reform and urge the public to do the same,” they added.
WHO THE SUPORTERS ARE
The signatories to the manifesto included the following former DOF chiefs: Juanita Amatong, Jose Isidro Camacho, Roberto De Ocampo, Jesus Estanislao, Jose Pardo, Cesar Purisima and Cesar Virata.
The following former DOF undersecretaries also signed the manifesto to support tax reform: Joel Bañares, Romeo Bernardo, Cornelio Gison, Lily Gruba, Milwida Guevara, Jose Emmanuel Reverente and Florencia Tarriela.
Former NEDA directors-general Arsenio Balisacan, Emmanuel Esguerra, Cielito Habito, Felipe Medalla and Romulo Neri said they were backing up the DOF’s tax reform proposal, which would help transform the country in one generation or by year 2040 under the so-called AmBisyon Natin 2040 vision.
AMBISYON NATIN 2040
Launched in 2016, AmBisyon Natin 2040 was aimed at tripling Filipinos’ per capita income to $11,000 in 24 years’ time by sustaining at least a 6.5-percent annual gross domestic product growth alongside the implementation of policies that would make the Philippines a high-income country by 2040.
A survey conducted early in 2016 showed that the majority of Filipinos aspire for a “simple and comfortable life,” which NEDA had said reflected middle-class lifestyle—earning enough, educating all children until college, owning a car, owning a medium-sized house, finding time to relax with family and friends, owning a business, and being able to travel around the country.
Last October, President Duterte signed Executive Order No. 5, which adopted the AmBisyon Natin 2040 as the long-term vision for the Philippines, such that “by 2040, the Philippines shall be a prosperous, predominantly middle-class society where no one is poor.”
The 19 former officials said tax reform would be an integral part of the goal to slash poverty. The Duterte administration wanted to cut poverty incidence to 14 percent by 2022 from 21.6 percent last year through its 10-point socioeconomic agenda, which included tax reform.
TAX POLICU REFORMS NEEDED
“Overall, tax policy reforms are needed to make the tax system fairer, simpler, and more efficient, to put more money in people’s pockets, and encourage investment, job creation, and poverty reduction, while making our country more competitive regionally,” the former DOF and NEDA officials said.
“We share NEDA’s goal—that by 2040, the Philippines will be a prosperous, predominantly middle-class society where no one is poor, and our people will live long, healthy lives, be smart and innovative, and live in a high-trust society. The Philippine government aims to triple real per capita incomes and eradicate hunger and poverty by 2040, if not sooner. We fully endorse the DOF’s tax reform as part of the solution toward achieving these aims,” they added.
The former officials called for the immediate passage of the tax reform proposals.
The DOF quoted them as saying that “tax administration and budget reforms alone will never raise the high level of revenues needed for the unparalleled investments in infrastructure, human capital and social protection for the poor and other vulnerable sectors.”
Tax reform will also reverse the tax system’s current weaknesses, which they said “make our economy less competitive relative to our neighbors and deprive our people of deeply needed investments to improve their lives.”
In particular, the 19 former officials expressed support the first package of the DOF’s tax policy reform program.
“We support DOF’s tax reform package 1, which seeks to equitably raise around 1 percent of GDP (gross domestic product) in additional revenues to fund the Duterte administration’s 10-point agenda,” they said.
“The personal income tax reform is long overdue and is a welcomed move. This needs to be complemented by revenue enhancing measures to ensure that the poor and vulnerable are provided better education and health services, as well as benefit from better infrastructure,” they added.
OIL, AUTOMOBILE TAX INCREASE
To compensate for lower personal income taxes, the former economic managers said they also “support the increase in oil and automobile excise taxes as a very progressive means of raising revenues and addressing the negative externalities of pollution and traffic congestion as families optimize the purchase and use of cars.”
“Given that the top 10 percent of households (comprising the richest twi million households) account for about 50 percent of all petroleum consumption, while the top 1 percent (comprising the richest 200,000 households) account for 13 percent of all petroleum consumption, raising oil excises means that we stop subsidizing the consumption of the rich and instead use the incremental tax revenues to fund infrastructure and protect the poor,” according to the former DOF and Neda officials.
According to the manifesto, they “also support the plan to provide highly targeted transfers to the poor and vulnerable to mitigate the impact of higher oil, food, and transportation prices” once higher oil prices due to increased excise taxes set in.
Also, “broadening the value-added tax (VAT) base will remove the large number of exemptions currently contributing to inequity and massive leakages,” they said, adding that such would be “consistent with the international best practice of limiting exemptions to the necessities of life.”
Before Congress went on a Christmas break, the DOF pitched a revised version of the first package of its comprehensive tax reform proposal, which will now include mandatory marking of oil products as well as the grant of absolute amnesty on estate tax deficiency.
A copy of the revised draft bill obtained by the Philippine Daily Inquirer said the first package “seeks to lower personal income taxes, broaden the VAT base, adjust excise taxes on petroleum and automobiles, reduce the estate and donors tax, and provide an amnesty to past estate tax cases.”
Under the first package, the following tax administration measures were to be pursued: mandatory use of fuel marking; recognition of e-receipts; mandatory interconnection of large and medium firms point of sale machines and accounting system with the Bureau of Internal Revenue; mandatory use of GPS locks when transporting cargo from ports to economic zones and free ports; shift to quarterly VAT and percentage tax filing to improve compliance; and relaxation of bank secrecy for fraud cases.
While it was initially supposed to be included in the succeeding tax reform packages, the DOF is now moving to include in the first package the reduction of estate and donors tax to 6 percent, while also providing absolute amnesty on past estate taxes that had been unpaid.
The bill retained the salient provisions of the original first package as proposed by the DOF, including adjusting tax brackets to correct “income bracket creeping”; reducing the maximum personal income tax rate to 25 percent over time, save for the “ultra-rich” who would be slapped a higher 35 percent; and shifting to a simpler modified gross system.
As lower personal income taxes would result into foregone revenues estimated at P127.4 billion by 2018, the DOF plans to offset and gain P301.6 billion by expanding the VAT base by limiting exemptions to necessities such as raw food, education and health products and services; increasing the excise tax slapped on all oil products and indexing them to inflation; as well as jacking up excise tax on automobiles.
The government stands to generate a net revenue gain of P174.2 billion from the first package by 2018, the first year of implementation being eyed by the DOF as the bill was targeted enacted into law in 2017.
Recognizing that the upward tax adjustments will impact on the poor, the bill also proposed earmarking for social protection.
AIM AT SUSTAINING 7% ECO GROWTH
The Duterte administration’s tax policy reform program, aimed at augmenting the P1 trillion in priority investments needed by the administration in the next six years to sustain at least 7-percent economic growth until 2040 as well as slash the poverty incidence, will come in six packages.
The second package, which would likely be introduced in 2018 or after the Sin Tax Reform Law matures next year, would levy taxes indexed to inflation on sweetened drinks, as well as further hike the excise tax slapped on alcohol and tobacco products.
Based on earlier DOF estimates, the “health tax” package would generate P120.4 billion in revenues for the government by 2019—P71.7 billion from alcohol and tobacco, on top of P48.7 billion from sweetened beverages.
The four other tax packages include those on corporate income tax and incentives; property tax; capital income tax; and other taxes (carbon tax, “fatty” food tax, lottery and casino tax, as well as mining tax). They are eyed for passage in the next two to three years.
According to the Cabinet-level, interagency Development Budget Coordination Committee (DBCC), the proposed 2018 national budget, pegged at a record-high of P3.84 trillion, will be contingent on Congress’ approval of the proposed first tax reform package, as government revenues are projected to hit P2.913 trillion with the help of additional taxes to be introduced to offset the planned lowering of personal income tax rates.
“The projected proceeds of the tax reform package—around P206.8 billion—will fund the government’s big-ticket development projects, particularly the infrastructure program,” the DBCC said in a recent report. SFM
RELATED FROM THE INQUIRER
2 senators buck higher taxes on oil products By: Christine O. Avendaño - Reporter / @10avendanoINQ Philippine Daily Inquirer / 03:23 AM January 07, 2017
COMPOSITE PHOTOS Sen. Leila de Lima and Ralph Recto
Two senators have opposed a plan to impose additional taxes on oil products while three others pushed for its careful study along with other measures designed to generate revenues for government.
Minority Senators Ralph Recto and Leila de Lima rejected the Duterte administration’s bid to impose a P6 per liter tax for diesel and taxes on gasoline and cooking gas.
Budget Secretary Benjamin Diokno on Wednesday said the government plans to impose additional taxes on oil products because of the need for an increase in revenue to finance its ambitious infrastructure program that would cost from P8 trillion to P9 trillion during the six-year Duterte administration.
Recto thumbed down the increases, saying there was no fiscal crisis in the country.
“The timing is also bad now that oil prices are on their way up. Just improve collection efficiency and stop smuggling,” he said in a statement.
“In addition, government collects more taxes when the economy grows faster. Then grow the economy. Spend the budget first,” Recto also said.
For her part, De Lima said the planned increases were “not acceptable” and would only burden the people since these could result to hikes in transport fares and consumer goods.
“Are they really angry at the poor? It’s always the poor who are the victims, such as in the war on drugs, so even in collecting taxes, it will be the poor who should suffer?” De Lima said in a statement.
The senator also pushed for an extensive study of the plan as she questioned the necessity of the increases.
“Maybe they should focus more on fulfilling the President’s campaign promise to curb corruption in these revenue collection agencies to increase collection efficiency,” De Lima said.
RELTED(2) FROM THE MANILA TIMES
S&P: Upgrade unlikely, may cut if reform stalls 0 BY MAYVELIN U. CARABALLO, TMT ON JANUARY 12, 2017 BUSINESS
Standard & Poor’s Global Ratings maintained its stable outlook for the Philippines’ investment grade rating for now, saying no upgrade may be expected in the next two years and that it may even cut the rating if the government reform agenda stalls.
“The stable outlook balances the Philippines’ lower middle-income economy and diminished policy stability, predictability, and accountability against its strong external position, which features rising foreign exchange reserves and low and declining external debt,” the credit rating agency said in a report released Wednesday.
It said it may consider a rating upgrade for the country if continued fiscal improvements under the new administration boost investment and economic growth prospects, or if improvements in the policy environment lead to a better assessment of institutional and governance effectiveness.
However, it added, “A higher rating is unlikely over our two-year ratings horizon.”
S&P even pointed out, “We may lower the ratings if, under the new administration, the reform agenda stalls or if there is a reversal of the recent gains in the Philippines’ fiscal or external positions.”
Tax reform bill pending in Congress The government led by President Rodrigo Duterte has launched reform measures intended to strengthen the country’s fiscal, political and economic position for sustainable growth.
A vital element of the reform plan is a comprehensive tax reform program, which was filed in Congress in September last year and remains pending with the House Committee on Ways and Means.
It needs to be in place by mid-2017 or early 2018, the Department of Finance (DoF) has said, warning that otherwise, the administration may consider cutting the infrastructure budget for 2018 which forms basis for the government’s growth projections and welfare programs.
S&P sees slowdown in 2017 The credit rater views the country’s gross domestic product (GDP) growth in line with the Duterte administration’s target range of 6 percent to 7 percent for 2016, adjusting its own estimate upward to 6.6 percent from a previous projection of 6.5 percent for that year.
For 2017, S&P sees a slight easing to 6.4 percent, although that already reflects an upward adjustment from its previous forecast of 6.3 percent. That falls below the official growth target in the range of 6.5 percent to 7.5 percent.
AsiaPac stability faces external risk The Philippines is among 15 economies with stable outlooks from S&P for their sovereign ratings in Asia-Pacific. Indonesia is the sole sovereign rating in the region with a positive outlook. Five others have negative outlooks as of Jan. 1, 2017.
These economies show sovereign credit trends continuing to be stable over the next year or two, but not without risk from the more mature economies around the world.
“Global economic performance is still weighed down by the lackluster performances of some advanced economies,” S&P Global Ratings credit analyst Kim Eng Tan was quoted in a separate statement issued along with the report.
“Sovereigns also face uncertainties generated by political developments in Europe and the US. These could have negative economic and geopolitical implications for Asia-Pacific,” the analyst said.
The credit watchdog added that political developments in advanced economies are adding to the challenges that Asia-Pacific sovereigns face.
“Anti-globalization sentiments are increasing and the risk of protectionist measures is growing,” Tan said.
“This is a negative development for Asia-Pacific, which has benefited much from global trade and investment flows. The risk may rise further if upcoming elections in Europe produce more surprises,” he added.
“If anti-trade measures become more likely or if the integrity of the European Union is called into question again, financial market volatility could return. And the resulting deterioration in financing conditions for sovereigns in this region could weaken credit metrics even before the trade impact becomes evident,” he added.
Pimentel: No ‘pork’ in P3.35-T budget By Paolo Romero (The Philippine Star) | Updated January 10, 2017 - 12:00am 0 0 googleplus0 0
Senate President Aquilino Pimentel III said yesterday funds allocated for projects initiated by lawmakers in this year’s P3.35-trillion national budget were not “pork.” Senate PRIB/Joseph Vidal
MANILA, Philippines - Senate President Aquilino Pimentel III said yesterday funds allocated for projects initiated by lawmakers in this year’s P3.35-trillion national budget were not “pork.”
Pimentel said the Supreme Court (SC) ruling on the Priority Development Assistance Fund in 2013 prohibits only lawmakers’ intervention in implementing their projects after the national budget is signed into law.
“The essence of the decision of the SC is not about the label or the pork barrel, but the act which is unconstitutional – that is, the involvement of legislators in implementing the budget, in making the budget complete after the budget law has been enacted,” Pimentel said.
“In this particular case, when a legislator helps in the budget process but it can be implemented after the enactment of the budget law without the legislator’s intervention, then that is no longer the act declared unconstitutional by the SC,” he added.
Pimentel added the preparation of the budget is a function of the executive branch, which has its own “style” of allocation, depending on the administration, before the proposed budget is submitted to Congress for scrutiny and amendments.
AQUINO'S BOTTOM-UP BUDGETING
The Senate President cited for example the “bottom-up budgeting” strategy of the Aquino administration that involved local government units.
“If the executive wants to involve other people like legislators, who are we to question the inclusive approach of the executive branch… I find nothing wrong with that. What is wrong is you cannot implement a budget law because you need the intervention of the legislator after the enactment,” Pimentel stressed.
He also denied Sen. Panfilo Lacson’s allegations that each senator was asked to identify at least P300 million worth of projects.
“I never heard an instruction to submit ‘X amount of projects.’ But of course, the budget is a law and once upon a time it was a bill. Hence, it underwent amendments,” Pimentel said.
He also downplayed some administration-allied senators’ reported dissatisfaction with his leadership.
“As in any collegial body, I don’t think there would be 100-percent happiness in each member – that’s okay with me. Even in a grade school class of 40, everybody does not get 100 in the report card. If it’s a petty matter, let’s not talk about it,” Pimentel said.
“I don’t look at the petty, but the important things. The leadership of the Senate must have the support of 13 senators at any given time. So, if there is a new senator who has the support of at least 13, then he should lead the Senate,” he added.
RELATED FROM THE INQUIRER
2017 budget ‘cholesterol-free’—Palace By: Marlon Ramos - Reporter / @MRamosINQ Philippine Daily Inquirer / 12:54 PM January 09, 2017
THANK YOU, BOSS Senators and congressmen applaud as President Duterte signs the General Appropriations Act for 2017 in this photo taken on Dec. 22, 2016. Sen. Panfilo Lacson has insisted that pork funds have been inserted into the national budget. —MALACAÑANG PHOTO
President Rodrigo Duterte’s first national budget is “cholesterol-free,” Malacañang insisted on Monday as it rejected Sen. Panfilo “Ping” Lacson’s claim that the Duterte administration has resuscitated the graft-plagued pork barrel system.
READ: Palace, Congress hit for keeping pork
Ernesto Abella, the President’s spokesperson, said this year’s budget of P3.35 trillion complied with the Supreme Court’s decision, which declared as unconstitutional the discretionary funds for lawmakers, officially called Priority Development Assistance Fund (PDAF).
“There are no pork barrel items in the 2017 budget. (It) is compliant to the SC ruling on PDAF,” Abella said in a text message to the INQUIRER.
Mr. Duterte has been very vocal against the pork barrel, which some corrupt senators and congressmen used to fatten their own wallets by endorsing spurious PDAF-funded projects and to promote patronage politics.
But Lacson accused the President and his allies in Congress of conniving with each other to clandestinely revive PDAF, which they allegedly did “without official records or communication.”
“To put a veil on their postenactment participation, in connivance with those in the executive branch, the legislators now identify their projects prior to submission of the budget to Congress, during the budget deliberations and even during the bicameral conference,” Lacson told the INQUIRER in an interview.
READ: Lacson to question pork in budget in SC
The senator said certain favored congressmen received as much as P3 billion in pork allocations while some of his colleagues in the Senate could access up to P300 million in PDAF.
Lacson, who has consistently ditched his pork barrel allocations, showed a copy of “pro forma files,” or standard documents on which congressmen identify their projects.
The documents would then be presented to the Department of Budget and Management for inclusion in the National Expenditure Program prepared by the Palace.
While it was widely regarded an open secret in the bureaucracy, corruption in the use of pork barrel came to the fore when whistleblower Benhur Luy spilled the beans on his cousin, businesswoman Janet Lim-Napoles.
Napoles allegedly utilized her vast network of friends in the Senate and the House to access about P10 billion in PDAF through fake nongovernment organizations, which implemented fraudulent government projects./rga
RELATED(2) FROM TRHE INQUIRER
P1B in budget to help get rid of loan sharks By: Tarra Quismundo - Reporter / @TarraINQ
Philippine Daily Inquirer / 05:26 AM January 13, 2017
As the government moves to clear the country’s streets of unregulated loan sharks, an alternative is available for entrepreneurs: a P1-billion budget for interest-free microfinancing.
Sen. Loren Legarda, chair of the Senate committee on finance, made this disclosure yesterday as she welcomed President Duterte’s crackdown on Indian lenders, who lure borrowers into easy, no-paperwork loan schemes but charge interest of as much as 20 percent.
These “5-6” moneylenders, mostly Indian nationals, are popular in the informal economy, serving as a last resort source of microcapitals to the country’s vendors and other small entrepreneurs.
The President this week ordered the arrest of these loan sharks, noting that they operate without permits and do not remit taxes to government.
“We put in a P1-billion microentrepreneurship development fund [in the national budget] so people won’t have to succumb to loan sharks,” Legarda told the Inquirer in an interview.
Not matter of race
“We’re against usury. It’s not a matter of race or religion or creed, [whether you’re] Indian or what, but just the usury practice. That’s why in the budget, we put a billion [pesos] collateral-free, interest-free loans to microentrepreneurs,” she said.
The fund, she said, would be available through Small Business Corp. (SB Corp.), the financing arm of the Department of Trade and Industry (DTI) and one of the smallest government-owned and -controlled corporations.
SB Corp. serves as the government’s chief agency for “small enterprise development financing and small credit delivery systems,” according to its website.
Legarda said the fund, approved under the 2017 national budget through the support of the President, Congress and the Department of Budget and Management (DBM), aimed to support “microentrepreneurs who need capital assistance.”
SB Corp. is expected to draft and soon enact implementing rules and regulations (IRR) detailing mechanics on how Filipinos could avail themselves of state microcapital support.
“They can go to Small Business Corp., which is under the DTI. They will be provided collateral-free, low- or no-interest loans depending on final IRR of SB Corp.,” Legarda said.
“This will prevent them from falling prey to usury practices,” she said.
The goal next year is for the government to make available a P1-billion fund for each of the country’s 18 regions.
“By 2018, we hope to fund P1 billion per region for micro-enterprise development. This is a project and advocacy of the President, which both DBM and Congress support,” she said.
Factory production quickens pace in Nov By Czeriza Valencia (The Philippine Star) | Updated January 11, 2017 - 12:00am 0 0 googleplus0 0
Factory output, as measured by the Volume of Production Index (VoPI), previously rose 8.4 percent in October 2016 and 4.4. percent in November 2015. Increased production was also seen from beverages, rubber and plastic products, tobacco products and textiles. File photo
MANILA, Philippines – Manufacturing output grew at a faster 14.6 percent pace in November, boosted by increased production of petroleum products, transport equipment and food products, the Philippine Statistics Authority (PSA) reported yesterday.
Factory output, as measured by the Volume of Production Index (VoPI), previously rose 8.4 percent in October 2016 and 4.4. percent in November 2015. Increased production was also seen from beverages, rubber and plastic products, tobacco products and textiles.
The Value of Production Index (VaPI) for manufacturing also registered a steep increase of 10.6 percent in November from 4.3 percent in October and a 2.2 percent contraction in November 2015.
Socioeconomic Planning Secretary Ernesto Pernia said the manufacturing sector likely registered stronger growth in December due to increased consumer demand during the Christmas season.
“Looking ahead, we see the sector benefitting from strong private and public investments,” he said. “Low inflation, low unemployment, and strong remittances will also continue to drive domestic demand, and will boost manufacturing in the Philippines.”
FAVORABLE FARMING CONDITIONS
Favorable farming conditions in November enabled the food subsector to register double-digit growth rates in both production (24.6 percent,) and sales (26.7 percent) from a 10 percent decline in both volume and value last year, said the National Economic and Development Authority (NEDA).
For intermediate goods, production value of petroleum products has been growing steadily for three consecutive months, following consistent declines since 2015. The petroleum subsector posted growth rates of 80.3 percent and 68.8 percent in volume and value of production during the reference period, respectively.
For capital goods, the transport equipment subsector posted a 40.4 percent growth in production volume and 39.1 percent growth in production value, supported by local demand for vehicles such as passenger cars, light trucks and buses.
In November, factories operated at an average capacity utilization rate of 83.8 percent, with production facilities for petroleum products operating at the highest utilization rate of 88.6 percent.
Fifty-five percent or 11 of the 20 major industries operated at 80 percent and above capacity utilization rates. These were: petroleum products, basic metals, non-metallic mineral products, machinery except electrical, food manufacturing, chemical products, electrical machinery, paper and paper products, rubber and plastic products, wood and wood products and printing.
Pernia said the government must continue to pursue efforts that will boost the country’s growing manufacturing sector and provide quality jobs.
“One is through encouraging innovation in manufacturing so that we remain competitive with the rest of the world. Second, we need to minimize bureaucratic procedures and regulatory barriers to attract investments and to reduce the cost of doing business and expand production capacity,” he said.
“Lastly, we must make sure that the technical skills of our labor force are in line with industry needs, and that opportunities to enhance technical competencies are available to people in the low-income and far-flung areas of our country,” Pernia added.
RELATED FROM THE INQUIRER
Leyte: Agriculture cuts poverty rate By: Ernesto M. Ordoñez - @inquirerdotnet Philippine Daily Inquirer / 12:18 AM January 13, 2017
In Leyte, the poverty level dropped from 31 percent in 2012 to 23 percent in 2015. This was inspite of “Yolanda,” which dealt the province a heavy blow in 2013. How did this happen? Leyte Governor Dominico Petilla provides a one-word answer: “agriculture.”
Continuing the agriculture emphasis in his second term, Petilla aims to see the poverty go down further to 15 percent in 2019. If this happens, Leyte will have less than half of the rural poverty rate of the Philippines, less than the rate of Vietnam (19 percent), and almost as low as Thailand and Indonesia (both at 14 percent).
Petilla continues: “I disagree with the emphasis of agriculture development being on things such as seeds, fertilizers, tools, and mechanization. Though these are all important, the emphasis should be more on people, than on things.
Petilla’s emphasis on people rests on four pillars: health; education and skills, character and values; and increased incomes. Farmers cannot work if they are not healthy. Consequently, information programs on health habits to prevent sickness are given to the farmers. When farmers get seriously ill, there are eleven hospitals in various parts of the province that cater mostly to farmers.
Leyte governor Leopoldo Dominico Petilla ...
Education is also given on basic agriculture in the elementary and high schools. However, even those who are illiterate are provided with programs on agriculture production. These people can achieve skill levels in production even higher than the literate people. They should therefore be harnessed rather than ignored.
But even if a farmer is healthy, educated and skillful, he can be a liability rather than an asset if he does not have strong character and the right set of values. Petilla addresses this with programs such as a three-day workshop called “Sons and Daughters Encounter.” This is where farmer parents and their children discuss the appropriate values needed for success. Examples are integrity, discipline, hard work, team spirit and generosity.
With the combination of health, skills and values, the fourth pillar is to harness these traits in an income generating venture that will take the farmers out of the poverty trap. This involves knowing the business aspects, such as a defined market, the correct production technology, and the appropriate partners and contacts.
From violence to prosperity
At Barangay Villa Conzoilo in Jaro, Leyte, there was much unrest because of the poverty level. The military and NPA engaged in frequent battles. Selling votes was rampant because people were poor and needed money.
For this barangay, Petilla solicited the help of government agencies and the private sector to introduce livelihood activities such as organic vegetable farming. With the added three pillars of health, skills and the right values, povery significantly decreased. In this barangay, 36 formerly poor farmers now collectively earn P12 million in annual revenue.
Petilla’s strategy is to do this agriculture program for the whole province, but he will use a barangay by barangay strategy. He will have 300 nucleus barangays by 2019 in different parts of the province. They will provide the impetus and models for inclusive growth in the surrounding areas.
To help ensure that agriculture development will be a priority for each municipality, Petilla has gotten the support of Leyte’s municipals mayors. To address the problem of many municipalities where the agriculture extension workers do work other than agriculture because of directives from misguided mayors, there is a comprehensive monitoring system to keep track of each municipal agriculture extension worker’s performance. This has a corresponding reward and penalty system.
Leyte has shown how agriculture can overcome poverty. Its provincial planning head, Cora Alvero (0917-83861230), can provide details on making Leyte a possible model to follow.
The author is Agriwatch chair, former Secretary of Presidential Programs and Projects, and former Undersecretary of DA and DTI.
Contact him at email@example.com.
GMA NEWS NETWORK
World Bank sees higher 2017 global growth, uncertainty over US policy Published January 11, 2017 5:26am BY DAVID LAWDER, Reuters
WASHINGTON - The World Bank on Tuesday said global growth would accelerate slightly as recovering oil and commodity prices ease pressures on emerging-market commodity exporters and painful recessions in Brazil and Russia come to an end.
In its latest Global Economic Prospects report, the multilateral lender said it expected 2017 real gross domestic product growth to rebound to 2.7 percent from a post-financial crisis low of 2.3 percent last year.
Growth in advanced economies is expected to edge up to 1.8 percent in 2017 from 1.6 percent in 2016, the World Bank said, while emerging and developing economies will see growth accelerate to 4.2 percent this year from 3.4 percent last year.
"After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon," World Bank Group President Jim Yong Kim said in a statement. "Now is the time to take advantage of this momentum and increase investments in infrastructure and people."
However, there was considerable uncertainty surrounding the forecasts, which did not incorporate the effects of various policy proposals from U.S. President-elect Donald Trump, which are expected to include increased fiscal stimulus from tax cuts and infrastructure spending, and a more protectionist trade stance.
The World Bank forecasts 2017 U.S. growth at 2.2 percent versus 1.6 percent in 2016, but the increase could be considerably larger -- and have effects far beyond U.S. shores.
"A surge in U.S. growth -- whether due to expansionary fiscal policies or other reasons -- could provide a significant boost to the global economy," the bank said.
However, this could lead to higher interest rates and tighter financial conditions that would have adverse effects on some emerging market countries that depend heavily on external financing.
It added that lingering uncertainty over the course of U.S. economic policy could weigh on global growth by keeping investment money on the sidelines until there is more policy clarity.
The World Bank said China's growth would continue to slow, easing to 6.2 percent in 2017 from 6.7 percent in 2016, but growth would edge higher in some Southeast Asian economies, including Indonesia and Thailand.
India's strong growth is expected to accelerate, rising to 7.6 percent in 2017 from 7.0 percent in 2016 as reforms ease domestic supply bottlenecks and increase productivity. — Reuters
RELATED FROM PHILSTAR
HSBC hikes Phl growth forecast By Lawrence Agcaoili (The Philippine Star) | Updated January 13, 2017 - 12:00am 0 0 googleplus0 0
British banking giant HSBC has raised its economic growth outlook for the Philippines as the country continues to stand out as one of the strongest performers in Asia. BusinessWorld File photo
MANILA, Philippines - British banking giant HSBC has raised its economic growth outlook for the Philippines as the country continues to stand out as one of the strongest performers in Asia.
Joseph Incalcaterra, economist at HSBC, said the bank has upgraded the gross domestic product (GDP) growth forecast for the Philippines to 6.5 percent from the original of 6.3 percent this year.
The British bank also raised the projected GDP growth for last year to 6.8 percent from the original forecast of 6.5 percent.
Despite an uncertain external environment and weak regional growth, the economy grew 7.1 percent in the third quarter of last year from seven percent in the second quarter.
“This is the fastest pace in almost three years, bringing growth for the first nine months of 2016 to seven percent and placing the government’s six to seven percent growth target for 2016 well within reach,” Incalcaterra said.
According to Incalcatera, private consumption and investment remain the main drivers of growth.
Economic managers are looking at a higher GDP growth range of 6.5 to 7.5 percent this year as it committed to ramp up infrastructure spending to five percent of GDP through more public private partnership (PPP) projects.
Incalcaterra added private consumption would continue to play a major role in the economic expansion amid the steady growth in remittances from overseas Filipinas as well as higher fixed capital investments.
“There are various headwinds on the horizon for the regional economy next year and, while the Philippines is not completely spared, the economy remains relatively insulated,” he said.
The economist cited the campaign rhetoric of US president-elect Donald Trump that could affect remittances as well as the business process outsourcing (BPO) sector in the Philippines.
He also noted the pivot to China of President Duterte.
“There are fears that investment from the US, which is the largest contributor of foreign direct investments in the Philippines, might fall under new US economic policies. However, China has made investment commitments of $24 billion recently, which could partly offset the potential decline in FDI from the US,” Incalcatera said.
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