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PHL is fiscally secure — Dominguez

Published in Business

MANILA — The Philippines is now “fiscally secure” and its government ready to fund its ambitious infrastructure program that will sustain the economy’s growth momentum and dramatically bring down poverty incidence to 14 percent by 2022, according to Finance Secretary Carlos Dominguez.


From the time President took over in July 2016 to May 2017, revenue collections increased to P2.09 trillion, up 7 percent from higher than the same period in the previous year, in part because of the administrative reforms put in place in the Bureaus of Internal Revenue (BIR) and of Customs (BOC), Dominguez said.


He said the approval by the Congress of the Duterte administration’s first tax reform package — the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN)--will ensure a steady revenue flow for the government’s massive infrastructure buildup and guarantee a “breakout growth rate” of above 7 percent that will be sustained over the medium term.


This robust pace of growth will, in turn, enable the government to pull down the poverty rate from 21.6 percent today to a significantly lower 14 percent by the time President Duterte leaves office in 2022, making the benefits of growth inclusive for all Filipinos, Dominguez said.


“Even at this earlier stage in our reform effort, you can distinctly hear the tiger roar. We are on the path towards a modern, investment-led and trade-driven economy,” said Dominguez at a Malacanang press briefing where he highlighted the first-year accomplishments of the Duterte administration on the fiscal and economic fronts.


Dominguez thanked the House of Representatives for its overwhelming support for TRAIN, which was approved by the chamber with a 246-9 vote last May 31.


The bill’s approval by a vast majority of the House members “shows how seriously they consider the tax reform because it benefits the far majority of Filipinos, and everyone wants to see the economy grow and benefit them in the coming years,” Dominguez said.


“This is an important milestone signaling a strong possibility that this package may be enacted into law shortly after Congress resumes this July,” the finance chief said.


He said the administration and its partners in civil society and the private sector would work hard to ensure that the Senate passes a tax reform package consistent with the proposal endorsed by the Department of Finance (DOF) after the Legislature reopens its session on July 24, especially after the President certified the bill as an urgent and priority measure before the end of the first regular session of the 17th Congress.


“We take heart at the fact the passage of the tax reform measure was welcomed by nearly all stakeholders: businesses, international development partners, credit rating agencies and, most of all, wage earners,” Dominguez said.


He said “The package accomplishes the dual goals of increasing disposable income for our workers and increasing spending for the poor” and is “a win-win package for our people.”


Dominguez cited the GDP’s robust 6.68 percent growth rate for the first nine months of the Duterte administration, which is faster than the expansion rates in all other previous administrations; the growth in investments spurred by low and stable interest rates; the average inflation rate of 2.64 percent in the first 11 month of the Duterte presidency, and the decline in the debt-to-GDP ratio from 43 percent as of the end-June 2016 to 41.9 percent by the end-March 2017 as among the key factors showing that the government is on track to meet its economic targets.


As a comparison, GDP growth for the first nine months was 4.69 percent in the presidency of Corazon Aquino and 2.10 percent under President Ramos. For the same period, it was 0.17 percent under President Joseph Estrada; 3.0 percent, Gloria Macapagal Arroyo; and 5.98 percent, Benigno Aquino III.


“We are on our way towards achieving the growth breakout our strategy aspires for,” he said.


“The broader economic strategy is bearing fruit. GDP grew by 6.68 percent during the first 3 quarters, faster than all other administrations. We expect to grow close to the targeted 7 percent through the year,” Dominguez said.


In the first 9 months of the Duterte administration, T-Bill rates averaged 2 percent, the lowest of all previous administrations despite the start of rate normalization undertaken by the US Federal Reserve, while the average inflation rate for the first 11 months stood at 2.64 percent, also the lowest registered in all previous administrations, Dominguez said.


He said the reduced debt load would allow the government “enough flexibility to pump prime our economy” when complemented by a tax reform package that provides funds for the Duterte administration’s planned unprecedented spending on infrastructure, education, health and social protection for the poorest of the poor.


The TRAIN bill approved by the House slashes personal income tax rates for 83 percent of Filipinos to enable them to increase their disposable income, which, in turn, will drive the growth of the domestic market.


TRAIN also provides for complementary measures expected to raise additional revenues for the government estimated at PHP133.8 billion in 2018.


At the same time, reforms in tax administration are now being implemented in the BIR and BOC, such as the expansion of the Large Taxpayers Service to closely monitor large businesses, and the strengthening of anti-smuggling capabilities, Dominguez said.


“We are bringing in all the powers of modern information technology to make electronic governance real and ensure a sustainable fiscal position. We are continuously fighting red tape and improving our economy’s competitiveness,” he added.

PHL foreign reserves reach $81.4 B

Published in Business

MANILA — Foreign currency reserves of the Philippines reached USD81.4 billion as of end-June 2017, a three-month low, but still higher than the revised full-year target of US$80.5 billion.


Data released by the Bangko Sentral ng Pilipinas (BSP) show that the foreign reserves of the country at the end of the first half of the year is lower than last May’s US$82.18 billion and year-ago’s US$85.28 billion.


BSP Governor Nestor A. Espenilla Jr., in a statement, traced the decline of the reserves to the central bank’s foreign exchange operations, payments made by the national government of its maturing foreign debt and decline in the value of central bank’s gold holdings, with the latter due to drop of gold prices in the international market.


He said the country’s current level of foreign reserves was equivalent to cover 8.7 months’ worth of imports of goods and payments of services and primary income, higher than the 8.3 months’ worth of cover of the full-year target.


The latest foreign reserves, on the other hand, got a boost from net foreign currency deposits by the national government and income from the central bank’s investments overseas, he said.


During the same period, net international reserves (NIR) or the difference between the central bank’s foreign reserves and total short-term debt, amounted to USD81.39 billion from the previous month’s US$82.16 billion.

Region 12 farmers export organic rice to UAE, US

Published in Business

GENERAL SANTOS CITY  — Farmers from Region 12, also known as Soccsksargen region, shipped anew 13.5 metric tons (MT) of organic rice to the United Arab Emirates (UAE) and the United States (US).


This brought to 150 MT the volume of organic rice exported by the Don Bosco Multipurpose Cooperative (Don Bosco MPC), based in M’lang, North Cotabato, to different parts of the world.


Milagros Casis, Department of Agriculture director for Region 12, said the latest shipment, shipped through the Davao City port, consists of 10 MT for Dubai, UAE and 3.5 MT of black rice to the US market.


Casis said the agency has poured interventions to the cooperative such as a double chamber vacuum packing machine, seed trading center, rice transplanter, seed cleaner and rice color sorter worth PHP3 million in 2012.


The coop also received P1.9 million worth of rice combine harvester in 2016, she added.


“We are also bringing Don Bosco MPC to local and international trade fairs and expo,” Casis noted.


Romano Laurilla, Don Bosco MPC general manager, said the opportunity to export organic black rice to the US came after he met Justin Garrido, a social entrepreneur and co-founder of the Social Project.PH.

Garrido is the coop’s distributor in the US, Laurilla said, adding that in November 2014 and February 2015, the coop exported two tons to Los Angeles, California.


Laurilla said they started exporting to the UAE in 2012. “The additional 10 MT organic rice shipment is the product of the Dubai OFW (Overseas Filipino Workers) Reintegration Program."


Under the program, overseas Filipino workers adopt organic rice farmers and provide financing to these organic rice cultivators in M’lang town, he said.


Ofelia Domingo, former regional director of the Department of Labor and Employment in Region 12 and now assigned in Region 9 conceptualized the program bearing in mind the welfare of OFWs.

“Through this program, we offer our OFWs a potential opportunity that they can invest on in the Philippines while they are earning abroad,” Domingo said.


Don Bosco MPC’s organic black, red and brown rice are grown in more than 500 hectares in the towns of M’lang, Tulunan, Midsayap, President Roxas and Kidapawan City in North Cotabato and Surallah in South Cotabato.


The coop is also expanding production areas in Sultan Kudarat province.


Don Bosco MPC currently holds a certification from the Organic Certifying Center of the Philippines. It is the first coop in the Philippines to receive international certification from Certification of Environmental Standards, a European-based certifying body.


It has also been certified by the National Organic Program of the US Department of Agriculture.


Last year, Agriculture Secretary Manny Pińol awarded PHP22.4 million worth of additional interventions to the coop to enhance their production.


Of the said amount, Laurilla said the Agricultural Credit Policy Council (ACPC) granted them a PHP5 million marketing loan.


The PHP17.4 million was already downloaded to the local government of M’lang, which will be used in the procurement of additional rice processing equipment and construction of a warehouse, he added. (RSS/PNA)


Peso to settle at P51:$1 this year — expert

Published in Business

MANILA (PhilAmPress) — The Philippine peso is expected to settle at P51.00:$1 on average this year, as the dollar appreciates against most currencies, according to an expert.

Victor A. Abola, economist at the University of Asia and the Pacific (UA&P), made the projection during the First Metro Investment Corp. (FMIC) Mid-year Economic Briefing in Makati City. FMIC is the investment arm of the Metro Bank.

"We're seeing that the US economy and surprisingly, EU and Japan are doing better. That means the dollar is expected to be stronger," Abola said.

The peso weakened further against the US dollar on Monday, July 10, as it slipped to another fresh low of 50.695, the weakest so far this year as the greenback strengthened due to expectations of better prospects for the US economy. This is also the lowest the peso has reached since Sept. 1, 2006, when it was 50.700 against $1. The peso fell to the new 10-year low on increased appetite for the greenback following better-than-expected US jobs report showing the world’s biggest economy is improving. The peso lost P0.11 to close at 50.695, down from 50.58 last Friday. It was the local currency’s weakest level since it averaged 50.755 a dollar on Sept. 4, 2006. Total volume turnover was thin at $438.8 million, down from $514.7 million Friday.


“The US dollar traded off the highs after the better–than-expected US jobs report last Friday night Asian time,” Security Bank Corp. said in its daily market report.


Earlier reports said the US job market had a better-than-expected 222,000 new positions created in June, more than the expected 179,000 for the month. The increase in payrolls came after a sluggish 152,000 jobs created in May. Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. earlier said the weakening of the peso was “not a cause of concern” and that its movement broadly reflected prevailing market conditions and underlying economic fundamentals, in line with the BSP exchange rate policy. 


Espenilla said Bangko Sentral actively managing excessive volatility. He said a major driver was sentiment for a stronger US dollar as the Fed moved forward with steps to normalize from ultra-easy monetary policy as US economic conditions steadily improved.


University of Asia & the Pacific economist Victor Abola last week said the weakness of the peso could be traced to the expected stronger imports. Business Monitor International, a unit of Fitch Group, said the peso might close the year at 50.50 a dollar, a downward revision of its previous estimate of 50 per greenback. It said the fragile political outlook in the Philippines and the expected additional rate hikes by the US Federal Reserve would put more pressure on the local currency.


BMI considered the Philippine peso one of the worst-performing currencies in Asia this year, after it broke support at 50 a dollar. BMI said while there was scope for further spot weakness over the coming months given rising real rates in developed markets, the peso was not expected to weaken excessively. 

Meanwhile, the total volume traded sank to $439 million from Friday’s $515 million. “The USD has been supported by the strong US payrolls data last Friday, which showed 222,000 job gains and indicated continued strength in the US economy,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit. 


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