Philippines commits more foreign and domestic investments

The Philippine government is committed to put in place policies to encourage both foreign and local investments.

Economic Planning Secretary Arsenio Balisacan says the government would also ensure that there is ample supply of commodities particularly food to manage risks of inflation due to weather disturbances, thus protecting the purchasing power of consumers.

With the coming of El Nino, Balisacan said measures to ensure ample food supply include expanding dispersal of drought-tolerant rice varieties to farmers and using appropriate technology and providing technical support for crop management and crop diversification.

Balisacan stresses the challenging external environment coupled with severe weather disturbances that can exert upward pressure on the price of commodities, may dampen the country’s growth prospects.

Meanwhile, Philippine imports increased by 4.1 percent in August 2015 on the back of higher payments for raw materials, intermediate goods, and consumer goods.

The Philippine Statistics Authority reported that payments for imports still went up to US$6.1 billion in August 2015 from US$5.8 billion in the same month last year.

“Merchandise imports growth is expected to maintain its growth momentum until the end of the year. This outcome supports our view that domestic consumption will be the main driver of economic growth, at least in the short term, while the manufacturing sector is seen to remain vibrant,” said Secretary Balisacan.

Payments for raw materials and intermediate goods, which account for 45 percent of the country’s total merchandise imports, increased by 41.2 percent at US$2.8 billion in August 2015 from US$2.0 billion in August 2014.

Spending for imported consumer goods grew by 19.0 percent to US$1.0 billion in August 2015 from US$865.9 million in August 2014 due to higher purchases of both durable goods (36.4%) and non-durable goods (5.1%).

“Imports of raw materials and intermediate goods as well as consumer goods will provide the boost going forward. Ramped-up importation for these commodity sub-sectors suggests an upward tick in the coming months as the manufacturing sector is expected to increase production in anticipation of increased demand during the holiday season.”

Among the monitored trade-oriented economies in East and Southeast Asia for August this year, only the Philippines and Viet Nam recorded positive imports.

“The onset of the election season in early 2016 is also seen as driver of import growth within the year, particularly of manufactured goods such as paper and similar products, textile yarn, fabrics and made-up articles,” Balisacan said.

The import bill for mineral fuels and lubricants declined significantly by 49.7 percent to US$635.9 million in August 2015 from US$1.3 billion in the comparable period last year.

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Philippines-Japan cooperation to improve transport infrastructure

BalisacanThe Philippines and Japan have advanced their cooperation efforts to improve transport infrastructure in Metro Manila through a road map aimed to establish a modern and efficient transportation network under the Roadmap for Transport Infrastructure Development for Metropolitan Manila and its Surrounding Areas.

The Cooperation Roadmap for Quality Infrastructure Development in the Transport Sector in Metropolitan Manila Area is intended to steer the development programs and projects, as well as harmonize efforts on transport projects in Metro Manila. It is also meant to guide the development of policies, design, and prioritization of transport-related projects in the short-, medium-, and long-term.

As part of the joint declaration for strengthened strategic partnership signed by President Benigno S. Aquino III and Japan Prime Minister Shinzo Abe during President Aquino’s state visit to Japan in June 2015, a “Cooperation Roadmap” called for the convening of a ministerial-level committee, which held its first meeting recently to review the progress of projects assisted by Japan.

The meeting, co-chaired by Economic Planning Secretary Arsenio Balisacan and Japanese Ambassador to the Philippines Kazuhide Ishikawa, involved discussions on studies being undertaken by the Japan International Cooperation Agency (JICA) for the possible implementation of the Mega Manila Subway and New Manila International Airport projects.

Also tackled were the Metro Manila Priority Bridges Seismic Improvement Project, the Exchange of Notes and Loan Agreement for which were signed on 25 August 2015, and the North-South Commuter Railway Project (Malolos – Tutuban), the exchange of notes and loan agreement signing for which are expected to be signed in the near future.

Philippines calls for global use of multi-dimensional poverty measures

BalisacanThe Philippines has called for the global use of multi-dimensional measures for countries to see more clearly how economic growth affects poverty in different areas.

Economic Planning Secretary Arsenio Balisacan told a high-level event on “Anchoring a Universal Multi-dimensional Poverty Index (MPI) at the United Nations in New York that poverty in the Philippines is seen as a multi-dimensional concept.

“It is the deprivation not only in income but also, simultaneously, access to health, education, clean water, sanitation, and secure housing.”

“The Philippine economy was growing at 6.2 percent on the average in the last five years but we saw that the growth was weakly correlated with income-based poverty measures.”

“When we developed a multidimensional poverty index (MPI) for the Philippines, based on the Alkire-Foster methodology, we saw that there was a very strong response of multidimensional poverty on growth. This led us to believe that it is high time to shift or to complement income poverty measures by adopting the MPI framework,” Balisacan said.

“The challenges for us moving forward are to expand our household surveys to cover disaggregation by locality and to cover the basic sectors of our society. We have to make sure that this measure is comparable not only across locality and over time but also as much as possible internationally. We need to find a way to linking these with the SDGs,” he added.

Colombia, Chile, and Bhutan, as well as Minas Gerais in Brazil and Ho Chi Minh City in Vietnam have adopted official multidimensional poverty measures. The Philippines joins about eight other countries in developing their own MPIs.

The Philippine Statistics Authority (PSA) is working on the methodology that will serve as the official basis of the country’s MPI.

The high-level event was organized by the Permanent Mission of Costa Rica, the Multidimensional Poverty Peer Network, and the Oxford Poverty and Human Development Initiative.

23 million adult Filipinos report they run out of money for food

WB logoTwenty-three million adult Filipinos report that their households run out of money for food and other necessary items either sometimes or regularly.

Even among those earning more than P50,000 a month, 23 percent state that they run short of money for basic necessities.

A new World Bank survey, “Enhancing Financial Capability and Inclusion in the Philippines – A Demand-side Assessment,” revealed that among the households that report that they run short of money for basic necessities, the use of credit is near universal – 94 percent borrow to cover costs.

Filipinos are more likely to use informal credit and saving services than formal financial services. Only 4 percent of respondents report having a mortgage, 5 percent have a credit card and 10 percent availed credit product from a formal financial institution.

At the same time, more than a third rely on informal savings and credit. Those who are knowledgeable about financial matters are more likely to report that they have money left after paying for basic necessities and less likely to say that they have borrowed beyond their means.

Higher financial literacy scores are strongly correlated with the level of education.

About six of 10 Filipinos say that they plan how they spend the money they earn or receive. Fifty seven percent of those who plan or budget their expenses say that they have money left after paying for basic expenditures, compared to forty two percent of those who do not plan their spending.

These are among the findings of the survey on financial inclusion and capability in the Philippines conducted from February to September 2014. The survey aims to assess people’s financial literacy or capability in managing their day-to-day finances, as well as their access to formal financial institutions like banks.

“It pays to be wise with the way we handle money – that’s what this survey is telling us,” said World Bank Country Director Motoo Konishi. “If people have more knowledge about money matters, this can help them access financial services. Promoting financial literacy is therefore important to achieve greater financial inclusion and boost the growth of micro and small enterprises.”

Financial inclusion refers to the ability of individuals or families to access banking and other formal financial services.

The survey found that about 20 million Filipino adults report that they save money. Of this number, only 10 million have bank accounts.

The most commonly reported obstacles to owning bank accounts are: not having enough money, lack of need for an account, distance, lack of documents, “the bank doesn’t treat people well” and high cost.

“Almost all, 98 percent, of those who save but don’t have bank accounts earn less than P50,000 a month,” said Nataliya Mylenko, World Bank senior financial sector specialist who supervised the survey.

“This suggests that there are significant opportunities for expanding financial inclusion among low- and lower-income groups in the Philippines.”

Survey results indicate the need to develop financial products that meet the needs of consumers, particularly the lower-income groups.

“In July this year, the central bank launched the country’s national financial inclusion strategy,” said Mylenko. “This will be a very important platform for coordinating policy and programs for achieving greater financial inclusion and improving financial education among Filipinos.”

Philippines joins 150 UN member-states to support adoption of sustainable development goals

Balisacan

The Philippines joined more than 150 members of the United Nations (UN) in support of the adoption of the Sustainable Development Goals (SDGs) and pushed for urgent action to combat climate change and its impact.

“If we are to achieve our development goals, we need to take urgent action to combat climate change,” said Economic Planning Secretary Arsenio M. Balisacan during the closing session of the 70th UN General Assembly.

“As president of the Climate Vulnerable Forum, and as one of the most disaster-prone countries in the world, we will also work in the upcoming Paris Conference to ensure that we adopt a new legally binding climate agreement, that is universal and equitable,” he said.

Balisacan emphasized the need to put in place climate change adaptation and mitigation measures particularly in the local levels and increase investments towards a climate resilient economy.

“We have seen extreme weather disturbances occurring with greater frequency and intensity. These calamities can negate our gains in reducing poverty, and even push back development,” he noted.

He also expressed the country’s appreciation of the emphasis placed on the SDGs’ Goal 14 to conserve and sustainably use oceans, seas and marine resources for sustainable development.

“Enshrining this as a global agenda obliges the community of nations to seriously acknowledge challenges to conservation, such as destruction due to massive reclamation as a common concern. These challenges need to be collectively addressed using a rules-based approach in international law as reflected in UNCLOS (United Nations Convention on the Law of the Sea),” Balisacan said.

Furthermore, he welcomed the inclusion of Philippine priorities in the 2030 Agenda, including collective action for conservation, vulnerabilities, and inequality of opportunities.

“There’s no true development if inequalities arising from lack of access to opportunities by the most vulnerable remain. We aspire to achieve education for all, universal health coverage, food security, and social and economic inclusion supported by quality infrastructure,” Balisacan said.

The Cabinet official also recognized the potential of the 2030 Agenda to continue the unfinished business of the Millennium Development Goals, as it is now embedded in the more ambitious and comprehensive SDGs comprised of 17 goals and 169 targets.

Moreover, Balisacan called on the other world leaders to mainstream migration in the development process, reduce remittance costs, and fully respect the human rights of migrants.

He likewise noted the pressing need to address maternal and reproductive health to accelerate the fulfillment of women’s human rights and the demand to strengthen the capacities of statistical agencies to make official statistics more disaggregated, frequent, timely, and accessible.

To meet the financial and technical requirements of the SDGs, the Philippines sought partnerships for expanding access to resources for domestic resource mobilization capacity-building, leveraging private sector participation, and achieving resiliency.

“To move forward and achieve the overarching goal of eradicating poverty, we must now develop our national plans and budgets for its (SDGs) implementation and monitoring. In doing so, we will collaborate with civil society and all stakeholders in line with the principle of inclusiveness and accountability,” Balisacan said.

The 2030 Sustainable Development Agenda will define international, regional and national development agenda priorities over the next 15 years. It pronounced the SDGs, also known as the Global Goals, which aim to eradicate poverty, hunger and inequality, take action on climate change and the environment, improve access to health and education, and build strong institutions and partnerships, among others.

86% of Filipino consumers willing to pay extra for products and services

Eighty-six percent of Filipino consumers are willing to pay extra for products and services that come from companies who are committed to positive social and environmental impact, a four point increase from last year.

“Sustainability is a worldwide concern and this is especially true for consumers in a growing population such as the Philippines to be continually aware of environmental and societal issues,” says Stuart Jamieson, managing director of Nielsen in the Philippines.

“More exposed to the stress in the environment and its effect to the community, consumers are trying to be responsible citizens and they expect the same from corporations.”

“When it comes to purchasing, they are doing their homework. They are checking labels before buying, they are looking at web sites for information on business and manufacturing practices, and they are paying closer attention to public opinion on specific brands in the news or on social media,” says Jamieson.

Committing to sustainability might just pay off for consumer brands. According to the Nielsen report, sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally in the past year, while those without grew less than 1%.

“There’s a strong link between doing good deeds and doing well with consumers. Integrating sustainability into their business models and objectives helps society and at the same time, raises goodwill towards their brands,” says Jamieson.

“Companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners, and importantly, consumers.”

The top sustainability factor that influences purchasing of Filipino consumers is health and wellness.

Products made with fresh, natural or organic ingredients also appeal strongly with Filipino consumers.  Nearly three quarters of survey respondents in the Philippines (74%) say that this factor has very heavy influence in the purchase decision.

Trust in a brand or company is a major influencer in the purchase decision of 77% of respondents.

“There’s still room to elevate trust even for consumer-goods brands that have established a high level of trust with consumers.  For these brands, this presents an opportunity to evaluate where best to introduce sustainable products into the market to drive growth,” says Jamieson.

“On the other hand, large global consumer-goods brands that overlook sustainability increase reputational and business risk.  Ignoring the sustainability imperative makes then vulnerable to competitors of all sizes who will seize the opportunity to build trust with the predominantly young, socially- conscious consumers who are looking for products that align with their values.”

A company’s commitment to the environment has the power to sway product purchase of around two thirds of consumers surveyed in the Philippines (64%).

Commitment to either social value or the consumer’s community are also important each influencing 62% and 60% of respondents, respectively. At the same time, 60% of consumers claim that environmentally friendly packaging also heavily influences their purchase decision.

In 2014, 65% of total sales of consumer goods measured globally were generated by brands whose marketing conveyed commitment to social and/or environmental value.

“Commitment to social and environmental responsibility is surpassing some of the more traditional influences for many consumers,” says Jamieson. “Consumer-goods brands that fail to consider this run the risk of falling behind.”

Forty-three percent of respondents in the Philippines find TV ads highlighting a company’s commitment to positive social and/or environmental impact influential in their purchase decision.

“Marketing good deeds is just as important as offering a sustainable product and is key to attracting and retaining consumers. Brands that actively integrate  sustainability commitment must amplify and socialize their message using multiple sources and distribution channels  such as third-party validation, annual reports, affiliation with a respected non-profit or civic organization, employee volunteerism, advertising, or reporting actual work in the community on a web site,” says  Jamieson.

“While marketing good deeds is encouraged and expected by consumers, authenticity and credibility are essential.  The emphasis must be placed on demonstrating good deeds rather than self-serving promotion. ”

 

 

 

 

Philippine manufacturing industry bounces back in August 2015

The Philippine manufacturing industry bounced back in August 2015 after a three-month decline due to the vigorous construction activity and high demand for automotive products, says the National Economic and Development Authority (NEDA).

The Philippine Statistics Authority (PSA) reported a 3.7% increase in the volume of production index (VoPI), a big improvement from its performance in the past three months.

However, it remains behind the 5.7-percent growth it posted in the same month last year.

“We must continuously drive domestic demand to offset the low global demand and strengthen the link between the agriculture and manufacturing sectors to reduce the economy’s vulnerability to external supply shocks,” says Economic Planning Secretary Arsenio Balisacan.

Meanwhile, the Value of Production Index (VaPI) declined by 4.6 percent.

For consumer goods, manufacture of beverages is leading in the growth in value of net sales, as it posted a 19.1-percent growth in August.

Tobacco also posted a double-digit growth in both value and volume of net sales. On the other hand, the food subsector dropped further in both value and volume of net sales due to the persistent decline in the production values of vegetable or animal oils and fats, grain mill products, processed meat and fish, milk and dairy products.

For intermediate goods, wood posted a double-digit growth of 37.9 and 11.8 percent in volume and value of net sales.

Non-metallic mineral products sustained its double-digit growth at 28.6 and 21.1 in volume and value of net sales due to the continuing demand for construction-related materials from both the private and public sector.

Petroleum continued to slip, posting a 25.0-percent drop in value of net sales due to an oversupply in the global market.

On a positive note, NEDA expects production to increase in 2016 with the completion of a refinery master plan of a major corporation.

For capital goods, fabricated metal products grew by 22.3 and 24.2 percent in volume and value of net sales respectively.

However, net sales of basic metals continued to contract with 28.1 percent in volume and 37.9 percent in value due to the decrease in production and of non-ferrous metals and an oversupply of basic metals globally.

Secretary Balisacan is optimistic for the fourth quarter due to the expected boost in both production and sales of manufactured goods with the coming holiday season, campaign season for the 2016 elections, and the expansion of the business process outsourcing (BPO) industry.

“This, together with the improved employment situation, low inflation rate, declining oil prices and the sustained remittances from overseas Filipino workers, will support the business confidence in the coming months,” says Balisacan.

Sureste Properties acquires land in Quezon City for P1.9 billion

Sureste Properties Inc. (SPI), the hotel and resort development arm of Bloomberry Resorts Corporation (BLOOM), has acquired a 15,676 square meter land in Vertis North, Quezon City Central Business District for P1.97 billion from the state-owned National Housing Authority (NHA).

The property was part of the NHA’s share in the joint venture between NHA and Ayala Land, Inc. (ALI) in the Vertis North project.

SPI plans to develop the property for a mix used project in line with the Veritas North master plan.

The property was the subject to two failed bids on 7 August and 28 August 2015.  As the lone bidder, SPI submitted its offer for the property which was accepted by the NHA.

Philippine exports dip 6.3% in August 2015

The Philippines’ export sales dropped by 6.3% to US$5.127 billion in August 2015 from US$5.471 billion recorded in August of 2014.

The Philippine Statistics Authority (PSA) says the negative growth was mainly brought about by the decrease of six major commodities – mineral products, apparel and clothing accessories, ignition wiring sets, aircraft and ships, chemicals, and metal components.

Combined   merchandise   exports   for the first eight months of 2015 registered a 4.4 percent decrease to US $39.34 billion from $41.130 billion in 2014.

“The latest export performance mirrors the recent developments in the global economy: the slowing down of global trade, sluggish momentum in industrial production in major economies, and downward price pressure on commodities,” says Economic Planning Secretary Arsenio Balisacan.

“With the absence of fresh triggers to spur renewed demand from major advanced economies, the exports sector is expected to remain constrained in the coming months.”

All selected trade-oriented economies in East and Southeast Asia posted negative exports growth for August, except Vietnam.

Reduced exports of mineral products weighed down total merchandise exports as it fell by 48.4 percent from US$413.9 million in August 2014 to US$213.6 million in August 2015. The contraction was primarily due to lower earnings from copper metal and other mineral products.

Balisacan says total export of agro-based products experienced its steepest decline this year at 37.4 percent, marking its seventh consecutive month of lower earnings. This was on account of lower receipts from coconut products, fruits and vegetables, sugar products, and other agro-based products.

“The export sector remains constrained by sluggish global demand, low oil prices, and most importantly, the threat of El Nino to the agriculture sector,” says Secretary Balisacan.

He urged policy makers to focus on enhancing and designing domestic policies that could mitigate the negative impact of external as well as domestic shocks, such as El Nino.

“Over the medium term, we encourage tapping new markets, diversifying export products, and pursuing innovation in order to secure growth, stability and competitiveness for the export sector,” says Balisacan.

“This must be coupled with government’s effort to develop infrastructure, improve business regulations and logistics, and lessen foreign investment restrictions in the country.”

Kempal Construction and TPE Share Sales win P160-million DOTC contract

The joint venture of Kempal Construction & Supply Corp. and TPE Share Sales Inc. has won the P160-million contract for the Metro Rail Transit Line 3 (MRT-3) to minimize operational disruption.

Kampal and TPE Share Sales will supply a brand-new rail grinding machine which will remove track irregularities and extend track life.

The machine, along with operations and maintenance manuals, repair tools, and a five-year supply of spares, will be delivered within a year.

The Department of Transportation and Communication is confident that this will put an end to the classification of systematic rail grinding as special repair works – which entails additional costs – and instead characterize it as an ordinary preventive maintenance undertaking.

“With its own rail grinding machine, the MRT-3 management can minimize costs, as similar equipment will no longer be leased from other firms.”

Last week, the DOTC awarded the signaling system upgrade project to Bombardier Transportation Signal, Ltd.

Under the contract, the existing local control system MAN 900 will be replaced with the more contemporary EBI Screen 900 within the next seven months.

The new tap-and-go ticketing system has also been activated at all MRT-3 stations, allowing the seamless transfer across the three rail lines and shortening queuing time.