Costs of services trade, investment barriers remain high – OECD

The costs of services trade and investment barriers remain high, largely exceeding the average tariff on traded goods.

An OECD report noted that consumers and business pay for these restrictions. In sectors such as transport, logistics and construction, the cost of services are estimated to be about 20% higher on average than they would be in the absence of restrictions, and in some countries are nearly 80% higher than otherwise, imposing substantial additional burdens on manufacturing enterprises and eventually on final customers.

Red tape across services markets also creates additional costs for exporters seeking to enter multiple markets – the ad valorem tariff equivalent of regulatory differences is estimated at about 40%.

Small and medium-sized enterprises (SMEs) would benefit from more open and better regulated services markets. SMEs often find that identifying the regulatory requirements of each country and documenting compliance is beyond their capacity.

Reducing the costs of market entry would help improve the inclusiveness of services trade by allowing more SMEs to take up global opportunities.

“Open and well-regulated services markets are the gateway to global value chains,” said OECD Secretary-General Angel Gurría.  “Services trade policy reform can boost SMEs, reduce trade costs, strengthen the digital economy and help make globalisation work for all.”

The report recommends that countries pursue co-ordinated services trade policy and regulatory reforms by scaling back restrictions on foreign entry and barriers to the movement of professionals that discriminate against foreign services providers.

Countries should adopt strategic reforms across a spectrum of trade, investment and competition policies to facilitate trade in services, targeting bottlenecks in transportation and logistics services to reduce trade costs.

ICTSI is one of Philippines’ best investor relations companies

ICTSI best investor relations company

Treasury Director and Head of Investor Relations Arthur R. Tabuena was named the Philippines’ Best Investor Relations Professional, receiving the citation from Corporate Governance Asia founder & publisher Aldrin Monsod.

Manila-based ICTSI has been named as one of the Best Investor Relations Company in the Philippines and its chairman and president Enrique Razon, Jr. was hailed as Asia’s Best CEO (Investor Relations) by Corporate Governance Asia during the recent 9th Asian Excellence Awards.

On the other hand, Rafael D. Consing Jr., ICTSI Senior Vice President and Chief Financial Officer, was named Asia’s Best CFO (Investor Relations) while Arthur R. Tabuena, ICTSI Treasury Director and Head of Investor Relations, was recognized as the Philippines’ Best Investor Relations Professional.

Now on its 9th year, the Asian Excellence Awards recognizes companies for their achievements and superiority in management acumen, financial performance, corporate social responsibility, environmental practices and investor relations. Winners were selected from several countries across the region, including China, Hong Kong, India, Japan, Korea, Indonesia, Malaysia, Singapore, Taiwan, Thailand, Vietnam, and the Philippines.

Adding to the long list of awards recognizing ICTSI for its governance excellence is Alpha Southeast Asia that cited the Company as one of the best managed companies in the Philippines – clinching five awards in the 9th Annual Institutional Investor Awards.

ICTSI led publicly-listed companies in the country as having the Strongest Adherence to Corporate Governance and Most Organized Investor Relations Company; whilst second best in having the Best Senior Management IR Support and Most Consistent Dividend Policy.

In the same awards, Mr. Consing was also named as the Philippines’ Best CFO. This is Mr. Consing’s second time to receive the coveted award from Alpha Southeast Asia, bagging the recognition for the first time in 2017.

As the only poll focused on Southeast Asia, the Institutional Investor Awards gauges performance in financial management, adherence to corporate governance, integrated reporting/CSR & IR. The awards presentation for Philippine winners will be held in Singapore on September 17.

Still in recognition of the Company’s commitment towards responsible stewardship, the Institute of Corporate Directors (ICD) rated ICTSI for being one of the high-ranking PLCs in the Philippines based on the Asean Corporate Governance Scorecard (ACGS).

Lauded for its 2018 results, the Company maintains commendable compliance with the best practices in the following areas: Board responsibilities, disclosure and transparency, rights of shareholders, equitable treatment of shareholders; and role of stakeholders.

Benchmarked against international best practices, the ACGS’ rigorous methodology provides foreign investors and external fund managers with comparable information from which to base their investment decision-making process.

Mr. Consing, who also serves as the Company’s Compliance Officer, welcomed these citations for ICTSI and its key officers: “Amidst an ever-evolving regulatory environment, these recognitions affirm that we are at the right track in ensuring ICTSI’s Group-wide commitment to sound, prudent and effective management – the bedrock of business sustainability. Our continuing adherence to good corporate governance, in turn, fulfills our vision to build long-term stakeholder and shareholder value.”

As a key player in the global supply chain, ICTSI has expanded the scope of its impact management, part of its efforts of guaranteeing good corporate governance. In 2018, ICTSI adopted new supply chain measures aligned with its sustainability objectives – including screening of new suppliers, using environmental criteria; measurement of spending on local suppliers; and assessing suppliers’ environmental impact.

On top of key governance frameworks in place, ICTSI has made various efforts over the previous year to promote transparency and fairness in the Company’s dealings and relationships with stakeholders – including the appointment of a third independent director within ICTSI’s board; and the adoption of a Conflict of Interest Policy and an Anti-Bribery Policy in 2018.

EU extends 100,000 Euros in humanitation aid to Philippine communities

EU downloadThe European Union has provided €100,000 EUR in humanitarian aid funding to assist the most affected Philippine communities. The aid has benefited 300,000 people in some of the hardest hit areas in the regions of Calabarzon, Central Luzon, Central Visayas, Metropolitan Manila, and Western Visayas.

This EU-funding supports the Philippine Red Cross (PRC) in delivering crucial assistance through the strengthening of public health services, such as the establishment of dengue emergency medical units or hospital extension wards at local government hospitals, and the provision of nursing staff to respond to overwhelming dengue cases.

In addition, water sources, which can be mosquito breeding grounds, will be cleaned and treated with a biological control agent to eliminate mosquito larvae. The funding also focuses on enhancing public awareness through health promotion activities and information dissemination to prevent and reduce new cases.

The funding is part of the EU’s overall contribution to the Disaster Relief Emergency Fund (DREF) of the International Federation of Red Cross and Red Crescent Societies (IFRC).

Since the beginning of 2019, the Philippines has seen a drastic increase in the number of dengue cases nationwide. According to the latest data from the government, close to 116 000 cases, including 491 deaths, have been reported during the first six months. This marks an increase of 86 per cent compared to the same period last year, when 57 564 cases were reported.

So far, the central Western Visayas region has been the worst hit area where nearly 16 000 cases have been registered. Following the sharp surge, the Philippine Department of Health declared a national dengue alert on 15 July in an effort to step up its surveillance and response to the mosquito-borne disease. As the archipelago island now experiences its annual monsoon season, when peak transmission typically occurs, the European Union’s humanitarian experts continue to closely monitor the situation.

The European Union is the world’s leading donor of humanitarian aid. Relief assistance is an expression of European solidarity towards people in need around the world. It aims to save lives, prevent and alleviate human suffering, and safeguard the integrity and human dignity of populations affected by natural disasters and man-made crises.

Through its European Civil Protection and Humanitarian Aid Operations (ECHO), the European Union helps over 120 million victims of conflicts and disasters every year. For more information, please visit ECHO’s website.

The European Commission has signed a €3 million humanitarian contribution agreement with the International Federation of Red Cross and Red Crescent Societies (IFRC) to support the Federation’s Disaster Relief Emergency Fund (DREF). Funds from the DREF are mainly allocated to “small-scale” disasters – those that do not give rise to a formal international appeal.

The Disaster Relief Emergency Fund was established in 1985 and is supported by contributions from donors. Each time a National Red Cross or Red Crescent Society needs immediate financial support to respond to a disaster, it can request funds from the DREF. For small-scale disasters, the IFRC allocates grants from the Fund, which can then be replenished by the donors. The contribution agreement between the IFRC and ECHO enables the latter to replenish the DREF for agreed operations (that fit in with its humanitarian mandate) up to a total of €3 million.

Philippine inflation rate to remain at 2 to 4% in 2019

The National Economic and Development Authority expects Philippine inflation rate to remain within the government’s target of 2 to 4 percent by the end of 2019.

The country’s headline inflation eased to 2.4 percent in July 2019, bringing the year-to-date inflation to 3.3 percent.

NEDA attributed the low inflation rate to slower price increases in food and non-alcoholic beverages and housing, water, electricity, gas and other fuels in July 2019. This was the slowest inflation recorded since December 2016’s 2.2 percent and was the same rate for July 2017.

Rice deflation also was observed for the third consecutive month, reaching -2.9 percent in July 2019.

“We welcome this decelerating trend in prices but we remain on guard against possible upside risks such as adverse weather conditions, possible entry of the African swine fever, and uncertainty in the global oil market, among others,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

Secretary Pernia says government agencies such as Department of Agriculture, Department of Trade and Industry, and the National Food Authority should ensure sufficient supply of basic food commodities, in view of the expected tropical cyclones

As part the government’s continued efforts to prevent the entry of African swine fever (ASF) into the country, the Food and Drug Administration temporarily banned the importation of pork meat products from Hong Kong, North Korea, and Germany, alongside 17 other ASF-infected areas.

“The concerned authorities should intensify its market surveillance to ensure the compliance of importers and retailers with the government’s directive. The government should also ensure that there is sufficient production of pork and other meat products locally as the threat of the epidemic is seen to continue in the near term,” Pernia added.

Philippine manufacturing sector on the downtrend

Philippine manufacturing activities continued to decline over the last six months as indicated by the 10.5% drop in volume of production index and 9.6% fall in the value of production index.

“We need to instill a sense of urgency in government to implement economic reforms,” says Socioeconomic Planning Secretary Ernesto M. Pernia.

“Manufacturing output will likely remain muted in the near term as business and consumer outlook for the third quarter of 2019 turned less upbeat,” Pernia said.

Secretary Pernia warned that production could be stifled as the seasonal slack in domestic demand and business activities during the rainy season limits overall manufacturing growth.

“Moving forward, domestic demand expansion is needed to support the growth of manufacturing, especially given the slowdown in global demand” he added.

“The now markedly slower inflation rate, which is back to government’s target range, bodes well for producers of manufactured goods,” said Pernia.

Lower prices of food staples such as rice, the anticipated downward adjustment in electricity rates, and the recent peso appreciation tempered inflation pressure in July.

Pernia added that the significant reduction in the intensity of El Niño will also soften the risk to the supply of raw materials for the food manufacturing subsector.  As of end-July 2019, only nine provinces are expected to experience drought compared to 32 provinces as of end-June 2019.

“The government has been working to strengthen the transport and logistics sector as it is crucial to prop up manufacturing growth,” the Cabinet official stressed.

A joint administrative order among various relevant agencies has been proposed, which aims to reduce shipping costs and port congestion.

“The passage of the amendment to the Public Service Act is expected to encourage competition in the air, maritime and road transport, as well as logistics services, and enhance the productivity and efficiency of service delivery,” Pernia added.

Secretary Pernia expects the issuance of the Implementing Rules and Regulations of the Ease of Doing Business and Efficient Government Service Delivery Act would boost cooperation among agencies, as well as encourage the alignment of efforts to address bureaucratic concerns.

“We need to also accelerate public works spending during the second semester of 2019 which will contribute to increases in employment and disposable incomes, thus raising the demand for consumer goods,” Secretary Pernia added.

Philippine trade down 5.8% in June 2019

The National Economic and Development Authority has urged the Philippine government to exert all efforts in boosting domestic demand and exports’ competitiveness to improve the country’s trade performance with global growth likely to remain sluggish for the remainder of 2019.

According to the Philippine Statistics Authority (PSA), the country’s total merchandise trade contracted by 5.8 percent in June 2019 as the decrease in merchandise imports (-10.4%) outstripped the growth of exports (1.5%).

Imports continued its downward trend for three consecutive months now, with raw material and intermediate good, and consumer goods posting the biggest decline at -16.5 percent and -12.8 percent, respectively.

The moderate recovery of exports, on the other hand, continued for the third consecutive month. Increased sales of agro-based products, minerals, and manufactures compensated for the decline in outward shipments of petroleum products and other agro-based products.

Socioeconomic Planning Secretary Ernesto M. Pernia attributed the external trade slowdown in part to the ongoing trade disputes, Brexit-related uncertainties, and rising geopolitical tensions.

“Despite the challenging external environment, the Philippines has shown resilience in its trade performance. The Philippines is among the countries in Asia with positive export growth,” he said.

In terms of exports earnings, only Vietnam and the Philippines registered gains among selected Asian economies – China, India, Indonesia, Malaysia, Philippines, Singapore, Thailand.

“The government must continue promoting the competitiveness of the Philippine exports by implementing policies and laws such as the Philippine Innovation Act. This will encourage innovation that will reduce the cost of production and elevate the quality of Philippine products to meet international standards,” says Secretary Pernia.

“However, considering the less optimistic global trade prospects, it is necessary to diversify markets and boost domestic demand to compensate for the weakness of external trade,” Pernia said.

Secretart Pernia reiterated NEDA’s call to diversify products and markets by establishing new trade relations and improving existing ones with strategic partners.

“In light of the current trade spat between Korea and Japan, we need to complete the negotiations for the free trade agreement with South Korea and review the decade-old Philippines-Japan Economic Partnership Agreement to further expand the country’s exports in both markets,” said Pernia.

“Importantly, the government has been fast-tracking the implementation of infrastructure projects under the Build, Build, Build program to enhance trade facilitation and provide logistical support to manufacturers and exporters,” said Pernia.

Pernia urged the government to also be ready with counter-measures against disruptions to construction activities that may occur from likely unfavorable weather conditions.