PAL to expand its network in the US

PAL A320

Philippine flag carrier Philippine Airlines (PAL) is expanding its market in the United States with an additional direct service to Seattle this year.

Routes Online said the Manila – Seattle service, which will operate three times per week from 3 May 2020 using Airbus A350-900 aircraft, is one of two new US routes being opened this year. From May, the airline also intends to resume operations between Cebu, the host of Routes Asia 2019, and Los Angeles.

Seattle will become the fifth destination in the US served by PAL in addition to Los Angeles International, New York JFK, San Francisco and Honolulu. All four are currently served from Manila.

According to Routes Online the new Seattle route will offer the airline an entry to the largest city in the Pacific Northwest region of North America, which is home to a sizable Filipino community. According to the 2010 United States Census, Seattle had a population of 608,660 residents, of which

PAL’s vice president sales Ryan Uy revealed that Seattle was on the radar for future routes, alongside Chicago, as part of an ongoing North American expansion strategy.

The planned launch marks the carrier’s most ambitious US move since launching a 16-hour route between Manila – New York route in October 2018 using A350-900 aircraft.

In addition to launching Manila – Seattle, PAL is also resuming flights between Cebu and Los Angeles. As reported by Airlineroute, flights will be three times per week using Boeing 777-300ER aircraft. The airline last operated the route from March 2016 to May 2017.

Outgoing ADB president awarded the Philippines’ highest civilian recognition

Outgoing ADB president receives award 59291-save-20200107-192211

ADB President Takehiko Nakao (right) receives Order of Sikatuna award from Philippine President Rodrigo Duterte (left) in Malacanang Palace.

Outgoing Asian Development Bank (ADB) President Mr. Takehiko Nakao has received the Order of Sikatuna, the Philippines’ highest civilian recognition, with the rank of Grand Cross, or Datu, Gold distinction from Philippine President Rodrigo Duterte.

“Mr. Nakao has proven to be a true partner of the government in its pursuit of sweeping reforms and ambitious development programs to bring about President Duterte’s goal of liberating Filipinos from poverty and transforming the Philippines into an upper-middle-income economy on his watch,” said Philippine Finance Secretary and ADB Governor Mr. Carlos G. Dominguez.

“Under Mr. Nakao’s leadership, the ADB has demonstrated its full confidence in the Duterte presidency’s capability to carry out a comprehensive development strategy for rapid and inclusive growth by raising its lending commitment to the Philippines for programs geared toward closing the country’s infrastructure gap, enhancing the local business climate, promoting countryside development, and achieving lasting peace in Mindanao.”

The Order of Sikatuna was established in 1953 by former President of the Philippines Mr. Elpidio Quirino as the country’s national order of diplomatic merit. It is given to individuals who have rendered exceptional services to the Philippines in developing and strengthening relations with the country.

“I receive this award with my deepest gratitude to President Duterte, Secretary Dominguez, the Government of the Philippines, and its people,” said Mr. Nakao.

“As our host country since ADB’s establishment in 1966, the government’s support of ADB over the years has been essential to the success of our operations throughout Asia and the Pacific. ADB has been a strong development partner of the Philippines since the country became a founding member, with our support considerably expanding in the last three years.”

Mr. Nakao assumed office as ADB President on 28 April 2013. Under his leadership, ADB operations in the Philippines have grown significantly. ADB has been supporting the Duterte administration’s “Build, Build, Build” (BBB) program and the 10-Point Socioeconomic Agenda including rural development and investment in human capital.

ADB’s sovereign lending to the Philippines reached a record high of $2.5 billion in 2019, building on $1.4 billion in 2018, compared with an annual average lending commitment of about $800 million in previous years. ADB has also provided knowledge support to the government on its tax reform initiative and K-to-12 extention of school years up to senior high school (from 10 years).

In 2019, about half of ADB’s assistance financed the first phase of the Malolos–Clark Railway Project, one of the government’s major infrastructure investments under BBB. ADB’s support for the project, which is expected to be partially operational in 2022, will total $2.75 billion, making it ADB’s largest project financing in Asia to date. Construction work is expected to begin in the second quarter of 2020.

The new Philippines Country Partnership Strategy for 2018–2022, designed under Mr. Nakao’s leadership, paves the way for providing considerably larger assistance to the country. ADB’s planned assistance through 2022 includes a significant number of major infrastructure projects, such as railways, bridges, flood risk management, and irrigation.

In addition, ADB will support the government’s Bangsamoro peace process through lending and technical assistance. ADB will also support policy reforms to improve the country’s investment climate, public financial management, and local economic development.

Mr. Nakao will step down as ADB President on 16 January. He will be succeeded on 17 January by Mr. Masatsugu Asakawa, Vice Minister of Finance for International Affairs of Japan until July 2019.


Philippines eyes cutting corporate income tax to 20% to lure more investors

The Philippine government’s plan to lower corporate income tax to 20 percent from the current level of 30 percent would help attract more foreign investors and boost the growth of industries.

This was one of the priorities that the government is considering on top of the proposed amendments to the Foreign Investments Act, the Public Service Act and the Retail Trade Act which critical in eliminating policy uncertainties that the affect the Philippine business climate, according to Socio-economic Planning Secretary Ernesto Pernia.

Secretary Pernia explained that the industry sector will benefit from the Corporate Income Tax and Incentives Rationalization Act (CITIRA) as it will lower the corporate income tax from 30 percent to 20 percent over the medium term.

“The easing of foreign ownership limitations in domestic industries will be crucial to increasing investment that would allow for tighter integration of value and supply chain across industries and provide opportunities for technology transfer, thus boosting the manufacturing sector,” says Secretary Pernia.

Pernia added that the passage of the 2020 budget is a welcome move in ensuring the continuity of critical government projects.

“The signing of the 2020 budget into law by the President ensures the continuity of projects aimed to attract local and offshore investments to boost growth and create more and quality employment opportunities for Filipinos,” Pernia said.

He also stressed that an industrial policy propelled by innovation is needed to drive the country’s manufacturing growth amid the bleak near-term outlook of the sector.

Secretary Pernia pointed out the need for an innovation-driven industrial policy that will strengthen the manufacturing sector.

“Industries need to be encouraged to innovate and adopt efficient technologies. This is a key strategy to entice more investments, similar to the experiences of the country’s ASEAN peers such as Thailand, Malaysia and Vietnam,” said Pernia.


NEDA warns of higher petroleum prices and rising Philippine inflation rate

downloadThe National Economic and Development Authority (NEDA) has warned of a surge in the prices of petroleum products and overall inflation rate in the Philippines as a result of the escalating tension in the Middle East that could disrupt global oil supply.

“The government should effectively manage expectations at the domestic front and be vigilant against any unwarranted increase in pump prices considering that the last tranche of excise tax increase on fuel products will be implemented this month,” says Socio-economic Planning Secretary Ernesto Pernia.

Pernia has urged the government that in the short-term, demand management and alternative sources of petroleum products should be explored, and over the medium to long-term, shifting away from fossil fuel and import dependence should be encouraged.

Philippine inflation rate inched up to 2.5 percent in 2019, which is well within the government target of 2.0 to 4.0 percent.

The Philippine Statistics Authority (PSA) attributed the higher inflation rate to the rising prices of both food and non-food items due to the impact of typhoons and rising oil prices in December 2019.

“The country ended last year with steady inflation but the government must remain vigilant and proactive in managing the impact of potential sources of price pressures this year such as typhoons, continuing presence of African swine fever (ASF) in the country, and the heightened conflict in the Middle East.,” Secretary Pernia said.

He added that the recovery and rehabilitation plans for the typhoon-affected areas must be immediately implemented and the production support programs for the affected farmers and fishermen must be fast-tracked.

“Over the medium to long-term, the agriculture, forestry, and fisheries sector must increasingly adopt climate and disaster-resilient technologies and best practices. Climate and disaster risks should also be considered in the program and project designs in the sector,” Pernia said.

He also stressed other priority areas such as assisting farmers to shift to high-value, short-maturing, and high-yielding crops; and sustaining bio-security measures and procedures until the African swine fever is fully eradicated.


MRT-4 to ease traffic in eastern Metro Manila and Rizal


The Department of Transportation (DOTr) is planning to build a 15.56-kilometer rail transit system that would link parts of eastern Metro Manila and Rizal province.

Dubbed as the Metro Rail Transit Line 4 (MRT-4), the rail-based transit system which is scheduled for operation in 2025, aims to address the worsening traffic condition and inadequate road capacities in the densely-populated areas of Quezon City, San Juan City, Mandaluyong City, Pasig City and the Ortigas Center. The line will also link eastern Metro Manila with the neighboring municipalities of Cainta and Taytay in Rizal.

With an initial daily capacity of 234,433 passengers, the rail line system will serve 11 stations.

The P59.3-billion MRT-4 project is set for construction from 2021-2025 to be funded by an official development assistance (ODA) from the Asian Development Bank (ADB).

DOTr Secretary Arthur Tugade said the MRT-4 project will greatly help in easing the traffic between eastern Metro Manila and Rizal province.

“Considering how densely-populated these areas are, which is made more difficult with the lack of road capacities and ever worsening traffic conditions, MRT-4 will be of great help in moving commuters between eastern Metro Manila and Rizal,” Secretary Tugade added.

PhP45.9 billion expansion project of Davao International Airport

Chelsea Logistics Holdings Corp. has secured a clearance from the Philippine government to implement the P48.9 billion operate-add-transfer project that would boost passenger traffic at the Davao International Airport by up to 15.1 million passengers per annum.

First phase of the project is set start this year and expected to be completed by 2028 with a concession period of 30 years.

The project involves the reconfiguration and expansion of the terminal building, construction of parallel taxiway, improvement of airside and landside facilities, installation of modern airport IT systems, and all activities needed to improve airport services.

Department of Transportation (DOTr) Secretary Arthur Tugade said the modernization of the Davao International Airport is expected to boost the economic growth of the Davao region and the rest of Mindanao through increased trade and tourism activities.

The primary gateway to Mindanao, the Davao International Airport is also the third largest airport in the country after the Mactan International Airport and the Ninoy Aquino International Airport.

Secretary Vince Dizon, presidential adviser for flagship programs and projects said: “This is a very positive development as far as fast-tracking our infrastructure projects.This projectwill also speed-up the realization of the transportation roadmap as envisioned by the DOTr.

12 new infra projects to boost regional growth

downloadThe Philippine government is set to implement 12 new infrastructure projects worth PhP557.4 billion that would boost growth in the regions and expand access to development opportunities.

Socio-economic Planning Secretary Ernesto Pernia says these projects are in line with the government’s national spatial strategy to make cities like Metro Manila more efficient and improve connectivity between areas.

These include three new projects of the Department of Transportation (DOTr), seven infrastructure projects of the Department of Public Works and Highways (DPWH), two projects of the Civil Aviation Authority of the Philippines (CAAP).

The DOTr-implemented projects include the MRT 4 Project; EDSA Greenways Project; and the Maritime Safety Enhancement Program (MSEP).

The infrastructure projects of the DPWH include the Bataan-Cavite Interlink Bridge Project, Cebu-Mactan Bridge (4th Bridge) and Coastal Road Construction Project (New Mactan Bridge Construction Project); Davao City Coastal Bypass Road including Bucana Bridge Project; Capas-Botolan Road Project; and Panay-Guimaras-Negros Island Bridges Project.

China is top cbontributor to Philippine trade deficit – BOI

China logo downloadChina is the top contributor of Philippine trade deficit which accounts for 32.41 percent followed by South Korea, Indonesia, Thailand and Taipei as they account for more than 90 percent of the country’s trade deficit.

“Trade deficit in the Philippines is quite alarming,” said Executive Director Ma. Corazon Dichosa of the Board of Investments (BoI) as he revealed that Philippine trade deficit for the past five years has averaged 76.54 percent.

“From 2014 to 2018, our trade deficit has been growing at US$127.93 billion. What is alarming is that trade deficit has been increasing in 2018 and has ballooned to negative US$47 billion,” Dichosa said.

In terms of products, the Philippines’ top sources of trade deficit are automotive, petrochemicals, coal, and steel and are the major imports since the Philippines cannot produce them.

Dichosa said the Philippines’ imports a lot of steel bars because local manufacturers are just starting to expand to cope with the demand of the government’s Build, Build, Build program.

The Philippines also imports coal from Indonesia because the supply in Semirara Coal plant has a low-heating value which some power plants cannot use.

The importation of cars is also a major contributor to the country’s ballooning trade deficit. Dichosa said the automotive sector has not grown to a certain point where it can supply the local demand. “It would have been better if these autos were manufactured in the Philippines because that would have contributed to the economy,” she said.

Another source of trade deficit is the ASEAN. “The markets that we trade in are the same set of countries that we compete with. For all the ASEAN members, our major markets are the EU, US, China, and Japan,” Dichosa explained.

One of the strategies identified to lower the trade deficit is by exporting more or importing less. However, Dichosa noted that this can only be done if the Philippines has good supply chains.

The implementation of a robust industrialization policy is also a way to address this issue, Dichosa added, explaining further that the Philippines will not implement protectionist measures and will not hesitate to impose trade remedies if necessary.

She mentioned that the Philippines has already imposed trade remedies on cement. “Any imports coming from Viet Nam, which is a heavy source of cement in the Philippines, will now be imposed additional tariffs. We will also be doing this for other products in the coming months,” Dichosa said.

Another remedy to lower the trade deficit is to tap the different free trade agreements (FTAs) of the Philippines. According to Dichosa the country has an expansive market access and huge network of FTAs.

“We have the ASEAN and the Regional Plus One with Japan, bilateral FTAs with Switzerland, Norway, Lichtenstein, and Iceland and a regional FTA with Australia, China, Korea, India, and New Zealand.  We enjoy GSP (generalized system of preferences) status with the EU, which means that export products that fall under more than 6,000 tariff lines enjoy tariff reduction in the EU market. We also enjoy benefits from the US, Russia, and Canada GSP,” Dichosa said.

ICTSI’s Polish unit to invest more in port equipment and IT systems

ICTSI Polsh port unit image001

Baltic Container Terminal (BCT), the Polish unit of International Container Terminal Services, Inc. (ICTSI) at the Port of Gydnia, is investing more in port equipment and IT systems to meet the growing demands in port services.

BCT which capped 2019 with a milestone after recently reaching its 500,000th twenty-foot equivalent unit (TEU) move on 21 December 2019, has a current annual handling capacity of up to one million TEUs and has excellent road and on-dock rail connectivity to Europe’s hinterlands.

 Wojciech Szymulewicz, BCT Chief Executive Officer, said:  “As a gateway terminal serving the Polish economy, we are extremely pleased to have reached this latest milestone. More than hitting our targets, this new record highlights Baltic Container Terminal’s capability to continuously outpace market growth, and our readiness to serve the vibrant Polish economy and the Eastern European markets.”

As part of its continuing efforts to boost the port’s operations, the Port of Gdynia Authority and the Center for European Union Transport Projects recently signed a contract for the reconstruction and electrification of the port’s rail access. An investment expected to cost around PLN 70 million, the rebuilt intermodal terminal will complement BCT’s operations from the land side.

To enable BCT to cater for growing demands, in the pipeline is new handling equipment on both sea and landside, rehabilitation of the present quay, deepening of harbor basins, additional storage areas, and state-of-the-art IT systems.

Szymulewicz adds: “Along with further investments in port equipment and IT systems, which are of structural importance for Poland and trans-European transport networks, we continue to work hand-in-hand with our customers to improve the efficiency of our operations and processes, and inevitably further improving the customer experience.”

Philippines urged to focus more in human capital development funding

DFA logo downloadPIDS logo

The Philippines should focus more on investing in human capital development to keeping up with the demands of the new globalization and ensure that Filipinos are equipped with the necessary skills as early as possible.

This was stressed by Department of Foreign Affairs Undersecretary for International Economic Relations Lourdes Yparraguirre during the recent Fifth Annual Public Policy Conference (APPC) conducted by state think tank Philippine Institute for Development Studies (PIDS).

Yparraguirre pointed out that one of the Duterte government’s key areas for policy action is the enhancement of human resources in the country.

“President Duterte said we should focus more on investing in human capital development through the enhancement of our basic education system and skills matching to seamlessly converge with the requirements of our businesses and the demands in our labor markets,”  said Yparraguirre.

With new technologies continuously developing, she suggested that enhancements in basic education be complemented with the promotion of science and technology, and research to spur innovation.

Speaking at the same conference, Institute of Corporate Directors President Alfredo Pascual expressed a similar sentiment.

While businesses in the Philippines are urged to start revising their job descriptions to accommodate senior high school (SHS) graduates, Pascual said there is a slow uptake because of their experience with SHS graduates.

“The more expensive high schools that train students very well produce students who eventually go to college. These are students who will not seek employment after high school. The ones who will seek employment after high school are those coming from less-endowed schools. They are not planning to go to college because of financial and other reasons. Their employability is difficult under the present situation,” Pascual explained.

“That is why I’m opposed to this universal free tuition at the tertiary level because that money should have been used to improve basic education in the country, rather than spend [it ] on college students from families who can well afford to pay the tuition,” Pascual added.

A recent by the Philippine Institute for Development Studies (PIDS), which looked at the labor market prospects for SHS graduates, revealed that students are more inclined to pursue higher education. They also lack confidence in getting a job after graduation and believe that firms still prefer college graduates or those with work experience.