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 to invest 768 billion pesos on 114 infra projects in next two years

The Philippine government would invest P768.81 billion to implement 114 core strategic projects over the next two years with the infrastructure program having biggest share of 82.7 percent or 635.84 billion, followed by social development with six strategic projects worth P53.10 billion and agriculture and fisheries with 10 projects worth P39.08 billion.

National Economic and Development Authority (NEDA) deputy-director Rolando Tungpalan revealed that some of the big ticket projects that the government will be implementing within the next two to five years include the North-South Commuter Railway, the improvement of major airports for Iloilo, Davao and Bacolod; and Davao Sasa port modernization, for the transport sector; the Bulacan Bulk Water Supply Project, new centennial water source – Kaliwa Dam, the Water District Development Sector Project and the National Sewerage and Septage Management Program; and the Clark Green City (CGC) to be implemented by the Bases Conversion and Development Authority (BCDA).

The Clark Green City is aimed at converting and developing about 9,450 hectares of land into a self-sufficient and self-sustaining green and intelligent city situated within the Clark Special Economic Zone (CSEZ) at an estimated cost of P607.34 billion.

Tungpalan said these projects are components of a wider range of investment requirements as identified in specific roadmaps developed by the government aimed at rationalizing investments for quality and responsive programs and projects.

The transport roadmap for Metro Manila and its environs, for instance, identifies 115 projects with an estimated investment requirement of Php 2.61 trillion aimed at reducing congestion and transport-related pollution emissions until 2030.

The P343.1 billion flood management master plan for Metro Manila and surrounding areas aims to provide a sustainable and effective flood risk management (FRM) in Metro Manila and surrounding areas until the year 2035.

Other roadmaps and master plans include the DPWH and Department of Tourism (DOT) convergence plan that will provide road access to designated priority tourism destinations under the National Tourism Development Plan (NTDP) and the survey on Mindanao Logistics Infrastructure (SMLIN) which aims, among others, to maximize the utilization of the Mindanao Container Terminal (MCT) to become the node of logistics and the center of economic development in Northern and Central Mindanao.

To further ensure the quality of programs and projects, under the General Appropriations Act (GAA) – fiscal year 2014, NEDA was tasked to administer an initial P400 million feasibility study fund to be used exclusively for the conduct of feasibility studies for non –PPP projects.

Tungpalan said the fund aims to support proposed pre-investment activities or feasibility studies for projects/programs of the government.

Currently, NEDA is in the process of procuring consultants for the conduct of four feasibility studies for various projects with a total budget of P202 million.

For the remaining P198 million, there are 34 proposals in the pipeline, with a total budge P1.98 billion, to be processed by NEDA for the second batch of the NEDA board committee on infrastructure approval.

On the other hand, the Project Development and Monitoring Fund (PDMF) has been established for the conduct of feasibility studies for solicited PPP projects of the government.

Tungpalan also stressed the significance of balanced budget under the Philippine Development Plan (PDP) without compromising the realization of development goals and thrusts.

IMF sees 6.5% growth for Philippine economy

The International Monetary Fund (IMF) has projected the country’s gross domestic product (GDP) growth at 6.5 percent in 2014 and year-end inflation to moderate to 4 percent.
The domestic economy posted a 7.2 percent growth in 2013 on account of the robust domestic demand coupled with higher public spending and private investments.
“With potential growth estimated at 6.25 percent, the positive output gap is expected to widen slightly in 2014 as the fiscal stimulus from reconstruction activities related to super typhoon Yolanda further supports growth, the IMF said its latest report on the Philippine economy.
The IMF sees higher imports to meet reconstruction needs expected to narrow the current account surplus to 3.2555 percent of GDP.
“Considering the reforms undertaken, GDP growth is projected to converge to 6 percent, with inflation remaining within the new lower 3±1 percent target band.”

While this envisaged growth path is faster than what was achieved during previous decades, realizing the Philippines’ full potential for rapid, sustained and inclusive growth calls for further reducing bottlenecks to investment and formal sector employment that may be discouraging broader-based business activities, the IMF said.
The report noted that a diversified production structure is more conducive to delivering more durable, employment-intensive growth.
“This would help achieve significant progress in lowering unemployment and poverty rates, thereby reducing the number of people who may be vulnerable to natural disasters and other shocks. The challenge is to continue implementing policies that deliver high quality, sustainable growth.”
The IMF said that the Philippines’ growth remained resilient, the external sector was strong, inflation was subdued, and the banking sector performed well, aided by prudent BSP oversight and regulatory standards.
The IMF supports the BSP-proposed amendments to the BSP charter authorizing, among others, higher capitalization, exemption from income tax, the issuance of its own bills and enhancing its supervisory powers.
“In the fiscal area, we support the government’s dual objectives of narrowing infrastructure gaps and mobilizing additional revenue.”
“Increasing the national government deficit to 2 percent of GDP in 2014, together with continued modest revenue gains from stronger tax administration, would accommodate sizable reconstruction spending needs under ‘build back better” standards arising from the recent earthquake and typhoon,” the report noted.
On the structural policy front, the IMF recommended further reforms to create a more enabling business environment and to generate additional employment.
“Successfully executing PPPs and public capital spending projects would relieve infrastructure bottlenecks and help catalyze private investment.”
The IMF said that identifying PPPs of national importance through amendments to the Build-Operate-Transfer law could mitigate regulatory uncertainty for investors, and further opening energy generation and distribution to competition would have downstream benefits for other sectors through lower input costs.
Narrowing the negative list for foreign investment and scaling back generous perpetual income tax holidays that favor incumbents would support greater market contestability, the report said.
“Reducing internal transport costs including by opening domestic shipping to foreign competition under the Cabotage law amendment would support agri-business and lower food prices.”
“Resolving uncertainties with land titles and use, expanding access to formal-sector credit by SMEs and micro-firms, reducing skill mismatches through better targeted education and apprenticeships would support job creation,” the report added.

Philippine exports up 9.3% in January

Philippine exports grew by 9.3 percent in January 2014 buoyed by the manufacturing sector and sustaining its positive growth momentum for the eighth consecutive month, according to the National Economic and Development Authority (NEDA).

The value of merchandise exports expanded to US$4.4 billion in January 2014 from US$4.0 billion in the same period in 2013, according to the Philippine Statistical Authority (PSA).

“The upward trajectory of Philippine exports as a result of the buoyant export performance of manufactured products clearly proves the significance of the manufacturing sector as one of our growth drivers,” said Economic Planning Sec. Arsenio Balisacan.

 Export earnings from manufactured goods continued to post a year-on-year increase in January 2014 at 15.3 percent. These goods reached US$3.8 billion as outbound shipments of electronics products, machinery and transport equipment, electronics equipment and parts, garments, and miscellaneous manufactures registered significant gains.

Balisacan added that the growth in manufactures also added a buffer against the reductions in export earnings from other major commodity groups such as total agro-based products, mineral products, petroleum, and forest products.

Total export receipts from agro-based products contracted by 28.8 percent to US$277.1 million from US$388.9 million in the same period last year. The contraction in the value of total agro-based exports was primarily driven by lower sales of sugar, coconut and fruits and vegetables.

“Despite the setbacks in some commodity groups and other sectors, the Philippines’ merchandise export growth in January 2014 is one of the fastest among selected trade-oriented economies in the East and Southeast Asian region, trailing behind PR China,” said the NEDA Director General.

Japan remains as the top destination of Philippine exports in January 2014, accounting for 26.3 percent of the country’s total overseas merchandise sales receipts, with a total value of US$1.15 billion. Other top markets for Philippine exports, were USA (13.8%), China (9.9%), Singapore (8.8%) and Hong Kong (7.5%).

Philippine industry sector to grow fastest in 2014

The Philippine industry sector is projected to grow the fastest this year as manufacturing and private construction are expected to gain momentum with the economy targeted to grow by 6.6 to 7.7 percent, according to the National Economic and Development Authority (NEDA).
Socio-economic Planning Sec. Arsenio Balisacan told members of the Management Association of the Philippines (MAP) that public construction will pick up in 2014 as government addresses infrastructure bottlenecks and spearheads reconstruction efforts in the areas affected by the disasters last year.
“The service sector is expected to remain robust as business process management, real estate, renting, and business activities are targeted to grow by an average of 9 percent beginning 2014,” said Balisacan.
On the supply side of the economy, growth will be driven by more vibrant manufacturing, buoyed by food and chemical manufactures, garments, and wood furniture and fixtures.
Balisacan expects a robust construction led by the public sector as the government starts with the construction of major infrastructure projects and intensifies reconstruction efforts in disaster-affected areas.
Other growth drivers are domestic and local tourism development, upbeat wholesale and retail trade, and robust business process management (BPM) that would fuel the fuel the growth in the real estate, renting, and business activities sector, and agribusiness.
Sec. Balisacan said that on the demand side, the economy will be buoyed by the following growth drivers: fixed capital formation mainly due to higher public construction, robust private investment in construction and durable equipment; strong household consumption due to better employment opportunities, strong remittance inflows, and improved consumer confidence; stronger export of services with good prospects on business process management; and improvement of external trade conditions.
“Since achieving high economic growth is necessary but not sufficient for inclusive growth, we aim for a substantial improvement in the labor and employment situation in the country.  Our goal is to reduce the unemployment rate from 7.0 percent in 2012 to 6.5 to 6.7 percent in 2016.”
Balisacan stressed that the government is committed to improving the quality of employment as reflected in the reduction of underemployment rate from the current 20 percent to about 17 percent in 2016 and in the structural transformation of the economy, particularly toward high income and employment growth drivers in industry, agribusiness, and services.
“The twin problems of poverty and unemployment require no less than sustained high economic growth, deliberate programs and policies to enable the poor to participate in the growth process and reduce vulnerabilities to shocks.”
The government target is to reduce income poverty to 18 to 20 percent by 2016 will fall short of the Millennium Development Goals (MDGs) target of 16.6 by 2015, said Balisacan.
“This new target takes into consideration the slow response of poverty to economic growth beginning 2006 and the setback in 2013 due to the wide-scale destruction resulting from natural and man-made disasters.”
With this updated Philippine Development Plan (PDP), the government’s goal up to 2016 is to sustain if not surpass the growth performance in the past three years. 
Sec. Balisacan is confident that the government could take advantage of available opportunities such as improving global economic environment and demographic conditions, increased integration of the ASEAN Economic Community and more financial resources available.

Philippine poverty did not improve despite strong economic growth

The poverty situation in the Philippines did not significantly improve despite of the six-percent economic growth posted from 2003 to 2006, according to the Philippine Institute for Development Studies (PIDS).
PIDS Supervising Research Specialist Danileen Parel noted that the education and infrastructure services in an area are both closely associated with its poverty situation.
Parel said poverty is highly concentrated in rural areas where level and quality of education and infrastructure are very poor.
Her findings showed that about 80 percent of the poor live in rural areas. Meanwhile, the National Capital Region (NCR) has the least number of poor households, which is 0.88 percent in 2003 and 1.18 percent in 2006.
The study also showed that access to electricity among poor households is only 52.73 percent in 2006, while access to potable piped water is 66.37 percent in the same year. It is miniscule compared to 80 percent of the nonpoor households who have access to electricity and piped water.
Parel also described the linkage of poverty and education. Fifty percent of the heads of poor household have no formal education, while almost 40 percent of them finished primary education. Only less than 0.5 percent of the poor have earned a bachelor’s degree.
Showing the linkage of poverty to lack of infrastructure services and basic education, Parel stressed that poor communities, especially in rural areas, must be provided with basic education and infrastructure services so that poverty reduction could be better achieved.
Rural-urban linkages should be strengthened to narrow the large gap between the rural and urban areas. Such linkages would enable rural households to take advantage of urban development like higher access to public goods, and more accessibility to human and physical capital and infrastructure, said Parel.
Parel also suggested more investments in areas where poverty is high. It can be through improving infrastructure services and providing basic education to poor communities.

World Bank sees 6.9% growth of Philippine economy

The World Bank (WB) has projected a 6.9 percent growth of the Philippine economy, reflecting the current construction boom following the devastation caused by the natural disasters.
The WB forecast was slightly lower than the government’s growth target of 7 percent last year with  a projected decline in the first quarter of 2014 following the damage caused by typhoon Yolanda.
The WB report noted that typhoon Yolanda had a large humanitarian impact and has cut deeply into the activities in Central Visayas but its impact on the country’s overall economic growth is likely to be limited, reflecting about a 0.9 percent decline in growth in the fourth quarter of 2013, leading to a marginal 0.2 percentage point fall in annual growth rate compared with pre-crisis projections.
Dollar remittances expanded by an estimated 5.8 percent in 2013 and would likely accelerate in the wake of the typhoon.
The WB report stressed the need to undertake structural reforms and re-balance the economy from its excessive dependence on consumption, while at the same time prioritizing investment, to rebuild the typhoon –stricken portions of the economy.
“Careful management of fiscal levers may be requested to direct spending toward the affected areas and away from overheating sectors elsewhere,” the report added.
In its latest global economic outlook, the WB reported a growth moderation of 7.2 percent in 2013 in the East Asia and the Pacific region from 7.4 percent in 2012.
Growth in China was unchanged from the 7.7 percent recorded in 2012.A one percentage point slowdown in growth in the rest of the region reflected a moderation of economic activity in
Indonesia, Malaysia, Thailand and a sharp slowdown in Papua New Guinea that resulted from completion of construction of a major liquid gas facility.
 Because output in the region was capacity-constrained at the onset of the 2008–09 crisis, domestic policy induced a quick rebound from the economic slowdown in 2009, leaving output in the region close to or above capacity, the WB report said.
“Continued fiscal and monetary stimulus in the post-crisis period combined with the strong foreign inflows exacerbated imbalances, leading to a rapid expansion of credit, deteriorating current account positions, and growing asset price pressures in several countries between 2007 and 2012.”
The WB report expects global GDP growth to gradually firm from 2.4 percent to 3.5 percent in 2016. Global trade flows are also projected to recover from their current low levels of 3.1 percent to 5.1 percent by 2016.
Increased trade will particularly benefit exporters of manufacturing products and services in China, Malaysia, Pacific Islands, the Philippines, Thailand and economies with relatively low unit labor costs and competitive exchange rates in Cambodia, Lao PDR,Myanmar and Vietnam.
Declining commodity prices are however, projected to weigh on for commodity exporters in Indonesia, Malaysia, Mongolia, and Papua New Guinea.
Full-year growth for China is expected to remain at around 7.7 percent in 2014, but the quarterly pace should slow somewhat toward the second half of the year, with growth projected to stabilize at around 7.5 percent in 2015 and 2016, the report said.
The WB also expects growth in the rest of the region would also  be broadly stable in 2014 but is projected to pick up in 2015 to 5.7 percent reflecting modest acceleration in Indonesia and Thailand, reconstruction efforts in the Philippines, and the start of production of Papua New Guinea Liquefied Gas before settling at 5.5 percent in 2016.

Philippine tourism to reach P1.2 trillion

The Department of Tourism (DOT) is projecting revenues from domestic tourism to hit P1.4 trillion in 2014, higher by P110.6 billion compared to 2013 earnings due to the projected increase in the daily expenditures by domestic tourists.
The DOT estimates domestic tourists to reach 47.7 million in 2014 up from 44.1 million in 2013. The average length of stay of local tourists remains at approximately five nights.
The increasing number of local travelers could be attributed to the promotions and expositions being held by the Philippine Travel Agencies Association (PTAA) which has been organizing the annual Traveltour Expo to be held this year at the SMX Convention Center in Pasay City on February 14 to 16.
The PTAA has been holding travel tour expo since 1993 varying from inbound and outbound expos until it decided to promote both inbound and outbound tourism in the latter years, said TTE Executive Director Marciano Ragaza.
Previous editions of the expo have seen an increasing presence of domestic tourism suppliers such as local airlines, domestic tour operators, hotels and resorts in the various islands as well as provincial tourism councils which showcase the various destinations around the Philippines. Very affordable offers and unique packages await those looking to see discover more of the islands.
The 21st Traveltour Expo, which promises to be the biggest and most diverse in terms of exhibitors, will be held at Halls 1 to 4 at the ground floor of SMX and the Function Room 5 at the 2nd Floor and will feature a total exhibition area of 11,480 square meters.
The expo will feature 53 travel agencies and tour operators, 27 airlines, five cruise lines, 96 hotels and resorts, 14 embassies and travel organizations and six theme parks.

ESCAP forecasts Philippine economy to grow by 6.7%

The UN Economic and Social Commission for Asia and the Pacific (ESCAP) forecasts the Philippines’ gross domestic product (GDP) growing by 6.7 percent this year, making it the second fastest growing economy in the Asia-Pacific region next to China.
ESCAP expects the Philippine economy to sustain its robust growth in 2014 and could further accelerate due to the reconstruction activities in the aftermath of typhoon Yolanda.

ESCAP noted that remittances would continue to serve as a stable source of support for the Philippine economy given the better outlook for receiving countries as well as the general lack of short-term volatility in remittance flows. 

ESCAP considered the economic performance of the Philippines a “bright spot” among the major economies with large domestic markets in the region.

The Philippines has seen its highest growth in years -above 7 percent in the last four quarters through the third quarter of 2013.

“The role of remittances in supporting buoyant domestic consumption in the country has been important,” ESCAP said.

ESCAP also cited the robust investments in the country, the benign inflation and a relatively low budget deficit that allowed for substantial government spending this year in infrastructure and other basic services. 

“The prospects are positive in 2014, despite the losses resulting from Typhoon Haiyan in 2013. Concerns remain, however, regarding the high unemployment rate and relatively low investment level compared to other similar South-East Asian economies,” it added. 

Meanwhile, the ESCAP also sees improving prospects for growth of developing Asia and the Pacific, which is forecast to expand by 5.6 percent in 2014 from an expected 5.2 percent this year.

ESCAP said the projected growth, however, depends on the gradual recovery in developed economies, particularly an increase in growth momentum in the United States, expansion in Japan and progression to positive growth territory of the European Union.   

 “If the positive outlook in the advanced economies does materialize, import volume growth by these economies is expected to reach a three-year high in 2014. Growth performance in developing economies is thus expected to resume some strength after a sluggish 2013,” ESCAP said.