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DoF: less pressure to put off oil tax hike

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By Elijah Joseph C. TubayanReporter
THERE MAY BE less pressure for the government to press on with its stated commitment earlier this week to put off an oil excise tax hike set in January amid signs that Dubai crude price — Asia’s benchmark — could in this final quarter average less than the $80 per barrel (/bbl) trigger price under the law for automatic suspension, the Department of Finance (DoF) hinted in a bulletin on Wednesday.
At the same time, one DoF senior official said in an interview that the situation bears watching as oil prices remain “too volatile,” hence, pressure is still tilted to the upside.
“While Dubai oil price levels for the next six months using Oct. 8 futures prices would have required suspension of the adjustment in excise tax for the next six months, the latest prices levels show otherwise,” read the bulletin — attributed to DoF Undersecretary and Chief Economist Gil S. Beltran — which was e-mailed to reporters, citing data from S&P Global Platts.
“From $82.577/bbl on Oct. 8, Monday, Dubai crude [futures] dropped 2.9% on Oct. 12, Friday to $80.188/bbl. Similarly, Dubai crude oil futures for the next six months dropped below US$80/bbl.”
Oct. 12 futures data show $77.913/bbl for November and $77.482 for December, from above $80/bbl for both months on Oct. 8 and 11, yielding a prospective $78.53/bbl average this quarter.
Dubai crude spot price rose by 43% to $77.02/bbl in September from $53.86/bbl a year ago and by 6.78% from August’s $72.23/bbl.
Spot prices averaged $81.74/bbl in the 12 trading days to Oct. 16, 49% more than the $54.86/bbl in last year’s comparable period. Dubai crude dropped to $79.30/bbl on Oct. 15 and further to $78.80/bbl on Oct. 16 from above-$80/bbl since September’s last three trading days.
Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN) that took effect in January, raised fuel excise taxes by P2.50 per liter this year and is scheduled to add P2/liter and P1.50/liter in 2019 and 2020, respectively, totaling a P6/liter excise tax hike.
Malacañan Palace announced its commitment to suspend the scheduled oil tax hike last Monday in the wake of Oct. 11 futures data showing above-$80/bbl levels this month to December, with prices falling below that trigger starting January. Oct. 8 futures data showed below-$80/bbl starting April. The Finance department explained then that Malacañang made the announcement in advance to douse inflation expectations.
“The announcement was made when the price and the futures market were above $80, so the decision to suspend will be released some point next year. Malacañang will announce it formally,” Assistant Secretary Antonio Joselito G. Lambino II, DoF’s spokesman, said in a telephone interview.
“[Presidential] Spokesperson [Salvador S.] Panelo already made an announcement that the suspension is forthcoming. We will abide by Malacañang’s decision. But the decision was made based on recommendations made by the leadership in the Senate and the… House and a support statement from the economic managers.”
Analysts said this week that the law’s trigger price may not be the only deciding factor in this issue, since the January trigger period is just four months away from the May mid-term elections that, in turn, have a bearing on the 2022 presidential elections.
The DoF bulletin on Wednesday noted that “[u]ncertainties in the global economy arising from the trade war, US President (Donald) Trump imposing sanctions on Iran, and declining Venezuela production scared financial and commodity markets, sending equities and commodity prices gyrating from day to day.”
“This has resulted in volatile crude oil prices,” the department explained.
But Mr. Lambino said that pressure remains on the upside.
“My understanding from experts is that it’s too volatile. We’re also looking at intensification of sanctions by the US against Iran by November. We’re also looking at the actual demand for oil, so that’s volatile,” he said.
“When the announcement was made, the prevailing price was about $80, and that was about a week ago. We’re still looking at the major factors globally when it comes to oil prices.”
SPENDING CUTS
The Finance department estimates suspension of January’s scheduled oil tax hike to cost the government some P41 billion in foregone revenues.
Economic managers are now scrounging for items — except for infrastructure and human capital development — for which expenditures could be suspended.
Also on Wednesday, Budget Secretary Benjamin E. Diokno said that the increase in fuel vouchers for public utility jeepney franchise holders will be put on hold, following Malacañang’s announcement of impending suspension of the scheduled oil tax increase.
The program was intended as a mitigating measure for the public transportation sector affected by the fuel tax hike under TRAIN.
About 179,000 jeepney franchise holders nationwide are entitled to receive P5,000 worth of fuel vouchers this year and P20,515 in 2019.
“The Pantawid Pasada for next year is premised on the P2 adjustment. Now if the P2 adjustment is suspended, then the Pantawid Pasada benefits will be based on 2018,” Mr. Diokno said in a media briefing on Wednesday.
Surging oil and rice prices drove headline inflation to multiyear peaks lately, averaging five percent in the nine months to September against the central bank’s 2-4% target range for full-year 2018.
The government now forecasts full-year inflation to average 4.8-5.2% this year and 3-4% in 2019.
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Competition body fines Grab, Uber P16 million

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PHILSTARBy Denise A. ValdezReporter
THE PHILIPPINE COMPETITION COMMISSION (PCC) has imposed fines totaling P16 million on Grab Philippines (MyTaxi.PH, Inc.) and Uber Philippines for violations of interim measures ordered on April 6 as the watchdog reviewed the companies’ March 25 acquisition deal.
“Last Thursday, Oct. 11, PCC imposed a fine on Grab and Uber amounting to P16 million. This is for violating the interim measures order that PCC issued last 6th April,” PCC Commissioner Stella Luz A. Quimbo said in a press briefing on Wednesday. “The interim measures order contained a total of seven interim measures and PCC found violations in two of these measures. And for these two measures, we found a total of 10 counts of violations.”
The measures bound the firms to maintain separate business operations and to refrain from executing final agreements that would transfer assets, equity and interest — including Uber’s assumption of a board seat in Grab — during the review period.
Both companies were collectively fined P4 million for proceeding with the merger during the PCC’s review period. An additional P8 million was imposed on Grab for failure to maintain pre-merger business conditions (pricing, rider promotions, driver incentives and service quality) during the review and P4 million on Uber for the same violations.
“These fines are not for finding of a substantial lessening of competition, but rather the fines are imposed for causing undue difficulties on the PCC review and decision making process,” Ms. Quimbo explained.
Grab gained 93% of the ride-hailing market in the Philippines after the deal and Uber stopped operations in the Philippines on April 16. The PCC reviewed the deal on April 3-Aug. 10.
PCC Commissioner Johannes R. Bernabe said Uber got a smaller fine since it had to comply with the Land Transportation Franchising and Regulatory Board’s April 11 cease-and-desist order from continuing its operations after the merger.
Grab Philippines said it was studying legal remedies to address the situation.
“We are currently studying all our legal options with regard to the fine imposed by the Philippine Competition Commission. We will continue to provide additional information as it becomes available,” it said in a statement.
Mr. Bernabe said the PCC will exhaust all legal means to compel Uber to settle the penalty.
The PCC last week appointed United Kingdom-based audit firm Smith and Williamson to monitor Grab’s compliance with voluntary commitments for 12 months.
Those commitments are meant to address competition concerns the PCC raised on May 22, including Grab’s service quality, fare transparency, pricing, removal of a “see destination” feature for drivers, driver and operator non-exclusivity, incentives monitoring and a service improvement plan.
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Market unfazed as BSP says Espenilla to take ‘intermittent medical leaves’

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Market participants say the central bank under Governor Nestor A. Espenilla, Jr. has been sending clear policy signals.By Melissa Luz T. LopezSenior Reporter
BANGKO SENTRAL ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. has extended his medical leave until the end of the month, adding that he could take “intermittent” leaves in the future.
Observers said, though, that this did not worry the market.
In an advisory, the BSP’s Corporate Affairs Office announced on Wednesday that Mr. Espenilla will be on medical leave until Oct. 26, marking the fifth straight week that he would be out of office.
“Thereafter, he may be taking intermittent medical leaves. During his medical leaves, BSP deputy governors will be taking turns as officer-in-charge in accordance with established BSP business continuity protocol,” the statement read.
“In the meantime, the BSP team stays steadfast in pursuing the Continuity ++ agenda while Governor Espenilla is completing his treatment.”
The central bank chief was diagnosed with early-stage tongue cancer in November 2017. Mr. Espenilla, now 60, said in February that he was declared cancer-free after surgery and radiation therapy.
Analysts said they believe that markets are unfazed by Mr. Espenilla’s health issues.
Traders sought for comment said there was “no observable impact” on financial markets following the news.
“[T]here is no change in views regarding BSP’s monetary policy,” one currency trader pointed out.
Policy direction remains clear, according to industry observers.
“Generally it’s very difficult to comment on the issue given the sensitivity of the matter. However, I do believe that for as long as BSP provides a clear, consistent and decisive communications strategy, the market will carry on with their business and look to the speedy recovery of the Governor,” said Nicholas Antonio T. Mapa, senior economist at ING Bank NV Manila.
“BSP’s adherence to a consistent and forceful hawkish stance has helped calm markets of late and rendered relative stability even as the Governor remains away. Consistent messaging will be key in maintaining market stability and the deputies will continue to hold the down the fort for as long as the Governor needs to get back to good health.”
Central bank officials have kept a hawkish stance as they announced another 50 basis points increase in policy rates last month, which was a show of force to rein in price expectations as inflation surged to a fresh nine-year high.
Monetary Board Member Felipe M. Medalla, however, said on Tuesday that the BSP may pause its tightening cycle should inflation momentum ease starting this month.
The peso has been seeing some reprieve this week as it returned to the P53 level versus the dollar level, which traders attributed to negative sentiment on Wall Street.
The Philippine Stock Exchange index has also been seeing sustained foreign outflows, with investors wary about trade tensions between the United States and China and, recently, the worsening political row between Washington and Saudi Arabia.
“At this point, market reaction regarding the governor’s health remains minimal, luckily, because BSP already laid their immediate plans out in the last meeting, and, as far as the public knows, the officers left in charge during his absence remain in line with Espenilla’s intended direction,” said Rens V. Cruz II, an analyst with Regina Capital Development Corp.
“However, investors will begin raising issues if the current macroeconomic woes (high inflation, currency depreciation, current account deterioration) persist and BSP will be delayed in responding with tightening policy measures.”
BSP Deputy Governor Chuchi G. Fonacier told reporters recently that monetary authorities have been able to communicate with Mr. Espenilla daily even during his leave. He had also assured that his new round of treatment has been “progressing very well.”
Also yesterday, the BSP governor said via WhatsApp messages that the central bank is piloting the use of digital tools for its bank supervision and consumer protection services through the RegTech for Regulators Accelerator.
To be rolled out are chatbots which will automate the handling of complaints from the public which are sent via mobile phone message and online platforms, which comes at a time of an aggressive push towards electronic transactions.
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Avida allots P7.4 billion for Mandaluyong condo

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AVIDA Towers Verge is a three-tower condominium development in Mandaluyong City. — AVIDA LAND CORP.AVIDA LAND Corp. will be spending P7.4 billion to build the first phase of its multi-tower residential condominium in Mandaluyong.
The mid-range brand of listed property developer Ayala Land, Inc. unveiled on Wednesday Avida Towers Verge, a three-tower condominium development along Reliance Street corner Mayflower Street, Mandaluyong City.
The first tower consists of 34 floors with a total of 1,020 residential units and seven commercial units. The units range from junior one-bedroom, or studio units, spanning 22 to 24 square meters (sq.m.), and one-bedroom covering 34 to 36 sq.m.
The junior one-bedrooms are priced from P4.2-4.4 million, while one-bedroom units are sold from P6.7-7.7 million. Monthly amortization starts at P17,000.
Avida Land Manager for Project and Strategic Management Group Melissa D. Corpuz said the company expects to generate P4 billion from the sale of units in the first tower, noting that 10% has been sold so far. At this pace, Ms. Corpuz said they expect to out the tower by next year.
“We are targeting professionals and millennials. Practically for them, a condo unit will serve as a primary or secondary home to be closer to their place of work and socials,” Ms. Corpuz said during a press briefing in Makati City on Wednesday.
The company will start constructing the second tower once it reaches 70% sales take-up in the first. The entire development will have more than 2,500 units.
Construction of amenities will also be done in the first phase. This includes a clubhouse, indoor gym, swimming pool, kiddie pool, play area, and gazebos.
The launch of Avida Towers Verge followed the completion of Avida Towers Centera, its four-tower condominium project also located along EDSA in Mandaluyong. The company said it spent P5.3 billion to develop the project.
Avida Land is currently turning over units at Avida Towers Centera, where it has nearly sold out 2,526 units.
Since its launch in 2011, Avida Land said prices of units have appreciated by as much as 40% to P139,000 per sq.m.
“Mandaluyong is a prime real estate hot spot. Its condo market is the country’s most buoyant, with demand often outstripping supply… While prices of condo units significantly rise in the area over time, it continues to be at a mid-level price range compare to other cities in the country,” Avida Land Vice-President for Project and Strategic Management Group Apollo B. Tanco said in a statement.
The company is likewise selling the 32 retail units in the first and second levels of the property, 70% of which have already been leased out. — Arra B. Francia
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IDC to spend up to P3 billion to expand provincial projects

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ITALPINAS Development Corp. is expanding its Primavera City project in Cagayan de Oro. — HTTP://PRIMAVERACITY.ITALPINAS.COM/ITALPINAS Development Corp. (IDC) plans to spend P2-3 billion for the expansion of two projects next year, driven by the demand for more housing units in the areas where it is present.
IDC Chairman and Chief Executive Officer Romolo V. Nati said the company will be launching the expansion of Primavera City in Cagayan de Oro, Misamis Oriental, and Miramonti in Sto. Tomas, Batangas.
Mr. Nati said the second phase of Miramonti will be similar in architecture to the first phase, which houses a total of 362 residential units and 12 commercial spaces. It will also have a bigger commercial podium compared with the first phase.
“We are surrounded by industrial parks with more than 100,000 employees, and the Batangas Port is growing fast, occupancy of hotels is very high in the area so we will develop this project so we can take advantage of this market condition,” Mr. Nati told reporters after the company’s annual shareholders’ meeting at the Manila Polo Club in Makati City.
IDC said it has already sold about P400 million worth of units in Miramonti, or 45% of the project. The entire Miramonti development will house 1,100 units across three towers standing on a 55,000-square meter (sq.m.) property.
For Primavera City, IDC will launch two more residential towers, which will also have office spaces. The mixed-use project will have a total of seven towers to be developed in four phases, and will offer 1,400 units once completed.
IDC has sold 82% of the first phase of Primavera City worth around P672 million.
Mr. Nati said the projects will be partially financed through the P500 million it will raise from the issuance of preferred shares. The company’s board of directors approved earlier this year the conversion of up to 100 million unissued common shares into preferred shares. He added that they will be working with banks for the rest of the funding.
“We are focusing on our fund-raising activity so we can acquire more land and develop more projects,” Mr. Nati said.
The IDC executive declined to specify target locations for future projects, but noted that the company wants to take advantage of the growth in emerging cities.
Asked about the company’s performance this year, Mr. Nati said sales so far have been “beyond expectations.”
IDC’s net income attributable to the parent went up 22% to P23.7 million in the first six months of 2018, as gross revenues doubled to P165.8 million in the same period.
Shares in IDC dropped 4.3% or 22 centavos to P4.90 each at the stock exchange on Wednesday. — Arra B. Francia
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Economic execs turn cautious on targets

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By Elijah Joseph C. TubayanReporter
THE DEVELOPMENT Budget Coordination Committee (DBCC) on Tuesday slashed economic growth and fiscal goals and raised inflation forecasts in the face of tighter credit conditions, rising oil prices and a worsening Sino-US trade row.
The DBCC cut the gross domestic product (GDP) growth target for 2018 to 6.5-6.9%, from 7-8% in its July meeting, but maintained the 2019-2022 target at 7-8%.
It also raised inflation forecasts to 4.8-5.2% for this year and 3-4% in 2019, from 4-4.5% and 2-4%, respectively, while keeping the 2-4% target range for 2020-2022.
“We have agreed to revise the medium-term macroeconomic assumptions to reflect the developments in national and local level, high global prices, tightening monetary policy, higher domestic inflation,” Budget Secretary Benjamin E. Diokno said in a press conference at the Bangko Sentral ng Pilipinas Complex after the 174th meeting of the DBCC, which he chairs.
“We have tempered our optimism with prudence and good judgement in terms of the reality. We feel we can still achieve up to 6.9%,” Socioeconomic Planning Secretary Ernesto M. Pernia said in the same briefing.
GDP grew 6.3% last semester against 6.6% in 2017’s first half.
“We have to all realize that we are living in a very different world now. Six months ago there were only rumors of a trade war starting. In May the trade war actually began and has escalated, adding the large measure of uncertainty into the world economic picture,” said Finance Secretary Carlos G. Dominguez III.
“Therefore, prices of oil have risen very steeply, interest rates which factor in risks have increased and the US normalization of interest rate policy has continued and looks like will continue in the future, driving interest rates up. The world starting in May has been difficult and I think our estimates and projections just reflect these,” he added.
Headline inflation averaged five percent in the nine months to September against the central bank’s 2-4% target range for full-year 2018.
Mr. Diokno said state economic managers are “optimistic that the administration has taken enough measures to tame inflation in the last quarter of 2018 and the full year of 2019,” citing President Rodrigo R. Duterte’s orders last month to boost supply and streamline distribution of farm goods, as well as the impending replacement of rice import quotas with a regular tariff scheme that is expected to slash retail prices of the staple by P7 per kilogram. Rice carries one of the heaviest weights in the theoretical basket of widely used goods at 9.6%.
The Bangko Sentral ng Pilipinas has raised benchmark interest rates by a cumulative 150 basis points since May in an effort to douse inflation expectations.
The DBCC also now expects the foreign exchange rate to average P52.5-53 per dollar in 2018 and P52-55 for 2019 until 2022, from P50-53 previously.
They also see Dubai crude averaging $70-75 per barrel (/bbl) this year, rising further to $75-85/bbl in 2019, and then easing to $70-80/bbl in 2020 and P65-75/bbl in 2021-2022. Previously, the body programmed $55-70 in 2018 and $50-65 from 2019 to 2022.
Malacañan Palace on Monday announced the suspension of a P2 per liter excise tax hike for oil scheduled in January, in the face of projections that the price of Dubai crude — Asia’s benchmark — will average more than the $80/bbl trigger set under the tax reform law for such deferment in the remaining three months of the year.
INFRASTRUCTURE DRIVE
Mr. Diokno said that the DBCC will form a task force “to look into the different items in the budget that can be postponed or outright cut” in order to temper the fiscal impact of some P41 billion in foregone revenues expected from the oil tax hike suspension.
Saying that infrastructure spending “will be exempted” from cuts, he said the DBCC team will consider cuts in government vehicle purchases, personnel benefits for unfilled positions as well as some maintenance and other operating expenses.
Mr. Diokno also said that the DBCC slashed projected revenues this year to P2.820 trillion from P2.846 trillion initially “with the deferred implementation of E-receipts and fuel marking” under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act — the first of up to five tax reform packages that took effect in January.
State expenditures are now programmed to hit P3.346 trillion this year from P3.370 trillion previously.
But the programmed fiscal deficit is unchanged at equivalent to three percent of GDP this year and 3.2% in 2019 on a planned spike in infrastructure spending, and three percent in 2020-2022.
“The strong momentum of public spending will be sustained as the government transitions to an annual cash-based budgeting system. In this scheme, all government programs and projects budgeted for the fiscal year should be implemented and delivered in the same fiscal year. This will address underspending, a perennial problem of the bureaucracy, while ensuring the prompt delivery and completion of economic and social services of the government,” said Mr. Diokno.
The DBCC also raised assumptions for the 364-day Treasury bill rate to 4.4-4.6% this year and to 4.5-5.5% in 2019-2022 from 3-4.5%.
Projected growth of goods exports was cut to two percent this year and six percent for 2019-2022, from nine percent previously.
Projected growth of goods imports was likewise reduced to nine percent in 2018 and 2019, and to eight percent for 2020-2022, from 10% across the board previously.
“We are fortunate we are not a trading nation [hence] our effect is not as bad as other countries,” said Mr. Dominguez.
“The source of domestic growth is our increase in domestic demand that’s because we are going into large infrastructure projects.”
BSP Monetary Board Member Felipe M. Medalla said: “This is not unique to the Philippines, but [is true of] all emerging markets.”
“To the extent coal, steel, aluminum prices fall, the impact of the standard of living of Filipinos may be much less relative to GDP numbers.”
Service exports are expected to grow nine percent this year and 11% in 2019-2022, as previously projected.
Service imports are projected at three percent this year, five percent in 2019, six percent in 2020, and seven percent in 2021-2022, from 10% across the board previously.
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Monetary board member says BSP ready to pause tightening

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Monetary Board Member Felipe M. Medalla (left) chats with National Treasurer Rosalia V. De Leon at the 36th Philippine Business Conference at The Manila Hotel in this Oct. 22, 2013 file photo.By Melissa Luz T. LopezSenior Reporter
THE BANGKO SENTRAL ng Pilipinas (BSP) may pause its tightening moves should month-on-month inflation show deceleration, a member of the policy-making Monetary Board said, noting that the impending removal of rice import quotas should help prod overall price increases back to target in 2019.
Monetary Board Member Felipe M. Medalla said the central bank may “take a pause” should the pace of price increases soften starting this month. But he did not discount the possibility that commodity prices could still pick up faster.
“We are yet to see the data on what we will do the next policy meeting. If there are signs that inflation is already abating, as measured by the month-on-month (reading), then we may take a pause, but that’s too early to tell at this point,” Mr. Medalla said during the press briefing of the Development Budget Coordination Committee (DBCC) yesterday.
The Monetary Board will hold its seventh review for the year on Nov. 15.
Policy makers have raised benchmark interest rates by a cumulative 150 basis points (bp) since May as the central bank sought to rein in inflation expectations at a time that prices of basic goods have been surging beyond the central bank’s 2-4% target band for full-year 2018. The BSP raised rates in four consecutive meetings, including a back-to-back 50bp increase in August and September, as inflation was seen breaching the target range even in 2019.
Inflation hit a fresh nine-year-high 6.7% in September, pushing the year-to-date pace to five percent. The BSP foresees 2018 inflation averaging 5.2% and by 4.3% next year, both piercing the ceiling of the target range.
Mr. Medalla said monetary authorities are watching month-on-month inflation as it shows the “momentum” of price movements. He explained that a month-on-month pace of 0.3% or less would be more in line with the original target, but noted that eight of the past nine months have clocked in a faster pace.
September’s month-on-month seasonally adjusted pace clocked in at 0.8%, coming from 0.9% in August.
The Monetary Board member noted that there may be a chance that inflation could still log faster this month, versus the central bank’s expectation that the prices may have already peaked last month.
“Month-on-month is almost certainly going to be lower, but year-on-year, there is no guarantee that it will be lower,” Mr. Medalla added when pressed further.
Still, he said that October or even November inflation could match last month’s pace.
The implementation of the rice tariffication law — which would replace a minimum quota scheme with a regular duty scheme — will be instrumental in tempering inflation, since it is expected to slash rice retail prices by about P7 per kilogram. “The real big item is rice,” Mr. Medalla said, noting that the measure will bring down inflation by 0.7 percentage points. “Without rice tariffication, average inflation year-on-year will be higher than four percent in all likelihood.”
The measure has been approved by the House of Representatives and which is expected to clear the Senate soon after lawmakers return from their Oct. 14-Nov. 12 break.
The DBCC also expects the peso to average P52-55 to the dollar in 2019, making key imports like oil more expensive.
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SE Asia among FDI growth drivers

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FOREIGN DIRECT INVESTMENT (FDI) inflows to the Philippines grew faster than the Southeast Asian average last semester, though the country’s volume paled in comparison with those of some of its regional peers.
The latest Investment Trends Monitor of the United Nations Conference on Trade and Development (UNCTAD) said FDI flows to Southeast Asia increased by 18% year-on-year to $73 billion, driven largely by Singapore’s $35 billion, Indonesia’s $9 billion and Thailand’s approximately $7 billion.
In comparison, data from the Bangko Sentral ng Pilipinas (BSP) showed that FDI net inflows to the Philippines rose 42.4% to $5.755 billion last semester from $4.041 billion in 2017’s first half.
The central bank has projected these inflows to hit $9.2 billion for full-year 2018 from the actual $10.049 billion actually received in 2017.
American Chamber of Commerce of the Philippines, Inc. Senior Advisor John D. Forbes said in a mobile phone reply to a request for comment that “… the high level of FDI flowing into developing countries is good for the Philippines, which is increasingly receiving a larger part of this pie than previously”.
BSP data also show the Philippines’ closest Southeast Asian competitors for FDIs, Thailand and Vietnam, growing inflows by 67.08% to $6.912 billion from $4.137 billion and by 11.84% to $6.99 billion from $6.25 billion, respectively.
The UNCTAD report said global FDI inflows fell by 41% to $470 billion last semester from $794 billion in 2017’s first half “mainly due to large repatriations by United States parent companies of accumulated foreign earnings from their affiliates abroad following (US) tax reforms”.
The decline was driven largely by a 69% year-on-year drop to $135 billion in developed economies, while inflows to developing markets slipped by four percent to $310 billion.
Inflows to developing Asia similarly dipped by four percent to $220 billion.
China, which saw inflows grow by six percent to $70 billion, was the biggest global FDI recipient, the report noted.
Britain placed second with $66 billion and the United States followed with $46.5 billion.
“The investment flows are more policy-driven and less economic cycle-driven,” UNCTAD investment chief James Zhan said at a news conference in Geneva, citing the US tax reform and economic liberalization in China.
“Overall, the picture is gloomy and the prospect is not so optimistic.”
FDI, comprising cross-border corporate takeovers, intra-company loans and investments in start-up projects abroad, is a bellwether of globalization and a potential sign of growth of corporate supply chains and future trade ties.
But it can also go into reverse as companies pull out of foreign projects or repatriate earnings.
Such reversals could erode the importance of international supply chains, which became an increasingly important driver of international trade until 2011 and subsequently stagnated, Mr. Zhan said.
“If there’s a lack of FDI for expansion of the value chains then of course it will impact on global value chains and therefore impact on global trade,” he said.
“It’s difficult to tell whether we are at a turning point (in globalization) or if this is only a slowdown.”
Despite the overall slowdown, money going into newly announced start-up projects — so-called “greenfield” investments — increased by 42%, providing a glimmer of hope that more money will follow and drive more spending and trade in future.
Greenfield investments in Asia hit a record, driven by China’s $41-billion crop and a surge of Southeast Asian projects, especially in Indonesia ($28 billion), Vietnam ($18 billion) and the Philippines ($12 billion). — with Janina C. Lim and Reuters
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DoubleDragon partners with Equicom for clinics at CityMalls

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BW FILE PHOTODOUBLEDRAGON Properties Corp. said it has partnered with the operator of MyHealth Clinics to open medical clinics in its community malls.
In a statement issued Tuesday, the listed property developer said its subsidiary CityMall Commercial Centers, Inc. (CMCCI) signed a strategic partnership with Equicom Group for the rollout of the latter’s multi-specialty medical clinics in CityMalls nationwide.
DoubleDragon said the first batch of clinics will be built in 12 CityMalls in the next 12 months, with four each in Luzon, Visayas, and Mindanao.
“These strong alliances further solidifies the relevance of CityMalls in the communities we serve,” DoubleDragon Chairman Edgar J. Sia II said in a statement.
“With the addition of state-of-the-art medical and dental clinics in CityMalls, we will now have the best modern retail brands, the strongest fastfood brands, the leading entertainment cinemas and the foremost medical clinic provider all in one roof,” he added.
MyHealth Clinic is under the Equicom Group and an affiliate of Maxicare Healthcare Corp., touted as the largest health maintenance organization in the country. It operates a network of full-service ambulatory clinics offering outpatient health care products and services.
The Equicom Group is led by businessman and banker Antonio L. Go, who was previously the chairman of Equitable PCI Bank. The bank was considered the third largest in the country in terms of assets until it was acquired by Sy-led BDO Unibank, Inc. in 2007.
CMCCI, the umbrella company for all CityMall projects, is 66% owned by DoubleDragon and 34% owned by SM Investments Corp.
The company is targeting to have 50 CityMalls by end of the year. This month, community malls opened in Iponan in Cagayan de Oro City and Sorsogon City in Bicol. It is set to open in Calapan City, Mindoro; and San Carlos City, Pangasinan next week, and in November, branches in Isulan, SOCCSKARGEN; Roxas Avenue, Capiz; Bulua, Cagayan de Oro City; and Cadiz City, Negros.
DoubleDragon aims to have 100 CityMalls covering 700,000 square meters (sq.m.) by 2020. The malls are mostly located in Tier 2 and 3 cities in the provinces, as the company seeks to position itself as the number one mall operator in those areas.
DoubleDragon’s net income surged 234% to P1.26 billion in the first six months of 2018, on the back of a 123% jump in consolidated revenues to P3.63 billion. Recurring revenues amounted to P1.41 billion during the period, 199% higher year-on-year.
Shares in DoubleDragon jumped 2.44% or 44 centavos to close at P18.46 each at the stock exchange on Tuesday. — ABF
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Smart says proposed common tower policy violates its franchise

By | Property News

By Denise A. Valdez, Reporter
SMART Communications, Inc. said the proposed policy on common towers violates its legislative franchise, which gave PLDT, Inc.’s wireless unit the right to build its own telecommunications towers.
In a position paper submitted to the Department of Information and Communications Technology (DICT) on Oct. 5, Smart said the proposed memorandum circular (MC) cannot amend a legislative measure such as its franchise under Republic Act no. 10926.
“Here, the proposed MC violates Smart’s franchise. By providing that future deployment can only be performed by the independent TowerCos (tower companies), the draft MC effectively amends Smart’s franchise. This is essentially an encroachment of legislative powers. If the proposed MC is issued, the DICT and NTC (National Telecommunications Commission) would arrogate upon itself the power and authority to amend the law — a power solely vested in Congress. Unless and until repealed through the enactment of another law, the provisions of Smart’s franchise are controlling,” the company said.
Congress renewed Smart’s franchise for another 25 years in April 2017.
The DICT presented last month a draft MC, prepared by Presidential Adviser for Economic Affairs and Information Technology Communications Ramon P. Jacinto, which seeks to limit the building of telco towers to only two registered tower companies.
Smart noted that efficient tower markets should allow different ownership models, including ownership by telecommunications companies.
Citing cases in United States, Nigeria, Ghana, India, Indonesia and Germany where telcos are allowed to own towers, Smart said the government’s objectives in issuing the infrastructure sharing policy “can still be achieved even without prohibiting (telcos) from building their own towers pursuant to their franchise.”
Smart also said independent tower companies would go through the same bureaucracy that telcos do in building towers, therefore there is no guarantee that the tower companies would roll out the infrastructure at a faster pace.
“This very tedious process of securing permits is really the main culprit behind the lack of telecommunications infrastructure in the Philippines. Inasmuch as (telcos) are able and willing to expand their networks and build more cell sites, permitting issues are hampering their efforts,” it said.
At the same time, Smart said the MC provision limiting the number of tower companies to two “unfairly” excludes other companies, and leads to a duopoly. It added this may violate the Philippine Competition Act.
“Notwithstanding the existence of independent TowerCos, MNOs should still be permitted to exercise their right to build telecommunications towers in accordance with their respective franchises. Finally, the number of independent TowerCos should not be limited to two as it is anti-competitive,” the company said.
Sought for comment, DICT Acting Secretary Eliseo M. Rio, Jr. said he agrees the government cannot keep the telcos from building their own towers.
“Yes, it is in their franchise and they cannot be prevented to put up their own infra including towers. We can’t come out with a Department policy or order that we cannot implement because we can be sued in court. We will have a dialogue with the telcos on how to resolve this,” Mr. Rio said in a text message to BusinessWorld.
Mr. Rio previously said the DICT targets to finalize the tower sharing policy by November.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
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