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Monday, August 17, 2020 Vol. 15 No. 312
P25.00 nationwide | 2 sections 16 pages |
‘POLICY RATES, RRR CUTS
WON’T ENSURE RECOVERY’ Peso to track econ data, F lockdown By Cai U. Ordinario
@caiordinario
URTHER reduction in interest rates and the reserve requirement ratio (RRR) this year may not be the solution the economy needs to recover, according to the Ateneo Center for Economic Research and Development (Acerd).
updates
By Tyrone Jasper C. Piad
Currently, money supply accounts for 70 percent of GDP and about P5 trillion is just “sleeping in the banks,” Acerd Director Alvin P. Ang said in a recent presentation. Most of the liquidity has been poured into bonds and recent Initial Public Offerings (IPOs). The government’s P30 billion worth of Retail Treasury Bonds (RTBs) which was six times oversubscribed and the IPOs of Merrymart and Ayala REIT were both two times oversubscribed. He added that corporate bonds issued in the first half of 2020 have already reached 80 percent of last year’s amount. “Yes, the economy is liquid but this is not being immediately reflected into what the purpose originally was, which is really for firms to be able to go back and borrow,” Ang said. “The thing is, the liquidity is already there but if it’s not absorbed by the sector you want it absorbed [in], then pushing down the rates further might not necessarily be the solution that you want because the money supply now is about more than 70 percent GDP and there’s still a lot of savings out there in the banks, about P5 trillion of savings still sleeping in the banks as of now,” he added. Ang said the monetary easing that the Bangko Sentral ng Pilipinas (BSP) implemented in recent months had led to a “very liquid” economy. He explained that during the
Asian Financial Crisis, the movement of the 91-day treasury bills, the overnight lending rates, and RRR were erratic. This, he said, prevented dollars from moving out of the economy. But as the economy normalized in the 2000s, the overnight lending rates and the 91-day treasury bills declined. They only increased slightly during the Global Financial Crisis. However, Ang said the RRR remained high throughout the 2000s until around 2017 when the BSP started bringing it down to around 12 percent currently. “The liquidity is just being captured in the financial system and we want really to bring it down to the small and medium enterprises, to the firms, so that they can continue floating their businesses,” he added. Ang said the impact of the government’s policies are taking time to have an effect. He noted that loans for productive economic activities are slowing while loans for consumption spiked in April but are also slowing. Further, there is a change in the behavior of those obtaining bank loans. Ang said in June 2019, most of the loans were accounted for by Construction; Water supply, Sewerage, and Wastewater treatment; Financial and Insurance Activities; Arts, Entertainment, and Recreation; and Agriculture, Forestry and Fishing. Continued on A2
BORACAY REOPENING TO FOREIGN GUESTS EYED BY OCTOBER By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
B
OR AC AY Island, the crown jewel of Philippine tourism, is looking to reopen to foreign guests within a travel bubble. Stakeholders who attended a meeting on Saturday called by the provincial government said Aklan Gov. Florencio Miraflores proposed to open Boracay by October “for that bubble travel.” BusinessMirror sources said the stakeholders agreed to the reopening, “but require
PESO EXCHANGE RATES n
a [negative] RT-PCR test” from guests, at least five days from the date tested. Miraflores also “got the commitment of hotel owners to give a discount [on published room rates] up to 75 percent,” the same sources said. The Aklan government is eyeing the travel bubble to initially be with South Korea, with Philippine Airlines flying between Incheon and the Kalibo International Airport. A working group has been tasked to discuss the details of the agreement between the Aklan LGU and Boracay stakeholders, See “Boracay,” A2
@Tyronepiad
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HE local currency will be tracking the release of major economic data and the government’s decision on lockdown measures in Metro Manila and nearby areas this week. “For [this] week, the Philippine June remittance data scheduled for release, with smart estimate at -6.7 percent versus prior print of -19.3 percent, will be a factor for peso movement,” RCBC Chief Economist Ruben Carlo O. Asuncion said. He said that the next support for peso is seen at P48.61 while resistance is at a “critical” P49 level. Offshore, Asuncion noted that the decision of the US Congress regarding the passage of an additional economic stimulus package will also affect the peso. RCBC Chief Economist Michael L. Ricafort, meanwhile, said traders are also on the lookout for the latest balance of payments data and the decision on policy rates by the Monetary Board this week. On late Friday, the Bangko Sentral ng Pilipinas reported that the gross international level reached a record-high of $98 billion as of end-July. “Major market leads/catalysts include the decision by the government to ease the MECQ [modified enhanced community quarantine] on Metro Manila and nearby areas after August 18,” he added. Over the weekend, Presidential spokesman Harry Roque said that President Duterte is expected to announce today (Monday) the new
WORKERS put the finishing touches to the steel foundation of the Nlex extension project along A. Bonifacio Avenue in Quezon City. Vital infrastructure projects have been given priority in the reopening of the economy after crippling lockdowns forced by the Covid-19 pandemic. NONOY LACZA
See “Peso,” A2
‘Good’ disruption: More people buy, eat eggs By Jasper Emmanuel Y. Arcalas
I
@jearcalas
RWIN Ambal, a longtime layer raiser, is used to queues of trucks in front of his warehouse in San Jose, Batangas. They are usually there to load trays of eggs to be distributed and sold. But the Covid-19 pandemic brought a new picture that until today he’s still trying to get used to: long lines of L300, SUV cars, and vans buying table eggs from him. And this picture of queues of private vehicles, instead of trucks of traditional buyers, is something he described as “borne out of need” during the Covid-19 pandemic. Ambal, president of the Philippine Egg Board Association (Peba), said they saw a drastic disruption in domestic egg trade with the rise of
online food sellers and community vendors or distributors. “There are more L300, Innovas, Nissan SUVs and trucks in front of our warehouse than traditional trucks everyday,” he told the BusinessMirror. He explained that Filipinos were forced to find alternative means of livelihood and profit to survive the pandemic; and egg reselling within their communities, such as subdivisions, or through online, was one such fallback. The apparent shift was also caused by the need to have a stockpile of food, especially during the height of lockdowns imposed by the government to curb the spread of Covid-19 in the country, he added. Health experts have kept saying that people needed to ensure their lockdown diets are healthy, and eggs were pitched as one of the best
—and most convenient—sources of nutrients. “I think it was borne out of need from months of lockdowns. We saw empty shelves in groceries and there were logistical issues at the start that hampered trade. So people were forced to buy in trays and stock up in their houses,” he said. “Eventually, they saw an entry point for business or selling: why don’t they sell table eggs in their subdivisions or villages?” he added.
‘Good’ disruption
AMBAL said the disruption was a good thing since it shortened the value chain providing consumers with more affordable and accessible table eggs. At the same time, he noted, it reduced carbon footprint and pre-
vented people from going out too far to purchase their egg requirements. Gregorio San Diego, chairman of Peba, said it was easy for Filipinos to venture into egg reselling since eggs have a long shelf life and do not require high overhead costs. And since most Filipinos tightened their belts at the height of the lockdowns they were forced to find cheaper food alternatives, especially since retail prices of prime meat like chicken and pork had risen in the past months. “Among the agricultural commodities, chicken eggs are the cheapest and easiest to handle. It has become a poor mans’ diet,” San Diego said. “To note, it is our cheapest protein source.” See “Good disruption,” A2
US 48.8900 n JAPAN 0.4573 n UK 63.8943 n HK 6.3081 n CHINA 7.0386 n SINGAPORE 35.6367 n AUSTRALIA 34.9417 n EU 57.7684 n SAUDI ARABIA 13.0377
Source: BSP (14 August 2020)