2nd Front Page BusinessMirror
A8 Wednesday, December 12, 2018
Foreign direct investments fell by nearly a third in Sept
F
By Bianca Cuaresma
@BcuaresmaBM
OREIGN investments placed in the Philippines for long-term yield declined by almost a third in September this year, as equity capital withdrawals expanded during the period, according to data from the Bangko Sentral ng Pilipinas (BSP). The BSP announced that net inflows of foreign direct investments (FDI) hit $569 million in September, 29.4 percent lower than the $807-million FDI net inflows
recorded last year. The culprit behind the decline, according to BSP data, was the sizeable rise in equity capital withdrawals, which reached $187 mil-
$569M FDI net inflows in September 2018, a figure that is 29.4 percent lower than the $807 million recorded in 2017
lion, exceeding the $69 million in equity capital placements during the period. FDI is the type of investment that is often more coveted, as it stays longer in the economy and creates jobs for locals. It is also not easily pulled out of the market unlike its shorterterm counterpart, the foreign portfolio investments.
In September, the equity capital infusions were mainly from the United States, Japan, Macau, Hong Kong and China. The investments were channeled mostly to real estate, manufacturing and electricity, gas, steam and air-conditioning supply activities. Among other subcomponents of the FDI, debt instruments—which consist mainly of intercompany borrowings and lending between foreign direct investors and their subsidiaries and affiliates in the Philippines—grew by 24.3 percent to $609 million, from last year’s $490 million. Reinvest ment of ea r nings amounted to $78 million during the month, according to BSP data. See “Investments,” A2
Draft federal charter hurdles House on third reading By Jovee Marie N. dela Cruz @joveemarie
T
HE House of Representatives on Wednesday approved on third and final reading the draft Federal Constitution of the Philippines, which no longer prescribes term limits for lawmakers and contains provisions relaxing foreign ownership restrictions. Voting 224 affirmatives, 22 negatives and three abstentions, the lower chamber passed the Resolution of Both Houses (RBH) 15. House Constitutional Amendments Committee Chairman Vicente Veloso of Leyte said the draft federal charter is a product of two years of public consultations and several other drafts proposed by the PDP-Laban, the Consultative Committee, former ABS Party-list Rep.
Eugene de Vera and Pampanga Rep. Aurelio Gonzales. RBH 15 is one the priority measures mentioned by President Duterte in his last State of the Nation Address. The resolution will be transmitted to the Senate for its own deliberations.
Foreign ownership THE proposed federal charter amends certain economic provisions of the 1987 Constitution by relaxing restrictive foreign ownership rules to attract more investments. RBH 15 will lift some of provisions of the current charter against the entry of foreign investors by inserting a phrase “unless otherwise provided by law.” Under the draft federal charter’s Section 3, unless otherwise provided by law, private corporations or associations may not hold such alienable lands
NORTHEAST MONSOON AFFECTING NORTHERN LUZON as of 4:00 pm - December 11, 2018
of the public domain except by lease, for a period not exceeding 25 year, renewable for not more than 25 years and not to exceed 1,000 hectares in area. Lands of the public domain are classified into agricultural lands, reclaimed lands, forest or timber lands, mineral lands and national parks. Also Section 7 indicated that except in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain, unless otherwise provided by law. Under Section 11, unless otherwise provided by law, no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the
laws of the Philippines. Filipinos must own at least 60 percent of the capital. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by Congress when the common good so requires.
Term limits RBH 15, principally authored by Speaker Gloria Macapagal-Arroyo, seeks a presidential-bicameral-federal system of government. It also empowers Congress to establish federal states by convening itself into a constituent assembly. The draft charter lifts the term limits for members of Congress and requires lawmakers to have a college degree. Under RBH 15, the first election under the new Constitution shall be held on the second Monday of May 2022. The term of the president and vice president, which shall end in 2022, will not be extended. The incumbent president is prohibited from running in the 2022 elections. Under the resolution, in case a vacancy arises by reason of removal, resignation, permanent incapacity or death of the incumbent president, the incumbent vice president shall act as president until a president has been chosen and qualified.
‘Not viable’ ALBAY Rep. Edcel C. Lagman, who voted against RBH 15, said the Charter change embodied in the resolution is “an initiative that has floundered before it could take off.” “Its centerpiece agenda on the shift to federalism is a virtual centerfold because it is bare. No less than President Duterte’s economic advisers have exposed it as not economically viable,” Lagman added. He said the “undue haste” in shifting from the unitary to the federal system of government will cause the “further deterioration” of the economy. “The President’s chief economist, National Economic and Development Authority [Neda] Director General Ernesto Pernia, has scored the country’s lack of preparedness for a shift to federalism,” Lagman said. “He [Pernia] said majority of our regions are fiscally ill prepared for federalism. He also said that only the National Capital Region, Central Luzon, Southern Tagalog [Calabarzon], and lately Cebu, or only four out of the possible 18 federated regions have the political and economic infrastructure that would allow them to adopt federalism,” he added. Lagman noted that Pernia had observed that implementing federalism before the country is ready would be detrimental to the country’s economy. He said Finance Secretary Carlos G. Dominguez III has, likewise, ventilated his concerns and said the transformation could lead to “dire, irreversible economic consequences.”
www.businessmirror.com.ph
PALACE TAX PACKAGE STALLED BY P3.7-TRILLION BUDGET BILL FOR 2019 By Butch Fernandez @butchfBM
S
ENATORS confirmed on Tuesday Budget Secretary Benjamin E. Diokno’s apprehension that the Duterte administration’s controversial tax-reform package is not likely to be approved by Congress this year, as lawmakers focus their efforts on first passing the proposed P3.7-trillion 2019 budget bill before lawmakers adjourn for their Christmas recess on December 14. “We do not have the time to pass the CTRP [Comprehensive Tax Reform Program],” Sen. Sherwin T. Gatchalian told the BusinessMirror. Gatchalian explained this was “because of the delay in the transmittal of the 2019 budget bill from the House of Representatives to the Senate.” He affirmed that the senators’ priority now is to first pass a new General Appropriations Act (GAA) before their Christmas break, in a bid to avert a looming scenario that has the government operating under a reenacted budget in January. Diokno earlier told the BusinessMirror a more realistic scenario was that the tax bills would be tackled and approved till beyond the May 2019 elections. However, Diokno did not see the time constraint imposed by the budget bill as the main reason for the stalled timeline of the CTRP packages. Instead, he cited what he saw as the senators’ “resistance” to certain key features of these tax packages.
Health budget cuts THIS developed as Senate Minority Leader Franklin M. Drilon prodded the Senate Finance Committee, chaired by Sen. Loren Legarda, to restore P16.8 billion of the P28-billion fund slashed from the 2019 budget of the Department of Health (DOH). The Minority Leader took the floor during deliberations on the P79-billion budget of the DOH, lamenting how an agency at the forefront of the government’s social protection program would “have its budget slashed by about P28 billion.” Drilon lamented that the huge P16.8-billion cut in the DOH budget is expected to adversely affect the Health Facilities Enhancement Program (HFEP). If the budget cut is not restored, a number of health facilities that have either been wholly or partially completed would “remain unutilized to the detriment of the poor and the vulnerable,” the senator said. For instance, Drilon noted there
Digital. . .
Continued from A1
The human capital category seeks to measure a country’s performance according to the quality and quantity of people that can create digital transformation environments. The last category aims to gauge countries’ performance in their ability to absorb and benefit from digital technology that is available in the market. The Philippines’s ranking in digital infrastructure was 11th with a score of 9.7. Its ranking slipped one notch, while countries like India improved four notches and Japan, two notches. Data showed only 4 percent of homes and buildings in the Philippines have superfast connectivity, unlike Singapore at 97 percent; mainland China, 77 percent; and Hong Kong, 74 percent.
Human capital
THE EIU white paper stated that the Philippines’s performance in terms of human capital remained stagnant at 9th overall with a score of 20.4. Data showed telecommunication professionals in the Philippines only account for 1 percent of the work force. Telecommunication professionals in other
are 900 health facilities with 100percent completed infrastructure and existing human resource but they need equipment for licensing and/or PhilHealth accreditation. The budget for which, amounting to P7.4 billion, however, was part of the P16.8 billion that was cut from the DOH’s budget, he pointed out. In addition, Drilon said there are 328 health facilities that are at least 80- to 90-percent complete, but are now “in danger of being left unfinished due to the budget cut.” Drilon aired apprehension that this will “have very adverse effects on our health program. [Many rural health units and district hospitals will be left hanging],” as the budget that was slashed is supposed to fund the health infrastructure requirement for Universal Health Care. “ These funds are necessary in order to enable the health facilities to deliver better services.” He lamented that the budget cut is not consistent with President Duterte’s budget message vowing to increase investment on social protection. “We have taken the position that the massive cuts in the population-related positions, including the Department of Health, National Housing Authority, are not consistent with the President’s budget message,” said Drilon. He added: “I don’t think we can face our people with the revelations that there are some districts which will get P2.4 billion for farm-to-market roads and yet, here, there are about 900 health facilities that are completed and manned but would not be able to operate because the budget was cut.” Drilon was referring to the earlier revelation made by Sen. Panfilo M. Lacson Sr. about congressional insertions in the 2019 budget bill. Besides the health department, Drilon said, “more social protection agencies also suffered huge budget cuts.” He listed: the Department of Social Welfare and Development whose budget was cut by 2.7 percent; the Department of Agriculture, a 7.5-percent reduction in budget; the Department of Education, 9.8 percent; and the National Housing Authority, 87.7 percent. According to Drilon, Senate Finance Committee chief Legarda has agreed with his findings and “vowed to work with the minority leader” in restoring the budget of DOH. “I don’t think that there is any argument that will justify the non-reinstatement of the budget,” says Drilon.
countries like Singapore and Hong Kong account for 8 percent and 5 percent of the work force, respectively.
Connectivity
IN terms of industry connectivity, the country’s ranking slipped two notches to last place with a score of 11.3. EIU cited data from the 2016 Global Open Data Index, which showed the country only scored 30 percent. “Foremost among these were big data and analytics, while mobile apps and services, mobile devices and cloud computing— naturally along with cyber security tools— were also high on their priority list. Large numbers also pointed to AI, robotics and the IoT [Internet of Things],” EIU said. “To generate the desired benefits, these technologies need to be used in combinations. It is the ability of firms to use these in an integrated manner, which will determine the scale of their contribution to digital transformation,” it added. The white paper said the success of a country’s digital transformation lies in changing employee mindsets and organizational culture, as much as access to technology and specialists. Nonetheless, EIU said Asian countries have companies with senior managers who are as able as those in Western countries to bring about technological change. Cai U. Ordinario