BusinessMirror February 06, 2020

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HIT, BUT ALSO GAIN IN VIRUS FALLOUT By Elijah Felice E. Rosales @alyasjah

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HE Philippines may take a hit from the business slowdown in China caused by the coronavirus outbreak, but the country can also benefit through the transfer of global production and orders to here, according to Trade Secretary Ramon M. Lopez. Lopez on Wednesday told reporters the country may experience a reduction in transactions with China, its largest trading partner. The coronavirus outbreak there that forced businesses to shut down their operations temporarily is hampering the flow of

Philippines to exploit the relocation of global production and orders from China. He cited, for one, the output transfer of some automotive parts makers in China to countries in Southeast Asia, including the Philippines. He disclosed the factory of Honda parts supplier in China is moving its production load to its counterpart here. “On the positive side, there are auto parts makers who vowed to move their production here. They will be loading their capacity in Wuhan to here instead of loading it there because they are already existing in the Philippines,” the trade chief explained.

goods from within and outside. “Even in our industries here, such as appliance makers, most of their parts come from China. If at all, there might be some delays for now in the delivery,” Lopez said. “There is a delivery from their source parts suppliers.” “We hope that when the situation in China normalizes, trade will return to normal as well. It’s important that the situation doesn’t last long because our worry is that the supply chain might be broken,” he added.

Opportunity However, for every adversity lies an opportunity, and Lopez wants the

See “Virus fallout,” A2

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Thursday, February 6, 2020 Vol. 15 No. 119

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P25.00 nationwide | 6 sections 56 pages |

PHL factories churned out fewer goods in ’19 T By Cai U. Ordinario

@caiordinario

HE volume of products churned out by factories last year contracted by an annualized rate of 8.6 percent, according to the Monthly Integrated Survey of Selected Industries (MISSI) released by the Philippine Statistics Authority (PSA) on Wednesday.

Data from the PSA also showed that in December alone, the Volume of Production Index declined by 10.1 percent year-on-year, the third worse level recorded in 2019. The VoPI has been contracting

since December 2018, when it fell by an annualized rate of 9.3 percent. Last year, the largest annual declines for the VoPI were recorded in April at 14 percent and August at

12.4 percent. PSA data indicated that the Value of Production Index (VaPI) dropped by an annualized rate of 7.1 percent. In December alone, it contracted by 9.5 percent year-on-year.

D.O.F. BULLISH ON CTRP PACKAGES’ PASSAGE

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HE Department of Finance (DOF) remains bullish on the prospects of passing the remaining packages under the Comprehensive Tax Reform Program (CTRP) within the year as these gain headway in the Senate. Finance Undersecretar y Karl Kendrick T. Chua expressed confidence that all the CTRP packages would be passed within DOF’s target of first 15 to 18 months of the 18th Congress. “I think so. I think we are progressing well in the Senate for the last three packages,” Chua said following the first Senate committee hearing on Package 4 or the Passive Income and Financial Intermediary Taxation Act (Pifita). Senate Ways and Means Committee Chairman Pia S. Cayetano also said in an interview that they are already

“To support manufacturing growth, there is a need to strengthen the transport and logistics sectors by building quality and climate-resilient infrastructure.” —Pernia

In terms of the Value of Net Sales Index, PSA figures revealed that it contracted by an annualized 1.1 percent, a reversal from the 10.2 percent recorded in 2018. “ To support manufacturing growth, there is a need to strengthen the transport and logistics sectors by building quality and climate-resilient infrastructure. See “PHL factories,” A2

‘Inefficient’ and ‘useless’ GOCCs must go–Drilon By Bernadette D. Nicolas @BNicolasBM

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EN AT E M i nor it y L e ad er Franklin M. Drilon on Wednesday made a pitch for the abolition of “inefficient” and “useless” government-owned and -controlled corporations (GOCCs). During the first hearing of the Senate Committee on Ways and Means on Package 4 of the Comprehensive Tax Reform Program (CTRP), Drilon noted that GOCCs receive subsidies from the national government aside from enjoying tax exemptions. Drilon made the remark after Finance Undersecretary Karl Kendrick T. Chua presented the department’s version of Package 4, or the proposed Passive Income and Financial Intermediary Taxation Act (Pifita). The Department of Finance (DOF) is hoping that the tax-reform program would repeal 33 laws, 19 of which would remove the tax exemptions granted to certain sectors, including GOCCs. In repealing the tax exemptions specified in the National Internal Revenue Code and special laws, Chua said the DOF expects a revenue gain of P11.3 billion. Drilon then requested data on the subsidies granted to GOCCs. “This would be an input as to whether or not these GOCCs should continue to exist.” In an interview following the

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hearing, Senate Ways and Means Committee Chairman Pia S. Cayetano said she is open to the idea of abolishing non-performing GOCCs, adding that this would help plug leakages. “That’s no longer the scope of this committee, but I have said to the extent that we can gather information through this committee and it can be used not just to confirm their passive incomes but also what subsidies they are receiving, [then] we could transmit those data to our colleagues so proper steps would be taken,” said Cayetano. “It’s so difficult on my part because my job is to raise taxes and we have leakages, right? Of course, I am open to that so we can maximize our limited funds,” she added. Chua was mum on whether the DOF favors Drilon’s suggestion to abolish non-performing GOCCs. However, he said the DOF is ready to provide the data being requested by the senators. “Well, you know his context is he really wants to know how much do we really subsidize the GOCCs and I think since he was the author of GOCC Governance Commission law, he wants to see if the GOCCs are performing,” Chua said. Pifita aims to redesign financial sector taxation into a simpler, fairer, more efficient, regionally more competitive and revenue neutral.

f i n a l i zi ng t he com m it tee report on Package 2 or Corporate Income Tax and Incentives Rationalization Act (Citira). “We are in the very final stage of proofreading. The commas, the periods and the erasures. We are working on that over this week, and I hope to sponsor it next week,” Cayetano said. As for Pifita, the senator said she also sees “very little resistance” in passing the measure. While she vowed that she can sponsor all packages within the timeline set by DOF, she said passing the measure is not her “sole decision.” “[For] Pifita, it appears that there will be very little resistance. We will list all the concerns of the sectors, but as far as the senators are concerned, there aren’t many issues against it. See “CTRP,” A2

PSA notes rice-price dip after tariffication

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QUARANTINE FACILITY This is the massive drug rehabilitation center inside Fort Magsaysay in Nueva Ecija, which the government has decided to use as quarantine facility for 14 days for Filipinos returning from China, Hong Kong and Macau. The first batch of repatriates are expected to come home on Saturday (February 8). NONIE REYES

Fitch, Moody’s see virus cutting Asia’s growth

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LOBAL think tanks and credit watchers agree that the novel coronav ir us (nCoV) now wreaking havoc on China and other countries in AsiaPacific could dent economic growth in the region. In separate pieces, Fitch Solutions—the research arm of Fitch Group, Moody’s Analytics—the research arm of Moody’s Group and

S&P Global ratings evaluated the economic impact of the nCoV. Only Fitch has specific figures as it projected that Asia-Pacific’s growth could decline to 4 percent this year, from 4.3 percent in 2019, if China’s economy would expand at a slower pace of 5.4 percent in 2020, from last year’s 6.1 percent. “We lay out two possible scenarios that could impact Asian

economies, and in both cases, we note that our initial view of a growth recovery in 2020, will be challenged,” Fitch said. Moody’s said the first quarter GDP growth of China could be slashed by up to 2 percentage points and this could affect other countries that have close ties with the economic powerhouse.

LMOST a year after the full implementation of the rice trade liberalization (RTL) law, rice prices continued to fall, albeit at a slower pace in January 2020, according to data released by the Philippine Statistics Authority (PSA). In January, PSA data showed inflation accelerated to 2.9 percent in January 2020, from 2.5 percent in the preceding month. However, this is still slower than the 4.4 percent posted in January 2019. National Statistician Claire Dennis S. Mapa said rice prices contracted 6.5 percent in January 2020, the ninth consecutive month rice experienced deflation. “This is one of the reasons why food inf lation was relatively low,” Mapa told reporters in a briefing in Quezon City on Wednesday. However, Laban Konsyumer Inc. (LKI) President Vic Dimagiba said despite the decline, a kilo of regular milled rice remained at P37, while a kilo of well-milled rice was at P40. Dimagiba said this was still higher than the government’s promise of P32 per kilo. Nonetheless, he said, there was already a P5-per-kilo reduction compared to 2019.

See “Fitch,” A8

US 50.7630 n japan 0.4636 n UK 66.1543 n HK 6.5369 n CHINA 7.2537 n singapore 37.0560 n australia 34.1990 n EU 56.0728 n SAUDI ARABIA 13.5310

See “PSA,” A2

Source: BSP (5 February 2020)


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