Poll: Most firms project recovery within 3 yrs By Elijah Felice Rosales
M
EUGENIO MARCIAL, 86, assembles a miniature bahay kubo that he sells for P1,500. He said he has been practicing this craft for 20 years, sourcing his materials of bamboo and rattan from Cavite and selling them on a vacant lot in Makati City, a trade that has helped to tide him over the pandemic. ROY DOMINGO
ROTARY CLUB OF MANILA JOURNALISM AWARDS
2006 National Newspaper of the Year 2011 National Newspaper of the Year 2013 Business Newspaper of the Year 2017 Business Newspaper of the Year 2019 Business Newspaper of the Year
OST corporations anticipate their operations to recover within one to three years, as they look to the government to intensify spending on infrastructure in the pandemic aftermath, according to a survey of businesses. In the PwC MAP 2020 CEO Survey, 90 percent of corporate officials said they expect their firms to experience revenue growth in the next three years. Further, 58 percent are hopeful their industries will recover over the next 12 months, contrary to the 41 percent who are pessimistic about prospects of a rebound. On the other hand, three in every four CEOs said the country is staring at a nega-
tive GDP by the end of the year, with majority forecasting it would be below negative 4 percent. As for 2021, 64 percent said GDP may be between 1 percent and 4 percent, as they see the economy slowly recovering on hopes a vaccine will be available by next year. “The CEOs, however, are not as optimistic at the macroeconomic level. The prolonged lockdown and the continuing rise in the number of Covid-19 cases have a massive impact on the economy,” the PwC MAP survey read. Over the next 12 months, CEOs believe the government should go aggressive with its buildup of infrastructure units. Based on the survey, two-thirds of corporate officials said infrastructure development will be the main growth driver for the economy in the next 12
months, followed by domestic consumption and state spending. In terms of recovery, 70 percent of CEOs said the government should provide industry-specific measures to boost confidence in both investments and consumption. Likewise, more than half pushed for the creation of new tax incentives and the crafting of a recovery plan for each sector, especially those swept by the pandemic. “The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill, which is Package 2 of the government’s comprehensive tax reform program, is also under review by the Senate. Under the CREATE bill, the 30-percent corporate income-tax rate will be reduced to 25 percent, and is expected to help micro, See “Poll,” A7
BusinessMirror A broader look at today’s business
EJAP JOURNALISM AWARDS
BUSINESS NEWS SOURCE OF THE YEAR (2017, 2018)
DEPARTMENT OF SCIENCE AND TECHNOLOGY
2018 BANTOG MEDIA AWARDS
PHILIPPINE STATISTICS AUTHORITY
DATA CHAMPION
CREDIBILITY RISK RAISED IN TOO-ACTIVE BSP ROLE www.businessmirror.com.ph
n
Tuesday, September 15, 2020 Vol. 15 No. 341
JENNIFER NABAUNAG, 37, from Muzon, Taytay, Rizal, sells bedsheets and pillow cases by consignment, literally carrying, on foot, an average of around 20 kilos of her items in Rizal towns, hoping to slowly regain what she used to earn pre-pandemic. Although she got P6,500 in government aid, the lockdowns have left her with only a net of P300 daily, not enough to buy her household’s food and other items, but she bears her burden, as she’s also saving up to buy even just a used tablet for her 16-year-old son’s virtual schooling. She hopes that as Christmas nears, more people will buy her stuff. BERNARD TESTA
M
By Tyrone Jasper C. Piad
ONEY authorities of emerging markets, including the Philippines, are risking their credibility if investors become convinced that the governments are relying heavily on their central banks to put the economy back on track, according to S&P Global Ratings.
The credit rating agency noted that the central banks of the Philippines and India have bought a total of $24 billion worth of government bonds to provide relief to their economies currently battling the adverse impact of the coronavirus pandemic. Bank Indonesia, meanwhile, also began buying bonds in July. “Bond-buying programs may impair the ability of emergingmarket central banks to respond to future crises, with rating implications for the respective sover-
eigns,” S&P Global Ratings credit analyst Andrew Wood said. Such a move is seen leading to debt monetization, which can trigger increases in inflation and financing costs. S&P clarified, however, that this has not happened yet so far, noting it means that the central banks have maintained their credibility and the investors have remained patient for “aggressive action.” However, it added, “if investors begin to view government See “BSP,” A7
Cutting poverty, UMIC status on hold–for 3 yrs By Cai U. Ordinario
T
HE Philippines would have to put on hold its aspirations of reducing poverty further and reaching Upper Middle Income status at least for the next three years as growth is expected to remain anemic, according to the Ateneo Center for Economic Research and Development (Acerd). In a Foreign Correspondents Association of the Philippines (Focap) briefing on Monday, Acerd Director Alvin P. Ang said the average growth of the country could slow to 4.5 percent at least in the next
three years, assuming the government’s current level of response continues. Ang said this is 1.5 percentage points lower than the country’s historical average GDP growth of 6 percent. He said the reduction in the growth would affect the country’s goals and targets. “Those goals have to be postponed for now because poverty will likely increase. If you go by SWS [Social Weather Stations] data, it’s possible that poverty will increase by 5 percent by December,” Ang told the BusinessMirror in a message. Ang said it would take around
PESO EXCHANGE RATES n US 48.5510
three years before the Philippine economy gets back its “production capacities.” This is going to affect the growth path of the economy. He said these capacities remain low at this point and would take time to return. He said these are labor, human resource, infrastructure and business capacities. Ang said in the last Monthly Integrated Survey of Selected Industries (Missi), manufacturing firms were still operating with a capacity of 60 to 70 percent. “We can see actually that you are incurring capacity losses and the capacity losses, even if the
economy all opened up, it’s not going to go back immediately. It’s easier to destroy than to build. Building a house takes months but only days to destroy. If businesses are gone, to bring them back will take time again,” Ang said. Acerd’s director said these estimates take into consideration the government’s current efforts, including the continuation of the Build, Build, Build (BBB) program. He said the country’s infrastructure capacities are intact and this could help the economy grow. However, more can be done to
P25.00 nationwide | 2 sections 16 pages | 7 DAYS A WEEK
AS INVESTORS SEEK HAVENS, GOLD TRADING SEEN TO BEEF UP G.I.R.
A
S the coronavirus pandemic intensifies market uncertainties, analysts said that the Bangko Sentral ng Pilipinas’s (BSP) shift to active gold trading was a welcome move to further beef up the country’s foreign reserves. UnionBank Chief Economist Ruben Carlo O. Asuncion said investors are now seeking safe haven assets such as gold amid the uncertainties wrought by the pandemic, noting that the BSP being active on gold trading was a “good and smart move.” “Gold has been rising because of the uncertainties brought by the Covid-19 pandemic,” he said. “If there is any investment or asset that the BSP should be holding now, it should be gold.” The country’s gold holdings are a portion of its foreign reserves, and Asuncion said that trading the safe haven asset could lift the latter. “It [active gold trading] will definitely help the GIR [gross international reserves] to rise further and be a security for the economy as we navigate the uncertainties of the pandemic,” he explained. The Philippines’s GIR rose to a record high of $98 billion in endJuly on the back of a surge in Central Bank’s gold holdings amounting to $12.595 billion. The Monetary Board recently reverted to an active strategy for handling its gold reserves. The measurement of gold was changed from amortized cost to fair value, resulting in revaluation gains of $719.69 per fine troy ounce or a total of $4.58 billion. With the country having a rich source of gold, the UnionBank economist said that trading the said asset could provide stability to the economy. “Having the availability of gold, a great asset to have in a crisis, affords an economy an array of reliable and safe storeof-value without the challenges of value volatility, unlike other risk-free assets in a crisis where risk-free assets may end up not really less of a risk,” he said. See “Gold,” A7
Continued on A7
n JAPAN 0.4576 n UK 62.1356 n HK 6.2645 n CHINA 7.1035 n SINGAPORE 35.5035 n AUSTRALIA 35.3306 n EU 57.4989 n SAUDI ARABIA 12.9449
Source: BSP (September 14, 2020)