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COVID vaccine imports to be exempted from taxes, says DoF
A health worker prepares a syringe during a coronavirus disease 2019 (COVID-19) vaccine rollout simulation at The Medical City in Pasig City, Feb. 18. — PHILIPPINE STAR/ MICHAEL VARCAS
THE Department of Finance (DoF) on Thursday said imports of coronavirus disease 2019 (COVID-19) vaccines will be exempted from taxes and duties, as the government is set to take delivery of the first batch of vaccines on Sunday.
Finance Secretary Carlos G. Dominguez III in a statement said the importation of COVID-19 vaccines will be included in the department’s express lane or “Mabuhay Lane” where the tax and duty exemption applications will be processed within 24 hours.
This would be faster than the current processing time of three days, he added.
Mr. Dominguez said the department is also waiving the filing fees for COVID-19 vaccine applications with the Mabuhay Lane, and allowed the use of the Tax Exemption System Online Filing Module to fast-track the rollout of the vaccination program.
The tax exemption policies will be included in guidelines on the implementation of a One-Stop Shop for International Donations and Government-procured COVID-19 vaccines that is currently being drafted by the Departments of Finance, Health and Foreign Affairs, Bureau of Customs and the Food and Drug Administration.
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Finance Assistant Secretary Maria Teresa S. Habitan told BusinessWorld the tax perks will result in around P14 billion in foregone revenues from value-added tax (VAT), based on 75 million doses of vaccines priced at P1,545 each.
Importers applying for the Mabuhay Lane perks would have to pay a filing fee of at least P200 for imports worth at least P100,000 and up to P1,000 for imports valued at more than P1 million.
Finance Undersecretary Antonette C. Tionko, head of the Revenue Operations Group, recommended the inclusion of COVID-19 vaccine imports in the Mabuhay Lane, “regardless of the applicable legal basis… to allow for the expedited processing of the tax and exemption of such applications.”
The Finance secretary is allowed to include more sectors that may be processed at the Mabuhay Lane under a Department Order No. 54-2000, issued in December 2000.
“We add that the Mabuhay Lane currently processes all Relief Consignment under Section 120 in relation to 121 of the Customs Modernization and Tariff Act (CMTA). The Lane is expected to process all COVID-19 vaccines which may qualify as relief consignment,” she said, referring to goods donated to the government.
Under CMTA’s Section 121, relief consignment imported during a state of calamity and intended for the use of calamity victims will be exempted from the payment of duties and taxes.
Presidential Spokesperson Herminio “Harry” L. Roque, Jr. on Thursday said 600,000 doses of Sinovac Biotech’s vaccines will arrive on Sunday, paving the way for the rollout of the government’s vaccination program the next day (Read related story “COVID-19 vaccination drive may start next week”).
The Philippines is the last country in Southeast Asia to take initial delivery of COVID-19 vaccines, even as it has the second-highest number of cases.
Economists warned that the slow vaccine rollout and continued quarantine restrictions will hurt the Philippines’ recovery this year.
President Rodrigo R. Duterte on Monday rejected the proposal of the economic team to ease further the lockdown restrictions until the vaccination program starts.
In light of this, Acting Socioeconomic Planning Secretary Kendrick Karl T. Chua said the Development Budget Coordination Committee will be reviewing its current economic forecasts and targets.
The government aims to grow by 6.5-7.5% this year from last year’s 9.5% contraction which was the worst on record. — Beatrice M. Laforga
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BoP posts $752-M deficit in January
THE Philippines’ balance of payments swung to a $752-million deficit in January after 11 straight months of surfeit, the central bank said. — REUTERS
MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.
The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.
“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.
Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.
Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.
Advertisement
The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.
The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.
It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.
The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble
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COVID vaccine imports to be exempted from taxes, says DoF
A health worker prepares a syringe during a coronavirus disease 2019 (COVID-19) vaccine rollout simulation at The Medical City in Pasig City, Feb. 18. — PHILIPPINE STAR/ MICHAEL VARCAS
THE Department of Finance (DoF) on Thursday said imports of coronavirus disease 2019 (COVID-19) vaccines will be exempted from taxes and duties, as the government is set to take delivery of the first batch of vaccines on Sunday.
Finance Secretary Carlos G. Dominguez III in a statement said the importation of COVID-19 vaccines will be included in the department’s express lane or “Mabuhay Lane” where the tax and duty exemption applications will be processed within 24 hours.
This would be faster than the current processing time of three days, he added.
Mr. Dominguez said the department is also waiving the filing fees for COVID-19 vaccine applications with the Mabuhay Lane, and allowed the use of the Tax Exemption System Online Filing Module to fast-track the rollout of the vaccination program.
The tax exemption policies will be included in guidelines on the implementation of a One-Stop Shop for International Donations and Government-procured COVID-19 vaccines that is currently being drafted by the Departments of Finance, Health and Foreign Affairs, Bureau of Customs and the Food and Drug Administration.
Advertisement
Finance Assistant Secretary Maria Teresa S. Habitan told BusinessWorld the tax perks will result in around P14 billion in foregone revenues from value-added tax (VAT), based on 75 million doses of vaccines priced at P1,545 each.
Importers applying for the Mabuhay Lane perks would have to pay a filing fee of at least P200 for imports worth at least P100,000 and up to P1,000 for imports valued at more than P1 million.
Finance Undersecretary Antonette C. Tionko, head of the Revenue Operations Group, recommended the inclusion of COVID-19 vaccine imports in the Mabuhay Lane, “regardless of the applicable legal basis… to allow for the expedited processing of the tax and exemption of such applications.”
The Finance secretary is allowed to include more sectors that may be processed at the Mabuhay Lane under a Department Order No. 54-2000, issued in December 2000.
“We add that the Mabuhay Lane currently processes all Relief Consignment under Section 120 in relation to 121 of the Customs Modernization and Tariff Act (CMTA). The Lane is expected to process all COVID-19 vaccines which may qualify as relief consignment,” she said, referring to goods donated to the government.
Under CMTA’s Section 121, relief consignment imported during a state of calamity and intended for the use of calamity victims will be exempted from the payment of duties and taxes.
Presidential Spokesperson Herminio “Harry” L. Roque, Jr. on Thursday said 600,000 doses of Sinovac Biotech’s vaccines will arrive on Sunday, paving the way for the rollout of the government’s vaccination program the next day (Read related story “COVID-19 vaccination drive may start next week”).
The Philippines is the last country in Southeast Asia to take initial delivery of COVID-19 vaccines, even as it has the second-highest number of cases.
Economists warned that the slow vaccine rollout and continued quarantine restrictions will hurt the Philippines’ recovery this year.
President Rodrigo R. Duterte on Monday rejected the proposal of the economic team to ease further the lockdown restrictions until the vaccination program starts.
In light of this, Acting Socioeconomic Planning Secretary Kendrick Karl T. Chua said the Development Budget Coordination Committee will be reviewing its current economic forecasts and targets.
The government aims to grow by 6.5-7.5% this year from last year’s 9.5% contraction which was the worst on record. — Beatrice M. Laforga
Advertisement
BSP rationalizes DOSRI reporting requirements
THE Bangko Sentral ng Pilipinas (BSP) is rationalizing some prudential reporting requirements from its supervised financial institutions, as part of efforts to improve the ease of doing business in the country.
BSP Governor Benjamin E. Diokno on Wednesday signed Circular No. 1110, which removed 12 reports that are required to be submitted by banks and nonbank financial institutions.
The BSP circular will remove weekly requirements for banks to submit their daily reports related to borrowings of directors, officers, stockholders and their related interests (DOSRI). Instead, it will be replaced by a semestral certification on DOSRI transactions.
Financial institutions will also discontinue the quarterly and semestral reporting documents for submission related to the compliance on aggregate ceiling on direct credit accommodation of such entities.
Quarterly reports on underwriting activities, annual general information sheet following stockholders’ meeting, and the weekly report of commercial banks on peso-denominated common trust funds and other similarly managed funds will no longer be required to be submitted to the BSP.
Advertisement
The circular will take effect after 15 days of its publication in the Official Gazette or in a newspaper of general circulation.
“The report rationalization initiative aims to contribute to continuing adherence to internationally recognized standards and practices on data aggregation and governance as well as to promote ease of doing business,” Mr. Diokno said.
BSP Deputy Governor Chuchi G. Fonacier said the Financial Supervision Sector decided to review and rationalize the number of prudential reports, in light of significant changes and developments in the business and regulatory environment.
“Even with this rationalization of reporting requirements, BSP continues to adhere to internationally recognized standards and practices on data aggregation and governance,” Ms. Fonacier said in a text message.
Republic Act No. 8791 or the General Banking Law of 2000 imposed individual and aggregate ceiling requirements for credit disbursed to DOSRIs. These loans cannot exceed the capital contribution and deposit of the borrowing party and are required to secure prior written approval by the majority of all the directors of the board.
“The BSP is right on track on relaxing the [prudential reporting] requirements,” Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said in a text message, noting such moves will improve local investment interest.
The country placed 95th in the World Bank Doing Business 2020 report, improving from its 124th place in 2019. However, it still placed seventh among 10 Southeast Asian Nations and was only better than Cambodia (144), Laos (154), and Myanmar (165). — Luz Wendy T. Noble
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BoP posts $752-M deficit in January
THE Philippines’ balance of payments swung to a $752-million deficit in January after 11 straight months of surfeit, the central bank said. — REUTERS
MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.
The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.
“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.
Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.
Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.
Advertisement
The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.
The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.
It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.
The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble
Advertisement
COVID vaccine imports to be exempted from taxes, says DoF
A health worker prepares a syringe during a coronavirus disease 2019 (COVID-19) vaccine rollout simulation at The Medical City in Pasig City, Feb. 18. — PHILIPPINE STAR/ MICHAEL VARCAS
THE Department of Finance (DoF) on Thursday said imports of coronavirus disease 2019 (COVID-19) vaccines will be exempted from taxes and duties, as the government is set to take delivery of the first batch of vaccines on Sunday.
Finance Secretary Carlos G. Dominguez III in a statement said the importation of COVID-19 vaccines will be included in the department’s express lane or “Mabuhay Lane” where the tax and duty exemption applications will be processed within 24 hours.
This would be faster than the current processing time of three days, he added.
Mr. Dominguez said the department is also waiving the filing fees for COVID-19 vaccine applications with the Mabuhay Lane, and allowed the use of the Tax Exemption System Online Filing Module to fast-track the rollout of the vaccination program.
The tax exemption policies will be included in guidelines on the implementation of a One-Stop Shop for International Donations and Government-procured COVID-19 vaccines that is currently being drafted by the Departments of Finance, Health and Foreign Affairs, Bureau of Customs and the Food and Drug Administration.
Advertisement
Finance Assistant Secretary Maria Teresa S. Habitan told BusinessWorld the tax perks will result in around P14 billion in foregone revenues from value-added tax (VAT), based on 75 million doses of vaccines priced at P1,545 each.
Importers applying for the Mabuhay Lane perks would have to pay a filing fee of at least P200 for imports worth at least P100,000 and up to P1,000 for imports valued at more than P1 million.
Finance Undersecretary Antonette C. Tionko, head of the Revenue Operations Group, recommended the inclusion of COVID-19 vaccine imports in the Mabuhay Lane, “regardless of the applicable legal basis… to allow for the expedited processing of the tax and exemption of such applications.”
The Finance secretary is allowed to include more sectors that may be processed at the Mabuhay Lane under a Department Order No. 54-2000, issued in December 2000.
“We add that the Mabuhay Lane currently processes all Relief Consignment under Section 120 in relation to 121 of the Customs Modernization and Tariff Act (CMTA). The Lane is expected to process all COVID-19 vaccines which may qualify as relief consignment,” she said, referring to goods donated to the government.
Under CMTA’s Section 121, relief consignment imported during a state of calamity and intended for the use of calamity victims will be exempted from the payment of duties and taxes.
Presidential Spokesperson Herminio “Harry” L. Roque, Jr. on Thursday said 600,000 doses of Sinovac Biotech’s vaccines will arrive on Sunday, paving the way for the rollout of the government’s vaccination program the next day (Read related story “COVID-19 vaccination drive may start next week”).
The Philippines is the last country in Southeast Asia to take initial delivery of COVID-19 vaccines, even as it has the second-highest number of cases.
Economists warned that the slow vaccine rollout and continued quarantine restrictions will hurt the Philippines’ recovery this year.
President Rodrigo R. Duterte on Monday rejected the proposal of the economic team to ease further the lockdown restrictions until the vaccination program starts.
In light of this, Acting Socioeconomic Planning Secretary Kendrick Karl T. Chua said the Development Budget Coordination Committee will be reviewing its current economic forecasts and targets.
The government aims to grow by 6.5-7.5% this year from last year’s 9.5% contraction which was the worst on record. — Beatrice M. Laforga
Advertisement
BSP rationalizes DOSRI reporting requirements
THE Bangko Sentral ng Pilipinas (BSP) is rationalizing some prudential reporting requirements from its supervised financial institutions, as part of efforts to improve the ease of doing business in the country.
BSP Governor Benjamin E. Diokno on Wednesday signed Circular No. 1110, which removed 12 reports that are required to be submitted by banks and nonbank financial institutions.
The BSP circular will remove weekly requirements for banks to submit their daily reports related to borrowings of directors, officers, stockholders and their related interests (DOSRI). Instead, it will be replaced by a semestral certification on DOSRI transactions.
Financial institutions will also discontinue the quarterly and semestral reporting documents for submission related to the compliance on aggregate ceiling on direct credit accommodation of such entities.
Quarterly reports on underwriting activities, annual general information sheet following stockholders’ meeting, and the weekly report of commercial banks on peso-denominated common trust funds and other similarly managed funds will no longer be required to be submitted to the BSP.
Advertisement
The circular will take effect after 15 days of its publication in the Official Gazette or in a newspaper of general circulation.
“The report rationalization initiative aims to contribute to continuing adherence to internationally recognized standards and practices on data aggregation and governance as well as to promote ease of doing business,” Mr. Diokno said.
BSP Deputy Governor Chuchi G. Fonacier said the Financial Supervision Sector decided to review and rationalize the number of prudential reports, in light of significant changes and developments in the business and regulatory environment.
“Even with this rationalization of reporting requirements, BSP continues to adhere to internationally recognized standards and practices on data aggregation and governance,” Ms. Fonacier said in a text message.
Republic Act No. 8791 or the General Banking Law of 2000 imposed individual and aggregate ceiling requirements for credit disbursed to DOSRIs. These loans cannot exceed the capital contribution and deposit of the borrowing party and are required to secure prior written approval by the majority of all the directors of the board.
“The BSP is right on track on relaxing the [prudential reporting] requirements,” Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said in a text message, noting such moves will improve local investment interest.
The country placed 95th in the World Bank Doing Business 2020 report, improving from its 124th place in 2019. However, it still placed seventh among 10 Southeast Asian Nations and was only better than Cambodia (144), Laos (154), and Myanmar (165). — Luz Wendy T. Noble
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BoP posts $752-M deficit in January
THE Philippines’ balance of payments swung to a $752-million deficit in January after 11 straight months of surfeit, the central bank said. — REUTERS
MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.
The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.
“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.
Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.
Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.
Advertisement
The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.
The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.
It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.
The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble
Advertisement
COVID vaccine imports to be exempted from taxes, says DoF
A health worker prepares a syringe during a coronavirus disease 2019 (COVID-19) vaccine rollout simulation at The Medical City in Pasig City, Feb. 18. — PHILIPPINE STAR/ MICHAEL VARCAS
THE Department of Finance (DoF) on Thursday said imports of coronavirus disease 2019 (COVID-19) vaccines will be exempted from taxes and duties, as the government is set to take delivery of the first batch of vaccines on Sunday.
Finance Secretary Carlos G. Dominguez III in a statement said the importation of COVID-19 vaccines will be included in the department’s express lane or “Mabuhay Lane” where the tax and duty exemption applications will be processed within 24 hours.
This would be faster than the current processing time of three days, he added.
Mr. Dominguez said the department is also waiving the filing fees for COVID-19 vaccine applications with the Mabuhay Lane, and allowed the use of the Tax Exemption System Online Filing Module to fast-track the rollout of the vaccination program.
The tax exemption policies will be included in guidelines on the implementation of a One-Stop Shop for International Donations and Government-procured COVID-19 vaccines that is currently being drafted by the Departments of Finance, Health and Foreign Affairs, Bureau of Customs and the Food and Drug Administration.
Advertisement
Finance Assistant Secretary Maria Teresa S. Habitan told BusinessWorld the tax perks will result in around P14 billion in foregone revenues from value-added tax (VAT), based on 75 million doses of vaccines priced at P1,545 each.
Importers applying for the Mabuhay Lane perks would have to pay a filing fee of at least P200 for imports worth at least P100,000 and up to P1,000 for imports valued at more than P1 million.
Finance Undersecretary Antonette C. Tionko, head of the Revenue Operations Group, recommended the inclusion of COVID-19 vaccine imports in the Mabuhay Lane, “regardless of the applicable legal basis… to allow for the expedited processing of the tax and exemption of such applications.”
The Finance secretary is allowed to include more sectors that may be processed at the Mabuhay Lane under a Department Order No. 54-2000, issued in December 2000.
“We add that the Mabuhay Lane currently processes all Relief Consignment under Section 120 in relation to 121 of the Customs Modernization and Tariff Act (CMTA). The Lane is expected to process all COVID-19 vaccines which may qualify as relief consignment,” she said, referring to goods donated to the government.
Under CMTA’s Section 121, relief consignment imported during a state of calamity and intended for the use of calamity victims will be exempted from the payment of duties and taxes.
Presidential Spokesperson Herminio “Harry” L. Roque, Jr. on Thursday said 600,000 doses of Sinovac Biotech’s vaccines will arrive on Sunday, paving the way for the rollout of the government’s vaccination program the next day (Read related story “COVID-19 vaccination drive may start next week”).
The Philippines is the last country in Southeast Asia to take initial delivery of COVID-19 vaccines, even as it has the second-highest number of cases.
Economists warned that the slow vaccine rollout and continued quarantine restrictions will hurt the Philippines’ recovery this year.
President Rodrigo R. Duterte on Monday rejected the proposal of the economic team to ease further the lockdown restrictions until the vaccination program starts.
In light of this, Acting Socioeconomic Planning Secretary Kendrick Karl T. Chua said the Development Budget Coordination Committee will be reviewing its current economic forecasts and targets.
The government aims to grow by 6.5-7.5% this year from last year’s 9.5% contraction which was the worst on record. — Beatrice M. Laforga
Advertisement
BSP rationalizes DOSRI reporting requirements
THE Bangko Sentral ng Pilipinas (BSP) is rationalizing some prudential reporting requirements from its supervised financial institutions, as part of efforts to improve the ease of doing business in the country.
BSP Governor Benjamin E. Diokno on Wednesday signed Circular No. 1110, which removed 12 reports that are required to be submitted by banks and nonbank financial institutions.
The BSP circular will remove weekly requirements for banks to submit their daily reports related to borrowings of directors, officers, stockholders and their related interests (DOSRI). Instead, it will be replaced by a semestral certification on DOSRI transactions.
Financial institutions will also discontinue the quarterly and semestral reporting documents for submission related to the compliance on aggregate ceiling on direct credit accommodation of such entities.
Quarterly reports on underwriting activities, annual general information sheet following stockholders’ meeting, and the weekly report of commercial banks on peso-denominated common trust funds and other similarly managed funds will no longer be required to be submitted to the BSP.
Advertisement
The circular will take effect after 15 days of its publication in the Official Gazette or in a newspaper of general circulation.
“The report rationalization initiative aims to contribute to continuing adherence to internationally recognized standards and practices on data aggregation and governance as well as to promote ease of doing business,” Mr. Diokno said.
BSP Deputy Governor Chuchi G. Fonacier said the Financial Supervision Sector decided to review and rationalize the number of prudential reports, in light of significant changes and developments in the business and regulatory environment.
“Even with this rationalization of reporting requirements, BSP continues to adhere to internationally recognized standards and practices on data aggregation and governance,” Ms. Fonacier said in a text message.
Republic Act No. 8791 or the General Banking Law of 2000 imposed individual and aggregate ceiling requirements for credit disbursed to DOSRIs. These loans cannot exceed the capital contribution and deposit of the borrowing party and are required to secure prior written approval by the majority of all the directors of the board.
“The BSP is right on track on relaxing the [prudential reporting] requirements,” Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said in a text message, noting such moves will improve local investment interest.
The country placed 95th in the World Bank Doing Business 2020 report, improving from its 124th place in 2019. However, it still placed seventh among 10 Southeast Asian Nations and was only better than Cambodia (144), Laos (154), and Myanmar (165). — Luz Wendy T. Noble
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PHL an ‘outperformer’ in frontier technology
REUTERS/REGIS DUVIGNAU
By Arjay L. Balinbin, Senior Reporter
THE Philippines is considered among developing countries that performed better on frontier technologies than their per capita gross domestic product (GDP) would suggest, a 2021 report by the United Nations Conference on Trade and Development (UNCTAD) showed.
UNCTAD’s “Technology and Innovation Report 2021” released on Thursday identified developing countries that have performed better on frontier technologies than their per capita GDP.
Frontier technologies include artificial intelligence (AI), the internet of things (IoT), big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, and nanotechnology.
“The extent of ‘overperformance’ is measured as the difference between the actual index rankings and the estimated index rankings based on per capita income… The greatest overperformer is India, by 65 ranking positions, followed by the Philippines by 57,” UNCTAD said.
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The Philippines was followed by Ukraine, with an actual ranking of 47, Vietnam (45), and China (40).
The UNCTAD report scored countries on their readiness for frontier technologies based on five building blocks: information and communications technology (ICT) deployment, skills, research and development (R&D), industry activity and access to finance.
The Philippines also has a high ranking for industry.
“This reflects high levels of foreign direct investment in high-technology manufacturing, particularly electronics,” it added.
Multinational businesses are attracted by the Philippines’ “strong” supply chains and “solid” base of parts manufacturing, UNCTAD said.
“The Philippines also has pro-business policies along with a skilled, well-educated workforce and a network of economic zones,” it added.
However, the top overperforming developing countries, including the Philippines, have lower rankings for “ICT connectivity and skills.”
Developing countries need to work towards “universal internet access and ensure that all their citizens have opportunities to learn the skills to be more ready for frontier technologies,” it said.
In the Philippines, there are generally wide urban-rural disparities in terms of connectivity as shown in the recent analysis by Asian Development Bank and Thinking Machines Data Science, Inc., where nearly a million Filipinos in rural areas do not have access to digital connections, as most cell towers are located in wealthy cities.
According to the UNCTAD report, top overall performers on the adoption of frontier technologies are wealthy nations: United States, Switzerland, United Kingdom, Sweden, and Singapore, among others.
“The top overall performers have well-balanced performances across all building blocks of the index and are typically associated with high innovation and GDP,” it said.
Sought for comment, Terry L. Ridon, convenor of InfraWatch PH, said he was not surprised.
“This is not surprising given that the Philippines ranks next to India in the global outsourcing industry, which uses various emerging technologies to improve operational efficiencies, such as artificial intelligence, blockchain and big data. Global cloud services led by Amazon Web Services have offices in major Philippine cities,” he said in a phone message.
Mr. Ridon said Filipinos have spearheaded the adoption and consumption of new technologies, such as 5G, drones, and IoT gadgets.
“Through a handful of domestic solar companies, we manufacture our own solar panels instead of full importation. Our top exports have always been in the semiconductor sector in the last decade,” he explained.
The Philippines’ performance should mean that these sectors remain “very competitive areas,” which the government should help further develop, Mr. Ridon said.
He noted the BPO sector contributes at least 7% of the country’s GDP, or $26 billion. “This should only mean a continuing upward trend in these high-growth sectors, which had continued to sustain growth despite the coronavirus pandemic and contributed to the job security of BPO employees.”
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BoP posts $752-M deficit in January
THE Philippines’ balance of payments swung to a $752-million deficit in January after 11 straight months of surfeit, the central bank said. — REUTERS
MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.
The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.
“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.
Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.
Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.
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The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.
The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.
It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.
The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble
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BoP posts $752-M deficit in January
THE Philippines’ balance of payments swung to a $752-million deficit in January after 11 straight months of surfeit, the central bank said. — REUTERS
MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.
The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.
“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.
Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.
Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.
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The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.
The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.
It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.
The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble
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COVID vaccine imports to be exempted from taxes, says DoF
A health worker prepares a syringe during a coronavirus disease 2019 (COVID-19) vaccine rollout simulation at The Medical City in Pasig City, Feb. 18. — PHILIPPINE STAR/ MICHAEL VARCAS
THE Department of Finance (DoF) on Thursday said imports of coronavirus disease 2019 (COVID-19) vaccines will be exempted from taxes and duties, as the government is set to take delivery of the first batch of vaccines on Sunday.
Finance Secretary Carlos G. Dominguez III in a statement said the importation of COVID-19 vaccines will be included in the department’s express lane or “Mabuhay Lane” where the tax and duty exemption applications will be processed within 24 hours.
This would be faster than the current processing time of three days, he added.
Mr. Dominguez said the department is also waiving the filing fees for COVID-19 vaccine applications with the Mabuhay Lane, and allowed the use of the Tax Exemption System Online Filing Module to fast-track the rollout of the vaccination program.
The tax exemption policies will be included in guidelines on the implementation of a One-Stop Shop for International Donations and Government-procured COVID-19 vaccines that is currently being drafted by the Departments of Finance, Health and Foreign Affairs, Bureau of Customs and the Food and Drug Administration.
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Finance Assistant Secretary Maria Teresa S. Habitan told BusinessWorld the tax perks will result in around P14 billion in foregone revenues from value-added tax (VAT), based on 75 million doses of vaccines priced at P1,545 each.
Importers applying for the Mabuhay Lane perks would have to pay a filing fee of at least P200 for imports worth at least P100,000 and up to P1,000 for imports valued at more than P1 million.
Finance Undersecretary Antonette C. Tionko, head of the Revenue Operations Group, recommended the inclusion of COVID-19 vaccine imports in the Mabuhay Lane, “regardless of the applicable legal basis… to allow for the expedited processing of the tax and exemption of such applications.”
The Finance secretary is allowed to include more sectors that may be processed at the Mabuhay Lane under a Department Order No. 54-2000, issued in December 2000.
“We add that the Mabuhay Lane currently processes all Relief Consignment under Section 120 in relation to 121 of the Customs Modernization and Tariff Act (CMTA). The Lane is expected to process all COVID-19 vaccines which may qualify as relief consignment,” she said, referring to goods donated to the government.
Under CMTA’s Section 121, relief consignment imported during a state of calamity and intended for the use of calamity victims will be exempted from the payment of duties and taxes.
Presidential Spokesperson Herminio “Harry” L. Roque, Jr. on Thursday said 600,000 doses of Sinovac Biotech’s vaccines will arrive on Sunday, paving the way for the rollout of the government’s vaccination program the next day (Read related story “COVID-19 vaccination drive may start next week”).
The Philippines is the last country in Southeast Asia to take initial delivery of COVID-19 vaccines, even as it has the second-highest number of cases.
Economists warned that the slow vaccine rollout and continued quarantine restrictions will hurt the Philippines’ recovery this year.
President Rodrigo R. Duterte on Monday rejected the proposal of the economic team to ease further the lockdown restrictions until the vaccination program starts.
In light of this, Acting Socioeconomic Planning Secretary Kendrick Karl T. Chua said the Development Budget Coordination Committee will be reviewing its current economic forecasts and targets.
The government aims to grow by 6.5-7.5% this year from last year’s 9.5% contraction which was the worst on record. — Beatrice M. Laforga
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BSP rationalizes DOSRI reporting requirements
THE Bangko Sentral ng Pilipinas (BSP) is rationalizing some prudential reporting requirements from its supervised financial institutions, as part of efforts to improve the ease of doing business in the country.
BSP Governor Benjamin E. Diokno on Wednesday signed Circular No. 1110, which removed 12 reports that are required to be submitted by banks and nonbank financial institutions.
The BSP circular will remove weekly requirements for banks to submit their daily reports related to borrowings of directors, officers, stockholders and their related interests (DOSRI). Instead, it will be replaced by a semestral certification on DOSRI transactions.
Financial institutions will also discontinue the quarterly and semestral reporting documents for submission related to the compliance on aggregate ceiling on direct credit accommodation of such entities.
Quarterly reports on underwriting activities, annual general information sheet following stockholders’ meeting, and the weekly report of commercial banks on peso-denominated common trust funds and other similarly managed funds will no longer be required to be submitted to the BSP.
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The circular will take effect after 15 days of its publication in the Official Gazette or in a newspaper of general circulation.
“The report rationalization initiative aims to contribute to continuing adherence to internationally recognized standards and practices on data aggregation and governance as well as to promote ease of doing business,” Mr. Diokno said.
BSP Deputy Governor Chuchi G. Fonacier said the Financial Supervision Sector decided to review and rationalize the number of prudential reports, in light of significant changes and developments in the business and regulatory environment.
“Even with this rationalization of reporting requirements, BSP continues to adhere to internationally recognized standards and practices on data aggregation and governance,” Ms. Fonacier said in a text message.
Republic Act No. 8791 or the General Banking Law of 2000 imposed individual and aggregate ceiling requirements for credit disbursed to DOSRIs. These loans cannot exceed the capital contribution and deposit of the borrowing party and are required to secure prior written approval by the majority of all the directors of the board.
“The BSP is right on track on relaxing the [prudential reporting] requirements,” Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said in a text message, noting such moves will improve local investment interest.
The country placed 95th in the World Bank Doing Business 2020 report, improving from its 124th place in 2019. However, it still placed seventh among 10 Southeast Asian Nations and was only better than Cambodia (144), Laos (154), and Myanmar (165). — Luz Wendy T. Noble
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PHL an ‘outperformer’ in frontier technology
REUTERS/REGIS DUVIGNAU
By Arjay L. Balinbin, Senior Reporter
THE Philippines is considered among developing countries that performed better on frontier technologies than their per capita gross domestic product (GDP) would suggest, a 2021 report by the United Nations Conference on Trade and Development (UNCTAD) showed.
UNCTAD’s “Technology and Innovation Report 2021” released on Thursday identified developing countries that have performed better on frontier technologies than their per capita GDP.
Frontier technologies include artificial intelligence (AI), the internet of things (IoT), big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, and nanotechnology.
“The extent of ‘overperformance’ is measured as the difference between the actual index rankings and the estimated index rankings based on per capita income… The greatest overperformer is India, by 65 ranking positions, followed by the Philippines by 57,” UNCTAD said.
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The Philippines was followed by Ukraine, with an actual ranking of 47, Vietnam (45), and China (40).
The UNCTAD report scored countries on their readiness for frontier technologies based on five building blocks: information and communications technology (ICT) deployment, skills, research and development (R&D), industry activity and access to finance.
The Philippines also has a high ranking for industry.
“This reflects high levels of foreign direct investment in high-technology manufacturing, particularly electronics,” it added.
Multinational businesses are attracted by the Philippines’ “strong” supply chains and “solid” base of parts manufacturing, UNCTAD said.
“The Philippines also has pro-business policies along with a skilled, well-educated workforce and a network of economic zones,” it added.
However, the top overperforming developing countries, including the Philippines, have lower rankings for “ICT connectivity and skills.”
Developing countries need to work towards “universal internet access and ensure that all their citizens have opportunities to learn the skills to be more ready for frontier technologies,” it said.
In the Philippines, there are generally wide urban-rural disparities in terms of connectivity as shown in the recent analysis by Asian Development Bank and Thinking Machines Data Science, Inc., where nearly a million Filipinos in rural areas do not have access to digital connections, as most cell towers are located in wealthy cities.
According to the UNCTAD report, top overall performers on the adoption of frontier technologies are wealthy nations: United States, Switzerland, United Kingdom, Sweden, and Singapore, among others.
“The top overall performers have well-balanced performances across all building blocks of the index and are typically associated with high innovation and GDP,” it said.
Sought for comment, Terry L. Ridon, convenor of InfraWatch PH, said he was not surprised.
“This is not surprising given that the Philippines ranks next to India in the global outsourcing industry, which uses various emerging technologies to improve operational efficiencies, such as artificial intelligence, blockchain and big data. Global cloud services led by Amazon Web Services have offices in major Philippine cities,” he said in a phone message.
Mr. Ridon said Filipinos have spearheaded the adoption and consumption of new technologies, such as 5G, drones, and IoT gadgets.
“Through a handful of domestic solar companies, we manufacture our own solar panels instead of full importation. Our top exports have always been in the semiconductor sector in the last decade,” he explained.
The Philippines’ performance should mean that these sectors remain “very competitive areas,” which the government should help further develop, Mr. Ridon said.
He noted the BPO sector contributes at least 7% of the country’s GDP, or $26 billion. “This should only mean a continuing upward trend in these high-growth sectors, which had continued to sustain growth despite the coronavirus pandemic and contributed to the job security of BPO employees.”
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Central banks say no tapering, but markets are not buying it
A security guard walks in front of an image of the Federal Reserve in Washington, DC, March 16, 2016. — REUTERS/KEVIN LAMARQUE/FILE PHOTO
LONDON/NEW YORK — Central bankers worldwide have been unequivocal: There are no plans to cut back on money printing any time soon, let alone raise interest rates.
Markets do not seem to be buying it.
US 10-year Treasury yields rose on Wednesday to one-year highs above 1.4%, extending this year’s near 50-basis-point (bp) jump that has dragged up sovereign borrowing costs in Europe, Japan and elsewhere. Yields retreated later in the session to 1.37%.
The reckoning is that the spending step-up by US President Joseph R. Biden’s administration and post-vaccine economic reopening will fuel global growth and an inflation rebound, forcing central banks to “taper” or withdraw stimulus ahead of schedule.
A brighter outlook may indeed justify higher yields. But what has started to spook markets is a sudden move up in so-called real yields, or returns in excess of inflation. That shift can tighten financial conditions, suck cash from stock markets and in general, hamper the recovery.
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It is spooking policy makers, too. Central bankers have weighed in this week to stress policy will remain loose for some time. But the mantra seems to be falling on deaf ears.
US Federal Reserve Chair Jerome Powell knocked yields just a couple of basis points lower after commenting that the inflation target was more than three years away.
Euro zone yields only briefly heeded European Central Bank (ECB) chief Christine Lagarde’s warning on Monday that the bank was “closely monitoring” the recent rise in yields.
The reason, according to ING Bank, is that markets are pricing “with an increasing degree of conviction” the end of ultra-easy policies.
“Market confidence in the strength of the US recovery is so strong and widespread that the tapering boat has sailed already,” they said, predicting “tapering” would happen by the end of 2021, rather than 2022 as predicted by Fed surveys.
Money markets show investors expect a Fed rate rise next year; some bet on an even earlier move. Euro-dollar futures suggest a roughly 64% chance of a 25-bp rate hike by the end of 2022. A week ago it was seen at 52%.
“Markets heard central bankers saying ‘Stop it, markets, you are going too far,’ but they are worrying central banks might change their mind as new data emerges,” said April LaRusse, head of fixed-income investment specialists at Insight Investment.
If travel, dining out and shopping fully resume in coming months, it could unleash trillions of dollars in pent-up savings worldwide. Just in the United States, personal savings totaled $2.38 trillion at a seasonally adjusted annual rate in December, higher than at any time before the pandemic.
The steeper yield curve is “a reflection of the fact that we’re seeing these green shoots in terms of economic stats, comfort that the vaccine is kicking in,” said Anders Persson, chief investment officer of global fixed income at Nuveen.
Some investors are betting that the rise in yields will prompt the Fed to act, but not by tightening policy.
“I do feel that some form of yield curve control is on the cards. Reason being, inflation will likely not be sustained. We will see a pop as we emerge from the COVID crisis but it will not be permanent,” said Nick Maroutsos, head of global bonds at Janus Henderson.
The Fed discussed the possibility of reweighting its bond purchases toward the long end of the curve at its November and December meetings. While the bank chose not to act then, yield curve control, which was used in the wake of the 2007-2009 financial crisis, remains an option.
ELSEWHEREThe picture is similar elsewhere.
In New Zealand, warnings of downside risks to the economy by Reserve Bank of New Zealand Governor Adrian Orr contrasted with buoyant data.
Bond yields shrugged off his comments to hit 11-month highs, while overnight index swaps (OIS) began pricing in the possibility of an end-2021 rate hike.
There is of course the possibility that the pledges to keep policy ultra-loose in the face of recovering growth only fan inflation expectations further. So could markets force central banks to act rather than just jawboning?
Here the Fed faces less of a dilemma than its peers.
Japan’s 10-year yields are near the highest since late 2018 at 0.12%, posing credibility issues for a central bank that aims to hold yields around 0%.
The ECB too may have to step up bond purchases under its emergency asset purchase program to combat rising yields.
“At the moment it’s a tension between markets and central banks rather than a conflict,” said Jacob Nell, head of European economics at Morgan Stanley.
“The attitude of the Fed is that if markets think growth is stronger than we do then that’s fine, it will help growth and inflation expectations. So the Fed won’t fight the market — it just doesn’t believe it.” — Reuters
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