MANILA-BUSINESS: Year End Review – 20 biggest business news of 2017
New skyscrapers
The year 2017 proved to be both challenging and exciting for the business sector, given the policy reforms and economic developments that shaped the local market. The Philippines emerged as one of the fastest growing economies in the world in 2017, which would likely continue through 2018 after the government passed tax reforms to support its ambitious infrastructure program. Here are 17 of the most important economic, corporate and business news in 2017.
Tax reform passed
President Rodrigo Duterte signed into law the Tax Reform for Acceleration and Inclusion Act or Train, the first of four tax reform measures planned by his administration.
Train aims to reduce personal income taxes while raising taxes on fuel, cars, coal and sugar-sweetened drinks. Additional proceeds will be used to fund the P8 trillion ‘Build, Build, Build’ infrastructure program. The measure is expected to generate an additional P92 billion for the government.
Income tax rates will be lowered for 99 percent of the country’s 7.5 million individual taxpayers. In particular, it exempts those with an annual income of P250,000 and below from personal income tax, and also adjusts excise taxes on fuel and automobiles.
It doubles the excise tax rates on all metallic and non-metallic minerals and quarry resources, adjust the tax rates on automobiles; sugar-sweetened beverages; diesel, gasoline and liquefied petroleum gas; coal; cosmetic procedures and others.
Fitch upgrades PH rating
Global debt watcher Fitch Ratings Inc. upgraded the Philippines’ sovereign credit rating to “BBB” from the minimum investment grade of “BBB-.”
Budget Secretary Benjamin Diokno said the upgrade supports the growing consensus that the Philippines is one of the fastest growing countries not only in the fast-growing Asia Pacific region but also in the entire world.
Fitch said the “Philippines’ strong and consistent macroeconomic performance has continued and underpinned by sound policies that are supporting high and sustainable growth rates.”
Finance Secretary Carlos Dominguez III said the government was pleased that Fitch was finally convinced that the Philippine economy was much stronger now and more resilient than in 2013, when it granted the Philippines its first investment grade rating of BBB-.
GDP expands 6.9 percent
The Philippines’ gross domestic product expanded 6.9 percent year-on-year in the third quarter of 2017, the second fastest in Southeast Asia, on higher government spending and manufacturing output.
“We attribute the country’s growth performance to sustained strong growth in exports and improvements in public spending, which then boosted the manufacturing subsector and the services sector,” Economic Planning Secretary Ernesto Pernia said.
The World Bank then raised its 2017 growth forecast for the Philippines to 6.7 percent and retained its 2018 growth projection at 6.7 percent.
The Asian Development Bank also raised its 2017 growth forecast to 6.7 percent from 6.5 percent.
Interest rates kept steady
The Bangko Sentral ng Pilipinas left its benchmark interest rates unchanged at record low this year, although policy tightening might start in 2018 to fight off inflation.
The Bangko Sentral kept the interest rates at 3.5 percent for overnight lending, 3 percent for overnight borrowing and 2.5 percent for overnight deposit. The reserve requirement ratio was also left untouched.
The Monetary Board of the Bangko Sentral maintained the inflation average forecasts of 3.2 percent for 2017, 3.4 percent for 2018, and 3.2 percent for 2019.
Inflation in the first 11 months averaged 3.2 percent, still near the midpoint of the target range of 2 percent to 4 percent.
Trade deficit hits record high
The Philippines posted a record monthly trade deficit of $2.84 billion in October 2017. This brought the total trade deficit in the first 10 months to $21.95 billion, compared to the $21.74-billion shortfall in the same period last year.
Exports in January to October went up 11.7 percent to $53.1 billion, while imports rose 8.3 percent to $75.1 billion.
Stocks post a rebound
Stocks rebounded in 2017, rising more than 25 percent from a year ago, after suffering losses in 2016.
The Philippine Stock Exchange index, the 30-company benchmark, jumped 25.1 percent in 2017, to close at a record 8,558.42 on Dec. 29, the final trading session of the year.
Most Asian markets rose following record gains on Wall Street, as the US Federal Reserve raised interest rates to end its monetary easing.
Peso sinks to 11-year low
The peso sank to an 11-year low of 51.77 against the US dollar on Oct. 25, pulled down mainly by the country’s widening trade deficit and the monetary tightening by the US Federal Reserve.
The local currency rebounded in November and December, on the back of rising remittances from Filipinos working overseas. It closed at 49.93 against the dollar on Dec. 29, just slightly down from 49.72 a dollar a year ago.
Latest data showed that money sent home by overseas Filipinos grew 4.2 percent in the first 10 months to $23.056 billion from $22.124 billion a year ago.
Chinese telco wooed
State-run China Telecom Corp. could become the third player in the Philippines’ telecommunication sector, after President Rodrigo Duterte asked China to help challenge the so-called duopoly of PLDT Inc. and Globe Telecom.
Presidential spokesman Harry Roque said the president wanted the third telecommunications player to be operational by the first quarter of 2018. The Chinese government selected China Telecom to invest in the Philippines.
Meanwhile, Department of Information and Communications Technology Secretary Rodolfo Salalima resigned from his post in September 2017.
The rise of Dennis Uy
Davao City-based businessman Dennis Uy, the owner of independent oil player Phoenix Petroleum Philippines Inc., has the fastest growing business empire in the country.
Among his new acquisitions are Chelsea Shipping Corp., 2Go Group Inc., Petronas Energy Philippines, Enderun Colleges Inc., Clark Global City Corp. and the Philippine franchise of Family Mart convenience stores. He has three listed firms, including 2Go Group, Phoenix Petroleum and Chelsea Logistics Holdings Inc.
PH to have first subway
Infrastructure spending is expected to keep its pace in 2018, as several projects, including the Metro Manila Subway Project will start construction next year, according to the Department of Finance.
There are 75 big-ticket projects under the ‘Build, Build, Build’ program: 31 roads and bridges, 12 rail and urban transport, six air transport, four water transport, four flood management projects, 11 water supply and irrigation, four power projects, and three other public infrastructure projects.
The DoTr is expected to commence project implementation of the Metro Manila Subway Project Phase 1 as early as third quarter of 2018. Financed through Japan official development assistance, the MMSP-Phase 1 is a 25.3-kilometer subway connecting the North and South of Manila (from Mindanao Avenue, Quezon City to Food Terminal Inc.) and Ninoy Aquino International Airport.
It will be the Philippines’ first mass underground transport system. Comprised of 13 stations, including a station at Naia, this aims to cut commuting time from Quezon City to Taguig to 31 minutes. The subway, which will cost around P355.6 billion, is expected to accommodate around 370,000 passengers in its first year of operations starting the fourth quarter of 2025.
More tourists visit PH
International visitor arrivals in the Philippines climbed 11.5 percent year-on-year in the first ten months of 2017, according to the Department of Tourism.
Data showed that the country accommodated 5.47 million arrivals in January to October this year, up by 11.5 percent from 4.9 million arrivals a year ago.
Revenue-wise, the DoT recorded P243.23 billion in visitor receipts in January to September, up by 36.28 percent from the previous year’s P178-billion earnings.
South Koreans remained the country’s top visitor market this year with 1,332,141 arrivals (24.33 percent), followed by China with 810,807 arrivals (14.81 percent) and the US with 785,269 arrivals (14.34 percent).
Environment chief gets the ax
Congress has rejected the appointment of Regina Lopez as Environment secretary, 10 months into her term in office, but not after she ordered the closure or suspension of 26 operating mines and revoked 75 mining contracts in what she said was a fight against “greedy miners” threatening public heath and nature.
Lopez was replaced by former army chief Roy Cimatu, who is now leading a review of the mining projects affected by his predecessor’s order.
The Mines and Geosciences Bureau said it may soon lift the moratorium on new mining projects as it aims to attract more investments into the local mining sector. The Chamber of Mines of the Philippines said the industry would not grow unless the moratorium on new mining projects was lifted.
Manila hosts Asean summit
Manila hosted the Association of Southeast Asian Nations Leaders Summit in November.
It also hosted leaders from Asean dialog partners such as the US, Canada, Australia, Japan, China, Korea, Hong Kong, New Zealand, Russia, India and European Union.
Among those who attended the summit was US President Donald Trump. The Philippines and the US issued a joint statement citing the 70-year partnership of the two countries. They reaffirmed their commitment to strengthening their bilateral alliance.
Golden period with China
Relations between China and the Philippines entered a “golden period of fast development,” according to Chinese Foreign Minister Wang Yi.
Foreign Affairs Secretary Alan Peter Cayetano said peace and stability in the East and South China Seas, as well as the whole region, was a tangible outcome of the recent improvement of relations with China.
China claims most of South China Sea, in conflict with the claims of Brunei, Malaysia, the Philippines, Taiwan and Vietnam.
President Rodrigo Duterte decided not to pursue the government’s case against China, even after his predecessor won a case with the Permanent Court of Arbitration in The Hague on maritime boundaries. The tribunal invalidated China’s claim to sovereignty over most of the South China Sea.
San Miguel faces P769-m fine
Conglomerate San Miguel Corp. described as “excessive and unreasonable” the P769.3-million fine slapped by the Securities and Exchange Commission against the company for the alleged late filing of additional documents pertaining to the acquisition of shares in Manila Electric Company in 2012.
San Miguel president and Ramon Ang said the company would contest in court the decision of the corporate regulator.
Busan contract annulled
The Department of Transportation terminated its contract with Busan Universal Rails Inc. as the maintenance provider of Metro Rail Transit Line 3.
Busan, however, said the DoTr should pay them more than P350-million in unpaid billings.
The maintenance transition team of the DoTr took over the maintenance operations of the line.
The government then signed an agreement with Japan that allow Sumitomo Corp. and technical partner Mitsubishi Heavy Industries to take over the maintenance works for MRT 3.
Mighty Corp. settles P25b
Japan Tobacco International acquired local cigarette manufacturer Mighty Corp. for P46.8 billion in September 2017.
Mighty used P30 billion of the proceeds to pay tax liabilities to the government, including P25 billion in tax settlement and the rest representing value added tax.
In return, the Department of Justice allowed the tax case filed by the Bureau of Internal Revenue against Mighty to be dropped.
Uber paid P500m
The Land Transportation Franchising and Regulatory Board lifted the suspension order against transport network vehicle service Uber on Aug. 29, after the ride-sharing service paid nearly half a billion pesos to the government and displaced drivers/
The San Francisco, California-based Uber said it is “grateful for the opportunity to serve the Philippines again.”
Uber paid a P190-million fine and another P299 million as compensation to partner drivers, after it was suspended on Aug. 14, for registering new cars without government approval.
Bird flu outbreak declared
Cases of avian influenza have been confirmed in a town in Pampanga province and two towns in Nueva Ecija province.
Culling operations within a 1-kilometer radius took place in the affected sites. This dampened demand for poultry, resulted in losses of local producers.
The first case of avian flu virus was reported in San Luis, Pampanga, triggering a scare that brought chicken prices down. The outbreak of avian influenza Type A subtype H4 happened in a quail farm before spreading to poultry farms.
PAL pays P6-b fee
The Department of Transportation accepted a P6-billion payment from Philippine Airlines for unpaid navigation fees.
“One of the overriding reasons why PAL agreed to settle is to manifest its trust and confidence in President Duterte’s administration,” PAL, owned by tycoon Lucio Tan, said.
President Durterte earlier threatened to close the Ninoy Aquino International Airport Terminal 2 if PAL would not settle its unpaid navigational fees.
PAL operates domestic and international flights at Naia Terminal 2. PAL has an unsolicited proposal to build a P20-billon passenger terminal beside its current hub to expand capacity.
COURTESY:
THE MANILA STANDARD
posted December 30, 2017 at 07:16 pm
by Roderick T. dela Cruz
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