‘BSP stance must come with investor market perks’ By Cai U. Ordinario @caiordinario
M
ORE Filipinos could benefit from the monetary policy stance of the Bangko Sentral ng Pilipinas (BSP) if there are more incentives to invest in the capital market, according to a regional think tank. In an email to BusinessMirror, Asean+3 Macroeconomic Research Office (AMRO) Group Head and Principal Economist Runchana Pongsaparn said the policy rate has increased by 4.5 percentage points between 2022 and 2024, leading key policy rates to peak at 6.5 percent. Despite this, Pongsaparn said the country’s average savings deposit rate only climbed 1.9 percentage points. This means, it only peaked 2 percent.
SM Mall of Asia enchants with Grand Mascot Parade, ushering in a joyful New Year Over 200 mascots brought joy to SM Mall of Asia (MOA) on New Year’s Day with a dynamic
Giant Mascot Parade featuring giant inflatables and beloved SM MOA characters like Mimi the Cat and Momo the Dog, and Sola the Panda from SM Southmall. The SM MOA Royal Marching Band, guest bands, and cheerleaders filled the air with music, while a meet-and-greet and a spectacular fireworks display delighted the crowd.
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“The government may consider granting tax incentives for investment in the capital market,” Pongsaparn told BusinessMirror. “These efforts will not only improve policy rate transmission but also help households utilize their savings more efficiently.” These incentives can make higher-yielding term deposits or unit investment trusts, whose returns are more sensitive to policy rates, more attractive for Filipinos. “Strengthening competition for bank funding would push banks to adjust their deposit rates more rapidly,” Pongsaparn said. “Crucially, authorities should also ensure that these investment alternatives are accessible to Filipinos across the income spectrum and demographics.”
Apart from strengthening the passthrough from the policy rate to bank financing, Pongsaparn told BusinessMirror there is an overall need to improve the quality of household credit data. This entails the use of alternative credit data sources such as payments to utility companies or online shopping platforms to supplement credit assessments. “Credit records are limited as only a quarter of Filipinos have access to formal credit. Although the Credit Information Corporation [CIC] collects credit histories, banks still face challenges with data quality and coverage,” Pongsaparn said. “The BSP and CIC should work together to improve the accuracy and completeness of credit data and make
them available to both bank and nonbank lenders,” she added. As of the fourth quarter of 2023, the BSP reported that there were 121.6 million deposit accounts, a 19.7-percent growth from the 101.6 million recorded in the fourth quarter of 2022. There were a total of 112.3 million depositors as of the last quarter of 2023, a 9.8-percent growth from the 102.2 million recorded in the same period in 2022. Total deposits reached P19 trillion in the last quarter of 2023, a 7.1-percent growth from the P17.7 trillion posted in the same period in 2022. Total loans extended by the banking system reached P12.4 trillion in the last quarter of 2023, 7.8 percent higher than the 11.5 percent posted in the same period in 2022.
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Monday, January 6, 2025 Vol. 20 No. 86
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NOV GOCC SUBSIDIES UP 82%; 11-MO TOTAL DOWN B
Holding firms, NBFIs more influential on investments
By Reine Juvierre S. Alberto
UDGETARY support to governmentowned and -controlled corporations (GOCCs) surged by over 80 percent in November 2024 but dropped by 15 percent over the 11-month period year-on-year, data from the Bureau of the Treasury (BTr) showed.
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Subsidies to state-run firms increased by 81.64 percent to P12.232 billion in November 2024 from P6.734 billion during the same month a year ago. This was also 2.20 percent higher than the P11.968-billion subsidies in October 2024. However, GOCCs were given lesser budgetary support from January to November 2024. Subsidies during the 11-month period amounted to P129.442 billion, 15.42 percent lower than the P153.050 billion a year ago. Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort told the BusinessMirror this is due to the national government’s tight fiscal space amid a series of typhoons that required calamity-related assistance. Meanwhile, the spike in subsidies in November “could be partly attributed to the increased disbursement/utilization of budget after some government underspending earlier in 2024, especially in the third quarter of 2024,” Ricafort said. See “Nov,” A2
NO HOLDING BACK TIME As the long Christmas holiday comes to an end, the PITX transport terminal in Parañaque comes alive again, as people get ready to go back to work and school on
January 6. Some spent the last few precious holiday hours for bonding with their family in the mall, or looking for a good buy as stores tends to offer discounted prices at this time of the year. NONIE REYES
OLDING firms and non-bank financial institutions (NBFIs) have more influence in terms of investments in companies compared to banks, according to the government’s think tank. In a discussion paper, Philippine Institute for Development Studies (PIDS) Research Fellows Aubrey D. Tabuga and Ramonette B. Serafica as well as research analyst Madeleine Louise S. Baiño found that while banks are crucial links in the financial system, they have less influence than holding firms and NBFIs. The researchers, using network analysis, plotted the network of the financial systems and found that it was mainly made up of NBFIs and holding companies, followed by banking institutions and individuals/estates. “Holding companies are in a position that enables them to reach many companies because they are of short distances to these actors. Their power and influence within the network emanating from their positions are fundamental because these are global measures of centrality,” the researchers said. “Various holding companies are therefore highly central and influential owing to their ability to invest in many companies within the financial sector,” they added. The PIDS study also found that in this network, government entities like the See “Holding,” A2
SUPPLY SEEN BETTER, BUT RE PLAYERS BANK ON GOVT MOVES By Lenie Lectura @llectura
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HILE power industry stakeholders keep investing to help government achieve renewable energy (RE) goals, they raised a common concern—to execute, as soon as possible, the policies and guidelines that are already in place. In separate interviews, top officials of power firms said supply this year is going to be “better” given the number of projects under development and nearing completion. “As for supply-demand outlook, we expect a better supply situation in 2025 given the
operational commencement of large thermal plants. We also expect new renewable energy plants to come online starting this year,” ACEN Corp. President Eric Francia said. Among others, the main concern of the power generation arm of conglomerate Ayala Corp. is grid stability. “Given the variable nature of renewables, we need to step up efforts to integrate more energy storage into the grid,” he said, referring to battery energy storage systems (BESS). Solar and wind, for instance, when paired with BESS, could store power and dispatch it when needed. The Department of Energy (DOE) hears this and has, in fact,
included Integrated Renewable Energy and Energy Storage System (IRESS) in the fourth round of Green Energy Auction (GEA4). However, actual auction has not been determined yet. In fact, the long-awaited GEA3 was pushed back from the original target completion date last year. The DOE defines IRESS as a comprehensive energy solution that combines RE technology with energy storage systems, resulting in a more consistent and efficient supply of power. Meralco PowerGen Corp. (MGen), the power generation arm of electricity distribution giant Meralco, also expects “2025 to be a better year in terms of
supply and reserve margins.” MGen president Emmanuel Rubio believes the grid will have sufficient supply this year given the entry of Excellent Energy Resources Inc. (EERI) and a number of solar plants, including some of MGen facilities in the north. And, with the forecasted La Niña in the first quarter of 2025, hydro plants are expected to generate at higher capacities compared to 2024. “However, to ensure energy projects that were given national significance, I would like DOE to strengthen the guidelines and provisions in order to align all the involved stakeholders, from national See “Supply,” A2
»EXPLAINER | B4
ERASED AND FORGOTTEN? JAN. 6 FADES IN THE CAPITOL AS TRUMP RETURNS
PESO EXCHANGE RATES n US 57.8830 n JAPAN 0.3674 n UK 71.6707 n HK 7.4431 n CHINA 7.9299 n SINGAPORE 42.2566 n AUSTRALIA 35.9048 n EU 59.4285 n KOREA 0.0394 n SAUDI ARABIA 15.4108 Source: BSP (January 3, 2025)