H1 trade gap widens as imports hit record high By Justine Xyrah Garcia
T SEARCH AMID TENSIONS A Philippine Coast Guard personnel aboard the BRP Malapascua (MRRV-4403) conducts search-and-rescue operations near a Chinese-occupied shoal in the South China Sea after the reported sinking of the Vietnamese cargo vessel Khoi Nguyen 18 on Tuesday, July 28, 2026. The operation highlights the Philippines’s continuing maritime presence in disputed waters, where humanitarian response efforts often unfold against the backdrop of competing territorial claims. PHILIPPINE COAST GUARD VIA AP
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 2021 Pro Patria Award PHILIPPINE STATISTICS AUTHORITY 2018 Data Champion
HE country’s trade gap widened in the first half of 2026 as the Philippines’s import payments soared to a 35year high, data from the Philippine Statistics Authority (PSA) showed. Based on the International Merchandise Trade Statistics (IMTS), the country’s import bill in January to June rose by 17.8 percent to $77.53 billion from $65.79 billion in the same period last year. The PSA said the latest figure was the highest first-half import value since the trade series began in 1991. Export earnings rose by 13.1 percent to $46.72 billion in the
first half, but this was slower than the recorded increase in imports. As a result, the country’s trade deficit widened by 25.9 percent to $30.81 billion from $24.48 billion a year earlier. Former Tariff Commissioner George N. Manzano said the record import bill partly reflected developments in the electronics industry, which remains heavily reliant on imported components for domestic production and exports. PSA data showed that electronic products continued to dominate first-half imports, with their value surging by 62.1 percent to $23.68 billion. Within electronic-product imports, semiconductors accounted
for the largest share at $18.23 billion, followed by electronic data-processing equipment worth $2.02 billion and telecommunications and radar equipment valued at $907 million. Manzano said the rise in electronic-component imports could support the country’s manufacturing and export sectors, as local electronics firms use imported parts to produce goods for overseas markets. “Without these imported components, Philippine manufacturers would struggle to produce and export higher-value electronic products,” he added. The increase in the import bill, however, was not limited to electronics. Imports of mineral fuels,
lubricants and related materials climbed by 28.8 percent to $11.03 billion. Transport-equipment imports, meanwhile, contracted by 17.6 percent to $5.36 billion. Manzano said the higher fuel import bill likely reflected elevated world oil prices and the country’s limited ability to reduce petroleum purchases, as fuel remains essential to transportation, manufacturing, power generation and household activities. He added that the decline in transport-equipment imports could partly indicate weaker investment demand, as higher fuel and operating costs may discourage firms and consumers from See “Trade gap,” A2
BusinessMirror A broader look at today’s business
EJAP JOURNALISM AWARDS
BUSINESS NEWS SOURCE OF THE YEAR
(2017, 2018, 2019, 2020, 2021) DEPARTMENT OF SCIENCE AND TECHNOLOGY
2018 BANTOG MEDIA AWARDS
GOVT DEBT HITS ₱19T BY JUNE, MORE THAN FULL-YR PROJECTION www.businessmirror.com.ph
n
Friday, July 31, 2026 Vol. 21 No. 290
P25.00 nationwide | 3 sections 32 pages | 7 DAYS A WEEK
Excise on sin products to cover for tax relief nixed
By Reine Juvierre S. Alberto
T
@reine_alberto
HE national government’s outstanding debt surged by halfa-trillion pesos in just a month, exceeding the fullyear debt projection as early as end-June. Data released by the Bureau of the Treasury on Thursday revealed that the outstanding debt climbed to a new record of P19.065 trillion as of end-June. This amount grew by 2.80 percent, or P518.98 billion, from P18.546 trillion at end-May due to additional domestic borrowings and new external loans “to fund national development,” the Treasury said. The latest debt figure has breached the government’s full-year projection of P19.057 trillion ahead of schedule, based on the 2026 Budget of Expenditures and Sources of Financing. The debt stock could have been higher if not tempered by the strengthening of the peso against the US dollar, which appreciated to P61.290 end-June from P61.501 in end-May. The outstanding debt rose by 10.41 percent, or P1.798 trillion, year-on-year from P17.267 trillion. Domestic debt accounted for the bulk, or 67.33 percent, of the total debt stock while external obligations comprised the remaining 32.67 percent. Debt owed to local creditors went up by 2.74 percent month-on-month to P12.838 trillion as of end-June from P12.495 trillion. The increase was driven by the Treasury’s net issuance of government securities worth P342.93 billion, but offset slightly by the P600-million decline in the valuation of onshore dollar bonds due to the stronger peso. Year-on-year, domestic debt climbed by 7.43 percent from P11.950 trillion. Foreign debt, meanwhile, increased by 2.92 percent to P6.227 trillion as of end-June from P6.051 trillion a month ago. This also went up by 17.13 percent from P5.316 trillion in the same period a year earlier. Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the outstanding debt swelled due to continued borrowing, higher debt servicing costs due to pandemic-era debt accumulation and wider budget deficits in recent months. “For the coming months, catch-up government spending, especially on infrastructure to make up for the government See “Debt,” A2
By Reine Juvierre S. Alberto
L
THE HAGUE APPEAL Vice President Sara Duterte addresses supporters during the “Free Duterte Now” demonstration outside the International Criminal Court (ICC) in The Hague, Netherlands, on Wednesday, July 29, 2026. The rally drew Filipinos and other supporters calling for the release of former President Rodrigo Duterte, who is facing ICC proceedings over allegations tied to his administration’s anti-illegal drug campaign. The overseas gathering comes as Sara Duterte is simultaneously defending herself in a closely watched Senate impeachment trial back home, a political battle that could shape the country’s leadership landscape ahead of the 2028 elections even as her father’s ICC case continues to deepen divisions over accountability, sovereignty, and human rights. AP/MOUNEB TAIM
PBBM eyes bills to fund ₧66-B tax relief By Samuel P. Medenilla
P
@sam_medenilla
RESIDENT Ferdinand Marcos Jr. is still undecided which tax and nontax measures the government will use to fund the P66-billion tax relief package which he announced in his fifth State of the Nation Address (Sona), according to Malacañang. Palace Press Officer Claire Castro confirmed the chief executive is now considering imposing additional taxes on vaping products, sugary drinks, and single-use plastics, which were proposed by the House of Repre-
sentatives to offset the lost revenue from the tax relief package. The tax relief package includes raising the tax exemption threshold, exempting small businesses from minimum corporate income tax, and implementing a tax amnesty. “It is being considered. We simply hope that any potential revenue losses can be offset by tax increases on other items,” Palace Press Officer Claire Castro said in Filipino. Castro said the government is still studying how much the government will earn from the said tax measures. However, she said the government is also open to non-tax
PRESIDENT Ferdinand Marcos Jr. PNA PHOTO
measures to secure the needed budget through additional cost cutting measures or getting it from other fund sources.
“Right now, the specific details and all proposals are being reviewed and studied, as the President has expressed a strong desire to provide assistance— particularly to the middle-income sector,” Castro said. The Presidential Communications Office undersecretary assured the people that the tax reform package will balance the interest of the investors and the public. “The government assures that all measures will undergo careful study so that our other investors are not unduly affected and to ensure the best possible outcome for our fellow citizens,” Castro said.
AWMAKERS’ plan to rely on excise taxes levied on goods deemed harmful to consumers—as a move to counterbalance potential revenue losses from adjusting income taxes—is not a prudent measure, according to a global tax expert. In a discussion with reporters on Thursday, Ashok Kaul, professor and senior partner at Munich-based consultancy Roland Berger, said so-called “sin taxes” are primarily intended to change consumer behavior rather than generate revenue. “It’s not wise to rely on the revenue from sin taxes,” Kaul said during a roundtable discussion organized by the American Chamber of Commerce Philippines. “It’s a desired consequence to have lower revenue over time because you correct the misbehavior of the people.” Lawmakers are eyeing to increase excise taxes on vaping devices, vape liquids, heated tobacco products and to expand products covered by the sugarsweetened beverage tax. The proposed higher sin taxes are being considered to offset the revenue losses from President Ferdinand R. Marcos Jr.’s proposal to raise the annual income tax exemption for employees and exempt micro businesses from corporate income tax. The Department of Finance estimated that the tax relief would cost the government P66 billion in foregone revenues annually if pushed through. (See: https://businessmirror.com. ph/2026/07/29/tax-relief-forworkers-small-biz-to-cost-govt%e2%82%b166b-dof/). The implementation of a global minimum tax on qualified multinational companies is also under review by lawmakers, which Kaul said would help curb the long-running “race to the bottom” among countries competing to attract investments through lower corporate tax rates. This would encourage governments to focus instead on factors that matter more to investors, such as infrastructure, trade opportunities and the ease of doing business, Paul said. “That step is in the right direction and it will enable us to switch away from rate competition to well-thoughtthrough structured ways of attracting investment,” he added. Cigarette taxes, however, have been among the few sin taxes globally that have continued to provide a steady See “Tax,” A2
PESO EXCHANGE RATES n US 61.4840 n JAPAN 0.3763 n UK 82.2164 n HK 7.8406 n CHINA 9.0912 n SINGAPORE 47.7064 n AUSTRALIA 42.7129 n EU 70.4853 n KOREA 0.0426 n SAUDI ARABIA 16.3769 Source: BSP (July 30, 2026)