Gains, risks as Fitch affirms PHL’s ratings
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BPI’S FIRST-EVER CORPORATE RUNNING EVENT The Bank of the Philippine Islands (BPI), in partnership with race organizer Runrio, hosted the BPI #BestLifeRun Corporate Race 2024, the country’s first corporate running event. The BPI #BestLifeRun Corporate Race 2024 builds on the success of last year’s #BestLifeRun by expanding its reach and inclusivity. The run along Ayala Avenue in Makati City, brought 4,000 participants from almost 300 companies and organizations for a day of health, wellness, and camaraderie. The event is part of the bank’s activities to celebrate its Sustainability Awareness Month. CONTRIBUTED PHOTO
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 recent Fitch Ratings decision to affirm the country’s investment grade ratings may be good for the economy but could also lead to more borrowings. Fitch Ratings over the weekend affirmed the BBB rating of the country with a stable outlook. Fitch said this reflected the country’s “strong medium-term growth.” National Economic and Development Authority (Neda) Undersecretary Rosemarie G. Edillon said the investment grade rating will help boost investments as well as public and private consumption, which are good for GDP growth. “It will encourage investments. For governmentt and business,
it can be about capacity expansion, like more infrastructure, more production facilities, more or better equipment, etc. For individuals and households, it can be about building up their assets, like housing,” Edillon told BusinessMirror over the weekend. Edillon said the affirmation of the country’s investment grade status also meant the economy was on the right track in increasing GDP growth and attracting investments through the administration’s roadshows. “This rating will help reduce the cost of borrowing, not just for the government, but also for the private sector. Of course, going forward, we will strive to improve
our rating even more,” Edillon told this newspaper.
Downside
JONATHAN L. RAVELAS, senior adviser at professional services firm Reyes Tacandong & Co., told BusinessMirror agreed and said the rating confirmed that Fitch Ratings was “comfortable” with a growth of at least 5.8 percent and a budget deficit of close to 5.4 percent of GDP for 2025. However, Ravelas said, despite this optimism, the country still faces higher inflation risks and high interest rates that could slow GDP growth. This could also increase government spending and pave the
way for higher debts. Some of the factors that could increase inflation, Ravelas said, are climate change risks that could cut farm production and cause natural disasters and flooding. Ravelas also cited supply chain disruptions from geopolitical events and fragmented sources that could make food and non-food items more expensive. “We will likely borrow more. [But] it will likely balance between domestic and internationally as risks of a stronger dollar prevails [and] provided it will yield more infra spending,” Ravelas told BusinessMirror over the weekend. See “Gains,” A2
BusinessMirror
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BONDS, BSP INVESTMENTS
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By Cai U. Ordinario
@caiordinario
HE government’s global bond issuance and income from the Bangko Sentral ng Pilipinas (BSP) investments abroad boosted the country’s Gross International Reserves (GIR) to the highest level in three years. ments abroad,” the BSP explained. The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income. The BSP deems the GIR level adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income. The data also showed that the GIR was about 5.9 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity. See “GIR,” A2
Philexport pushes CREATE MORE to plug gaps in law By Andrea E. San Juan @andreasanjuan
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HE country’s umbrella organization of exporters is calling for the swift approval of the CREATE MORE bill, a measure to iron out inconsistencies on value-added tax (VAT) zero-rating and tax administration on domestic enterprises, among others. “The Senate’s consideration of our recommendations above will go a long way in ensuring that we remain on track in achieving the principles and objectives of inclusive growth and development,” Philexport President Sergio R. Ortiz-Luis Jr. said in a statement on Friday. The Philexport chief said this as he outlined “uncertainties” in the implementation of (Corporate Recovery and Tax Incentives for Enterprises) CREATE Act that must be addressed. These, he said, have “seriously and unfairly impacted the operations and competitiveness of existing companies and are inconsistent with the current efforts of the Marcos administration to attract investors.”
The strong support for CREATE MORE is contained in a recent position letter signed by Philexport president Sergio R. Ortiz-Luis Jr. and addressed to Senator Sherwin Gatchalian, who introduced Senate Bill 2654 last May 6. In the position letter, Ortiz-Luis noted that the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Act was enacted with the good intention to raise the country’s regional competitiveness by lowering corporate income tax rates and rationalizing fiscal incentives granted to registered business enterprises (RBEs). However, he also pointed out that three years after the passage of CREATE, inconsistencies have come up between this law and the corresponding administrative issuances on taxes and incentives enjoyed in freeport and economic zones. “These issues have seriously and unfairly impacted the operations and competitiveness of existing companies and are inconsistent with the current efforts of the Marcos administration to attract investors,” said Ortiz-Luis. See “Philexport,” A2
BROTHERHOOD WALK Filipino-Chinese community members participated in a Sunday morning march called “Lakad Magkaibigan” (Walk for Brotherhood) from Binondo, crossing the BinondoIntramuros Bridge to Kartilya Park in Arroceros. The event, attended by various Filipino-Chinese business groups, was organized by the FFCCCII (Federation of Filipino-Chinese Chambers of Commerce and Industry Inc.). FFCCCII President Cecilio Pedro echoed calls for unity and brotherhood among all. The event was also attended by Chinese Ambassador Huang Xilian, former Senator Gringo Honasan, and Vice Mayor Yul Servo-Nieto, among others. NONIE REYES
VILLAR SAYS HE WAS A VICTIM OF DEEPFAKE VIDEO FOR SCAM By VG Cabuag
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ILLIONAIRE and former Senator Manuel B. Villar Jr. has warned the public of a deepfake video that made use of his face and voice to promote what he called an investment scam. Villar said in a statement that “deceptive individuals” made use of an old footage of him in an interview with TV network SMNI, to alter what he said by using artificial intelligence, or AI. In the video, Villar was quoted promoting a supposed lifesaving platform named Momentum Capital. “I don’t like long conversations. I am proud of this project and I am glad that it would be able to help many people,” the deepfake video said.
“I guarantee that every participant of my program investing the minimum the amount to start 450 to 500 Philippine peso will earn a minimum of 4,500 Philippine peso per day. Try it,” it said. In a statement, Villar said: “I urge the public to disregard that video. There is no such investment program. I enjoin the public to be more discerning and extra cautious when viewing posts and videos that use AI technologies and that promise easy money or success.” “There is no such thing as easy money. There is no substitute to good, old fashioned sipag at tiyaga in achieving success in life. Mag-iingat po tayo sa mga manloloko,” Villar said in a statement. See “Villar,” A2
EXPLAINER »B4
NATURAL GAS BOOM IN THE PHILIPPINES: ECONOMIC BOON OR ENVIRONMENTAL BANE?
PESO EXCHANGE RATES n US 58.6410 n JAPAN 0.3769 n UK 75.0253 n HK 7.5087 n CHINA 8.0943 n SINGAPORE 43.5830 n AUSTRALIA 39.0960 n EU 63.8718 n KOREA 0.0430 n SAUDI ARABIA 15.6359 Source: BSP (June 7, 2024)
LOFT392STUDIO | DREAMSTIME.COM
T he BSP preliminar y data showed the country’s GIR level rose to $104.48 billion as of end-May from $102.65 billion as of end-April 2024. This was the highest since the $108.79 billion posted at the end of 2021. BSP data showed the GIR level at the end of May 2023 was at $100.59 billion. “The month-on-month increase in the GIR level reflected mainly the National Government’s [NG] net foreign currency deposits with the Bangko Sentral ng Pilipinas [BSP], which include proceeds from its issuance of ROP Global Bonds, and net income from the BSP’s invest-