CORPORATEContents BRIEFSAugust 2018 THE MONTH’S HIGHLIGHTS 58 PH climbs to 10th spot in Sustainable Trade Index WORD FOR WORD 60 E-money transaction value up COMMENTARY 9% in 1H2018 SPECIAL REPORTS MINING 17 POLITICAL 63 Metal production rose in 1H2018 66 Small-scale mining operations 17 Duterte revokes Trillanes in CAR suspended amnesty; court orders his arrest I.T. UPDATE 19 September 2018 Approval and Trust Ratings of Top 28 Government Officials 68 Gov’t issues final guidelines 23 Bangsamoro plebiscite set on for new telco player January 2019 26 House panel junks BUSINESS CLIMATE INDEX impeachment complaint against 7 SC justices CORPORATE BRIEFS INFRASTRUCTURE 51 THE ECONOMY 85 ADB approves loans and new 28 Inflation at 9-year high CPS with PH 29 Peso drops to 54 vs. the dollar 90 Two projects of “national in September significance” approved 30 PH FDI inflows soared by 42% 83 PH to ramp up investments in 1H2018 in rail, aviation and maritime 85 transport 33 PH national debt remains manageable as of end-June 81 NEDA reviews infra projects 2018 89 Revised Bulacan airport 35 Employment situation contract under review continues to improve 88 Foreign contractors keen on 36 Consumers less optimistic in Zamboanga power plant 3rd quarter BSP survey CONGRESSWATCH 95 BUSINESS 95 Congress approves Telecommuting Act 51 Business confidence declines 96 Universal Healthcare bill in 3Q2018 nearing passage Online To read Philippine ANALYST online, 53 PH CEOs still bullish amid 99 Senate oks bill promoting go to wallacebusinessforum.com mounting challenges Central Luzon For information, send an email to 56 2018 SME Policy Index finds 101 Asia Pacific Executive Brief PH a mid-level performer [email protected] or 119 Asia Brief contributors [email protected] For publications, visit our website: wallacebusinessforum.com Philippine ANALYST September 2018 Philippine Consulting is our business...We tell it like it is PETER WALLACE Publisher BING ICAMINA Editor Research Staff: Rachel Rodica Christopher Miguel Saulo Robynne Ann Albaniel Beatrix Palomar Hanna Macuroy Production-Layout Larry Sagun Efs Salita Rose Basas Ramon Lopez 5/F Builders Center Bldg., 170 Salcedo St., Legaspi Village, Makati City ● TEL: (632) 810 96 06 to 09 ● FAX: (632) 810 96 10 ● EMAIL: pwallace@ wbf.ph ● WEBSITE: www.wallacebusinessforum.com ● To read Philippine ANALYST online, go to wallacebusinessforum.com ● For information, send an email to [email protected] or [email protected] ● For publications, visit our website: wallacebusinessforum.com the month’s highlights 1 Political PRESENT DEVELOPMENT PRESENT DEVELOPMENT Peso drops to 54 vs. the dollar in September The peso fell to the 54-to-the-dollar mark in mid-September and never looked back for the rest of the month. It closed at Duterte revokes Trillanes amnesty; court orders his arrest P54.13:$1 on the last trading day of September. (see story on p29) Senator Antonio Trillanes IV is facing his previously dismissed rebellion and coup d’état charges again after President Rodrigo Employment situation continues to improve Duterte revoked the amnesty granted to him in 2011. Beyond the arrest of the senator, the crisis could have far more reaching The July 2018 (3rd quarter) labor force survey disclosed that consequences to those who were previously granted amnesty. employment had reached 40.89 million, an increase of 488,000 (see story on p17) over a 12-month period, the highest net gain in employment among July surveys in the last 10 years. The average employment was 41.1 million during the first 3 quarters of 2018, a net gain House panel junks impeachment complaint against 7 SC of 1.17 million from 39.9 million in the same period last year, justices on track with the government’s job creation target of 900,000 The House Committee on Justice officially dismissed the to 1.1 million for 2018. (see story on p35) consolidated impeachment complaints filed against 7 Supreme Court (SC) justices who voted to remove former Chief Justice Consumers less optimistic in 3rd quarter BSP survey (CJ) Maria Lourdes Sereno through a quo warranto petition. (see story on p26) Consumer sentiment turned negative in the current quarter, and consumer outlook was less optimistic in the next quarter and the next 12 months, according to the Consumer Expectations September 2018 Approval and Trust Ratings of Top Government Survey conducted by the central bank in the 3rd quarter of Officials 2018. (see story on p36) President Rodrigo Duterte’s approval and trust ratings sharply declined in September 2018. This is according to the latest results of Pulse Asia Research, Inc’s ‘Ulat ng Bayan’ national survey Business about the performance and trust ratings of top government officials and key government institutions in the country. PAST DEVELOPMENT (see story on p19) E-money transaction value up 9% in 1H2018 FUTURE DEVELOPMENT Value of electronic money (e-money) transactions in the Philippines rose by 8.9% to P513.8 billion in 1H2018 from P471.7 Bangsamoro plebiscite set on January 2019 billion in the same period last year due to enabling regulatory The fate of the Bangsamoro Autonomous Region now rests on environment, rising number of providers, and aggressive the results of the plebiscite scheduled on January 2019. It is a marketing. (see story on p60) historic step towards achieving lasting peace and prosperity in Mindanao. (see story on p23) PRESENT DEVELOPMENT Economy Business confidence declines in 3Q2018 Business confidence in the country declined in 3Q2018 to 30.1% PAST DEVELOPMENT from 37.9% in 3Q2017 according to the latest Business Expectations Survey (BES) conducted by the Bangko Sentral ng Pilipinas (BSP) Inflation at 9-year high or central bank. (see story on p51) The headline inflation rose to an annual rate of 6.4% in August, the highest since 6.6% in March 2009, on continuing surge in PH CEOs still bullish amid mounting challenges food prices. Year-to-August inflation averaged 4.8%, exceeding Chief Executive Officers (CEO) in the Philippines are still bullish the 2-4% target range set the central bank for 2018. in doing business over the next 12 months despite challenges (see story on p28) arising from global trade tensions, regulatory changes, and technological disruption. This is according to the latest results PH FDI inflows soared by 42% in 1H2018 of a survey conducted by PwC Philippines for the Management Foreign direct investments (FDI) net inflows into the Philippines Association of the Philippines (MAP). (see story on p53) jumped by 42.4% to $5.8 billion in 1H2018 from $4 billion recorded in the same period in 2017 signifying investor confidence in PH climbs to 10th spot in Sustainable Trade Index the country’s strong macroeconomic fundamentals and growth prospects. (see story on p30) The Philippines is still a top performer in the 2018 Hinrich Foundation Sustainable Trade Index (STI). Although there PH national debt remains manageable as of end-June 2018 are factors that dampened the country’s performance, the government believes key economic reforms will help with the The Philippine government’s outstanding external debt posted country’s participation in international trade. (see story on p58) a 0.4% decrease to $72.2 billion as of end-June 2018, from $72.5 billion recorded in the same period in 2017 attributed to prudent debt management. (see story on p33) Philippine ANALYST September 2018 2 the month’s highlights 2018 SME Policy Index finds PH a mid-level performer Two projects of “national significance” approved The Organisation for Economic Cooperation and Development The Department of Energy (DOE) has certified 2 more power (OECD) considered the Philippines, along with Thailand and projects as “Project of National Significance” under Executive Indonesia, as “mid-level performers” among Association of Order (EO) 30: Atimonan coal power plant in Quezon and the Southeast Asian Nations (ASEAN) countries, in terms of the Talim wind power plant in Rizal. (see story on p90) implementation of Small and Medium Enterprises (SMEs) policy in 2018. (see story on p56) FUTURE DEVELOPMENTS PH to ramp up investments in rail, aviation and maritime Mining transport The Department of Budget and Management (DBM) said PAST DEVELOPMENT 2019 marks the start of the government’s heavy investments in improving mass urban, aviation and maritime transport Metal production rose in 1H2018 infrastructure. This is seen to improve seamless transport Metal production in the Philippines marginally improved in the within the country which will help enhance economic activities 1st half of 2018, despite the decline it posted in the 1st quarter in emerging growth centers. (see story on p83) of 2018. The Mines and Geosciences Bureau (MGB) attributed the good performance in metal production to the higher metal NEDA reviews infra projects prices in the world market. (see story on p63) The National Economic and Development Authority (NEDA) is reviewing major unsolicited infrastructure projects, including PRESENT DEVELOPMENT the Metro Rail Transit (MRT) 10, the Skytrain and the East West Rail. (see story on p81) Small-scale mining operations in CAR suspended Revised Bulacan airport contract under review The Department of Environment and Natural Resources (DENR) ordered the suspension of all small-scale mining operations in The P735-billion New Manila International Airport project in the Cordillera Administrative Region (CAR) after a landslide hit the province of Bulacan is nearing realization following the Benguet amidst the onslaught of Typhoon Mangkhut (Ompong). submission of a revised concession contract by San Miguel Corp. (see story on p66) (SMC). The contract is now under review by the Department of Transportation (DOTr) after which it will be submitted to the NEDA Investment Coordination Committee (NEDA-ICC) for final IT Update approval. (see story on p89) Foreign contractors keen on Zamboanga power plant PRESENT DEVELOPMENT Foreign firms signified their interest in building the Alsons Power Group’s San Ramon coal-fired power plant that will supply Gov’t issues final guidelines for new telco player 105MW to Zamboanga City to alleviate the power shortage in After several revisions and consultations, the Department of the area.