The improving global investment sentiment and financial conditions provided a much-needed lift for local currency bond markets in emerging East Asia, despite risks from the coronavirus disease (COVID-19) pandemic, the latest issue of the Asian Development Bank’s (ADB) Asia Bond Monitor says.

“Governments in the region have been agile in dealing with the impact of the COVID-19 pandemic through a wide range of policy responses, including monetary easing and fiscal stimulus,” said ADB chief economist Yasuyuki Sawada. “It is crucial that governments and central banks maintain accommodative monetary policy stances and ensure sufficient liquidity to support financial stability and economic recovery.”

Emerging East Asia is composed of the People’s Republic of China (PRC); Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; Thailand; and Vietnam.

But, the ADB said government bond yields in most emerging East Asian markets declined from 15 June to 11 September on the back of accommodative monetary policies and weakening growth across the region.

Meanwhile, improving sentiment led to gains in the region’s equity markets and a narrowing of credit spreads, with most regional currencies strengthening against the United States (US) dollar.

Local currency bonds outstanding in emerging East Asia reached $17.2 trillion at the end of June, up 5.0 percent from March 2020 and 15.5 percent higher than in June 2019.

As a share of regional gross domestic product, emerging East Asia’s local currency bonds outstanding climbed to 91.6 percent at the end of June, from 87.8 percent in March, mainly due to the large amount of funding needed to fight the pandemic and mitigate its impact.

Bond issuance in the region totaled $2 trillion in the second quarter, increasing by 21.3 percent from the first quarter this year. The PRC remained home to the region’s largest bond market, accounting for 76.6 percent of the region’s total bond stock as of end-June.

The region’s government bonds outstanding reached $10.5 trillion at the end of June which accounted for 60.8 percent of the region’s aggregate bond stock. Corporate bonds, meanwhile, totaled $6.7 trillion.

A worsening and prolonged COVID-19 pandemic that could further dent the region’s economic outlook is the biggest downside risk to financial stability, prompting ADB to project a 0.7 percent contraction for developing Asia in 2020.

The Philippine Chamber of Commerce and Industry (PCCI), the country’s biggest business group, asked the government to come up with innovation-oriented regulations, as the economy changes its gears to embrace innovation towards recovery amid the COVID-19 pandemic.

In the virtual press briefing for the launch of the 46th Philippine Business Conference and Expo, PCCI president, Ambassador Benedicto V. Yujuico, said with the pandemic disrupting normal business operations, enterprises, particularly micro, small and medium enterprises (MSME) and even the informal sector, are now adapting new business models to survive lockdowns on economic and social activities.

“I believe we have made some headway with regards to innovation, since the agenda of my presidency to PCCI is focused solely on innovation. Many of our members are now using the e-commerce platform. But we still have a long way,” Yujuico said.

With this, Yujuico said the PCCI is constantly working hand-in-hand with the government, including the Department of Labor and Employment (DoLE), Department of Finance Department of Trade and Industry, National Economic and Development Authority (NEDA), and Department of the Interior and Local Government, as well as Department of Science and Technology (DoST) and Department of Information and Communications Technology (DICT), to support their agenda and in establishing an innovation ecosystem to generate new ideas and transform it into new products, services and processes.

“This ecosystem will require accessible markets, human capital, funding, mentors, conducive regulatory framework, infrastructure, education and training, universities and research institutions which will serve as catalysts as well as public support,” he said.

According to Yujuico, the PCCI advocated government agencies, particularly DoST and DICT, to have a unified approach to technology planning, funding, management and allocation, as they acknowledged the two agencies for putting in place programs such as Filipinnovation.

Beside this, Yujuico said they are also asking for the government’s supportive policies such as the creation and preservation of the incentive system and sustainability of finance.

“We also want the government to address issues on red tape, lengthy licensing procedures, overregulation, education that is not conducive to creative thinking, training not aligned with market needs and state of technologies, monopolies, inadequate intellectual property protection, and most important, internet connectivity, which drives digitalization that has been powering all these innovations we are now seeing,” according to Yujuico.

The PCCI maintained that they will continue to aim in making entrepreneurs/firms the dominant force in innovation, including how to enhance the innovative talent that is nurtured and used.

The country continues to bleed foreign currency as foreign portfolio investments, also known as hot or speculative money, posted net outflows for the month of August 2020.

Latest data from the Bangko Sentral ng Pilipinas (BSP) reveals that BSP-registered foreign portfolio investments for the month yielding net outflows of $127 million as gross outflows of $793 million surpassed gross inflows of just $667 million.

Despite the waning investments, the BSP said the latest figure proves to be smaller compared to the month-ago figure of $453 million net outflows.

Still, the registered investments of $667 million in August was lower by 7.3 percent versus the listed $719 million in July.

Bulk or 84.3 percent of the inflows were placed in securities listed in the local bourse, while the remaining 15.7 percent went to peso-denominated government IOU.

By country source, the United States (US), Singapore, United Kingdom, Hong Kong and Luxembourg comprised the top five investor countries for the month, with combined share total at 82.6 percent.

While the gross outflows of $793 million exceeded inflows in August, such proved to be notably lower compared to the registered $1.2 billion month-ago, majority of which exited to the US.

Rizal Commercial Banking Corp. chief economist Michael Ricafort recognized the latest BSP data as an improvement versus previous numbers owing partly to the record-high issuance of the Bureau of Treasury’s Retail Treasury bonds along with other corporate bond offers.

“For the coming months, further re-opening of the economy and sustained pick-up in economic recovery would fundamentally help improve investments valuations and in turn, net foreign portfolio investments data,” Ricafort explained.

“Going forward, any sustained tapering off in new COVID-19 cases and any successful development and deployment of vaccine/s for COVID-19 would also help economic recovery prospects gain further traction that help improve investment valuations,” he added.

BSP projects net inflows of $2.4 billion by year-end, a major revision from its earlier $8.2 billion outlook owing to the serious impact of the pandemic.

Vital recommendations made by Anti-Red Tape Authority (ARTA) will be endorsed to Congress by the Ease of Doing Business and Anti-Red Tape Advisory Council regarding its expanded anti-red tape powers.

Pursuant to its mandate as stated in Section 8(f) of the Implementing Rules and Regulations of Republic Act 11032 to “propose legislation, amendments or modifications to Philippine laws related to anti-red tape and ease of doing business,” the council approved the proposed amendments to the said law which include an expanded power to the ARTA empowerment and enforcement functions. This, following the Senate Budget Hearing last 17 September where certain limitations of ARTA were raised.

In order to solidify its empowerment function, ARTA proposes that its streamlining and reengineering recommendations be imposed in a compulsory basis to government agencies as compared to its policies being merely recommendatory under the law.

According to director general Jeremiah B. Belgica, “making ARTA findings on suggested changes in the different agencies’ processes mandatory for implementation will definitely solve a lot of red tape problems. The real lasting solution is enforced streamlining and not just a mere recommendation. Our recommendation is for the EODB-ART Advisory Council to stand as an approving body for the recommendations of ARTA on certain streamlining measures that a particular agency or agencies refuse to implement. If the Council approves it then the agency should be compelled to follow.”

Under the proposal of ARTA, all covered agencies be required to allot a certain percentage of its budget for an EODB or ease of doing business plan and program similar to how agencies are required to allot five percent of its budget for the Gender and Development Program.

Top officials of Pag-IBIG Fund announced Secretary Eduardo D. del Rosario, chairman of the Department of Human Settlements and Urban Development and the 11-member Pag-IBIG Fund Board of Trustees, said they have granted a one-time 60-day grace period on payments of all loans in accordance with Republic Act 11494 or the Bayanihan to Recover as One Act (Bayanihan 2), while providing its housing loan borrowers in arrears with a Special Housing Loan Restructuring Program to help update their accounts and keep their homes.

“We heed and support President Duterte’s call to help our fellow Filipinos who are experiencing financial hardships brought about by the COVID-19 pandemic. We recognize that this pandemic continues to impact jobs and businesses in the country. And so, the Board immediately approved the implementation of the 60-day grace period following the signing of the Bayanihan 2 law and our Special Housing Loan Restructuring Program to provide further financial relief to our members,” said Del Rosario.

Under Pag-IBIG Fund’s guidelines, the granting of the 60-day grace period will be applied automatically to all loan payments on the agency’s Multi-Purpose Loan, Calamity Loan, and Housing Loan which fall due from September 15 until November 14, 2020.

The grace period will give borrowers payment reprieve without incurring any penalty, and interest on interest.

“Under the Bayanihan 2 law, the grace period covers loan accounts with up to three months in arrears. But under our approved Pag-IBIG guidelines, we will cover loan accounts with up to nine months in arrears so we can help more borrowers, specifically those whose incomes were affected when community quarantines were first declared in mid-March,” Del Rosario added.

The coronavirus pandemic tested the health care systems of practically all countries worldwide, including affluent western and European nations. According to a recent report released by the International Council of Nurses (ICN), there is already a global shortage of almost six million nurses prior to the pandemic, and became more acute due to the virus. Demand for international nurses from the usual destination countries is likely to continue if pre-COVID-19 nursing shortages persist.

According to ICN’s State of the World’s Nursing (SOWN) report, the Philippines is often described adopting a “train for export” model of nurse education, facilitated by the Philippine Overseas Employment Administration (POEA). This, ICN added, is to enable local nurses to move and work abroad, where pay and career opportunities are much more attractive, and for them to then remit part of their foreign currency earnings back to their family.

Most nursing schools in the Philippines are in the private sector, with nursing students paying for their education, often with the express intention of moving abroad to practice when they graduate.

The ICN report said the outflow of nurses from the Philippines has been around 15,000 to 20,000 per annum in recent years. In the Organization for Economic Cooperation and Development (OECD) alone, almost 240,000 local nurses are working in OECD countries. A significant number of local nurses are also posted in Saudi Arabia, Europe (UK and Ireland) and Asia/Australasia (Singapore, New Zealand, Australia). The United States is also reported to be the home for almost 150,000 Filipino nurses, earning as much as 20 times what they were making back home.

The remittances flowing back into the country from the migrant nurses help boost the Philippine economy and support the local population. Total remittances to the Philippines have grown substantially in recent years and reached $34 billion in 2018, with much of these funds coming from service workers, especially nurses.

The unremitting migration of local nurses elsewhere to seek greener pastures in recent years has significantly depleted the country’s nursing workforce. The effect of this outflow was greatly felt when the pandemic hit the country, as the government appealed to health care workers in the provinces and those returning from abroad to help beef up the frontline workforce in the capital in the fight against the dreaded virus.

During the early months when the pandemic hit the country, the Department of Labor and Employment (DoLE) issued a temporary suspension order preventing nurses from going overseas. This order put nurses with existing employment contracts with hospitals overseas in a precarious situation of missing tremendous opportunity to earn higher pay and perks that they would not receive if they choose to stay at home.

While the number of COVID cases in the country continues to increase, it was a huge relief for health care workers, nurses in particular, when the President stepped in and ordered the lifting of the suspension order for health workers and new hires who secured requirements by 31 August to leave the country.

Despite the move to allow health care workers with contracts to travel overseas, the President appealed to the remaining frontliners and volunteers to take care of COVID-19 patients and help in the fight against the dreaded virus.

In an attempt to entice local nurses to stay and serve the country first, the DoLE recently urged the government to increase the salary of nurses. Labor Secretary Silvestre Bello III said a significant salary upgrade for nurses is long overdue, adding that this is the reason why some 200,000 local nurses are unemployed despite the Department of Health’s (DoH) emergency hiring program.

Bello said we cannot blame nurses from the private sector from leaving the country. They work from eight to 16 hours, with the average salary ranging only from P9,000 to P18,000 as compared to public hospital nurses’ proposed minimum take home pay of P32,000 a month.

Echoing Bello’s call, Filipino Nurses United’s (FNU) head Maristela Abenojar said we cannot blame private hospital nurses from leaving the country, adding that the government needs to improve their working conditions and increase their salaries for them to stay.

While public hospital nurses are set to receive adjusted salary packages under the Department of Budget and Management’s Circular 2002-4 issued on 17 July, FNU is desolate that the private sector nurses were not included.

The FNU said some nurses in the private sector cannot even afford their own basic needs because their salary is “way below” the minimum wage. These overworked nurses, FNU added, are made to handle a patient load beyond the DoH-set standard of 1:12 patients with no additional pay for overtime or extended work.

Abenojar said nurses’ work in private hospitals is not valued in the country, adding that it is an example of the neglect and exploitation our nurses face.

FNU’s call is now being addressed as concrete actions are being taken care of by relevant government agencies to enhance the working conditions of health care workers. The urgent task is to agree on the terms, start aligning and operationalizing whatever changes will be formalized.

My take right now is for Bello and Health Secretary Francisco Duque III to lobby at Congress for the urgent deliberation and passing of the law that would increase the salaries of nurses working in both public and private hospitals.

Moving forward, the government must give serious consideration to maintaining the attractiveness of nursing as a career by the provision of fair pay and conditions of employment and career prospects in order to ensure that the mid- to long-term supply of new nurses is not compromised.

Indeed, 2020 is the Year of the Nurse. At times like this, we are all reminded of the important role all of our health care heroes play in caring for people in crisis. I will continue to salute our health care workers and be grateful for the work they are doing. They are the country’s real heroes, no doubt.

San Miguel Energy Corp., a unit of the Asian conglomerate, and the state-owned Philippine National Oil Co. (PNOC) were the initial groups floated yesterday as being interested in the 45 percent share in the Malampaya natural gas field that Shell Exploration B.V. (SPEX) is divesting.

An industry source said SMC President Ramon S. Ang is intently studying a potential bid for an estimated P28 billion value of the SPEX shares which is about the same amount that Udenna Corp. of Davao City-based magnate Dennis Uy paid for in acquiring the 45 percent stake of Chevron Corp.

Energy experts estimate that the project is still good for 97.67 petajoules of banked or unutilized gas.

Shell Philippines earlier said in a statement it is scouting for a buyer as it confirmed that it is divesting from the Malampaya project to preserve its financial footing.

The unit of oil giant Royal Dutch Shell said it is looking to “rationalize” its local portfolio, starting with its 45 percent interest and operator status in the Malampaya gas-to-power project.

“As part of an ongoing portfolio rationalization to simplify and increase the resilience of its business, Shell is exploring its options with a view to divest its interest in SC38 (Malampaya),” SPEX managing director and general manager Don Paulino said in a statement.

Fertile spot
The Malampaya facility is near the disputed West Philippine Sea, an area believed to be rich in oil deposits.

“Shell would ensure a smooth transition of the asset to a credible buyer who would be well placed to optimize the value from Malampaya,” the company said.

Businessman Manny V. Pangilinan had made a rival offer on the Chevron stake but he had yet to indicate if he will also bid for the SPEX share.

PNOC is also reviewing a possible offer but the tight fiscal situation may frustrate its plan.

PNOC president Reuben Lista said the state firm is waiting for further information regarding the SPEX divestment.

“We have data from other sources. We are studying, if it is prudent for us to get involved,” Lista said.

PNOC subsidiary PNOC Exploration Corp. (PNOC-EC), holds a 10-percent stake in the Malampaya project, which supplies fuel to power plants providing about one-fifth of electricity supply in Luzon.

PNOC-EC has right of first refusal since Udenna indicated that it will not bid for the SPEX holdings.

Raymond Zorilla, senior vice president for external affairs at Phoenix Petroleum Philippines, said Udenna will welcome whomever will replace Shell.

The Philippines will experience a huge swing end in the economy from a contraction of 9.5 percent by year’s before recovering strongly with a 9.6 percent gross domestic product (GDP) expansion the next year based on projections released by credit watchdog Standard and Poors Global Ratings (S&P) yesterday.

The economic turnaround will also be the third strongest in the Asian region next year after Vietnam’s 11 percent growth forecast and India’s 10 percent.

S&P expects Malaysia to grow 8.4 percent in 2021; China, 6.9 percent; Indonesia and Singapore, 6.3 percent; Thailand, 6.2 percent; Hong Kong, 5.3 percent and New Zealand, 5.2 percent.

China will continue to lead Asia’s uneven recovery from the economic disruption. S&P said it has revised up its 2020 GDP forecasts for China as well as for Korea, Taiwan, and Vietnam amid stronger trade and consumer spending.

“We now expect normalization to take longer in India, Japan, Australia and most of Southeast Asia,” the report titled “Asia-Pacific’s Recovery: The Hard Work Begins” said.

Not over yet
“The pandemic is not over but the worst of its economic impact has passed,” S&P Asia-Pacific chief economist Shaun Roache said.

“Governments are adopting more targeted strategies for flattening COVID curves, with less recourse to nationwide lockdowns. Households are spending again on services as well as goods”, Roache projected.

COVID-19 is proving hard to beat but fatality rates are falling and prospects have brightened for a widely available vaccine by mid-2021.

“In the meantime, people are moving and spending more, testament to a world becoming accustomed to COVID-19. Trade, for example, has bottomed”, according to the rating firm.

As a whole, S&P expects Asia-Pacific economies to shrink by two percent in 2020 and rebound by 6.9 percent next year. This will still leave the region almost five percent below the pre-COVID trend by end 2021.

“The hard work now begins,” Roache noted. “As relief measures taper, we will find out how much economic damage has been wrought,” he said.

Hard decisions needed
Fading temporary tax cuts, wage subsidies, loan moratoriums and other measures will force banks, businesses and households to make hard decisions.

Businesses only getting by due to grace periods on servicing debt may be forced to close up shop. Banks will have to assess whether to restructure or foreclose on questionable loans. “The true deterioration across balance sheets will become apparent even as economies reopen,” it stated.

The employment situation will be a key determinant of the strength of recovery, S&P said, adding that employment is expected to return to pre-COVID trends only by 2022, at the earliest, in most cases.

“This will put a lid on wages, drag on consumer spending, and keep inflation low across the region. With fiscal policies and financial conditions likely to tighten, central banks have no option but to keep policies exceptionally easy,” S&P forecast.

With still limited operating capacity allowed for Philippine Offshore Gaming Operators (POGO) and its service providers, the Philippine Gaming and Amusement Corp. (PAGCOR) reported a 50 percent drop on its online gaming revenues.

The gaming regulator, nonetheless, reported an 80 percent revenue decline during the pandemic as POGO operations were restricted.

“Our monthly regulatory fees of around P600 million pre-COVID-19 is now down by almost half. This should have been lower if not for the minimum guaranteed fees which allows PAGCOR to impose higher regulatory fees,” PAGCOR assistant vice president Jose Tria said.

According to him, the significantly lower collections were not surprising as only 32 out of 60 POGO were allowed to resume operations, but on a limited or 30 percent capacity.

50% cleared
The PAGCOR official said that only half or 111 of the 218 accredited POGO service providers were allowed to operate after getting clearances from the Bureau of Internal Revenue (BIR).

Moreover, an exodus of several POGO firms was brewing as industry sources cited the stricter quarantine and tax rules to ramp up the pressure on the sector.

Tria said five POGO had canceled their licenses while another five were suspended and 42 service providers have requested to cancel their accreditation.

Department of Finance Secretary Carlos Dominguez III earlier said the exit of POGO firms will definitely affect the government’s tax revenues including both corporate and value-added taxes (VAT) from the real estate sector and other POGO-dependent businesses.

Taxes will be settled
On a separate development, the DoF chief said while POGO outfits are leaving the country, their tax duties and obligations will still be recovered.

“Before a Philippine registered entity can close its business, it is required to get a clearance from the BIR. This triggers an audit where the BIR can determine if they have paid the correct taxes,” Dominguez explained.