Philippines Microeconomic Weekly Update #44

MACROECONOMICS WEEKLY UPDATE

The Bangko Sentral ng Pilipinas (BSP) expects the country’s growth domestic product (GDP) to fall below the targets set by the Development Budget Coordination Committee (DBCC) at 6-7% for 2023 and 6.5-8% for 2024 and 2025. The BSP attributed this outlook to the slower-than-expected 2Q23 GDP growth, benign global economic conditions, higher global crude oil prices, economic headwinds, and the cumulative monetary policy adjustments.

The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board (MB) decided to keep the interest rate on the overnight reverse repurchase facility at 6.25%. Accordingly, the interest rates on the overnight deposit and lending facilities were kept at 5.75% and 6.75%, respectively. The MB also slightly upgraded its 2023 inflation forecast to 5.6% from 5.4% previously amid the impact of higher international oil price. Inflation forecasts for 2024 and 2025 is at 3.3% and 3.4%, respectively.

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board has kept the 3% interest rate ceiling on credit card transactions. The maximum interest rate on the unpaid outstanding card balance of a cardholder was maintained at 3% per month, or 36% a year. Meanwhile, the monthly add-on rate that credit card users can charge on installment loans is still at 1%.

The Philippine banking system’s total assets went up to P22.83tr (+6.93% y-o-y) in 1H23 as deposits, loans and investments continued to expand. Banks’ assets are mainly funded by its core business of deposits, as well as loans and investments. Meanwhile, the banking system’s liabilities, which are financial and deposit liabilities, also increased P20.05tr (+6.83% y-o-y).

The Energy Regulatory Commission (ERC) said that it has extended the suspension on collecting the feed-in tariff allowance (FIT-All) indefinitely beginning September 2023 to provide relief to consumers. ERC’s move forms part of its goal to ease financial burden on consumers amid the escalating cost of electricity. The suspension was initially set to expire by end-August 2023.

The state-led Philippine National Oil Co. (PNOC) said that it plans to build a logistics center servicing the offshore wind power industry in Batangas, forming part of its five major projects for 2024. In 2024, PNOC has an operating budget of P2.21bn, of which 64.82% will be allocated for capital outlays, including a solar photovoltaic (PV) system for government entities, and the development of the Batangas offshore wind power logistics port.

INDUSTRY UPDATE

POWER AND UTILITIES

Manila Water Co., Inc. (MWC), through its subsidiary, Laguna AAAWater Corp. (Laguna Water), has signed a P1.6bn 10-year term loan facility with the Bank of Philippine Islands (BPI). MWC said that the proceeds of the loan will be used to partially finance the company’s capital expenditures until 2025.

PROPERTIES

DoubleDragon Corp. (DD) disclosed that its residential development Ascott-DD Meridian Park will be operational by 2024 and will be operated and managed by Ascott Ltd, a subsidiary of Capital Land. In partnership with Ascott Ltd., DD developed the 5,567 square-metre (sqm) Ascott-DD Meridian Park which is expected to feature more than 300 residences within the Double Dragon Meridian Park complex. Reportedly, the premium luxury development is expected to enhance mini-central business district (CBD) Double Dragon Meridian Park located in the Bay Area in Pasay.

TELECOMMUNICATIONS  

Globe Telecom, Inc. (GLO) has closed deals to sell 213 telecommunication towers to Frontier Tower Associates Philippines, Inc. and MIESCOR Infrastructure Development Corp. (MIDC) for around P2.6bn. GLO said that the sale of 113 towers to Frontier Tower closed on 15 Aug 2023 totalled a cash consideration of P1.4bn

PLDT Inc. (TEL) is targeting to grow its data centres by up to 25% with a planned expansion in Luzon. To date, TEL has 10 data centres and is currently building its 11th data centre – its biggest data centre with a capacity of up to 50MW. TEL is in the first phase of sourcing the location for its 12th data centre, adding that they have a shortlist of locations for the plan.

DITO CME Holdings Corp. (DITO) said its board had approved the issuance of 2.2bn shares to Xterra Ventures Pte. Ltd. and Summit Telco Corp. Pte. Ltd. DITO said its board had approved the issuance of 1.59bn common shares after it signed a subscription agreement with Summit Telco. The transaction would increase DITO’s issued and outstanding shares to 15.63bn from 14.04bn. DITO said its directors had executed a subscription agreement with Xterra Ventures for 610m common shares of DITO at P1 per share. This transaction would increase its issued and outstanding shares to 16.24bn from 15.63bn.

Now Corp. (NOW) said that it has signed a memorandum of understanding (MoU) with US-based enterprise networking company Celona, Inc. for 5G local area network (LAN) solutions. NOW said the signing took place on 17 Aug 2023 together with Now Telecom Co., Inc. (NOW Tel). The company added that it would leverage the complete end-to-end portfolio of products and technology of Celona to hasten the rollout of private wireless network applications. The partnership will target vertical markets such as manufacturing, oil and natural gas, logistics and transportation ports.

REAL ESTATE INVESTMENT TRUST

DDMP REIT, Inc (DDMPR) disclosed that rental deposits for 15,100 square metres (sqm) of its mini central business district Double Dragon Plaza in the Bay Area, Pasay City, Metro Manila amounted to P55.0m. Reportedly, the taken space amounted to P798.8m in total lease value with the entire property housing eight commercial banks, multiple food chains, and a MerryMart supermarket. Furthermore, DDMPR also disclosed that it is expecting a third government agency as its third-state locator.

HOLDINGS

SM Investments Corp. (SM) disclosed that the planned Real Estate Investment Trust (REIT) of its subsidiary, SM Prime Holdings, Inc. (SMPH), will possibly list in 2024 instead of SMPH’s original target launch in 2H23. Initially, the planned REIT’s offering is said to be valued at approximately US$3.5bn to US$4.0bn with 12 to 15 assets under its portfolio. Furthermore, SM also disclosed that the company has temporarily stopped all its reclamation operations in accordance with the government suspending all reclamation projects as the Department of Environment and Natural Resources (DENR) reviews the projects.

DMCI Holdings, Inc. (DMC) said that the company is exploring opportunities for its core businesses, mainly its mining and power units, as they continue to expand through vertical integration to complement their core business. DMC expects more coal exploration activities for Semirara Mining and Power Corp. (SCC) due to the depleting supply of coal in Semirara Island. For DMC’s nickel ore assets under DMCI Mining Corp., the company expects to start operations of two of its nickel facilities in Zambales between December 2023 to mid-2024.

Related Posts