Philippines Microeconomic Weekly Update #45

MACROECONOMICS WEEKLY UPDATE

In July 2023, the Philippine Statistics Authority (PSA) reported the country’s preliminary labor force participation rate at 60.1%, down from June 2023 (66.1%) and July 2022 (65.2%). This figure represented 46.90 million Filipinos, whether employed or unemployed. The unemployment rate for July 2023 stood at 4.8%, which was a slight increase from June 2023 (4.5%) but lower than July 2022 (5.2%). Simultaneously, the employment rate reached 95.2% during this period, resulting in a total of 2.27 million individuals being unemployed, down from July 2022’s 2.60 million.

In the same month, the Philippines experienced a decline in total trade for July 2023, with a year-on-year decrease of 10.5%, amounting to US$16.49 billion. This trend continued from June 2023 (-9.5%) and contrasted with the growth observed in July 2022 (+11.9%). Notably, the trade deficit significantly narrowed by 30.0% year-on-year in July 2023 (compared to -32.9% in June 2023 and +71.2% in July 2022), amounting to US$4.20 billion. During this period, exports also saw a year-on-year decline of 1.2%, totaling US$6.14 billion, while imports fell by 15.3% year-on-year, amounting to US$10.35 billion.

INDUSTRY UPDATE

TOURISIM 

The Hotel Sales and Marketing Association (HSMA) of the Philippines is expecting the rise of hotel occupancy rates ahead of the holiday season – even higher than the 82% average achieved in the previous year. With domestic tourists comprising 80% and foreigners comprising 20%, HSMA noted that current hotel occupancy rates are higher versus pre-pandemic levels. Furthermore, HSMA reported extended length of hotel stays in the industry which it considers as an indication of the industry’s recovery.

FAST MOVING CONSUMER GOODS

Wilcon Depot, Inc Chief Operating Officer (COO) Rosemarie B. Ong expects an uptake in sales in the “ber” months due to seasonal heightened consumer spending. She noted that despite the temporary shift in spending, they are still confident that the home improvement will approach normalcy. However, it may be muted coming from a very high base.

TELECOMMUNICATIONS  

Dito CME Holdings Corp. (DITO) sold another block of shares to an outside investor as it seeks to fund the crucial network rollout of its telco challenger, Dito Telecommunity (Dito Tel). DITO said Summit Global Ltd. (Summit), an entity organised and existing under the laws of Cayman Islands, bought for P2.24bn an 18.5% stake in Dito Holdings Corp. (Dito Holdings), a subsidiary running its telecommunication business. Summit bought 2.24bn shares in Dito Holdings for P1.00/sh, a 54% discount of DITO’s closing of P2.20. The issuance of new shares decreased DITO’s ownership in Dito Holdings to 72.91% from 89.46%.

PLDT Inc.’s (TEL) mobile business, Smart Communications Inc. (Smart), said it plans to roll out new technologies to serve more far-flung areas across the country. According to Eric Santiago, network head of PLDT Inc. and Smart, TEL was looking into technologies that would enable a cost-effective and faster network rollout and studying how to leverage existing network assets. He added that Smart was also using technologies such as Massive MIMO (Multiple Input, Multiple Output) to boost speeds and coverage. Smart also said it is also looking into expanding the use of solar energy for its cell sites using solar panels with battery storage systems via the ‘Solar Energy as a Service’ model, which will improve the availability of power supply to serve more remote communities. These technologies are expected to bolster TEL’s integrated fixed and wireless networks.

HOLDINGS

San Miguel Corp. (SMC) and GMR Group (GMR) plan to bid for the P171bn contract to rehabilitate, optimise, and maintain the Ninoy Aquino International Airport (NAIA). According to Department of Transportation (DOTr) Secretary Jaime Bautista, SMC and GMR have already bought bid documents for the NAIA rehabilitation project.

The Government Service Insurance System (GSIS) guaranteed that it will not hinder Metro Pacific Investments Corp.’s (MPI) plan to delist despite owning 3.44bn or 11.98% of the company’s common share, which is well above the 95% prerequisite for voluntary delisting. The acquisition of said shares enables GSIS to acquire one seat in the Board of Directors of the conglomerate.

POWER AND UTILITIES

Manila Electric Co. (MER) said that upward pressure on the generation charge could push electricity higher for Sep 2023. According to MER, the expected increase in generation charges is driven by higher fuel prices in the world market and the depreciation of the peso against USD.

Alsons Consolidated Resources (ACR) aims to expand its renewable energy (RE) power generation capacity in Mindanao. ACR said that it plans to achieve a roughly 60:40 ratio of renewable to non-renewable capacity balance across its portfolio. ACR has a power portfolio with an aggregate capacity of 413 megawatts (MW).

ACEN Corp. (ACEN) said that the company plans to invest in a 335-megawatt (MW) onshore wind project, through its subsidiary, Giga Ace 6, Inc. (Giga Ace), which was recently awarded a contract from the second round of Green Energy Auction (GEA-2). Giga Ace won the bid for its Isla wind power project located in the provinces of Laguna and Quezon with an offered capacity of 230 MW for P5.79/kilowatt-hour (kWh). The wind project is expected to commence operations by Dec 2026.

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