Budget and Taxes

* My article in  BusinessWorld  last September 5.  -------------- There are as usual four topics in this column and we go straight to them. ASSESSMENT OF DUTERTE’S BUILD-BUILD-BUILD Dr. Epictetus E. Patalinghug, Professor Emeritus of UP Diliman (and my former undergrad Economics teacher in the 1980s), wrote a good paper: “An Assessment of the Infrastructure Program of the Duterte Administration” (funded by the UP Professor Emeritus Research Program, published August 2022). The paper assesses the end-of-term performance (2016-2022) of the previous Administration’s Build, Build, Build (BBB) Program. It observed that the scope of BBB changed from 75 big-ticket projects to 112 less ambitious and more doable projects. The huge gap between the actual and targeted infrastructure expenditures in the early years of the program was a manifestation of the weak absorptive capacity of the implementing agencies. Among the 15 railway projects examined by the study, only two were complet...

* My column in  BusinessWorld  last August 29. --------------- .... SMC PETITION FOR POWER INCREASE These two recent reports in  BusinessWorld  might send another chill down the spines of consumers in the Meralco franchise area: “SMC power unit says losses hit P15B, seeks rate hike” (Aug. 2) “SMC unit warns of power price surge starting Oct.” (Aug. 24). San Miguel Corp. (SMC) has two power generation companies (gencos) — San Miguel Energy Corp. (SMEC), a coal plant in Sual, Pangasinan, and South Premiere Power Corp. (SPPC), a natural gas plant in Ilijan, Batangas — which it declared had incurred combined losses of P15 billion: P10 billion in 2021, and P5 billion in January-May 2022. SMEC committed 330 MW and SPPC committed 670 MW, for a total of 1,000 MW, to Meralco from December 2019 to December 2029. SPPC has asked the Energy Regulatory Commission (ERC) for a rate increase from January to May 2022 of P0.80/kWh (from P4.30 to P5.10/kWh), and SMEC asked for a big inc...

* My article in  BusinessWorld  last August 22. ------------------- This week will mark the sixth month of Russia’s invasion of Ukraine, so we review commodity prices as a result of invasion and US-led economic sanctions against Russia. We will also discuss the Philippine government budget for 2023 which is to be submitted to Congress today. Here are 10 things to watch out. 1. Continued high power prices that trigger high inflation. Last week, the Dutch Title Transfer Facility (TTF), the leading Europe benchmark for wholesale gas prices, reached an all-time high of €245 per megawatt hour (MWH) — 505% higher than it was a year ago. And last week, the UK reported a double-digit inflation rate of 10.1% in July, another 40-year high record. Germany’s overall electricity prices (all in for generation, transmission, distribution, etc.) have been rising from €0.14/kwh in 2000 to €0.24 in 2010, €0.32 in 2020, and €0.41 in 2022. 2. High fertilizer prices, high food prices. Fertilizers ...

* My column in  BusinessWorld  last August 15. -------------- This piece will cover six topics and events that occurred last week so we go straight to them. 1. GROWTH RECOVERY AND RISING INFLATION Last week, the Philippine Statistics Authority (PSA) released the 2nd quarter (Q2) 2022 GDP growth and it was 7.4%, a bit lower than the Q1 growth of 8.2%. The PSA also released the July 2022 inflation rate last week and it was 6.4%, a bit higher than June’s inflation of 6.1%. So, for Table 1, I averaged the GDP growth for Q1 and Q2 of selected countries and compared them with the Philippines’. Then I also averaged the inflation rate from January to July. The big East Asian economies with no Q2 GDP report yet, like Japan and Thailand, are not included in the table. The Philippines so far has the fastest growth recovery in first half 2022 with 7.8%, followed by Malaysia and Vietnam. The main explanation is low base effect — the Philippines had the deepest GDP contraction in Asia in 20...

* My article in  BusinessWorld  last August 8. -------------- There were four economic developments last week that I want to comment on. The first is high inflation driven by transport, alcoholic beverages and tobacco (ABT), and financial services. Last Friday, the Philippine Statistics Authority (PSA) reported the July 2022 inflation rate at 6.4%, another four-year high from October 2018’s 6.9%. Transport and ABT are among the big inflation generators (Table 1). From transport inflation of 18.1% July, the inflation rates of sub-components are: 1.) Operation of personal transport equipment, 48.1%; 2.) Passenger transport services, 7.2%; 3.) Purchase of vehicles, 1.3%; 4.) Transport services of goods, 0.3%. MOTORCYCLE TAXIS AND LTFRB As shown in the numbers above, the cost of operating personal transport like cars was very high, 48% in July due to higher gasoline and diesel prices. Last week, there was this report in  BusinessWorld : “Grab PHL says MOVE IT acquisition comp...