Archives: Business World Article

The national government’s (NG) fiscal position swung to a surplus in October as revenues and expenditures declined amid a corruption scandal, the Bureau of the Treasury (BTr) said on Wednesday.

Data from the Treasury showed a PHP 11.2-billion surplus in October, a turnaround from the P248.08-billion deficit in September and wider than the PHP 6.3-billion surplus seen in October 2024.

This was the first budget surplus since the PHP 67.3-billion surplus in April.

In October, government expenditures fell by 7.76% to PHP 430.6 billion from PHP 466.8 billion in the same month last year.

October marked the third straight month that expenditures declined on an annual basis, as disbursements for public works projects were tightened amid a widening corruption probe.

Primary spending — which refers to total expenditures minus interest payments — fell by 9.29% to PHP 373.2 billion in October from PHP 411.4 billion a year earlier.

Interest payments rose by 3.57% to PHP 57.4 billion in October this year from PHP 55.4 billion in the same month in 2024.

At the same time, revenue declined by 6.64% to PHP 441.7 billion in October from PHP 473.1 billion in the same month last year.

Tax revenues inched down by 0.09% to PHP 414.5 billion in October from PHP 414.9 billion in the same month in 2024.

The bulk or 69.62% of tax revenues came from the Bureau of Internal Revenue (BIR), whose collections rose by 1.02% to PHP 328.8 billion in October from PHP 325.5 billion a year ago.

This included a PHP 211-billion tax refund, which pushed the gross BIR collections to HP P329.1 billion.

“This robust performance was driven by collections from corporate income tax, personal income tax, value-added tax, percentage tax on banks/financial institutions, and excise tax on tobacco products,” the BTr said.

The Bureau of Customs (BoC) saw revenues fall by 4.52% to PHP 83 billion in October from PHP 86.9 billion a year ago, as a ban on rice imports started in September.

Nontax revenues plunged by 53.29% to PHP 27.2 billion in October from PHP 58.3 billion in the same month in 2024.

BTr revenues dropped by 13.82% to PHP 12.5 billion in October, while other offices slid by 66.39% to PHP 14.7 billion.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said in a Viber message that the wider surplus in October is mainly caused by the sharp decline in government spending.

“Since public spending issues became a hot topic, the government became very cautious to avoid backlash, thus spending went down significantly,” he said.

However, he noted that revenues also declined due to slower economic activity and less tax filings.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the budget surplus to the government’s lower disbursement in implementation of anti-corruption measures.

The wider surplus could also signal more disciplined spending, Mr. Ricafort said in a Viber message.

Mr. Erece also noted that a surplus is not necessarily a positive sign and may signal poor budget efficiency.

“Surpluses mean that there are still cash or resources that can be used to further drive growth,” he said.

10-month deficit

For the first 10 months, the NG budget deficit sharply widened to PHP 1.11 trillion from the PHP 963.9-billion gap in the same period last year.

“The 10-month fiscal gap was underpinned by a 1.13% growth in revenues, amidst the non-recurrence of last year’s extraordinary nontax receipts, matched with a modest 3.9% expansion in expenditures,” the BTr said.

The Treasury said the end-October fiscal gap showed the “government’s continued implementation of priority programs and projects to accelerate inclusive economic growth and drive meaningful social transformation.”

“The year-to-date deficit remains in line with the government’s fiscal consolidation goal at 70.83% of the FY 2025 revised full-year target of P1.56 trillion,” BTr said.

State spending rose by 3.9% to PHP 4.91 trillion in the January-to-October period. This was already 80.8% of the PHP 6.08-trillion revised full-year expenditure program.

Primary expenditures rose by 2.45% to PHP 4.19 trillion as of end-October, while interest payments went up by 13.24% to PHP 723.2 billion.

“The minimal growth in primary expenditures was affected by the contraction in infrastructure spending amid the ongoing probe on the DPWH’s flood control issues and review of project implementation,” it said.

Meanwhile, total revenue collection during the January-to-October period slipped by 1.13% to PHP 3.81 trillion. The BTr said the cumulative collection was 84.25% of the PHP 4.52-trillion revised full-year program.

Tax revenues rose by 7.45% to PHP 3.47 trillion, which was already 82.28% of the PHP 4.21-trillion target.

BIR collections went up by 7.45% to PHP 3.47 trillion, accounting for 82.35% of the agency’s PHP 3.22-trillion full-year target.

Customs collection inched up by 0.91% to PHP 784.6 billion as of end-October. This was 81.84% of the revised PHP 958.7-billion program for the year.

Nontax revenues plunged by 36.71% to PHP 341.3 billion for the first ten months of the year, even as it has already exceeded the PHP 301.5-billion full-year nontax revenue program by 11.37%.

Treasury income slipped by 6.75% to PHP 209.6 billion as of end-October, while other offices’ income slumped by 58.12% to PHP 131.7 billion.

In the coming months, Mr. Ricafort said there is still a “good chance” that the NG could hit the PHP 1.56-trillion budget deficit ceiling by yearend.

“(This) could be made possible by further fiscal reform measures, tax reform measures, especially anti-corruption measures/reforms to increase the structural source of National Government revenues and to prevent corruption, wastage, leakages on the government expenditure side, as part of the overall priority on governance reforms,” he said. — Aubrey Rose A. Inosante, Reporter

The Department of Agriculture (DA) said it has ordered importers to explain the slow arrival of red onion shipments, warning that unused import permits will be canceled and reallocated as retail prices climbed above PHP 300 per kilo ahead of the holiday season.

The Bureau of Plant Industry (BPI) is reviewing the utilization of Sanitary and Phytosanitary Import Clearances (SPSICs) after data showed that permits for red onions are being used at a much slower pace than those for yellow onions, despite significantly higher demand for the red variety, the DA said.

“We want to know the status of those import permits — if they plan to use them. If not, we will cancel the permits and award them to other importers to ensure sufficient domestic supply, especially at this time of year,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. was quoted as saying in a statement.

The DA earlier issued SPSICs for up to 69,040 metric tons (MT) of red onions and 42,261 MT of yellow onions.

As of Nov. 20, importers have only used 192 of the 1,202 SPSICs issued for red onions, bringing in 12,824 MT since September.

According to the DA, the slow utilization of permits for red onions comes amid higher demand, with monthly consumption estimated at around 17,000 MT.

The DA said vegetable vendors have reported tight supply in markets, with red onion prices surging past P300 per kilo.

Mr. Laurel said import permits that are not being used will be canceled and reassigned to other importers, including the state-run Food Terminal, Inc., to speed up onion importation and help ease supply pressures.

Sought for comment, Danilo V. Fausto, president of the Philippine Chamber of Agriculture and Food, Inc., said that while onion prices normally increase as the holiday season approaches due to tight supply, importers may also be deliberately delaying shipments.

“I think traders are trying to leverage for good prices, but I think they can do this only up to December. Shortage of supply could be deliberate to bring up prices,” he told BusinessWorld via Viber.

He added that some cold storage facilities still hold imported and local onions and will only release them starting next week.

According to the DA, all SPSICs must be used by Jan. 15, 2026, a deadline set to prevent importers from hoarding clearances to influence supply and prices.

The schedule is also designed to ensure that arrivals of imported onions do not overlap with the domestic harvest, which could depress farmgate prices and hurt local farmers. — Vonn Andrei E. Villamiel

Top Philippine business leaders said investor confidence could still recover despite the drag from a multibillion-peso flood control corruption scandal but stressed that the government should restore credibility and provide a clearer policy direction to sustain investment momentum.

“At times like this, what matters most for markets and businesses is not the noise around us, but the strength of our institutions and the steadiness of our long-term fundamentals,” SM Investments Corp. Chairman Amando M. Tetangco, Jr. said in his keynote address at BusinessWorld Forecast 2026.

Mr. Tetangco, a former Bangko Sentral ng Pilipinas governor, said the graft scandal, which has eroded sentiment and contributed to slower growth and weaker household spending, should be confronted with fairness and transparency.

“In this environment, investors and consumers look for clarity — clarity of direction, policy consistency and disciplined execution,” he said. “Credibility is the foundation of trust, and trust is the foundation of confidence.”

He added that the country’s institutions remain stable and that the Philippines’ macroeconomic strengths continue to “prevail over instability.” Filipinos’ resilience, he said, has been a consistent source of stability through past economic cycles.

Mr. Tetangco said strengthening the Philippines’ appeal as an investment destination would require lowering power costs, diversifying the energy mix, improving predictability in the permitting process and upgrading ports and logistics.

Despite softer third-quarter growth and a series of downgraded forecasts from multilateral institutions, he described the 2026 outlook as “constructive.” He said expansion would be supported by firm domestic consumption, public infrastructure spending and a gradual pickup in private capital expenditure as borrowing costs ease.

BDO Capital & Investment Corp. President Eduardo V. Francisco said executives remain committed to investing in the Philippines even as they wait for stronger government action.

“We have to continue to invest,” he told the BusinessWorld forum. “We have to continue to consume because there’s really a slowdown in government investments… That way, the government will see the need to build the infrastructure to support it.”

Mr. Francisco said his confidence is steadily improving, adding that sustained private sector activity is key to reinforcing the growth momentum amid lingering uncertainty.

“From the micro side, from the bank side, low growth is still there,” he said. “It’s slowed down a bit, but it’s strong… People are going to the malls, sales are improving. It’s going to be a better Christmas for everyone.”

Andrew Jeffries, Asian Development Bank (ADB) country director for the Philippines, said the economy is likely to expand faster in 2026, driven in part by a rebound in public infrastructure spending, though the timing and pace of recovery remain uncertain.

“It’s more of a factor of internal events and actions and proactive positive change rather than external events that could propel that even toward higher growth or stay around that area,” he told the forum, citing the resilience of Filipino households and the “very promising” underlying fundamentals of the economy.

He added that the ADB would continue to engage with the Philippine government, extending technical and financial support to projects while emphasizing strong oversight, adherence to procedural procurement standards and audited project-level financial statements.

Private sector leaders echoed the view that recovery is possible, “as long as we’re united and we stand on common values and principles,” Divina Law founder and Managing Partner Nilo T. Divina said.

‘Sinister form of disruption’

Metrobank Chief Economist Nicholas Antonio T. Mapa said that sustained growth would require policy discipline.

“Once again, always go back to the fundamentals,” he told the forum. “Go back to the basics. We’re going to find our stride again, and we’re bound to get back in the economic boom phase.”

“Growth goes to 6% assuming this is next year or the year after,” he added, urging the government to maintain price stability and an appropriate monetary policy stance.

The Philippine economy expanded 5% in the first nine months after a slowdown in the third quarter. Executive Secretary and former Finance Secretary Ralph G. Recto had signaled that the country would likely miss its 5.5-6.5% growth target for the year, citing bad weather and a drag on government spending linked to the flood control probe.

Business leaders highlighted the broader economic risks posed by corruption, beyond the immediate fiscal impact.

Miguel G. Belmonte, president and chief executive officer at BusinessWorld Publishing Corp., said companies face a “sinister form of disruption” that, compounded by political volatility, has weakened the peso, dragged down the stock market and eroded business confidence.

“The embezzlement of public funds cannot be tolerated any longer,” he told the forum. “Transparency is an economic necessity because investors respond to clarity and trustworthy leadership.”

He added that rebuilding confidence would require technological or institutional reform. “Outside of our own corruption crisis, which trumps all other disruptions in shock value, the global environment continues to shift in ways none of us can fully predict.”

Meanwhile, Finance Assistant Secretary Neil Adrian S. Cabiles said the government is taking steps to mitigate risks to growth. Measures include a spending catch-up plan, governance reforms, labor market adaptation programs and enhanced disaster risk management.

“We will still see that the Philippines really has very sound economic fundamentals,” he said. “The Philippines still has promising trajectory, except that it has the issues we have right now.” — Aubrey Rose A. Inosante, Reporter

The Philippines’ semiconductor and electronics sector is poised for a modest rebound next year, with exports projected to rise 5% as demand for advanced technologies continues to climb, the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) said.

Danilo C. Lachica, SEIPI president, said growth would be driven by emerging tech, including artificial intelligence (AI), electric vehicles, the internet of things and data centers.

“It will be driven by the usual driver — advanced technologies. It’s the demand for chips for these applications,” he told BusinessWorld Forecast 2026 on Tuesday.

The outlook reflects a revision for 2025, with exports now expected to expand 5% to 7% from earlier projections of flat growth.

Electronics exports reached USD 36.32 billion in the first nine months, contributing about 58% of the country’s total commodity exports. “We’re probably going to grow at a modest 5-7%, which will bring us to about USD 45 [billion] to USD 47 billion of exports,” Mr. Lachica said.

SEIPI’s earlier conservative forecast accounted for potential disruptions from US reciprocal tariffs, but the zero-percent tariff on key electronic components has largely preserved competitiveness. “We were hedging our bets, but not much has happened,” he said in mixed English and Filipino.

Top export destinations remain Hong Kong, the US, China, Japan and Taiwan. Mr. Lachica noted that Hong Kong functions as a hub for exports destined for North America, Europe and other regions.

While the sector’s momentum remains strong, growth is vulnerable to policy shifts in the US. If the US removes the exemptions currently under challenge at the Supreme Court, it could impact SEIPI’s 5% projection for next year, he said.

Beyond export projections, SEIPI is pressing for greater recognition of the semiconductor and electronics sector in national and regional economic agendas.

Mr. Lachica expressed concern that the Philippines’ chairmanship of the Association of Southeast Asian Nations (ASEAN) in 2026 has so far omitted the industry from priority economic drivers.

“Surprisingly, the first draft I saw did not include semiconductor electronics, albeit being the biggest export value generator,” he pointed out.

He said attracting foreign investment requires not just policy focus but proof of a supportive ecosystem.

“The ecosystem has to be developed. You have to show first that you’re worthy of the investment. Without the proof of concept, without the ecosystem, it’s wishful thinking,” he said, highlighting the need for infrastructure, supply-chain capabilities and skilled talent.

Mr. Lachica called for “drastic changes” to ensure the Philippines retains its competitive position in the global semiconductor market. Inclusion in ASEAN’s agenda, he said, would provide an opportunity to present a coherent national strategy and showcase the country’s readiness to investors. — Justine Irish D. Tabile, Reporter

The Philippines’ digital economy is set to hit USD 36 billion in gross merchandise value (GMV) this year, supported by rapid adoption of e-commerce, transport and delivery services, digital finance and artificial intelligence (AI), according to a report by Google, Temasek Holdings and Bain & Company.

“The Philippines is a digital powerhouse, sustaining its double-digit growth and firmly on track to hit USD 36 billion in GMV by 2025,” Google Philippines Country Manager Prep B. Palacios told a news briefing on Tuesday.

“This momentum is not a temporary spike; it’s a sustained, systemic transformation, a convergence of innovative platforms, a tech-positive regulatory environment and our uniquely AI-curious Filipino consumers with real spending power,” he added.

The report projected that the country’s overall digital economy could reach USD 70 billion to USD 140 billion in GMV by 2030, slightly lower than last year’s forecast of USD 80 billion to USD 150 billion.

E-commerce alone is expected to contribute USD 50 billion, while transport and food services could hit USD 7 billion, online travel USD 8 billion and online media another USD 8 billion by the end of the decade.

Digital payments will remain a key growth driver, with digital financial services projected to expand to USD 200 billion to USD 300 billion in gross transaction value (GTV) by 2030, according to the report. Across Southeast Asia, the digital economy is expected to surpass USD 300 billion in GMV by the end of the decade, fueled by continued digital adoption and monetization strategies.

Charles Benedict Aquino, a partner at Bain, highlighted the resilience of the Filipino market. “The Philippines has shown itself to be resilient, that is the key message we are really seeing,” he told the briefing.

This year, the country’s e-commerce sector is expected to reach USD 24 billion, up 20% from last year. Online travel is projected to grow 33% to USD 4 billion, while online media will hit USD 5 billion and transport and food services USD 4 billion.

Ronald B. Gustilo, national campaigner for Digital Pinoys, said strong performance across these sectors reflects growing trust in digital platforms among both consumers and businesses.

“The Philippines’ digital economy continues to expand, driven by strong growth in e-commerce, transport and delivery services, and the rapid adoption of digital financial tools,” he said in a Viber message. –

Experts noted that the growth potential remains particularly strong in rural and underserved areas as mobile and data connectivity improves. “Logistics will be a requirement and also a growing business,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said via Viber.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said infrastructure gaps, cyberthreats, uneven logistics, regulatory uncertainty and low digital literacy among small businesses could slow digital adoption.

“Overall, growth prospects remain strong, but the digital ecosystem needs better safeguards, faster infrastructure rollout and more support for small businesses to fully realize its potential,” he said.

Cybersecurity was flagged as a pressing concern. Mr. Gustilo warned that phishing and AI-enabled scams could undermine consumer confidence and slow adoption, urging both the government and industry to treat cybersecurity as critical infrastructure.

“Protecting Filipinos online is essential if we want the country’s digital economy to reach its full potential,” he added.

The Department of Information and Communications Technology (DICT) seeks to increase the digital economy’s share of the economy to 12.5% by 2028, fast-tracking digital infrastructure projects and attracting hyperscalers to operate in the country. Data center capacity is projected to reach 1.5 gigawatts by 2028, supported by both foreign and domestic operators.

The digital economy contributed 8.5% of GDP in 2024, little changed from 8.6% in 2023, though it remains below the 2021 peak of 9.2%. Bain’s Mr. Aquino noted that expansion of the digital economy depends in part on continued growth in data center capacity and robust digital infrastructure rollout. — Ashley Erika O. Jose, Reporter

PANGLAO, Bohol — The Bangko Sentral ng Pilipinas (BSP) said it plans to continue setting a range for its inflation target amid potential risks of having a precise goal.

“So, as you know, our current target is 3% plus or minus 1%. Our recent inflation rates are actually even below that range, doing 1.7%…” BSP Governor Eli M. Remolona, Jr. said at a press briefing after a central banking symposium held here on Monday. “I think this is consistent with Governor Sethaput’s advice that we shouldn’t focus too much on the precise number.”

This, after former Bank of Thailand Governor Sethaput Suthiwartnarueput said during the symposium that central banks should have a more flexible inflation targeting framework.

“I would argue that we need to make that inflation targeting framework even more flexible,” Mr. Suthiwartnarueput said. “And why is that? Again, I think given the challenges that we face, we’re likely to face larger and longer deviations from inflation targeting.”

“And so the idea of trying to use very specific numerical targets, I think, is quite uncomfortable,” he added.

Earlier this year, Mr. Remolona said the BSP was eyeing to set a point target for inflation to mirror inflation targeting frameworks of foreign central banks such as the US Federal Reserve.

Currently, the BSP targets full-year headline inflation to settle between 2% to 4%.

“I think we would follow (Mr. Suthiwartnarueput’s) advice and not be too concerned about the precise numerical number,” Mr. Remolona said.

He also noted that the central banks’ inflation expectations are “more or less anchored.”

However, he added that they are developing a mechanism to precisely measure the degree of anchoring.

RRR cut

Meanwhile, the BSP chief said it could trim large banks’ reserve requirement ratio (RRR) but it is not rushing to do so.

“I would say it’s on the table but there’s no urgency in adjusting it,” he said.

Mr. Remolona noted that the current 5% RRR is “pretty low” but any further easing would depend on whether the BSP could successfully manage liquidity in the market.

He added that he is unsure when they would deliver an RRR cut, adding that it would depend on the Monetary Board.

The Monetary Board last reduced universal and commercial banks and non-bank financial institutions with quasi-banking functions’ RRR by 200 bps to 5% on Feb. 21, which took effect in the week of March 28.

It likewise reduced digital banks’ by 150 bps to 2.5%, while thrift banks’ RRR was lowered by 100 bps to 0%. — Katherine K. Chan