BSP eyes rules for digital marketplace activities of banks

The Bangko Sentral ng Pilipinas (BSP) is looking to issue guidelines for banks’ and electronic money issuers’ (EMIs) digital marketplace activities, allowing them to offer their own products as well as those from third-party providers via a single platform to better meet customers’ needs.

The draft rules allow institutions to offer both financial and nonfinancial products and services via a digital marketplace or other online distribution platforms but prohibit them from presenting offerings associated with gambling activities, such as online casinos or online betting.

The proposed guidelines aim to ensure that financial firms that want to offer their products and services via digital marketplace platforms have the governance and risk management capabilities to do so, the central bank said in a draft circular posted on its website.

“The Bangko Sentral recognizes the emergence of new business models and arrangements that will further drive innovation and financial inclusion, as well as promote customer centricity. To remain competitive, it is important for BSP-supervised financial institutions (BSFIs) to forge strategic and meaningful ecosystem partnerships with product/service providers which leverage digital distribution platforms or channels. Through these ecosystem partnerships, customers are provided with a broad selection of financial and nonfinancial products and services through the banks/EMIs’ digital marketplace which will create a more tailored and holistic customer experience that cater to their needs and expectations,” it said.

“In this light, the Bangko Sentral supports the adoption of digital marketplace model by banks and electronic money issuers. Underpinning the adoption of a digital marketplace model is sound governance, risk management and consumer protection systems, including an effective, consent-driven information sharing arrangement to ensure that attendant risks are adequately managed, and consumer interests are protected.”

The BSP said a digital marketplace model will allow banks and EMIs to offer their own core products and services along with those of third-party providers via a single platform to meet “evolving” customer demands.

“By presenting third-party products/services in their digital platforms, banks and EMIs remain focused on their core business, while at the same time, provide broader suite of related products and services for a more tailored and holistic customer experience, and build greater consumer trust,” it said.

Under the draft rules, the activities in a digital marketplace operated by a bank or EMI shall be limited to the offering of its own products and services and the presentation or display of the products and services of product or service providers (PSP) that are not supervised by the BSP.

“The marketplace may facilitate the customer’s comparison and selection from a range of products and services from different PSPs that best meet customer needs, as well as the application for and/or approval of selected products or services.”

The marketplace operator may also perform additional functions like preliminary screening or underwriting and credit risk assessment. It may also act as an intermediary to facilitate payments and transactions, including integrating or connecting third-party systems to the marketplace to allow purchases, subscriptions, order taking, or request processing, through the marketplace.

The products and services that can be offered in a digital marketplace include retail deposit products, retail loan products, business loan products, plain vanilla debt and equity securities, e-money or payment cards, and retail insurance products, among others.

Operators may also offer non-financial products or services created or distributed by an accredited PSP that complement their business models or strategies.

“Products and services that are associated with gambling activities (e.g., online casinos, online betting, electronic gaming, or other forms of gambling/gaming), or any activities that could undermine the reputation of the marketplace participants and the financial system, are prohibited to be offered or presented in the marketplace,” the central bank said.

A bank or EMI must get BSP approval to become a digital marketplace operator. Processing fees range from P10,000 to P50,000 depending on the type of firm, while licensing fees are from P50,000 to P200,000.

Banks or EMIs looking to operate digital marketplaces must meet the BSP’s prudential criteria, have a net worth or combined capital of at least P1 billion and have “adequate” risk management systems related to information technology (IT), cybersecurity, anti-money laundering/countering terrorism and proliferation financing, data privacy, consumer protection and market conduct, among others.

They must also have an advanced electronic payments and financial services license.

“A bank or EMI granted with authority to engage as marketplace operator shall continuously comply with the qualification requirements even after the authority has been granted. Any deviation or noncompliance may be a basis for the imposition of appropriate enforcement actions, including revocation of authority to engage as marketplace operator,” the BSP added.

Meanwhile, the proposed rules also include guidelines on BSFIs that will act as product or service providers in a digital marketplace or other digital distribution platform operated or owned by another bank, EMI, or entities not supervised by the BSP.

The central bank said BSFIs with a Supervisory Assessment Framework (SAFr) rating of at least “3” are allowed to present or distribute products or services in a digital marketplace or other digital distribution platform without prior BSP approval and notification.

Those with SAFr ratings below “3” or those that will engage a marketplace operator not supervised by the Bangko Sentral must comply with the necessary notification requirements, it said.

BSFIs must conduct due diligence prior to entering into an arrangement with a digital marketplace or other distribution platform operated by third parties, the BSP said. These arrangements must be supported by a contract or service level agreement that covers the scope of work or services, fee structure, responsibilities of both parties, data governance, business continuity plans, and asset recovery, among others.

“The marketplace participants shall ensure that appropriate products or services are offered and/or recommended in the marketplace considering the needs, goals, and financial capabilities of consumers,” the BSP added.

It also mandates that marketplace participants must adhere to the applicable laws, rules and regulations on consumer protection.

“Marketplace participants shall establish an effective complaint handling and redress mechanism to ensure that any complaints that may arise from digital marketplace activities are resolved in a fair, timely and efficient manner,” the central bank said.

The draft also includes guidelines on product bundling, cooling-off policy, data governance and consent management, among others.

Marketplace participants of existing digital platforms must comply with the BSP’s requirements within a year from the effectivity of the circular once it is approved. — Luisa Maria Jacinta C. Jocson

Peso may weaken vs dollar on RRR announcement

The peso may weaken against the dollar this week after the Bangko Sentral ng Pilipinas (BSP) said it will bring down banks’ reserve requirement ratios (RRR) by March.

The local unit closed unchanged at PHP 57.94 per dollar on Friday, Bankers Association of the Philippines data showed.

Week on week, the peso weakened by 11 centavos from its PHP 57.83 finish on Feb. 14.

The dollar was generally weaker early on Friday after US President Donald J. Trump hinted at a possible trade deal with China. Rizal Commercial Banking Corp. Michael L. Ricafort said in a Viber message. The greenback eventually rebounded later in the session.

The peso was initially stronger against the dollar on Friday following Mr. Trump’s comments on China, a trader likewise said, but weakened after the BSP’s announcement of the RRR cuts.

“For [this] week, we may see some spillover peso weakness following the RRR cut announcement, on trade developments, and if the US Federal Reserve continues to send out hawkish signals,” the trader said in a phone interview.

The trader said the peso could move between PHP 57.80 and PHP 58.30 against the dollar this week, while Mr. Ricafort sees it ranging from PHP 57.70 to PHP 58.20.

The BSP on Friday said it will reduce the reserve requirement ratios for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 200 basis points (bps) to 5% from 7% effective March 28.

The RRR for digital banks will be cut by 150 bps to 2.5%, while that for thrift banks will be slashed by 100 bps to 0%.

The central bank last cut banks’ reserve ratios in October 2024.

“The BSP reiterates its long-run goal of enabling banks to channel their funds more effectively toward productive loans and investments. Reducing RRRs will lessen frictions that hinder financial intermediation,” it said.

Meanwhile, the US dollar rose against a broad range of currencies on Friday, partly retracing losses versus the yen as investors consolidated positions ahead of the weekend, looked to more inflation data next week, and kept an eye on tariff headlines, Reuters reported.

In late morning trading, the dollar was last flat on the day against the yen at 149.58 yen. It has fallen in five of the last six weeks, and was down 1.8% on the week.

Also weighing on the dollar was the more-than-expected drop in the US consumer sentiment index to a 15-month low. At the same time, inflation expectations surged as households worried about Mr. Trump’s steep and broad-based tariffs and their impact on their purchasing power.

The dollar index was last up 0.3% at 106.68.

Mr. Trump last week unveiled plans for tariffs on lumber imports, but also said a new trade deal with China was possible. — A.M.C. Sy with Reuters

Stocks end lower on tariff threats, Fed minutes

Philippine shares closed lower on Thursday due to concerns over US President Donald J. Trump’s latest round of tariff threats and the Federal Reserve’s policy easing path.

The Philippine Stock Exchange index declined by 0.87% or 53.25 points to close at 6,066.63 on Thursday, while the broader all shares index inched down by 0.09% or 3.38 points to 3,671.62.

“The local market joined its regional peers in their decline as investors dealt with US President Donald Trump’s latest tariff threats on auto, semiconductor, and pharmaceutical imports,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also digested the Fed’s latest minutes of the meeting wherein they expressed concerns over the new US government’s trade and immigration policies and their effect on US inflation.”

“Philippines shares fell below 6,100 once again as the market took cues from a cautious Federal Reserve and President Trump’s threat of a 25% tariff on imported autos, semiconductors, and pharmaceuticals,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said in a Viber message.

Global stocks treaded with caution on Thursday, with Asian shares feeling the heat as Mr. Trump’s tariff plans, geopolitical worries and a cautious stance from Federal Reserve policymakers hurt risk sentiment, Reuters reported.

Mr. Trump through the week has vowed tariffs on wide-ranging imports including pharmaceutical products, semiconductor chips and lumber. He intends to impose tariffs on autos as soon as April 2.

In Asia, Japan’s Nikkei slid 1.5% on the strong yen, while a blistering rally in Chinese technology shares took a breather. Hong Kong’s Hang Seng Index slipped 1.3%, having touched a four-month high earlier this week.

Mr. Trump’s initial policy proposals raised concern at the Fed about higher inflation, with firms telling the US central bank they generally expected to raise prices to pass along the cost of import tariffs, according to the Fed’s January meeting minutes released on Wednesday.

Traders are pricing in 39 basis points of cuts this year from the Fed with the next move fully priced in for September, LSEG data showed.

Back home, almost all sectoral indices ended lower on Thursday. Property declined by 2.56% or 57.83 points to 2,199.49; holding firms went down by 1.25% or 64.18 points to 5,062.47; industrials decreased by 0.78% or 69.48 points to 8,785.45; mining and oil shed 0.52% or 43.54 points to close at 8,272.33; and services retreated by 0.44% or 8.91 points to 1,974.56.

Meanwhile, financials rose by 0.57% or 13.07 points to 2,272.93.

Value turnover went up to PHP 5.72 billion on Thursday with 1.2 billion shares exchanged from the PHP 5.18 billion with 1.41 billion issues traded on Wednesday.

Decliners outnumbered advancers, 113 versus 74, while 58 names were unchanged.

Net foreign selling went up to PHP 601.30 million on Thursday from PHP 515.39 million on Wednesday. — R.M.D. Ochave with Reuters

Inflation still top risk to Philippine growth

A reacceleration of inflation is still the biggest headwind to the Philippines’ economic outlook this year, which may pose a risk to the central bank’s easing cycle, a Moody’s Analytics economist said.

“The acceleration in inflation is the biggest risk for the Philippine economy and these are coming from both domestic and external factors,” Moody’s Analytics economist Sarah Tan said in an interview on Money Talks with Cathy Yang on One News on Wednesday.

“Domestically, I think the risk is that food inflation remains elevated due to frequent weather disruptions that could hurt domestic supply,” she said.

In January, inflation remained steady at 2.9% although food inflation alone accelerated to 4% from 3.5% in December.

Several storms hit the country late last year, which resulted in billions of pesos worth of agricultural damage.

“Externally, I think we worry that the tariffs imposed by the US could cause global inflation to rise due to the disruptions to supply-chain networks,” Ms. Tan said.

However, she said that the impact of the US President Donald J. Trump’s restrictive trade policies on the Philippines will likely be minimal.

“If we take a step back and look at the trade relationship between the Philippines and the US, it is quite clear that the Philippines’ trade deficit with the US is rather small, especially when you compare that with other economies, be it globally or with ASEAN (Association of Southeast Asian Nations) economies.”

“That really means that the Philippines is unlikely to be high on President Trump’s list,” she added.

Since taking office in January, Mr. Trump has already slapped a 10% tariff on Chinese goods as well as duties on all steel and aluminum imports beginning March.

On the other hand, Mr. Trump’s plan to impose reciprocal tariffs on all countries that charge duties on US imports may have a more significant impact on the Philippines.

“If there’s a universal reciprocal tariff that’s going to be imposed by the US, then that will hurt the Philippines because the duties that are levied on US imports into the Philippines is higher than the other way around,” she said.

“If there is a matching of tariffs, then that will make Philippine goods to the US more costly and less competitive, which will ultimately hurt our Filipino manufacturers and exporters.”

The US is typically the top destination for Philippine-made goods. In 2024, exports to the US were valued at USD 12.12 billion or 16.6% of total export sales.

“I believe the impact on the Philippines is rather small given the low trade exposure with the US. That said, there are indirect channels of impact on the Philippines,” Ms. Tan added.

Risks to easing

Inflationary pressures from these risks could prompt the Bangko Sentral ng Pilipinas (BSP) to be more cautious about further easing, Ms. Tan said.

“If we have inflation accelerating again beyond the BSP’s target, that could delay the timing and magnitude of a potential policy easing in the Philippines,” she said.

“If that is the case, then the combination of borrowing costs and inflation staying higher for longer will be a recipe for further weakening in private consumption which is not great for the economy, given how it’s the main driver of growth.”

The BSP surprised markets after it left the benchmark unchanged at 5.75% at its Feb. 13 meeting. This after the central bank cut rates at three straight meetings since it began its easing cycle in August.

Ms. Tan was the only economist in a BusinessWorld poll of 20 analysts that correctly predicted the hold.

“It is a balancing act that the BSP has played. They have to balance both inflationary risks as well as the strength of the peso.”

“But that said, we don’t expect the pause to be felt very long. In fact, the next rate cut could come as early as in April, which is the next time the Monetary Board will meet,” she added.

Despite the pause, BSP Governor Eli M. Remolona, Jr. has said that a rate cut is still on the table at the Monetary Board’s next rate-setting meeting on April 3.

He also said the central bank is still on an easing path, signaling the possibility of up to 50 basis points (bps) worth of cuts this year.

“With inflation now largely back on target, and GDP (gross domestic product) growth still slightly below the government’s expectations, these will prompt the next rate cut sooner rather than later,” Ms. Tan added.

The Philippines’ GDP expanded by a slower-than-anticipated 5.2% in the fourth quarter. This brought full-year 2024 growth to 5.6%, short of the government’s 6-6.5% target.

Meanwhile, Ms. Tan said the upcoming midterm elections in May could provide a boost to spending.

“In general, elections, whether it’s national or midterm, they have to give a boost to the economy, especially through the consumption channel.”

“So, we will see spending on campaign-related goods and services increase. But at the same time, you know, all that increase in demand could also signal bad news for inflation,” she added. — Luisa Maria Jacinta C. Jocson

Agri dep’t finalizing pork-imports quota

The Department of Agriculture (DA) is finalizing the minimum access volume (MAV) quota for pork imports this month amid pressure from meat importers and traders.

“The general direction for MAV will be 55,000 metric tons (MT), although not yet finalized,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said on the sidelines of an event in Valenzuela City.

Of the 55,000 MT, Mr. Laurel said 30,000 MT will be allocated for meat processors and 10,000 MT will be “equally distributed” among traders.

The DA will be given an allocation of 15,000 MT to address any potential spike in pork prices.

Under Executive Order No. 50, pork tariffs are at 15% for shipments within the MAV and 25% for those exceeding the quota.

Meat traders have been calling on the DA to issue the MAV allocation for 2025 as soon as possible to avoid supply disruptions. They claimed that the MAV quotas should have been released in the first week of January.

In a Viber message to BusinessWorld, Meat Importers and Traders Association (MITA) President Jess C. Cham said the DA is tweaking the MAV guidelines to favor processors over traders, a move that the group called a “2-class distinction.”

“It is unfair and unjust to licensees who are not processors,” he said.

“They have acquired quota legally and fairly following the MAV guidelines. Other sectors will be deprived of affordable pork and rendered uncompetitive.”

In a letter addressed to Mr. Laurel, the MITA expressed concern that the quotas for the MAV have not been distributed. The group noted that last year, the full pork quota was only released in September.

“We do not think the outcome was good for the consumers or the economy,” it said.

MITA also opposed a proposed amendment to the guidelines that only processors would be eligible to file an application either as a regular licensee or entrant.

Under the amendment, public and private entities may also qualify to secure license for the purpose of participating in the government’s food security programs.

The existing guidelines state there are only “licensees” and new entrants, and the only way to retain and acquire quota is by the licensees’ utilization or performance.

“The reemergence of ‘class distinctions’ is obviously contrary to existing guidelines and very problematic — classifying the licensees only as trader or processor,” MITA said.

“What about the producers and commercial food service providers? What are they entitled to?”

MITA noted that a two-class distinction is “very shallow and superficial.”

“After nearly three decades of MAV, the licensees have developed and established their unique characteristics. They are no longer confined to the four classes of the initial year. We now see the emergence of licensees with meat shops, meat cutting plants, cold storage facilities and logistics, serving across different trade channels and not merely confined to any solitary one,” it added.

MITA said licensees have acquired and retained quota in accordance with the guidelines.

“Hence any reallocation not in accordance with current guidelines is in fact an ‘appropriation’ and that is unfair and unjust,” it said, adding that the move will affect small processors who are unable to import and will render them uncompetitive against the larger establishments that have access to MAV.

“Some meat processors have also engaged in meat trading, while others have established meat trading companies. While MDM (mechanically deboned meat) is the major poultry item, there are ‘processors’ that currently import chicken meat that are used in food service,” MITA said.

“Will these processors be deprived of quota as well? How about rice, corn, sugar, and coffee? Or will this rule apply only to pork, making it a ‘special’ commodity?”

MITA said taking away MAV quotas from all licensees except processors will deprive direct consumers of affordable pork and poultry meat.

“Currently MAV pork and poultry are sold in wet markets, supermarkets, meat shops, restaurants, and canteens. They can easily be sold in the Kadiwa stores too.”

National Federation of Hog Farmers, Inc. (NatFed) Vice-Chairman Alfred Ng said Mr. Laurel’s MAV pronouncement was discussed during a meeting with stakeholders on Tuesday.

“Giving more to the processors is a prudent move because they are directly involved in the manufacturing of our processed meats,” he said in a Viber message.

“Before, more was taken by the traders who enjoyed the much lower tariffs with not much risks unlike processors who have facility and machine investments,” he added.

British Chamber of Commerce of the Philippines Executive Director Chris Nelson welcomed the expected issuance of the MAV allocation.

“But what I would say is we want to see a smooth issuing. We would want that the MAV be issued as before, and that we have supply coming to the country,” he said in a Viber call.

He said the original system has benefited both the United Kingdom and the Philippines.

The Philippines is still the United Kingdom’s second-largest export market for pork.

Pork prices have surged in the country, prompting the DA to consider the imposition of a maximum suggested retail price (MSRP) for the commodity.

The DA has said the reasonable price for pork is P380 per kilo, given that the farmgate price is at P250 plus a profit margin of P100.

Mr. Laurel said the DA is eyeing to buy pork from producers and to sell the commodity directly to retailers to avoid any “layering.”

The government “will be forced to intervene” if pork prices remain high, he noted.

“I am skeptical about DA directly engaging in the sale of pork to lower prices,” Federation of Free Farmers National Director Raul Q. Montemayor said in a Viber message.

He noted DA’s role is to ensure that the market runs smoothly and is not distorted by profiteers and price manipulators.

“They have powers under the Price Act and the Anti-Economic Sabotage Law to run after these criminals,” he said. “If there is excessive layering, why not find a way to reduce these layers without having to buy and sell pork directly?” — K.A.T. Atienza

Developers struggle to adjust condo prices as costs remain high — Cushman

Property developers in Metro Manila are unable to adjust condominium prices as inflation and supply chain issues keep costs high, according to real estate services firm Cushman & Wakefield.

“Developers are grappling with increased input costs due to persistent global inflation and supply chain issues, exacerbated by geopolitical tensions. These factors hinder their ability to adjust prices quickly, leading to slower sales and impacting revenues,” Claro dG. Cordero, Jr., director and head of research, said in a statement on Tuesday.

The mid-end segment faces a supply-demand mismatch, mainly driven by elevated condominium prices. Buyers also prefer larger units, while available studio types are often less than 25 square meters (sq.m).

Condominium prices dropped by 9.4% year on year, reversing the 8.3% increase recorded last year and the 10.6% rise in the previous quarter, according to the latest data from the Philippine central bank.

“Until a balance is achieved between buyers’ expectations and developers’ pricing, excess inventory in the mid-end residential condominium sector will persist,” Mr. Cordero said.

The Metro Manila market has a total supply of 450,000 mid- and high-end condominium units, with around 8% remaining unsold.

Before the pandemic, the annual average completion rate for residential condominiums was 35,000 units. Over the past five years, it has declined to 25,000 units.

Outside Metro Manila, unsold inventory is lower at 5%, with about 250,000 completed units.

Dominant locations include Metro Cebu at 54%, followed by the Cavite-Laguna-Batangas corridor (24%), Metro Davao (13%), and Metro Iloilo (3%).

In the Metro Manila office market, vacancy rates are expected to stabilize at around 17–18% in 2025, Cushman & Wakefield said.

“Despite the return of office space from POGO (Philippine offshore gaming operators) companies, absorption rates have improved from pandemic lows but remain influenced by flexible work trends and corporate policies. On the other hand, some companies mandating a return to the office are positively impacting demand growth,” it said.

In central business districts (CBDs), average office rentals have declined by 2.9% annually, while rental rates in non-CBDs fell by 4.2%.

“This trend reflects a continued flight to quality, with CBD office developments benefiting from their superior finishes, amenities, and tenant mix,” Cushman & Wakefield said.

It also noted the rise of office spaces in non-CBDs, with 2.9 million sq.m. added outside Makati and Bonifacio Global City in the past decade. This was driven by flexible work trends and developments outside CBDs.

For retail, the property consultant noted an increase in redevelopments of existing spaces, incorporating additional features to enhance the shopping experience. Mid-end and high-end shopping malls have an average annual supply of about 376,000 sq.m., Cushman & Wakefield reported.

In the hotel segment, Cushman & Wakefield cited uneven regional recovery due to the untapped potential of many tourist destinations. It expects 1,600 additional keys in the mid-end and higher-end hotel and serviced residence segments this year.

However, it may take five years to reach the projected 70,000 keys due to construction delays.

Meanwhile, Cushman & Wakefield highlighted rising demand in the logistics and industrial sub-sector, driven by the growth of the digital economy.

However, it emphasized the need to improve the quality of logistics facilities to meet the demands of new occupiers. Challenges in the sector include achieving sustainability targets, clarifying restrictions related to data privacy laws, and addressing the high costs, availability, and viability of support utilities.

“Across all key Philippine real estate sub-sectors, the increased demand for higher-quality, well-located, and resilient developments is significantly shaping the future real estate landscape,” Mr. Cordero said. “Investors and tenants prioritize properties in prime locations with superior amenities and robust infrastructure.” — Beatriz Marie D. Cruz

New incentives for carmakers eyed

The Philippine government is finalizing an incentive program that seeks to encourage car companies to boost manufacturing operations in the country, according to the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA).

OSAPIEA chief Frederick D. Go said the government would soon introduce the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program.

“The previous administration came up with the Comprehensive Automotive Resurgence Strategy (CARS) program, and that’s already done, but we want to continue promoting the vehicle industry,” he told reporters on Monday.

Mr. Go said the RACE program would provide incentives to companies that will manufacture new car models in the country.

The program will be implemented by the Department of Trade and Industry (DTI), unlike CARS, which was established through an executive order.

“We designed RACE so that it is a department initiative,” Mr. Go said, noting that funds have been allotted for the program through the 2025 General Appropriations Act.

The RACE program has been allotted PHP 250 million under the DTI’s budget for locally funded projects.

Created through Executive Order No. 182 by then President Benigno S. Aquino III, the CARS program aimed to attract new investments in the automotive industry.

It provided three slots for car manufacturers, which were required to produce at least 200,000 units of an enrolled model to avail themselves of the incentives.

However, only two slots were filled — Toyota Motor Philippines Corp. (TMP), which produces the Vios sedan, and Mitsubishi Motors Philippines Corp. (MMPC), which manufactures the Mirage hatchback and Mirage G4 sedan.

Mr. Go hinted the RACE program could accept more than three participants.

“We learned from CARS… The (RACE) program is slightly different, but the intent is the same, that if you introduce more local components into the vehicle, then you can qualify for the (incentives),” he added.

With the new program in the works, TMP and MMPC are again expected to register new models through RACE.

“We have expressed to DTI our intention to register the Next Generation Tamaraw as an additional CARS model if supported by regulation (CARS extension), particularly in considering reasonable flexibility for new production models,” TMP said in a statement.

“In case the DTI creates a new CARS-like program instead of ex- tending the existing program, we will gladly take that opportunity to make the Tamaraw even more sustainable for us automotive manufacturers, as well as our part makers and even body builders,” it added.

TMP recently invested PHP 5.5 billion in its Laguna plant to ramp up vehicle production and in-house and outsourced parts localizations, as well as build a new conversion facility.

Meanwhile, Mitsubishi Motors Corp. (MMC), in a recent courtesy call to President Ferdinand R. Marcos, Jr., committed a PHP 7-billion investment in the Philippines for the next five years.

The investment plan is said to include a new production model at its plant in Laguna, according to the Presidential Communications Office (PCO). The PCO said MMC would take part in the RACE program.

Meanwhile, the Philippine Parts Maker Association, Inc. (PPMA) urged the government to create a conducive environment for car manufacturing and assembly so the Philippines could keep up with its neighbors in the Association of Southeast Asian Nations (ASEAN) region.

“The time for action is now. Without immediate intervention… the Philippines risks falling further behind its ASEAN competitors,” the group said in a statement on Monday.

“The urgency to adapt and evolve in the automotive sector cannot be overstated. More decisive measures are essential to foster a sustainable and competitive automotive industry in the Philippines,” it added.

Data from the ASEAN Automotive Federation showed that the Philippines produced 116,650 motor vehicles in the first 11 months of 2024, ranking fifth in terms of production volume among six ASEAN countries.

Thailand produced the most cars, totaling 1.36 million in the January-to-November period, followed by Indonesia (885,516), Malaysia (725,173), and Vietnam (157,115).

“Our industry is in peril. We must urgently adopt measures to revitalize our auto parts manufacturing capabilities, or we will continue to fall behind our ASEAN neighbors,” said PPMA President Ferdinand I. Raquelsantos.

“The DTI has a critical role in this scenario, fostering initiatives that cannot only sustain but also enhance the automotive parts manufacturing sector is imperative,” he added.

Previously, the PPMA said the government could support the industry by mandating a 30% local content requirement for vehicles assembled in the Philippines and giving incentives such as income tax holidays and duty exemption on raw materials.

It also proposed tax credits for exports, accelerated depreciation for machinery and enhanced research and development deductions. – Justine Irish D. Tabile, Reporter

Metro Manila commuters face higher LRT-1 fares

Commuters in Metro Manila will pay higher fares for the Light Rail Transit Line 1 (LRT-1) starting April 2 after the Department of Transportation (DoTr) approved a new fare matrix.

In a letter dated Feb. 14 but published on Tuesday, the DoTr said it had approved the petition of Light Rail Manila Corp. (LRMC) for adjustments in the LRT-1 fare matrix.

The letter was signed by Transportation Undersecretary for Railways Jeremy S. Regino.

Beginning April 2, the boarding fare will be raised to PHP 16.25 from PHP 13.29, while the distance per kilometer fare will be increased to PHP 1.47 from PHP 1.21.

Based on the approved fare matrix, the maximum fare for a single-journey end-to-end trip will increase by P10 to P55 from P45. This will cover the trip from FPJ Station (formerly Roosevelt) in Quezon City to Baclaran Station in Pasay City, including the last station of the Cavite extension Phase 1.

Meanwhile, stored value cardholders will pay PHP 9 more for the end-to-end trip, bringing the fare to PHP 52.

The approved rate is lower than LRMC’s proposal to raise the end-to-end-trip fare to PHP 60 for single-journey tickets and PHP 58 for stored value cards.

LRMC President and Chief Executive Officer Enrico R. Benipayo said the company is grateful for the approval of new fares.

“In the past 10 years of operating and maintaining the 40-year-old railway line, this will only be the second time that LRMC has been allowed to implement fare adjustments for LRT-1,” he said in a statement.

The private operator took over LRT-1 from Light Rail Transit Authority (LRTA) in 2015.

The company said the newly approved fare matrix, which is lower than its petition, is the same as its fare adjustment petition in 2022.

Under its concession agreement, the private operator may seek a fare adjustment once every two years. Mr. Benipayo has said previously the approved rate in 2023 is still well below the notional fare and has resulted in a fare deficit of PHP 2.17 billion.

“Public transport is a service that requires continuous investment in maintenance, upgrades and expansion. Countries with world-class transport systems such as Singapore and Japan adjust fares regularly to keep services efficient and safe. We are thankful to our partners in government for their support in ensuring that we can sustain the necessary upgrades,” Mr. Benipayo said.

LRMC reiterated that it has made substantial operational improvements and system upgrades for LRT-1, which includes the completion of phase 1 of the LRT-1 Cavite extension last year. The second and third phases of construction of the LRT-1 Cavite extension may begin next year if right-of-way acquisition issues are resolved.

“LRMC has since introduced new trains, station upgrades and better service efficiency,” Mr. Benipayo said.

He also justified the fare adjustment as LRMC also improved LRT-1’s cycle time — the average time for a train to complete an end-to-end journey — from 106 minutes or almost two hours to 91 minutes in 2024.

Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said the approval of the LRT-1 fare hike is a necessary step since the government has to comply with its commitments under the public-private partnership (PPP) deal.

“(This) clears the way for more PPP tenders in the future. More than that, all public transport — rail, bus, jeepney — deserve long-delayed fare adjustments,” he said in a Viber message.

Meanwhile, Renato M. Reyes, Jr., secretary-general of Bagong Alyansang Makabayan (Bayan), said they are not surprised by the approval of the fare increase.

He called for a review of the private operator’s concession agreement which allows them to adjust fares every two years.

In a statement, transport group PISTON National President Mody T. Floranda called the fare increase unjustified and would hurt the pockets of ordinary Filipinos.

LRMC is a joint venture of Ayala Corp., Metro Pacific Light Rail Corp. and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd.

Metro Pacific Light Rail is a unit of Metro Pacific Investments Corp., which is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. – Ashley Erika O. Jose, Reporter

Below-target growth to support further rate cuts

Expectations of below-target growth and manageable inflation should support further rate cuts by the Bangko Sentral ng Pilipinas (BSP) this year, DBS Bank said in a report.

At the same time, a Nomura Global Markets Research analyst said the BSP could have delivered a rate cut instead of a pause at last week’s meeting amid “persistent” uncertainty.

“The growth-inflation dynamic backs further rate cuts, with the real rate buffer considerably wide at 2.5%-2.75%, providing room for monetary policy to be growth supportive,” DBS Senior Economist Radhika Rao said.

DBS expects gross domestic product (GDP) to grow below 6% this year after a weaker-than-expected 5.6% growth in 2024. The government is targeting 6-8% growth this year.

Inflation has been “buoyant” in the past few months, DBS said. Headline inflation remained steady at 2.9% in January, within the central bank’s 2-4% target.

“Food supply disruptions due to a lagged impact of typhoons, utility costs and a weaker peso were behind this spurt, though are likely to be viewed as temporary and will not deter the central bank from a dovish path,” it added.

DBS expects the central bank to deliver up to 50 basis points (bps) worth of rate cuts this year.

“After a 75-bp rate reduction in 2024, the BSP is likely to bide time to monitor risk of further tariffs and the consequent inflation/US dollar path, before resuming further easing,” Ms. Rao said.

The BSP left the benchmark rate unchanged at 5.75% on Feb. 13, with BSP Governor Eli M. Remolona, Jr. citing global uncertainties due to US trade policies.

Nomura Global Markets Research analyst Euben Paracuelles said central banks, including the BSP, might struggle to consider the implications of US President Donald J. Trump’s tariff policies.

“I think this is going to be a sort of a persistent type of uncertainty. We will never really get a good handle of it. And I think sometimes it’s better to be just reactive than proactive just because of the extent of the uncertainty,” he said in an interview on Money Talks with Cathy Yang on One News on Tuesday.

Mr. Remolona last week said the BSP is recalibrating their models to better account for these uncertainties and other “unusual” phenomena.

“The uncertainty in itself is the one that’s going to create some downside pressure and growth, whether it’s weighing on business sentiment and other indirect channels,” Mr. Paracuelles said.

“And more importantly, we’ve already seen this in the first Trump administration. So, it’s not that difficult to think about the risks and how they play out when we get some of these tariffs announced by President Trump.”

Mr. Trump is planning to impose reciprocal tariffs on every country that charges duties on US imports, a move that has raised fears of a wider global trade war.

“So, to me, it’s a downside risk to growth. And therefore, it’s not a reason for us (to hold rates). It’s actually a reason to keep cutting,” Mr. Paracuelles said.

He said the Philippine economy “still needs a little bit of support from all policy fronts.”

“So, after they paused, I think there’s a little bit of a change in the sequencing. There might be a little bit of a preference to inject liquidity via the RRR (reserve requirement ratio) cuts, which they’ve already done in October,” he said.

“I think they’re doing more. What that does really is it improves the policy transmission of later policy rate cuts, which I still expect for the rest of the year, given a very benign inflation outlook. So, the BSP can actually focus a little bit more on supporting the economy with all of these tools.”

The central bank is looking to bring down the RRR to 5% from 7% this year.

“The RRR could be front-loaded a little bit. I think April is a good window because, obviously, we have the elections coming in early May, and that means the critical conditions could tighten,” Mr. Paracuelles added.

The BSP reduced the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5%, which took effect in October. — Luisa Maria Jacinta C. Jocson

Remittances jump to record USD 34.49B

Cash remittances from overseas Filipino workers (OFWs) hit an all-time high of USD 34.49 billion in 2024, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Money sent home by OFWs through banks rose by 3% to USD 3.38 billion in December from USD 3.28 billion in the same month in 2023. This was the highest-ever monthly level for cash remittances.

This brought the full-year remittance level to a record-high USD 34.49 billion, up by 3% from USD 33.49 billion posted in 2023.

This was in line with the BSP’s 3% remittance growth forecast and its full-year projection of USD 34.5 billion.

“The increase was observed in remittances from both land-based and sea-based workers,” the BSP said.

In December alone, remittances from land-based workers jumped by 3.7% year on year to USD 2.71 billion from USD 2.61 billion.

For the full year, remittances from land-based workers increased by 3.4% to USD 27.55 billion from USD 26.64 billion in 2023.

Meanwhile, money sent by sea-based workers inched up by 0.6% to USD 669.28 million in December and rose by 1.3% to USD 6.94 billion for the full year.

Personal remittances, which include inflows in kind, rose by 3% to USD 3.73 billion in December from USD 3.62 billion in December 2023.

As of end-2024, personal remittances increased by 3% to USD 38.34 billion from USD 37.21 billion in the year prior. This also marked an all-time high for personal remittances.

The remittances accounted for 8.3% and 7.4% of the country’s gross domestic product (GDP) and gross national income (GNI), respectively.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates, mainly contributed to the increase in remittances in 2024,” the central bank said.

The US was the top source of cash remittances last year, accounting for 40.6% of the total.

This was followed by Singapore (7.2%), Saudi Arabia (6.4%), Japan (4.9%) and the United Kingdom (4.7%).

Other sources of remittances include the United Arab Emirates (4.4%), Canada (3.6%), Qatar (2.8%), Taiwan (2.7%), and South Korea (2.5%).

“The growth in cash remittances in 2024 reflects the continued resilience of OFWs in supporting the Philippine economy,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

“Sustained economic recovery in the US, Middle East, and Asia-Pacific led to higher wages and employment opportunities for OFWs, boosting remittances,” he added.

Mr. Rivera said the weaker peso in the last few months of the year also increased the value of remittances sent home.

At end-2024, the peso closed at P57.845 against the dollar, depreciating by 4.28% from its end-2023 finish of P55.37. It also fell to the record-low P59-per-dollar level thrice last year.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the surge in remittances was also due to seasonal factors amid the holidays.

“December saw a seasonal uptick in remittances as OFWs sent additional funds for holiday-related expenses and family support. The adoption of digital remittance platforms made transfers faster and cheaper, encouraging higher remittance flows,” Mr. Rivera added.

For this year, Mr. Rivera said remittances are likely to remain a stable growth driver.

“Continued overseas labor demand, particularly in healthcare, tech, and skilled trades. More favorable exchange rates could encourage higher remittance volumes. Government agreements and labor deployment policies could open new job markets.”

Mr. Ricafort said remittances have been “growing consistently around 3% year on year in recent months and years and still expected to similarly grow, going forward, being demographic based.”

However, global uncertainties stemming from US President Donald J. Trump’s trade policies could weigh on remittances, Mr. Ricafort said.

“Mr. Trump’s threats of higher tariffs and America-first policies could also slow down global trade, investments, employment including OFW jobs, and overall world economic growth,” he said.

Mr. Trump is eyeing to impose reciprocal tariffs across all US imports. This after slapping a 10% tariff on all Chinese imports into the US, which took effect earlier this month.

Mr. Rivera likewise noted that geopolitical tensions and a possible global economic downturn could dampen the growth in remittances.

“Overall, remittances are expected to maintain modest growth in 2025, barring major economic disruptions. The steady inflows will continue to support household spending, helping drive consumption-led growth,” Mr. Rivera added.

The central bank expects cash remittances to grow by 3% this year. – Luisa Maria Jacinta C. Jocson, Reporter

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