SEC considers tiered public float for IPOs

The Securities and Exchange Commission (SEC) is looking at a tiered approach for the minimum public float requirement of companies seeking to list on the stock exchange, its chairperson said.

SEC Chairperson Francisco Ed. Lim said the current 20% minimum public float requirement for companies planning to conduct an initial public offering (IPO) is a “one-size-fits-all” situation that could be addressed by a tiered system depending on the company’s market capitalization.

“A 20% float at IPO, regardless of the size of the issue, was done to improve the liquidity of the market, which is one of the basic problems. But I think the 20% (float) is ‘one size fits all.’ Personally, I don’t think that’s the way,” Mr. Lim said in an interview to be aired on One News’ Thought Leaders with Cathy Yang on July 25.

Mr. Lim said he asked the supervising SEC commissioner to look at tiers that would depend on the company’s market capitalization.

“The higher the market capitalization is, the lower the percentage of free float,” he said.

Mr. Lim said the SEC will internally discuss the proposal but will also get comments from the Philippine Stock Exchange (PSE) and the public.

“I think this has been done by other exchanges. Let’s see what happens,” he said.

Mr. Lim said he is not in favor of providing exemptive relief from the current 20% public float requirement.

“I’m quite allergic to exemptive relief,” he added.

Mr. Lim said the tiered approach makes the rule applicable to all companies, unlike exemptive relief which is granted on a case-to-case basis.

“Just amend the rule to make it applicable to everybody rather than applying to a particular company, because once you do that, then other companies will have their own reasons why you should give exemptive relief,” he said.

In March, the SEC, which was then led by chairperson Emilio B. Aquino, said companies may apply for exemptive relief from the 20% public float rule “provided they bridge any gap from the 20% standard within less than 24 months from the listing date and only as deemed necessary by the commission.”

The SEC initially allowed an initial public float of 15% by way of exemptive relief, but subject to strict criteria.

However, the corporate regulator “remained firm” on the 20% minimum public float requirement for companies eyeing to do an IPO, citing the “value of higher public ownership to market depth and efficiency.”

The SEC’s move came as Globe Telecom, Inc. said the long-awaited IPO of GCash, controlled by Globe Fintech Innovations (Mynt), will depend on regulators lowering the required public float to 10%-15%.

In 2017, the commission increased the minimum public ownership requirement for companies looking to do an IPO to 20% from the previous 10%.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that the tier system would be better for companies seeking to go public.

“That would be a better approach than exemptive relief, since the latter feels too much like favoritism. It also makes better sense as it translates the percentage into peso amount, so the end result is still in keeping with the goal of ensuring liquidity,” he said.

“At least Mr. Lim seems to be more concerned about actual shareholder welfare rather than changing up the rules to accommodate certain companies,” he added.

Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said in a Viber message that the tiered approach offers a “more practical and inclusive way to encourage IPOs.”

“It offers a clearer and more predictable path for companies that may find it challenging to meet the 20% threshold right away. At the same time, it still supports the goal of improving market liquidity without being too rigid,” she said.

“This approach also helps avoid the impression that rules are being bent for certain companies, which can happen when exemptions are granted too often. Overall, it’s a fairer and more transparent way to strike a balance between attracting listings and building a healthy, liquid market,” she added.

The PSE aims to have six IPOs this year. However, only one company has made its stock market debut — Cebu-based fuel retailer and distributor Top Line Business Development Corp. in April.

Aside from GCash, other companies expected to go public include Maynilad Water Services, Inc. and integrated resort operator Hann Holdings, Inc.

On Tuesday, the bellwether PSE index rose by 0.04% or 2.95 points to 6,355.69, while the broader all shares index gained by 0.1% or 3.76 points to 3,757.20.

Mr. Lim’s interview on Thought Leaders with Cathy Yang will be aired at 9:30 p.m. on July 25 on One News Channel. — Revin Mikhael D. Ochave, Reporter

TIEZA books PHP 192-million investment commitments as of July

The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) said it has secured PHP 192.3 million worth of investments so far this year.

“For 2025, we have secured PHP 192 million. That is January to this date,” TIEZA Chief Operating Officer Mark T. Lapid told BusinessWorld on the sidelines of the agency’s Partners and Stakeholders Appreciation Night on Monday.

Compared to last year, Mr. Lapid said the TIEZA’s aggressive information drive has been key in attracting more investments.

“We have more this year because we are being aggressive on the information drive even with the market sounding and the missions that we do with different local stakeholders in different areas.”

“If you look at it, we are still a new investment promotion agency. That’s why we are very happy that there are more investors applying and trying to get accredited with us,” he added.

Since 2021, TIEZA has secured investment commitments worth PHP 225.7 billion, which are expected to generate 131,805 jobs.

“These figures underscore the growing confidence of investors in the Philippine tourism sector and affirm TIEZA’s continued role as the key investment promotion agency (IPA) in driving high-impact tourism investments nationwide through our expanding portfolio of registered business enterprises (RBEs),” Mr. Lapid said.

On Monday, TIEZA welcomed seven registered business enterprises to its portfolio. These are Bukid Amara Davao, Fairfield by Marriott Cebu Mactan, Anjo World Conference Center, Avignon Clinic, Flow State Bouldering, Belo Medical Group – Greenhills, and Reside Siargao.

These tourism-related ventures span accommodations and meetings, incentive travel, convention and exhibition facilities, health and wellness, farm tourism, sports facilities, and recreational centers.

“Their entry into the TIEZA registry is expected to generate employment and stimulate local economies and attract fresh investments to their respective communities,” TIEZA said.

Aside from the agency’s information drive, Mr. Lapid said the increased investments are also being driven by the enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.

“With CREATE MORE, the playing field became level among different investment promotion agencies like the Philippine Economic Zone Authority and the Board of Investments,” he said.

“And of course, we have infrastructure support in our mandate that will help our investors, so it is better in encouraging our campaign for investment in tourism,” he added.

Asked about what he wants to hear from President Ferdinand R. Marcos, Jr. in his State of the Nation Address next week, Mr. Lapid said he hoped TIEZA would be recognized for its efforts to digitalize the collection of travel tax.

“On Thursday, we will have a memorandum of agreement signing with the Department of Information and Communications Technology for the integration of travel tax in the eGov app so that the access to travel tax will be faster,” he added.

In 2024, Mr. Lapid said travel tax collections reached PHP 7.8 billion, which is at par with collections in 2019.

“We’re two years early from the projection that was given to us to recover by the United Nations World Tourism Organization,” he said.

“So, our recovery program is quite good, showing a strong recovery and renewed public confidence in travel,” he added.

Half of the travel tax collections goes to TIEZA, while 40% goes to the Commission on Higher Education, and 10% goes to the National Commission for Culture and the Arts. — Justine Irish D. Tabile, Reporter

BPOs wary of ‘indirect’ effects of US tariffs

The IT & Business Process Association of the Philippines (IBPAP) said US tariffs may result in disruptions to global investment flows that could ultimately affect its industry.

IBPAP President and Chief Executive Officer Jonathan R. Madrid said no direct impact is expected on the information technology and business process management (IT-BPM) industry, which is also known as the Business Process Outsourcing (BPO), because it supplies services and not goods.

“(Nevertheless), we are closely monitoring the broader economic and investment impacts this may indirectly bring,” he told BusinessWorld.

US President Donald J. Trump announced a 20% tariff on the Philippines this month, higher than the 17% reciprocal tariff he initially imposed in early April.

Mr. Madrid said the government has responded to the US tariff decisions promptly, with a diplomatic push by President Ferdinand R. Marcos, Jr., who is visiting Washington for “a strategic dialogue.”

“Their efforts reflect a strong commitment to investment promotion and economic diplomacy at a critical time,” he added.

He said sustained engagement and collaboration with the US will help “ensure that the Philippine economy remains resilient and attractive to global investors, especially with US counterparts.”

Mr. Marcos and tariff negotiators are in the US to negotiate a lower rate.

Mr. Marcos was due to meet Mr. Trump on Tuesday, Washington time, becoming the first head of state from the Association of Southeast Asian Nations to meet the US President during his second term.

IBPAP said it still expects a 5% increase in industry revenue this year and between 4% and 5% workforce growth.

“For 2025, we are going to show growth. I think we will touch USD 40 billion in revenue as an industry and should touch 1.9 million in terms of number of workers,” Mr. Madrid said. — Justine Irish D. Tabile, Reporter

Shares inch up ahead of Marcos-Trump meeting

Philippine shares edged up on Tuesday as investors await updates on bilateral talks between the Philippines and the United States and on expectations of further monetary easing at home.

The benchmark Philippine Stock Exchange index (PSEi) inched up by 0.04% or 2.95 points to end at 6,355.69, while the broader all shares index rose by 0.1% or 3.76 points to 3,757.20.

“The PSEi corrected higher for the third consecutive trading day as President Ferdinand R. Marcos, Jr. is scheduled to meet US President Donald J. Trump on July 22 (US time) that could lead to a possible trade deal,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The market also improved after the latest dovish signals from Finance Secretary Ralph G. Recto on possible 50-basis-point (bp) rate cuts for the rest of 2025…,” he added.

Mr. Marcos is in the US from July 20-22. He had a meeting with US Secretary of Defense Pete Hegseth at the Pentagon on the first day of his three-day working visit.

Mr. Marcos is also set to meet with Mr. Trump to discuss trade and security. Mr. Trump earlier announced a 20% “reciprocal” import tariff on Philippine products starting Aug. 1, higher than the initial 17% duty set in April.

Meanwhile, Mr. Recto, who sits on the central bank’s policy-setting Monetary Board, said last week that the Bangko Sentral ng Pilipinas (BSP) has room for two more 25-bp cuts this year amid subdued inflation.

Last month, the BSP delivered a second straight 25-bp cut to bring its policy rate to 5.25%. The Monetary Board has three more meetings this year.

“The PSEi remains above the 6,350 mark, holding modest gains as sentiment showed slight improvement despite lower than usual market volume,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message. “Technical setups hint at renewed confidence while still cautious after last week’s dip, most likely awaiting the development of the trade discussions in Washington this week and upcoming corporate earnings.”

Majority of sectoral indices rose on Tuesday. Mining and oil climbed by 0.89% or 81.67 points to 9,199.41; property increased by 0.69% or 16.41 points to 2,391.26; financials went up by 0.64% or 14.37 points to 2,248.90; and industrials inched up by 0.11% or 10.40 points to 9,140.11.

Meanwhile, holding firms dropped by 0.61% or 33.11 points to 5,397.20 and services went down by 0.13% or 2.79 points to 2,139.35.

Value turnover decreased to PHP 5.01 billion on Tuesday with 1.07 billion shares traded from the PHP 5.79 billion with 1.14 billion shares exchanged on Monday.

Advancers edged out decliners, 97 versus 96, while 45 names were unchanged.

Net foreign selling went down to PHP 14.67 million on Tuesday from PHP 36.3 million on Monday. — Revin Mikhael D. Ochave

PHL eyes PHP 200-B RTB offer in Q3

The government is planning to raise PHP 200 billion from its first retail Treasury bond (RTB) offering this year, which it could launch within this quarter, Finance Secretary Ralph G. Recto said.

“I think, we’ll issue now the retail Treasury bonds. I think this quarter, within the quarter,” Mr. Recto told reporters last week.

He did not give more details.

The government’s last RTB offering was in February 2024. It raised a record PHP 584.86 billion from its offering of five-year RTBs.

RTBs are medium- to long-term debt securities issued by the government available to retail investors, especially ordinary Filipinos. It is usually sold in minimum denominations of PHP 5,000.

Mr. Recto noted that the upcoming RTB offering will not likely be the last this year.

Analysts expect high demand for the new RTB offering, citing favorable yields and accessibility, while suggesting a tenor of five years may be optimal.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said the RTB offering is expected to attract strong investor interest.

“RTBs remain attractive due to their accessibility to retail investors, relatively high yields compared to savings products, and their reputation as low-risk instruments,” Mr. Asuncion said in a Viber message.

Last May, National Treasurer Sharon P. Almanza said the Bureau of the Treasury (BTr) plans to launch GBonds, which allow retail investors to buy and sell government securities on e-wallet giant GCash by the second half of the year.

This will allow the platform’s 94 million registered users to invest a minimum of PHP 5,000 for RTB and PHP 500 for Treasury bills through the app.

“A tenor of 5 to 7 years would be appropriate, offering a balance between competitive returns and manageable duration risk, while aligning with the government’s medium-term funding strategy,” Mr. Asuncion said.

Meanwhile, a trader said good demand is expected for this issuance, “since the target is lower than the expected maturity.”

“If the yield is attractive enough, I think the BTr can issue up to PHP 400 billion,” the trader said in a Viber message.

It also added that a tenor of 5 to 5.5 years would be suitable for the offering.

The government is looking to hike its borrowing program to PHP 2.6 trillion this year from P2.55 trillion previously, to fund the ballooning budget deficit.

It is still targeting to source 80% of its borrowings domestically and 20% externally.

The latest data from the Treasury showed that the National Government’s gross borrowings fell by 6.67% to P1.33 trillion in the five-month period this year.

Domestic gross borrowings fell by 12.74% year on year to PHP 1.02 trillion.

TWO MORE RATE CUTS
Meanwhile, Recto, who also sits on the Monetary Board, said the Bangko Sentral ng Pilipinas (BSP) has room to deliver two more 25-basis-point (bp) rate cuts this year amid subdued inflation.

“I think the BSP is clear that we expect a 50-bp rate cut all the way till the end of the year,” Mr. Recto said, adding these will likely be delivered in two increments.

“Inflation is down right now,” he added.

Headline inflation averaged 1.8% in the six-month period.

The central bank’s remaining policy meetings are scheduled for Aug. 28, Oct. 9, and Dec. 11.

BSP Governor Eli M. Remolona, Jr. earlier signaled two more rate cuts in 2025, citing inflation falling within the 2-4% target and expected lower economic growth.

At its June 19 meeting, the central bank delivered a second straight 25-bp cut this year, bringing its policy rate to 5.25%.

It has now lowered interest rates by a cumulative 125 bps since it started its easing cycle in August 2024.

However, Mr. Recto said the government remains cautious ahead of the Federal Reserve’s policy meeting later this month.

“We just don’t know what happens in the US right now, what’s going to happen there. We’ll be closely monitoring that as well,” he said.

US President Donald J. Trump has been pushing Federal Reserve Chairman Jerome H. Powell to lower borrowing costs, targeting a 1% policy rate.

However, recent US inflation data may complicate the Fed’s easing trajectory. The US consumer price index picked up to 2.7% from a year ago in June, after rising to 2.4% in May.

“Trump wants to change the Fed, right? He wants a rate cut. That’s what happens there. But for us, as we’re looking at our own inflation data, so far that looks good,” he said.

Asked whether the central bank would proceed with easing even if the Fed holds rates steady, Mr. Recto said: “I think we have room to cut.”

“Maybe not two, depends on what happens in the US as well. But as of today, I would assume that we’re okay for a two rate cuts.” — Aubrey Rose A. Inosante

Marcos seeks support from semiconductor execs ahead of Trump meeting

Philippine President Ferdinand R. Marcos, Jr. is set to meet with top executives of US semiconductor companies this week as he seeks to further strengthen economic ties with the US, Manila’s envoy to Washington said on Sunday.

Mr. Marcos will hold talks with Semiconductor Industry Association President John Neuffer this week, Philippine Ambassador to the US Jose Manuel G. Romualdez said during a press briefing in Washington, DC. A video of the briefing was posted by Radio Television Malacañang (RTVM) on YouTube.

“We’ll be talking to the semiconductor industry, which is very important for us. [It’s] one of our biggest industries [with which we have] economic ties with the United States,” he added.

US President Donald J. Trump has imposed a 20% tariff on Philippine-made goods entering the country starting Aug. 1, higher than the 17% previously announced.

For now, semiconductors are excluded from the new reciprocal tariffs. Semiconductors and electronics are the Philippines’ top exports to the US.

Mr. Marcos is hoping to secure support from US semiconductor firms to shield the Philippine electronics sector from potential disruption. He is also set to meet with Mr. Trump to discuss the tariff issue.

Mr. Marcos met with Mr. Neuffer last December 2024, where he stressed the need to advance the Philippines’ position in the semiconductor value chain to keep pace with global technological shifts.

Manila is one of seven countries that the US is partnering with to diversify its semiconductor supply chain under the CHIPS and Science Act.

Mr. Marcos is also scheduled to meet on Monday afternoon (US time) executives of top US companies that are planning to boost investments in the Philippines.

Mr. Romualdez said the president’s meetings will include investors that are interested in the infrastructure sector.

“We also have some of those in infrastructure, which is part of the Luzon Corridor. So those… are part of his (Mr. Marcos’) business meetings that he will conduct in between important official meetings on Monday,” he said.

The Luzon Economic Corridor project is being undertaken via a trilateral commitment among the Philippines, US and Japan. The project seeks to enhance the connectivity of Luzon’s key economic areas — Subic Bay, Clark, Metro Manila and Batangas. It is widely seen to counter China’s Belt and Road Initiative.

Josue Raphael J. Cortez, diplomacy lecturer at the De La Salle-College of St. Benilde’s School of Diplomacy and Governance, said Manila can boost its semiconductor sector by ensuring fair competition and leveraging its partnership with the US under the CHIPS Act to enhance production capabilities and adopt best practices.

However, he added that to protect its broader economic interests, the country should maintain balanced trade ties with China, especially in mineral resources, agriculture, and raw materials, rather than relying solely on US investments.

“In the case of China, given that there could be a conflict of interest regarding chip production, we must strategize on how we can bolster our trade with Beijing, particularly on mineral resources, agricultural products, and raw materials, which are among our top exports to the country,” he said via Messenger chat.

China remains the Philippines’ largest trading partner, with the US coming in third. However, the territorial dispute with Beijing complicates the prospect of deeper cooperation.

Mr. Marcos’ trip to Washington could also position Manila as the potential lead during trade negotiations between the Association of Southeast Asian Nations (ASEAN) and the US, especially as Manila assumes chairmanship in the regional bloc in 2026, said Mr. Cortez.

This visit could enable Manila to drive a regional economic balancing strategy that leverages Southeast Asia’s strengths to benefit both ASEAN and the US while countering the economic impact of the US tariffs and China’s regional dominance, he added.

Meanwhile, Mr. Romualdez said Manila is not planning to pursue a free trade agreement at this time with Washington, as lowering the “reciprocal” tariffs is the current priority, in addition to defense and security matters.

“That’s still very far in the sense that we have to get over this particular discussion first on the tariff,” he said. “After that, we’re hoping that the free trade agreement will probably come into play.”

Mr. Romualdez also cited other agreements with the US, including security pacts on the Mutual Defense Treaty signed in 1951, the Visiting Forces Agreement signed in 1999, and the Enhanced Defense Cooperation Agreement signed in 2014.

“[There] will be more discussions on how we can continue to cooperate with the United States, our major ally. At the same time, also, I think President Marcos would like to see how we can work with the United States and other countries that have the same mindset as far as the West Philippines is concerned,” he added.

“We can’t negotiate on the basis of what we can get from another country. We have to focus on what is good for both countries.” — Chloe Mari A. Hufana

CMEPA seen to boost PERA adoption among Filipinos

The Securities and Exchange Commission (SEC) expects more Filipinos to grow their retirement funds under the Personal Equity and Retirement Account (PERA) with the recent implementation of Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA).

“The CMEPA strengthens the role of PERA by offering stronger incentives for long-term savings,” SEC Chairperson Francisco Ed. Lim said in an e-mailed statement on Monday.

“It encourages companies to support their employees’ retirement planning while simultaneously increasing the capital available in the financial system, stimulating the local stock market,” he added.

One of the CMEPA’s provisions is a 50% additional tax deduction for private employers who contribute an amount equal to or greater than their employees’ PERA contributions.

PERA, created under Republic Act No. 9505, is a voluntary retirement saving program. This is aimed at complementing the existing retirement benefits from the Social Security System, Government Service Insurance System and employer-sponsored plans.

“The program offers contributors tax benefits not available in other retirement investment products, encouraging Filipinos to save for their future,” the SEC said.

In January, DoubleDragon Corp.’s stock brokerage arm DragonFi Securities, Inc. became the first SEC-accredited PERA administrator after the corporate regulator issued guidelines on the accreditation of PERA market participants in September last year.

The SEC guidelines expanded the categories of entities eligible to register as PERA administrators to include securities brokers, investment houses, and investment company advisers or fund managers.

Under the SEC guidelines, a PERA administrator should have maintain a net worth of at least P100 million at all times, and have the adequate systems and technological capabilities, as well as the necessary technical expertise and personnel to administer all types of PERA investment products.

“Take-up of PERA is still relatively low in recent years. Hopefully, the CMEPA would further provide greater motivation to increase PERA in view of the additional incentives,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Data from the Bangko Sentral ng Pilipinas showed that PERA contributions increased by 24% to PHP 491.4 million as of end-2024 from PHP 396.3 million as of end-2023.

CMEPA took effect on July 1 after being signed by President Ferdinand R. Marcos, Jr. on May 29.

Among the law’s provisions is the reduction of the stock transaction tax to 0.1% from 0.6% as well as the decrease in the documentary stamp tax on the original issuance of shares of stock to 0.75% from 1% of par value.

The law also standardized the final withholding tax on interest income at 20% and harmonized the capital gains tax to a flat 15% on shares of foreign corporations.

“At its core, CMEPA is designed to align the Philippine capital markets more closely with regional peers by removing long-standing barriers to investor participation,” Mr. Lim said.

“This supports the commission’s mission to continue introducing reforms that will increase the local market’s competitiveness. The strict implementation of provisions under CMEPA is key toward ensuring broader public participation in the capital market and fostering a deeper investment culture among Filipinos,” he added. — Revin Mikhael D. Ochave

Philippines eyes zero tariffs on some US goods

The Philippines is open to lowering duties on selected imports from the US to zero as part of tariff negotiations with Washington, Finance Secretary Ralph G. Recto said.

When asked whether the government might offer zero tariffs on US goods — similar to Vietnam’s approach, Mr. Recto replied: “Definitely.”

“Not for all products, but we have identified a set of products,” he told reporters last week, without giving details.

This as Philippine President Ferdinand R. Marcos, Jr. on Sunday departed for an official visit to the US, where he is scheduled to meet with US President Donald J. Trump.

Mr. Marcos is expected to bring up the proposed 20% US tariff on Philippine exports during his meeting with Mr. Trump on July 22.

In his departure speech at Villamor Airbase in Pasay City, Mr. Marcos said the Philippines is ready to negotiate a trade deal with the US to drive “strong, mutually beneficial, and future-oriented collaborations” that will support the country’s economic growth.

“My top priority for this visit is to push for greater economic engagement, particularly through trade and investment between the Philippines and the United States,” he said, according to a transcript from his office.

“I intend to convey to President Trump and his Cabinet officials that the Philippines is ready to negotiate a bilateral trade deal that will ensure strong, mutually beneficial, and future-oriented collaborations that only the United States and the Philippines will be able to take advantage of,” he added.

Mr. Marcos’ visit to the US is the first by a head of state from the Association of Southeast Asian Nations (ASEAN) since Mr. Trump assumed the presidency in January.

Mr. Marcos emphasized that while defense and security discussions will be tackled during the meeting with Mr. Trump, business and economic opportunities will dominate the agenda.

“I expect to meet with business leaders to explore business opportunities that will help to grow our economy even more,” he said.

Members of his economic team are already in Washington ahead of his arrival to prepare for investment talks and trade negotiations.

Mr. Recto said the economic team has a “great plan” for the negotiations with the US. He expressed optimism that the talks could lead to a lower tariff rate.

“I think our relationship with the US is not only trade, but also security. I’m sure they’ll be giving that some importance as well,” he said.

Mr. Trump had earlier slapped a 17% tariff on Philippine goods, the second lowest rate among ASEAN members. This was raised to 20%, despite earlier efforts by Philippine negotiators to lower the tariff rate. If no deal is forged, the 20% tariff will take effect on Aug. 1.

The Philippines is now under pressure to secure a tariff rate lower than Indonesia and Vietnam, which have both completed negotiations with the US.

The US lowered the tariff rate on goods from Indonesia to 19% from 32% previously.

“If it’s 19% for them, it should be 10% for us. The minimum is 10%, right? 11% is fine,” Mr. Recto said hours after the news of Indonesia-US deal was released.

Vietnam currently faces a 20% tariff on its exports to the US, along with a 40% levy on goods transshipped through the country. This is significantly lower than the previously announced US tariff of 46%.

Thailand earlier said it is offering to scrap tariffs on 90% of US goods in a bid to negotiate a tariff lower than the 36% previously announced.

Cambodia is also facing the same 36% rate and still without a finalized deal.

Free trade deal

Meanwhile, Mr. Recto said a free trade agreement (FTA) with the US is also part of the negotiations.

“We prefer that. We want to have one FTA. Not only with the US, but with Europe, and with many other countries. More trade should be better,” Mr. Recto said.

“We have to expand their markets. Get more investments in manufacturing in the Philippines so that we can export more. Then let’s take a look at the final tariffs later on.”

The Philippines is also pushing to maintain the zero tariffs on semiconductor exports, a key component of its top export commodity, the electronics sector.

“We want to reduce whatever duties they impose on our products. If possible, we want it to be zero [on semiconductors],” Mr. Recto said.

Analysts said the Philippines’ offer to apply zero tariffs on goods from the US is unlikely to sway the Trump administration.

“It may not be enough on its own to bring down the 20% US tariff,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies said in a Viber message.

He said the offer will be seen as a “strong goodwill gesture” and show the country is willing to engage constructively.

“The Philippines must complement this offer with a clear value proposition such as enhancing supply-chain partnerships, especially in critical sectors like semiconductors and agri-processing,” he said.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said a key element to achieve a lower export levy is “reciprocity.”

“We need to take advantage of US agriculture. Particularly, wheat and soyabeans. Which are used primarily on feeds. If we are able to import cheaper this will help food security,” he said in a Viber message.

Josue Raphael J. Cortez, who lectures on diplomacy at De La Salle-College of St. Benilde’s School of Diplomacy and Governance, said the Philippines can maintain a healthy balance between fulfilling its security commitments to the US and pursuing economic independence by continuing to promote an independent foreign policy.

However, he warned that such a path carries risks amid today’s geopolitical volatility, citing the US reciprocal tariffs and rising tensions in the South China Sea.

“The political-security and economic dimensions may be interrelated, but our approach presently is showing that we highly value our security partnership with the US, but we cannot overly depend on one partner alone,” he said in a Messenger chat.

Mr. Cortez said the Philippines can strengthen economic security by expanding partnerships in sectors where it has strategic advantages, such as semiconductors, and by sustainably using mineral resources like nickel, which is essential for electric vehicle batteries.

IBON Foundation Executive Director Jose Enrique A. Africa said the government has weak negotiating leverage as manufacturing is now at the smallest share of the economy in 75 years.

“The delegation offering to open up the economy even more to get lower US tariffs will be self-defeating and dangerous,” he said in a Viber message.

“The Philippines will be at fault for eroding what little leverage it has if it succumbs to playing by the rules being imposed by the US. It’s never too late to adopt a posture of domestic industrialization policy, such as exactly what the US is doing, and building strategic alliances within the region to shift the balance,” he added. — Aubrey Rose A. Inosante and Chloe Mari A. Hufana, Reporters

US tax to cut Philippine remittance growth

The United States’ remittance tax could trim the Philippines’ remittance growth by 0.5 percentage point (ppt), the Bangko Sentral ng Pilipinas (BSP) said.

“The impact under the worst-case scenario could be about 0.5 (ppt) or even lower,” BSP Deputy Governor Zeno R. Abenoja told BusinessWorld on the sidelines of an event on Friday.

“But again, behavior could change. For example, it’s possible that the sender will absorb the rate, the additional tax on it, such that in the end, what is received is still the same as what is sent,” he added.

The central bank expects cash remittances from overseas Filipino workers to grow by 2.8% this year and by 3% in 2026.

The 0.5 ppt estimated impact is still “very preliminary,” Mr. Abenoja said, as they are still studying the effects of the remittance tax.

“We still have some time to assess since it’s going to be January next year that it will be implemented. We are trying to confirm and clarify how it will be implemented, so we look at some worst-case scenarios,” he said.

US President Donald J. Trump’s recently passed “One Big Beautiful Bill” imposes a 1% excise tax on cash remittance transfers from the United States to other countries, starting Jan. 1, 2026. This was lower than earlier proposals of a 3.5% levy.

The tax was also initially aimed at non-US citizens but now applies to any remittance sender.

“As you know, the remittances from the US compose the bulk of our overseas Filipino remittances. If you look at the behavior of remittances, they’re used to finance education, health expenditures, and housing. These are necessary expenditures,” Mr. Abenoja said.

In the first five months of the year, cash remittances grew by 3% to USD 13.77 billion from USD 13.37 billion a year prior.

Around two-fifths of the Philippines’ remittance flows come from the United States. Latest BSP data showed that the US was the top source of remittances in the five-month period, accounting for 40.2% of the total.

“We’re looking at these characteristics of flows before we can finalize the impact. Because the behavior may also change such that in the end, the impact could be minimal,” Mr. Abenoja said.

“So, we’re looking at both how it will be implemented and how the senders will adjust to these new rules.”

The Department of Finance earlier said the tax could impact 12.8% of the Philippines’ annual remittances. This would impact around USD 1.9 billion of the expected USD 36.5-billion remittances from the US in 2026.

In a separate e-mail to BusinessWorld, the BSP said that remittances often remain resilient despite shocks.

“During periods of crisis and uncertainties, overseas Filipino (OF) remittances have generally continued to increase, reflecting the strong altruistic motives of OF migrants and workers to support their dependents regardless of prevailing economic conditions,” it said.

The number of documented temporary Filipino migrants in the US are at an estimated 500,000, the BSP said, though noted that these figures vary.

“These are non-US citizens from the Philippines who hold either green cards (immigrant) or long-term nonresident visas. As a share of total documented migrants reported by the Department of Foreign Affairs, documented temporary migrants comprise 12%,” it added. — Luisa Maria Jacinta C. Jocson, Senior Reporter

External debt service burden rises to near USD 5B at end-April

The Philippines’ external debt service burden rose to nearly USD 5 billion at end-April due to higher amortization payments, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Preliminary data from the central bank showed debt servicing on external borrowings went up by 1.3% to USD 4.91 billion in the January-April period from USD 4.85 billion a year ago.

Broken down, amortization payments increased by 6.2% to USD 2.42 billion in the first four months from USD 2.28 billion in the same period in 2024.

On the other hand, interest payments declined by 3% year on year to USD 2.49 billion from USD 2.57 billion.

The debt service burden represents principal and interest payments after rescheduling, according to the BSP.

This includes principal and interest payments on fixed medium- and long-term credits, including International Monetary Fund credits, loans covered by the Paris Club and commercial banks’ rescheduling, and New Money Facilities.

It also covers interest payments on fixed and revolving short-term liabilities of banks and nonbanks.

However, the debt service burden data exclude prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and nonbanks.

“The slight year-on-year increase in external debt service may partly reflect the wider budget deficits that needed more NG (National Government) borrowings,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The NG’s budget deficit widened by 29.41% to P523.9 billion in the January-May period from the P404.8-billion gap last year.

Mr. Ricafort also cited “still relatively higher Fed interest rates since 2022 that contributed to higher debt servicing costs.”

The Fed is expected to keep its benchmark rate steady in the 4.25%-4.5% range at its July 29-30 meeting, a level policymakers regard as at least moderately restrictive, Reuters reported.

The Fed last cut rates in December, when policymakers started assessing the possible impact on prices from the import tariffs that Mr. Trump quickly began imposing after returning to the White House in January.

“For the coming months, the share of foreign borrowings in the total borrowing mix has been reduced in view of forex (foreign exchange) risks entailed, with a greater share of domestic borrowings. Nevertheless, future borrowings would be a function of the trend on budget deficits,” Mr. Ricafort said.

From this year until 2027, the National Government plans to source at least 80% of its borrowing program from domestic sources, and 20% from foreign lenders. The government previously adopted a 75:25 borrowing mix.

Earlier BSP data showed outstanding external debt jumped by 14% to USD 146.74 billion at the end of March. This brought the external debt as a percentage of gross domestic product (GDP) to 31.5% from 29.8% in the fourth quarter.

The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination.

Meanwhile, the debt burden as a share of GDP stood at 2.8% in the first quarter, lower than the 3.1% in the year-ago period. — Luisa Maria Jacinta C. Jocson with Reuters

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