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Water prices in Metro Manila will go up starting January after the regulator approved the rate increases sought by the region’s two concessionaires, which could add to inflationary pressures.

The Metropolitan Waterworks and Sewerage System (MWSS) Regulatory Office approved a PHP 5.95-per-cubic-meter increase for Manila Water Co., Inc. and PHP 7.32 per cubic meter for Maynilad Water Services, Inc.

The rates will take effect on Jan. 1, 2025, Patrick Lester N. Ty, MWSS Regulatory Office chief regulator, told a news briefing on Thursday.

Customers served by Manila Water in the east zone who consume 10 cubic meters or less will have to pay PHP 24.68 more to PHP 254.83 a month, according to a rate matrix provided by the regulator.

Those who consume 20 and 30 cubic meters will see their monthly bills go up by PHP 54.79 and PHP 111.83, respectively. Low-income customers who consume less than 10 cubic meters will see a PHP 2.87 increase to PHP 91.40 a month.

Meanwhile, Maynilad customers in the west zone who consume 10 cubic meters and below will have to pay PHP 20.08 more, while those who consume 20 cubic meters will see their bills increase by PHP 75.89. Customers who consume 30 cubic meters will pay PHP 155.32 more.

Low-income lifeline customers who consume 10 cubic meters of water will pay PHP 10.56 more to PHP 151.04 a month.

The rate increases would likely add to inflationary pressures, said Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co.

These would increase household expenses and raise the production costs of industries that rely on water. These companies could pass on the costs to consumers by raising prices, he pointed out.

While necessary for infrastructure improvement, these hikes will add to short-term inflationary pressures,” Mr. Ravelas said in a Viber message. “Policy makers will need to monitor and manage these impacts carefully.”

The increase is the third tranche of approved tariffs for the 2023-2027 rate rebasing period. In 2022, the MWSS board greenlit higher rates on a staggered basis for five years starting in January 2023.

Rate rebasing is done every five years, accompanied by a performance review and validation of the two concessionaires’ projected cash flows. It also sets the water rates in a manner that allows the water suppliers to recover their expenditures.

“We monitor their capex (capital expenditure) spending [if] they are actually spending the necessary capex for the rate rebasing,” Mr. Ty told reporters. “Before we allow them to increase their tariff, we will check the actual spending, not just their target.”

“As long as you reach a reasonable target, we will then approve the tariff adjustment,” he added.

Manila Water had spent PHP 32.67 billion of its capex as of November, 81% of the target for 2023 to 2024, he said. Maynilad’s capex spending has hit PHP 47.59 billion, 83% of the target for the two-year period.

In a statement, Maynilad said its commitment to invest over PHP 163 billion to improve the water and wastewater infrastructure in the west zone “necessitates the timely implementation of these staggered adjustments.”

“We remain vigilant in meeting our business plan commitments and are pleased that the corresponding tariff adjustments are being implemented as planned,” it added.

Philippine inflation quickened to 2.5% in November from 2.3% in October, though still within the central bank’s 2.2%-3% forecast for the month.

Manila Water serves the east zone network of Metro Manila, covering parts of Marikina, Pasig, Makati, Taguig, Pateros, Mandaluyong, San Juan, portions of Quezon City and Manila, and several towns in Rizal province.

Maynilad serves the cities of Manila, except San Andres and Sta. Ana. It also operates in Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon. It also supplies water to the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in Cavite province.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

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. –Sheldeen Joy Talavera, Reporter

Philippine economic growth could weaken further next year, falling short of the government’s target amid an incomplete post-coronavirus disease 2019 (COVID-19) fiscal consolidation and still high interest rates, analysts said.

Pantheon Macroeconomics in its Emerging Asia Outlook report said it expects a “continued slowdown” in growth next year. It expects the economy to grow 5.4% this year and slow to 5.2% in 2025.

These are both well below the government’s 6-6.5% and 6-8% targets for 2024 and 2025, respectively.

The Philippine economy grew 5.2% in the third quarter, weaker-than-expected and the slowest in five quarters.

“Surveys show that a slowing rebuild of household savings in the Philippines from COVID and a cost-of-living crisis damage cushioned the slump in consumption growth this year, albeit at the likely expense of delaying a real recovery in GDP (gross domestic product) growth,” Pantheon said.

It added that the country’s economic output would “remain hampered by incomplete post-COVID fiscal consolidation and historically tight monetary policy.”

ANZ Research in its latest quarterly report said it expects economic growth to slow to 5.6% in 2025 from 5.7% this year. It said its outlook for 2025 is “downbeat, complicated by the lack of domestic growth catalysts amid fading exports.”

Consumer confidence has remained static and below pre-pandemic levels in most economies in Asia, it pointed out.

“Consumer surveys in both Indonesia and the Philippines suggest a fall in household savings over the last few years.”

The Institute of International Finance said it expects Philippine growth to average 5.8% this year and in 2025.

“Countries that are more reliant on dollar financing such as Malaysia, Korea and the Philippines are likely to face increased pressure from a strong US dollar and ‘higher-for-longer’ US Fed Funds policy rate,” it said.

The peso sank to the P59-a-dollar level twice last month, hitting a record low on Nov. 21 and Nov. 26.

“The Philippines, in particular, stands out due to its higher external financing needs, given its larger twin current account and fiscal deficits,” the institute said.

Meanwhile, both Pantheon and ANZ expect inflation to settle at 3.2% this year, compared with the Bangko Sentral ng Pilipinas’ (BSP) 3.1% estimate.

The central bank is also expected to continue its rate-cutting cycle next year. ANZ expects the policy rate to end at 5.75% this year and 5% by end-2025.

“Real rates are likely to stay elevated in Indonesia, South Korea and the Philippines where 50-to-100-basis-point (bp) rate cuts are likely in 2025,” it said.

“The efficacy of rate cuts in Indonesia and the Philippines will be limited by the need to rebuild household savings,” it added.

Pantheon also expects the key rate to end at 5.75% this year but sees it falling further to 4.75% by the end of next year.

The Philippine central bank started its easing cycle in August with a 25-bp rate cut. It delivered another 25-bp cut in October, bringing the key rate to 6%.

The Monetary Board will hold its final policy review of the year on Dec. 19.

BSP Governor Eli M. Remolona, Jr. earlier signaled the possibility of another 25-bp cut at the meeting. – Luisa Maria Jacinta C. Jocson, Reporter

Philippine lawmakers on Wednesday evening ratified the bicameral conference committee report on the PHP 6.352-trillion national budget for 2025. 

The committee earlier on Wednesday approved the final version of the budget bill. After the measure is ratified by Congress, it will be sent to Malacañang.

Presidential Communications Office Secretary Cesar B. Chavez told reporters in a Viber message that Philippine President Ferdinand R. Marcos Jr. is “tentatively” scheduled to sign the 2025 General Appropriations Act on Dec. 20.

In the bicameral report, lawmakers scrapped the PHP 74-billion subsidy for Philippine Health Insurance Corp. (PhilHealth) under next year’s budget, saying the agency needs to use its PHP 600-billion reserve funds to boost its services.

“PhilHealth has P600 billion in reserve funds and they should use these to address delayed reimbursements, and we will use this (funding subsidy) to fund departments that need it more,” Senate Finance Commitee Chairperson Mary Grace Natividad S. Poe-Llamanzares said in mixed English and Filipino.

Ms. Poe said PhilHealth would still have funding for its operations, but she did not give the exact figures.

Senator Joseph Victor G. Ejercito, one of the authors of the Universal Health Care (UHC) Act, said the legality of slashing the PhilHealth subsidy could be challenged since it is mandated under the sin tax and UHC laws.

“By law, this is really earmarked for PhilHealth’s use and for indirect contributors such as persons with disabilities, senior citizens and those who cannot pay for their premiums,” he told reporters later in the afternoon.

Senator Sherwin T. Gatchalian said PhilHealth could continue to provide services without the PHP 74-billion yearly subsidy.

“It’s a question of spending, not cash flow,” he told reporters. “If you look at the balance sheet of PhilHealth, they’re very healthy and the reserve funds are quite substantial.”

In a statement, Senate Deputy Minority Floor Leader Ana Theresia N. Hontiveros-Baraquel opposed the removal of the subsidy for PhilHealth since it is mandated by the Constitution for the government to pay for the premiums of its indirect members.

“Despite these ‘excess or reserve funds’ there are still laws that mandate this, and it is illegal, unfair and potentially unconstitutional to remove it,” she said in a statement in mixed English and Filipino.

“If the government abandons this obligation, ordinary citizens will be burdened by their monthly contributions to PhilHealth.”

In August, the Senate passed on final reading a bill that seeks to cut PhilHealth premiums to 3.25% next year from 5% this year under the Universal Health Care Act.

Ms. Poe said the 2025 budget does not include a provision allowing the National Government to sweep unused funds of government-owned or -controlled corporations (GOCC).

A provision in this year’s national budget authorized a cash sweep from GOCCs. The Supreme Court had blocked the transfer of PHP 29.9 billion, the last tranche of PhilHealth’s P90 billion excess funds, to the Treasury.

The excess PhilHealth funds would have been used to support unprogrammed appropriations worth PHP 203.1 billion, for state health, infrastructure and social service programs.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms (AER), said taking out the subsidy from the spending plan would worsen PhilHealth’s financial situation and make it harder for contributors to sustain the agency’s programs.

“What they removed are the contributions from those who do not have the ability to pay PhilHealth premiums,” he said in a Facebook Messenger chat.

“That also means direct contributors are the ones that will bear the sole burden of sustaining PhilHealth.”

Zy-za Nadine M. Suzara, a public budget analyst and former executive director of policy think tank Institute for Leadership, Empowerment and Democracy, said giving a “zero budget” for the PhilHealth subsidy is the same as slashing funding for the needs of indirect members.

“The General Appropriations Act cannot amend the Universal Health Care Law and the Sin Tax Law,” she said in a Viber message. “PhilHealth should have a reserve fund for two years or projected expenditures.”

Meanwhile, the bicameral committee also reduced the budget for the Ayuda Para sa Kapos ang Kita Program (AKAP) to PHP 26 billion, Ms. Poe said.

The House earlier proposed a PHP 39-billion budget for the Department of Social Welfare and Development (DSWD) financial aid program for workers with incomes lower than the poverty threshold.

The Senate earlier deleted the AKAP as a line item in DSWD’s proposed budget, opting instead to merge it with another DSWD aid program.

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said the cut in AKAP’s funding next year would make it more difficult for the government to deal with rising prices and low salaries.

“This leaves the private sector with the burden to carry out the needs of society and in the process weakens the whole economy,” he said in a Facebook Messenger chat.

In a statement, House Speaker Ferdinand Martin G. Romualdez said lawmakers increased the daily subsistence allowance for soldiers to PHP 350 from PHP 150 or to PHP 10,500 monthly.

Party-list Rep. and House Appropriations Committee Chairperson Elizaldy S. Co said P16 billion was allotted for soldiers’ allowances under the budget.

Before the plenary, Mr. Gatchalian told reporters the allocation for DSWD was cut by nearly PHP 96 billion, while the Department of Health’s budget was reduced by more than PHP 20 billion.

However, he said their budgets were still in an acceptable range.

The DSWD was given a budget of PHP 217.34 billion next year, lower than the PHP 313.26 proposed by the House and the PHP 226.67 under the National Expenditure Plan (NEP), based on a copy of the amendments included in the harmonized budget measure provided by the Senate Public Relations and Information Bureau via Viber.

“We’re talking about the DSWD still having about PHP 200 billion so it’s still within the NEP proposal and my benchmark is keeping it close to the NEP,” Mr. Gatchalian said in mixed English and Filipino.

The DoH received a PHP 247.92 billion budget for 2025, lower than the PHP 273.72 billion proposed by the House and higher than the PHP 217.39 proposed by the Budget department.

Mr. Gatchalian said the final budget bill had a shortfall of PHP 4 billion for the government’s free college education programs

The Department of Education has an approved budget of PHP 737.08 billion, which is lower than the PHP 748.65 billion proposed by the House, based on the reconciled version.

State universities and colleges will get PHP 122.16 billion under the reconciled budget.

Mr. Ejercito lamented the decision to cut next year’s budget for the Armed Forces of the Philippines’ revised modernization plan by PHP 5 billion to PHP 35 billion amid tensions in the South China Sea.

“At least it (the modernization plan funding) was not set to zero next year,” he told reporters in mixed English and Filipino. – John Victor D. Ordoñez, Reporter

Net inflows of foreign direct investments (FDI) fell to their lowest level in over four years in September, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The central bank on Tuesday reported FDI net inflows slumped by 36.2% to USD 368 million in September from USD 577 million in the same month a year ago.

This was also the lowest monthly FDI inflow in 53 months or since the USD 314 million recorded in April 2020. To recall, strict lockdowns to curb the spread of the coronavirus disease 2019 (COVID-19) were in effect in April 2020.

Month on month, net inflows likewise plunged by 54.8% from USD 815 million.

“The downturn in FDI net inflows in September 2024 was due largely to the decline in nonresidents’ net investments in debt instruments,” the BSP said.

Nonresidents’ net investments in debt instruments of local affiliates dropped by 32.8% to USD 277 million in September from USD 413 million a year prior.

Net investments in equity capital other than reinvestment of earnings plummeted by 91.2% to USD 7 million in September from USD 83 million a year earlier.

Equity capital placements slid by 53.4% year on year to USD 82 million, while withdrawals dropped by 19.7% to USD 75 million.

By source, equity placements were mainly from Japan (60%), followed by the United States (25%), and Singapore (8%).

These were invested mostly in manufacturing (58%), real estate (19%), information and communication (8%), and wholesale and retail trade (5%).

Meanwhile, investments in equity and investment fund shares stood at USD 91 million in September, down by 44.6% from USD 164 million a year ago.

On the other hand, reinvestment of earnings went up by 3.6% to USD 84 million in September from USD 81 million last year.

Nine-month FDI

For the first nine months of the year, FDI net inflows rose by 3.8% to USD 6.66 billion from USD 6.42 billion in the similar period a year ago.

Investments in equity and investment fund shares jumped by 20.4% to USD 2.3 billion in the period ending September from USD 1.91 billion a year ago.

Net foreign investments in equity capital surged by 46.9% to USD 1.36 billion as of end-September from USD 923 million a year ago.

This as equity capital placements climbed by 28.1% to USD 1.79 billion, while withdrawals dipped by 8.5% to USD 434 million.

In the nine-month period, these placements mostly came from the United Kingdom (43%), Japan (37%), the United States (9%), and Singapore (4%).

Meanwhile, foreign investments in debt instruments decreased by 3.3% to USD 4.35 billion in the January-September period from USD 4.5 billion.

Reinvestment of earnings dipped by 4.2% to USD 949 million as of end-September from USD 991 million a year ago.

“The relatively lower FDI inflows could be largely brought about by a wait-and-see stance by some foreign investors while waiting for the CREATE MORE to be passed into law,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

In November, President Ferdinand R. Marcos, Jr. signed the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which expands fiscal incentives and lowers corporate income tax on certain foreign enterprises.

Mr. Ricafort also noted the “still relatively high” interest rates, which may have weighed on foreign investments.

The BSP embarked on its rate-cutting cycle in August this year with a 25-basis-point (bp) rate cut. It later delivered another 25-bp cut in October, bringing the key rate to 6%.

“Persistently high global interest rates, led by the US Fed have made emerging market investments like the Philippines less attractive,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

“Investors often prefer safe-haven assets in advanced economies under these conditions,” he added.

The US Federal Reserve kicked off its easing cycle with a 50-bp cut in mid-September.

Mr. Rivera also noted “heightened geopolitical tensions and economic uncertainties may have also further dampened investor confidence globally.”

“Likewise, slowing economic growth could have raised concerns among foreign investors. Economic growth was slightly weaker than anticipated in the third quarter of 2024, which may have influenced investment sentiment,” he added.

The Philippine economy grew by weaker-than-expected 5.2% in the July-to-September period, its slowest growth in five quarters or since the 4.3% expansion in the second quarter of 2023.

“For the coming months, the CREATE MORE law would now make international investors more decisive to locate in the country with better incentives that could compete better with other Asian countries,” Mr. Ricafort said.

Further rate cuts by the BSP and Fed would also increase demand for loans and attract more FDIs moving forward, he added.

The Monetary Board is set to have its final policy review on Dec. 19. BSP Governor Eli M. Remolona, Jr. has signaled the possibility of reducing or keeping rates steady.

Meanwhile, Reuters reported that traders are pricing in an 86% chance of another quarter-percentage-point rate cut from the Fed at its Dec. 17-18 meeting.

On the other hand, Mr. Ricafort flagged US President-elect Donald J. Trump’s protectionist trade policies.

“More protectionist policies by a Trump presidency starting in 2025 would discourage some US companies from investing and creating more jobs outside the US, as well as a potential trade war between the US and China or other countries that could slow down the world economy and global trade,” he added.

Mr. Trump has pledged to slap an additional 10% tariff on Chinese goods in a bid to force Beijing to do more to stop the trafficking of chemicals used to make fentanyl, Reuters reported.

Mr. Trump has previously said he would introduce tariffs in excess of 60% on Chinese goods.

The BSP expects to record FDI net inflows of USD 10 billion this year. – Luisa Maria Jacinta C. Jocson, Reporter