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Trade and investment between the Philippines and the European Union (EU) are still lower than the level of mutual ambitions and could be improved through a free trade agreement (FTA), the EU ambassador to the Philippines said.

“Trade and investment figures for the whole of 2024 have not yet been published, but we can already say that our bilateral exchanges are not at the level of our mutual ambitions. They are good, but they are not yet at the right level,” European Union Ambassador to the Philippines Massimo Santoro said at the 9^th Joint Economic Briefing on Wednesday.

“While the EU remains, and it is good, the fourth-largest trading partner of the Philippines with a share of 11% of Philippine exports and 6% of imports, the Philippines is only the sixth economic partner of the EU amongst the ASEAN (Association of Southeast Asian Nations) countries,” he added.

Mr. Santoro said there is potential for bilateral trade and investments to grow further and that can be achieved through an FTA, citing that the target is to see a yearly increase.

“We can do more, considering the potential and the size of the Philippine market and the resources of the country. Thus, the objective of our FTA is to bring our bilateral economic ties to a new level,” he said.

“Through the FTA, we aim to facilitate not only merchandise trade but also trade in services and to create more incentives for investment. We believe that an FTA can serve as a catalyst for economic growth, benefiting businesses, workers, and consumers on both sides,” he added.

Last year, the EU and the Philippines formally resumed FTA negotiations seven years after talks were stalled due to the trade bloc’s concern over human rights violations under the previous administration.

The first round of negotiations took place in October in Brussels, Belgium, while the second round will be from Feb. 10 to Feb. 14 in Manila.

“These discussions started with a very positive momentum, and I am confident this very positive momentum will be kept in order for us, for both sides — the EU and the Philippines — to deliver well and deliver fast,” said Mr. Santoro.

He said the FTA is a priority since it will boost trade and economic bilateral ties between the EU and the Philippines.

For the second round of FTA talks, Mr. Santoro said both sides will continue working on the chapter that has been discussed in the previous round, as well as discuss other chapters. He declined to give other details.

“I am completely confident that the second round will be as productive as the first one, which means a lot,” he added.

President Ferdinand R. Marcos, Jr. is aiming to conclude the negotiations for the EU-Philippines FTA by 2027.  Philippine negotiators have set an internal target of concluding the negotiations by 2026.

DTI Undersecretary Allan B. Gepty earlier said that there is a need to conclude the FTA negotiations as early as 2026, as the Philippines is set to lose its preferential market access to the trade bloc once it hits upper middle-income status.

The Philippines participates in the EU’s Generalised Scheme of Preferences Plus (GSP+), a special incentive arrangement for low- and lower-middle-income countries. It grants the country zero duties on 6,274 locally made products.

Meanwhile, the Philippines is aiming to become an upper-middle-income economy this year and a predominantly middle-class society by 2040. — Justine Irish D. Tabile

Money sent home by overseas Filipino workers (OFW) rose by an annual 3.3% in November amid the peso depreciation against the US dollar, the Bangko Sentral ng Pilipinas (BSP) said.

Data from the central bank showed that cash remittances coursed through banks grew by 3.3% to USD 2.81 billion in November from USD 2.72 billion in the same month a year ago.

However, the amount of remittances in November was the lowest in six months or since the USD 2.58 billion posted in May.

Month on month, cash remittances declined by 8.7% from USD 3.08 billion posted in October.

BSP data showed remittances from land-based workers jumped by 3.9% year on year to USD 2.22 billion in November, while money sent by sea-based workers inched up by 1% to USD 585.505 million.

Meanwhile, personal remittances, which include inflows in kind, increased by 3.5% to USD 3.12 billion in November from USD 3.02 billion a year earlier.

Remittances from workers with contracts of one year or more rose by 3.7% to USD 2.4 billion, while money sent home by workers with contracts of less than a year edged higher by 1.7% to USD 650 million.

11-month period

In the January-to-November period, cash remittances climbed by 3% to USD 31.11 billion from USD 30.21 billion a year earlier.

“Cash remittances are projected to increase by 3% for the full-year 2024,” the central bank said.

The end-November remittances accounted for 90.2% of the BSP’s full-year projection of USD 34.5 billion.

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

“In terms of country sources, the US accounted for the largest share of overall cash remittances January-November 2024, followed by Singapore and Saudi Arabia.”

The United States accounted for 40.9% of overall remittances in the 11-month period, followed by Singapore (7.1%), Saudi Arabia (6.3%), Japan (5%) and the United Kingdom (4.7%).

Other top sources of remittances were the UAE (4.4%), Canada (3.5%), Qatar (2.9%), Taiwan (2.8%) and South Korea (2.5%).

Personal remittances likewise expanded by 3% to USD 34.61 billion as of end-November from USD 33.59 billion a year ago.

Analysts said the recent peso depreciation may have affected cash remittances during the month.

“For the month of November, the US dollar-peso exchange rate mostly ranged at P58-59 levels versus the P56-58 levels in the previous month that somewhat increased the peso equivalent of OFW remittances,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Mr. Ricafort said this would “reduce the sending of more OFW remittances denominated in US dollars/other foreign currencies to pay for the same amount in pesos.”

The peso closed at P58.62 against the dollar at the end of November, weakening by 52 centavos from its P58.10 finish as of end-October.

The local unit also fell to the record low P59-a-dollar level twice during the month.

“The peso experienced a depreciation, indicating more pesos for the same foreign currency,” Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said.

“Remittances are mainly by recipients used to meet their basic needs. The sender may have figured out that they don’t need to send more of their money to meet the needs of their family here,” he added.

Mr. Ricafort also added that the higher cost of living in OFWs’ host countries could have reduced remittances sent home.

For December, Mr. Ricafort said that remittances likely rose amid the holidays.

“OFW remittances could go up in December in view of the expected seasonal surge during the Christmas and New Year holiday season, the biggest spending by households in a typical year,” he said.

The central bank expects cash remittances to grow by 3% in 2024 and 2025. – Luisa Maria Jacinta C. Jocson, Reporter

Corruption remained the top concern of business executives this year, according to a survey of members of the Management Association of the Philippines (MAP).

“We did a survey late last year, and we will certainly address the top seven concerns of MAP members,” said MAP President Alfredo S. Panlilio at the MAP Inaugural Meeting on Wednesday at Shangri-La The Fort.

Aside from corruption, the survey showed other top concerns of management executives include education, the economy, ease of doing business (EODB), climate change, cybersecurity, and dealing with local government units (LGUs).

The survey, conducted late last year, showed fewer MAP members or 45% said that corruption is a top concern for 2025. In the previous survey, 47% of the members said they see corruption as a top concern.

Rising concern over education was also seen in the survey results after 38% of members identified it as a top concern versus 25% in the previous survey.

Around 33% of MAP members are concerned about the economy this year, versus 40% in the previous survey.

According to Mr. Panlilio, MAP plans to address the top concerns through its four thrusts — member engagement; country competitiveness; environmental, social, and governance (ESG) and shared prosperity; and investing in the youth.

“Last year, there were five thrusts. This year, we will merge it into four. Last year’s cluster on innovation, technology, and digitalization has been merged into the cluster on country competitiveness,” he said.

“Not so much because there is less to do, but because our hope is that in focusing, we sharpen impact,” he added.

Mr. Panlilio said the MAP will also continue working with the Anti-Red Tape Authority to address issues on corruption, EODB, and LGUs.

The survey showed 21% of MAP members expressed concern about dealing with LGUs, versus 13% in the previous survey.

“You know, when I was in PLDT Inc. during the pandemic, we had some issues also, but ARTA came in a big way to help us. Actually, there was a directive by the President then to improve connectivity, and one of the hindrances at that time was the licensing and business permits,” Mr. Panlilio said. 

“There were like, 30-plus signatures that were needed to do a project. And because of ARTA, we were able to cut that process down,” he added.

He noted that any project that requires LGU involvement typically experiences delays.

“It is hard. We are talking about telco, power, and any project related to some involvement with LGU where there’s always a delay,” he said.

“So, I think that was a very big initiative that started during the pandemic but was extended by BBM (President Ferdinand R. Marcos, Jr.). So, those are ways that we can sort of help out on how we deal with the LGUs,” he added.

However, he said that improvements, particularly since ARTA ensures there is ease of doing business whenever projects require LGU approval.

“I commend ARTA for what they are doing,” he added. — Justine Irish D. Tabile

The Department of Finance (DoF) is hoping several tax reform measures will be approved by Congress this year despite the upcoming midterm elections.

“The legislators have the option to do public hearings during the break. We can do the work then do just one committee meeting during the resumption to pass the committee report,” DoF Director and Organisation for Economic Co-operation and Development Representative Euvimil Nina R. Asuncion told reporters on the sidelines of an event on Jan. 8.

“We will continue working with the leadership of the House and the Senate to pass the measures.”

The 19^th Congress resumes session on Jan. 14, but will adjourn on Feb. 8 as lawmakers prepare for the start of campaign period. The campaign period for national elective posts starts on Feb. 11, while the campaign for local posts starts on March 28. The elections are scheduled for May 12.

Lawmakers will resume session on June 2 and will adjourn sine die on June 13, formally closing the 19^th Congress.

Ms. Asuncion said the DoF is pushing for the approval of the excise tax on single-use plastics (SUPs), the proposed Government Revenues Optimization through Wealth Tax Harmonization (GROWTH) bill, and reforms for the fiscal regime for the mining industry.

“Instead of doing the CMEPA (Capital Markets Efficiency Promotion Act), we want the GROWTH bill [passed] instead since it covers both capital markets and financial intermediates. Actually, all of the items that are in CMEPA are also in the GROWTH bill. The GROWTH bill is the new Passive Income and Financial Intermediary Taxation Act (PIFITA), basically,” she added.

Ms. Asuncion also said the DoF hopes Congress will approve the bill imposing an excise tax on single-use plastics.

“We’re pushing for that as well. Not just because of revenues, but we really have to start looking at our commitments on climate change… We really see it as causing plastic pollution, especially in our cities. We really have to push for a revenue measure that will really discourage the use,” she said.

The House of Representatives approved its version of the bill in November 2022, while a similar measure is pending with a Senate committee.

Ms. Asuncion said these measures should have been approved last year, and could be deliberated on by the 20^th Congress, which will open on July 28.

“That’s a new Congress again. We will have to explain the measures again and convince different people, depending on who wins in the elections,” DoF’s Ms. Asuncion said.

Albay Rep. Jose Maria Clemente “Joey” S. Salceda, who chairs the House Ways and Means Committee, said in a Viber message that tax reforms would not be delayed by the elections.

“I am not that worried about the elections. We were able to pass significant reforms during the lame duck session last time,” he said.

He noted the CMEPA bill is “well on the way,” while the proposed mining fiscal regime reform bill has a “strong chance” of getting passed before the 19^th Congress ends.

“My preference is we get the Motor Vehicle Road User’s Charge done before the 19^th Congress ends. The rates have not been updated since 2004, and it could yield substantial revenues of up to 52 billion for public transport, road projects, and other transport improvements,” Mr. Salceda said.

Tax amnesty

Meanwhile, DoF’s Ms. Asuncion said the department is looking to introduce a general tax amnesty measure.

“So right now, the estate tax amnesty is still effective. The delinquencies are down. But this is what we will look at if we were to have general tax amnesty,” she said.

“Hopefully we get to introduce it this year. Whether this Congress or the next, that is the question,” she added.

In 2019, then President Rodrigo R. Duterte signed Republic Act 11213 or the Tax Amnesty Act but vetoed the provision for a general tax amnesty due to loopholes. Mr. Duterte only retained the provisions for estate tax amnesty.

“Tax amnesty is but a one-off measure but can result in tax decline in the long run as taxpayers would think they could always avail themselves of amnesty in the future,” Action for Economic Reforms Coordinator Filomeno S. Sta. Ana III said in a Viber message. — AMCS 

The Philippines’ gross domestic product (GDP) is expected to accelerate this year and in 2026 amid strong domestic demand, the United Nations (UN) said.

In its latest World Economic Situation and Prospects report, the UN said it expects the Philippine economy to expand by 6.1% in 2025 and 6.2% in 2026.

“The Philippines is one of the strongest growth performers among East Asian economies,” UN Department of Economic and Social Affairs Economic Affairs Officer Zhenqian Huang said in a follow-up e-mail.

“The anticipated sustained growth reflects robust domestic demand, ongoing public investments, and the positive effects of recent investment policy reforms, along with a vibrant labor market and a growing services sector.”

The UN’s forecasts are both within the government’s 6-8% growth target for this year and the next.

It noted that GDP growth likely averaged 5.6% in 2024, below the government’s 6-6.5% target.

For 2025, the Philippines is projected to be the second-fastest growing economy in the region, just after Vietnam (6.5%) and ahead of Cambodia (6%), Malaysia (4.6%), Thailand (3.1%) and Singapore (2.6%).

“In 2025 and 2026, economic growth in the Philippines is expected to be fueled by strong investment activity and robust private consumption,” Ms. Huang said.

“Monetary easing amid lower inflation will support domestic demand in the near term,” she added.

The Bangko Sentral ng Pilipinas (BSP) began its easing cycle in August, cutting interest rates by a total of 75 basis points (bps) last year. This brought the target reverse repurchase rate to 5.75%.

BSP Governor Eli M. Remolona, Jr. has signaled further cuts this year, citing that there is “still room to ease.”

Full-year inflation settled at 3.2% in 2024, in line with the BSP’s own forecast.

It also marked the first time that annual inflation fell within the central bank’s 2-4% target since 2021, when inflation averaged 3.9%.

Ms. Huang also noted “robust” remittance flows, which will help boost household spending.

Latest data from the central bank showed that cash remittances grew by 3% year on year to $28.3 billion in the January-October period.

“Despite ongoing fiscal consolidation, improved government revenue collection over the past decade has enabled sustained public spending on essential infrastructure to unlock long-term potential,” she said.

Latest data from the Bureau of the Treasury (BTr) showed the National Government’s (NG) budget deficit stood at PHP 1.18 trillion in the 11-month period. Revenues jumped by 15.16% year on year to PHP 4.11 trillion.

“Additionally, the global demand for AI (artificial intelligence)-related electronic products is expected to boost merchandise trade, while services trade will benefit from the ongoing recovery in international tourism.”

On the other hand, Ms. Huang flagged downside risks to the growth outlook.

“Increasing trade tensions, including the possibility of higher tariffs, could undermine merchandise trade performance,” she said.

US President-elect Donald J. Trump, who is set to take office next week, has pledged to impose a 10% universal tariff as well as a 60% tariff on Chinese goods.

“Current account deficits since the end of the pandemic make the economy susceptible to exchange rate volatility, especially if there are unexpected monetary policy shifts by major developed country central banks.”

She also noted how the country is vulnerable to climate shocks and natural disasters, which could lead to “significant economic and social losses.”

A recent study by the Asian Development Bank (ADB) showed the Philippines could potentially lose 18.1% of its GDP by 2070 due to climate change under a high emissions scenario.

Meanwhile, the UN expects headline inflation to remain steady at 3% this year until 2026.

“Inflation in the Philippines has been relatively benign and is projected to remain within the central bank’s target range in the near term,” Ms. Huang said.

This year, the BSP expects inflation to average 3.3%. Its risk-adjusted forecast is at 3.4%.

The downtrend in inflation will be mainly driven by easing price pressures on food, she said.

“While inflation is not a major policy concern at the moment, inflationary pressures are unlikely to dissipate entirely… Potential higher tariffs from trading partners, disruptions to supply chains and trade routes, and climate-related disasters could reignite upward pressure on prices,” Ms. Huang said. – Luisa Maria Jacinta C. Jocson, Reporter