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The Bangko ng Pilipinas (BSP) is expected to deliver two more 25-basis-point (bp) cuts until early next year following the central bank chief’s dovish comments, analysts said.

This came after the Monetary Board last week unexpectedly trimmed the key policy rate by 25 bps to a three-year low of 4.75%, a move that BSP Governor Eli M. Remolona, Jr. attributed to weakening business sentiment amid the widening flood control corruption mess.   

“We never bought into Mr. Remolona’s talk of a ‘sweet spot’ in August and, with corporate sentiment going from underwhelming to outright miserable, we reckon more monetary easing is in the pipeline until early next year,” Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco and Asia Economist Meekita Gupta said in a report.

“We still see a 25-bp cut in December and we’ve added an additional reduction in (the first quarter next year), taking the TRR (target reverse repurchase) rate to a terminal of 4.25%,” they added.

If realized, the policy rate of 4.25% would be the lowest in over three years or since August 2022 and would match the rate in September 2022.

Mr. Remolona had also signaled at least two more cuts at its December meeting and by next year, noting the BSP now sees the neutral nominal policy rate to be closer to 4% than their earlier projection of 5%. 

“BSP’s tone was decisively more dovish by suggesting that it sees scope for a more accommodative stance and that the output gap may be larger,” Nomura Global Markets Research analysts Euben Paracuelles and Yiru Chen said in a note.

Nomura likewise expects the BSP to bring borrowing costs to a terminal rate of 4.25% by the first quarter next year, but noted that they see “risks of more cuts next year if adverse scenarios play out.”

Meanwhile, Bank of the Philippine Islands (BPI) and MUFG Global Markets Research see the central bank’s policy easing potentially stretching until the first half of 2026.

“Further easing could be supported by several factors, including expectations that the (United States) Federal Reserve will also deliver additional rate cuts amid a more dovish composition of the FOMC (Federal Open Market Committee) once Chair (Jerome) Powell steps down in May 2026,” BPI Lead Economist Emilio S. Neri, Jr. said in a note.

Slower Philippine economic growth amid growing concerns over public infrastructure spending and disinflationary risks from China’s potential dumping could likewise give the BSP more room to cut, he added.

Last week, the Trade department warned China, which is facing high US tariff rates, might start diverting its goods to the Philippines. This move could lead to foregone revenues and slower inflation.

Mr. Neri expects the BSP to end its current easing cycle once the policy rate hits 4% next year.

“However, such aggressive easing could prove to be an overshoot, raising the risk of a sharp policy reversal later on once inflation accelerates,” he said.

“The possible continuation of BSP rate cuts could drive a rally in government bonds, led by the short end of the yield curve,” he added.

Meanwhile, MUFG Senior Currency Analyst Michael Wan said the central bank might also bring its reserve requirement ratio (RRR) to 4% from 5% by 2026. 

The BSP last reduced the RRR in February by 200 bps to 5%. RRR refers to the portion of a bank’s deposits held as reserves and cannot be lent out and is used to manage the banking system’s liquidity.

MUFG also noted that the Philippine central bank governor’s sentiments in the latest meeting reflect “somewhat less support” for the peso.

Mr. Remolona on Thursday said they will only defend the peso if it depreciates sharply to a point that it could become inflationary.

“For the PHP, these changes in forecasts imply somewhat less support for PHP from (a foreign exchange) perspective, but what will also matter for FX (foreign exchange) is the extent of growth slowdown, and also the resultant impact on key flow dynamics such as the current account deficit, FDI (foreign direct investment) inflows, and to a smaller extent portfolio flows,” MUFG’s Mr. Wan said. — Katherine K. Chan

Right-of-way (RoW) bottlenecks are stalling the rollout of official development assistance (ODA)-funded infrastructure projects, Asian Development Bank (ADB) Philippine Country Director Andrew Jeffries said.

“The problems that are ongoing — right of way, land acquisition and the like, are problems faced globally, that’s not a unique problem in the Philippines,” Mr. Jeffries told BusinessWorld on the sidelines of an event on Oct. 6.

He cited densely populated areas such as the Clark region through Metro Manila to Laguna, where the ADB-funded Malolos-Clark Railway, part of the North-South Commuter Railway (NSCR), is located.

“The government in particular is very adamant that progress be made quickly, and they’re anxious to show tangible results during this administration. We’re working hard with them to make sure that happens,” Mr. Jeffries said.

The acquisition of RoW from landowners for National Government infrastructure projects is mostly hampered by disputes over property valuation.

Department of Transporation (DoTr) Acting Secretary Giovanni Z. Lopez said the newly signed Accelerated and Reformed Right-of-Way Act (ARROW) as a key tool in resolving land acquisition issues. 

The agency also expanded its workforce, tightened coordination with the local government units for RoW acquisition.

“On the issue of right of way, I think we have to disabuse our mind that to consider right of way as parallel activity, it must be considered as the first priority when it comes to project implementation,” he said in a separate Philippine Development Forum panel on Oct. 6.

Republic Act No. 12289 or the ARROW law, which was recently signed by President Ferdinand R. Marcos, Jr., sought to streamline the land acquisition process to ensure the faster construction of key infrastructure.

This measure amended the existing law on government access or expropriation of land for infrastructure projects by clarifying provisions on subterranean or underground rights-of-way.

It covers roads, bridges, power and water pipelines, telecommunications facilities, airports, seaports, and irrigation projects, among others.

Mr. Lopez said it already resolved 75% of right-of-way issues for the Metro Manila Subway and expected to complete 95% by end-2025. The bulk of the project is funded by the ADB.

Nigel Paul C. Villarete, a senior adviser on public-private partnerships at the technical advisory group Libra Konsult, Inc., said the law will allow the government to streamline RoW acquisition process and speed up project implementation.

“The Accelerated and Reformed Right-of-Way Act surely helped in facilitating for faster and easier project implementation, but it retains restraints called for by the upholding of private rights,” he told BusinessWorld in a Viber message over the weekend.

Mr. Villarete said many land owners will resist but national interests should be upheld over private ones.

“Until we can amend our existing RoW law, our ODA will always be hampered by that,” Mr. Villarete said.

In the 2024 ODA Portfolio Review Report, the Department of Economy, Planning, and Development (DEPDev) also flagged the right of way acquisition issues along with procurement delays project design misalignment as among the ongoing challenges faced by implementing agencies.

The ADB was the second-biggest development partner of the Philippines, with USD 11.05 billion worth of 59 loans and grants, behind Japan at USD 13.32 billion.

ADB projects

In the same interview, Mr. Jeffries said the ADB is working on extending more support in Mindanao as it is funding connectivity infrastructure projects such as North-South Commuter Railway, Bataan-Cavite Interlink Bridge, and Laguna Bay transport.

“Going forward, we have further financing for some of these same large projects, but we are working on more support in Mindanao. We have projects in the design stage for more connectivity in Mindanao,” he said.

The ADB is also looking at getting the board’s approval for support for the insurance sector and improving the business environment with technology.

“We have a support program for the insurance industry, which is much lower penetration in the Philippines compared to a lot of ASEAN (Association of Southeast Asian Nations) neighbors, and there’s a lot of elements to that,” the ADB official said.

“Insurance companies, you know, people pay them premiums to insure health or other life or other kinds of risks. Insurance companies need to invest that money, and in a lot of countries it’s a source of funding for infrastructure,” he added.

ADB approval for the PHP 400-million Insurance Reform Program Subprogram 1 project is still pending. The Insurance Commission is the implementing agency. — Aubrey Rose A. Inosante, Reporter

The Bangko Sentral ng Pilipinas (BSP) unexpectedly slashed its policy rate by 25 basis points (bps) for a fourth straight meeting on Thursday, citing a weakened economic outlook and declining investor confidence amid a widening corruption scandal. 

The Monetary Board reduced the target reverse repurchase rate by 25 bps to 4.75%, the lowest in three years or since September 2022.

Rates on the overnight deposit and lending facilities were also lowered by 25 bps each to 4.25% and 5.25%, respectively.

“The Monetary Board… noted that the outlook for domestic economic growth has weakened. This outlook reflects in part the impact on business confidence of governance concerns about public infrastructure spending,” it said in a statement.

The rate cut came as a surprise as most analysts expected a pause in monetary easing. Only six out of 16 analysts polled by BusinessWorld last week predicted a 25-bp cut.

The central bank has now lowered borrowing costs by a total of 175 bps since it began its easing cycle in August 2024.

After the BSP’s announcement, the peso fell by 28.5 centavos to close at PHP 58.235 versus the dollar on Thursday from its PHP 57.95 finish on Wednesday, Bankers Association of the Philippines data showed.

The Philippine Stock Exchange index fell by 0.67% to close at 6,057.40 on Thursday.

“This decision reflects our latest economic conditions as well as judicious adjustments to our model. These adjustments reflect the new importance of business sentiment in light of the issues related to government infrastructure spending,” BSP Governor Eli M. Remolona, Jr. said during a briefing.

A corruption probe into anomalous infrastructure projects has embroiled government officials, including lawmakers, the Public Works department and contractors. They are accused of pocketing millions of pesos in government funds meant for flood control projects, prompting widespread anger among citizens.

Mr. Remolona said the corruption scandal has weakened business sentiment and in turn, weighed on the economic growth outlook in the near term.

“Governance concerns on public infrastructure spending have weighed on business sentiment. The stock market has declined, and there are now fewer companies with expansion plans,” Mr. Remolona said.

“We need a credible resolution to this issue.”

The BSP kept its gross domestic product (GDP) growth forecast for this year at 5.5%. If realized, GDP would be at the lower end of the government’s 5.5-6.5% growth target.

It expects economic growth to pick up to 6% in 2026, at the low end of the government’s 6-7% goal.

BSP Deputy Governor Zeno Ronald R. Abenoja noted that there is a “greater probability” that the country’s economic growth will fall short of the target.

“There could be some adjustments later on, but we want to better understand how the National Government and the business community respond as this crisis evolves,” he said.

Mr. Remolona said investments not going where they are supposed to go has caused the economy to underperform, leading to a wider-than-expected output gap.

“As the extent of the issues related to infrastructure spending became clear, our estimates of the output gap needed to be recalibrated. We now think the gap is wider than we thought,” he said. “All in all, we see more scope for a more accommodative policy… We have more wiggle room than before.”

Asked if developments in the country now outweigh external factors, Mr. Remolona said: “The external factors are still there. They’re still affecting our outlook. But I do think that these governance issues are a bigger factor for now.”

The Monetary Board also noted indications of “moderating demand” that reflect “lingering uncertainty from the external environment.”

More rate cuts

Meanwhile, Mr. Remolona said there could be another rate cut at the next policy meeting in December, adding it is possible there could be further easing next year.

“The favorable inflation outlook and moderating domestic demand provide room to further support economic activity,” the BSP said.

Mr. Remolona said that the nominal rate could settle between 4% and 5%.

The central bank also said inflation remains “quite benign,” but potentially higher electricity rates and increased tariffs on rice imports pose limited inflationary pressures.

It lowered its inflation projections for next year to 3.1% from 3.3% and for 2027 to 2.8% from 3.4%.

Inflation picked up to a six-month high of 1.7% in September due to costlier vegetables and fuel, but was still below the 2-4% target. This brought the nine-month average to 1.7%.

Analysts expect the Monetary Board to deliver another 25-bp cut in December to bring the rate to 4.5% by yearend.

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank and & Trust Co., said in a Viber message that the latest cut reflects BSP’s efforts to support “moderating economic growth momentum” ahead of the third-quarter GDP report.

“Given the rather dovish statement, we retain our (December) rate cut call with (the BSP) possibly taking rates to 4.5% by end 2025. The focus is growth while inflation dynamics allow them to work back aggressive rate cuts from the post pandemic,” he added.

Third-quarter GDP data will be released on Nov. 7.

“Our core view now is that the Board will cut again at the next meeting, to a terminal level of 4.5%, given its decidedly more dovish October statement,” Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said.

ANZ Research said the subdued growth and inflation outlook gives the BSP room to deliver two more 25-bp cuts until the first quarter next year to bring the key policy rate to 4.25%.

“A tighter fiscal policy is not desirable at this stage of the business cycle when prospects for other growth drivers including exports and household consumption are also not robust,” ANZ economist Arindam Chakraborty and Chief Economist Sanjay Mathur said in a report.

Meanwhile, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the latest rate cut brings the differential rate between the BSP and the US Federal Reserve to 50 bps, its narrowest yet.

The Federal Reserve’s current policy rate stands at the 4-4.25% range.

Mr. Ricafort likewise expects another 25-bp cut on Dec. 11, “essentially matching the total of (50 bps) additional Fed rate cuts for the rest of 2025 to maintain healthy interest rate differentials as well.” — Katherine K. Chan

The ASEAN+3 Macroeconomic Research Office (AMRO) maintained its Philippine growth projections for this year and next year, despite global trade uncertainties.

In its latest ASEAN+3 Regional Economic Outlook, AMRO said it sees the Philippine economy growing by 5.6% this year and 5.5% in 2026, unchanged from its July estimates.

If realized, the Philippines would be the second-fastest growing economy in the region until 2026, behind Vietnam which is seen to grow by 7.5% this year and 6.4% next year.

While the AMRO’s projection for 2025 was within the National Government’s 5.5-6.5% target but below the 6-7% goal for 2026.

AMRO Group Head and Lead Economist Runchana Pongsaparn said the Philippine gross domestic product (GDP) growth projection for 2025 and 2026 are slower than the 5.7% expansion in 2024.

“It’s partly because of the weaker export, just like in other countries in the region, where we expect that the impact of the US (United States) tariff is going to kick in towards the end of the year and next year,” she said in an online briefing on Thursday.

Since August, Philippine goods entering the US have been slapped with a 19% levy, the same rate imposed on the country’s neighbors Indonesia, Cambodia, Malaysia and Thailand.

Ms. Pongsaparn said they expect Philippine consumption to grow steadily on the back of slower inflation, a robust labor market and remittances.

Asked if the growing corruption scandal would have an impact on growth, Ms. Pongsaparn said the impact would be minimal if it is “short-lived.”

“In terms of the scandal, I think we would have to see to what extent it’s actually going to affect the wider economy because if the event is short-lived and then it does not severely affect the investment sentiment, then that could be contained and may not affect the growth forecast materially. So, we still wait and see the overall impact,” she said.

On the other hand, AMRO Chief Economist Dong He said public spending as well as public and private investments should shield the economy from risks surrounding climate and services exports.

“The Philippines, because of its geography, is quite exposed to climate risks,” he said. “So, infrastructure really has to be strengthened. Some of these issues with flooding have to do with the infrastructure.”

Mr. He also said that the Philippines should continue upskilling its workforce, especially in the age of artificial intelligence (AI).

“The Philippines is a very service-oriented economy… But look, in the age of AI, how do we operate these services? So, that would also require upskilling of human resources in terms of public investment and also private sector investment,” he said.

The think tank upwardly revised its growth outlook for the ASEAN+3 region to 4.1% this year from its earlier projection of 3.8%. It also raised its 2026 growth projection to 3.8% from 3.6% previously.

ASEAN+3 comprises the Association of Southeast Asian Nations (ASEAN) members plus China — including Hong Kong — Japan and South Korea.

AMRO said the better outlook came amid the region’s “robust first-half performance and stronger-than-expected export momentum.”

It also raised its GDP forecast for the ASEAN region to 4.6% this year from 4.4%; and 4.3% in 2026 from 4.2% previously.

However, AMRO noted that more protectionist policies, slower growth in major economies, more volatile global financial markets, and higher global commodity prices pose risks to the region’s economic growth.

It also said governments in the ASEAN+3 region should use a monetary-fiscal-macroprudential policy mix to support growth and be prompt in addressing potential risks from structural changes in the market.

AMRO added that it should also “deepen regional financial cooperation to help reduce vulnerabilities stemming from heavy resilience on the US dollar.”

Meanwhile, AMRO’s Philippine inflation estimates for 2025 and 2026 were also unchanged at 1.8% and 3.2%, respectively.

These are slightly higher than the Bangko Sentral ng Pilipinas’ forecast of 1.7% for this year and 3.3% for 2026.

For ASEAN+3, inflation is projected to average 1% in 2025 and 1.1% in 2026. For ASEAN alone, inflation is seen to settle at 2.5% this year and 2.8% next year.

“Well-calibrated policy mixes and strong fundamentals — including robust banking systems, deepening financial markets, ample foreign reserves, and available policy space — have provided critical buffers,” it said.

The think tank said the region’s inflation outlook provides central banks with room to be more accommodative in its monetary policy to support growth. — Katherine K. Chan

The Philippines’ unemployment rate dropped to 3.9% in August, driven by renewed hiring in the agriculture and construction sectors, the Philippine Statistics Authority (PSA) reported on Wednesday.

The August jobless rate is an improvement from the three-year high of 5.3% in July, and 4% in August 2024, preliminary Labor Force Survey data showed.

The number of jobless Filipinos slid to 2.03 million in August from 2.59 million in July and 2.07 million a year earlier.

PSA Undersecretary and National Statistician Claire Dennis S. Mapa attributed improvement in the labor market in August to the recovery in some industries that were affected by typhoons in July.

“What we observed was that the biggest decline in July was in agriculture, retail trade, and construction — but they’ve now bounced back,” he told a news briefing in Filipino.

“So, in a way, the job losses in July turned out to be temporary, and those who were displaced have returned. Basically, these are the industries that recovered,” he added.

For the first eight months, the jobless rate stood at 4.1%, a tad higher than the 4% rate a year ago.

In August, the agriculture and forestry sector gained 1.35 million jobs from July, a month that was battered by bad weather. This brought the total number of workers in the sector to 8.73 million, up from 7.38 million a month prior. Year on year, the sector gained 300,000 workers in August.

The Philippines is struck by more tropical cyclones annually than any other region, with an average of 20 storms each year. According to the national weather bureau, typhoon activity peaks between July and October, accounting for nearly 70% of all cyclone formations during this period.

Labor Secretary Bienvenido E. Laguesma welcomed the improved jobs data, saying the government is committed to “future-proofing” and “weather-proofing” jobs.

“We hope and look forward to sustaining these favorable employment statistics through stronger collaboration and partnerships with business organizations and the private sector, as well as government agencies and departments,” he said via Viber.

Underemployment falls

Meanwhile, underemployment eased to 10.7% in August from 11.2% a year prior and 14.8% a month before.

This was equivalent to 5.38 million Filipino workers that wanted more working hours or an additional job in August.

Of the underemployed workers in August, 62.4% worked less than 40 hours a week, while 37.6% worked 40 hours or more a week.

For the January-to-August period, the underemployment rate rose to 12.7% from 12.1% a year ago.

Also, the employment rate improved to 96.1% in August from 94.7% in July, with the total employed persons rising to 50.1 million.

This brought the eight-month average employment rate to 95.9%, down from 96% a year ago.

Wage and salary workers accounted for 64.4% of employed persons, followed by self-employed without any paid employees (27%), unpaid family workers (7%) and employers in own family-operated farm or business (1.6%).

Among wage and salary workers, those employed by private establishments accounted for 78%, followed by those employed in government or government-controlled corporations (14.1%).

The labor force participation rate climbed to 65.1% in August from 60.7% in July, equivalent to 52.13 million Filipinos aged 15 and older either working or seeking work.

PSA data showed the service sector remained the country’s biggest employer in August, accounting for 61.5% of total jobs, followed by agriculture at 20.4% and industry at 18.1%.

Wholesale and retail trade, agriculture and forestry, and construction were the top sub-sectors.

On an annual basis, construction gained 540,000 workers, followed by fishing and aquaculture (448,000), administrative and support service activities (307,000), agriculture and forestry (300,000), and other service activities (239,000).

In contrast, wholesale and retail trade; repair of motor vehicles and motorcycles posted the largest annual decline in workers at 788,000, followed by public administration and defense, compulsory social security (-220,000); education (-151,000); human health and social work activities (-134,000); and real estate activities (-75,000).

Youth employment also improved, with the employment rate among those aged 15 to 24 rising to 88.3% from 81.9% in July, the local statistics agency said.

On average, employees worked 41 hours a week, up from 40.7 hours in August last year.

Threat of bad weather

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan called for continued investment in workforce development, infrastructure and digitalization — especially for micro, small, and medium enterprises — to build resilience in vulnerable sectors. 

“We aim to enhance resilience in sectors vulnerable to disruptions, such as retail trade and agriculture, by prioritizing improvements in logistics, infrastructure, digitalization, and workforce development,” he noted.

“The government is also ramping up investments in climate-resilient infrastructure and proactive measures, alongside timely emergency employment programs to support workers affected by disruptions.”

In a note, Chinabank Research said the threat of bad weather conditions persists and continues to pose a risk to job opportunities, especially in agriculture and fisheries, retail trade and construction.

“On a more positive note, seasonal demand due to the upcoming holidays should provide some support to the labor market this quarter,” it added.

University of the Philippines School of Labor and Industrial Relations Benjamin B. Velasco said historical data show an uptick in employment as the holiday season approaches.

“It can still be dampened by the impact of climate events on vulnerable sectors like agriculture,” he said via Facebook Messenger.

Mr. Velasco said the drop in unemployment and rise in labor force participation are positive developments as more people who were out of work or discouraged from working are now employed.

“Hopefully, more of them are in full-time work and good jobs, as shown in [a] slight decrease in the underemployed.”

PSA’s Mr. Mapa said the labor market in September may have been affected by the series of typhoons and the recent 6.9-magnitude earthquake that hit southern Philippines. — Chloe Mari A. Hufana, Reporter

Economists and tax experts warned that scrapping the value-added tax (VAT) may trigger a fiscal or even an economic crisis, as the Bureau of Internal Revenue (BIR) collected PHP 487 billion in the first eight months of 2025.

“Abolishing VAT will put the country in fiscal crisis, drive up inflation, constrain government spending for social welfare and other vital programs, and cause a ratings downgrade,” Foundation for Economic Freedom President Calixto V. Chikiamco told BusinessWorld in a Viber message.

“Feasible but insane.”

VAT is a 12% tax slapped on sales, leases, barters, and imports of goods and services in the Philippines. VAT collections account for around a fifth of the BIR’s total revenues.

Cavite Rep. Francisco A. Barzaga filed a bill on Monday seeking to remove the 12% VAT on goods and services, citing its disproportionate impact on low- and middle-income households amid elevated inflation and rising cost of living.

Mr. Barzaga had suggested that any revenue shortfalls could be offset by imposing “wealth taxes” and increasing excise duties on “nonessential and luxury goods,” including cigarettes, alcoholic drinks, vehicles and gambling activities.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said Mr. Barzaga’s “incredulous” proposal will result in an economic collapse.

“Removing VAT will not just result in a fiscal crisis. It would lead to an economic crisis,” he said in a Viber message.

Raymond “Mon” Abrea, chairman and chief executive officer of the Asian Consulting Group called the lawmaker’s proposal “reckless and populist.”

“The real issue is not the tax, but the billions lost to leakages and fake exemptions, including an estimated P88 billion abuses of PWD (persons with disability) perks in 2023,” he said in social media post on Tuesday.

Mr. Abrea said the “more prudent approach” would be trimming the VAT rate to 10% while eliminating unnecessary exemptions such as broadening the tax base, curbing abuse, and safeguarding fiscal stability without placing additional burden on consumers.

He earlier estimated that a 2% VAT reduction could cost the government around PHP 200 billion annually, while saving households roughly PHP 7,000 per year.

Mr. Abrea’s proposal to cut the VAT rate to 10% aligns with the bill filed by Batangas Rep. Leandro Antonio L. Leviste, who argued that the current tax system is “regressive.”

However, Mr. Chikiamco said lowering VAT will still have the “same bad effects although to a lesser degree.”

Eleanor L. Roque, a tax principal of P&A Grant Thornton, said abolishing VAT altogether is not feasible as the government relies on the VAT as a major source of tax collection.

“Congress can look at lowering the VAT rate and compare it with our peers in the ASEAN (Association of Southeast Asian Nations) region if they are looking for ways to help the taxpayers,” she said in a Viber message.

The Philippines’ 12% VAT rate is relatively higher compared with Southeast Asian countries. For instance, Indonesia’s VAT is at 12%, while Cambodia, Malaysia, Vietnam and Laos are at 10%; Singapore at 9% and Thailand at 7%.

Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, said scrapping VAT would “ease the disproportionate tax burden on ordinary Filipinos.”

“Abolishing it and compensating with stronger billionaire wealth, corporate and wealthy family income taxes will make the tax system much fairer and more equitable,” he said in a Viber message.

Mr. Africa said that implementing a “billionaire wealth tax” could yield PHP 500 billion to PHP 600 billion in government revenues annually, and would be enough to supplement the funding shortfalls from the removal of VAT.

However, proposals to abolish VAT or amend the VAT law are unlikely to get the support of Finance Secretary Ralph G. Recto, who authored the legislation that raised the VAT rate to 12% in 2005.

Meanwhile, the BIR said it collected PHP 487.12 billion in VAT as of end-August period, up 8.87% from PHP 447.42 billion a year ago. However, this was 1.64% short of the BIR’s PHP 495.26-billion VAT collection goal for the January-to-August period.

VAT collection accounted for 22.77% of the agency’s total revenues of PHP 2.14 trillion during the eight-month period.

In an e-mailed document to BusinessWorld, the BIR said VAT collection from “government investments in healthcare, infrastructure and agriculture” helped drive overall revenue collection so far this year.

The BIR is expected to collect PHP 796.87 billion from net of VAT refunds this year, climbing to PHP 1.3 trillion by 2028, the latest Budget of Expenditures and Sources of Financing said.

Meanwhile, the Bureau of Customs is projected to generate PHP 589.5 billion from VAT on imports in 2025, with collections reaching PHP 695.77 billion by 2028.

Earlier, the World Bank said that the Philippines can boost its revenue collections by expanding its VAT base and improving tax administration.

World Bank Country Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoğlu said the country has “substantial space to increase VAT revenues by improving compliance and reducing exemptions and special rates.” — Aubrey Rose A. Inosante, Reporter with Kenneth Christiane L. Basilio

President Ferdinand R. Marcos, Jr. on Wednesday signed eight new petroleum service contracts (PSCs), representing a potential investment of around USd 207 million (around PHP 12 billion) over a seven-year exploration period.

The Department of Energy (DoE) said the awarding of these service contracts (SC) means that exploration for potential petroleum and hydrogen sources in key areas across the Sulu Sea, Cagayan, Cebu, Northwest Palawan, East Palawan, and Central Luzon can now begin.

“Unlocking over USD 200 million in investments, these service contracts represent our continued efforts to attain greater energy security, and therefore, economic stability, and self-reliance,” Mr. Marcos said in his speech during the official presentation of the signed agreements at Malacañan Palace.

The Philippines is a major importer of petroleum products, which are primarily sourced from the Middle East.

Mr. Marcos said the country imported over 340,600 barrels of liquid fuel last year, equivalent to approximately 99.68% of the Philippines’ entire petroleum supply.

To reduce dependence on imported oil and increase the utilization of indigenous resources, the Philippines also explores the potential of hydrogen as an alternative fuel.

“These service contracts signify not only our determination to secure new energy sources, but also our readiness to embrace innovation and sustainability while reducing import dependence,” said Energy Secretary Sharon S. Garin.

“From conventional petroleum to native hydrogen, we are expanding the frontiers of Philippine energy exploration,” she added.

Asked about the potential interference by China in the contracted areas, specifically those located in west of Palawan, the Energy chief said that all projects are well coordinated with the Department of National Defense “whether near the disputed areas or not.”

The DoE said that all the awarded contracts have undergone a transparent and competitive selection process under the Philippine Conventional Energy Contracting Program.

PSC Nos. 80 and 81 located in the southern Sulu Sea were awarded to a consortium comprising of Australia’s Triangle Energy (Global) Limited, United Kingdom’s Sunda Energy Plc., Pangilinan-led PXP Energy Corp. and The Philodrill Corp.

PSC 80 spans about 780,000 hectares, while PSC 81 covers 532,000 hectares. These contracts will be co-managed by the DoE and the Ministry of Environment, Natural Resources, and Energy of the Bangsamoro Autonomous Region in Muslim Mindanao.

Separately, PSC No. 82 was awarded to Triangle Energy, allowing it to proceed with petroleum exploration across 480,000 hectares in Cagayan basin.

For native hydrogen exploration in Central Luzon, the government awarded PSC Nos. 83 and 84 to US-based Koloma, Inc. SC 83 covers 126,645 hectares while SC 84 covers 85,082 hectares.

Gas 2 Grid Pte. Ltd. secured PSC No. 85 to explore 127,475 hectares in onshore Cebu.

A consortium of Filipino companies composed of Philodrill, Anglo Philippine Holdings Corp., PXP Energy, and Forum Energy Philippines Corp. received PSC No. 86, which covers 132,000 hectares in the Northwest Palawan Basin.

Situated in the East Palawan Basin, PSC No. 87 was awarded to Israel’s Ratio Petroleum Ltd.

With contracts in place, the companies can commence their respective work programs, which include geological and geophysical studies, seismic surveys, and drilling activities, as appropriate, to assess the potential of the contract areas.

Aside from exploration, service contractors will fund and undertake educational scholarships, capacity-building, and community development programs.

Edgar Benedict C. Cutiongco, president of the Philippine Petroleum Association, said that the PSCs unlock the potential of indigenous hydrocarbon resources to offer “a cost-effective and competitive energy supply” for consumers.

He said that reducing reliance on imported fuels “directly contributes to price stability and economic resilience.”

“The timely execution of these PSCs is expected to catalyze exploration and discovery activities, ensuring a reliable and secure energy supply for the future,” Mr. Cutiongco told BusinessWorld.

“The success of these initiatives will depend on the industry’s collective commitment to responsible and efficient resource development.”

Former Energy Undersecretary Jose M. Layug, Jr. said that the signing of eight PSCs is “a good signal for revival of oil and gas exploration in the Philippines.”

The President has urged investors to leverage their investments to drive meaningful progress for the Philippines.

“In return, I encourage our investors to turn your investments into engines of progress. Operate with accountability, with respect for the environment, and fairness towards the communities that host your operations,” Mr. Marcos said.

“Let us prove that responsible enterprise and national development can go hand-in-hand — that growth built on transparency and responsibility is growth that will last,” he added. — Sheldeen Joy Talavera, Reporter