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Philippines Leads Manufacturing Sector in ASEAN

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Malacañang on Thursday, June 8, welcomed the report saying that the Philippine manufacturing sector now tops ASEAN countries. Presidential spokesperson Ernesto Abella, in a press briefing, noted that this feat is attributed to sound economic fundamentals under the Duterte administration.

According to Nikkei ASEAN Manufacturing Purchasing Managers’ Index (PMI), the country’s manufacturing sector scored 54.3, indicating a solid increase in output for the month of May.

As a result, the Philippines has ranked first among ASEAN countries in the manufacturing sector, replacing Vietnam as stronger performer in this sector,” Abella said.

We’d like to attribute this to the strong economic fundamentals also of the Philippines,” he added.

Joining Abella during the press briefing was Irene Santiago, the chairperson of the Government of the Philippines Implementing Panel for the Bangsamoro Peace Accord.

Santiago reported that the Bangsamoro peace process is on track and that the Bangsamoro Transition Commission (BTC) has approved the final draft of the Bangsamoro Basic Law last Tuesday, June 6.

She said they hope that the final draft can be submitted to the President before the middle of June.

Santiago also said that the government, in cooperation with the Moro Islamic Liberation Front, opened the second peace corridor in Lanao del Sur to rescue trapped civilians and channel relief goods.

Several organizations and groups such as the Autonomous Region in Muslim Mindanao, the International Committee of the Red Cross, as well as the Bangsamoro Development Agency, were able to send food, medicines, and other humanitarian aid, she said.

So the idea of the peace corridor is really a safe passageway to save lives, whether it’s trapped civilians in Marawi City or opening a passageway so that food and other medicines and other assistance can come through,” Santiago said.

For his part, Eastern Mindanao Command deputy commander, Brig. Gen. Gilbert Gapay assured that while martial law continues to be implemented in Mindanao, government’s actions are in accordance with the rule of law and in adherence to human rights.

He said checkpoints and maritime patrols are being conducted in eastern Mindanao, noting that it was during the checkpoint operations where the Maute patriarch, Cayamora Maute and former Marawi City mayor Fajad Umpar Salic were apprehended in separate occasions.

In some areas, curfews were also imposed and this was in coordination with the various LGUs and we are implementing total gun ban since the permit to carry was suspended by the PNP,” Gapay said.

Aside from security operations, however, Gapay said they are also involved in various humanitarian operations to help those affected by the Marawi crisis.

Two major relief assistance, operations were conducted utilizing our Navy vessels in these relief goods. Truckloads of relief goods were transported to Marawi to provide assistance to our countrymen there,” he said.

In the same briefing, Dr. Rene Escalante, chairman of the National Historical Commission of the Philippines (NHCP), said President Rodrigo Duterte will lead the 119th Independence Day celebration on June 12. Escalante said President Duterte will lead the flag-raising and wreath-laying at the Rizal Park in the morning and it will be followed by the Vin d’honneur in Malacañang at noontime.

He said there will be simultaneous flag-raising and wreath-laying events throughout the country on June 12 and those events will be led by different government officials.

To ensure public security and safety, Escalante said the government has crafted a contingency plan to respond to emergencies.

At gaya ng palaging pinaalala na iba na ang panahon natin ngayon, maging mapagmatyag po tayo at kung may mga nahalata tayong hindi maganda. So nagkalat po ang pulis at mga alagad ng militar, maari pong ipagbigay-alam natin sa kanila,” he said.

The 119th Independence Day celebration has a theme “Kalayaan 2017: Pagbabagong Sama-samang Balikatin”. (PND) 

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Economy

Improving Access And Financial Literacy Are Key To Financial Inclusion In PH—PIDS Study

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Improving financial literacy and broadening access to financial institutions like banks and insurance companies, especially in the rural areas, are key to achieving financial inclusion in the country.

This was according to a study by state think tank Philippine Institute for Development Studies (PIDS) on factors affecting financial inclusion in the Philippines. The research showed that more educated individuals living in urban areas, wherein most financial institutions like banks are situated, are more likely to have savings and insurance than their less educated counterparts in the rural areas.

The World Bank defines financial inclusion as a situation where people and businesses have access to useful and affordable financial products and services that meet their needs. Financial products and services include payments, savings, credit, and insurance.

Authors Gilberto Llanto and Maureen Ane Rosellon, PIDS president and research associate, respectively, emphasized that access to finance allows the poor to accumulate assets like savings and insurance to protect them from potential risks and shocks, and to invest in income-generating activities.

However, access to financial products and services remains a big challenge in the Philippines as shown in the latest data of the Bangko Sentral ng Pilipinas(BSP). According to BSP, only about 43 percent of Filipino adults have bank savings while 72 percent of those who borrow, transact with informal financial institutions. Also, only about 30 percent of small and medium enterprises have formal lines of credit and/or bank loans.

One of the main factors that limits people’s access to formal financial institutions, according to Llanto and Rosellon, is their remote location in the rural areas. “For example, data on bank network vis-à-vis population on a regional level indicate a great difference between urban areas like the National Capital Region (ARMM) and highly rural regions like the Autonomous Region of Muslim Mindanao (ARMM),” they explained. Citing statistics from BSP, they noted that the number of banks per 10,000 adults in the NCR is estimated at 3.6 in 2010 and 2015 compared to only one bank per 100,000 adults in ARMM for the same period.

“Due to the absence of banks, people would usually just keep their money at home or join informal group savings in the community, such as rotating savings and credit associations locally called “paluwagan”, the authors concluded.

Also, data from BSP show that majority of adults (about 70%) find pawnshops as the nearest and easiest to reach among financial products and service providers. Likewise, nonstock savings and loan associations, payment centers, and remittance agents take the shortest time to reach at 17 to 18 minutes. The cost of a round-trip travel to these establishments is also the lowest, at PHP 31 to PHP 37.

Llanto and Rosellon said the first step to encourage people to access banks and other formal financial institutions is to improve people’s education. “A higher level of education increases the likelihood of saving and borrowing from a formal financial institution. Educational attainment can be an indicator of the knowledge and level of understanding of credit options and opportunities, and confidence to apply for a loan,” they pointed out.

Furthermore, the authors highlighted the importance of looking at potential barriers to access, which includes, among others, cost or proximity to providers of financial services.

Meanwhile, banks have recently introduced electronic banking (e-banking) to the market as a proper response to global innovations in banking. According to the study, e-banking has started to penetrate “unbanked” markets. Still, poor people in far-flung areas are unable to access this technology as it requires suitable electronic devices and strong Internet connection.

“Although mobile financial services have taken a foothold in the financial markets, the majority of retail transactions by individuals and businesses in the Philippines are still done in cash,” the authors stated. They cited a 2015 report by Better Than Cash Alliance showing that only 1 percent of the 2.5 billion retail payments per month in the country were done electronically.

This press release is based on the PIDS discussion paper titled “What Determines Financial Inclusion in the Philippines? Evidence from a National Baseline Survey”.

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BSP Sees 3.4-4% Inflation for January

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Higher oil and commodity prices are seen as upside risks for Philippines’ inflation rate in January 2018 and bring the rate between 3.5 and four percent.

In a statement, the central bank said its Department of Economic Research considered the impact of higher fuel prices overseas and weather-related disturbances in the country as factors that would push up prices.

“In addition, higher excise taxes on fuel, sugar sweetened beverages with the implementation of the TRAIN (Tax Reform for Acceleration and Inclusion) this month, would lead to additional upward price pressures,” it said, referring to the first package of the tax reform program that is being implemented starting Jan. 1 this year.

“The increase in prices could be partly offset by lower electricity rates in Meralco-serviced areas for the month,” it added.

The government has a two to four percent inflation target for 2017-19.

Last year, inflation averaged at 3.2 percent, higher than year-ago’s 1.8 percent rate but still within the government’s target range.

Last December alone, inflation was flat at 3.3 percent but higher than year-ago’s 2.6 percent.

Philippine monetary officials forecast this year’s inflation to average at 3.4 percent.

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Improving Access and Financial Literacy Are Key to Financial Inclusion in PH—PIDS Study

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Image Source: lawyer24h.net

Improving financial literacy and broadening access to financial institutions like banks and insurance companies, especially in the rural areas, are key to achieving financial inclusion in the country.

This was according to a study by state think tank Philippine Institute for Development Studies (PIDS) on factors affecting financial inclusion in the Philippines. The research showed that more educated individuals living in urban areas, wherein most financial institutions like banks are situated, are more likely to have savings and insurance than their less educated counterparts in the rural areas.

The World Bank defines financial inclusion as a situation where people and businesses have access to useful and affordable financial products and services that meet their needs. Financial products and services include payments, savings, credit, and insurance.

Authors Gilberto Llanto and Maureen Ane Rosellon, PIDS president and research associate, respectively, emphasized that access to finance allows the poor to accumulate assets like savings and insurance to protect them from potential risks and shocks, and to invest in income-generating activities.

However, access to financial products and services remains a big challenge in the Philippines as shown in the latest data of the Bangko Sentral ng Pilipinas(BSP). According to BSP, only about 43 percent of Filipino adults have bank savings while 72 percent of those who borrow, transact with informal financial institutions. Also, only about 30 percent of small and medium enterprises have formal lines of credit and/or bank loans.

One of the main factors that limits people’s access to formal financial institutions, according to Llanto and Rosellon, is their remote location in the rural areas.

“For example, data on bank network vis-à-vis population on a regional level indicate a great difference between urban areas like the National Capital Region (ARMM) and highly rural regions like the Autonomous Region of Muslim Mindanao (ARMM),” they explained.

Citing statistics from BSP, they noted that the number of banks per 10,000 adults in the NCR is estimated at 3.6 in 2010 and 2015 compared to only one bank per 100,000 adults in ARMM for the same period.

“Due to the absence of banks, people would usually just keep their money at home or join informal group savings in the community, such as rotating savings and credit associations locally called “paluwagan”, the authors concluded.

Also, data from BSP show that majority of adults (about 70%) find pawnshops as the nearest and easiest to reach among financial products and service providers. Likewise, nonstock savings and loan associations, payment centers, and remittance agents take the shortest time to reach at 17 to 18 minutes. The cost of a round-trip travel to these establishments is also the lowest, at Php 31 to Php 37.

Llanto and Rosellon said the first step to encourage people to access banks and other formal financial institutions is to improve people’s education. “A higher level of education increases the likelihood of saving and borrowing from a formal financial institution. Educational attainment can be an indicator of the knowledge and level of understanding of credit options and opportunities, and confidence to apply for a loan,” they pointed out.

Furthermore, the authors highlighted the importance of looking at potential barriers to access, which includes, among others, cost or proximity to providers of financial services.

Meanwhile, banks have recently introduced electronic banking (e-banking) to the market as a proper response to global innovations in banking. According to the study, e-banking has started to penetrate “unbanked” markets. Still, poor people in far-flung areas are unable to access this technology as it requires suitable electronic devices and strong Internet connection.

“Although mobile financial services have taken a foothold in the financial markets, the majority of retail transactions by individuals and businesses in the Philippines are still done in cash,” the authors stated.

They cited a 2015 report by Better Than Cash Alliance showing that only 1 percent of the 2.5 billion retail payments per month in the country were done electronically.

www.pids.gov.ph

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BMI Research Forecasts Sustained 6% Level Growth for Philippines

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The research subsidiary of Fitch Group projects the sustained robust expansion of the Philippine economy on back of the government’s infrastructure program, favorable demographics and increased trade with China.

BMI Research eyes a 6.3 percent growth in 2018 and 6.2 percent in 2019 – – levels that the research entity considers “respectable.

These are lower than the 6.7 percent output, as measured by gross domestic product (GPD), that the economy posted in 2017.

“We emphasize that the 6+% GDP expansion is still strong by regional and historical standards and this will be supported by positive demographic trends, a strong public infrastructure drive, and deepening economic cooperation with China,” the study said.

However, BMI Research cited as risk to growth the deteriorating business environment, citing that the seven percent growth in the third quarter of 2017 will “unlikely to continue as leading financial market indicators were showing signs of fatigue while the business environment has been deteriorating.”

This deterioration, it said, is expected to hamper further improvement on private sector investment in the next quarters.

It noted that growth of fixed capital formation declined to 10.3 percent in 2017 from year-ago’s 25.2 percent, with construction rising only by 5.7 percent from 2016’s 15.1 percent and durable equipment by 12.2 percent from year-ago’s 34.5 percent.

Amidst these risks, BMI Research remains optimistic on the domestic economy’s growth, which is expected to get additional lift from the tax reform program, the first package of which is for implementation starting January this year.

Package 1 of the Tax Reform for Acceleration and Inclusion (TRAIN) law cuts personal income tax in the country, making workers’ first Php250,000 annual income tax free. Impact of this on government revenues will be countered by excise tax hikes on fuel and sugar-sweetened beverages, among others.

The first tax reform package is estimated to generate around Php82.3 billion additional revenues for this year alone, and this, the study said, is a plus on the government’s program to increase infrastructure investment.

“This will likely go some way in improving the country’s poor infrastructure, which has long prevented the Philippines from reaching its growth potential,” it added.

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