The game changer

"A bigger dividend is the revival of the economy with return of consumer confidence."


Despite being the slowest in the ten-nation ASEAN, the rollout by the Philippines of its anti-COVID-19 vaccination program is the game changer businessmen and investors have been waiting for, as early as December last year.

The inoculation scheme, began in earnest on March 1, should help save 20 deaths daily or up to 7,000 fatalities in one year. As the saying goes, any death is one death too many. The vaccines have efficacy rates ranging from 50.4 percent to 95 percent.

A bigger dividend is the revival of the economy with return of consumer confidence. Consumption is 83 percent of the economy. With lockdowns, the economy was losing P2.2 billion a day.

The worst pandemic in a century nearly killed the Philippine economy resulting in the worst slump (-9.5 percent GDP decline in 2020) since Magellan landed in Mactan 500 years ago. The economy is resilient, however. It is expected to bounce back better to register one of the most sterling growth rates in the region this year (by 5.9 percent, according to the World Bank) and next (6 percent).

The government projects higher growth figures, 6.5 percent to 7.5 percent in 2021 and 8 percent to 10 percent in 2022. With the vaccination drive, herd community will be reached only in 2023, according to President Duterte. This early though, a sense of buoyancy is in the air.

As our credit ratings remain better than our peers, we continue to have good access to official development assistance and external commercial loans,” says Finance Secretary Carlos Dominguez. “Our record-high international reserves and strong Philippine peso will strengthen our ability to import the goods that we need to support our economic recovery,” he adds.

To its eternal credit, the Philippine corporate sector kept its bullish attitude amid the pandemic. San Miguel Corp. is building its P750-billion airport in Bulacan feverishly.

Property developers have proved their resilience. One reason for that is that property prices did not nosedive at the height of the pandemic. “Real estate is still the best investment,” asserts Bernard Vincent Dy, president of Ayala Land, Inc. Lots at the Ayalas’ Forbes Park and Alabang upscale subdivisions turned in 16-17 percent compounded annual rates of appreciation in land values in the past 50 years and 40 years, respectively. In 1969, Forbes lots sold for just P200 per square meter. Today, they go for P400,000 per sqm. In 1978, Alabang lots sold for P230 per sqm; today, they sell for P100,000 and above.

Notes Ayala Corporation Chair and CEO Jaime Augusto Zobel de Ayala: “Filipino investors—big and small—are helping stimulate the country’s economy by supporting expansion despite the challenges presented by the pandemic.” “Businesses and investors of all sizes have a unique role to play to exponentially accelerate our recovery,” says JAZA.

Small investors have invaded the stock market. This year, retail investors accounted for 25.9 percent of total domestic investors. That’s up from 18.2 percent last year.

In 2020, despite massive uncertainties, the Ayala Group continued investing in different sustainable projects alongside actively engaging with the government and the private sector in capacitating the country’s COVID-19 defense.

The Ayala group firmly believes in promoting shareholder-focused capitalism to expand financial and economic inclusion across all market segments.

Further, the group continuously seeks to find innovative ways to pivot its businesses to remain sustainable and relevant to the market it serves. These are the guiding principles for its investment priorities as they directly contribute to and demonstrate its partnership in nation building for nearly two centuries.

Despite the unprecedented economic slump in 2020, Zobel said the Ayala Group is cautiously optimistic for 2021 as mall traffic and remittances continue to improve. “We are at a critical time for the country. Aside from averting new COVID infections and ensuring proper vaccine administration, we face the huge task of reorienting our institutions towards sustained and inclusive economic growth.”

Ayala Land’s Bobby Dy cites three main reasons for the economy’s strength: one, macroeconomic fundamentals remain stable; two, the country’s fiscal position continues to be strong with a lot of space to pump-prime the economy; and three, recovery in the property sector.

The Economist Magazine ranked the Philippines sixth out of 66 countries to be best positioned fiscally to weather this crisis. The Japan Credit Rating Agency (JCR) last week upgraded our credit rating from BBB+ to A-.

In Congress, of the administration’s 30 priority economic reform measures, five have been passed by both Houses: 1) General Appropriations Act (GAA) for Fiscal Year (FY) 2021; 2) the Financial Institutions Strategic Transfer (FIST) Act; 3) amendments to the Anti-Money Laundering Act; 4) Coconut Farmers’ and Industry Trust Fund Act, and 5) the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Top 12 priority measures targeted to be passed by June 2021:

1. Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act;

2. Package 3 of Comprehensive Tax Reform Package (CTRP) or the Valuation Reform Act;

3. Package 4 of CTRP or the Passive Income and Financial Intermediary Taxation Act (PIFITA);

4. Amendments to the Public Service Act;

5. Amendments to the Retail Trade Liberalization Act;

6. Amendments to the Foreign Investments Act;

7. Rural Agricultural and Fisheries Development Financing System Act (Agri-Agra);

8. Creating a Medical Reserve Corps Act;

9. Creating a Disease Prevention and Control Authority Act;

10.Imposing Amusement Tax on Digital Platform and Offshore Betting Stations of Licensed Cockpits;

11. Establishing the Tax Regime of Philippine Offshore Gaming Operators (POGO); and

12. Strengthening Local Government Participation in National Development by Increasing the Share of Local Government Units in the National Internal Revenue Taxes.

Another 13 bills are to be passed by December 2021.

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Topics: Tony Lopez , ASEAN , COVID-19 vaccination program
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