BusinessWorld – Page 4 – Author Carlo Carrasco

2024 FDI net inflow into Philippines reaches $8.93 billion

March 21, 2025March 12, 2025carlocarrasco

Foreign direct investments (FDI) that flowed into the Philippines reached $8.93 billion in 2024 which is a tiny improvement over the previous year, according to a BusinessWorld news report. The result was below the target for 2024 set by the Bangko Sentral ng Pilipinas (BSP).

To put things in perspective, posted below is an excerpt from the BusinessWorld report. Some parts in boldface…

NET INFLOWS of foreign direct investments (FDI) into the Philippines inched up by just 0.1% in 2024 but plunged in December to its lowest monthly tally in 11 years, amid uncertainty in global trade, data from the central bank showed.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed FDI net inflows edged higher to $8.93 billion in 2024 from $8.925 billion in 2023, ending two straight years of declining inflows.

The 2024 FDI tally was also the highest in two years but below the BSP’s forecast of $9 billion.

Investments in equity and investment fund shares rose by 13.1% to $2.7 billion in 2024 from $2.39 billion in 2023.

Net foreign investments in equity capital climbed by 42.4% to $1.54 billion last year from $1.08 billion in 2023. Placements increased by 4.3% to $2.17 billion, while withdrawals fell by 37.1% to $628 million.

BSP data showed these placements mainly came from Japan (38%), the United Kingdom (35%), the United States (10%), and Singapore (8%).

Investments were mostly channeled into manufacturing (68%), followed by real estate (12%), and information and communication (5%) industries.

Meanwhile, net investments in debt instruments stood at $6.23 billion, down by 4.7% from $6.53 billion in 2023. Reinvestment of earnings likewise declined by 11.2% to $1.17 billion from $1.31 billion.

DECEMBER SLUMP – In December alone, FDI net inflows plunged by 85.2% to $110 million from $743 million in the same month in 2023. Month on month, inflows likewise fell by 88% from $922 million.

December saw the lowest FDI net inflow in 11 years or since the $102.16 million recorded in December 2013.

“While nonresidents’ net equity capital investments rose, FDI declined due to increased debt repayments by resident corporations to their nonresident direct investors,” the BSP said.

The higher debt repayments brought net investments in debt instruments to an outflow of $19 million in December, a reversal of the $618-million inflow in the same month in 2023.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines can do more to attract more foreign direct investments this year? Do you think the FDI of 2024 will result in new businesses and new jobs all over the Philippines this year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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IMF sees stronger economic growth for the Philippines in 2026 but warns about risks related to external developments

January 28, 2025January 25, 2025carlocarrasco

Recently the International Monetary Fund (IMF) stated that it expects the economic growth of the Philippines to get stronger in 2026 but it issue a warning that external developments could prevent it from happening, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld Some parts in boldface…

THE PHILIPPINE ECONOMY will continue to accelerate from this year to 2026 as domestic demand remains robust, the International Monetary Fund (IMF) said, but warned risks are tilted to the downside due to possible external shocks.

At the same time, Finance Secretary Ralph G. Recto said that the Philippines likely failed to hit its 6-6.5% growth goal for 2024, amid typhoons.

“If it hits 6% in the fourth quarter, I’ll be happy with that. I don’t think it will hit 6% for 2024, but I think it will surpass 6% in 2025,” Mr. Recto told reporters on Jan. 16.

For the first nine months of 2024, Philippine growth averaged 5.8%, the same as the IMF’s projection for the full year. Preliminary fourth-quarter and full-year gross domestic product (GDP) data will be released on Jan. 30.

In its latest World Economic Outlook update, the IMF kept its GDP forecasts for the Philippines at 6.1% this year and 6.3% for 2026, the same as its projections in October.

These would fall within the government’s 6-8% GDP target for 2025 and 2026.

“Growth for 2025-2026 is projected to be primarily driven by domestic demand, namely consumption and investment,” an IMF spokesperson said in an e-mail.

“Consumption growth will be supported by lower food prices and gradual monetary policy easing,” it added.

Latest data from the Philippine Statistics Authority showed household consumption, which accounts for over three-fourths of the economy, jumped by 5.1% in the third quarter from 4.7% a quarter ago.

“Investment growth is expected to pick up on the back of a sustained public investment push, gradually declining borrowing costs and acceleration in the implementation of public-private partnership projects and foreign direct investments (FDI), following recent legislative reforms,” the IMF said.

Gross capital formation, the investment component of the economy, expanded by 13.1% in the third quarter, a turnaround from the 0.3% dip a year ago.

However, the IMF said that the balance of risks to the growth outlook is tilted to the downside, citing external risks.

“Some of the main downside risks include recurrent commodity price volatility, and new supply shocks, which may necessitate tighter monetary policy to anchor inflation expectations,” it said.

The IMF also cited shocks such as geopolitical tensions which could disrupt trade and other financial flows.

“Higher for longer policy rates in advanced economies (could cause) capital outflows, and tighter financial conditions,” it added.

The multilateral institution also cited climate shocks and extreme weather events which would lead to economic losses.

“There are also upside risks to the outlook, including from higher-than-expected growth in private investment through public-private partnerships, higher inward FDI following a faster-than-expected global recovery, or stronger reform momentum,” it added.

INFLATION – Meanwhile, the IMF said it expects inflation to remain within the central bank’s 2-4% target range in the near to medium term. It projects headline inflation to average 2.8% this year and 3% in 2026.

“However, risks are tilted to the upside, as rising geopolitical tensions, extreme climate events, and recurrent commodity price volatility continue to pose upside risks to inflation,” it said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the IMF is correct with its current analysis of the details and economic forecast for the Philippines? Do you think the national government should focus more on attracting new foreign investors and bringing inflation down to build up the economic momentum?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Citigroup sees Philippine economy expanding by about 6% this year

January 28, 2025January 21, 2025carlocarrasco

In the perspective of Citigroup, Inc. (Citi), the economy of the Philippines will grow this year by around 6%, pointing to the growth of the business process outsourcing (BPO), according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld Some parts in boldface…

CITIGROUP, INC. (Citi) expects the Philippine economy to expand by around 6% this year, partly driven by sustained growth in the business process outsourcing (BPO) sector.

“We expect the growth in 2025 to stay within the 6% handle,” Citi Asia South Head Amol Gupte said in an online briefing on Monday.

Citi’s forecast would be at the low end of the government’s 6-8% target for the year.

“The Philippines will continue to benefit from [the BPO industry] and will create a lot of jobs. On moving up the value chain on global capability centers, countries like the Philippines will play a very large role along with India,” Mr. Gupte said.

The information technology and business process management (IT-BPM) industry ended 2024 with $38 billion in export revenue, and 1.82 million full-time employees.

Under the Philippine IT-BPM Industry Roadmap, the target is to grow into a $59-billion industry and increase the full-time employee count to 2.5 million by 2028.

“So, I think it’s really important that the Philippines, as it thinks about the BPO industry, moves up the value chain so that it retains and bring more middle-office kinds of jobs beyond the voice jobs that exist in the tens of thousands,” Mr. Gupte said.

However, the rise of artificial intelligence (AI) could be a risk to the IT-BPM sector in the Philippines.

“There’s also the risk to that in terms of what AI will do to that industry and whether that will reduce jobs,” Mr. Gupte said.

Meanwhile, Citi South Asia Corporate Banking Head K Balasubramanian said sustained economic growth ensures that Philippine banks are well-positioned to continue to generate profits.

“I think the financial profile of the Filipino banks continues to be very strong, and with 6% growth I think they are well capitalized to look at the opportunities ahead,” he said.

As of end-September 2023, the Philippine banking system’s net profit rose by 6.4% to P290 billion as both net interest and non-interest income grew.

“We just saw the upgraded Philippine sovereign rating that happened in the fourth quarter of last year. And if you look at the impact of that on the Republic of Philippines, as well as the state-owned banks of the Philippines, I think that’s going to be crucially positive because we are now up to BBB+,” Mr. Balasubramanian said.

“(This) means that the ability to access international financing is going to be better and even the cost of the access is going to be better than what it was in the past.”

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think Citgroup is correct about its research on the Philippine economy? Do you think the BPO industry will contribute a lot to the economic growth of the nation this year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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P500 million investment coming into Las Piñas City IT park

January 20, 2025January 10, 2025carlocarrasco

Recently in the City of Las Piñas, the newly certified IT (information technology) sector One Townsquare Place is about to receive a major investment of P500 million from an IT and business process management (IT-BPM) firm, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…

AN information technology and business process management (IT-BPM) company is set to invest P500 million in One Townsquare Place, a recently proclaimed IT Center in Las Piñas City, the Philippine Economic Zone Authority (PEZA) said.

“The fully built IT Center will host companies in various IT-BPM services, with one prospective locator expected to employ more than 500 Filipinos and invest more than P500 million,” PEZA said in a statement on Wednesday.

On Dec. 20, President Ferdinand R. Marcos, Jr. issued Proclamation No. 765, which designated around 3,729 square meters of land in barangay Almanza Uno, Las Piñas City, as an IT Center.

“The approval of this new ecozone will boost Las Piñas City’s growth and employment in the National Capital Region,” PEZA said.

According to PEZA, the construction of the IT Center cost P1 billion. It has been fully developed since 2017.

Including IT Center, 28 economic zones (ecozones) have been proclaimed during the administration of Mr. Marcos. Eleven ecozones were proclaimed in 2023, while 17 were proclaimed last year.

Let me end this piece by asking you readers: If you are a resident of Las Piñas City, what is your reaction to this development? Do you think the P500 million investment into the IT center will make an impact on Las Piñas’ economy this year? Are you hoping that more IT firms will open new offices at the One Townsquare Place?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Maharlika Investment Corp. (MIC) to make first investment this quarter

January 15, 2025January 7, 2025carlocarrasco

The Maharlika Investment Corp. (MIC) – the entity responsible for making investments on behalf of the Philippines – will be making its first investment within the first quarter of 2025, according to a BusinessWorld news report. Take note that it has been over eighteen months since the Maharlika Investment Fund was formally signed into law. The IRR (implementing rules and regulations) has already been finalized.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…

THE MAHARLIKA Investment Corp. (MIC) is expected to make its first investment this quarter, most likely in the energy sector, its top official said.

“Definitely the first quarter. I think we had a year to set up. We had a year to basically put our governance in place. We obtained our formal approval to begin hiring last end of July,” MIC President and Chief Executive Officer Rafael D. Consing, Jr. said in an interview with BusinessWorld on Jan. 2.

The MIC has yet to make any investments since President Ferdinand R. Marcos, Jr. signed the law creating the country’s first wealth fund in July 2023. The Maharlika Investment Fund (MIF) had initially committed to make its first investments before the end of 2024.

Mr. Consing said sovereign wealth fund is “ready” and backed with funding and the needed workforce, but will not invest “without the benefit of due diligence.”

MIC earned P2.3 billion in interest income in 2024, Mr. Consing said.

Under the law, the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines were mandated to contribute P25 billion and P50 billion, respectively, as the initial seed capital for the MIF. The two state lenders have remitted the funds to the Bureau of the Treasury in September 2023.

Mr. Consing said the MIC’s strategic plan will be up for board approval on Jan. 9. This after it made some changes after meeting with the Governance Commission for Government-Owned and -Controlled Corporations (GCG) before the holidays, he added.

The MIC is looking into investing in energy, food security, healthcare, and resource development, particularly mining.

“In the first quarter, that would be the energy sector. Healthcare, if it turns out okay, if our due diligence results turn out okay, first half. I would say early second quarter for the latter two,” Mr. Consing said.

Mr. Consing said he believes that investments in the energy sector, particularly transmission lines, would be “most impactful.”

“That’s why ideally, we’d like to be able to buy into the national grid, if we’re able to. Or number two, we have also separately signed MOUs (memoranda of understanding) with the likes of Mindoro and Palawan, which fall under the SPUGS [small power utilities group] category,” he said.

In 2024, the MIC signed an agreement with Occidental and Oriental Mindoro to support investments in critical energy infrastructure.

“There are about 34 SPUGS in the country. The two biggest are Mindoro and Palawan. And we believe that given the contribution of Palawan when it comes to tourism, and also the population that lives in there, and the potential contribution of Mindoro in respect to the entire electricity sector in the Philippines, we felt that these are two priority areas where we can help, in fact, build transmission lines,” he said.

However, Mr. Consing declined to comment on the MIC’s plan to invest in the National Grid Corp. of the Philippines (NGCP).

He said the National Power Corp. is currently doing an inventory of all its assets in Mindoro and MIC “will have to sit down and determine which part of those assets it would need as part of the expansion of these lines.”

“Where we are now is we’re procuring the services of the technical consultant and the team that will be putting together the whole feasibility study. Because all of these will require regulatory approval by the Energy Regulatory Commission,” he added.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think that the MIC will be able to make smart decisions with regards to making the investments? Do you think the Maharlika Investment Fund will make positive impact on the market and encourage others to invest?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Stakeholders and analysts perceive VAT refund limit for tourists just right to ensure small businesses will benefit

January 3, 2025December 27, 2024carlocarrasco

As far as the analysts and tourism stakeholders are concerned, the minimum purchase requirement for non-resident tourists to qualify for the value-added tax refund is just right in relation to benefiting the small businesses, according to a BusinessWorld news report. There is, however, one dissenting opinion.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…

THE P3,000 ($51) minimum purchase requirement for nonresident tourists to qualify for a value-added tax (VAT) refund is “just right” to ensure small businesses benefit, analysts said.

President Ferdinand R. Marcos, Jr. recently signed into law Republic Act (RA) No. 12079, which allows tourists to claim VAT refunds on purchases worth at least P3,000 from government-accredited stores, in an effort to boost tourism receipts.

“The P3,000 is just right to benefit micro, small and medium enterprise (MSME) retailers and local products,” Philippine Retailers Association (PRA) President Roberto S. Claudio said. He said the purchase cap is kept to a minimum to benefit locally made products.

“I think it’s a good entry and good starting point. Some countries are still higher than P3,000 as well. I think we’re above the middle, so I think that’s a good place to be,” Tourism Congress of the Philippines President James M. Montenegro said via phone call.

Under RA 12079, the value of the locally bought goods from accredited stores must reach at least P3,000 per transaction, provided these goods are taken out of the country within 60 days of purchase.

“This law is primarily designed to boost tourist arrivals and expenditure. Hopefully, it will also increase the sales revenue of retailers,” Mr. Claudio said.

Mr. Montenegro said the minimum purchase amount could be adjusted in the future.

The threshold is subject to review and adjustment every three years by the Finance secretary, upon recommendation of the Commissioner of Internal Revenue, considering the inflation data from the statistics agency.

“I think the minimum rate is at par with our ASEAN [Association of Southeast Asian Nations] neighbors. If you look at the minimum amounts in other countries, it is almost the same,” Eleanor L. Roque, a tax principal at P&A Grant Thornton, told BusinessWorld.

The Philippines has joined other ASEAN countries with a tax refund program for nonresident tourists. The scheme has increased retail activity, particularly in sectors such as fashion, electronics and souvenirs.

In Malaysia, the minimum purchase is 300 ringgit ($67). Singapore allows tourists to spend at least S$100 ($74), while in Indonesia, it starts at 500,000 rupiah ($31).

“It is good to have a minimum amount as it limits the refund claim to valuable expenses. De minimis spendings are normally not considered for VAT refund as it is not administratively practical. In some cases, the cost will be more expensive than the amount being refunded,” Ms. Roque said.

She said the government should tap accredited international firms in the VAT refund processing, adding that the “government should take advantage of the track record and best practices of these known companies.”

Ms. Roque said the government should ensure the goods bought are really brought out of the country.

“Physical inspection of the goods when exiting the country should be strict to ensure that local buyers do not use tourists for availing themselves of the VAT refund,” she added.

However, Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the P3,000 threshold “may not be enough to significantly encourage higher spending among affluent tourists,” especially compared with ASEAN counterparts.

“A higher or more flexible threshold might align better with international best practices and encourage larger purchases,” he said.

Mr. Rivera also urged the government to simplify the VAT refund process, rather than make it “extra bureaucratic.”

Let me end this post by asking you readers: What is your reaction to this recent development? Do you consider the current purchase requirement for the VAT refund for foreign tourists a proper amount? Do you think foreign tourists will be receptive to the current standard for VAT refund of their purchases here in the Philippines?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippines attracted more international visitors than last year but still behind 2024 target

December 24, 2024December 18, 2024carlocarrasco

When it comes to attracting visitors from overseas, the Philippines improved over the 5.45 million international visitors of 2023 but they have yet to hit the declared 2024 target of 7.7 million international visitors and time is already running out, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…

INTERNATIONAL visitors to the Philippines totaled 5.65 million as of Dec. 15, according to the Department of Tourism (DoT), well behind the pace needed to achieve the 7.7 million target for the year.

“South Korea remains our top source market, followed by the US and Japan,” Tourism Secretary Christina G. Frasco said at a briefing on Tuesday.

“To further expand our reach, we have intensified efforts to engage emerging opportunity markets, sharing the unique story of the Filipino and showcasing the rich array of experiences our country has to offer,” Ms. Frasco added.

The mid-December total is equivalent to 73.4% of the target for the year.

The DoT said that South Korea accounted for 1.15 million or 20.3% of the total arrivals, followed by the US with 889,489 or 15.7%, and Japan 367,747 or 6.5%.

Rounding out the top five were China, which sent 306,549 visitors or 5.4%, and Australia with 249,140 or 4.4%.

The other leading sources of visitors were Canada, Taiwan, Singapore, the UK, and Malaysia.

“We have graduated from measuring tourism merely by the number of people arriving, but rather on the more important numbers” like spending, length of stay, and return visits, she added.

Ms. Frasco said tourism receipts as of Dec. 15 amounted to P712 billion, exceeding the P697 billion booked in 2023.

“Tourists are now spending an average of over 11 nights in the country, and over 70% are repeat visitors,” she added.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think it is still possible for the Philippines to be able to attracted at least 6.5 million international tourists by December 31, 2024? Do you think the Philippines could do better or worse in 2025? What do you think is the one single issue that made it hard for the Philippines to attract more visitors from overseas? Do you think the new law of Value-Added Tax (VAT) refund for foreign tourists will make an impact by the middle of 2025?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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DBCC adjusts Philippines GDP growth targets for 2024 to 2028

December 11, 2024December 3, 2024carlocarrasco

Recently the Development Budget Coordination Committee (DBCC) adjusted its economic growth targets for the Philippines covering the next few years in relation to varied factors, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…

THE Development Budget Coordination Committee (DBCC) on Monday trimmed the economic growth target for this year to a range of 6-6.5% but widened the target band to 6-8% for 2025 until 2028, due to “evolving domestic and global uncertainties.”

Budget Secretary Amenah F. Pangandaman, who chairs the DBCC, said Philippine gross domestic product (GDP) is now projected to grow by 6-6.5% this year, narrower than the previous 6-7% goal.

“Despite domestic challenges, we are optimistic that we can still attain our growth target for the year of 6% to 6.5%. In particular, we expect the Philippine economy to bounce back during the last quarter, given the anticipated increase in holiday spending, continued disaster recovery efforts, low inflation, and a robust labor market,” she said at a briefing after a DBCC meeting on Monday afternoon.

The DBCC’s review of the macroeconomic assumptions came after the Philippine economy expanded by a weaker-than-expected 5.2% in the third quarter, which was the slowest since the 4.3% logged in the second quarter of 2023.

In the first nine months, GDP growth averaged 5.8%. To meet the lower end of the government’s revised 6-6.5% target band, the economy would need to grow by 6.5% in the fourth quarter.

Finance Secretary Ralph G. Recto said the Philippine economy can still “realistically” grow by 6% for the full year.

“The growth assumptions for 2025 to 2028 have been given a wider band of 6% to 8%, reflecting the anticipated impact of structural reforms and evolving domestic and global uncertainties,” Ms. Pangandaman said.

To achieve the targets, she said the government is committed to “accelerating infrastructure investments, enhancing the ease of doing business, and boosting national competitiveness.”

The DBCC chair said they expect the recently signed Republic Act No. 12066 or Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act to spur faster growth and attract more foreign investments.

FISCAL program – “We have maintained our medium-term fiscal targets for 2025 to 2028. This means that we remain determined to reduce the country’s deficit in a more gradual and realistic manner, while also bolstering long-term investments that create more jobs, increase incomes, and decrease poverty incidence,” Ms. Pangandaman said.

The DBCC said it raised the deficit ceiling for 2024 to -5.7% of GDP from -5.6% previously. It kept the deficit ceiling at -5.3% of GDP for 2025, -4.7% for 2026, -4.1% for 2027 and -3.7% for 2028.

For this year, the DBCC raised the revenue outlook to P4.383 trillion in 2024 from P4.27 trillion previously. Revenue targets were kept at P4.644 trillion for 2025, P5.063 trillion for 2026, P5.627 trillion for 2027, and P6.249 trillion for 2028.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the DBCC is correct with its GDP projections for the Philippines for the next few years?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Lower-than-expected economic growth for the Philippines until 2025

November 26, 2024November 19, 2024carlocarrasco

Based on the recent findings of Citigroup, Inc., the growth domestic product (GDP) of the Philippines will grow at a lower-than-expected rate until 2025, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…

THE Philippines’ gross domestic product (GDP) is likely to expand slower than the government’s target until 2025, Citigroup, Inc. (Citi) said.

Citi cut its GDP growth forecast for the Philippines to 5.8% this year but kept its 6% growth forecast for 2025. This is below the government’s 6-7% target this year and 6.5-7.5% goal next year.

“We lowered 2024 GDP growth slightly from 6% to 5.8%, mainly due to a weak third-quarter outturn that had been a result of several temporary, weather-related factors,” Citi economist for Thailand and the Philippines Nalin Chutchotitham said in a report.

The Philippine economy slowed to 5.2% in the July-to-September period from 6.4% in the second quarter and 6% a year ago. This was also the weakest growth since the 4.3% expansion in the second quarter of last year.

“Nonetheless, we think it would be misleading to view the weaker third-quarter expansion as the start of a slowdown as several negative factors in the third quarter are one-off events,” Ms. Chutchotitham said.

She said the weakness in third-quarter economic growth mainly stemmed from the drop in agriculture production, construction activity and net exports.

Despite the weak third quarter, Citi expects growth to accelerate in the fourth quarter as domestic demand is seen to pick up due to easing inflation and lower rates.

“We expect fourth-quarter 2024 GDP growth to accelerate to 6% year on year. Household consumption is expected to continue improving, supported by lower interest rates and improved consumer sentiment as inflation continues to stabilize.”

In the first nine months, GDP grew by 5.8%. The economy would need to grow by at least 6.5% in the fourth quarter to meet the lower end of the government’s 6-7% target.

“With the storm season passing soon, we also expect infrastructure projects’ progress to proceed at a faster clip in the fourth quarter and first quarter of 2025,” Ms. Chutchotitham said.

Domestic demand will also likely be sustained by improving employment conditions, remittance growth and bank lending.

“The RRR (reserve requirement ratio) cut of 250 basis points (bps), effective on Oct. 25, would also release more liquidity into the banking system and likely continue to support strong credit expansion,” Ms. Chutchotitham added.

The central bank last month reduced the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7%.

“We also maintain our expectation of 6% growth in 2025 but see some upside risks due to tailwinds from more rate cuts,” Citi said.

The Bangko Sentral ng Pilipinas (BSP) will likely cut by 25 bps in December and by a total of 75 bps next year, according to Citi.

This year so far, the central bank has reduced interest rates by 50 bps since August. The Monetary Board is set to hold its last rate-setting meeting of the year on Dec. 19.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines still has enough momentum to exceed the 4^th quarter growth targets of economists?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Ayala-Mitsubishi deal likely to boost GCash IPO

October 30, 2024October 21, 2024carlocarrasco

If things go well, the recent deal made between Ayala Corp. and Japan’s Mitsubishi Corp. will likely boost the anticipated initial public offering (IPO) of e-wallet entity GCash, according to a BusinessWorld news report referencing analysts.

To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…

THE RECENT deal between Ayala Corp. and Japan’s Mitsubishi Corp. is likely to increase the valuation of the anticipated initial public offering (IPO) of the electronic wallet GCash, according to analysts.

On Friday last week, Ayala Corp. announced that it was selling its 50% stake in AC Ventures Holding Corp. (ACV) to Mitsubishi for a minimum of P18.4 billion.

ACV owns 13% of Globe Fintech Innovations, Inc. (Mynt), which has two fintech companies, G-Xchange Inc., the operator of GCash, and Fuse Lending, a tech-based microlender.

“The deal reinforces the value of Mynt for its future IPO. With key investors coming in at a valuation of around $5 billion, Mynt is poised for an IPO at a much higher valuation,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

GCash previously said it was planning an IPO but would wait for a more favorable market.

According to Mr. Colet, the IPO could happen as early as next year depending on market conditions.

“I can see the IPO within the next two to three years. Perhaps as soon as next year if market conditions are very good,” he said.

“So far, it seems Globe wants a local IPO for Mynt. But it would be better if they do a dual listing in the Philippines and a larger stock market to get the best of both worlds,” he added.

Globalinks Securities and Stocks, Inc. Trader Mark V. Santarina said in a Viber message that the deal helps GCash’s international expansion plans.

GCash services are available in 16 countries, including the United States, United Kingdom, United Arab Emirates, Italy, Australia, Canada, Germany, and other Asian countries.

“For GCash, Mitsubishi’s entry paves the way for potential international expansion, particularly into Japan, and may boost its service offerings in microlending and financial technology,” he said.

“While GCash is considering overseas listings for its IPO, there is still hope it may choose to list on the Philippine Stock Exchange (PSE) instead, which would be a significant win for the local market,” he added.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that the deal could help improve other Ayala ventures.

“With its entry into ACV, Mitsubishi is not only buying into GCash but also into other ventures under ACV like Gogoro and Zalora. We believe Mitsubishi’s expertise can help improve these businesses and maybe even accelerate the expansion of GCash into Japan,” he said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think an IPO of GCash could happen sometime in 2025? Are you an investor waiting for the GCash IPO to happen?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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