Finance chief says PH economy to remain strong amid nCoV threat, other challenges
Robie de Guzman • February 6, 2020 • 824
MANILA, Philippines – The Department of Finance (DOF) has expressed confidence that the challenges posed by the global spread of the novel coronavirus (2019-nCoV), the eruption of Taal Volcano and the cases of African Swine Fever (ASF) are not enough to drag the country’s economic growth below the government’s target.
In a joint hearing conducted by the Senate committees on health and finance on Tuesday, Finance Secretary Carlos Dominguez III said the administration’s economic teams stands by its target of attaining a gross domestic product (GDP) growth rate of 6.5 % to 7.5% this year even amid the headwinds from 2019-nCoV and other challenges.
“At this moment, it is reasonable to expect that while these developments might slightly restrain our economic expansion, these threats are not enough to force a dramatic reduction in our growth estimates,” Dominguez said.
While the hearing was called to study ways of mitigating the impact of the nCoV outbreak on the economy, Dominguez said this development should be assessed together with the effects of the recent Taal Volcano eruption and the ASF outbreak to determine whether these require revisiting economic growth targets this year.
“While these developments may dampen our growth somewhat, domestic tourism is expected to increase as more people would likely prefer to travel within our borders, thus boosting domestic consumption,” he said.
“With our ‘Build, Build Build’ program firing on all cylinders this year, complemented by a benign inflation rate and a stable monetary policy, we expect the economy at large to sustain its momentum,” he added.
The Finance chief also stated that with the nCoV outbreak still on its early stages, it would be difficult for the economic team to estimate its potential economic costs at this time.
“We are consoled by the observation that the virus has limited local transmissions outside China,” he said.
“A significant impact on the economy will most likely be centered in the tourism sector. The travel and tourism industries around the globe are taking a hit as a result of the various levels of travel bans imposed by national governments and of voluntary decisions of airlines to cut flights to and from China,” he added.
Dominguez also said that the country may also suffer a short-term slight decline in exports, particularly in the sale of electronics and auto parts, due to a possible disruption in the global supply chain as a result of the temporary factory closures in China, which is the country’s top trading partner.
“Incidentally, our top imports from China such as steel, machinery and petroleum are products that do not seem to carry the nCoV virus, though we will continue to take all necessary precautions,” he said.
To address the possible temporary decline in the exports of electronics and auto parts, the Department of Trade and Industry (DTI) has committed to work closely with affected Chinese and China-based companies, which will be looking to strengthen their operations by adding a production site outside of China, Dominguez said.
Dominguez added that what happened during the previous outbreaks of the Severe Acute Respiratory Syndrome (SARS), H1N1, and the Middle East Respiratory Syndrome (MERSCoV) might give authorities a glimpse of how the nCoV could impact the economy.
As for the ASF outbreak, Dominguez noted that the government has been successful in intercepting contaminated pork imported from other countries through the Bureau of Customs’ anti-smuggling campaign and the Bureau of Animal Industry’s meat inspection efforts.
The Department of Agriculture (DA) has also been strictly enforcing biosecurity measures and setting up more quarantine checkpoints, as well as providing more disinfection facilities to manage, contain, and control the spread of the ASF, he said.
As for the impact of the latest Taal Volcano eruption, the Finance chief said that an explosive eruption could still happen, and “unless and until this actually happens, we can only speculate on the full impact of this episode on the economy.”
As of January 20, estimates from the National Economic and Development Authority (NEDA) show that the total foregone income in the economic sectors owing to the eruption could reach P6.66 billion pesos or 0.26 percent of the 2018 gross regional domestic product of the CALABARZON (Cavite, Laguna, Batangas, Rizal and Quezon) corridor.
“The bulk of the foregone income comes from agriculture and fisheries sector, services, and industry,” Dominguez said. “Short of a major eruption, the damage to our crops and the challenges of dislocated communities to which the government will continue to respond, will not significantly impact our overall growth projections.”
He said the DA and the concerned local government units are expediting the release of production support, agri-fishery aid and livelihood assistance, and cash or zero-interest loan assistance programs to the affected farmers and fisherfolk, as well as the implementation of the recovery and rehabilitation plans for the affected areas.
MANILA, Philippines – The Bureau of Internal Revenue (BIR) has collected a total of P547.9 million in taxes from January to September this year from 178 commercial establishments that were padlocked earlier for failing to either register or pay the correct amount of taxes, the Department of Finance (DOF) said Wednesday.
In a statement, the DOF said BIR’s operations conducted against the padlocked establishments were pursuant to Revenue Memorandum Order (RMO) No. 3-2009, otherwise known as the “Oplan Kandado Program.”
In a report to Finance Secretary Carlos Dominguez III, the BIR said it has also filed 14 cases before the Court of Tax Appeals (CTA) in a bid to collect some P338 million in tax liabilities from various respondents.
Meanwhile, 72 complaints involving an estimated P3.4 billion in tax liabilities that the bureau has filed before the Department of Justice (DOJ) are now under preliminary investigation, BIR Deputy Commissioner Arnel Guballa said in his report.
Last year, the BIR collected a total of P1.92 billion under its Oplan Kandado program as a result of the temporary closure of 743 establishments for various violations of the National Internal Revenue Code.
BIR’s performance under the Oplan Kandado program in 2019 was a 218.88-percent improvement over its 233 closures of establishments reported in 2018 and a 140.76-percent increase in collections amounting to P799.47 million during that year.
Also in 2019, the BIR filed a total of 347 complaints involving tax liabilities estimated to be worth P24.02 billion combined before either the DOJ or CTA as part of the Duterte administration’s all-out campaign against tax evaders.
Under its Run After Tax Evaders (RATE) program, 309 cases for preliminary investigation were filed by the bureau before the DOJ last year for tax liabilities of various individuals and corporations estimated at P19.06 billion combined.
The DOF said this was a marked improvement of 56.85 percent over the 197 cases filed by the BIR in 2018 involving some P15 billion-worth of tax liabilities.
In the CTA, the bureau has filed 38 cases for tax liabilities worth P4.94 billion combined, or more than triple the 12 cases filed before the tax appeals court in 2018.
The cases filed before the CTA involving close to P5 billion in tax liabilities represent a 480.67 percent increase over the estimated P851.57 million in taxes that the BIR had hoped to collect in 2018 through litigation, the DOF said.
MANILA, Philippines – The Department of Finance (DOF) ordered the Philippine International Trading Corporation (PITC) to remit all income from interests it generated from various government agencies so the fund may used for the government’s response against coronavirus disease (COVID-19) pandemic and relief efforts to areas affected by the recent typhoons.
In a statement, Finance Secretary Carlos Dominguez wrote to Trade Secretary Ramon Lopez who chairs the PITC Board to remit to the national treasury a total of P1.1 billion that the corporation collected from the years 2018 and 2019.
The said amount was the balance of the interest income from funds of various government agencies supposedly for equipment that has been noted as “parked” funds in the state-run corporation.
The DOF noted that in 2019, the PITC had a trust liabilities of P33-B while from the start of this year to October it had P32.6-B.
“Following our discussion, we would like to request the return to the Bureau of the Treasury (BTr) by PITC, the interest earned on such funds held in trust. From 2018 to 2019, the interest earned on such funds totaled P1.151 billion,” Sec. Dominguez confirmed.
Dominguez cited a Commission on Audit (COA) report which stresses that PITC’s non-remittance of the said fund to the National Treasury is a clear violation of the Government Auditing Code of the Philippines.
Prior to this, Dominguez also notified Budget Secretary Wendel Avisado through a letter of his order to PITC to return the P33-B to the national treasury.
Senator Franklin Drilon who raised the issue on the ‘parked’ unused public funds at PITC suggested the termination of the agency citing the problems it causes the government for concealing public funds.
Also, Drilon said PITC seems to be a duplication of government function because the Budget Department also has an existing procurement service, not to mention each government agency’s Bids and Awards Committee that do similar work as PITC. MNP (with reports from Harlene Delgado)
MANILA, Philippines – Department of Finance (DOF) Secretary Carlos Dominguez III has ordered the Bureau of Internal Revenue (BIR) and the Bureau of Customs to assist in the investigation being conducted by the Department of Agriculture (DA) into the reported use of cooperatives by private traders as dummies for rice imports.
“There’s this question now as to why traders are using coops to import rice …. Let’s look into that because they might be using the tax advantage on rice imports,” Dominguez told BIR Commissioner Caesar Dulay and BOC Commissioner Rey Leonardo Guerrero during a recent executive committee meeting.
Dominguez issued the directive following the DA’s decision to temporarily halt the issuance of sanitary and phytosanitary import clearances (SPSIC) to farmers’ cooperatives and irrigators’ associations for commercial purposes.
Through Administrative Order No. 34 issued in October, the DA suspended the SPSICs to coops and irrigators’ associations, effectively barring them from importing rice, after the DA received reports that these organizations have resorted to rice imports rather than carry out their purpose of procuring local rice from farmers.
Both the DOF and DA have also received reports that the SPSICs issued to cooperatives have been misused by traders to avoid legal responsibilities and evade the payment of the correct amount of import taxes.
Finance Undersecretary Antonette Tionko also noted that while cooperatives are not exempted from paying duties for importing rice, they can be exempted from paying the income tax on these imports if they are registered with the BIR as tax-exempt entities.
Through the AO, the DA directed the Bureau of Plant Industry to probe and to consult with affected stakeholders “to come up with new policies and rules to avoid circumvention of the laws” and to protect the farmers and cooperatives form exploitation.
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