Slow economic growth to remain

Interesting economic briefing and fireside chat organized by the UP College of Business Administration Alumni Association (UPCBAA).

Held during the general membership meeting of the Virata School of Business alumni group last Wednesday, UPCBAA president and BDO Capital & Investment Corp. president Eduardo Francisco discussed the country’s soft 2.8 percent gross domestic product (GDP) growth, marking the third straight quarter of sequentially slower growth for the economy. BDO Capital expects the economy to grow by 2.2 percent by the end of the year, or still below pre-pandemic level and 3.2 percent next year. The economy expanded by 4.4 percent in 2025.

He noted that broader inflationary pressures stemming from the energy supply shock triggered by the US-Iran conflict dragged down overall consumption spending, particularly for essentials. Meanwhile, private construction and capital expenditure were dampened by weak risk sentiment, interest rate and foreign exchange volatility and a slow post-pandemic real estate recovery.

Household consumption growth is forecast to reach two percent this year (compared to three percent during the first quarter and 4.5 percent last year), private fixed capital investments growth at three percent (against 2.3 percent in the first quarter and 6.9 percent in 2025) and government expenditures growth for this year at 4.5 percent compared to negative 1.3 percent in the first quarter and 0.9 percent last year.

Meanwhile, export growth is expected to be sluggish at 3.5 percent this year compared to 7.8 percent in the first quarter and 8.2 percent in 2025. Francisco pointed out that growth in exports of goods, led by semiconductors, which registered a 13.3-percent expansion in the first quarter, continues despite trade uncertainties. The relatively resilient IT-BPM sector continues to support services exports, which grew by three percent in the first quarter.

Import growth, he said, remained stable despite weak domestic demand, at 6.1 percent in the first quarter, and is forecast to drop to 4.2 percent for the year. But Francisco warned that stable imports amid a weak external environment may lead to a wider trade deficit.

Francisco emphasized that the Middle East conflict is still evolving, but at least so far, financial stress indicators suggest that the country’s growth slowdown is unlikely to evolve into a systemic shock.

Fellow UP CBA alumni and Energy Undersecretary Wimpy Fuentebella, who joined Francisco in the fireside chat, urged Filipinos who can afford it to switch to electric vehicles to save on foreign exchange spent on imported fuel. He also said the country is on track to achieving a 50-percent renewable energy share in the power mix by 2040.

Lilian Selda of Palawan Group, likewise a fellow alumna, traced the company’s growth from a single loss-making pawnshop in Palawan – acquired by her father – into a diversified enterprise spanning lending, insurance, remittance and foreign exchange, with over 3,600 branches nationwide, addressing the lack of access to formal credit among Filipinos.

Irthym Philippines country manager Daniel Rupinta also joined the fireside chat and discussed the company’s digital health care solutions, which are available abroad but not in the Philippines, leaving Filipinos without access to these technologies due to gaps in local health insurance coverage.

The UPCBAA also elected a new set of trustees and officers. Former senator Manuel Villar was named chairman emeritus, with Toyota Albay chairman Francis Laurel as chairman. Francisco was elected president; KPMG chair and CEO Sharon Dayoan, vice president; lawyer Anthony Parungao, secretary; Palawan Group of Companies vice chairman and CFO Lilian Castro-Selda, treasurer; KPMG partner Michael Guarin, auditor; lawyer Jose Antonio Santos, assistant corporate secretary and lawyer Mary Ann Reyes, PRO. They are joined on the board by Unilab president and CEO Sebastian Baquiran, GCash president and CEO Martha Sazon, The French Baker CEO Johnlu Kua, architect Armin Sarthou, MedGrocer associate director David Gozali, Maharlika Investment Corp. AVP Winchell Wong and Times Paint president and CEO Reginald Yu.

Still no end in sight

Recently, the Securities and Exchange Commission ordered ABS-CBN Corp. and its top executives to answer a complaint filed by board director Federico “Piki” Lopez, who accused them of violating corporate and securities laws.

Piki asked the regulators to investigate what he described as a pattern of corporate asset dissipation, excessive executive compensation, questionable related-party transactions and alleged misstatements in financial reports.

He also sought the appointment of an interim management committee to oversee ABS-CBN, conduct a forensic audit and investigate the respondents.

For its part, ABS-CBN said its board of directors and committees have consistently exercised proper oversight of executive compensation, capex and financial reporting in accordance with applicable laws.

The complaint was filed by Piki against ABS-CBN, The Big Dipper Digital Content & Design Inc, chairman Martin Lopez, president Carlo Katigbak and treasurer and group CFO Ricardo Tan Jr.

Meanwhile, the Lopez family majority continues to challenge Piki and the First Gen Corp. board’s hydropower partnership deal with Prime Infrastructure Capital – particularly the alleged P42-billion premium that First Gen agreed to pay for a 33-percent stake in Prime Infra’s hydropower business, and the alleged “poison pill”  provision that will allow Prime Infra to buy out First Gen’s 33-percent stake at a 25-percent discount if Piki and his designates are removed from the company for any reason.

However, First Gen has clarified that the inclusion of “change-of-management-control” (CMC) provision was requested by Prime Infra, not by Piki.

The company has further explained that there is nothing unusual or “scandalous” about the CMC provision, also known as a “key man clause.” It said that such provisions are commonly found in large-scale energy and infrastructure projects where investors place significant value on the experience and continuity of a management team responsible for executing complex, multibillion-peso developments.

First Gen has stated that the inclusion of the CMC provision reflects Prime Infra’s confidence in Piki and his management team and underscores the importance of management continuity to the success of the projects.

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