Worthy of praise

It’s not everyday that you see the House of Representatives praising, not castigating, an agency of the Executive Department.

But that is exactly what happened recently when Congress took notice of the performance of the Bureau of Internal Revenue (BIR) despite the pandemic, after the agency exceeded its collection target for 2020.

Data from the Department of Finance showed that the BIR has collected a total of P1.94 trillion last year, exceeding its target by P255.19 billion. And because of this, the Lower House adopted a resolution praising the country’s premier tax collection agency for surpassing its 2020 target collection of P1.69 trillion by 15 percent.

In House Resolution 1538, Majority Leader and Leyte Rep. Martin Romualdez and Deputy Majority Leader and Pampanga Rep. Juan Miguel Arroyo emphasized that the sterling performance of the BIR for fiscal year 2020 under the leadership of commissioner Caesar Dulay, despite the current economic challenges, should be held up as an example for other public servants to emulate, and therefore worthy of commendation from the House of Representatives.

HR 1538 also commended the entire economic team of President Duterte, led by Finance Secretary Carlos Dominguez, for its dedicated hard work to help the economy recover from the crippling effects of the COVID-19 pandemic

Romualdez even pointed out that the last time the BIR hit its goal was in 2001 and 2003.

The resolution noted that decisive leadership, and together with the entire economic team of President Duterte, has allowed the bureau to surpass its target through sustained implementation of various fiscal measures aimed at improving the tax collection efficiency of the national government. These measures include the strict implementation of the taxpayer account management program, monitoring of tax remittances, and escalation of tax awareness learning activities at the local level despite the global health crisis brought about by the pandemic.

Romualdez, also chairman of the House committee on rules, and Arroyo, chairman of the committee on energy, said the members of the House of Representatives, acting together, are duty-bound to not only nominally recognize but also meaningfully support extraordinary acts that redound to the benefit of the whole country.

For his part, Dulay expressed optimism that the BIR would be able to perform strongly this year, as he cited the Bangko Sentral ng Pilipinas’ pronouncements that the Philippines was already on its path toward recovery. This year, the BIR is aiming to collect P2.081 trillion, 7.27 percent higher than the actual collection in 2020.

Dulay stressed that tax collection from POGOs or Philippine offshore gaming operators, increased by 11.71 percent to P7.18 billion from about P6.4 billion in 2019 and only P2.36 billion in 2018. The increase in the tax collection is attributed mainly to a BIR ruling mandating POGOs and service providers to first pay their tax dues before they could resume operations amidst the quarantine.

BIR’s intensified tax collection efforts will be very important especially this year. Moody’s Investors Service, in its just released credit opinion of the Philippine government which it rated Baa2 stable, said that while the country’s credit profile has been characterized in recent years by strong economic performance, a strengthening financial position, and limited vulnerability to external shocks, the pandemic will disrupt or potentially reverse these trends.

Moody’s pointed out structural credit challenges that include low per capita income, weak rule of law and control of corruption, and exposure to climate change and natural disaster risks even as it highlighted the country’s credit strengths, i.e. high growth potential supported by favorable demographics; moderate government debt levels, improved debt affordability due to revenue reform; and stable and resilient banking system.

Long way to go

One of the leading property consultancy firms operating in the country recently released the results of a survey that showed very interesting insights into this pandemic.

The survey conducted by Colliers Philippines revealed that despite the popularity of work-from-home arrangement, majority or 63 percent the respondents believe that they are more productive in a traditional office setup. This, Colliers concluded, should buoy landlords’ optimism that have been suffering from increasing vacancies since the start of the pandemic.

When the enhanced community quarantine was first imposed last year, many non-essential businesses were forced to stop operations, either temporarily or permanently. As a result, many office leases were not renewed, inspite of the relaxed quarantine. Colliers in its report said that office vacancy in Metro Manila rose to 9.1 percent in 2020, more than double the 4.3 percent vacancy in 2019. Meanwhile, flexible workspaces’ vacancy ballooned to 41 percent in 2020 from 28 percent in 2019.

In so far as the residential sector is concerned, the survey also showed that more than 70 percent of the respondents plan to make a residential investment in Mandaluyong and Alabang-Las Piñas areas in the next 12 months. Major business districts such as Makati CBD, Fort Bonifacio and Ortigas were, however, excluded from the choices.

Colliers said it has observed a stable demand for mid-income to luxury condominium units even during the pandemic. These are units priced starting at P3.2 million. Meanwhile, in the pre-selling condominium market, only 31,000 units were sold in 2020, the lowest since 2013. Of the units sold in 2020, mid-income to luxury covered 86 percent of total takeup compared to 72 percent in 2019.

For the hotel sector, 66 percent of the respondents said they are willing to work in a hotel room converted into a flexible workspace or co-working facility, which according to the report should help hotels across Metro Manila which have been suffering from low occupancies and significantly reduced daily rates.

The report revealed that last year, hotel occupancy in the capital region was a measly 20 percent from 72 percent in 2019. Colliers observed that Metro Manila hotels continue to reel from the adverse impact of the pandemic and global travel restrictions, with data from the Department of Tourism showing that in 2020, foreign arrivals dropped by 82 percent to 1.48 million from a record-high 8.3 million in 2019.

The warehousing business, meanwhile, is one that has benefitted a lot from the pandemic. The survey showed that 76 percent of respondents are willing to pay additional fee for same-day deliveries for their online purchases. This, Colliers said, has raised the demand for fulfillment centers and warehouses within Metro Manila and nearby integrated communities or business hubs. In fact, mall operators have been converting vacant mall spaces into warehouses or fulfillment centers to cash in in this growing need.

In another report, Colliers said it expects to see an uncertain office leasing environment in Metro Manila over the next 12 months, although those that provide essential goods and services will be expanding and absorbing office space.

In 2020, the report revealed that there were 27,000 square meters of office space deals from traditional occupiers providing essential services such as healthcare, e-commerce, financial technology, telecommunications, and logistics and warehousing. Colliers projects demand from these sub-segments, driven by the lockdown and household consumption-led economy, will be sustained over the next 12 to 24 months.

Overall, Colliers noted that the decrease in demand will likely result in a rental correction this year before recovery starts in 2022. Subdued leasing across all segments, whether traditional, POGOs, or outsourcing, will result in a bottoming out of rents in 2021 before recovering next year.

It said the vacancy this year will rise as POGOs continue to vacate office space and outsourcing firms rationalize office requirements. As a result, vacancy is expected to reach 12.5 percent in 2021, the highest since 2013.

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