Meanwhile, all domestic flights of PAL will now operate from Terminal 2, alongside domestic flights of AirAsia.

The reassignments are part of the Schedule and Terminal Assignment Rationalization (STAR) program of the Manila International Airport Authority, which started on April 16. Under the program, MIAA estimates the capacity of Terminal 2 to increase from 7.5 million to 10 million passengers a year.

Terminal 2 was originally designed as a domestic terminal with continuous passenger flow. But in the 1990s, PAL began to use Terminal 2 exclusively for its international and domestic operations, an arrangement that was entered into during a time of financial distress for the flagship carrier.

Prior to this, PAL also began moving flights to and from Singapore, Ho Chi Minh, and Phnom Penh to Terminal 1.

See the full list of terminal reassignments here. – Rappler.com

The Development Budget Coordination Committee (DBCC) on Friday, June 9, announced that they had maintained the gross domestic product (GDP) growth outlook for 2023 at 6% to 7% for 2023 and 6.5% to 8% for 2024 to 2028.

GDP growth was not revised upward despite the inflation outlook – which was mainly the hindrance for higher growth – being narrowed to 5% to 6% from the previous assumption range of 5% to 7%.

National Economic and Development Authority Secretary Arsenio Balisacan said that while inflation has eased, growth will continue to be challenged by slowing global growth.

The “lag effect” of higher interest rates that were imposed mostly in 2022 due to higher commodity prices will also challenge growth, according to him.

Balisacan, however, noted that domestic demand, which comprises three-fourths of the country’s overall GDP figure, as well as “strong macroeconomic fundamentals,” will sustain the Philippines’ economic growth.

The DBCC also lowered its exports and imports growth projections for 2023, at 1% and 2% from 3% and 4%, respectively. These are expected to stabilize at 6% and 8%, respectively, in the medium term.

Bangko Sentral ng Pilipinas Deputy Governor Franciso Dakila Jr. said that trade figures were revised downward mainly due to lower global demand for electronics products as well as coconuts and minerals. The slowdown in imports was attributed to moderation in commodity prices as well as slower manufacturing activities.

“The DBCC is confident that the country can withstand these risks and achieve upper-middle-income status in the next two years through the implementation of near- and medium-term strategies, such as ensuring timely and adequate importation, providing preemptive measures to address El Niño, strengthening biosecurity, enhancing agricultural productivity, and pushing for legislative reforms, including the Livestock, Poultry, and Dairy Competitiveness and Development Act, among others,” the DBCC’s joint statement read. – Rappler.com

Since the driver’s license mess began making headlines, the LTO and Department of Transportation (DOTr) have been pointing fingers at each other for the cause of the shortage.

Then-LTO chief Jose Arturo Tugade claimed that the agency was ready to procure by December 2022 before a special order issued by the DOTr “stopped all procurement activities.” This special order – issued on January 25, 2023 – required all procurement activities over P50 million to be handled by the DOTr Central Office.

Meanwhile, the DOTr said that it was finding ways to speed up the purchase of license cards, after LTO’s “failure to undertake early procurement activities in compliance with existing rules.”

These disagreements peaked when, a few weeks back, Tugade resigned as head of the LTO, pointing to the driver’s license issue and “differences” with Transportation Secretary Jaime Bautista. 

New head, old problems

Hector Villacorta has since stepped in as the offer-in-charge starting June 1, but it seems that the agency’s new head must find his own way through a messy turnover.

“There was no turnover of documents or any lecture on ‘these are the things that are pending,’” Villacorta said during a Senate hearing on Thursday, June 8. “I just smiled when he said ‘you are bound to fail in this office.’”

“There was a 15-minute coffee, and that was all – except to say that I should have not taken the post,” he added.

Villacorta, who is the third head of the LTO under the Marcos administration, faces the daunting task of solving the driver’s license shortage.

“Kawawa naman si Acting Secretary Villacorta. Para flying blind ito eh (I feel bad for Acting Secretary Villacorta. It’s like flying blind) – almost like wishing him failure,” Senator Grace Poe said during the Senate hearing. “I think part of the responsibility of accepting a position in government is to be able to provide a smooth transition to the next administration.”

This wouldn’t be the first time that procurement of the driver’s licenses was hampered by a turnover. 

Teofilo Guadiz III, the LTO chief who served before Tugade, said that he was aware of the dwindling supply of driver’s license cards – something he had been tackling before he was replaced.

“We did do our job during my three-and-a-half months of stay with the Land Transportation Office. We have commenced with the technical working group. We’re about 75% done when I was replaced as head of the Land Transportation Office,” Guadiz said during the Senate hearing.

He said that he submitted the documents and studies to Tugade’s team before he left, with the “final request” to monitor the driver’s licenses and license plates.

“The person who replaced me took his oath on a Monday. And on a Tuesday, nandoon na po siya sa office ko (he was already at my office) and requested that I vacate my office on a Wednesday,” Guadiz said, referring to Tugade.

Tugade did not attend the Senate hearing, prompting senators to issue a subpoena against him. 

How bad is the shortage?

As the months drag on with no supplier yet finalized, the backlog of driver’s licenses has only continued to climb.

As of May 2, the LTO set the backlog at 234,149. Now, the figure stands at around 690,000 – the most ever recorded – according to the latest data from the DOTr. This means that in the span of around a month, an additional backlog of more than 450,000 license cards has accumulated.

Meanwhile, the limited supply left is dwindling by the day.

“Right now, meron nang shortage ng (there is a shortage of) driver’s licenses. As of today, we have only around 70,000 ID cards available nationwide and we are reserving this for OFWs,” DOTr Secretary Bautista said during the Senate hearing.

So what could have been done to avoid the shortage? According to the DOTr, the LTO could have started procuring driver’s license cards as early as August 2022. 

“Puwede na pong mag-early procure considering that the NEP (National Expenditure Program) is already submitted to Congress and kailangan na rin pong mag-procure dahil mauubos na rin po ‘yung mga IDs, which are needed for 2023,” he said.

(You could do early procurement considering that the NEP is already submitted to Congress, and you need to procure because the IDs are already running out, which are needed for 2023.)

Instead, the LTO failed to submit the terms of reference until March 21. It was only after that point that the DOTr could proceed with the procurement process. 

Currently, Bautista said that the department was finalizing the procurement for the plastic cards, with a lowest bidder already identified.

“If we will be able to finalize this, if we will qualify the lowest bidder, we should be able to get maybe 500,000 licenses in July,” he said. – Rappler.com

In a statement on Thursday, June 8, the BSP said it will implement a reduction in the reserve requirement ratios (RRRs) by 250 basis points for universal and commercial banks as well as non-bank financial institutions with quasi-banking functions; 200 bps for digital banks; and 100 bps for thrift banks, rural banks, and cooperative banks. 

This brings the RRRs of universal and commercial banks as well as non-bank financial institutions to 9.5%, digital banks to 6%, thrift banks to 2%, and rural banks and cooperative banks to 1%.

The new ratios will take effect on the reserve week beginning June 30 and will apply to local currency deposits and deposit substitute liabilities.

What is RRR?

The RRR is a monetary policy tool used by central banks to regulate the amount of reserves that commercial banks are required to hold against their deposits. It represents the percentage of a bank’s total deposits that must be held in reserve, either as cash in their vaults or as deposits with the central bank.

By setting the RRR, central banks can influence the amount of money that banks can lend out and, consequently, the overall money supply in the economy. When the RRR is increased, banks are required to hold a larger portion of their deposits in reserve, which reduces the amount of money available for lending and slows down the growth of money supply. Conversely, when the RRR is lowered, banks have more funds available for lending, which can stimulate economic activity and increase money supply.

It also serves as a tool for central banks to manage liquidity and maintain stability in the banking system. By adjusting this ratio, central banks can control inflation, influence interest rates, and manage the overall health of the economy.

Why did the BSP cut RRRs?

The BSP said the reduction in reserve ratios is intended to “coincide with the expiration of alternative modes of compliance with reserve requirements by end-June 2023 and thereby ensure stable domestic liquidity and credit conditions.” 

The central bank noted that this adjustment is in line with its ongoing efforts toward a “more active and flexible approach” to liquidity management through market-based monetary operations. 

While RRR adjustments are usually used as a tool to manage liquidity and inflation, the BSP emphasized that the lower reserve requirements do not constitute any shift in its monetary policy settings. 

“The BSP continues to prioritize bringing inflation back towards a target-consistent path over the medium term and will continue to signal its monetary policy stance through the key policy interest rate, or the rate on the overnight reverse repurchase facility,” it said.

In a rate-setting meeting last May 17, the BSP’s Monetary Board made no change to the key policy rate of 6.25%. It earlier enforced a hike of 25 bps in March.

BSP Governor Felipe Medalla earlier said interest rate cuts and hikes are unlikely in upcoming Monetary Board meetings set for August and September. But the central bank would still be open to adjusting key policy rates depending on its inflation forecasts and also the monetary policy decisions of the United States Federal Reserve. – Rappler.com

The Philippines posted a GDP growth of 6.4% in the first quarter of 2023, higher than the levels of growth in Malaysia (5.6%), Indonesia (6.0%), Vietnam (3.3%), and Thailand (2.7). This was attributed to the continued release of pent-up demand, improved employment, and steady remittances. 

But the World Bank cautioned that these rosy numbers are expected to fall in the face of stubborn inflation, among other factors.

“That growth was highest among peers in the region. However, growth is expected to moderate in 2023,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines, and Thailand in a media briefing on Wednesday, June 7.

“This is because elevated inflation and a tight policy environment will weigh on domestic demand while the slowdown in global growth will weigh on external demand. And those explain the moderation that we have predicted in 2023,” he added.

Inflation to fall, but risks remain

Although inflation had already peaked in early 2023, it remained “well above those in peer countries in the ASEAN region,” according to World Bank senior economist Ralph Van Doorn. May’s inflation rate of 6.1% – which marked the fourth consecutive month of deceleration – still remained far above the 2% to 4% target range of the Bangko Sentral ng Pilipinas.

The World Bank expects inflation to go down in the Philippines and around the world, but it highlighted the persistence of global risks, such as “unexpectedly sticky core inflation” that could be transmitted to the Philippine economy, rising geopolitical tensions, and the recent episodes of financial market instability in advanced economies. 

Domestically, there’s also the threat of El Niño and supply chain bottlenecks that could again strain the country’s food supply and inflate prices.

Taking into account these risks, the World Bank estimated that the Philippine economy would grow at 6% in 2023, 5.9% in 2024, and 5.7% over the medium-term.

Low-quality jobs rise past pre-pandemic levels

While the country’s growth has generated jobs and lifted people out of poverty, the World Bank has its eye on another trend that it caused: the rise of low-quality jobs.

“Higher labor force participation and net job creation mask the persistence of low-quality jobs,” the World Bank’s Philippines Economic Update report said. “Low-quality jobs are on a rise, even surpassing pre-pandemic levels.”

The Philippine economy generated 998,000 jobs from September 2022 to March 2023, but a big chunk of this is what the World Bank labels as “low-quality jobs,” which are characterized by low and irregular pay. 

“While the economy has generated a significant number of jobs, particularly in agriculture and the service sector, the quality of these jobs remains a concern. There has been an increase in part-time workers, self-employed individuals, and unpaid workers, indicating a shift towards the informal labor market and low-productivity jobs,” Doorn said during the media briefing.

Elementary occupations with low and irregular pay took up almost 30% of all employment in March 2023, higher than the 27% level in January 2020. The percentage of part-time workers, self-employed individuals, and unpaid workers also rose above pre-pandemic levels, showing a shift to low-productivity jobs.

Worryingly, data from the Philippine Statistics Authority showed that around 41% of new jobs created in February were unpaid – that is, they were held by people who work in family businesses without compensation.

(READ: Philippines mutes rise of unpaid workers, highlights rosy jobs figures)

“Job creation in the Philippines since 2015 has actually lifted a lot of people out of poverty. And we’ve seen that in a very sharp decline in the poverty rate from 2015 until the pandemic. However, many of these jobs were not very productive, and are precarious, with low job certainty,” Doorn said.

“The challenge going forward to be a middle- and upper-middle-income country is for the economy to create not only jobs, but high-quality jobs in the manufacturing and the high value-added-service sectors,” he added. – Rappler.com

Reuters exclusively reported last week that Vietnam was planning subsidies worth hundreds of millions of dollars to partly compensate multinationals with big investments in the country, including Samsung Electronics and Intel, for the higher taxes they will face from next year.

Under the new rules shepherded by the OECD, companies paying less than 15% in a low-tax jurisdiction will from January face a top-up levy either in that jurisdiction or in their home country.

Vietnam’s plan is the first reported attempt worldwide to find a partial workaround to the new global rules, but other countries are considering similar moves, the person familiar with the talks said, noting the OECD warned of risks these arrangements may pose, potentially “compromising the ultimate purpose” of the reform.

The rules were mainly devised to tackle tax planning practices which have allowed multinationals to pay very low or no tax at all. Usually this is done by basing their headquarters in tax havens, such as Caribbean islands or small European states, where often they had no production activities.

Vietnam is a major manufacturing hub heavily reliant on foreign investment which it has been able to attract over the decades partly thanks to tax sweeteners, but also because of low labor costs, proximity to China, free trade deals, and stable government.

Hanoi wants to introduce a top-up tax, but fears that without some sort of compensation, the higher levy could make it less attractive to large multinationals, which have been asking for compensation in private talks. In 2019, Samsung paid as little as 5.1% in tax in one province.

OECD warning

In meetings in Hanoi last week, OECD officials told Vietnamese government officials that if subsidies to multinationals were found to be direct compensation for the higher levy, “the domestic top-up tax would be disqualified,” the person said, declining to be named because the information was not public.

The person said the OECD made it clear that large companies would therefore have to pay the top-up levy in their home country, for instance South Korea in the case of Samsung.

OECD senior tax official John Peterson declined to comment about the outcome of the meeting, citing confidentiality rules.

However, he said if one country compensates a multinational with “targeted benefits, for example in the form of grants or tax credits” it would no longer be able to raise revenues from a top-up tax.

In that case, the company “will simply be subject to additional top-up tax, equal to the same amount, in another jurisdiction.”

Vietnam’s government did not reply to Reuters requests for comment.

Asked about the planned measures at a press conference on Monday, June 5, Nguyen Thanh Lam, deputy information minister, said: “It’s a broad and complicated matter. Many government agencies are involved and studying it.”

Vietnam’s planned subsidies would be in the form of after-tax cash handouts or refundable tax credits, according to initial plans subject to changes, Reuters has reported.

That would benefit companies facing higher levies due to the global tax reform, but also firms which are not impacted by the overhaul, another source familiar with the separate talks between companies and the Vietnamese government told Reuters.

Decisions on compensation would be taken case by case and no direct link would be established between handouts and the top-up tax, the source added.

Asked whether the planned rules could be considered a direct subsidy to offset multinationals’ higher taxes, the OECD declined to comment as Vietnam’s plans had not been finalized.

Under the new rules, countries can introduce tax incentives for companies, but their laws must be reviewed and supported by tens of nations worldwide which have agreed to the global reform. – Rappler.com

Faculty members of the University of the Philippines School of Economics (UPSE) issued a strongly-worded discussion paper on Tuesday, June 6, a week after both chambers of Congress swiftly acted on the measure, saying that the Maharlika fund “violates fundamental principles of economics and finance and poses serious risks to the economy and the public sector – notwithstanding its proponents’ good intentions.”

UPSE faculty underscored some crucial points for Marcos to consider:

Maharlika’s purpose remains unclear even after deliberations of both houses of Congress

Sovereign wealth funds are funded either through surplus revenues drawn from natural resources such as oil or through government’s current account surpluses, fiscal surpluses, foreign exchange reserves, and privatization proceeds.

Without resource windfalls or government surpluses, fund sources can come from the national budget with the primary objective of attaining developmental goals infrastructure investments.

Whatever the funding source may be, any sovereign wealth fund must be clear: is it for stabilizing government finances, accumulating wealth, or funding projects?

Maharlika’s goals, however, lack a clear focus, as it seeks to earn both from commercial returns and investment of huge portions of its funds in local development projects.

While there is nothing inherently wrong with pursuing multiple goals, it must articulate its objectives and expectations.

UPSE faculty emphasized that any sovereign wealth fund must have clear goals on its allowable investments and activities and lay down reasonable expectations and metrics of success.

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Maharlika fund now approved. How has it changed?

Maharlika may encroach upon the budget process

Maharlika aims to invest in projects for economic gains. But isn’t this the goal of the government and the budget process anyway?

The discussion paper also warns that Maharlika may bypass the normal budget process, diminish Congress’ power of the purse, and even violate the Constitution.

Maharlika poses huge risks to strained public coffers

In 2022, the Philippines’ current account deficit reached its highest level in nearly two decades, implying that the country is a net borrower from the rest of the world. Meanwhile, the budget deficit had exceeded P1.6 trillion in 2022.

With an authorized capital of P500 billion, the Maharlika fund risks worsening the public debt.

Draining capital from state banks like Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP) risks destabilizing these institutions and compromises their ability to meet capitalization requirements.

Maharlika poses moral hazard risks

The UPSE discussion paper, crafted by 20 faculty members, also warns of moral hazard risks.

In economics, a moral hazard situation is where one party is willing to take on more risk because it believes another party will bear the burden of those risks.

In the context of Maharlika, fund managers may undertake riskier investments because they know that the state stands behind them. The Maharlika board may also be incentivized to take on riskier investments in pursuit of higher returns.

“This means that the public, through their taxes or pensions, could end up bearing the risk of poor investment decisions, while the rewards (if the risky investments succeed) may accrue to a limited group of people, such as those in power and their associates or managers of the fund.”

Safeguards are also unclear. As it is, the bill does not distinguish between poor fund management and general market downturns. 

The bill also has no provisions regarding bankruptcy, which could imply that in the end, the Philippine government will shoulder any liabilities or losses.

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[ANALYSIS] Beware the Maharliscam

Maharlika’s goals are vague and may contradict other economic blueprints

Experts noted that Maharlika’s goals speak of “development only in the broadest possible terms” and does not make any reference to the Philippine Development Plan.

“Without anchoring the Maharlika Investment Fund on specific long-term development objectives, [it] may pose macroeconomic risks to become prone to exhaustion when the political environment is unstable or incumbent officials prioritize short-term goals,” the discussion paper read.

Its goals have already been taken up by other government agencies and government-owned corporations like the National Development Corporation, Landbank, and the DBP, which will fund Maharlika, are already involved in development projects.

It may also overstep the functions of the National Economic Development Authority, which scrutinizes and approves infrastructure projects.

Experts also questioned Maharlika’s expected returns. The bill aims to “obtain the optimal absolute return” without elaborating on the level of returns and financial gains.

Red flags in the governance structure

The Maharlika Investment Fund has a poorly designed governance structure that could open floodgates for political interference and corruption.

All board members, as well as its advisory body, are presidential appointees, even the independent directors.

“These provisions will effectively allow presidential appointees to exert significant influence on the everyday operations of the Maharlika, potentially paving the way for politicization and boding ill for the [Maharlika Investment Corporation’s] operational independence – a key determinant of the success of any sovereign wealth fund,” the discussion paper said.

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[PASTILAN] A Ponzi scheme called Maharlika

Maharlika is unlikely to grow substantially to finance development projects

Any new sovereign investment fund should be able to “crowd-in” private investments. But with the current global economic environment, this may be difficult to achieve.

A downgrade of the global growth projection, geopolitical conflict, and rising interest rate hikes, are some of the headwinds Maharlika will face.

Norway’s sovereign wealth fund has lost $164.4 billion due to these reasons. Indonesia’s wealth fund, which is Maharlika’s “inspiration,” was injected with $5 billion in 2021. But as of 2022, no foreign investors had come in to reinforce its seed money.

Despite the concerns raised, the discussion paper did not ask Marcos to scrap the proposal. It, however, urged economic managers to “reconsider their position” and advise Marcos “accordingly.”

“We are not unmindful of the political stakes and reputational face-saving that have led to the hasty passage of this law. Short of asking Congress to rescind the bill or the President not signing it – both unlikely scenarios – some hope still exists for reducing the harm and risks this law might bring to the economy,” – Rappler.com

Real global gross domestic product (GDP) is set to climb 2.1% this year, the World Bank said in its latest Global Economic Prospects report. That’s up from a 1.7% forecast issued in January but well below the 2022 growth rate of 3.1%.

The development lender cut its 2024 global growth forecast to 2.4% from 2.7% in January, citing the lagged effects of central bank monetary tightening and more restrictive credit conditions that were reducing business and residential investment.

These factors will slow growth further in the second half of 2023 and into 2024, but the bank released a new 2025 global growth forecast of 3%.

World Bank Chief Economist Indermit Gill put a gloomy spin on the new forecasts, saying that 2023 would still mark one of the slowest growth years for advanced economies in the last five decades.

Two-thirds of developing economies will see lower growth than in 2022, dealing a major setback to pandemic recovery and poverty reduction and increasing sovereign debt distress, he added.

“Even by the end of next year, a third of the developing world will not beat the per-capita income levels that they had at the end of 2019,” Gill told reporters. “That’s five lost years for nearly a third of the world’s countries.”

In January, the World Bank had warned that global GDP was slowing to the brink of recession, but since then, strength in the labor market and consumption in the US had exceeded expectations as has China’s recovery from COVID-19 lockdowns.

US growth for 2023 is now forecast at 1.1%, more than double the 0.5% forecast in January, while China’s growth is expected to climb to 5.6%, compared to a 4.3% forecast in January after COVID-reduced growth of 3% in 2022.

The bank, however, halved its previous 2024 US growth forecast to 0.8%, and cut China’s forecast by 0.4 percentage point to 4.6%.

The eurozone got a forecast increase to 0.4% growth for 2023 from a flat outlook in January, but the forecast for next year was also cut slightly.

Banking stress

Recent banking sector stress is also contributing to tighter financial conditions that will continue into 2024, the lender said.

It cited one potential downside scenario where banking stress results in a severe credit crunch and broader financial market stress in advanced economies. This would likely cut 2024 growth by nearly half to just 1.3% – the slowest pace in 30 years outside of the 2009 and 2020 recessions.

“In another scenario where financial stress propagates globally to a far greater degree, the world economy would fall into recession in 2024,” the bank added.

The bank said inflation is expected to gradually edge down as growth decelerates and labor demand in many economies softens and commodity prices remain stable. But it added that core inflation is expected to remain above central bank targets in many countries throughout 2024. – Rappler.com

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“We advise that LTFRB has no power to apprehend, impound, and dispose ‘colorum’ vehicles. Its authority extends only in the coordination [and] cooperation with other government agencies in the apprehension, impounding, and disposal of such vehicles,” Justice Secretary Jesus Crispin Remulla stated in a legal opinion dated May 31, 2023.

Instead, the DOJ declared, the Land Transportation Office (LTO) and the Traffic Management Unit of the Philippine National Police (PNP) are the agencies authorized to enforce traffic rules and regulations under Section 4(5) of Republic Act 4136, also known as the Land Transportation and Traffic Code, and Section 35(b)(8) of RA No. 6975, otherwise known as the Department of the Interior and Local Government Act of 1990.

“Even without the power to enforce the provisions of EO No. 202, the LTFRB may still coordinate and cooperate with these government agencies to enforce the provision of the aforementioned issuance and other related laws,” the DOJ said.

DOTr and LTFRB’s position

The issue was first raised by former Department of Transportation secretary Arthur Tugade in March 2022. Two transport cooperatives – the Liga ng Transportasyon at Operators sa Pilipinas and the National Federation Transport Cooperative – had written to the DOTr to clarify the limits of the LTFRB’s power. The DOTr then requested the DOJ for a legal opinion.

Current Transportation Secretary Jaime Bautista, however, is of the position that the LTFRB does possess the power to apprehend and impound vehicles. 

The DOTr pointed out that Commonwealth Act. No. 146, or the Public Service Act, authorizes the agency to make “reasonable rules and regulations for the operation of public services and to enforce such rules and regulations.” The department also argued that Executive Order (EO) No. 202 – which created the LTFRB – mandates the LTFRB to “promulgate, administer, and enforce policies, laws, and regulations of public transportation services.”

The DOTr also said that Joint Administrative Order (JAO) No. 2014-01 affirms the LTFRB’s enforcement power. It contained penalties for violations related to franchise, including the apprehension and impounding of vehicles, but it didn’t explicitly state whether the LTFRB was the agency authorized to apprehend and impound the vehicle.

The LTFRB, which leads the apprehending and impounding efforts of the Inter-Agency Council for Traffic against “colorum” vehicles, also shared DOTr’s position.

“[The] President’s directive to conduct a nationwide crackdown on all ‘colorum’ vehicles, including the arrest of drivers and seizure of vehicles and approval by Congress of budgets for acquisition of impounding areas for this purpose, reinforces, if not affirms, LTFRB’s authority to apprehend and impound vehicles,” the LTFRB was quoted as saying in the legal opinion.

DOJ’s position

However, the DOJ rejected this position and pointed out that EO No. 202 “does not contain any express provision which authorizes LTFRB to apprehend, impound, and dispose ‘colorum’ vehicles.” 

The DOJ clarified that, although EO No. 202 gives the LTFRB the power to enforce its rules and regulations, it only applies to specific purposes expressly written in the provision.

The relevant section enumerates the following purposes: “To formulate, promulgate, administer, implement and enforce rules and regulations on land transportation public utilities, standards of measurements and/or design, and rules and regulations requiring operators of any public land transportation service to equip, install and provide in their utilities and in their stations such devices, equipment facilities and operating procedures and techniques as may promote safety, protection, comfort and convenience to persons and property in their charges as well as the safety of persons and property within their areas of operations.”  

According to the DOJ, “nothing therein can be remotely used to justify the power to apprehend and impound ‘colorum’ vehicles.”

“It is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law and those that are necessarily implied in the exercise thereof,” the DOJ added. 

Addressing DOTr’s argument that JAO No. 2014-01 gives the LTRFB enforcement power, the DOJ said that if the EO did not expressly grant to LTFRB the power to apprehend, impound, and dispose “colorum” vehicles, then such powers can’t be inferred from the JAO.

“Under the foregoing premises, we are of the opinion that, unless duly deputized by the LTO or PNP, the LTFRB has no power to enforce the provisions of EO No. 202 and other related laws and, hence, cannot legally apprehend and impound ‘colorum’ vehicles,” the DOJ said in its legal opinion. – Rappler.com

The following explains the OPEC+ agreement reached on Sunday, June 4, and its effect on supply.

What was agreed for 2023?

OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, already had in place oil output cuts of 3.66 million barrels per day (bpd), amounting to 3.6% of global demand.

The figure comprises a 2 million bpd cut agreed last year from August 2022 production levels, and a further 1.66 million bpd of voluntary cuts from nine OPEC+ countries.

OPEC+ did not increase the 2023 production cuts.

But on Sunday, Saudi Arabia pledged an additional voluntary oil output reduction of 1 million bpd for the month of July, which could be extended.

As a result, the country’s output will drop to 9 million bpd in July from around 10 million bpd in May.

What was agreed for 2024?

The OPEC+ alliance on Sunday chose to focus on a lower production target for 2024.

As well as extending the group’s existing supply cuts of 3.66 million bpd for another year, it agreed to reduce overall production targets from January 2024 by a further 1.4 million bpd versus current targets to a combined 40.46 million bpd.

Including additional voluntary production cuts, which the nine partaking countries extended to the end of 2024, this results in an even lower target of 38.81 million bpd.

In real terms, this is around 500,000 bpd lower than April 2023 production, when compared with International Energy Agency (IEA) figures.

As part of Sunday’s agreement, the United Arab Emirates received a higher production target.

Meanwhile, targets for Russia, Nigeria, and Angola were reduced to bring them in line with declining production levels.

What’s the short-term impact?

Analysts, including at OPEC and the IEA, already expected supply to tighten in the second half of 2023 with the current OPEC+ production policy in place.

As Saudi Arabia has a track record of fully delivering on its output commitments, analysts see the deal’s initial impact as lowering supply.

Rystad Energy said it expects the Saudi cut to deepen the market deficit to more than 3 million bpd in July, “which could add upside pressure in the coming weeks.”

“The oil balance will tighten due to the voluntary Saudi reduction, which was announced for July but could be extended if deemed necessary,” Tamas Varga of oil broker PVM said.

Saudi domestic crude use rises to as high as 1 million bpd in summer months when demand for air conditioning drives power consumption.

2024 supply

JP Morgan estimated the OPEC+ decision will reduce supply in 2024 by almost 1.1 million bpd compared to its previous expectations.

“Almost all of this reduction would come from the larger producers in the alliance, and very little would come from smaller members, as their production capacity will likely remain below their quotas,” the bank said in a report. – Rappler.com