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Building on her government's gains in the last three years, President
Gloria Macapagal-Arroyo yesterday presented to Congress
her administration's program for the next six years and asked all
sectors to take bolder steps to curb the budget deficit, arrest
corruption, and improve the living conditions of the average Filipino.
In her first
State of the Nation Address (SONA) as the 14th president
of the Philippines, Ms. Arroyo
presented a 34-minute to-do list aimed at highlighting the
government's commitment to a new direction of putting the Filipino first
in all its undertakings, "and finally get things right." And as
expected, the president used the recent hostage incident in Iraq of
Filipino truck driver Angelo dela Cruz to drive home her point, and to
emphasize that her government cared more about people than critics. "You
have a government -- indeed, you have a country -- that cares. Your life
is held more dearly than international acclaim. And you have a president
who is your friend, and I cannot apologize for being a protector of my
people," the president said in her
speech, which was applauded 36 times. The president used the
euphoria over the safe release of Mr. dela Cruz as a rallying point for
the Filipinos to unite to "put our economic house back in working
order." "Having saved one Filipino from a painful and pointless death,
we must seize the unity we attained to improve our government and save
our economy," she said.
KEY RESULT AREAS
Ms. Arroyo bared her government's targets in five key areas: job
creation and economic growth, energy independence and savings, social
justice and basic needs, education improvement and youth opportunity,
and the government's anti-corruption campaign. To boost the economy, the
president pledged to wipe out the country's chronic budget deficit
within her six-year term by running after tax cheats. The president also
pledged to cut the country's unwieldy bureaucracy and devote her new
term to raising millions out of poverty, although she gave few details
on how she would do it. Ms. Arroyo also reiterated plans to introduce
new tax steps to raise an extra
PhP80 billion a year while saving an extra
PhP100 billion a year, but gave no further details on tax. Her
Energy secretary yesterday said that she had signed an order to raise
tariffs on oil product imports to 5% from 3% to net an extra
PhP4.4 billion.
Analysts said Ms. Arroyo needed to show her deficit-cutting plans had
teeth within months or risk further damaging downgrades by international
ratings agencies, which already rank the country's sovereign debt two
notches below investment grade. "We have to see progress on the actual
fiscal reforms over the next few months," said Nicholas Bibby, an
analyst at Barclays Capital in Singapore, adding that a downgrade by one
of the major agencies was possible this year. Ms. Arroyo asked Congress
to approve a bill on the privatization of debt-laden state power firm
National Power Corporation (Napocor), promising that it would not be a
"fire sale," and to pass a bill making the country's anti-corruption
ombudsman as strong as that of Hong Kong. She also promised to create a
more efficient bureaucracy by cutting staffing and giving the private
sector a greater role. "We will downsize the government, motivate excess
employees to become entrepreneurs and increase the pay of a lean and
mean bureaucracy," she said. After three years overshadowed by
legitimacy doubts, Ms. Arroyo had pledged to use her mandate for a fresh
six-year term and legislative majorities to wipe out the $3.6 billion
annual budget deficit, create six million jobs and put computers in all
schools.
'LIKE A MEDIOCRE TERM PAPER'
It is still far from clear whether
politicians are ready to tackle the country's problems with renewed
urgency, pushing aside the bickering and bad blood that has lingered
since anti-graft protests turfed out Joseph Estrada and installed Ms.
Arroyo in 2001. Moves to raise "sin" taxes on tobacco and alcohol have
been stymied for years by entrenched opposition. Early proposals to
abolish the value-added tax in favor of a new tax on gross income have
been criticized as counter to a trend towards VAT-based tax systems in
other countries. Tax hikes also promise to be unpopular among the
country's 82 million people, a third of whom live in dire poverty, and
the Iraq withdrawal has raised doubts over Arroyo's ability to make
decisions that run against popular opinion.
The initial reaction to
Ms. Arroyo's address by one senator suggested she had failed to win
over the doubters. "It reads like a mediocre term paper," administration
senator Joker Arroyo said in a statement. "Long in rhetoric, short in
substance. The president's advisers have failed her." Ms. Arroyo's
decision to withdraw from Iraq won her no respite from left-wing groups
strongly critical of her support for US policies and her failure to
eradicate poverty. "I don't think the people are about to give Gloria a
second chance," said Renato Reyes, one of the leaders of several
thousand protesters who set fire to a vulture-like effigy of Ms. Arroyo
near the Congress building. In her annual state-of-the-nation address
before both houses of Congress, Ms. Arroyo also called on legislators to
take up a possible shift from a US-style presidential system to a
parliamentary style of government starting next year.
'TOUGH LOVE FROM HERE ON'
She also said she would work to develop the impoverished nation and
spur economic growth, but warned that the country must "take bolder
steps forward," in her next six years in office. "Tough decisions will
have to be made. It is going to be tough love from here on," she said,
warning the upper-classes would feel the brunt of these reforms. "Our
most urgent problem is the budget deficit," Ms. Arroyo warned, saying
this could drive away investments, hurt job growth, and reduce the
government's ability to set up much-needed infrastructure. She thus
called on Congress to pass eight revenue measures. She also called for a
reduction of the bureaucracy, saying she would personally cut 30
agencies under the Office of the president. Ms. Arroyo received her
loudest applause from the legislators when she called for revising the
charter to allow for a parliamentary form of government.
Many legislators who favor this move say it will save time and money
in getting reforms enacted, make elected officials more accountable to
the public, and allow for more continuity in government. But critics
charge it is just a ploy for congressmen to entrench themselves in
power. In a conciliatory gesture to the opposition, Ms. Arroyo reached
out to the opposition, saying "I do not ask for unprincipled support. I
do ask for an end of unprincipled obstructionism because that always
succeeds in defeating our best efforts." Even before Ms. Arroyo
delivered her speech, her critics in Congress had already rejected her
new revenue measures. Senator Joker Arroyo remarked "in Congress, it is
hard enough for one tax measure to pass, much more eight." "I support
her but I will oppose these taxes. She can't expect us to be blind and
just agree to everything," said the senator, a nominal ally of the
president. Opposition Senate leader Aquilino Pimentel said, "her plan to
impose new taxes, we will fight against that." "We are telling them to
just collect what they need to collect with enforcement of existing
taxes," he stressed. About 3,000 leftist protesters tried to march on
the Lower House of Congress during Ms. Arroyo's speech but were pushed
back by club-wielding riot police. --
Jeffrey O. Valisno with reports from Reuters and AFP
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... but remain wary of the mode of
Charter change
'There were so many other issues that deserved a standing ovation.
But [lawmakers appeared to be] so eager on [charter change].' -- Jesus
L. Arranza, president of the Federation of Philippine Industries
Businessmen were upbeat yesterday following the president's
state of the nation address, saying they were ready to support her
reform programs and share part of the burden. Jesus L. Arranza,
president of the Federation of Philippine Industries (FPI), said the
president came across as "sincere," adding that he agreed that
businesses should adopt a policy of "tax acceptance" rather than "tax
avoidance." "Sincerity is contagious. I hope it filters down to
businessmen, government officials, and the common tao [people]," he said
in an interview.
Philippine Chamber of Commerce and Industry (PCCI) chairman Sergio R.
Ortiz Luis, Jr. said the president's push for "government reengineering"
should encourage the private sector to support her initiatives. "I think
it's a good signal to businessmen in the sense that it's not only
business that is going to sacrifice, [and that] it's [going to be]
pain-sharing and burden-sharing," Mr. Ortiz Luis said. Raul T.
Concepcion, chairman of the Consumer and Oil Price Watch, likewise said
businessmen were more than willing to help. "Let's walk the talk and we
will do it," he said in a television interview. His twin brother, Jose
S. Concepcion, Jr., who heads the Bishops-Businessmen's Conference and
the National Movement for Free Elections, echoed this view and said
various sectors would respond to the president's call. "We will be
involved in the fight versus corruption because this is something big
for our economy. [But we need] small victories, not a confrontation with
Congress. We will also monitor [government projects] so the people will
know where their money is being spent," he said in a television
interview.
CAUTIOUS
On the issue of constitutional amendments, Mr. Ortiz Luis said he
hoped the extraordinary applause given by legislators would not
necessarily mean there would already be a shift in the form of
government through a constituent assembly of both houses of Congress. A
constituent assembly is widely perceived as serving the vested interests
of incumbent lawmakers in the House of Representatives since they would
be the ones forming the body that would amend the Charter -- possibly
including provisions that now limit their terms.
The Senate, on the other hand, is aligned with many other groups that
back an elected Constitutional Convention -- composed of popularly
elected individuals who are supposed provide the widest socioeconomic
representation. "It's the most applauded, but I guess she will have to
look at it from the view of the crowd she was addressing," the PCCI
chairman said. "Let us not preempt kung ano ang magiging [what
will be the] result. [There] should be an educated campaign and
consultations should be made before a conclusion is arrived at." Mr.
Arranza said he was "surprised" that lawmakers gave the president a
standing ovation on her charter change stance. "I don't know what signal
it will give. Is it because they are involved [in the process]? Will
their terms be extended? Will there be a change in the form of
government?" he asked. "There were so many other issues that deserved a
standing ovation. But [lawmakers appeared to be] so eager on [charter
change]," the FPI chief said.
Peter Wallace of the Wallace Business Forum said it was "important to
recognize that the problem is not in the system. It's in the culture and
the attitude." He added that a parliamentary form of government would
not necessarily cure government inefficiency and corruption. Applying
the same analysis to taxation, Mr. Wallace said it was "too simplistic
to change it because it doesn't work." Mr. Wallace pointed out the
Philippines "doesn't have a good record of putting in place new
systems." He said "full computerization" of the net income tax system,
and value-added tax transactions should do the trick.
Also, changing the tax scheme on telecommunications companies will
bring "uncertainty" to the markets and is "quite frightening." "I'm not
at all happy with that. That would be penalizing a business for being
successful," Mr. Wallace warned. Mr. Ortiz Luis nonetheless praised the
president for highlighting the need for more infrastructure. "Another
thing that I like as a businessman is the way she spent more time in
explaining the need to implement infrastructure programs. In previous
[addresses] infrastructure was relegated to the backburner because they
were treated as a frivolous expense. Now, she's saying it's a necessary
expense," he said. Echoing the president, Trade and Industry Secretary
Cesar A.V. Purisima said infrastructure projects would be "fast-tracked"
to make the country "a preferred [destination] for doing business." "The
department will focus in attracting foreign and domestic investments
which will bring in needed capital and technological expertise," he
said. Seven industries will be prioritized, the Cabinet official said:
manufacturing, information technology, medical tourism, retirement
services, tourism, mining, and agribusiness.
MARKET REACTION
Meanwhile, traders said four-year Treasury bonds could be cheaper
today at just a few points above 11% in reaction to the president's
address. Four-year T-bonds fetched a rate of 11.375% in June. They were
trading at 11.3422% at the secondary market yesterday. Debt yields
started to drop last week on news that the budget deficit target for the
year was attainable. "There was nothing new in her speech, but I think
she was serious in implementing her revenue-generating plans. That's
still good news for us," a bond trader said Another trader noted, "there
is a sense of urgency in her tone," as the president committed new taxes
for Congress to approve. "What will matter now is how she will deliver
such plans," a trader said.
At the stock market, analysts said the president's speech failed to
move stocks because its contents were already anticipated. "It was a
non-event. The contents of the president's speech were already
anticipated," the analyst said. At the same time, Ms. Arroyo's speech
drew mixed reactions from economists.
Bienvenido S. Oplas Jr. of private research group Think Tank Inc.
expressed satisfaction with the tax measures proposed by Ms. Arroyo, as
well as her plan to maintain a "lean but mean bureacracy." "OK na rin
-- the government is looking at reducing the bureaucracy," he said. But
he also expressed disappointment over the failure of Ms. Arroyo to
detail the eight tax measures she wanted Congress to approve. "The
president will surely be met with criticisms if she focused on the eight
tax measures. Issues like taxes are very divisive and politically
unaccetable," he said. On charter change, he said he favored the lifting
of restrictions on foreign ownership of businesses as well as those that
relate to the practice of certain professions by foreigners. But he also
said key areas of reform pledged by Ms. Arroyo were nothing new. "Those
are general programs that have been pledged by past presidents and even
losing presidential candidates such as Fernando Poe Jr. and Bro. Eddie
Villanueva," Mr. Oplas said.
University of Asia and the Pacific (UA&P) economist Erico Claudio was
more cautious. "As a social scientist, the SONA would be very
interesting. But as an economist, I'd like to see how [those programs]
would be done. There were a lot of good ideas, but at the end of the
day, do you have the resources to do them?" Mr. Claudio said. "They are
very nice to hear, but let's see how they will be done." He said that
having the political will to translate the government's plan into action
would be crucial. "The targets are good, but [the government] should be
focused in achieving them," he said. As for reengineering the
bureaucracy, he said the plan would not come easy. "Reengineering is
easier said than done. It would require a lot of changes and, in a
democratic institution, it's more difficult because you have all sorts
of interest groups, unlike in a private company," he said.
SILENCE ON THE PROVINCES
In Davao City in southern Mindanao, traders said the assurance of a
constitutional change in the president's speech provided optimism that a
federal system of government would get the attention of the legislature
in the near term. Top leaders of the Davao City Chamber of Commerce and
Industry, as well as the Mindanao Business Council, both lobbying for a
shift to a federal form of government, were unavailable for comment on
the president's speech, but small- to medium-scale entrepreneurs at the
city's Chinese-Filipino business community said it was good enough
despite no new statements that specifically addressed Mindanao's
problems. Obviously, the president was expecting the island's security
situation to improve with the peace process, said trader Bob Te. "But
the shift to a more decentralized form of government is something many
Mindanaoans want to happen in the medium term, and that she covered in
her speech," he added. Others, however, remained wary of the promises
and objectives of the president. "The speech was predictable, like her
previous addresses before Congress," said Nilo Cabiles, an automotive
parts trader. "I was waiting for statements specifically on Mindanao but
there were none." "Those were politicians' promises and they do not
apply to us," added Lucita Napala, an employee of a private company. "I
didn't waste my time watching her speech. I didn't vote for her, anyway,
in the last elections." -- Felipe F.
Salvosa II with reports from Ira P. Pedrasa, Roulee Jane
F. Calayag, Jennifer A. Ng and BusinessWorld's Mindanao bureau
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By FELIPE F. SALVOSA II, Reporter
First half exports from economic zones all over the country went up
by 19.4% to $15.334 billion from $12.838 billion in the same period last
year, data released by the Philippine Economic Zone Authority (PEZA)
yesterday showed. In a report, PEZA Director-General Lilia B. de Lima
said 36 privately owned special ecozones generated $11.944 billion in
exports, a 22.5% increase from last year's $9.750 billion. Service
exporters in fourteen information technology or IT buildings and parks
logged $85.225 million, a 52% jump over last year's $56.083 million.
Four government-run ecozones contributed $3.305 billion in exports,
9% higher than the $3.032 billion registered in 2003, the PEZA data
showed. Laguna Technopark in Sta. Rosa, Laguna, the consistent top
earner among the special ecozones, reported a 15.5% growth in exports at
$4.177 billion, up from $3.615 billion last year. Gateway Business Park
in General Trias, Cavite came in second with $2.254 billion, 369% higher
than last year's $480.537 million.
Rounding out the top ten were Amkor Technology ($1.086 billion, up
70%), Carmelray Industrial Park I ($494.196 million, up 49%), Lima
Technology Center ($397.476 million, up 65%), Carmelray Industrial Park
II ($351.554 million, down 82%), People's Technology Complex ($350.231
million, up 48%), Light Industry and Science Park II ($322.636 million,
up 47%), Light Industry and Science Park I ($312.889 million, up 36%),
and Leyte Industrial Development Estate ($312.305 million, up 109%).
Among the IT facilities, RCBC Plaza emerged as number one with
$25.441 million in revenues, up 163% over last year's $9.673 million.
Eastwood City Cyber Park raked in $21.131, down 17.5% from last year's
$25.611 million, followed by Pacific IT ($12.028, down 5%), PBCom Tower
($6.458 million, up 139.3%), and The Enterprise Center ($6.284 million).
Baguio City Economic Zone ranked first among the public ecozones,
reporting a 7.5% increase in exports to $1.398 billion from $1.3 billion
in January to June last year.
Cavite Economic Zone registered $988.426 million in exports, a 7%
increase, followed by Mactan Economic Zone ($759.767 million, up 7.6%),
and Bataan Economic Zone ($158.556 million, up 15.7%). Ms. de Lima said
the special ecozones directly employed 245,627 workers during the
period, up 18.9% from last year's 206,410. IT buildings and parks had
11,985 workers, almost 50% more than the 8,003 workers in the same
period in 2003. Public ecozones employed 4.4% more workers at 136,625
from 130,865 last year. If the estimated indirect employment for 591,355
workers is added, PEZA-registered business generated a total of 985,592
jobs from 863,195 last year for a 14% increase, she said. Indirect
employment includes employment generated by enterprises providing inputs
and services to economic zone export-producers and service exporters
such as subcontractors, brokers, cargo handlers and forwarders, canteens
and restaurants, banks, utilities, construction, and janitorial and
maintenance services.
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By CARINA I. RONCESVALLES,
Reporter
The 13th Congress yesterday opened its first session with the hope of
enacting measures aimed at addressing the country's financial problems.
"Our country is besieged with insurmountable problems. We have to set
policies and enact laws that would avert a looming fiscal crisis, set
the proper stage to create jobs, conquer poverty, eradicate graft and
achieve lasting peace," Senate President Franklin M. Drilon said in a
speech during the opening of the 13th Congress. He said the Executive
and Legislative branches of government need to buckle down to work
following the heated elections in May.
The country, the administration lawmaker said, is no longer in
"business as usual mode" and needs to go into "survival mode." "In the
economic front, a 6.2% economic growth in the first quarter of this year
is not sufficient. A fragile economy we remain today. The fiscal crisis
is at our doorsteps. With the consolidated public sector deficit (CPSD)
now standing at
PhP235 billion, we should immediately find measures to narrow the
gap between government earning and spending," Mr. Drilon said. He also
said the Executive should explain the present revenue collection
efficiency before Congress enacts new tax measures, citing poor tax
collections with tax revenues representing only 12.3% of gross domestic
product (GDP) last year compared to 17% in 1997. "We must examine our
tax collection efficiency before we consider new tax measures. We must
determine whether a good portion of the revenues under our present laws
are indeed being collected. It is not acceptable to impose new taxes
especially on those who are already heavily burdened when there appears
to be so much revenue leakage and tax evasion going on," he said.
Other conditions that need to be met before the legislature enacts
new tax measures, he said, include the reenactment of the Bureau of
Internal Revenue (BIR) Lateral Attrition bill to provide rewards for
accomplishments and sanctions for failures; reexamination of the
spending priorities of the government; and streamlining of the
bureaucracy. President Gloria Macapagal Arroyo has announced several
measures which she wants passed by Congress: a shift to gross from net
income taxation for corporations and self-employed individuals; repeal
of the Value-Added Tax (VAT) law; collection of a tax on the windfall
income of telecommunications companies; an increase in taxes on tobacco
and alcohol products as well as petroleum products; limiting fiscal
incentives; a targeted tax amnesty; and the creation of a
performance-driven system for government agencies.
The tax proposals have earned criticism from business groups as well
as members of Congress. But Mrs. Arroyo insists the new taxes will save
the government from a looming fiscal crisis. Mr. Drilon also stressed
the need for fiscal responsibility to keep government borrowings at a
manageable level. "As a measure to instill fiscal responsibility, let us
consider putting a cap on government borrowings. It is rather appalling
that for every PhP100 of taxes collected, PhP40 will go to debt
servicing. Good sense tells us that the more we borrow, the more we
plunge into the debt pit," he said. Mr. Drilon has filed a debt cap bill
which provides a threshold level for public debt to assure that payments
do not affect expenditures for important social and physical
infrastructures. Once enacted into law, the Debt Cap Act mandates that
the CPSD -- the combined debts of the national government and the
government-owned and controlled corporations -- should not exceed the
nominal GDP in five years' time. It also mandates that the outstanding
debt not exceed 80% of GDP in the next five years. The budget deficit
reached
PhP199.9 billion last year. The government hopes to keep it to
PhP197.8 billion this year as it works for a balanced budget by
2009.
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By IRIS CECILIA C. GONZALES,
Reporter
Government regulators will ask Congress to restore to the interagency
Anti-Money Laundering Council (AMLC) the authority to freeze accounts
involving dirty money transactions. This was after the influential
Paris-based Financial Action Task Force (FATF) against money laundering
said restoring this power to the council would speed up the
investigation of suspected dirty money transactions. The Philippines
wants to be removed from the international roster of dirty money havens
maintained by the FATF. Money laundering, which is illegal in the
Philippines after Congress passed an anti-money laundering law in 2001,
is the traffic of funds from illegal activities such as drugs and
terrorism. Vicente S. Aquino, AMLC executive director, said yesterday
FATF's latest recommendation would require an amendment to the country's
anti-money laundering law which transferred the authority to freeze
accounts to the Court of Appeals.
The council will seek the support of the 13th Congress for the
necessary amendments. If AMLC were given the power to freeze bank
accounts, "we can freeze the account on the same day," Mr. Aquino told
reporters yesterday. In contrast, he said when the Court of Appeals
issues the freeze order, this goes through the judicial process and
could take time. On the other hand, if it is the council that issues the
freeze order, he said the AMLC may have to deal with restraining orders
issued by regional courts. But a Court of Appeals order to freeze
accounts can only be reversed by the Supreme Court. At present, the
Court of Appeals is looking at freezing various accounts amounting to
PhP400 million, Mr. Aquino said. He declined to divulge details
on the process. The FATF also wants the council to focus its efforts on
monitoring cash transactions instead of non-cash transactions. The
Paris-based group said this would speed up the council's investigation
against money laundering. Mr. Aquino said the AMLC would also seek
Congressional support for this particular amendment. He assured that
government regulators are exerting all efforts to have the country
delisted from the FATF list.
Bangko Sentral Governor Rafael B. Buenaventura, who chairs the
council, said the Philippines is likely to stay in FATF list this year.
Council officials have said that if the country remains on the list,
dollar remittances of overseas Filipino workers, which amount to some $8
billion a year, would go through "heavier scrutiny."
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By JENNEE GRACE U. RUBRICO,
Reporter
The Securities and Exchange Commission (SEC) may relax provisions in
its proposed anti-money laundering rules to allow internet stock
trading, provided that a third party can vouch for the identity of the
buying or selling parties. SEC Director Jose Aquino told reporters
regulated institutions may open accounts or execute orders of clients
without first meeting them so long as someone else would meet with the
clients on their behalf. He said the corporate regulator may allow this
for brokers who engage in internet trading and whose clients are not in
Metro Manila.
Under the draft guidelines released by the SEC for the creation of
anti-money laundering manuals by institutions that are covered by the
dirty money law and are regulated by the commission, the opening of new
accounts for clients without face-to-face contact is prohibited.
Regulated intermediaries are required to do a company search before
establishing business ties with firms to ensure that these have not
been, or are not, in the process of being dissolved, struck off, wound
up or terminated. If significant changes to the company structure or
ownership occur, or suspicions arise as a result of a change in the
payment profile of a company, regulated intermediaries are required to
make further checks in the identities of the owners, SEC said. "How can
you execute the order of clients if they are trading with you by way of
internet? We are making possible transactions without face-to-face
[meetings] on the part of the broker provided that the face-to-face
meeting will still be done by a bank. It [transaction] will be coursed
through the bank," Mr. Aquino said. For transactions that would involve
clients that are outside the country, Mr. Aquino said "special
arrangements" will be made. He said the guidelines allow for special
arrangements provided that these meet certain conditions. If a broker
asks for an arrangement wherein a bank or any other third party will
conduct an inquiry and fill out the customer account information form on
behalf of the broker, this will have to be approved by the commission,
he said. If the commission finds out that the arrangement is abused, or
if the third party simply certified the customer account information
form without really conducting the inquiry, the SEC will cancel the
special arrangement, Mr. Aquino said. "If it will be discovered later on
that a bank of another region outside of Metro Manila only gave the
certification without asking the questions, we can disallow the
arrangement," he said. He said relaxing the draft guidelines would "make
the brokers happy, especially those with internet facilities." He also
said the SEC may also allow other brokers that do not engage in internet
trading to avail of the facility "as long as it is done properly."
SEC is one of three government agencies comprising the Anti-Money
Laundering Council, the body tasked to implement the anti-money
laundering law. Among the institutions covered by the anti-money
laundering law and regulated by the corporate watchdog are securities
brokers, investment houses, common trust fund companies, and pre-need
companies. Last month, the SEC released draft guidelines on the
preparation of the anti-money laundering manuals of institutions that
are covered by the law and are regulated by the commission. The new
guidelines would incorporate amendments in the Anti-Money Laundering
Law, international best practices and related provisions in Securities
Regulation Code for brokers. Mr. Aquino said only the provision on
face-to-face meetings with clients was questioned by the institutions
that are covered by the law and are regulated by the SEC. Besides
requiring face-to-face meetings with clients, the draft guidelines also
require these institutions to establish, document, and maintain a
written customer identification program as part of their anti-money
laundering compliance program.
For shell companies, the guidelines provide that regulated
intermediaries should obtain a board of directors' certification that
would detail the purpose of the owners in acquiring the company.
Regulated intermediaries are also required to check if the applicant for
business relationship is acting on behalf of another person as trustee,
nominee or agent. If the intermediary believes that the trustee, nominee
or agent is being used as a dummy, it is required to make further
inquiries to verify the status of the business relationship between
parties, SEC said. For transactions undertaken on behalf of non-account
holders, and where the transaction involves significant amounts,
customers should be asked to produce "positive evidence of identity
including nationality... the purposes of transaction, and the sources of
funds."
The draft guidelines also require the designation of at least two
persons for the safekeeping of all records. It also mandates regulated
intermediaries to report before the council transactions in cash or
other equivalent monetary instrument which are over P500,000 within one
banking day. This is following amendments in the law on the threshold
amount for reporting transactions, which used to be
PhP400,000. The firms are also required to file a suspicious
transaction report before the council, regardless of the amount of
transaction, if there is no underlying legal or trade obligation,
purpose or economic justification; the client is not properly
identified; the amount involved is not commensurate with the business or
financial capacity of the client; the client's transaction is structured
to avoid being the subject of reporting requirements; circumstances
relating to the transaction deviate from the profile of the client or
its past transactions; or if the transaction is related to unlawful
activities. The guidelines also require institutions regulated by SEC to
have internal controls and procedures for preventing and impeding money
laundering. It adds that regulated intermediaries should provide
education and training for all its staff and personnel.
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But utility says debts, refund
continue to be a burden
By BENNET S. STO. DOMINGO, Reporter
Lopez-led Manila Electric Co. (Meralco) yesterday said it posted a
net income of
PhP1.4 billion for the first half, more than double the year-ago
period's
PhP66.092 million on better sales. Still, the company said it
continues to be burdened by huge debt obligations and an ongoing refund
to customers. "At its face value the reported net income of PhP1.4
billion is a pittance compared to our financial obligations. This also
includes the heavy burden the ongoing refund has on our financial
position," said Meralco Vice-President for corporate communication Elpi
O. Cuna, Jr. Estimated cash outlay for customer refunds for the last six
months is at
PhP2.4 billion and about
PhP4.7 billion in 2005, Meralco said.
The firm said it is finalizing a refinancing plan that will help it
manage its debt obligations for the next two years which stand at
PhP24.2 billion as of June 30. Around
PhP8.7 billion of this amount is due in the second half,
including short-term debt amounting to
PhP4.8 billion, Meralco said. Mr. Cuna said the firm is expected
to spend around
PhP5.75 billion for its capital expenditure for 2004. "Our
capital expenditure program is of primordial importance since this will
ensure that our company will be able to provide the level of service
expected by our customers," Mr. Cuna said.
During the 1994-2002 period, Meralco invested
PhP60 billion in plant and equipment to keep up with the growth
in customers and demand. Net income for the same period of about
PhP29 billion, however, was "wiped out" by the retroactive rate
rollback ordered by the Supreme Court, the firm said. The first-half
profit increase is attributed to a 3.8% rise in sales volume, the firm
said in a statement. It added the amount represents an annualized return
on rate base of 6.9% after tax. During the first semester, Meralco said
the commercial sector posted the highest growth rate at 5% over the same
period last year, logging 4,226.98 million kilowatt-hour (kWh) followed
by the residential class with 4,369.58 million kWh for a 4% growth. The
industrial sector showed a 2.3% growth at 3,360.87 million kWh.
Streetlights, however, dipped to 5.8% at 69.13 million kWh, Meralco
said.
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Oil giant Petron Corp. registered a net income of
PhP1.36 billion in the first half, up 6% from
PhP1.28 billion during the same period last year, officials
yesterday said. The firm also reported that total revenues reached
PhP66.1 billion in the six months to June, up 19.5% from
PhP55.32 billion in the year-ago period. President Khalid D. Al-Faddagh
said Petron saw profits of
PhP3.1 billion in 2003, a 7% increase from
PhP2.9 billion in 2002. The firm attributed the increase to
efficient operations and initiatives to generate additional revenue
streams. This year, Petron is targeting a net income of
PhP3.1 billion to
PhP3.3 billion, Mr. Al-Faddagh said. "Considering that results
for the first half of the year showed an upward trend, we believe our
initiatives will reap benefits. We are hopeful that our initiatives will
continue to support a favorable trend in our finances for the rest of
the year," he said.
Petron said first-half earnings reflect an increase in year-to-date
total sales volumes of 2.3% to 25.8 million barrels. Domestic sales also
rose 14.3% to nearly 24 million barrels. Export fell to 1.9 million
barrels from 4.2 million barrels last year due to the volumes diverted
for local consumption. As of June, state-owned National Power Corp. and
industrial sales volumes increased by 20% to 27%, respectively, Petron
said. The firm, however, said net income fell for the second quarter to
PhP572 million from
PhP836 million compared to last year due to a routinary shutdown
of its refinery in March and May. Mr. Al-Faddagh said the shutdown
resulted in a decrease in Petron's average crude run to 100,000 barrels
a day from 125,000 barrels last year. The firm also reported an increase
of 37.4% in market share compared to 33.8% in 2003.
Chairman and Chief Executive Nicasio I. Alcantara said the decision
of rival Caltex Philippines, Inc. to shut down its refinery in October
was a boon to Petron. "We took away 2% to 3% market share from Caltex."
Petron is also mulling to build 200 additional stations nationwide over
the next five years and put up additional company-owned and -operated
service stations in strategic locations. The firm said it has allotted
PhP1.3 billion out of
PhP1.8 billion in capital expenditure for major projects such as
refinery upgrade and new service stations. -- Bennet
S. Sto. Domingo
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Lopez-led Bayan Telecommunications, Inc. (BayanTel) said the
completion of its debt restructuring agreement with creditors would help
the company to build shareholder value and eventually allow it to go
public. "We can clearly look at that option now. We look forward to
addressing that challenge once the restructuring is behind us," chief
consultant, Tunde Fafunwa, said. BayanTel is required to go public under
its telecom franchise. Mr. Fafunwa said there will be no conflict when
BayanTel lists its shares even if majority of these is held by the Lopez
Group since it is not a subsidiary of Benpres Holdings Corp. He added
that because of its debt problems, BayanTel needs to build an image that
would be attractive to investors. "We have to create equity value for
our shareholders. The market as a whole do not understand the quality
and success that BayanTel has had," Mr. Fafunwa said.
A Pasig regional trial court last month approved the restructuring of
$325 million in BayanTel debt, payable in 19 years. Under the plan, all
creditors will be treated on equal footing. The court said debts which
would not be covered by BayanTel's restructuring plan should be
converted into "an appropriate financial instrument that shall not be a
financial burden" to the firm. In the past three and a half years,
BayanTel managed to sustain its operations solely through internally
generated cash. Following the court's approval of its restructuring
plan, BayanTel said it is targetting
PhP5.7 billion in full-year revenue on the growth of its voice
and data business. In the first half, BayanTel revenues hit
PhP2.66 billion, 7% higher than the
PhP2.47 billion it posted for the same period last year. BayanTel
also said earnings before interest, taxes, depreciation and amortization
rose 18% to
PhP931 million, as against
PhP787 million from January to June 2003. --
Anna Barbara L. Lorenzo
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After a series of defaults, the government has started paying on time
the maintenance fees for the Metro Rail Transit III (MRT). The
Department of Transportation and Communication has paid Japanese
creditor Sumitomo Corp. a total of $4.3 million over the last three
weeks, following the provisions of their restructuring agreement.
Payment totaling $2.6 million was turned over on July 8 and another $1.7
million was given on July 16. Both amounts were both for unpaid
maintenance rental fees. Another installment is due on July 31 and local
credit rating agency, Philippine Ratings Services Corp. (PhilRatings),
said it will closely watch whether government could consistently meet
its obligations to Sumitomo. "PhilRatings shall closely monitor possible
sources of payment for these installments, as well as the status of
obtaining the consent and waiver of project lenders to the RRFA
[Restructuring, Repayment and Forebearance Agreement] which had been
extended from the original deadline of June 2, 2004 to July 31," said
the local affiliate of Standard & Poor's. "Implementation of a possible
rate hike for the MRT in the short term and developments on negotiations
for other payables [that is, unpaid collection amount and unpaid
value-added tax] as provided for in the RRFA likewise bear close watch,"
PhilRatings added.
On June 2, the government failed to pay some $4 million it owed the
Japanese contractor. The lapse resulted in the downgrade of MRT III's
asset-backed securities to PRS A rating from PRS Aa rating. The failure
to remit, PhilRatings noted, demonstrated the government's inability to
meet payment deadlines it had committed itself to. The June 2 deadline
was thereafter extended to July 31. As of June 17, the Bank of New York
said a total of $13.3 million is available in the collection, reserve
and liquidity accounts that can cover coupon payment on the notes due on
Aug. 7, Feb. 2005, Aug. 2005, Feb. 2006 and a portion of the payment due
in Aug. 2006. -- Cecille M. Santillan-Visto
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CEBU CITY in Central Visayas -- TMX Phils., Inc., maker of Timex
watches, will invest $10 million in the construction of a distribution
center at the Mactan economic zone next year. TMX President and General
Manager Robert Oliver said the distribution center will cater to buyers
worldwide. At present, the US serves as the company's mayor distribution
point. "This [new distribution center] will enable us to go directly to
our customers worldwide," he said in a press conference yesterday. With
the expansion, Mr. Oliver said they will hire an additional 200 workers.
TMX is currently one of the biggest employers at the zone. "This is an
additional big operation for the company here in Cebu. It will be a
state-of-the-art technology which will be capable of global
distribution," he said. He said the company chose to establish the
distribution center in Cebu because of the support of the Philippine
Economic Zone Authority and the available infrastructure at the zone.
With the added investment, Mr. Oliver urged the Bureau of Customs to
implement fully automated operations in order to fast-track transactions
with export-import companies. TMX Phils., an affiliate of TIMEX Corp. in
Connecticut, is a pioneer at the Mactan ecozone. It set up a watch
manufacturing plant at the zone in 1979. From mere assembly of
mechanical watches, TMX Phils. expanded to assembly of quartz and
digital watches as well as the manufacture of watch dial, lenses, cases
and other components. -- Jun P. Tagalog
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By ROULEE JANE F. CALAYAG
Stocks closed weaker yesterday, following slight gains during the
last three sessions. From an optimistic outlook over the weekend, the
Philippine Stock Exchange composite index (Phisix) languished by 15.96
points to 1,543.26. President Gloria Macapagal Arroyo's two pre-SONA
speeches last week had given the market a glimpse of what she would
actually talk about. The
State of the Nation Address (SONA), delivered by the President in
Congress at 4 p.m. yesterday, seems to have been discounted especially
as investors tried to discern her administration's stand on the proposed
additional taxes. The proposals are heralded as effective measures to
increase revenues and wipe out the public sector debt when Mrs. Arroyo's
term ends in 2010. But some investors were reportedly cold to the
proposals, opting instead for renewed and intensified revenue collection
measures.
ROW WITH GSIS
Worry over these proposed taxes exacerbated an already tense
situation at the Philippine Stock Exchange (PSE) which is currently
embroiled in a dispute with the Government Service Insurance System (GSIS)
over its intention to return its 9.1% stake at the bourse. Irving I.
Ackerman, president of I. Ackerman and Co., Inc., said the investing
public was jittery over the situation at the bourse as shown by the
trading volume that has been thinning for months. "This shows that
people are worried over what is happening at the exchange and the whole
situation in general," he said. Trading was unimpressive as the market
slid more than twice its 6.43 gain on Friday. Value turnover was also
slightly lower than last week's close at
PhP333 million. The market's weak performance was also due to
additional net foreign selling at PhP32 million, Mr. Ackerman said.
"Although not disastrous, [yesterday] was another weak trading day. The
continued selling situation is a little difficult," remarked Mr.
Ackerman, while expressing optimism that the situation would improve
shortly. "By next week, we hope that certain moves that are being
planned would materialize properly to help the exchange get back on an
even keel," he added. But he refused to share details as these may
affect the market. "The volume of trading is extremely low due to the
problems that the exchange is undergoing. Perhaps things will change in
three to four days with the new moves," said Mr. Ackerman.
THREE FACTORS
Jose Vistan, Jr., research head of AB Capital Securities, Inc., said
that the market's weakness was due to three factors. "The weakness in
major markets abroad affected us," said Mr. Vistan, noting that the
local bourse could not be isolated from the effects of the performance
of leading exchanges overseas. Wall Street prices dropped on Friday as
rising oil prices fuelled concerns taht dampened global market
sentiment. An adjustment in earnings expectations was the other culprit
for the weakness experienced by the Philippine market. "Fund managers
are lightening their loads on equities to adjust expectations on
earnings. Disappointed by the first-half reports of some companies, they
are making adjustments in their outlooks which were too optimistic," he
added. Single-digit growths reported by some companies have dashed grand
hopes of double-digit earnings growth.
Listed firm Petron Corp. reported yesterday a 6% year-on-year
increase in its net profit which was at
PhP1.36 billion for the first half. Its revenue was up 19.5%
year-on-year at PhP66.1 billion. The first-half net profit of Manila
Electric Co. (Meralco) was also weak at PhP1.4 billion, or higher by
only by 3.8% over the yearago level. The power firm said it has PhP8.7
billion debts that will fall due in the second semester. Its capital
expenditure for the whole year is at PhP5.75 billion. Metropolitan Bank
and Trust Co. was the only one among those that submitted early reports
that managed to post a double-digit growth. Its net profit for the first
half was PhP1.73 billion, up 10.56% year-on-year. Expectations of
continued technical corrections in the short term likewise accounted for
the decline in the Phisix. "The market has not yet made a great
correction since its significant rallies in May last year and April,"
said Mr. Vistan. He added that this is basically due to lack of positive
leads to steer the market to new highs.
INDICES
Reversing an earlier trend, oil and mining indices managed to reclaim
lost ground. Oil was up 0.07 at 1.48 and mining inched up 5.86 at
1,610.30. Commercial-industrial slid 13.36 to 2,444.73, followed by
banks and financial services which declined 10.75 to 454.94. Less than
2,000 trades, involving 414.8 million shares worth
PhP313.6 billion, were held. Decliners beat advancers, 39-22
while 40 issues kept to their previous levels. Philippine Long Distance
Telephone Co. was the most actively traded, accounting for 21.89% of
total turnover. It stayed strong at PhP1,210 on 56,980 shares valued at
PhP68.6 million.
POWER
Meanwhile, the President rallied a number of causes during her SONA.
She promised to focus on job creation and economic growth while
intensifying the drive against corruption. Mrs. Arroyo also showed a
strong resolve when she stressed the need to pass the eight tax measures
expected to raise PhP80 billion, in order to plug the budget deficit
which she described as a "most urgent problem." She said power plants
and transmission lines will get top priority. Her administration will
push for the downsizing of the government. And she asked Congress to
reconsider a Constitutional change next year. While these measures all
promise a continuity of reforms, the market's reaction to them has yet
to be seen.
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President Gloria Macapagal-Arroyo will deliver this afternoon her
first State of the Nation Address (SONA) as the 14th
President of the Republic before the joint session of the 13th
Congress. Based on the theme "A New Direction: Putting People First in
an Era of Change and National Renewal", Presidential Spokesman Ignacio
R. Bunye said the President would ask Congress to craft laws that would
focus on five key points. These will be new measures for job creation
and economic growth, the government's anti-corruption campaign, social
justice and basic needs, education improvement and youth opportunity,
and energy independence and savings.
Since the President has already discussed education as well as the
economic aspects of her agenda in her two "pre-SONA" speeches last week,
Mr. Bunye said Ms. Arroyo would likely discuss in greater detail, the
three other components in her speech, which is expected to last for 40
minutes. However, the spokesman did not discount the possibility that
the President could pull out some surprises in her SONA speech, her
third since she assumed the Presidency in 2001 following the ouster of
former President Joseph E. Estrada. Mr. Bunye said the President's
speech was "a work in progress." As such, no one could really be sure
what the final draft of the speech would be. "As is her habit, our
President personally is continually reviewing and revising the draft of
the speech based on the inputs of her Cabinet and advisers," Mr. Bunye
said in a radio interview. "It is safe to say, however, that the SONA
will be very comprehensive as it will cover all six years of her new
term, unlike her previous ones which had time frames of one year."
The President earlier bared her plans to ask Congress to make
pre-school mandatory in the education ladder instead of requiring
another year in the current 10-year public elementary and high school
curricula. Last Thursday, the President discussed her economic plans,
which included pushing for eight tax bills, before business leaders in
Makati City. After the SONA, Mr. Bunye said the President would continue
to explain her programs to the Legislative-Executive Development
Advisory Council (LEDAC), and also to people in town meetings or pulong
bayans. And while new tax proposals will be the economic focal point of
SONA, Congress will pass on to the Department of Finance (DoF) the
burden of explaining the need for new tax laws even if collection is
dismal. Senate Committee on Ways and Means Chairman Ralph G. Recto said
that while much has been said about the new tax laws the Executive would
want Congress to pass, only general statements have been made so far.
"The next Congress will have to hear these proposals of the Executive,
especially when they give the exact proposals. I have an open mind with
regards to the tax proposals but more importantly, the Executive must be
able to explain to Congress why there is a need for new tax measures,"
Mr. Recto told BusinessWorld.
The administration lawmaker, who also expressed confidence that he
would remain as the head of the committee that handled tax measures,
noted that revenue-collecting agencies should detail how much they have
been collecting through existing tax laws. "They have to explain to us
how effective they are today in collecting existing taxes. What is their
optimum administrative effectiveness -- are they collecting 50% or 80%
of potential? If they are hitting a benchmark of 75% or 80% of
potential, maybe there is a need for new tax measures. But if they are
collecting only 50%, it does not sound right that we impose new tax
measures," Mr. Recto said. The lawmaker also said DoF, along with the
Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC), should
explain how much revenues could be collected if Congress were to pass
the eight new tax measures that the Executive has proposed. He added
that DoF should specify the sectors that would be affected by additional
taxes.
Ms. Arroyo's tax wish list covers:
- the shift to gross from net income taxation for corporations and
self-employed individuals;
- the repeal of the Value-Added Tax (VAT) law;
- collection of a tax on the windfall income of telecommunications
companies;
- an increase in taxes on tobacco, alcohol and petroleum products;
- limiting fiscal incentives;
- a targeted tax amnesty; and
- the creation of a performance-driven system for government
agencies.
While these proposals have reaped criticisms from business groups and
from members of Congress, Ms. Arroyo noted that new taxes would save the
government from a looming fiscal crisis since they could yield over
PhP80 billion in additional revenues annually and
PhP100 billion in savings.
ROUGH SAILING AHEAD
Mr. Recto, however, said DoF still has a lot of work to do in
defining the new tax proposals. "There have been no specific proposals
really, with the exception of the 'sin' taxes, more or less we know what
the Executive and the Department of Finance wants. They have not
submitted a proposed bill. They also have very vague proposal on gross
income taxation," he said. Mr. Recto added that the most unclear measure
was the proposed shift from value added tax to sales tax, while the
proposals for tax amnesty and rationalized fiscal incentives lacked
specifics. "These are all general statements and general areas of the
economy where they intend to get these new taxes from. We are yet to see
their specific proposals," Mr. Recto said.
For his part, Senate President Pro-Tempore Juan M. Flavier said
Congress could no longer escape the reality that the fiscal position of
the government remained volatile, hence, the need to step up tax
collection and at the same time enact new tax laws. "The State of the
Nation Address really involves a listing of the legislative thrust of
the President for us to act on. It is my impression that majority of
these are tax laws because we seem to be in a stage when we are now
going to bite the bullet in terms of our financial deficit," Mr. Flavier
said in a separate interview. He noted that while all the tax proposals
earlier announced by DoF looked feasible, Congress would still
scrutinize all measures.
Administration Senator Joker P. Arroyo, meanwhile, said it was
"sneaky" for the Chief Executive to focus on new tax proposals in her
first SONA after the May 10 elections since she did not mention any new
taxes during the campaign period. "We are hearing them for the first
time. The President cannot claim that her election is an endorsement of
her tax proposals," Mr. Arroyo said in a statement. "She assured us
during the campaign that she was doing very well as President, and that
she deserved a renewed mandate for another term so she could build on
the gains and successes of her first term. Now she sings a different
tune: times are bad so we have to bite the bullet," he noted.
Acting Senate Minority Leader Aquilino Q. Pimentel Jr., for his part,
said rather than asking Congress to pass new tax laws, Ms. Arroyo should
lead a stronger campaign against tax cheats and influence peddlers who
have robbed the government of much-needed revenues. "We are going to
listen to what the President has to say. But as a general position, we
will oppose all intention to impose taxes that will impose additional
burden to the people," Mr. Pimentel said in a telephone interview.
"There is no need to impose additional taxes to create revenues. It is
better for the President to embark on a more determined campaign to
collect the right taxes. We would like to suggest that instead of
imposing new taxes, we should first collect the right revenues using the
existing laws," he added. Mr. Pimentel also cited a recent DoF study
which showed that the government has failed to collect 72.7% of
individual income taxes, 39.8% of corporate income taxes, and 49.4% of
VAT annually.
Opposition Senator Sergio R. Osmeña III said new taxes would face
rough-sailing in Congress, which would balance the government's need for
additional revenues and the public's objection to additional burden. "We
have to examine the proposals and object to those that are unfair and
unreasonable," Mr. Osmena toldBusinessWorld. He also expressed
objection to the proposed tax amnesty, gross income taxation, shift from
VAT to sales tax, and tax on the windfall income of telecommunications
companies. "Gross income taxation will make matters worse. The
conversion of VAT to sales tax will have a cascading effect since the
[prices of] products will eventually rise. For the tax on
telecommunications companies, I am not too sure if they can support the
increase in taxes; maybe for those who are profitable, but not for those
that are losing money," Mr. Osmena said. "We have to see some
performance in increasing tax collection and imposing penalties to
delinquent tax payers. This should be the first priority. If we are
collecting the right taxes, why should we pass new tax laws?" he added.
Another opposition senator, Jose "Jinggoy" E. Estrada, also objected
to the plan to impose new taxes. He said Ms. Arroyo should spare the
poor from the new round of tax measures. Mr. Estrada also advised BIR to
tap the barangays in their revenue collection efforts. He noted that
barangay officials could identify business establishments and real
estate property owners not been paying the right taxes to the
government. "There is no need to impose new taxes on the poor Filipinos,
particularly the proposed tax on text messages, which will have an
effect on many citizens. The government should only collect all the
existing taxes," Mr. Estrada said.
ACHIEVEMENTS
Meanwhile, a report of the House Committee on Oversight has given
President Arroyo an 80% accomplishment rate on her 2003 SONA commitments
-- an improvement over her 63% and 67% accomplishment rates in 2001 and
2002. But while the report lauded the higher accomplishment rate during
Ms. Arroyo's third year in office, it also admitted that the "need" to
be elected as president this year could be her "most compelling driver"
to meet her 2004 SONA targets. The Committee on Oversight, which was
chaired by Albay (southern Luzon) Rep. Jose Clemente S. Salceda in the
previous Congress, noted "outstanding achievements" by the Arroyo
administration in the distribution of private and public lands and
ancestral domains, as well in the provision of housing units to workers.
Commitments in land distribution, housing and health -- as well as in
education, energy, defense and transportation -- were made in Ms.
Arroyo's 2001 SONA, which were carried up to the 2003 SONA.
The Department of Agrarian Reform was able to distribute 351,361
hectares of private agricultural lands or a 117% accomplishment over the
target of 300,000 hectares over three years. The Department of
Environment and Natural Resources was able to distribute 291,318
hectares of public lands, which translated to a 97.11% accomplishment
over the targeted 300,000 hectares over three years. The National
Commission on Indigenous Peoples, meanwhile, was able to distribute 23
certificate of ancestral domain titles and 44 certificate of ancestral
land titles, equivalent to 547,343.7 hectares of land benefiting 120,359
indigenous peoples. The commitment was to distribute 100 ancestral
domain titles or 300,000 hectares over three years.
In housing, 328,877 workers were able to avail of loans from the
Social Security System, the Government Service Insurance System, and
Home Development Mutual Fund or Pag-IBIG Fund. This was way over the
target of 240,000 workers over three years. The Arroyo administration
was also able to distribute housing units to 190,787 urban poor
households out of the target 210,000 households over three years. The
Committee also noted that cheap medicines were made available through
the GMA (Gamot na Mabisa at Abot Kaya) 50 program that was implemented
by the Department of Health. Forty-two essential drugs, imported from
India by the Philippine International Trading Corp., a unit of the
Department of Trade and Industry, were made available through DOH-retained
hospitals and 129 hospitals that had been devolved to local government
units. The Arroyo administration also enjoined the pharmaceuticals
industry to develop and sell cheap drugs. United Laboratories and Glaxo
Smith Klein, the Committee noted, have agreed to develop a line of
medicines that are priced 30% to 50% lower than similar medicines in the
market. Botika ng Barangay in around 1,700 barangays all over the
country, rolling stores of the National Food Authority, also sold
over-the-counter drugs and herbal medicines. Ms. Arroyo's SONA
commitment to health had been the reduction by half of the prices of
medicines frequently used by the poor.
... AND SHORTFALLS
The Committee, however, noted deficiencies in the SONA promise to
construct a schoolbuilding in every barangay. Only 964 schoolbuildings
were built out of the targeted 1,612 over three years, with only three
constructed during the 2003 SONA period, for a compliance rate of only
61%. The Arroyo administration also failed to reduce power rates, with
the purchased power adjustment still making up a substantial part of
consumers' electricity bills, combined with higher global prices of fuel
especially coal, the depreciation of the peso, and mounting debt of
state-run National Power Corporation. Modernization of the Armed Forces
of the Philippines and the Philippine National Police were also not
undertaken, principally because of budget constraints. Neither were the
envisioned additional rail systems built, and of the three of seven that
were targeted to be completed by 2004, only the LRT Line 2, which runs
from Santolan in Pasig to Legarda (eventually Recto in Manila) has been
completed.
In the area of legislation, the Committee noted that only one of 13
bills proposed by Ms. Arroyo in her 2002 SONA was passed into law. This
was the Securitization Act, which created the regulatory framework for
the sale of assets such as loans, mortgages, receivables, and other debt
instruments as new securities to raise capital. Bills that were at
various stages of deliberation in the previous Congress included the
anti-terrorism bill, the bill making farmland acceptable as collateral,
the bill creating a secondary housing mortgage market, the Personal
Equity Retirement Act, the Investment Company Act, amendments to the
Securities Regulation Code, the law on the shift to gross income
taxation, the bills creating the Department of Telecommunications and
Information Technology and the Department of Housing, the Transco
franchise bill, the bill imposing tariffs on rice importation, and the
bill allowing the Ombudsman to accept private prosecutors. Overall, the
Committee "finds that on the whole, the Arroyo administration has
consistently and substantially complied with its SONA commitments for
the past three years." Its analysis was based on 35 quantifiable
commitments in the 2001 SONA, 33 in the 2002 SONA, and 25 in the 2003
SONA. The Arroyo administration, the Committee said, accomplished 22 of
2001 SONA commitments, 21 the following SONA period, and 20 during the
third SONA period.
For 2004 and succeeding SONAs, the Committee recommended that funding
source for SONA commitments be identified, noting that the budget
deficit will be a constraint in spending. "The Committee finds that the
credibility and efficacy of future SONAs as an instrument of the state
for social, economic and other public policy will be determined if the
corresponding funding sources are simultaneously identified," it said.
-- Jeffrey O. Valisno, Carina I. Roncesvalles and Judy
T. Gulane
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State-run Development Bank of the Philippines (DBP) will soon operate
its electronic trading facility for the auction of the "receivables" of
small and medium enterprises (SME). "We want to make sure that it works
when we roll it out. We are not going to roll it out before it is ready.
The first trades will probably be end of July or August. But there are
some of the things we need to clearthat is outside of our control," said
DBP president and chief executive officer Simon R. Paterno. Aside from
issues with the Bureau of Internal Revenue (BIR), DBP is also getting
certification from the Securities and Exchange Commission as an
alternative trading system. DBP launched last month the Marketplace for
SME Receivables (M4SME-RP), which would serve as a clearinghouse where
electronic trade documents would be authenticated and digitally signed
as securities. Through this competitive auction process participated in
by qualified banks, SMEs can get the best price for their receivables,
aside from gaining faster access to credit.
SMEs usually encounter difficulties securing formal financing due to
lack of credit history and banking relationships, lack of familiarity
with financial products, and high cost of authenticating credit
information, among others. Also, financing of trade receivables usually
come in the form of short-term, secured, high interest-bearing bank
loans. With the M4SME-RP, big companies can lower the cost of money
borrowed to finance payments to suppliers.
In line with the program, DBP inked an agreement with San Miguel
Corporation (SMC), so it could participate in the M4SME-RP. SMETRIX and
Commerceworks will provide the software and the document hub services to
allow authentication of electronic documents under M4SME-RP. "There are
many SMEs dealing with SMC. We have the best starting entities. First
will be SMC, afterwards it will be ShoeMart, Inc. whic has agreed
already. However, this will not help all SMEs but only those that do
business with the 'big brothers'," Mr. Paterno said. Big brothers are
large companies included in the BIR's list of large taxpayers, with
highly favorable credit ratings from reputable credit ratings agency,
that agree to confirm authenticity of trade documents, and to pay the
invoice at maturity. He added, "This is an out-of-the-box solution to
SMEs. DBP can be better in SMEs lending. Looking at Metropolitan Bank
and Trust Co. and Bank of the Philippine Islands each having 10 times
the number of branches, we have to find an unusual way to help the SMEs."
DBP has presented the program to Nestlé Philippines, consumer
products giant Unilever, and Pilipinas Shell Petroleum Corp. Offering
the best source for working capital regardless of the payment term of
large company clients, M4SME-RP gives SMEs the lowest possible cost of
financing. "With the M4SME-RP's document authentication requirement, the
credit liability is transferred from SME to his large company client.
The SME is then freed from any liability in the repayment of the
financing. Through this facility, we are providing equal practical
access to financing for SMEs," Mr. Paterno said.
-- Ruby Anne M. Rubio |
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The Bangko Sentral ng Pilipinas (BSP) wants the
13th Congress, which opens today, to support reforms needed to spur
the growth of the country's "weak" capital market. BSP Governor Rafael
B. Buenaventura warned that sectors such as real estate and banking,
among others, will remain underdeveloped as long as the capital market
remains underdeveloped. He also said dollar inflows to the Philippines,
whether foreign direct investment or portfolio investments, will remain
"puny" without a full-grown capital market. "The market needs to grow
from infancy to adolescence," he told a press briefing on Friday.
Among the economic reform bills the BSP is pushing for are the
Corporate Recovery Act, Personal Equity Retirement Act and the Revised
Investment Company Act. Mr. Buenaventura said he hopes legislators will
pass the proposed legislative measures within the next six months to
spur the capital market by next year. "It's a tall order but it has to
be done," he said. A weak domestic capital market, he said, will
continue to hinder the growth of other sectors. For instance, Mr.
Buenaventura said the real estate sector remains untapped because of the
lack of financing for end-users.
OTHER FUNDING SOURCES
Under a strong capital market environment, end-users in the property
market will have more access to financing rather than depend on the
banking system for their credit needs. "There is demand in real estate
but access to financing is lacking," he said. Mr. Buenaventura said that
at least 70 related industries including cement, tiles and bathroom
fixtures, and furniture will benefit once the real estate sector
recovers. Aside from the property market, the banking sector also
remains vulnerable. Mr. Buenaventura expressed concern that more than
90% of domestic credit is being channeled through the banking system
compared to only about 50% in other countries. "This makes the banks
vulnerable to downturns," he said.
A strong capital market will address this because the corporate
market and even individuals will have access to other means of financing
and reduce their dependence on banks. Mr. Buenaventura allayed banks'
fears that they would lose their market, saying banks will actually have
greater opportunity for profit with less risks. He also said dollar
inflows will grow once investors see the market develop. "These inflows
are puny because we don't have a strong capital market," he said, adding
that the Philippines is already lagging behind Malaysia and Thailand
which have investor-friendly markets. "It's where everyone is going,"
Mr. Buenaventura said.
AD VALOREM TAX
As this developed, however, a member of the government's economic
team warned that the Macapagal-Arroyo administration is considering an
ad valorem tax on financial transactions, a move the official described
as counterproductive in the aim of developing the capital market. The
source said the Department of Finance is considering imposing the ad
valorem tax or value-based tax on financial transactions, particularly
electronic payments made through banks. "We are trying to remove, as
much as possible, friction costs to encourage the development of the
capital market," the official said. For one, he said, the move will go
against the aim of an earlier move by government to reform the
documentary stamp tax system.
Congress earlier approved a documentary stamp tax measure which
lowered the tax on stock transactions to PhP1 per
PhP200 for primary issuances from PhP2 previously. It also raised
taxes to PhP1 per PhP200 for debt instruments from PhP0.30 previously.
Another government official said proposals to impose an ad valorem tax
is not included in President Gloria Macapagal-Arroyo's 10-point agenda
for her fresh six-year term. -- Iris Cecilia C.
Gonzales
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The country's banking regulators should be given enough protection to
carry out their mandate more effectively, the International Monetary
Fund (IMF) said. In addition, the Washington-based Fund also said
regulators should have the power to write-down banks' assets to bring in
more capital and in the process encourage mergers. An IMF team was in
the country last month for a regular review of the government's economic
policies and targets.
Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura
said one of the team's key recommendations was for the BSP to be given
protection from lawsuits. "The IMF said regulators should be given
appropriate protection so they can impose reforms," Mr. Buenaventura
told a press briefing on Friday. The 12th Congress failed to pass bills
seeking to amend the central bank charter. The changes seek to grant
immunity from lawsuits to central bank officials in the course of doing
their duties. Mr. Buenaventura said he hopes the
13th Congress will pass the proposed amendments so that the BSP can
examine banks more thoroughly and in the process encourage more mergers
and consolidations.
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A bill broadening the examination powers of the Commission on Audit (CoA)
over infrastructure projects has been filed in the Senate in a bid to
address the corruption issue. Senate Bill 1326, filed by administration
Sen. Ralph G. Recto, calls for a mandatory CoA audit of all
infrastructure projects. The measure aims to amend Republic Act 6957
which limits the examination powers of Commission to the final stage of
infrastructure projects. "At present, under the Implementing Rules and
Regulations of RA 6957, the audit is being done only in the collection
part and the project implementation," Mr. Recto said. "Our government
auditors come into play only after the project has been completed when
they are allowed to examine all the revenues and receipts pertaining to
such project," the legislator added.
Once the Senate Bill 1326 becomes a law, Mr. Recto said the CoA will
be allowed to examine the projects from the "approval of the contract,
procurement of materials, commencement of construction, operation of the
facility, and transfer of facility to the proper government agency or
local government unit." Proponents of the project will also be required
to hire private accountants and other professionals to examine
implementation as another safeguard against corruption. The CoA,
Department of Finance, National Economic Development Authority, and the
Department of Public works and Highways will promulgate the implementing
rules and regulations of the bill once it is passed by Congress and
signed into law. -- Carina I. Roncesvalles
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The National Transmission Corp. (Transco) will push for expansion
projects in the Visayas and Mindanao despite a planned cut in its
capital expenditures over the next six years. Transco President and
Chief Executive Alan T. Ortiz said the firm's board will this week be
asked to approve a new capex program for key projects. "We still have a
lot of expansion to do. That's why we have put forward a transmission
development plan asking for at least $1 billion in capex over the next
six years," Mr. Ortiz said.
Energy Secretary Vincent S. Perez, Jr., earlier said economic
managers have agreed to add $50 million to the proposed $450-million
Transco capex for the next six years. He said the 2004-2009 budget was
pegged anew at $500 million. The Department of Finance, Department of
Budget and Management and the National Economic and Development
Authority had proposed to cut Transco's outlay to $450 million from $1.2
billion. Mr. Ortiz earlier said if the cut pushes through, a number of
projects in the Visayas and Mindanao grids could be shelved, including
the Cebu-Negros-Panay (CNP) grid interconnection and uprating project.
"It is not our call. But if we are to decide, we'll ask for the full
amount. Since we are in an austerity program, we will have to comply.
The amount will have to be reduced somewhat but not too much, I hope,"
Mr. Ortiz said. He said Transco has prepared a list of about nine
expansion projects that the firm wants to push through. "We are ready to
defend what we think are the essential projects that will allow us to
attain enhanced capability nationwide," Mr. Ortiz said.
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By IRIS CECILIA C. GONZALES,
Reporter
The Bangko Sentral ng Pilipinas (BSP) is now on the final stages of a
plan to overhaul the rules governing banks' common trust funds to rid
the system of weaknesses that had led to bank failures. Banks are now
amenable to the proposed changes after two years of discussing the draft
rules with the central bank, a member of the Trust Officers Association
of the Philippines (TOAP) said over the weekend. BSP Assistant Governor
Nestor A. Espenilla said the central bank would issue the circular "very
soon."
Under the proposed changes, the BSP will require banks to focus on
unit investment trust funds (UITF) instead of common trust funds (CTF)
which pose more risks compared to unitized investment instruments. The
move is in line with global practice. It will also require banks to
explain more thoroughly to clients the advantages of a UITF and where
investments will be placed. The rules will require the banks to focus
their investments on high-grade debt papers such as government
securities and commercial papers. Investors have complained in the past
that there were some banks marketing the common trust funds as if these
were similar to time-deposit placements. CTFs, however, offer higher
yields but risks are borne by the clients. Mr. Espenilla said for UITFs,
banks will use the mark-to market system for valuation of the assets.
This means the use of net asset value serves as the basis for pricing
the investments on a daily basis instead of applying pre-determined or
fixed interest. He said the move is expected to attract more fund
managers and huge investors as the fund's valuation process is
market-driven, more transparent and the assets of the fund would be
monitored.
A banks' trust operation is supposedly an independent investment
function. In reality, however, trust funds are being mixed with funds
earmarked for lending. Some banks have also tapped their common trust
funds to finance their foreign exchange trading. BSP data show that the
banking system's trust departments have total resources of between
PhP400 billion and PhP700 billion. For two years now, the central
bank has been trying to craft out new rules that would govern banks'
trust accounts but industry players have opposed some of the stricter
provisions. The BSP's move to reform the system followed a spate of
closures of financial institutions whose financial woes were tied to
problems faced by their own trust departments.
One trust officer said a change in the valuation of CTFs and its
eventual shift to becoming UITFs will require extensive educational
campaign for investors and the banks themselves. The officer said
initially, banks expect investors to show little interest for such
intruments because they always want to know exactly how much their money
will earn. Filipino investors are still very conservative and
fixed-income-oriented. They want to know how much their money will grow
in the fund, the officer said. "But eventually, people will learn. In
the long run, the move will attract more investors," the TOAP member
said.
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The Philippine peso is expected to stay on solid ground today as
President Gloria Macapagal Arroyo delivers her State of the Nation
Address (SONA). After falling again to the PhP56 level on Friday, the
peso is expected to move sideways as traders mull "how the President
will put flesh in her 10-point agenda." A trader said that they would
wait for the central bank to support the peso during trading to put on
hold issues that affected its performance in recent days. Week on week,
the peso fell to 0.10% after the US dollar moved stronger against
regional currencies. This was after US Federal Reserve Chairman Alan
Greenspan reiterated that there is still room for more interest rate
hikes amid an upbeat economy. The better-than-expected fiscal report on
Tuesday allowed the peso to hold a four-centavo lead. Currency traders
said, however, that the dollar is stronger on positive investor feedback
for the US economic outlook.
The peso tracked the overall positive sentiment from the money
market. Traders were relieved when the government's budget deficit
reached
PhP80.1 billion in the first half or higher than its
PhP79.6-billion target. They earlier expected the budget gap to reach
PhP85 billion. "The near-term resistance at PhP56.10 is at risk. A break
above the PhP56.10 levels could call for further tests towards the
PhP56.20-PhP56.25 level. Only a move below the PhP55.75 levels would put
the peso bulls at play again. Immediate support and resistance is seen
at PhP55.75 and PhP56.10, respectively," said Jonathan L. Ravelas, Banco
de Oro Universal Bank market strategist. As the President addresses the
nation today, the money market's attention will be on her revenue
enhancement plan and her take on the economic setup. "We hope that she
will finally convince [the market] that she's all business. We want to
hear how she will put flesh on her 10-point agenda which was earlier
viewed as overly ambitious. There was not much on capital market reform
but she might finetune her revenue generation plans, including the
proposed taxes which has generated negative reactions," said First Metro
Investment Corp. executive vice-president Roberto Juanchito T. Dispo.
Another trader said, however, that the SONA is a "non-event, a hype-up
extension of what we already know -- which are the proposed taxes."
In a meeting with businessmen on Thursday, the President asked for
their support for the proposed tax measures that include the shift to
gross from net income taxation, repeal of the Value-Added Tax law,
franchise tax on telecommunication companies, among others. "She has a
lot to prove but I think adding tax measures is not the solution. The
new taxes are just additional costs to consumers," another trader added.
-- Ira May Pedrasa
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By JENNEE GRACE U. RUBRICO, Senior
Reporter
The Securities and Exchange Commission (SEC) has prohibited state
insurer Government Service Insurance System (GSIS) from returning shares
in the Philippine Stock Exchange (PSE) unless it has the approval of the
bourse's stockholders. "But can they get the agreement of all the
stockholders? Pumasok na 'yon eh [The deal has already been
made]. It will be up to the stockholders," SEC Chairman Lilia R.
Bautista said in a press conference. PSE sold a 40% stake to non-brokers
in February as part of efforts to demutualize the stock exchange. GSIS
bought 9.1% out of the 40%.
Recently, GSIS wrote the PSE to ask if it could return the shares,
saying infighting among PSE board members hinders efforts at
strengthening the regulatory and policy-making framework of the stock
market. The state pension fund also threatened to pull out its other
investments in PSE, totaling PhP39 billion, saying if the issues at the
PSE "cannot be handled," it will "look somewhere else" for investment
opportunities. "Under the trust fund doctrine, once you have made an
investment, you cannot give it back unless the stockholders agree, and
unless there is something that prejudices you. In this case, nag-away
lang sila (they only fought). That's not sufficient. But if all the
stockholders agree, GSIS can do this," Ms. Bautista said.
In a statement, the SEC said the outstanding capital stock of a
corporation, including unpaid subscriptions, constitutes a trust fund
held by the corporation for the benefit of creditors which cannot be
returned to the stockholders. Quoting an opinion by lawyer Dionisio DT
Garciano, the statement said that the Corporation Code "does not confer
upon any stockholder the right to demand refund of investment" based on
"the general rule that subscription of capital stock of a corporation
constitutes a trust fund for the benefit of the creditors and no valid
agreement can be made by which a subscriber can be released therefrom."
"A contract of subscription is a contract among several subscribers. For
this reason, no one among the several subscribers can withdraw from the
contract without the consent of all the others and thereby diminish
without the universal consent, the common from which l have acquired
interest," the statement said. Ms. Bautista said the GSIS can only
exercise its right of appraisal if it had been "prejudiced" in its
investment.
The SEC said under the Corporation Code, a stockholder can only
demand payment of the fair value of his share on the following grounds:
if any amendment in the articles of incorporation would change or
restrict the rights of any stockholder, or class of shares, or would
authorize preferences which will be superior to those of outstanding
shares of any class, or would extend or shorten the term of the
corporate existence; in case of sale, lease, exchange, transfer,
mortgage, pledge, or other disposition of all or substantially all of
the corporate property and assets; and in case of merger or
consolidation. "The situation of the GSIS and PSE does not fall within
the above said enumerated instances. Thus, GSIS, although a stockholder,
cannot exercise its appraisal right," the SEC said.
On GSIS proposal to sell the shares to the PSE, Ms. Bautista said
this is not possible because it would defeat the purpose of selling the
40% stake to non-brokers in the first place -- to reduce the control of
brokers in the stock exchange. "This will in effect dilute the 40% stake
which should be held by non-brokers," she said. She said if the PSE buys
back the shares, the stock exchange will have more difficulty unloading
its shares to meet the requirements of the Securities Regulation Code.
"The PSE will have to unload another 50% instead of just another 40% if
it takes back the 9.1% stake of GSIS," she said. She added that a rule
on retained earnings may also prevent PSE from buying back the shares as
treasury shares. The SEC said the rules governing redeemable and
treasury shares provide that no corporation shall redeem, repurchase, or
reacquire its own outstanding shares or whatever class unless it has an
adequate amount of unrestricted retained earnings to pay for the cost of
the shares.
The rule, SEC said, can only be circumvented if the shares are
reacquired through redemption of redeemable shares of the corporation,
when the shares are reacquired to effect a decrease in the capital stock
of the corporation, when the assets of the corporation are liquidated
after its dissolution, and when the shares are reacquired by a close
corporation. "The PSE cannot merely repurchase the shares of stock
bought by the GSIS without the required unrestricted retained earnings
or the presence of the enumerated exceptions. In view of the foregoing,
it is therefore clear that the return of the shares of stock requires
the observance of the Corporation Code as well as the Rules governing
such act which the PSE may not be in the position to do," the SEC said.
It added that "the only reasonable and lawful way to dispose of the
shares of stock" is to offer these in the market. Ms. Bautista said that
GSIS can sell the stake to the market on a staggered basis, or at a
discount. SEC director Jose Aquino said since the GSIS already received
dividends from its shareholdings in PSE "the dividends should be taken
into consideration." Also, he said that GSIS is free to withdraw its
PhP39-billion investment in the market for as long as share
prices are not adversely affected. "If they will unload to the market,
they [should] see to it also that they will not drop the other prices.
This will be to the disadvantage of other members. They [should] see to
it that interest of members is properly protected. [It does not mean
that] simply because [GSIS] is angry with PSE that it will have to sell
at a low, low price, which will be a disadvantage to the other members,"
he said.
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By ROULEE JANE F. CALAYAG,
Reporter
Market sentiment will take its cue from the State of the Nation (SONA)
address of President Gloria Macapagal Arroyo today. The SONA will either
stem out the selling spree in the past week and move up the market, or
continue to dampen the sentiment of investors, analysts said. Although
the SONA has been discounted in the market for at least a fortnight,
investors will be eagerly looking to Mrs. Arroyo's economic program,
especially after the government overshot its budget deficit target at
PhP80.1 billion for the first semester. Her ability to marshal
her economic team to roll out a massive but effective set of measures to
boost the economy and reduce debts without sacrificing the lot of the
masses will be a strong indicator for investors to get into action,
analysts said. Any sign of weakness or the lack of political backbone to
get tough on economic reforms may cause investors to scurry to the
sidelines, they added.
BULLISH
Grace C. Cerdeña of 2tradeasia.com said trading will be bullish. "How
inflation could be contained is important," she said, noting that it
will serve as "moral suasion" from the President to buoy the economy.
The President last week sought the support of the business community for
what she described as "the most ambitious economic reform agenda in a
generation." Businessmen welcomed the reforms but asked Mrs. Arroyo to
ensure that these are fair and equitable. With Mrs. Arroyo's assurance
that her administration will focus on the needed reforms, the stock
market should be moving up, particularly "if the selling stigma of the
past seven days is abated," Ms. Cerdeña said. "Bargain hunters may take
this opportunity to buy blue chip stocks," she said, adding that the
market seems unfazed by the threat of state insurer Government Service
Insurance System (GSIS) to withdraw its
PhP39-billion investments in the capital market if the alleged
dissension among the directors of the Philippine Stock Exchange (PSE) is
not addressed. Another factor that will lend credibility to Mrs.
Arroyo's focused leadership is the safe release of Filipino truck driver
Angelo de la Cruz who was taken hostage in Iraq by militants.
Second-quarter earnings results are also expected to pave the way for
the stock market's upward trek.
TELECOMS, BANKS, POWER
"The outlook for the second quarter earnings is that these will
mostly be in the double-digit levels," she said. She sees bright
opportunities ahead for telecommunication companies, banks and firms
involved in power generation. "For the telco side, the churn rates are
gradually reducing. It started with Globe Telecoms' over-the-air
reload," Ms. Cerdeña said. "Banks may also be enjoying additional
liquidity with the possible extension of the deadline for [the availment]
of the Special Purpose Vehicle Act (SPV) which will allow them more time
to dispose their non-performing loans (NPLs)." Lopez-owned First
Philippine Holdings (FPH) is expected to announce cash dividends soon,
an indication that it has significant cashflow. Ms. Cerdeña said the
fast-tracking of the Electric Power Reform Act (EPIRA) will benefit FPH
especially with the upcoming bidding for the San Lorenzo and Sta. Rita
power plants.
DISCOUNTED
But Jojo Gonzales, research head of Philippine Equity Partners, Inc.,
said everything had already been discounted in the market. "The SONA and
the reporting season are not new," he said. Mr. Gonzales, however, sees
the market reacting to a set of proposals to raise revenues for the
government. "The proposal to raise taxes for the oil sector will affect
Petron Corp. SM Prime Holdings Corp. will be affected by the plan of the
Bureau of Internal Revenue (BIR) to go after theater owners. These
proposals might have certain impact on specific companies. Until the
market sees these proposals made concrete, it will remain at a loss," he
added. Trade and Industry Secretary Cesar A.V. Purisima, who is
designated recently as Mrs. Arroyo's "economic spokesperson," said the
new tax measures will generate
PhP100 billion in additional revenues annually, eventually
reducing public sector debt by 90% within six years. The market's
direction will also depend on the numbers that companies will be
reporting for the second quarter, Mr. Gonzales said.
LAST WEEK
A technical rebound and continued bargain hunting generally propped
up trading last week. The stock market closed higher on Friday, up 6.43
points to 1,559.22 as it sustained gains for a third consecutive day.
Having breached the 1,550 level, the market is expected to trade on a
new level, promising a series of bullish sessions for the week. Except
for the All Shares and Mining, the rest of the indices were in positive
territory. Banks and financial services inched up 0.49 TO 465.69.
Commercial-Industrial gained 15.08, the highest at 2,458.09. Oil moved
slower at 0.01 to 1.41. Property was also slow at 0.04 to 522.23. All
shares shed 0.89 at 996.35 and mining slid 17.59 TO 1,604.44. There were
1,875 trades of over two billion shares worth
PhP333 million from 23 gainers, 33 losers and 61 issues that were
unchanged. The total value turnover at the end of the week was PhP6
million more than Thursday's PhP327 million which saw almost seven
billion shares exchange hands.
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