Businessmen have no reason to reject the bill that will
require all taxpayers to publicly disclose their assets and
networth if they have "nothing to hide," deputy tax commissioner
Kim J. Henares said yesterday. At the same time, Finance
Secretary Juanita D. Amatong said neither should corporations
complain that the filing of statements of assets, liabilities,
and networth or SALN would be an "additional burden" to them.
She noted that businesses were already required under tax laws
to submit financial statements to regulators. At least three big
business groups have expressed opposition to a bill in the House
of Representatives that will require all taxpayers to file asset
statements starting next year. The Federation of Philippine
Industries, Chamber of Real Estate and Builders Association, as
well as the Chinese Filipino Business Club have written the
House ways and means committee to complain that the bill will
violate their constitutionally guaranteed right to privacy. But
Ms. Henares said, "Why are they afraid if they have nothing to
hide, and what privacy are they talking about when their assets
could be found in the registries?" She added, "Why would they
fear that they would be harassed if what they have declared were
true?"
For her part, Ms. Amatong said the National Internal Revenue
Code already required businesses to attach their asset
statements to their income tax returns. Section 232 of the code
states:
"... corporations, companies, partnerships or persons
whose gross quarterly sales, earnings, receipts or output
exceed
PhP150,000 shall have their books of accounts audited
and examined yearly by an independent Certified Public
Accountants, and their income tax returns, accompanied with
a duly accomplished Account Information Form, which shall
contain, among others, information lifted from certified
balance sheets, profit and loss statements, schedules
listing income-producing properties, and the corresponding
income therefrom and other relevant statements."
Ms. Henares also said the law prescribed that "if you are a
business or corporation, you should file your income tax returns
whether or not you are required to pay taxes or not." If
corporations and businessmen oppose the filing of asset
statements, it goes to show they are "not sincere," and they
intend "not to report their right taxes," she said. "It looks
like we are not mature enough to give tax amnesty, and the
people have not yet learned their lessons and do not want to pay
the right taxes," she said. Businesses have also argued that
House Bill No. 2895 would likewise violate a taxpayer's right
against self-incrimination, as well as his the right to be
presumed innocent.
The builders' chamber also claimed that there were no
guarantees that submission of asset statements would improve tax
collection. It noted that government officials were already
required to file asset statements, yet this has not been
effective in indentifying tax cheats among them. It also said
disclosure of assets could even lead to kidnappings and capital
flight. But Ms. Henares said, "Kidnappers need not look at the
person's assets to know whether he is rich. All kidnappers have
to do is look at the person's house, where he eats, and the
person's lifestyle."
Under House Bill No. 2895, by Cavite Rep. Jesus Cripin C.
Remulla, taxpayers earning an annual gross income of more than
PhP200,000 or owning real or personal properties with an
acquisition cost of at least PhP500,000 must file asset
statements as of December 31, 2004 at revenue district offices.
They must file their first statement on or before April 15,
2005, and on or before the same date in succeeding years. In its
letter, the Chinese Filipino Business Club also told Tarlac Rep.
Jesli A. Lapus, chairman of the House ways and means committee,
that asset statements would violate a taxpayer's right to
privacy, and restrain his liberty. "A person's right to
contract, right to choose one's employment, and right to labor
are within the bounds of one's liberty, which are essential
elements of the right to privacy," the club said. "Requiring a
person to submit [an asset statement] would give the feeling
that [he or she] is being watched, and thus, eventually losing
[his or her] right to privacy," it said. "Worse, the information
in the [statement] may be summarily used against the individual
in any inquiry against [him or her]," it added.
WRONG SOLUTION
Meanwhile, the Senate ways and means committee said it would
seek a legal opinion from the Department of Justice whether the
mandatory submission of statements of assets, liabilities and
networth would be unconstitutional. An option, senators said, is
to revise existing regulations on the filing of income tax
returns to cover all the sources of revenues of taxpayers. "We
will be seeking the legal opinion of the [Justice department]
and some noted constitutionalists on this matter. But offhand, I
think this is regular, just like a taxpayer is required to file
his [tax return]," said Senator Ralph G. Recto, committee
chairman.
Senator Juan Ponce Enrile said the constitutional right
against self-incrimination should also be considered. "We will
be compelling taxpayers to incriminate themselves through
legislation. There might a constitutional issue here if we will
be fishing for evidence," he said during a committee hearing
yesterday. But Senator Sergio R. Osmeņa III said, "The moment
you file the income tax return, there is right against
self-incrimination. But we file it," Mr. Osmeņa said. He also
said the mandatory submission of asset statements would not
guarantee higher tax collection. "There is no country in the
world that does that. So there is something wrong. It does not
work because there is no direct link between net worth and
income. What we tax is income, and not net worth," he said. He
also said the expansion of the coverage of tax returns was
overdue. He noted he United States requires taxpayers to report
all sources of income. "We exempt trading gains in the stock
market. Interest payments on deposits in bank accounts are also
exempt because you already paid taxes on them. So the income tax
returns will not reflect the real income of the taxpayers. We
should include income from all sources -- rents, interest,
dividends, capital gains, trading gains, and gambling wins," he
said.
For his part, Finance undersecretary Emmanuel Bonoan said his
office would thoroughly study the bill. He also noted the
mandatory filing of asset statements would not directly
translate to better tax collection. He also noted that asset
statements usually filed by public officials were 30%
understated. -- Karen L. Lema
with Carina I. Roncesvalles and Judy T.
Gulane
|
By ERNESTO B. CALUCAG,
Researcher
Businesses and consumers alike are expected to suffer from
recent increases in electricity prices, with industries
estimated to shoulder a 2.6% rise in their total production
cost, the National Statistical Coordination Board (NSCB) said
recently. And in terms of consumer prices, NSCB said households
should brace for a 2% average hike on top of the normal
inflation rate. The figures came from NSCB's price cost analysis
using 1994-based prices, as it aimed to estimate the effects of
higher electricity prices on industries as well as consumers.
Recently, the Energy Regulatory Commission (ERC) granted a
provisional authority to state-run National Power Corporation (Napocor)
to raise its prices by an average of 97.98 centavos per kilowatt
hour, a 40.09% increment from the present generation cost of
PhP2.4438 per kilowatthour. The new rate became effective
September 26 and will be reflected in consumers' bills starting
November 1.
Based on the study, the industry sector will be the most
affected among economic sectors, with an expected 1.95%
increment in their total production cost. Among its subsectors,
the combined electricity, gas and water, and the manufacturing
sectors registered the highest weighted increases of 0.97% and
0.87%, respectively. Specifically under manufacturing, companies
engaged in the semiconductor and electronics businesses will be
hard hit since these firms are heavy users of electricity.
Electric consumption among semiconductor and electronics
companies comprise about 41% of their total operating costs. At
present, semiconductor firms partly pay or subsidize electricity
consumed by residences, hospitals, and street lights, among
others through so-called "interclass" subsidies" charged under
the law by distribution utilities like Manila Electric Company (Meralco).
These cross-subsidies account for an additional 11% to a
semiconductor company's average electric bill. Higher
electricity rates will also raise total costs of the services
sector by 0.59%, with trade, private, and government services
posting the biggest increases of 0.21%, 0.15% and 0.08%,
respectively, the NSCB study said. "Least affected of the three
major sectors is agriculture, fishery and forestry whose cost of
production would increase by only 0.10%," added the NSCB.
SHORT-TERM PAIN, LONG-TERM GAIN
Despite this, analysts welcomed the latest increase in
electricity prices, saying it would help improve the financial
viability of the power industry as well as make it and state-run
Napocor more attractive to investors. "Companies in the long run
would benefit from the adjustment since the additional costs to
their production would be lesser compared to the higher taxes
they would have been paying if the adjustment was not
implemented. In the end, somebody really has to shoulder [Napocor's]
losses," said Bienvenido Oplas, economist at Think Tank, Inc.
"Eventually, electric rates in the country will correct itself.
What's important is for the government to already skip the
problem of electric political pricing," he added. In terms of
change in production costs, NSCB estimates show the
manufacturing of ice, except dry ice, suffered the biggest
increase of 13.5% because of higher power prices.
|
The Philippine Stock Exchange (PSE) has started its
investigation of stock transactions by Metro Pacific
Corporation, a listed company that has been accused of insider
trading. But PSE president Francis Lim told reporters yesterday
there would be no preliminary disclosures on the probe, to
protect investors. "The review is ongoing. It is a formal review
of all the transactions, a process that is done in due course.
But we cannot make preliminary statements that may be
misinterpreted by the market," he said. He said an investigative
committee would carefully look into figures and data from
transactions allegedly tainted by insider trading and stock
price manipulation. Only after all records are reviewed will PSE
take any necessary action.
Mr. Lim said PSE was constrained by some limitations,
including the fact that Metro Pacific's parent company, Hong
Kong-based First Pacific Corp., was not listed locally. It was
the parent firm that sold stakes in its local
subsidiaryequivalent to 930.2 million common shares. "We cannot
come up with a definite timetable [on completing the
investigation] because it all depends on how things develop," he
said. "We will make the review as broad as possible. It will not
be limited to disclosure and insider trading." He also said most
issues would be addressed at PSE's board meeting next Wednesday.
A foreign brokerage company allegedly handled most of Metro
Pacific's transactions a few months ago, as it took advantage of
company chairman Manuel V. Pangilinan's optimistic
announcements. Some brokers claimed there was collusion between
Metro Pacific and the foreign brokerage company, which resulted
in insider trading and stock price manipulation. They also
claimed Metro Pacific failed to disclose First Pacific's sale of
a 5% stake, announcing only after the transaction was completed
last week. But Metro Pacific had argued that it did not violate
PSE rules. David Nugent, Metro Pacific vice-president for
corporate communications, had dismissed as "grossly inaccurate"
the allegation that good news about the company were
intentionally released to raise share prices. "There were no
violations of [the] disclosure [rule]. We do not even have to
disclose October trade until next month," he had said. Brokers
said PSE should investigate the incident to prevent another BW
scandal, which almost crippled the bourse in 2000.
-- Roulee Jane F. Calayag
|
The Philippines can become the preferred location for foreign
investors involved in IT-related services and call centers, said
a report released recently by the United Nations Conference on
Trade and Development (UNCTAD). UNCTAD said in its "World
Investment Report 2004" that based on its interviews with
transnational companies, the Philippines was cited as a
"potential future location" for foreign direct investment
projects related to IT services. "Asked about the potential
future locations for [foreign investment] projects related to IT
services, companies interviewed by UNCTAD mentioned India, the
Russian Federation, Bulgaria, Albania, the Philippines, China,
Mexico, the Czech Republic and the United Arab Emirates, in that
order," the report said. The report also noted that the
preferred locations for call centers in the near future would
include India, the Philippines, China, South Africa, Mauritius,
and the United Arab Emirates.
While India was the top destination of foreign investors
involved in offshore services, UNCTAD noted that the Philippines
was becoming an attractive country for offshoring, particularly
of business process. "[This] is partly to its cultural affinity
to the United States and American-style English speakers," the
report said.
INDIA'S CLOSEST COMPETITOR
UNCTAD also said the country was enjoying a reputation as a
"stable, fast-growing economy" with rapid telecommunication and
technological advances. "Although the labor pool is smaller than
in India and costs are somewhat higher, [the Philippines],
nevertheless, is frequently regarded as the closest competitor
to India," the report said. It also said it expected employment
in the local call center industry to double from 27,000 jobs
created last year. Intel, Microsoft, Safeway and Kodak are among
the companies that have opened call centers in the country.
Among developing countries, UNCTAD noted that South and
Southeast Asia dominated as desinations for foreign-investment
projects related to service offshoring, particularly in the area
of IT services. UNCTAD's report discussed the prospects for
investment flows in both developed and developing countries,
noting the particular shift of foreign investments to services.
UNCTAD interviewed 335 of the world's largest transnational
companies from developed, developing, and transition economies,
and 87 international site-selection experts for the report.
-- Jennifer A. Ng
|
The World Bank is extending a $716,000 grant to the
government to boost the Office of the Ombudsman's
anti-corruption activities. The grant comes on the heels of a
Transparency International's Corruption Index the Philippines
landed at the 102th spot in Transparency International's
Corruption Index among 146 countries surveyed worldwide. The
money was turned over by World Bank country director Joachim Von
Amsberg to Finance Secretary Juanita Amatong. The grant will be
used to finance an initiative called "Strengthening the
Institution of the Office of the Ombudsman for Good Governance."
"By strengthening the capacity of the Ombudsman's office, this
grant (would) eventually help public institutions to be more
accountable," Mr. von Amsberg said in a statement.
Ombudsman Simeon V. Marcelo said the grant would boost the
government's efforts to curb graft and corruption in the
government, especially through the lifestyle check system. "This
grant will help us in our efforts to make corruption a high
risk, low reward activity," Mr. Marcelo said. World Bank said in
a statement that the money will fund selected technical
assistance and capacity-building activities which include:
- Strengthening the knowledge and skills of field
investigators through training and workshops;
- Providing technical help for the design and development
of an electronic case monitoring and tracking system;
- Establishment of a data-banking system to facilitate the
analysis of Statements of Assets, Liabilities, and Net Worth
(SALN) of public officials and employees.
The grant is expected to boost the Ombudsman which currently
has only 57 full-time litigators, of which half are newly-hired
young lawyers, handling more than 2,000 cases. World Bank said
the money came from the Asian Financial Crisis Response Fund of
the ASEM (Asia-Europe Meeting) Trust Fund which it administers.
The ASEM Trust Fund was put up by the European Commission and 11
other countries to help countries recover from and avoid a
repeat of the 1997-1998 financial crisis which hit Asia.
-- Jennifer A. Ng
|
Government agencies opposing a proposed system of rewards and
punishments for revenue collection performance have virtually
admitted that they will not fulfill what will be expected of
them in the future, Finance Secretary Juanita D. Amatong said.
"If they are opposing it, then they themselves do not expect to
perform well," she said in response to the opposition raised by
the Securities and Exchange Commission (SEC), Department of
Transportation and Communications (DoTC), National
Telecommunications Commission (NTC), Land Registration Authority
(LRA) Philippine National Police (PNP) and Bureau of Immigration
(BI) against the proposed lateral attrition system. "If they do
not want to perform...bahala sila (that will be their
problem)," she added.
Senator Ralph Recto has filed Senate Bill 1236, which seeks
to provide a system of rewards and punishments for excess or
failure to meet revenue collection targets. The measure, which
is one of eight Palace-backed revenue proposals, will cover the
Bueau of Internal Revenue (BIR), Bureau of Customs (BOC) and
other revenue-generating agencies with an annual income of at
least
PhP100 million, except the Bangko Sentral ng Pilipinas
(Central Bank of the Philippines, or BSP) and the Bureau of the
Treasury (BTr). Under the proposal, officials and employees of
revenue collection agencies who fail to meet collection targets
will have to be transferred or removed from government service.
It also provides for performance standards and review mechanism
as well as incentives to performing collection agency equivalent
to 10% of excess of collection over target.
In the House of Representatives, the lateral attrition bill
filed by Quezon Rep. Danilo A. Suarez has been approved by the
oversight, ways and means, and appropriations committees. Data
from the BTr showed that the government earned PhP9.2 billion
from the collection of fees and charges during the first half of
the year, 3.4% lower than the PhP9.5 billion collected for the
counterpart period last year. An adjustment in the rates as well
as improvement in collection efficiency are expected to raise
much-needed cash for the government to rein in the deficit. This
early, however, government agencies bucked the proposal, saying
that the collection of fees and charges was only incidental to
their main functions of implementing laws and providing
services. The DoTC noted that its attached agencies, such as the
Land Transportation Office, Manila International Airport
Authority and Philippine Ports Authority, were "not primarily
mandated to generate income, although they have the capacity to
earn revenues because of the volume of their stakeholders."
The NTC and LRA, meanwhile, said the process for the rewards
and punishments would be difficult to implement. The NTC noted
that it would be laborious to identify officials and employees
who contribute to higher revenue collections. The LRA said it
could not set a collection target because registration was
voluntary. The PNP and BI also said they could not be considered
as revenue-generating agencies even if they collect fees and
charges. State companies Philippine Charity Sweepstakes Office (PCSO)
and Philippine Amusement and Gaming Corp. (Pagcor) also opposed
the proposal. They argued that they were not involved in the
collection of taxes or levies.
Meanwhile, the Senate ways and means committee yesterday
doubled the incentives for the officials and employees of the
Bureau of Internal Revenue (BIR) and Customs (BoC) who would
exceed collection targets in the proposed lateral attrition
bill. Committee chairman Ralph G. Recto said 20% of the excess
annual collection over the target will be allocated as
incentives for the two agencies from the earlier proposal of
10%. "There is a marked improvement in the bill in that in the
past, the reward was just 10%. We have doubled that. Frankly
speaking, if the BIR hits the revenue target and surpasses it by
about PhP10 billion, they can sahre PhP2 billion of that, which
in effect doubles the salaries of the BIR personnel," Mr. Recto
told reporters in a news confernec after the hearing on the
lateral attrition bill. -- Karen L. Lema
with a report from Carina I. Roncesvalles
|
A bill filed in the House of Representatives seeks to repeal
the value-added tax (VAT) exemptions granted to six kinds of
transactions, including services rendered by doctors and
lawyers. House Bill No. 3105 by Ilocos Sur Rep. Salacnib F.
Baterina seeks to repeal Section 109 of the National Internal
Revenue Code (NIRC) and put the following transactions under VAT
coverage:
- sale or importation of coal, natural gas, and petroleum
products;
- sale or importation of raw materials used in the
manufacture of petroleum products by the buyer or importer
himself;
- importation of a passenger and/or cargo vessels of more
than 5,000 tons, whether coast-wise or ocean-going,
including engine and spare parts of said vessel to be used
by the importer himself as operator;
- sales and importation of cooperatives, excluding lending
activities of credit and multi-purpose cooperatives;
- sales and importation, printing and publication of
books; and
- services rendered in the exercise of medical and legal
profession.
Mr. Baterina, a member of the ways and means committee,
essentially adopted a Department of Finance (DoF) bill seeking
to remove the VAT exemption on these six transactions. Ways and
means committee chairman Rep. Jesli A. Lapus of Tarlac said the
measure complements a proposal to rationalize or harmonize
fiscal incentives. Section 109 of the NIRC presently grants
exemptions to 26 kinds of transactions. Three transactions were
added to the list only last year:
- services of banks, non-bank financial intermediaries
performing quasi-banking functions, and other non-bank
financial intermediaries;
- services rendered by doctors of medicine registered with
the Professional Regulations Commission; and
- services rendered by lawyers registered with the
Integrated Bar of the Philippines.
Some transactions will continue to enjoy exemption from VAT,
including:
- sale or nonfood agricultural products, copra, cotton,
marine and forest products;
- sale or importation of agricultural marine food products
in their original state, livestock, breeding stock and
genetic materials; and
- sale or importation of fertilizers, seeds, seedlings,
fish, prawn, livestock and poultry seeds.
|
... watches
inflation
The Philippine central bank kept interest rates steady on
Thursday, as expected, saying it saw no need to tighten policy
unless high oil prices sparked demand-led inflation. The central
bank has said it wants to keep interest rates conducive for
private investment and economic growth as the government deals
with persistent budget deficits and a debt load equivalent to
about 135% of GDP. "In the absence of clear evidence of demand
side effects of supply shocks or mounting demand-side
inflationary pressures, monetary authorities have opted to
maintain the present settings for monetary policy," central bank
Governor Rafael Buenaventura said in a statement. "Nevertheless,
the present stance does not mean that monetary action will not
be used to counter inflationary pressures in the future," he
said after a meeting of the central bank's Monetary Board.
Prices of consumer goods most likely went up faster in the
year through October and further slashed the peso's purchasing
power, the Bangko Sentral ng Pilipinas (Central Bank of the
Philippines, or BSP) said yesterday. The BSP expects inflation
rate to have risen anywhere between 6.9% to 7.4% in October
because of runaway oil prices, Mr. Buenaventura told a press
briefing yesterday. The lower end of the BSP's inflation
forecast for October is the same as the actual inflation in
September of 6.9% in September, its highest level in three years
on the back of skyrocketing oil prices. The National Statistics
Office is expected to release the actual inflation figures for
October on November 6. The government hopes to contain the
year-end average inflation rate between 4% to 5%, even as the
Bangko Sentral has already conceded that upward price swings
could reach a high of 5.4% by yearend.
The average inflation rate from January to September already
stood at 4.8%, just a few notches shy of BSP's 4%-5% target. Mr.
Buenaventura said that if inflation rate averages 7.2% in
October to December, the year-end inflation rate could end at
5.4%, in line with the monetary authority's forecast.
"Inflation, which is expected to be higher than the 4%-5% target
range for 2004 and 2005, is expected to return to the 4%-5%
range in 2006," he said yesterday. Despite higher oil prices,
the BSP's policy-making Monetary Board kept policy-interest
rates unchanged, saying that the movement in prices are caused
by shortage in supply rather than excess money in circulation.
The policy-making body kept policy rates unchanged at a 12-year
low of 6.75% for the overnight borrowing and 9% for the
overnight lending. The BSP increases rates to siphon off excess
money in the local economy that could be pushing inflation
upward and slash the purchasing power of the peso. "For now,
it's still largely supply driven," Mr. Buenaventura said
yesterday. As such, he said that increasing interest rates will
not be effective in addressing inflation. He said the BSP is
inclined to keep rates unchanged for the rest of the year to
help spur economic growth, but said that monetary authorities
will keep a tight watch on demand-side pressures.
-- Reuters with a report from Iris Cecilia C. Gonzales
|
The prospect of a "selective" free trade agreement (FTA) for
the garments sector with the United States appears to be dim,
with an official saying yesterday that getting the Americans to
agree on such an arrangement would be a "tall order." This is
because garments is a sensitive sector in the US, and FTAs
usually cover substantially all products, not a selected few,
said Jose Antonio Buencamino, Philippine trade representative to
the World Trade Organization (WTO) in Geneva, Switzerland.
An industry source earlier said the Philippines would push
for a selective FTA with the US for top export sectors such as
electronics and garments. Garments and textile are of particular
concern because the quota system will expire by the end of the
year, ending a regime of guaranteed market access to the
lucrative American market. The US accounts for at least 70% of
Philippine garments exports. Mr. Buencamino said he was not
aware of the progress of such a proposal. "That idea has been
floated but there are some problems there because first of all,
this sector is very sensitive to the United States," he said.
"So just getting the US to say [yes] to that might be a tall
order."
An FTA involving a single sector such as garments would also
"bring some problem" because "by definition, FTAs cover
substantially all trade," Mr. Buencamino added. Earlier efforts
by the Philippines to be able to negotiate for a full FTA with
the US have been put in the backburner. Visiting US trade
officials have said the Philippines does not qualify as a
candidate since potential FTA partners must be able to fulfill
commitments. This statement was issued right after the
Philippines withdrew a humanitarian contingent from Iraq to save
the life of a Filipino hostage. -- F. F.
Salvosa II
|
By IRIS CECILIA C. GONZALES,
Reporter
The Bangko Sentral ng Pilipinas has given banks some
flexibility in dealing with clients who do not want to place
their securities with a third-party custodian as required by the
regulator. According to the revised rules, banks and other
financial institutions under central bank supervision may
maintain custody of existing securities of their clients who
decline to deliver these to a third-party custodian. The central
bank, however, said this would only be allowed provided that the
financial institutions meet certain requirements such as if the
custody arrangements with clients have been in existence prior
to the new rules. It also said the dealing bank or non-bank
financial institution must have been "informed in writing by the
client that he is not willing to have his existing securities
delivered to a third-party custodian." Bangko Sentral Governor
Rafael B. Buenaventura said this provision makes sure that
clients know the move they're taking when they choose not to
have their securities delivered to a third-party custodian.
In a recent circular, the Bangko Sentral said a regulated
institution shall not enter into securities transactions with a
client who has outstanding securities not delivered to a central
bank-accredited third-party custodian. It added that it is the
institution's responsibility to satisfy itself that the person
purchasing securities from it has no outstanding securities that
were not delivered to an accredited custodian. The
responsibility for restricting the trading activities of
noncomplying clients will fall squarely on the banks. The
central bank has earlier issued Circular 392, which required
banks and other financial institutions under its supervision to
entrust to accredited third-party custodians the registration
and safekeeping of "all securities, sold, borrowed, purchased,
traded and transacted in the Philippines." Bangko Sentral is
pushing for the securities registry as it would serve as a check
and balance for government securities and debt instruments
currently traded in the secondary market. The measure seeks to
prevent a repeat of the BanCap scam in the 1990s, which involved
the secondary but double sale of Treasury bills. This affected
several banks and institutions. Some securities traders,
however, have said the rules would just restrict capital market
growth. "They infringe on the investor-dealer relationship
primarily anchored on trust and confidence; and their
effectivity and implementation are imperilled not only by
practical and operational details, but by basic legal and
constitutional infirmities," traders have said in a position
paper.
Starting November 16, all holders of debt securities are
mandated to lodge their investments with independent custodians.
Custodians are firms which keep and manage, on the clients'
behalf, their holdings of marketable securities like government
bonds and commercial papers into stocks. So far, the bank
regulator has approved the custodianship licenses of the Bank of
the Philippine Islands, the local units of HSBC, Standard
Chartered Bank, Deutsche Bank and Citibank. The Philippine
Depository and Trust Co. has also received provisional approval
from the central bank.
|
The Philippine peso yesterday rode high on the euro and other
regional currencies' appreciation due to overall dollar weakness
but buckled down in late trade, traders said. "As soon as the
peso reached PhP56.27, corporate players bought the cheap price,
and eventually it went back to current levels," a trader at a
local bank said. Hitting an intraday high of PhP56.27, the peso
finished at PhP56.315 against the US dollar. The Japanese yen, a
mover of Asian currencies, again strengthened against the dollar
at 107.50, coming from 108. The euro, a commodity currency, was
at 1.2637 from 1.24 in earlier trade. "We are not the only one
dealing with fiscal problems, the United States is also battling
its trade deficit," a trader said, explaining the dollar's
weakness.
Traders also said dollar inflows steadied the peso-dollar
exchange rate. The other day, the central bank said dollar
inflows, led by foreign exchange remittances from Filipino
overseas workers, have started to come in. "Some banks also
brought back their dollars in the afternoon for profit purposes
when they saw that the peso was inching its way down," another
trader said. The volume of transacted dollars was at $108
million in the morning and only $65 million in the afternoon,
but higher from the previous day's total of $171 million.
Traders also said the central bank's decision to again hold off
increases in overnight rates affected the peso only toward the
end. At the Philippine Dealing System, the country's electronic
currencies exchange, the peso strengthened by almost three
centavos to average at PhP56.295 from PhP56.322. It capped its
intraday high at its opening value of PhP56.27. Hovering within
a 5.5-centavo range, the peso slipped to as low as PhP56.325. It
closed weaker by less than two centavos to PhP56.315 from
PhP56.30 the other day. -- Ira P. Pedrasa
|
SINGAPORE -- The Taiwan dollar rose to a three-month high
yesterday and the Singapore dollar and South Korean won held
near six-month highs as the US dollar extended its fall against
major currencies. The Indonesian rupiah was the only loser among
major Asian currencies after President Susilo Bambang Yudhoyono
surprised investors by naming Jusuf Anwar, a lesser known
economist, as the finance minister in his new cabinet. Asian
currencies have been on an uptrend since last week, led by the
yen, as the US dollar has been undermined by worries about its
widening trade deficit and the impact of record oil prices on an
economy already showing signs of softness. The yen strengthened
to around 107.80 against the dollar, its highest in more than
three months, while the euro surged to its highest in eight
months. "The market is focused on the dollar," said James
Malcolm, Deutsche Bank's currency strategist in Singapore. "Very
few people are disappointed by the dollar's decline."
Only interventions by the region's currency regulators, and a
drop in share prices in South Korea and Taiwan, held back the
currencies from matching the gains in the yen against the
dollar, he said. At current levels, the trade-weighted Singapore
dollar probably traded at the top end of the central bank's
undisclosed policy band, while the South Korean authorities have
intervened in the market in the last few days by buying dollars
to stem again in the currency, Mr. Malcolm said. Should the won
break its April highs near 1,140 per dollar, it would be trading
at four-year highs. Similarly, if the Singapore dollar rallied
through its April high it would be trading at its strongest in
almost five years.
Asian currencies were also supported by recent data from
Japan, the region's largest economy, that showed record profits
at some of its biggest companies helped by an economy that was
recovering from decade-long deflation. Even record high oil
prices, which climbed back to $55 per barrel, failed to dampen
investor sentiment toward the yen. Although Japanese authorities
have warned about the negative impact of high oil prices on the
economy, Mr. Malcolm did not expect them to intervene to halt
the yen's gains unless the dollar weakened past 105 yen. In
Indonesia, President Yudhoyono's new cabinet included business
tycoon Aburizal Bakrie as the chief economics minister. Bakrie's
companies ran up more than $1 billion in debt at the height of
the Asian financial crisis in the late 1990s. "Everybody's
scratching their head a little bit," said Mr. Malcolm.
-- Reuters
|
By ROULEE JANE F. CALAYAG,
Reporter
The Philippine Stock Exchange (PSE) is bent on putting behind
the ghosts of the BW Resources fiasco and Asia Capital Equities,
Inc. by enhancing the provisions of a fund, effectively insuring
the public's stock market investments. The so-called Securities
Investors Protection Fund (SIPF) is meant to assure stock
investors they will be able to recoup some of their investments
in case their stock broker closes shop. With the fund, stock
investments are insured up to a certain amount should a stock
brokerage firm be declared insolvent or is forced to close down.
PSE President Francis Lim said a more efficient way of
compensating customers for their claims will encourage investors
to put their money at the bourse. "We want to clean up the house
and put those issues to rest. In fact, we are working on
changing some rules to ensure that claimants are paid even
before a broker is declared judicially as bankrupt," said Mr.
Lim, noting that he is pushing for a provision that ensures a
front-end payment to assure investors that they are protected.
"This will bring back confidence of investors in the local
market." He said the PSE expects the approval of the revised
rules by the general membership on Nov. 18. "The mechanics are
there," he said, referring to provisions that will cushion
investors from insolvencies of trading participants and serve as
recourse for claimants.
The Securities and Exchange Commission (SEC) is reviewing the
revised rules and regulations of the fund, which works like the
Philippine Deposit Insurance Corp. of banks. The contributions
of the 180 member stockbrokers at the PSE are channeled to the
fund, where each pays
PhP10,000. Monthly dues, determined by the fund's board, are also
put into the fund. Part of the revised rules submitted by
the bourse to the SEC is that the fund will only be available to
claims of customers arising from obligations incurred by a
trading participant when it was still a fund member of good
standing. The fund will be used to pay such claims equivalent to
a customer's total claim but not exceeding
PhP100,000. The fund could only compensate claimants after the
PSE has used the liquid assets of the broker to cover the
liabilities. The fund will pay in full claims of
PhP5,000 or less. However, for claims more than PhP5,000 but less
than PhP100,000, it can only pay 20% of the claim or PhP5,000,
whichever is higher. Customers with claims of PhP100,000 or more
will receive
PhP20,000 as payment from the fund. Subject to the limitations
provided in the rules, the fund shall pay the remaining balance
of the claims originally endorsed by the PSE once the assets of
the trading participants are exhausted.
|
By BERNARDETTE S. Sto.
DOMINGO, Reporter
Industry players yesterday called for a speedy sale of the
National Transmission Corp. (Transco), saying its privatization
could lead to better efficiency and lower transmission charges.
The state firm's privatization through a 25-year concession
agreement is critical to the whole electricity privatization
program, First Gas Power Corp. Chief Executive Peter D. Garrucho,
Jr. said. "A privatized Transco should be able to introduce
efficiencies that could bring transmission charges down so that
final electricity costs are more aligned with international
prices. Eventually, that should help sustainability," he said.
He said the active participation of a strong, capable and
independent operator will ensure the sale of National Power
Corp.'s power plants will be done in a least cost manner. Mr.
Garrucho also cited the need for substantial investments to
support the country's transmission system. "Government, despite
its limited resources, has accomplished much, but if we want
dramatic improvements in adequate lines, redundant systems,
lower systems losses, interisland connections, major players
have to enter this sector of the industry," he said.
As this developed, Transco yesterday said it will increase
the reliability of its power supply to major load centers in the
Laguna area once it commissions a 100-mega volt amps (MVA)
transformer by mid-November. Transco President and Chief
Executive Alan T. Ortiz said the commissioning of the
transformer is part of Transco's plan to transfer the Makban
switchyard to a new location to minimize the impact of
environmental degradation to the facility. The state firm said
the Makban switchyard is situated in the "path of steam" coming
from the Mak-Ban power complex. "A decision was made to relocate
it to avoid similar incidences such as this week's power
interruptions which hit portions of Laguna and Batangas," the
firm said.
Several areas, including Los Baņos and Calamba, experienced
power shortages last Wednesday when the 100MVA transformer
bogged down, but power was restored within 24 hours after the
Manila Electric Co. shifted some of the load through its
secondary lines. "It is just unfortunate that this incident
happened before we can operate the new transformer in the new
location. However, it underscored our concerns about the Makban
switchyard which we have now addressed by relocating it and
boosting its load capability," Mr. Ortiz said. The new
transformer is expected to become operational from Nov. 5 to 15,
Transco said. The relocation of the Makban switchyard, which
provides the power requirements of Tanauan and Malvar in
Batangas as well as industrial customers in the Batangas-Laguna
area including Philtown Industrial Complex, UP Los Baņos,
International Rice Research Institute, and Canlubang Sugar
Estates, is part of the PhP9.8-billion Batangas reinforment
transmission project set to be completed next year. The project
is aimed at providing relief to power plants in Batangas which
are having problems in transmitting electricity by putting up
higher capacity lines, building new substations, and boosting
the capability of associated substations to handle bigger loads.
Its key components include the construction of 230 kilovolt
lines connecting the San Lorenzo switchyard to the Batangas
substation; the Batangas substation to the Makban "A"
switchyard; the Makban switchyard to the Calamba Tower No. 50;
and tower 50 to the Biņan substation.
|
By JENNEE GRACE U. RUBRICO,
Senior Reporter
The Securities and Exchange Commission (SEC) has allowed
publicly listed finance company PCI Leasing and Finance, Inc. to
register
PhP500 million worth of short-term commercial papers, paving the
way for their sale. In a resolution approved by the
commission en banc yesterday, the SEC said that PCI Leasing has
met all the requirements for the registration of the papers.
"Considering the company has complied with the registration
requirements of the Securities Regulation Code and its
implementing rules and regulations, it is hereby recommended
that the registration statement of PCI Leasing and Finance, Inc.
for the registration of short-term commercial papers worth
PhP500 million be rendered effective," the SEC said.
PCI Leasing said it will use
PhP400 million of the PhP500 million for re-lending and
PhP100 million for payment of maturing obligations. It said the
issuance of the short-term commercial papers will be
underwritten by PCI Capital Corp., its affiliate. The papers
will have a maturity of one year from the date of approval of
the SEC. They will have a minimum maturity value of
PhP300,000. "The short-term papers will be available for sale by
the selling agent, subject to the minimum purchase amount with
interest rate and maturity terms based on prevailing market
conditions. Delivery of the commercial paper will be made upon
full payment of any purchase from the selling agent," PCI
Leasing said. The company has secured the approval of the Bangko
Sentral ng Pilipinas (Central Bank of the Philippines) for its
plan to issue the commercial papers. Under the approval, the
total number of lenders of PCI Leasing should not exceed 19
because the company has no quasi-banking authority.
PCI Leasing has a PRS1 rating from Standard and Poor's
affiliate, Philippine Rating Services Corp. The rating
considered the company's strong liquidity position, as evidenced
by well-matched receivables and maturity; large absolute size
and stable quality of its capital; its fair asset quality;
support from its parent company, and the improving growth of
finance companies. PCI Leasing is an 84%-owned subsidiary of
Equitable PCI Bank. Its principal business is to provide leasing
and financing products to commercial clients. Its leasing
products include direct leases, sale and leaseback arrangements,
and dollar-denominated leases. Its financing products,
meanwhile, include commercial and consumer loans, installment
paper purchases, employee personal loans, and receivables
discounting and factoring. Assets finance include automobiles,
trucks, office equipment, industrial, agricultural and office
machinery, real property, and financial assets such as
receivables. It sources 40% of its revenues from its leasing
business and 60% from its financing business. As of June 30, the
company's assets hit
PhP2.041 billion while liabilities stood at
PhP5.44 billion. Last year, the company issued short-term
commercial papers amounting to PhP100 million, half of which was
used to finance maturing obligations and other other half for
re-lending.
|
Nissan Motors Philippines, Inc. is eyeing a 28% increase in
sales by 2005 as car sales are expected to pick up, particularly
in the sport utility and passenger vehicle segments. Out of
a 4,700-unit sales target for the year, head for marketing and
production planning Raymond Tribdino said Nissan and its partner
Universal Motors Co. had already sold 3,500 units.
After lowering the projection for industry sales this year to
87,000 units, he said the Chamber of Automotive Manufacturers of
the Philippines, Inc. is eyeing a recovery back to the sales
level of about 100,000 units next year. "The growth is seen
particularly on the SUV [sport utility vehicle] segment because
costs are going down, there's a variety of models out in the
market, and diesel engines are also more available. These
factors will help increase the market," he said. He said the
introduction of new models for passenger vehicles are also
expected to drive sales. "For the SUV segment, we're looking at
a growth of 12%, and for passenger cars, it's 8%." He added that
Nissan's test drive program, which was launched yesterday, is
also expected to help boost the sales. "This is a global
awareness campaign to bring vehicles closer to the market," Mr.
Tribdino said. The Nissan group worldwide targets to sell one
million units, gain an 8% growth, and cut debts down to zero in
three years' time. "The Philippines will contribute 6,000 units
to the total sales next year," Mr. Tribdino said.
-- Anna Barbara L. Lorenzo
|
Several Japanese firms are keen on the ongoing privatization
of the generation assets of state-owned National Power Corp. (Napocor),
Energy Secretary Vincent S. Perez, Jr. yesterday said. Some 11
"big names" in Japan's electricity industry, which he did not
identify, have indicated willingness to participate in the
government's privatization efforts, the Energy chief said in a
statement. The firms also expressed interest to take part in the
development of the country's geothermal fields. State-run Power
Sector Assets and Liabilities Management Corp. (PSALM) has
successfully bid out four hydroelectric power plants such as the
3.5-megawatt Talomo in Bukidnon, the 1.6-MW Agusan in Bohol, the
1.8-MW Barit in Camarines Sur, and the 0.4-MW Cawayan in
Sorsogon.
PSALM is the government company tasked to oversee the
privatization of Napocor and its spin-off firm, the National
Transmission Corp. Mr. Perez said PSALM is working on an
accelerated privatization program with about 70% of Napocor's
total assets in Luzon and Visayas sold by end-2005. He said
three Japanese firms have signified intention to take part in
the geothermal bidding round set next month. The Energy
department said among the geothermal fields open for bidding are
the: Manito-Kayabon and Rangas-Tanawon in Sorsogon; Biliran in
Eastern Visayas; Amacan in North Davao; Dauin, Negros
Occidental; Natib, Bataan; Mabini, Batangas; Montelago, Mindoro
Oriental; Kabalian in Leyte and North Cotabato (Mindanao
optimization). Initial estimates show these fields could yield
as much as 300-470 MW in additional capacity, Mr. Perez said.
The Philippines is considered the world's second largest
geothermal producer with an installed generating capacity of
1,932 MW, next to the US. -- Bernardette S.
Sto. Domingo
|
By ROULEE JANE F. CALAYAG,
Reporter
Philippine share prices yesterday closed at a three-week low
as a confluence of events, weighed down by a growing impatience
among investors, overshadowed earlier gains. "Overall, the
market was weak. The decline was broad-based, led by PLDT
[Philippine Long Distance Telephone Co.]," said Jose Vistan,
Jr., research director at AB Capital Securities, Inc. PLDT, the
country's telecommunications giant, was down to PhP1,375 from
its previous close of PhP1,425. The market's breadth was also
weak at 5:1, said Mr. Vistan. Losers ruled as they overturned
gainers at 53-15. Unchanged issues totalled 49. Trades totalled
2,802 for 696.2 million shares worth
PhP724.3 million. The benchmark Philippine Stock Exchange
composite index (Phisix) slipped 18.33 or 1.03% to 1,766.60.
Only property floated, up 2.63 or 0.40% at 658.76. Oil was
unchanged at 1.71. The rest were down. The commercial-industrial
dropped 34.19 or 1.22% to 2,776.91. Mining slumped 28.86 or
1.40% to 2,034.12. The banks and financial services index dipped
6.64 or 1.33% to 492.76. The all-shares index went down 3.60 or
0.32% to 1,110.71.
RISING OIL PRICES
Mr. Vistan attributed the decline largely to the market's
impatience which resulted from various factors. "The market was
impatient because share prices were unable to sustain previous
rallies. The continuing rise in oil prices was the deterrent for
the market to rally to the 1,900 to 2,000 level," said Mr.
Vistan. He said a rising market and rising oil prices "could not
coexist." He remarked that "one has to be flat or down for the
other to be up." The heavy sentiment, he said, was hindering the
market from testing new levels. "The conditions [for a new
rally] are not there due to some factors," he added. He said
negative factors abound, preventing the market from staging a
rally that could replicate last month's gains. "There are the
crude oil price [that keeps increasing] and the slowness in
legislating tax measures to avoid a [credit ratings] downgrade,"
explained Mr. Vistan.
CORPORATE EARNINGS
But these are not the only obstacles. There is also the
effect of the corporate earnings results on the investors' mood,
he said. "Corporate earnings must either be in line or better
[than expectations] or another Jollibee experience will
[ensue]," said Mr. Vistan, referring to the market's immediate
reaction to the lower-than-expected earnings report of the
country's leading fastfood chain. Jollibee Foods Corp. managed
to post a 6% increase in net profit to
PhP317 million for the third quarter. But investors were
unimpressed as they were expecting to see at least a
double-digit growth. The stability of the Armed Forces of the
Philippines (AFP) is also a concern as investors monitor the
investigation on AFP comptroller Major General Carlos Garcia,
who is alleged to have amassed billions of pesos at the expense
of the military. "The stability of the military situation is
also a factor," said Mr. Vistan. The massive decline in markets
abroad such as the Dow Jones Industrial Average which shed 10.69
at 9,886.93 and Japan's Nikkei which dropped 92.95 to 10,789.23
also triggered some selling among local investors. These
exacerbated negative sentiments that filtered through the
Philippine market as individual foreign companies felt some
pinch in their operations resulting from escalating oil prices.
OVERSOLD
Mr. Vistan said the market is now at an oversold level after
"being flat for a while." "If it bounces back, it will purely be
technical and not a reversal or a sign for a resumption of a
rally. The short-term is a negative bias, zigzagging a downward
trend," added Mr. Vistan. Investors and the market, in general,
must decide on what they have to do as early as now, advised Mr.
Vistan.
Although its price declined, PLDT remained the top actively
traded stock. PLDT is the parent firm of Smart Communications,
Inc., the country's market leader in mobile communications.
Investors are gauging how its rival, Sun Cellular of the
Gokongwei family's Digital Telecommunications Philippines, Inc.
(Digitel), will affect Smart's operations. Digitel, also down at
PhP1.32, recently launched a 24/7 service allowing for cheaper
calls at all times of the day. The company told Mr. Vistan that
"it was too early to say if the new service [not a promo]" was
doing well since it was only two weeks in the market. But it
seems that the new service has already attracted a number of
Smart's subscribers to shift to Sun Cellular. Some observers
said if claims by Sun Cellular on its new service prove to be
true, more mobile phone users may consider switching to the
firm.
Ayala stocks secured their positions as among the widely
traded stocks. Ayala Land, Inc. followed PLDT as the second most
active stock as it closed unchanged at seven pesos with 12.32%
share of the market. Parent Ayala Corp. was fourth. It was also
unchanged at PhP6.30 but with only 8.4 million shares transacted
for PhP52.9 million. Its market share was 7.3%. The Bank of the
Philippine Islands, which is a part of the Ayala group,
completed the top five most active stocks. But BPI was down to
PhP46 with 6.75% market share. SM Prime Holdings, Inc. (SMPH) of
retail tycoon Henry Sy has not retreated from the race as it
ended third most active stock, up at PhP7.30 with almost 10
million shares traded worth PhP72.6 million.
Meanwhile, Marita Limlingan, PSE director and investor
education committee chairman, said despite the decline in the
Phisix, the market is still poised for a bull run. "Those are
only technical corrections. The market is always bound to
correct and the decline is not a reflection of the fiscal
situation in the country," she said.
|
By JUDY T. GULANE,
Reporter
Manufacturers and housing contractors oppose a bill now
pending in Congress that will require all taxpayers to submit
statements of assets, liabilities and networth to the Bureau of
Internal Revenue starting next year. These businessmen, through
their respective industry associations, told the House of
Representatives ways and means committee yesterday that House
Bill No. 2895 would violate a taxpayer's right to privacy, and
would impose an additional burden on businesses. The Chamber of
Real Estate and Builders' Association, Inc. (CREBA) submitted to
the committee a position paper signed by its national president,
Purita S. Soliven.
Meanwhile, the Federation of Philippine Industries (FPI) was
represented in the ways and means committee hearing by the
chairman of its finance committee, Napoleon Cabello. CREBA said
House Bill No. 2895 also violated a taxpayer's right against
self-incrimination as well as his the right to be presumed
innocent. "Every person must be entitled to keep private his
assets and other valuables and he or she must not be compelled
to disclose them compulsorily under pain of penal action," CREBA
said. "No person should be compelled to a witness against
himself or herself. [House Bill No. 2895] will unduly put a
taxpayer in a position where his own declarationcan be used by
unscrupulous revenue officials to harass the taxpayer," it said.
"The premise of [the bill] already presumes that the taxpayer is
guilty of tax evasion or fraud, thus presuming the corresponding
imposition of penalty for any mistake or error in the [asset
statement," it added.
Mr. Cabello, meanwhile, said the filing of an asset statement
would unduly burden corporations that must also prepare balance
sheets and income statements, and foundations that were not
required to pay taxes. He also said there were no guarantees
that submission of asset statements would improve tax
collection. He noted government officials were already required
to file asset statements, yet this has not been effective in
indentifying tax cheats. There are also concerns of "selective
application of the law," that the asset statements will be used
against taxpayers, Mr. Cabello said. This can lead to
kidnappings and capital flight, he added. The government, as it
is, already has a lot of information at its disposal if it wants
to verify whether the correct taxes are being paid, he said.
These information are with the Securities and Exchange
Commission, Land Transportation Office, and Land Registration
Authority. CREBA also suggested that the submission of asset
statements be voluntary, and be made attractive with incentives.
During the committee hearing, Marinduque Rep. Edmund O. Reyes
Jr. said the timing of the bill was "bad" since it would
additionally burden taxpayers who would also deal with new
taxes.
Under House Bill No. 2895, by Cavite Rep. Jesus Cripin C.
Remulla, taxpayers earning an annual gross income of more than
PhP200,000 or owning real or personal properties with an
acquisition cost of at least
PhP500,000 must file asset statements as of December 31,
2004 at revenue district offices of the Bureau of Internal
Revenue. They must file their first statement on or before April
15, 2005, and on or before the same date in succeeding years.
|
While the government again spent more than it earned in nine
months to September, it claims to have better managed its
finances during the period to keep its overspending below the
limit. Its expenses rose substantially particularly in the third
quarter (July-September) because of large interest payments on
foreign loans that period. It also made big advances to
government-owned and -controlled corporations, which have been
losing money, since the start of the year until last month.
For January-September, the government's budget deficit
totaled
PhP141.907 billion, which was just PhP2 billion shy of the
PhP143.341-billion deficit ceiling for the period, the Finance
department reported yesterday. The state earned PhP516.39
billion and spent PhP658.3 billion during the period. In the
third quarter alone (July-September), the deficit totaled
PhP61.78 billion, also below the PhP63.76-billion limit for the
period.
For that quarter, interest payments on foreign loans was
PhP30 billion higher year on year as it rose to PhP78.025
billion because of the peso's depreciation. The government had
to raise more pesos for every dollar in interest to be paid,
since what was earlier budgeted for payments was only PhP74.49
billion. Its lending to state-run firms in nine months to
September was also unexpectedly high. Advances to these firms
totaled PhP8.9 billion, while what was earlier budgeted was only
PhP1.1 billion. These firm included big losers like the National
Power Corporation, National Irrigation Authority, Light Railway
Transit Administration, and Philippine Nationa Railways. Around
PhP2.7 billion was also used to pay for obligations from the
Casecnan irrigation project. But Finance Secretary Juanita D.
Amatong told reporters in a press conference she was still
"almost certain" the government would keep to its
PhP197.8-billion deficit ceiling for the year.
Claiming that the government was better managing its
finances, she said she was confident it could also maintain its
credit ratings. "The deficit level in the last two years are
very good indicators of how we practice fiscal discipline," she
said. "This is a very good performance for the third quarter,
and the second year of good fiscal performance measured by the
actual results versus the programmed targets," she added.
Socioeconomic Planning Secretary Romulo L. Neri also said he was
confident the government would not breach its budget deficit
ceiling for the year. "We may even do better," he said in a
telephone interview, noting that the deficit may end 2004 even
below the ceiling of 4.2% of total economic output or gross
domestic product. Ms. Amatong also said advances to Napocor
totaling PhP500 million were expected to be paid within the
year.
International creditors have expressed concern over the
government's ability to control the deficit, given its record of
failing to meet targets. Ms. Amatong earlier said she was
optimistic the government would balance the budget and eliminate
the deficit by 2009 by raising taxes and cutting expenditures.
The Finance chief said the government has long recognized the
urgency of legislating new taxes to solve its fiscal problem.
The Department of Finance hopes Congress will pass at least four
tax-related measures by yearend.
-- Karen L. Lema with inputs from J. A. Ng
|
The Board of Investments (BoI) and the Philippine Economic
Zone Authority (PEZA) approved
PhP1.61 billion in new investment pledges for August, up
50.47% from PhP1.07 billion in the same month last year. Data
released by the Trade department yesterday also showed that in
eight months to August, investment pledges totaled PhP146.57
billion, up substantially from PhP25.53 billion in same period
last year. Manufacturing investments accounted for PhP838
million or 52% of August investments, while information
technology or IT services contributed PhP451.24 million or 28%
of the total. Year-to-date, manufacturing and IT services
comprised 24.06% of total investments, but Elmer C. Hernandez,
Trade and Industry undersecretary and BoI managing head, said
they were expected to account for almost all of new jobs to be
created at 47,333. Investments in manufacturing and services are
expected to create 6,120 and 1,154 jobs, respectively, for
August, which brings the January to August total to 47,834.
Trade Secretary Cesar A.V. Purisima noted that foreign
investments went up 38.55% to PhP1.08 billion in August. Local
businessmen, meanwhile, put up 81.09% more investments at
PhP530.28 million. "Increased foreign capital infusion is a
signal that foreign business confidence on the Philippines is on
the rise and we expect more offshore firms to make their firm
commitment to locate here before the year ends," Mr. Purisima
said. Still, the amount of investments to the Philippines is
"meager" when compared to that of neighbors in the Association
of Southeast Asian Nations as well as India and China, the
Cabinet official said. "The government intends to correct this
situation by making the country a preferred [foreign direct
investment or FDI] destination, and one way is through the
incentives rationalization plan of the government," Mr. Purisima
said. "We have to make our incentives at par or even better than
our Asian neighbors if we intend to attract the big ticket
projects that are going to the Asian region."
While the government wants to compete with other countries in
attracting FDIs, it is still making sure that the grant of tax
and other incentives is justified, Mr. Hernandez said. "The
government does not just easily give incentives; it has
stringent criteria for projects to pass before these are given.
Aside from employment generation and the amount of capital being
infused, criteria for giving incentives include the impact of
the project to the community/country and the appropriateness of
the technology being introduced," the BoI managing head
explained. Mr. Hernandez said that it is important for the
Philippines to hike infrastructure investments. "Infrastructure
lays down the necessary platform from where firms can establish
their operation. The better the infrastructure the more chances
the country can attract business," he said. "But it is in
manufacturing and services that the country can generate more
jobs for the population. In infrastructure, most jobs are
generated during the construction phase while jobs in
manufacturing continue as long as the firms are operational,"
Mr. Hernandez added.
Top investors for August include Pilipinas Kyoritsu, which is
embarking on a PhP237.27-million wiring project in the Southern
Tagalog region; and the Property Company of Friends, which
registered a PhP101.54-million mass, low-cost housing project.
Two garments companies, Scrap Heap International Corp. and Gweng
Woo Garments Co., Inc., poured in PhP193.78 million and PhP87
million, respectively. "These investments dispel the notion that
the garments industry is on the downtrend. Our industry has
competitive advantages that make it an ideal manufacturing base
of garments such as its quick turn-around production time and
skilled manpower. These advantages allow our industries to have
strong presence in the export market," Mr. Purisima said.
NUCOMM International Philippines is setting up a PhP110
million contact center, bringing total investments in the sector
for the year to PhP4.18 billion. Investments in IT services
reached PhP5.34 billion from January to August, up 46.01% and
creating 11,338 jobs. IT projects totaled 56, higher than last
year's 44. "Our outbound investment missions have been
successful in promoting the country to prospective investors.
Furthermore, the successful operations of existing notable firms
in the country served as powerful testimonial to foreign firms
that profitable business can be made in the Philippines," Mr.
Purisima said. At yesterday's meeting of the American Chamber of
Commerce of the Philippines, however, John D. Forbes, chairman
of the organization's legislative committee, cited the need to
distinguish between actual investments and investment pledges
recorded by agencies like BoI. Mr. Forbes said the Bangko
Sentral ng Pilipinas (Central Bank of the Philippines, or BSP)
records not only actual investments, but also net FDI, or
investment inflows minus investment outflows. Net FDI for 2003
reached only $319 million, BSP data showed. This is an 82%
decline from 2002's $1.792 billion. In 2001, net FDI reached
$982 million. -- Felipe F.
Salvosa II
|
Banking regulators plan to gradually lower over the next six
years the amount of deposits banks are required to set aside as
reserves if only to encourage them to put more money in a wider
variety of investments. This way, they can limit the risks to
their investments, better manage their finances, and give more
protection to their depositors, Bangko Sentral (Central Bank)
Governor Rafael Buenavantura said in a forum yesterday. Freeing
more deposits from vaults will also allow banks to help develop
the capital market through their investments in equities or
stocks, corporate debt papers, bonds, and government securities,
among others. This, in turn can help them reduce their risks as
alternative modes of financing become available to businesses
and consumers. More money will also be released into the
financial system for possible lending to the cash-strapped
government, to reduce its dependence on foreign borrowings.
"Over the medium-term, we hope to effect a phased generalized
lowering of reserve requirements, to be more competitive with
low reserve requirement regimes found in most other countries,"
Mr. Buenaventura said. This would give banks "greater
flexibility in managing and redistributing [their] risks via the
capital market, particularly through securitization and
hedging," he added.
Right now, local banks must keep at least 19% of deposits in
their vaults as reserve requirement. Other Asian central banks
require only 3%-6% of deposits. Bangko Sentral Deputy Governor
Amando M. Tetangco, Jr. said countries with healthy capital
markets have kept their reserve requirement at below 10%. Bangko
Sentral Assistant Governor Diwa C. Guinigundo noted that every
one percentage point change in reserves could free up to
PhP15 billion in bank deposits and make them available for
either lending or investment, and consequently encourage
business of economic activity. Mr. Buenaventura said the gradual
lowering of the reserve requirement could apply to a number of
transactions and financial products, to create more profit
opportunities for banks. Bangko Sentral's reserve requirement is
currently high to better secure deposits as well as to control
money supply amid high inflation or fast-rising consumer prices.
Mr. Buenaventura noted the need to develop the capital market
also to encourage more people to save.
Data shows Philippine savings at only 20.1% of total economic
output or gross domestic product, compared with 31.6% in Hong
Kong, 33.1% in Thailand, 42.9% in Malaysia, and 46.7% in
Singapore. Mr. Buenaventura said the central bank would push for
more reforms in the financial sector, including a special law
for a strong credit reporting system and more balanced
bankruptcy rules. "We particularly attach great importance to
the amendment of the [Bangko Sentral] charter. Unless we are
able to properly police the banking system with sufficient
powers, we will be constantly plagued by a vulnerable banking
system," he said. -- Iris
Cecilia C. Gonzales
|
Toll fees at the North Luzon Expressway will be four times
more expensive once its repairs will have been completed before
the end of the year. From
PhP41 currently for cars and jeepneys entering the
Balitantawak, Quezon City gate and exiting at Mabalacat,
Pampanga, the toll fee will go up to PhP200. Buses and light
trucks now paying PhP82 will be charged PhP500, while heavy
trucks now paying PhP123 will be charged PhP600.
The tollway's contractor, Lopez-owned Manila North Tollways
Corporation, said yesterday it would petition the Toll
Regulatory Board for the higher fees after it will have
completed the expressway's rehabilitation by the end of next
month. Company president Jose P. De Jesus said repairs were 92%
done. He also said the toll increase was based on computations
approved as early as 1998, which were included in the tollway
operation agreement between the government and his company.
Factors affecting toll prices include changes in consumer prices
as well as the peso's depreciation against the US dollar. But
Mr. De Jesus said only seven out of 10 tollway users actually
travel the full length of the highway, so the higher fees should
not significantly burden the public. "The average payment of [tollway]
users is only PhP75 because the average length of travel is only
31 kilometers," Mr. De Jesus said. In turn, however, the
improved road system will result in less vehicle wear and tear
and less fuel consumption for motorists.
North Luzon Expressway last raised toll fees in December last
year. The $371-million repair of the 82.62-kilometer highway
started in February last year, under a joint venture agreement
between state-controlled Philippine National Construction Corp.
and Manila North Tollways Corp. The repairs include the
construction of 138 new lane kilometers, to accommodate more
vehicles and reduce traffic congestion. Four new interchanges
were also added to the existing 10.
-- Beverly T. Natividad
|
American businessmen in the country are offering their own
"road map" to raise foreign investments and improve the economy,
listing six "broad areas of recommendation" for the government.
John D. Forbes, chairman of the American Chamber of Commerce of
the Philippines' (AmCham) legislative committee, said that to
attract more foreign investments, the country should modernize
infrastructure, improve governance, slow population growth,
accelerate legal reform, reverse the declining proficiency in
English, and improve security. Also, the government should soon
move on five issues that all foreign chambers view as an
"immediate action priority," namely:
- rehabilite the South Luzon Expressway and its connection
to the Southern Tagalog Arterial Road all the way to the
Batangas port;
- open the Manila international airport's Terminal 3;
- upgrade power transmission grids;
- pass tax-related bills, specifically higher taxes on
"sin" products; and
- stop the importation of used motor vehicles.
Mr. Forbes said the country would need at least $3 billion in
investments annually, but has been getting only about $1
billion. Data from the United Nations Conference on Trade and
Development showed that foreign direct investments to the
Philippines reached $1.1 billion in 2002, slightly higher than
Thailand's $1.07 billion but lower than Vietnam's $1.2 billion
and Malaysia's $3.2 billion. "China is emerging as a major
threat," added Robert W. Blume, chairman of AmCham's trade and
investment committee and director of the American Desk at the
Board of Investments. He also noted three clear investment
trends developing in the country:
- migration of manufacturing to other countries but
retaining marketing;
- maturity of a large information technology or IT
manufacturing sector such as electronics and semiconductors;
and
- the emergence of fast-growing IT-enabled services such
as contact centers.
Overall, "new foreign investment inflow is inadequate and
declining," Mr. Forbes said. Not enough foreign investments is
one reason the Philippines remains poor, he added, also citing
that per capita income "is barely growing." While per capita
income grew by 14% from 1975 to 1999 to $647, this is still
considerably low compared with China's 235% ($887), Thailand's
220% ($1,780), and Malaysia's 153% ($3,175), he said. Mr. Forbes
also warned that a downgrade in sovereign ratings by credit
ratings firms Fitch, Moody's and Standard and Poor's would cost
the government
PhP20 billion more in foreign debt servicing, aside from
dampening foreign investments. "Implementing our road map will
bring more foreign direct investment. A status quo could cause
foreign investors to relocate," he said.
A Gallup survey commissioned by AmCham this year listed nine
main concerns of American investors in 17 business sectors.
These are corruption, unstable political system, infrastructure,
laws and regulations, tax structure, new business incentives,
local protectionism, personal security, and the free movement of
goods, Mr. Blume said. But there are also two areas of
satisfaction: trained personnel and office lease costs. Mr.
Blume said the country should strive to improve competitiveness
to arrest its decline in rankings, as shown in the separate
reports of the World Economic Forum, the World Competitiveness
Yearbook, Transparency International, and the Index of Economic
Freedom. Mr. Forbes also called for slower population growth by
intensifying family planning, passing the reproductive health
bill, a national advocacy for smaller families, and providing
incentives to poor parents with only two children. If population
growth is not contained, there can be 100 million Filipinos by
2011. "We cannot reduce poverty or achieve strong [economic]
growth with a 2.36% population growth rate," he said.
-- Felipe F. Salvosa II
|
The National Government will be forced to borrow to pay off
the
PhP200-billion debts of the National Power Corporation (Napocor)
if lawmakers fail to approve any of the Executive department's
proposed taxes, Finance Secretary Juanita D. Amatong told
reporters yesterday. She explained that the Napocor debt to be
assumed by the government beginning next year will have to be
paid out of the expected income to be generated from the eight
revenue measures now pending in Congress. "If there will be no
new taxes, the National Government will have to go borrowing,"
Mrs. Amatong told reporters yesterday.
President Gloria Macapagal Arroyo issued on Oct. 12 Executive
Order No. 370, allowing the government to directly assume PhP200
billion of the PhP500 billion debt of Napocor to speed up its
privatization. The remaining PhP300-billion Napocor debts, Ms.
Amatong said, would have to be funded through the proceeds that
will be generated from the sale of its transmission and
generation assets, which is expected to earn for the power firm
PhP200-billion. Napocor has trimmed its projected losses to
PhP106 billion from PhP113 billion after it was allowed by the
Energy Regulatory Commission a provisional rate increase of an
average 98 centavos per kilowatt-hour. Napocor had earlier asked
for an average increase of PhP1.87 per kilowatt-hour. The new
rate is expected to earn Napocor an additional PhP37-billion in
revenues. "The increase in the tariff rate of NPC [Napocor] will
stop the bleeding of NPC, otherwise NPC will go into debt," Ms.
Amatong said. The Finance chief added that Napocor's financial
requirements for next year will significantly be reduced given
the debt-absorption order and the favorable ruling it got from
the ERC.
Congress mandated the debt assumption when it passed the
Electric Power Industry Reform Act (EPIRA) in 2001. "The
National Government shall directly assume a portion of the
financial obligations of Napocor in an amount not to exceed
PhP200 billion," states Section 32 of the power sector reform
law. Last June, the government said it plans to assume Napocor's
debts of PhP500 billion to help smoothen its privatization. The
DoF has repeatedly stated that the government's move to assume
the debts of Napocor as prescribed by the law is expected to
boost the participation of the private sector in the country's
energy industry. The debt transfer is one of the commitments
made by the government to Napocor's major creditors -- the Asian
Development Bank, World Bank, and Japan Bank for International
Cooperation -- to help facilitate the privatization of the
energy sector. But several lawmakers have questioned the timing
of the debt-assumption order issued by the President, citing the
poor state of the government's finances. Ms. Arroyo recently
said that the government is in a midst of a fiscal crisis.
Senator Manuel Roxas II has called for a public accounting of
Napocor debts before the government assumes them. He called for
a review of how the debts were incurred, why they were borrowed,
and for what exact purposes they were contracted. The
debt-assumption order, Executive Order No. 370, took effect Oct.
15, immediately after it was published in a newspaper of general
circulation. No announcement, other than the newspaper ad, was
made about it. Under the order, the DoF, in consultation with
the Department of Budget and Management and the Commission on
Audit, will work out the details on how to go about the debt
absorption. But a Finance official, who requested anonymity,
defended the dept-assumption order issued by the Malacaņan
presidential palace, saying: "It is a law, therefore, there are
extensive debates that will show the reasons why the government
needs to shoulder Napocor's debts." Moreover "what we are doing
today is not different with what we have to do later on," the
official said.
Napocor, like other government-owned and -controlled
corporations (GOCC), was granted automatic guarantee privileges
under its corporate charter. This means that in case the firm
defaults, government has to assume the payments of its debts.
And such a scenario is likely given the precarious financial
situation of the state-run power firm. If the government will
not assume payment of Napocor's debts "the repercussions will
be, unfortunately exactly the same with what we are confronted
with today," the official said. -- Karen L.
Lema
|
The Bangko Sentral ng Pilipinas (Central Bank of the
Philippines, or BSP) told a visiting team from credit ratings
firm Fitch Ratings that the Macapagal-Arroyo administration is
committed to pass revenue measures designed to help rein in the
budget deficit by yearend. BSP Governor Rafael B. Buenaventura,
who met with officials of the agency, surmised that Fitch would
be closely watching whether Congress would be able to pass some
of the proposed revenue measures soon after it resumes session
on October 25. He told Fitch officials that lawmakers have said
that the approval of the proposed measures is as good as done.
He conceded, however, that nobody could guarantee the passage of
the measures except both houses of Congress. "I think [Fitch]
will give us time. They will probably see what's going to happen
after the recess [of Congress]," he said yesterday. Mr.
Buenaventura said the country cannot afford a credit downgrade
since this move would further shoot up government's borrowing
costs. He conceded that it was difficult to say whether the
Philippines would get another credit downgrade, since Fitch has
yet to review "the numbers."
Senate ways and means committee chairman Ralph G. Recto said
Congress has a timetable to pass revenue-enhancement measures to
ease the financial burden of the government. Mr. Recto noted
that the Senate ways and means committee will submit a report
next month on the results of the initial deliberations on tax
amnesty and performance-based lateral attrition. The committee
will conduct another hearing on the two revenue measures today.
Mr. Recto noted that this should fast-track the discussion on
the revenue measures. The chairman of the House of
Representatives ways and means committee, meanwhile, is
appealing to his members to expedite the passage of the measure
indexing the excise tax on alcohol, cigarette and tobacco
products to inflation to avert a credit downgrade for the
Philippines. "I plead with members of the committee, let us not
make the 13th Congress the scapegoat (once this
downgrade happens)," Tarlac Rep. Jesli A. Lapus said yesterday.
-- Iris Cecilia C. Gonzales, Carina I. Roncesvalles and Judy
T. Gulane
|
By BERNARDETTE S. STO
DOMINGO, Reporter
Oil companies would implement a weekly increase of 35
centavos a liter for diesel products to recoup under-recoveries
of between
PhP2 to PhP3 per liter, an official of the Independent Philippine
Petroleum Companies Association (IPPCA) yesterday said. Glenn
Yu, president of Seaoil Philippines, Inc. and IPPCA
vice-president, yesterday said oil companies would have to
impose an additional PhP2.00 per liter increase until November
on a staggered basis. This was confirmed by IPPCA Chairman
Fernando L. Martinez, noting that high prices of oil in the
world market were pushing local prices up. Mr. Martinez is also
the president of Eastern Petroleum Corp. "It is highly possible
that (price increases may extend until next month), unless the
trend in the world market is reversed," he said in an interview.
This developed as small oil retailers which account for 15% of
the local oil market, yesterday increased diesel and kerosene
prices between 12:01 a.m. to 6 a.m., citing continued increase
of prices in the world market.
Eastern Petroleum, Seaoil, and Unioil Philippines raised
diesel and kerosene prices by 35 centavos a liter effective 6
a.m. yesterday. Flying V increased diesel and kerosene prices by
45 centavos at 12:01 a.m. Total Philippines Corp. and Caltex
Philippines, Inc. also increased diesel and kerosene prices
Tuesday by 35 centavos a liter for diesel and kerosene. Early
this week, Total and Caltex also raised prices of liquefied
petroleum gas by 50 centavos per kilogram. For its part, oil
refiner Pilipinas Shell Petroleum Corp. also announced that it
has diesel and kerosene prices by 35 centavos a liter effective
12:01 a.m. yesterday.
Energy Sec. Vincent S. Perez Jr. on Tuesday asked oil
companies to limit any price increase even as he warned of
higher fuel prices in the coming months. The tight supply of
diesel, which is used as heating fuel in the winter months in
the United States and Europe, has kept its price on steady
uptrend, Mr. Perez said. There were also disruptions in
production because of an oil workers' strike and threats of
rebel attacks in Nigeria, production losses in the Gulf of
Mexico due to several hurricanes, continuing violence in Iraq,
and the ongoing legal and financial problems of Yukos, Russia's
largest oil company.
DIESEL-ENHANCER
As this developed, Seaoil yesterday launched Bio Exceed, a
diesel-enchancing product aimed at providing 25% improvement on
diesel engine efficiency translating to cost-savings of more
than PhP1 per liter of fuel for motorists. Seaoil has 88
gasoline stations nationwide and has a 3% market share in terms
of stations. "If for example, customers are paying PhP22.50 per
liter for diesel but if Bio Exceed is blended as an additive,
it's as if they are paying only PhP21.50 because it gives
improved mileage, better fuel efficiency and longer engine
life," Mr. Yu said during a product launch. He said Seaoil was
looking at expanding production and possibly exporting the
product to Japan. "We are proud to offer the Filipino public a
product that not only helps cut down fuel costs but also helps
uplift the country's economy as a whole. With the current trend
of increasing oil prices, we found it necessary to look into
alternative sources of energy to reduce our dependence on
imported fuels," Mr. Yu said. The new product does not require
engine modification and can be used at once, he said. Bio Exceed
is made from trans-esterified coconut oil or coco methyl ester.
It can be used as an enchancer of diesel fuel or as a total
substitute for it.
|
By IRIS CECILIA C. GONZALES
and IRA P. PEDRASA, Reporters
Dollar inflows helped the Philippine peso's rally in
yesterday's trade, creating enough liquidity in the country's
electronic currencies exchange. The peso strengthened by almost
six centavos to PhP56.30 from PhP56.355 previously, following
other regional currencies' reaction to the weakness of the US
dollar. For the rest of the year, the Bangko Sentral ng
Pilipinas expects the peso to steadily recover because of strong
dollar inflows. Amando M. Tetangco, Jr., deputy governor of the
central bank, said the inflow of dollars began ahead of
expectations. The central bank had expected this in early
November and to continue throughout December in anticipation of
the Christmas season. Mr. Tetangco said the three sources of
dollar inflows are remittances from overseas Filipino workers,
sales of exporters and equity investments.
The general weakness of the dollar, attributed to
election-related concerns in the United States, has also helped
strengthen the peso, he said. He also said demand for dollars
have eased compared with the third quarter when importers had to
settle their quarter-end obligations. "Demand is not as strong
as in the third quarter," he said. Bangko Sentral Governor
Rafael B. Buenaventura has said the peso can recover to below
PhP50 from the current PhP56 against the dollar, if the
Macapagal-Arroyo administration delivers its package of revenue
measures. Otherwise, central bank projects the peso to fall to
PhP57 against the dollar, starting next year and stay at this
level until reforms are in place.
At the Philippine Dealing System, the country's electronic
currencies exchange, the peso averaged at PhP56.322 against the
dollar yesterday, higher by more than five centavos than
PhP56.376 on Tuesday. After opening at PhP56.33, it hovered
within a seven-centavo range, following the upward momentum of
strong Asian currencies. The yen was higher at 108.20 per
dollar, coming from the 109.20 level. A trader at a foreign bank
said the peso went to as high as PhP56.28 as soon as the yen
jumped. The peso then went to as low as PhP56.35 and finally
settled at PhP56.30 against the greenback. Total volume of
transacted dollars increased to $171 million from $115.5
million, which traders said indicates a "push and pull" from
dollar inflows and corporate demands.
CREDIT RATING
"We felt the impact of remittances, and I think we have
outgrown any possible downgrading from credit agencies," Rovic
de Guzman, head of trading at the Union Bank of the Philippines
said. He added that a negative result from such agencies was
already assumed. Representatives from Fitch Ratings Services are
in town this week to look into the country's performance in
generating a healthy cash flow.
Earlier, Standard & Poor's Ratings Services also warned the
Philippines of another downgrade if Congress fails to enact
revenue measures. A credit downgrade makes it more expensive for
the country to borrow as it reflects its ability to pay debts.
It also increases the cost of doing business in the country.
Traders expect the peso to remain steady at PhP56.25 to PhP56.35
today, partly because of the dollar's weakness as the US
struggles to trim its trade deficit. "Add to that the round of
oil price hikes which is dragging down its trade connections,"
the foreign bank trader added. The trader also said "a stronger
peso should not be in place yet. Remember that the month-end
requirements of oil and manufacturing companies is nearing. They
would rather buy now while the dollar is still relatively
cheap."
|
A merger may not be in the works for the Money Market
Association of the Philippines (MART) and the Financial Markets
Association ACI Philippines due to differing operational
frameworks. MART president Asterio L. Favis, Jr. told
BusinessWorld that "each [group] felt that a merger might
cause a diffusion" of definite obligations. MART is the umbrella
organization of government securities eligible dealers, or
financial institutions that are allowed to purchase
government-issued debt instruments from the Bureau of the
Treasury. At present, MART has a total of 68 member
institutions, or 90% of dealers in the market.
Formerly Forex Philippines, ACI Philippines is composed of
individual currency traders. It is under the umbrella
organization of the international financial market organization
Association Cambiste International (ACI). "It's not yet
official, in fact, we will meet again next week. Even if we are
separate entities, we will still coordinate closely with ACI,"
Mr. Favis said. The two groups signed a memorandum of agreement
last December, creating an ad hoc committee to study and
recommend the feasibility of a merger. The unification was
supposed to take place by 2005. One entity was seen to focus on
the total financial market. Officers of both MART and ACI
Philippines in the past said a unification would be suitable
especially with market developments in the global front which
has blurred the distinction between their definite obligations.
This would also present a more efficient and economical group.
"The plan has been discussed on and off for years. Maybe this is
not the proper time for the two organizations to merge as much
as we like" them to, a bond trader said. The trader added that
there may be some operational problems that the unified
organization could face later on. "Probably, there are issues
that have yet to be addressed like which one would absorb the
other in terms of specific roles. There are members of ACI doing
money market businesses, [while] the MART can't. ACI has its own
international standards and conventions," the trader added. A
foreign exchange trader said, however, that "ACI is not being
elitist. The work is almost the same. Perhaps, it's really not
the time."
Meanwhile, MART will celebrate its 33rd anniversary this
November. A series of educational briefings and television
interviews will jumpstart the celebration, followed by a
convention on November 12 to 14. On November 9, the organization
will also conduct a briefing on fixed-income or government
securities market for the Economic Journalists Association of
the Philippines.
|
Philippine National Bank (PNB), the country's sixth largest
bank in terms of assets, reported a higher level of
non-performing loans for the third quarter as more borrowers
defaulted on their obligations. In its published statement of
condition, the semiprivate bank said loans that were at least 90
days past due represented 46% of its total loan portfolio, up
two percentage points from June's 44%. Nonperforming loans (NPLs)
grew by 6.46% to PhP47.79 billion as of Sept. 21 from PhP44.89
billion in the second quarter. Total assets of the bank hit
PhP214.78 billion, growing less than 1% from PhP212.71 billion.
Liabilities inched up by 1.04% to PhP190.84 billion from
PhP188.87 billion before the end of the first half of the year.
OTHER BANKS
State-run Development Bank of the Philippines' NPLs rose by
2.45% to PhP9.59 billion from PhP9.36 billion against general
provision of PhP2.86 billion and specific provision of PhP4.2
billion. Sy-led Banco de Oro Universal Bank's NPL ratio slightly
went up to 6.81% from 6.73%. Bad debts amounted to PhP5.04
billion, while aggregate loan loss reserves stood at PhP3.34
billion. China Banking Corp. bad debts represented 13.30% of the
its total loan portfolio, shrinking from the previous quarter's
14.65% level. Bad loans stood at PhP9.42 billion, increasing by
2.06% from PhP9.23 billion in June. General provisions for loan
losses was at PhP2.5 billion while specific provisions stood at
PhP4.56 billion. Export and Industry Bank, Inc., the country's
22nd bank, reported a 7.69% increase in NPLs to PhP2.1 billion
from PhP1.95 billion in the second quarter. Its NPL ratio of
19.35% was slightly higher than the 19.26% registered. Earlier
this week, government bank Land Bank of the Philippines said its
NPL ratio increased to 14.7% in August from 13.4% the earlier
month. It also said its coverage ratio was at 77%.
-- R. A. M. Rubio
|
By KRISTIN L. ALAVE,
Reporter
A Manila court granted Grand Boulevard Hotel's petition for
suspension of debt payment last Monday, giving the hotel a
"breathing space" to come up with a plan to pay for $19 million
worth of debts. The order, signed by Manila Regional Trial Court
Branch 24 Judge Antonio M. Eugenio, Jr. on Oct.18, also
appointed Celso P. Vivas to be the rehabilitation receiver of
the Panlilio-owned hotel, formerly Silahis Hotel, Inc. Mr. Vivas
must post a bond of PhP1 million upon his acceptance of the
post, according to the order. As it undergoes rehabilitation,
the court directed the hotel "from making any payment of its
liabilities outstanding as at the date of the filing of the
petition." It also prohibited Grand Boulevard from "selling,
encumbering, transferring, or disposing" any of its properties,
except in the ordinary course of business.
PROHIBITED
For the hotel to be in operation during the rehabilitation,
Mr. Eugenio's ruling also forbids its suppliers from
"withholding the supply of goods and services in the ordinary
course of business for as long as the debtor makes payments"
after the order's effectivity. An initial hearing on the
petition is scheduled on Dec. 8. This is the second time Grand
Boulevard filed for corporate rehabilitation and suspension of
debt payments. On Oct. 13, another Manila court, Branch 46,
junked its petition for rehabilitation. In his ruling, Branch 24
Judge Artemio S. Tipon said the hotel owners failed to come up
with a detailed rehabilitation plan fair to all stakeholders. He
said the owners were not willing to sacrifice to save their
business. Instead of submitting a motion for reconsideration,
the company took their rehabilitation petition to Branch 24 two
days later. The hotel owes a syndicated loan worth $19 million
to Export and Industry Bank, Land Bank of the Philippines,
Security Bank, and United Overseas Bank. However, due to the
1997 Asian financial crisis, the hotel was unable to pay
amortizations and negotiate to restructure the loan due to the
stiff penalties imposed by the banks, the hotel said in its
petition.
|
By JEFFREY O. VALISNO,
Reporter
A US court has nullified the subpoenas served on 30
Philippine telecom executives that required them to testify on
an antitrust investigation by US federal authorities, President
Gloria Macapagal Arroyo yesterday said. The executives were
attending an international conference in Honolulu last January
when the subpoenas were served. "In an amicable resolution of a
hard profile case between the Philippines' biggest and inherited
telecommunications companies and American companies, the US
court of Hawaii has nullified subpoena served on several
Filipino businessmen," the President said in a speech during the
ceremonies marking the 60th anniversary of the Leyte Landing.
She didn't give other details, but welcomed the development,
saying that the nullification of the subpoenas is a prime
example of the Philippines' "economic partnership with America,"
which was "forged in the flames of war." The Filipino telecom
executives were served summons by the US Justice department and
have been told to appear before a US grand jury on Jan. 15, 21,
26 and 29 on alleged violation of US antitrust laws.
SUMMONS
Among those who were served summons while attending the
Pacific Telecommunications Council Conference and exhibition in
Hawaii were 10 officials of the Philippine Long Distance
Telephone Co. (PLDT), including senior vice-president Alfredo
Panlilio; seven from Globe Telecom, Inc. -- senior
vice-president Gil Genio along with Fernando Cruz, Manuel Maceda,
Robert Martinez, Grace Castillo, Jesus Romero and Hedley
Serrano; two from Bayan Telecommunications, Inc. (BayanTel) --
chief consultant Tunde Fafunwa and Sherry Ann Suplena of the
company's international carrier division; Perla Ignacio of
Digital Telecommunications Philippines, Inc (Digitel); two from
Smart Communications, Inc., one of them legal head Rogelio
Quevedo; Capwire Chief Operating Officer Maureen Santiago; and
Eastern Telecommunications Phils., Inc. President Nenita Cruz.
The issue stemmed from a dispute between US telcos, AT&T and
MCI, and six Philippine telcos. The row started after local
carriers increased termination rates early last year to 12
centavos per minute from 8 centavos for landline calls, and 16
centavos per minute from 12 centavos for mobile calls. AT&T and
MCI opposed the rate increase and filed a case at the Federal
Communications Commission (FCC) for protection from whipsawing
in the Philippines-US route. The FCC later ruled local carriers
disrupted the US-Philippine networks of AT&T and MCI. It thus
ordered the two US carriers to suspend payments to the
Philippine carriers pending restoration of their US-Philippine
circuits. The dispute was settled late last year after
Philippine carriers closed interim agreements for termination
rates with AT&T and MCI. FCC also lifted the suspension of
payment order against BayanTel, Digitel, Smart, PLDT, and Globe.
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Metro Pacific Corp. did not violate any Philippine Stock
Exchange (PSE) rules in relation to the sale of Hong Kong parent
First Pacific Co. Ltd.'s 5% stake in the local firm, it said
yesterday . The firm is facing an investigation from the PSE
concerning the sale. But Vice-President for Corporate
Communication David Nugent said allegations they attempted to
inflate share prices by floating good news about the corporation
are "grossly inaccurate." Mr. Nugent said First Pacific's sale
of 930.2 million Metro Pacific shares was aboveboard. "There
were no violations of [the] disclosure [rule]. We don't even
have to disclose October trade until next month," he said.
"People claimed it was [a] pump and dump [strategy], that is
categorically not true. The misconception that Metro Pacific
tried to hide this trade is also inaccurate," Mr. Nugent said.
He said even at the onset of 2004 they already disclosed much of
the planned activities of the corporation. "If people are
buying, then they are buying on a level of confidence that we
are not giving them," he said.
At the bourse, new President Francis Lim refused to comment
on the case as it may prejudice the parties involved. But he
assured investors the BW stock-rigging scandal that almost
crippled the bourse will not happen again. "We are taking the
appropriate action on this issue which is under the juridistion
of the market integrity board and the market regulations office.
Such allegations are serious so we will carefully act on it. We
will do everything it takes to prevent another BW fiasco," Mr.
Lim said.
A group of brokers had said Metro Pacific shares had been
moving briskly "for several months between July and August."
"One foreign broker sold 610 million shares of Metro Pacific in
a day before the issuer made the disclosure and it continued
selling massively causing prices to drop from PhP0.55 to PhP0.30
before these were sold to PhP0.60 each -- more than double the
PhP0.30 share price," said a broker who refused to be
identified. The source said the transaction, which he described
was a "strategic move" on the part of Metro Pacific, was made
between Aug. 10 and Oct. 10. "It was a hype and dump
[strategy]," added the broker as he urged the PSE to look deeper
into the issue. "The PSE is doing something on it but it has to
investigate more. These [matters] concern a lack of disclosure
and ethical issue." The broker said the pronouncements made by
Metro Pacific Chairman Manuel V. Pangilinan about the company's
plans in recent months might have been done to boost the price
of its shares in view of the massive sale that took place over
the past few months. The charges of insider trading and stock
price manipulation were floated as the newly created integrity
board, tasked to strengthen integrity at the exchange by
establishing stronger relationships with brokers, began to work
last Tuesday.
Astro del Castillo, managing director of First Grade
Holdings, Inc., said it is "hard to say" that there was stock
price manipulation. "The market was on an upsurge during those
times that even speculative issues went up. A bullish wave
caused prices to move up north although there may be relevant
information," he said. First Pacific sold 5% of its stakes or
930.2 million common shares in the local firm over the past few
weeks to help its shipping subsidiary Negros Navigation Co.,
Inc. (Nenaco) to implement a court-approved rehabilitation plan.
It completed the transaction when it sold 1.88% or 349.1 million
shares of the total issued common shares of Metro Pacific last
week. Metro Pacific's share price closed higher at PhP0.47 from
PhP0.46 after the sale.
-- Roulee Jane F. Calayag and Beverly T. Natividad
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Downstream steel industry players threatened to sue the
Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP) and the Indian buyer of National Steel Corp., claiming the
PhP13.25-billion sale of the steel firm is tantamount to plunder.
The Roque, Butuyan Law Office, representing downstream
industries, claimed the Bangko Sentral committed a mistake when
it certified the National Steel transaction as eligible under
the Special Purpose Vehicle (SPV) law. "The sale is tantamount
to plunder," said lawyer Romel B. Bagares of the law firm
handling the matter.
Last Friday, the Indian-owned Global Group said it had
already completed the requirements for the acquisition of the
steel complex in Iligan City. This finally closes the sale of
the steel firm to the Indian-owned company. The PhP13.25-billion
price tag is to be paid in full within eight years with the next
installment due on Oct. 15, 2005. "This is a PhP13.25-billion
transaction involving government assets any citizen of this
country should be concerned about. We believe an illegal
transaction of this nature courts a suit for plunder of the
nation's coffers. The last time we checked the Plunder Law, the
threshold amount for plunder was still only at
PhP50 million," Mr. Bagares said. He claimed there was nothing in
the asset purchase agreement signed between the Global group and
its creditors to support the Bangko Sentral's contention the
transaction involved is a "true sale" as defined by the SPV law.
LEGITIMATE
The Bangko Sentral, however, said the sale is a legitimate
special purpose vehicle transaction and a true sale. "We wish to
clarify that the transactions in issue involve the sale of
nonperforming loans of secured financial creditors of National
Steel to two SPVs," said BSP Assistant Governor and General
Counsel Juan de Zuniga. He added the transactions fall under the
implementing rules of the SPV law. "Moreover, the selling
financial institutions including banks, will sell absolutely and
unconditionally, their NPLs [nonperforming loans] to the SPVs.
The absolute and unconditional sale of the NPLs does not include
any buyback arrangement by which said NPLs would revert to the
creditors," Mr. de Zuniga had said. As such, he said the
transaction is a "true sale," contrary to the claims of the law
firm.
The Global group, for its part, said the transaction already
met all the necessary approvals including those of the Bangko
Sentral, the Securities and Exchange Commission, the National
Power Corp., and the local government of Iligan.
-- Iris Cecilia C. Gonzales
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The Bases Conversion Development Authority (BCDA) yesterday
said it had remitted
PhP670 million to the Treasury as of October, bringing the
agency's total contributions to
PhP26.8 billion. In a statement, BCDA President Rufo Colayco said
the remittances came from the sale of military camps. "BCDA is
one of the few self-sustaining, self-liquidating [state-owned
firms] which does not receive a single centavo from the National
Government," he said. BCDA contributes to the military and
police modernization program, the National Shelter Fund and the
National Health Insurance Program, Mr. Colayco added. It also
contributed more than PhP532 million in infrastructure projects
in Bulacan, as well as the former American bases Clark and Subic,
Camp John Hay in Baguio, and Fort Bonifacio. These include the
PhP251-million squatter relocation for the Northrail project,
and Phase 2 of the Angeles City Friendship Bridge costing PhP60
million.
BCDA also contributes operating funds for subsidiaries such
as the John Hay Management Corp., Poro Point Management Corp.,
Bataan Technology Park, and North Luzon Railways. BCDA issued
the statement following a Commission on Audit report showing
that it incurred a PhP419-million net loss last year. Mr.
Colayco explained that the BCDA charter requires that revenues
from the sale of military lands should be capitalized instead of
being treated as income. "From the revenues generated from the
disposition of military lands, only 27.5% is retained by BCDA.
Yet, had the revenues received from the BCDA disposition program
been credited as income, BCDA would have posted a net income of
PhP66 million for 2003," he said. -- Felipe F.
Salvosa II
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Jardine Davies Inc. will transfer its business and related
assets and liabilities worth some
PhP415 million to two wholly owned subsidiaries as part of an
internal reorganization. The company told the exchange its board
approved the transfer at a special meeting yesterday, paving the
way for the conversion of the company into a pure holding entity
whereby only shares of stocks in its subsidiaries are held as
assets. The operating assets of Jardine Davies, which consist of
its distribution business and related assets, will be housed in
one of its wholly owned subsidiaries. Jardine Davies assured
there will be no material difference in the rights of security
holders due to the transfer. The per unit value of Jardine
Davies shares will not change as the assets are intended to be
transferred at net book value to wholly owned subsidiaries. The
internal reorganization process includes incorporating the
agrochemical distribution business, which currently operates as
a division of Jardine Davies. As a result, the company's
business and related assets and liabilities will be transferred
to Jardine Distribution, Inc. (formerly Jardine BS
International, Inc.), a 100%-owned subsidiary of Jardine Davies.
Jardine Davies Investments, Inc., another wholly owned
subsidiary, will have the remaining assets of Jardine Davies.
The company said it will seek the consent of the stockholders at
a meeting on Dec. 6. The transfer of its agrochemical
distribution business and related assets and liabilities to
Jardine Distribution at a price not exceeding its unaudited net
asset value as of Sept. 30 will be made in exchange for shares
in Jardine Distribution. The transfer value is estimated at
PhP75 million. The assets to be transferred consist of
agrochemical distribution business, fixed assets, trade
receivables, non-trade receivables, inventories, club shares and
debentures, and others. Jardine Distribution is a local company
with an authorized capital stock of
PhP13.5 million. -- Roulee Jane F. Calayag
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By ROULEE JANE F. CALAYAG,
Reporter
Last-minute buying yesterday pushed share prices to close
higher and resume their bullish thrust. But this development was
not enough to give investors an idea on which direction the
Philippine stock market will move in the coming days. Rommel
Macapagal, chairman of Westlink Securities, Inc., said while
last-minute buying propped up the market, a low trading volume
caused the main index to hover at the 1,780 level. "The market
still lacks direction. It has no leads as to where it will go
because of low trading volume," said Mr. Macapagal.
The Philippine Stock Exchange composite index (Phisix) rose
6.08 or 0.34% to 1,784.93. Over 800 million shares were traded
for only
PhP667.6 million, back to the pre-bullish trading level of less
than a billion pesos. As earlier projected, the market is
following a cycle this week -- where it sheds a number of points
in a day, gains a little than its previous loss the next day,
and then reverts to a negative mode. Trades totalled 2,476, with
losers outnumbering gainers at 38-25. Unchanged issues have not
yet relinquished their lead at 49.
INDICES
Results of the indices improved with only two finishing
lower. The all shares closed higher, up 0.32 or 0.03% to
1,114.31. The banks and financial services index was up 6.57 or
1.33% to 499.40. Commercial-industrial climbed 1.57 or 0.05% to
2,811.10. Property also sustained its upward momentum as it
improved 3.72 or 0.57% at 656.13. Mining, however, bled 33.71 or
1.61% at 2,062.98 while oil shed 0.05 or 2.84% at 1.71.
Mr. Macapagal said given the state of things at the market,
the Phisix may try to hold on to the 1,780 level in the coming
weeks. If circumstances improve and positive corporate earnings
reports come in, there may be a chance that the benchmark index
will try to test the 1,800 level, some traders said. However,
this remains to be seen because aside from these factors, the
stock market also gets its cue from the US markets. "A drop in
the Dow Jones, the same as last week, and a lack of buying
support may [fix] the Phisix at 1,750 level [temporarily],"
added Mr. Macapagal. The Phisix weakened last Friday after the
Dow Jones, Nasdaq and Standard & Poor's 500 all posted
significant declines. The Dow Jones shed over 100 points.
BLUE CHIPS
Despite a gloomy atmosphere, some investors kept on buying
select blue-chips while some took to bargain hunting. Philippine
Long Distance Telephone Co. (PLDT) was the undisputed market
king, taking over 27.60% of the market at
PhP184.3 million for 130,000 shares but its price was unchanged
at PhP1,425. The stock was resilient although its American
Depositary Receipts (ADRs) in New York had a lackluster
performance. PLDT's ADRs dipped 0.17 or 0.67% to $25.28. Trading
of property developer Ayala Land, Inc. and its parent, Ayala
Corp., was feverish, as their transactions accounted for 14.37%
and 12.06% of the market, respectively. Both stocks were
unchanged at seven pesos and PhP6.30 each.
Metro Pacific Corp., which is under the same First Pacific
Corp. umbrella that PLDT belongs to, clung to the fourth slot.
It was unchanged at PhP0.45 on PhP91.7 million shares worth
PhP39.9 million. It cornered only 5.97% of the market. Some
brokers have cried foul over the alleged insider trading
involving the shares of Metro Pacific. A foreign brokerage
company allegedly took the lion's share of the transactions
equivalent to 930.2 million common shares or 5% stake of First
Pacific in Metro Pacific. The brokers said the foreign brokerage
should be investigated for insider trading and Metro Pacific for
stock price manipulation. Citing the earlier announcements of
Metro Pacific chairman Manuel V. Pangilinan on the company's
interest in the South Luzon Expressway, the parties surmised
that these were trumpeted to puff up the price of the stock
after it slid to its lowest during the sale.
Other stocks that had significant transactions included DMCI
Holdings, Inc., Bank of the Philippine Islands (BPI), Digital
Telecommunications Philippines, Inc., SM Prime Holdings, Inc.
and ABS-CBN Holdings Corp. Philippine Deposit Receipts. Except
for ABS-CBN Philippine Deposit Receipts which was down at
PhP20.25, the other four were up with BPI closing respectably at
PhP47.
JARDINE DAVIES
Meanwhile, Jardine Davies, Inc. told the exchange that it is
transferring all its assets and liabilities to two wholly-owned
subsidiaries as part of an ongoing internal reorganization. The
process includes incorporating the agrochemical distribution
business, which currently operates the division of Jardine
Davies. With this setup, the business and related assets and
liabilities of Jardine Davies will be transferred to Jardine
Distribution, Inc., formerly Jardine BS International, Inc., a
100%-owned subsidiary. The remaining assets of Jardine Davies
will be transferred to Jardine Davies Investments, Inc., another
wholly owned subsidiary.
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