|
The Malacañan presidential palace yesterday approved the creation of
a joint legislative-executive task force that would ensure Congress'
approval by yearend of at least one of eight Palace-backed tax bills.
Speaking after the 97th meeting of the Legislative Executive
Development Advisory Council (LEDAC) at the Palace, Trade and Secretary
Cesar V. Purisima said President Gloria Macapagal Arroyo as well as
senators and congressmen reached a consensus on working together to trim
the budget deficit through new taxes. "Nothing is final yet as to the
exact set of measures that will be passed, but there is a common need
for both groups to pass a [tax] measure by the end of the year," Mr.
Purisima told reporters. He said the members of the said proposed task
force would come from the Senate and House of Representatives ways and
means committees, and the President's economic task force -- composed of
Mr. Purisima, Finance Secretary Juanita D. Amatong, Socioeconomic
Planning Secretary Romulo L. Neri, and Energy Secretary Vincent S.
Perez.
In her
State of the Nation Address two weeks ago, the President asked
Congress to approve eight tax bills that would generate additional
revenues, cut government expenses, and trim the budget deficit within
her six-year term. The bills involve:
- adopting gross income (instead of the current net income)
taxation for corporations and self-employed individuals;
- the repeal of the Value-Added Tax law;
- a tax on the windfall income of telecommunications companies;
- an increase in excise taxes on tobacco and alcoholic products,
as on well as petroleum products;
- limiting fiscal incentives or tax perks for businesses,
- a targeted tax amnesty, and
- on the creation of a performance-driven system for government
agencies.
Mr. Purisima said the proposed task force has yet to meet and agree
on which among the eight tax proposals would be prioritized.
A CLEAR 'FAVORITE'
However, this early. it seems the bill on an additional PhPhP2
per liter excise tax on petroleum products will be the first in the
agenda of Congress. Albay (southern Luzon) Rep. Joey S. Salceda has said
that the bill that would to levy additional petroleum taxes, filed by
Quezon Rep. Danilo Suarez, was the easiest to implement among the tax
measures proposed by Malacañang. And yesterday, Mr. Purisima said Mr.
Salceda convinced the LEDAC meeting that the additional
PhP2 per liter tax was "the most progressive" among all the tax
bills. Mr. Purisima, recently designated as "economic spokesperson" of
the Arroyo government, also said that based on the statistics presented
during the meeting, the higher petroleum tax was not "anti-poor."
"Although there was no final decision on this particular issue, it was
nevertheless pointed out that oil tax is a progressive tax. It affects
the upper income-earning sector of our society. According to statistics
mentioned, 96% of those that would be affected have a [monthly] income
of
PhP60,000 and above," Mr. Purisima said. What he failed to mention,
however, was that based on the same statistics, almost seven out of 10
families in more than 15 million families nationwide would also be
affected by the tax hike. But Mr. Purisima assured the public that the
government would cushion the impact of higher taxes by pushing for
"safety nets" like the exemption of "highly sensitive products" such as
Liquefied Petroleum Gas (LPG) or cooking gas, as well as diesel, from
the additional tax. He defended the need to raise excise taxes on
petroleum products, reiterating that imported oil products in the
Philippines were among the least taxed in Asia. At the same time, he
reiterated that Philippine pump prices remain some of the lowest among
petroleum-importing countries in East Asia.
BROWNIE POINTS
To convince lawmakers of the need to immediately approve the
Palace-backed tax proposals, Mr. Purisima said the government would save
at least
PhP20 billion in interest payments once credit rating agencies
improve our status by a notch because of our efforts to eliminate the
budget deficit. "If we send a signal to international and financial
community that our acts are together in this issue, there is a chance
that we can get upgraded terms in our credit ranking. In fact, one notch
improvement in our credit ranking would be a
PhP20 billion savings in interest alone," he said. "It is to our
interest, all of us, that we quickly fix this issue because we will gain
brownie points from the financial and investment communities in terms of
lower costs of borrowing. Hopefully, if we can convince them that we are
serious in addressing the issue," he added.
In pushing for the eight tax bills, the President earlier said the
government was expected to generate an additional
PhP80 billion in revenues, and
PhP20 billion in government savings annually once Congress approves
them. Additional revenues, and reduced government spending, would help
in the state's campaign to eliminate the budget deficit -- expected to
hit
PhP197.8 billion this year. The President aims to wipe out the
budget deficit within her six-year term. At the same time, she wants to
reduce the Consolidated Public Sector Deficit -- the total debts of the
public sector including those of state-owned firms -- to not more than
3$ of the gross domestic product, or the country's total economic
output. The country's consolidated public sector deficit is currently at
6.7% of GDP.
TEST OF POLITICAL WILL
But senators reiterated their firm opposition to the tax bills being
pushed by the Palace, even if still has to sufficiently explain the
inefficient tax collection. Senators Francis N. Pangilinan, Joker P.
Arroyo, Ralph G. Recto, Sergio R. Osme˜a, III and Manuel B. Villar Jr.
all said it would be very difficult to justify the new tax laws. Mr.
Pangilinan, Senate Majority leader, said the Executive branch should
shoulder the burden of explaining to the public the need to impose new
taxes despite collection inefficiency. "If the government is really
intent on having new taxes to raise government revenue, then we need to
justify that effectively to our people. This need to explain the
political dimension cannot be underestimated," Mr. Pangilinan said in a
statement. This was in reaction to the lobbying of the Finance
department for the enactment of the eight new tax bills. Mr. Pangilinan
said the Executive department and Congress were facing a "crucial test
of political will" to justify new taxes amid rising prices of oil. "This
urgent issue of the budget deficit and government revenue needs the
synchronized effort of the Executive and Legislative branches. We will
assist the President realize her 10-point agenda," he said. Mr. Arroyo
was more critical in his statement, as he urged the President to control
the "tax terrorists in her cabinet who keep on badgering 'we must bite
the bullet, otherwise we would have a fiscal crisis' as if Congress does
not know that we face a deficit."
For the first six months of the year, the government spent
PhP80.1 billion more than it earned, and thus exceeded by
PhP544 million its budget deficit ceiling of
PhP79.6 billion for the period. The government, however, remains
confident that the full-year budget deficit will be below the
PhP197.8-billion ceiling. Mr. Arroyo, chairman of the Senate
Committee on Public Services, noted that if the real motive behind the
new taxes was to raise
PhP80 billion in additional revenues, the intent could be achieved
by stepping up revenue collection using existing tax laws. "The
alternative to not imposing new taxes is to collect the
PhP80 billion under present laws. That means increasing the revenue
collection by 10%. That means the tax burden will not be passed on to
the taxpayers but to the tax collectors," he said in a statement.
'VERY UNFAIR'
The lawmaker added that the first order of business of the Senate
Committee on Ways and Means, to be chaired by Mr. Recto, was to call the
tax proponents in the Executive branch to answer if they could raise
revenues by 10% or
PhP80 billion. "No new tax measures will be discussed unless the
question is answered satisfactorily. Let us see how the tax terrorist
will perform," Mr. Arroyo said. Mr. Recto has filed a resolution calling
for the examination of the National Internal Revenue Code and other tax
laws "to enhance revenue collection without imposing new or additional
taxes." He noted that revenue collecting agencies have failed to give
justice to existing tax laws. "There is a need to raise the level of
efficiency in the collection of existing taxes rather than impose new or
additional taxes. Tax leakages that constitute a failure of the tax
system to maximize collection of existing taxes impose a deadweight
burden on the economy," Mr. Recto said in his resolution, a copy of
which was obtained by BusinessWorld. The lawmaker noted that tax
collection inefficiency was one of the culprits of the ballooning budget
deficit. "The tax effort of the Philippines has not only failed to keep
pace with the needs of a rapidly growing population and respond to the
demands of globalization and socioeconomic growth, but has in fact
dropped from 17% in 1996 to a dismal 12% over the last eight-year period
whereas our Asian neighbors have much higher tax effort ratios ranging
from 14% to 20%." Mr. Osme˜a also shot down the new tax bills, noting
that this would send the wrong signal that the government was coddling
tax cheats. "We will be penalizing the taxpayers who pay and we will be
rewarding the taxpayers who are supposed to pay but do not pay. Why are
we going to do that? It is very unfair," he told BusinessWorld.
The lawmaker also said the new tax bills would do more harm than good
to the country. "It will be bad for the economy. If you increase taxes,
people will have less disposable income. We will be hitting the poorest,
not the rich," Mr. Osme˜a said. He also noted that the proposal to tax
Short Message Service or text was a move in the wrong direction.
"Everybody who uses text, whether rich or poor, will have to pay taxes.
This is what I call a regressive rather than a progressive form of
taxation," Mr. Osme˜a said. Mr. Villar,chairman of the Senate Committee
on Finance, also bucked the proposal for a text tax. He noted that this
measure would negatively affect overseas Filipino workers who regularly
communicated with their families and relatives in the country through
text messages. "By imposing a text tax, the government would be
punishing the people who pay their taxes every pay day or those who are
exempted from paying taxes because of their meager earnings. But tax
evaders will continue to cheat he government," Mr. Villar said in a
statement.
NO QUESTION, BUT ...
Senate President Franklin M. Drilon, for his part, noted that
Congress has not yet started its legislative work so it was too early to
speculate on the fate of the tax bills. The Senate opened last July 26
but it has yet to complete the line-up of committee chairmen who will
lead discussions on proposed measures. "Everybody is convinced that we
have to address the fiscal deficit. There is no question about that. We
have to address the fiscal problem. There were a lot of views expressed
on how to address it. There were spirited discussions on all the
measures necessary -- from legislative to administrative," Mr. Drilon
said. He added that during the LEDAC meeting, the Cabinet officials
noted the need to raise
PhP100 billion annually from revenue and cost-cutting measures to
avert a fiscal crisis. The Senate President also said the examination of
tax collection efficiency should be before the enactment of new tax
measures. Mr. Drilon laid out conditions for enacting new tax measures.
These conditions include the re-enactment of the Bureau of Internal
Revenue Lateral Attrition bill, to provide rewards for good
accomplishments and sanctions for failure to meet revenue collection
targets; re-examination of the spending priorities of the government;
and streamlining of the bureaucracy.
At the House of Representatives, leaders said they would ensure the
quick approval of the tax bills, and foremost among these was the
indexation to inflation of the excise tax on tobacco and alcohol
products, the rationalization of fiscal incentives, and a general tax
amnesty with the required submission of statements of assets,
liabilities and net worth. "We agreed that it is time for government to
seriously consider various revenue measures and to improve the
collection of the Bureau of Internal Revenue and Bureau of Customs,"
House Speaker Jose C. de Venecia Jr. told reporters. Another bill that
is sure to be approved is the one on reimposing the franchise tax -- in
lieu of the value-added tax -- for telecommunications companies. The
additional
PhP2 excise tax on petroleum products and the shift to a system of
gross income taxation from net income taxation, meanwhile, will be
subject to extensive studies and consultations. "There might be some
danger by shifting to gross income taxation," Mr. De Venecia said. "In
some cases, it has led to a decrease in revenues."
The Speaker also said he would "lead a revolt" against the tax on
text messaging, given that it would prejudice 28 million Filipinos who
owned and used mobile phones. "[Texting] is the cheapest form of
communication among Filipinos," he said. "A bill on a tax on text
messaging will not pass in the House." A bill on taxing text messaging
has not been filed at the House. Albay Rep. Jose Clemente S. Salceda
said the reimposition of the franchise tax on telecommunications
companies was more acceptable than a tax on text messaging. Franchise
tax will yield more revenues for the government than VAT. Mr. De Venecia
suggested that a provision be made that the franchise tax would not be
passed on by telecommunications companies to customers. Still, he
acknowledged the need to balance the need of government for revenues and
the need of telecommunications companies for funds to finance their
capital expenditures.
The House Committee on Ways and Means will start deliberating on the
tax bills by September, Mr. De Venecia said. Already, bills on the
reimposition of franchise tax on telecommunications companies,
indexation to inflation or restructuring of the tax system of tobacco
and alcohol products, shift to gross income taxation, lateral attrition
system, increase of the petroleum tax by
PhP2, increase of the VAT to 12% from 10%, tax amnesty, and limiting
fiscal incentives have been filed at the House. Tarlac (Central Luzon)
Rep. Jesli A. Lapus, chairman of the House Committee on Ways and Means,
has said committee hearings on the bills would be scheduled.
-- Jeffrey O. Valisno, Carina I. Roncesvalles and
Judy T. Gulane
|
|
The Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP) is likely to raise key policy rates next year to head off
inflation. BSP Governor Rafael B. Buenaventura said yesterday that
rising oil prices could push inflation -- the rise in prices of consumer
goods -- higher than BSP's 4%-5% target for next year. "Next year, we
will most likely overshoot the [inflation] target. Oil prices may
require [monetary] response on our part," he told reporters. But he
remains confident this year's inflation will be contained within the
4%-5% target range for 2004. However, he did not discount the
possibility of a rate adjustment also this year. "We are hoping that we
don't have to do anything this year, but we don't know," Mr.
Buenaventura said. BSP has kept key policy rates unchanged for 13 months
straight, with overnight borrowing at 6.7% and overnight lending at 9%.
Mr. Buenaventura said the government would first resort to nonmonetary
policy interventions such as increasing the supply of certain goods in
the market, to help stabilize prices.
Monetary tightening will be the last measure since this can raise the
costs of borrowing and affect economic growth, he said. Inflation,
however, has been moving faster-than-expected, leaving the market
guessing as to whether BSP will raise its interest rates. Inflation went
up to 6% in July, its highest level in almost three years. This was
higher than BSP's July inflation forecast of 5.2%-5.9%, and its yearend
inflation target of 4%-5%. BSP Assistant Governor Diwa C. Guinigundo
said monetary officials would coordinate with the departments of
Agriculture, and Trade and Industry for possible government intervention
to stabilize prices.
Asked if another rate increase by the United States Federal Reserve
this week will prompt a similar move by BSP, Mr. Buenaventura said
monetary authorities have yet to assess the situation. He said the
market has adjusted itself, and therefore it may not be necessary for
BSP to follow the increase in US Fed rates. Traders have said the US Fed
might increase its rate by as much as 75 basis points by yearend, after
earlier adjusting them by 25 basis points, to contain inflation in the
growing US economy. Monetary authorities usually match a move by the Fed
to prevent capital flight, with investors choosing to park their funds
in the US or other economies that offer higher interest rates.
-- Iris Cecilia C. Gonzales
|
|
Manila councilors are now studying the feasibility of gradually
raising the assessment rates of real properties in the city, instead of
the earlier plan to double them immediately, to cushion its impact on
city taxpayers. The gradual increase was proposed by private companies
that attended the July 30 public hearing on the proposal to double
current assessment rates, said Luis G. Santarin, legislative officer of
City Councilor Victoriano A. Melen-dez, chairman of the Manila city
council's committee on ways and means. Companies that clamored for
changes to the proposed assessment rates included shopping mall
developers like SM Prime Holdings, Inc. and hotel and restaurant owners,
Mr. Santarin said. The city council is debating on whether to double the
assessment rates (percentage of a property's fair market value) used in
determining real property taxes. Doubling the rates, assuming a constant
fair market value, will in effect result in the doubling of real estate
taxes in the city.
Since the city council has refused to accept lower assessment rates,
it is now looking at options to soften the impact of the rate increase
on taxpayers. "We're considering [a staggered increase] ... it's on the
drawing board," Mr. Santarin said. He said that his superior, councilor
Melendez, and the office of the City Assessor were going over the
mechanics and computations of revenues under a staggered increase in
assessment rates. These mechanics will serve as the basis for the
implementing rules and regulations of the city ordinance that will set
the new rates. A source at the City of Manila's Assessment Department
said City Hall administrators were scheduled to meet with Department of
Finance officials to discuss whether a staggered increase was allowed by
law. With a staggered increase, Mr. Santarin said "the [tax] collection
will be lower [and] not immediately [higher by] 100%" for the next two
years. The City of Manila will collect real property taxes in full only
after the second year, he added. Mr. Santarin also said the city council
was willing to hear other suggestions and options. In fact, it is
expecting more position papers from private firms this week. But so far,
only Robinson's Land Corp., which runs Robinsons Place in Ermita, is set
to submit a position paper. The Manila city council is increasing the
assessment level of real properties, at Mayor Jose L. Atienza Jr.'s
instructions, to help generate more income for the city's needs.
If enacted, the higher assessment rates will help the city earn at
least
PhP2.5 billion to
PhP2.6 billion a year. At present, Manila collects an average of
PhP1.4 billion in real property taxes annually. Current assessment
values of residential, commercial, and industrial lands in Manila are
10%, 25%, and 25%, respectively, of their fair market value, as
stipulated in the eight-year-old City Ordinance No. 7905. A new
ordinance being discussed by the city council will raise the assessment
values of residential lands to 20% of fair market value, and that of
commercial lands and industrial lands to 50%. A 100% increase in
assessment rates is also proposed for residential, commercial, and
industrial buildings, as well as machineries and government-owned
properties. Mr. Santarin said he expected new rates to be ready before
yearend. The proposal for higher assessment rates, which is endorsed by
the majority bloc of the council, is scheduled for second hearing on
August 17. -- Kristine L. Alave
|
|
The Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP) yesterday urged credit card firms to be more prudent in issuing
cards to clients, following the surge in past due receivables. BSP
Governor Rafael B. Buenaventura said that the proposed credit bureau
would help the banking industry as well as credit card firms avoid bad
or delinquent payers. The proposed credit bureau, which will require
banks to share information on their borrowers, is just one among the
measures that BSP has been pushing to develop the country's capital
markets. The operation of the facility, however, requires legislation.
Mr. Buenaventura said credit card companies should be more careful in
choosing clients. Because of the cutthroat competition, credit card
firms tend be lenient in choosing clients, he said. BSP reported that
past due credit-card receivables went up by 66% year on year, or by
PhP5.5 billion, to
PhP13.8 billion in the first quarter. Credit card bills that
remained unpaid for at least 90 days amounted to only
PhP8.3 billion in the same period last year. Unpaid receivables of
the banking industry also rose by 20.1% year on year, or by
PhP9.7 billion, to
PhP57.5 billion in the first quarter, from
PhP48.1 billion the year before.
Mr. Buenaventura said the proposed credit bureau was only one of the
infrastructures necessary to develop the country's domestic capital
market. The BSP chief reiterated that the country's primitive capital
market needed a lot of support, particularly several legislations. These
include bills previously filed in Congress such as the proposed
Corporate Recovery Act, the proposed Personal Equity Retirement Act, and
proposed amendments to the respective charters of the country's banking
regulators. He said that without these measures, the country's capital
market would remain weak. "Why do we always have to be the last?" Mr.
Buenaventura said as he noted that the country used to be ahead of other
countries in the region in terms of financial systems. He cited the case
of College Assurance Plan Philippines (CAP), which has yet to sell its
bonds to raise much needed financing. He said CAP would have had an
easier time selling its bonds if the domestic capital market had been
more developed. -- Iris Cecilia C.
Gonzales
|
By ANNA BARBARA L. LORENZO,
Reporter
Second largest telecommunications firm Globe Telecom, Inc. on Friday
filed an opposition to the United States Department of Justice's (US DoJ)
objection to a recommendation made by the District Court of Hawaii,
which relieved local telecommunication firms officials to submit
documents related to an on-going antitrust case in the US. Globe lawyers
in the US filed the opposition on Friday, saying the objection of the US
DoJ's arguments were just a repeat of the arguments they presented
before the Hawaii district court came out with the decision, said Globe
Senior Vice-President for Corporate and Regulatory Affairs Rodolfo A.
Salalima. "Our lawyers filed the opposition to their (US DoJ) objection
because they presented the same arguments before Kobayashi. We are now
waiting for the development from the US Court and from our lawyers," Mr.
Salalima told a press conference. Judge Leslie Kobayashi of the District
Court of Hawaii last month decided not to require Globe officials to
submit documents such as computer files, electronic mails, spreadsheets
and calendars, which would show how local firms negotiate with their
foreign counterparts. The court said Globe officials should not be
required to submit documents since the firm was not under the
jurisdiction of the US, and the acts were committed outside the US
territory. The documents were earlier subpoenaed in connection with an
on-going case in the US involving the alleged price-fixing of local
carriers. Other respondents to the case are Philippine Long Distance
Telephone Co., Smart Communications, Inc., Subic Telecom, Inc., Bayan
Telecommunications, Inc. (BayanTel), Eastern Telecommunications
Philippines, Inc., and Digital Telecommunications Philippines, Inc. (Digitel).
Thirty executives from the six firms were issued summons on the
alleged whipsawing case while attending the Pacific Telecommunications
Council Conference in Hawaii early this year. This came as a surprise as
the US International Federal Communications Commission (FCC) and the
Philippines' National Telecommunications Commission have settled the
issue, and local and US firms have inked an interim pact on the
termination rates. In line with the subpoena of documents, Globe and
Eastern Telecommunications filed a motion to quash before District Court
of Hawaii in April. The motion was supported by Bayantel and Digitel.
The dispute between the US carriers AT&T Corp. and MCI International,
and Philippine telecom firms broke out when local carriers started
imposing higher termination rates in February 2003. Local carriers hiked
termination charges for landline calls 12 cents from eight cents, while
mobile calls were charged 16 cents from 12 cents. Local carriers barred
incoming calls from AT&T and MCI as both telecom firms opposed the new
rates. The US FCC International Bureau ruled that local telecom firms
conspired in asking for new termination rates for calls between the
Philippines and the US. It asked US carriers to stop paying termination
services to the Philippine firms. The US FCC lifted its stop-payment
order when it settled with the Philippines' National Telecommunications
Commission and after local and US carriers inked interim agreements on
the termination rates.
|
|
The Arroyo administration aims to increase appropriations for capital
expenditures to 4% of gross domestic product (GDP) by 2009 to sustain
economic growth rates without veering away from its debt reduction
program. "This is one of the emerging targets we are looking at to
support the government's 7% six-year growth target," National Economic
Development Authority (NEDA) Assistant Director Scholastica Cororaton
said in a telephone interview. Key to achieving this goal, she said, is
the "availability of resources." Capital expenditure as a percentage of
the economy's total value has consistently declined beginning 1999. From
3.9% of GDP, it went down to 3.3% in 2000 and 2.9% in 2001. It went
slightly up to 3.1% in 2002 but dropped to 1.9% in 2003. Compared to
1997 when capital expenditure accounted for 16.8% of the budget, only
9.4% of the last year's spending went to infrastructure.
Among six countries in Asia, Philippines has the smallest outlay for
capital expenditures, 2002 data from the Department of Finance showed.
Indonesia has the highest allotments for infrastructure, followed by
Malaysia, Korea, Thailand and China. Finance Secretary Juanita D.
Amatong has said the government recognizes the need to fund
infrastructure to attract more foreign investors. This objective, Ms.
Amatong said, will be pursued along with a reduction in the budget
deficit by improving tax collection, introducing new revenue measures as
well as strengthening the regulatory system. "If we have to have
stability in economy we have to address the fiscal problem. Therefore we
have to raise revenues and manage public expenditures by reforming the
civil service and bureaucracy," Ms. Amatong said. Salary and debt
payments, which comprise more than half of the government's budget, have
led to cuts in funds for social services and infrastructure development.
"There is urgency in implementing the reform program to develop an
environment that would improve investors' confidence in our country
which will result to increase in employment and growth thereby improving
the economy of this country," Ms. Amatong has said. Part of the
government's objective is to narrow the consolidated public sector
deficit down to 3% of GDP, zero the national government budget deficit
in six years and reduce the country's public sector debt to 90% of GDP
by the end of the present government's term. -- Karen
L. Lema
|
|
The lack of a Department of Justice (DoJ) opinion is delaying a
three-station expansion of the Metro Rail Transit Line 3 (MRT3) which is
scheduled to start this year. MRT3 General Manager Roberto Lastimoso
said his office cannot completely comply with requirements set by the
National Economic and Development Authority (NEDA) without the DoJ
opinion. "We have submitted four out of the five requirements. We can't
submit [all] because the issue is not yet resolved by the DoJ," Mr.
Lastimoso said in an interview. He said the DoJ has yet to decide
whether to award to MRT Corp. the expansion project or to open the
project to other possible bidders. "Under the package, MRT Corp. should
start the construction of Phase 2 18 months after the construction of
Phase 1," Mr. Lastimoso said. Certain parties, he said, have insisted
that Phase 2 is a new project and therefore must go through the whole
bidding process. The delay means the NEDA's Investment Coordination
Committee (NEDA-ICC) cannot start its project evaluation for MRT3. Aside
from the DoJ's legal opinion, the NEDA-ICC is requiring details on the
project's return on equity, political risk premiums and interest
limitations, review of costs from the Department of Budget and
Management, and the acquisition of light rail vehicles.
The project comprises the construction of three new stations in
Roosevelt and Balintawak in Quezon City to Monumento in Caloocan. The
expansion is expected to increase the current MRT3's ridership of
350,000 to 400,000 passengers daily. Meanwhile, he said the MRT3 is not
liable to pay real estate taxes, estimated at about
PhP4 billion, said to be owed to four cities hosting the railway.
Mr. Lastimoso said he will just wait for the local governments to file a
case so that the issue would be settled in the proper forum. The MRT3
chief said that even before he took office, there was an informal
agreement between the DoTC, DILG and the Finance Department exempting
the rail system from paying taxes because it is a public utility. "As
far as the national government is concerned, the MRT3 should not pay
taxes because it is a public utility," Mr. Lastimoso said.
-- B. L. Lorenzo
|
|
The Energy department yesterday welcomed an Asian Development Bank (ADB)
offer for a new Philippine assistance package aimed at expediting the
sale of National Power Corp. (Napocor). "ADB's move to provide financing
assistance is much welcome to help us avert any shortage of power supply
in the near future," Energy Secretary Vincent S. Perez, Jr., said in a
statement. The ADB last week said it is in discussions with the
government on what kind of support it could provide the sector. It said
it is eyeing three options: emergency investment, guarantee component or
comprehensive assistance. "We are hopeful that the ADB would be able to
come up pretty soon with a new financing package given that we've been
making headway in the privatization of Napocor's generating and
transmission assets," Mr. Perez said. He said the Energy department been
in talks with the ADB for years on any assistance to further develop the
country's power sector. "ADB has been a major partner in the reforms
we've been instituting for our electricity industry. We believe its
continued confidence in us would bring fresh and revived interest from
investors. In turn, this provides guarantee that we will be able to
generate maximum returns for our privatization efforts," he said.
Mr. Perez said that to date, the Power Sector Assets Liabilities and
Management Corp. (PSALM), the entity tasked to handle Napocor's
privatization, has successfully bid out three generating assets the
3.5-megawatt (MW) Talomo, 1.6-MW Agusan and 1.8MW Barit hydropower
plants. The Energy chief said PSALM is hopeful that it will be able to
sell 70% of Napocor's generating plants in Luzon and Visayas by
end-2005. He also said the PSALM will start negotiations on the sale of
the National Transmission Corp., a spin-off firm of Napocor, following
the submission of expressions of interest from five firms. Power
generation companies have warned that a power crisis is already evident
in the Visayas and Mindanao and that this could hit Luzon by 2007 or
2008. A recent Court of Appeals ruling on the unbundling of Manila
Electric Co.'s rates was also seen as a setback to the entry of
investments in the country. In addition, investors are still awaiting
for the passage of a bill that would grant them a franchise in operating
Napocor's transmission assets.
|
By IRA P. PEDRASA
Excess liquidity pushed the market to drive down interest rates for
long-term debt papers despite a hike in the national inflation rate and
following a weak jobs report in the US. The Bureau of the Treasury
yesterday fully awarded all bids for the freshly issued five-year
Treasury bonds which fetched a premium risk rate of 11.875%, or down by
12.5 basis points from its last auction on June 15. A sign of the
market's appetite, tenders reached
PhP9.359 billion against a public offering of PhP4.5 billion.
"The inflation report did not pressure [the market] that much. Friday's
United States [jobs data] does not show a strong economy. Their momentum
was pulled down and interest rate rise may not be as fast as initially
perceived," National Treasurer Mina C. Figueroa said. "The market is
still liquid, the demand for government securities is still there." The
US Labor Department reported that job creation in July increased by
32,000 against the forecast of around 240,000.
International analysts cast doubts on Fed Reserve head Alan
Greenspan's argument last month that the US economy was upbeat. They
also said this may hamper its aggressive move to raise interest rates.
Last Thursday, news that the central bank was expecting to raise local
interest rates to match the US Fed Reserve's move, jolted the bond
market and pushed debt yields higher. "Despite the inflation report, the
market calmed down because [of the job data's impact] and the market's
overall liquidity," a bond trader said. "If they [US] want to spur
economic activity, they should be bringing down interest rates," another
trader said. The source pointed out that companies that want to expand
can't borrow at a time when interest rates are high. The trader also
said the Philippine inflation report -- which showed July prices of
basic goods rising by 6% from 5.1% in June -- would not drastically
affect the market. He said, however, that the market is still wary of an
upward trend. "Other than that, banks still have the money to invest in
an outlet. Loan figures are weak for now; government securities are
still there," he added.
PESO
While awaiting for the US Fed's next move, the Philippine peso only
range-traded despite a stronger five-centavo closing aganst the US
dollar, currency traders said. At the Philippine Dealing System, the
country's electronic currencies exchange, the peso weakened by almost
three centavos to average at PhP55.697 from PhP55.71 previously. The
local unit opened at PhP55.69 against the greenback, and at one point
during yesterday's nine-centavo range-trading, dropped to as low as
PhP55.74 per dollar. After hitting a high of PhP55.65, the peso finally
closed at PhP55.66. Total volume of transacted dollars decreased to $139
million from $150.40 million the previous trading.
Meanwhile, the Bangko Sentral ng Pilipinas expects the peso to still
hover around the PhP56-to-the-dollar level by yearend. Central bank
Governor Rafael B. Buenaventura said the peso, which he said was still
undervalued, could end up at PhP55-PhP56 against the dollar. Earlier, he
said the peso should recover at PhP54 against the dollar after the
elections as political jitters subside and when government would have
presented a credible economic program for the next six years. Proposed
tax measures which form a big part of the government's program, however,
have yet to hurdle deliberations in Congress. -- with
Iris Cecilia C. Gonzales
|
By KAREN L. LEMA, Reporter
The Arroyo government will revive several legislative proposals that
are deemed critical to the development of the country's long-term
capital market. Included in the list are the Corporate Recovery Bill,
Pre-Need Code, Personal Equity Retirement Account (PERA), Lending
Investors Bill and Revised Investment Company Bill. These measures that
have failed to get the nod of the previous Congresses will be refiled
with the hope that the legislators would be convinced of the necessity
of the reforms, Finance Secretary Juanita D. Amatong said during the 8th
General Membership Meeting of the Management Association of the
Philippines in Makati City on Monday. The corporate recovery bill, which
was filed as early as the 11th Congress seeks to hasten the recovery of
distressed firms by pursuing rehabilitation and liquidation outside the
powers of the court. The bill also seeks to empower creditors, which
have often been left holding the bag due to delays in the rehabilitation
or liquidation process of borrower-firms. It aims to simplify the
procedures of resolving cases involving distressed corporations as the
proposed measure will institutionalize the so-called "fast-track
rehabilitation."
The Pre-need Plan Code of the Philippines, in the meantime, is
expected to provide protection for pre-need investors and plan holders.
It is aimed at strengthening the legislative framework and regulations
for the multi-billion peso pre-need industry. The PERA bill, one of the
measures endorsed by President Gloria Macapagal Arroyo during her first
State of the Nation Address in 2001, is a savings and retirement plan.
It aims to accelerate capital markets development through its
contribution to the growth of government securities and the stock
market, as well as a shift in favor of long-term financing to promote
the equity and bonds market. The measure is designed to achieve a
comfortable and financially secure retirement for workers through
planned savings, sound investment, and tax deferral.
Meanwhile, the Lending Investors Bill is meant to regulate activities
of lending investors. There is no specific law regulating these
investors. There is only the Memorandum Circular No. 13 S. 2001 issued
by the Securities and Exchange Commission, which serves as guidelines.
Under the original proposal, the regulating powers of the SEC over the
operation of lending firms would be transferred to the Department of
Trade and Industry. The Revised Investment Company Bill, seeks to
replace the old Investment Company Act of 1960 or Republic Act 2629. It
seeks to create a conducive environment for the development of the local
mutual fund industry by lifting certain restrictions on the operations
of investment companies. Such a development will increase public
savings, which will provide the economy an alternative source of
much-needed capital to spur growth. Countries having high savings ratios
show faster economic growth compared with those that are less keen to
save. Bigger savings mean greater capacity to invest, and propel an
economy to grow.
|
By RUBY ANNE M. RUBIO, Reporter
Midsize commercial bank Philippine Bank of Communications (PBCom)
will auction off PhP12.5 billion worth of foreclosed properties and bad
loans on August 24. In a telephone interview, PBCom president Isidro C.
Alcantara, Jr. said 50% of the total asset portfolio will be composed of
nonperforming loans (NPLs) while the remaining half will be
nonperforming assets or those classified as real estate and other
properties owned or acquired (ROPOA). The planned asset sale will be
arranged by KPMG Laya Mananghaya. "I am hopeful and optimistic this will
push through given the response from the bidders. I did not expect they
were this many. We already have five data rooms. The investors are all
doing their due diligence. They have all different objectives. We
divided the NPLs and ROPOAs into separate tranches. I think we have
provided them the complete information as all documents and data are
available to them," Mr. Alcantara said. PBCom is confident that it can
meet the September deadline set by the Bangko Sentral ng Pilipinas for
local banks to sell their bad assets to a special purpose vehicle to
avail of tax perks.
The first bank to successfully unload its bad loans after the passage
of law, Ayala-led Bank of the Philippine Islands announced last month it
sold PhP8.6 billion worth of bad loans to Morgan Stanley Emerging
Markets, Inc. The transaction is expected to be completed within the
year after regulatory requirements are met. In a disclosure yesterday,
PBCom said 14 local and foreign investors, led by Bank of America,
Deutsche Bank, Ayala Corp. and Robinsons Land Corp., are keen on its
idle assets. Among the entities already conducting due diligence on
PBCom are the Bank of America, Deutsche Bank, Sovereign Fund, and
Marathon Fund. "The public bidding for the sale of PBCom's NPAs
[nonperforming assets] is part of the bank's [bad assets] disposal
program," the bank said. This year, the bank expects a 6.53% drop in net
income to PhP200 million from PhP213.98 million in 2003. Mr. Alcantara
earlier said 2004 will be marked by a clean balance sheet, more
diversified business, fully automated business processes, prudent
lending, adherence to risk management principles and capital
optimization.
|
|
Second largest lender Bank of the Philippine Islands (BPI) continues
to look at possible investments outside the country although it has not
decided yet to take any significant step. "As we have previously
disclosed to the exchange as well as to our stakeholders, BPI has been
considering a possible investment outside the country, and Indonesia has
been identified as one of those areas where opportunities for the bank
may be present," the Ayala-led bank said yesterday in a disclosure to
the Philippine Stock Exchange.
BPI was reportedly thinking of bidding for PT Bank Permata Tbk, which
is Indonesia's seventh largest lender in terms of assets and the last
bank to be sold under a government divestment program aimed to plug the
budget gap. PT Perusahaan Pengelola Aset may sell Bank Permata for at
least 1.8 times its 2003 book value, which would be about 1.6 trillion
rupiah for a 51% stake. Backed by higher revenues, BPI's net earnings
rose 32% to
PhP3.5 billion in the first half of the year.
|
By JENNEE GRACE U. RUBRICO, Senior
Reporter
Lopez-led ABS-CBN Broadcasting Corp. yesterday reported net income of
PhP560 million for the first half of the year, 10% higher than
last year's
PhP509 million. Vice-President for Finance and Chief Financial
Officer Randolph T. Estrellado said in the investor's briefing yesterday
the profit rise could be attributed to the robust growth in revenues and
the reduction in interest expenses. "The growth in net income was
primarily brought about by overall revenue growth as well as lower
interest expense," he said. Total net revenues for the period was pegged
at
PhP6.6 billion, 10% higher than the year-ago period. Airtime
revenues and broadcast-related revenues increased 5% to
PhP5.6 billion. Of the amount,
PhP5.4 billion came from airtime revenues, which increased due to
a combination of growth in advertising rates as well as an increase in
television advertising minutes. Mr. Estrellado said that during the
election period, Channel 2 cornered 90% of the political ads. Airtime
revenues from other channels of the company, however, fell 7% during the
period due to a wait-and-see mode by regular advertisers during the
election period. "While we benefited from political advertising in March
to May, our other advertisers went on a wait-and-see attitude. This was
mainly because of the elections and the Middle East situation," Mr.
Estrellado said. Broadcast-related revenues increased 38% to P142
million driven primarily by text revenues from audience interaction in
some of the shows. Net sales and services also increased 23% to P2.1
billion driven mainly by the continued expansion of unit ABS-CBN Global.
The viewership of ABS-CBN's international arm grew 24% to 1.5 million
audiences in end-June, from 1.2 million a year ago, the ABS-CBN
executive said. Mr. Estrellado said the international unit's net
revenues for January to June rose 24% to P1.412 billion from P1.135
billion in the first half of 2003. ABS-CBN Global recently expanded to
Australia as part of efforts to penetrate more countries in the region.
ABS-CBN said it considers Australia "a very good market" for the The
Filipino Channel, with 150,000 Filipinos based there. "Australia is the
first step into this region for us and we think it will be the start of
ABS-CBN Global's continued growth and leadership in the Asia-Pacific
region," the statement said. It said it is also looking at bringing its
services to Singapore, Hong Kong, and Taiwan.
On the expense side, Mr. Estrellado said ABS-CBN's operating expenses
grew 15% to
PhP5.6 billion from
PhP4.885 billion the previous year. This was due to an increase
in cash operating expenses including production costs totaling
PhP1.9 billion, general and administrative costs amounting to
PhP1.5 billion, and cost of sales and services of
PhP1.038 billion. Noncash operating expenses was flat at
PhP1.1 billion after a reduction in depreciation expense was
offset by an increase in the company's amortization of program rights.
Other expenses, which include interest expenses, fell 37% to
PhP193 million from
PhP307 million. "The improvement in other expenses was due to
lower interest expense as the company paid down
PhP1.5 billion worth of maturing debt obligations from internally
generated cash in the first half of the year," Mr. Estrellado said. But
he also said that interest expense is expected to increase in the second
half, when a $120-million loan, of which $100 million was drawn in June,
would be reflected in the company's financials. Mr. Estrellado said ABS-CBN
is optimistic it could hit its 10% profit growth target for the year.
"Barring any catastrophe, I think we can [attain this]," he said. In
line with this, the company has allocated
PhP1.5 billion this year for capital expenditures. The amount,
Mr. Estrellado said, is being used for both capital spending and
acquiring film rights.
For the first six months of the year, ABS-CBN captured 40% of the
television audience in Metro Manila on a per day basis. The company's
audience share increased slightly to 43% during prime time. Of the top
20 programs for the first half, 13 were ABS-CBN shows. ABS-CBN has total
consolidated assets of
PhP24.5 billion as of end-June. Receivables stood at
PhP4.277 billion, while interest-bearing debts reached
PhP6.01 billion.
|
By ANNA BARBARA L. LORENZO,
Reporter
An increase in the taxes paid by telecommunication firms is likely to
be passed on to users as higher taxes would mean added costs for the
production of services offered by telcos, the two industry leaders said.
Smart Communications, Inc. and Globe Telecom, Inc. are in center stage
as the government eyes new tax measures to increase revenues and narrow
the budget gap. "Tax is a factor of production. Once it is increased,
the production of the service increases and the product cost also
increases," said Rodolfo A. Salalima, Globe senior vice-president for
corporate regulatory affairs. Among the options the government is
considering for better revenue collection from the telecom industry are
the imposition of higher value-added taxes (VAT), the re-imposition of
the franchise tax in lieu of the VAT, the "windfall" tax, and the
so-called tax on text. Ramon Isberto, head of public affairs at Smart,
said the firm is still studying the possible effects of the suggested
tax measures. "It depends on what kind of tax, and how high the tariff
will be. But that would have an impact on the consumers one way or the
other."
Earlier, officials from both Globe and Smart have expressed
preference for an increase in VAT versus the reimposition of the
franchise tax. They said the VAT is easier to compute, and would be
equitable across all industries and not just on telecom firms. Both
firms also opposed the proposed tax on text, saying that it would be too
burdensome for consumers who choose their service because of the cheaper
way of communication via text messaging. Mr. Salalima said if the
government taxes texting, it would contradict its own program in
providing universal access to the public. He said about 95% of cellular
phone users have prepaid accounts and are heavy text users. "An
additional tax on telcos would also reflect in the increase of rates of
text," he said.
|
|
PetroEnergy Resources Corp. will list today more than 84 million
shares at the second board of the Philippine Stock Exchange. In a
statement, PetroEnergy President Milagros V. Reyes said the shares
represent the exploration firm's total outstanding capital stock out of
PhP330 million in authorized capital stock which is divided into
330 million common shares. The shares have a par value of P1 per share
and listing price of
PhP3 apiece. "We are going to be listed by way of introduction so
we are not making an initial public offering [IPO] at this time,"
PetroEnergy's Ms. Reyes said in the statement.
EARNINGS
With earnings of
PhP160 million annually from its oil operations in Gabon, West
Africa, PetroEnergy may not need an IPO which usually raises capital
from investors. Listing by introduction allows companies to go public if
the securities sought for listing would be of such an amount and would
be so widely held that their marketability when listed can be assumed.
PetroEnergy is the only Filipino oil company that is operating in
offshore Gabon. It said the high prices of crude oil are benefiting the
company now. The company derives its revenues largely from the
production of the Etame oilfield in Gabon where it is a participant. The
Etame field is estimated to be able to produce about 46 million barrels
of oil. PetroEnergy's Gabon operations made two discoveries outside of
the Etame field early this year. These are the Ebouri discovery which
could contain 21 million barrels of recoverable oil and the Avouma
discovery which is estimated to have 17 million barrels of recoverable
oil. PetroEnergy's timely oil production in Gabon and the spike in world
crude prices enabled the company to recover from the Asian financial
crisis in 1997. PetroEnergy used to be a subsidiary of Petrofields
Corp., now named iPeople which acquired majority ownership and
management of the Mapua Institute of Technology in 1999.
-- Roulee Jane F. Calayag
|
By ROULEE JANE F. CALAYAG
Despite the absence of strong news on the corporate front, share
prices yesterday sustained gains and moved at a slower pace. "There was
not much speculative trades because no major corporate news were
released," said Dianne Sy, research associate at Unicapital Securities,
Inc. The Philippine Stock Exchange composite index (Phisix) gained 1.05
points or 0.07% at 1,579.26 with 2.15 billion shares traded for
PhP995.2 million. Decliners toppled advancers, 38 to 35.
Forty-three stocks held on to their price levels.
ABS-CBN
The market was basically quiet except in the afternoon when
Lopez-owned ABS-CBN Broadcasting Corp. reported that its net profit in
the first six months of the year grew 10%
PhP560 million from a year ago. It attributed the growth to
higher advertising revenue. The network's revenues from airtime and
other broadcasting sources were up 5% to PhP5.6 billion during the
period. Aside from its television operations, ABS-CBN also manages radio
stations and is into filmmaking as well.
SMALL STOCKS
Ms. Sy said small capital issues, which have cheaper prices compared
to other stocks, dominated trading due to some developments in
mining-related companies such as Vulcan Industrial and Mining Corp. and
DMCI Holdings, Corp. "Mining is driving the [interest in] small stocks
amid the short absence of corporate news," said Ms. Sy. Vulcan yesterday
disclosed to the Philippine Stock Exchange (PSE) that work in its gold
project in Cordon, Isabela has started. The development came less than a
month after it signed a deal with Australia's Medusa Mining Ltd. to
study the feasibility of reviving the Marian Gold Mine in Isabela.
Meanwhile, DMCI Holdings sustained gains as its share price rose
PhP0.14 to PhP1.54 on news that it will subscribe to new shares issued
by coal producer Semirara Mining Corp. The resumption of the trading of
shares of Wellex Industries, Inc. yesterday was also seen to boost
interest in small cap stocks. The PSE lifted the suspension order which
took effect in May after Wellex complied with the Exchange's reporting
requirements and settled the fines for the delayed submission.
INFLATION
Concerns that the government may bust its inflation target of 4% to
5% are fuelling worries among investors as oil prices continue to
increase. But Bangko Sentral Governor Rafael Buenaventura had assured
that inflation will still be within the 5% target this year despite
heightened inflationary pressures that may likely be experienced next
year. Mr. Buenaventura also stressed that the central bank is not likely
to follow the 25-basis-point increase expected in US interest rates. He
said an adjustment to the overnight interest rates, which remain
unchanged at 6.75% for borrowing and 9% for lending, is not likely.
Inflation rate in July shot up to 6% from 5.1% in June due to a series
of increases in transport fares and prices of oil and food. The
inflation rate for January to July was at 4.3%, still within the
government's target. Unicapital's Ms. Sy said these worries should not
last long, especially as investments approved by the Board of
Investments and the Philippine Economic Zone Authority in January to
June rose 590% to
PhP140.9 billion from a year ago. However, she cautioned that the
government must get its act together and show concrete fiscal reforms to
ensure this is sustained. "Unless the government pushes for concrete
fiscal reforms, the market will still be [hard up], especially with the
worrisome rising oil prices," said Ms. Dy.
ACTIVE STOCKS
Leading the most actively traded stocks was Globe Telecom, outpacing
previous leader Philippine Long Distance Telephone Co. (PLDT) as it
gained PhP20 at PhP905 on 356,580 shares. PLDT advanced by five pesos to
PhP1,280, following overnight gains in its American Depositary Receipts.
Property firm SM Prime declined PhP0.10 to PhP5.80. Ayala Land followed
close, down PhP0.10 to PhP5.50. The all-shares index was strong, up 1.34
points at 998.76. The commercial-industrial index was also firm as it
advanced 13.24 to 2,509.21. Property dropped 8.67 to 526.99. Mining
weakened 60.33 at 2,051.04, and oil slipped 0.02 to 1.64. Banking and
financial services lost 1.59 at 454.73.
POSITIVE
The outlook for the market is positive although the incessant oil
price increases and plans to push more tax measures are weighing down on
investors. Presidential Spokesman Ignacio Bunye had said the new tax
measures need to be passed immediately because "it is a matter of
national survival" given a burgeoning budget deficit. Ms. Dy said the
prospects are looking better, with the trend toward relatively stable
interest rates. The Bureau of Treasury yesterday said the coupon rate
for five-year T-bonds slipped to 11.875%. It raised
PhP4.5 billion in the auction.
|
|
Prices of land at the country's top central business districts (CBD)
are expected to rise by as much as 13% in the next 12 months due to
increasing demand for office space amid a dearth of new buildings being
built. In its Philippine property market overview for the second quarter
of 2004, multinational property consultant Colliers International said
land values in the Makati and Ortigas business districts in central and
eastern Metropolitan Manila, respectively, continued to rise in the
second quarter, and were expected to continue rising until next year.
"In the next 12 months, our estimate is that land values should further
post a 13% year-on-year increase. [Value of] Prime sites in the Makati
CBD is forecast at a value of
PhP199,678 per square meter while still-to-be-developed plots in
Ortigas could escalate to
PhP90,365 per square meter by the second quarter of 2005," the
property firm said.
Colliers also said that in the second quarter, land values in the
Makati CBD went up by 1% to an average of
PhP176,388 per square meter from its level in the first three months
of the year. At the same time, Ortigas land values went up by the same
magnitude during the period to an average of
PhP79,825 per square meter. "After the previous quarter's initial
appreciation, land values are estimated to have further increased as
vacancy rates continue to ease in the office sector and take-up for
residential condominiums remain encouraging," Colliers said. The company
noted that a steady rise in demand for office space has eaten up
vacancies in the central business districts. As of end-June, vacancy in
Makati City was recorded at 11.1%, from 11.6% in the first quarter. For
six months to June, the Makati CBD was able to accomodate 30,606 square
meters of new offices.
Colliers expects an additional 42,394 square meters of office space
will be filled up until the end of the year, to raise total take-up to
73,000 square meters for 2004. The property firm noted that one of the
main catalysts of the increase in office space take-up was the expansion
of the local call center industry in the recent months. "The
availability of contiguous space for call centers affected demand to a
certain extent," Colliers said. Despite the demand, only Ayala Land's
custom-built office for call center PeopleSupport Inc. will be completed
in the next 12 months. As such, additional demand for office space from
call center companies will have to be serviced by existing buildings in
the area.
As a result of the increase in demand for office space, rent for
premium grade office in the Makati CBD was up by 1% in the second
quarter to average at
PhP495 per square meter per month. Rents are expected to rise as
space supply tightens in the coming months. At the same time, prices of
Premium Grade office property went up by 2% in the second quarter to an
average of
PhP66,250 per square meter compared with prices during the first
quarter. In the next 12 months, Colliers expects prices to average
PhP73,125 per square meter, or an increase of 10.4% from this year's
level.
Following the trend, Grade A office valuations also went up by 2%
during the second quarter to average at
PhP47,000 per square meter. This is expected to rise to as much as
PhP52,650 per square meter within the next 12 months. Grade B
offices averaged
PhP36,050 per square meter in the second quarter, and this is
expected to increase to
PhP39,200 per square meter by the second quarter of 2005. Aside from
the bullish outlook on the office sector, Colliers said it also expected
residential land values to pick up in the next 12 months -- although at
a more subdued rate. As of end-June, the company said the price of prime
three-bedroom residential units in the Makati CBD went up by 3% quarter
on quarter, to an average of
PhP65,920 per square meter. In the next 12 months, this is expected
to further improve by 9% to an average of
PhP71,680 per square meter -- on declining supply of large units.
Colliers, however, said this would apply only to three-bedroom units,
since prices of one-bedroom and studio-type units could remain static
because of the significant number of new units that would be available
next year. "The stock of residential condominiums in the Makati CBD has
remained static at 9,268 units since the third quarter of 2003. In the
next 12 months, an aggregate of 1,013 units will be added with the
completion of Greenbelt Radissons, Greenbelt Parkplace, and One Legaspi
Park," Colliers said. Colliers said rents for prime three-bedroom units
as of end-June averaged at
PhP83,000 per unit per month -- up by nearly 4% from the first
quarter. On a per square meter basis, prime residential rents are at an
average of
PhP319 per square meter per month. "In the next 12 months, we expect
an escalation of around 9% to
PhP89,750 per unit per month or
PhP345 square meter per month," the company said.
It also noted that rents for three-bedroom units along the Apartment
Ridge and Roxas Triangle areas increased by arround 3% in the second
quarter to an average of
PhP94,000 per month or
PhP348 per square meter per month compared with rents during the
first quarter. Rent in Salcedo Village was static at an average of
PhP71,536 per unit or
PhP378 per square meter per month. Rent in the Rockwell Center
remained at an average of
PhP115,625 per unit or
PhP517 per square meter per month. Colliers said this was the same
trend for Fort Bonifacio, which has an average rent price of
PhP123,333 per unit or
PhP420 per square meter per month. Colliers also said that as of
end-June, capital value for prime three-bedroom units in the Makati CBD
posted a 3% increase from its level in the first quarter, for an average
of
PhP65,920 per square meter. "In the next 12 months, we expect the
market to post further capital appreciation of nearly 9% to an average
of
PhP71,680 per square meter," Colliers said. (Read
related story.) -- Leilani M.
Gallardo
|
|
'The filing of the cases is a proof that you can no longer hide
from BIR. We have the technology to identify who have been cheating.' --
BIR Commissioner Guillermo L. Parayno, Jr.
The Bureau of Internal Revenue (BIR) yesterday filed tax evasion and
perjury charges against nine companies for under-declaring their value
added tax (VAT) payments by a total of at least
PhP20 million. Charged before the Quezon City prosecutor's office
were Philippines Shoe Expo Marketing Corp.; ANFLO Inter-Chemical Supply,
Inc.; Konstrak International, Inc.; Renzek Inc.; Kyota Paper & Printing
Corp.; Grand Multi Motors & Transport Corp.; P and Z Brobio Plumbing
Contractors, Inc.; Hi-Tech Packaging Printhouse; and Cosmic
Distributors. These cases are on top of 14 other criminal complaints
that BIR plans to file this week in other fiscals' offices nationwide.
BIR expects to collect
PhP380 million in back taxes from these firms should the courts
eventually rule in favor of the government. "This is the start of a
series of filing criminal complaints...this is the first stop and we
will file similar cases in other [fiscals' office] all over the country
against 23 business establishments," BIR Commissioner Guillermo L.
Parayno, Jr. told reporters yesterday.
Quezon City prosecutor Claro A. Arellano said he would constitute a
panel to conduct a preliminary finding of probable cause against the
accused, so appropriate cases could be filed in court. The erring
companies, said BIR deputy commissioner Licerio C. Evangelista, were
found to have unlawfully discounted or underdeclared their sales by as
much as 80%. The under-reported taxes were discovered via BIR's
Reconciliation for Listing and Enforcement System, where discrepancies
in VAT payments are traced by comparing purchases and sales transactions
via an electronic matching system. "We estimate the total
underdeclarations by the 23 firms at
PhP380 million," said Mr. Parayno, who led the filing the cases. VAT
is a tax based on the gross selling price or gross value of the goods or
services sold or imported by any person engaged in trade. These
companies and individuals had been given several opportunities to settle
their tax liabilities but repeatedly failed to do so, "thus compelling
us to file the charges," Mr. Parayno said. They will be given another
"five-day tax compliance" to settle their liabilities. If they fail to
respond to BIR's demand, Mr. Parayno said the tax agency would have to
close the 23 establishments. The settlement of their tax dues however is
no guarantee that they will be exonerated from criminal charges, Mr.
Parayno added.
Aside from closure, erring companies can also face heavy fines and
imprisonment if found guilty of the charges. "The filing of the cases is
a proof that you can no longer hide from BIR. We have the technology to
identify who have been cheating," Mr. Parayno said. As of 2003 BIR has
uncovered tax discrepancies worth about
PhP100 billion as it monitors allegedly understated sales by
corporate and individual taxpayers. Mr. Parayno said BIR has written to
10,000 taxpaying companies suspected of underdeclaring sales by
"hundreds of million," asking them to settle their tax dues. The BIR
chief said more cases would be filed in the coming months, possibly
against two dealers of telecommunication companies, as BIR "ends"
discussions with firms that have challenged their tax assessments.
The Department of Finance has noted a number of obstacles to
efficient VAT collection: lack of coordination in the grant of tax
incentives; loopholes due to the number of VAT-exempt and VAT zero-rated
transactions; excessive input tax credits allowed by law under the
presumptive input tax; lack of resources; difficulty in monitoring VAT
receipts; and underdeclaration of sales. BIR aims to improve tax
collection by modernizing the tax system, among others. The tax
shortfall has been the main reason for the budget deficit blowout. For
January to June, the budget deficit has reached
PhP80.1 billion, above the original six-month target of
PhP79.6 billion. -- Karen L. Lema
|
|
Investments in the first half of 2004 went up almost seven times to
PhP140.97 billion from
PhP20.42 billion in the same period last year, the government's two
premier investment promotion agencies said yesterday. But the figure was
boosted by the single big-ticket investment of the Republic of Nauru via
GNPower Ltd. Co., which has committed to build a liquefied natural
gas-fired power plant in Bataan, Central Luzon to the tune of
PhP96.52 billion. This project was approved by the Board of
Investments (BoI) in the first quarter, bringing that agency's
first-half total to
PhP113.72 billion from
PhP9.15 billion last year. Investments approved by the Philippine
Economic Zone Authority (PEZA), meanwhile, rose by 142% to
PhP27.24 billion from
PhP11.28 billion in January to June 2003.
For June alone, BoI and PEZA investments went up by 21% to
PhP3.74 billion from
PhP3.09 billion last year, the Trade department said. Trade and
Industry Secretary Cesar A.V. Purisima said he was optimistic the growth
in investments would be carried over in the second half of the year "as
government moves to improve the country's investment climate, lure more
local and foreign investors, and help realize president Arroyo's
commitment to create at least six million jobs." The total 39 projects
approved in June will generate an estimated 5,548 additional jobs, Mr.
Purisima said. For January to June, 216 approved projects are projected
to create 37,604 additional jobs. Investments in the utilities sector
went up by 78% for the first half, the Trade department noted. The
manufacturing sector, meanwhile, more than doubled investments to
PhP23.85 billion from
PhP11.78 billion in 2003. In June, manufacturing attracted
PhP3.02 billion or 81% of total investments, while the information
technology (IT) sector posted
PhP584.29 million or 16% of the total. IT investments continued to
surge, posting an 844% growth from the
PhP61.86 million in investments approved in June 2003. Mr. Purisima
noted that the contact center industry captured 83% or
PhP3.86 billion of total IT investments from January to June. This
will generate 9,826 new jobs or 67% of total employment in the IT
sector, he said. Foreigners accounted for
PhP123.33 billion or 87% of total investments in the first half,
while Filipinos chipped in
PhP17.63 billion. In June, foreigners also committed the majority of
investments at
PhP3.22 billion, as against
PhP523.90 million pledged by local investors. The Trade department
said
PhP97.08 billion in investments were concentrated in Central Luzon,
while
PhP21.29 billion will go to manufacturing activities in economic
zones in Southern Luzon. -- Felipe F.
Salvosa II
|
|
Another round of increase in the motor vehicle users charge (MVUC)
has been proposed by Quezon Rep. Danilo E. Suarez at the House of
Representatives. The proposal seeks a gradual increase in the MVUC over
four years. In House Bill No. 1559, the MVUC base rates in the different
categories of motor vehicles will be increased by 25%, then 50%, then
75% and finally 100% in the first, second, third and fourth year,
respectively, after the bill is passed into law. Revenues from the
increase in the MVUC will be dedicated to maintaining and improving the
condition of roads, building new roads, and ensuring road safety. "The
National Government lacks the finances to realize these undertakings
because of its burgeoning budgetary deficit," Mr. Suarez said in his
bill's explanatory note. The last increase in the MVUC was imposed about
four years ago through Republic Act 8794. That increase adjusted the
private motor vehicle tax under Executive Order No. 43 series of 1986,
which is more than a decade old. Mr. Suarez added in his explanatory
note that the increase then should have been 300% instead of 100% in
four years, "to reflect the impact of inflation since 1978 and the
deterioration of roads through the years."
The base rates for private and government vehicles specified in House
Bill No. 1559 are the following:
- passenger cars with gross weights between 1,600 kilograms (kg.)
and 2,300 kg. -- from
PhP1,600 to
PhP8,000
- utility vehicles with gross weight up to 2,700 kg. --
PhP2,000
- utility vehicles with gross weight between 2,700 kg. and 4,500
kg. --
PhP2,000 and additional
PhP20 per 100 kg. over 2,700 kg.
- motorcycles without sidecar --
PhP240
- motorcycles with sidecar --
PhP300
- buses with gross weight of more than 4,500 kg. --
PhP1,800 and additional
PhP12 per 100 kg. over 2,700 kg.
- trucks with gross weight of more than 4,500 kg. --
PhP1,800 and additional
PhP12 per 100 kg. over 2,700 kg.
- trailers with gross weight of more than 4,500 kg. --
PhP24 per 100 kg.
The base rates for vehicles for hire are the following:
- passenger cars with gross weights between 1,600 kg. and 2,300
kg. -- from
PhP900 to
PhP5,000
- utility vehicles with gross weight of up to 4,500 kg. --
PhP30 per 100 kg.
- motorcycles without sidecar --
PhP300
- motorcycles with sidecar --
PhP480
- buses with gross weight of more than 4,500 kg. --
PhP30 per 100 kg.
- trucks with gross weight of more than 4,500 kg. --
PhP1,800 plus
PhP12 per 100 kg. of gross weight over 2,700 kg.
- trailers with gross weight of more than 4,500 kg. --
PhP24 per 100 kg.
|
|
President Gloria Macapagal-Arroyo yesterday lauded the United Nations
for launching a five-point development agenda worth $107.7 million aimed
at reducing poverty in the Philippines. "We appreciate the UN's
development agenda for the country. It is a close companion of our
10-point agenda and five reform packages," the President said in a
statement. The UN program, called the UN Development Assistance
Framework in the Philippines or UNDAF, will run from 2005 to 2009. The
program aims to contribute to five key areas: macroeconomic stability;
broad-based and equitable development; basic social services; good
governance and environmental stability; and conflict prevention and
peace-building. At the same time, the program aims to address the rising
incidence of poverty in the country.
The UN said the national per capita poverty threshold -- the amount
of money a person needs to earn to meet his nutritional requirements and
other basic needs -- stands at
PhP11,605. This means that about 34% of Filipino families are
impoverished -- a percentage that is "even higher than during the
1997-1998 Asian financial crisis," the agency said. "We have always
adhered to the human development principles of the UN and the holistic
approach combining good governance and equitable economic programs," the
President said. "Our quest for human progress extends beyond our
borders, enveloping eight million Filipinos abroad and their host
nations," she added. On her inaugural address last June, the President
unveiled her 10-point agenda aimed at improving the lives of the
Filipinos.
Based on the 10-point program, the President vowed:
- to create at least six million jobs in six years through more
opportunities given to entrepreneurs, to triple the amount of
lending for small and medium enterprises, and to develop as much as
two million hectares of land for agricultural businesses;
- to provide scholarships, books, and desks and chairs for public
school students, to construct new school buildings and classrooms;
- to balance the budget by 2009;
- to decentralize development to other regions by developing a
modern digital infrastructure, and a reliable transportation network
like the roll-on, roll-off system;
- to provide electricity and water to all barangays nationwide;
- to decongest Metro Manila by creating new centers of governance,
commerce, and housing in Luzon, Visayas, and Mindanao;
- to develop former US bases Clark Field in Pampanga, and Subic
Bay in Zambales as the region's best international service and
logistics center;
- to automate the conduct of elections in the country;
- to ensure a just conclusion on the government's peace process;
and
- to arrive at a fair closure on the divisiveness among EDSA 1,
EDSA 2, and EDSA 3 forces.
Meanwhile, the President bared her five reform packages in her
State of the Nation Address before the joint session of Congress
last month. These packages include new measures for job creation and
economic growth, the government's anti-corruption campaign, social
justice and basic needs, education improvement and youth opportunity,
and energy independence and savings. The Legislative Executive Advisory
Development Council is scheduled to meet today to discuss in detail the
President's job creation and economic growth package. Finance Secretary
Juanita D. Amatong is set to make the presentation before legislators
today in Malacañang. -- Jeffrey O. Valisno
|
|
The International Monetary Fund (IMF) yesterday urged government to
review the current tax regime, including the value-added tax (VAT)
system, to see how revenues can further be boosted. In a forum with the
chief executives, businessmen and managers, IMF resident representative
Vikram Haksar yesterday said the government can still improve on its tax
structure. The Macapagal-Arroyo administration has drawn up a list of
tax measures deemed necessary for government to balance the budget,
create jobs and spur economic growth in the next six years. Mr. Haksar
said additional revenues will also help the government pay off its
debts. The Philippines, Asia's most active issuer of sovereign dollar
bonds, had a total external debt of $56.6 billion as of end-March. "Debt
has to be paid out of revenues," Mr. Haksar told a forum organized by
the Management Association of the Philippines (MAP). One way is to
improve its tax collection effort. "In the Philippines, raising revenue
efforts would be key to developing the economy," he said. He also urged
a review of the VAT system, saying the VAT collection effort is only
3.1% of gross domestic product (GDP). "This is relatively low," he said.
The IMF official said the current 10% VAT rate in the Philippines
compares to the average VAT rate in the region of 12%.
Finance Undersecretary Eric O. Recto said the Department of Finance
is very supportive of continuing the VAT tax regime. An increase in the
current VAT rate is on the list of the tax measures proposed by the
government. Aside from raising VAT rates, Mr. Haksar said the government
should also look into the prevailing package of fiscal incentives
offered to businessmen and investors. The same proposal is also in the
list of government's list of proposed tax measures. Mr. Haksar's
statements echoed last month's recommendations by an IMF review team
which assessed the country's economic policies and targets. The IMF
mission said a major stumbling block to growth was the sustained decline
in revenues. It said the government should strengthen fiscal
performance, restore financial soundness in the power sector, and
reinvigorate the financial sector. Former Finance Undersecretary Romeo
L. Bernardo, meanwhile, said the government should look into raising the
fees of pension funds such as the Government Service Insurance System
and the Social Security System. Without an increase, state pension funds
may become as heavily indebted as the National Power Corp., Mr. Bernardo
said.
|
|
The Arroyo administration aims to trim the country's public sector
debt to 90% of gross domestic product (GDP) by 2009 as part of efforts
to advance the goal of economic development. Part of the government's
medium-term fiscal program, said Finance Secretary Juanita D. Amatong,
is to significantly reduce the country's public debt in six years from
its present level of 135.6% of GDP -- the total value of the economy's
output. The government, she said, will propose that Congress limit the
automatic guarantees enjoyed by government-owned and -controlled
companies (GOCCs) in a bid to reduce contingent liabilities. "We will
limit guarantees and look at the laws that provide automatic guarantees
and ask Congress to amend or repeal some automatic guarantees in their
charters," Ms. Amatong said during the 8th General Membership Meeting of
the Management Association of the Philippines (MAP). At the same time,
the government will seek to amend the charters of state-owned firms to
reduce the amount of subsidies given to these entities yearly, she
added.
For the first semester of 2004, the government shelled out
PhP5.6 billion in subsidies to more than 20 GOCCs. The
government's contingent liabilities - mostly composed of guarantees for
infrastructure projects and debts by state-owned firms - totalled
PhP723 billion as of February this year. This contributed to the
bloating of the public sector debt to over
PhP5 trillion. The public sector debt, a measure of the
government's total financial burden, covers liabilities of the
bureaucracy as well as loans of GOCCs that it has assumed or guaranteed.
These debts also include borrowings of the Bangko Sentral ng Pilipinas
and other government financial institutions. Rising public debt is a
consequence of the government's failure to raise enough money to pay for
its expenses. In order to finance its spending, the government has
borrowed abroad or locally. Finance data showed the government has
failed to manage its finances well over the last decade - as evidenced
by the consolidated public sector deficit (CPSD). The government has
borrowed heavily since 1996 as its budget shortfall grew. The last time
the government enjoyed a positive consolidated financial position was in
1996, with a public sector surplus of
PhP7.5 billion. It has been downhill from then on, with the CPSD
climbing to an all-time high of
PhP244.6 billion at the end of 2003 or 5.6% of the economy's
total value. As the public sector deficit grows, so does total public
debt. And so does money allocated for debt and interest payments.
Debt servicing has led to cuts in funds for social services and
infrastructure development, the lack of which deter foreign investors
from coming in and also translate to less taxes for the national
government. "There is urgency in implementing the reform program to
develop an environment that would improve investors' confidence in our
country which will result to increase in employment and growth thereby
improving the economy of this country, Ms. Amatong said. Former Finance
Undersecretary Romeo L. Bernardo warned the government may be left with
no choice but to resort to what he calls "nonelective surgery" should it
fail to reverse the trend by improving tax administration and
introducing new taxes. The choice, he said, is not whether to reform or
not but whether to do it on our own or under a creditor committee's
dictates. "Nonelective surgery is always more painful, bloodier,
costlier and presents more risk to the patient," he said. "While we
recognize that the fiscal problem is serious, it is not insurmountable,"
he said. "We should act now, now that we have a credible tax package."
Mr. Bernardo said "with continuing large budget deficits and mounting
debt there is no other alternative but to raise the tax effort, which
has fallen from 17% in 1997 to just 12% last year." "While BIR [Bureau
of Internal Revenue] Commissioner [Guillermo] Parayno's far-reaching
systems-driven initiatives at the BIR helped check the slide in the tax
effort, administrative reforms can only do so much. Government needs to
rely on easy tax handles such as higher excise taxes achieved simply by
indexing these to inflation, higher oil taxes, which are progressive and
simple to collect, increasing value-added tax rate, which increases the
system's efficiency, and rationalizing fiscal incentives, " Mr. Bernardo
said. The government is hoping to raise
PhP80 billion in taxes from eight Palace-proposed revenue
measures. This is crucial if the government wants to achieve its goal of
balancing the budget by 2009. -- Karen L. Lema
|
|
The expansion of the Metro Rail Transit (MRT) to Monumento faces
further delays as the National Economic Development Authority's
Investment Coordination Committee (NEDA-ICC) cannot proceed with its
evaluation of the project. A NEDA source said the agency has yet to
receive word from the Department of Transportation and Communications (DoTC)
on whether project proponent Metro Rail Transit Corp. (MRTC) has
complied with five conditions laid down by the ICC. "The ICC did not
take up the MRT-3 project because we have yet to receive communication
from the DoTC on the matter," the source said. The source made the
statement in reaction to a letter sent by MRTC to President Gloria
Macapagal-Arroyo saying the firm has already complied "with four of the
five requirements of the ICC-NEDA Cabinet Committee last July 18, 2002."
The letter, sent by MRTC chairman and chief executive officer Robert
John L. Sobrepeña, also appealed that Mrs. Arroyo order the
fast-tracking of the project. "We are appealing to Her Excellency for
the early implementation of the MRT-3 Phase II Project that stands to
benefit 750,000 passengers everyday and (will be) beneficial to the
Government," the letter read.
The NEDA-ICC laid down five conditions for approval for Phase II of
MRT-3: providing the agency with details on the project's return on
equity; procurement of light rail vehicles; limitations on political
risk premiums and interest; a Department of Budget and Management review
of the costs; and a Justice Department legal opinion regarding the
supplemental agreement between the government and MRTC for MRT-3. "But
we have not received word from DoTC so the evaluation continues to hang
in the balance," the source said. Phase II of MRT-3 means its extension
from North Avenue in Quezon City to Monumento in Caloocan. The project
is included in the President's 10-point agenda. --
Jennifer A. Ng
|
By IRIS CECILIA C. GONZALES,
Reporter
The proposed bond exchange will be further delayed as proponents have
yet to comply with several regulatory requirements. The Bankers
Association of the Philippines said yesterday the exchange failed to
open last month as scheduled because of a host of regulatory
requirements and technical difficulties. Cesar E.A. Virata, the group's
president, said the bond exchange will be regulated by different
regulators. "We are a multiple regulated entity... we still have to
comply to the different regulations," Mr. Virata said in an interview.
He added that both the Securities and Exchange Commission and the Bangko
Sentral ng Pilipinas (central bank) have regulatory requirements related
to the proposed bond exchange which proponents have to comply with.
Although he declined to specify the different requirements, he said the
proponents are already working on meeting these requirements. Banks were
supposed to open last month an exchange where people can buy and sell
bonds, particularly government and corporate debt papers. The exchange
will operate like the stock market, but will trade bonds instead of
stocks, with banks acting like brokers.
A brainchild of the bankers' group, the fixed-income exchange will be
the country's first official electronic market for public and private
debt instruments. Mr. Virata said the bond exchange will open within the
year. "I think, it will be this year but I don't like to speculate on
the time," he said. "The information technology system has to be
perfected," he added. Last October, the Philippine Dealing System
Holdings Corp., which would operate the fixed-income exchange, inked an
agreement with Australia's Computershare group to do the technological
groundwork. The Australian firm will help develop and provide software
for the multi-product and multi-currency trading platform to be used by
the Philippine Dealing & Exchange Corp., a self-regulating subsidiary of
the Philippine Dealing System Holdings Corp. The Philippine Dealing
System will operate the bond exchange through three entities. The
trading entity will promote price transparency. The clearing and
settlement entity will ensure the simultaneous delivery of securities
and cash. The depository and custody entity will ensure the proper
accounting, disclosure, and safekeeping of securities. The bond exchange
will initially be capitalized at
PhP500 million. It is expected to ensure an efficient, stable and
secure market for the trading and settlement of securities by providing
centralized trading facilities that promote price discovery and
transparency and efficient clearing and settlement systems that comply
with best international practice standards.
|
By ROULEE JANE F. CALAYAG
The fixed income exchange, which is set to open this year, may
compete with the stock market for investments but its existence will not
be detrimental to listed firms. It may even turn out beneficial to the
stock exchange over the long term because it will help stabilize
interest rates, and in turn, lure back investors, analysts polled by
BusinessWorld said. Erico Claudio, investment analyst at Unicapital
Securities, Inc., said, "Equities market traders welcome the plan.
Although we may be biased toward the equities market, the process will
help the stock market over the long term because it will help stabilize
rates." But a market observer who requested anonymity said the stock
exchange would be affected by the fixed income exchange. "It is going to
be a contest between the Philippine Stock Exchange and the Bankers'
Association of the Philippines based on their reputation," he said,
adding that the rivalry will lead to investments being drawn away from
the stock exchange. "There is a possibility that the fixed income
exchange will draw away investments from the stock exchange because of
[the bankers group's] credibility," he added. There are also the
prestige, the monetary factor and the media mileage behind it, the
source said. These factors would be enough for investors to veer away
from the stock exchange, especially if industry heavyweights throw in
their support behind the fixed income exchange, he added. However, Mr.
Claudio said the move "will not necessarily draw away investments from
the stock exchange." "Initially, it may draw away investments but the
trend will reverse over the long term.
There is going to be an improvement and re-balancing that will make
the stock exchange a better market place," added Mr.Claudio. He believes
that once investment gains from the fixed income exchange expands, the
equities market will benefit because investors will consider the latter
as an option to park their money for a longer time. "We need to scratch
the figures; but as we see it, the fixed income exchange will improve
the capital market and make it more attractive and accessible. This will
make prices less volatile and improve interest rates," added Mr.
Claudio. Another equities analyst agreed. "The fixed income exchange
will create diversity in the capital market and will improve interest
rates. It is going to be beneficial to the whole capital market," she
said. But she noted that there may be some transfer of investments with
the opening of the fixed income exchange. "In a way, this will lead to
some shift toward the fixed income from equities market unless there
will be greater stability, and [it will depend on] how fast the
government turns in results," she added. But Grace Cerdeña of
SourcePilipinas.com said the fixed income exchange will benefit banks
more. "The fixed income exchange is the [bankers'] turf so it will be
lucrative to the banks," said Ms. Cerdeña. In this case, the issuance by
the government of retail Treasury bonds will be a litmus test for the
planned exchange. This plan apparently did not gain headway due to the
issue involving commissions. A source said parties interested to
participate in the new exchange have to become licensed traders first.
But before they become licensed, these traders have to fork out at least
PhP50,000, a large amount that reportedly remains stagnant. "It
does not earn money," the source said. The fixed exchange's scheduled
launch last month was moved to a later date due to technical problems
and pending regulatory requirements.
|
|
State-led insurer Government Service Insurance System (GSIS)
yesterday said it earned
PhP392.75 million from its stock trading activities from January
to the first week of August. It did not give a comparative figure for
the previous year. GSIS said it is optimistic of meeting its 2004 target
income of PhP497 million given its performance so far this year. "[The
target] is well within reach, considering the steady performance of the
GSIS stock portfolio," said the government-owned agency in a statement.
It also said its investments in equities have continuously increased
since October last year. From October to December 2003, the GSIS earned
PhP24.36 million from its stock trading activities. For January to March
this year, its earnings increased to PhP105.57 million, and to PhP127.3
million in the following quarter. For July to August 6, GSIS said it
booked PhP159.87 million in trading gains, "positioning the agency to
again exceed its previous quarter's performance for the third time in a
row." GSIS holds some PhP39 billion worth of shares of mostly blue chip
firms.
Earlier, the agency threatened to pull out its investments in
equities "if vested interest" in the Philippine Stock Exchange (PSE)
prevail. This is related to the firm's request to be allowed to return
to PSE PhP166 million worth of shares in the exchange which it purchased
in February. GSIS wants to return the 1.4 million shares it purchased in
the bourse after the state insurer was included in a court case that a
faction of brokers filed against other PSE officials. GSIS said it
wanted to return the shares because it did not want to be part of the
"intramurals" at the PSE. It also said it had wanted to participate in
the institution of reforms in the stock exchange, but added that the
"dissention" among officials of the PSE makes the implementation of the
reforms impossible. -- Roulee Jane F. Calayag
|
|
The Philippine peso extended its rally yesterday as the US dollar
sank against most regional currencies after US job data fell below
expectations. According to the US Labor Department, job creation
increased by only 32,000 as against the forecast of around 240,000.
Revised figures for the May and June figures also show a decline.
Traders in the global market cast doubts on the views of Federal Reserve
Chairman Alan Greenspan that key US economic indicators were within
targets. The Japanese yen hit a two-week high versus the US dollar,
trading within 110.17 to 110.57 yen from past values at 111 yen.
Meanwhile, the Philippine currency opened at PhP55.66 per dollar.
"[The market] only bought back the peso near the closing as the dollar
tried to bounce back in the afternoon," a trader said. The peso closed
by less than a centavo to PhP55.71 from PhP55.715 previously. "There
were lack of dollar flows, but we sensed some demands from the oil
companies," another trader said. The country imports most of its oil and
fuel products. At the Philippine Dealing System, the peso averaged
stronger by almost four centavos to PhP55.67 from PhP55.706 last Friday.
Hovering within an almost 12-centavo range, the local unit rose as high
as PhP55.60 and went to as low as PhP55.715. Total volume of transacted
dollars decreased to $150.4 million against the previous $217.39
million. -- Ira P. Pedrasa
|
|
Maynilad Water Services, Inc. said it owes Metropolitan Waterworks
and Sewerage System (MWSS) a little above $120 million in back payments
and not as much as $180 million as projected by some groups. In a recent
interview with reporters, Maynilad legal counsel Helena Calo said while
the firm is still reviewing its financial records, it does not believe
its obligation to the state-run firm has increased that much than its
initial level. "We're still looking into the numbers. Because we haven't
been current with our payments, they think it's $180 million, but we are
saying it's near $120 million." Ms. Calo said Maynilad is reviewing its
financial projections in light of recent events that have affected its
initial forecast. This includes the non-implementation of a planned
water rate increase which was incorporated in its financial projections
for its rehabilitation plan. She said if Maynilad's unpaid fees to MWSS
go beyond $120 million, or the amount of its performance bond, the
company is considering restructuring the remaining debts or converting
it into equity. "This time, there are other ways to do it, other than
debt-to-equity swap we can stretch the repayment terms for other
creditors. There are so many permutations right now and we're going to
study each one of them," she said.
Maynilad is revising its proposed financial rehabilitation program to
take into account the possibility that MWSS will draw in full its
$120-million performance bond to pay Maynilad's unpaid concession fees.
The issuance of the performance bond was required under the 1997
concession agreement between Maynilad and MWSS and ensure that Maynilad
pays its concession fees to the state-run water agency. But due to
financial problems, Maynilad was unable to pay its concession fees to
the government, which has ballooned to
PhP8 billion, thus prompting MWSS's move to draw on the
performance bond. -- Leilani M. Gallardo
|
|
Exploration company PetroEnergy Resources Corp. is set to list its
entire outstanding capital stock at the Philippine Stock Exchange (PSE)
tomorrow. PetroEnergy said it is listing by way of introduction 84.253
million common shares with a par value of PhP1 per share at the bourse's
second board. Listing by way of introduction covers an application for
the listing of securities where no public offering is undertaken. It is
allowed if the securities for which the listing is sought are already
listed or traded or will simultaneously be listed on another stock
exchange or is listed on another trading market. Listing at the PSE's
second board applies when the applicant's market capitalization is at
least
PhP25 million and its authorized capital stock is a minimum of
PhP100 million. The company should also have an operating history
of at least one year prior to the listing. "Please be informed that the
listing date of PetroEnergy Resources Corporation's 84,253,606 common
shares is set for Wednesday, August 11," the PSE said in a circular for
brokers. The company appointed Rizal Commercial Banking Corp. as its
stock transfer agent and RCBC Capital Corp. as its financial adviser.
The Securities and Exchange Commission approved PetroEnergy's request
to be allowed to list at the second board on June 27. It got the PSE's
nod for the listing on July 28. PetroEnergy, formerly Petrotech
Consultants, Inc. of the Yuchengcos, is engaged in the exploration
extraction, production, and purchase of petroleum and petroleum
products, natural gas, volatile materials, precious and base metals and
other minerals and chemical substances. It also manufactures, refines,
prepares for market, buys, sells, imports, exports and transports
petroleum and other minerals, as well as provides technical services to
local and international firms. -- Jennee Grace U.
Rubrico
|
|
Family enterprises make up 70% of all businesses in most countries, a
survey in 26 countries showed recently. This global data is echoed in
the Philippines by the increasing number of small and medium enterprises
(SMEs), most of which are family-owned and are seen by the government as
a significant player in generating domestic-driven growth, said
accounting and consulting firm Grant Thornton in a study. Grant
Thornton's People and Relationship Issues in Management global research
report also showed that family-owned businesses face unique challenges
precisely because of the "overlapping" relationship that binds family
owners and managers of the enterprise. Too often, family values collide
with tested business-oriented principles.
During the recent launch of the family business consulting services
of public accounting and business advisory firm Punongbayan & Araullo,
Andrew Godfrey, international director of the research report, presented
some of the research findings. Punongbayan & Araullo is a Grant Thornton
member firm. Mr. Godfrey said that in Asia, family businesses that
banked on close family ties became problematic when extended family
members entered the picture. "Family system is not equipped beyond those
lines. There is no framework for cousin-to-cousin." He added that "there
is an enormous similarity of conflicts and other crucial issues faced by
these family-run businesses, whether they are from western or eastern
countries." Mr. Godfrey also noted that family businesses faced the
unique challenges not only of recognizing family influence, but also of
balancing the needs of the family with the commercial needs of the
business. In a statement, Punongbayan & Araullo said it has added family
business consulting to its roster of professional services, developing a
service methodology for Filipino families based on Grant Thornton's
framework. Punongbayan & Araullo will build on its known strengths in
accounting, merger and acquisition advisory, tax planning, corporate
valuations, financial modeling, forensics and fraud audit or business
outsourcing to provide a wide-array of family business
consulting-related services.
|
|
Logistics and distribution firm Aboitiz One, Inc. is looking at an
additional
PhP350 million in revenues this year with the consolidation of
two delivery services to its one-day delivery scheme. President Sabin
Aboitiz said the revenues from the recently launched D136 delivery could
double in the next two years. The service gives clients lead-time when
it comes to delivery. "We will run about PhP350 million through the
system without adding head count. That's about 15% more throughput
without adding cost," he said. Aboitiz One recently launched its D136
service, representing the number of days a client may want to have his
goods delivered. Under the service, the client has a choice of lead-time
when it comes to delivery, and there is also a simplified rate structure
with the minimum rate at
PhP275 for boxes weighing one to five kilos. The new delivery
scheme is also supported by a multi-modal movement of goods as Aboitiz
One is equipped with seven YS11 aircraft, about 20 sea vessels, and more
than 1,000 trailer trucks, motorcycles and multi-cab vans.
-- Anna Barbara L. Lorenzo
|
By ROULEE JANE F. CALAYAG
Interest in small capital issues yesterday propped up the stock
market which closed marginally higher. In line with earlier projections,
the market moved slowly, marked by cautious trading, due to
uncertainties arising from increasing oil prices. Analysts told
BusinessWorld that investors took to bargain hunting due to a lack
of news that could move the market. "There was more of bargain hunting
by the middle session despite concerns over the oil price hike and the
likely interest rate adjustment by the [United States] Federal Open
Market Committee," said Chelsea Dipasupil, research chief of RCBC
Securities, Inc. Roberto Cano, analyst at BPI Securities, Inc., agreed.
"There was bargain hunting on select issues that corrected in the past
sessions such as San Miguel Corp. and Ayala Corp.," he said. He added
that the decline in Wall Street over the weekend also dampened investor
sentiment in the Philippine market. The Dow Jones Industrial Average
lost 147.70 points or 1.48% at 9,815.33 on Friday.
PROFIT-TAKING
Toward the end of the trading session, Ms. Dipasupil said market
players took profits. "Investors may be positioning on issues that have
given strong positive reports for their performance during the first
half" of the year, said Ms. Dipasupil. Profit-taking was also observed
in the stocks of Ayala Land, Inc., SM Prime Holdings, Inc. and
Philippine Long Distance Telephone Co. (PLDT). Some support for heavy
selling was spotted on telco issues such as Globe Telecom and PLDT. The
market is seen to linger for some time under the spell of impending oil
price increases. "Oil prices will be dragging the market for a while,
depending on how things adjust," said Ms. Dipasupil. Only strong
positive news could counteract this trend which could impact negatively
on the country's inflation and corporate earnings.
BPI Securities' Mr. Cano said the oil price increases "may have an
impact" on the market as higher prices of oil lessen residual income and
affect consumption. But just when the effect of these incessant oil
price increases will come and how long it will stay remain to be seen,
he said. He said the prices of Lopez stocks First Philippine Holdings,
Inc. and Manila Electric Co. (Meralco) recovered after their prices hit
low levels due to a selldown resulting from an earlier ruling by the
Court of Appeals. The appellate court had declared void the order of the
Energy Regulatory Commission (ERC) that allowed the power retailer to
unbundle or itemize its rates. The court ruled that the Commission on
Audit should have first looked through the books of Meralco before the
ERC allowed the unbundling of rates. Mr. Cano said the market is
expected to continue trading on a cautious note while awaiting other
corporate earnings data that will come this week. "Trading will be
sideways. The market's movement will most likely be dependent on strong
news that could change the prevailing sentiment," he added.
FOREIGN INVESTMENTS
Meanwhile, another analyst said that the government has to work hard
to deliver promises made under President Gloria Macapagal Arroyo's
10-point agenda or risk seeing foreign investments flee from the capital
markets. "The current uncertainty with the oil price hikes and the slow
pace of the government are affecting foreign investments," the source
said. Net foreign investments, added the source, dipped after the Arroyo
administration made the decision to secure the release of Angelo de la
Cruz who was taken hostage by militants in Iraq. At the stock market,
the Philippine Stock Exchange composite index (Phisix) recovered. It was
up 1.36 points or 0.09% at 1,578.21. Gainers toppled losers 43 to 27 but
37 issues stuck to their previous prices. Consistently the most actively
traded stock, PLDT dropped five pesos at PhP1,275. It traded 161,730
shares worth
PhP206.9 million. Ayala Land was the second top stock but it lost
PhP0.10 at PhP5.60 on 15.76 million shares traded for PhP88.93 million.
Globe kept to its previous price at PhP885 on 65,530 shares worth
PhP57.7 million. Pilipino Telephone Corp. weakened by PhP0.06 at PhP2.34
with 12.19 million shares traded worth PhP28.7 million.
DMCI Holdings was the fifth most actively traded stock. It advanced
PhP0.24 to PhP1.40 on 21.57 million shares worth PhP28.05 million. The
company earlier said it hopes to double its net profit this year to
PhP400 million from PhP196.5 million in 2003. Revenue growth is expected
to be driven by its unit Semirara Mining Corp. which is seeing a
significant improvement in coal output, higher prices and increased
demand from cement firms. Ayala-led Bank of the Philippine Islands was
unchanged at PhP41 while SM Prime dropped PhP0.10 to PhP5.90. Lepanto
Consolidated Mining A rose PhP0.015 to PhP0.25. Lepanto B followed suit,
up PhP0.01 to PhP0.30. Ayala Corp. rose slightly by PhP0.10 to PhP5.40.
Meralco B kept a strong line, gaining PhP0.50 at PhP21.75. Meralco A was
unchanged at PhP14.75. Except for all share and property, the indices
were all in positive territory. The all-shares index declined 0.97
points at 997.42. The commercial-industrial gained 7.01 at 2,495.97.
Property slid 5.70 to 535.66. Mining climbed 28.53 to 2,111.37, while
oil gained 0.06 at 1.66. Expectations of a recovery in the mining sector
and increased prospects for exploration in the second half reportedly
boosted mining share prices. Banking and finance rose 0.32 to 456.32.
|
|