Home Blog Page 10079

Peso may strengthen vs dollar

THE PESO is expected to strengthen this week as the dollar declined against the other currencies due to weaker-than-expected economic data as well as declining government bond yields.
Last Friday, the peso ended the week at P52.51 versus the greenback, surging by 14 centavos from the P52.65-per-dollar finish last Thursday, following the release of the December inflation data, which came slower than expected.
Week-on-week, the peso strengthened a tad from its P52.58 finish last Dec. 28.
In a text message, Rizal Commercial Banking Corp. economist Michael L. Ricafort said the peso-dollar exchange rate could range between P52.30 and P52.60 this week as the greenback was weaker against other units.
“The US dollar was weaker versus major and emerging market currencies after [the release of the] weaker manufacturing data (biggest drop since 2008) to two-year lows,” Mr. Ricafort said on Friday.
The US Manufacturing Purchasing Managers’ Index was at 53.8 last month, down from the 55.3 recorded in November, amid a “weaker rise in new business and the joint-softest expansion in output since September 2017,” according to IHS Markit.
Mr. Ricafort added that the dollar was also lower compared with major global currencies after the benchmark 10-year US bond yield declined to 2.5%.
“This reduced the interest rate returns on US dollar-denominated bonds as well as the attractiveness of the US currency.”
For this week, he said the market will price in any developments in the US government shutdown as well as the upcoming talks between Washington and Beijing on their trade relations.
On the local front, investors will look at the latest gross international reserves data which will be released today, as well as the trade figures to be released on Jan. 10.
Meanwhile, a foreign exchange trader said the peso could trade stronger against the greenback should the dollar index continue to trade lower amid increased risk appetite among investors.
For this week, the trader expects the peso to trade between P52.45 and P52.65. — Karl Angelo N. Vidal

Calamities driving workers away from agriculture

THE CONTRACTION in agricultural employment accelerated to more than 11% in 2018, the Bureau of Local Employment (BLE) said.
BLE Director Dominique R. Tutay told BusinessWorld last week that natural calamities have been depressing employment in agriculture.
“Given the calamities over the last three years, employment is really negative in agriculture,” Ms. Tutay said.
On Friday, the BLE reported that growth in Agricultural employment was minus 11.4% in 2018 compared with minus 2.0% in 2015.
The Agriculture sector includes Agriculture, Hunting, and Forestry; and Fishing and Aquaculture. The contraction in Agriculture, Hunting, and Forestry was 11.0% in 2018 compared to 2015. For Fishing and Aquaculture, the contraction was 14.7%.
Employment in the Agriculture sector was 10,002,000 in 2018, against 11,294,000 in 2015.
The Jobsfit 2022 Labor Market Information report classifies Agribusiness, or commercial agriculture, as a key employment generator for most regions. — Gillian M. Cortez

Rustan’s End of Season Sale

RUSTAN’s is kicking off 2019 with a sale, offering discounts of up to 70% on fashion, home, fine jewelry and children’s brands until Jan. 31.
Among the fashion brands on sale are Kurt Geiger, Hackett London, Faconnable, Pedro del Hierro, Ricardo Preto, Tadashi Shoji, Longchamp, Anne Klein and Sergio Rossi. For the home, the following brands will take part in the sale: Kate Spade New York Home, Rosenthal, Rustan’s Filipiniana Our Very Own, and Dome Deco.
There are special offers on jewelry labels Mikimoto, Marco Bicego and Carrera y Carrera. For children, Kiddos, Rustanette, Gund, and Sugarbooger are offering discounts.

PT&T partners with cybersecurity firm

PHILIPPINE TELEGRAPH and Telephone Corp. (PT&T) is boosting its enterprise business by teaming up with security solutions firm 5G Security, Inc. (5GS) to offer cybersecurity services to its customers.
In a statement over the weekend, the listed company said it recently signed a partnership with the solutions provider in support of the government’s National Cybersecurity Plan 2022.
“The DICT’s (Department of Information and Communications Technology) Cybersecurity Plan of 2022 outlined the need to make government, business and individual information secure and available. A true end-to-end security setup is realized with the 100% fiber network of PT&T and the cybersecurity expertise of 5GS,” it said.
One of the goals of the government’s cybersecurity plan is to establish cyber resiliency measures that would prepare the country for any cyber attack.
PT&T named a few of the hardware and software solutions 5GS offers, such as a multi-dimensional security system, ground security, medium and low airspace protection, computer network and online protection, security visualization and security operations center.
“PT&T’s partnership with 5GS couldn’t be more timely. Cybersecurity is essential in today’s world where the number of transactions in the web are increasing,” PT&T President and Chief Executive Officer James G. Velasquez said in the statement.
For 5GS, its senior vice-president and chief operations officer, Leuvino Valencia, was quoted as saying, “The strength and reliability of our services will complement PT&T’s products and services.”
Last year, PT&T announced it wants to transform into a digital services provider that offers telecommunications and information technology (IT) services.
In line with this objective, the company appointed last week Ella Mae Ortega as new General Manager for IT Services. Ms. Ortega was country manager of Teradata Philippines for five years prior to joining PT&T.
The listed firm posted a 193% increase in net income at P25 million for the full year ending June, driven by a 62% growth in revenue to P201 million. — Denise A. Valdez

PSBank sees better loan growth in 2019

PHILIPPINE Savings Bank (PSBank) sees better loan growth for this year as decelerating inflation coupled with other economic conditions translate to softer loan rates.
PSBank President Jose Vicente L. Alde said the thrift banking arm of Metropolitan Bank & Trust Co. expects its consumer loan growth to “be better than last year’s” as price increases are expected to taper off.
“Based on analysts’ projections, inflation for 2019 is expected to trend lower,” Mr. Alde said in a text message. “If lower inflation, combined with other factors affecting the financial markets, translates to softer loan rates, then we can expect consumer loan growth to be better than last year’s.”
Inflation eased for a second consecutive month in December to print at 5.1%, as food and transportation prices increased at a slower pace.
The inflation print last month was slower than the 6% recorded in November and fell below the 5.2-6% forecast band of the Bangko Sentral ng Pilipinas.
Mr. Alde added that car, home and small business loans will drive its lending growth this year.
PSBank is set to raise P8 billion through a stock rights offer today until Jan. 11, issuing 184.7 million common shares.
In a previous e-mail, Mr. Alde said proceeds from the stock rights issuance will “support the projected growth of the bank.”
PSBank booked a P2.03-billion net income in the first nine months of 2018, 8.1% higher than the P1.88 billion booked in the comparable year-ago period.
Its shares closed at P57.50 each on Friday, down P3.50 or 5.74% from the previous close. — Karl Angelo N. Vidal

How PSEi member stocks performed — January 4, 2019

Here’s a quick glance at how PSEi stocks fared on Friday, January 4, 2019.
psei010419
 
Philippine Stock Exchange’s most active stocks by value turnover — January 4, 2019
pseiactive010419

GOCC dividends rise 32% in 2018 to over P40B

GOVERNMENT-OWNED and -controlled corporations (GOCCs) remitted a record P40.18 billion worth of dividends to the national government in 2018, the Department of Finance (DoF) said in a statement over the weekend.
The 2018 dividend rose 32% from 2017.
The total was remitted by 55 GOCCs.
The DOF-Corporate Affairs Group (CAG) said the GOCC dividends for 2018 were a record, despite an exemption won by Land Bank of the Philippines (LANDBANK) from remitting dividends.
With LANDBANK’s share of P7.82 billion, the dividend total would have risen to P48 billion.
The national government waived LANDBANK‘s dividend obligation in 2017 to help it comply with the 10% capital adequacy ratio imposed by the Bangko Sentral ng Pilipinas, which is higher than the Basel 3 framework international standard of 8%, according to the DoF.
The DoF said that GOCC dividends in 2018 comprised 15.72% of the total non-tax revenue.
“This is unprecedented. The record amount demonstrates the effectivity of Undersecretary [Antonette C.] Tionko and her team in instilling fiscal discipline among the GOCCs since the Duterte administration took over in 2016,” Finance Secretary Carlos G. Dominguez III was quoted as saying.
Republic Act No. 7656 requires state firms to remit half of their annual earnings to the national government.
The Philippine Deposit Insurance Corp. was the top contributor in 2018, generating P8.844 billion worth of dividends in 2018.
Other top dividend contributors were the Civil Aviation Authority of the Philippines (CAAP) with P6.224 billion; Bangko Sentral ng Pilipinas (BSP), P3.637 billion; Philippine Ports Authority (PPA), P3.103 billion; Philippine Amusement and Gaming Corp. (PAGCOR), P2.593 billion; Philippine Charity Sweepstakes Office (PCSO), P2.535 billion; Manila International Airport Authority (MIAA), P2.251 billion; and the National Power Corp. (NPC), P1.410 billion.
Mr. Dominguez attributed dividend growth to the “efficient monitoring of GOCCs by the DOF-CAG as well as by finance officials sitting on the boards of these state-run firms.” — Elijah Joseph C. Tubayan

DoE to require transparency on markups charged by oil firms

THE Department of Energy (DoE) hopes to issue by the first quarter a circular that will require oil companies to submit a breakdown of the costs that go into the pricing of petroleum products, including the so-called “industry take” that discloses their mark ups.
In a draft circular, the DoE said it will also impose a penalty on those that fail to comply with the provisions of the circular, which include a timely announcement of oil price adjustments.
Rino E. Abad, director of the DoE’s Oil Industry Management Bureau (OIMB), told reporters last week that the agency would schedule a second public consultation to discuss the draft circular.
“So we will really do this process within the first quarter,” he said. “Lahat naman ng items (All the items) there will be debated thus the second public consultation.”
Mr. Abad said the proposed circular has eight major components. He said the DoE had obtained the consensus of the oil companies on seven of them.
“What we are discussing is only industry take,” he said.
He said industry take is a contentious issue for the companies as this covers their profit margin and operational costs.
Based on the draft circular, the oil firms are required to “strictly comply with the submission of the formal notice of price adjustments per liter for liquid fuels and per kilogram for LPG (liquefied petroleum gas).”
The submissions should contain the computation and the corresponding explanation of the unbundled cost items of all products subject for sale.
The required computation covers the price movement for both the international content and the local content of the fuel products. International content covers the product cost, freight cost, insurance and foreign exchange rate. Local content should enumerate taxes, biofuel cost and the industry take.
The fuel products included in the circular are gasoline, automotive and industrial diesel, kerosene, jet fuel, bunker fuel oil, and household and automotive LPG.
The DoE may require retail outlets to submit to the OIMB an unbundled computation with corresponding explanation of the retailers’ price of all petroleum products sold in a specified period.
The draft circular also calls for oil companies to notify the DoE not later than 3:00 p.m. of every Monday of the week for any price adjustment — increase, decrease or no adjustment — and prior to any public announcement and implementation.
For LPG, they are to notify the department not later than the end of every month for any price adjustment before any public announcement and implementation.
“For the purpose of establishing uniformity in the timing of price adjustment across the whole industry thereby avoiding any confusion among the stakeholders and consumers, the price adjustment for liquid fuel shall be implemented beginning every Tuesday of the week, and applicable for the whole week (from Tuesday to the next Monday) and for LPG, beginning every first day of the month and applicable for the whole month,” the proposed circular states. — Victor V. Saulon

PCC studying valuation method for data assets in mergers

THE Philippine Competition Commission (PCC) is considering the possibility of taking into account the valuation of data assets in mergers or acquisitions.
In a phone interview, PCC Commissioner Johannes Benjamin R. Bernabe said the anti-trust body has recently dealt with mergers where the physical assets of the parties were less significant than the value of their data.
The PCC’s data valuation practices may affect the reporting threshold of merger deals — the point at which transactions need to be cleared by the commission — involving technology firms whose value is determined largely by the data they collect.
Citing the Grab acquisition of Uber’s Southeast Asian operations last year, Mr. Bernabe said the commission took note that the parties did not provide a valuation of their data in calculating their transaction’s value, which did not fall within the agency’s notification threshold.
“If you have a value of physical assets at $500,000, and in exchange you give up 27.5% of your equity when your market valuation is upwards $6 billion, what does that tell you? You are purchasing data which is not being valued properly. What is that data? It’s data of the drivers, whatever rider information is embedded in the systems that would have been transferred to Grab,” Mr. Bernabe said.
However, he noted that capturing data-driven transactions will need an adjustment to the PCC’s valuation method.
Mr. Bernabe cited an example from Germany, which factors in the transaction’s purchase price, as a viable model.
“Germany has adopted a valuation method that takes into account the purchase price because they realized that there are so many transactions going on in the members of the EU (European Union) where simply looking at the revenues generated would be misleading because the revenues may be minimal but the market valuation of these social media businesses are going through the roof. And why is it so? Because of the data that goes with the acquisition,” the PCC commissioner said.
“While we have only preliminarily discussed it, one issue that we will have to reexamine moving into the future is whether we can do what Germany did… because that would give input to the value of data that is being transferred,” he added.
Mr. Bernabe said the PCC has not come to a firm decision on the matter.
However, he said drafting the guidelines to notification rules is only a “fraction of the bigger picture” in assessing the impact of data on mergers and acquisitions.
“The more interesting exercise is really conducting an analysis on the substance of what happens once the data is in the hands of the merged entity,” he said.
He said he has been pushing other commissioners and the PCC’s Enforcement Office to analyze whether there will be substantial reduction of competition in the market not only in terms of the impact of the sharing or transfer of goods or services between companies but also at the data that will be controlled by the merged entity.
Mr. Bernabe said he first urged for the broadening of analytical scope particularly after Bayer AG’s $66 billion acquisition of Monsanto Co. in 2017.
“Maybe they’re not going to have significant share insofar as the products are concerned. But what about the research and development, information, that they have which are subject to patent? If they will not provide access to other users to these patented products, then our world will be poorer because R&d will not be facilitated,” Mr. Bernabe said.
The commissioner is also hoping to extend the post-merger review beyond the two-to-five-year period, noting that other jurisdictions have recently realized the longer timeframe that data takes to be made applicable and useful to a business.
Mr. Bernabe pointed out that for patents, for instance, the lifecycle of data that leads to the development of a patented product, including the research and development that goes with it, is much longer than the PCC’s post-merger analysis timetable.
“We have to look at how data will affect the way business will work 10 years from now. It requires more far-sighted analysis. Of course, questions arise [as to] how can you really predict how markets will evolve in 10 years but this is where… really more intensive interviews with market participants come into play,” he added.
In terms of how other commissioners are reacting to this push, Mr. Bernabe said “it’s a slow grind”, as the commissioners are from various disciplines.
However, Mr. Bernabe believes “the commission will be more compelled to face the situation sooner rather than later,” as big-data driven businesses are on the rise.
“I guess that’s the trend in new businesses coming up, based on the use of big data application of data science and data analytics. So we have to prepare for that,” he added. — Janina C. Lim

CTA partially grants mining firm’s nickel VAT refund claim

THE Court of Tax Appeals (CTA) partially granted the tax refund claim of Taganito Mining Corp. for P28.93 million in excess input value added tax (VAT) attributable to zero-rated sales for 2014, but approved only P25.95 million while finding the remainder without documentary support.
In a decision dated Dec. 6, the CTA special second division said the miner only proved its entitlement to P25.95 million as it failed to comply with some requirements.
“In fine, petitioner has sufficiently proven its entitlement to a refund in the amount of P25,946,279.40 representing its unutilized excess input VAT for the four quarters of CY (calendar year) 2014 which is attributable to its zero-rated sales/receipts for the same period,” the court said.
Taganito Mining claimed that it is entitled to excess input tax refund of P28.93 million, after it recorded P8.8 billion worth of zero-rated sales in 2014, P7-billion of which were export sales to non-resident foreign companies. The exported commodities were nickel saprolite and limonite ore. It also generated sales from other exploration activities.
According to the National Internal Revenue Code (NIRC) of 1997, a VAT-registered entity may claim a refund on any input tax attributable to zero-rated sales, provided that the input taxes were not applied against any output VAT liability and the claim was filed during the prescribed period.
NIRC classifies export sales paid for in an acceptable foreign currency or its equivalent goods or services accounted for in line with the regulations of the Bangko Sentral ng Pilipinas as zero-rated sales.
Exports must be supported with various proofs of sale, such as bills of lading or airway bills, as proof of shipment and any document proving the payment for goods in an acceptable foreign currency.
For sales of services, meanwhile, the service must be other than processing, manufacturing or repackaging of goods, the payment must be in an acceptable foreign currency, and the client must be doing business outside the country. — Vann Marlo M. Villegas

Benguet mayors seek bigger say in Greater Baguio

BENGUET mayors said they want the role of a development authority centered on Baguio City to be clearly defined to prevent overlaps with local government units (LGUs).
The mayors testified Friday at a Senate hearing in Camp John Hay, Baguio City on the proposed Baguio City, La Trinidad, Itogon, Sablan, Tuba and Tublay Development Authority (BLISTTDA).
“We do not like an authority, which is another bureaucracy over and above the LGUs, that will infringe on the autonomy and functions of the LGUs,” Baguio City Mayor Mauricio G. Domogan said, speaking on behalf of the mayors, during the Senate hearing.
“Instead, our suggestion is that we define the relationship of the development authority with the local government units, with the line agencies so that there will be no overlapping of functions and conflict,” he added.
Mr. Domogan also proposed for BLISTTDA to have a governing council chaired by a person elected by Benguet mayors, instead of appointment by the President as prescribed in the bill.
He also called for the proposed measure to clearly define the project funding responsibilities between the authority and LGUs. BLISTTDA should not interfere as well with the LGUs’ programs in its own jurisdictions, he added.
“Programs… of LGUs totally funded by their own funds, which does not involve other members of BLISTT, shall be the concern to be implemented by the said LGUs. The authority has no power to mingle with those programs and development which is solely for the development and programs of the LGU,” he said.
Mr. Domogan said Benguet mayors are otherwise in favor of the creation of a development authority that will monitor and coordinate policies between national government agencies and LGUs for the region.
In response, committee chair Senator Richard J. Gordon said there will be plebiscite on the creation of the development authority, with its composition and functions subject to the approval of citizens. He added that he will introduce a “proposition system” in the bill that would allow a mechanism for stakeholders to freely provide feedback on the policies of BLISTTDA.
“There will be a plebiscite. We cannot do this without a plebiscite… In the plebiscite, you can even suggest if it will be now a new board of supervisors that will handle it or the old system. There will be suggestions in the plebiscite. We will draft a law in such a way that we do this,” he said.
The Senate committee on government corporations and public enterprises, chaired by Mr. Gordon, conducted its second public hearing in Baguio City on House Bill No. 6974 and Senate Bill No. 1692, which propose to establish BLISTTDA.
The proposed body is tasked to formulate and regulate the implementation of the medium- and long-term plans and programs for the delivery of services, land use and physical infrastructure within the covered area. It will also set policies on traffic management and impose fines and penalties for all kinds of violations of traffic rules.
Under the bill filed by Senate President Pro Tempore Ralph G. Recto, the BLISTTDA council serves as the policy-making body of the development authority. It will be composed of the Benguet governor, congressmen of Baguio City and Benguet, as well as the mayors of the covered areas. The council’s chairman is appointed by the President. — Camille A. Aguinaldo

Palawan power utility submits revised distribution plan

THE Department of Energy (DoE) has ordered Palawan Electric Cooperative (Paleco) to submit an updated power distribution development plan (DDP) to determine whether the government should continue looking after the provision of electricity in the area.
“We required them to submit a revised DDP,” Mario C. Marasigan, director of the DoE’s Electric Power Industry Management Bureau, told reporters last week.
“Depending on the DDP, then we may have to decide whether to continue the arrangement with the NPC (National Power Corp.) to provide services for the El Nido area in terms of the generation and wires,” he added.
DoE Undersecretary William Felix B. Fuentebella confirmed that Paleco has submitted a revised DDP, which was forwarded to Mr. Marasigan’s bureau. Mr. Marasigan said that for the rest of Palawan, the DoE is looking at enhancing the power transmission substations. He said his bureau will also review the power supply agreements.
“We have already initiated discussions with them to include in their DDP the power supply procurement program and the review,” he said.
DoE’s intervention in Palawan comes after President Rodrigo R. Duterte issued a warning to local officials to solve the energy issues in the province. He gave Paleco until the end of the year to address the frequent brownouts or he will seek a new electricity provider for Palawan.
Last month, state-run National Electrification Administration (NEA) said it intervened in the management and operation of Paleco in its bid to help resolve the power supply issues in the province.
NEA Administrator Edgardo R. Masongsong issued an office order on Dec. 10 designating engineer Nelson Lalas as project supervisor and acting general manager of Paleco “effective immediately,” the agency said in a statement.
Mr. Lalas’ designation will cease upon the appointment of a regular general manager, which is subject to NEA confirmation.
Mr. Marasigan said the problem in Palawan is related to transmission.
“The common causes of the problem in Palawan apparently are the lines and substations. It’s not insufficient power supply. In fact, it has oversupply in terms of PSAs,” he said.
He also said that some areas in Palawan were also not connected to the electric cooperative such as El Nido, Taytay and San Vicente, which are among the province’s key tourist destinations.
“But the interconnection should be completed by 2019 as programmed by NPC-SPUG (small power utilities group),” he said.
For this year, DoE expects power demand in Palawan to fall in line with expectations that the Department of Environment and Natural Resources and the Department of Tourism are looking “some of sort of restrictions as far as the entry to El Nido,” Mr. Marasigan said.
“There won’t be any closures but the DENR has been finding some issues. For example there is a lot of encroachment on beach areas so that means we will see a reduction in such facilities. So that’s reduction in consumption,” he said. — Victor V. Saulon