THE BANKING INDUSTRY expects the economy to grow by 6-7% in the next two years, aligned with the government’s forecast, according to a survey by the Bangko Sentral ng Pilipinas (BSP).
A big chunk of the lenders that responded to the Banking Sector Outlook Survey (BSOS) for the first half are also positive that the industry will remain stable as most of them are optimistic of a double-digit growth in their assets, loans, deposits, as well as net income.
“Banks maintain their optimism on the country’s economic prospect amid global uncertainties and market volatilities during the first semester of 2019 as 83.5% of the BSOS respondents projected that the gross domestic product (GDP) shall grow between six to seven percent within the next two years,” according to the BSP report published on its website on Thursday.
Meanwhile, 73.5% of bank respondents expect double-digit growth in their assets. This is lower compared to the 80% of them that projected a double-digit growth in the first half of 2018.
Despite some banks becoming less positive in terms of a double-digit growth forecast, lenders are bullish on better return on equity (RoE). The survey found that only 13.8% expect an RoE of less than 5% compared to the 20.6% that expected the same in the same comparable period a year ago.
The survey results also showed that lenders are becoming more alarmed about their non-performing loan (NPL) ratios as 66.7% of respondents expect NPL to climb from only 54.4% in the first half of 2018.
“The sluggish global growth, coupled with trade tensions among the world’s biggest economies, may adversely impact the domestic manufacturing sector which exports a significant portion of its output. This, in turn, may have led to the banks’ forecast of an uptick in the NPL ratios,” the report said.
Aside from this, majority of banks also said corporate and retail banking continue to be their biggest priority. This is followed by payment services.
In terms of strategic priorities, lenders mentioned that their top two are to grow their bank and to optimize the available technology.
“In particular, most of the banks planning or already employing technology in their operations find its most important application in areas of data security and privacy, know your customer (KYC) procedures and loan scoring. Moreover, most of the respondent banks revealed preparedness in managing cybersecurity risks,” the report said.
The survey respondents include all universal banks and thrift banks, as well as the top 20 rural lenders in terms of total loan portfolio. — LWTN
HAMBURG — BMW management and labor have reached an agreement on measures to reduce costs that avoids “drastic measures,” the German carmaker said on Wednesday.
BMW had been in talks with labor representatives and its top suppliers as it seeks to achieve cost savings of more than 12 billion euros ($13.23 billion) by 2022.
The agreement involves reducing a payout scheme for workers based on company profits, as well changes to Christmas and other bonuses for some workers. The measures are effective from 2020.
The announcement comes a day after Volkswagen’s luxury car unit Audi said it would cut one in 10 jobs, freeing up billions of euros to fund its shift toward electric vehicle production.
“We have achieved a solution based on solidarity. This allows us to avoid drastic measures that others are currently taking to reduce their costs,” CEO Oliver Zipse said.
Carmakers have been struggling with an auto industry downturn, particularly in China, and the need to increase investment in electric vehicles as several countries move to eventually ban conventional combustion engines.
Rival Daimler as well as car suppliers Continental and Osram have also recently announced staff and cost cuts. — Reuters
CENTURY Pacific Food, Inc. (CNPF), maker of Century Tuna and Argentina corned beef, is expanding into coconut products with the introduction of its own brand Coco Mama Fresh Gata.
“Coco Mama Fresh Gata… is meant to provide home cooks with an easy and convenient way to use fresh coconut cream without having to buy the actual coconut, and then grating and pressing it themselves,” the listed company said in a statement Thursday.
CNPF is an integrated manufacturer of high-value coconut products such as organic virgin coconut oil, desiccated coconut and coco water, for OEM (original equipment manufacturer) exports. Its milk and coconut businesses account for nearly a third of the company’s revenues.
Coco Mama is CNPF’s first culinary coconut product under its own brand, as the company expands into new product categories.
“Geared towards the domestic market, (Coco Mama) leverages on CNPF’s existing coconut manufacturing facilities and extensive distribution network in the Philippines,” the company said.
CNPF has a coconut products manufacturing facility in General Santos City.
Aside from coconut products, CNPF is also involved in the manufacturing and distribution of processed marine and meat products for export and its own brands such as Century Tuna, Argentina, Swift, and 555. Its milk brands include Angel and Birch Tree.
This year, it also launched Birch Tree Fortified Choco, another variant of its powdered milk product, and Argentina Corned Chicken. It also has the Philippine license for pork and beans brands Hunt’s and the Kamayan trademark for North America. Kamayan is a top brand for shrimp paste or bagoong.
In the third quarter, CNPF reported a 7% increase in net income to P797.83 million, driven by double-digit growth in its tuna brands. Revenues jumped 10% to P10.10 billion during the said period.
For the first nine months, the company also booked a 7% rise in net income to P2.36 billion, while consolidated revenues increased 17% to P29.47 billion — 75% of which came from its branded segments. Its revenues from OEM business inched 3% higher to P7.5 billion.
Shares in Century Pacific went down 1.82% or 0.28 points to close at P15.10 each in the stock exchange on Thursday. — Vincent Mariel P. Galang
RUSTANS.COM has unveiled its online-only Black Friday Cyber Monday deals. On Black Friday on Nov. 29, it will begin its biggest four-day online event by capping off with Cyber Monday deals until midnight of Dec. 2. Across the four-day sale, customers can enjoy up to 80% Off on major brands. For information visit rustans.com.
Ogie and the Hurados 2
DUE to public demand Ogie Alcasid and the Hurados of Tawag ng Tanghalan reunite for a repeat show of Ogie and The Hurados 2 on Dec. 1, 8 p.m., at the Newport Performing Arts Theater, Resorts World Manila. With musical direction by Nikko Rivera and direction by Paolo Bustamante, guest performers include Erik Santos, Jaya, Mitoy Yonting, Jolina Magdangal, and Regine Velasquez-Alcasid. Tickets are available through TicketWorld (www.ticketworld.com.ph, 891-9999).
Shangri-La tree lighting
JOSE MARI CHAN, the Philippine Madrigal Singers, and the Mini Madz will perform when Shangri-La Plaza lights up its Christmas Tree on Dec. 1, 6 p.m., at Level 2, Grand Atrium, Shangri-La Plaza.
Van Gogh Alive
THE multi-sensory exhibition about the life of Dutch painter Vincent Van Gogh, told through his works and letters, is ongoing at the 4F of One Bonifacio High Street in BGC, Taguig City, until Dec. 8. For details visit www.vangoghalive.ph.
The Quest for the Adarna
REPERTORY Philippines’s Theater for Young Audiences presents a musical retelling of the Philippine folk tale “Ibong Adarna.” The Quest for the Adarna has performances until Jan. 26, 2020 at Onstage Theater, Greenbelt 1, in Makati. In the kingdom of Berbania, the king falls mysteriously ill and can only be healed by the song of the mythical bird, Adarna, which can be found in its mountain home. His three sons take turns attempting the dangerous journey to help their father. Tickets are available through TicketWorld (www.ticketworld.com.ph, 891-9999).
Cats the Musical
CATS The Musical will be on its final weekend of performances.
THE international tour of the Olivier and Tony award-winning musical by Andrew Lloyd Webber, based on T. S. Eliot’s poetry book, “Old Possum’s Book of Practical Cats” has performances at The Theater at Solaire until Dec. 1. The show stars Joanna Ampil as Grizabella. For more information, visit www.catsthemusical.com. Tickets are available at TicketWorld (891-9999, www.ticketworld.com.ph).
Metro’s Crazy Sale
METRO Retails is slashing its prices, with discounts of up to 70%, on Nov. 30, 7 a.m. to midnight. The Metro Crazy Sale will be held across all departments including home goods and the supermarket. Among the deals are a Buy 1 Take 1 promo for 32” LED TV for P9,999. Sheets, curtains, and apparel will go for up to 70% off while children’s clothes and toys will see discounts of up to 50% with Buy 1 Take 1 deals too. Metro Rewards Club cardholders will receive three times more points per purchase, while shoppers who use their cards at Metro Supermarkets will get freebies for minimum purchases of P1,500 or P2,500 for MRC cardholders and P5,000 for Metro Business Club cardholders. For details visit www.metroretail.com.ph.
Landers End of Year Sale
LANDERS SUPERSTORE is holding its Super Crazy End of Year Sale which offers all members discounts, exclusive deals, and other surprises. Ongoing until Dec. 1, the sale gives Landers members discounts of up to 50%, buy-one-get-one deals, and urPrices (Piso offers) on food items, clothes, toys, housewares, health and beauty products, and more. For more information about the sale, visit http://landers.ph/.
Coming Together: An Exhibit
HUB Make Lab and the Goethe Residency Presentation will showcase the coming together of Eliz Ting and Sophia Guggenberger in an exhibit as the culmination of their one-month HUB Residency. During the residency period, a space at the Hub Make Lab in Escolta was occupied and gradually filled with experiments and conversations on the topic of crafting with water hyacinth, a material that is prolific in Laguna de Bay. The exhibit will be held on Nov. 30, 1 p.m. at the Hub Make Lab, Ground Floor, First United Bldg., 413 Escolta St., Binondo, Manila.
PPO in Aklan
THE Philippine Philharmonic Orchestra (PPO) will be performing in the province of Aklan. A “Masters Mentoring Program” will be held at the Infant Jesus Academy classrooms in Kalibo, Aklan. The outreach program will culminate in a concert of the PPO entitled An Enchanting Evening in Balete on Dec. 1, 6 p.m. at the Teodoro F. Calizo Sr. Memorial Civic Center in the municipality of Balete, Aklan.
4th German Film Week
AFTER screenings in Manila, The Goethe-Institut’s 4th German Film Week hits the road and will visit the cities of Cagayan de Oro, Cebu, and Baguio from Nov. 27 to Dec. 15. Catch the screenings on Nov. 27-29 at the Liceo De Cagayan University, Cagayan de Oro; Nov. 27 and 29 at the University of San Carlos-Talamban Campus, Cebu, and Dec. 9-15 at the Ililikha Artist Village, Baguio.
Antique the focus in Central Square fair
THE Department of Tourism’s Philippine Harvest fair returns on Nov. 29 to Dec. 1, featuring the produce of the province of Antique over at Central Square, Bonifacio High Street Central in Bonifacio Global City. The three-day sustainable food and travel fair will feature more than 10 weaving associations who will present the patadyong or multi-functional wrap-around cloth made of cotton blends in plaid pattern, as well as handwoven scarves, shawls, bags, T-shirts, shoes, hand-painted pillows, bariw and banig bags, place mats, carpets, hot pods, table runners, embroidered products, and accessories. There will also be food products ranging from muscovado sugar, candies, virgin coconut oil products, roasted coffee, taro chips, and sweet potato chips, to fesh produce like peanuts, ginger, turmeric, squash, monggo, kadyos, batwan, corn, gabi, canton squash, and moringga powder. Visitors can enjoy a variety of kakanin, vegan food products, local coffee, organic fruits and vegetables, artisanal tuyo, and gourmet salted egg, among others.
BPI ASSET Management and Trust Corp. (BPI AMTC) has launched a unit investment trust fund (UITF) that will allow its clients to invest in US stocks without needing a dollar account or exchanging peso to dollars.
Called BPI Invest US Equity Index Feeder Fund Peso Call, the UITF will enable its clients to invest in the US market using their peso accounts. Bank clients may invest in the pool of stocks belonging to the S&P 500 Index which is a market-capitalization-weighted index where the largest 500 US publicly traded companies belong, including Apple, Inc., Microsoft Corp., Amazon, and Facebook, amongst others.
“The US economy is expected to grow 2.3% in 2019. Investing in both local and global markets allow investors to derive returns from other markets and experience less volatility in their overall portfolio,” BPI AMTC President Sheila Marie U. Tan said in a statement.
Bank clients can access the new UITF in both peso or US dollar classes through BPI branches or through BPI Online. Minimum investments for the fund start at P50,000 or $1,000, while top-ups can be done from P10,000 or $500.
“The fund is suitable for investors with an aggressive risk profile and awareness of the risks involved in investing in the US equities market,” BPI said.
The Ayala-led lender’s net income in the third quarter climbed 38.6% year on year from the same period in 2018, supported by growth traced from its core businesses, according to a regulatory filing in October.
BPI’s shares closed at P88 apiece on Thursday, down 0.96% from its previous finish. — LWTN
I am the production manager of a medium-sized factory in Laguna. When I assumed the job eight months ago, I was surprised at the high rate of product defects, sometimes as high as 30%. On the average, we settle for a defect rate of about 15%. That means a lot of money for the company in terms of repairing them, if at all possible. If not, they are simply thrown away. When I analyzed the situation, it appears that our workers (more than half are subcontractors) are partly responsible for the problem. I haven’t been able to sleep for weeks trying to think of a solution. I’m not sure if hiring only regular workers would solve the problem. Can I charge the cost of defects to the agency workers? What do you think? — Deep Blue Sea.
Andy Capp walks home from a pub, arm-in-arm with a male friend while singing “Dear Old Pals.” As he enters his house shortly before midnight, he calls out to his wife: “Yoohoo! It’s me,” and then passes out on the floor. His wife walks over and covers him with a blanket and placed a pillow on his head as he reeks of liquor.
Andy wakes up and says: “Thanks, Sweetheart!” His wife replies:
“Don’t mention it as long as you don’t take your problems to bed with you.”
It should be the first step in the process. Don’t bring your work problems home no matter how difficult they are.
Just do whatever you think is best under the circumstances. Whatever your options, don’t delay in studying and implementing them all with the help of your workers. After all, they are closer to the ground. Again, don’t delay. An imperfect action is better than perfect inaction. But to answer your two questions on hiring only regular workers and charging the cost of defects to the agency workers, you have to explore both the pros and cons of it.
That’s because you don’t want to complicate things which may include the increased cost of hiring a regular workforce compared to outsourcing, if not the possible refusal of agency workers to pay for the defects because of their lack of training. At times, it would be difficult to discover the real root cause or causes of product defects.
For these reasons, I suggest that you consider the following broad strategies to reduce, if not eliminate product defects in your factory.
One, create and maintain a Total Quality Management policy. Or you can review your corporate Vision, Mission, and Value statements. Somehow, you can find a sound basis for implementing something that already exists in the first place. It is better that way than have these corporate statements exist as mere wallpaper in the factory’s lobby and showroom.
If there is none, now is the time to create something which you can refer to as the factory’s quality and productivity constitution. It should be holistic so that you don’t have to focus on only defect prevention as part of the TQM equation. You must have a systematic approach.
Two, develop a good working relationship with everyone. That includes the minimum wage earners, regardless of their employment status (regular or contractual). If they are treated well enough, they are more than willing to help management. Therefore, it’s always a good idea to be pleasant with all employees. It is as simple as going to their work stations, smiling to everyone, and offering your help to make things better.
Sometimes, the enemy is within your management team, especially if there’s one who was bypassed for promotion. If that happens, a different tack is necessary with the active participation of your CEO.
Three, show respect and interest for the workers’ suggestions. In fact, you must create an environment where all workers, regardless of rank, must provide ideas on how to improve product quality and labor productivity. You can install a Quality Circle Program or the Employee Suggestion Scheme. Whatever you want to call it, ensure that they become part of everyone’s key performance requirements.
Of course, there are times that workers would simply go through the process of giving ideas, but not enough to create a dent in the workplace. It’s better than nothing. At least, they’re communicating with you. Over a certain period, as you adjust your policy and procedures, people would have to respond positively.
Four, understand and learn how to manage routine objections. It’s part of the ball game. Be ready to be challenged by people who are used to enjoy their respective comfort zones before. But that’s an imperative if only you would like to show your worth to the whole organization. In doing this, you can develop as many individual approaches that fit into the personality of people.
There are many approaches that you can take on how to manage difficult workers and managers. The specifics will vary according to the requirements of the situation. But the most important point is how to create proactive communication strategies to gain the cooperation of most people.
Last, give credit where credit is due. It’s one basic thing in management you can’t afford to ignore. And it doesn’t have to be limited to giving material things. In fact, you don’t even have to give cash. I could write a book on many zero-cash strategies that motivate people to do their best. One of these is a reward points system, similar to what’s being done by credit card companies to entice their cardholders to use their cards more often.
The advantage of this is you don’t have to pay tax compared to when you give out cash incentives. Whatever you do, don’t forget to shine the spotlight on deserving people during yearend celebrations and corporate anniversaries.
In conclusion, let me tell you that these rules are not exactly comprehensive but more than enough to remind you of the basic things in people management. In whatever you do, be watchful of bottlenecks, including difficult managers who are plain indecisive, as well as others who, in their attempt to justify their existence, would question everything.
Whatever the reason, don’t focus your attention on the product defects. The real answers could be more than you bargained for.
ELBONOMICS: An imperfect action is better than perfect inaction.
6 films to see on the week of November 29 — December 5, 2019
Last Christmas
A FRUSTRATED Kate works as Santa’s elf for a department store. Life takes a turn when she meets Tom who sees through many of Kate’s barriers. Directed by Paul Feig, the film stars Emilia Clarke, Henry Golding, Emma Thompson, Madison Ingoldsby, Boris Isakovic, and Michelle Yeoh. The Times (UK)’s Ed Putton writes, “You don’t want to spoil it — it’s silly, but satisfying as a plum pudding.”
MTRCB Rating: PG
The Good Liar
CAREER con man Roy sets sight on recently widowed Betty. As the two draw closer, what should have been another simple swindle, the stakes suddenly rise. Directed by Bill Condon, the film stars Helen Mirren, Ian McKellen, and Russell Tovey. Peter Sobczynski from www.rogerebert.com writes, “In many ways, this film feels like a fusion of those two otherwise dissimilar filmmaking periods by taking a storyline (adapted by Jeffrey Hatcher from the book by Nicholas Searle) that is undeniably twisty and trashy in equal measure and using the formidable presence of the two leads to distract when the story threatens to go off the rails.”
MTRCB Rating: R-13
Knives Out
AFTER A Family gathering goes horribly wrong, a master detective is tasked to investigate the death of the family patriarch. Directed by Rian Johnson, the film stars Daniel Craig, Chris Evans, Christopher Plummer, and Ana de Armas. The New York Times’ Manohla Dargis writes, “Johnson scatters enough hints to keep you busy guessing as characters enter and exit amid abrupt cuts and flashbacks. Things get complicated, though they never deepen, which seems by design. Knives Out is essentially an energetic, showy take on a dusty Agatha Christie-style murder mystery, with interrogations, possible motives and dubious alibis.”
MTRCB Rating: PG
Kings of Reality Shows
THE movie follows comedians Ariel and Maverick’s trip to the United States 10 years ago when they auditioned for American Idol Season 7. Since the film was shelved for 10 years, Ariel included his true-to-life story. Directed by Ariel Villasanta, it stars Ariel Villasanta and Maverick Relova.
MTRCB Rating: R-13
The Heiress
A POWERFUL sorceress will stop at nothing to keep custody of her young niece. Directed by Frasco Mortiz, the film stars Maricel Soriano, Janella Salvador, and Sunshine Cruz.
MTRCB Rating: R-13
Unbreakable
MARIEL SALVADOR and Deena Yambao have been best friends since college. Upon marrying brothers Justin and Bene Saavedra, their relationship gradually changes. Family obligations and a tragedy make them re-evaluate their friendship. Directed by Mae Cruz-Alviar, the film stars Angelica Panganiban, Bea Alonzo, Ian Veneracion, and Richard Gutierez.
KUALA LUMPUR — Malaysia’s flagship budget airline AirAsia Group Bhd flipped to a loss in its third-quarter, hit by foreign exchange losses and a writedown in the value of currency and interest rate swaps.
It posted on Wednesday a net loss of 51.4 million ringgit ($12.3 million) for the three-month period ended September, from 915.9 million ringgit net profit in the year ago period.
Revenue was 17.5% higher at 3.1 billion ringgit, however.
In a filing to the bourse, it also recorded a depreciation of right of use of asset, and finance costs for lease liabilities during the quarter.
Among its non-airline businesses, travel and lifestyle arm AirAsia.com and financial services unit BigPay also recorded wider losses.
Cost per unit during the period rose 11% mainly due to increases in maintenance and overhaul, user charges and other operating expenses.
AirAsia recorded one-off gains in the corresponding period last year from the disposal of its remaining stake in a joint venture with travel platform Expedia Group, Inc. for $60 million, and a 515.4 million ringgit deferred tax asset linked to aircraft disposals during the quarter.
The airline carried 13 million passengers in the three months, 20% higher but load factor — which measures how full planes are — fell 2 percentage points to 84%.
The group said it was positive about its fourth quarter performance, a seasonally strong period. It is also planning a net fleet growth of 18 aircraft, it said.
The airline received delivery of its first fuel-efficient A321neo this month, that will be operated on populous routes and at airports with infrastructure constraints.
AirAsia has hedged 86% of its fuel requirement for the last quarter of the year at average Brent hedge prices of $60.72 per barrel, and 73% of next year’s requirement at $60.22. — Reuters
The Asian Bankers Association (ABA) celebrated its 36th annual event last Nov. 14-15 in the Philippines, hosted by Philippine National Bank (PNB), gathering a large group of top bankers and finance executives from 25 countries from Asia and key markets across the globe. ABA provides a forum for advancing the cause of the banking and financial industry in the region by promoting regional economic cooperation. ABA’s membership is composed of 100 of the leading banks and financial institutions in the Asia-Pacific region. With this year’s theme, “Reshaping the Asian Financial Landscape,” the conference tackled the relevant topics of sustainable financing, cyber-security and digitalization. The speakers were experts who shared their experiences and knowledge in the current trends of banking. Attendees discussed and shared experiences as they tackled the most relevant developments facing the Asian financial landscape today. At the forefront was the integration of digital technology into the financial landscape and how digital banking and the wave of technologies are now disrupting the banking industry.
Digitalization is a must to be competitive and has been at the core of the host bank’s strategy of safe, aggressive growth. This is a bid for a more financially inclusive Philippines, as PNB President and CEO Wick Veloso exclaimed, “our vision for the future is a nation where prosperity belongs not just to a few, but to more Filipinos.” Through digitalization, PNB believes that it will allow Filipinos from all walks of life, from across the world immediate access to financial services anytime, anywhere.
A looming question that’s been asked among the delegates was “in the advent of digitalization, will the banks become obsolete? Will financial technologies replace them?” Jonathan Alles, ABA Chairman and President and CEO of Hatton Bank believes otherwise. He said, “We see fintech as partners now. Banks have deep pockets and ‘fintechs’ have ideas… staying separate will only lead to things not being able to be achieved optimally.” In support of his claim, Mr. Alles has even sought to extend associate memberships of ABA towards financial technologies.
Eugene Acevedo, president of Rizal Commercial Banking Corporation (RCBC), the only other Philippine bank member reminded that “technology alone is not the solution, we need process and redesign and hardcore credit skills. The solution is a combination of all three.” And he said this is based on his actual experience to avoid the same mistake for others.
Nevertheless, an important takeaway is what Bangko Sentral ng Pilipinas’ Deputy Governor Chuchi Fonacier comedically said, “flex your responsible digital services,” as a challenge towards the Philippine financial industry. She emphasized that the regulators are more than supportive in developing an effective digital ecosystem, especially in the Philippines. Shirsh Pathak, Fintelekt Advisory Services Managing Director, further drove-in the point by saying, “Banks must have a pre-emptive communication with the regulators,” to encourage collaboration between bank and government towards digital innovation.
A series of presentations that I have also found quite endearing was the state of sustainable financing across Asia — a practice that funds initiatives towards the environmental security, sustainable development and good governance. Our neighbors have seen tremendous success in this area. In fact, Thailand, Taiwan and Japan have introduced several green bonds and green loans into their respective markets. Some green bonds in Thailand that support renewable energy and clean transportation have seen 8.41x oversubscription and in totality represent 5% of their bond market. Although, much still needs to be seen. Green wash or the creation of environmental initiatives to mask unsustainable practices remain a definitive issue.
Apart from the presentations, the beauty and hospitality of the Philippines were showcased through various festivities throughout the convention. The delegates were toured around historical landmarks in Metro Manila, several world-class talents to entertain and serenade the guests. A delicious Filipino feast from Kare-Kare to Lechon were served, a fiesta organized for Asian Bankers.
Indeed, there is no end to learning. I am happy to see that hosting the ABA Convention has given considerable insight and tons of learning that we can use in our organizations to uplift and secure the lives of Filipinos.
Flor Gozon Tarriela is the Chairman of the Philippine National Bank. She is former Undersecretary of Finance and the First Filipina Vice-President of Citibank N.A. She is a Go Negosyo 2018 Woman Intrapreneur Awardee. She is a FINEX Foundation Trustee and an Institute of Corporate Directors (ICD) Fellow.
THE Philippine Economic Zone Authority (PEZA) said it hopes to grandfather more locators and impose a 15-year transition period in its proposals to modify the bill seeking to rationalize investor incentives.
PEZA in a statement Thursday laid out its proposed amendments to the Corporate Income Tax and Incentives Rationalization Act (CITIRA).
CITIRA aims to cut corporate tax incentives from 30% to 20% in 10 years and rationalize fiscal incentives, which PEZA has warned will deter investment and drive current locators away.
PEZA had earlier sought exemption for its locators from the CITIRA bill, fearing the exit of foreign investors. But it agreed to soften its position in October after a meeting with the trade secretary, and instead agreed to propose refinements to the bill.
PEZA Director General Charito B. Plaza said that the proposed changes are based on consultations with its exporters and information technology enterprises, ecozone developers, and industry partners.
“While the agency supports the goals of the CITIRA bill, PEZA aims to address the possible exits of foreign investors from the country’s ecozones towards other countries as this will result in massive job losses for thousands of Filipinos, thus affecting peace and prosperity,” she said.
PEZA consulted with the Philippine Ecozones Association (PHILEA), Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI), Information Technology and Business Process Association of the Philippines (IBPAP), Confederation of Wearable Exports of the Philippines (CONWEP), and various foreign business chambers.
PEZA said the “principles” guiding its proposals are to eliminate the risk of massive unemployment, minimize red tape, remove constitutional infirmities, prevent the Philippines from becoming uncompetitive, and avoid a backlash from exporters.
It said its proposals remove complicated items, controversy, and “shotgun approaches” to regulating investors.
changes refinements would save P21 billion intended for the structural adjustment fund, as well as “save the reputation of the Philippines and its Investments Promotion Agencies (IPAs) as honorable members of the global business community.” — Jenina P. Ibañez
CHINA said there is no basis for fears that one of its grid companies which invested in the Philippines has the ability to shut down power here.
“To my knowledge, the State Grid Corp. of China took part in the Transco (the Philippines’ National Transmission Corp.) project as a cooperation partner, providing safe, efficient and high-quality electricity services,” Geng Shuang, spokesperson of the Chinese Foreign Ministry, said in a statement issued by the Chinese Embassy in Manila.
State Grid, one of China’s two grid companies, which is responsible for power transmission in northern China, is a 40% investor in the National Grid Corp. of the Philippines (NGCP).
The foreign ministry issued the comments from a Nov. 27 briefing.
“The project is now operated, managed and maintained by the Philippine side, with the Chinese partner offering necessary technical support upon request,” Mr. Geng said.
“The allegation of China’s control over the Philippines’ power grid or threat to the country’s national security is completely groundless. Besides, the Chinese business also actively fulfills its social responsibilities. The ‘Brighten Up’ project that brings electricity to remote areas in the Philippines has been applauded by local authorities and people,” he added.
Philippine legislators are calling for an investigation into NGCP’s ownership, raising concerns that China is capable of shutting down the Philippines’ transmission system.
Separately, the Philippines’ Department of Energy (DoE) said Thursday that it “welcomes the strong public attention, as well as the ensuing discussions on national security concerns surrounding [NGCP], which has been brought forth by questions raised by some Senators.”
The questions were raised during the Energy department’s budget plenary deliberations on Nov. 19.
The DoE said together with TransCo, it will “actively take part in the Senate inquiries that will be scrutinizing these issues. We would like to emphasize that the matter at hand is not something new, and is, in fact, the very same point raised by [Energy] Secretary Alfonso G. Cusi upon his assumption as head of the Department.”
It said both DoE and TransCo would continue to call for and are fully supportive of the Senate’s interest to take a closer look at the administrative, operational, and procedural structures in NGCP given that aspects in the existing franchise agreement with the grid operator “seem inimical to the best interests of the national government, and more importantly, the Filipino people.”
“We consider the Senate hearings as a positive development towards the long overdue and much needed audit of NGCP, as well as the comprehensive reexamination of the Franchise Agreement, which is part of the Presidential directive to review all government contracts that appear to be onerous,” the DoE said.
“These steps would facilitate the introduction of all necessary amendments to uphold our national security and the welfare of our citizens and consumers,” it added.
On Wednesday, NGCP issued a statement outlining State Grid’s 40% stake in the company, adding that the controlling 60% belongs to Filipino companies Monte Oro Grid Resources Corp. and Calaca High Power Corp. with 30% shares each.
As such, State Grid has only three nominees to the NGCP board proportionate to its capital shares, it added. — Victor V. Saulon
