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PHL catastrophe bonds attract strong demand

THE CATASTROPHE-LINKED bonds (CAT) the government launched on Monday through the World Bank was met with strong interest from investors as it served as a diversifier to the pool of such securities in the market, top officials said.

“The successful float of the Philippines’ first ever ILS (insurance-linked security) or Cat bonds is one more proof of the strong investor support of the international business community for the Philippines amid the sweeping reforms being implemented by the Duterte administration to sustain the growth momentum while climate-proofing the country,” Finance Secretary Carlos G. Dominguez III was quoted in a statement released yesterday.

The Bureau of the Treasury (BTr) said aside from being the Philippines’ first CAT bonds, this issue was also the first CAT bonds to be listed in the Singapore Exchange and in any Asian exchange.

Last October, the government announced its plans to approach international financial markets to provide protection against earthquake and tropical cyclone risks. The BTr said that in partnership with the World Bank, the securities were planned to be coursed through the multilateral lender through the issuance of the ILS.

National Treasurer Rosalia V. de Leon said even though it took the government years to finalize the securities, it is high time for them to guard the fiscal health of the country against natural disasters given the country’s exposure to calamities.

“This instrument was years in the making, and we are grateful to the World Bank and our structuring agents for ensuring a successful deal. With our exposure to natural disasters, we cannot just sit idly by and do nothing,” Ms. De Leon was quoted as saying.

“We would also like to thank the Monetary Authority of Singapore (MAS) for their invaluable support of this endeavor and for the grant that they gave the Philippines to defray some of the expenses of this transaction,” she added.

The CAT bonds have two tranches, with a $75-million allotment for losses from earthquakes and $150 million for losses from tropical cyclones. Both tranches have a settlement date of Nov. 22 and maturity date of Dec. 2, 2022.

The bonds were under the International Bank for Reconstruction and Development’s capital-at-risk notes program designed to transfer risks related to natural disasters to capital markets.

To trigger payouts, an earthquake or a tropical cyclone will need to meet the criteria set under bond terms. — Beatrice M. Laforga

Art & Culture (11/27/19)

CCP launches art book for 50th year

THE Cultural Center of the Philippines launched an exhibition book entitled POSTER/ITY: 50 Years of Art and Culture at the CCP yesterday. The book features the posters that are currently exhibited at the CCP in line with the celebration of its 50th anniversary. The CCP’s timeline is also featured and it shows the significance of the posters and how they portrayed the artistic directions of Filipino aesthetics that evolved from the 1970s towards the search of a new identity in the present. For details regarding the book, check the CCP Intertextual Division Facebook page or contact the Intertextual Division at ccpintertextualdivision@gmail.com, 8551-5959 or 0919-317-5708. For more information on the Posterity exhibit, contact the CCP Visual Arts and Museum Division, Production and Exhibition Department at loc. 1504/1505 and (632) 8832-3702, mobile (0917-603-3809), e-mail (ccp.exhibits@gmail.com).

León Gallery’s Kingly Treasures Auction 2019

LEÓN GALLERY’s yearend The Kingly Treasures Auction 2019 featuring Philippine fine art, antiques, and furniture from the Luis Ma. Araneta y Zaragoza Collection on Nov. 30, 2 p.m., at Eurovilla 1, Legaspi St. corner Rufino St., Legazpi Village, Makati City. An architect, Mr. Araneta (1916–1984) designed the Makati Medical Center, Manila Doctors Hospital, the Immaculate Concepcion Church in Cubao, and the Times Theater in Quiapo. Among the items for sale are Fabian de la Rosa’s Landscape (Mariquina); two pieces by National Artist Fernando Amorsolo, the early work River (1927, 18” x 12”) and a later Under the Mango Tree (1962, 24” x 33”); a rare “late Neoclassical” stained golden narra armchair with original mother of pearl inlays; a pair of batikuling wood archangels with their original polychromy and gilding from turn of the 19th century; and a letter signed by Katipunan Founder and Supremo Andres Bonifacio in 1892 on the organization’s desire to expand its reach to Mindanao. Other historical documents are a Katipunan blood oath, one of only two extant known today; a battle map of the first three days of the Cry of Pugad Lawin; several cedulas personales; and a “dramatic eyewitness portrayal” by Jorge Pineda of the execution of Jose Rizal at the Luneta. The preview of The Kingly Treasures Auction 2019 is ongoing until Nov. 29 at León Gallery. For details visit www.leon-gallery.com, call 8856-2781 or e-mail info@leon-gallery.com.

Gateway Gallery exhibit on Andres Bonifacio

IN CELEBRATION of Bonifacio Day on Nov. 30, 10 a.m. to noon, the Gateway Gallery in Araneta City, Cubao, QC presents Bonifacio Redux¸ a project of the culture and heritage advocacy group Proyekto that aims to revisit the life and heroism of Andres Bonifacio. Professor Xiao Chua of De La Salle University will give a talk on “Andres Bonifacio: Comparing Old and New Biographical Dara and their Sources,” while John Ray Ramos of Ateneo de Manila University will give a talk on “Heroism for Kids: History and Heroes in Children’s Literature.” Registration is P300, inclusive of a certificate and a copy of the book Bayani Biographies: Andres Bonifacio, authored by Xiao Chua and John Ray Ramos, and published by Kahel Press. To register, text or call Proyekto at 0920-222-8889. Pre-registration is required for the certificate of attendance. Gateway Gallery is located at the 5f Gateway Tower, Araneta City, QC.

Tickets to Matilda the Musical are out

TICKETS to the international tour of the award-winning show Matilda the Musical are now available on TicketWorld. Matilda opens at The Theatre at Solaire on March 5, 2020. The stage adaptation of the Roald Dahl classic was originally produced for the stage by the Royal Shakespeare Company. The producers are launching the Tuesday Special: one price across all orchestra seats, and one price across all balcony seats. With book by Dennis Kelly and original songs by Tim Minchin, Matilda The Musical is the story of a little girl who, armed with a vivid imagination and a sharp mind, dares to take a stand and change her own destiny. Winner of over 85 international awards, including 16 for Best Musical, Matilda The Musical is now in its 7th year in London.

Bank stocks back on menu on strong earnings


AMID strong earnings results for banks and market expectations on lower borrowing costs, analysts are once again warming up to bank stocks.

The barometer Philippine Stock Exchange index (PSEi) lost 2.8% in the third quarter, a reversal from the one-percent increase in the second quarter and 1.2% in the third quarter of 2018.

On the other hand, the financial sub-index — which included the banks — gained 4.9% in the July-September period versus the 2.4% and 8.9% declines in the second quarter and last year’s third quarter, respectively.

This uptrend was reflected on the listed banks’ share prices during the July–September period with six of the 14 listed banks posting quarter-on-quarter gains. The Bank of the Philippine Islands (ticker symbol: BPI) saw the biggest rally among lenders with an 18.5% increase in its stock price, followed by Security Bank Corp. (SECB, 15.9%), Philippine Trust Co. (PTC, 12.2%), Philippine Savings Bank (PSB, 4.7%), East West Banking Corp. (EW, 2.8%), and BDO Unibank, Inc. (BDO, 2.1%).

At the same time, the Philippine National Bank (PNB) saw the biggest drop in share price at 11.5%, followed by that of China Banking Corp. (CHIB, -8.9%), Rizal Commercial Banking Corp. (RCB, -5.7%), Asia United Bank (AUB, -4.1%), Metropolitan Bank & Trust Co. (MBT, -4%), UnionBank of the Philippines (UBP, -3.5%), Philippine Bank of Communications (PBC, -2.8%), and the Philippine Business Bank (PBB, -2%).

“Banks generally outperformed the market… The positive sentiment for banking stocks was brought about by the multiple cuts in banks’ reserve requirement ratios (RRR) which is expected to lower funding cost, especially for smaller banks,” said COL Financial Group, Inc.’s senior research analyst John Martin L. Luciano in an e-mail.

For Senior Research Associate at China Bank Securities Corp. Rastine Mackie D. Mercado: “[B]anks reported double-digit growth in net income in the quarter (compared to the third quarter of 2018) as trading grains recovered from last year’s slump.”

“We note that most banking stocks were depressed in the first half of the year likely due to the yield curve inversion. As such, the recent normalization of the yield curve has been positive for the bank stocks,” Mr. Mercado said in a separate e-mail.

The third quarter saw the BSP cutting policy rates by 50 basis points (bps) as expected following the inflation downtrend and the pronouncements of BSP Governor Benjamin E. Diokno.

It also saw another 100-bp cut in banks’ RRR on September 27, effective in November, following the decision on May 23 that saw the reserve requirements slashed by 200 bps in the three phases or until July 28. It was cut again by another 100 bps in its October 24 meeting — for a total of 400 bps so far this year.

Banks also managed to perform well during the quarter as BSP data showed the bottom line of the country’s universal and commercial banks (U/KBs) grew by 34.19% to P155.76 billion from the P116.1-billion accumulated earnings at the end of the third quarter last year.

Net interest margin (NIM), the ratio that measures banks’ efficiency in investing their funds by dividing the annualized net interest income to average earning assets, improved to 3.43% in the third quarter from 3.38% in the second quarter and 3.15% posted a year ago.

“The [nine-month/three-months-to-September] earnings performance of the banking sector exceeded expectations as me and many analysts are selective on banking stocks at the start of the year,” Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan told BusinessWorld.

“It turned out that the trend has changed, but this is also in line with our expectations on what the growth for the banking sector will be… in the second-quarter banking report,” he added.

Mr. Tan also attributed “consumer confidence” as one of the “domestic catalysts” for the banks’ bottom line performance for the quarter.

“This also affects not just the consumer companies, but also banks since more people spending means more consumer credit demand will take place. This should also boost the loan growth since spending will also increase demand for credit,” he explained.

The listed bank stocks that stood out, Mr. Tan said, include BPI, BDO, MBT, and SECB owing to their “high double-digit” earnings growth coming mostly from their core businesses.

PNB Vice President and Head of Equity Research Division Alvin Joseph A. Arogo noted BDO and SECB’s high NIM year-on-year expansion in the third quarter at 50 bps and 46 bps, respectively.

“Consequently, the net interest income of both banks also outperformed,” Mr. Arogo said.

For Mandarin Securities Corp. Research Analyst Zoren Philip A. Musngi: “The three big banks (BDO, BPI, and MBT) surprised as they reported strong third quarter figures, with net income growth averaging 43% year on year…”

“In the past quarter (Q2), there was some uncertainty on whether the banks will be able to sustain their strong earnings, but they managed to pull through,” he added.

This assessment was shared by First Resources Management and Securities Corp. Officer-in-Charge of Trading and Research Charlene Ericka P. Reyes: “The third quarter earnings results… were mainly driven by the significant improvements in their non-core businesses, primarily in net trading gains. However, in contrast to the other banks that we cover, what stood out for me was BDO, which surprisingly did not heavily rely on trading gains to boost its non-interest income for the covered period…,” she explained.

“[I]nstead, recurring income from fees and commissions and insurance premiums mainly contributed to the growth in its non-core business,” she noted, citing BDO’s 32.3% decline in trading gains for the third quarter “versus the 200%-500% surge from BPI, MBT, and EW.”

Ms. Reyes also mentioned EW’s “notable” 13.2% loan growth during the quarter, which outpaced the eight-percent average loan growth from the big banks “driven by their high concentration in consumer loans at 72%.”

“[L]astly, MBT was also seen to take advantage of the low interest rate environment this year as reflected by their shift of funds in the bond market, with their total bonds for the first nine months of the year increasing to P62.68 billion from P2.91 billion during the same period in 2018,” she said.

Abacus Securities Corp. Investment Analyst Elizabeth T. Santiago noted MBT’s and EW’s “low current market valuation, which makes them cheap compared to their peers.”

Apart from valuation, Ms. Santiago said that MBT and EW also stood out with the former having the largest trading gains among the listed banks and the latter with its “compelling recovery story as it was disproportionately hit by funding costs earlier in the year.”

“[EW] managed to grow its net income during the quarter… as the other major listed banks despite not having much by way of trading gains…,” she added.

RECOMMENDATIONS AND OUTLOOK
All things considered, many of the analysts being interviewed continued to be optimistic on the prospects of bank stocks going into the fourth quarter.

Joylin F. Telagen, research head at IB Gimenez Securities, Inc., noted that the ongoing US-China trade war “will still continue” to affect stock prices in the last three months of the year.

“Other than that, I’m looking at… the US Federal Reserve’s and BSP’s policy meetings (on December 10–11 and December 12, respectively) that might possibly cause market volatility before the effect of a possible Santa Claus rally,” Ms. Telagen said, referring to the tendency of stock prices to rise over the last weeks of December into the new year.

“We like to focus more on the stable big banks like BDO, MBT, BPI, and the leader in digital transformation UBP as they will stably continue to post strong earnings and capture the larger percentage of the rising market demand,” she added.

For First Resources’ Ms. Reyes: “We are maintaining our recommendation to overweight selected banking stocks as valuations continue to be attractive versus the other sectors.”

“Despite the slowdown in loan and deposit growth, we believe that banks will continue to record improvements in net interest margin driven by the normalization in funding cost amid the reduction in reserve requirement ratio and the decline in bond yields,” she added.

China Bank Securities’ Mr. Mercado was likewise upbeat: “[We are] generally bullish for the sector in light of the recent easing policies from the BSP, as these should translate into higher loan book growth and, at the same time, lower funding costs — which could lead to higher NIMs, especially for those with portfolios tilted towards consumer loans,” he said.

Also hopeful was Abacus Securities’ Ms. Santiago: “We are still bullish for the sector, especially going into next year, as government catch-up spending may finally spur private investment and loan growth through expected multiplier effects.”

“The brunt of this year’s rate cuts would also be felt in 2020, but liquidity may start to ease in the fourth quarter. We also expect margin expansion to continue as easing liquidity would continue to drive funding costs down, while the industry expands efforts to grow its retail and SME lending components (where yields are higher),” she said.

Mandarin Securities’ Mr. Musngi has maintained the positive outlook on the listed banks.

“Even though loan growth has been tempered for the most of 2019, bank profits are benefitting from the [interest] rate and RRR cuts [as well as] solid growth in fee income and recovery in trading gains. We expect the stable market environment and easing policy of the central bank to continue for the most part of 2020,” he said.

Philstocks’ Mr. Tan shared this assessment, but said that they are “still selective” on banks “due to the high competition in the industry” and that they are also looking into “global uncertainties.” — J.E. Hernandez

US SEC proposes new rules on use of derivatives in ETFs

WASHINGTON — The US securities regulator on Monday proposed new regulations for the use of derivatives by investment funds to introduce some safeguards for more risky products and increase competition.

The proposal from the Securities and Exchange Commission (SEC), which is subject to public consultation, would address concerns over the risks posed by so-called inverse and leveraged exchange traded funds (ETF), after some products experienced heavy losses during a spike in volatility in February 2018 subsequently dubbed “volmageddon.”

Critics of the products blamed the magnified losses on their complexity, which many investors did not understand.

Monday’s proposal partly reissues an earlier 2015 proposal meant to replace the current ad hoc product approvals system, which has allowed firms such as ProShares and Direxion to gain approval for their leveraged and inverse products.

Industry players have long complained that a lack of consistent rules has effectively barred new players in these products from entering the market to compete.

“By standardizing the framework for funds’ derivatives risk management, the proposal would benefit investors, funds and our markets,” said SEC Chairman Jay Clayton.

ETFs track baskets of stocks and have become popular due to their lower fees, but some have grown to include derivatives to amplify returns.

Leveraged ETFs seek to magnify the performance of the indexes they track, like the Standard & Poor’s 500-stock index, for a single day. Inverse ETFs try to achieve the opposite performance, which allow investors to make money when the market or the underlying index declines.

If adopted, the new rules would require funds to limit leverage to 150% based on value-at-risk, the SEC said in its proposal, while it would allow leveraged and inverse products to limit their investment results to 300% of the return — or inverse of the return — of the underlying index.

The rules would also require all funds and advisers to determine upfront whether a customer is capable of evaluating the risk of these instruments before allowing investors to trade in leveraged or inverse ETFs.

Firms would have to implement a risk management program that includes spelling out in their prospectus whether they are subject to a proposed limit on fund leverage risk.

The agency said it would afford exemptions to firms that limit derivatives exposure to 10% of net assets or use derivatives only to hedge certain currency risks. — Reuters

Grab PHL says it did not overcharge riders; any increase was ‘within fare matrix’

GRAB Philippines on Tuesday said there is no basis for Puwersa ng Bayaning Atleta (PBA Partylist) Rep. Jericho B. Nograles’ assertion that it “should be liable for P15 billion worth of fines” for overcharging customers.

“Grab did not overcharge its riders and has no liability to pay any fine, contrary to a claim by (Mr. Nograles),” the ride-hailing firm said in a statement.

Grab argued that its fares “were well within the fare matrix” of the regulator Land Transportation Franchising and Regulatory Board (LTFRB).

The Philippine Competition Commission (PCC) earlier this month slapped a fine of P23.45 million on Grab for breaching its initial pricing commitments. The fine includes a P5 million refund to its Grab riders who used the service between February and May.

“We complied with our regulator but in the interest of showing good faith, we will comply with the PCC although clearly we could have filed a motion for reconsideration or appealed to a higher authority, which we did not since we want to focus on our business instead,” Grab country manager Brian P. Cu was quoted as saying in the statement.

He said Mr. Nograles’s claim that Grab Philippines should face bigger fines has “no basis,” adding this is “incorrect, misleading, irresponsible and will only hurt the morale of drivers who only want to make a decent living by serving the riding public.”

Grab also maintained that it “has not made any form of admission of allegedly 3-million offenses of ‘overcharging’.”

“What Grab said in the press conference last November 22 was there is no overcharging, and that there are around 3 million passengers that would receive the payment of P5.05 million in total fines as ordered by the PCC,” it explained.

Grab has said that it respects PCC’s mandate to protect Philippine consumers, and has worked with the authority to form and finalize its voluntary commitments.

Grab has until Dec. 14 to pay its first and second quarter fines amounting to P11.3 million and P7.1 million respectively. — A.L.Balinbin

How PSEi member stocks performed — November 26, 2019

Here’s a quick glance at how PSEi stocks fared on Tuesday, November 26, 2019.

 

ARTA sets deadline for FDA to clear backlog

THE Anti-Red Tape Authority (ARTA) has instructed the Food and Drug Administration (FDA) to address half of its backlog of 11,000 applications for certificates of product registration within 11 days, starting Tuesday.

ARTA Director General Jeremiah B. Belgica told FDA in a meeting that ARTA will automatically approve low-risk products, which consist of 40-50% of pending registrations, if they are not processed within that period.

The bulk of pending applications are with FDA’s Center for Food Regulation and Research.

The FDA was given three days from Tuesday to assess its internal processes and information technology capacity to move the applications forward. The remaining seven to eight days was allotted to application processing.

ARTA in September automatically approved 3,125 pending applications for automatic renewal.

FDA Center for Food Regulation and Research Director Pilar Marilyn P. Pagayunan said that the slow approvals were due to lack of manpower and IT infrastructure.

Ms. Pagayunan noted that identifying low-risk products from the applications is manual. Mr. Belgica said that ARTA will send an IT representative to the FDA to help the agency examine its digital classification of records.

“We’ll give you three days to please figure it out. It will be a disappointment if it is not addressed by Friday,” Mr. Belgica said.

Low-risk food products for FDA registration, according to a 2016 circular, include certain fats, oils and fat emulsions; processed fruits; vegetable and edible fungi; confectionery; cereal-based products; processed meat and meat products; and bakery wares, among others.

Requirements for a certificate of product registration include a license to operate, proof of payment, an accomplished e-registration form, a picture of the label, samples (for food supplements), and justification of claims and scientific studies.

Applicants for low-risk products are not always required to submit scientific studies if there are no nutritional claims, FDA said.

“I would assume the scientific studies would be the ones that take time, because all of the others would basically be ministerial,” Mr. Belgica said.

FDA said it also evaluates labelling to monitor compliance with guidelines on nutrition information, allergen information, and ingredients lists.

Asked if he has concerns about the risk to the public if ARTA automatically approves products, Mr. Belgica said in an interview after the meeting that “If it’s low-risk, it’s already cleared. They’re just looking at the labels.”

“I’ve been pre-clearing it with them — are these products still up for testing whether it’s viable… I think it’s no longer the problem. So we’ll make sure in those orders we come up with that tapos na ‘yung testing, na-certify na (the testing and certification is complete).”

Meanwhile, ARTA also directed all government agencies to submit their lists of pending contracts by Dec. 9 following President Rodrigo R. Duterte’s directive.

In a statement Tuesday, ARTA said that Mr. Belgica and ARTA Deputy Director General Ernesto Perez signed a memorandum circular that applies to all government offices and agencies in the executive department, including local government units and government-owned or controlled corporations. — Jenina P. Ibañez

BIR’s POGO employee list well short of real estate sector’s estimated numbers

A HOUSE COMMITTEE heard estimates of employee numbers in the offshore gaming industry that far exceeded the population of workers registered for tax purposes with the Bureau of Internal Revenue (BIR).

The House Ways and Means Committee heard on Tuesday an estimate from real estate sources that the number of workers in the industry, whose members are known as Philippine Offshore Gaming Operators (POGOs), of between 400,000 and 800,000, significantly larger than the BIR-registered 108,940, raising questions about whether such workers are properly taxed.

Representative Estrellita B. Suansing of Nueva Ecija’s first district cited the estimate of POGO employee numbers made by David Leechiu, Co-Founder and CEO of Leechiu Property Consultants. Property firms have extensive dealings with POGOs and are in a position to estimate office populations based on floor space.

BIR Deputy Commissioner Arnel SD. Guballa told the panel: “Ang registered po dito na submitted by PAGCOR to BIR is 108,940 individuals (Registered employees based on the list submitted by the Philippine Amusements And Gaming Corp is 108,940 individuals).”

Ms. Suansing added: “Sixty lang ang licensed (POGOs with PAGCOR). 100 ang unlicensed. Tapos nyo (BIR), out of 60, 10 lang ang registered… Yung 60 na yun habulin ninyo. Baka nandun yung P104 billion niyo na shortfall (Pangcor has 60 licensed POGOS and 100 are unlicensed. Of the 60, only 10 are registered with the BIR. You need to run after the rest of the 60 and maybe you can make up your P104 billion shortfall)” Ms. Suansing said, referring to the BIR’s shortfall against its revenue target.

“What BIR is doing is we are asking the Bureau of Immigration (about) all these foreign workers entering our country. But the problem is we cannot get the data.” Mr. Guballa said. — Genshen L. Espedido

Luzon grid goes on yellow alert for second day on plant outages

THE GRID OPERATOR placed the Luzon grid on yellow alert on Tuesday, the second straight day it has done so but for a longer period starting from 9:00 a.m. until 8:00 p.m.

The notice from the National Grid Corp. of the Philippines (NGCP) comes at a time when the country’s main island does not traditionally register high power demand, which usually peaks during the dry season.

Manila Electric Co. (Meralco) said it is ready to activate its interruptible load program, which relies on the private sector’s power generation sets to ease demand on the grid.

“This is due to insufficient operating reserve brought about by power plant outage,” Meralco said.

Meralco Public Information Office Head Joe R. Zaldarriaga said in case of supply deficiency, corporations and commercial establishments participating under the interruptible load program are ready to use their generator sets to help prevent or minimize incidents of power outage.

The power plants that went on unplanned outage are San Buenaventura Power Ltd.’s coal-fired power plant, which has installed and dependable capacity of 455 megawatts (MW). It went out on Nov. 25 and is expected to be back online on Nov. 27.

A day earlier, Quezon Power Ltd. Co. went on unscheduled shutdown. It has an installed capacity of 511 MW and a dependable capacity of 460 MW.

They added to plants that shut down earlier this month as scheduled: AP Renewables, Inc.’s Tiwi geothermal power plant unit 6, with installed capacity of 57 MW and dependable capacity of 50 MW; South Luzon Thermal Energy Corp.’s coal-fired power plant unit 2, with installed capacity of 135 MW, and dependable capacity of 122 MW.

In September and August, two plants that went offline have yet to be back: GN Power Mariveles Coal Plant Ltd., Co.’s coal-fired power plant unit 1, with installed capacity of 345 MW and dependable capacity of 316 MW; and Prime Meridian Power Corp.’s Avion natural gas-fired power plant unit 2, with installed capacity of 50.3 megawatts (MW) and dependable capacity of 48 MW.

On Monday, NGCP placed Luzon on yellow alert between 10:01 a.m. and 4:00 p.m. — Victor V. Saulon

Senate approves measure extending 2019 budget validity

THE SENATE on Tuesday approved on third and final reading a measure extending the availability of the 2019 national budget until December 2020.

With 19 affirmative votes, zero negative and no abstentions, House Bill No. 5437, which was earlier adopted by the Senate Committee on Finance without amendment, hurdled the chamber.

The bill will amend Section 65 of Republic Act No. 1260, or the P3.662-trillion General Appropriations Act of 2019.

“We did this because under RA 11260 or the 2019 GAA and Executive Order No. 91 on the implementation of a cash-budgeting system, all appropriations that were not released, obligated or paid by Dec. 31, 2019 will lapse and revert to the national treasury,” Senator Juan Edgardo M. Angara said in a statement Tuesday.

Mr. Angara also raised the need to extend the validity of the budget, in light of the delay in the enactment of 2019 spending plan due to the months-long impasse between the House of Representatives and the Department of Budget and Management, and later with the Senate.

“Through this measure we would be extending a big helping hand to the Executive Branch which has had to operate during the first few months of this year on a re-enacted budget,” he also said.

Aside from the budget delay, spending was also stalled by the 45-day election ban on project implementation ahead of the May 13 midterm polls.

Moreover, Mr. Angara said without such an extension, programs and projects that will suffer are the repair and rehabilitation of 2,900 classrooms and the electrification of 5,900 schools; funding for infrastructure projects and the acquisition of medical equipment for 2,800 health facilities, among others.

Senate President Pro Tempore Ralph G. Recto supported the bill, which he sees as a measure to speed up spending of the government.

“This bill is more about giving the government the chance to accelerate actual spending and less about giving more time for them to do it,” Mr Recto said in explaining his vote Tuesday.

“It is meant to turbo charge spending and not simply extend period for it to continue with its current sluggish pace because if the velocity and volume of disbursement will remain as is during the extended period then at the end it will not make much of a difference.” — Charmaine A. Tadalan

Philippines, S. Korea issue FTA progress report after missing summit deadline

THE Philippines and South Korea signed an “early achievement package” on market access for goods at the ASEAN-Korea commemorative summit on Monday pending the possible conclusion of a free trade agreement between the two countries by the first half of 2020.

In a statement on Tuesday, the Department of Trade and Industry (DTI) said that the package reports the progress of trade negotiations on banana, garments and auto parts exports from Philippines as well as pharmaceuticals, petrochemicals, and auto parts exports from South Korea.

The two sides had hoped to achieve substantial progress on the FTA by this month’s summit, but went with the progress report after apparently stalling on items like bananas, for which Philippine producers are seeking lower tariffs, and South Korean auto exports, for which Seoul is seeking greater access.

The package was signed by Trade Secretary Ramon M. Lopez and South Korean Minister for Trade Yoo Myung-hee on Nov. 25 on the sidelines of the summit in Busan.

In a joint statement during the signing, the two trade ministers reiterated the importance of expanding trade. They agreed that the FTA should be mutually beneficial and should build upon the multilateral and regional trade agreements in which both countries are part.

They committed to concluding negotiations by the first half of 2020, agreeing that the early achievement package will be improved “through consideration of additional tariff lines and/or other mechanisms that will further facilitate trade and investment.”

Since the countries first began negotiations in June, DTI said that the negotiating team had concluded chapters on Competition, and “made significant headway” on the remaining six chapters: Trade in Goods, Trade in Services, Investment, Rules of Origin, Economic and Technical Cooperation, and Legal and Institutional Issues.

Mr. Lopez said that the Philippines’ goal is to improve market access for bananas and other tropical fruits.

“The FTA, once enforced, will be an important vehicle for improving the balance of trade with South Korea through enhanced trade flows, facilitating the movement of natural persons, and generating more investment opportunities and by extension, job generation possibilities,” he said.

Through the FTA, the Philippines hopes to increase its exports of agricultural products, auto parts, organic and natural products, and design-driven products like garments and furnishings.

Top exports to South Korea include bananas as well as electrical and semiconductor products. Top imports include petroleum and integrated circuits. — Jenina P. Ibañez

PHL signs tourism promotion deal with South Korea

THE Philippines and South Korea signed a five-year tourism promotion agreement, Tourism Secretary Bernadette Romulo-Puyat said.

In a statement, the Department of Tourism (DoT) said the deal, which is valid until 2024, will boost two-way visitor volumes while improving security for tourists.

Ms. Romulo-Puyat said South Korea has always been the top source of tourist arrivals. In the nine months to September the Philippines received 1.45 million South Korean visitors, or 23.55% of the total.

“South Korea is undisputed in its position as the top source market of the Philippines for nine consecutive years. To sustain the momentum, the DoT will embark on a more aggressive marketing campaign to continue capture a bigger chunk of the Korean market,” she said.

She added that the agreement will also enable DoT and the South Korean government to develop “new thematic tour products” targeted at specific markets like Busan and Daegu.

DoT also hopes to convince international airlines to add services between the two countries. — Gillian M. Cortez

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