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Dining Out (09/26/19)

Chocolate mooncakes

CITY OF DREAMS Manila celebrates the Mid-Autumn festival with uniquely handcrafted chocolate mooncakes this September at The Garage’s Chocol8. The mooncakes, stamped with City of Dreams Manila’s logo, are made from pure chocolate, consisting of exclusively blended Swiss dark chocolate fashioned in a mould resembling the traditional mooncake’s pastry skin, which are then filled with different flavors of ganache that mirror the yolk of a salted egg. The varieties are: Lemon-Caramel, which is composed of lemon ganache complemented by caramel ganache; Orange-Almond, which melds orange ganache, caramelized roasted almonds, and almond ganache; and Mango-Pistachio, which harmoniously blends mango ganache, caramelized pistachios, and pistachio ganache. The mooncakes come in a two-color toned box for P780 net per box. For inquiries, call 800-8080 or e-mail guestservices@cod-manila.com or visit www.cityofdreamsmanila.com.

Promo on hold

AFTER THE “overwhelming response” to McDonald’s McDelivery Moon Coupon promo last Friday caused “technical difficulties,” the fast food giant is postponing its next Moon Coupon releases which were originally scheduled on Sept. 24 and 29. The McDelivery’s Moon Coupons were meant to give customers discounts based on the moon’s phases through the McDo App,

P28 beer at Dencio’s

DENCIO’S continues its 28th anniversary celebration this September with a special deal: for one night only, on Sept. 27, get an ice-cold bottle of San Mig Light for only P28.

Marriott’s anniversary deals

THE Marriott Manila turns 10 in October and will be offering special promos to mark the occasion. The Manila Life Café and Greatroom will offer P10 food picks. Manila Life Café will offer a Street Food Platter sampler (kwek-kwek, fish ball and chicken fritters) for P10, while the Greatroom will serve Limited Signature Tapas at P10 each (minimum of 10 orders). Meanwhile, the Greatroom and Still will hold happy hours that start at 10 p.m. featuring everything from hand crafted concoctions to premium whiskeys. The Marriott Café will celebrate Throwback Thursdays, offering its hefty buffet on all Thursdays of October at the same price from 10 years ago (lunch from noon to 2:30 p.m. for P1,350 nett, and dinner from 6-10:30 p.m. for 1,500 nett). Meanwhile, a minimum spend of P10,000 when dining at Cru Steakhouse will come with a bottle of wine, on the house.

Beer fest at RWM

AS PART of its 10th anniversary celebrations, Resorts World Manila (RWM) will features over 30 craft beer brewers from the Philippine Craft Beer Community (PCBC) in its October Fiesta. The celebration will be on Oct. 4 and 5, 4 p.m. to midnight, at the 2/F Retail Area of the Newport Mall. Guests may choose from a selection of over 30 craft beers during the two-day event which they can “mix and match” them with signature RWM pulutans (bar chow) including Franks’ Pinoy Hotdogs, Franks’ Sisig Wrap, RWM Fiesta Ham, and Bolahan’s selection of tusok-tusok favorites. There will also be musical entertainment with featured artists including Paolo Santos, Migz Haleco, Davey Langit, New Maincast, and Julius on Oct. 4; and Hans Dimayuga, Tiara Shaye, Juno, and Hello Ceasar on Oct. 5. The door charge for October Fiesta is P1,000 inclusive of five RWM pulutan, three local craft beer servings, and one raffle coupon. Meanwhile for P400, guests may enjoy two local craft beers samples, and one souvenir pilsner glass. Visit www.rwmanila.com for details.

Fear of retirement poverty drives Japanese to private pensions

JAPANESE households are rushing to private retirement products after a government report fueled fears that the national pension system won’t be enough to support them during old age.

SBI Securities Co. and Monex Group Inc. have seen applications for defined contribution pension plans surge since the report was released in early June. The document, published on the Financial Services Agency’s website, sparked angst after showing that a couple in their sixties may need as much as 20 million yen ($186,000) on top of their public pension to cover living expenses.

Governments around the world are grappling with how to sustain retirement systems as their populations age and interest rates plummet. The problem is most acute in Japan, where people live longer than almost anywhere else and remain averse to investing more of their $17 trillion of financial assets, despite earning virtually zero interest in bank accounts.

Now, nervousness over the future of the pension system is prompting some to finally take action, providing an unexpected boon to local securities firms.

“The 20 million yen issue is a tailwind for us,” said Ryugo Hashimoto, who heads the investment trust and fixed-income department at SBI Securities. “The era of 100-year lifespans is approaching, and so people are becoming aware that they may have a retirement savings shortfall that they need to prepare for.”

Tomoko Minegishi, a 47-year-old school teacher’s aide, is among people who are considering an individual-type defined contribution pension plan known as iDeCo.

“I’m concerned whether our public pension benefits will be sufficient,” Ms. Minegishi said. “I don’t think my salary will rise much, so I want to save on taxes” through iDeCo, she said.

Similar to 401(k) plans in the U.S., under iDeCo people pay a fixed amount each month to make long-term investments in financial products such as funds that buy stocks and bonds. Contributions are tax deductible.

The number of applications for iDeCo accounts at SBI and Monex increased about 50% in June and July from May, according to the two online brokerages. Overall, new enrollments rose 8.5% from a year earlier to 36,778 people in July, data from the National Pension Fund Association show.

Applications for a small-lot, tax-free investment program called the installment-type Nippon Individual Savings Account also increased in June and July from May, SBI and Monex said.

Japanese workers are among the worst prepared for rising life expectancy because of their tendency to hoard cash savings rather than invest, a World Economic Forum report showed in June. Households in Japan have 53% of their financial assets in cash and deposits, compared with 13% in the U.S. and 34% in the euro area, Bank of Japan data show.

MONEY IN THE BANK
One key to sustaining the recent spate of investment is boosting financial literacy, according to Hiroaki Muto, chief economist at Tokai Tokyo Research Institute Co. in Tokyo. Japan hasn’t provided enough financial education programs at schools, and people remain deterred from investing after the nation’s asset-price bubble burst in the early 1990s, he said.

“There’s a myth that savings are the safest and stocks are seen as gambling,” Ms. Muto said.

To avoid a tough retirement, more people like Minegishi may find that it’s a punt worth taking.

“To supplement my pension, I think I’ll have to work as long as I can,” she said. “I’m worried if we’ll be OK.” — Bloomberg

How PSEi member stocks performed — September 25, 2019

Here’s a quick glance at how PSEi stocks fared on Wednesday, September 25, 2019.

 

NEDA sees cabinet decision this month on NAIA rehab, Panglao

ECONOMIC planners are expecting a cabinet committee decision by the end of the month on the Ninoy Aquino International Airport (NAIA) rehabilitation project and the Panglao, Bohol International Airport privatization.

The National Economic and Development Authority (NEDA) said in a statement Wednesday that the NAIA rehabilitation and the unsolicited proposal for the new Panglao, Bohol International Airport will be up for cabinet committee action in the last week of September after hurdling a review by NEDA’s Investment Coordination Committee (ICC) Technical Board (TB).

A total of 20 unsolicited proposals have been submitted to NEDA’s ICC as of Sept. 20. Meanwhile the NEDA Board has approved one public-private partnership (PPP), the unsolicited build-operate-transfer Bulacan International Airport.

The Department of Transportation (DoTr) recently awarded the P734-billion Bulacan airport project to proponent San Miguel Holdings Corp., and the company could start construction of the gateway by December.

NEDA added that 10 proposals have been presented to the ICC-TB and approval is awaiting compliance with various requirements.

Those awaiting further review by the ICC-Technical Working Group are the unsolicited proposal for the Davao People Mover Project and the unsolicited proposal for the C5 MRT 10 Project, both under the DoTr.

Other projects are the unsolicited Build-Transfer-Operate proposal for the Fort Bonifacio-Makati Sky Train Project, the unsolicited Build-Operate-Transfer proposal for the 50-Year Integrated Development Plan for the Mactan-Cebu International Airport (MCIAA) and the unsolicited proposal for an IT project for the City of Naga, Cebu known as UNLAD BAYAN Local Government Information.

Those with pending compliance requirements at the ICC-TB level are the unsolicited Operate-Add-Transfer proposal for Laguindingan Airport, the unsolicited OAT Proposal for the Davao International Airport, the unsolicited Operate-Maintain-Upgrade-Transfer Proposal for the Operation and Maintenance and Facility Upgrade of Kalibo International Airport, the unsolicited proposal for the Light Rail Transit (LRT) 6 Cavite Line A Project, and the unsolicited proposal for the MRT-11 Project.

“The remaining seven project proposals are still under ICC secretariat evaluation and undergoing refinements based on technical discussions with ICC member agencies,” according to NEDA.

“We view these unsolicited proposals as an indication of private sector confidence in the Philippine economy. NEDA is doing its best to efficiently and speedily process these, allowing the private sector to innovate, while keeping in mind the public’s interest over the medium and long term,” Economic Planning Secretary Ernesto M. Pernia was quoted as saying. — Beatrice M. Laforga

House approves extra year of 2019 budget validity

THE House of Representatives, sitting as a plenary body, approved on second reading Wednesday a resolution extending the validity of the 2019 budget until December 2020.

House Joint Resolution No. 19, which consolidates House Joint Resolution No. 9 by Antique Rep. Loren Legarda and House Joint Resolution No. 10 by San Juan City Rep. Ronaldo B. Zamora and Davao Oriental 2nd district Rep. Joel Mayo Z. Almario, was approved also on Wednesday morning by the Appropriations Committee.

House Appropriations committee chairperson Isidro T. Ungab, representing Davao City’s third district, said the extension of the validity of 2019 budget will permit the full utilization of the appropriations.

“First, We will give more time for agencies to implement… second, Inabot tayo ng election ban (the election ban hindered spending)… So i-extend natin up to the end of 2020. (The solution is to extend validity the end of 2020),” Mr. Ungab said in chance remarks to BusinessWorld.

The budget passage was delayed by nearly four months, and when President Rodrigo R. Duterte signed the spending plan in April he vetoed about P95.3 billion in public works items.

The 2019 budget was the first use-it-or-lose-it spending plan passed under new “cash-based” budgeting rules, which gave agencies only a year to disburse the appropriations in order to ensure that funds were spent quickly. The budget languished in Congress past the turn of the new year, causing the government to miss the dry-season construction window for key infrastructure projects, which was cited as a drag on economic growth in the second quarter.

The passage of the 2019 budget was also delayed by wrangling between the two chambers about “insertions” allegedly made after the document’s finalization by virtue of bicameral approval. Many of the insertions fell foul of the presidential veto.

Mr. Ungab added that the House is also studying ways to make the second year of the cash-based budgeting rules more flexible.

“Pinagaaralan natin ng husto, yung 2019 kasi may birth pains yung start ng cash-based budgeting. (We have studied intensively the 2019 budget, which marked the start of cash-based budgeting) Kaya bigyan natin ng more leeway. So itong sa 2020, hopefully, second year na ito ng implementation ng cash-based budgeting. Hopefully, efficient na at may acceptance na (We believe we need more leeway in 2020. We hope that by the second year of cash-based budgeting the process will be more efficient and widely accepted),” he said. — Vince Angelo C. Ferreras

Mindanao-Visayas grid connector on track for 2020 completion

PRIVATELY OWNED National Grid Corp. of the Philippines (NGCP) expects to complete as scheduled next year the P52-billion project that will link the power grids of Mindanao and the Visayas despite continuing right-of-way and permitting issues.

“MVIP (Mindanao-Visayas Interconnection Project) is underway. I hope we finish as scheduled. We have already awarded part of the submarine cable,” Nanette Nancy G. Bugnosen, NGCP chief finance officer, told reporters.

“We are still negotiating with some local government units for the necessary permits to proceed with the work, and also we are negotiating with some landowners for right-of-way clearance,” she added.

MVIP, which was classified in May 2018 by the Energy department as an energy project of national significance (EPNS), will undergo a streamlined permitting process while speeding up its required documentation for its faster construction and completion.

In November, NGCP announced that it had simultaneously broke ground on the project’s cable terminal stations in the municipality of Santander in Cebu, and Dapitan City in Zamboanga del Norte.

The cable terminal stations serve as the landing points of the two 92-kilometer submarine cables that will carry around 450 megawatts (MW) of power from the Visayas and Mindanao, and vice versa.

Considered the biggest power infrastructure project in Philippine history, the project also requires the installation of 526 circuit-kilometers of overhead transmission lines, high-voltage direct current converter stations, and upgrades to substations in both regions.

Ms. Bugnosen said once the negotiations with local governments and landowners are complete, NGCP will proceed with the needed construction.

“In the meantime, we have worked with the providers and consultants to make sure that we make the deadline — that’s end -2020,” she said.

MVIP is one of the 29 NGCP projects that were certified as energy projects of national significance by the Department of Energy. An executive order gives an EPNS faster issuance of regulatory and documentary requirements from local and national government agencies.

The perks include action on applications for permits and requirements within 30 days, and the automatic approval of all applications within five working days if no action of a government agency is made after 30 days.

The 29 projects will cost a total of P90.291 billlion as approved by the Energy Regulatory Commission. — Victor V. Saulon

House discussing extended foreign farmland leases

THE House of Representatives received bills and resolutions seeking to ease restrictions on foreign investment, including a proposal to increase the term foreigners can lease farmland.

Among the bills and resolutions filed at the House seeking various amendments to the 1987 Constitution was Joint House Resolution No. 4, introduced by Pampanga 3rd district Representative Aurelio D. Gonzales, Jr.

“We propose the qualified owning of land for foreigners to entice them to invest in our country and invite foreign direct investment. Additionally, this will ensure that our country produces enough food for our people,” Mr. Gonzales said at a committee hearing.

He said he proposes an amendment to allow the renewal of foreign leases of agricultural land for another 25 years.

“Foreign investors must be assured that our economic environment is conducive. That’s why we propose that we increase the renewal of the lease period of agricultural lands for another 25 years to ensure continued economic growth and development,” he said.

Asked to comment, American Chamber of Commerce of the Philippines, Inc. Senior Adviser John D. Forbes said that in general, the Constitutional restrictions on foreign investment are out of date.

“The restrictions were originally protectionist. But… the world has changed. A lot has changed since 1987. The restrictions, the way they are in the Constitution, are inflexible and difficult to change,” Mr. Forbes said.

He added: “The Philippines has tremendous investment potential. There are now more foreign investments coming into ASEAN than China… I don’t think one has to fear foreign investors if you can regulate foreign investors.”

Competition Commissioner Johannes R. Bernabe, also asked to comment, said: “Even as we generally support liberalization in so far as economic activity is concerned, because this fosters greater competition in the markets, regulation should also accompany such liberalization.”

John Paul P. Corpus, a supervising research specialist at the Philippine Institute for Development Studies, said he supports the power of Congress to “legislate exemptions” to foreign investor restrictions.

“We support the proposed amendments giving the Congress’s ability to legislate exemptions to foreign equity restrictions in order to attract greater foreign investments and improve competitiveness. (However)…there is a need to balance the pursuit of economic goals while protecting the national patrimony and the public interest,” Mr. Corpus said.

According to the United Nations Conference on Trade and Development’s (UNCTAD) 2019 World Investment Report on special economic zones, Foreign Direct Investment flows to the Philippines fell 25.75% to $6.46 billion in 2017. — Vince Angelo C. Ferreras

Duterte signs law allowing foreign universities to offer degree programs in Philippines

PRESIDENT Rodrigo R. Duterte has signed a law allowing foreign institutions of higher education to establish commercial enterprises in the Philippines providing educational services and to collaborate with universities here.

Mr. Duterte signed Republic Act No. 11448, also known as the Transnational Higher Education Act, on Aug. 28, according to a statement issued Wednesday by the Palace.

The law cites the need to provide quality education relevant to the changing needs of Filipinos in light of the “rapid developments brought about by globalization, including liberalization of goods and services and expanding use of information and communication technologies, have created a climate for borderless teaching and learning.”

The transnational higher education (TNHE) industry, as defined by the law, covers all types and modes of delivery of higher education study programs, sets of courses of study, or educational services.

Under the law, foreign higher education institutions (FHEI) may establish a commercial presence or provide educational services in the Philippines through various modes or arrangements with a Philippine counterpart.

The law recognizes business models such as Academic Franchising, the establishment of a Branch Campus, and the offering of Joint Degrees with Philippine counterparts.

The law also permits Online, Blended, and Distance Learning; Twinning Arrangements with foreign study components, and Validation, under which an FHEI awards degrees to students who complete a program while studying with its Philippine partners. — Arjay L. Balinbin

Freeze on loan talks affects BRT, climate change funding

THE Department of Finance (DoF) said on Wednesday that two loan agreements being negotiated by the department were affected by a presidential order to suspend such talks with countries that backed a United Nations human rights investigation against the Philippines.

“There are two loans we are looking at. [The] 21 million euros from France supporting the BRT (Bus Rapid Transit) program of DoTr (the Department of Transportation). We already found a substitute for that portion… that is a soft loan but we can get very similar terms from a multilateral agency,” Finance Secretary Carlos G. Dominguez III said during a budget hearing before the Senate Finance Committee.

“The other set of loans is from Germany [which is] $46 million and that has to do with funding studies for climate change. It’s mostly the study and we are looking for a substitute for that program,” Mr. Dominguez said.

Minority leader Franklin M. Drilon had asked Mr. Dominguez about the effects of the suspension of loan talks.

Mr. Dominguez said that agencies have to inform the DoF or the Office of the President of loan programs that have been affected by the presidential order.

A total of 18 countries backed a United Nations resolution calling for a human rights investigation into the Philippines’ handling of its drug war: Australia, Argentina, Austria, Bahamas, Bulgaria, Croatia, Czech Republic, Denmark, Fiji, Iceland, Italy, Mexico, Peru, Slovakia, Spain, Ukraine, the UK and Uruguay.

France and Germany did not vote but were co-sponsors of the resolution.

Meanwhile, the committee approved for plenary discussion the proposed P17.3-billion DoF budget for 2020.

“We will refer your budget to the plenary,” Finance Committee chairperson Juan Edgardo M. Angara said during the hearing.

The DoF proposed a budget 8% lower than its 2019 funding plan.

In the first eight months, the DoF said revenue collection by its agencies hit P2.09 trillion, up 9.5% from a year earlier, including P1.9 trillion from taxes.

The Bureau of Internal Revenue’s (BIR) collections rose 10.6% during the period, while revenue generated by the Bureau of Customs rose 7.2%.

“We are confident this growth will be sustained in the coming period through continuing administrative reforms and the completion of the comprehensive tax reform program that will make our tax system simpler, fairer and more efficient. In both revenue agencies, we are automating processes and strengthening control measures against slippages,” Mr. Dominguez added.

The BIR proposed budget was P8.46 billion, a funding level expected to help “further improve the agency’s tax administration and enforcement capabilities.” — Marc Wyxzel C. dela Paz

South Korea poised to resume chicken imports from PHL this year

SOUTH KOREA is set to accredit new poultry facilities in the Philippines amid plans to resume chicken imports, Agriculture Secretary William D. Dar said.

“The accreditation, which is a follow-up to the lifting of the temporary suspension of imports of poultry and pet birds from the Philippines on July 4, 2019, will also pave way for the resumption of the market access of Philippine duck meat and poultry eggs to South Korea,” the Department of Agriculture (DA) said in a statement.

The start of accreditation was confirmed during a meeting between Mr. Dar and a delegation from South Korea’s Ministry of Agriculture, Food, and Rural Affairs on Sept. 23.

South Korea, along with Japan and Singapore, banned the import of poultry products and pet birds from the Philippines in 2017 after an outbreak of bird flu.

The facilities to be accredited are located in Davao City, Batangas, and La Union. South Korea will bring an audit team to the Philippines to conduct inspections to facilitate the resumption of imports from the Philippines this year.

Mr. Dar said he hopes to increase poultry exports to South Korea.

South Korea imported 140,000 metric tons (MT) of chicken in 2018 from all markets. This is expected to increase to 145,000 MT this year amid continued demand for processed chicken and the attractive prices of imports relative to domestically-produced poultry.

According to the Philippine Statistics Authority (PSA), chicken production in the second quarter rose 3.1% year-on-year to 477,110 metric tons. — Vincent Mariel P. Galang

Global slowdown seen as main risk to PHL financial sector

THE main risk to Philippine financial system is the global economic slowdown, according to the inter-agency Financial Stability Coordinating Council.

In its Financial Stability Report reviewing the events of the second half of 2018 and the first half of 2019, the council identified slowing economic expansion as the “principal risk” to financial stability, and the effects of the slowdown are starting to become apparent in the ASEAN region.

“The effect of the slowdown will be seen through the changes in market prices. And those market price changes will then affect the banking and capital market sectors,” according to Johnny Noe E. Ravalo, the central bank’s Assistant Governor at the Office of Systemic Risk Management and the Head of the FSCC Technical Secretariat, who was speaking at a media.

The FSCC’s members are the Bangko Sentral ng Pilipinas (BSP), Department of Finance (DoF), Philippine Deposit Insurance Corp. (PDIC), and the Securities and Exchange Commission (SEC).

He said unlike previous financial crises, no region is expected to be immune from the impact of the slowdown.

“We’ll see that in terms of (lower) incomes, and therefore also ability to repay outstanding obligations, and the changes in the currency markets,” Mr. Ravalo said.

The effects on the Philippines have led the BSP to cut rates by a total of 50 basis points (bps) this year — lowering by 25 bps each on May 9 and Aug. 8 — to 4.25% for the overnight reverse repurchase rate, 4.75% for overnight lending and 3.75% for the overnight deposit rate, partially dialing back the 175-bp worth of rate hikes triggered by the 2018 inflation crisis, which helped bring rates to a nine-year high.

Despite the global slowdown, Mr. Ravalo said Philippine growth is only “moderating.”

“Unlike the rest of the world (which is) probably growing at close to two and a half to 3%, the Philippines is still growing at 6%. So if there’s going to be a slowdown, we do have a little bit of a buffer,” Mr. Ravalo said.

As of March, the government projects gross domestic product (GDP) in 2019 to come in at 6-7%.

The FSR’s multi-period coverage allows the council a more complete view of the system’s performance, according to BSP Governor Benjamin E. Diokno.

“The fluidity of evolving issues H1 2019 made it imprudent to limit ourselves to 2018 issues only, and thus, we cover the first semester of 2019 as well. This better represents how market volatility has changed, not just between more versus less but also between volatility heading upwards versus volatility heading the other way,” the central bank chief said at the launch of the FSR. — Luz Wendy T. Noble

Re-establishment of the prior disclosure program

With the issuance of Executive Order No. 46 on Oct. 20, 2017, the duty of conducting the post clearance audit on imports was transferred to the Bureau of Customs (BoC) from the Department of Finance’s Fiscal Intelligence Unit. Along with the reversion of the Post Clearance Audit (previously known as the Post Entry Audit) to the BoC, it also brought back the Voluntary Disclosure Program (VDP) now called the Prior Disclosure Program (PDP).

Under Customs Administrative Order (CAO) No. 01-2019, the PDP allows importers to voluntarily disclose and report to the BoC simple errors in their import declarations and payment of duties and taxes for correction. However, unlike the previous VDP where no penalties were imposed, the PDP imposes penalties that may be waived with the approval of the Secretary of Finance.

As in the case of the VDP, the PDP is available under two scenarios: (a) before the receipt of an Audit Notification Letter (ANL) or (b) upon receipt of an ANL but before the field audit to be conducted by the Post Clearance Audit Group (PCAG).

The penalty rules under the PDP are enumerated below:

• For importers who have not yet received an ANL, deficiency duties and taxes will only be subject to 20% interest per year which is counted from the date of the final assessment of imported goods. However, additional duties and taxes paid due to royalty payments, filed within 30 days from the date of payment or accrual of the proceeds, are not subject to any penalties.

• For importers who have already received an ANL, deficiency duties and taxes will be subject to a 20% interest with a penalty of 10% of the deficiency duties, taxes and interest.

To avail of the PDP, the following procedures will apply:

1. The applicant shall accomplish BoC Form B (PDP application form) with an Affidavit of Undertaking signifying the importer’s agreement that should the application be denied, they will be subject to a full audit by the PCAG, and any resulting deficiency duties and taxes shall be subject to the corresponding penalties and 20% interest. Once accomplished, include the above with the payment of the disclosed amount as indicated in the form to the BoC — PCAG, which shall in turn issue the corresponding BoC official receipt (BCOR).

2. The applicant shall submit the duly accomplished BoC Form B, Affidavit of Undertaking, and BCOR to the PCAG for further verification and approval.

3. Upon approval of the PDP application by the PCAG and the Commissioner of Customs (CoC), the application papers shall be forwarded to the Secretary of Finance for final approval, if there is a request for waiver of penalties, interest, fine or surcharge.

4. Upon approval of the PDP application by the PCAG, the CoC, and the Secretary of Finance, the BoC shall inform the applicant in writing about the close of the audit.

However, the PCAG may opt to deny the PDP application and recommend a full audit of the applicant with the approval of the CoC. Consequently, the applicant will be subject to a full audit, and any resultant deficiency duties and taxes shall be subject to the imposition of 25% to 600% penalties and 20% interest. Any payment made through the PDP application by the importer shall be credited against the deficiency assessment that may be issued by the BoC.

In the processing of the PDP application, the following issues may arise upon review of the applicant’s import applications: the proper valuation of imported goods, computation of royalty payments, non-inclusion of fees or charges on the dutiable value or the landed cost, etc.

In consideration of these concerns, applicants of the PDP should make a complete disclosure of their issues to ensure that their application will not be denied after review. Applicants may consider seeking expert advice and assistance to mitigate the risk of denial, to fully maximize the benefits and available rights they are entitled to under the BoC rules and regulations, and to raise defenses in the protection of their rights.

Although the benefits of the PDP are not as liberal as those in the previous VDP, it could still be considered a good opportunity for the importers to correct their import declarations, evaluate their customs practices in compliance with the customs rules & regulations, and reduce the penalties that could be incurred if the BoC–PCAG proceeds with the audit of their import transactions. The PDP not only assists the importer applicant with the proper declaration of their import transactions but also supports the BoC in its bid to increase revenue collection and spur economic growth in the country.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Mikhail J. Escoto is a senior associate at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

mikhail.j.escoto@ph.pwc.com

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