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Central bank eyes ‘national QR code’ for retail payments

THE BANGKO SENTRAL ng Pilipinas (BSP) will require financial firms to use a standard design for quick response (QR) codes to allow simpler transactions across service providers.
BSP Governor Nestor A. Espenilla, Jr. said they are looking to issue the guidelines for a “national QR code” within the year, which is expected to allow inter-operable retail payments in the country.
“The approach is we will issue a circular that will require the industry basically to come together and come up with a unified code and there are certain principles,” Mr. Espenilla told reporters on the sidelines of a payments and settlements conference on Friday.
QR codes are computer-generated images which are used for payments or fund transfers. The black-and-white square is usually scanned via a smartphone camera, which will then bring the user to a computer link or online payment portal to complete the transaction.
As regulator, the central bank will mandate players to sit down and agree on one QR design to be used by all. However, execution and compliance will have to go through the Philippine Payments Management, Inc., an industry-led body expected to police their own ranks.
Discussions are still ongoing, Mr. Espenilla said. Among the issues being resolved is whether or not QR payments will need their own automated clearing house (ACH) or if the technology will simply be used with a barcode reader of sorts to fast-track payment procedures using existing channels.
“There’s a live discussion right now: if it is merely an instrument for reading information, we can tap it on to Instapay. But if it is going to be a different business scheme, say, with a different fees structure, it might warrant a separate ACH,” the BSP chief said.
Launched in April, InstaPay clears electronic fund transfers worth up to P50,000 per transaction and without a daily limit. The platform is available 24/7, with the funds to be made available to receiving accounts almost immediately.
Looking ahead, Mr. Espenilla also plans to connect the QR payment platforms used here with those rolled out in Singapore and Thailand, which would be convenient for tourists and cross-border transactions.
This forms part of the BSP’s National Retail Payment System framework that seeks to spur digital payments. The goal is to raise to share of e-payments to 20% of all transactions by 2020 coming from a mere 1% share in 2013. — Melissa Luz T. Lopez

Lorenzana apologizes for saying Hague ruling was an ‘empty victory’

DEFENSE Secretary Delfin N. Lorenzana on Friday issued an apology to former foreign affairs secretary Albert F. del Rosario and Acting Supreme Court (SC) Chief Justice Antonio T. Carpio for saying that The Hague’s 2016 ruling favoring the Philippines in a maritime dispute with China is “an empty victory.”
Both gentlemen have his “highest regard for being true patriots” for spending “enormous efforts and time to vigorously and successfully argue our case” before the Permanent Court of Arbitration (PCA), Mr. Lorenzana said in an apology statement.
“I sincerely apologize to these two great gentlemen for ruffling their feelings when I said that the PCA ruling in our favor is an empty victory. Both have reasons to be miffed for they worked hard to win our case before the PCA. It was not my intention to denigrate their achievement,” he said.
He clarified that his “empty victory” remark “does not pertain to the efforts of Mssrs. Carpio and del Rosario in successfully winning our case in the PCA but rather, to the outcome of the ruling.”
“With the realities on the ground, the victory being claimed is premature and incomplete since the ruling has no enforcement mechanism. How can victory be claimed over an arbitration case that proceeded even if the other party declined to participate, having stated from the beginning that it will not abide by the arbitration’s outcome? If it is a victory, then why is the West Philippines Sea (WPS) not under our complete control? If we are victorious, why are the Chinese still in the WPS?” Mr. Lorenzana said.
“Lest we forget, the Malaysians and Vietnamese are also within our exclusive economic zone (EEZ), occupying many islands which they have improved through the years. Until we regain complete control of our EEZ, and until the PCA ruling is fully enforced, it remains just a piece of paper. It pains me to say this but it is the fact. Not telling the people the real situation on the ground vis-a-vis the PCA ruling and pretending that it is a victory is grossly misleading, and gives our people false hopes,” he also explained. — Arjay L. Balinbin

Transpacific Broadband seeks franchise renewal to join race to be third telco player

TRANSPACIFIC Broadband Group International, Inc. (TBGI) said it is seeking to renew its congressional franchise to boost its efforts to join the government’s search for a so-called “third telco” player, among other telecommunication opportunities.
In a disclosure to the stock exchange on Thursday, the company said its board has “authorized and empowered (the company) to apply for renewal (of) its congressional Franchise under Republic Act 8657 for another 25 years covering periods of year 2023 to 2048.”
It added, the effort is ultimately to “support government initiative for a 3rd Telco to serve the public interest.”
“TBGI has signified its interest to participate in various DICT (Department of Information and Communications Technology) opportunities in the telecommunication market, given the urgent 2018 directive of the government to have a 3rd Telco in the Philippines.”
Besides intending to participate in the government’s efforts to find a new major player in the telco industry, the listed company also expressed interest to join a consortium in building 50,000 common towers in the country and to join a Chinese consortium to open a representative office in China.
The China unit, it said, is supposed to “bring in Artificial Intelligence (AI) Initiative, Block Chain Technology, Asset-backed Initial Coin Offering (ICO), and Internet of Things technology” to the Philippines.
“The China representative office will complement the PEZA Ecozone of ATN Group, by orienting possible host locators including AI / technology companies,” TBGI added.
At present, the Arsenio T. Ng-led firm operates satellite operations for Uplink Services, VSAT Services and Internet over Satellite Services. — Denise A. Valdez

Gov’t issues rules for one-year duty-free extension of equipment imports

THE Board of Investments (BoI) on Friday issued rules for an executive order (EO) that extended duty-free privileges of equipment and spare parts importers for another year.
Enterprises qualified to avail “of zero percent (0%) duty importation of capital equipment, spare parts and accessories shall submit an application with the BOI,” the agency said on its website.
EO No. 57 or the “Reducing the Rates of Duty on Capital Equipment, Spare Parts, and Accessories Imported by Board of Investments — Registered New and Expanding Enterprises” was signed by President Rodrigo R. Duterte in June.
For companies to qualify for the incentive, the products it will be importing must not be “manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices,” and are “reasonably needed and will be used exclusively by the qualified enterprise in its registered activity.”
Reasonability of prices will be determined by the BoI according to import cost of the imported capital equipment, spare parts and accessories, taking into consideration “all applicable taxes and duties to be paid thereon, and a fifteen percent (15%) mark-up.”
A certificate of authority (CA) valid will be given by the BoI to qualified enterprises that will benefit from duty-free importations.
The enterprises are also required to communicate with the Department of Finance (DoF) for official import documents and the Bureau of Customs (BoC) for an import entry declaration.
The new policy is set to take effect for one year after complete publication of the IRR in a newspaper. — Denise A. Valdez

Duterte signs order cutting property taxes of power plants

PRESIDENT Rodrigo R. Duterte has signed an executive order (EO) that cuts and condones real property taxes and interest and/or penalties assessed on the power generation facilities of independent power producers (IPPs).
The EO No. 60, which was signed by Mr. Duterte on July 25, covers the power generation facilities of independent power producers under build-operate-transfer contracts with government-owned or-controlled corporations (GOCCs).
Section 1 of the EO states that “(a)ll liabilities for real property tax, including any special levies accruing to the Special Education Fund, for calendar year (CY) 2017, on property, machinery, and equipment actually and directly used by IPPs for the production of electricity under a Build-Operate-Transfer scheme and similar contracts (whether denominated Power Purchase Agreements, Energy Conversion Agreements, or other contractual agreements) with GOCCs, assessed by local government units (LGUs) and other entities authorized to impose real property tax for all years up to CY 2017, are hereby reduced to an amount equivalent to the tax due if computed based on an assessment level of fifteen percent (15%) of the fair market value of the said property, machinery and equipment depreciated at the rate of two percent (2%) per annum, less any amounts already paid by the IPPs.”
It also says that “(a)ll interests on such deficiency, real property tax liabilities are also hereby condoned and the concerned IPPs are relieved from payment thereof.”
As for its application to future real proper tax liabilities, the EO says that all property tax payments made by the IPPs over and above the reduced amount under Section 1 shall be applied to their real property tax liabilities for the succeeding years. — Arjay L. Balinbin

Court of Appeals denies Rappler’s petition

By Arjay L. Balinbin, Reporter
THE Court of Appeals (CA) has denied the petition of online news site Rappler.com to reverse the decision of the Securities and Exchange Commission (SEC) revoking its incorporation papers for failing to meet the constitutional limits on foreign ownership.
Dated July 26, the court’s 72-page decision also directed the Securities and Exchange Commission to conduct an evaluation of the legal effect of the alleged supervening donation made by Omidyar Network of all its Philippine Depositary Receipts (PDRs) to the Staff of Rappler, Inc.”
The SEC, according to the CA, “does not dispute that the issuance of PDRs is not illegal per se.”
“As noted by petitioners, other corporations like ABS-CBN, GMA and Globe have issued PDRs in the past and the same were allowed by the SEC. Further, the SEC also reviewed the North Base Media PDR and found nothing illegal or irregular in its terms,” the CA also said.
In SEC’s decision on Jan. 11, it declared “void” the PDRs issued by Rappler to Omidyar pursuant to Section 71.2 of the Securities Regulation Code for being a “fraudulent” transaction.
The SEC said: “The restriction of foreign equity prevents any scheme to transfer rights attached to equity — even in the guise of an equity derivative. The (Omidyar) PDR requirement of ‘prior discussion’ and ‘approval of 2/3’ was a grant of more than 0% control to foreigners; control no less than 100% reserved to Filipinos.”
In a statement, as posted on Rappler.com on Friday, July 27, Rappler CEO and Executive Editor Maria A. Ressa said that it is still “business as usual for Rappler.”
Ms. Ressa noted that the appellate court has “sided” with her company on “three key issues.”
She said: “First, that the SEC’s revocation of our certificate of incorporation is wrong. Omidyar never exercised its right to the allegedly questionable clause in its Philippine Depositary Receipt (PDR) and later even waived its right under that clause, according to the CA. Second, that the SEC failed to apply its own rules and practices to Rappler. Worse, the SEC went against the mandate of the law by not giving Rappler an opportunity to amend or correct any perceived error before revoking its certificate of incorporation.”
“Third, that the SEC needs to reinvestigate the case, given Omidyar’s donation of its PDRs to Rappler’s staff last February 19.”
“We are here for the long haul — with you, inspired and reinvigorated by the mission of journalism,” Ms. Ressa also said.
For his part, Presidential Spokesperson Harry L. Roque, Jr. said the CA’s decision “supports the Palace stance that this case does not involve press freedom, but the regulatory powers of the SEC.”
He also said that the decision affirms that the SEC “was correct to revoke Rappler’s registration based on its previous investigation.”
“We are confident that the SEC will be able to resolve the case with the same competence and objectivity as before,” Mr. Roque added.

Belle Corp’s earnings up thanks to City of Dreams

BELLE Corp.’s attributable profit expanded by 10% in the three months ending June, driven by higher earnings of the City of Dreams Manila.
In a regulatory filing, the listed firm said net income attributable to equity holders of the parent reached P919 million in the second quarter of the year, higher than the P834 million it generated in the same period a year ago. Revenues for the second quarter meanwhile grew by 17% to P2.5 billion
This brought the company’s attributable profit for the first half of the year to P1.6 billion, 10% higher year-on-year, supported by a 9.6% increase in revenues to P4.52 billion.
The Sy-led firm attributed the increase to the higher income share from the City of Dreams Manila, an integrated resort and casino in the Philippine Amusement and Gaming Corp.’s Entertainment City by the Manila Bay. The property is being leased on a long-term basis to Melco Resorts and Entertainment Limited.
Belle sources its earnings from its subsidiary Premium Leisure Corp., which has an operating agreement with Melco’s local unit that grants it a share of the gaming revenues or earnings at City of Dreams Manila.
Earlier this year, the company said it has proposed to expand the hotel and non-gaming operations of City of Dreams in order to meet the demand for more accommodations inside the resort and casino complex. Belle owns around a hectare of undeveloped land across where City of Dreams stands.
Aside from City of Dreams, Belle also owns and develops premium residential resort projects in Tagaytay City. This includes Tagaytay Highlands and Tagaytay Midlands, considered as exclusive destinations with club and golf facilities alongside residential communities.
The company also has over 800 hectares in its land bank set aside for future development. — Arra B. Francia

Cemex net income down despite higher cement sales

CEMEX Holdings Philippines, Inc. (CHP) swung to a net loss in the second quarter of 2018, as higher income tax expenses dragged its bottomline despite rising cement volumes.
In a disclosure to the stock exchange on Friday, the listed cement manufacturer said it recorded a net loss of P635 million in the three months ending June, against a profit of P136 million in the same period a year ago.
The company attributed the negative performance to higher income tax expenses amounting to P710 million during the period.
“This was due mainly to the utilization of the company’s deferred tax assets, which is a non-cash expense,” the company said.
The company generated P5.99 billion in net sales during the quarter, 6% higher year-on-year. Cement prices however slowed by 5% from the same period a year ago, dampening the higher volume.
On a six-month basis, CHP’s net loss amounted to P535 million, versus a net income of P486 million during the first six months of 2017. Revenues meanwhile went up by 8% to P11.88 billion.
Construction activities in the residential were among the factors that pushed CHP’s sales for the quarter, driven by sustained inflows from overseas, demand from the growing middle class and foreign residents, as well as more low-income and socialized housing projects.
The company also saw accelerated growth from infrastructure projects for the period. Citing government data, CHP said disbursements for infrastructure and capital outlay grew by 96% last April and 26% last May.
“Our results show our ability as a company to grow together with the market and serve the increasing infrastructure demand of the country, both public and private. The upgrades we have implemented in our operations and distribution processes have allowed us to continue supporting the country’s development,” CHP President and Chief Executive Officer Ignacio Mijares said in a statement.
Amid recording a loss for the first semester of the year, CHP noted that cash flow remained positive at P1.25 billion. Mr. Mijares said this will allow them to continue pursuing their expansion.
“We will continue to look for opportunities to improve our profitability understanding the need to increase our efficiencies to compensate rising input costs. We are encouraged by the progress in our cash position that will help fund the expansion of our operations in the coming years,” Mr. Mijares said.
CHP is currently undertaking a solid plant capacity expansion, investing $225 million into this. The company looks to complete the expansion by the first quarter of 2020.
The funding for capacity expansion forms part of the company’s P3.74-billion capital expenditures for the year, which also includes allocation for maintenance and other strategic investments.
Shares in CHP dropped 9.48% or 33 centavos to close at P3.15 each at the stock exchange on Friday. — Arra B. Francia

Vista Land secures P500-M corporate notes for capex

VISTA Land & Lifescapes, Inc. (VLL) has secured corporate notes amounting to P500 million to partially finance this year’s capital expenditures.
In a disclosure to the stock exchange on Friday, the listed property developer said the corporate notes are due 2028 with a fixed interest rate of 7.4985% per annum.
The corporate notes were issued to Eastwest Banking Corp., as per a corporate notes facility agreement the parties signed earlier this month. China Banking Corp., China Bank Savings, Inc., and Security Bank Corp were the note holders, while China Bank Capital Corp and SB Capital Investment Corp were tapped as joint lead underwriters.
China Bank Capital also acted as sole issue manager and sole bookrunner.
China Banking Corp. — Trust and Asset Management Group was the issuance’s facility agent, while VLL’s subsidiaries Brittany Corp., Crown Asia Properties, Inc., Camella Homes, Inc., Communities Philippines, Inc., Vista Residences, Inc., and Starmalls, Inc., were the subsidiary guarantors.
The P500-million corporate note issuance is in addition to the P7.7-billion note facility the company secured early this month, which will also be for VLL’s 2018 capex. The initial note issuance consisted of seven-year corporate notes worth P1.7 billion carrying an interest rate of 7.4913% per year, and 10-year corporate notes worth P6 billion with a coupon rate of 7.7083% per annum.
The Villar-led firm has committed to spend P50 billion in capex this year, in order to expand VLL’s leasable space to 1.4 million square meters. The company also looks to end the year with 30 shopping malls, from 22 at the end of 2017.
Earnings of VLL jumped by 13% to P2.6 billion in the first quarter of 2018, lifted by a 12% uptick in revenues to P10.1 billion during the same period.
Shares in VLL closed flat at P5.97 each at the stock exchange on Friday. — Arra B. Francia

Cebu Pacific expands fleet further with five Airbus A320neo order

CEBU AIR, Inc. the listed operator of Cebu Pacific, continues to expand its fleet as it looks to acquire five new aircraft, all of which are expected to be delivered by next year.
In a statement released on Friday, the local carrier said it is looking at the arrival of the first planes of its order of five Airbus A320neo with Pratt & Whitney PurePower PW1100G-JM geared turbofans during the first half of 2019.
“The five additional A320neo aircraft is on top of its order of two more A321ceo, 32 Airbus A321neo, and six ATR 72-600 aircraft, which are scheduled for delivery between 2018 and 2022. The additional aircraft will be used to support the carrier’s expansion plans,” the company said.
The new A320neos will join the Gokongwei-led company’s current fleet of 67 planes.
The acquisition of the new aircraft is hoped to be an economical move for the carrier, which may lead to “more compelling fares,” as it noted the A320neo’s higher seat capacity and more efficient fuel consumption. It said the new aircraft could fly a distance of up to 6,300 kilometers using 20% less fuel.
The new aircraft will come from Dublin-based aircraft leasing company Avolon Aerospace Leasing Ltd. Cebu Pacific signed an Operating Lease Agreement with the company for the acquisition.
Its Vice-President for Commercial Planning, Alexander G. Lao, said Cebu Pacific is eyeing nine additional aircraft every year from 2018 to 2022.
“We see expansion opportunities in new markets, as well as pent-up demand in areas where we currently operate. The introduction of the first new generation, fuel-efficient A320neo aircraft to the Philippine market will help us to further strengthen our position in the Philippines and allow us to further pursue expansion of our international route network,” Mr. Lao said in the statement.
During the first quarter, Cebu Air posted a 12% hike in its income at P1.437 billion, driven by an increase in passenger revenues. — Denise A. Valdez

BDO books flat first-half net income

By Melissa Luz T. Lopez, Senior Reporter
SY-LED BDO Unibank, Inc. reported a P13.1-billion net income as of end-June, slipping from a year ago amid lower non-interest gains and bigger operating costs.
In a disclosure on Friday, BDO said it booked P13.1 billion in earnings in the first six months of the year, 1.5% lower than the P13.3-billion net profit logged at end-June 2017.
The bank said procedural changes in the investment portfolio of subsidiaries BDO Life which took effect earlier this year, as well as the continued expansion of rural lender One Network Bank, Inc. fed into BDO’s bottom line.
Minus these changes, net income “would have increased by 13%,” the bank told the Philippine Stock Exchange.
Net interest income surged by 19% year-on-year to hit roughly P46 billion as customer loans grew by a fifth to reach P1.9 trillion. The bank also reported a lower share of soured debts at 1.2% of the total despite “broad-based” loan growth across all market segments.
Bank deposits also posted a 17% climb to P2.3 trillion.
Total capital reached P303 billion as of June which brought BDO’s capital adequacy ratio at 14%, well above the 10% requirement set by the Bangko Sentral ng Pilipinas.
Meanwhile, non-interest income declined by two percent to P22.8 billion. BDO said increases in insurance premiums and fee collections were offset by “unrealized mark-to-market losses” on BDO Life’s portfolio.
“Service charges and fees remained strong, but was tempered by weak underwriting and syndication activities in the capital markets,” the country’s biggest lender said.
The bank also incurred a 12% pickup in operating costs after it opened 45 additional branches and spent more on settling taxes. The Tax Reform for Acceleration and Inclusion law which took effect Jan. 1 doubled the documentary stamp tax rates imposed on bank checks, certificates of deposit, and similar financial instruments.
BDO currently runs 1,200 branches and over 4,000 automated teller machines nationwide, plus 24 service offices abroad.
The first semester income is barely half the P31 billion full-year profit guidance set by the bank when the year opened. BDO reported a P5.9-billion profit during the first three months of 2018.
“Despite the challenging macro environment, BDO will continue to capitalize on its strong business franchise and extensive distribution network, generate quality earnings driven by recurring income sources, as well as execute its growth strategy to expand into high growth areas and underserved segments,” the bank said.
BDO reported record earnings worth P28.1 billion in 2017.
Shares in BDO closed at P137 apiece on Friday, down 50 centavos or 0.36%.

Peso climbs on hawkish BSP

THE PESO gained strength versus the dollar on Friday, with hawkish remarks from the Bangko Sentral ng Pilipinas (BSP) boosting the currency to a one-month high.
The local unit closed at P53.285 against the greenback, 16 centavos stronger than its P53.435 finish on Thursday.
The peso initially traded weaker at P53.50, which also happened to be its intraday low. It improved during the session and even touched P53.28 as its best showing before settling at the closing rate.
Friday’s rate is the strongest since the P53.28-per-dollar close recorded on June 22.
Market players likely grew more upbeat towards the peso following a hawkish statement from BSP Governor Nestor A. Espenilla, Jr. on monetary policy.
“Central banks from emerging markets and Asia have made announcements about preemptive actions… in anticipation of trade tensions. We’ve been seeing that lately — even the BSP said they will more aggressive,” one trader said in a phone interview.
“Everyone’s proactive now, and that’s giving a little bit of a boost to Asian currencies and weakness to the dollar.”
Mr. Espenilla has said the central bank is already considering a “strong follow-through” policy adjustment during their Aug. 9 rate-setting meeting, and will also pause from reducing bank reserves this year and wait until inflation returns to target by 2019.
“That statement probably had an effect that meant BSP is really serious in containing inflation,” the trader added.
On top of the “more hawkish” cues from the central bank, another trader attributed the peso appreciation to heavy selling offshore as well as inflows from the equity market.
She added that market players are still awaiting for cues on the second-quarter economic growth in the United States, which will be released Friday night Manila time.
Dollars traded on Friday reached $794.8 million, bigger than the $625.4 million which exchanged hands the previous day. Both traders said that the higher amount was likely due to strong demand for trades rather than an intervention from the central bank. — Melissa Luz T. Lopez

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