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BSP plans to sanction lenders that fail to join digital clearing houses

By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK is looking to sanction lenders that will fail to join the industry’s digital clearing houses by end-November, possibly via a ban on offering new products.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said the regulator is currently studying the set of sanctions they will impose on any banks that will not sign up for the industry’s two automated clearing houses (ACHs) for digital payments, which is mandatory by Nov. 30.
Launched in April, InstaPay is a digital clearing house which processes real-time transfers worth P50,000 or lower across accounts or e-wallets from different banks or service providers. Money is sent and credited to a destination account in a matter of seconds or minutes.
Meanwhile, the Philippine Electronic Fund Transfer System and Operations Network (PESONet) — which compiles all interbank fund transfer instructions, runs a batch process, and credits the amount to the receiver by the end of the banking day — has been seeing steady usage since its launch in November last year.
The BSP has required all banks and other financial firms offering electronic and mobile banking services to get onboard the two ACHs which process online payments.
The central bank is eyeing to raise the share of e-payments to 20% of all transactions in the Philippines by 2020, coming from a measly 1% share back in 2013.
Already, central bank officials have noted rapid growth in the use of online payments, with InstaPay volumes seeing “exponential” increase over the past few months.
Although the penalties are yet to be finalized, Ms. Fonacier said “there will definitely be” sanctions imposed on banks unable to join the PESONet and InstaPay platforms by month’s end.
“It’s not monetary, it’s probably more of constricting some activities — kapag wala kang ganun (if you don’t have that), you can’t afford to provide other products or even some services,” the BSP official said.
This, in turn, is expected to force lenders to already get aboard the ACHs as being prohibited to offer new products would hurt their businesses more and “restrict growth.” However, Ms. Fonacier noted this track is not yet definite.
Weeks ahead of the deadline, Ms. Fonacier noted that most banks are ramping up their efforts to go digital, largely for them to keep up with competition.
Under the National Retail Payment System framework, the BSP targets to shift cash-heavy transactions to digital avenues, which is expected to broaden access to financial services and spur increased economic activity.
There are 46 lenders using PESONet as of end-September, according to BSP data.
InstaPay participants are fewer with only 18 firms able to send and receive across accounts as of that month, while 15 banks and e-money issuers are capable of receiving funds only.

BPI raises P25B via bonds

BANK OF THE Philippine Islands (BPI) has priced its peso-denominated bond offer worth P25 billion, which will support its expansion plans and diversify funding sources.
In a regulatory filing Tuesday, the Ayala-led BPI said it raised P25 billion from the peso-denominated bond offer, higher than the initial guidance of P5 billion and the P15 billion announced last Oct. 17.
The fixed-rate notes carry a coupon of 6.797% per annum to be paid quarterly until March 2020, as they will mature in 1.25 years.
“The coupon represents a spread of 20 bps (basis points) over the interpolated 1.25 year [PHP Bloomberg Valuation Service] government benchmark rate, and is at the tight end of the spread range of 20 to 40 bps communicated to institutional investors during the institutional bookbuilding period,” the bank said in a statement.
The bonds will be issued and listed on the Philippine Dealing & Exchange Corp. on Dec. 6.
The offering marks the first tranche of the bank’s P50-billion bond and commercial paper program.
BPI said it decided to close the offer period on Nov. 19 — a day ahead of schedule — as the order book reached P38 billion while achieving at the tightest end on the pricing range.
Proceeds from the fund-raising activity will be used to support the bank’s growth objectives and expansion plans while diversifying its funding sources, it said.
This will also “address clients’ need for new investments with shorter tenors compared with the long-term negotiable certificates of deposits,” BPI said in the statement.
“We are very pleased by the strong response to our peso bond offering,” BPI President and Chief Executive Officer Cezar P. Consing was quoted as saying in the statement. “We are grateful that investors recognize our strong credit metrics and we are happy to meet their needs for innovative fixed income products.”
Lenders can now raise fresh funds through corporate bonds with greater ease as new rules do away with having to secure approval from the Bangko Sentral ng Pilipinas.
Metropolitan Bank & Trust Co. recently raised P10 billion via fixed-rate bonds, part of its P100-billion bond and commercial paper program announced last month. This was the first ever bond issue by a bank since the central bank liberalized rules on lenders’ fund-raising activities.
In May, BPI completed a P50-billion rights offer, with the proceeds funding its business operations and expansion.
The bank also raised $600 million in August through a drawdown from its $2-billion medium-term note program, which it said was the largest issuance by a local lender in the offshore debt market.
The Ayala-led bank reported a P5.98-billion net profit in the third quarter on the back of the double-digit expansion of its net interest income.
BPI shares gained P1.80 or 2.03% to close at P90.50 apiece on Tuesday. — K.A.N. Vidal

PCC slaps fine on 2 steel firms

THE Philippine Competition Commission (PCC) approved Macsteel Global SARL B.V.’s (MacGlobal) acquisition of MSSA Investments’s stake in Macsteel International Holdings B.V., but slapped the companies with a more than P500,000 fine for its failure to notify the competition watchdog within the required period.
In a statement on Tuesday, the antitrust body said the merger of the steel firms was cleared because it was not seen as substantially lessening competition in the market.
In July, MacGlobal bought 50% of MSSA Investments B.V.’s shares in Macsteel International. MacGlobal is a subsidiary of Macsteel Holdings Luxembourg, while MSSA is an indirect subsidiary of Dutch steel and mining company ArcelorMittal S.A.
The PCC found in its review in October that “there are no substantial changes to the management and operations of Macsteel International and its subsidiaries after the buyout. Enough competitors were also present post-transaction.”
However, MacGlobal and MSSA could not escape the fine for violating the notification requirement.
“Under the PCC Rules of Merger Procedure, firms that notify beyond the 30-day period but before consummating the transaction are subjected to a fine of 1/2 of 1% of 1% of the value of transaction… [T]he fine imposed on MacGlobal-ArcelorMittal transaction amounted to P526,219.50,” the PCC said, without disclosing the transaction value.
MacGlobal and MSSA, the two companies behind the Macsteel International joint venture, have 45 days from Nov. 14 to settle its fine with the PCC. — Denise A. Valdez

Michelangelo buy sends waste manager’s shares soaring

A CHINESE former construction products company wants to offer anyone with a brokerage account a piece of a Michelangelo.
Shares in Yulong Eco-Materials Ltd. jumped as much as 47% after the company said it agreed to buy a Crucifixion painting for $75 million. The added market value that resulted, as much as $65 million from Friday’s close, came after the company said it plans to pay for the acquisition by issuing 7.5 million restricted shares valued at $10 per share — if the deal gets shareholder approval, and the painting passes an appraisal and has authentication documents.
That’s a big shift from Yulong’s prior business model, as a “vertically integrated manufacturer of eco-friendly building products and a construction waste management company located in the city of Pingdingshan in Henan Province, China.”
Now the company wants to issue stock to buy art, display its purchases, and “open the opportunity of shared ownership of its acquired masterpieces to anyone with a brokerage account.”
The Michelangelo deal follows the company’s 900% gain when it pivoted from bricks to a 61,500-carat gem: in October, Yulong bought the “Millennium Sapphire” for $50 million and said it would take the jewel on a world tour, as well as develop games and films. — Bloomberg

Chinese steel firm to build $3.5-B plant in Misamis Oriental

CHINESE steel company Panhua Group Co., Ltd. will build a 305-hectare integrated steel manufacturing plant in Misamis Oriental through a three-phase project at an investment of $3.5 billion, the Trade secretary said on Tuesday.
The project, which will be set up at the PHIVIDEC Industrial Estate of the Misamis Oriental-Special Economic Zone, will consist of a port, an integrated steel mill with a capacity of 10 million tons, an industrial park, and other downstream industries.
Ramon M. Lopez, secretary of the Department of Trade and Industry (DTI), on Nov. 20 led the signing of a memorandum of understanding (MoU) between Panhua Chairman Xinghua Li, PHIVIDEC Industrial Authority Chief Executive and Administrator Franklin M. Quijano, and Philippine Economic Zone Authority (PEZA) Deputy Director General Tereso O. Panga.
“The signing of this MoU is a testament to the strengthened relations between Philippines and China. A completely private undertaking, Panhua, is set to accomplish President Rodrigo Duterte’s vision of growing the integrated iron and steel industry so it can cater to the growing domestic and external market demand,” Mr. Lopez said in a statement.
The project is expected to be completed in six to seven years and will generate 50,000 jobs.
After the MoU, Panhua will have to obtain a PEZA registration and an Environmental Compliance Certificate from the Department of Environment and Natural Resources, and sign a memorandum of agreement to begin the construction of the project.
DTI quoted the Panhua chairman as saying that his group was looking forward to the inception of this project. He is optimistic about building more industrial parks to increase employment and attract businesses into the provinces of Philippines, it added.
The department also said, through its attached agency PEZA, it was committed to assist Panhua in accomplishing the succeeding steps to immediately set up the steel plant early next year. — Victor V. Saulon

How PSEi member stocks performed — November 20, 2018

Here’s a quick glance at how PSEi stocks fared on Tuesday, November 20, 2018.

 
Philippine Stock Exchange’s most active stocks by value turnover — November 20, 2018

Arts & Culture (11/21/18)

Homage to Charles Aznavour

THE Embassy of France and Alliance Française de Manille present Hommage a Charles Aznavour, a musical tribute to the legendary French-Armenian icon, on Nov. 22, 7 p.m., at the Alliance Française de Manille.

Larawan spoof

THE Benilde Arts and Culture Cluster’s Theater Arts Program presents Larawan ng Pilipino Bilang Artist(a), a parody of Portrait of the Artist as Filipino, done in celebration of the centenary of National Artist Nick Joaquin. Written and directed by Nonon Padilla, it features Alan Bautista, Sherry Lara, Stella Cañete-Mendoza, Mosang, Bembol Roco, and Jaime Yambao plus the Theater Arts Batch 2015. Performances are on Nov. 21 to 24, 28, 29, and Dec. 1, at 1 and 7 p.m., at the SDA Theater, DLS-CSB, 950 Pablo Ocampo St., Malate, Manila.

Cinderella

BALLET MANILA restages Lisa Macuja-Elizalde’s first full-length choreographic work, Cinderella, at the Aliw Theater on Nov. 24, 25, Dec. 1 and 2. For details visit www.balletmanila.com.ph.

Thesis dance

A THESIS production, /sa•yaw/, will be staged on Nov. 23 and 24, 1 and 7 p.m., at the DLS-CSB’s Black Box Theater at the School of Design and Arts Campus. The featured series of dance vignettes is directed and choreographed by graduating student Olivia Bugayong, an Ani ng Dangal awardee. For tickets (P200) call 0939-215-5594.

Alan Rivera exhibit

THE Cultural Center of the Philippines presents CONTINUUM / The art of Alan Rivera / A reconstruction of memories on Nov. 17, 4 p.m., at the 4th floor galleries. It is the first retrospective exhibition of the late artist.

Arias

HIRAYA GALLERY presents The Night of Arias and Duets, featuring Nanette Moscardon Maigue and Lara Maigue, on Nov. 21, 7 p.m., at the Globe Art Gallery, Globe Tower

NFA private-sector rice auction awards deals for 500,000 MT

FIVE PRIVATE bidders from across Southeast Asia will be awarded contracts by the National Food Authority (NFA) to import 500,000 metric tons (MT) of rice, with the auction finding takers even though bids were generally lower compared to the reference price of $447.88 quoted in the government-to-government auction earlier in the month.
Half of the auctioned volume is contracted to arrive by Dec. 31, ensuring the availability of large volumes of staple around the year-end holiday period.
The successful bidders were: Thai Capital Crops Co. Ltd, Myanmar’s Shwe Wah Yaung Agriculture Production Co., Singapore’s Olam International Ltd, Thailand’s Asia Golden Rice Co Ltd, and Vietnam’s Tan Long Group Joint Stock Co. The awarded volumes are subject to post-qualification processes, and formal awards will be made within the week.
Reuters reported that the rice to fill the Philippine order will be sourced from Vietnam, Thailand, Myanmar, India and Pakistan.
Thai Capital Crops was awarded a lot amounting to 45,000 metric tons for delivery to General Santos and Davao, after it bid $439.75 per MT.
Olam International was awarded 65,000 MT for delivery to La Union after bidding $429.80 per MT. It also won a lot of 40,000 MT for delivery to Batangas after bidding $425.80 per MT; 30,000 MT for delivery to Tabaco, Albay following a bid of $432.10 per MT; and 75,000 MT for delivery to Manila after bidding $434 per MT.
Tan Long Group was awarded a lot of 118,000 MT for delivery to Subic at $459 per MT.
Asia Golden Rice was awarded a lot of 54,000 MT for delivery to Cebu and Tacloban at $458 per MT; and a further 54,000 MT for delivery to Zamboanga, Cagayan de Oro and Surigao at $439.75 per MT.
Shwe Wah was awarded a lot of 28,000 MT for delivery to Iloilo and Bacolod after bidding $418.65 per MT.
Judy Carol L. Dansal, NFA Deputy Administrator for Marketing Operations, told reporters that the delivery deadlines for half the volume is before the end of the year.
“The terms of reference have schedules of 250,000 MT arriving not later than Dec. 31, and the other 250,000 arriving in January,” Ms. Dansal said.
The 500,000 MT forms part of the 750,000 MT authorized for importation by the NFA in 2018.
A government-to-government auction of up to 250,000 MT has awarded only 43,000 MT. — Reicelene Joy N. Ignacio

Senate bill filed granting perks to OFW-owned firms

SENATOR Paolo Benigno A. Aquino IV has filed a bill seeking to provide incentives and benefits to overseas Filipino workers (OFWs) who start businesses in the Philippines.
Senate Bill No. 2101 or the proposed Business Incentives for OFWs Act provides for incentives such as five-year tax exemptions for OFW-owned enterprises.
Other incentives include a 50% reduction in real property tax as well as tax and duty-free importation of raw materials, capital equipment, machinery, and spare parts used exclusively in the operations of the business.
Qualified businesses will also receive preferential access to financing from government financial institutions at below-market rates for five years.
Mr. Aquino said the filing of the proposed measure was based on a suggestion of an OFW from Batangas City during a consultation session.
“This is a reform that was requested by our OFWs. Many of them want to have a livelihood in the Philippine and to spend time with their families,” the senator said in a statement.
“One of the sources of livelihood of our OFWs is to have a successful business. Let’s give them the opportunity to have a livelihood in the Philippines so they could be with their families and see their children grow up,” he added. — Camille A. Aguinaldo

Senate panel to resume hearings probing third-player selection

THE Senate committee on public services will resume next week its hearing on the selection process for third entrant into the telecommunications industry, the so-called “third player.”
In a statement on Tuesday, Senator Grace S. Poe-Llamanzares, who chairs the committee, said the hearing will focus on the details that led to the selection of the Mislatel Group as the third player.
“Next week, we will resume our public hearing on the third telco and we will use the opportunity to delve into the details of the decision to choose Mislatel,” she said.
The Senate hearing was earlier scheduled for Thursday, Nov. 22 but was later cancelled due to the unavailability of government officials due to the visit of Chinese President Xi Jinping.
“Because of (the) State Visit, we had to move the date and make sure government officials are available,” the senator said in a text message to reporters.
The government on Monday declared the Mislatel Group of China Telecommunications Corp., Dennis A. Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., as well as Mindanao Islamic Telephone Company, Inc. (Mislatel) as the telecom industry’s third player.
Department of Information and Communications Technology (DICT) Acting Secretary Eliseo M. Rio, Jr. has said Mislatel could launch commercial operations in mid-2019.
Ms. Poe-Llamanzares said the committee will hear from the DICT, the National Telecommunications Commission (NTC), and Mislatel officials on the services to be offered to the public by the third player.
Experts will also weigh in on national security issues due to the presence of a foreign telco in the winning consortium.
“While we have been assured by the NTC and the DICT that the selection process was without bias, we cannot be remiss on our duty and mandate to look into the matter,” Ms. Poe-Llamanzares said.
“We should also take note that it is a requirement under our laws that the third telco or its Filipino partner must secure a congressional franchise. In the end, transparency, accountability and integrity are always the benchmark for government projects and undertaking,” she added. — Camille A. Aguinaldo

Nomura says US-China trade war offers import substitution opportunities

ASIAN countries can benefit from the trade war between the US and China through short-term import substitution programs under which companies will seek to replace expensive imports with items sourced from other countries, Nomura said in a report.
They can also benefit through production relocation where multinationals are prompted to divert some of their production to factories in other countries, Nomura said, citing the results of its research, where it found that some parties could end up “relative winners” despite the trade war.
“In the short-term, if the US and China charge higher tariffs on each other’s imports, then companies will have an incentive to replace these expensive imports with local production sources or substitute from other countries,” it said.
“Meanwhile, a prolonged US-Sino trade conflict, in the medium term, would encourage MNCs (multinationals) to start diverting some of their production to factories in other countries to escape tariffs, or even relocating whole plants if the trade war sustains,” it added.
Nomura said the results of its study of 13 Asian countries show that Malaysia stands out as the biggest beneficiary of import substitution, followed by Japan, Pakistan, Thailand and the Philippines. Bangladesh, India and South Korea came out as the least likely to gain on a relative basis.
“Breaking down the results we find that many ASEAN (Association of Southeast Asian) countries are best placed to benefit from the US imposing tariffs on China; while Pakistan, Japan and Malaysia could benefit from China imposing tariffs on the US,” it said.
Nomura said its looked into the specific products that are likely to benefit in each country. For instance, the biggest benefit to Malaysia is likely to come from electronic integrated circuits, liquefied natural gas and communication apparatus.
“For others, there is usually one leading product: ‘vehicles with only spark-ignition internal combustion reciprocating piston engines’ in Japan, cotton yarn in Pakistan, ‘units of automatic data processing’ in Thailand and ‘electronic integrated circuits’ in the Philippines,” it said.
On production relocation, Vietnam is the clear standout if companies were to divert production and foreign direct investment (FDI) from China, Nomura said. It is followed by Malaysia, Singapore and India.
“Interestingly, while Pakistan is one of the biggest beneficiaries from import substitution, it benefits least from the diversion of production and FDI,” it said.
Nomura also enumerated the top 15 products across each of the 13 Asian countries that could benefit from import substitution in a US-Sino trade war and their importance for the country.
For the Philippines, this list is topped by electronic integrated circuits; processors and controllers, whether combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits. — Victor V. Saulon

PHL improves ranking in WB/PwC in study on ease of paying taxes

THE PHILIPPINES placed 94th out of 190 economies on the ease of paying taxes, according to the World Bank and PricewaterhouseCoopers’ Paying Taxes 2019 report, after the country ranked 105th a year earlier.
The Philippines scored 71.80 points, below the Ease Asia and the Pacific average of 72.98 points.
In the region, the Philippines outperformed the scores posted by Indonesia and Laos of 68.03 and 54.22, respectively. Thailand scored 77.72, and Malaysia 76.06.
The study found that Philippine taxpayers have to pay 14 taxes, an improvement from 20 in the previous report. The regional average is 21.2.
It now takes 181 total hours to prepare, file, and pay taxes in the Philippines, an improvement from 182 hours in the previous report. The East Asia and Pacific average is 180.9 hours. The tax contribution rate was 42.9%, above the 33.5% regional average.
The report’s post-filing index — a new measure of the efficiency of claiming tax refunds — had the Philippines scoring 50, against the regional average of 56.42.
In 2018, the Philippines implemented the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The law lowered personal income, donor, and estate tax rates, reduced value-added tax exemptions, while raising taxes on tobacco, automobiles, fuel, coal, minerals, documentary stamps, and imposing new taxes on sugar-sweetened beverages and cosmetic procedures, among others, while improving tax administration.
“Technology is transforming the nature of jobs that are available and the skills needed to do them. This in turn is likely to require greater investment in human capital, especially in learning and development. It is therefore vital that governments are able to understand the challenges ahead and how they can build resilience for public finances in the long term. We hope that this report will be of value to all those interested in making tax systems more efficient, whether in government, business, academia or civil society,” said World bank Senior Manager Rita Ramalho.
Andrew Packman, leader for Tax Transparency and Total Tax Contribution at PwC, added: “This report highlights the extent to which, when implemented strategically, new technology can drive considerable efficiencies for tax authorities and businesses alike. Yet it is also important to remember that improvements to tax systems do not come from technology alone. Simple, coherent, well understood and properly administered tax systems can help to lower the barriers for businesses to move from the informal to the formal sector. This can broaden the tax base and raise revenue without requiring new taxes. To do so, tax professionals and policy-makers need to have access to the correct skills and insight, which technology gains can help to support.” — Elijah Joseph C. Tubayan

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