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BSP to simplify licensing requirements for e-payments firms

By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK will soon allow banks and other financial firms looking to offer basic digital financial services to start operations without securing prior approval from the regulator, amid an industry push towards e-payments.
The Bangko Sentral ng Pilipinas (BSP) said it is simplifying the licensing requirements for non-banks that will offer electronic payment and financial services (EPFS), as it looks to promote digital solutions.
“Under the enhanced EPFS licensing policy, the BSFIs (BSP-supervised financial institutions) that provide basic services or those that enable clients to access information on their deposit, loan and other accounts (e.g. outstanding balance), or receive funds in electronic means shall simply notify the BSP within 30 days prior to the launch of those services,” the BSP said in a statement on Friday.
The relaxed rules are meant to increase the “availability of safer and more efficient channels for delivering banking, payment, remittance, investment, and other financial services.”
However, financial firms that will provide “advanced” services — which include fund transfer across accounts and initiate other types of transactions — will still have to seek prior BSP approval, although the central bank said the process has also been made simpler.
The licensing process involves three steps: the BSFIs need to do a self-assessment on their compliance with the criteria set under the BSP’s existing licensing framework. If compliant, they shall submit a certification proving so and must request a confirmation of eligibility to offer EPFS from the central bank.
Later on, the BSFI needs to submit documentary requirements to the BSP before it can be given a license.
With the new rule, players holding an existing license must re-register their e-services with the BSP by March 31, including those who are licensed but are yet to launch their platforms before Sept. 30 this year.
Still, all financial entities need to submit periodic prudential reports to the central bank for monitoring and policy purposes.
All firms that will offer online services are required to sign up with the automated clearing houses that process digital payments, namely the InstaPay and the Philippine Electronic Fund Transfer System and Operations Network (PESONet).
The central bank said these reforms are expected to help instill a “highly efficient” funds flow and fuel economic growth.
The BSP is setting sights on its goal of raising the share of e-payments to 20% of total transactions by the year 2020, coming from a measly one percent back in 2013. Digitizing payments and remittances would be crucial towards financial inclusion, as it would improve access while also trimming transaction costs.

Peso climbs ahead on hawkish comments from Guinigundo

THE PESO strengthened versus the dollar on Friday, buoyed by hawkish comments from a central bank official and offshore inflows ahead of the sale of retail Treasury bonds next week.
The local unit ended the week at P52.065 against the greenback, stronger by 6.5 centavos from Thursday’s P52.13 finish. This is the best showing of the peso since Wednesday, when it closed at P52.06.
The currency initially traded weaker as it opened at P52.24 and even touched P52.25 as its intraday low. The peso went on to gain strength later in the day, logging P52.04 as its best showing before settling at the closing rate.
Two traders interviewed by phone said the peso received a boost from a hawkish comment by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo.
“The peso traded higher initially due to a strong dollar overnight. It was offered down during the onshore trading and collapsed in the afternoon following statements by BSP’s Guinigundo that they are still on a hawkish stance,” one trader said.
The central bank official told Bloomberg that the BSP remains “more on the hawkish side” on monetary policy. Mr. Guinigundo said in an interview in Osaka, Japan that authorities “choose to be more cautious” in terms of setting interest rates, as they have not reversed the cumulative 175 basis point increase in key rates which took effect in 2018.
Another trader also pointed out that market players are likely taking positions ahead of the three-day weekend. Financial markets will be closed on Monday in observance of the People Power Anniversary.
“The peso was pretty much well-offered because of the long weekend. Players are getting ready for possible remittances,” the second trader noted, adding that there possible inflows due to offshore buying into the retail bonds offered by the Bureau of the Treasury also came into play.
Dollars traded on Friday reached $961.87 million, down from the $1.234 billion that exchanged hands the previous day.
The government revealed plans to raise at least P30 billion through the offer of five-year retail Treasury bonds, which is will be opened to both individual and institutional investors from Feb. 26 to March 8.
The first trader also noted that they saw the BSP buying some units as the below the P52.10 mark, which is seen to be a fresh attempt to rebuild its dollar reserves. — Melissa Luz T. Lopez

PSEi climbs higher as US-China trade talks progress

By Arra B. Francia, Reporter
SHARES firmed up on Friday as updates on the United States and China’s trade negotiations helped offset fears of a slowdown in world economic growth.
The bellweather Philippine Stock Exchange index (PSEi) rose 0.39% or 30.83 points to close at 7,962.13. The broader all shares index likewise climbed 0.55% or 26.83 points to 4,883.63.
“Stocks in the Philippines managed to climb higher… The fears about a worldwide slowdown were somewhat muted by reports that U.S. and Chinese negotiators were beginning to outline a deal to end a long-running trade spat,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.
US and Chinese officials have resumed talks on Thursday in hopes of arriving at a concrete deal to end their trade war, about a week before their truce ends on March 1.
Papa Securities Corp. Sales Associate Gabriel Jose F. Perez noted that the PSEi was trading in the red for most of the day, before gaining momentum at the market’s close.
“The index traded weakly for most of the day on account of US markets ending in the red last night, before only being bought up at the close to end 30.83 points higher at 7,962.13,” Mr. Perez said in an email.
“We might not be out of the woods yet despite the PSEi ending in the green given that it was only bought up at the close. Watch out if US markets continue to weaken tonight given how they declined last night,” Mr. Perez added.
Four sectoral indices ended in positive territory, led by property which jumped 1.12% or 44.86 points to 4,045.68. Holding firms went up 0.6% or 48.15 points to 8,020.92; industrial increased 0.47% or 54.25 points to 11,678.17, while services added 0.26% or 4.01 points to 1,578.39.
In contrast, financials dropped 0.99% or 17.49 points to 1,754.68, while mining and oil tumbled 0.19% or 16.27 points to 8,609.85.
Some 1.51 billion issues switched hands, valued at P8.01 billion, improving from the previous session’s P7-billion turnover.
Decliners outpaced advancers, 97 to 89, while 54 names were unchanged.
Foreign investors remained net buyers for the third straight session, although much lower at P17.62 million, compared to Thursday’s figure of P522.09 million.
The local index bucked the weakness seen in markets abroad. The Dow Jones Industrial Average shed 0.4% or 103.81 points to 25,850.63. The S&P 500 index fell 0.35% or 9.82 points to 2,774.88, while the Nasdaq Composite index slipped 0.39% or 29.36 points to 7,459.71.
Asian markets ended mixed, with Japan’s Nikkei 225 ending 0.18% lower or 38.72 points to 21,425.51. The Hang Seng index gained 0.36% or 103.63 points to 28,733.55, while the Shanghai Composite soared 1.91% or 52.42 points to 2,804.23.

Not just for D.O.M.s

THEATER
Dirty Old Musical
Presented by Spotlight Artists Centre
Dirty Old Musical (DOM), the musical about the “titos of Manila,” has been so successful that it is not just back for its third run with new cast members and new songs, but may even go on tour.
“We have the best actors in the industry doing funny things… [Dirty Old Musical] is one hell of a ride,” Dexter M. Santos, the show’s director, said during a press conference last month in Quezon City.
The Dawn front man Jett Pangan joins the cast as Freddie, a role originally played by John Arcilla, while former cast members Robert Sena, Nonie Buencamino, Bo Cerrudo, and Carlo Orosa reprises their individual roles.
Also in the cast are Soraya Ray “Kitkat” Banas, Ima Castro, Neo Rivera, Katherine Tiuseco, Anthony Castillo, Matel Patayon and Carlon Matobato.
First presented in 2016, DOM is a musical about the Bench Boys, a 1980s one-hit-wonder that disbanded due to personality difference (among other reasons) and whose members reunite more than 30 years later to raise funds for an ailing member.
The show has performances until March 23 at the Music Museum at the Greenhills Shoppine Center in San Juan.
“It’s a feel good story. Playfully naughty and irreverent, the musical takes a peek into the personal struggles of five men dealing with [mid-life] crisis and all its telltale signs,” said a press release.
The musical, written by Rody Vera with musical direction by Myke Salomon, uses songs from the 1980s, from novelty songs like “Mag-Exercise Tayo Tuwing Umaga” to ballads like Basil Valdez’s “Nais Ko” and National Artist Ryan Cayabyab’s “Kay Ganda ng Ating Musika.”
This production sees the inclusion of two more songs: Mike Hanopol’s “Kengkoy” and Sampaguita’s “Nosi Balasi.”
Aside from the songs, for its third run, Mr. Santos said that they have added text and dialogue because the musical “is always evolving.”
“It’s a riot, you discover something new every time you watch it,” he said.
“[The musical] is a good vehicle to introduce millennials to the songs of the period,” Mr. Pangan said in the same press conference.
Because of its success, Spotlight Artists Centre, which produced the musical, has toyed with the idea of creating a live album but no concrete plans are currently in place.
“We also want to tour the musical all over the Philippines,” Isay Alvarez, who founded Spotlight with her husband, Mr. Seña, told BusinessWorld.
She said that the appeal of musical is multi-generational as she noticed the audience ranges from people who lived in the 1980s all the way to millennials who watch the show and sing the songs. — ZBC
Dirty Old Musical runs until March 23, 8 p.m. (with matinees on March 16 and 23 at 3 p.m.) at the Music Museum. Tickets are available at TicketWorld (www.ticketworld.com.ph), the Music Museum (721-6276), via Spotlight Artists Center (776-4487/0919-911-4444). Ticket prices range from P1,000 to P3,000.

Getting to know Aguinaldo

By Michelle Anne P. Soliman, Reporter
THEATER
Miong
Presented by Repertory Philippines
TWENTY-ONE years after it was first perfomred, Miong, the musical based on the life of Gen. Emilio Aguinaldo, has returned to the stage as Repertory Philippines’ first production for its 82nd season.
It follows Miong (Aguinaldo’s nickname) from his early life — a young boy who promised his dying father to become a gentleman, to dropping out of school to get into business, then being appointed as cabeza de barangay at the tender age of 17 (the result of his mother’s finagling with a priest) — to his role in the Philippine Revolution, fighting battles both political and against the Spaniards.
The musical was first staged in 1998 for the centennial celebration of the country’s declaration of independence; Repertory Philippines is restaging it this year to coincide with Aguinaldo’s 150th birth anniversary on March 22, 1869.
Tim Pavino suitably embodies Miong, first as young and indecisive boy then the mature and independent leader. The cast brings life to the story with its catchy songs and energetic revolution sequences which are reminiscent of Les Miserables. The musical is sung-through in English (just in case you expected it to be in Filipino).
Joy Virata, the play’s writer and director, noted in her director’s message that she shortened the play to an hour and 40 minutes from the original three hours to achieve fast-paced storytelling.
The quick transition of events was able to focus on details of Aguinaldo’s political rise from cabeza de barangay to kapitan municipal of Kawit, Cavite, his recruitment into the Katipunan, and the revolts that led to the declaration of independence.
Ms. Virata noted that messages of unity and strength are valuable takeaways from the story.
“If you ask a lot of young people now, they really don’t know about this part of history. And so I thought it was right to do it again,” she told the press after the media preview on Feb. 15.
“There was this boy who was really, really ordinary and he made himself, out of love of his country, into something great.”
At a time when Gen. Aguinaldo is often depicted as a controversial character in history — think of his portrayal as the less than honorable president of the first republic in the popular movie Heneral Luna — the restaging of Miong gives audiences an opportunity to know more about his life.
“Movies, including this — a dramatic performance — is partly fiction,” Ms. Virata said, saying that the events in the story are based in history, while the songs are the production’s original outputs.
“If you create something, you can create whatever you wish. In this case, I am creating the life of Aguinaldo up to when he declared independence.
“If they want an enjoyable and entertaining musical to watch, so come and watch. And they’ll learn something else besides what they learn from movies,” she said.
Miong runs until March 10 at the Onstage Theater, Greenbelt 1. For tickets and schedules, contact TicketWorld at (www.ticketworld.com.ph, 891-9999).

A critical decision

By Michelle Anne P. Soliman, Reporter
Theater Review
Charot!
Presented by PETA
PETA’s inventive musical comedy Charot! takes place on election day in May 2020 when citizens of P.I. battle traffic and bad weather to reach their voting precincts before they close. A plebiscite is being held to determine whether the nation will transition to a new charter which will establish federalism as the country’s new form of government.
But before the performance starts, the audience is asked to connect to the theater’s free wi-fi — they will be participating in a plebiscite themselves, voting on serveral questions during the course of the play. It is advised to keep the browser open until the end of the show. (If the wi-fi is slow, activate your mobile data. If you have no data, you can borrow your seatmate’s phone and open a new browser to vote.)
Read the short primer on federalism distributed by the cast if you’re one of the lucky audience members to be given one. It is not a dummy script.
It is noon when a group of citizens — a female millennial influencer, a millennial boy who is indifferent about the impact a plebiscite can have, a supermall saleslady, a gay former OFW turned carpool driver, a pregnant woman, an aunt motivated to finish her 10,000 daily steps, a traffic enforcer, a street vendor, and a nurse who has had breast augmentation — are on their way to their precinct to vote. A car accident followed by unexpected heavy rain cause a traffic jam. The characters resort to getting out of their cars and walking — but they cannot go forward as the rains have cause a flood.
They begin to worry that they will not be able to vote. While stuck, they begin to voice out their views about the possible shift in the system of government. Each of the characters present the varied (and oftentimes confused) attitudes Filipinos have about federalism and charter change.
By 4 p.m., things get competitive when a rescue helicopter with limited seats and orange life boat arrive. This leads to a division between the group based on differences in their political views.
I particularly admire how representations of the country’s current situation are represented through the traffic as a slow movement to progress, the bad weather and flood as hindrances to a course of action. The characters are relatable as they represent Filipinos from all walks of life with diverse attitudes and perspectives.
Listen carefully to the song lyrics as they are not only entertaining and catchy, but also voice messages about the value of democracy.
By the end of the show, the characters finally arrive at the precinct to cast their votes. However, the poll results are 50-50. The final votes are cast by the audience. (You should have your phones and internet connection all set by now.) The evening that BusinessWorld watched, the audience poll showed a majority vote against charter change.
If an actual plebiscite of charter change is held, we can only hope that we understand well enough what the proposed shift in the system of government entails to make the right decision. After all, the marks we make on a ballot set the indelible course of our nation’s future.
Charot! runs until March 17. For tickets and schedules, contact TicketWorld (www.ticketworld.com.ph, 891-9999).

A period of disruptive change

Businesses operating in the transport and logistics industry are going through a period of disruptive change, one that not only presents complex challenges but also offers exciting possibilities.

A report titled “The future of the logistics industry” by the professional services firm PricewaterhouseCoopers explored several areas of disruption logistics companies should focus on. And one of those has to do with customer expectations.

“Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly, and — in the case of consumers — at low or no delivery cost,” the report said.

It added that there’s a trend toward a more customized manufacturing, which it described as good for customers but hard for the logistics industry. “Add it all up and the sector is under acute and growing pressure to deliver a better service at an ever-lower cost.”

Technology is also extensively impacting players in the industry, but it’s by making a “maximum” and “intelligent” use of technology that those players can provide cheap, better service, the report said.

“‘Digital fitness’ will be a prerequisite for success: the winners will be those who understand how to exploit a whole range of new technologies, from data analytics to automation and platform solutions,” the report said. “Those who don’t, risk obsolescence.”

Attaining so-called digital fitness is a challenge for the sector, which, the report noted, “is currently lagging many of its customers in this respect.” “Attracting the right skills is one issue, but developing the right strategy is even more crucial,” it said.

The entry of new firms has made the environment in which logistics companies operate more competitive. These firms, the report said, are taking advantage of digital technology or new “sharing” business models in order to carve out the more lucrative elements of the value chain. They also have the advantages of not having asset-heavy balance sheets and cumbersome existing systems that could weigh them down.

The new players are mostly start-ups in “asset light” parts of the value chain, the report said. One example is a virtual freight forwarder. “These asset-less or asset-light businesses exploit digital technology to offer interactive benchmarking of freight rates, or match shippers with available capacity,” the report said.

Even in last-mile delivery, the conveyance of a product from a distribution center to its final destination, like the house of the person who ordered it, many start-ups have emerged. “Some of these companies are using technology to tap into the ‘sharing economy’ by matching available capacity with delivery needs,” the report said.

The fourth area of disruption the report identified was about collaboration. “‘Sharing’ is a big story for logistics now – from Uber-style approaches to last-mile delivery, to more formal [joint ventures] and partnerships at corporate level, the whole sector is redefining collaboration,” it said, adding that much of that is being hampered by inconsistencies in, for instance, shipment sizes, processes and information technology systems.

On-demand urban delivery providers

A separate article by the management consulting firm McKinsey noted that a new set of competitors had entered the business-to-consumer delivery market — the on-demand urban delivery providers.

These firms offer a different form of service, the article said. “[T]hey integrate demand aggregation via their own mobile platforms with dedicated in-house operations to enable (almost) instant delivery.”

“These innovations in the go-to-market approach and logistics model have attracted almost $5 billion in venture capital since 2014 in Western markets alone with leading players on average raising more than 90% of their total funding in that period,” the article, which came out in 2017, said. “That’s shaking up the urban shopping and delivery landscape.”

The article estimated that more than two-thirds of urban delivery start-up action was in the category of prepared-food delivery. And the dominant players in that sphere were emerging.

“For the many runners-up, a new hunting ground is needed, but it will be hard to come by. Markets such as groceries or nonfood retail do not offer the same rare combination of high gross margins and high urgency as hot food does,” the article said.

“At average variable costs per delivery as high as $7 to $10 (roughly P364 to P520), profitability will remain out of reach for these start-ups in the broader market — unless they reinvent themselves and address the limitations of their instant delivery model,” it added.

This process, however, entails a shift from a pure point-to-point delivery to a more cost-efficient network-based consolidation and adoption of “old school” models of product warehousing and employment.

“For most new entrants, however, a shift of this magnitude would exceed their capabilities and budgets, and trying to make it happen would set them up for failure,” the article said.

Still, the article argued that the impact of start-ups on the expectations of urban consumers will be lasting. “[S]hoppers have grown fond of having the city at their fingertips,” it said.

Retail T-bond sale set on Feb. 26

THE GOVERNMENT is looking to raise at least P30 billion from the sale of retail Treasury bonds (RTB) next week, the Bureau of the Treasury announced on Thursday.
In a notice posted on its Web site, the Treasury said it will offer peso-denominated five-year fixed-rate debt papers to retail investors amounting to at least P30 billion.
This is the first RTB offering of the government this year and the 22nd issuance overall, following a similar sale in June 2018 that raised some P121.765 billion ($2.31 billion) from three-year papers.
The auction and pricing of the five-year RTBs, due 2024, has been set for Feb. 26, to be immediately followed by a public offering until March 8 and issue date on March 12. The Treasury may choose to cut short the offer period and increase the offer volume as needed.
RTBs target small investors as they consist of low-risk, higher-yielding savings instruments backed by the national government. Orders for this issue will be in increments of P5,000.
This will be the fifth RTB sale under the administration of President Rodrigo R. Duterte, which has been moving to spend up to P8 trillion until 2022, when he ends his six-year term, on infrastructure development in a bid to prod gross domestic product growth to 7-8% annually till then from a 6.3% average in 2010-2016.
For the first time, the bonds can be bought online on the Web sites of Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP).
“The RTB Online Facility’s… objective is to encourage wider participation among individual investors,” the bureau said in its notice sent to agent banks that was signed by Deputy Treasurer Erwin D. Sta. Ana.
The RTB online facility will be available to existing individual peso deposit account holders of LANDBANK and DBP who have undergone the required know-your-client procedures.
To make way for the retail bond sale, the planned Treasury bill auction on Feb. 26 as well as the three-year bond auction on Feb. 27 will be cancelled.
The government raised P121.765 billion worth of RTBs last year at a 4.875% coupon. That was less than the P255.4 billion raised in the 20th RTB sale in November 2017.
National Treasurer Rosalia V. De Leon told reporters in a mobile phone message that the bond sale will help finance this year’s P3.757-trillion national budget and give “small investors access to government securities”.
The state wants to borrow P1.189 trillion in 2019 to fund its spending plans. Of the amount, 75% will be sourced domestically while the balance will be from foreign creditors.
Apart from the retail bond sale, the Treasury is also studying an offer of renminbi-denominated “panda” bonds next quarter as well as yen-denominated “samurai” bonds in the following quarter, in accordance with the government’s 12-month cycle of offshore bond offers.
The Philippines raised some $1.5 billion in 10-year dollar bonds in January, making it the first country in Asia to tap the global debt market this year. — Karl Angelo N. Vidal with Reuters

Watchdog ups M&A reporting trigger

By Janina C. Lim, Reporter
THE PHILIPPINE Competition Commission will raise next month the threshold values for required notification of mergers and acquisitions (M&As), according to a resolution posted on Thursday on the watchdog’s Web site.
PCC Advisory 2019-001 raises the thresholds to P5.6 billion from P5 billion for “size of persons” (SoP) and to P2.2 billion from P2 billion for the size of transactions (SoT).
The SoP is defined as the aggregate annual gross revenues or value of assets of “the ultimate parent entity of at least one of the acquiring or acquired entities” while SoT pertains to the value of assets or revenues of the acquired entity. When both are met, entities are mandated to notify the PCC of their transactions.
TO PREVENT CONFUSION
The adjustment was in accordance with last year’s PCC Memorandum Circular No. 18-001 which established a system of automatic annual adjustment of these thresholds based on the nominal gross domestic product (GDP) growth of the previous year rounded up to the nearest hundred millions. GDP grew by 6.2% last year, based on constant 2000 prices, and by 10.2% in nominal terms.
“The Commission deemed it more prudent to issue the resolution even though the memorandum circular mandates automatic adjustment of notification thresholds to prevent any confusion as to the determination of the adjusted thresholds based on the formula given under the memorandum circular,” the PCC’s Mergers and Acquisition Office said in a statement sent by mobile phone message.
PCC Chairman Arsenio M. Balisacan said recalibrating the threshold in line with the economy “ensures that the thresholds maintain their real value over time and relative to the size of the economy.”
“The PCC observes that the appetite for mergers and acquisitions within a rapidly growing economy remains high,” the anti-trust chief said in a statement yesterday.
“A well-designed threshold must be reflective of the country’s economic condition, such that the scope of merger control remains faithful to the intent of the law. The rationale for setting a notification threshold is to ensure that M&As that are more likely to substantially lessen competition are subject to compulsory notification and review, and to exclude those that are less likely to pose competition concerns,” Mr. Balisacan explained.
The adjustment marks the second such move since Republic Act No. 10667, or the Philippine Competition Act (PCA), was enacted in 2015 when thresholds started off at P1 billion for both SoP and SoT.
The first adjustment was made in March last year.
The law noted factors to consider when determining the need for an adjustment: structure of the relevant market, degree of integration, access to end-users, technology and financial resources, and other factors affecting the control of a market as provided by the law.
The new thresholds will apply to M&As with definitive agreements executed on or after March 1.
Under the law, the PCC is mandated to review mergers and acquisitions to ensure that these deals will not substantially prevent, restrict or lessen competition in the relevant market.
The country’s antitrust body has reviewed 177 transactions with a combined value of P2.83 trillion to date.
Of this, 161 or 91% have been approved.
Most of these transactions are from manufacturing, finance and insurance, real estate, electricity and gas, transportation and storage sectors.

Unofficial data show fiscal deficit breaching 2018 cap

1000 peso bills
BW FILE PHOTO

By Melissa Luz T. Lopez, Senior Reporter
THE GOVERNMENT breached its deficit limit in 2018, as state spending shot past target to outpace the increase in revenue collections.
Unofficial data secured by reporters showed the budget balance at a P558.259-billion deficit last year, substantially bigger than the P350.637-billion shortfall in 2017 and past the P526.8 billion programmed for the entire year.
The wider fiscal gap came as state disbursements reached P3.408 trillion, bigger than the P3.346-trillion target for the year and marking a 20.7% increase from the P2.824 trillion spent in 2017.
Economic growth settled at a three-year low of 6.2% in 2018 despite the hefty spending, with officials pinning the blame on elevated inflation.
Meanwhile, revenues totaled some P2.85 trillion, higher than the P2.82-trillion goal for the year. The amount was 15.2% more than 2017’s P2.473 trillion, fueled by implementation of Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act (TRAIN).
The TRAIN was expected to generate an additional P63.3 billion revenues during its first year of implementation from the removal of some exemptions to value-added tax (VAT); increased tax rates for fuel, cars, tobacco, coal, minerals, documentary stamps; and new taxes for sugar-sweetened drinks and cosmetic procedures, to name a few.
However, December saw a wider P81.042-billion gap, the biggest since September, as state spending totalled P313.251 billion, down by 5.1% year-on-year, versus a P232.209-billion revenue haul, data showed.
As a developing economy, the Philippines operates on a budget deficit as it spends more than what it earns to support hefty funding needs for infrastructure development and social services.
This also meant that the deficit ceiling set at three percent of gross domestic product (GDP) may have been breached.
Michael L. Ricafort, economist at the Rizal Commercial Banking Corp., pegged the amount as equal to 3.2% of GDP. That compares to the 2.2% fiscal shortfall in 2017 and appears to be the widest since 2010.
Mr. Ricafort said the wider-than-programmed deficit is not a cause for concern just yet.
“Exceeding the said target may be justified by increased government spending on major infrastructure projects that may have future benefits in terms of further development and improved productivity in the economy in the long run,” he said.
Budget Secretary Benjamin E. Diokno said in January that the 2018 deficit ceiling was likely breached to settle at 3.1% of GDP amid brisk state spending.
The administration of President Rodrigo R. Duterte has programmed an even wider deficit this year at P624.4 billion — equivalent to 3.2% of GDP — to accommodate bigger provisions for infrastructure projects.
This should spur growth to 7-8%, with the state also counting on a one-time boost from election-related expenses.

WB pushes 4.5% of GDP infrastructure spending

DEVELOPING COUNTRIES like the Philippines should invest more to improve living conditions and contribute to global efforts against climate change, the World Bank said.
In its Beyond the Gap report, the multilateral lender cited the need to increase spending on key infrastructure to as much as 4.5% of gross domestic product (GDP) for low- and middle-income nations, so that they can be on track in achieving the Sustainable Development Goals (SDGs).
“Our analysis clearly shows that developing countries can build the climate-smart infrastructure they need by spending around 4.5% of GDP. The good news is this is close to what many countries already spend,” Kristalina Georgieva, interim president of the World Bank Group, was quoted as saying in a statement issued yesterday.
“With the right choices, infrastructure can be built that helps achieve globally agreed emissions targets. The focus must be on smarter and more resilient investments, not necessarily more money.”
The United Nations introduced the SDGs in 2015, setting global standards for poverty reduction and social inclusion; environmental sustainability, climate change and disaster risk management; accountable, responsive and participatory governance; fair and stable order based on international rule of law; as well as peace and security.
The World Bank study focused on policy approaches that would enable developing economies to provide universal access to water, sanitation and electricity; greater mobility; improved food security; better protection from floods; and eventual full decarbonization.
The report found that nations do not necessarily have to spend more, but will have to spend efficiently and pour equal attention to maintaining key infrastructure to maximize outcomes.
Across East Asia and the Pacific, the preferred investment scenario shows that investments for infrastructure capital must stand at four percent of regional GDP, while maintenance costs entail another 2.5% of GDP to ensure sustained quality. This covers expenses for electricity, transport, water supply and sanitation, irrigation and flood protection.
The World Bank’s recommendations include spending for renewable energy development in the interest of promoting long-term sustainability.
A separate study by the Asian Development Bank (ADB) showed that the Philippines needs to increase tax collections by at least 5.9-9.6% from 2015 to 2030 to fund increased spending for social services with the SDGs in mind.
MALPASS BACKED
In a related development, Finance Secretary Carlos G. Dominguez III threw his support behind the appointment of David Malpass as the new World Bank chief.
Mr. Malpass, who is the United States’ treasury undersecretary, is President Donald J. Trump’s nominee for the position.
This comes after the surprise resignation of ex-president Jim Yong Kim, who left the multilateral lender to take a premier post at a privately held infrastructure investment fund.
The Department of Finance said Messrs. Dominguez and Malpass talked over the phone on Thursday morning when the Cabinet official was in Osaka, Japan for joint meetings and a fresh leg of the Philippine Economic Briefing.
Under Mr. Malpass’ leadership, Mr. Dominguez said he expects the World Bank to “work closely” with the Japan-led ADB in terms of charting a global reform agenda for the Asia-Pacific.
Mr. Dominguez sits as the Philippine representative in the Board of Governors of the World Bank Group. — Melissa Luz T. Lopez

No host? No problem

LOS ANGELES — There will not be a host and Sunday’s Oscars ceremony will not open with the traditional monologue in which celebrities and politicians are skewered.
Yet, with rock band Queen, pop superstar Lady Gaga, and two musicals in the race for best picture, the highest honors in the movie industry will have an unusually strong music vibe as the Oscars seek to regain television audiences.
British band Queen, featuring Adam Lambert as lead vocalist, will open the Feb. 24 show with a live performance celebrating the box-office success of best picture nominee Bohemian Rhapsody, a representative of the band told Reuters.
Bette Midler, Jennifer Hudson, Jennifer Lopez, and record producer Pharrell Williams are also set to attend or present, along with James Bond actor Daniel Craig, tennis champion Serena Williams, Black Panther star Chadwick Boseman, and comedians Tina Fey and Amy Poehler.
Details have been scant about the first Academy Awards ceremony in 30 years to go ahead without a host, bringing a curiosity factor to the last and biggest awards show of the season. Comedian Kevin Hart withdrew from the host job in December after past homophobic tweets resurfaced.
“Hollywood is all about suspense,” said Tom O’Neil, founder of awards website Goldderby.com.
One thing is certain; it will not be shorter. A pledge to broadcaster ABC to keep the show to three hours was wrecked last week when the Academy of Motion Picture Arts and Sciences bowed to protests and scrapped plans to hand out four of the 24 Oscars during commercial breaks.
In 1989, the last time there was no host, the telecast opened with an 11-minute song and dance number featuring Rob Lowe and an actress dressed as Snow White that was widely derided.
Under pressure to deliver a compelling show for viewers after last year’s TV audience hit an all-time low, producers have made the most of the best original song contenders.
Lady Gaga and actor-director Bradley Cooper will perform a live duet of her hit song “Shallow” from their best picture contender A Star is Born, while Jennifer Hudson has been tapped to sing “Fight” from documentary RBG.
Ms. Midler will do the honors for the Mary Poppins Returns song “The Place Where Lost Things Go,” and country duo Gillian Welch and David Rawlings will perform “”When a Cowboy Trades His Spurs for Wings.”
“That is one of the places where the star wattage can make a difference,” said Alison Willmore, critic and culture writer at BuzzFeed News. “Lady Gaga is a music superstar and I would imagine her hard core fans will be tuning in for her,” Ms. Willmore added.
Organizers have not said whether rapper Kendrick Lamar will perform his Oscar-nominated song “All the Stars” from superhero movie Black Panther.
The academy on Wednesday said that Serena Williams, talk show host Trevor Noah, and Congressman John Lewis would appear to talk about what the best picture nominees mean to them. Spanish-American chef Jose Andres, musician Tom Morello, and Barbra Streisand will also be among those introducing the nominees.
Sunday’s show is also expected to dispense with the segments between award handouts that in recent years have focused on pizza deliveries or surprising people on bus tours.
“I’m not going to miss a lot of those little bits. That often feels like the part that makes the ceremony long, so maybe without a host it won’t feel like it’s dragging,” said BuzzFeed’s Ms. Willmore. — Reuters

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