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Rediscount loans hit P9.6 billion in Nov.

BSP
PESO rediscount loans totalled P9.642 billion during November.

BANKS took additional loans from the central bank’s rediscount window in November, boosting money supply to service bigger capital expenses and commercial lending.
Peso rediscount loans totalled P9.642 billion during the month, lower than the P16.553 billion incurred back in October, the Bangko Sentral ng Pilipinas (BSP) said yesterday. Still, the amount was higher than the P171 million availed in November 2017.
The BSP’s rediscount facility provides an avenue for banks to get hold of more cash by posting their collectibles as collateral for short-term borrowings. The banks can then use the fresh money supply — either in peso, dollar or yen — to hand out more loans for corporate or retail clients and service unexpected withdrawals.
The November availments brought the year-to-date tally to P56.818 billion, which surged from the P1.144 billion secured during the comparable period in 2017.
In a statement, the BSP said more than half of the loans were used to support capital asset expenses, while roughly a fifth was handed out for commercial credits.
Other rediscount loans funded other services (17%), permanent working capital (8.5%), as well as production and housing needs.
Central bank officials previously said that market players may have chosen to tap the rediscount window to append their money supply at a time of tighter liquidity in the local financial markets.
The bigger rediscount loans also came ahead of the Christmas season, which usually sees a spike in demand for cash amid the merriment.
For December, rates for rediscount loans rose anew to reflect a 25 basis point (bp) increase in benchmark rates during the BSP’s Nov. 15 meeting. The “proactive” rate hike marks the fifth straight tightening move this year, which brought benchmark yields higher to a 4.25-5.25% range.
As a result, rediscount rates for peso loans went up to 5.3125% for loans maturing in 90 days and below, while those with 91 to 180-day terms are priced at 5.375% since Nov. 19.
The Monetary Board will hold their eighth and final policy review on Thursday, with economists widely expecting them to keep rates steady.
On the other hand, the dollar and yen rediscount windows for exporters remained untouched as of end-November, sustaining a trend seen the previous year.
For December, yields on dollar borrowings are higher at 4.73613% for one to 90-day loans; 4.79863% for 91- to 180-day loans; and 4.86113% for 181- to 360-day loans, the central bank said.
Meanwhile, rates for yen loans dropped anew to 1.8845% for one to 90-day loans, 1.947% for 91- to 180-day loans, and 2.0095% for 181- to 360-day loans. These are the interest rates levied by the BSP to banks securing short-term credit lines, which track movements of global yields. — Melissa Luz T. Lopez

Singing along with Per Sorensen

By Michelle Anne P. Soliman, Reporter
Concert Review
The Voice of Fra Lippo Lippi
Dec. 6
Newport Performing Arts Theater,
Resorts World Manila, Pasay City
WE WERE ON EDSA some time in the 1990s when dad played the album Fra Lippo Lippi’s The Virgin Years: Greatest Hits (1997) on the car’s stereo system, the New Wave music filling the space as we made our way home. That is how I was introduced to the unique sound of the Norwegian duo whose group name I did not know then — not until I found the old album hidden deep in a shelf in my early teens.
Many years later, I got a chance to Fra Lippo Lippi’s frontman Per Sorensen perform live in concert. Sorensen kept the Fra Lippo Lippi brand, after splitting with his partner Rune Kristofferson in 2002. This time he was performing with his two sons.
On the evening of Dec. 6, the audience found the stage of the lightly populated Newport Performing Arts Theater in Resorts World Manila in Pasay City divided in two — on the right was a band which included a bass guitarist, drummer, and keyboard player; on the left, the Manila Philharmonic Orchestra under the baton of maestro Rodel Colmenar. The two groups were separated by a white baby grand piano at the center.
When the music started, the stage lit up with psychedelic colors and patterns on the theater’s giant LED screen. Dressed in a pale suit and black shirt, Per Sorensen sang the first lines to “Distance Between Us” (1986).
The singer stood under the lights, his thinning light hair hinted at his age; but his voice sounded as pure as when I first heard it.
The first song was followed by “Shouldn’t Have to Be Like That” (1986), played simply on piano; then Mr. Sorensen stood in front of a microphone for “Even Tall Trees Bend” (1986).
After the first three songs, the singer spoke to the audience, telling them that some Filipino fans had sent messages to his official Facebook page about which songs they hoped he would perform that evening. He proceeded to sing “Mother’s Little Soldier” (1990) which was one of the songs which his fans had said meant a lot to them when they went through difficult times.
By 9 p.m. the theater’s empty seats were mostly filled. “There’s more people here now — I thought you didn’t have much traffic in Manila?” the singer joked.
The audience fell quiet when he proceeded to play his favorite song, “Will I Recognize” (2002) on the piano and showcased his well-maintained vocals; this was followed by a lovely string section-accompanied rendition of “Light and Shade” (1987).
The first segment of the show ended with an energetic solo performance on electric guitar and vocals by his son, Jack Holldorff.
The second half of the show saw Mr. Sorensen returned to the stage dressed all in black, and he proceeded to perform “Regrets” (1986), “Angel” (1987), and a sorrowful ballad, “I Will Hold You” (a song he had written about dealing with a difficult marriage) with Mr. Sorensen alternately playing the piano and an electric keyboard.
The atmosphere in the theater shifted into an interactive sing-along with “Some People” (1988). The singer instructed the audience at the center of the theater to sing the song’s melody while his two sons assisted in instructing the left and right sides of the crowd to sing harmony in a lower and higher octave respectively.
Before taking a second break from the stage, he introduced his son, Oskar Holldorff, who played an original composition titled “Wondering” on the piano.
He returned onstage with delight as he commended his sons for performing with him for the first time.
Sitting at the piano, a faint squeal in the crowd echoed when the first bars to “Later” (2002) were played — the song was only a warm up to the rest of the ballads which the crowd sang along to.
“Everytime I See You” (1986) — the song that I had been waiting for that evening — was sung in a version similar to the original on the album.
After cheerful applause, a male audience member shouted, “Stitches and Burns!” To which the singer replied, “If you say so.” He sat in front of the piano as the crowd enjoyed the performance.
As the crowd screamed for more, a female audience member shouted, “Beauty and Madness!” And, of course, without objection, the piano introduction followed.
The singer has returned multiple times to the Philippines since he first performed here in 1988, always welcomed warmly.
He closed the show by saying that “coming here to the Philippines is absolutely like coming home.” With that, he sang a heartfelt rendition of “Coming Home” (1985) as he played the piano.
All throughout the evening, Mr. Sorensen’s voice sounded rich in tone even when accompanied by the orchestra and the band. His performance was, as they say in Norwegian, nydelig!

House OK’s Solar Para sa Bayan’s franchise

THE HOUSE of Representatives on Monday approved on third and final reading the bill giving a nationwide microgrid franchise to Solar Para sa Bayan Corporation (SPSBC), despite opposition from solar energy developers and electric cooperatives.
With 198 affirmative votes, 7 negatives, and one abstention, the chamber approved House Bill No. 8179 allowing SPSBC to “construct, install, establish operate and maintain distributable power technologies and minigrid systems.”
SPSBC is an energy distribution company founded by Solar Philippines President Leandro L. Leviste, the son of Senator Loren B. Legarda. The company has said it will provide power to remote areas in the country through the establishment of microgrids.
Several groups have strongly opposed SPSBC’s 25-year legislative franchise, including National Association of General Managers of Electric Cooperatives, Philippine Rural Electric Cooperatives Association (PHILRECA), and the Philippine Independent Power Producers Association, Inc. (PIPPA).
“Passing this bill will burden our countrymen as SPSBC seeks for a franchise which Mr. Leviste can use as his ticket to operate anywhere in the country. Granting a national franchise means that our legislators will allow the SPSBC to circumvent the provisions of the EPIRA (Electric Power Industry Reform Act), and by doing so, will give the SPSBC the permission to undermine the government’s regulatory power in the energy sector,” PHILRECA said last month.
PIPPA earlier said that while electrification is a valid concern, granting a nationwide franchise to any entity is not the proper means to achieving this purpose.
“PIPPA believes that the same may be achieved, without any undue favor or harm, simply through the proper implementation of the EPIRA. The unbridled authority to operate at any capacity, of whatever kind, and in any part of the Philippines, is far too great a privilege for any entity,” the association said.

Veterans Bank names Claravall as new president

PHILIPPINE Veterans Bank (PVB) named Renato A. Claravall as its new president and chief operating officer (COO), replacing Nonilo C. Cruz.
In a statement, the lender said its board of directors approved the appointment of Mr. Claravall as the president and COO effective Dec. 1, 2018.
According to the bank, Mr. Claravall’s career in banking and finance spans 45 years in both commercial and investment banking. He was senior vice-president and chief finance officer of Benguet Corp. from 2010 to 2015. He also served as the director of various wholly owned subsidiaries of Benguet Corp.
Mr. Claravall has been a director of PVB since 2015.
Philippine Veterans Bank is licensed as a commercial bank owned by Filipino World War II veterans and their heirs. The bank caters to both corporate and retail clients, operating 60 branches and over 130 automated teller machines nationwide.
It is the 25th biggest in the industry with P49.363 billion assets at end-June, according to the latest central bank data. — K.A.N. Vidal

Coming soon: New projects at Tagaytay Highlands

UP to four new projects is expected to be launched in Tagaytay Highlands next year, as the mountain resort development marks its 25th anniversary.
Mabe E. De Goitia, Belle Corp. assistant vice president for marketing, said the company is planning to develop between three to four projects next year which will be a mix of condominiums and lots.
During a recent press conference at the Tagaytay Highlands, Ms. De Goitia said the whole property spans 1,500 hectares, and the 27 current projects make up less than 50% of the area.
“That’s why we are also launching a lot of new projects kasi [because] we have a very huge land bank to still develop,” she said.
Ahead of its 25th anniversary next year, Tagaytay Highlands’ facilities are being rehabilitated and improved such as the funicular train from the Bell View to the Madre De Dios Chapel, and the cable car,
“We’ve been very active with regards to maintaining our facilities, even rehabilitating it, even with properties. Every year we’ve been launching a lot of new projects… There is actually a lot that’s happening here,” Jaime S. Humarang, Jr., director for marketing communications of Tagaytay Highlands, said.
Re-opening starting this month are the Japanese, Spanish, and Filipino restaurants within the Tagaytay Highlands. New coffee shops are also scheduled to open next year.
The premier mountain resort development of SM Group features communities like Woodlands Point which features luxury log cabins; Horizon Terraces with its Asian-contemporary garden suites and villas; Sycamore Heights which offers views of Taal Lake and Midlands fairways; and Vireya, the only tropical resort community in the whole development. — Vincent Mariel P. Galang

How PSEi member stocks performed — December 10, 2018

Here’s a quick glance at how PSEi stocks fared on Monday, December 10, 2018.

 
Philippine Stock Exchange’s most active stocks by value turnover — December 10, 2018

DoF wants assurances REIT gains will be reinvested

THE Department of Finance (DoF) will not implement the Real Estate Investment Trust (REIT) until it obtains assurances that gains realized from such schemes will be reinvested in the Philippines.
“How can we implement the REIT program if we’re not sure that the money will be reinvested here. They might buy dollars and buy property in the US and I’m sure many guys want to do that,” Finance Secretary Carlos G. Dominguez III told BusinessWorld.
“That’s really a serious issue. How do you make sure that they reinvest here? In the US, they do it by deferring the tax if you invest in an equivalent or a larger piece of property. Maybe that’s something we can do. We will not implement it until we figure that out,” he added.
The Bureau of Internal Revenue (BIR) issued a clarification that initial property transfers from REIT sponsors to REIT vehicles are exempt from value-added tax (VAT) under the Tax Reform for Acceleration and Inclusion law. The exempt status of such transfers has been a longstanding hurdle to the REIT law’s implementation. It was enacted in 2009.
Following this clarification, the Securities and Exchange Commission (SEC) said it will now move to lower the minimum public ownership (MPO) for REITs to 33%, consistent with the law, from 40% currently, rising further to 67% after two years, also a big hurdle as property developers would have little control over the REIT.
REITs are listed corporations that own and operate income-generating real estate assets like offices, apartment buildings, hotels, warehouses, shopping centers and highways.
“It’s fair for DoF to want capital to be invested back in the Philippines. It won’t be reasonable to grant incentives just for those incentives to be used to benefit others,” Leechiu Property Consultants (LPC) David Leechiu said in a mobile phone message when asked for comment.
However, SEC Commissioner Ephyro Luis B. Amatong said that more legal issues need to be addressed before the commission can issue a circular to officially lower the minimum public ownership.
“The challenge to us is the tax treatment needs to be well established beforehand so that investors can be assured of the tax treatment of their investments, not only in the VAT treatment for the transfer of property, but also on income tax,” he said in a separate interview.
Under Revenue Regulation 13-2011, the REIT is required place in escrow in favor of the government “the income tax collectible from the REIT on the dividend it declared and deducted from its taxable income for the first and second year of the REIT prior to its attaining of the minimum ownership of 67% had it been disallowed.”
REITs are also subject to only 50% of the applicable documentary stamp tax payable, but will also have to put these in escrow until it reaches the required MPO level.
He said that the SEC, together with the DoF and the Bureau of Internal Revenue (BIR), will meet today to harmonize the regulations.
“Right now there’s Revenue Regulations out that provide for a required escrow arrangement. So the tax-exempt portion needs to be put in escrow until they reach the minimum public ownership. If we remove the MPO, what does that mean? Does that mean the money remains in escrow until they voluntarily hit the MPO, or there’s no more escrow? We want to align,” Mr. Amatong said.
“If we reduce the MPO does the BIR still require escrow, in which case that portion is not actually returned to the REIT… what happens?” — Elijah Joseph C. Tubayan

Bicam approves simplified power permits bill

A BILL seeking to modernize and streamline the permitting process for power generation, transmission, and distribution projects was approved by the bicameral conference committee.
The House members of the panel led by Marinduque Rep. Lord Allan Q. Velasco and the Senate members led by Senator Sherwin T. Gatchalian agreed to adopt the Senate version of the proposed Energy Virtual One-Stop Shop Act of 2017. Mr. Velasco and Mr. Gatchalian are chairs of their respective chambers’ energy committees.
In a statement on Monday, Mr. Gatchalian said the passage of the measure would help lower electricity costs, especially when inflation remains high at 6% in November. He estimated that the reduced generation cost may lower consumer electricity prices by as much as P0.35 kilowatt per hour.
“We are optimistic that this bill is poised to drive down electricity costs and provide significant savings to power consumers by modernizing and streamlining the permitting process behind power infrastructure projects,” he said.
The proposed measure seeks to create an online platform called the Energy Virtual One-Stop Shop (EVOSS) where prospective developers can file the necessary permits and applications, submit all documentary requirements, and pay the required fees.
The EVOSS system will be managed and maintained by the Department of Energy (DoE), while its operations will handed to a EVOSS Steering Committee.
A strict time frame will be observed by government agencies involved to act on pending applications. Under the bill, the failure of an agency to act within the prescribed time frame will result in the automatic approval of the application.
Administrative sanctions against government employees will also be imposed.
For private entities that fail to act within the prescribed time frame the law provides for a P100,000 fine per day of delay.
Mr. Gatchalian said the EVOSS system will also encourage foreign investors to enter the market as to eliminates red tape in the permitting process. It also hopes to stimulate competition in the energy generation industry.
“The elimination of red tape in the permitting process will go a long way toward rejuvenating our energy sector. It will remove a formidable barrier to entry that has often discouraged foreign firms from entering the generation market,” he said. — Camille A. Aguinaldo

DoT, DoTr to harmonize airport dev’t policies

THE Department of Tourism (DoT) and the Department of Transportation (DoTr) said they are looking to harmonize policy that will determine priorities for airport development.
During the DoT-DoTr Convergence Conference on Airport Development held at Makati Shangri-La on Monday, Tourism Undersecretary Arturo P. Boncato, Jr. said the government intends to strengthen tourism by undertaking formal coordination with various stakeholders.
“Our target output…is to have a joint department order of DoT and DoTr providing policy directions and guidelines in implementing the prioritization criteria for tourism airport project timelines,” he said during the program.
The conference gathered representatives from the two departments, attached agencies and executives from the private sector, including Philippine Airlines, Cebu Pacific, AirAsia, AirJuan, Skyjet and Airswift.
Mr. Boncato told reporters on the sidelines of the event that the DoT and DoTr have long been communicating to streamline their efforts, but the conference aims to formalize their working arrangements.
“We’ve been talking since day one. But this is our first formal meeting and this will lead to a formal agreement between both departments, of course led by our secretaries — (Transportation) Secretary (Arthur P.) Tugade and (Tourism) Secretary (Bernadette Romulo-)Puyat, to agree on the criteria in terms of prioritizing and developing primary and secondary airports,” he said.
Mr. Boncato noted that the DoTr needs to consider the DoT’s input in developing airports, as that department has the data to help determine which areas promise the best economic return.
“[W]e would show them market trends. When tourists come to the Philippines, where do they exactly want to go? Do they want to go to an island, to a mountain, to the north, to the south? So this is very important information that we can share with the DoTr that could help them prioritize the development of airports,” he said.
“That’s why the program is about both the development, like helping airports grow, and prioritization, which ones to go first in terms of development, that would give the greatest impact to tourism growth,” he added. — Denise A. Valdez

ADB to fund finance, infrastructure inclusiveness

THE ASIAN Development Bank (ADB) and the Philippines exchanged loan documents for a combined $600 million credit line for two projects that seek to expand private-sector participation in public infrastructure projects and promote financial inclusion.
ADB President Takehiko Nakao and Finance Secretary Carlos G. Dominguez III exchanged loan documents on Monday for the Expanding Private Participation in Infrastructure Program Subprogram 2 (EPPIP2), and the Inclusive Finance Development Program Subprogram 1 (IFDP1).
The EPPIP is a policy-based lending program with $300 million worth of funding, which supports government reforms to strengthen financial support to public-private partnerships (PPPs), expand the pipeline of PPP projects, and strengthen the legal and regulatory framework for PPPs.
It is an expansion of the previous EPPIP program in 2012 when PPP regulatory frameworks had just been established. Mr. Dominguez said that a total of 12 national and two local government-level PPP projects were awarded so far since the previous program.
The previous EPPIP program helped the government complete the implementing rules and regulations for the use of alternative dispute resolution mechanisms in all contracts involving PPP projects, and also developed a handbook on standard PPP contract provisions.
However Mr. Dominguez said that the government is still standing by its policy to restrict PPPs largely to the operations and maintenance components of a project, in order to fast-track the implementation. For the initial stages the government prefers to use budget funds and official development assistance, a reversal of the procedure observed by the previous administration.
“What we have done is basically de-emphasize the PPP in the construction phase for projects so they can be implemented immediately. Although we have de-emphasized the construction, we have pushed forward the PPP in the management (area),” Mr. Dominguez said, citing success in the Clark International Airport and the Panglao Airport using that hybrid type of PPP.
But he said that the government remains keen on pure PPPs as long as they introduce new technology. He added that the government is entertaining proposals for the proposed international airports in Bulacan and Sangley, as well as the Ninoy Aquino International Airport rehabilitation.
The IFDP1 meanwhile is another policy-based lending program with $300 million worth of funding, which aims to support government reforms to expand financial products and services to the poor, promote financial literacy, and invest in support networks and infrastructure such as the national retail payment system and the new national identification system.
ADB studies show that only 34% of Filipino adults had a bank account in 2017, compared with 82% in Thailand and 49% in Indonesia. A separate study from the Bangko Sentral ng Pilipinas said that only 14% Filipino adults borrowed from a bank last year.
“ADB is committed to supporting the Philippine government as it pursues more inclusive growth across the archipelago. Boosting the government’s effort to build up infrastructure and expand financial services in underserved areas of the country will help reduce income inequality in the country, which has persisted despite sustained strong economic growth in recent years,” said Mr. Nakao.
“It is encouraging that the Philippine economy is continuing on a sustained, high growth rate and the robust banking sector is helping build resilience amidst global volatility,” he added.
Mr. Nakao also commended the Philippine government’s efforts to stabilize high inflation and rationalize tax systems.
The ADB expects its board to approve before the end of the year a $400 million emergency loan and $8 million grant for the reconstruction and recovery of Marawi City.
The ADB is also looking at an additional technical assistance loan for the Infrastructure Preparation and Innovation Facility to expand the existing $100 million credit line, to help the government prepare and design infrastructure projects.
The government seeks to raise public spending on infrastructure to 7.4% of gross domestic product by 2022 from 5.1% in 2016.
The ADB has set a $7.4 billion financing pipeline for the Philippines from 2019 to 2022, which is about double than the program in the previous three years. — Elijah Joseph C. Tubayan

Senate commits to find money to build health centers

THE Senate committee on finance on Monday committed to restore at least P16 billion worth of allocations to the budget of the Department of Health (DoH), especially to the agency’s Health Facilities Enhancement Program (HFEP), in the proposed 2019 national budget.
Senate Minority Leader Franklin M. Drilon raised the issue during the continuation of the deliberations in the Senate on the General Appropriations Bill.
“I’m forced to bring it up because of the very substantial reduction. It has to have the decision of the committee on finance so we can reinstate it if we can the budget because of the very adverse effect on our health services,” he said.
“I’m more than willing to do it. I simply have to find a source of funds… It’s important we restore it in full,” Senator Loren B. Legarda, chair of the committee, said in response.
Under the GAB, the DoH budget allocation is P77 billion, but the Senate’ version of the budget bill propose P79 billion. The latter amount is P28 billion less than the P107 billion current DoH budget in 2018.
Mr. Drilon said Health Secretary Francisco T. Duque has told him that the department needs P16.8 billion more to cover the HFEP. Mr. Duque has also said there were about 900 health facilities with existing human resources but lacking in the equipment. Several health facilities being constructed were already more than 70% complete, which need funding.
“I don’t think we can face people with revelations that there are some districts which get P2.4 billion in farm-to-market roads. And here there are 900 health facilities that are completely manned but needs equipment,” Mr. Drilon said.
Ms. Legarda said the Senate will prioritize the funding of the equipment for the health facilities. She also said special provisions may be added in the GAB that would help the DoH obligate their funding faster, citing that the agency has only 16% obligated its budget as of September 2018.
She also noted that the DoH may also utilize unused 2018 appropriations, which Congress authorized through a joint resolution, to cover funding gaps in the agency. — Camille A. Aguinaldo

Small firms advised to clean up books for more capital access

DAVAO CITY — Local businesses, especially family enterprises, have been urged to clean up their books and professionalize operations to open more windows to capital funding, an official of a consulting and accounting company said.
Emiliano S. Librea III, partner and head of advisory services of Punongbayan and Araullo, the Philippine member of Grant Thorton International Ltd., said good management practices will allow small and medium enterprises to access financing, including public investment by listing in the Philippine Stock Exchange.
Mr. Librea cited the case of Davao-headquartered Phoenix Petroleum Philippines, Inc., which listed in 2007 and has since grown its capital to about P15.7 billion from less than P2 billion.
“Imagine that, that is how huge the jump in its market capital,” Mr. Librea told BusinessWorld on the sidelines of a briefing for local companies last week.
The briefing, held together with the consultancy firm’s partners, Uni-Capital and the Martinez Vergara Gutierrez and Serrano law firm, included discussions on the benefits and requirement of listing in the stock market.
Mr. Librea said some companies, especially those run by families, pay for personal expenses out of company funds, which affects real valuation.
These “skeletons in the closet,” he said, are also means to lower tax due.
“They either do not have books or they don’t depict the true state of the business,” he said.
Mr. Librea also said that even without considering the stock market or borrowing from financial institutions, it would do companies good to put their accounting and operations in order to have better chances for growth.
“Hopefully, (they implement) the changes in the management of their businesses especially with the new generation,” he said. — Carmelito Q. Francisco

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