LUDWIG VAN BEETHOVEN is loved for the emotional depth of his music. His iconic “Moonlight Sonata” has been a window to peer into his loneliest moments, allowing people to share in his sorrows. His ninth symphony, Ode to Joy, lifts the human spirit to great heights with themes of triumphant joy in brotherhood with man and fellowship with God.
On Nov. 30, 8 p.m., at the Meralco Theater, the Manila Symphony Orchestra (MSO) will celebrate this beloved composer’s music with Beethoven Redux.
The MSO will be playing music by and inspired by Beethoven. Among these is “Par Clemenza pour Clement,” a “diptych after Beethoven’s Violin Concerto” made by Filipino composer Jeffrey Ching. Mr. Ching describes it as mostly made out of “solo cadenzas that are really mini-fantasias on Beethoven’s themes, but quoted and combined in unexpected ways. These are punctuated by fragments of Beethoven’s original orchestration which appear in the wrong order.” Indonesian-German violin virtuoso Iskandar Widjaja, described as “a force of nature,” will be performing Jeffrey Ching’s “Par Clemenza pour Clement,” a “diptych after Beethoven’s Violin Concerto.”
Mr. Ching studied in Harvard, Cambridge, and London, and now resides in Berlin. He represented the Philippines in three cultural delegations to China, was 1998 TOYM Awardee in Music, and in 2003 was the first composer to receive the Jose Rizal Award for Excellence from the Philippine president. He is currently working on three new operas.
For this concert, the MSO will be led by Singaporean conductor Darrell Ang. Mr. Ang has been Artistic Director and Chief Conductor of the Sichuan Orchestra of China since December 2016 and is a regular guest conductor at the Mariinsky Theatre. He studied conducting in St. Petersburg with Leonid Korchmar and continued at Yale with Shinik Hahm. He took all three top awards at the 50th Besançon International Young Conductors’ Competition leading to the Music Directorship of the Orchestre Symphonique de Bretagne (2012-2015).
Mr. Ching’s music is to be played by Iskandar Widjaja, an Indonesian-German violin virtuoso. Mr. Widjaja has performed with internationally renowned ensembles in Germany, Switzerland, China, Australia, and Austria. His personality and energy are aptly summed up by The Strad: “Iskandar Widjaja, a true force of nature.” Mr. Ching fondly describes Mr. Widjaja: “He combines absolute technical mastery and interpretive depth with a pop star’s stage persona that is entirely of our own time.” Beethoven Redux will be held on Nov. 30, 8 p.m., at The Meralco Theater, Ortigas Ave. cor. Meralco Ave., Pasig City. Tickets are available at TicketWorld, (https://tinyurl.com/MSOBeethovenRedux or 891-9999). For group and other special discounts, call the MSO office at 523-5712 or e-mail marketing@manilasymphony.com. — Gideon Isidro
THE SENATE on Monday approved on third and final reading the bill granting the franchise of MORE Electric and Power Corp., effectively replacing Panay Electric Co. (PECO) as the sole power distributor in Iloilo City.
House Bill No. 8302, which grants the company to operate for 25 years, was approved with 15 affirmative votes, zero negative vote, and no abstentions.
It was sponsored by Senator Grace S. Poe-Llamanzares, chair of the Senate committee on public services, for the Senate’s plenary approval.
The House of Representatives approved MORE Power’s legislative franchise on Oct. 8 and transmitted it to the Senate the following day. MORE Power was previously MORE Minerals Corp., a unit of Enrique K. Razon, Jr.’s Monte Oro Resources and Energy, Inc. (MORE).
To ensure the uninterrupted supply of electricity, the franchise bill provides for a transition period allowing PECO to operate temporarily until MORE Power is in full operation. The period will not exceed to two years from the grant of legislative franchise.
During the transition period, PECO is required to settle all refunds in connection with the all cases filed against it.
Meanwhile, MORE Power is directed to “accord preference” to hiring PECO employees and to conduct an information campaign regarding its operations to Iloilo end-users.
Both companies are also required to ensure that laid-off employees receive all separation and retirements benefits prescribed by law.
MORE Power should also undergo a competitive selection process in securing power supply agreements, the bill stated. It should also reduce the duration and frequency of power interruptions.
MORE Power is required to submit an annual report to Congress on its compliance with the terms and conditions of the franchise. Any sale or transfer of its shares are also subject to Congressional notification.
The Energy Regulatory Commission (ERC) was directed to conduct a comprehensive assessment of the company’s operations one year after the grant of the franchise and five years thereafter. — Camille A. Aguinaldo
SEMIRARA Mining and Power Corporation (SMPC) on Tuesday said its retail electricity unit has signed a 4-megawatt (MW) retail supply contract with a steel manufacturing company based in Luzon.
In a disclosure to the stock exchange, the Consunji-led energy company said Sem-Calaca RES Corporation’s (SCRC) supply contract, which started in September, will last for 15 months.
“We expect a challenging 2019 for the local power industry because of increasing power supply in the market and the growing competition for power contracts. With the increasing contestable customers switching to retail suppliers, the RES (retail electricity supplier) market could be a bright spot for SMPC,” SMPC President and Chief Operating Officer Victor A. Consunji was quoted as saying in a statement.
RES refers to a person or entity “authorized to sell, broker, market or aggregate electricity to the ‘contestable’ market.” Starting this year, the threshold for the 12-month average peak demand to qualify to become a contestable customer was brought down to 750 kW from 1 MW.
“We are in talks with a number of contestable clients for an aggregate volume of 150 MW. The negotiations are in various stages of negotiation,” Mr. Consunji said.
Mr. Consunji expressed confidence that SCRC can compete with other RES players, as it provides customers with customized solutions in managing electricity costs.
SCRC offers affordable electricity prices “by securing sufficient supply from affiliate power plants Sem-Calaca Power Corporation and Southwest Luzon Power Generation Corporation, other independent power generators, or from the Wholesale Electricity Spot Market.”
Parent company SMPC reported a 23% drop in consolidated net income to P8.9 billion as of September this year from P11.6 billion a year ago as coal and energy sales both declined during the period.
Coal sales dipped 4% to P17.7 billion during the nine-month period, as production slipped 10% to 8.9 million metric tons. Revenues from the power business decreased by 11% to P13.2 billion on weaker plants’ performance.
By Lourdes O. Pilar Researcher
RURAL BANKS began to sprout in the 1950s when the countryside lacked basic financial services, which prompted the government to set up measures to incentivize the establishment of such lenders by way of lower interest and other perks. Prior to this, the main sources of credit were moneylenders in the informal sector that charged very high interest rates. Convenient and secured payment facilities in many rural communities hardly existed.
However, issues of undercapitalization, illiquidity, and insolvency have led many of these banks to file for bankruptcy, prompting the central bank to tell these banks to shape up, or else face closure.
From a peak of around 1,040 in 1981, the number of rural banks in the country has been reduced to more than half, with several closures happening every year or so. The growing number of rural banks driven to bankruptcy led to initiatives such as the Consolidation Program for Rural Banks (CPRB) to encourage more mergers among lenders to fortify their financial footing.
“The unfortunate closure of some rural banks resulted to the reduction of the number of banks serving the market, but the joint enabling support of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. via the CPRB Plus with the specific push for merger and consolidation, coupled with other regulatory initiatives, has admittedly helped further strengthen the industry,” the Rural Bankers Association of the Philippine (RBAP) told BusinessWorld in an email.
The group cited BSP data explaining that while the number of rural banks’ head offices declined, the number of branches was on an uptrend from 2,956 as of March 2018 to 2,972 as of June 2018.
“In addition, the number of ‘branch lites’ and ‘agencies of banks’ allowed under BSP Circular Nos. 987 and 940, respectively, have scaled up (1,690 branch-lite units, 926 of which are rural banks and 138 micro-banking offices) the capacity of our rural banks to address the financial requirements of these farmers and fisherfolk,” RBAP noted.
In 2015, state agencies launched the CPRB, which aims to strengthen the rural banking system by way of consolidations. The initiative, which expire on Aug. 25, 2017, was extended until 2019 to prod more mergers among small lenders to fortify their financial footing. The revived CPRB program dropped the five-bank requirement in order to be eligible for the funding aid although merging banks still have to meet the required capitalization.
To date, there are four groups involving 18 rural banks under the revived CPRB program according to RBAP.
“Closures and consolidation of rural banks are meant to strengthen and improve the stability of the rural banking industry, and not weaken it. Accordingly, we do not believe such closures have negatively affected the rural banks’ ability to lend to farmers and fisherfolk. Well-managed and strong rural banks can be more responsive to the financing requirements of the rural clients,” said Pia Bernadette Roman-Tayag, Head of the BSP’s Financial Consumer Protection Department and Inclusive Finance Advocacy Office. KNOWING THE MARKET
The rural banking sector held a combined P238.03 billion in assets, representing a 1.5% share of the Philippine banking system’s total assets of around P15.71 trillion as of the end of the second quarter according to BSP data.
Even with its relatively small size, the rural banking has the advantage of knowing their market in the countryside.
“While the unfortunate closure of some rural banks resulted to the reduction of the number of banks serving the market, it doesn’t necessarily end up to diminishing the ability of the remaining banks to lend to farmers and fisherfolk,” RBAP said.
“Considering that rural banks are strategically located in the countryside, they get to maintain foothold position over the agri-lending market. This is basically the edge of these member-banks of ours over the rest of the banks in the country,” RBAP noted.
“Because of their proximity to the farmers and fisherfolk, they get to immediately reach out to this specific client group and provide them the financial solutions they need.”
Rural banks could also offer services other than loans given their knowledge of their rural clients.
“Our member-banks can further assist them by establishing possible linkages with possible buyers of farm produce. There is always a huge opportunity for our member-banks to work with other merchants in the agricultural value chain to further improve farming business viability,” RBAP said.
“In addition, our member-banks can serve as their financial literacy mentors to also improve the skills of our farmers and fisherfolk in this aspect,” RBAP added.
BSP’s Ms. Tayag, concurred: “These [rural] banks are perceived to have comparative advantage in granting relationship lending to small-sized enterprises, including those belonging to the agriculture sector. For instance, big banks given their sheer size, have ‘standardized’ their lending process. On the other hand, small banks have the advantage of being community-based which afford them with more intimate information and insights about the rural clients,” she said.
“Such local knowledge can be particularly valuable in determining market opportunities and managing credit risk.”
Figures on compliance under the Agri-Agra Reform Credit Act of 2009, which mandates banks to allot at least 10% of total loanable funds for agrarian reform beneficiaries (ARBs) and 15% for farmers and fisherfolk, have shown that only rural banks, along with cooperative banks, have consistently managed to meet the quota while other banks fall short.
As seen in the previous quarter, rural and cooperative banks shelled out 35.64% of their total loanable funds as compliance to the law, allotting 11.2% of their available funds to the agra-component and 24.5% to the agri-component.
Even so, RBAP noted that the 10%- and 15%- cap on the agri-agra components, respectively, have “been a fence” for their member-banks.
“Apparently, it is more challenging to scout for agrarian reform beneficiaries in some areas than to generally find farmers. Having a 25% blanket requirement for lending to agriculture is definitely going to have its ‘liberalizing’ effect to our member-banks. In turn, this would mean having more clients to be openly served,” RBAP said.
RBAP was referring to a proposal to lump the agri-agra lending provisions into a 25%-blanket requirement for lending to the agriculture sector in order to allow for greater flexibility.
BSP’s Ms. Tayag noted the BSP’s reservation to the mandatory credit quota scheme “given its implementation challenges and potential negative impact on financial stability and consumer protection as reported in local and international research papers.”
Ms. Tayag likewise noted that while rural and cooperative banks have been meeting the 10% quota requirement for agrarian reform, their compliance rates has been on a decline to 11.18% in Q2 2018 from 13.97% in Q2 2017. GETTING BETTER
RBAP reiterated that even with the decrease in rural bank head offices, the rural banking network in general “is growing significantly.”
Latest data from the BSP show the rural and cooperative bank group’s gross total loan portfolio as of June 2018 at around P135.94 billion, 4.6% higher compared to the figure as of June 2017.
BSP’s Ms. Tayag likewise noted the rural banks’ current upward trend, citing the increase of the group’s deposits by 4.8% to P169.6 billion versus the P161.8 billion in the same period last year as well as the number of deposit accounts to 8.18 million as of June 2018 compared to 7.37 million and 6.57 million in 2017 and 2016.
There was also “steady improvements” in the group’s capital adequacy ratio, which increased to 19.57% as of June 2018 versus the 18.32% in 2017 and 17.37% in 2018, Ms. Tayag said.
“In terms of profitability, liquidity and asset quality, however, rural banks’ performance for the same periods has not shown marked improvement,” noted the central bank official.
“Overall and in the long term, we see that consolidation and closures will bring about greater banking stability and strengthen rural banks’ ability to effectively respond to the dynamic operating environment.”
For RBAP, they believe there is “still huge room” for their member-banks to expand their respective agri-loan portfolios: “The demand-supply data that we have from the Department of Agriculture and the BSP are apparently telling us to reach out further to this needing farmers in the countryside,” RBAP said.
The group also cited the passage of Personal Property Security Act (Republic Act 11057) into law as a “confidence booster” of lending towards the agriculture sector. The law increased the list of acceptable personal properties that small businesses can use as loan collaterals besides real estate.
“Our farmers can even make use of their future crops, produce or livestock for this purpose. This should, in effect, encourage these client groups to be on-boarded onto the formal banking scenario,” RBAP said.
They also mentioned the credit guarantees offered by the Agricultural Guarantee Fund Pool (AGFP) program and the crop insurance in the cart of the Philippine Crop Insurance Corp. (PCIC). The AGFP covers 85% guarantee to private financial institutions against default risks of farmers while PCIC gives insurance protection to farmers against certain type of damages and losses to their agricultural assets.
The rural banks have also taken step to digitalize their operations to improve their services.
“To sustain its ability to provide better access to credit in the countryside, rural banks need to effectively adopt and leverage technology. Digitalization will allow rural banks to operate more efficiently and develop contextualized, more convenient and affordable financial services for their clients,” BSP’s Ms. Tayag said.
Ms. Tayag said that the BSP has promoted digitalization to help address the high transaction costs in lending to the agriculture sector.
“The BSP issued a package of policies for digital financial inclusion which are particularly relevant and designed for rural communities… These include polices that aim to: 1.) enable ease in the opening of basic, no-frills accounts; 2.) expand banking access through ubiquitous, low-key cash agents; and 3.) develop and interoperable retail payment system as a platform for innovative banking products,” she explained.
These policies, Ms. Tayag said, enable lenders to develop loan products that “are more aligned with the profile and preferences of agri workers and enterprises.”
Aiding in the digitalization process, Ms. Tayag said, is the Philippine ID system that is expected to further expand and deepen digitalization of financial services benefitting the underserved and financially excluded.
By Melissa Luz T. Lopez Senior Reporter
THE GOVERNMENT raised P15 billion via Treasury bonds (T-bonds) yesterday, and looked to raise more funds via a tap facility given overwhelming demand for the papers at lower prices.
The Bureau of the Treasury made a full award of reissued seven-year papers on Tuesday, which have a remaining life of six years and four months. This came as market players put forward P62.227 billion worth of bids, which was more than four times the programmed offering.
The long-term notes also saw its rate drop to a 6.974% average, 11.1 basis points lower than the 7.085% fetched when the papers were last awarded in September.
The yield is likewise below the 7.084% market rate yesterday, based on the benchmark Bloomberg Valuation Service reference rates.
The seven-year IOUs originally carried a 5.75% coupon when these were first floated in April. This week, market players asked for returns ranging from 6.9% to 6.99%.
National Treasurer Rosalia V. De Leon said the strong demand for T-bonds reflects a last ditch effort among banks and investment firms to allocate their portfolios now as they anticipate rates to trend lower in 2019.
“We are pleasantly surprised,” Ms. De Leon told reporters after the auction. “Actually we are seeing…the preference going into the intermediate, they are going longer because they want to lock in the rates right now.”
“The expectation is that the rates will further be falling already given that the inflation is expected to already trend downwards [with] lower oil prices, peso is appreciating, so they better lock in already on the long end of the curve,” the official added.
The Treasury also chose to open a tap facility to accommodate other bids that did not meet the first cut-off, where it raised P15 billion more as planned. Tenders reached P53.9 billion.
The tap facility was limited to the 10 firms that have been named as market makers by the Treasury, which are given privileges like this in exchange for obligations like submitting rate bids within a prescribed range.
The government also opened the tap window last week and raised an additional P15 billion worth of reissued five-year T-bonds, as appetite for the papers amounted to P48.857 billion during the 1 p.m. cut-off.
Raising more funds from the tap facility may allow the Treasury to advance its fundraising activities and avoid higher interest rates in future note offerings.
Sought for comment, a bond trader said the better turnout of the auction came on the back of an “improved near-term CPI (consumer price index) outlook,” as investors appear convinced that inflation is indeed on its way down coming from a peak of 6.7% in September and October.
The trader noted that the tap facility will likely be fully subscribed given upbeat market demand.
Meanwhile, Ms. De Leon said they remain watchful of developments as they time the issuance of dollar bonds to global investors. In particular, they are looking out for the minutes of the Nov. 7-8 meeting of the United States Federal Reserve to look for cues for the expected rate hike in December.
Speeches by Fed officials scheduled this week are also anticipated as authorities want to digest the “slant” of their remarks.
Another major event eyed by markets is the upcoming G-20 meeting of US President Donald J. Trump and Chinese President Xi Jinping, as they seek to settle the trade war between the world’s largest economies.
The Treasury is raising P270 billion from the domestic market this quarter through auctions of securities, offering P180 billion in T-bills and another P90 billion in Treasury bonds.
This is part of the P888.23-billion borrowing plan this year from local and foreign sources to fund the budget deficit and support increased government spending.
ATENEO DE MANILA University’s (ADMU) Arete formally opened its main plaza which will be called the Ubuntu Space. The link that will connect Arete’s arts and innovation wings is sponsored by the UnionBank of the Philippines.
An African word which means “humanity,” or “belonging through collaboration,” Ubuntu Space can be a venue for town-hall meetings, exhibitions, and launches.
ADMU’s Arete is the creative hub for students where they can develop their thinking, creativity, and ideas.
UnionBank chairman Justo A. Ortiz, an Ateneo alumnus, said in a statement that the bank has always supported “out of the box innovation” and expects the partnership to be a “mutual benefit to all involved,” meaning the students, the school, and the bank.
Prior to this particular partnership, UnionBank HR director Michelle Rubio said it had partnerships with Ateneo, including the Design Thinking workshops where students are asked to conceptualize and innovate human-centered creations.
“It’s important to have connections between the academe and the private institutions, not just about the arts, but about our broad capabilities for learning and keeping up with innovation in education,” Ms. Rubio told BusinessWorld at the sidelines of the quick Ubuntu unveiling.
Outside Ateneo, UnionBank is “friendly to all schools” said Mr. Rubio. For instance, it has a Hackathon program that started in 2016 where students and professionals all over the country are given “wicked challenges like themes on poverty, climate change, and agriculture” and the student have to come up with a solution, a prototype, within the next 24 hours.
UnionBank is banking on “the creativity of the Filipinos,” said Ms. Rubio. — NFPDG
THE PHILIPPINES has achieved a “turnaround” in sourcing power from renewable sources with policy innovations that have helped bring down the cost, putting the country sixth among developing nations in the Climatescope 2018 ranking compiled by Bloomberg New Energy Finance Ltd. (BNEF).
The Philippines scored 2.29 points, enough for sixth on the rankings, amid surging electricity demand, decreasing technology costs, and innovative laws.
“It’s been quite a turnaround. Just a few years ago, some argued that less developed nations could not, or even should not, expand power generation with zero-carbon sources because these were too expensive. Today, these countries are leading the charge when it comes to deployment, investment, policy innovation and cost reductions,” said Dario Traum, senior associate of BNEF and project manager of Climatescope in a statement Tuesday.
BNEF said reforms introduced by the Electric Power Industry Reform Act (EPIRA), or Republic Act 9136, and the Renewable Energy Act (RE), or RA 9513, fueled the growth of the renewable energy sector.
In September, the Department of Energy also issued a circular detailing its intent to identify competitive renewable energy zones (CREZ), where renewable sources are deemed feasible for development.
The government has also moved to give energy developers the right to sign power supply agreements (PSAs) directly with customers. Meanwhile, the Green Energy Option program authorizes utilities to supply customers opting for renewable energy.
BNEF also noted the country’s target for renewable capacity of 15.3 gigawatts (GW) by 2030.
BNEF said the negatives include targets to increase coal energy capacity by up to five times the current level. It said that while additins to coal-fired capacity fell to their lowest levels in over a decade in 2017, actual power generated by coal plants rose 4% year-on-year.
The top five in the BNEF ranking were Chile at 2.63 points, India (2.57), Jordan (2.54), Brazil (2.52), and Rwanda (2.31). China, which claimed the top spot last year, finished seventh. — Vincent Mariel P. Galang
THE Securities and Exchange Commission (SEC) and the Philippine National Police (PNP) cracked down on a group called GDM Finance Sarl, which the corporate regulator found to be soliciting investments illegally.
On Nov. 24, operatives of the SEC’s Enforcement and Investors Protection Department (EIPD) and the PNP arrested 12 people, namely Hen Yanchao, Josephine Delgado Maranan, Milany Peligro Cabrera, Nanette Diaz Tongco, Joy Camille Andaya Pural, Anita Egana Armada, Virgilio S. Castillo, Denmark V. Salazar, Jacinto Lucio P. de Catalina, Jay Nasayao Moral, Gerald Lansangan Samson, and Venancio Gacus Mendoza.
They also identified a Pastor Benny Cabrera who managed to escape the authorities.
Those arrested were found to be conducting an investment-solicitation session in Holiday Inn, Pasig City under GDM Finance Sarl, an investment firm based in Switzerland. They supposedly encouraged attendees to investment in the firm, promising a weekly interest of 2.5-4.5% from the money that will be invested in preferred shares at the New York Stock Exchange.
“The SEC-EIPD in its initial investigations, found that GDM Finance Sarl had not been issued a Certificate of Authority to Operate as Lending Company or a Financing Company,” the SEC said.
The commission noted that such violations could carry a maximum penalty of P5 million, or imprisonment of 21 years or both at the court’s discretion, as per Section 28 of the Securities Regulation Code (SRC).
The SEC-EIPD said it has already filed criminal charges against the arrested persons for violating the SRC. — Arra B. Francia
By Marissa Mae M. Ramos
THE Development Bank of the Philippines (DBP) has been designated as the government’s infrastructure financing bank. Since then, it saw a double-digit expansion in its loan portfolio, with outstanding credit standing at P250.59 billion as of the first half this year. Of that amount, around 33% (P82.88 billion) was lent to the infrastructure and logistics sector.
But their portfolio in the agriculture sector continues to be sizeable, with the sector receiving loans totaling around P40 billion or around 16% during the same period.
The Bank’s involvement in financing agriculture is perceived to be vital to the sector’s growth as one of their mandates is to serve the needs of agriculture enterprises in the countryside.
One such program is the Sustainable Agribusiness Financing Program (SAFP), which provides funding up to a maximum of 90% of the total cost in projects engaged in agribusiness. Under the SAFP are two sub-programs geared towards lending to the broiler poultry (Broiler Contract Growing Program, or the BCGP) and dairy farmers (SAFP-Dairy).
In addition, the Bank had further ventured on adopting advancements in better serving its clients. With technology refining the ease of doing business, DBP sees fresh opportunities to bolster projects of Filipino agripreneurs.
For this quarter, BusinessWorld interviewed DBP President and Chief Executive Officer Cecilia C. Borromeo to walk us through the new light they are crossing to serve the agriculture sector. DBP President and Chief Executive Officer Cecilia C. Borromeo DBP has been more known on lending primarily to infrastructure projects in agriculture. What measures were taken to have your programs intended for Filipino entrepreneurs in the micro, small, and medium enterprises (MSMEs) become more well-known?
One major measure was to partner and work closely with the Department of Trade and Industry (DTI), the main agency which deals with MSMEs nationwide. DTI invites DBP to many relevant initiatives and projects for MSMEs including the following:
•Policy-related matters — DBP is a member of the MSME Development Council, which provides primary direction for the promotion and development of MSMEs in the country; ensure compliance with the Magna Carta for MSMEs; and craft strategy to ensure that the MSME is integrated in all Philippine development plans.
• Business development and SME capacitating events — DBP has committed to be a resource for DTI’s Kapatid Mentor ME (KMME) program where the DBP had a memorandum of agreement with DTI.
• Active participation to trade events like the Sikat Pinoy Food Fair last March 14-18, [and] the 2018 National MSME Summit in Pampanga last July 9, among others.
• Constant exposure through Negosyo Centers — DBP is often invited to visit DTI’s Negosyo Centers, hubs of DTI’s SME development and marketing activities.
• Program development — recently, DTI has also requested DBP’s assistance to craft a special program for the revival of the local shoe industry with majority of shoe businesses being MSMEs.
Other measures not related to DTI include the following:
• Making available MSME programs in the DBP website where an online loan application is also made available;
• Promptly and comprehensively answering queries from potential borrowers;
• Putting up booths and distributing program brochures in MSME-related marketing events like trade fairs and expos;
• Providing brochures, relevant MSME-related materials, and technical and advisory services on MSME programs through DBP’s 22 lending centers and through lending groups across the country;
• Cooperating with relevant MSME trade associations like Chinese Filipino Business Club, Inc. and different chapters of the Philippine Chamber of Commerce and Industry (PCCI), among others. In regard to this, one of your programs that was available for MSMEs was the SAFP. How has it been implemented since its launch? Would you say that it is meeting its objectives?
Yes, it has contributed to the government’s objective on food security. The Bank has already approved P3.2-billion for 182 borrowers with released amount of P2.3-billion as of September 2018. What can you say was the advantage of SAFP in delivering assistance to entrepreneurs in the agricultural sector compared to similar programs offered by other banks?
Except for DBP and Land Bank of the Philippines, the remaining eight of the top banks in the country do not offer any specific agricultural program. Traditionally, banks view agricultural projects as high risk and consequently, would rather pay the penalty of not complying with the agri-agra law than to lend to agricultural projects.
Compared to other banks, DBP emphasizes supporting agricultural projects with post-harvest and or infrastructure facilities which all add value to agricultural products versus mere production which generates raw agricultural materials. In effect, DBP looks into the whole value chain from production to consumption.
In addition, DBP considers the nature of each unique agricultural project, including the business plan, the cash conversion cycle, through its operations, backward and forward linkages when granting loans.
Finally, DBP is willing to fund novel agricultural projects for as long as it is viable and sustainable. One example is funding the integrated farm development of a business that developed the first tropical Philippine peking duck variety in the country. How does the Bank attract customers to use this program over other government programs?
The bank employs several means to promote the use of SAFP to complement other government programs including the following:
• Partnering and or collaborating with other relevant stakeholders in the agricultural sector including both the public and private sector. Government agencies include the Department of Agriculture, Department of Agrarian Reform, Department of Environment and Natural Resources, and DTI; integrators like San Miguel Foods, Inc., Bounty Fresh Food, Inc., Charoen Pokphand Foods Philippines Corp., Cargill Philippines, Inc., and others; and agricultural supplies, etc. in reaching out to farmer’s and fisher folk groups.
• Targeting specific value-adding networking and marketing events in agriculture including investment fora, technical working groups, senate and house hearings and public consultations, among others, wherever these may be.
• Promptly replying to both email and phone queries on agricultural projects. SAFP seems motivated by the eligibility of the projects that borrowers apply to the program, while commercial, thrift, rural, and cooperative banks were qualified borrowers. In that case, how do these banks apply for the program?
SAFP can be accessed through DBP’s wholesale lending operations by different banks following the standard bank policy, processes, and practice for wholesale lending. Wholesale borrowers were qualified to apply for the program given at least a year of profitable operation. Can you describe how the bank perceive or handle the risk?
The Bank can lend to wholesale institutional borrowers with at least three year track record of profitable operations. The participating financial institution (FI) should also have a good credit risk management system. FIs will also have to undergo an accreditation process for them to access the funds of the bank for their on-lending operations. How was the repayment for rate for the program?
As of September 2018, collection efficiency is around 80%. Were there rewards or incentives for good payers?
If the borrowers pay on time, it improves their credit risk ratin. A good credit rating will translate to lower interest rate. What was the motivation of DBP in offering the SAFP sub-programs targeted for select industries (such as SAFP-DAIRY and BCGP)?
As the country’s premiere development policy bank, DBP supports the national agenda. One of the important programs that we supported was the improvement of the country’s dairy industry. Hence, we signed a Memorandum on Agreement with the National Dairy Authority (NDA) to craft a program for the local dairy industry, which resulted in the creation of SAFP-Dairy. Moreover, DBP supports the vision of NDA to provide a good quality of life for dairy farmers and ensure safe and quality milk and milk products to consumers by 2020. This, in turn, will hopefully contribute to building a nation of healthier children, wealthier dairy farmers while expanding agribusiness expansion, and creating more jobs in agriculture. How would SAFP contribute to Agri-Agra law to improve the status of farm production in the country?
SAFP is DBP’s generic lending program for agriculture. The program allows us to lend to the whole value chain of an agricultural project including production, harvesting, post-harvest processing, and marketing-related activities for crops; livestock and poultry; fisheries and aquaculture projects. All loans extended for agricultural projects under SAFP can form part of the Bank’s compliance with the Agri-Agra law. DBP has recently partnered with Lendr to increase your presence in credit assistance. Which programs were offered through this partnership? Do you have plans to add more programs through this channel, particularly your programs for agripreneurs?
One of DBP’s newest lending programs, the Small Business Puhunan Loan Program (SBPLP) will be marketed under FINTQnologies’ online platform, Lendr. The SBPLP requires fewer documentary requirements, and significantly faster turn-around time for loan processing. It covers the financing of permanent working capital up to a maximum of P1 million, which is payable up to two years.
One of our pilot sub-programs under the SBPLP is the Cignal Dealer’s Financing Program, which aims to finance the short and long-term inventory requirements of top Cignal dealers.
DBP hopes to see [that] through the partnership with Lendr, we can significantly contribute to the Bank’s MSME portfolio. DBP may opt to offer more programs under Lendr as it grows the MSME portfolio under such platform. How do you see the bank’s involvement in agri-business ventures in shaping the economic development in the agricultural sector?
In the short term, DBP desires to showcase to other banks that under the right conditions, the agricultural sector is worth supporting for a variety of reasons. We believe in helping the sector to increase agricultural productivity as a means to achieve food security and self-sufficiency, eradicate extreme poverty and hunger, and improve the sector’s competitiveness compared to other countries while preserving the environment and promoting innovation. Achieving all these lofty goals will ultimately benefit DBP by keeping the Bank relevant and viable while contributing to the socio-economic agenda of the government and the Sustainable Development Goals.
One good example of this is the BCGP, a SAFP sub-program which supports large-scale tunnel ventilated poultry projects. These projects ultimately produce chicken meat, which is still the cheapest source of meat in the country. These projects take advantage of economies of scale, automation, and climate control technologies for better cash conversion cycles. One can grow and harvest broiler chickens in about 28 to 32 days.
These projects provide employment too, and oftentimes also offer CSR (Corporate Social Responsibility) programs to local communities, including scholarships and alternative livelihood opportunities, among others.
Finally, facilities built under this program are durable and build to last since they were designed to withstand wind speed of up to 250 kilometers-per-hour. There is also little waste since manure is easy to consolidate and sell to farmers and fertilizer producers.
In line with the Bank’s Vision 2040 to be catalyst for a progressive and prosperous Philippines, in the long-term, DBP would like the Philippines to be an agricultural powerhouse like our neighboring Asian countries. If increasingly more banks prudently support good agricultural projects then everyone will ultimately benefit — the agripreneurs, the banking system, the private and government sectors, and the Filipino people in general.
THE BUREAU of Internal Revenue (BIR) said it is reviewing the taxability of health insurance premiums, with a decision possibly released within the week.
Deputy Commissioner Marissa O. Cabreros said that the BIR was reviewing the measure even before it was raised by Senator Juan Edgardo M. Angara on Sunday.
“There’s a workaround to be done, (which is) to issue a clarification. I can not discuss it right now, but within the week we’ll come out with something to clarify the issue for the taxpayers, since they are affected,” she told reporters in a chance interview on Tuesday.
“We will issue a statement,” she added.
The concern stemmed from BIR Revenue Memorandum Circular 50-2018 BIR containing frequently asked questions on the implementation of income and withholding tax provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) law. It states that premiums paid by employers to health maintenance organizations (HMO) are included in the P90,000 tax-exempt threshold of bonuses together with the 13th month pay.
Total bonuses exceeding the threshold will be taxed a 35% fringe benefits tax, which was increased from 32% before the TRAIN law was implemented.
Mr. Angara said that the BIR violates a 1998 Revenue Regulation stating that health card premiums are not taxable, and should not be included in the computation of gross bonuses to be subject to the tax-exempt threshold.
“Many are asking about that. But even before it was raised, we were studying it,” Ms. Cabreros said. — Elijah Joseph C. Tubayan
SENATOR Leila M. de Lima has filed a resolution seeking to reexamine casino and online gaming regulations to safeguard against the use of gaming companies as fronts for money laundering or fraud.
Senate Resolution No. 953 urged the Senate committee on games and amusement, chaired by Senator Panfilo M. Lacson, to review the regulation of the industry.
Ms. De Lima warned that current policy on monitoring the casino resorts and online gamine sites may make the country susceptible to money laundering, fraud, and other illegal activities.
The senator cited a bribery scandal involving Bureau of Immigration (BI) officials last year as well as the number of Chinese gambling companies and Chinese gamblers in the country.
She said the Philippine Amusement and Gaming Corp. (PAGCOR) has authorized the operation of 57 foreign gaming companies, also referred to as Philippine Offshore Gaming Operators (POGOs).
Ms. De Lima said the Senate needed to review the effects of the Philippine gambling industry “from multiple perspectives” to help make policy towards the industry more comprehensive.
She also expressed concerns that dealers, including Filipino women, may be placed at even more risk of sexual harassment and exploitation by online gaming.
She also noted the rise in rents which is crowding out Filipino residents because a number of Chinese workers are taking up residency near POGO offices.
“Apart from its purported positive economic impacts, there are nevertheless lingering questions regarding the social costs of the influx and proliferation of integrated casino entertainment resorts and POGOs within the country,” she said.
“A comprehensive policy that seeks to address these issues should be of utmost importance if this industry is to truly benefit the Filipino people,” she added. — Camille A. Aguinaldo
GRAB Philippines (MyTaxi.PH, Inc.) said on Tuesday it has started offering its GrabTaxi services at the Subic Bay Freeport Zone, the 12th city in the Philippines where it operates.
In a statement, the ride-hailing firm said 120 taxi drivers in Subic are already registered with Grab.
“With GrabTaxi now in place, locals and tourists will now have a more convenient, safer, and faster way of commuting,” Grab Philippines country head Brian P. Cu said in the statement.
Aside from Subic, Grab is also present in Manila, Cebu, Davao, Pampanga, Cagayan de Oro, Bacolod, Baguio, Bataan, Naga, Iloilo and Tacloban.
Subic Bay Metropolitan Authority (SBMA) chairman and administrator Wilma T. Eisma said having Grab’s services in the city will help improve connectivity for the thousands of employees in the area.
“GrabTaxi can make a difference in the lives of locals and tourists in Subic,” she was quoted as saying. — Denise A. Valdez
