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PHL posts largest annual trade deficit in 2017; factory output slumps

By Christine Joyce S. Castañeda and Jochebed B. Gonzales,
Senior Researchers

THE Philippines’ trade deficit hit a new record high in December as exports contracted for the first time in more than a year and imports posted double-digit growth.

Preliminary data released by the Philippine Statistics Authority (PSA) showed the December trade deficit reaching $4.017 billion, wider than the previous record-high of $3.845 billion in November and the $2.468 billion recorded in the same period in 2016.

Prior to the December results, the country’s trade deficit recorded three record-highs: in May ($2.737 billion), in October ($2.819 billion) and in November ($3.845 billion).

This brought the country’s trade deficit last year at $29.786 billion, the highest on record.

For the first time since November 2016, merchandise exports contracted in December 2017 by 4.9% to $4.721 billion. This was a reversal from the previous month’s 2.7% growth and the 6.6% growth in December 2016. Historically, export performance for the month was slowest since the 10.9% decline in July 2016.

In contrast, the country’s import bill continued to increase by double-digits. In December, imports grew 17.6% to $8.738 billion, decelerating from the 20.1% seen in November and 19% in December 2016.

“Imports and exports posted 10.2% and 9.5% growth rates, respectively, exceeding the Development Budget Coordinating Committee’s emerging estimates (as of December 2017) of 9% for imports and 8% for exports,” the National Economic and Development Authority (NEDA) said in a statement.

For Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo O. Asuncion, the widened trade deficit was “expected” especially “for a high-growth and investment-driven economy.”

“The growth in imports have largely geared towards investments in the economy for more economic activities and expansion,” Mr. Asuncion said.

“This shows that the Philippines’ economic growth gears are moving and moving strong. The demand for more imports comes from the push for more infrastructure investments by both government and consequently the private sector.”

Security Bank Corp. economist Angelo B. Taningco, for his part, pointed to the strong demand during the holiday season, which led to double-digit increments in the imports of raw materials and intermediate goods (17% to $3.126 billion) and consumer goods (13.3% to $1.507 billion).

Other major type of goods registered sharp increases as well with mineral fuels, lubricant and related materials jumping by 61.8% to $1.180 billion in December. Capital goods, meanwhile, increased 8.4% to $2.886 billion.

“Likewise, relatively low inflation in the top country sources for our imports (e.g. China, South Korea, Japan, US) may have encouraged our importers to purchase more,” Mr. Taningco said.

Meanwhile, Mr. Asuncion attributed the decline in exports to the top export losers for December — coconut oil (-56.7%) and ignition wiring set and other wiring sets used in vehicles, aircrafts and ships (-27.1%).

“This is not to mention other manufactured goods and metal components also contributing to the export December decline. Demand for these products might have been weaker-than-expected,” he added.

Sales of the country’s manufactured goods were down 1.1% to $4.149 billion in December. Exports of agro-based products took a hit as well, declining 61.7% to $150.398 million in December from $392.743 million in the same period a year prior.

Bucking the trend were exports of electronic products, which expanded by 15% to $2.859 billion. This constituted 60.6% of the country’s total exports revenue.

Hong Kong was the Philippines’ top export market in December with a 16.7% share at $789.61 million, a 27.3% increase from 2016.

The US came in second, albeit, export receipts were down 7.6% resulting in a 13.9% share of the total.

On the other hand, orders from Japan declined by 34.4%, albeit still with a 13.5% market share during the month.

Meanwhile, China was the country’s top source imports with a 28.3% increase of inbound shipments during the month for a 18.9% share, followed by Korea’s 62.7% (for a 10.7% share) and Japan’s 12.7% decline (for a 9.5% share).

FACTORY OUTPUT WORST IN MORE THAN 6 YEARS
In a separate release, the PSA reported a steep decline in factory production to its worst in six years last December.

In the latest Monthly Integrated Survey of Selected Industries (MISSI), factory output, as measured by the Volume of Production Index (VoPI) — fell 9.7% year-on-year, worse than the 9.1% contraction in November and a reversal of the 21.7% uptick in December 2016.

The December turnout was the worst since the 12.5% plunge in October 2011.

For the entire 2017, manufacturing dipped 0.4%, in contrast to the 11.7% average growth in 2016.

Eight out of 20 sectors dragged the VoPI led by chemical products whose output shrank by 67.3%. Other sectors that posted sharp declines were footwear and wearing apparel (-42.9%); tobacco products (-31.8%) and textiles (-30.5%).

Average capacity utilization, the extent by which industry resources are being used in the production of goods, stood at 84%.

UnionBank’s Mr. Asuncion said the decrease in factory output may have played a role in the export slump: “It could also be that manufacturers have been holding back temporarily because of expected market structural changes that can impact their outputs in the longer-run,” he said.

Michael L. Ricafort, economist at Rizal Commercial Banking Corp., noted that there were stockpiling among firms last year in anticipation of the increase in excise taxes.

“At the same time, generally for all commodities, there were some upward trend in prices from the lows. [The contraction] was also reflective of the export performance which slowed down and exchange rate was also volatile last year,” he added.

OUTLOOK
“The recent declines in manufacturing are a cause for concern, but we are also fully aware of the opportunities that lie ahead: robust domestic consumption demand, increased demand from government, and government’s resolve to improve the ease of doing business,” said Socioeconomic Planning Secretary Ernesto M. Pernia in a statement.

“Inflationary pressures, higher global raw material costs, and peso depreciation will continue to be a challenge to the sector’s growth,” Mr. Pernia added on the prospects of factory output.

Despite the negative turnout, Union Bank’s Mr. Asuncion remained upbeat on the prospects of manufacturing: “The expectation is that both external and internal demand for goods and services are on the uptrend, with the global economy continuing to grow and recent structural fiscal reforms have provided more spending for local consumers, respectively,” he said.

“So, this trend of decreasing production may dissipate in the coming months. This also is supported by continuing confidence of both consumer and business sentiments in the economy.”

For RCBC’s Mr. Ricafort, manufacturing may soon rebound as local and foreign direct investments, especially by exporters, materialize into production of output.

For trade, the analysts expect imports to outperform exports: “My forecast is for the trade deficit to edge up to $32 billion this year (2018),” Security Bank’s Mr. Taningco said.

UnionBank’s Mr. Asuncion was of the same opinion: “I expect exports to be softer, but imports will definitely [be] stronger, as expected.”

Meralco to implement P1.08 per kwh rate hike in 2 tranches

MANILA Electric Co. (Meralco) will implement its P1.08 per kilowatt-hour (kWh) rate hike for the February billing in two tranches.

In a statement on Friday, the country’s largest distribution utility said it will increase electricity rates by 75 centavos per kWh in this month’s billing. The remaining 30% or a 33-centavo increase will be included in the March billing.

Meralco said the power rate hike is being implemented in two tranches, “cognizant of the fact that there were recent price increases on fuel and other basic commodities.”

The overall February rate will now stand at P9.47 per kWh, compared to P8.72 per kWh in January.

With this, households consuming 200 kWh a month will see a P150 increase in their monthly bills. Households that consume 300 kWh, 400 kWh, and 500 kWh will see an increase of P225, P300, and P375, respectively in February.

Meralco attributed this month’s increase in generation charges to higher charges from plants under Power Supply Agreements (PSAs) and Independent Power Producers (IPPs).

Meralco said the generation charge increased by P0.8469 to P4.6548 per kWh in February, from P4.0768 per kWh in the previous month. However, the February billing will only reflect a P0.5780 per kWh hike, with the balance implemented in the March bill.

“The return to normal levels of capacity fees, particularly Pagbilao and Ilijan, was the main reason for the P1.7067 per kWh increase in PSA charges, to be reflected this February,” the company said.

Meanwhile, charges from IPPs rose by P0.3430 centavos per kWh, which the company attributed to the peso depreciation as well as higher Malampaya natural gas prices due to quarterly repricing and lower average plant dispatch.

A total of 40.6% of Meralco’s energy requirements were sourced from PSAs, while 40.7% came from IPPs.

The remaining 18.7% of Meralco’s power requirements came from the Wholesale Electricity Spot Market (WESM) this month, where charges decreased by P0.0041 per kWh on lower power demand in the Luzon grid.

Previously, Meralco reduced electricity rates in January and December due to lower charges from supply contracts and at the spot market.

Transmission charge of residential customers meanwhile fell by P0.0372 per kWh, which goes directly to the National Grid Corporation of the Philippines. Taxes and other charges, which are remitted to the government, rose by P0.2092 per kWh this month.

“Meralco’s distribution, supply, and metering charges have remained unchanged for 31 months, after these registered reductions in July 2015,” the company said.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.

Electricity contributes 4.51% to the theoretical basket of basic goods and services used by a typical Filipino household on which annual inflation is computed.

Shares in Meralco gained P4 or 1.24% to close at P318 each at the stock exchange on Friday. — Arra B. Francia

Central bank likely to raise policy rates in March

By Melissa Luz T. Lopez, Senior Reporter

THERE is little room for the Bangko Sentral ng Pilipinas (BSP) to keep interest rates steady as inflation is expected to overshoot its four percent target, with analysts pricing in a rate hike by March.

ANZ Research said the central bank would need to raise policy rates by 25 basis points during its March 22 meeting.

“A likely breach in the inflation target alongside intensifying external imbalances suggest that the central bank will need to hike policy rates. We expect tightening to commence in March,” economists Eugenia Fabon Victorino and Sanjay Mathur said in a research note, adding that the window to keep policy steady is “rapidly narrowing.”

The BSP’s policy-setting Monetary Board kept benchmark rates unchanged on Thursday, even as it noted that inflation will remain on the rise over the coming months.

The central bank raised its inflation forecast to 4.3% for 2018, higher than the 3.4% previously expected and beyond the 2-4% target band. BSP Managing Director Francisco G. Dakila, Jr. said monthly inflation will eventually normalize by March 2019, which will keep next year’s average down to 3.5%.

Mr. Dakila attributed the higher forecast to the impact of the tax reform law which took effect last month, alongside rising global crude oil prices and the faster-than-expected January inflation rate at four percent.

The ANZ economists said they see strong domestic demand to keep pushing prices upward, against the BSP’s view that price drivers will remain “short-lived.” The bank analysts said the central bank may even consider more than two rate hikes this year if inflation sustains its uptrend.

On the other hand, ING Bank N.V. Manila senior economist Jose Mario I. Cuyegkeng said the central bank appeared to be “dovish” about the inflation path despite an expected spike this 2018, as it expects the rate to return within target by next year.

“We believe the BSP will need to stabilize inflation expectations in the coming months as the market also considers another wave of excise tax increases and second-round effects in 2019,” Mr. Cuyegkeng said, as he floated the possibility of a tightening move next month.

BSP Governor Nestor A. Espenilla, Jr. said the monetary authority is “watchful” against the second round impact of the tax reform law to inflation, as well as a more “broader-based” increase in commodity prices.

The Tax Reform for Acceleration and Inclusion Act imposed an additional P2.50 excise tax per liter of diesel and P3/liter for kerosene, which came at a time of three-year highs for world crude prices. The new law also introduced additional taxes on cars, coal, sugar-sweetened drinks, sin products and a host of other goods and services.

Malacañang confirms Duterte order to temporarily stop putting up new casinos

Malacañang on Friday confirmed that President Rodrigo R. Duterte has ordered a moratorium on new casinos, a day after Reuters reported that the country’s gaming regulator stopped processing applications for gaming licenses.

“The President decided to temporarily stop putting up casinos,” Presidential Spokesperson Herminio Harry L. Roque, Jr. told reporters in Filipino during a press briefing. “The President first wishes to see how these big companies will run once they’re part of Entertainment City if there’s a need to put up new casinos. But right now, we should have a moratorium on these big casinos.”

Mr. Roque’s announcement confirmed a Reuters report on Thursday which quoted Philippine Amusement and Gaming Corp (PAGCOR) chairman Andrea D. Domingo as saying that the agency “will no longer process applications for gaming licenses following the ban.”

“Four applications for licenses, mostly by local businessmen, are pending with the gaming regulator,” she added.

Last Monday, PAGCOR, which operates casinos in the country, had reported that its “revenues rose 7.6% in 2017, with the opening of new casino sites and the entry of offshore gaming operators.”

PAGCOR said its full-year income from gaming operations stood at P57.34 billion, higher than the P53.3 billion recorded in 2016. This was also 25% higher than its P45.76-billion full-year target.

However, PAGCOR special assistant to the chairman Jose S. Tria, Jr. noted that the 2017’s gross revenue growth of 7.5% was slower than 2016’s 22.88% year-on-year growth from 2015.

Mr. Tria attributed the slower revenue growth to the implementation of a nationwide smoking ban, which also covered casinos. — Arjay L. Balinbin

Duterte asks Filipino workers in Kuwait to leave within 72 hours

PRESIDENT Rodrigo R. Duterte on Friday asked overseas Filipino workers (OFWs) in Kuwait to leave the country “within 72 hours” after receiving a report about the body of a Filipina maid believed to have been frozen for more than a year.

“I want them out of the country — those who want to go out — in 72 hours,” Mr. Duterte said in a televised press briefing in Davao City.

He added: “When will this inhuman treatment of our Filipino workers end? When will the upliftment of their human dignity begin? To the Kuwaiti government and all others where our OFWs work, we seek and expect your assistance in this regard.”

Mr. Duterte said that the government “does not seek special treatment or privileges for its workers.

“But we do expect respect for their dignity and basic human rights. Keep them free from harm. I implore you. Nakikiusap ako sa lahat ng mga Arabo,” the President further said.

The President also stressed that every abuse committed against an OFW “is an affront against the nation.”

“We send to you a Filipino worker, hale and hearty, determined to work his heart out in order to give his family a decent and comfortable life in the Philippines. Do not give us back a battered worker or a mutilated corpse,” Mr. Duterte added.

He warned that if the Philippine government is reduced into “helplessness because other foreign governments do not heed [the Philippines’] requests to protect and give justice to [the] overseas Filipino workers within the limits that their laws allow, he is “ready to take drastic steps that will help preserve Filipino life and limb.”

“If a ban is what is needed, then let it be so,” he said.

Labor secretary Silvestre H. Bello III, who was also present at the briefing, said that the suspension of OFW deployment to Kuwait “continues.”

In an administrative order last month, Mr. Bello directed the Philippine Overseas Welfare Administration to suspend the processing and issuance of Overseas Employment Certificate to all Kuwait-bound passengers.

Mr. Bello issued the suspension order following the deaths of seven Overseas Filipino Workers in the Gulf state.

The seven OFWs who died in Kuwait were Liezl Truz Hukdong, Vanessa Karissha L. Esguerra, Marie Fe Saliling Librada, Arlene Castillo Manzano, Devine Riche Encarnacion, Patrick Sunga, and Mira Luna Juntilla — all of whom were employed as household service workers.

Last month, Mr. Duterte had also warned that he would impose a total ban on the deployment of OFWs, particularly household workers to Kuwait following reports of sexual abuses. — Arjay L. Balinbin

No need for international court probe since Duterte’s been cleared already, spokesman says

THERE is no need for the International Criminal Court (ICC) to investigate President Rodrigo R. Duterte because even the United Nations (UN) special rapporteur on extra-legal killings had already cleared him over ‘Davao Death Squad’ claims, saying the police are to blame,” Presidential Spokesperson Herminio Harry L. Roque, Jr. said.

“Our domestic courts are able and willing to prosecute these crimes. The ICC is not a course of first instance. The ICC is only a court of last resort. Moreover, the alleged deaths attributed to the war on drugs is because of lawful police operations and cannot therefore constitute an attack against civilians…,” Mr. Roque said in a press briefing on Friday.

He added: “The President, when I consulted him on this matter, said that even the former UN Special Rapporteur on extra-legal killings Philip Alston in his report, if you remember, cleared him of any possible criminal liability when the Special Rapporteur investigated the workings of the alleged Davao Death Squad.”

“The most that Special Rapporteur Philip Alston recommended then was criminal charge for simple negligence against the police,” the spokesman further said.

According to Mr. Roque, Mr. Duterte said that “if the conclusion of the UN Special Rapporteur was that the police was only liable for simple negligence, he is very confident that the prosecutor therefore will not go beyond a preliminary examination, and he is confident that at most, what could be the finding would be similar to the finding of Philip Alston-that sometimes, not all the time, police appear to be negligent in conducting the war against drugs.”

The spokesman announced last Thursday, Feb.8, that the ICC prosecutors have opened a “preliminary examination” into a complaint filed by the camp of opposition senator Antonio F. Trillanes IV alleging that Mr. Duterte has committed “crimes against humanity” in his war on drugs.

“The prosecutor announced this in a video message that the Office of the Prosecutor of the International Criminal Court has in fact opened [a] preliminary examination of the situation in the Philippines and Venezuela,” Mr. Roque said.

“While the position of the President is that, he welcomes this as an opportunity to clear his name from the accusation that he’s guilty of extra-legal killings, the President will also insist on the basis of our consent to become a member of the International Criminal Court and that is the principle of complementarity.” — Arjay L. Balinbin

Foreign business groups have asked gov’t to retain workers’ tax perks, Roque says

FOREIGN business groups have asked the government to retain the tax perks of employees of regional headquarters (RHQs) and regional operating headquarters (ROHQs), among others, contained in the tax reform legislation, Presidential Spokesperson Herminio Harry L. Roque, Jr. said.

“There is an appeal of Foreign Chambers of Commerce to retain the tax perks of existing regional headquarters of multinational company[ies],” Mr. Roque said in a televised press briefing in Sagñay, Camarines Sur on Friday.

He added: “Now of course, President [Rodrigo R.] Duterte’s veto message strongly disagrees with the current system that offers reduced tax rates for qualified employees of regional headquarters and regional operating headquarters among others. To distinguish them from other similarly hardworking employees is in violation of the Equal Protection Clause of the Constitution.”

The spokesman explained that to further qualify present employees from future employees of ROHQs, OBUs (Offshore Banking Units), petroleum service contractors, and subcontractors is even more a violation of the Equal Protection Clause.

“Those enjoying the preferential rate are mostly managerial employees and those above them including Presidents and CEOs. Rank-and-file employees in the same company do not enjoy the same lower tax rates. President Duterte’s veto ensures the taxpayers are treated alike and high ranking and highly paid employees in the company are taxed appropriately as others.”

In December last year, Mr. Duterte vetoed the 15% preferential tax rate for employees of RHQs, ROHQs, OBUs, and petroleum service contractors and subcontractors, saying the preferential tax “is violative of the Equal Protection Clause under Section 1, Article III of the 1987 Constitution, as well as the rule of equity and uniformity in the application of the burden of taxation.”

“The overriding consideration is the promotion of fairness of the tax system for individuals performing similar work. Given the significant reduction in the personal income tax, the employees of these firms should follow the regular tax rates applicable to other individual taxpayers,” the President said in his veto message. — Arjay L. Balinbin

New law gives free irrigation for farmers

PRESIDENT Rodrigo R. Duterte on February 2 has signed into law Republic Act No. 10969, which grants free irrigation to farmers and condones unpaid irrigation fees.

The Free Irrigation Act would help “sustain the farm sector’s turnaround, which posted a 3.97% growth last year, after posting a 1.4% dip in 2016,” Senate President Pro Tempore Ralph G. Recto, one of the authors of the measure, said in a statement.

The new law also “grants free irrigation to farmers owning not more than 8 hectares of land, and condones unpaid irrigation fees by farmers who till the same size of land,” he added.

“Irrigation fees — pegged at the price of two cavans of palay per hectare during the wet season, and three cavans during the dry months — are waived,” Mr. Recto said.

“It may just be cappuccino money for coffeeshop regulars, but for those who work the land in never ending penury, those three cavans could spell the difference between famine or feast.”

NATIONAL TECH-VOC DAY
The President also approved the Republic Act No.10970 declaring the 25th day of August every year as the National Tech-Voc Day.

To ensure a meaningful observance of this special working holiday, all heads of government agencies and instrumentalities, including government-owned and -controlled corporations, local government units, public and private schools, and the basic technical-vocational, and tertiary education institutions, employers in the private sectors, and industry associations, shall encourage and afford sufficient time and opportunities for their employees to engage and participate in any activity conducted within the premises of their offices or establishments in celebration of the “National Tech-Voc Day.”

The annual program of activities and advocacy campaign shall be prepared and implemented with Technical Education and Skills Development Authority (TESDA) and the Department of Education (DepEd) as the lead agencies. — Arjay L. Balinbin

Megaworld eyes offshore gaming operators at Davao Finance Center

DAVAO CITY — Megaworld Corp. is in discussions with offshore gaming operators who have expressed interest in locating at the Davao Finance Center, which is targeted to open within the first half of this year.

“Davao is one of the key cities that they are looking into,” Megaworld Senior Vice-President Jericho P. Gotold media here Thursday.

The 14-storey Davao Finance Center, the first building that will be completed within the company’s Davao Park District township project, will have 26,000 square meters of office space that is positioned for licensed Philippine Offshore Gaming Operators (POGO) and business process outsources (BPO) companies.

The POGO program, with licenses issued by the Philippine Amusement and Gaming Corp., was launched in 2016.

For BPOs, Mr. Go said three to five companies have already expressed their intent to lease space at the center.

“Now that the building is ready… we know that BPOs both in Davao and other parts of the Philippines are very interested to start operating here,” he said.

The finance center has two lobbies, one for the “low zone” and the other for the “high zone,” each with exclusive elevator access.

Mr. Go said apart from efficient foot traffic management, the separate access points are also intended to address cultural “challenges.”

“Ideally, when you entertain BPO and POGO (in one building), they would have separate and exclusive access. For a basic reason, when you talk about POGO, these are Chinese nationals and more often than not they don’t speak Tagalog so in order to anticipate possibilities that there might be some challenges facing both Filipino and Chinese, we created two separate lobbies,” he said.

The Davao Park District would be among Megaworld’s first sites for its iTownship concept, wherein “smart” technology would be a salient feature in all the facilities.

“This (Davao Finance Center) will become one, if not the most, technological advanced office tower in Mindanao,” Mr. Go said. — Maya M. Padillo

HIV-infected workers forced to quit jobs, face discrimination due to lack of gov’t support

THE Philippines’ labor department maintains no records of anti-discrimination cases filed by workers infected with the Human Immunodeficiency Virus (HIV), New York-based Human Rights Watch (HRW) said in its latest report.

As a result, “there is little evidence that the government is adequately enforcing the laws to prevent and punish workplace discrimination” especially those against HIV-infected employees.

“The DOLE’s [Department of Labor and Employment] Bureau of Working Conditions, which monitors HIV in the workplace policy compliance, maintains no database on the number of complaints people living with HIV have filed with its office or other DOLE agencies, such as the National Conciliation and Mediation Board (NCMB), which tries to settle labor disputes before they escalate into litigation,” the group said in its report.

In their interviews with individuals living with HIV, the HRW found that “there is a lack of meaningful public education in the Philippines about HIV transmission and safer sex practices.”

“Workplace discrimination was ranked as among the most serious concern,” the organization said, citing its interviews with nongovernmental organizations and 33 people with HIV. “Many said they had no information about how to seek redress.”

With these findings, the group urged government to “create a major education and awareness campaign through various media to inform people living with HIV of their rights concerning workplace discrimination.”

The campaign “should direct concerned agencies to create and publish regularly updated databases of discrimination cases. And it should conduct an expanded public education campaign about HIV and address the wider issue of social stigmatization of people with HIV.”

“LGBT rights advocates say that this reflects the government’s longstanding failure to adequately address the HIV epidemic. For example, millions of Filipinos are not sufficiently educated about the role of condoms in preventing HIV transmission. Department of Health data indicates that only one out of five men who have sex with men have basic knowledge of HIV. Inadequate public education on HIV and the rights of people with HIV facilitates stigma and discrimination in the workplace,” the organization’s report said.

From “only four a day in 2010 to 31 a day as of November 2017; also, from just 117 cases 10 years ago, the total number of HIV cases as of November 2017 is 49,733,” the HRW said.

For its part, the government recently reported that “most new infections, up to 83%, occur among men or transgender women who have sex with men.”

HIV SUFFERERS ASKED TO QUIT, FACE JOB DISCRIMINATION
“Gus,” 21, was diagnosed with HIV in August 2016 while still a college student. After he graduated, he got a teaching job at a Catholic school in Pasay City. He initially did not disclose his HIV status, but later informed the school’s dean.

“I was asked to resign,” Gus said in an interview with HRW. “They wrote my resignation letter and asked me to sign it.” The dean told him that she wanted her teachers to be in good health. But what hurt Gus the most, he said, was when the dean told him he “might infect the students.”

That experience pushed Gus into depression, forcing him to say that he quit his job because the teaching load was just too much for him. He eventually found another teaching job at an international school teaching Tagalog. He had not yet disclosed his status to his new school, but he was confident it would be acceptable: “As long as I work hard, it shouldn’t be a problem to them.”

Meanwhile, “Marlon,” a twenty-three-year-old seafarer from Manila, learned he had HIV in December 2015. After his diagnosis, he enrolled in an HIV treatment program at a government hospital and continued applying for seafaring jobs. He was forthcoming about his HIV status, and the employment agency declined to hire him. “[Employment agencies] told me that the principal did not want to hire people with illnesses such as HIV,” Marlon said.

He applied for jobs through five other agencies for one year, but his applications were consistently rejected explicitly due to his HIV status. “I was denied each time because of my HIV status,” he said. “They would tell me that they’d call back, but no one ever did.” He eventually found Positibong Marino Philippines on Facebook and volunteered to help. “The manning [employment] agencies — that’s where the discrimination starts,” Marlon said.

“Andie,” 32, was working as a paralegal in a law firm in Iligan City in 2014 when HIV started to take a toll on his health. He grew thin and developed rashes on his arms and face, and on several occasions was absent from work. Andie said that his employer became upset with his absences and started telling people that he had HIV. “Each time a client asked [my employer] where I was, he would say I was in [nearby] Cagayan de Oro to deal with my AIDS situation,” Andie said. He said he was so humiliated he decided to quit his job.

Before leaving, he told his employer about the Philippine HIV/AIDS law and its prohibition against disclosing an employee’s HIV status. The lawyer responded: “Good luck in spreading your virus!” — Arjay L. Balinbin

BSP sets minimum liquidity ratio for small lenders

By Melissa Luz T. Lopez, Senior Reporter

THE CENTRAL BANK will impose liquidity standards on small banks by 2019, parallel to a measure imposed on bigger lenders in order to manage financial risks and maintain a sound banking system.

In a statement on Friday, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) announced the approval of the minimum liquidity ratio (MLR) which will cover thrift, rural, cooperative, and quasi-banks.

The new standard will require these lenders to keep liquid assets that can cover at least 20% of its total liabilities at any given time. Considered as eligible liquid assets are a bank’s cash on hand, other cash items, claims from the BSP, debt securities tagged with a zero risk weight, and deposits in other banks.

The new rule is designed to enhance the “resilience” of these supervised entities to episodes of a potential funding crunch without suffering losses or causing a widespread collapse across the banking industry.

The MLR is the equivalent of the liquidity coverage ratio (LCR) imposed on universal and commercial banks, which requires them to hold high-quality and easily convertible assets to cover expected net cash outflows for a 30-day period. Big banks must hold assets that can cover 90% of their monthly cash outflows this year, which will go up to 100% by 2019.

The BSP will use two approaches in determining the liquidity tool for a bank: small lenders which are subsidiaries of a universal or commercial bank will be covered by the LCR, while other stand-alone players will be covered by the MLR.

BSP Governor Nestor A. Espenilla, Jr. previously said that 531 banks and quasi-banks can comfortably meet the 20% liquidity standard. In particular, thrift banks posted an average ratio of 74.9%, while rural and cooperative banks clocked in at 68% as of March 2017.

The small players need to monitor their liquidity positions this year running up to the implementation of the 20% standard by Jan. 1, 2019.

“Once the minimum requirements are implemented in 2019, the BSP will address breaches in accordance with the persistence and gravity of the breach. Supervisory actions may therefore range from heightened monitoring, to requiring remedial measures, and finally, imposing sanctions,” read the BSP statement released Friday.

The MLR and LCR form part of the central bank’s moves to align local regulations with international standards under the Basel 3 framework, which prescribes supervisory tools to improve risk management and prevent a repeat of the 2008 Global Financial Crisis.

Melco revenues up 15.7%

THE developer of City of Dreams Manila grew its revenues by 15.7% in the fourth quarter of 2017, supported by the generally strong performance of its casino operations.

In a disclosure to the stock exchange on Friday, Melco Resorts and Entertainment (Philippines) Corp said net revenues came at $167.5 million in the three months ending December, against $144.7 million in the same period in 2016.

Adjusted earnings before interest, tax, depreciation, and amortization was up by 7% to $53.8 million during the fourth quarter, against $50.2 million in the comparable period last year.

Melco Resorts saw strong revenues across all segments, with rolling chip volume posting $2.9 billion for the quarter, 38% up year-on-year. The win rate for rolling chip was recorded at 3.1%, with expected wins within the range of 2.7% to 3%.

Mass market table games had a hold percentage of 30.9% for the period, allowing mass table revenues to inch up 26.9% to $189.2 million. Gaming machine handles enjoyed a strong quarter as well, as revenues grew 18% to $793.3 million.

Meanwhile, non-gaming revenues also climbed 11.7% to $31.4 million during the quarter.

The company noted that the unaudited financial results for the fourth quarter and full year 2017 results have also been filed with the United States’ Securities and Exchange Commission on Feb. 8.

Incorporated in 1974, Melco Resorts is one of the co-licencees that developed the integrated hotel, gaming, retail and entertainment complex called City of Dreams Manila in the state-run Entertainment City.

Shares in Melco Resorts lost 18 centavos or 2.07% on Friday, closing the week at P8.50 each. — Arra B. Francia

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