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Producers Bank merges with two rural lenders

PRODUCERS Savings Bank Corp. has absorbed two rural banks.

By Melissa Luz T. Lopez, Senior Reporter
A THRIFT BANK has absorbed two smaller lenders within Central Luzon, in line with a push by the Bangko Sentral ng Pilipinas (BSP) for bank mergers.
In a circular issued last week, the BSP said Producers Savings Bank Corp. (PROSB) has merged with the Rural Bank of Bustos, Inc. from Bulacan and the Rural Bank of Sto. Domingo, Inc. based in Nueva Ecija.
BSP Deputy Governor Chuchi G. Fonacier issued Circular Letter 2018-055 on July 17 to announce that PROSB has been named as the surviving corporation following a merger plan executed by the three small banks in August 2017.
The Securities and Exchange Commission approved the consolidation last month, paving the way for the merged thrift bank to start its new operations on June 29.
PROSB is a thrift lender headquartered in Pasig City led by Andres M. Cornejo as president and chief executive officer. Former Land Bank of the Philippines president Gilda E. Pico is currently the bank’s chairman.
The bank has 166 branches.
It is the 14th biggest thrift lender in the country as of end-March with P14.977 billion worth of assets, according to latest available central bank data.
The bank booked P226.255 million in consolidated net income in 2017, down from the P311.796 million made a year ago.
With the merger, the BSP said the entire assets and liabilities of the two provincial banks “will be transferred to and absorbed by” PROSB.
The central bank has been encouraging mergers among small banks in order to fortify their financial footing by dangling a host of incentives for those who pursue such plans.
State agencies have also extended the Consolidation Program for Rural Banks (CPRB) until 2019 to prod lenders located in one province or region to come together and form a new financial entity. These mergers are seen to bolster the capital and asset base of these lenders, making them more liquid and resilient versus defaults.
The central bank has ordered four banks to shut down this year after they were found with unhealthy balance sheets and insufficient assets to remain in business.

GNPower Kauswagan ramps up development of Mindanao power plant

By Victor V. Saulon, Sub-Editor
GNPOWER KAUSWAGAN Ltd. Co. (GNPK) has stepped up the development of one of Mindanao’s biggest power plants and has sought regulatory approval to build a point-to-point transmission line from the facility to the national grid.
In its application with the Energy Regulatory Commission (ERC), GNPK said it is building a clean pulverized coal-fired power generation facility with four units, each with a capacity of 138 megawatts (MW) or a total of 552 MW.
GNPK, which is led by Ayala Corp. subsidiary AC Energy Holdings, Inc., is seeking ERC approval to develop, own and operate grid connection facilities with a capacity of 230 kilovolt (kV) and a 69 kV.
“In order for GNPK to timely conduct the necessary testing and commissioning of the first unit of the [power plant] by the second half of 2018, GNPK intends to have the Dedicated Connection Facilities operationally ready by then,” it said in its application.
“GNPK and NGCP are currently discussing the terms and conditions of the connection agreement which will govern the interconnection and transmission of power supply” from the generation facility into the Mindanao grid, it added.
The company is building the power plant in barangays Libertad and Tacub in the municipality of Kauswagan in Lanao del Norte province.
In its application with the ERC, GNPK said the power plant will be connected to the Mindanao grid through the Balo-I-Kauswagan-Aurora 230-kV transmission line. Given the location of the facility, its optimum connection to the grid network should be through the National Grid Corporation of the Philippines’ (NGCP) 230 kV transmission line.
The company said the technical feasibility of connecting the power plant to NGCP’s Kauswagan 230-kV substation was confirmed in the system impact study (SIS) that the system operator approved in April 2014.
Aside from the SIS, a facility study has been conducted to determine the technical specifications, the design and operational criteria, and the cost of the equipment, engineering, procurement and construction, as well as the time required for the proposed connection.
GNPK is a subsidiary of AC Energy in partnership with the Philippine Investment Alliance for Infrastructure Fund and Power Partners. The construction of the plant is in full swing and is expected to be in commercial operation by 2018, AC Energy said in its website.
The facility will operate as a baseload plant to support the power demand and economic development of Mindanao, it added.
In its initial order, the ERC said it had found the application “sufficient in substance” and had set the expository presentation, pre-trial conference and presentation of evidence on Sept. 7, 2018.
If completed, the plant will be among the biggest power generator in Mindanao, which has an installed capacity of 2,730.1 MW, of which 2,378.8 MW are considered dependable. The southern island’s biggest power facility at present is the Agus hydroelectric plants, which has seven units, the biggest of which generates 255 MW.

How PSEi member stocks performed — July 23, 2018

Here’s a quick glance at how PSEi stocks fared on Monday, July 23, 2018.

SMB expresses readiness for Commissioner’s Cup finals

By Michael Angelo S. Murillo
Senior Reporter
SUCCESSFULLY bucking a 0-3 start to their campaign in the Philippine Basketball Association (PBA) Commissioner’s Cup, the defending champions San Miguel Beermen expressed readiness now that they are back in the finals.
Completed their tournament turnaround with another finals appearance after eliminating the Alaska Aces on Sunday in their best-of-five semifinal series in four games, the Beermen are now gearing up for another run at the championship for the midseason PBA tournament, armed with the many lessons they learned from what they described was a trying road they had to take.
Saw itself open its title defense with three straight losses, San Miguel started to turn things around when it replaced original import Troy Gillenwater with erstwhile PBA-banned Renaldo Balkman, going 6-3 the rest of the classification after the latter’s arrival.
The Beermen wound up at sixth place and set up a quarterfinal date with the third-seeded TNT KaTropa, whom they eventually swept in an emotionally charged best-of-three series.
Alaska stood as the last hurdle for San Miguel in its quest to return to the finals and the Beermen broke through to it notwithstanding the gallant stand the undermanned Aces made.
“We’re happy we were able to pull ourselves through despite the tough start for us in the tournament. Good thing we replaced our import with Renaldo Balkman and the locals eventually found their game collectively and picked it up,” said San Miguel coach Leo Austria following their ouster of Alaska at the weekend.
Mr. Austria and the Beermen are now awaiting the winner of the other semifinal series between the Barangay Ginebra San Miguel Kings and Rain or Shine Elasto Painters.
The Kings and Elasto Painters were to play in Game Four of their series later yesterday with Barangay Ginebra holding a 2-1 series lead.
For Mr. Austria, regardless of who they get to face in the finals they will go into in it prepared and ready to go.
“In the finals it’s a 50/50 chance. Anything can happen. But my team will be ready be it Barangay Ginebra or Rain or Shine,” Mr. Austria said.
In eliminating the Aces and barging into the finals, June Mar Fajardo and Mr. Balkman had solid double-double outputs.
Mr. Fajardo had 26 points and 12 rebounds while the San Miguel import finished with 23 and 16.
Guards Alex Cabagnot and Chris Ross also made their presence felt in Game Four, winding up with 18 and 17 points, respectively, to help tow the Beermen to their 40th PBA finals appearance.

Molinari steals limelight to hand Italy rare moment of golfing glory

CARNOUSTIE — It was expected that recent American dominance of the majors would continue at the British Open, but instead Carnoustie delivered Italy’s first ever winner of the Claret Jug in the shape of Francesco Molinari.
Perhaps it was not the outcome that the huge crowds thronging the fairways on Sunday were hoping for, especially as Molinari’s playing partner Tiger Woods looked in line at one point to claim his first major in a decade.
But while Woods faded after dropping three strokes in two holes at the 11th and 12th, Molinari kept his cool to shoot a second consecutive bogey-free round.
His 69 left him eight under par, two shots clear of his nearest challengers including Justin Rose and Rory McIlroy, three ahead of Woods and four shots ahead of last year’s winner Jordan Spieth.
Molinari is a rare golfer from continental Europe to lift the Claret Jug — Sweden’s Henrik Stenson triumphed at Royal Troon in 2016 but before him you have to go back to Seve Ballesteros in 1988.
The 35-year-old also finally delivered a major win for his country, going one step further than Costantino Rocca, who famously lost in a playoff to John Daly at St. Andrews in 1995.
And he hopes his victory will have an impact back home in Italy, where Formula One is usually just about the only sport that competes with football for the headlines.
“The last round already was big news in Italy. Obviously, to achieve something like this is on another level,” said Molinari, who started the day six under par, three shots off the lead.
“Hopefully, there were a lot of young kids watching on TV today, like I was watching Constantino in ’95 coming so close. Hopefully, they will get as inspired as I was at the time, watching him vie for the Claret Jug.”
Molinari, who lives in London and supports West Ham United, was not the favorite coming into the week but perhaps he should have been given his recent form.
He won the PGA Championship at Wentworth in May and recently claimed his first victory on the PGA Tour at the Quicken Loans National. He was also the runner-up at last year’s US PGA Championship.
Molinari has long since emerged from the shadow of his elder brother Edoardo, who played at the 2010 Ryder Cup and finished in the top 10 at the 2014 British Open but has dropped to 397th in the world rankings.
“I would love for him to get back to where he was a few years ago. Golf is a tough beast,” said Francesco.
“He’s experienced some bad injuries and two hand surgeries, but he’s come back from this one again already.
“I wish him all the best, and I’m sure this will motivate him even more to achieve some great things in the game of golf in the future, and hopefully we’ll be competing more together again very soon.”
RYDER CUP BOOST
Contributing to Molinari’s success has been a performance coach called Dave Alred, who used to work as a kicking coach for England rugby star Jonny Wilkinson.
The improvement in his game is a huge boost for Europe as they aim to reclaim the Ryder Cup from the United States at Le Golf National near Paris in late September.
Molinari has been there before — he and his brother played in the European team that won at Celtic Manor in 2010, while Francesco’s half with Woods gave Europe victory at Medinah in 2012.
“There’s going to be a lot of European guys vying for his partnership in the foursomes at the Ryder Cup, that’s for sure,” said McIlroy.
Meanwhile, the Americans will be particularly wary of the Italian after his outstanding performance in Carnoustie.
“He’s been playing unbelievable golf. He’s been working his butt off. I see him in the gym all the time, going through his routine, grinding on the range, doing his own stuff,” said Spieth.
“It truly is hard work that paid off for Francesco. I’m certainly happy for him.” — AFP

Barangay Ginebra survives ROS to book finals spot

By Michael Angelo S. Murillo
Senior Reporter
THE Barangay Ginebra San Miguel Kings booked the last spot in the Philippine Basketball Association Commissioner’s Cup finals on Monday night after they survived the Rain or Shine Elasto Painters in Game Four of their best-of-five semifinal series, 96-94, to take the series, 3-1.
Forced to the limit anew by a resilient Rain or Shine crew, Barangay Ginebra dug deep and made the needed plays in the end to hold on for the victory and make its way to the championship series of the midseason PBA tournament against defending champions San Miguel Beermen.
LA Tenorio got Barangay Ginebra to a strong start, helping it to a 17-9 lead in the first six minutes of the ball game.
Raymond Almazan, however, would not allow Rain or Shine to fall behind too long, jump-starting a mini run for them to come within two points, 19-17, at the 3:02 mark.
The Kings though survived the Elasto Painters’ comeback, holding a 25-20 edge by the end of the opening quarter.
Barangay Ginebra once again at a higher gear to begin the second canto, outscoring its opponent, 6-2, to extend its lead to nine points, 31-22, with just two minutes lapsing, before stretching it to 14 points, 40-26, in the next four minutes.
Behind import Reggie Johnson, Rain or Shine narrowed its deficit, cutting it to six points, 42-36, with 2:05 left in the opening half.
The Kings remained on top, 47-40, by the halftime break.
Barangay Ginebra continued to hold sway for much of the third period until Rain or Shine once again made a run back, with Mark Borboran and Jay Washington providing the offensive punch.
Down by 13 points, 64-51, with 4:26 to go, the Elasto Painters narrowed the gap, 67-63, in the next three minutes.
Justin Brownlee doused cold water on the Rain or Shine run with a three-pointer to give his team more breathing space, 70-63, a cushion they would use to build a 73-67 lead heading into the final quarter.
Recognizing that their campaign might be down to the last 12 minutes, the Elasto Painters opened with a sense of urgency in the payoff period.
Led once again by Mr. Almazan, the Elasto Painters went on a 12-6 run in the first three minutes to tie the count at 79-all.
The two teams went back and forth after, jostling to establish control heading into the final stretch.
The score was tied at 86-all with four minutes remaining before Greg Slaughter broke it with a basket to give the Kings the upper hand, 88-86, with 3:12 remaining.
Two free throws by James Yap 13 seconds later levelled the count anew at 88-all.
Gabe Norwood handed the lead, 90-88, to Rain or Shine with a floater with 2:29 to go, only to be answered by Mr. Tenorio with a triple to give the Kings the lead back, 91-90, 20 seconds later.
A forced turnover after by the Kings led to an easy layup by Joe Devance to extend their lead to three points, 93-90, with 1:46 left.
Rain or Shine had its chances to tie or take the lead but a couple of attempts to the basket failed to hit the mark.
Mr. Tenorio made it a five-point advantage for the Kings, 95-90, with 39 ticks remaining.
A quick basket for Mr. Johnson pulled the Elasto Painter to within three points, 95-92, two seconds later.
Two free throws by Chris Tiu later pushed Rain or Shine closer to a single point, 95-94, with seven seconds to go.
The Elasto Painters were forced to foul Jeff Chan after. A split by Mr. Chan on the charity stripe still opened the window for the Elasto Painters but they could not capitalize on it and saw the Kings hold for the victory.
Messrs. Devance and Slaughter led the way for the Kings with 19 points each with Mr. Tenorio chipping 16 of his own.
Mr. Brownlee only had 13 points but finished with 17 rebounds and eight assists.
Mr. Johnson paced Rain or Shine with 22 points, 16 rebounds and five assists with Mr. Almazan adding 13 points and Messrs. Borboran and Washington 11 points each.
“Rain or Shine is a great team and is well disciplined which allowed them to come back. We’re happy we got this win and to be back in the finals against San Miguel,” said Barangay Ginebra coach Tim Cone, whose wards now channel their focus on the Beermen in their best-of-seven finals which begin on Friday, July 27.

FMIC expects inflation to remain above 5% until Sept.; peak in July

By Melissa Luz T. Lopez
Senior Reporter
INFLATION is expected to stay above 5% until September, with analysts at First Metro Investment Corp. (FMIC) warning that higher prices will likely dampen consumer sentiment despite robust economic growth.
FMIC economists see prices of widely used goods and services recording a rise of 5.3% in July, possibly the peak for the year. They expect a 5.2% rise in August and 5.1% in September.
“We remain confident that Q2 GDP performance will hit 7% again given outsized gains in infrastructure spending, capital goods imports, and manufacturing. However, consumer confidence may be eroded unless inflation slows down back to below 5% in Q3 as we expect it will,” analysts said in the July edition of The Market Call.
Inflation averaged 4.3% during the first half, with the June result of 5.2% the highest in nine years. Sustained price spikes will likely weigh on sentiment as consumer optimism turns sour.
The Bangko Sentral ng Pilipinas (BSP) sees inflation peaking between July-September and surpass the 2-4% target band, but is expected to ease for the last few months of 2018 to average 4.5%.
The central bank has said inflation is likely to rise due to higher taxes on selected goods, rising global oil prices, a weaker peso, and the approval of increased minimum wages, to name a few. Last week, Standard Chartered Bank projected that inflation will peak at 5.8% in August.
Meanwhile, credit analysts at S&P Global Ratings said separately that soaring prices are likely a “one-off” trend due to the impact of tax reform, which took effect Jan. 1.
“The main focus on the Philippine economy continues to be inflation. We remain steadfast in our view that runs counter to speculation about overheating and growth running above capacity,” the debt watcher said in a report yesterday.
“Instead, we view the current pace of growth as within the bounds of the economy’s potential, since strong demographic trends have provided a large and educated labor force that generated much stronger capital investment in recent years.”
Economist Bernardo M. Villegas said during last week’s FMIC mid-year economic briefing that the BSP may consider a “more aggressive” monetary response and tighten policy rates by 50 basis points (bp) in one go next month just to catch up with inflation.
BSP Governor Nestor A. Espenilla, Jr. said on Friday that the central bank is considering a “strong follow-through” policy action for its Aug. 9 rate-setting meeting, as he acknowledged that some demand-side pressures are also feeding into inflation. This will follow back-to-back 25bp increases during its May and June reviews.
Even with rising inflation, FMIC still believes that economic growth will be robust at 7% during the second quarter. If realized, this will be higher than the 6.8% in the first quarter, falling within the government’s 7-8% target.
Analysts said the government “appears successful” in ramping up spending particularly on infrastructure, accompanied by strong growth in factory output. Exports are also expected to recover following a “strong acceleration” of economic activity in the United States during the second quarter.

Agriculture dep’t sees ‘hiccup’ in Q3 output due to recent storms

THE damage caused by recent storms this month may show up as a “slight hiccup” in third quarter agricultural output, the Department of Agriculture (DA) said.
Agriculture Secretary Emmanuel F. Piñol did not disclose on Monday how much he expects output to be set back, saying only that most of the damage to crops, while widespread, was only partial.
“There is (also) a beneficial effect from the strong rains since the areas that are non-irrigated and rain-fed actually benefited from these storms as they were able to plant a second crop,” he added.
“We had a little damage… but more than that the rain still had a beneficial effect.”
Overall agricultural losses as of Monday were estimated at P565.19 million, the department said.
Mr. Piñol added that the DA expects farmers to replant as soon as possible to make up for the losses. However, this will delay their harvest, Mr. Piñol said.
“We still have under the QRF (quick respond funds) P1 billion. In addition to that, we have the SURE (Survival and Recovery) Assistance Program [and] we have the [Philippine Crop Insurance for those who had their crops ensured],” he added, referring to funding available to farmers affected by the storms.
“Of course [we] the immediate intervention in terms of seed. It’s not a question of resources. We have the resources.”
The SURE Assistance Program, which is implemented by DA’s Agricultural Credit Policy Council, provides assistance to farmers and fisherfolk affected by natural calamities.
The program can give survival assistance grant up to P10,000 per borrower or recovery assistance loan up to P25,000 per borrower at 0% interest payable for up to three years.
Assistant Secretary Andrew B. Villacorta said that while damaged areas planted to rice was 26,000 hectares (ha) as of July 22, with most of the crop “in the vegetative and seedling stages.”
“If you look at the total damage, the area that suffered total damage is about 1,000 ha. and the rest are partially damaged,” he added.
The rice crop that was destroyed by storms was the equivalent of “304 metric tons only because these are the ones that reached the maturity stage. The rest are vegetative. So what we expect is that the farmers will simply replant.”
In July, tropical depressions Florita, Gardo, Henry, Inday, and Josie entered the Philippine Area of Responsibility. Heavily affected were Regions I and III, Mr. Villacorta said.
PAGASA has reported that as another low pressure area tailing the outgoing Josie may strengthen into another tropical depression. — Anna Gabriela A. Mogato

France offering €400,000 grant for Metro Manila cable car feasibility study

THE Department of Transportation (DoTr) said it may tap a grant from France amounting to €400,000, or about P25 million, to conduct a feasibility study on a cable car route in Metro Manila.
“There is a grant from the French Embassy, and we are waiting for approval from the Office of the President,” Transportation Undersecretary for Administration and Finance Garry V. De Guzman said in a recent interview.
The study will evaluate the suitability of cable cars for Metro Manila’s transport needs, though other locations may be considered such as Baguio and Boracay.
Mr. De Guzman said France wants to focus on urban centers, adding that the Metro Manila project is not limited to EDSA. He said the cable car may also connect main lines to make it easier for passengers to move around.
Transportation Secretary Arthur P. Tugade said in May the DoTr is finalizing details on the cable car plan, subject to a reasonable fare that will make it competitive with other modes of transportation.
The government first floated the idea of installing cable cars a month after President Rodrigo R. Duterte took office in 2016. It is meant to augment existing traffic solutions, especially in highly-congested areas of Metro Manila.
In March 2017, Megawide Construction Corp. and GMR Infrastructure Ltd. also expressed their intent to explore a cable car route linking the Mactan-Cebu International Airport to major drop-off points in Cebu City. — Denise A. Valdez

PHL, Indonesia hold talks to revive Mindanao RoRo

THE Philippines and Indonesia held talks to revive a cargo service connecting Mindanao and Bitung, Indonesia, which was suspended shortly after its launch last year due to lack of demand.
In a statement, the Philippine Embassy in Jakarta said Ambassador Leehiong Tan Wee met with his counterpart, Indonesian Ambassador to Manila Sinyo Harry Sarundajang on July 13, in part to discuss the revival of the Davao City-General Santos City-Bitung roll-on, roll-off (RoRo) cargo service.
The RoRo service is intended to spark trade between the two countries by bypassing the usual Manila-to-Java trade routes, which are more expensive and indirect. Instead it hopes to build up direct trading links between Mindanao and regions of Indonesia near it, such as the island of Sulawesi across the Celebes Sea.
The RoRo service was launched by President Rodrigo R. Duterte and Indonesian President Joko Widodo on April 30, 2017, between Davao City and General Santos and Bitung in North Sulawesi.
In the statement, the embassy said Philippine-Indonesia trade was $7 billion in 2017, with Indonesia rising to the Philippines’ 9th-leading trading partner from 11th in 2015, when trade was $4 billion.
Following the meeting between the ambassadors in Manila, Mr. Wee consulted with stakeholders including the Management Association of the Philippines, the Philippine Chamber of Commerce and Industry, and the Federation of Filipino-Chinese Chambers of Commerce.
He also met with airlines to explore the establishment of a direct air route between Davao and Manado, the capital of North Sulawesi.

World Bank rates progress on rural projects ‘satisfactory’

THE WORLD Bank said it views progress to be “satisfactory” on the Department of Agriculture’s (DA) rural infrastructure projects that it funded.
In its Implementation Status & Results Report dated July 17, the World Bank said that the progress of the Philippine Rural Development Project (PRDP) “continues to be rated satisfactory.”
“An assessment of project impacts records increases in real household income, increase in value of marketed output, reduction in input and output hauling costs, increases in farmed area, increase in production volume, reduction in travel time from farm to market, increase in traffic density, and increase in school attendance,” the bank said.
“In addition, broader outcomes are being realized via the country-wide institutionalization and acceptance of the PCIP (Provincial Commodity Investment Plan) as a technically based planning platform for convergence between programs of the DA, LGUs (local government units), and other national government agencies,” it added.
The PRDP, which began in 2014, provides funding and technical support for building provincial roads, bridges, communal irrigation systems, potable water supply, solar dryers, greenhouses, and composting facilities.
The World Bank rated the project’s overall risk as “substantial.”
According to the report, results of the bank’s household survey for the project’s beneficiaries show a 15.20% increase in their annual household income in June, compared with December 2014, a slight improvement from the 15.16% increase recorded in December 2017.
This marks about half of the 30% increase targeted by May 2021.
The bank also reported that the income of beneficiaries involved in enterprise development grew 27% over the same period, little changed from the end of 2017, but approaching the 30% target.
Roads completed totaled 269 kilometers as of June, about 11.7% of the 2,300 kilometer targeted for May 2021.
Some 50%, or $249.54 million of the $501.25 million loan has been disbursed, while $3.54 million of the $7 million worth of trust funds have been spent.
In January, the World Bank opened an additional $170 million worth of funding for the project, but is has yet to be tapped. — Elijah Joseph C. Tubayan

Economists, technocrats signal in-principle support for TRAIN 2

ECONOMISTS signed a joint statement of support in principle for the Department of Finance’s (DoF) second tax reform package overhauling the corporate tax system and the investor incentives regime.
“As Congress deliberates on the second package of the reform, we express our support for the main principle of a corporate tax system that is broad-based and competitive relative to our peers in the region. More importantly, lowering the corporate income tax rate will help entrepreneurs and small and medium enterprises thrive. However, in the interest of fiscal prudence, the lowering of rates should be in conjunction with the rationalization of fiscal incentives,” the economists said in their joint statement of support.
The second tax reform package, filed as House Bill No. 7458, and known as TRAIN 2, after the name of the tax reform law (Tax Reform for Acceleration and Inclusion) is currently being considered by the House ways and means committee.
The measure primarily seeks to lower the corporate income (CIT) tax rate gradually to up to 20% from the current 30% to be competitive with peer economies in Southeast Asia, while streamlining fiscal incentives to grant them only to those who need them.
It hopes to streamline and remove some redundant incentives granted by 123 laws under 14 investment-promotion agencies, but retain those consistent with the government’s medium-term Strategic Investment Priority Plan, and those that are deemed contributing to the economy.
However, the government will replace the existing 5% gross income earned tax incentive, turning it into a 15% tax on net income but removing the “in lieu of all national and local taxes” provision of the tax code. The proposal also seeks to cap incentives at five years; disallow the use of value-added tax as an investment incentive; establish the Fiscal Incentives Review Board to administer tax perks; and expand the coverage of the Tax Incentives Management and Transparency Act.
The DoF’s version of the bill, meanwhile, seeks to raise revenue equivalent to 0.15% of gross domestic product (GDP) before cutting one percentage point off the CIT.
“We stand with the Department of Finance and the Department of Trade and Industry that tax incentives should be performance-based, time-bound, targeted, and transparent,” the economists said.
“We affirm the need for this reform and we call on Congress to take urgent action to ensure its timely passage,” they added.
The DoF hopes to have the second tax reform package within this year, in time for its implementation in 2019.
“Tax incentives that are given permanently discourage firms from becoming self-sufficient and stifle our ability to align incentives with strategic priorities as they evolve over time,” the economists said.
“Incentives are not the be-all and end-all of investment promotion. For our country to be truly attractive to investors in the long-run, the government needs to improve public infrastructure, human development, and the ease of doing business as long-term solutions to development and competitiveness,” they added.
The statement was signed by former Finance Undersecretary Romeo L. Bernardo; Professor Dante B. Canlas of the University of the Philippines (UP) School of Economics and President and Chief Executive of the Philippine National Oil Co. Alternative Fuels Corp.; Gerardo P. Sicat, professor emeritus at the UP School of Economics and former director-general of the National Economic and Development Authority; Gilberto M. Llanto, board member and former president of the Philippine Institute of Development Studies; Renato E. Reside, assistant professor of the UP School of Economics; Monetary Board members Felipe N. Medalla and Bruce J. Tolentino; and Arsenio M. Balisacan, chair of the Philippine Competition Commission. — Elijah Joseph C. Tubayan

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