Rally loses steam on profit taking; Fed watched

July 31, 2018 | 9:00 pm

By Arra B. Francia, Reporter
SHARES snapped their five-day winning streak on Tuesday after investors resorted to profit taking ahead of the United States Federal Reserve’s meeting this week, even as those overseas remained predominantly buyers.
The 30-company Philippine Stock Exchange index (PSEi) gave up 1.3% or 101.32 points to close at 7,672, while the all-shares index lost 0.88% or 41.16 points to 4,604.12.
“After a five straight days of gains totaling 5.26%, the market succumbed to profit taking…” RCBC Securities, Inc. said in a note prepared by research analyst John Paolo D. Ayson, who noted “[i]t was the locals who cashed in their gains, with the foreigners accumulating P256mn net today.”
“Market had profit taking today… following regional market downtrend,” Diversified Securities, Inc. trader Aniceto K. Pangan said in a text message.
Regina Capital Development Corp. Managing Director Luis A. Limlingan also cited profit taking as the trigger for the index’s fall, saying in a separate message: “After five consecutive days of bargain hunting, investors decided to take profit from issues that they had bought earlier.”
“Funds also kept to cash ahead of the FOMC (Federal Open Market Committee) meeting which will occur tomorrow evening in the US,” Mr. Limlingan added.
The US Federal Reserve is widely expected to keep rates steady at the end of its July 31-Aug. 1 meeting.
Wall Street fell under the weight of technology stocks, while Asian markets closed mixed. Japan’s Nikkei 225 and the Shanghai SE Composite index edged up 0.04% and 0.26%, respectively, while Hong Kong’s Hang Seng index shed 0.52%.
Back home, all sectoral indices ended in negative territory, led by property which plunged 1.72% or 65.72 points to 3,754.81 and followed by financials that went down by 1.18% or 22.33 points to 1,858.92; holding firms that dropped 1.13% or 86.88 points to 7,593.74; mining and oil that fell by 0.98% or 96.88 points to 9,714.41; industrials that gave up 0.82% or 89.70 points to 10,830.18; and services that slipped by 0.51% or 7.79 points to 1,493.58.
Turnover grew to 842.022 million shares worth P7.05 billion, compared to Monday’s 1.02 billion shares worth P5.61 billion. Stocks that fell were more than double those that gained at 130 to 63, while 52 issues ended flat.
Tuesday’s list of 20 most active stocks counted 15 losers, including Ayala Land, Inc. (down 3.20% to P40.85 apiece); BDO Unibank, Inc. (1.49% to P132); Ayala Corp. (1.38% to P999); Universal Robina Corp. (5.88% to P128); GT Capital Holdings, Inc. (2.41% to P970); and PLDT, Inc. (down 1.62% to P1,337 each).
Only five stocks on the list gained: Metro Pacific Investments Corp. (up 0.43% to P4.71 apiece); Jollibee Foods Corp. (1.50% to P270); Globe Telecom, Inc. (1.21% to P1,835); DMCI Holdings, Inc. (0.68% to P11.80); and International Container Terminal Services, Inc. (0.68% to P89).

Peso up on higher inflation estimate

July 31, 2018 | 9:00 pm

THE PESO strengthened against the dollar on Tuesday to a seven-week high as the central bank said inflation likely quickened further last month.
The local unit ended the session at P53.095 versus the greenback, 12.5 centavos stronger from its P53.22-per-dollar finish on Monday.
This was the peso’s best showing in seven weeks or since it closed at P52.95 versus the US currency on June 11.
The peso strengthened immediately as it opened the session at P53.15 versus the greenback. It slid to as low as P53.22 intraday, while its best showing stood at P53.09 per dollar.
Dollars traded climbed to $670.81 million from the $664.5 million that exchanged hands the previous day.
In an e-mail, a trader said the peso continued to strengthen following the faster inflation projection of the Bangko Sentral ng Pilipinas (BSP) for July.
“The peso continued appreciating after the BSP gave its initial inflation forecast for July,” the trader said.
The BSP’s economic research department said yesterday that July inflation could have fallen within a 5.1-5.8% range from the 5.2% print in June.
The central bank said water rates adjustments, petroleum prices and jeepney fares, among others, could have put “upward pressures” on inflation during the month.
The trader added that the inflation estimate of the BSP increased expectations of a rate hike from in its Monetary Board meeting this month.
“The BSP will continue to keep a watchful eye on the risks to the inflation outlook and will take necessary action to help ensure that inflation expectations remain firmly anchored to the target,” the monetary authority said yesterday.
Last week, BSP Governor Nestor A. Espenilla, Jr. signalled that the central bank is “ready to follow through” the two tightening moves it has implemented this year to quell inflation expectations.
Meanwhile, another trader said the peso strengthened as the dollar weakened further.
Reuters reported that the dollar index traded nearly flat against a basket of six major currencies at 94.361, well below the one-year high of 95.656 it touched on July 19.
“I think it’s more of a technical correction since last week, we saw strong numbers from the US, but more or less the market already priced in a strong number from them,” the trader said in a phone interview on Tuesday.
“At the same time, I think there were also flows from developed markets to emerging markets like us,” the second trader added.
For Wednesday, the first trader expects the peso to move between P52.95 and P53.15, while the other gave a P52.90-P53.20 range. — K.A.N. Vidal

Ecozone stakeholders worried TRAIN 2 will drive away FDI

July 31, 2018 | 8:43 pm

STAKEHOLDERS representing various economic zone constituencies said they are worried about the impact of the government’s plan to reform corporate incentives on foreign direct investment (FDI).
Representative Jose Enrique S. Garcia III of Bataan, whose economic zone is a major contributor to the local economy, expressed concern that the Philippines is currently not a leading destination for FDI, and that reforming their incentives might make things worse.
“My concern is we are not on top of the list when it comes to the FDI and then we’re changing the investment scheme. I don’t know how Department of Finance (DoF) expects us to rise by changing the investment scheme that we already have,” Mr. Garcia said.
Philippine Economic Zone Authority legal counsel Francis James Brillantes also pointed out the DoF must take into account the “constantly evolving, constantly innovating” global supply chains.
“We are now part of a global economy. Part of being in a global economy is that there is a global supply chain, and the BPO (Business Process Outsourcing) industry, including voice, is seeking efficiencies,” Mr. Brillantes said.
He also said BPO firms may leave the country to transfer to more competitive economies and possibly attract Filipino workers overseas.
“Instead of reinvesting, it is easy for them just to transfer and lease in another country, purchase equipment there and hire qualified employees in that country and possibly just hire Filipinos from there,” he said.
He added: “Again we will only be exporting Filipinos because there are no longer available good jobs here.”
He proposed the bill should consider the charters of Investment Promotion Authorities which are based on attracting capital investment and creating employment.
“We should look at the overall economy. This bill should not just affect revenue to be earned by the government, but also consider employment and social progress that investors bring to our country,” he said.
Meanwhile, Speaker Gloria M. Arroyo said the passage of the second package of comprehensive tax reform, which deals with streamlining investment incentives, is a priority under her leadership of the House.
“I don’t want to be very explicit about the timeline but it’s priority,” Ms. Arroyo told reporters in a chance interview Tuesday.
“I said in my very short statement upon assumption that the first and foremost job I have as a Speaker is to carry out the legislative agenda of President (Rodrigo R.) Duterte,” Ms. Arroyo said.
The Speaker also said she prefers to call the new tax reform package “Corporate Incentives Reform,” instead of TRAIN 2 (Tax Reform for Acceleration and Inclusion).
The DoF, meanwhile, allayed fears that streamlining tax incentives will drive away investment from the Philippines.
“The industries or firms that create jobs that benefit the country should have nothing to fear. Of course, those industries that do not benefit the country are those we are asking, after so many years of being helped by the government, to take their turn to help,” Finance Undersecretary Karl Kendrick T. Chua told the Ways and Means panel.
Committee chair Dakila Carlo E. Cua also proposed that the measure include incentives for reinvested profit. “Can we still explore the possibility of convincing these firms to reinvest? We should be encouraging the reinvestment of the majority of the profit back into the economy to create more jobs,” Mr. Cua said.
Mr. Chua said the proposed bills offer a “reinvestment allowance,” which will be granted to firms or industries that opt to stay in the country.
“Since the package two is performance based, we will continue to support the worthy industries if they create jobs,” Mr. Chua said. — Charmaine A. Tadalan

Davao City losing out on investors due to lack of industrial zones

July 31, 2018 | 8:43 pm

DAVAO CITY is being hindered on the investment front by the absence of economic zones and the unavailability of large contiguous areas suitable for agriculture, according to the city’s business chamber.
“The problem now is no longer about investment promotion but investment capture,” Davao City Chamber of Commerce and Industry, Inc. (DCCCII) President Arturo M. Milan said during this week’s Kapehan sa Dabaw media forum.
“(Investors) are coming, but there’s a lot of things we need to do and the city is doing its best and trying to offer incentives, but there’s a limit to what the city can offer,” he added.
Mr. Milan cited a company based in Guangdong, China that is keen on transferring its rubber manufacturing plant to Davao City.
“In China there is a scarcity of labor and any available labor, it is too expensive… that is why they are looking at the Philippines, particularly Davao. They came and they wanted to explore the potential of putting up a manufacturing facility in Davao City,” he said.
The company found positives in a stable power supply and the availability of an English-speaking work force, Mr. Milan said, but the “downside” is the absence of an industrial park.
“Being a foreign-owned company, they are looking for an industrial estate where they can locate and maintain 100% foreign ownership,” Mr. Milan said.
John Carlo B. Tria, DCCCII vice-president for professional and service ventures, said what the business group is trying to focus on matching potential partners.
“A lot of our local entrepreneurs and businessmen will really have to go beyond the usual casual meetings over coffee, and discuss business ventures,” Mr. Tria said.
Mr. Milan also said that land tenure is a major challenge for investors.
“Our land is sold piecemeal because of the agrarian reform (program), so if you need a big site, especially for agriculture… where can you find an area?” he said.
A Malaysian group interested in establishing an oil palm plantation needed 1,000 hectares, but the available contiguous areas have ancestral domain restrictions.
“We have a lot of vacant and available unproductive land, but they are ancestral domain areas. And when you negotiate, it’s a very tedious process to get prior consent, the permits that you have to secure. It’s kind of challenging,” Mr. Milan said. — Maya M. Padillo

Universal health care bill presented to Senate

July 31, 2018 | 8:42 pm

SENATOR Joseph Victor G. Ejercito presented to the plenary on Tuesday the universal health care bill providing for the automatic inclusion of all Filipinos under the National Health Insurance Program of the Philippines Health Insurance Corp. (PhilHealth).
In his sponsorship speech, Mr. Ejercito, chair of the Senate committee on health and demography, said Senate Bill No. 1896 or the proposed Universal Health Care for All Filipinos Act guarantees the equal access of quality and affordable health goods and services for Filipinos.
It also clarifies the roles and responsibilities of the PhilHealth, Department of Health (DoH), local government units, and the private sector as well in delivering health care.
“Every Filipino is automatically covered or included under the National Health Insurance Program as direct or indirect contributor. We also expanded the scope of service coverage as well as strengthened preventive and promotive aspects of health care services,” Mr. Ejercito said.
He cited data from the Philippine Statistics Authority (PSA) indicating that spending on health increased to P6,345 for every Filipino in 2016, from P5,840 in 2015.
In the same year, household out-of-pocket payments rose to 54.2% of the total medical bill or P342 billion while only 34.2% or P216 billion was covered by the government. Voluntary health care payment schemes, meanwhile, accounted for 11.6% or P73 billion.
Senators Juan Edgardo M. Angara, Joel J. Villanueva, Risa N. Hontiveros-Baraquel, and Nancy S. Binay-Angeles also co-sponsored the proposed measure.
Under the proposed measure, PhilHealth is mandated to manage the pool of funds allocated for health programs from contributions, subsidies, administrative fines, donations, grant, and appropriations from various government agencies such as the Philippine Charity Sweepstakes Office (PCSO) and Philippine Amusement and Gaming Corp. (PAGCOR).
A National Health Workforce Support System will be established under the bill tasked to strengthen public-owned or —led service delivery networks and to address the lack of health workers.
Service delivery networks composed of the public and private institutions will also be created to address the increased cases in tertiary hospitals that can be treated in nearby heath centers as well.
The bill also provides a Health Technology Assessment Council to determine the safety of investments for health care. Mr. Ejercito said this process will prevent the experience of the government in the Dengvaxia controversy. The council is composed of experts capable of validating and developing policies to recommend for the DoH and PhilHealth.
President Rodrigo R. Duterte certified the bill as an urgent measure early July. Its counterpart measure in the House of Representatives passed on third and final reading in September. It has been identified as among the priority bills of the Legislative Executive Development Advisory Council (LEDAC). — Camille A. Aguinaldo

DA to review 2019 spending on seed after budget cuts

July 31, 2018 | 8:41 pm

THE Department of Agriculture (DA) said it will review its spending priorities for 2019 after the Department of Budget and Management approved a P49.8-billion budget for the DA, significantly lower than the P60 billion approved for this year.
Agriculture Secretary Emmanuel F. Piñol told reporters on Tuesday: “We will have to streamline some programs” like a national reserve for seed “because I noticed that the seed stocks are not used.”
Mr. Piñol said that he has asked Assistant Secretary Andrew B. Villacorta and the DA’s operations team to compile data on which regions were given the most seed.
In 2019, he said the priority will be regions with a track record of using up their allocation “because a lot of the seed is being wasted.”
After recent storms, the department last week announced that it will need to tap its seed reserves, for distribution by the DA’s regional field offices.
The DA set aside 32,000 bags of rice seed to Pangasinan, which declared a state of calamity last week following heavy downpours caused by Tropical Storm Inday and Tropical Depression Josie.
Mr. Piñol said he will not be appealing the budget reduction.
“At the last cabinet meeting, it was agreed that the departments will not make any moves to ask for a bigger budget because we will try to make do with a smaller budget,” he added.
The DA had requested a P123.7-billion budget for 2019, which was to be spent on rice programs and easy-access credit for farmers. — Anna Gabriela A. Mogato

WB pledges support for Bangsamoro region

July 31, 2018 | 8:41 pm

THE World Bank (WB) said it will ramp up development support to the Bangsamoro region after President Rodrigo R. Duterte signed the Bangsamoro Organic Law (BOL) last week,
“The signing of the Bangsamoro Organic Law and its implementation are critical to achieve long lasting peace in the region, and we are committed to scale up our program and double our efforts in support of this promising opportunity,” said Mara Warwick, World Bank Country Director for Brunei, Malaysia, the Philippines and Thailand in a statement on Tuesday.
The BOL will allow the Bangsamoro Autonomous Region in Muslim Mindanao to have its own government with expanded powers of taxation. President Rodrigo R. Duterte promised the Muslim community in the southern Philippines to resolve long-standing conflicts.
“This is a significant milestone towards achieving stability in the region. The Law creates new opportunities for sustainable peace in Mindanao,” the World Bank said.
Currently, the bank along with other development partners is supporting the peace process between the Philippines government and the Moro Islamic Liberation Front through the Mindanao Trust Fund (MTF).
It first launched the program in 2006 seeking to assist social and economic recovery in conflict-affected communities, providing livelihood centers, solar driers, water and sanitation systems, among others.
The MTF pooled together P1.4 billion or $29.9 million as of 2017, which translated to 573 infrastructure and social projects
In April, the World Bank and Spanish Agency for International Development Cooperation provided an additional $3.2-million grant funding to the MTF.
The World Bank also recalled that it “recalibrated” its Country Partnership Strategy for the Philippines to “deepen its focus on the Mindanao region,” to boost financing programs for improving agricultural productivity and connectivity; boosting education, skills, and employability of the youth; and helping build resilient communities.
“Besides the MTF, the World Bank has also been supporting the Mindanao through community-driven development, social protection, education, infrastructure, and rural development projects and programs,” the World Bank said.
“The World Bank has been a long-time partner in supporting peace and inclusive growth in Mindanao. We welcome the news and look forward to continue working closely with the Government of the Philippines and the Moro Islamic Liberation Front in support of sustainable peace and development in Bangsamoro and the entire Mindanao region,” said World Bank Vice-President for East Asia and Pacific Victoria Kwakwa. — Elijah Joseph C. Tubayan

House passes on 3rd reading bill raising BSP capitalization

July 31, 2018 | 8:41 pm

THE House of Representatives, voting 219-0, on Tuesday approved on third and final reading the bill strengthening the Bangko Sentral ng Pilipinas (BSP).
House Bill 7742 seeks to amend Republic Act 7653, “The New Central Bank Act,” by enhancing its monetary and financial stability functions.
The proposed measure raises the capital of the BSP from P50 billion to P200 billion, which will be subject to review every five years.
Adjustments to the BSP capital shall be made upon the recommendation of the Department of Finance, Department of Budget and Management and the Monetary Board.
The bill further amends RA 7653 by placing money service businesses, credit granting businesses, and payment system operators under the BSP’s regulatory and examination powers.
Under the bill, the Monetary Board will also be allowed to authorize entities or persons to engage in money services.
The BSP is mandated to promote financial stability by overseeing “the payment and settlement systems in the Philippines, including critical financial market infrastructures.”
The BSP will also be tasked to closely work with the Securities and Exchange Commission, the Insurance Commission, the Philippine Deposit Insurance Corporation and the National Government.
Among its authors were Representatives Ben P. Evardone, Henry S. Oaminal and Ma. Theresa V. Collantes.
For its part, the Senate has yet to pass on second reading, Senate Bill 1297, which likewise seeks to amend RA 7653. — Charmaine A. Tadalan

Agri dep’t bans import of California poultry

July 31, 2018 | 8:40 pm

THE Department of Agriculture (DA) said it has imposed a temporary ban on the entry of bird products from Southern California after a form of Newcastle disease was confirmed there.
In a memorandum order dated July 9, the DA said the US Department of Agriculture (USDA) confirmed the presence of the disease in the region.
The DA in the order said that the ban, which covers domestic poultry and game fowl, was issued “to prevent the entry of Virulent Newcastle Disease (vND) to protect the health of the local poultry population.”
The ban also includes an immediate suspension of the processing and evaluation of sanitary and phytosanitary import clearances.
The USDA’s Animal and Plant Health Inspection Service (APHIS) reported the confirmation of vND affecting backyard chickens in Southern California.
Since May, the USDA has found 66 confirmed cases of vND in poultry, mostly in San Bernardino County. Other cases were found in Riverside County and Los Angeles County.
According to the agency, the disease, which affects the digestive, nervous and respiratory systems of the bird, “is so virulent that many birds and poultry die without showing any clinical signs.”
APHIS, however, said that the vND does not pose any safety issue with humans eating the infected poultry so long as it is cooked properly. — Anna Gabriela A. Mogato

DTI approves SRP hike for some canned goods

July 31, 2018 | 8:38 pm

THE Department of Trade and Industry (DTI) said it has approved price increases for some canned goods which are subject to price controls.
Trade Secretary Ramon M. Lopez said the appeals of at least five food producers resulted in increases of 1.5 to 2%.
He added that the new suggested retail prices for three sardine brands and two corned beef brands will reflect the change this month.
“The requests were reasonable based on the cost of fish and canning material,” Trade Secretary Ramon M. Lopez told reporters Tuesday adding that the source of higher costs is mainly the price of global commodities.
“It’s still the world prices, which have yet to stabilize,” Mr. Lopez added.
Mr. Lopez noted that many companies have not yet resorted to raising prices.
“The others have chosen to absorb the higher costs to gain market share,” he added.
He said manufacturers of domestically sourced food can use the situation to expand their sales.
“Consumers have an option to buy cheaper goods, which is why some sellers will have second thoughts about raising prices,” Mr. Lopez added.
He said the latest price monitoring survey conducted by the DTI indicates that prices of 80% of products are stable. — Janina C. Lim

DoE gives up chair of PHL Electricity Market

July 31, 2018 | 8:38 pm

THE Department of Energy (DoE) on Tuesday formally relinquished the chairmanship of the Philippine Electricity Market (PEM) board, paving the way for the assumption by an independent market operator (IMO) of the functions previously led by the Energy secretary over the country’s wholesale electricity spot market (WESM).
DoE Secretary Alfonso G. Cusi said his department will keep its distance to ensure that the electricity market functions independently but competitively.
“The Energy department remains the ultimate guardian of present rules and manuals and protector against industry breaches and anti-competitive behavior,” he said during the ceremony held at the office of the Philippine Electricity Market Corp. (PEMC), the WESM’s governance arm, in Ortigas Center, Pasig City.
“To do this effectively, we will continue to be attuned to the present developments while maintaining enough distance from the market’s daily functions,” he said.
Mr. Cusi earlier said that he remains firm in calling for the IMO’s establishment, which is already overdue by more than a decade from what the Electric Power Industry Reform Act of 2001 (EPIRA) originally required.
“As for the DoE, we will remain faithful to the wisdom of the EPIRA and maintain oversight of the wholesale electricity market. As we bow out from PEMC, we will remain to do our task as a policy oversight,” he said during the event.
Under the transition plan approved earlier this year, the IMO will manage the operations of the WESM while PEMC will remain the spot market’s governing body.
Mr. Cusi said the DoE’s involvement with the WESM needs to be close enough for the department to understand key developments.
He said together with the Energy Regulatory Commission, the two will protect electricity consumers against industry breaches and anti-competitive behavior.
Before the turnover, PEMC, through its PEM board — composed of representatives from the government, power generation companies, transmission utilities, and distribution utilities — conducted both the operations and governance functions of WESM.
The IMO is tasked to operate the WESM and allocate resources for that purpose. It will also set the dispatch schedule of all power facilities, and monitor daily market trading activities.
It will oversee transaction billing and settlement procedures, and maintain and publish a registry of WESM trading participants.
Noel V. Aboboto is the first chairman freely elected by the members of the PEM board. — Victor V. Saulon

BIR proceeding with eTIS server migration

July 31, 2018 | 8:37 pm

THE BUREAU of Internal Revenue (BIR) said that its electronic Tax Information System (eTIS) will return to normal today after migrating to another server, nearly a month after the bureau reported a “major hardware breakdown” in core systems hosted by the Department of Information and Communications Technology (DICT).
“The problem will be fixed today or tomorrow. The DICT has given us an alternative,” BIR Commissioner Caesar R. Dulay told reporters yesterday, noting that the BIR met with the DICT on July 30.
The BIR said it is moving the data center to Makati.
“We are moving to another site. They committed that today will be the start of migration,” said BIR Deputy Commissioner Lanee C. David.
The BIR wrote to the DICT on July 3 that its eTIS operations broke down, denying the bureau access to taxpayer records, especially in its Large Taxpayers Office and the Makati Revenue Region.
The eTIS is a web-based platform covering taxpayer registration systems, returns filing and processing, collection, remittance and reconciliation, audit, case management system, taxpayer accounts system, batch architecture module, and system administration management.
The BIR said the breakdown will not affect its collection performance.
The BIR is tasked to collect P2.039 trillion this year, 14.5% higher than the actual P1.78 trillion collected in 2017. — Elijah Joseph C. Tubayan