Proposed 2019 national budget

July 11, 2018 | 7:30 am

PRESIDENT Rodrigo R. Duterte and his Cabinet approved in a July 9 meeting the proposed P3.757-trillion national budget for 2019 that is designed to help spur faster overall economic growth that will also lift more Filipinos out of poverty by the time he ends his six-year term in mid-2022.
Read the full story: Duterte OK’s proposed 2019 national budget

May trade gap widest so far for 2018

July 11, 2018 | 12:33 am

MERCHANDISE exports slid for the fifth straight month in May while imports grew further, albeit at a slower pace, driving the trade deficit to its widest level so far this year, according to latest trade data the government released on Tuesday.
Preliminary data from the Philippine Statistics Authority (PSA) showed merchandise exports declining 3.8% to $5.762 billion in May, improving slightly from the 4.9% contraction seen in April but still a reversal from the 24% growth recorded in May 2017.
The latest merchandise export figure brought year-to-date sales to $26.914 billion, down five percent from $28.33 billion in 2017’s comparable five months and further away from an official nine percent growth target for 2018.
By major type of goods, manufactured goods — which made up 83.8% of the country’s total outbound shipments — declined 2.7% to $4.830 billion.
Also recording declines in May were exports of mineral products (-6.9%), agro-based products (-23.2%) and petroleum products (-66.6%) to $374.781 million, $363.978 million and $9.673 million, respectively.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), said that the decline in exports in May was expected given “softer” overseas sales so far this year.
“However, it is fitting to note that the country’s top export, electronic products, has actually increased by 2.3% [to $3.133 billion]. This may be a sign of a positive recovery… “ Mr. Asuncion said, noting that May was “so far the best month” for exports.
Cumulatively, exports of electronic products have been up by 3.1% to $14.883 billion. This is compared to manufactured goods, which logged a 4.7% decline in the same five months.
DEFICIT CONTINUES TO WIDEN
The country’s trade gap widened by 47.6% to $3.701 billion in May from $2.507 billion a year ago as import payments rose 11.4% to $9.462 billion that month, albeit slower than the 23.1% growth in April and 20.2% in May 2017.
May’s trade deficit marked the biggest gap so far this year and was the highest since December 2017’s $3.972 billion.
Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), said that the slower import growth during the month may be due to the weaker peso exchange rate versus the dollar and higher prices of global commodities including crude oil.
“Weaker peso and higher oil [and other] commodity prices made imports more expensive from the point of view of local buyers, thereby resulting in some reduction in import demand growth,” he said.
Year-to-date, the country’s balance of trade posted a $15.766-billion deficit, compared to the $10.164-billion gap recorded in 2017’s comparable five months.
Merchandise imports grew 10.9% in January-May, above the government’s 10% target.
Comprising 36.7% of the total import bill in May, the value of imported raw materials and intermediate goods increased 4.3% to $3.476 billion.
Capital goods, which accounted for 33.4%, rose 10.1% to $3.163 billion.
Consumer goods, with a 16.1% share, went up 11.6% to $1.525 billion, while mineral fuels, lubricants and related materials picked up 41.6% to $1.257 billion.
PROSPECTS
Economists expect exports to recover somewhat in the coming months, but still project the trade deficit to remain elevated due to sustained import growth.
“Exports could start to grow again in the coming months [at] around 1-2% growth in June 2018 amid the pick up in the US/global economy. The weaker peso exchange rate could make Philippine exports more price competitive from the point of view of international buyers and could support some pick up in exports demand,” RCBC’s Mr. Ricafort explained.
At the same time, the economist noted that downside risk factors remain, which include escalating trade war between the United States on the one hand and China, the European Union and other developed countries on the other that could slow global trade; rising global inflation and interest rates amid higher prices of global oil; and increased “market volatilities” in emerging markets.
As for imports, Mr. Ricafort expected a “relatively stronger” year on year growth due to lower base effects.
Other major factors that could support continued growth in imports, Mr. Ricafort said, include a “sustained” increase in foreign and local investments that would require more inbound shipments of capital equipment, the pickup in manufacturing and construction that would require more imports of construction and other raw materials, and increased household spending resulting in more imports of consumer goods.
For UnionBank’s Mr. Asuncion, the slower import growth in May “may signal” further slowdown in June and July due to “seasonal” factors.
“However, import growth is generally and still expected with the growth of both public and private investments,” he said.
Asked on the prospects of reaching the government target of nine-percent export growth, Mr. Asuncion said that while it would be possible, such pace would be “really challenging under the new environment.”
“At the beginning of the year, the expectation was continuing recovery, but the current environment with the threat of a trade war between the US and China, the impact of which for Asian countries is undetermined, is hanging over the initial projection for export growth,” he said.
For RCBC’s Mr. Ricafort, a “flat or single-digit” export growth figure for 2018 is still within reach and, therefore, may have some positive contribution to economic growth “under a more optimistic scenario.”
In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia cited the recent enactment of the Ease of Doing Business Act of 2018 and opportunities from free trade agreements as factors that should facilitate trade transactions and improve the business climate for exporters.
The United States was the Philippines’ top export market in May with a 14.6% market share at $840.146 million, followed by Hong Kong’s 13.8% ($796.468 million) and China’s 13.2% ($761.405 million) market shares.
The same month saw China as the Philippines’ top source of imports with a 20.3% share in May ($1.924 billion), followed by South Korea’s 10.3% ($978.611 million) and Japan’s 9.5% ($901.266 million) market shares. — Lourdes O. Pilar

Philippine trade year-on-year performance

July 11, 2018 | 12:33 am

MERCHANDISE exports slid for the fifth straight month in May while imports grew further, albeit at a slower pace, driving the trade deficit to its widest level so far this year, according to latest trade data the government released on Tuesday. Read the full story.

Foreign direct investments in the Philippines

July 11, 2018 | 12:32 am

FOREIGN DIRECT INVESTMENTS (FDI) inflows rose further in April to a six-month peak, the central bank said in a statement on Tuesday, supported by solid investor optimism towards the Philippines. Read the full story.

Net foreign direct investments biggest in six months in April

July 11, 2018 | 12:32 am

FOREIGN DIRECT INVESTMENTS (FDI) inflows rose further in April to a six-month peak, the central bank said in a statement on Tuesday, supported by solid investor optimism towards the Philippines.
Net FDI inflows reached $1.027 billion for the month, surging from the $682 million in March but 3.2% less than the $1.062-billion inbound capital recorded in April 2017, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Inflows marked the third straight month of increase and were the largest seen since October’s $1.918 billion.
Investors grew more bullish about Philippine prospects as they poured more funds into equity.
Total equity investments reached $262 million in April, almost triple the $84 million tallied a year ago. These inflows were partly offset by $15 million in withdrawn capital, versus $14 million the prior year.
This yielded $247 million in net equity capital that was nearly four times bigger than the $70 million in April 2017.

Investors from Singapore, Hong Kong, the Netherlands, the United States and Japan were the biggest sources of fresh capital in April, the BSP said. Funds went to manufacturing; arts, entertainment and recreation; real estate; financial and insurance; and wholesale and retail trade activities.
The surge in equity infusions more than offset declines in other investment components.
Reinvested earnings slipped by 7.1% to $75 million from $81 million.
Lending by foreign companies to their Philippine subsidiaries and affiliates saw a bigger 22.6% fall to $705 million from $911 million the past year.
Despite April’s decline, year-to-date FDIs still settled 24.3% higher at $3.202 billion from $2.577 billion in 2017’s comparable four months.
Net equity placements grew sixfold to $1.134 billion as of April from $199 million in the 2017’s first four months, as total placements increased more than fourfold to $1.258 billion from $285 million and total withdrawals increased by a slower 43.4% to $124 million from $86 million.
The same comparable four months saw foreign companies’ investments in their Philippine units’ debt instruments going down 14.6% to $1.8 billion from $2.104 billion and reinvested earnings slipping by 2.1% to $268 million from $274 million.
“FDI inflows were boosted by continued favorable investor sentiment on the back of the country’s solid macroeconomic fundamentals and growth prospects,” the central bank said in its statement.
Such investments — which are longer term than foreign portfolio investments that come and go with ease in the face of breaking developments and news and, hence, are labelled as “hot money” — inject additional capital to the local economy, spurring business expansion and, in turn, generating more jobs.
The Philippine economy expanded by 6.8% in the first quarter, fueled partly by industry expansion, the Philippine Statistics Authority said.
This compares to the government’s 7-8% growth goal, largely supported by P1.068 trillion in infrastructure investments for 2018.
Economic managers have said that they expect growth to have accelerated to seven percent last quarter given a fresh boost from government spending as more infrastructure projects are rolled out.
The central bank expects full-year FDIs to reach $9.2 billion this year, coming from the record $10.049 billion in 2017.
London-based Capital Economics has flagged that persistent political noise and relatively unstable policy in the Philippines could turn off investors and “hold back” the economy, but acknowledged that it has not seen such impact on growth so far. — Melissa Luz T. Lopez

Duterte OK’s proposed 2019 national budget

July 11, 2018 | 12:31 am

PRESIDENT Rodrigo R. Duterte and his Cabinet approved in a July 9 meeting the proposed P3.757-trillion national budget for 2019 that is designed to help spur faster overall economic growth that will also lift more Filipinos out of poverty by the time he ends his six-year term in mid-2022.
“Kahapon po ay na-approve po ng kabinete iyong ating budget for 2019; at ang ating budget po ay P3.757 trillion (Yesterday, the Cabinet approved our budget for 2019, and our budget is P3.757 trillion),” Presidential Spokesperson Harry L. Roque, Jr. told journalists in a briefing in Indang, Cavite on Tuesday.
The P3.757-trillion 2019 proposed national budget is slightly less than the P3.767 trillion programmed this year, since next year’s spending plan will have only allocations that can be disbursed within the fiscal year, versus previous obligation-based budgets that allowed implementing agencies to disburse funds over two years.

Mr. Roque also said: “Ang major expense po natin ay (Our major expenses are): personnel services, P1.185 trillion (31.5% of the total); maintenance expenditures, P562.9 billion (15%); capital outlays, P752.7 billion (20%); allotment to local government units, P640.6 billion (17.1%); support to government-owned and controlled corporations, P187.1 billion (five percent); tax expenditures (tax subsidies for items like duties for state rice importation), P14.5 billion (0.4%) and debt burden which is 414.1 billion (11%).”
In a text message to reporters on Tuesday, Budget Secretary Benjamin E. Diokno said “[t]he 2019 budget amounting to P3.757 trillion was approved by President Duterte and the Cabinet in a marathon meeting last night that ended until 2 a.m.”
He also said the proposed 2019 budget “will be 19.8% of the gross domestic product” compared to 21.6% for this year.
Mr. Diokno said that, in proportion to the total proposed budget for 2019, allocations for social services (consisting of human capital investments like education and healthcare) for 2019 was cut to 36.7% from 37.8% this year and for economic services (such as infrastructure) was reduced to 28.4% from 30.6%, while those for general public services will go up to 18.9% from 17.4%, for debt service will rise to 11% from 9.9% and for defense will increase to 5.0% from 4.3%.
On July 2, the Development Budget Coordination Committee raised the revenue program for 2019 to P3.208 trillion from P3.203 trillion earlier programmed in the interagency body’s previous meeting in April, and 12.7% more than the P2.846 trillion targeted this year.
Disbursements for next year were likewise raised to P3.832 trillion from P3.782 trillion initially programmed and 13.7% more than the P3.37-trillion spending target in 2018.
This program will result in a P624.37-billion fiscal deficit that is equivalent to 3.2% of GDP, as well as 7.79% wider than the P579.23 billion initially programmed for 2019 and 19.23% bigger than the P523.68-billion deficit target this year — both equivalent to three percent of GDP.
The Department of Budget and Management has said that it targets to submit the proposed 2019 budget to Congress on July 23, the day Mr. Duterte delivers his third State of the Nation Address.
The current administration plans to increase spending on public infrastructure and social services in a bid to drive GDP growth to 7-8% annually till 2022 from a 6.3% average in 2010-2016, believing it will take such pace of overall economic expansion to slash unemployment rate to 3-5% by 2022 from 5.5% in 2016 and achieve its bottom line of cutting the national poverty rate to 14% also by 2022 from 21.6% in 2015. — Arjay L. Balinbin

Central bank official downplays initial impact of US-China trade spat

July 11, 2018 | 12:30 am

THE IMPACT of the escalating trade row between the United States and China should remain “negligible” for now, a senior central bank official said, noting that Philippine reliance on the affected goods has been “negligible” so far.
The US imposed tariffs starting July 6 on $34 billion worth of goods brought in from China. In a Reuters report, China said it will “retaliate” which, in turn, will be met in turn by countermeasures from Washington.
For Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo, the Philippines has little to worry about as Washington and Beijing slap each other with steeper import duties, but said its impact could be stronger down the road.
“On first approximation, looking at the items that will be affected — that means aluminium, iron, and steel… What we import and export from the US and from China are very negligible, maliit lang. That’s the first-round effects, wala masyadong impact sa atin,” Mr. Guinigundo told reporters yesterday when sought for comment.
The US was the top destination of Philippine exports as of end-May, accounting for 15% of the total, according to the Philippine Statistics Authority. The same period saw China as the biggest source of imported goods at 18.9% of the total.
Global research firm Natixis said in a report that the escalation of the US-China tariff showdown has “caused an abrupt fall across various stock markets” and led to capital outflows and weaker currencies for emerging market economies, which include the Philippines.
Mr. Guinigundo explained that the trade spat between the world’s biggest economies could eventually dampen overall external trade and could stunt economic growth should it persist for a longer period.
“Kapag umabot ka na sa second and third round when the economic performance of the countries involved like China, Japan and even the US is considered, then the impact could be more significant,” the BSP official said.
“If trade gets constricted… your net exports will go down; that will pull down your growth. If growth is pulled down, there’s a lot of ramifications when that happens.”
Still, the central bank official said that the Philippines may have breathing space with more diversified markets for its exports as well as other sources for its import needs.
“The export market has been diversified actually with veering away from US and Japan in favor of intra-ASEAN trade. That has become very important,” Mr. Guinigundo explained. — Melissa Luz T. Lopez

SMC proposes to build Caticlan-Boracay bridge

July 11, 2018 | 12:08 am

By Arra B. Francia, Reporter
DIVERSIFIED conglomerate San Miguel Corp. (SMC) will be submitting today an unsolicited proposal to the government for a P3-billion bridge connecting Caticlan to Boracay island.
“We are going to submit the proposal for the unsolicited offer to build the bridge of Caticlan-Boracay tomorrow,” SMC President and Chief Operating Officer Ramon S. Ang told reporters in a briefing after the annual shareholders’ meeting of Top Frontier Investment Holdings, Inc. in Mandaluyong yesterday. Top Frontier holds 66.09% of SMC.
Mr. Ang said the bridge will connect the two islands which have an actual gap of 1.1 kilometers. He said the project can be completed within two years after securing approval from the government.
The proposed bridge will also include a pipe that can handle the sewage and waste from Boracay.
“It can handle the sewage pipe and lahat ng sewage from Boracay to Caticlan, and then from Caticlan we can bring in fresh water to Boracay para ’di na kailangan mag-deep well. And also it can bring out all the solid waste,” Mr. Ang said, noting that the amount of waste generated in Boracay stood at 170 tons a day before the island’s six-month closure last April.
To regain its P3-billion investment, Mr. Ang said a fee will be imposed on vehicles and pedestrians who will use the bridge, as well as the waste, sewage, fresh water, and power lines that will be passing through it.
Mr. Ang noted that the investment recovery period will take around 10 to 15 years.
Asked why the company is proposing to build the project, Mr. Ang said this will help recover its investments in the Caticlan airport in Boracay.
The company is currently expanding Caticlan airport’s apron areas, or the parking spaces of aircrafts.
“Kailangan naming i-expand ’yung apron to be able to handle 28 aircrafts. And then kulang na lang ngayon ’yung passenger terminals (We need to expand the apron to handle 28 aircraft. What is needed now are the passenger terminals),” Mr. Ang said.
The airport expansion will cost SMC around P15 billion, according to Mr. Ang. The project is expected to be completed by the end of 2019.
GINEBRA EXPANSION
For its traditional businesses, SMC plans to increase production of its liquor unit, Ginebra San Miguel, Inc. (GSMI) with the construction of four new manufacturing plants.
Mr. Ang said the company is choosing from eight potential locations for the plants. It will take two years to build the four manufacturing plants.
The company will also be completing a brewery in Sta. Rosa, Laguna with a capacity of two million hectoliters per year. In addition to this, SMC will be adding seven more breweries in Pangasinan, Quezon, Cebu, Bacolod, Cagayan de Oro, Bicol, and Iloilo.
SMC’s unit, San Miguel Food and Beverage, Inc. (FB), recently gained approval from the Philippine Stock Exchange to execute a share swap that would formally place San Miguel Pure Foods, Inc., GSMI, and San Miguel Brewery, Inc. under one entity.
Trading of FB shares are currently suspended, until such time that the newly formed unit meets the minimum public ownership (MPO) rule of 15%. FB’s public float is currently at around 4%.
Mr. Ang said the share sale, which would allow it to comply with the MPO rule, is targeted within the year. It may however opt to ask for an extension should it fail to get the necessary regulatory approvals or be prevented from selling the shares due to market volatility.
SMC’s recurring profit grew by 31% to P19.4 billion during the first quarter of 2018, supported by a 19% increase in consolidated revenues to P234.3 billion.
Shares in SMC dropped by 0.87% or P1.20 to close at P136.80 each at the stock exchange on Tuesday.

Megaworld acquires South Luzon-based company

July 11, 2018 | 12:07 am

MEGAWORLD Corp. is ramping up its land bank in Cavite and Laguna with the acquisition of a South Luzon-based real estate firm through one of its subsidiaries.
In a statement issued Tuesday, Megaworld said its wholly owned unit Suntrust Properties, Inc. recently acquired Stateland, Inc. The financial details of the deal were not disclosed.
The 42-year old Stateland has existing developments covering over 200 hectares primarily in Cavite and Laguna, as well as some parts of Metro Manila.
Stateland’s existing developments include horizontal residential projects, such as the 4.34-hectare Villa San Lorenzo in Imus, Cavite; the 23-hectare San Francisco Heights; 16.25-hectare Gran Avila, and 7.46-hectare Casa Laguerta, all in Calamba, Laguna.
The company’s latest project is its flagship community development called Washington Place along Aguinaldo Highway in Dasmariñas, Cavite. Washington Place spans 40 hectares and offers some 1,700 housing units priced at around P1.7 million to P5.6 million.
Stateland also has developments around Metro Manila, having built upscale pocket townhouse projects such as the Royal Circle Townhomes in Parañaque City; Royal Garden Townhomes in Malate, Manila; Hillcrest Townhomes in Quezon City; and Royal Chateau in Pasay City.
The company’s portfolio further includes residential and office condominiums in Makati, Quezon City, San Juan, Mandaluyong, and in Binondo, Manila.
Stateland is known to participate in the government’s shelter programs in areas with potential growth.
Aside from residential projects, Stateland has developed a number of industrial and farm lots in Bulacan, Cavite, and Pasig City.
The acquisition also includes around 150 hectares of raw land and other allied properties of Stateland, which will now be placed under Megaworld’s portfolio.
For its part, Suntrust has residential communities in Dasmariñas, Gen. Trias, and Silang in Cavite; Lipa, Batangas; Sta. Rosa and Calamba in Laguna; and in Bacolod City. The company also has condominium projects in Manila, Quezon City, Baguio City, and Davao City which cater to the middle to upper income segment.
“Our goal is to further expand our developments in CALABARZON area where the growth prospects are great. Stateland’s existing properties in nearby provinces of Cavite and Laguna are impressive, and we are more than excited for the opportunities to develop them,” Suntrust President Harrison M. Paltongan said in a statement.
Mr. Paltongan will now sit as the new president of Stateland.
Stateland will now be folded into Megaworld’s portfolio. Megaworld is the parent firm for tycoon Andrew L. Tan’s property investments, including Global-Estate Resorts, Inc and Empire East Land Holdings, Inc., among others.
Megaworld is under Mr. Tan’s Alliance Global Group, Inc., which also has core interests in liquor, gaming, and quick service restaurants.
The company grew its attributable profit by 11% to P3.2 billion in the first quarter of 2018, following a 10% uptick in revenues to P13.1 billion for the period.
Shares in Megaworld went up by a centavo or 0.23% to close at P4.41 each at the stock exchange on Tuesday. — Arra B. Francia

Celebrating Philippine Cinema’s 100th year with an exhibit

July 11, 2018 | 12:06 am

FILMS TELL the story and present the identity of a nation and its people. So to mark 100 years of Philippine cinema, filmmaker and UP Film Institute associate professor Nicolas A. Deocampo has curated an exhibit titled Hidden Cinema: The Virtual Experience of Philippine Cinema’s Centenary, showcasing the evolution of motion pictures in the country.
“We are bringing through this exhibition Philippine cinema back to its very roots. Cinema started a hundred years ago as a short film and how little do we remember that cinema started using that kind of form,” Mr. Deocampo said at the exhibit launch at Makati’s Ayala Museum on July 2, noting that the short film is “the mother of all cinema.”
“One can also think of cinema as documentary because many of the first films that were made were about reality and documentation of actual phenomenological events,” he added.
Mr. Deocampo also noted that such alternative films made up two major movements in cinema — post World War 2 and post Martial Law. “The elements happening in the alternative cinema are very much connected to the actual political history that is going on in this country, [we just have] to see the connection.”
In the exhibit, Mr. Deocampo contextualizes Philippine cinema history and its diversity with Philippine social history. He illustrates alternative cinema’s multiplicity by using the structure of a rhizome — a wooden model in this case — with roots that are interconnected and non-hierarchical. He surrounds the rhizome with descriptions and footage of various film genres including experimental films, documentaries, and archipelagic (regional) films, which he classifies as short, non-commercial, reality-based films, and compares to indie filmmaking.
With the advent of what Mr. Deocampo calls “digital cinema” made possible by technological advancements, he hopes that more of these genres will continue to flourish among emerging filmmakers.
In conjunction with the exhibit, films on the history of Philippine cinema will be shown at Greenbelt 3’s MyCinema on July 14, starting at 1 p.m. These include Cine > Sine: Spanish Beginnings of Philippine Cinema (2009), 1 p.m.; Film: American Beginnings of Philippine Cinema (2012), 2:45 p.m.; Eiga: Cinema During World War II (2016), 4:30 p.m.; Jose Nepomuceno and the Birth of Philippine Cinema (2018), 6:15 p.m.; and Cine Tala (Movie Chronicles), 8:10 p.m. Free screenings of Memories of Old Manila (1993) will follow after each film. Schedule of screenings may change without prior notice. Screenings cost P100 (regular) and P75 (senior citizens, students, teachers, Ayala Museum members, employees of the Ayala Group of Companies, and Ayala Rewards Circle members). There is also the option to purchase a full day ticket for P400 (regular) and P300 (discounted).
The exhibition runs until Aug. 5 at the second floor of the Ayala Museum.

Grab slapped with P10-M fine for overcharging passengers

July 11, 2018 | 12:06 am

THE LAND Transportation Franchising and Regulatory Board (LTFRB) has imposed a P10-million fine on Grab Philippines (MyTaxi.PH) for allegedly overcharging passengers over a ten-month period.
At the same time, Grab Philippines was also ordered by the LTFRB to reimburse its passengers who were charged with a P2 per-minute waiting time charge from June 5, 2017 to April 19, 2018 through rebates for future rides.
In an order dated July 9, 2018, the LTFRB said the rebate will apply only to Grab passengers who were charged the P2 per-minute waiting time rate, and will be available for 20 days.
“The amount of the rebate shall be limited to the portion of the income of the respondent only, directly related to or arising from the P2 per minute (charge) during the period of its unauthorized imposition,” the order by LTFRB Chairman Martin B. Delgra III read.
The LTFRB said Grab “failed to impress the Board that its imposition of the per minute travel fare is within purview of its discretion or authority.” It added, the P2 per minute charge is “invalid and without authority from the Board,” therefore Grab must “suffer its consequences.”
The LTFRB acknowledged that if it computed the P5,000 penalty for each case of overcharging done by Grab during the period, the penalty would amount to “trillions of pesos.” This was why it only considered Grab’s overcharging as “one continuing offense.”
“Imposing such amount may not only be considered excessive or disproportionate to the violation committed, but might also result to the cessation of respondent TNCs (transport network companies) services which will affect not only the transportation system of key cities in our country but also the employment of thousands of drivers… as well as the adverse effect of the same upon our economy,” it said.
LTFRB said Grab may still file a motion for reconsideration within 15 days. If its motion is denied, it may turn to the Department of Transportation (DoTr) to file an appeal.
Grab Philippines public affairs head Leo Emmanuel K. Gonzales declined to comment until the matter has been studied by its legal team.
In April, Representative Jericho Jonas B. Nograles questioned Grab’s P2 per minute waiting time charge, which led to its suspension by the LTFRB in the same month. LTFRB argued it was not informed of Grab’s fare matrix.
In May, Grab filed a petition to reimpose the charge, saying it has the “legal authority” to implement its own fare structure according to a department order (DO) in 2015.
But the DoTr issued a new DO in June putting the LTFRB in charge of setting the fares of TNCs. — Denise A. Valdez

Banks’ fund raising to bolster lending

July 11, 2018 | 12:06 am

By Melissa Luz T. Lopez, Senior Reporter
ACTIVE fund-raising initiatives taken by Philippine banks should help sustain robust lending in the country, especially amid strong demand for infrastructure financing, a global credit rater said.
“What we are seeing over the last 12 months… I think all these initiatives are to prepare for future growth. I think the good thing is banks are actively thinking about what they need to prepare themselves,” Moody’s senior analyst Simon Chen said in a recent interview.
Universal and commercial banks have taken turns in soliciting fresh investments in order to beef up their capital bases by issuing long-term notes and stock rights offerings from both local and foreign investors, shoring up billions of pesos for the lenders.
“Capital is something that is perhaps an area that banks need to work on every couple of years. So it really will sustain the kind of growth banks need to replenish the capital every three to four years,” Mr. Chen said. “I think the reason they need to do it is because the profitability isn’t strong enough to sustain strong growth.”
Return on equity clocked in at a 5.09% median rate from January-March, slipping from the 5.70% tallied the previous quarter, according to data from BusinessWorld Research. This came alongside a 17.8% year-on-year growth in total loans to hit P8.07 trillion, which ushered in assets growth by nearly 11% for big banks.
Officials from the Bangko Sentral ng Pilipinas (BSP) have also said that the industry trend for capital-raising represents the banks’ steps towards the full implementation of tighter standards imposed by the regulator.
Starting Jan. 1, 2019, big banks are expected to be fully compliant with capital and liquidity standards set under the international Basel 3 framework, a set of prudential measures meant to improve risk management that ensures a solid footing for banks.
These stricter rules ensure that banks will not fold even during a financial crisis.
The BSP has been introducing tighter regulatory standards under the Basel 3 regime since 2014, which include the 10% capital adequacy ratio, a framework for domestic systemically important banks, the 5% leverage ratio, a 30-day liquidity coverage ratio, and a year-long net stable funding ratio.
Moody’s holds a “stable” outlook for the Philippine banking system as they see macroeconomic conditions remaining robust, which they said will “trickle down” to lend support to local lenders.
INFRASTRUCTURE LENDING
Meanwhile, Mr. Chen said the recent change in relaxed ceilings for infrastructure lending entails a “neutral” adjustment as far as Philippine banks are concerned.
The central bank announced in April that they will allow firms implementing major infrastructure projects to have a separate single borrower’s limit in securing credit lines from banks and quasi-banks.
The new rules allow project contractors — called special purpose entities — to have a separate 25% exposure cap from lenders. This effectively leaves a bigger loan line for them to tap, as it would be treated separately from credit secured by their parent firms.
“Right now… the demand for financing is really coming from infrastructure-related projects, and banks are participating in these projects,” the credit analyst said. “How we view the change is really more neutral where the regulations are now tweaked so that banks have the capacity to support these projects, but at the same time banks are cognizant of the risks.”
The BSP has said that this move is “in support of the government’s Build, Build, Build initiative,” referring to the plan of the Duterte administration to spend as much as P8 trillion from 2016 to 2022 on high-impact infrastructure projects nationwide.