MONEY SENT HOME by overseas Filipino workers (OFWs) — a driver of household spending that contributes more than 73% to gross domestic product (GDP) — grew faster in June to hit a three-month high amid strong deployment, the central bank said yesterday. Read the full story.
Here’s a quick glance at how PSEi stocks fared on Tuesday, August 15, 2017.
THE Department of Finance (DoF) is seeking to amend the Real Estate Investment Trust (REIT) Act to eliminate ambiguities on its tax implications, which has stalled the development of a REIT industry nearly eight years since it was enacted.
The House committee on economic affairs clashed in a hearing with the Department of Finance and Bureau of Internal Revenue (BIR) on the latter’s imposition of value-added tax (VAT) on property transfers connected with REITs. Finance Undersecretary Antonette C. Tionko said that there should be an amendment to the law instead of just having to amend the implementing rules and regulations (IRR).
“It should not be prone to different interpretations whenever there’s a change in Commissioner or Secretary of Finance. So that is the ideal situation, that is the ideally how it should be so there would be no doubt,” Ms. Tionko said on the sidelines of the hearing.
The concerns emerged after the BIR under former Commissioner Kim S. Jacinto-Henares issued a memorandum ordering gains from transfer of properties under REIT subjected to 12% VAT.
Assistant Commissioner Marissa O. Cabreros said during the hearing that the 12% VAT imposed was justified as “transactions deemed sale” under section 106 B of the National Internal Revenue code, as the REIT law has not explicitly stated that the transfer of properties will be exempt from paying VAT.
“VAT attaches only when the assets being transferred are classified as ordinary assets, meaning these are used in business. The fact that those manifested intention are malls, then those are ordinary assets,” said Ms. Cabreros.
Asked whether the DoF is open to withdrawing the VAT provision on the IRR, Ms. Tionko said that she has yet to consult Finance Secretary Carlos G. Dominguez III.
However, members of the committee said that an amendment of the IRR may be favorable, in order to implement the law immediately compared to delaying it further due to adding new provisions that have yet to undergo the legislative process.
The committee, chaired by Bohol Rep. Arthur C. Yap, ordered a technical working group to determine whether or not an amendment of the law is warranted, and also to address concerns from potential investors.
David Leechiu, Chief Executive Officer of Leechiu Property Consultants, said during the hearing that the Philippines is “in a good position” to take advantage of the law.
“The BPO (business process outsourcing) industry has helped the economy to become one of the largest office markets in the world. That’s massive office space that can be REIT-able, that’s an opportunity that we can’t waste. The time for the Philippines is now,” he said.
The REIT law, or Republic Act 9856, was signed into law in 2009, but has never been fully implemented as the VAT policy has discouraged property developers from establishing trusts.
SM Prime Holdings, Inc., Megaworld Corp., Century Properties Group, Inc. and other property developers have expressed an interest in forming REITs in the wake of plans to review the IRR.
REITs promote the development of the capital markets by expanding the participation of the investing public in real estate development including residential projects, hotels, hospitals, malls, power plants and even toll roads.
A REIT must distribute annually at least 90% of its distributable income as dividends to its shareholders.
On top of the issue on taxation, the assurance of reinvestment as well as the minimum public float requirements still remains an issue.
Mr. Dominguez earlier said that there is no assurance that the perks given under the REIT law are reinvested in the country.
Also, the law states that one third of the investment trust should be publicly owned, while the implementing rules and regulations mandate 40% for the first two years and at least two-thirds thereafter. The government also subjected the transfer of assets into REITs to tax and levies a 12% rate on additional income generated, while the law considers them to be tax-free. — Elijah Joseph C. Tubayan
BPI Direct BanKo, Inc. (BanKo), the microfinance subsidiary of Bank of the Philippine Islands (BPI), said it expects to reach 100 branches by October — ahead of the target date — with the bank also poised boost its lending activities.
“In fact, we are earlier than expected. We’re tracking October, in fact, to finish all of [the branches,]” BanKo President Jerome D. Minglana told BusinessWorld in an interview when asked if the bank is on track to end the year with 100 branches.
The lender previously said it plans to end 2017 with a total branch network of 100 in a bid to reach out to more to the micro, small and medium enterprises (MSME) sector, particularly self-employed micro entrepreneurs (SEMEs).
To date, BanKo has a total of 24 branches situated nationwide. The lender targets to open around 20 new offices per month.
Asked how much the bank shells out in building the new branches, Mr. Minglana declined to give a specific figure, but noted that they have trimmed expenses related to establishing new offices.
“The good thing about this model is it’s not a huge branch so we were able to bring down costs. That’s why we can afford more branches,” he said. “The most I can say for now is it’s not the cost at which BPI builds its branches.”
Its aggressive expansion strategy, the official said, could help the bank achieve loan growth higher than double digits, or even a “ten-fold increase” in terms of volume.
“[We are looking at] a lot more because we only have 10 branches to start with and we’re running after 100 [branches.] So in terms of volume, that itself would give you a ten-fold increase, but of course there’s a ramp-up, but it is a lot more because of the mere footprint that we will be in,” Mr. Minglana said.
“So a lot more in terms of volume and that’s really key for us to be able to reach out to more, the sooner the better,” he added.
To date, the bank has a total of around 870,000 accounts. Mr. Minglana said this total could hit a million by end-2017.
“If our branches deliver as we’ve expected them, yes. But we’ll see,” he said.
BPI formally launched BanKo last July 25. The new microfinance subsidiary was a result of the merger of two of BPI’s thrift bank units namely BPI Direct Savings Bank, Inc. and BPI Globe BanKo. — Janine Marie D. Soliman
Between matters of national importance, former government employees Ali Sangalang (a writer) and Panch Alvarez (a visual artist) like to fool around. Out of the monotony of news bulletins and sensitive information, an unintended pun comes up.
Obviously, they couldn’t put their unsolicited humor on the President’s speeches or the Official Gazette, so they channelled it elsewhere.
They started by posting their collaborative works on social media website Tumblr and Facebook, which initially received huge support from their friends and later on went viral.
As the artworks gained traction online, Yabang Pinoy, an organization that supports local startups, provided the duo with funding to put their illustrated wordplay on a t‑shirt.
Thus, borne of a pocketful of puns, Linya‑Linya (which gets its name from the owners’ desired response to their work: “Uy, lumilinya‑linya ka!”) became a retail shop of items laced with memorable Pinoy lines. They now have 14 stalls in different malls.
“It took us a while before we had the courage and guts to launch Linya‑Linya because we were really pressured,” Mr. Sangalang told SparkUp in an interview. “We’re both from the literary circle, artists circle, and we were influenced by our peers who are award‑winning poets and artists, so we were pressured to follow in their footsteps.” The two entrepreneurs first met as members of Ateneo Heights and eventually became co‑workers at a digital marketing agency.
The tandem started selling their shirts at a weekend bazaar in Eastwood Mall, Quezon City, where the brand began to gain popularity.
“Our co‑sellers’ spaces were four times bigger than ours, but when the sales came out, ours were four times bigger,” Mr. Sangalang gleamed.
“Statement shirts are not new, but I think what’s unique with our products is their relatability. People see themselves on what’s written on the shirts,” Mr. Sangalang said, adding that the statements they put in their products are a “reflection of who we are as people.”
But the two said they initially had no plan to make a living out of what was then just a side hustle. In fact, Mr. Sangalang recounted that their initial earnings went to night‑outs.
In 2015, they tapped musician Jim Bacarro, who is also Mr. Sangalang’s classmate since grade school, to manage the business side of Linya‑Linya. Mr. Bacarro previously worked in marketing and branding units of companies like Del Monte Philippines Incorporated, Petron, and JB Music.
“I was shocked when he (Mr. Bacarro) called me because I had no idea that he knew Linya‑Linya,” Mr. Sangalang recalled, adding that Mr. Bacarro joining the company was “in perfect timing.”
“Our weakness was that we didn’t know anything about business. When we saw the potential of the business to grow, we looked for partners who would lead the business side,” Mr. Alvarez said.
With Mr. Bacaro’s addition, Linya‑Linya launched an online store and joined more bazaars. The new team also added other products like notebooks, bookmarks, bags, and keychains, among others. At the annual Trend Setters bazaar in World Trade Center, Pasay City in November that year, Linya‑Linya received an offer from a team from Ayala Malls to open its first shop in UP Town Center, Quezon City.
In the next five years, the company plans to further multiply its current shops into 33 and bring their products in different provinces.
But the business is “just a bonus,” Mr. Alvarez says. More than gaining profit, the two said that Linya‑Linya’s vision runs deeper.
“We’re not just a meme that people will forget after several years. Beyond the shirt, we want our statements to be on the tongue of Filipinos,” Mr. Sangalang said. “Words and art never get old.”
“We’ll continue to do what we do now but we would like to dream, hope, and believe that one day one of our statements will be part of the Filipino oral tradition,” Mr. Alvarez said.
South Korean protesters shout slogans during an anti-US rally demanding peace in the Korean Peninsula in Seoul on August 15, 2017.
North Korean leader Kim Jong-Un said on August 15 he would hold off on a planned missile strike near Guam, but warned the highly provocative move would go ahead in the event of further “reckless actions” by Washington. — AFP
By Ian Nicolas P. Cigaral
Reporter
LAST QUARTER saw more Filipinos believing the quality of their lives will improve in the next 12 months, according to a Social Weather Stations (SWS) report that nevertheless showed optimism over economic prospects was weakest in two years, though both readings were deemed “excellent.”
For the survey, SWS interviewed 1,200 adults nationwide from June 23 to 26. The latest poll has sampling error margins of ±3 points for national percentages, ±4 for “Balance Luzon,” as well as ±6 each for Metro Manila, the Visayas and Mindanao.
QUALITY OF LIFE AHEAD
Forty-four percent of those surveyed said they expect their quality of life to improve in the next 12 months (“optimists”), while four percent expected it to worsen (“pessimists”), yielding a net personal optimism score of +40, classified by SWS as “excellent.”
That was one grade up and four points more than the “very high” +36 (43% optimists, six percent pessimists) logged in the preceding quarter.
SWS noted that net personal optimism had been “excellent” for five consecutive quarters before the March 2017 survey.
All geographic areas saw marginal increases in this regard.
“Balance Luzon” edged up five points to +42 in June from March’s +37, even as this upgraded the reading to “excellent” from “very high” previously.
It stayed “excellent” in Metro Manila, edging up just three points to +46 in June, as well as “very high” in Mindanao and the Visayas, inching up five points to +37 and by just two points to +36, respectively.
In terms of socioeconomic groups, net personal optimism edged up three points into “excellent” category to +41 in June from March’s “very high” +38 among respondents in class “D”; rose by eight points to a “very high” +37 in June from a “high” +29 in March among those in class “E,” and stayed “very high” among those belonging to “ABC,” inching up just two points to +39.
ECONOMIC OUTLOOK ‘EXCELLENT’ BUT DOWN
The same survey showed 39% of respondents bullish that the general Philippine economy next year will improve, while 12% feeling it will deteriorate.
June survey readings yielded a net optimism score of “excellent” +27 that was nevertheless 11 points less than the first quarter’s “excellent” +38 and was the lowest since June 2015’s “very high” +15.
Net scores stayed “excellent” in all areas despite declines led by Mindanao which gave up 15 points to +34, Metro Manila that lost 12 points to +27, “Balance Luzon” which dropped 10 points to +23 and the Visayas, whose reading declined by seven points to +27.
It also steadied in “excellent” territory across socioeconomic classes despite a fall of 27 points to +22 among “ABC” respondents, 11 points to +27 among those in “D” and seven points to +25 in “E”.
QUALITY OF LIFE STEADIES
Asked on change in personal quality of life from 12 months ago, 37% of respondents said their lives improved (“gainers”) while 19% said they’re worse off (“losers”), yielding a “very high” +17 net gainers score that, SWS said, was “similar to March’s +16 and just two points less than the record-high +19 in September 2016.
SWS attributed the national net gainers score increment to increases in “Balance Luzon” which saw its reading gain nine points to an “excellent” +20 in June from March’s “very high” +11 and in the Visayas where the score stayed “very high” as it gained five points to +19. These gains offset Metro Manila’s 12-point drop to a “very high” +14 in June from March’s “excellent” +26, and Mindanao’s eight-point fall to a “very high” +13 from an “excellent” +21.
Net gainers reading remained “excellent” among respondents belonging to class “ABC”, though just four points up to +27 in June from +23 in March; “very high” among “D” respondents whose reading edged up a point to +18 and “high” in “E”, steady at +9.
SWS said it revised its response classifications as scores in recent surveys have been testing upper thresholds.
“Up to the previous quarter, ‘very high’ has been the highest category for net personal optimism, net economic optimism and net personal gainers, used when their scores are +30 and up, +10 and up, and +10 and up, respectively,” the report explained.
“This was due to the very rare occasions for the said indicators to go as high as the said borderlines.”
The second-quarter survey added the open-ended “excellent” category, applied when net optimism score is at least +40, as well as when net economic optimism and net personal gainers readings are at least +20.
“Very high” now applies to net personal optimism scores of +39 to +39, as well as when net optimism about the economy and net gainers scores range from +10 to +19.
The other categories of “high,” “fair,” “mediocre,” “low” and “very low” stay with their original ranges, SWS added.
Commenting on the survey results, Presidential Spokesperson Ernesto C. Abella said in mobile phone message that while Malacañang is “pleased” with SWS findings, “what we need are truly institutional changes.”
“We have significant strides in the first year to ensure the inclusion of the marginalized and disadvantaged sectors,” Mr. Abella said.
“The government has certified as urgent a comprehensive tax reform package that would boost economic growth and infrastructure development while raising spending for the poor,” he added.
“This would lay down a strong foundation for inclusive and sustainable growth to enable our people to achieve their aspiration of a matatag, maginhawa at panatag na buhay.”
University of Santo Tomas political science professor Edmund S. Tayao said in a telephone interview, however, that perceptible drops in net optimism about the economy among geographical areas and socioeconomic classes may be due to uneasiness with the declaration in the last week of May of martial law across Mindanao as militants aligned with the Islamic State took over Marawi City.
“Of course, people expect that, among others, the tourism industry will be the most significantly hit by the declaration of martial law apart from the expected impact on the net production of the region again also resulting from martial law,” Mr. Tayao said.
He also cited “doubts and questions with regard to the proposed tax reform program, which is expected to hit the day-to-day… [life of]… the ordinary worker… optimism definitely will be affected as a result.”
