Philippines, Japan firm up infrastructure partnership

July 8, 2017 | 9:24 am

THE COUNTRY’S economic team and its Japanese counterpart moved to streamline infrastructure implementation as they firmed up the list of Japan-funded projects during their second High Level Joint Committee and Infrastructure Development and Economic Cooperation meeting on Friday.

PHL-Japan meeting — The government’s economic team meet with their Japanese counterparts during the second Philippines-Japan High Level Joint Committee on Infrastructure Development and Economic Cooperation Meeting. Photo taken July 7, 2017. *PHOTO CREDIT: NEDA’S OFFICIAL TWITTER ACCOUNT*

“Both sides have made significant progress in finalizing the list of flagship cooperation projects in the Philippines for funding by Japan and identifying several others for possible Japanese financing, in step with the intensified public investment program of the Duterte presidency,” Finance Secretary Carlos G. Dominguez III said in his opening statement at a press briefing after the meeting.

“Both sides have also discussed plans and actions to be undertaken in a mutually agreed schedule that will ensure the swift implementation of big-ticket projects,” said Mr. Dominguez, who heads the Philippine government’s economic team.

The meeting was attended by chiefs of the National Economic Development and Authority, Department of Budget and Management, Department of Public Works and Highways, Department of Transportation, and the Bases Conversion and Development Authority (BCDA). Attendees on the Japanese government’s side included Hiroto Izumi, special advisor to Japan Prime Minister Shinzo Abe, and other high-ranking officials.

This was the second meeting between the two nations, with the first conducted in Tokyo last March where the Philippine delegation pitched its list of infrastructure projects.

“The overall theme speed in processing and implementation of these projects, how much traction does this theme take hold,” said Socioeconomic Planning Secretary Ernesto M. Pernia.
Mr. Pernia said nine projects were reviewed, namely the P2.05 billion Harnessing Agribusiness Opportunities through Robust and Vibrant Entrepreneurship Supportive of Peaceful Transformation project; the P214 billion Mega Manila Subway; the P93.37 billion Malolos-Clark railway; the P9.8 billion Cavite Industrial Area Flood Management; the P4.01 billion Dalton Pass East Alignment Alternative Road project; the Malitubog-Maridagao Irrigation Project, Stage 2; the Road Network Development Project in Conflict-Affected Areas in Mindanao; the Circumferential Road 3 Missing Link project; and the Pasig-River Marikina Channel Improvement project phase four.

Collectively, the nine projects, which will be funded through loans from the Japan International Cooperation Agency (JICA) mixed with funds from other multilateral lenders, are worth an initial P315.42 billion, or $6.289 billion.

However, this is a shorter list compared to the initial 14 projects proposed in the first meeting.

Mr. Pernia said the list will still be subject to changes in the upcoming meeting, which has yet to be scheduled.

The third meeting will seek to finalize the list of projects before it is signed by the Philippines’ and Japan’s heads of states in November during the Association of Southeast Asian Nations (ASEAN) Summit and Related meetings.

“Both sides have decided to continue holding expert-level consultations to address issues pertaining to proposed railway projects and to pinpoint solutions to ensure the smooth implementation of these ventures,” said Mr. Dominguez.

On top of the listed projects, both countries also discussed possible participation in the power, environment, agriculture, information and communications technology, and disaster prevention and preparedness sectors.

The economic managers said the partnership signal rejuvenated relations between Manila and Tokyo as part of President Rodrigo R. Duterte’s foreign policy rebalancing.

Also, during the meeting, the BCDA and the Japan Overseas Infrastructure Investment Corporation for Transport and Urban Development (JOIN) signed the memorandum of cooperation for the Clark Green City project to firm up the financing commitment made last March.

JOIN earlier said it will provide an initial $2 million for the project, or 55% of the total cost, while the BCDA will shoulder the rest. — E.J.C. Tubayan

Tax perks for BoI firms, locators to stay

July 8, 2017 | 9:17 am

THE PROPOSED tax reform program will retain fiscal incentives for firms registered with the Board of Investments (BoI) as well as economic zone locators stated under the Special Economic Zone (SEZ) Act, the Finance department clarified.

business centers — “The fear that the Philippine BPO (business process outsourcing) industry will lose its competitiveness because of the proposed tax reform has no basis.” — Finance Undersecretary Karl Kendrick T. Chua

Finance Undersecretary Karl Kendrick T. Chua said the removal of value-added tax (VAT) exemptions under the Tax Reform for Acceleration and Inclusion Act or House Bill 5636 is limited to indirect exporters, as direct exporters that send their goods out of the country will continue to enjoy tax perks.

“Receipts from foreign services within the SEZs of the Philippine Economic Zone Authority (PEZA) will remain VAT-exempt, as is the case now, because they are outside customs territory by legal fiction, or zero-rated if the exporters are outside the special economic zone, including those that are BoI-registered,” Mr. Chua said in a statement.

“As for exporters outside SEZs, they are zero-rated on VAT payments and are entitled to get back their VAT payments once they apply for such refunds under the proposed 90-day refund system, while all other taxpayers, including suppliers to exporters will have to pay the VAT,” he said.

However, Mr. Chua also clarified that the zero-rated VAT privilege of indirect exporters will be removed only “if and when a credible and enhanced system is put in place” that will allow affected companies to get cash refunds of their VAT payments within 90 days after their filing of VAT refund applications with the Bureau of Internal Revenue.

“The fear that the Philippine BPO (business process outsourcing) industry will lose its competitiveness because of the proposed tax reform has no basis. Certain industry stakeholders are likely misinterpreting the provisions of the bill, said Mr. Chua.

The clarification was made following calls from PEZA and the BPO industry to retain their tax perks to keep them competitive against neighboring BPO hubs.

The removal of VAT exemptions is part of the Finance department’s bid to broaden the tax base and plug up leakages to increase revenue collections.

The Finance department first package of the tax reform program is expected to yield a P1.163 trillion net revenue from 2018 to 2022, which will be earmarked for infrastructure and social spending. — E.J.C. Tubayan

BSP excludes clearing, settlement from SBL

July 8, 2017 | 8:57 am

By Melissa Luz T. Lopez,
Senior Reporter

THE CENTRAL BANK will exclude payment transactions of conglomerates from its computation of the single borrower’s limit (SBL) of financial firms, providing leeway for banks to further raise the loans they extend to these big players.

The Bangko Sentral ng Pilipinas headquarters in Manila -- BW file photo — Businesses must maintain a clearing and settlement account with a local or foreign bank and enter into an agreement with the lender to designate such account as “exclusively for short-term payment transactions,” the BSP said. — *BW FILE PHOTO*

In a statement, the Bangko Sentral ng Pilipinas (BSP) said it has relaxed the SBL for banks and quasi-banks by allowing them to remove short-term payment and settlement transactions from the cap, effectively freeing up more funds which such companies can borrow.

“Said exclusion was accorded as applying SBL to clearing and settlement accounts may impede financial market activities and fund transfers from one institution to another. Moreover, the distinct nature of clearing and settlement accounts as mere ‘pass through’ for short-term payment transactions entails relatively low credit exposure to the clearing and settlement bank,” the central bank said on Friday.

The SBL is intended to cap banks’ credit exposure to a single client to a maximum of 25% of a bank’s net worth. The ceiling includes loans, credit guarantees, and securities underwritten by universal and commercial banks as well as investment houses that were unsold after 90 days.

This comes at a time of rapid credit growth and with the Duterte administration pursuing an aggressive infrastructure push, which banks are looking to cash in on by underwriting loans for various big-ticket projects.

“It is an easing because we are basically distinguishing between normal transactions and clearing and settlement transactions, because these are the major temporary payments,” BSP Governor Nestor A. Espenilla, Jr. told reporters on the sidelines of a meeting of the Credit Management Association of the Philippines on Friday.

“In the course of settlement sometimes the balances exceed SBL. But it’s very temporary, so if you have to put an SBL on that, it will hamper the clearing and settlement process.”

Mr. Espenilla said the simpler rules will help banks prevent going beyond the loan exposure ceiling, which would merit penalties for breaching the limit.

Businesses must maintain a clearing and settlement account with a local or foreign bank and enter into an agreement with the lender to designate such account as “exclusively for short-term payment transactions,” the BSP said. Banks and quasi-banks, in turn, must adopt internal controls to properly identify which accounts are considered as mere settlement channels versus loan accounts.

Mr. Espenilla added that the reform would promote the efficiency of the payment system,” as the new rule acknowledges that such deposits stand as petty cash kept by businesses to settle its dues.

International credit raters said there are minimal risks seen for the Philippine banking system despite the double-digit credit growth, as these loans currently support upbeat domestic economic activity. However, they noted that corporate lending continues to take the biggest chunk of borrowings, which meant bigger exposures split among several big businesses.

Peso rebounds ahead of US payrolls data

July 8, 2017 | 8:52 am

THE PESO rebounded versus the dollar on Friday due to profit-taking ahead of the release of US non-farm payrolls data.

The local currency finished at P50.58 against the greenback to cap the week, jumping nine centavos from its P50.67-per-dollar finish on Thursday.

The peso opened the session at P50.64 versus the dollar. It dropped to as low as P50.68 against the greenback, while its intraday high was at P50.54.

Dollars traded rose to $514.7 million from the $429.9 million logged on Thursday.

“[S]ome players were just trying to reduce dollar positions ahead the NFP release, although it is still expected to probably be higher,” a trader said.

The trader said the US economy is expected to have created around 180,000 jobs last month.

If realized, this would be higher than the 138,000 recorded in May, according to US Bureau of Labor Statistics data.

“If it’s lower than 180,000, then the dollar would probably correct a bit after this, given that they’re just trying to lower their base ahead of that event,” the trader added.

The peso has been trading above the P50 level since late last month, but Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla said that it is not a cause for concern.

“It’s not a concern. BSP has always said it’s market pricing, and our concern is primarily in terms of excessive volatility… We want the exchange rate to continuously reflect market conditions and underlying fundamentals,” he told reporters on Friday. — EJCT

San Miguel Foods gets BoI incentives for 2 chicken processing plants

July 8, 2017 | 8:37 am

THE Board of Investments (BOI) has granted incentives to a unit of San Miguel Pure Foods Co., Inc. for its proposed meat processing plants in Sta. Cruz, Davao del Sur, and Pagbilao, Quezon.

In a statement, the attached agency of the Department of Trade and Industry (DTI) said it approved San Miguel Foods, Inc.’s (SMFI) application for registration as a producer of whole dressed chicken and further processed chicken parts for a P1.3-billion facility in Davao del Sur and P1.1-billion project in Quezon.

Both projects are scheduled to be operational by January 2018 and are expected to employ 1,127 people.

The Davao del Sur plant will produce 17,215 metric tons (MT) of dressed chicken and 16,892 MT of further processed chicken parts annually, while the Quezon plant will have an annual output of10,00 9MT of processed chicken and 22,972 MT of further processed chicken parts.

Broilers will come from SMFI’s contract growers.

“The finished products will boost the domestic market demand with further processed chicken parts targeted for established fastfood brands like Jollibee, McDonald’s, and KFC within Mindanao, South Luzon and (Greater Manila) areas,” Trade Undersecretary and BOI Managing Head Ceferino S. Rodolfo was quoted in the statement as saying.

Both plants will be fully mechanized, integrated processing facilities that will utilize the technology of electric stimulation in carcasses. It is expected to improve the quality of chicken by enhancing bleeding capability of carcass and meat tenderness even without maturation by chilling process.

The two facilities will be constructed as “AAA” plants in compliance with the standards set by the National Meat Inspection Service.

The plants will have blast freezers, chilled holding rooms, cold storage for frozen products and corresponding utilities.

They will be also be equipped with wastewater treatment facilities in accordance with the Clean Air Act and the presence of rendering plants to convert solid waste into poultry meal for its feed milling activities.

SMPFC is the food division of San Miguel Corp., which is one of the country’s largest conglomerates. SMFI has diversified products in the agro-industrial sector, with businesses ranging from commercial feeds and poultry to pork and beef.

Shares in SMPFC dropped six centavos or 0.19% to end at P309 each on Friday. — Krista Angela M. Montealegre

Filinvest unit expects to triple revenues by 2020

July 8, 2017 | 8:33 am

CYBERZONE Properties, Inc. (CPI), a unit of Filinvest Land, Inc., is building more office projects as business process outsourcing (BPO) firms pursue their expansion despite the protectionist policy of United States President Donald Trump, allowing the company to triple its revenues by 2020.

North Gate_Cyberzone CPI President Joseph M. Yap told reporters on Friday the office segment will generate P6 billion in revenues by 2020 when it would have completed a plan to triple its gross leasable area (GLA) to 493,720 square meters (sq.m).

At the moment, CPI has 18 office buildings with 239,823 sq.m. of GLA, generating P2 billion in annual revenues.

The developer of office space remains bullish about the prospects of the BPO industry despite the slowdown in absorption from this market segment.

Deals with BPOs covered a GLA of 81,400 sq.m. in Metro Manila during the first quarter, 35% lower than the take-up a year earlier, according to data from property consultancy firm Colliers International Philippines.

“Right after the election of [United States President Donald] Trump — because of his talk on protectionism — most of the BPOs, especially the American ones, were a little bit hesitant to do too much planning for expansion, but in terms of actual take-up wala namang slowdown,” Mr. Yap said.

“Now that people are more comfortable, they don’t see all the talk of Trump will translate into a significant effect in the BPO industry. People are now more confident, optimistic, so they are doing their expansion,” he added.

This year, CPI is adding nearly 103,000 sq.m. of GLA to its portfolio through three new buildings — Vector Three and Axis Tower One in Northgate Cyberzone Alabang and Tower 2 in Cyberzone Cebu.

CPI raised P6 billion from its maiden capital market issuance to fund an aggressive build-up program involving the construction of five additional buildings in Filinvest City, Alabang and three new towers in Lahug, Cebu City.

The base size of P5 billion was 2.65x oversubscribed, prompting the company to exercise the oversubscription option of P1 billion.

The company pegged the interest rate for the 5.5-year bonds at 5.0496% per annum. Philippine Rating Services Corp. (PhilRatings) assigned a top credit rating to the debt securities.

BDO Capital & Investments Corp., BPI Capital Corp., EastWest Banking Corp., and First Metro Investments Corp. serve as the joint issue managers, bookrunners, and lead underwriters, while PNB Capital and Investments Corp. and SB Capital Investments Corp. are the co-lead underwriters for the bond offer.

Shares in FLI added three centavos or 1.76% to close at P1.73 apiece on Friday. — Krista Angela M. Montealegre

Leyte town placed under state of calamity after quake

July 8, 2017 | 12:07 am

By Jil Danielle M. Caro

KANANGA, Leyte has been placed in a state of calamity on Friday after it was hit by a 6.5-magnitude earthquake on Thursday that killed two and injured 72, the government said.

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AFP may release martial law recommendation next week

July 8, 2017 | 12:06 am

By Raynan F. Javil
Reporter

THE Philippine military may release its recommendation on whether to extend or lift martial law in Mindanao as early as next week, its spokesperson said.

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Grab drivers seek gov’t amnesty as rival Uber supports move

July 8, 2017 | 12:05 am

LOCAL drivers of Singapore-based Grab have sought government amnesty, almost a year after authorities stopped accepting applications for permits to run and operate ride-hailing services.

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Ex-magistrate who reduced charges of general accused of plunder now Ombudsman’s top prosecutor

July 8, 2017 | 12:04 am

A FORMER top magistrate of the Sandiganbayan who reduced charges of a general accused of plunder is now the Ombudsman’s top prosecutor.

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JBC releases shortlist of bets for new SC justice

July 8, 2017 | 12:03 am

THE Judicial Bar Council (JBC) during its regular meeting on Friday released a shortlist of 8 qualified applicants — from the previous 13 — vying to replace the position to be vacated by Supreme Court (SC) Associate Justice Jose Catral Mendoza.

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Duterte pardons ten political prisoners

July 8, 2017 | 12:02 am

TEN political prisoners were released on Thursday night after President Rodrigo R. Duterte pardoned them, a move that is in line with the government’s peace talks with the National Democratic Front of the Philippines (NDFP).

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