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Sugarcane output seen approaching 2.5 million MT

SUGARCANE production may hit 2.5 million metric tons, the Sugar Regulatory Administration (SRA) said, with favorable weather boosting output and the numbers firming up with the production season coming to a close.

In a mobile message last week, SRA Administrator Anna Rosario V. Paner said raw sugar production, may reach “close to 2.5 million metric tons” this crop year, exceeding the earlier target of 2.25 million MT and higher than the 2.23 million MT output last crop year.

She added that only around nine mills are extending their operations until the third week of July.

The 2.5 million metric ton estimate represents an upgrade from June 19, when the agency estimated production of 2.4 million MT.

The agency’s preliminary weekly demand and supply situationer shows that, as of June 25, sugarcane output was 2.46 million MT.

Meanwhile, millsite prices of domestic refined sugar fell to P1,404.50 per 50 kilogram bag, significantly lower than the P1,784.92 at the start of the crop year.

Ms. Paner, in an earlier interview, said imports of a competing sweetener, high fructose corn syrup (HFCS), have dropped from year-earlier levels. The expanded adoption of HFCS by industrial users has been blamed for pulling down sugar prices. — Janina C. Lim

Lanzhou positions itself as new Belt and Road economic hub

LANZHOU — The city of Lanzhou signed 164 investment projects totaling more than RMB 111.4 billion during the 23rd Lanzhou Investment and Trade Fair that concluded on Sunday, a sign for the government of promising economic growth as the city positions itself as a key transport link and manufacturing hub for China’s transnational “One Belt, One Road” economic plan.

Once an important trading town on the old Silk Road, Lanzhou is seeking to revive its fortunes and return to prominence as a future gateway to Western China and Central Asia in the “One Belt, One Road” initiative, the extensive network of rail lines and highways connecting Chinese factories with markets in the rest of Asia and Europe.

Already, a freight cargo line has begun shipping goods from eastern China to western Europe through Lanzhou, with two trains arriving in the city every day. On Sunday, a new high-speed rail line started service between Lanzhou and Baoji in Shaanxi province, linking the vast, remote western half of China with the rest of the national high-speed rail network.

And last year, a new cargo rail line opened between Lanzhou and Tibet, allowing goods to be shipped to the Nepal border and then transferred to trucks to reach the capital of Kathmandu.

“Lanzhou is located in the exact center of the country,” said Mao Yuduo, the director of the Lanzhou government’s Economic, Cooperation and Services department. “It has an obvious advantage in terms of transportation. And it’s the biggest logistics center to deliver cargo in western China.”

Given Lanzhou’s prime location, the government has invested heavily to build a sprawling 800-square-kilometer city known as the Lanzhou New Area to the north of the city, with a free-trade zone, scores of high-rise apartment blocks, and infrastructure to support industries such as petrochemical, biomedical, and automobile and equipment manufacturing, as well as a burgeoning information technology sector.

The government is also keen to attract tourists with a just-opened dinosaur-themed amusement park (complete with water slides and a hotel), mini-replicas of the Great Sphinx in Egypt and the Parthenon in Greece, and a RMB 3 billion, state-of-the-art film studio.

The Lanzhou New Area was the first state-level “new area” economic zone in northwest China — similar in status to the Pudong New Area in Shanghai — when it was founded in 2012.

“Every new district has different responsibilities and Lanzhou’s responsibility is to be pole of economic growth of northwest China,” said Hao Jingxin, the director of the Lanzhou New Area’s Economic, Cooperation and Services department.

Since its inception, the new area has steadily attracted investors from across China and overseas, such as a German company producing steel pipes and a South Korean company making facial products, Mao said.

Shenzhen-based Amer International Group, one of the world’s largest copper companies, set up its production base for western China in the new area last year. In the first six months of 2017, the company earned RMB 4 billion in sales from the new factory, according to Wang Ligang, Amer’s Investment Committee vice-chairman.

Mr. Wang said the factory’s position in Lanzhou saves considerable time and money shipping goods to Europe — it takes just 30 days for its copper products to reach Germany by rail, compared to the usual 45 days by ship.

“When China was the strongest country in world in the Han and Tang dynasties, it was because of the Silk Road,” Mr. Wang said. “Now, China could not realize its future development without ‘One Belt, One Road.’”

At the Lanzhou Investment and Trade Fair, dozens of businesses from across Asia, Europe and Africa were also eager to talk up the potential market for their goods in western China. There were stalls selling everything from red wines from France and Spain to jade bracelets from Myanmar to organic jasmine rice from Cambodia.

Many Chinese provinces and localities also had their own booths promoting food products like goji berries from the Ningxia Hui Autonomous Region, buckwheat tea from Sichuan province and bags of bright-red chili peppers from the city of Chongqing.

Samir Ahmad, the China sales manager for an Indian handicraft company called Moughal Cottage Industries, said he sold so many Kashmir silk rugs and Pashmina shawls when he attended the fair for the first time last year, he decided to come back for this year’s edition.

“Lanzhou is one of the places in China which has a Muslim influence,” he said. “I would say that’s a benefit which brings us more and more customers — it’s the culture here.”

Ugandan businessman Kasozi Samson’s stall was also doing a brisk trade in his family-run company’s shea butter and cocoa butter skin-care products and handicrafts like carved wooden masks and drums.

“This fair is always good. People always buy,” he said. “Whenever we come here, we come with good expectations.” — AFP

A SONA cum budget road show

Corporate Watch
Amelia H. C. Ylagan

Headline news last week announced that President Rodrigo R. Duterte approved his Cabinet’s proposed P3.767-trillion 2018 national budget for submission to Congress on his first-year State of the Nation Address (SONA) on July 24 (BusinessWorld [BW], 07.05.2017).”

A SONA cum budget road show — it is actually a very good idea. Budget Secretary Benjamin E. Diokno declared, “The plan is to submit the President’s Budget of Expenditures and Sources of Financing (BESF) on the day of the SONA (Ibid.),” and presumably the detailed BESF will draw much of the applause for the President at the SONA for the transparent and concrete plans and projects/programs for the country in 2018 and to 2022, when his mandated 6-year term ends.

The administration’s “build, build, build” program and its focus on human capital have reserved 25.4% for “infrastructure and capital outlays” and about 29.4% of the proposed budget to “personnel services,” Presidential Spokesperson Ernesto C. Abella announced (Ibid.). The biggest departmental budget allocations will go to Education, Public Works and Highways, Interior and Local Government, Health, Social Welfare and Development, Agriculture, Environment and Natural Resources, and the Autonomous Region in Muslim Mindanao.

The proposed 2018 national budget is equivalent to 21.6% of (a projected P17.44 trillion) gross domestic product (GDP), and is about 12.4% more than the P3.35-trillion budget for 2017, Abella noted (Ibid.). Next year’s budget counts on P2.841 trillion in revenues (16.3% of GDP) to be available for disbursements of P3.364 trillion (19.3% of GDP), for which the shortfall will be covered by borrowing.

Duterte’s economic team assumes that the Tax Reform Package (House Bill No. 5636) already approved in the House of Representatives will generate P133.6 billion revenues in 2018. The high optimism for tax reforms to provide revenues had earlier pushed for the 2018 budget to be at P3.84 trillion, but revenue expectations had to be reduced 35% after Congress pared down in May the Department of Finance’s (DoF) first stage of a five-stage tax reform program. Yet despite the reductions in corporate and individual taxes, and the increased taxes on oil and “sinful” food for example, the calibrated increased net tax collection bolstered by incentivized tax compliance, all are expected to bring in 17% more than the P2.427-trillion projected 2017 revenues.

Disbursements will increase by some 15.6% to P3.364 trillion (19.3% of GDP), from 2017’s P2.909-trillion program (18.3% of GDP). Of disbursements, infrastructure spending will be pumped up 54.47% to P752.9 billion, from the P487.4 billion planned for 2017. The deficit-to-GDP ratio will be capped at three percent from 2017 to 2022, to keep to disbursement targets that have so far been missed (Ibid.). The government intends to borrow P889.72 billion in 2018, up 22.72% from the P727.64 billion planned for 2017 (BusinessWorld, 07.05.2017, Melissa T. Lopez reporting). Eighty percent or P711.776 billion will be borrowed locally, while the remaining 20% or 177.944 billion will be from foreign lenders (Ibid.).

And so Diokno says “there will be a ‘strong call’ for the Senate to approve the proposed tax measure after the President certified as urgent the CTRP (comprehensive tax reform program) bill…thus removing the requirement under legislative rules for second- and final-reading approval to be granted by each chamber of Congress on separate days (Ibid.).” Clever and neat move to present the 2018 Budget to the Legislature on the day of the SONA, if only to impress upon all that the budget, the proposed tax reform package, and the infrastructure projects are interdependent and bundled together for that Big Bang towards progress and development under “Dutertenomics.” With this road map, GDP growth is projected by government to grow 7-8% from next year to 2022, from 6.5-7.5% this year and from 2016’s actual of 6.9% (BW earlier cited).

It can be (or should be) presumed that the 2018 budget has been fashioned by Duterte and his Cabinet on the scenario of no-martial law for the country at least within next year. But today, since May 23, martial law has been proclaimed in the whole of Mindanao with its 22 million people, because of the rebellion of the rebel Maute group allegedly assisted by international terrorists, the ISIS. The destruction to public and private property from ground combat and air strikes is massive — has the cost of rebuilding Marawi City and the loss of revenues from productive activity, at least during the 60-day martial law in the region, been factored in the 2018 national budget? Columnist Marichu Villanueva pointed out: “the P20 billion mentioned by President Duterte was just off-the-cuff estimates of funds needed to bankroll the reconstruction of war-torn Marawi City. The amount is twice as much as the P10-billion rehabilitation budget proposed by the Department of National Defense (DND) (The Philippine Star, 06.23.2017).”

Have the lost revenue, opportunity costs, deaths, and pain in beleaguered Mindanao from the first open civil war against rebellion in the country been considered in such a seemingly innocuous document as a national budget?

President Duterte announced that he is not lifting martial law in Mindanao before his State of the Nation Address on July 24. The Supreme Court in its July 4 ruling junking contrary petitions effectively allowed the 60-day period of Duterte’s imposition of martial rule in Mindanao, which ends on July 22. Duterte said he will depend on an assessment by the military and police when and if martial law will be lifted or extended (Business Nightly, ANC, 07.07. 2017).

It’s OK to PR at the SONA with the 2018 national budget and the “Build, build, build” P8-trillion infrastructure program promising to over-generously offset the P139.6 billion in reduced revenues under the Tax Reform Packages — but say something definite about the pall of martial law that saps the joy of peaceful living in our free and democratic Philippines.

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Syria talks resume in Geneva after ceasefire

GENEVA — Syria’s government and opposition meet Monday for a seventh round of UN-sponsored peace talks with little expectation of a breakthrough to end the six-year conflict.

The talks in Geneva open after a ceasefire took effect in three provinces in southern Syria on Sunday, with a monitor reporting that the region was mostly quiet despite scattered violations.

The ceasefire was brokered by the United States, Russia and Jordan, the latest agreement reached outside the Geneva framework.

The peace process in the Swiss city has been increasingly overshadowed by a separate track organized by regime allies Russia and Iran, and rebel backer Turkey.

In principle, the new round of Geneva negotiations will focus on four so-called “baskets”: a new constitution, governance, elections and combating “terrorism.”

The last talks ended in May with little progress towards ending a war that has killed more than 320,000 people since it began in March 2011.

Syria’s opposition insists that President Bashar al-Assad must step down as part of any political solution to the war, but the government says Assad’s fate is not up for discussion.

Still, both sides are expected to participate once again, with Yehya al-Aridi, a spokesman for the opposition High Negotiations Committee, telling AFP he had “modest expectations.”

Washington, once a key opposition backer and peace process partner, stepped back from involvement in the diplomatic process after President Donald Trump took office in January.

But its involvement in the south Syria ceasefire raises the prospect it may be re-engaging in a limited fashion.

US Secretary of State Rex Tillerson said American and Russian officials had discussed “other areas in Syria that we can continue to work together on.”

And in Washington, a senior State Department official said both countries had a role to play in ending Syria’s conflict.

“If there’s going to be a resolution of the conflict in Syria, we both need to somehow be involved in it.” — AFP

SEC files raps against lending company officers over falsified bank certificates

THE Securities and Exchange Commission (SEC) on Monday filed criminal raps against 153 individuals, including 67 Indian nationals, for violations of the Lending Company Regulation Act (LCRA).

In a statement, SEC Commissioner Emilio B. Aquino said its Enforcement and Investor Protection Department filed criminal complaints at the Pasay City Prosecutor’s Office against officers, directors, stockholders, agents, and a number of John Does linked with 18 lending firms.

The companies were identified as: 7 Lions Lending Management Corp., Amsuda Lending Corp.; Bhati and Jogi and Swali Lending and Trading Corp.; Dr. Verma Lending Corp.; Maan & Bhaker Landing, Inc.; Manak Pur Lohara Lending Corp.; Paramjit Harvinder Gold Lending, Inc.; Purewal and Rashpal Lending, Inc.; Divya and Kavita Lending Corporation; Satguru Lending Corporation; Sartaj Lending, Inc.; All In 7000 Lending and Trading Corp.; Balak1008 Lending and Trading, Inc.; Star 77777 Lending and Trading, Inc.; Chardikla 786 Lending and Trading, Inc.; Naurasidhu55 Lending and Trading Corporation; Phil 86 Gurunanak Lending and Trading Corp.; and X-Ceee86 Lending and Trading, Inc.

The corporate regulator found the 18 firms violated Section 5 of the LCRA, or Republic Act No. 9474, which states that lending companies applying for a Certificate of Authority (CA) to operate from the SEC must deposit a minimum paid-in capital of P1 million. Applicants must then secure a notarized bank certificate as proof of the deposit.

Upon checking, the SEC discovered the identified lending firms had submitted fake bank certificates that were “not issued by the bank at all.”

“Representatives from the subject bank, in a letter to the SEC, categorically denied having issued the submitted bank certificates. It verified that the account numbers indicated in the bank deposit certificates were not issued by the subject bank since they use a different bank code,” the SEC said.

This prompted the regulator to also file criminal complaints against the 18 firms for falsification of public and commercial documents under Article 172 of the Revised Penal Code.

“We will prosecute those submitting fake bank certificates. The SEC shall be the complainant. For sure the SEC was indeed misled by the bank certificates as proof of paid in capital,” Mr. Aquino was quoted as saying in a statement.

The SEC further said that it plans to blacklist all company service providers involved in the submission of the fake documents.

The regulator also intends to revoke the Certificates of Incorporation of lending firms found to have submitted false documents but have already received their CAs. “Further, they shall face the possibility of a perpetual ban from ever establishing a lending company again,” the SEC said.

Under the LCRA, lending company officers or employees found to have willingly made any false statement may face a fine of between P10,000 and P50,000, or imprisonment of not less than six months but not more than 10 years, or both, at the discretion of the court.

In its crackdown against illegal lenders, the SEC has revoked the primary registration as corporations of 1,248 entities as of July 4, after failing to obtain their CAs amid the extended time given to them.

The commission gave them until April 30, 2017 to secure their CAs, almost a decade after it first implemented the LCRA on June 12, 2008.

“They have been given more than sufficient time to comply and the President himself has been vocal about riding the country of these entities engaged in illegal lending and we will end their illegal ways by revoking their primary registrations,” Mr. Aquino said.

The regulator expects this number to increase as they continue the review and monitoring of more entities.

“The SEC takes very seriously its mandate to uphold the laws it administers. We will not back down against these illegal lenders. They have to legitimize, incorporate, and obtain proper licenses. There is a law that requires them to do so. Until they comply with the law, we will run after them and charge them,” Mr. Aquino said. — Arra B. Francia

London’s Grosvenor House hotel sold to Ashkenazy

SEATTLE — Ashkenazy Acquisition Corp., the US real estate investor that recently bought a stake in New York’s Plaza Hotel, said that it acquired the Grosvenor House hotel in London, helping resolve an imbroglio that kept ownership of the famed properties in limbo for three years.

Terms of the purchase, announced on Friday, weren’t disclosed. The Grosvenor House acquisition “reflects a continued aggressive focus” on buying an additional €2 billion ($2.3 billion) of “global iconic assets” over the next two years, New York-based Ashkenazy said in a statement.

Billionaire brothers David and Simon Reuben held the debt on the Plaza and Grosvenor House, which were cross-collateralized with another hotel, the Dream Downtown in New York. The Reubens had bought the debt after a default by Sahara India Pariwar, controlled by Subrata Roy, who was imprisoned in India in 2014 for allegedly defrauding investors. The Reubens had scheduled an auction for the Plaza early last year, then canceled it after negotiating a debt extension. Prospective buyers including Qatar Investment Authority had explored a purchase.

The chateau-like Plaza, located at the corner of Fifth Avenue and Central Park South, has changed hands many times over its 110-year history. Previous owners include President Donald J. Trump and Israel’s Elad Group. Saudi Prince Alwaleed bin Talal has held a stake in the property since the mid 1990s.

POSH NEIGHBORHOOD
The Grosvenor House opened in 1929 on Park Lane in the Mayfair neighborhood, one of London’s poshest. The property is managed by Marriott International, Inc., whose chairman, Bill Marriott, likes to stay there when he’s in London.

A bid of more than £600 million ($774 million) for the hotel was made by David and Frederick Barclay, the billionaire owners of The Daily Telegraph, The Sunday Times reported in April, citing a person with knowledge of the matter that it didn’t identify.

Ashkenazy’s other holdings include Union Station in Washington, Faneuil Hall Marketplace in Boston, and 625 Madison Ave. in New York. The firm has assets valued at more than $10 billion with a focus on retail, hotel, office and residential properties, according to the statement. — Bloomberg

DoE, DPWH agree on guidelines for transfers of power facilities

TWO GOVERNMENT departments have signed a joint circular that will guide electric cooperatives on a unified mechanism concerning relocation of their power facilities that are affected by public construction.

The joint circular, signed by the Department of Energy (DoE) and the Department of Public Works and Highways (DPWH), prescribes uniform guidelines and procedures for the proper payment of compensation, including recovery of cost if there is a need to relocate the distribution or subtransmission lines of the electric cooperatives.

“We have to address situations where the facilities of electric cooperatives need to be relocated due to government projects, such as road-widening, bridge construction, among others, and provide a unified mechanism for reasonable compensation to them for every affected facility,” said DoE Secretary Alfonso G. Cusi in a statement on Monday.

Undersecretary Karen Olivia V. Jimeno represented DPWH in the signing ceremony, which was held at the DoE head office in Taguig City.

“This joint initiative is in cognizance of the need to provide continuous, adequate and reliable electricity services to consumers while government projects are underway,” Mr. Cusi said.

According to the circular, a government agency implementing a public works project should coordinate with the National Electrification Administration (NEA) and electric cooperatives to address right-of-way issues. The concerns that need to be answered include claims for compensation and determination of relocation sites.

The circular also provides a formula in determining proper compensation to the electric cooperative for the cost of the removal of affected facility, the DoE said.

Mr. Cusi said with the joint circular, “we will be able to accelerate and expand access to electricity services by our people.” — Victor V. Saulon

Just a title

Fence Sitter
A. R. Samson

Sometimes, titles like chairman, senior adviser, even president are merely designed to justify inclusion of a person in the company payroll. Holders of these familiar titles with undefined responsibilities may be important for some reasons having to do with status or favors granted. Holders of these appellations may be mere figureheads. This is why calling cards specify the designation of chief executive officer. The “CEO” title alerts everyone that this card holder is to be taken seriously, until proven otherwise.

The term “figurehead” originally referred only to the carving on the prow of a ship that serves as its distinguishing mark and symbol. It is the part of the ship against which the inaugural champagne bottle is bashed. While this symbol leads the ship forward simply by being positioned in front, it has nothing to do with steering the ship’s course.

The figurehead then of an organization refers to a person with a fancy title, but actually possessing no real authority or responsibility. Being at the prow of the ship is a matter of location that has nothing to do with control.

No one, least of all the subject himself, attaches the description of “figurehead” to a position holder, except perhaps behind his back. And it is not always easy for outsiders to determine if the person with a fancy title even has the authority to give away his company’s Christmas umbrellas. Courtesy visitors from abroad routinely make calls on the figurehead. They can be forgiven the mistake of leaving proposals for major acquisitions with this titular titan. He may flip through the pages of the report as he assures his visitors that “we will seriously evaluate this” as he ushers the latter out the door… and sends the proposal on its way to the real decision points.

Why are figureheads hired at all if they are not expected to do anything affecting the corporate ship’s course?

Such ceremonial leaders are venerable and wizened personages who may have retired from a major position that actually wielded real authority of life and death in a previous incarnation. Japanese banks and conglomerates pluck former Cabinet ministers “descended from heaven” to fill the role of ritual head. These gray hairs (often dyed dark brown) can attract business and provide prestige even if they do not have budget targets to meet.

Figureheads report for work regularly, sometimes very early as if they need to get started before the cock crows. They sign checks and contracts already negotiated and reviewed by the real powers, cut ribbons for new plants, and take out courtesy callers to lunch.

A second-in-command in the country may also be a figurehead stripped of a real portfolio and not allowed to sit in on meetings. She can keep busy by popping up in areas featured in the front pages. She can pick a cause like malnutrition and the stunted brain growth attached to this. She occasionally intones for those who care to listen that her commitment to democratic ideals is strong (pause for five seconds with a faraway look)…and unwavering.

Make-believe positions (MBP) are not to be confused with the role of figurehead. The former has to do with ambiguous jobs in creativity nurturing or corporate culture with no specific key result areas. These are characterized by the need to call several meetings a day and request reports from people doing real work like marketing and production. The MBP Head is the emperor with no clothes. He walks the halls confidently, dreading that question from the uninformed — what do you really do?

Nobody asks the chairman/figurehead what he does. He chairs meetings. While his title reveals nothing, it also requires no explanation. Like the figure carved on the prow, the figurehead can feel the ship moving without his help. He understands when a journey has begun.

It’s also possible to use a figurehead as a convenient device for the real manipulators behind a company to have a respectable front. Maybe the latter possesses the aura of respectability. This front can take the bayonet in the stomach when investigations are launched on what the company is up to.

The figurehead occasionally feels the salt water spray on his face as the ship plows through the water. He doesn’t need to know where the ship is headed.

A. R. Samson is chair and CEO of Touch DDB.

ar.samson@yahoo.com

Cambodia changes election law ahead of 2018 vote

PHNOM PENH — Cambodia’s parliament on Monday amended the law to ban people from associating with anyone convicted of a criminal offense, a move the opposition says aims to hobble rivals of Prime Minister Hun Sen ahead of a general election next year.

Hun Sen’s ruling Cambodian People’s Party (CPP) voted to change the election law to ban political parties from engaging with such individuals, who also face bans on participating in politics through images, audio recordings and writing.

Political parties which violate the law face a five-year suspension or could be dissolved.

The amendment effectively bans former opposition leader Sam Rainsy, who lives in exile in France to avoid arrest in a number of convictions, from campaigning from abroad for the Cambodia National Rescue Party (CNRP).

The opposition CNRP boycotted Monday’s National Assembly vote, calling the changes illegal.

“The proposed law is politically motivated and is a political pressure on individual rights, the party and on rivals,” the CNRP said in a statement.

The ruling CPP denied the changes were a bid to rein in the opposition.

“These amendments are aimed at promoting the rule of law … and strongly respect multi-party democracy,” CPP lawmaker Cheam Yeap told parliament before all 66 lawmakers present voted to back the changes.

KEM SOKHA
Hun Sen has ruled Cambodia for more than three decades and has shown no signs of wanting to relinquish power.

His party won local elections last month.

The opposition CNRP did not fare badly in the vote, which many saw as a litmus test of its position ahead of the all-important national poll, winning about 43% of the vote.

Commenting on the change to the law, ASEAN Parliamentarians for Human Rights said the CPP was expanding its harassment of the opposition.

Hun Sen proposed the amendments last month with the aim of removing Sam Rainsy from the political equation, one analyst said.

“This is the CPP’s way of consigning Rainsy to an early retirement, but expect him to continue his campaign against Hun Sen from abroad,” said Sebastian Strangio, author of the book Hun Sen’s Cambodia.

Strangio said the impact on the CNRP remains to be seen as current opposition leader Kem Sokha has shown that he is able to lead the party on his own.

Sam Rainsy resigned from the CNRP in February before a law was adopted to bar those convicted of an offense from seeking office.

He continues to be an active voice in Cambodia’s politics, however, posting comments on social media platforms. — Reuters

Filling Spaces (07/11/17)

Parkway Corporate’s top-off

THE FILINVEST group said it is on track to completing its office condominium Parkway Corporate Center by 2019 after a top-off ceremony set for June.

“Parkway Corporate Center… is set for completion in 2019,” it said in a recent press release.

The office condominium is located within the company’s flagship master planned township project, Filinvest City, in Alabang.

Designed by H1 Architecture and Design, the tower will have units averaging 36 square meters in size and targeted at boutique companies as well as small enterprises “averaging six to 30 employees,” the statement read.

“For investors, Parkway Corporate Center presents a unique opportunity to own an office unit and is an excellent investment,” it added.


More awards for Daiichi

GRADE-A HIGH RISE office builder Daiichi Properties, Inc. is adding another feather in its cap after already bagging three international real estate awards in the past four years.

Daiichi said its Web site http://daiichiproperties.com earned it the five-star best developer Web site Philippines award at the recently concluded 2017 Asia-Pacific Property Awards held in Bangkok, Thailand.

“We are proud of the fact that Daiichi Properties’ culture of excellence is not only limited to our office developments, which are at the core of our business, but also in other aspects of our operations,” Charmaine Uy, the company’s senior vice-president, said in a statement.

Three of the builder’s office developments are internationally acclaimed: the 32-storey One World Place, the 27-storey World Plaza and The Finance Centre.

All three are designed by architectural firm Gensler and located with the upscale business district Bonifacio Global City. They are all LEED (Leadership in Energy and Environmental Design) — certified too.

Toothless penalty?

Let’s Talk Tax
Francis B. Rebuldela

On Aug. 19, 2013, the Supreme Court (SC) decided in the case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue (G.R. No. 188550) and made the emphasis that the BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. The SC was referring to the BIR requirement to file a tax treaty relief application (TTRA) within a specified period to avail of the treaty rates.

The SC highlighted in the case that tax treaties are entered into to minimize, if not to eliminate, the acerbity of international juridical double taxation. This is why tax treaties are also known as double tax treaties or double tax agreements. The SC goes on to say that tax conventions are drafted with a view towards the elimination of international juridical double taxation. A state that has contracted valid international obligations is bound to make in its legislations those modifications that may be necessary to ensure the fulfilment of the obligations undertaken. Laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto.

However, for the BIR, filing of TTRA is still required not for the approval of privileges but only for regulatory purposes and compliance checking.

Flash forward to 2017 when the BIR issued Revenue Memorandum Order (RMO) 8-2017 that simplified the filing of TTRA.

The RMO provides that non-residents claiming tax treaty relief shall submit a duly accomplished Certificate of Residence for Tax Treaty Relief (CORTT) form (Part I and II) or the prescribed certificate of residency with Part I (A, B and C) and II of the CORTT form to their withholding agents/income payors before income is paid or credited. Upon compliance with the CORTT requirements, the preferential treaty rates for interest, dividends and royalties shall be applied outright.

The withholding agent/income payor shall file BIR form 1601-F and BIR Form 1604-CF and shall pay the withholding taxes due, based on the treaty provisions, in accordance with the Tax Code and existing revenue issuances.

The withholding agent shall submit the CORTT form to the BIR International Tax Affairs Division (ITAD) and Revenue Division Office 39 within 30 days after the payment of withholding taxes.

But what is eyebrow-raising in this new RMO is Section 7 stating the penalties for non-compliance. The BIR severely penalizes non-compliance, resulting in the denial of the use of the preferential treatment rate or even the disallowance of the exemption. Hence, although the BIR has announced that the filing of TTRA with ITAD has been waived, non-compliance with the new RMO would still amount to a denial of the use of preferential rates. Bottom line, a taxpayer is still required to comply before reaping the benefits of tax treaties.

Failure to supply and complete the CORTT Form will render the non-resident and withholding agent non-compliant, similar to that of non-filing of TTRA. The RMO provides that the discrepancy between the information contained in the CORTT Form and the information on the 1601-F is also a ground for disqualification.

There is a discrepancy when the pieces of information provided in the CORTT Form and 1601-F are inconsistent. Note that the CORTT form is filed prior to payment of the income and submitted after remitting the withholding tax. For recurring payment of interest and royalties, discrepancies may arise as a result of movements in foreign exchange rate and other instances during the effectivity of the loan or royalty agreement. It is possible that the amount indicated in the CORTT form will differ from the amounts in the 1601-F. Hence, is there a risk that the validity of the treaty rate will be questioned, especially during audit?

Furthermore, the RMO still provides a deadline for submission of the CORTT form which is 30 days from payment of the withholding tax. According to the RMO, failure to beat this deadline will make the income payee liable to the regular income tax.

But the highlight of the SC decision in 2013 stated that the failure to strictly comply with the domestic law requirement under RMO No. 1-2000 to file a TTRA 15 days prior to a transaction should not deprive a taxpayer of a benefit of a tax treaty.

Or will the taxpayer who failed to file the CORTT be deprived of the remedy to refund the excessively withheld tax if, as has happened in previous cases, the taxpayer was only made aware of their tax treaty privilege and the CORTT requirement after the regular tax has been withheld and remitted?

On my point, did the BIR amend the Supreme Court Decision in 2013? Or to be more blatant about it, is the BIR courting contempt? A more cerebral reading will point to the fact that the penalty is toothless. Before the provision existed in a regulation, no less than the Chief Justice Maria Lourdes P. A. Sereno has spoken.

Did the Supreme Court preempt the effectivity of the RMO?

Francis B. Rebuldela is an associate with the Tax Advisory and Compliance division of P&A Grant Thornton.

How PSEi member stocks performed — July 10, 2017

Here’s a quick glance at how PSEi stocks fared on Monday, July 10, 2017.

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