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Fuel prices to drop tomorrow, Feb. 13

After seven straight weeks of price increases, oil companies this week will be cutting the price of diesel and kerosene by P1.30 per liter and P0.85 per liter, respectively.

Gasoline will also be down by P1.00 per liter after the series of prices increases since the start of the year that was broken only when prices were unchanged on the second week of January.

The decrease, which reflects the movement of prices in the international market, will be implemented by the oil companies at 6:00 a.m. on Tuesday, Feb. 13, 2018. Seaoil Philippines, Inc. will be among those that will cut prices at 12:01 a.m.on Tuesday. — Victor V. Saulon

Revisiting the fiduciary duties of the board of directors and management: Part IV

The Code of Corporate Governance for Publicly-Listed Companies (SEC Memo Circular No. 19, s. 2016) formally defines “Corporate Governance” as “the system of stewardship and control to guide organizations in fulfilling their long-term economic, moral, legal and social obligations towards their stakeholders.”

As structure, the definition embodies as its capstone the Stakeholder Theory, but with “long-term economic . . . obligations” appearing first in the listing, and therefore emphasizing the point that the foremost obligation of a stock for-profit corporation, especially one whose shares are publicly-listed, is the maximization of profits with an eye towards its sustainability.

We will therefore proceed to discuss how the Corporate Governance (CG) Code for publicly-listed companies (PLC) has managed to handle the “equilibrium problem” besetting the version of the Stakeholders Theory it has adopted that can provide a robust system of corporate governance for publicly-listed companies.

By its Principle 1 under the general heading “The Board’s Governance Responsibilities,” there can be no doubt that the CG Code for PLCs, embodies the Maximization of Profits Doctrine as the cornerstone of its corporate governance regime, albeit operating within a greater concentric circle of the Stakeholders Theory, thus:

Principal 1:

The company should be headed by a competent, working board to foster the long-term success of the corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the long-term best interests of its shareholders and other stakeholders.

Principle 1 therefore sets a hierarchy of priorities for the Board and Management in the fulfillment of their duties and responsibilities to the various stakeholders:

  • First and foremost, they must foster the long-term success of the company to sustain its competitiveness and profitability—which thereby place the stockholders in the first rung of stakeholders whose interest must be served;
  • Secondly, the manner of pursuing the “foremost objective of maximization of profits,” must be consistent with the company’s objectives and long-term best interests of other stakeholders.

The foregoing governance formula is consistent with the adage that “In order that a company can do good in the communities it operates in, it must necessarily do well in its business operations.” It is also consistent with the PSE’s concept of corporate governance as a framework that governs the “performance by the Board of Directors and Management of their respective duties and responsibilities to the stockholders, with due regard to the stakeholders.”

The nature of the rights and legal standing of stockholders and securities-holders in publicly-listed companies, as well as the nature and consequences of the fiduciary duties and responsibilities of their Boards and Managements towards stockholders and securities-holders are well defined both by law (Corporation Code and the Securities Regulation Code) and underlying jurisprudence. There are, however, no clear statutory bases to define the nature of the rights and legal standing of other stakeholders to allow for a proper application of the hybrid corporate governance central principle of “First and foremost, the company must be operated to maximize profits, but in a manner consistent with the long-term best interests of other stakeholders.”

In other words, we must seek from the CG Code for PLCs the answer to the question uppermost in the minds of members of the Board and Management: We know exactly when we are fulfilling our obligation to maximize profits, and how to exercise our business judgment in faithful compliance with such doctrine; but how do we know that we are giving “due regards to the long-term best interests of other stakeholders?

Principle 2 under the heading “Establishing Clear Roles and Responsibilities of the Board,” ought to provide an indication of where the Boards and Management of publicly-listed companies may seek guidance of what may constitute acts that are “with due regards to other stakeholders,” thus:

Principle 2:

The fiduciary roles, responsibilities, and accountabilities of the Board as provided under the law, the company’s articles and by-laws, and other legal pronouncements and guidelines should be clearly made known to all directors as well as to stockholders and other stakeholders.

A close-reading of Principle 2 does not clearly indicate that the SEC is setting forth a fiduciary duties on the part of the Board and Management in relation to stakeholders other than stockholders, but merely imposes an obligation “to know” whatever fiduciary roles, responsibilities, and accountabilities that the Board has to stakeholders (other than stockholders) as they are provided for in law and the company’s charter documents. In other words, Boards and Management of publicly-listed companies do not seem to per se owe fiduciary duties to stakeholders (other than stockholders). Another way of looking at the same concept embodied in Principle 2 is that, stakeholders (other than stockholders) do not by the fact of being such per se assume any right to demand any fiduciary duty from the Board and Management, except only when in instances provided by law, or formally assumed in the company charter documents.

This position is bolstered by language used in Recommendation 2.1 that seems to define the director’s duty of diligence as pertaining only to the company and all shareholders, but not to other stakeholders, thus: “The Board members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and all shareholders”. This seems to imply that when the Board exercises its business judgment, it remains limited to maximization of shareholders’ value. Even underlying Explanation seems to imply that directors of publicly-listed companies do not owe fiduciary duty of loyalty to “any other stakeholder,” thus: “The duty of loyalty is also of central importance; the board member should act in the interest of the company and all its shareholders, and not those of the controlling company of the group or any other stakeholder.”

More telling is the language of Recommendation 2.4 that seems to channel the Board’s responsibility for succession planning program towards the duty of maximization of shareholders value, thus: “The Board should be responsible for ensuring and adopting an effective succession planning program for directors, key officers and management to ensure growth and a continued increase in the shareholders’ value.” In fact, other than in Principle 2 and Recommendation 2.1, there is no other reference to “stakeholders” other than stockholders under the heading “Establishing Clear Roles and Responsibilities of the Board.”

We can therefore make the preliminary assessment that the SEC in the exercise of its quasi-legislative powers through the promulgation of the CG Code for PLCs, recognizes that the fiduciary duties of diligence and loyalty (of governance principles of responsibility and accountability) in the management of the assets and the enterprise of the company are owed primarily to the stockholders under the well-established principle of Maximization of Shareholders’ Value; that any fiduciary duty that may be owed to other stakeholders in implementation of the Stakeholders Theory is only to the extent that such duties are imposed by law, rules and regulations, and what are voluntarily assumed by the company in its charter documents.

What are the fiduciary duties of the Board and Management to stakeholders, other than stockholders, in publicly-listed companies?

We endeavor to answer that question by evaluating Principles 14, 15, and 16 of the CG Code for PLCs under the heading “Duties to Stakeholders” to allow a better understanding of what exactly constitute the rights and legitimate interests of stakeholders, other than stockholders in publicly-listed companies.

It should be borne in mind that the CG Code for PLCs defines “stakeholder” as “any individual, organization or society at large who can either affect and/or be affected by the company’s strategies, policies, business decisions and operations, in general. This includes, among others, customers, creditors, employees, suppliers, investors, as well as the government and community in which it operates.” Yet, it is clear from Principle 14 that the Code does not attempt to formally grant to stakeholders of publicly-listed companies the legal standing to any rights as such other than the rights “established by law, by contractual relations and through voluntary commitments,” thus:

Principle 14:

The rights of stakeholders established by law, by contractual relations and through voluntary commitments must be respected. Where stakeholders’ rights and/or interests are at stake, stakeholders should have the opportunity to obtain prompt effective redress for the violation of their rights.

The obligation of the Board and Management when it comes to the rights of stakeholders “arising from law” is embodied under Article 1158 of the Civil Code that provides: “Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them.” In essence, the rights of stakeholders that are “established by law”, will be governed primarily under the establishing statute, e.g., Labor Code for employees, Insurance Code for policyholders, pertinent environmental laws for affected communities, etc., and not under the aegis of corporate governance. Therefore, the stakeholders’ entitlement to “obtain prompt effective redress for the violation of their rights” under Principle 14, would necessarily and legally be dependent on complying with the redress process provided by the establishing law.

Rights of stakeholders “arising from contractual relations”, would be governed by the terms and conditions of each contractual agreement under the aegis of Contract Law that “Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith,” (Article 1159, Civil Code); and that “Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law,” (Article 1315, Civil Code).

In essence, the rights of stakeholders “arising from contractual relations” create necessarily a corresponding “obligation on the part of the corporation, acting through the Board and Management,” but not necessarily an open-ended “fiduciary duty” that would be within the realm of corporate governance. So also the “prompt redress” principle embodied in Principle 14 should consequently be measured within the enforcement principles for all contractual obligations, i.e., it is fair game for the company, acting through its Board and Management, to insist upon compliance only within the “obligatory force” principle abiding in all contracts—they are bound to comply only with obligations that are clearly established within the four corners of the contract.

It may be argued that rights of stakeholders other than stockholders established “through voluntary commitment” is what would constitute as the adoption of the Stakeholders Theory for publicly-listed companies; yet essentially it is merely an extension of the rights of stakeholders arising from contractual commitment rule. In other words, stakeholders (other than stockholders and securities-holders) of publicly-listed companies do not have any inherent rights as such except to what the company, acting through its Board, voluntarily assumes as part of its corporate vision and mission, as expressed in its corporate charter documents. Such rights are as consequential or inconsequential depending on what the Board formally decides to assume in company charters, or periodically in the exercise of its business judgment in the course of operating the affairs of the company.

To summarize, although Principles 14, 15 and 16 are found under the caption “Duties to Stakeholders”, their language do not exactly establish a fiduciary duty-standing vis-à-vis the Board and Management of publicly-listed companies, under which such stakeholders would have legal standing to demand “good corporate governance” practice and redress, beyond what is provided for by establishing statute, contracts or voluntary commitments on the part of the Board and Management.

In contrast, in Principles 8 to 11 under the heading “Disclosure and Transparency”, the CG Code for PLCs clearly establishes the duty of to report company operations and finances upon the Boards and Management of publicly-listed companies in favor of both stockholders and other stakeholders, which are in addition to the same obligations to report and disclose found in the Securities Regulation Code (SRC), thus:

Principle 8:

The company should establish corporate disclosure policies and procedures that are practical and in accordance with best practices and regulatory expectations.

Principle 9:

The company should establish standards for the appropriate selection of an external auditor, and exercise effective oversight of the same to strengthen the external auditor’s independence and enhance audit quality.

Principle 10:

The company should ensure that material and reportable non-financial and sustainability issues are disclosed.

Principle 11:

The company should maintain a comprehensive and cost-efficient communication channel for disseminating relevant information.

This channel is crucial for informed decision-making by investors, stakeholders and other interested users.

A close readings of the Recommendations and Explanations under Principles 8 to 11 would show a constant reference of the duty of transparency to both the “shareholders and other stakeholders.”

The relevant question that arises then is: Why do statutory law (Securities Regulation Code) and the CG Code for PLCs unabashedly impose the fiduciary duty of transparency (or the duty to inform in Corporate Law parlance) on the Boards and Management of publicly-held companies as clearly pertaining to all stakeholders, but not the duties of diligence and loyalty?

It seems to this writer that the best way to appreciate the underlying corporate governance regime of the CG Code for PLCs is to refer to its enforcement mechanism.

The SEC has formally adopted the “comply or explain” approach in the enforcement of the Code, in that companies who do not comply therewith must state in their annual corporate governance reports the areas of non-compliance and explain the reason for such non-compliance. It is the same approach that the PSE earlier adopted for its Corporate Governance Guidelines for its listed companies. The approach brings into the play the disciplining effect of the capital market in that it allows the Boards and Management of publicly-listed companies the ability to gauge the sentiments of the market with respect to innovative measures taken in pursuing corporate governance reforms.

Under the Code’s  “comply or explain” approach, the SEC has taken the most reasonable means to be able to tackle the “equilibrium problem” pervading the Stakeholders Theory: It allows the Boards of publicly-listed companies to evolve a hierarchy of stakeholders’ rights based on the prevailing circumstances in each of the industries they operate in, and being shaped by sentiments of the capital market.

The SEC recognizes in the Introduction of the Code that it is impractical to impose specific duties and obligations to properly cover all of the stakeholders within the institution of publicly-listed companies, which admittedly is composed of disparate industries, thus: “This Code does not, in any way, prescribe a ‘one size fits all’ framework. It is designed to allow boards some flexibility in establishing their corporate governance arrangements.” It is a gallant admission that an effective regulatory agency cannot pretend to know more than the managers of companies, how to optimally run the corporate affairs — that the primary job of a regulatory agency is to promote policies, and not to micro-manage the business affairs of the companies it oversees.

Thus, under Principle 2, operating under the aegis of “The Board’s Governance Responsibilities,” the SEC imposes an obligation on the Board of every publicly-listed company to determine and set out the fiduciary roles, responsibilities, and accountabilities of the Board in the company’s articles and by-laws, and to make them known to all directors, as well as to all stakeholders.

Under Principle 14, operating within the aegis of “Duties to Stakeholders,” it becomes more apparent that an overall duty imposed upon the Board of publicly-listed companies is the obligation to identify who their stakeholders are and to determine their legitimate interest. The Code does not dictate the particular process by which this is to be undertaken, but clearly indicates that the failure to so identify who are the company’s stakeholders and the rights owed to them would be a violation of such duty. Thus, Recommendation 14.1 mandates that the Board “should identify the company’s various stakeholders and promote cooperation between them and the company in creating wealth, growth and sustainability.”

In addition, Recommendation 14.2 mandates that the Board “should establish clear policies and programs to provide a mechanism on the fair treatment and protection of stakeholders.” The Code explains that “In instances when stakeholders’ interest are not legislated, companies voluntary commitments ensure the protection of the stakeholders’ rights.”

The whole process by which each Board and Management of a publicly-listed company goes above identifying the stakeholders to whom it voluntarily commits to recognize its “legitimate interests” in the company affairs, has both an “internalizing effect” to directors and senior officers who undertake such process.

Even when the Board and Management decides not to comply, their obligation “to explain” still requires from the directors and senior officers a serious reflection on the company’s reputation and the effect on its operations.

CG Code for PLCs reflects the SEC’s recognition that the Boards and Management of publicly-listed companies must be given a certain level of comfort in the exercise of their business judgment to (a) know that first and foremost their primary fiduciary duty in pursuing the affairs of a stock and for-profit company is the maximization of profits that must serve the best interests of not only the stockholders, but other stakeholders as well; (b) they are in the better position than the SEC to evolve a system of hierarchy of rights among the stakeholders of the company that ensures the long-term success of the company; and (c) they must be allowed the flexibility to evolve their system of corporate governance in accordance with prevailing or evolving circumstances of the markets they operate in.

More importantly, the CG Code for PLCs puts in place a superior “principle-based” (as contrasted from a “rules-based”) system by which to cover the fiduciary duties of diligence and loyalty as they are owed to stakeholders, other than stockholders, and to the country as well.

Under Principle 7 under the heading “Strengthening Board Ethics,” the Code does impose a clear, albeit open-ended, duty upon the Board of a publicly-listed companies that is owed to “all stakeholders,” which is to act with “high ethical standards” in pursuing the company’s affairs, thus:

Principle 7:

Members of the Board are duty-bound to apply high ethical standards, taking into account the interests of all stakeholders.

The Code mandates the Board to adopt, implement and monitor a Code of Business Conduct and Ethics, without dictating its contents, but rather recommending the parameters that it should cover: “Code of Business Conduct and Ethics, [should] provide standards for professional and ethical behavior, as well as articulate acceptable and unacceptable conduct and practices in internal and external dealings.”

The Code mandates that the Code should properly be disseminated to the Board, Management, and employees and be disclosed and made available to the public through the company websites. It explains that “A company’s ethics policy can be made effective and inculcated in the company culture through a communication and awareness campaign, continuous training to reinforce the code, strict monitoring and implementation and setting in place proper avenues where issues may be raised and addressed without fear of retribution.”

Under Recommendation 14.2, which mandates the Board to establish clear policies and programs to provide a mechanism on the fair treatment and protection of stakeholders, the Code explains that “The company’s Code of Conduct ideally includes provisions on the company’s policies and procedures on dealing with various stakeholders. The company’s stakeholders include its customers, resource providers, creditors and the community in which it operates. Fair, professional and objective dealings as well as clear, timely and regular communication with the various stakeholders ensure their fair treatment and better protection of their rights.”

A company’s set of ethical standards has therefore the potency of evolving a corporate culture that is internally adhered to as a matter of principle; it provides a legal standing on the part of all stakeholders to expect, and in certain instances, to demand, compliance therewith from the responsible fiduciary agencies within the company.

That brings us therefore to the very last Principle 16 under the heading “Encouraging Sustainability and Social Responsibility” mandates (not obligates) the highest form of ethical values — Good Corporate Citizenship — from the Board and Management of publicly-listed companies.

Principle 16:

The company should be socially responsible in all its dealings with the communities where it operates. It should ensure that its interactions serve its environment and stakeholders in a positive and progressive manner that is fully supportive of its comprehensive and balanced development.

Under Recommendation 16.1, the Code mandates (not obligates) that every publicly-listed company whose business is inherently vested with public interests, “should recognize and place an importance on the interdependence between business and society, and promote a mutually beneficial relationship that allows the company to grow its business, while contributing to the advancement of the society where it operates.”

The Code further explains that “Sustainable development means that the company not only complies with existing regulations, but also voluntarily employs value chain processes that takes into consideration economic, environmental, social and governance issues and concerns. In considering sustainability concerns, the company plays an indispensable role alongside the government and civil society in contributing solutions to complex global challenges like poverty, inequality, unemployment and climate change.”

Therefore, the Code seeks to invoke from the Board and Management of publicly-listed companies a sense of “corporate patriotism” and what carries them forward towards ethical corporate behavior would come not from a deep sense of “going above and beyond the call of duty.”

We come to the proposition, if not our conclusion, that the underlying principles upon which the CG Code for PLCs operates are these:

That an effective corporate governance regime goes beyond what is “legal” but seeks to achieve what is “ethical”, since that which is ethical promotes the best interests for the company, its fiduciaries, the various stakeholders, and society as a whole.

That true ethical corporate behavior happens not solely under a regime of regulator-imposed standards, but proceeds with greater fervor from a “corporate culture” developed by the corporate fiduciaries themselves, and continually evolved in the course of interactions with the various stakeholders.

That the disciplining effect of the market under a regime of full transparency, is the best driver for ethical corporate behavior and conveys more efficiently the sentiments of the stakeholders.

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the M.A.P.)

CESAR L. VILLANUEVA is a member of the Management Association of the Philippines (M.A.P.), the former Chair of the Governance Commission for GOCCs and the Founding Partner of the Villanueva Gabionza & Dy Law Offices.
cvillanueva@vgslaw.com
map@map.org.ph
http://map.org.ph

Laying the groundwork for more growth

By Bjorn Biel M. Beltran

In a bid to attract further investments into the Philippines, the Duterte administration has invested in an aggressive infrastructure program that will lay the groundwork for the country’s strong sustained economic growth. The thought behind it is that for a skyscraper to rise, the foundations need to be laid on firm bedrock to bear the weight. The same concept holds true for almost any ambitious undertaking. The Philippine Business Bank (PBB) is drafting plans to lay some groundwork of its own.

In a briefing with the media, John David D. Sison, PBB’s Corporate Planning Group and Investor Relations head, said that PBB has seen a “phenomenal growth” in its balance sheet for the past year.

From last year’s figures, PBB’s loan portfolio significantly increased, while the Bank’s deposits expanded. As a result, all of PBB’s core brick-and-mortar income sources such as net interest income, service fees, and miscellaneous income expanded versus the same period last year, where core income has immensely grown.

The savings bank reported a net interest income of P2.2 billion for the third quarter of 2017, up 19.0% versus P1.8 billion in the comparable period the year before on the back of newly streamlined account management processes.

Loans and other receivables for the period grew 37.4% year on year, ending the quarter at P65.1 billion. Consequently, interest income from loans and other receivables increased by 29.8% from P1.958 billion in the nine months ended 2016 to P2.541 billion in 2017.

Nine-month core income also expanded by 50.6% to P673.7 million versus the P447.3 million from the same period in 2016.

And PBB is still growing. This year, Mr. Sison said that it could expect anywhere from P14 billion to P20 billion in new loans for 2018.

“This year, we might be doing around 2 billion a month in terms of loans,” he said. “That’s the optimistic target. But I think we will be quite satisfied if we do around 14-15 billion in new loans this year.”

Even for a conservative estimate, such an upshot can quickly spiral out of hand. To keep up with the rapid pace of its own growth, the bank is planning to raise more funding this year, an additional P3 billion to P5 billion, through the potential sale of LTNCDs (Long Term Negotiable Certificate of Deposit) and bonds in tandem with its usual capital raising efforts.

“Definitely we will need to raise equity capital in 2018,” Mr. Sison said. “I guess that’s an indicator of how much confidence we have in our ability to deploy the capital. I’m not a big macroeconomics guy, but with respect to what we’re seeing in the market, even with the expectation that rates will move up this year because of inflation concerns, there’s still a lot of demand for financing.”

“For PBB to be able to participate in that anticipated demand, we will need to raise additional capital, additional funding, not just to support us on the financial side but also on some much-needed infrastructure improvements,” he added.

Mr. Sison noted that part of the expected new equity will finance the purchase of an updated core banking system with the aim of expediting management decision making processes and bring PBB to the digital age. As innovation in the financial industry steers it further towards a future where a significant portion is faceless, fully electronic banking, PBB is spending P600-750 million in the next 18-24 months to strengthen its infrastructure to keep up.

“We’re starting from scratch essentially to better prepare us for that future where everything or a significant number of transactions are digital in nature,” Mr. Sison said.

“That core banking system will enable us to be one of the leaders in that field. Right now, we’re already hearing universal banks that are planning to roll up a product within the next 6-12 months that offers digital services from loan applications to disbursement. I guess it’s something positive for the industry. Hopefully, it happens sooner rather than later, and PBB is in a position to participate in that movement.”

To this end, Rolando R. Avante, PBB president and CEO, noted that the bank is carefully considering easily adaptable changes to keep the processes simplified and straightforward. PBB at its heart continues to be a customer-centric business, and despite sweeping changes and rapid growth that core component will not change.

“Definitely, the bank’s growth and expansion plans will continue and with that, also our emphasis on service excellence and delivery,” Mr. Avante said.

“We will also continue to enhance our technology infrastructure across the bank, including our online banking through the cash management capabilities to ensure the quality of our clients’ experience is consistent across all channels and to meet the evolving demands of our customers’ businesses. Strengthening our risk management and compliance practices will continue to be a priority as we strive to maintain our strong asset quality, particularly in this uncertain environment. Our performance is guided by our time-tested principles of prudence and enterprise, and we continue to focus on the core fundamentals of banking — ensuring balance sheet strength and building capabilities for the future.”

“You might not be the best bank in terms of the rates, the expanse of your branch network, but if you’re a bank that is able to deliver service at a high level, then that can be a differentiator,” he added.

PBB: Strengthening SMEs innovatively for 21 years

For 21 years, Philippine Business Bank (PBB) has consistently been the bank of choice of the small and medium enterprises (SME) in the country for its wide portfolio of financial products and services apart from its visible presence in several commercial and industrial centers of the country.

Its lineup of products include commercial, industrial, and developmental loans, which mostly cater to the SME market segment; as well as consumer loans like auto, salary, and housing loans. PBB also offers various deposit and investment services.

After concluding 2017 with double-digit growth, PBB is moving forward this year, as it celebrates another anniversary milestone, with focus on consumer and SME financing as well as innovation in its line up of products and services.

According to John David D. Sison, PBB’s Corporate Planning Group and Investor Relations head, they see a lot of demand for these types of loan services.

“Last year, we did a lot of corporate accounts, a lot of deals in power and transportation with our involvement in RoRo companies. This year, the plan is to shift back to our bread and butter, which is our SME/commercial loans side,” said Mr. Sison, explaining that the yields in this segment are more attractive.

In terms of consumer financing, PBB aims to set up about 10 to 12 consumer finance centers around the country to bring this lending service closer to more Filipinos.

Along with strengthening this particular service, PBB also shared its initiative to transition from mostly just SME corporate business-related transactions to a more inclusive set of services by including loan products and services catering to secondhand auto, brand new cars, and real estate.

Mr. Sison also mentioned their plans to expand their digital space presence. “We’re putting in place little by little our personnel, and hopefully, the infrastructure to be developed by the different teams within the bank. We’re only starting to develop today, but assuming we’re able to iron that out and do it automated, where we are able to view their businesses on a dynamic basis, we will be much quicker.”

He added: “In terms of disbursing loans servicing clients, we will be faster as opposed to two to three weeks, which is as I understand, is the fastest in the industry, but we want to make it even faster with respect to how we service the needs of our clients.”

As a testament to its unparalleled financing solutions, through the years, PBB has received a number of awards. In 2013 and 2014 at the Wholesale Banking Awards in Singapore, it was recognized by the Asian Banking and Finance magazine as the Philippines Domestic Technology and Operations Bank of the Year for its ongoing innovation and excellence in development and delivery of modern technology solutions and customer service.

Also in 2014, PBB was awarded the Best Banking Technology Awards by London-based online magazine Global Banking & Finance Review. A year after at the Asian Banking Summit in Hong Kong, the Asian Banker Technology Implementation Awards gave PBB the Best Cloud Based Award. — Romsanne R. Ortiguero

Into a wider reach

Philippine Business Bank (PBB) has helped diversified the economy towards more sustainable growth by providing small and medium-sized enterprises (SMEs) access to financial and business support services. For 21 years, the bank has remained committed to this call while continuously strengthening its core business through expanding its branch network and portfolio.

From a small bank that started in 1997 — serving small clientele in Caloocan City — PBB has shown a phenomenal growth, expanding up to more than 150 branches nationwide today. The bank caters the needs of SMEs, the vital growth drivers of the economy due to its potential in driving job creation and innovation.

Fueled by the desire to serve more SMEs, PBB has increased its branch presence in areas with high concentration of the said market such as Caloocan, Malabon, Navotas, Valenzuela and Quezon City. It has also aggressively extended its footprint in provinces that are underserved or not served at all by other financial institutions. In the past years, only a handful of branches were established in Metro Manila whereas around 70 were set up in the provinces, mostly in Southern Luzon, Visayas and Mindanao.

In the next month or two, the bank will open branches in Catbalogan in Samar, Ormoc in Leyte, and Solano in Nueva Vizcaya, bringing PBB a total of 155 branch network.

John David D. Sison, PBB’s Corporate Planning Group and Investor Relations head, told during a recent media briefing that in the next years, the bank is looking to add 10 to 15 branches a year.

“Everything has been growing rapidly as expected,” Mr. Sison said, noting that the growth has not just been on the financial side but on the personnel side as well. He shared that as of the end of December, PBB has 1,448 personnel.

To keep abreast with the changes and expansion, the staff of PBB undergo trainings and seminars that improve their skills and make them more responsive to clients. The bank believes that these employees have to be attuned to the demands of the work and the environment to sustain the growth the bank has achieved.

In addition to establishing more branches, PBB has acquired rural banks over the years that speed up its expansion, including the Insular Savers Bank, Bataan Savings and Loan, Inc., and Rural Bank of Kawit, Inc. that boast a notable deposit and client bases in its respective areas of operation.

Mr. Sison said that PBB is also planning to set up an initial 10 to 12 consumer finance centers around the Philippines, including lending centers in Central Luzon, Batangas, Iloilo, Legazpi, Cagayan de Oro, Davao and other parts of Visayas and Mindanao. He shared that this can be a promising business with a lot of potential as what they have observed in the last two to three years.

This will be handled by Rodel P. Geneblazo, former president of Insular Savers Bank, where he was able to shift the bank’s portfolio from bus loans into salary loans and secondhand auto loans. “Now, he will try to replicate that business within PBB,” Mr. Sison said.

“On that end, hopefully it’s the start of a strong consumer business for PBB where the president expects that portfolio to grow around 20% to 25% of our balance sheet by 2023,” Mr. Sison added. — Mark Louis F. Ferrolino

Rides worth waiting for

As the new year started, new car models are on the way. Auto companies continue to compete for the top spot of the race by bringing new car models that fit to the changing needs and demands of the consumers.

This 2018, cars that exemplify powerful engine and great aesthetic are coming to level up the run. These two factors are undeniably the vital features that most car buyers consider, driving their way to perfection while reflecting their sense of style, personality and values on the road. To give you an overview on what cars will redefine the market this year, here is a round-up of car models that not just exude a stylish exterior but also a powerful engine.

Chevrolet Equinox

With the all-new 2018 Chevrolet Equinox, style and function comes together. It has a completely redesigned exterior that complements the LED daytime running lamps, designed for an unmistakable presence on the road.

In terms of interior, Equinox boasts a spacious cabin, giving driver and passengers a comfortable ride. The dual-cockpit design features an integrated center stack, making everything easily accessible through driver’s fingertips.

The 2018 Equinox comes with powerful 1.5L turbo engine and 1.6L turbo-diesel engine, exhibiting an estimated 32 and 39 miles per gallon (mpg) on highway, respectively. For those who crave a more exhilarating drive, Equinox also comes with the 2.0L turbo engine, paired with an all-new nine-speed automatic transmission and offers 252 horsepower (hp) with 260 pound-feet of torque.

Ford Expedition

A sleek design of the new 2018 Ford Expedition and its bold, sculpted grille in sleek satin aluminum give it a standout style in any setting. It features a spacious seating, exceptional cargo space and panoramic roof, giving everyone an incredible and comfortable riding experience like no other.

Behind its elegance, the 2018 Expedition is designed to do more. Its standard 3.5L EcoBoost engine delivers up to 375 hp and 470 pound-feet of torque, giving the Expedition a towing capacity of 9,300 pounds when equipped with the Heavy-Duty Trailer Tow Package.

It also offers a range of convenience features including a capacitive touchscreen SYNC 3 with swipe capability that help the driver stay connected while on the road; six available USB ports; a center console wireless charger; and the available12-speaker B&O PLAY premium audio system and dual-headrest rear-seat entertainment system, making long trips more fun for everyone.

Honda Accord

The completely redesigned Honda Accord is one of the best models in the midsize cars segment, earning good reviews from professional test drivers in terms of style and driving verve.

The 2018 Accord boasts a head-turning style with its bold exterior, expressed through strong character lines and a muscular, fastback-inspired design. Its front-end is tailored distinctively with Active Grille Shutters and Air Curtains that help improve aerodynamic and efficiency. For a true sport look, it is complemented by LED taillights and integrated Chrome Exhaust Finishers.

It offers three advanced powertrains including 1.5L and 2.0L turbocharged engines and a two-motor hybrid system that both deliver great gas mileage, getting an estimated 30 and 38 mpg in the city and highway, respectively.

Mazda CX-5

With a more sophisticated design and advanced systems that elevate the driving experience for both driver and passengers, the all-new 2018 Mazda CX-5 is definitely worth waiting for. Mazda CX-5 embodies the “Soul of Motion” philosophy design based on the idea of refined toughness while its interior adheres to a human-centered approach in line with the jinba-ittai principle.

Its rich-looking interior is also a class above with the available Active Driving Display that shows vital information such as vehicle status, current speed and route guidance; and the Mazda Connect, an advanced infotainment system that helps the driver be entertained, informed and connected with the use of multifunctional Commander Control on the center console.

To make driving experience much better, the 2018 CX-5 is engineered with SKYACTIV Technology, where every aspect of the vehicle is designed to maximize driving dynamics and efficiency — from body construction and engine technology to the chassis and transmission — offering impressive mpg ratings.

Mitsubishi Eclipse Cross

Coming early this 2018, the all-new Mitsubishi Eclipse Cross combines the latest styling design with incredible driving dynamics and intuitive safety technology.

Eclipse Cross makes a bold statement with its muscular profile, dynamic alloy wheels and distinctive lightings, complementing the advanced shield design that merges safety with a vibrant, sporty style. This “bold vision of the future” reflects up to its interior, in which every detail was meticulously crafted. The cockpit of Eclipse is designed to enhance awareness and control, making driving feels more natural.

Eclipse Cross delivers a truly premium experience with the 1.5L direct-injection turbo engine. The newly developed MIVEC engine puts instant acceleration at driver’s command, developing an impressive 110 kilowatts (kW) of power and 250 newton meters (Nm) of torque for highly responsive performance.

Toyota Camry

With the new 2018 Toyota Camry, you will surely leave a long-lasting impression anywhere. Camry exudes an evocative new look with unique catamaran-inspired accents and a black sport mesh grille. Its muscular shape is defined by a mix of sweeping curves and chiseled surfaces, channeling its sporty side.

Camry offers a 2.5L Dynamic Force four-cylinder and a 3.5L V6, delivering a sophisticated blend of performance and efficiency. Both engines utilize the D-4S direct-injection system, which selects the optimal injection method based on driving conditions to pack a powerful punch with enhanced fuel efficiency to boot. — Mark Louis F. Ferrolino

Latest engine designs and future of cars

Automobiles continue to evolve along with the ever-changing needs of car buyers. One of the top-of-mind factors are the vehicle’s engine design that both deliver to different driving needs and is fuel-efficient at the same time. For some, owning an eco-friendly vehicle is a major consideration as well.

With this, automobile companies continue its quest to provide the latest innovation in car technologies to provide the best value for money car units as well as to cater to the most discerning tastes of car buyers.

One of those is Japan automaker Mazda which boasts of their 2.2L Skyactiv-D engine, which they claim as their most technologically advanced clean diesel engine so far. Compliant to the stringent Euro-6 standards for its ultra-low nitrous oxide emissions, this engine has the lowest compression ratio of 14:1 that enables reduction in engine weight and mechanical friction thus its fuel efficiency. At the same time, the Skyactiv-D engine delivers a maximum torque of 420 Nm and maximum power of 175 Ps.

On the other hand, Mitsubishi is notable for its vehicles featuring the Mitsubishi Innovative Valve timing Electronic Control (MIVEC) system. According to the Japanese automotive manufacturer, this exclusive technology controls valve timing and amount of lift in order to achieve high power output, low fuel consumption, and low exhaust emissions. Mitsubishi’s  Euro-4 compliant 4N15 engine with the MIVEC technology used in Montero Sport, features an engine’s power and torque rating at 181 Ps/3,500 rpm and 430 Nm/2,500 rpm.

Japanese automobile manufacturer Isuzu is also notable for its powerful yet fuel-efficient 4JJ1-TCX Blue Power diesel engine. This Euro-4 compliant engine has maximum power output of 177 Ps of power and 380 Nm of torque while at the same time, has low emissions.

Swedish car brand Volvo’s award-winning Golf Grand Touring Sport (GTS) caught the attention of car enthusiasts with its 2.0 TDI Engine that promises “real drive combined with low fuel bills.” The engine’s featured common rail technology ensures maximum power development with low fuel consumption.

While these engine technologies deliver in power, style, and efficiency, it is projected this year that hybrid cars will be more available in the local market in light of the half tax rates for these type of vehicles under the recently implemented Tax Reform for Acceleration and Inclusion (TRAIN) law. This is part of the government’s effort to promote eco-friendly vehicles for cleaner transportation.

According to reports, the Association of Vehicle Importers and Distributors (AVID) also sees the potential sales in hybrid cars. AVID President Ma. Fe Perez-Agudo said in the report, “For the year ahead, we remain optimistic as we expect short-run market adjustments resulting from the TRAIN. Nevertheless, the new automotive landscape opens waves of opportunities for the luxury, e-vehicles, and hybrid vehicles market.”

Apart from hybrid cars, more car buyers, particularly Filipinos, also consider purchasing more electric vehicles according to the Nissan-commissioned study titled “Future of Electric Vehicles in Southeast Asia,” which was presented at the Nissan Futures symposium event held in Singapore early February of this year.

The said survey conducted by research firm Frost & Sullivan was participated by 1,800 individuals in countries including Singapore, Malaysia, Vietnam, Thailand, Indonesia, and the Philippines. The said last three countries emerged as the most enthusiastic about buying electric cars with Philippines at the top. — Romsanne R. Ortiguero

Sophisticated drives

Vehicles are getting increasingly sophisticated, thanks to the manifold technologies automakers are equipping their offerings with. It is precisely because of these technologies that the driving experience today is arguably more enjoyable and definitely safer. Here are some of them.

Adaptive cruise control (ACC) is one of the car innovations that the Web site Digital Trends has paid homage to, in an article titled “20 car technologies we’re thankful for (and a little spoiled by).” This particular piece of technology involves the use of a radar or a camera system to adjust the speed of a vehicle relative to the one in front of it. It isn’t totally new; there’s regular cruise control that keeps the vehicle running at a steady pace, and it only stops when the driver intervenes. ACC “will speed up or slow based on the position of the cars in front, reducing fatigue,” the site says. “Some will even bring you a complete stop when necessary, allowing the driver to set off again with a quick touch of the Resume’ button,” it adds.

Kelley Blue Book (KBB), an automotive research company, has named automatic emergency braking (AEB) one of the 10 best car technologies of 2018. And it’s clear why. “Automatic Emergency Braking or AEB uses a variety of sensors to determine if a forward collision crash is imminent and automatically applies the brakes to diminish the severity or avoid a crash entirely,” the company says. But while it has praised the system as “extremely good,” KBB discourages complete dependence on it. “[I]t’s meant as a last resort for when the driver isn’t paying attention, and it’s extremely alarming when the system does engage.” Still, AEB deserves to be a priority on one’s shopping list, the company says.

Another safety technology that KBB considers to be among the best automotive technologies of the year is lane departure warning (LDW). “Distracted driving happens. Whether it’s a quick glance at the stereo to change the channel or a child urgently asking for your attention, sometimes we pay a little less attention to the road than we should,” the company says. Using cameras, an LDW system can detect if a car has wandered too far out of its lane and immediately alert the driver — by giving a visual or audible signal or prompting the seat or the steering wheel to vibrate. “The system turns itself off when you use a directional, so there’s no fear of accidental engagement,” KBB says.

Navigation technology has long been in existence, but the kind built into vehicles today is far more sophisticated than previous iterations. “When the first GPS units starting showing up in the 1990s, they were laughably slow and inaccurate, often taking several seconds to respond to simple commands like zoom in or zoom out,” Digital Trends notes. The site adds that while car manufacturer systems still can’t match smartphone navigation, they’re getting better and “still get you out of asking for directions.” “Modern navigation technology can search for local points of interest, download traffic data, automatically detour in case of an accident, and much, much more,” the site says. And in the near future, there will likely be holographic windshield projection, smarter head-up displays and more cloud connectivity.

Ayala Land sets 450 hectares to carbon forests for sustainability

The world is changing at an alarming rate, and not all for the good. While the continued progress of technology and the lasting effects of the industrial revolution have propelled many countries towards prosperity, the benefits are taking their toll on the planet.

Climate change has become one of the most critical issues of the modern age, mainly because of the amount of greenhouse gases that many economies produce daily. The Intergovernmental Panel on Climate Change, which includes more than 1,300 scientists from the United States and other countries, forecasts that the temperature of the Earth would rise 2.5 to 10 degrees Fahrenheit over the next century if unmitigated, in the process doing catastrophic damage to various ecosystems, causing severe weather conditions like droughts and super hurricanes, and raising the ocean’s water level.

“Global climate change has already had observable effects on the environment. Glaciers have shrunk, ice on rivers and lakes is breaking up earlier, plant and animal ranges have shifted and trees are flowering sooner,” NASA stated on its climate change Web site.

“Effects that scientists had predicted in the past would result from global climate change are now occurring: loss of sea ice, accelerated sea level rise and longer, more intense heat waves.”

Why climate change is so difficult to address, however, is because the modern society has become dependent on the carbon-emitting processes that many industries use to fuel growth. The Philippines, for instance, emitted 157.6 million metric tons of greenhouse gases in 2012 alone. More than half, or 54%, came from the energy sector, followed by the agriculture and industrial processes, which contributed 33% and 8%, respectively, according to data from the United States Agency for International Development. Recent estimates are sure to be higher, as the country is currently experiencing a boom in its economy.

The Philippines is currently ranked the fifth most vulnerable country to climate and disaster risks. Much work needs to be done, and Ayala Land, Inc. (ALI), a leading developer of sustainable mixed-use estates and the real estate arm of Ayala Corporation, is taking the lead through a significant carbon emission offsetting program that targets the carbon neutrality of its commercial properties by 2022.

This January, the company announced that it is dedicating 450 hectares of land to develop carbon-guzzling forests in line with its aggressive targets, alongside its endeavors in renewable energy and green building.

“We have been tracking, among other environment, social, governance metrics, our greenhouse gas emissions throughout the various stages of our project development process,” Anna Maria Gonzales, ALI Sustainability manager, told the media in a recent briefing.

“We are taking this a step further by aiming for carbon neutrality, and one of the ways to achieve this is through our carbon forests,” she added.

Through a process called carbon sequestration, the carbon forest sites remove carbon dioxide from the atmosphere through natural processes. ALI collaborated with the Center for Conservation Innovations, Inc. for a study to determine the baseline carbon stock in these carbon forest sites, which consists of five sites located in different parts of the Philippines.

In addition to this, the study identified the best protection and enhancement approach through assisted natural regeneration (ANR) and other methods to maximize the carbon storage potential for each site. These methods aim to support forest regrowth through protection, and encourage biodiversity through the tending of diverse indigenous plant-life.

ALI has partnered with community-based, nongovernment organizations like Pusod, Inc., Soil and Water Conservation Foundation, and Philippine Eagle Foundation.

“ALI’s carbon forests sites are expected to augment ALI’s total carbon emission reduction by approximately 20% year on year,” Ms. Gonzales said.

Other than forest regeneration, ALI is also looking into a combination of strategies to reach its carbon neutrality target, such as the implementation of passive cooling designs in its developments, energy efficiency, and renewable energy sourcing.

As a subsidiary of one of the biggest and most influential conglomerates in the country, ALI is pushing for sustainable and environment-friendly practices in the real estate industry. The company stated that it believes that real estate developments greatly influence how society operates and by promoting responsible and sustainable developments, this will gradually promote awareness and inculcate the standards needed to create long-term value for the country.

Work on new mining taxes begins

By Melissa Luz T. Lopez
Senior Reporter

THE GOVERNMENT is moving closer to lifting the ban on new mining projects as the interagency Mining Industry Coordinating Council (MICC) works out a new tax regime for the mineral industry, in conjunction with the Finance department’s efforts to generate fresh revenue streams.

Finance Secretary Carlos G. Dominguez III, who co-chairs the MICC together with Environment chief Roy A. Cimatu, said Friday last week that the MICC will convene by the “first week of March” to “discuss” options the government could take that will effectively render Executive Order 79 obsolete.

A new law governing taxes for the mineral industry would lift that six-year-old order signed by then-President Benigno S.C. Aquino III which imposed a moratorium on the grant of new mining permits.

The 16th Congress attempted to mint a new revenue-sharing measure for the industry, but did not go beyond committee-level discussions.

“PACKAGE TWO PLUS”
A new mining bill will be submitted to the 17th Congress as part of “Package Two Plus” — a supplement of sorts to Package Two under the Duterte administration’s tax reform program and one that’s being prepared by the Finance department.

Finance Undersecretary Karl Kendrick T. Chua said last Friday that the agency is “still consulting” industry players on the proposed tax scheme, which could delay the submission of this supplement measure to Congress.

Package Two — submitted last month when Congress resumed session — seeks to impose additional taxes on gambling activities, as well as on coal production and alcohol and tobacco manufacturing. These are expected to complement the proposal to reduce corporate income taxes to 25% from 30%, alongside the removal of tax perks being enjoyed by big companies.

Since the MICC consultations have to be concluded first before writing “Package Two Plus,” the second round of tax proposals will likely appear as multiple bills referred to Congress on a piecemeal basis.

Mr. Dominguez said the proposal to provide different tax schemes for various metals is also being explored, an idea earlier floated by the Mines and Geosciences Bureau (MGB).

MGB Director Wilfredo G. Moncano said in November last year that his agency wants to impose taxes on a per-commodity basis, versus plans of maintaining a uniform tax rate for all mineral producers.

“It makes sense. You don’t tax nickel at the same rate as you tax copper,” Mr. Dominguez told reporters when asked about the plan late Friday. “First of all, the extractive costs are different and secondly, the values are different.”

The Cabinet official said these discussions are live even “at the technical level.”

Uncertainty over local mining policy has driven flighty foreign capital out of the Philippines in 2017.

That came in the wake of former Environment Secretary Regina Paz “Gina” L. Lopez’s announcement that she was closing 23 of the country’s 41 mines and suspending operations in five other sites a year ago. She later on said she wanted contracts for 75 projects in pre-operation stage also cancelled for being located in watersheds.

Business groups had warned the government of the negative impact of these shutdowns on the country’s overall investment climate, while pointing out the need to “fully explain and justify” the cancellations of mining permits.

The MICC is currently carrying out an audit of these shuttered mines through industry experts commissioned for the review, which is targeted to be completed by March.

President Rodrigo R. Duterte’s entire tax reform program aims to shift the burden to those who can afford to pay more and raise additional revenues to help support his administration’s “Build, Build, Build” program that will see P8.44 trillion spent on major public infrastructure until he ends his term in mid-2022.

Capital markets pause for breath as rate hike fears upset stock prices

By Krista Angela M. Montealegre
National Correspondent

COMPANIES seeking to tap the stock market for funding may stay on the sidelines until the dust from the global equity sell-off settles, as investors grapple with rate hike fears.

The bellwether Philippine Stock Exchange index (PSEi) — a barometer of investor confidence — wiped out its gains in a volatile week for investors that saw the main gauge plunge 3.49% to 8,503.69.

The benchmark index is now down 0.64% for the year after surging to an all-time high of 9,058.62 just 10 sessions ago, as Wall Street succumbed to a correction on concerns that rising borrowing costs will derail economic growth.

“We hear that investors and issuers are revisiting their timetables to take into account global market developments in addition to the changing monetary policies that may have an impact on interest rates and global growth and development,” PSE Chief Operating Officer Roel A. Refran said in a mobile phone message.

The PSE pushed back a planned P3.16-billion stock rights offering to March in light of the turbulence gripping markets worldwide.

Other companies may adopt a similar wait-and-see stance until the equity market normalizes while they pursue the necessary preparatory work to launch their offers when the window of opportunity presents itself, China Bank Capital Corp. Managing Director Virgilio O. Chua said.

“It’s still a go for my clients. They are still positive and optimistic. Volatility is normal and we will just adjust prices as necessary,” BDO Capital and Investment Corp. President Eduardo V. Francisco said.

With the PSEi kicking off the year with guns blazing, corporates embarked on bold fund-raising initiatives to capitalize on the strength of the stock market.

Bank of the Philippine Islands, Metropolitan Bank & Trust Co., Rizal Commercial Banking Corp., Robinsons Land Corp., and Integrated Micro-Electronics, Inc. announced their respective plans to sell shares worth more than P150 billion to existing investors.

“If the rights shares are offered at a discount to market then the current market weakness shouldn’t affect the existing offers too much,” PNB Securities President Manuel Antonio G. Lisbona said.

“For new or planned offers, the volatility might make timing the announcement and the pricing more tricky.”

RCBC Securities is sticking to its yearend forecast of 9,500 for the PSEi as long as the benchmark index stays above the critical support level of 8,100, its Head of Research Raul P. Ruiz said.

First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang warned that global equities markets will remain volatile as central banks gear up to normalize policy rates.

The United States Federal Reserve raised borrowing costs three times last year after maintaining interest rates near zero for nearly a decade in an effort to buoy the world’s largest economy in the aftermath of the global financial crisis in 2008.

Fed policy makers are expected to lift key rates three times this year, as the US economy continues to show signs of strengthening.

Rising US Treasuries also reflect overheating risks that are affecting global markets, with the Bangko Sentral ng Pilipinas (BSP) projecting higher inflation despite standing pat on interest rates in its last policy-setting meeting, Ms. Ulang said.

The BSP expects inflation to average 4.3% this year, surpassing the 2-4% target range due to price pressures stemming from the new tax reform law that increased the cost of fuel, cars, tobacco, coal and sugar-sweetened drinks.

“Accumulate blue chips slowly on dips as the Philippines remains one of Asia’s best macro growth story,” Ms. Ulang said.

BIR collection up 15% in Jan. from sugar tax boost

COLLECTIONS of the Bureau of Internal Revenue (BIR) surged in January on the back of tax reform, the agency’s chief said noting that additional duties imposed on sweetened drinks provided the biggest lift.

BIR Commissioner Caesar R. Dulay said preliminary data showed that the agency’s collections jumped last month by 15% year on year.

The agency collected P147.39 billion in January 2017. A 15% increase would bring the month’s tally to around P169.5 billion.

Although declining to give a ballpark figure, Mr. Dulay told reporters that new taxes imposed on sugar-sweetened beverages shored up collection by P1.4 billion in just 18 days.

“I can tell you that the new tax on sugar-sweetened beverages, (we collected) P2 billion in less than a month… That’s a new addition because in 2017, wala pa ‘yan (we didn’t have that boost),” Mr. Dulay told reporters on the sidelines of the BIR’s 2018 Tax Campaign Kick-off last Friday.

The Tax Reform for Acceleration and Inclusion (TRAIN) law imposed additional excise taxes on sugary drinks, with the higher prices aimed at discouraging Filipinos from consuming soft drinks and similar unhealthy treats.

The new law, which took effect on Jan. 1, imposed an excise rate of P6 per liter on drinks containing caloric or non-caloric sweetener and P12 per liter on drinks containing high-fructose corn syrup. Instant coffee mixes and milk are exempted from these taxes.

Signed by President Rodrigo R. Duterte as Republic Act No. 10963, the TRAIN removed some exemptions to value-added tax as it increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not on the stock exchange, and stock transactions. It also introduced a new tax covering cosmetic procedures.

These are expected to more than offset lower rates for personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes.

The BIR is targeting to collect P2.039 trillion in taxes this 2018, which is 11.48% more than the P1.829 trillion goal it initially set early last year. If realized, this would also be 14.6% higher than the P1.779 trillion collected in 2017.

Mr. Dulay had said in January that the TRAIN is expected to contribute an additional P15.893 billion in tax revenues to the BIR this year.

During Friday’s tax campaign launch, Finance Secretary Carlos G. Dominguez III said the BIR’s efforts would receive a boost from the TRAIN law.

“While we expect some revenue losses from reducing the individual income tax rate and by raising exemption levels, we should be able to offset these losses with a whole new range of excise taxes. This should be easier for the BIR to calculate the excise taxes and collect them more efficiently,” Mr. Dominguez said in his speech. — Melissa Luz T. Lopez

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