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Trump lawyers want him to refuse Russia interview

WASHINGTON — US President Donald J. Trump’s lawyers have urged him to refuse to sit down with Special Counsel Robert Mueller as part of the probe into his campaign’s ties with Russia, The New York Times reported Monday. However, Mr. Trump himself has repeatedly stated that he would like to speak with Mr. Mueller about the ongoing investigation, which is examining his campaign’s possible collusion with Russia over election interference, and possible obstruction of justice. “I’m looking forward to it, actually,” Mr. Trump told reporters at the White House last month, though adding: “subject to my lawyers and all of that.” The president said he would even testify under oath. While Mr. Mueller’s questioning would not be under oath, it is a crime to lie to federal investigators. The New York Times cited four people briefed on the matter as saying the president’s lawyers are concerned that he could be charged with lying to investigators, as he has previously made false statements and contradicted himself. A refusal could lead Mr. Mueller to issue a subpoena for the president to testify before a grand jury, with a court fight that would be decided by the US Supreme Court. — AFP

PHL stocks extend decline, joining global sell-off

By Arra B. Francia, Reporter

SHARES continued to tumble on Tuesday as global markets continued their sell-off on fears of faster rate hikes from the United States Federal Reserve.

The bellwether Philippine Stock Exchange index (PSEi) dropped to the 8,500 level yesterday, shedding 0.76% or 65.58 points to 8,550.42. The market fell by more down 200 points intraday, hitting a low of 8,379.83 before paring losses at the closing bell. 

With this, the index has already wiped out more than 500 points from its record high of 9,058.62 last Jan. 29.

The broader all-shares index likewise lost 0.83% or 42.51 points to 5,027.91.

“PSEi followed global markets’ decline on continued risk-off sentiment. Rising bond yields continued to fuel the sell-off as hints of inflation pickup prompted that the pace of Fed rate hikes may not be gradual,” First Metro Securities Brokerage Corp. Equity Research Associate Royce Christopher A. Aguilar said in a text message.

The sell-off prevailed in international markets, with the Dow Jones Industrial Average plunging 4.6% or 1,175.21 points to 24,345.75. Meanwhile, the S&P 500 index dropped 4.1% or 113.19 points to 2,648.94 and the Nasdaq Composite Index gave up 3.78% or 273.42 points to 6,967.53.

“Philippine markets could do little to withstand another round of sell-off regionally, with the US recording its worst-one day point drop in history,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message.

All sectoral indices remained in negative territory at the session’s end, with the mining and oil sector posting the largest decline, closing at 11,509.38, 2.18% or 256.71 points lower. Holding firms followed with a decrease of 1.11% or 97.66 points to 8,689.61. Financials gave up 1.09% or 24.16 points to 2,179.92; services went down 0.67% or 11.51 points to 1,685.76; while industrials declined by 0.50% or 58.42 points to 11,513.58.

Some 1.89 billion issues switched hands on Tuesday, for a value turnover of P10.42 billion. This is higher than the P8.51-billion turnover in the previous trading day.

Declining stocks prevailed for the day at 159 against the 52 that advanced and the remaining 44 which closed flat.

Foreign investors were sellers for the eighth consecutive day, disposing of a net P1.44 billion worth of funds on Tuesday, albeit lower than the previous session’s P1.95-billion net outflow. 

Despite the market’s three-day losing streak, First Metro Securities’ Mr. Aguilar noted that fundamentals remain unchanged, providing opportunity for investors to buy more stocks.

“Investors may try to start accumulating at current levels as global growth is still strong and the local market’s fundamentals are intact,” Mr. Aguilar said.

Customs demolishes P61.63-M worth of smuggled luxury cars

THE Bureau of Customs (BoC) destroyed P61.63 million worth of luxury cars on Tuesday, Feb.6, as ordered by President Rodrigo R. Duterte.

Twenty smuggled cars, including Lexus, BMW, Benz, Audi, Jaguar, and Corvette models, were destroyed in the Port of Manila. Not included were the Lamborghini, Ferrari, and McLaren models that the BoC seized in November.

The vehicles destroyed were worth less than the P150.47-million worth of smuggled vehicles the Customs seized in 2017.

The BoC also said that seven smuggled cars were destroyed in the Port of Davao, and three in the Port of Cebu. — Elijah Joseph C. Tubayan with multimedia report from Santiago Jose J. Arnaiz

When the CCP encouraged taking selfies

The hallowed halls of the Cultural Center of the Philippines (CCP) is often cold and intimidating—here lie the works that are considered acceptable by the learned scholars and critics of Filipino arts and culture. One of the pet projects of then‑First Lady Imelda Marcos, the CCP holds a selective collection of Filipino beauty, keeping it safe and unfortunately and unintentionally distant to the common Filipino.

But the CCP is actually open to the people, and there is no larger celebration of Filipino art and culture than the Pasinaya. This year, from February 3 to 4, the CCP held Pasinaya 2018: Pusuan ang Sining (Like the Arts), named after the Filipino slang for liking something on social media. Every once in a while, in between the simultaneous art exhibits and presentations in every nook and cranny in the building, a commercial would be played telling the festival goers that they encourage taking photos and videos of the presentations—an act often banned and frown upon at the prestigious theater—to be uploaded in the largest public forum of all: the internet.

One can barely feel the air‑conditioning when falling in line with the festival goers—mostly millennials and centennials—in hopes that you could get into the exhibit or show that you want. While there are no audience cut‑offs for the folk dance and music presentations held outside the building, seating inside the CCP’s many theaters are limited, leading to much rushing and pushing by the younger festival audience who were adamant about seeing a particular show at a particular time. Ushers have even started advising people to arrive thirty minutes early to their chosen show. Some have given up on checking their maps and schedules, opting to go with the flow. Every room in the CCP is like a portal to another world, leading to different stories told through different art forms. And if that wasn’t enough, there were vans outside to take you museum hopping in Manila.

A majority of the crowd were high school and college students who came for different reasons, some because it was a school field trip, some for extra credit for a particular subject, and some just for the fun of it. Most of them carried with them a mobile device or camera of some sort, taking photos, videos, and selfies. There were families from grandparents who had to be wheeled up and down the ramps and the toddlers who hopped around to the beat of the kulintang like they would during a Hi‑5 concert.

With the Pasinaya’s theme clearly catering to the selfie generation, suddenly art felt exciting and attainable to all. No longer were you pressured to stay the silent and polite member of the audience. Art was participatory. Art was something that you save not just in your heart but in the cloud, to be retrieved through the internet every time you want to recall it.

 

Art as an Infestation

On the wall of the third floor of the CCP were several Garapata (ticks), the tag of street artist Dex Fernandez, modified into different characters using different art materials. For example there was Garapata Pikachu, Garapata Batman, skull Garapata, bahay kubo Garapata, and whale Garapata getting eaten by a fanged monster. These were all the works of the people who participated in the workshop given by Fernandez, where he gave people printed bases of his Garapata character for them to personalize however they want.

Photo Lucia Edna P. de Guzman

The Garapata was a character Fernandez created based on an experience he had as a child, when ticks spread all over his house when his dog came home with an infestation. It has since became his tag when he became a graffiti and street artist in 2006. You might have seen it outside the walls of Today x Future in Cubao or the PETA Theater in New Manila. (“These were legal tags,” Fernandez told SparkUp, as opposed to the secretive and often “illegal” ways graffiti artists spread their art.)

“The Garapata fit the theme of street art well,” Fernandez told SparkUp at the sidelines of the GC:1,2,3 (Garapata Chapter 1,2,3) exhibit, where participants got to make their own Garapatas. “They’re just there, pakalat‑kalat (lying around), and looking for a host.”

But travel to other countries has opened Fernandez’ eyes to a less personal aspect of his Garapata metaphor. “You can relate it to the Filipino. No matter you went you’d find another Filipino, in every nook and cranny of the world.”

Photo Lucia Edna P. de Guzman

Now Fernandez plans to expand his work to infest others. “Painting is my medium but I don’t want my art to end with just painting walls. Now I’m working on an animation project, and projects that require audience participation,” said Fernandez. “I provide the main image and they provide the background. Nape‑peste ko silang gumawa ng sariling garapata. (I’m infecting them to make their own Garapata.”

Fernandez’ future projects include a “GaraParty,” a one night rave party of Garapata visuals (and inflatable balloons!) and featuring several DJs. He hopes to hold this in the CCP so he can rain Garapata inflatables down the chandeliered balconies of the arts center. He will also be participating in the Manila Biennale on February 23.

Fernandez found a new fan in Kenneth, a 17 year old student from Dagupan City National High School, who took a selfie with Fernandez after his exhibit. Dagupan City National High School takes its students from Pangasinan to Manila every year for Pasinaya. “I was amazed because I’m also a painter, and I appreciate what he has done. I was inspired by how he conceptualized the Garapata, taking it from his childhood,” said Kenneth. “I appreciate his painting very much.” Kenneth’s Garapata will be one among the many that will infest the CCP’s halls until March 4, when Fernandez’ exhibit will end.

 

Rise of Contemporary Romance

One of the shows held in the CCP Library was a dramatic reading of contemporary Filipino novels from Romance Class. It was again fully booked, this time with students and art fans who might have never heard of them before.

Romance Class is a collective of Filipino romance authors that started from a Facebook group by romance novelist Mina V. Esguerra in 2013, when she decided to take a break from writing to teach about writing romance. It has since become a place for Filipino romance authors, aspiring authors, and fans to connect and help each other with their work. Every once in a while, to promote their work, Romance Class holds live readings of excerpts of their novels, which has become super effective in drawing out all the kilig feelings from the audience that they probably wouldn’t get from merely reading the blurb written behind the novel.

This is the first time that Romance Class has ever performed in CCP.

“I didn’t realize how big a deal it was going to be until we showed up and there were like a zillion people,” Esguerra told SparkUp after several members of the audience took selfies with her, the other authors, and the actors who did the live reading.

“It’s an entirely new group,” Esguerra said about their CCP audience. “I don’t think most of them have ever been to any of our events. But it seems that it gone well. They were reacting to the same lines that most audiences react to.”

While art snobs might feel skeptical about the inclusion of contemporary Filipino romance novels in CCP performances, Esguerra believes that they do have a place among the so‑called high art.

“We had the same audience for the CCP audience and our romance reader audience,” Esguerra said. “I think we have a place here, based on the audience’s reaction to it, people are ready for it.”

“People know what to do when they see the performance and they react to the same thing that romance readers react to.” It seems that kilig, like the love between the snooty rich leading man and the down‑to‑earth working student leading lady, knows no boundaries.

Renzo, a 22 year‑old communications student from the Colegio de San Juan de Letran Calamba, encouraged by his teachers to go to Pasinaya, found strength in experiencing the works of Romance Class. “I’m a frustrated writer, before I started writing and I somewhat failed,” Renzo told SparkUp while his friends cheered him on. “I interviewed one the authors of one of the books that were presented and I asked for motivation.” SparkUp was not privy to the conversation between Renzo and Esguerra but the growth of Romance Class is testament to her strength as a teacher and motivator.

 

The Old Dances Made New

The students and teachers of the Ligao National High School from Ligao City, Albay danced under the noontime sun on the hot concrete road that was closed down for the Pasinaya. With their costumes, props, and loud chanting, they told the story of the epic of Ibalong—how the ancient Bicolano heroes Baltog, Handyong and Bantong defeated several monsters to keep their people safe.

Photo Lucia Edna P. de Guzman

While the audience at first were a little skeptical of the dance, some laughing at the over the top performance of it all, they were soon drawn to the battles told through dance and wonderful craftsmanship. It was exciting to see the heroes defeat Tandayag the wild boar, Oryol the serpent, various other monstrous creatures, and finally, the gorgon‑like Rabot, who can turn its enemies to stone. This is the tale of how Bicolanos came to be, and is celebrated to this day during the Ibalong Festival.

“It’s important for us to show the rich culture and tradition of a certain province,” said John Michael Monares, a teacher from Ligao National High School, who danced the role of Baltog. “We have to show them what kind of lives the people of Albay and the Bicolanos led before and even after.”

“The reception was overwhelming. I guess this was the first time the people saw Ibalong in Manila,” he added. And it was, there was an audible gasp when Monares, as Baltog, ripped the jaw from Tandayag the Boar. It was a realization that we too, as Filipinos, have epic stories that rival those that we hear from India, China, and Europe.

Photo Lucia Edna P. de Guzman

SparkUp also spoke to Camille, a 20 year‑old student from Rizal Technical University, who went with her barkada to Pasinaya and took several selfies with folk dancers in their sparkling costumes. She had heard of Pasinaya from her humanities teacher, who encouraged them to come for extra credit and to inspire them as a part of their performance arts class.

“This was optional, but we chose to go,” she said. “The selfie was a requirement, to prove that we went here.”

“But I had fun. It’s important that people go here so that they’ll know how beautiful the Filipino culture is, and to encourage people to enjoy and participate in the arts,” said Camille.

Perhaps it’s a little disheartening to know that the CCP, and the so‑called “high art” is so intimidating that the youth have to be encouraged or required to go to events like Pasinaya. But with an overwhelming postive reception from the youth, maybe there will come a time when more Filipinos will actively seek out to enjoy and create art.

January inflation highest in three years

Inflation rose in January, the government reported Tuesday morning.

The Philippine Statistics Authority said that the headline inflation jumped by 4% last month from 3.3% logged in December and 2.7% recorded in January 2017.

The preliminary result is higher than the 3.5% median estimate in a BusinessWorld poll of 14 economists and analysts conducted late last week and matching the top end of the Bangko Sentral ng Pilipinas’ (BSP) 3.5%-4% range seen for January as well as higher than the Department of Finance’s 3.3% forecast.

The January print was also the fastest reading since October 2014’s 4.3% clip.

BSP expects full-year inflation to average 3.4% this year, higher than the 3.2% finish in 2017 but still within the 2%-4% target range.

Excluding volatile food and energy items, core inflation increased by 3.9% last month compared to December’s 3% and higher than 2.5% in January last year. — Mark T. Amoguis

Tax bureau suspends mission orders

THE BUREAU of Internal Revenue (BIR) has suspended investigations of taxpayers, saying yesterday it needs to review policies and procedures in this regard after its head said last month that the practice has not improved collections.

The BIR said in a statement that it has recalled all mission orders (MOs) issued by its National Investigation Division (NID) and ordered the unit’s revenue officers to submit a list of all outstanding MOs, including those already cancelled and terminated.

“The order also suspended and/or terminated any further investigation, field audit, or any form of business visitation pursuant to the said MOs unless otherwise authorized in writing,” the statement read.

In a separate order, the BIR also directed the NID to submit a status report on all letters of authority (LAs).

An LA authorizes a revenue officer to examine a taxpayer’s books of accounts and other business records in order to determine if he has paid appropriate taxes.

“The bureau aims to improve current audit guidelines, policies and procedures — including reporting requirements governing tax audits/investigations — within the context of a responsive system of tax collection/enforcement measures,” the BIR said in its statement.

BIR Commissioner Caesar R. Dulay told reporters on Jan. 25 that LAs have not made significant contribution to collections.

“Because I feel personally that the letters of authority — they’re supposed to contribute to our collection efforts. But I don’t see much improvement. And some like the first time I came in, I had an inventory… matagal (the audit takes too long),” Mr. Dulay had said.

“Matagal hinahawakan (Revenue officers take too long to investigate). There’s a certain limit there: 180 days. That’s six months, then you come out with your report. Then you should assess if you feel that there is a deficiency tax for the tax payer.”

Tax Management Association of the Philippines President Raymund S. Gallardo welcomed the order when sought for comment. “That’s okay, since if it goes beyond 180 days, some have to explain to the Commissioner [why it is taking them long to audit a taxpayer],” Mr. Gallardo said in a telephone interview yesterday. “Mapapa-speed up ‘yung collections, since the BIR is asking for reasons why hindi natapos ang investigations…”

The BIR raked in P1.779 trillion last year, 12.92% more than 2016’s P1.576 trillion. That was 97.27% of an original P1.829-trillion collection goal but bigger than the downward-revised P1.763 trillion target.

This year, the BIR has been tasked to collect P2.039 trillion. — Elijah Joseph C. Tubayan

House panel targets ‘early March’ approval of tax amnesty measure

By Elijah Joseph C. Tubayan
Reporter

THE HOUSE of Representatives’ Ways and Means committee hopes to approve a tax amnesty measure by “early March,” its chairman said on Monday, as it irons out details to make sure it brings more tax evaders into the fold.

“Early March possibly,” Quirino Rep. Dakila Carlo E. Cua told reporters after a public hearing yesterday when asked when he expected the bill to be approved at his committee’s level.

House Bill No. 7105, filed by Speaker Pantaleon D. Alvarez, Majority Leader Rodolfo C. Fariñas and Mr. Cua, seeks to “enhance revenue administration and tax collection by granting an amnesty on all unpaid internal revenue taxes imposed by the national government.”

The measure offers a flat eight percent tax on the net worth of those who will avail of amnesty covering taxable year 2017, or P10,000 to P10 million, depending on taxpayer bracket “whichever is higher,” in exchange for immunity from civil, criminal and administrative penalties.

The bill also relaxes bank secrecy restrictions, allowing the BIR to inspect the bank accounts of those who will avail of tax amnesty in order to ensure the accuracy of their declarations.

The amnesty forms part of a follow-up to Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion Act — as that law, enacted in December and which took effect last month, saw projected revenues whittled down to over P90 billion from P133.8-157.2 billion originally after both chambers of Congress watered down some provisions.

The follow-up package, which also includes a proposed increase to the motor vehicle users tax that is pending in the committee, is designed to bring projected revenues closer to the original intent.

There will be up to five tax reform packages that are meant to cover a fourth of the P8-trillion planned state infrastructure investments until 2022, when President Rodrigo R. Duterte will end his six-year term.

The second package, submitted to the House last Jan. 16, consists of a proposed cut in corporate income tax to 25% from 30% currently in order to put the Philippines at par with its Southeast Asian competitors, as well as removal of redundant fiscal incentives that have been costing the government more than P300 billion annually in foregone revenues.

Mr. Cua said the proposed new tax amnesty should “be more successful than the past” since it will employ new technology to clean up the Bureau of Internal Revenue’s taxpayer database.

“This is important since we already passed the (first) tax reform (package) and we’re going to package 2,” Mr. Cua said, citing the need to ensure that the reformed tax system will have a more reliable taxpayer database.

The committee is focusing on details like amnesty rate, target revenue, scope of those qualified to avail, as well as the extent of privileges to be granted.

During the hearing, Donaldo B. Boo of the Finance department’s National Tax Research Center, proposed that the rate should be imposed on taxpayers’ assets — similar to Indonesia’s model — to avoid bloating of liabilities that would result in a lower tax assessment. “It is simpler than the net worth. The use of total assets can be considered to avoid bloating or overstatement of liabilities just to lower the net worth,” he said.

He also proposed a three-year assessment period against the bill’s proposed one year, to “give more time to the Bureau of Internal Revenue to study and verify the correctness of their statement of assets and liabilities and their tax amnesty return.”

Mr. Boo also proposed to give a lower amnesty rate to those who would avail early in the offer period.

The proposed amnesty offer, however, will be limited to those who do not have pending criminal cases filed in court for tax evasion, money laundering or for unexplained wealth.

Maria Lourdes P. Lim, tax managing partner at PwC Philippines, advised the committee to review the proposed eight percent amnesty rate by taking inflation and target revenues into consideration. “The minimum amount appears to be low, since it’s the same rate as the 2007 tax amnesty law,” Ms. Lim noted.

Mr. Cua cited the need to strike a balance as the committee tackles amnesty details.

“We need to study it because its a risk-and-reward issue,” he explained.

“There’s a logic that if we are to strict, then they may not find the package that attractive and not actually avail. Then again… we need to study how much the government is willing to pardon the infractions of these people.”

Macau faces major challenges if China casino monopoly ends

HONG KONG — A plan to allow gambling on the Chinese island of Hainan and pave the way for casinos less than 300 miles (480 kilometers) from Macau could pose a challenge to the $33-billion industry fueling revenue for Las Vegas Sands Corp. and Wynn Resorts Ltd.

Government agencies are considering allowing online betting and other gambling on Hainan Island, and the proposal could open the door to physical casinos south of the former Portuguese colony, according to people familiar with the talks.

The move would reshape gaming in China’s territories, especially in Macau, which is hosting a surge of mainland visitors. Currently, Macau and Hong Kong are the only Chinese cities where gambling is allowed, while Macau is the only one that hosts casinos.

An index of Macau casino firms tumbled on the news, with Sands China Ltd. and MGM China Holdings Ltd. dropping up to six percent and Wynn Macau Ltd. falling up to 6.7% before paring losses.

The world’s largest gambling hub faces key challenges if gambling and casinos eventually take hold in Hainan.

COMPETING MARKETS
Hainan, often referred to as China’s Hawaii for its white sand beaches, presents an alternative destination for Chinese gamblers on the mainland.

It could sap the flow of tourists to Macau, where casino gaming revenue last month showed the strongest growth since 2014.

The bulk of Macau’s gaming revenue comes from Chinese tourists. Out of 3 million visitors in December, more than 2 million were from the mainland.

The two destinations could also be competing over the same type of customers.

Macau, which has relied on high rollers to drive a rebound in business over the past year and a half, has been shifting to attract Chinese tourists and families to the territory. That’s the same target audience in Hainan’s push.

Macau’s gambling revenue from casual gamblers accounted for nearly half of December’s total, the highest split with VIP since July 2016, according to Bloomberg Intelligence.

Analysts played down the potential risks for Macau. Morgan Stanley expects the territory’s growth trend to continue, with analysts writing in a note that legalization of gambling outside Macau is unlikely and the process would take time. Analysts at Sanford C. Bernstein & Co. noted that talks are preliminary, saying, “We do not see casino development in China as a real threat to Macau.”

RESORT INVESTMENTS
Casino operators’ expansion plans for Macau may become more risky if Hainan draws away visitors.

Companies are doubling down on investments in Macau, adding hotel suites and junket rooms to bring in more VIP and mass-market business. They are also creating more family friendly attractions to target Chinese recreational gamblers.

Billionaire Sheldon Adelson’s Las Vegas Sands has invested over $13 billion in Macau since 2002, and plans to spend $1.1 billion in a remodel to bring a London-themed resort.

MGM Resorts International is expected to open its Cotai property as early as this month.

Infrastructure upgrades, such as the Hong Kong-Zhuhai-Macau Bridge, are in the works to allow more traffic and better access from mainland China and Hong Kong.

REGULATORS AND RIVALS
Macau is often the elephant in the room as China aims to stem billion of dollars in outflows, with the territory’s casino industry considered a primary exit point.

Last year, regulators required cash machines to be deployed with facial recognition software to limit withdrawals by Chinese cardholders and curb potential money laundering schemes.

Allowing gaming on the mainland would be one way for Chinese authorities to limit capital outflows and ensure gaming revenue benefits the provincial economy on the mainland.

Hainan’s plans also come at a sensitive time as Macau regulators outline the process for the bidding of gaming concessions this year, with operators’ licenses expiring beginning in 2020.

The casino industry is also being roiled by the sexual harassment allegations against Steve Wynn, raising concerns that the scandal could taint Macau’s reputation as it pushes for a more family-friendly image.

Hainan would add another destination for global gamblers to choose from as casinos pop up from Australia to Manila in an effort to draw tourists from China.

Japan is also ramping up plans to introduce casino resorts, with expectations for doors to swing open sometime after the 2020 Tokyo Olympics.

Casinos in the Philippines and Vietnam are also drawing Chinese gamblers. — Bloomberg

Indonesia’s growth best in 4 years; consumption weak

JAKARTA — Indonesia’s economy grew at its fastest pace in four years in October-December, propped up by investment and government spending, but sluggish consumption is still keeping growth from moving much above five percent, where it has been for years.

In the fourth-quarter, gross domestic product (GDP) rose by 5.19% from a year earlier — the highest since 2013’s last period, while full-year growth was 5.07% — making 2017 the best year since 2013.

Consumption, the biggest contributor to Indonesia’s economy, picked up pace in the fourth quarter from the previous one, but gains remained slightly below five percent on an annual basis, the statistics bureau’s data showed.

The head of the bureau said consumers opted to put more into banks savings in the last quarter rather than spending.

“What prevented them from spending the money? Is it simply just the right time for them to save or are they scared about future prospects?” said Mr. Suhariyanto, who predicted consumers would hold off buying big ticket items in the first quarter.

Car sales in Indonesia grew by 1.6% last year, but those of motorcycles fell 0.8%.

Capital Economics said it sees “little prospect of a sustained recovery” in economic growth.

Despite interest rates cuts, credit growth remains very weak, the firm said, adding that it expects economic growth of five percent both this year and in 2019.

Others were more optimistic. ANZ is forecasting 5.3% growth this year as consumption demand improves and with Indonesia’s hosting of the Asian Games with 45 nations participating also set to help.

Still, economic growth remains well below the near seven percent levels recorded for 2017 in neighbors such as Vietnam and the Philippines.

The government of President Joko Widodo, whose five-year term ends in 2019, has rolled out a series of deregulation moves in a bid to attract more investment and cut reliance on consumption as a growth engine.

In the fourth quarter, investment grew by 7.27% according to the statistics bureau, picking up pace from 7.11% in the third quarter.

For the full year, investment rose 6.15%, up from 4.48% in 2016, making it the second-biggest contributor to growth after consumption.

“We are seeing signs the investment up-cycle is broadening from public infrastructure projects to more private sector spending on machinery and equipment,” said Euben Paracuelles, an analyst at Nomura in Singapore, who forecast 5.6% GDP growth in 2018.

Government spending increased in the fourth quarter and grew by 2.14% for the full year, after a small contraction in 2016.

Gundy Cahyadi of DBS said that if commodity prices remain at current levels, investment growth will possibly have “positive spillover impact to household consumption”.

Indonesia’s business community sees overall business conditions as positive but regulatory hurdles remain a problem.

“The central and regional government are not synchronized. Many overlapping (regulations) and the coordination between ministries and agencies is yet to be maximized,” said Shinta Widjaja Kamdani, a deputy chief of Indonesia’s Chamber of Commerce and Industry.

Investment board chief Thomas Lembong warned last week that the country is still losing out on attracting foreign investment to the Philippines, Thailand and Vietnam.

Indonesia posted a trade surplus nearly every month in 2017, and price improvements in energy-related commodities and palm oil boosted commodity exports.

Exports grew 9.09% in 2017, while imports rose 8.06%, the statistics bureau said. — Reuters

Smaller lenders seen equipped to meet new liquidity standards

By Melissa Luz T. Lopez,
Senior Reporter

SMALLER BANKS are well-equipped to meet new liquidity standards the central bank is looking to impose on them, parallel to a risk management tool which currently covers big lenders, a senior official said.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said thrift, rural, and cooperative banks can easily comply with the minimum liquidity ratio (MLR), which will require lenders to have high-quality liquid capital equal to 20% of its total liabilities at any given time.

The MLR will cover smaller banks as well as quasi-banks (QBs) like investment houses which are not covered by liquidity standards under the international Basel 3 regime.

The draft rules define the MLR as the share of a firm’s stock of liquid assets against total liabilities. Considered as eligible liquid assets are a bank’s cash on hand, other cash items, claims from the BSP, debt securities tagged with a zero risk weight, and deposits in other banks, subject to a 50% haircut.

“Based on a more recent simulation involving 531 banks and QBs using data as of end-March 2017, MLR-covered institutions generally meet the 20% requirement with average ratio of 74.9% for thrift banks and 68% for rural and cooperative banks,” Mr. Espenilla said in an e-mail interview with BusinessWorld.

“Only a few banks will need the observation period to adjust to the quantitative requirement.”

All firms must also submit a monthly report on its MLR compliance, according to the draft regulation. To add, the banks should also monitor the share of liquid assets in terms for both the peso and foreign currency deposit units where there is “significant activity.”

The MLR is the equivalent of the liquidity coverage ratio imposed on universal and commercial banks, which requires them to hold high-quality and easily convertible assets to cover their total net cash outflows for a 30-day period. Banks must have assets that will cover 90% of their monthly cash outflows this year, which will go up to 100% by 2019.

The central bank wants all banks to remain liquid at all times, as their inability to service withdrawals or payment transactions could bear “unacceptable costs” and affect their financial footing. The BSP also wants to put in place a scheme to report intraday liquidity levels.

For the MLR, Mr. Espenilla said the regulator is looking to introduce a one-year trial period before the rule becomes binding by Jan. 1, 2019.

“During the observation period, the concerned banks/QBs should assess their compliance with the minimum requirement.”

Those which cannot comply with the standard for two consecutive weeks need to prepare a liquidity buildup plan that will “clearly articulate” strategies for the firm to meet the MLR. A shortfall in the amount of liquid assets will merit heightened supervision from the central bank, while a failure to meet the standard for a “prolonged” period would entail remedial action and possible sanctions on the entity and its officials.

These liquidity management measures form part of the Basel 3 regime crafted by international policy makers to improve risk management and prevent a repeat of the 2008 Global Financial Crisis. Excessive lending led to massive credit defaults, which triggered the collapse of big banks and caused widespread recession worldwide.

Megaworld to open P2.2-billion mall in Iloilo City

By Arra B. Francia, Reporter

MANDURRIAO, ILOILO CITY — Megaworld Corp. is set to open a P2.2-billion lifestyle mall in this city in April, as it looks to end the year with a total of 18 malls.

Located inside the company’s 72-hectare Iloilo Business Park, Megaworld said the 90,000-square meter (sq.m.) Festive Walk Mall will be the largest and first full-scale mall outside Luzon.

“We are excited to bring our lifestyle mall concept to Iloilo, our first outside of Luzon. This full-scale mall will further expand our offerings in Iloilo Business Park as it matures as a township,” Megaworld Senior Vice-President and Head for Lifestyle Malls Kevin Andrew L. Tan said in a press briefing here on Monday.

Festive Walk Mall will offer around 40,000 sq.m. of net leasable space. The company expects around 75% of the space to be taken up by tenants once it opens, and hopes to raise this to 90% within three months of opening.

Mr. Tan said they are currently talking with the SM group and the Metro Gaisano group to open two supermarkets at Festive Walk Mall. The development will also feature seven cinemas, three activity centers, a children’s playground, and around 1,000 parking slots.

An open space with gardens and greeneries, a chapel, and a dog park will be located at the third level, collectively called The Deck. 

Mr. Tan noted Festive Walk would be different from other malls in Iloilo as it would have more food and beverage tenants, pegged at around 30% of total occupants.

“Malls here now are run-of-the-mill shopping malls, grocery, bookstore, that’s it. Here we’re redefining it, providing a round- the-clock lifestyle mall that fits the younger demographic,” the Megaworld executive said.

The mall will also have an annex building connected by the 1.1-kilometer Festive Walk Parade. The annex will house government offices, with the Land Transportation Office, Social Security System, and Philippine Health Insurance Corp. already contracted as tenants.

The company is also in talks with the Bureau of Immigration and Department of Foreign Affairs to set up shop in the annex.

“We’ll have a complete government center in the annex, and we’ll also have medical facilities there that will compete the service offerings,” Mr. Tan said. 

The Festive Walk Mall is the first lifestyle mall that Megaworld will be opening this year, bringing the company’s gross floor area to 690,000 square meters from 15 malls.

This year, Megaworld is slated to open malls in Pasig City, Alabang, and Boracay Newcoast.

“Not as big as Iloilo, but smaller formats… so we’ll end the year with 18. We are on track to hit that 28 malls by 2020. We still have more townships being developed right now,” Mr. Tan said. 

The mall expansion is part of Megaworld’s efforts to generate P20 billion in recurring income by 2020, of which lifestyle malls will contribute 50%. Business process outsourcing firms will account for the other half.

Megaworld’s net income attributable to the parent grew 11% to P9.98 billion in the first nine months of 2017, following a 5% increase in revenues to P35.4 billion for the period.

Shares in Megaworld dropped 11 centavos or 2.22% to close at P4.85 each at the Philippine Stock Exchange on Monday.

BPI net income climbs

BANK of the Philippine Islands (BPI) booked slightly higher net earnings in 2017 driven by the growth of its net interest income.

In a disclosure to the Philippine Stock Exchange on Monday, the Ayala-led BPI said it recorded a net income of P22.42 billion last year, up by 1.7% from 2016.

For the fourth quarter alone, BPI’s net income grew 14.9% to P5.37 billion from the P4.67 billion posted in the comparable year-ago period.

BPI’s net interest income climbed 13.4% to P48.04 billion in 2017, driven by growth in its assets and improvement in its net interest margin.

Meanwhile, non-interest income slid 4.9% to P22.98 billion last year in the absence of trading gains. The bank’s lower non-interest income was partially offset by higher fee-based income, which rose 15.6% to P19.9 billion year-on-year. This was driven by higher credit card fees, trust and investment management fees, insurance fees, bank commissions and service charges. This brought BPI’s total revenues to P71.02 billion in 2017, up 6.7%.

Total loans grew 15.5% year-on-year to P1.20 trillion on the back of corporate loans. Despite an increase in lending, BPI’s asset quality improved as its gross 90-day non-performing loans ratio declined to 1.29% from 1.46%. Its reserve cover ratio also increased to 129.2% from 118.7%.

Total deposits, meanwhile, stood at P1.56 trillion, up 9.1%, with the bank’s current account and savings account ratio at 71.2%. Its loan-to-deposit ratio stood at 77%.

The bank’s assets expanded to P1.9 trillion at end-2017, up 10.3%, while total capital grew 9.4% to P180.69 billion, net of P7.09 billion in cash dividends paid.

Capital adequacy ratio and common equity Tier 1 ratio stood at 12.74% and 11.84%, respectively, both down by 0.26 percentage point.

Operating expenses grew 10.3% to P38.53 billion driven by higher expenses on technology, operations and marketing, as well as the growth in assets accompanied by increase in regulatory costs.

BPI’s securities position was stable at P306.12 billion, slipping by 0.41% from 2016. Over 90% of the bank’s securities portfolio was in held-to-maturity assets, and thus less exposed to interest rate risk.

“The bank continues to be a leader in profitability metrics, with cost-to-income ratio of 54.3%, slightly higher compared to 52.5% in 2016, driven mainly by digitalization initiatives,” BPI said in the disclosure.

Return on equity was 12.8% and return on assets was 1.3%, slightly lower by 1.0 and 0.12 percentage points, respectively.

“We come out of 2017 stronger than ever”, BPI President and Chief Executive Officer Cezar P. Consing was quoted as saying in the statement. “While the [bank] has grown significantly in the past several years, we intend to continue to invest in people, technology and branches to support and benefit from a surging Philippine economy. Inclusive, profitable growth will be our focus.”

BPI earlier the creation of its business banking segment which caters on the banking needs of the country’s small and medium enterprises. Operations of the segment commenced at the start of the year.

Meanwhile, BPI raised P12.24 billion from its issuance of long-term negotiable certificates of time deposit, the largest issuance by far in the industry.

BPI shares closed at P121.80 each yesterday, up P1.80 or 1.5% from its previous finish. — KANV

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