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Stalled Las Vegas resort a go on tax-law fervor

NEW YORK — For New York developer Steven Witkoff, the tax overhaul signed on Dec. 23 by President Donald Trump will have an immediate effect: he’s plowing ahead with his plan to develop the stalled Fontainebleau resort in Las Vegas.

“Now, we’re not going to be patient,” Mr. Witkoff said in a phone interview.

“We’ve basically pressed the ‘go’ button to do everything necessary to finish design on the project and take down a construction loan.”

As soon as it became clear to Mr. Witkoff that the bill had a good chance of clearing both houses of Congress, he began seeking financing for as much as 60% of the estimated $3 billion in development costs, he said.

He plans a resort with 4,000 rooms, a casino and a restaurant on the property, purchased for $600 million in August, more than seven years after billionaire Carl Icahn acquired it out of bankruptcy. The project will create 6,000 hotel jobs and 5,000 construction jobs, Mr. Witkoff said.

The Fontainebleau, on roughly 27 acres (11 hectares) at the north end of the Strip, was about 70% complete when Icahn won court approval to take it over.

Mr. Witkoff was motivated by a provision in the new law that allows full and immediate expensing of capital investments. He said the plan’s passage will usher in a period of sustained economic growth, which would benefit the hotel and travel industries.

“You can just feel it,” said Mr. Witkoff, who’s been friends with the president for more than 30 years.

“You can feel the pent-up fervor that’s happening out there, and it hasn’t even seeped through the system yet. And I’m not a Republican ideologue, for God’s sake.” — Bloomberg

Banana growers oppose GM field-testing in Mindanao

DAVAO CITY — Major banana growers and exporters said they oppose a plan to conduct field-testing of genetically modified (GM) bananas in Mindanao, saying this will affect the marketability of the region’s produce.

Stephen A. Antig, executive director of the Pilipino Banana Growers and Exporters Association, Inc. (PBGEA), said in an interview last week that such trials pose a danger to the country’s second-biggest agricultural export commodity as “it might send a wrong signal to the markets where we sell our bananas.”

Mr. Antig said those behind the plan to conduct the test should consult industry stakeholders.

“They must remember that any news will have a very huge impact on the industry,” he cautioned.

It was reported on a local television network in November that researchers from Australia are planning to carry out field trials for GM bananas that will address Fusarium wilt, also known as the Panama disease.

Mr. Antig pointed out that local researchers, among them those in the Department of Agriculture, have already developed varieties that are resistant to Fusarium wilt.

The tissues for these new varieties that have been cultured are ready for propagation and could be distributed as planting materials to growers, particularly the small-scale farmers.

The PBGEA official said the government should provide assistance to smallholders in accessing available solutions instead of allowing other countries to intervene.

“We should be cautious in order not to compound our problems,” he said, noting that introducing GM bananas might just create other problems.

Philippine banana exporters have long been trying but have yet to penetrate the Australian market. — Carmelito Q. Francisco

Can you be too prepared?

By this time, the planning sessions of companies are done. Risks and opportunities have been assessed. And appropriate responses arising from assorted threats like a new competitor in the horizon, the disruption (a favorite word this year) from technology and the rise of a young market have been laid out.

There are consultancies involved in risk management and contingency planning. They aim to anticipate different scenarios, from best case up to the worst case (the end of the world). This process is called “future-proofing,” insinuating that the future and all its unpleasant surprises can somehow be adequately planned and prepared for. Often, the price tags of these various options are estimates that can swing wildly.

Can over-preparedness be too costly?

Insurance companies, HMOs, and sellers of fire extinguishers promote the notion that one can’t be too over-prepared. Their “what-if” scenarios are powerful marketing tools to sell products or services to address even the most unlikely events taking place. What if the CEO gets hit by a red truck? (He won’t, he walks too slowly.) Who takes over the business? Short answer: the ones already running it now.

A “just-in-case” mentality can easily become a costly strategy if intended to overcome any foreseeable contingency. Sometimes, all the swans you will encounter next year are white. Maybe you won’t even see any swans at all, unless you travel.

When moving into a new home or condo unit, this just-in-case approach rears its head. While staunchly proclaiming her skepticism about feng shui, the housewife still scrupulously follows all the prescribed layouts, purchasing aquariums to counter the good chi flowing out, or is it to prevent the bad chi coming in? She quickly demurs when criticized for the costs she is racking up — there’s no harm in following these beliefs to the letter. I just want to avoid bad luck… just in case.

The making-sure attitude seeps through corporate thinking as well. Layers of control are ordered just in case people do not behave as they are supposed to. Because of this suspiciousness, Filipino corporations may have the biggest internal audit and security departments in the world. The recent introduction of corporate governance rules has allowed other countries to narrow the gap. People whose only job is to watch other people to ensure they are doing their jobs are considered necessary… just in case there are loafers out to cheat the company.

Even family corporations though can exhibit a failure of trust — what, you sold the stocks I thought I still had?

A photographer with a digital camera allows him to preview the shot just taken. But, he will still routinely take a second shot in case the first one is accidentally deleted. Preparing for a party, a hostess adds an extra table or two in case bodyguards show up with their boss or invitees bring along nieces visiting from Toronto. This over-allocation already presumes a hundred percent attendance from those who confirmed in the RSVP. This batch is likely to reflect an additional delinquency rate of 20% (I was really all dressed up to go when my daughter who is supposed to drive me over came home late from a children’s party.) Is it any wonder that on a per-capita basis, our country has the highest incidence of doggie-bag requests? (I just made that up.)

Just-in-case thinking makes sure nothing goes wrong. A person who exhibits a spirit of over-preparedness is good to have on one’s team. She is the one who will have the can opener everybody else forgot to bring along in the picnic. She also breaks the budget for an event by ordering extension cords, stand-by generators, and a tent in case it rains.

Still, the segurista makes sure she gets her money’s worth. She is a figure of awe in TV commercials, a fussy buyer for which only a superior (and more expensive) product is good enough.

“Just-in-time” dealing with any crisis is a low-cost approach to risk. Being jolted out of one’s comfort zone unprepared allows us to contemplate life’s lessons. It’s not what happens to us, but how we react to it that defines our character, and our solvency.

But of course, there’s no harm in having a hefty cash balance… just in case you need to get over life’s bumps.

 

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

ar.samson@yahoo.com

Where’s Santa? US-Canadian military command tracking St. Nick

WASHINGTON — It’s the question every good little girl and boy asks on Christmas Eve: When is Santa coming?

As it has done every year since 1955, a Canadian and American defense agency is tracking the jolly old man’s path around the globe in his reindeer-powered sleigh.

A 3-D, interactive Web site at www.noradsanta.org shows Santa on his delivery route, allowing users to click and learn more about the various cities along the way.

The Santa tracker presented by the North American Aerospace Defense Command (NORAD) dates to 1955, when a Colorado newspaper advertisement printed a phone number to connect children with St. Nick but mistakenly directed them to the hot line for the military nerve center.

To avoid disappointing the little ones, NORAD’s director of operations at the time, Colonel Harry Shoup, ordered his staff to check the radar to see where Santa might be and update the children on his location.

President Donald Trump joined in the NORAD tradition on Sunday, answering the phone from his Mar-a-Lago resort in Florida.

“What would you like more than anything?” the president asked one child.

“Building blocks, that’s what I’ve always liked too. I always loved building blocks,” Trump said after the child responded.

Another asked help for his hospitalized grandmother.

“So you want your grandma to get out of the hospital? That’s what your wish is? That’s great. That’s better than asking for some toy or something,” Trump said.

“Your grandma’s gonna be good, okay, she’s gonna be good.”

LIFT-OFF FROM THE NORTH POLE
First lady Melania Trump also took calls: “How are you? Merry Christmas. Are you tracking Santa? Do you know where he is right now?” she asked.

“As soon as you go to sleep, Santa will be there.”

When not spreading holiday cheer, NORAD conducts aerospace and maritime control and warning operations — including monitoring for missile launches from North Korea, something that may have been on Santa’s mind as he passed over the country’s capital of Pyongyang.

“NORAD radars have sensed movement near the North Pole. It appears that the elves have finished loading Santa’s sleigh and Santa has lifted off! Even loaded with all the gifts and goodies, Santa’s sleigh seems to be moving lightning fast,” the website said in a video clip at the launch of Santa’s global journey.

As of 0130 GMT, Santa was headed for French Guiana in South America, having already left more than 4.4 billion gifts for sleeping children in his wake.

Volunteers manning the NORAD phone line included military members in uniform. One soldier completed his look with a camouflage Santa hat, according to photos on the website’s Twitter account.

The Santa tracker “has become a magical tradition for generations of families everywhere,” General Lori Robinson, commander of the US Northern Command and NORAD, told Politico.

“While certainly a reminder that we have the watch defending North America, our ultimate goal is to provide goodwill and cheer during the holiday season.”

Volunteers are armed with a 14-page handbook detailing the “tracking operation,” Politico reported.

“When a rocket or missile is launched, a tremendous amount of heat is produced — enough for the satellites to see them,” it says. “Rudolph’s nose gives off an infrared signature similar to a missile launch. The satellites detect Rudolph’s bright red nose with no problem.” — AFP

Peru’s ailing ex-president Fujimori pardoned

LIMA — Peru’s jailed ex-president Alberto Fujimori, who was serving a 25-year sentence for corruption and rights abuses, has been pardoned on humanitarian grounds, the presidency said on Sunday.

The announcement came after Mr. Fujimori’s son Kenji split the opposition vote in parliament, allowing Peruvian President Pedro Pablo Kuczynski to avoid impeachment and sparking speculation about a pardon as political payback.

“The president of the republic… has decided to grant a humanitarian pardon to Mr. Alberto Fujimori and seven other people in similar condition,” the presidency said in a statement that did not name the other pardon recipients.

A medical team “determined that Mr. Fujimori suffers from a progressive, degenerative and incurable illness and that prison conditions represent a grave risk to his life,” the statement said.

Kenji Fujimori hailed the decision.

“On behalf of the Fujimori family, I would like to thank President Pedro Pablo Kuczynski for the noble and magnanimous gesture of giving my father Alberto the humanitarian pardon,” he wrote on his Twitter account.

Alberto Fujimori was transferred from his cell to a clinic Saturday suffering from low blood pressure and an irregular heartbeat.

The 79-year-old had a “sudden drop of pressure with marked arrhythmia,” doctors said.

“He is making adequate progress in the intensive care unit,” said his physician Alejandro Aguinaga. “He will remain hospitalized for as long as necessary, until he has stabilized.”

Mr. Fujimori, in office from 1990 to 2000 and imprisoned since 2005, was admitted amid rumors that he could be pardoned this Christmas.

QUID PRO QUO?
He has been hospitalized on several previous occasions, the last time in September, and has had heart, back and stomach trouble as well as several operations to remove cancerous growths from his tongue.

Despite his conviction for human rights abuses, Fujimori retains a level of popularity in Peru for having defeated guerillas and for stabilizing the economy after a period of crisis.

Under him and his hardline security chief Vladimiro Montesinos, state forces virtually wiped out the leftist Shining Path and Tupac Amaru rebels.

Mr. Fujimori also clamped down hard on his political rivals. In 1992, he staged an internal coup, dissolving the legislature with the knowledge of only Montesinos and military chiefs.

Speculation about a pardon arose after Kenji Fujimori broke ranks on Thursday with the ex-president’s daughter Keiko, who leads the Peruvian opposition and was pushing to impeach Mr. Kuczynski.

Kenji, whose more moderate line has set him at odds with his sister recently, was followed by other deputies from the party whose votes were crucial to securing the impeachment.

That allowed Mr. Kuczynski — who was accused of lying to cover up $5 million in payments received from disgraced Brazilian construction firm Odebrecht — to survive the vote.

“Kenji is a sort of Santa Claus who appeared with his Christmas sleigh bringing 10 congressional votes,” said political analyst Luis Benavente.

Keiko lost to Mr. Kuczynski in last year’s presidential election and is herself facing questioning linked to the sprawling Odebrecht graft investigation. — AFP

Trump hotel among federal properties in flood zones

WASHINGTON — The worst hurricane season in memory has spurred President Donald Trump to consider new ways to prod private homeowners to move out of flood plains.

But many of the federal government’s own buildings are also at risk of flooding, including the one that Mr. Trump has leased for his Washington hotel.

The US General Services Administration (GSA), which runs most non-defense federal facilities, owns or operates 14.3 million square feet of buildings in the flood zone. That’s equivalent to nearly three Pentagons, spread across 14 states, the District of Columbia and the Virgin Islands.

Unlike private buildings, those structures aren’t required to follow local permitting rules for flood risk. And they don’t carry flood insurance.

The greatest concentration of flood-exposed federal civilian buildings is in Washington, according to documents obtained by Bloomberg News through a government-records request.

In Washington, the list of properties in the 100-year flood plain includes the headquarters of the Environmental Protection Agency (EPA), the Department of Commerce, the Internal Revenue Service and the Justice Department, the government data shows. The EPA’s headquarters alone has sustained $1.6 million in flood or wind damage over the past decade.

The headquarters of the Federal Emergency Management Agency — the agency responsible for responding to floods, hurricanes and other disasters — sits just outside the floodplain.

The list of government-own properties in the 100-year flood zone also includes the Old Post Office Pavilion, which the Trump Organization leased and has opened as Trump International Hotel.

Patricia Tang, director of sales and marketing for the hotel, said she didn’t know whether the company’s management was aware the building was in a flood plain when it pursued the lease.

However, “I would assume that it wouldn’t have been an issue, otherwise they wouldn’t have gone forward.”

Ms. Tang said the hotel has “a lot of plans” to deal with flooding and other security risks. She declined to say what those plans were.

Unlike homeowners with federally backed mortgages, government buildings in flood zones aren’t required to carry flood insurance. So, when those buildings get flooded, taxpayers shoulder the cost. For example, the US Post Office in Galveston, Texas, flooded during Hurricane Harvey and also during Hurricane Ike in 2008; the two events cost taxpayers $1.5 million.

As warmer temperatures lead to more frequent and severe hurricanes, rainstorms and other types of extreme weather, the number of federal properties exposed to flooding is likely to grow.

The risk has already started to spread: While the most expensive damage to federal facilities over the past decade occurred at buildings in the flood plain, an even greater number of buildings hit by floods or wind damage were outside that zone.

The GSA says its policy is to avoid putting new properties in the flood plain unless there are no alternatives in the area. For buildings that are in a flood plain, GSA has a process to identify and mitigate adverse impacts from flooding, the agency said.

Yet the federal government’s own rules for reducing flood exposure have been weakened under this administration. In August, President Donald Trump reversed an Obama-era rule that required federally funded buildings and other government projects to account for future flood risks.

That leaves federal agencies poorly equipped to protect their buildings against the risks, said Chad Berginnis, executive director of the Association of State Flood Plain Managers.

The federal government needs to follow “a robust examination of flood risk” when it decides where and how to build new facilities, Mr. Berginnis said in an e-mail.

“The 100-year floodplain was not enough.” — Bloomberg

How long should a minimum wage earner work to afford a holiday basket?

Fewer tax returns to file under TRAIN

Giving gifts on special occasions like Christmas, Valentine’s, birthdays, etc., is a tradition.  Most of us have sent or received lots of Christmas gifts. If you find giving gifts fun, you do an inventory of the names of your nephews, nieces and godsons and goddaughters. You don’t want to miss anyone on the Christmas list. You don’t want someone lonely on Christmas day.

If you missed Christmas, you can still give or have some for New Year’s celebration.

This year, some people will get gifts for the New Year.  If our interpretations are correct, tax compliance officers will be very pleased that under the Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, the filing of certain monthly tax returns has been streamlined. Particularly, withholding tax returns listed below are now required to be filed on a quarterly basis, instead of on a monthly basis.

Final Withholding Tax (FWT) and Expanded Withholding Tax (EWT) returns: Under TRAIN, the return for FWT and EWT shall now be filed not later than the last day of the month following the close of the taxable quarter. Under the current regulations, withholding taxes under these returns are being filed not later than the 10th day, for manual filers, and 11th to 15th day, for e-FPS filers of the month following the close of the taxable month.

This means, filing becomes four times a year instead of 12. This doesn’t mean, however, that we can slack off in monitoring whether each income payment to local supplier has been correctly subjected to withholding tax. It is prudent for monitoring and evaluation to be done regularly, if not in real time. Another advantage is that in case there are misstatements in the first two months of the quarter, there is an opportunity to adjust on the third month, in time for filing the quarterly return.

Quarterly filing, instead of monthly filing, is significantly important in some cases for income payments to foreign suppliers. Transactions subject to FWT may sometimes need a longer period for evaluation. I have seen taxpayers who are torn between the option to withhold taxes, apply for tax exemption or lower tax rate, or take the risk not to withhold.  Now, taxpayers have more time to evaluate and assess their best option.

On another note, under the current rules, income payments to domestic or foreign suppliers are subject to withholding tax upon accrual or payment whichever comes first.  In practice, most of the small and medium entities withhold only upon payment. Thus, accrued expenses at the end of the period are not subjected to withholding tax. On the other hand, big entities withhold on their prepayments or accrual, but in most instances, accruals not supported by the invoice/billing, are not. In sum, expenses may only be subjected to withholding tax upon payment or upon receipt of the invoice/billing, depending on the practice of the entity.

Worry less because quarterly withholding tax return now will cover a longer period. This means that the gap between the tax rules and taxpayers’ practices will somehow be narrowed down. The taxpayer with accrued expenses, which are paid within the quarter, can now say that the withholding tax was remitted on time.

Value Added Tax (VAT): Starting 2023, VAT returns shall be filed and paid within 25 days following the close of each taxable quarter, as compared to monthly basis under the current rules.

In practice, there are many instances where there is excess payment in the quarterly VAT returns due to over-payment in the monthly declarations, which is bothersome when it accumulates. One of the reasons for excess payment is the late receipt of documents that will support the zero-rating or input VAT credits, such as the PEZA certificate of zero-rating, creditable withholding VAT certificates from the government, VAT invoices or official receipts from suppliers, and import documents from brokers, among others.

Given that monthly declaration and payment are no longer required, the taxpayer has more time to secure the above documentation, and thus avoid overpayment.

Other percentage taxes (OPT): Under TRAIN, the Commissioner shall no longer have the power to prescribe the time for filing of other percentage tax returns at intervals other than that prescribed under the Tax Code.

Under the current rules, certain OPT tax returns such as Gross receipts tax on interest and commissions of banks are filed on a monthly basis. Given that the return will now be filed quarterly, it will lessen the burden of banks to monitor which gain, income or transaction is realized at the end of the month for GRT purposes.

In addition to the above, TRAIN has now required that individual ITRs be filed on or before May 15 of the following calendar year, instead of April 15 under the current rules. As we are aware, this deadline coincides with the deadline for the annual income tax returns of individuals and corporations. Hence, we expect BIR offices and banks to be less congested.  We also expect less stress as there will only be one ITR due on April 15. Nonetheless, individuals are encouraged to file their ITRs early to have sufficient time to gather information or accomplish required attachments which might be known only upon filing.

The New Year and the effectivity of the TRAIN are fast approaching. As we are not yet familiar with the new rules, we hope the BIR can issue implementing rules in time. Are the e-FPS and e-BIR Forms already designed for quarterly filings?

The BIR may have taken steps to update its systems to the new rules. But if we want to stay as prudent as possible, we may continue to maintain the records compliant with current rules, until such time there are clear guidelines on how to transition to the new rules.

The streamlined filing of the tax returns is truly a wonderful Christmas and New Year gift. Tax officers of companies can have more time to focus on other tax projects to optimize tax compliance in the coming year.

Marie Fe F. Dangiwan is a manager with the Tax Advisory and Compliance division of P&A Grant Thornton.

Nation at a Glance — (12/26/17)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Central bank further relaxes rules on private sector’s FX access

THE BANGKO SENTRAL ng Pilipinas (BSP) has further relaxed its foreign exchange (FX) rules by making it easier for the private sector to tap such currencies, the monetary authority said in a press release on Friday.

The latest reform was approved by the Monetary Board “in line with the (Central) Bank’s thrust to further open up the economy through a more liberal policy environment”, the statement read, explaining that the latest moves “aim to promote greater ease in the use of the FX resources of the banking system for legitimate needs by further relaxing FX rules and further streamlining procedures and requirements”.

This initiative, in turn, aims ultimately “to help support economic activities”.

The circulars concerned, which BSP said will take effect on Jan. 15, 2018:

• remove as prerequisite for purely private sector loans — those without guarantee from or exposure of any government entity — prior central bank approval, requiring such loans only to be registered with the monetary authority. “The revised rules aim to further facilitate financing of critical, urgent projects and activites that can contribute to a more vibrant business climate conducive to growth,” the BSP said in its statement.

• open a six-month window during which purely private sector loans obtained without required BSP approval, and recorded in borrowers’ books as of the date of the circulars, can be registered with the central bank following the new guidelines. “BSP registration of these accounts will qualify the outstanding balances of the obligations to be paid… using FX resources of the banking system,” the statement explained. “Previously, these loans could be settled only with the borrower’s own FX or with funds sourced outside the banking system.”

Top-level budget body updates medium-term fiscal program

THE DEVELOPMENT Budget Coordinating Committee (DBCC) in its 171st meeting — and the last for the year — on Friday updated the government’s medium-term fiscal program with downscaled revenue projections due to the recently enacted tax reform law, while it left most macroeconomic assumptions unchanged.

Although the 2018 national budget — Republic Act No.10964 enacted last Dec. 19 — remained steady at P3.767 trillion, projected revenues are now at P2.788 trillion, 1.8% less than the P2.84 trillion in the DBCC’s June 9 meeting.

The new projection compares to P2.387 trillion in “emerging” actual revenues, according to a table provided by the Department of Finance (DoF).

Expenditures on the other hard are now at P3.313 trillion, 1.5% less than the initial P3.364 trillion, but 18.6% larger than the actual P2.794 trillion so far this year — putting the 2018 budget deficit at P523.7 billion.

“The medium-term fiscal targets of the government were updated by the DBCC with regards to revenues, disbursements and the financing of borrowings. This is in light of the developments and projections in fiscal and economic conditions in the medium-term,” the DBCC, chaired by Budget Secretary Benjamin E. Diokno, said in a statement.

“The DoF proposed the medium-term revenue program inclusive of the revenue-generating effects of the recently passed Tax Reform for Acceleration and Inclusion (TRAIN). The DBCC then approved the said medium-term revenue targets proposed by the DoF.”

The TRAIN’s revenues in 2018 are projected at P82.3 billion, according to the DBCC,38.49% less than the P133.8 billion previously expected.

Finance Secretary Carlos G. Dominguez III, however, said President Rodrigo R. Duterte’s veto of parts of the TRAIN law, RA 10963, as well as approval next quarter of a general tax amnesty, estate tax amnesty, Motor Vehicle Users Charge increase and easing of bank secrecy restrictions should help shore up additional revenues.

“Actually with the veto, we estimate the revenues will go up close to P90 billion. That’s only for 1A. Part B is P48 or 40 billion more. We expect that passed by the first quarter,” Mr. Dominguez said in a press conference after the DBCC meeting.

The budgets for 2019 to 2022 were likewise retained at P4.213 trillion, P4.676 trillion, P5.102 trillion and P5.661 trillion, respectively, but had tweaks in their revenue, disbursement and deficit programs, while retaining its deficit ceiling at 3.0% of gross domestic product (GDP).

The year 2019 will see revenues at P3.134 trillion from P3.244 trillion projected initially, and disbursements at P3.708 trillion from P3.82 trillion, yielding a fiscal deficit of P574.5 billion from P575.6 billion.

The year 2020 will see revenues of P3.53 trillion from P3.638 trillion previously, disbursements at P4.161 trillion from P4.271 trillion and a deficit of P630.4 billion from P633.7 billion.

The year 2021 will see revenues at P3.929 trillion from P4.019 trillion and disbursements at P4.622 trillion from P4.716 trillion, resulting in a P692.2-billion fiscal gap from P696.9 billion.

The year 2022 will see revenues of P4.387 trillion from P4.504 trillion, disbursements of P5.148 trillion from P5.272 trillion and a deficit of P761 billion from P767.9 billion.

BORROWING MIX
However, it adjusted its borrowing mix next year to 74-26% in favor of local sources, and programmed an 80-20% ratio for 2019 until 2022.

“That’s because there will be a global commercial bond issue; as you know these issues are lumpy,” said Bangko Sentral ng Pilipinas Monetary Board member Felipe M. Medalla when sought for an explanation.

The government also expects government debt to decline to 37.9% of GDP in 2022 from 42% this year.

“The medium-term fiscal program is geared to support the development objectives of the Duterte administration. We will ensure that all the revenues collected and monies disbursed will be for the benefit of our people,” said Mr. Diokno.

At the same time, the government retained its GDP and inflation projections.

“We think we’re doing well that we didn’t find a need to change much of our assumptions until 2022,” he said.

“The growth rate, we didn’t change it. 7-8% next year until 2022,” added the Budget chief.

Inflation forecasts were likewise kept at 2-4%, despite the tax reform’s expected inflationary effects that could contribute up to a percentage point.

“The long-term effects of TRAIN are different from short-term effects. The long-term effects are anti-inflation, to the extent that infrastructure will reduce transportation cost, increase productivity. Initially you will have cost-push effect in the higher indirect taxes. But our models say that at most 1%, 2018 and half a percent in 2019. If an increase in inflation is transitory, no need for a monetary policy response because after all eventually inflation will settle down,” said Mr. Medalla.

He added that the planned shift to tariff from quantitative restriction on rice imports should contribute to the easing of inflation on the staple.

The DBCC also kept merchandise import growth projections “unchanged” at 10% in 2018 and 2019 and 11% from 2020 to 2022, as well as the 364-day Treasury bill rates at 2.5-4% from 2018 to 2022, according to Mr. Diokno.

At the same time, the DBCC adjusted upward assumptions in foreign exchange, export growth and Dubai crude oil prices.

Merchandise exports are now expected to grow by 9.0% next year from 7.0% programmed in its June 9 meeting, while it retained the 9.0% assumption from 2019 to 2022, according to Mr. Diokno.

Peso-dollar rate assumption was raised to P49-52 from 2018 to 2022 from P48-51 previously.

Dubai crude oil price assumptions were likewise raised to $50-65 per barrel for next year until 2022 from $45-60 per barrel in 2018 and $50-65 per barrel for 2019 to 2022 in its earlier assumptions.

“There’s a slight adjustment on the peso from 2018 to 2022. We changed it to P49-52 per dollar this adjustment however should not be a cause of concern. A peso depreciation is actually favorable to our fiscal position,” said Mr. Diokno.

“We adjusted Dubai crude oil prices we raised it slightly to $50-65 per barrel in 2018, and we retain it until 2022. With regards to interest rates, we kept it at 2.5-4%,” he added. — Elijah Joseph C. Tubayan

BSP approves Landbank acquisition of postal bank

THE central bank has approved the acquisition of the Philippine Postal Savings Bank (PPSB) by Land Bank of the Philippines (Landbank), which intends to position the takeover target as a lender for overseas Filipinos.

At a signing ceremony involving the Bangko Sentral ng Pilipinas (BSP) and the Philippine Competition Commission (PCC), BSP Deputy Governor Chuchi G. Fonacier revealed that the Monetary Board gave its approval for the acquisition two weeks ago.

Malacañang signed an executive order in October, directing the PPSB to transfer all its assets to Landbank to create the Overseas Filipino Bank (OFB).

In the executive order, OFB will be “dedicated to provide financial products and services tailored to the requirements of overseas Filipinos, and focused on delivering quality and efficient foreign remittance services.”

BSP Governor Nestor A. Espenilla, Jr. is expecting the bank to be fully operational in February, as the monetary authority is waiting for the approval of the PCC.

“[We’re just waiting for the approval of the] PCC because [it was already approved] from the BSP side,” Ms. Fonacier noted.

PCC Chairman Arsenio M. Balisacan said the Landbank’s acquisition of PPSB is in the early stage of its review process.

“The documents have been submitted, now we’re in phase one which has a maximum period of 30 days. Hopefully, the process can move quickly,” Mr. Balisacan said.

BSP’s Ms. Fonacier clarified that the process of acquisition is separate from the process of establishing the OFB’.

“[They have to go through with the] acquisition [first] and then the creation of the bank,” she said.

The officials were commenting during a memorandum of agreement signing between the central bank and the PCC which aims to foster competitiveness among banks and other financial institutions.

The agreement is geared toward “efficient regulatory approach concerning the banking and financial industry,” Mr. Balisacan was quoted as saying in a statement.

“Our objective is for us to be able to enforce our law well by way of sharing information to the extent allowed by applicable laws,” the PCC chairman noted shortly after the signing, adding that the partnership will help promote and preserve the ease of doing business in the country.

The partnership will position the BSP to make recommendations regarding proposed mergers and acquisitions to the competition regulator.

“The BSP may certify to PCC the urgency of concluding a proposed merger or acquisition involving BSP-supervised financial institutions (BSFIs), in which the PCC shall take into account in the conduct of its review of the notification,” the statement from PCC read.

“The BSP may also recommend to PCC that a proposed merger or acquisition involving BSFIs may be exempted from prior notification, released from obligation to submit review requirements,” it said.

The agreement will also set up mechanisms to “boost detection, investigation and prosecution” of anti-competitive activities in the sector.

“The critical element here is facilitation of our processes in such a way that the process is efficient, that will not undermine the efficiency of business operations and at the same time will achieve consumer welfare,” Mr. Balisacan said. — Karl Angelo N. Vidal

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