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Nonstop Manila-Toronto flights to give PAL an advantage — CAPA

LAUNCHING of direct Manila-Toronto flights gives Philippine Airlines (PAL) a competitive advantage, an aviation market intelligence provider said.

Flag carrier Philippine Airlines launched this month its direct Manila-Toronto flights, replacing previous flights operated via Vancouver. Its return flight was the first ultra-long polar flight from Toronto nonstop to Manila, the first crossing of the Polar region by a Filipino airline.

“By introducing a nonstop option in the Toronto-Manila market, PAL has gained a competitive advantage over the nine airlines that offer a one-stop product. Several of these airlines offered similar, or shorter, total transit times than PAL before PAL introduced a nonstop service,” CAPA-Centre for Aviation said on its Web site.

For the Manila-Toronto flight, PAL used a Boeing 777-300ER that crossed Canada, Greenland, the Arctic Circle, Russia, Mongolia and parts of China.

The Manila-Toronto route is now one of the 20 longest routes in the world, with a block time of 16 hours and 30 minutes on the westbound leg, and 14 hours and 40 minutes on the eastbound leg. The nonstop flight is 4.5 hours shorter than PAL’s previous one-stop service, which had a total transit time of 21 hours on the westbound sector.

Other airlines which offer the Manila-Toronto route are Cathay Pacific Airways Limited (via Hong Kong), and China Eastern Airlines Corporation Limited (via Shanghai).

PAL plans to follow up with another polar crossing service on a longer nonstop route, over 17 hours, within the second half of 2018, from Manila to New York (JFK Airport) and from New York to Manila, using the A350. — P.P.C. Marcelo

US sanctions two North Koreans over ballistic missile program

WASHINGTON — The United States sanctioned two North Korean officials on Tuesday over the development of ballistic missiles, as Russia and America’s top diplomats held talks on Pyongyang’s nuclear program.

Tensions have escalated after the isolated but nuclear-armed regime staged a series of atomic and intercontinental ballistic missile (ICBM) tests, most recently on November 28. US President Donald J. Trump and North Korean leader Kim Jong-Un have also traded personal insults.

“Treasury is targeting leaders of North Korea’s ballistic missile programs, as part of our maximum pressure campaign to isolate the DPRK and achieve a fully denuclearized Korean Peninsula,” Treasury Secretary Steven Mnuchin said in a statement, referring to North Korea by the abbreviation of its formal name.

The two officials were listed last Friday in a new United Nations Security Council resolution sanctioning North Korea, it said.

“Kim Jong-Sik reportedly is a key figure in North Korea’s ballistic missile development, including efforts to switch from liquid to solid fuel, and Ri Pyong-Chol is reported to be a key official involved in North Korea’s intercontinental ballistic missile development,” the Treasury statement said.

Solid-fuel missiles can be fired on shorter notice, as they do not have to be filled with liquid fuel prior to launch.

“As a result of today’s actions, any property or interests in property of those designated by OFAC within US jurisdiction are blocked, and transactions by US persons involving the designated person are generally prohibited,” Treasury said, referring to its Office of Foreign Assets Control.

The sanctions announcement came as Russian Foreign Minister Sergei Lavrov and US Secretary of State Rex Tillerson held talks by phone in which they discussed North Korea’s nuclear program.

“The sides were united in the opinion that nuclear missile projects in North Korea violate the demands of the UN Security Council,” the Russian foreign ministry said after the call.

Mr. Lavrov “once again highlighted that it is unacceptable to exacerbate tensions around the Korean peninsula with Washington’s aggressive rhetoric toward Pyongyang and increasing military preparations in the region,” it said.

Mr. Trump habitually refers to Kim as “Little Rocket Man” and has threatened to utterly destroy his regime with “fire and fury.” North Korea has branded Mr. Trump a mentally disturbed “dotard.”

“It was underlined that it is necessary to move from the language of sanctions to the negotiating process as soon as possible,” the statement said, adding that it was Mr. Tillerson who initiated the call.

On Friday, the UN Security Council unanimously passed new, US-drafted sanctions that will restrict oil supplies vital for North Korea’s missile and nuclear programs.

The third raft of sanctions imposed on the North this year, sparked by last month’s ICBM test, also received the backing of China — the North’s sole major ally and economic lifeline.

The sanctions also order the repatriation of North Korean workers sent abroad to earn much-needed revenue for Mr. Kim’s regime.

North Korea slammed the fresh UN sanctions as an “act of war.”

“We fully reject the latest UN sanctions… as a violent breach of our republic’s sovereignty and an act of war that destroys the peace and stability of the Korean peninsula and a wider region,” Pyongyang’s foreign ministry said in a statement carried by the state-run KCNA news agency.

The latest launch of the Hwasong-15 ICBM, theoretically capable of hitting all major US cities, further heightened global alarm over the rapid advance in North Korea’s weapons technology, which has made significant progress since Mr. Kim took power in 2011. — AFP

How PSEi member stocks performed — December 27, 2017

Here’s a quick glance at how PSEi stocks fared on Wednesday, December 27, 2017.

Finally, the TRAIN passes

On Dec. 19, President Rodrigo Duterte signed into law Republic Act 10963, also known as the Tax Reform for Acceleration and Inclusion (TRAIN), to promote a simpler, more equitable and efficient tax system. Said law will become effective beginning Jan. 1 after fulfilling the publication requirement.

This first tax reform package (out of five total) contains amendments to several provisions of the National Internal Revenue Code of 1997, specifically on individual income tax, donor’s and estate tax, value added tax (VAT)/ percentage tax, excise tax on certain products and services, documentary stamp tax (DST) and certain administrative procedures.

The revisions contained in TRAIN include:

PERSONAL INCOME TAXATION
Personal income tax exemption for individuals deriving purely compensation income and/or self-employed and professionals is increased to P250,000, regardless of civil status or qualified dependents. The threshold amount for tax-exempt 13th month pay and other benefits is increased to P90,000 (previously P82,000).

The foregone tax collection as the result of the increased exemption will be passed on to high income earners who will be taxed at a maximum rate of 35% (previously 32%) for taxable income in excess of P8 million.

Moreover, under TRAIN, purely self-employed and professional individuals (e.g., independent agents/distributors, freelancers) whose total income (i.e., gross sales/receipts and other non-operating income) does not exceed P3 million will have the option to be taxed at 8% of gross sales/receipts and other income in excess of P250,000 in lieu of the graduated rates and percentage tax.

INCREASE IN CERTAIN PASSIVE INCOME TAX RATES
Capital gains tax on sale of unlisted shares of stock and interest income from foreign currency bank deposits derived by citizens, resident aliens and domestic corporations are subject to an increased final tax of 15%.

Moreover, beginning 2018, PCSO and lotto winnings exceeding P10,000 will be subject to 20% final tax.

INCREASED FRINGE BENEFIT TAX (FBT)
Effective Jan. 1, fringe benefits given to non-rank and file employees are subject to 35% FBT (previously 32%). The grossed-up monetary value is determined by dividing the actual monetary value by 65%.

ESTATE TAX REVISIONS
Estate taxation was changed from graduated rates to a flat rate of 6% based on the value of the net estate. The net estate is derived by deducting the allowable expenses from the gross estate of the decedent. To simplify, certain allowable deductions were removed under the revised law. For a citizen or resident decedent, funeral expenses, judicial expenses, and medical expenses are no longer deductible, but the amount of standard deduction and deduction for the family home is increased to P5 million and P10 million, respectively.

Meanwhile, for non-resident decedents, allowance for deduction of expenses, losses, indebtedness and taxes were removed but additional provisions were included allowing a standard deduction of P500,000 and claims against the estate and insolvent persons, and unpaid mortgages as deductions from the estate.

DECREASED DONOR’S TAX
Donors shall be subject to a fixed rate of 6% (previously at graduated rates) based on total gifts in excess of P250,000 during the calendar year, whether or not the donee is a stranger. Moreover, dowries or gifts made on account of marriage of P10,000 are no longer exempted from donor’s tax.

The sale, exchange or transfer of property made in the ordinary course of business (i.e., a bona fide transaction conducted at arm’s length and free from any donative intent) shall be considered as made for adequate and full consideration. Thus, no donor’s tax should be imposed.

VAT REVISIONS
Certain provisions on VAT zero-rating of sale of goods and services and VAT exempt sales were adjusted. The definition of sale or exchange of services was expanded to include the sale of electricity by generation companies, transmission by any entity, and distribution companies, including electric cooperatives.

In terms of creditable input VAT on the purchase of local or imported capital goods, amortization of the input VAT shall only be allowed until Dec. 31, 2021, after which, taxpayers with unutilized input VAT on capital goods shall be allowed to apply the same as scheduled until fully utilized.

Moreover, the VAT refund period for excess creditable input VAT is shortened to 90 days (previously 120 days) from the date of submission of the relevant documents supporting the claim. Penalties shall be imposed on BIR officials who fail to act on the application within the 90-day period.

In case of denial of the refund claim by the Commissioner, the legal and factual basis for the denial must be stated in writing. In case of full or partial denial of the VAT refund claim, the taxpayer may file an appeal with the Court of Tax Appeals (CTA) within 30 days from receipt of the BIR denial.

As regards sales to the government, the VAT withholding system shall shift from final to creditable effective Jan. 1, 2021.

INCREASE IN PERCENTAGE TAX ON SALE OF LISTED/TRADED SHARES
Disposal of listed shares through the Philippine Stock Exchange or through Initial Public Offering is subject to percentage of 6/10 of 1% based on the gross selling price or gross value in money of the shares of stock.

ADJUSTMENTS TO EXCISE TAXATION
Under the new tax law, the excise tax coverage is expanded to include services performed in the Philippines. Moreover, the excise tax rates for certain products such as cigarettes, automobiles, petroleum and mineral products among others, are increased.

Specifically, the excise tax on cigarettes both packed by hand and machines will be taxed at P32.5 per pack starting Jan. 1 which will gradually increase to P40 per pack by Jan. 1, 2022. Beginning Jan. 1, 2024, the tax rate imposed shall be increased by 4% every year thereafter.

The excise tax on automobiles, on the other hand, is adjusted to 4%; 10%; 20%; 50% depending on the value of the vehicle. However, hybrid vehicles will only be taxed at 50% of the applicable excise tax rates. Moreover, exemptions from excise tax are given to purely electric vehicles and pick-up trucks.

Sweetened beverages which use purely caloric sweeteners and purely non-caloric sweeteners, or a mixture of both, are subject to excise tax of P6 per liter. Meanwhile, beverages which use purely high-fructose corn syrup or in combination with any caloric or non-caloric sweetener, are taxed at P12 per liter. Tax exemptions are given to beverages using purely coconut sap sugar/purely steviol glycosides as sweetener.

The following products, however, are not considered excisable products under this new provision: (1) All milk products; (2) 100% natural fruit and vegetable juices; (3) Meal replacement and medically indicated beverages; and (4) Ground coffee, instant soluble coffee, and pre-packaged powdered coffee products.

Non-essential services, specifically the performance of cosmetic surgeries, procedures, and body enhancements for aesthetic purposes, shall generally be subjected to 5% tax on gross receipts.

DOUBLING OF DST
Almost all DST rates were doubled except for certain insurance policies and sale of real property.

SIMPLIFIED TAX RETURNS
Income tax returns for individuals and corporations shall be limited to a maximum of four pages for both paper and electronic form. Taxpayers will have to wait until their 2018 tax filings to avail of this benefit. To be clear, the income tax return to be filed for taxable year 2017 should still be the existing tax forms, even if filed in 2018.

AMENDMENTS TO COMPLIANCE REQUIREMENTS
There are also revisions to certain compliance requirements such as keeping of books of account, registration requirements, and issuance of receipts or sales invoices. For example, taxpayers with gross annual sales/earnings/receipts exceeding P3 million must have their books audited by a certified public accountant.

The threshold for taxpayers to mandatorily register for VAT was increased from P1.9 million to P3 million. Moreover, persons who elect to pay the 8% tax on gross sales/receipts, in lieu of the graduated income tax rates, shall not be allowed to avail of the option of registering for VAT.

IMPLEMENTING REGULATIONS
With so many changes, questions may arise in terms of the interpretation of some provisions and the intention of our lawmakers. The tax authorities will have to provide implementing guidelines to minimize confusion in the interpretation of the new tax provisions.

One example is the taxation on employees of regional or area headquarters (RHQs), regional operating headquarters (ROHQs) of multinational companies, offshore banking units (OBUs) and petroleum service contractors and subcontractors. Under the current rules, alien individuals and qualified Filipinos employed by such entities are subject to a final withholding tax of 15% on their gross compensation income.

Based on the bicameral report that was sent to the President for approval, an additional paragraph was inserted into the Tax Code stating that the 15% tax rate will no longer be available to employees of ROHQs/RHQs/OBUs etc. that will be registered with the Securities and Exchange Commission beginning Jan. 1 2018. However, present and future qualified employees of such entities existing as of Dec. 31, 2017 shall continue to enjoy the preferential tax treatment.

On Dec. 22, the Office of the President issued a veto statement removing the proposed sunset provision since it violates the Equal Protection Clause under the 1987 Constitution. It said the removal of such incentives will promote fairness and equity of tax system for individuals performing similar nature of work.

While it would appear that the intention is to totally eliminate the 15% preferential tax rate, the provisions under Sections 25 (C), (D) and (E) of the Tax Code were not repealed since such repeal has to come from the legislature. Thus, the Tax Code provision providing for the 15% employee tax rate appears to remain intact as of this writing.

The passing of the TRAIN law surely has its benefits. Indeed, this is good way to start the year 2018.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Wendy Go is a manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of PwC global network.

845 2728

wendy.c.go@ph.pwc.com

Nation at a Glance — (12/28/17)

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

National government fiscal performance

THE National government’s budget utilization rate in November fell to 82.8% from 86% a year earlier, the Department of Budget and Management said. Read the full story.

Mining tax change has just begun — DoF

THE DOUBLING of a mining levy under the first of up to five planned tax reform packages enacted last week will not preclude further changes to the sector’s fiscal regime, an official of the Department of Finance (DoF) has said.

“The first package does not preclude us from continuing with the study and recommending the different fiscal regime…” Finance Assistant Secretary Maria Teresa S. Habitan told reporters on Thursday last week when asked if mining taxes would form part of succeeding tax reform packages.

“Package five kasi talaga ang mining,” Ms. Habitan added.

“So the question is what they are paying the government — is it enough and are we sharing enough?”

Her remarks signal continuation of a policy adopted by the administration of former president Benigno S. C. Aquino III that had imposed in July 2012 a moratorium on new mining projects until the government revises the sector’s fiscal regime in order to get a bigger slice of its revenues.

Republic Act No. 10963, enacted last Dec. 19, increased the excise tax rate for nonmetallic and metallic minerals — including copper, gold, and chromite — to four percent from two percent, and on indigenous petroleum to six percent from three percent starting Jan. 1, 2018.

Asked if the sector could expect more changes as early as in the second tax reform package that DoF plans to submit to Congress next quarter, Finance Undersecretary Bayani H. Agabin told reporters: “Not on the horizon.”

But he said future changes could include royalties and local government fees miners have to pay. Besides excise tax, miners also need to pay corporate income, value added, real property and local business taxes, as well as royalties to host indigenous communities, among others.

“So the fiscal regime will have to address… especially revenue sharing between the government and private contractor. So ’yun ’yung issues that are under consideration ’dun sa study na ginagawa,” said Ms. Habitan.

Sought for comment, Chamber of Mines of the Philippines Executive Director Ronaldo S. Recidoro said in a mobile phone message: “We’d like to see faster [sic] LGU (local government unit) shares in mining revenues” but added that the group would wait for the DoF’s next proposal before giving further views.

Miners in the country have complained that their sector is the most heavily taxed among peers in Southeast Asia, and 2015 DoF simulations estimated that the industry had an average effective tax rate of 62%.

A bill filed in the House of Representatives that year — but which failed to win legislative approval before the Aquino administration ended its term in mid-2016 — had sought to increase that rate to 71%. — Elijah Joseph C. Tubayan

Report sees Q4 GDP off to good start

A CONFLUENCE of bigger state spending, muted inflation and continued recovery of merchandise exports could propel gross domestic product (GDP) growth faster this quarter, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint report.

“Infrastructure spending’s 17.8% jump in October and positive exports performance… along with the rebound in foreign investment and slower inflation, augur well for a further acceleration of GDP growth in Q4,” FMIC and UA&P said in the December issue of The Market Call Capital Markets Research that was e-mailed to journalists on Tuesday.

“We think that PH is off to a good start in Q4, tracking the above economic indicators and following GDP acceleration in Q3” at 6.9%. The third-quarter clip took the three-quarter pace to 6.7% against the government’s 6.5-7.5% target for the entire 2017.

“[W]e believe that our 6.5-7% FY target will easily be hit,” the report read, noting that “[e]xports should rise at a faster rate in Q4 [from the third quarter’s 8.3%] as the synchronized upswing in the global economy make its impact.”

It added that it expected inflation to “remain at 3.3% in December,” flat from November. That December estimate, if realized, would result in a 3.17% full-year inflation average against the central bank’s 3.2% forecast for 2017.

FMIC and UA&P also noted that national government infrastructure and capital outlays picked up by 17.8% in October as total state spending surged by 28%, “setting the stage for even faster GDP growth in Q4.”

AND AS 2018 STARTS…
Analysts at ANZ Research said in a separate report that rising interest rates and a weaker peso will be key economic trends in 2018, until the central bank tightens policy to ease pressures on the currency.

They said these themes will likely persist through 2018 alongside faster inflation and upbeat economic growth.

ANZ sees the Philippine economy expanding by 6.4% next year, still robust although slower than the 6.7% forecast for 2017.

Inflation is expected to 3.5% in 2018 and could pick up further following the rollout of the first tranche of the government’s tax reform package that kicks in on Jan. 1.

With “elevated” inflation, “[w]e expect Philippine interest rates to continue to face upward pressure in 2018,” ANZ analysts said in the report.

“Apart from rising US rates, domestic peso liquidity has been on a decline, as banks channel funds for overnight lending and other investments,” ANZ said in its Asia Economic Outlook published earlier this month.

The US Federal Reserve raised rates for a third time this year during its Dec. 12-13 review as it maintained plans for three more hikes next year. This development is seen to drive up global yields and trigger capital outflows from emerging markets like the Philippines towards the US.

Money supply grew by 14.8% to P10.3 trillion as of October, according to latest data from the Bangko Sentral ng Pilipinas (BSP).

However, results of the central bank’s weekly term deposit auctions showed a shrinking amount of excess liquidity held by banks, as these funds are deployed to more loans, foreign exchange purchases and withdrawn by clients.

“Until some modest tightening comes about to help eliminate the imbalances, investors will stay cautious and continue to favour short duration. This, coupled with peso underperformance, will cap foreign interest in the RPGB (global bonds) market,” the global research firm said.

On the other hand, concerns about the Philippines’ widening current account deficit are seen to keep the peso weak, having been dubbed the “worst performer” in the region in 2017. ANZ even sees the peso-dollar rate touching P52.50 by end-2018 unless the central bank steps in.

The peso touched a fresh 11-year low in October when it traded at P51.77 versus the greenback. The local unit has since recovered to return at P50.14-per-dollar as of Friday’s session.

“Any delay in monetary tightening will increase pressure on the PHP,” the bank said, noting that a rate hike from the BSP will ease pressures on the currency and keep local yields competitive.

“[W]ith a small deficit, the willingness of foreign investors to fund the currency matters more. At present, foreign inflows have been muted, given the relatively low interest rates on offer, especially with the real policy rate in negative territory.”

ANZ, however, noted that the central bank remains “reluctant” to tighten monetary policy. Central bank officials have said that they do not have to move in sync with the Fed in raising rates, as domestic conditions do not warrant adjustments just yet. — with Melissa Luz T. Lopez

Revenue surge causes fiscal deficit to shrink

By Elijah Joseph C. Tubayan
Reporter

THE NATIONAL GOVERNMENT’s (NG) budget deficit was more than halved in November as revenues surged — particularly due to nontax collections — and outpaced expenditure growth, according to data the Bureau of the Treasury (BTr) released on Tuesday.

Year-to-date deficit, however, was still slightly bigger than the gap in 2016’s comparable 11 months.

The Treasury said yesterday that the government’s budget balance saw an P8.6-billion deficit last month that was 55% less than November 2016’s P19.1 billion.

Overall government revenues increased 16% that month to P243.5 billion from P209.2 billion a year ago. Of that amount, tax revenues totaled P228.3 billion, 15% more than the year-ago P197.8 billion.

The Bureau of Internal Revenue (BIR) raked in P179.4 billion, 14% more than P156.8 billion previously, while the Bureau of Customs (BoC) collected P46.4 billion, 15% more than P40.2 billion a year ago.

Nontax revenues for the month were 33% more at P15.2 billion from P11.5 billion. Of that amount, the Treasury raised P4.3 billion, two percent bigger than the year-ago P4.2 billion, while other government officer collected 51% more at P11 billion from P7.3 billion.

The national government spent P252.1 billion in November, 10% more than the P228.4 billion spent in 2016’s comparable month.

Of total expenditures, interest payments accounted for P20.6 billion, five percent more than the year-ago P19.6 billion.

Other expenditures grew by a bigger 11% to P231.5 billion from November 2016’s P208.8 billion.

The latest figures took the 11-month deficit to P243.5 billion, still four percent more than the P235.2-billion gap seen a year ago.

The current budget gap is 50.51% off the P482.1-billion shortfall programmed for this year.

Overall revenues as of end-November grew 11% to P2.25 trillion from P2.031 trillion in 2016’s corresponding 11 months. That, in turn, was equivalent to 92.71% of the P2.427-trillion disbursement program.

Tax revenues totaled some P2.054 trillion, up 12% from P1.828 trillion previously.

Year to date, the BIR collected P1.621 trillion, 12% more than the year-ago P1.45 trillion, while the BoC collected 14% more at P413.1 billion from P361.5 billion. Other offices’ collections grew 22% to P19.8 billion, from P16.3 billion.

Nontax revenues slipped three percent to P196 billion as of November from the P202.8 billion recorded in 2016’s corresponding 11 months. Of that amount, the Treasury accounted for P86.5 billion, nine percent less than the year-ago P95.3 billion. Other offices’ revenues edged up by two percent to P109.5 billion from P107.5 billion.

The government’s 11-month spending level was 10% up at P2.494 trillion from P2.266 trillion, equivalent to 85.73% of 2017’s P2.909 trillion disbursement program.

Interest payments went up 2% to P290 billion from P285.4 billion. Spending by other agencies on the other hand grew 11% to P2.204 trillion from P1.98 trillion a year ago.

Sought for comment, Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion said that while November’s revenue growth was “welcome news,” analysts will continue to check if the government can sustain spending to help prod overall economic expansion.

“From past experience, spending has always been on the weak side… It must be noted that growing the expenditure has been the focus of government this year, with more spending in the next five years,” Mr. Asuncion said in an e-mail yesterday.

“In 2018, spending will continue be the focus, as continuously stressed by the Duterte administration. I expect that government spending to finish closer to the target.”

Facebook team helps gov’ts that reach out, crack down

AUSTIN/SAN FRANCISCO — Under fire for Facebook, Inc.’s role as a platform for political propaganda, cofounder Mark Zuckerberg has punched back, saying his mission is above partisanship.

“We hope to give all people a voice and create a platform for all ideas,” Mr. Zuckerberg wrote in September after President Donald Trump accused Facebook of bias.

Mr. Zuckerberg’s social network is a politically agnostic tool for its more than 2 billion users, he has said.

But Facebook, it turns out, is no bystander in global politics. What he hasn’t said is that his company actively works with political parties and leaders including those who use the platform to stifle opposition — sometimes with the aid of “troll armies” that spread misinformation and extremist ideologies.

The initiative is run by a little-known Facebook global government and politics team that’s neutral in that it works with nearly anyone seeking or securing power. The unit is led from Washington by Katie Harbath, a former Republican digital strategist who worked on former New York Mayor Rudy Giuliani’s 2008 presidential campaign. Since Facebook hired Ms. Harbath three years later, her team has traveled the globe helping political clients use the company’s powerful digital tools.

In some of the world’s biggest democracies — from India and Brazil to Germany and the UK — the unit’s employees have become de facto campaign workers. And once a candidate is elected, the company in some instances goes on to train government employees or provide technical assistance for live streams at official state events.

Even before Facebook was forced to explain its role in US election meddling — portrayed by its executives as a largely passive affair involving Russian-funded ads — the company’s direct and growing role catering to political campaigns raised concerns inside the social media giant. “It’s not Facebook’s job, in my opinion, to be so close to any election campaign,” said Elizabeth Linder, who started and ran the Facebook politics unit’s Europe, Middle East and Africa efforts until 2016. Ms. Linder had been excited about the company’s potential to be “extraordinarily useful for the world’s leaders, but also the global citizenry.” She said she left the company in part because she grew uncomfortable with what she saw as increased emphasis on electioneering and campaigns.

In the US, the unit embedded employees in Mr. Trump’s campaign. In India, it helped develop the online presence of Prime Minister Narendra Modi, who now has more Facebook followers than any other world leader. In the Philippines, it trained the campaign of Rodrigo R. Duterte, known for encouraging extrajudicial killings, in how to effectively use the platform.

And in Germany it helped the anti-immigrant Alternative for Germany party (AfD) win its first Bundestag seats, according to campaign staff.

By all accounts, Facebook has been an indispensable tool of civic engagement, with candidates and elected officials from mayor to prime minister using the platform to communicate directly with their constituents, and with grassroots groups like Black Lives Matter relying on it to organize. The company says it offers the same tools and services to all candidates and governments regardless of political affiliation, and even to civil society groups that may have a lesser voice. Facebook says it provides advice on how best to use its tools, not strategic advice about what to say.

“We’re proud to work with the thousands of elected officials around the world who use Facebook as a way to communicate directly with their constituents, interact with voters, and hear about the issues important in their community,” Ms. Harbath said in an e-mailed statement.

She said the company is investing in artificial intelligence and other ways to better police hate speech and threats. “We take our responsibility to prevent abuse of our platform extremely seriously,” Ms. Harbath said. “We know there are ways we can do better, and are constantly working to improve.”

Power and social media converge by design at Facebook. The company has long worked to crush its smaller rival, Twitter, in a race to be the platform of choice for the world’s so-called influencers, whether politicians, cricket stars or Kardashians. Their posts will, in theory, draw followers to Facebook more frequently, resulting in higher traffic for advertisers and better data about what attracts users.

Politicians running for office can be lucrative ad buyers. For those who spend enough, Facebook offers customized services to help them build effective campaigns, the same way it would Unilever NV or Coca-Cola Co. ahead of a product launch.

While Facebook declined to give the size of its politics unit, one executive said it can expand to include hundreds during the peak of an election, drawing in people from the company’s legal, information security and policy teams.

At meetings with political campaigns, members of Ms. Harbath’s team sit alongside Facebook advertising sales staff who help monetize the often viral attention stirred up by elections and politics. They train politicians and leaders how to set up a campaign page and get it authenticated with a blue verification check mark, how to best use video to engage viewers and how to target ads to critical voting blocs.

Once those candidates are elected, their relationship with Facebook can help extend the company’s reach into government in meaningful ways, such as being well-positioned to push against regulations.

At the very least, the optics of directly aiding campaigns or those in power may create the impression among users that Facebook is taking sides. Its effort effectively helping the Scottish National Party to victory in 2015 is recounted as a “success story” on Facebook’s corporate Web site that lists business case studies, even though those who favor staying in the UK might see it otherwise. In April, Vietnamese officials bragged that Facebook would build a dedicated channel to prioritize takedown requests for content that offended authorities. The company generally routes requests from governments through a separate channel, and takes the content down if it violates community standards. If it violates local law, it’ll only be unavailable in the relevant country.

“They’re too cozy with power,” said Mark Crispin Miller, a media and culture professor at New York University.

That problem is exacerbated when Facebook’s engine of democracy is deployed in an undemocratic fashion. A November report by Freedom House, a US-based nonprofit that advocates for political and human rights, found that a growing number of countries are “manipulating social media to undermine democracy.” One aspect of that involves “patriotic trolling,” or the use of government-backed harassment and propaganda meant to control the narrative, silence dissidents and consolidate power.

Internally, Facebook executives are grappling with how to distinguish between what constitutes trolling harassment and protected political speech. Mr. Zuckerberg has long maintained the company doesn’t want to play censor, but Facebook has drawn some lines — banning Greece’s Golden Dawn, the ultranationalist party, for example. The company also often removes the most extreme content, from white nationalists in the US and from the Islamic State, as well as content it catches violating its “community standards” on hate speech and violence.

Not all such content gets caught.

In retrospect, the nexus of power and data at Facebook seems inevitable. In 2007, Facebook opened its first office in Washington. The presidential election the following year saw the rise of the world’s first “Facebook President” in Barack Obama, who with the platform’s help was able to reach millions of voters in the weeks before the election. The number of Facebook users surged around the Arab Spring uprisings in the Middle East around 2010 and 2011, demonstrating the broad power of the platform to influence democracy.

By the time Facebook named Ms. Harbath, the former Giuliani aide, to lead its global politics and government unit, elections were becoming major social-media attractions. They now rank alongside the Super Bowl and the Olympics in terms of events that draw blockbuster ad dollars and boost engagement.

Facebook began getting involved in electoral hot spots around the world. They went to Argentina in 2015, where now President Mauricio Macri streamed campaign rallies live on Facebook and, once elected, announced his entire Cabinet on the site, complete with emojis. The same year, Poland’s nationalist president, Andrzej Duda, became one of the first world leaders to livestream his inauguration on the social network. Even as Mr. Duda has overseen a crackdown on press freedom in the country, Facebook’s corporate Web site says the company was “integral” to his electoral success and that his page is “one of his office’s main communication channels.”

Facebook has embedded itself in some of the globe’s most controversial political movements while resisting transparency. Since 2011, it has asked the US Federal Election Commission for blanket exemptions from political advertising disclosure rules that could have helped it avoid the current crisis over Russian ad spending ahead of the 2016 election, Bloomberg reported in October. After a Congressional inquiry into Russian election meddling, Facebook has pledged to be more transparent about ad buyers and said it’s open to regulation.

The company’s relationship with governments remains complicated. Facebook has come under fire in the European Union, including for the spread of Islamic extremism on its network. The company just issued its annual transparency report explaining that it will only provide user data to governments if that request is legally sufficient, and will push back in court if it’s not. Despite Facebook’s desire to eventually operate in China and Mr. Zuckerberg’s flirtation with the country’s leaders, it’s still unwilling to compromise as much as the government wants it to in order to enter.

India is arguably Facebook’s most important market, with the nation recently edging out the US as the company’s biggest. The number of users there is growing twice as fast as in the US And that doesn’t even count the 200 million people who use the company’s WhatsApp messaging service in India, more than anywhere else on the globe.

By the time of India’s 2014 elections, Facebook had for months been working with several campaigns. Mr. Modi, who belongs to the nationalist Bharatiya Janata Party, relied heavily on Facebook and WhatsApp to recruit volunteers who in turn spread his message on social media.

Since his election, Mr. Modi’s Facebook followers have risen to 43 million, almost twice Mr. Trump’s count. Within weeks of Mr. Modi’s election, Mr. Zuckerberg and Chief Operating Officer Sheryl Sandberg both visited the nation as it was rolling out a critical free Internet service that the government later curbed. Ms. Harbath and her team have also traveled there, offering a series of workshops and sessions that have trained more than 6,000 government officials.

As Mr. Modi’s social media reach grew, his followers increasingly turned to Facebook and WhatsApp to target harassment campaigns against his political rivals. India has become a hotbed for fake news, with one hoax story this year that circulated on WhatsApp leading to two separate mob beatings resulting in seven deaths.

The nation has also become an increasingly dangerous place for opposition parties and reporters. In the past year, several journalists critical of the ruling party have been killed. Hindu extremists who back Mr. Modi’s party have used social media to issue death threats against Muslims or critics of the government.

On the night of Sept. 5, a Honda motorcycle pulled in front of the Bengaluru home of Gauri Lankesh, an outspoken critic of Mr. Modi who had been targeted by patriotic trolls on Facebook and other social media. As the Indian journalist was unlocking her gate, three bullets struck her in the head and chest, killing her. No arrests have been made.

The final editorial Ms. Lankesh had written for her newspaper was titled “In the Age of False News.” In it, she lamented how misinformation and propaganda on social media were poisoning the political environment. — Bloomberg

Vista Land targets double-digit growth up to 2020

By Arra B. Francia, Reporter

VISTA LAND & Lifescapes, Inc. (VLL) is looking at double-digit growth every year up to 2020, as the company aims to introduce more products in order to be one of the major property players in the next three years.

VLL Chairman Manuel B. Villar, Jr. said the company is aiming to book a 12-15% growth in both net income and revenues starting 2018, to be driven by the expected positive performance of its core residential business and a 22-25% increase in its leasing business.

This will be boosted by the development of 24 master-planned communities, which will see VLL expanding not only housing projects but hotels, retail establishments, and schools as well.

“You will see the grand strategy of this, including 24 master-planned communities. Now given a piece of property, we know how to build hotels, we would know how to build malls, retail establishments. Di na namin kailangan kumuha ng tenants, schools. Lahat meron tayo, so whatever we develop, kumpleto na kami,” Mr. Villar told reporters last week.

The company is banking on its presence outside Metro Manila given that the government has been encouraging development in the provinces.

“We’re anticipating that, the reverse migration. We’re the biggest property developer outside Metro Manila, so it benefits us that government policy is moving toward the countryside… We’ve also started condominiums in the province,” Mr. Villar said.

VLL’s condominiums in the provinces will be priced from P2 million to P2.2 million, which the company says would be the acceptable price point there.

The company’s commercial assets, meanwhile, now totals 72 — with 22 malls, seven office buildings, and a mix of community malls and other retail formats. For mall operations alone, VLL looks to add 60 more in the next three years.

For its expansion into the hospitality sector, Mr. Villar said they will be building six hotels in the next three years mostly under its homegrown brand, Hotel Mella.

The company has identified Boracay, Tagaytay, Balanga in Bataan, Cebu, and its Evia Lifestyle Center in Las Piñas as locations for the hotels. VLL is looking to tap a partner to operate the planned hotel in Evia Lifestyle Center.

The VLL chairman said construction of two hotels will begin in the first quarter of 2018, with each one having 150 rooms each. The Boracay hotel will be its largest with around 300 rooms.

Alongside the master-planned communities, the Villar group will also be expanding its school network, Georgia Academy, which currently has three branches. Mr. Villar said they target to have up to 13 schools, which offers up to the Grade 12 level, by 2020

This plan comes amid the company’s vision to be recognized as one of the top property developers in the country.

“We will have become a major player by 2020. You will see a different Vista Land going forward. Kasi ngayon we’re viewed as a housing developer. By then we will be viewed the same way like Ayala (Land, Inc.), SM (Prime Holdings, Inc.), Megaworld (Corp.),” Mr. Villar said.

VLL currently has housing developments in 132 cities and municipalities, and 46 provinces. For the first nine months of 2017, the company booked a net income attributable to the parent of P6.95 billion, 11% higher than the P6.25 billion it realized in the same period in 2016. Revenues were up 11.8% to P26.86 billion for this period.

PEZA hopes to register more ore processors in coming year

THE Philippine Economic Zone Authority (PEZA) said it expects to register more ore processing plants operating in special economic zones, after President Rodrigo R. Duterte encouraged the industry to do more processing domestically.

PEZA promotions group manager Elmer H. San Pascual told BusinessWorld that currently only two processors focused on exports are registered for PEZA incentives.

“[We met] with [Environment and Natural Resources] Secretary [Roy A.] Cimatu [and we told him] there are a lot of parties inquiring [about processing plants] but there should be some harmony in the policies of the Philippines on this,” he added.

Mr. San Pascual said PEZA can register export enterprises engaged in manufacturing, processing, and assembly, but has no authority to register mineral extraction operations, whose incentives are covered by a separate law.

At present, there are 378 economic zones nationwide, but only four are run by PEZA while the rest are owned by the private sector.

“We are encouraging [more to register for accreditation] but those will have to be shouldered by the private sector. If they think they would like to put up a special economic zone in the country and if they think that they can profit from it then we will support that,” Mr. San Pascual said.

Mr. San Pascual said PEZA has been in talks with the Chamber of Mines of the Philippines (CoMP), which expressed concerns over importing processing equipment.

“The one that we have in Taganito [Taganito HPAL Nickel Corp.] in Surigao Del Norte, the investment there is very big but the nickel that they process is only at the medium level (quality), not the high end. They will need more expensive machines so they can really process high-grade minerals,” he added.

Aside from Taganito, the other PEZA-registered processor is Coral Bay Nickel Corp. in Palawan.

Mr. San Pascual added that both Taganito and Coral Bay generated government revenue of P395.7 million and P611 million, respectively, in 2014.

Mines and Geosciences Bureau Acting Director Wilfredo G. Moncano told BusinessWorld earlier that the agency held talks with PEZA beginning four months ago on encouraging more domestic processing.

“Our cost of power is very expensive so there are necessities given to those who will invest and locate in the special economic zone so that way they can, of course, lower the cost of their operations due to incentives. There are sites mentioned but I am not sure [if those are final],” he added.

CoMP President Gerard H. Brimo said that PEZA’s offer to help put up more economic zones is secondary to the industry’s concern about higher excise taxes in the new tax reform package.

“It’s the reality and we accept it. It’s actually pretty expensive already because there are a number of mines that are operating in mineral reservations; they’ll be paying 11% on their gross revenues whether they make money or not,” he added.

“We’ve done some computations comparing what the new tax structure looks like compared to other countries, and we are a bit on the expensive side now. But so be it, we accept it now. Let’s just hope that prices remain firm so we can easily absorb it.” — Anna Gabriela A. Mogato