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Yellen says hiking rates too quickly may cause inflation to go below 2%

FEDERAL RESERVE Chair Janet Yellen cautioned that raising interest rates too quickly risked stranding inflation below the US central bank’s 2% target and said there’d been “some hint” that expectations for future price increases may be drifting down.

“It can be quite dangerous to allow inflation to drift down and not to achieve over time a central bank’s inflation target,” she said Tuesday, while also discussing perils of leaving rates too low for too long.

“One reason it’s dangerous is because inflation expectations are likely to also drift down and indeed there is some evidence — I don’t really think they’ve drifted down very much — but there’s some suggestion,” they may be drifting down, she said at an event at New York University moderated by former Bank of England Governor Mervyn King. “That would be a very undesirable state of affairs.”

The Fed announced Monday that Yellen, 71, would step down once current Fed Governor Jerome Powell — who President Donald Trump nominated to replace her when her term expires in February — is confirmed by the Senate and sworn into office.

Yellen, Powell and the rest of the US central bank’s policy-setting Federal Open Market Committee (FOMC) are attempting to guide interest rates back to what they deem a more neutral level after years of keeping them near zero to combat the effects of the financial crisis.

Their median forecast pegged neutral at about 2.75% when quarterly projections were last published in September. The Fed currently targets a range of 1% to 1.25% for its benchmark overnight rate.

Yellen said that with rates so low by historical standards, the central bank would have less scope than in the past to respond to economic weakness by easing policy.

“Removing policy accommodation too quickly risks leaving inflation below our target with all those dangers,” she said. “On the other hand, removing policy accommodation too slowly also has risks and the labor market could tighten very quickly.”

While unemployment fell to 4.1% last month — the lowest in nearly 17 years — inflation has remained below the central bank’s target throughout most of the expansion, and has slowed unexpectedly this year.

The deceleration led to increased investor pessimism about higher interest rates over the spring and summer, but guidance from Fed officials in the past two months that they are looking through what they see as a temporary abatement of price pressures has led to a rebound in market rates.

Investors are nearly certain the FOMC will raise the overnight rate when they gather next in December, and assign better-than-even odds to another hike in March, according to the prices of federal funds futures contracts. The FOMC projections published in September had three increases penciled in for 2018.

Yellen made no explicit reference to upcoming Fed policy decisions but assured the audience that “we don’t want a boom-bust policy.” — Bloomberg

How PSEi member stocks performed — November 22, 2017

Here’s a quick glance at how PSEi stocks fared on Wednesday, November 22, 2017.

Q1-Q3 growth data put manufacturing ahead of services

Due process in a tax assessment

As a democratic nation, every Filipino is entitled to due process as enshrined in Section 1, Article III of the 1987 Philippine Constitution.

When a motorist is pulled over by an enforcer for a traffic violation, he has the right to clarify or dispute the alleged violation. In a criminal case, a suspect is presumed innocent, unless proven guilty beyond reasonable doubt.

There is also due process in tax assessments.

Taxation is the lifeblood of the government as it funds the needs of its citizenry in terms of public infrastructure, education, law and order, and food security. The Bureau of Internal Revenue (BIR), the government’s main tax agency, was assigned a P1.8 trillion tax collection target this year. Based on news reports, the BIR’s total revenue take for the first nine months amounted to P1.3 trillion, up by 10.8% from the same period last year. This means that the BIR needs to collect P500 billion taxes during the remaining three months of the year to meet its target. This is a tall order considering that the “ber” months are also normally the “lean” months.

To meet this gargantuan task, one can expect the BIR to pursue a more aggressive approach in collecting taxes. But in carrying out its mandate, the BIR must respect the rights of taxpayers, such as in faithfully observing the taxpayer’s right to substantive and procedural due process during a tax investigation.

An assessment is formalized through the issuance of the formal assessment notice (FAN), which must be protested within 30 days from its receipt. Otherwise, the FAN shall become final and executory. The BIR can then enforce collection by issuing a warrant of distraint/garnishment.

However, for an assessment to be valid, the corresponding assessment notice must be properly served and received by the taxpayer. This is in accordance with Section 228 of the National Internal Revenue Code, which provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. The assessment regulations (i.e., Revenue Regulations No. 12-99) explicitly require “the written details on the nature, factual and legal bases of the deficiency tax assessments.”

In a July 24, 2017 case docketed as CTA EB Case No. 1444, the Court of Tax Appeals (CTA) struck down a deficiency tax assessment on the basis that the taxpayer did not receive the assessment notice. In the said case, the taxpayer did not get the assessment notice since it was addressed and delivered to the taxpayer’s old address. Under existing jurisprudence, in case of denial of receipt of the assessment notice by the taxpayer, the BIR has the burden to prove that such assessment was indeed received by the taxpayer. In this case, the court noted that the BIR failed to prove that the taxpayer had received the assessment notice.

Citing a Supreme Court decision, the CTA stated that if the BIR was already aware of the new location of the taxpayer, even in the absence of any formal application for change of address, it cannot simply pretend lack of knowledge of the change of address and is bound to send any issuance/notice to the taxpayer’s new location. Without receipt of the assessment notice, the Court ruled that the taxpayer was deprived of due process as required under Section 228 of the Tax Code. Consequently, the assessment is deemed null and void.

Finally, the CTA declared the issued Warrant of Garnishment as illegal, on the strength of the Supreme Court ruling, that “a void assessment bears no valid fruit.”

The CTA decision, in this case, reminds us of the importance of due process, particularly in the proper service of an assessment notice. Compliance with the requirements of Section 228 of the Tax Code is not merely a matter of formality; it is a mandatory substantive requirement. The precepts of due process dictates that every taxpayer must be accorded the opportunity to produce evidence on its behalf based on the factual and legal grounds indicated on the assessment notice.

However, to invoke the right to due process, the taxpayer is also expected to come forward with clean hands. It is incumbent on the taxpayer to inform the BIR of the change in its address so that the assessment notice can be served accordingly. Failure to inform or update such information would mean that the data on the BIR’s official record is presumed to be correct. Relying on the taxpayer’s representation, the BIR’s mailing of notice based on the address on record would then be considered regular and binding on the taxpayer.

In this case, if the taxpayer had failed to properly notify the BIR of its change of address, the assessment notice, which is presumed to be properly served, would not likely be protested on time. Accordingly, the related deficiency tax assessment will be deemed final and executory. In other words, even assuming for the sake of argument that the deficiency assessment lacks merit, the taxpayer has no choice but to pay because of its failure to timely protest the related assessment notice.

The taxpayer’s mailing address is really not a simple data entry in the BIR’s record. Along with the declaration is the taxpayer’s duty to be transparent and forthright when transacting with the government and its agencies. Similarly, tax officials cannot conveniently send notices to a wrong address despite having been advised of its change. In both instances, the message is loud and clear — tax transactions must be dealt with following the rules of equity, and not deception. In a democratic mandate, the right to due process requires mutual respect for the norms of fair play.

Our Civil Code provides that “Ignorance of the law excuses no one from compliance therewith.” So let’s know our tax laws and regulations (or at least be properly counseled), so we can exercise our taxpayer rights, which includes the right to due process (and of course, not lose a case due to a mere technicality).

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.

Carlos Hilario H. Mateo is a director at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

carlos.mateo@ph.pwc.com

Nation at a Glance — (11/23/17)

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

You can study for FREE in the Czech Republic. Here’s how

Wolfgang Amadeus Mozart had Joseph Haydn. Marilyn Monroe had Ella Fitzgerald. Matt Damon has Ben Affleck. And Jose Rizal found a BFF in Ferdinand Blumenttrit. Though the two only met briefly during Rizal’s studies in Europe and most of their correspondences have been through letters, he found in the Prague‑born gentleman a lifelong advisor, confidant and friend.

And who knows? Maybe you’ll find your BFF (if you haven’t already) in the Czech Republic, which has opened many of its universities to Filipinos students. Five of its universities took part in the one‑day 2017 European Higher Education Fair (EHEF) last October 18 at Shangri‑la Plaza: Czech University of Life Sciences Prague, Masaryk University, Mendel University in Brno, University of Chemistry and Technology Prague, and University of West Bohemia. If you weren’t there, don’t worry. SparkUp spoke to the highest representative of the Czech Republic in the Philippines, Ambassador Jaroslav Olša, Jr., on what makes their country a great place to study for Filipinos.

“For us, the Philippines is an important country. We want to have more students and more exchanges,” Amb. Olša told SparkUp. Most of the exchanges, he explained, happens in the field of life sciences—agriculture, botany and zoology. “Philippines is one of the rare countries with real diversity, and the Czech universities are interested in studying this diversity and also helping local universities to create their technical possibilities.”

Life sciences may be the prime focus of Philippine‑Czech educational exchanges, but their universities also offer various courses in the humanities, mathematics, history, and the like. According to the ambassador, our Southeast Asian neighbours, the Malysians, have been sending several medicine students to the Czech Republic because they found out that studying there is cheaper than in the United Kingdom or in the United States but with the same quality of education.

Amb. Olša added that there are currently several programs between Czech universities and Philippine universities, including Ateneo de Manila, University of the Philippines, Ateneo de Naga, University of St. La Salle in Bacolod, and the Visayas State University.

The Czech Republic’s highest ranking diplomat to the Philippines (both literally and figuratively, as he is very tall) gave three main advantages to choosing his country as your next study destination: a long tradition of university education, low cost of living, and the glory of living in the historic heart of Europe. The Czech Republic’s highest ranking diplomat to the Philippines (both literally and figuratively, as he is very tall) gave three main advantages to choosing his country as your next study destination: a long tradition of university education, low cost of living, and the glory of living in the historic heart of Europe.

In education, Amb. Olša cited the Charles University in Prague, the first university in Central Europe, which was established in the 14th Century. “Our universities have very good quality education traditionally,” he said.

As for the costs, Amb. Olša said that the cost of living in Central Europe in general is lower in comparison to more popular European destinations like Germany, the United Kingdom and France. “There is an even more interesting advantage,” he added, with an extra glint in his smile. “If a student invests in a one‑year intensive course in Czech (the language), and you take your studies in Czech, then even if you are a Filipino you can study free‑of‑charge. You have to invest and learn the language. If you learn the language then you don’t have to pay a fee in any course.” He was quick to add that Czech universities also offer courses taught in English, but those won’t be for free.

“Third, I would say quite a big advantage is the beauty of our country,” Amb. Olša said. “Prague and the Czech Republic is the historic heart of Europe. We have beautiful medieval castles, wonderful Baroque churches, we have the Sto. Niño of Prague. And there are so many beautiful things that you can enjoy on your spare time on weekends.”

He also cited the results of the 2016 Global Peace Index which ranked the Czech Republic as the sixth safest place to live in. And while he did not cite the country’s reputation for excellent beer (why else would Pilsen be named after a Czech city in the Western Bohemia region) and being the birthplace of robots (early 20th century writer Karel Ćapek first used the term in his play Rossum’s Universal Robots), a quick visit to the Czech Embassy in Manila’s Facebook page will tell you more.

Despite the many differences between our countries—the climate, the culture, the people—the core of our cultures has one key similarity: Christianity. “Our history has intertwined many times,” he said. “There’s quite a big group of Czech Jesuit missionaries came to Manila and the Philippines during the 17th and 18th century. Another connection is you know the best friend of Jose Rizal was Fernand Blumentritt. He was from a small city one hour by car from Prague. There are many things which connects us and also there’s an increasing group of Filipinos living in our country.”

For more information on how to study in the Czech Republic, check out the official website of the Embassy of the Czech Republic in Manila. You can also get a head start on studying the Czech language with “Wika at Kulturang Tsek Para sa Mga Pilipino,” a free e-book that you can download from the Embassy website.

Ateneo is offering a Master’s in big data by 2018 and we got all the deets here

The Ateneo de Manila University (ADMU) has partnered with Queen Mary University of London (QMUL) to create master’s programs in data science or big data, as well as media and arts technology.

“In this digital age we will need programs like big data for digital innovation and we will need renewed competency to navigate such strange new world,” ADMU President Jose Ramon Villarin said during the launch of the partnership last Nov. 20 at the university in Quezon City.

According to Villarin, ADMU is already finalizing “internal arrangements” to begin offering the programs by September next year or 2019.

“The digital economy will run on many engines. In such an economy the most important engine will be creativity and innovation,” Villarin said.

The university will choose 10 scholars for the first batch for the programs, which will run for 18 months. Selected students will study in ADMU for 12 months, and then stay in QMUL for six months.

The launch of such programs marks the preparation of the country’s education sector for a digital economy, which according to Villarin is “data‑intense, algorithm‑driven, efficient, fast, hyper‑connected, and personalized.”

“[What will be] more crucial to the economy of the future will be intelligent and creative contents and the new connections that these kinds of content can make among people from all over,” he said.

“For instance the Internet of Things is all about software connecting devices, people, and services. Disruption and obsolescence are happening not because of brick‑and‑mortar structures but because of much softer things like creative software and the creative integration of systems,” Villarin added.

‘Huge’ demand for data scientists

Citing a report by U.S.‑based research and advisory firm Gartner, Inc., Francis del Val, founder and President of Cobena Business Analytics & Strategy, Inc., said the global business intelligence and analytics software market is set to grow to $22.8 billion by the end of 2020. By the same period there will also be a demand for 1.7 million data scientists in the world.

According to Del Val, the Philippines has a “huge potential” to be a source of the world’s best data scientists. In five to 10 years, he said, the country could have an industry of “hundreds of thousands or maybe even half a million” data scientists.

“Here in the Philippines it is already happening. You can see that a lot of more modern organizations can now find better, more efficient way of moving around because they get to transport data, but equally what we are seeing right now is that companies who adapt big data are able to make smarter decisions,” he told SparkUp during the event.

However, the integration of such technology in the country is “just at the tip of the iceberg” as many companies remain “very reluctant to share their data and the government still has a lot to do in terms of releasing data to the public.”

“It’s very difficult to come up with a figure right now, but what we do know, though, is that the future is immense because we have a lot of consumers and consumers, of course, generate a lot of data,” he said.

SEC OK’s higher minimum public float

By Arra B. Francia
Reporter

COMPANIES planning to list on the bourse for the first time will now have to ensure that 20% of issued and outstanding shares will be freely available and tradable in the market, double the previous minimum after the Securities and Exchange Commission (SEC) approved the stiffer requirement.

The country’s corporate regulator announced on Tuesday that it has doubled from 10% — in place since 2011 — the minimum public ownership requirement (MPO) of firms applying to conduct an initial public offering (IPO) in order to increase market liquidity.

“Now the requirement is that, if there’s an IPO coming forward, the minimum public float is 20%. That’s already been approved by the commission, effective now,” SEC Commissioner Ephyro Luis B. Amatong told reporters in a briefing at the Philippine International Convention Center in Pasay City on Tuesday.

The commission will release the memorandum circular for the new regulation this month, but Markets and Securities Regulation Department (MSRD) Director Vicente Graciano P. Felizmenio, Jr. noted that companies must already comply with the rule.

“As a matter of policy, that’s already required,” Mr. Felizmenio said.

A draft circular the SEC released for public comment in June had said that those already listed at the Philippine Stock Exchange (PSE) “will be required to increase their public float to at least 15% on or before the end of 2018, and then to at least 20% on or before the end of 2020.”

“Going forward, MSRD is still studying the mechanics for the application of the rules on existing [listed firms],” Mr. Felizmenio said, adding that the rules for existing listed firms will be released by the first quarter of next year.

“That’s being studied: their prospective for a re-IPO or FOOs (follow-on offerings).”

He claimed the stiffer requirement has been well-received by fund managers and investors, explaining that “[t]he higher the public float, definitely we expect more liquidity; and more liquidity means we are more attractive to investors, especially the institutional ones.”

The SEC had said in June that 68 listed companies will have to raise their MPO as a result of this increase.

The PSE had noted in May last year that actual public float of many of the bourse’s 264 companies ranged from 45% to 47%, already exceeding the required minimum MPO level.

Mr. Amatong noted that no large companies will be affected by the MPO increase, since their MPOs already exceed 20%. “Marami na doon sa existing — pwera sa dormant — above 20% na rin (Many of existing listed firms — except for those dormant — already have MPOs that are above 20%),” he said.

Noncompliance with the MPO requirement opens erring listed companies to administrative sanctions under Section 54 of Republic Act No. 8799, or The Securities Regulation Code, besides a higher tax rate.

The Bureau of Internal Revenue’s Revenue Regulations No. 16-2012 provides that publicly listed companies that maintain the minimum public ownership level are subject to stock transaction tax amounting to one-half of one percent of gross selling price, while those that fail to do so have to pay a five percent final tax or 10% net capital gains tax, as well as documentary stamp tax.

Sought for comment, analysts said the higher MPO requirement will increase small investors’ chances of participating in IPOs.

“Well that’s great for minor shareholders and investors — better participation and liquidity assuming that pushes through,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message.

While acknowledging via text that “[a]dditional public float would be more conducive for liquid stock trading and, hence, entice investors more to invest in the stock doing IPO”, RCBC Securities Inc. equities analyst Jeffrey Lucero said that the “additional float requirement may discourage some firms from conducting IPO.”

BSP readies tools as risks rise with global interest rates

By Melissa Luz T. Lopez
Senior Reporter
and Elijah Joseph C. Tubayan
Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) is prepared to tweak its policy settings to address market volatility that could emerge from rising global interest rates, the central bank chief said, even as he noted that domestic growth and price dynamics remain sustainable so far.

BSP Governor Nestor A. Espenilla, Jr. said uncertainty over the pace of monetary policy tightening in the United States and other advanced economies would likely trigger “bouts of volatility” in financial markets worldwide, together with exchange rate movements, concerns on overheating and disruptive financial technology.

The central bank stands well-equipped to guide the economy in weathering such headwinds.

“We can rely on several anchors of stability to manage these pressing issues,” Mr. Espenilla said in a speech during the Security Bank Economic Forum 2017 yesterday at the Makati Shangri-La hotel.

“We are ready to deploy the full array of our monetary policy toolkit in case of changes to deal with possible market volatility, as policy settings evolve and normalize in the US and other advanced economies.”

Market participants are gearing up for higher rates as they expect the US Federal Reserve to introduce another hike — its third this year — at its December policy review as part of normalization from near-zero rates following the 2008 Global Financial Crisis.

Mr. Espenilla again quelled fears of overheating, noting that growth prospects “remain bright” for the Philippines with both government and private sector investments rising.

Stable inflation, averaging 3.2% as of end-October, is likewise seen supporting stronger domestic demand as it continues to remain “manageable.” The BSP expects full-year inflation to settle at 3.2%, well within the 2-4% target band set for 2017.

“The risk of economic overheating has been raised by some analysts. We do not believe that we are there yet, and we remain very vigilant to avoid it. The current pace of credit growth is manageable,” the BSP chief said, adding that the 63.6% share of total credit relative to the economy remains the lowest in Asia.

Bank lending remains diversified and directed largely at productive activities, Mr. Espenilla said, growing by 21.1% in September.

Property prices also remain backed by fundamentals, although the BSP stands ready to deploy “targeted” policy responses should threats of a bubble arise. Latest stress tests conducted by the regulator showed the financial system is far from a crisis, Mr. Espenilla said.

On the exchange rate, Mr. Espenilla said concerns over the depreciation of the peso remain “overdone” as the currency tracks a “moderate and controlled” path versus the dollar. The peso averaged P51.3433 against the dollar last month to hit fresh 11-year-lows, hovering above P51 in the daily trading sessions.

Mr. Espenilla has said that the BSP employs tactical intervention to temper sharp exchange rate swings in daily trading, even as he noted that recent market movements reflect strong import demand, increased offshore investments held by Filipinos and debt prepayments against the backdrop of “bullish” economic growth.

The Philippine economy expanded by 6.7% in the nine months to September, well within the 6.5-7.5% growth goal set by economic managers for the entire 2017.

The Monetary Board kept key rates unchanged in its Nov. 9 meeting — this year’s seventh policy review — in the face of within-target inflation and firm domestic economic activity. Rates were kept at 3.5% for overnight lending, 3.0% for the overnight reverse repurchase rate and 2.5% for overnight deposit.

Speakers in the same forum said the Philippines has all the tools it needs to weather the impact of China’s slowing economy — the world’s second-biggest just after the United States and Asia’s largest.

“The economic reality today is that China will have a very influential say within Asia,” said Kaushik Rudra, Standard Chartered Bank managing director & global head for Rates and Credit Research.

“As China slows down, the rest of the region slows down,” he added, noting that it could dent the Philippines’ current export recovery for instance.

Hence, the need to further fortify the Philippines’ domestic economy, including by making sure that the government’s massive P8.44-trillion infrastructure plan till 2022 is realized.

“What the Philippines can do is make its own systems, own infrastructure. But also the various organizations in the country, its tools have to be stronger, aside from the banking sector,” Mr. Rudra said.

“The ingredients are all there, once you have the good mix of infrastructure and stronger stable environment that the Philippines has created for its self. Then you have a recipe for a long term sustainable platform,” he added.

“The Philippines is sustainable, it is seeing the right rate of growth.”

Finance Undersecretary Gil S. Beltran said that he expects the infrastructure plan to pick up pace starting this quarter. “For the last quarter for the year, the government can speed it up,” he said in the same forum. “The main challenge is in the implementation part. We need to prime up agencies so they would be able to spend the money.”

While gross domestic product (GDP) growth picked up to 6.9% in the third quarter — the fastest clip in four quarters — it was still slightly slower than the year-ago 7.1%.

Certain segments of the economy slowed, however.

Household consumption remained a key anchor of the economy, accounting for 55.7% of GDP in the third quarter. Growth of household spending, however, eased to 4.5% last quarter from the preceding three months’ 5.9% and the 7.2% recorded in July-September 2016. The third-quarter pace tempered year-to-date increase to 5.4% from the 7.3% logged in 2016’s comparable nine months.

Construction growth slowed to 2.8% from the second quarter’s 7.6% and from the 18.8% of 2016’s third quarter, “driven by the increase in public construction but… weighed down by the modest growth in private construction,” the Philippine Statistics Authority had reported on Nov. 16.

Better prices push up value of metal production even as volumes drop

VALUE of metallic mineral output in the country rose in the nine months to September, driven primarily by an increase in world prices of copper, nickel and silver, according to a press release of the Mines and Geosciences Bureau (MGB) on Tuesday.

With the sole exception of mixed nickel-cobalt sulfide, however, output of all other metals dropped in terms of volume in the same period.

Total value of metallic mineral production increased by 6.06% to P81.475 billion as of September from the P76.82 billion recorded in 2016’s comparable nine months on the back of “more favorable metal price levels during the period.” Monthly and quarterly data were not immediately available as of yesterday afternoon.

The report noted that the nine-month average price of gold — which accounted for 42% of total production value — dropped to $1,251.72 per troy ounce (/t oz) from $1,256.71/t oz, while that of direct shipping nickel ore and mixed nickel-cobalt sulfide — which together accounted for 40% — went up to $4.49 per pound (/lb) from $4.17/lb.

The price of copper, which accounted for 17% of total output value, similarly increased to $2.60/lb from $2.14/lb, while that of silver — which together with chromite accounted for just one percent — improved to $17.17/t oz from $17.05/t oz in the same comparable periods.

The statement said that “[t]he encouraging price gain” of base metals like copper and nickel “was primarily due to the increased metal demand of China” — particularly “for its infrastructure, automotive and construction sectors” — leading “to a tighter metals supply in the world market.”

“China remains… the major market of the Philippines for nickel ores,” MGB said in its statement, while “for copper and gold exports, the country’s primary partners were Japan and Switzerland, respectively.”

Only mixed nickel-cobalt sulfide — a raw material for products like electrolytic nickel, which is used as an undercoat for decorative chrome plating, among others — saw both value and volume rise year-on-year: by 15% to 68,413 dry metric tons (DMT) and by 36% to P14.786 billion.

MGB noted that “mine output was generally sluggish during the period, as most commodities reported production shortfalls.”

Gold saw volume drop three percent to 16,999 kilograms (kg) even as value edged up by one percent to P33.814 billion.

Silver dropped both in volume and value terms: by 11% to 23,951 kg and by eight percent to P659.963 million.

Copper concentrate contracted by 19% to 210,428 DMT even as value rose by five percent to P14.007 billion.

Nickel direct shipping ore saw volume drop 11% to 19.01 million DMT and value of production stayed relatively flat at P18.101 billion.

Finally, chromite saw volume fall by 47% to 13,694 DMT and value drop 41% to P107.369 million.

As of last year, the Philippines was estimated to have reserves consisting of 1.854 billion MT of gold, 1.696 billion MT of silver, 1.761 billion MT of copper, 116.136 million MT of nickel, 116.001 million MT of iron and 47.264 million MT of chromite, MGB said in its statement. — with A. G. A. Mogato

Palay, corn output seen up 10%

PALAY output is expected to rise 10.11% to a record 19.409 million metric tons (MT) this year, the Philippine Statistics Authority (PSA) said in a report on Tuesday.

In this final quarter alone, palay production is expected to increase by 6.26% to 7.45 million MT, as yield improvement offsets a contraction of harvest area, the PSA said. In the first quarter of 2018, rice output is forecast to rise 2.58% to 4.533 million MT.

The same report said that it expects corn output to decline by 5.41% to 1.635 million MT this quarter, rise 9.72% to 7.92 million MT for the entire 2017 and grow 5.45% to 2.495 million in 2018’s first quarter. — with Reuters

IFC to invest P650M in Discovery World

THE International Finance Corp. (IFC), the private sector investment arm of the World Bank, is investing in Discovery World Corp. (DWC), a property firm developing two new hotels in Palawan and Benguet.

In a disclosure to the stock exchange on Tuesday, Discovery World said it signed a subscription agreement with IFC allowing the latter to infuse as much as P650 million into the property firm, “to meet the growing demand for hospitality infrastructure in the Philippines.”

Under the deal, IFC will subscribe to up to 216.67 million preferred shares in Discovery World, priced at P3 apiece.

“Please note the DWC has not issued any preferred shares. The subscription of IFC shall be conditioned on the approval by the stockholders of DWC and, thereafter, the approval by the Securities and Exchange Commission, of DWC’s amended Articles of Incorporation on the reclassification of part of its present unissued common shares to preferred shares,” the company said.

Discovery World said the issuance of common shares to IFC as a result of its conversion of preferred shares will not lead to foreign shareholdings exceeding 40% of its outstanding capital stock.

The leisure properties developer will be using the funds raised from the transaction to finance two hotels, one in El Nido, Palawan and another in La Trinidad, Benguet.

“These projects will expand DWC’s portfolio that includes Discovery Shores Boracay, a multi-awarded luxury resort, and Club Paradise Palawan, an exclusive island resort in Coron,” Discovery World said in the disclosure. 

Aside from these properties, DWC also owns Discovery Fleet, a cruise boats operator for scuba safari expeditions in various diving sites.

IFC is a global development institution that is a member of the World Bank Group. The company makes use of its financial resources and technical expertise to support business worldwide. IFC has already supplied $351 billion in loans to small and medium enterprises by 2016, according to its Web site.

Shares in DWC jumped 26.87% or 54 centavos to end Tuesday’s trading at P2.55 each. — Arra B. Francia

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