THE GOVERNMENT could launch its maiden offer of yuan-denominated — or “panda” — bonds “in the next week or so,” the Finance department announced on Wednesday, even if it maintained that much depends on market conditions.
“We have our team there now… We got the approval from the finance authorities about three weeks ago and the Bank of China is underwriting for our first-ever ‘panda’ bond issue,” Finance Secretary Carlos G. Dominguez III said during a panel discussion at the 28th Inter-Pacific Bar Association Annual Meeting and Conference at Shangri-La at the Fort.
“Our National Treasurer, in fact, is in China doing a road show,” Mr. Dominguez said of Rosalia V. de Leon.
“So that will happen in the next week or so. So we hope that it is successful.”
At the same time, he maintained that timing of the sale will depend on market conditions.
“Ang binabantayan namin ngayon ay ‘yung spread tsaka ‘yung interest (We are watching the spread and interest),” he told reporters after his speech.
“Kung hindi maganda ang (If) market conditions (are not right), siguro ipo-postpone nila (Treasury will postpone the sale). But they want to make sure that they get the right rates,” he added.
The People’s Bank of China and National Association of Financial Market Institutional Investors approved on Feb. 9 the planned offer of up to $200 million securities equivalent to some 1.46 billion renminbi.
Mr. Dominguez had said in November last year that the government planned to proceed with the panda bond sale this quarter from the initial October-November time table.
China Lianhe Credit Rating Company Ltd. on Monday gave the debt notes an “AAA” rating with a stable outlook, noting they “have the lowest expectation of default risk.”
Asked how the government planned to use panda bond sale proceeds, Mr. Dominguez replied: “Basically, for budget support.”
“And what we do is swap it with the central bank because they need renminbi.”
This year, the government has programmed P888.23 billion in borrowings to fund its budget deficit of up to three percent of gross domestic product (GDP). Of this amount, P176.27 billion will be from external creditors while P711.96 billion will be sourced locally.
Mr. Dominguez also noted in his speech that tax reform has begun to deliver more revenues.
Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act, slashed personal income tax rates and plugged the resulting foregone revenues by adding levies on cars, fuel, tobacco products, sugar-sweetened drinks and a host of other items, besides reducing exemptions from the value added tax when the law took effect on Jan. 1.
RA 10963 — the first of up to five planned tax reforms — is now projected to rake in nearly P90 billion in additional revenues this year compared to an original estimate of P149.6-157.2 billion before Congress watered down provisions significantly.
“As a result, we made revenues easier to collect,” Mr. Dominguez said of TRAIN.
“In the first two months of this year since the TRAIN was passed, we are actually collecting more revenues than expected.”
The Bureau of Internal Revenue collected a total of P280.6 billion in January and February, 10.8% more than the P253.3 billion recorded in the same months in 2017. The haul exceeded the bureau’s P238.71-billion target for the two months by 17.55%, according to the monthly collection goal of the BIR under Revenue Memorandum Order No. 8-2018.
The Bureau of Customs, meanwhile, collected P85.63 billion in the January-February period, surging 26.5% from P66.8 billion in last year’s comparable months. However, this was 2.8% lower than the P88.10-billion target for the two months.
In the same event, PLDT, Inc. Chairman, President and Chief Executive Officer Manuel V. Pangilinan said in a speech delivered by Michael T. Toledo, Philex Mining Corp. senior vice-president for Corporate Affairs, that the Philippines should continue to be one of Asia’s fastest-growing major economies on the back of a young population that “will drive consumption and investment spending in the decades to come”, a strong fiscal position, sound monetary policy and increased public expenditures particularly on infrastructure.
The government hopes to prod GDP growth to 7-8% starting this year up to 2022, when President Rodrigo R. Duterte ends his six-year term, from last year’s 6.7% and 2010-2016’s 6.3%.
“We expect FDIs to hit $22 billion by 2022,” Mr. Toledo said in the speech.
Last year saw net FDI inflows grow 21.4% to $10.049 billion from $8.28 billion in 2016, marking a fresh record-high that topped the central bank’s $8-billion target for 2017.
But the government still needs “to provide an environment where the private sector can thrive… through a levelled playing field that does not favor a few”, primarily by further easing foreign ownership restrictions, tweaking incentives to favor those that help countryside development, speeding up efforts to improve competitiveness and enhance ease of doing business and honoring the sanctity of contracts “across administrations”.
“Addressing these will keep anxiety and uncertainty… at bay.” — Elijah Joseph C. Tubayan
