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POGO ban may support PHL exit from ‘gray list’ 

President Ferdinand R. Marcos, Jr. has ordered a total ban on all offshore gaming operations in the country due to its ties to illicit activities. — PHILIPPINE STAR/RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter 

THE RECENT BAN on Philippine offshore gaming operators (POGO) would help expedite the country’s exit from a global financial watchdog’s “gray list” of jurisdictions under increased monitoring for money laundering risks, the central bank governor said.

“With the POGO ban, we do see a drop in money laundering, which should help us exit the gray list,” Bangko Sentral ng Pilipinas (BPS) Governor Eli M. Remolona, Jr. told BusinessWorld in a text message.

Last week, President Ferdinand R. Marcos, Jr. ordered a total ban on all offshore gaming operations due to their ties to illicit activities such as financial scams, money laundering, prostitution and human trafficking.

Mr. Marcos directed the Philippine Amusement and Gaming Corp. (PAGCOR) to shutter all POGO facilities by the end of the year. 

This comes after the Financial Action Task Force (FATF) in June kept the Philippines in its gray list for a third straight year.

The global watchdog said the country still needs to address three remaining action items, one of which is “demonstrating that supervisors are using anti-money laundering and counterfinancing of terrorism (AML/CFT) controls to mitigate risks associated with casino junkets.”

Mr. Remolona earlier said the Philippines would likely exit the gray list by next year as it still needs to address the remaining deficiencies cited by the FATF.

From 2018 to 2023, the Philippines was among the top five countries in Southeast Asia with money laundering activities added over the five-year period, earlier data from Moody’s showed.

The number of money laundering events added in the Philippines jumped by 45% from 2022 to 2023, it said.

Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said Mr. Marcos’ order to ban POGOs would encourage more “legitimate” investments to enter into the country.

“With the expected ban, the Philippines may be relieved with the gray list tag and re-strategize for fulfilling more legal and moral entertainment investments for the inclusive growth of the country,” he said via Facebook Messenger.

Bienvenido S. Oplas, Jr., president of a research consultancy and of the Minimal Government Thinkers think tank, said the POGO ban would be a “big push” for tourism in the country.

“When POGOs are banned, then gamblers from China will be forced to travel to the Philippines and do their gambling in big casinos,” he said.

Mr. Oplas noted that the POGO ban should not be rushed due to its impact on the property market.

On the other hand, Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said there are still many other sources of money laundering aside from POGOs.

“(POGO) might not even be the main vehicle for money laundering in the Philippines,” he said via Facebook Messenger chat. “POGOs offer online gambling catering to a foreign country, specifically China. But what about online gambling within the Philippines? What about the proliferation of physical casinos in the Philippines? Money laundering thrives in said activities and places.”

Mr. Sta. Ana noted that there are many sectors that are vulnerable to money laundering.

“There are many ways to launder money — real estate, mineral extraction, setting up shell companies, establishing low-key businesses, purchasing artworks, jewelry, luxury automobiles, etc. A major step to get out of the gray list is to lift the strict secrecy rules on bank deposits.”

IMPACT ON BANKS
In a separate report, Fitch Ratings said the Philippine financial system is resilient enough to withstand the spillover effects of the POGO ban.

“The government’s ban on POGOs may hurt Fitch-rated banks’ asset quality and performance, but their loss-absorption buffers will be sufficient to withstand associated losses, which are likely to be limited in scale,” it said.

Banks have ample buffers to “absorb POGO-related losses without pressuring their current standalone viability ratings.”

“Moreover, banks’ record-high margins and higher loan growth — the key drivers of our ‘improving’ sector outlook for Philippine banks — are likely to compensate for higher credit costs associated with potential new impairments from the POGO ban,” it added.

The Philippine banking industry’s net income rose by 2.95% to P92.107 billion at end-March, latest data from the central bank showed.

Separate data showed that bank lending grew by 10.1% in May to P12 trillion, the fastest in 14 months.

Fitch Ratings noted that POGOs’ influence on the property market has waned due to tighter regulations. Travel restrictions also affected the sector, which is heavily dependent on workers from China, it added.

“One property consultant, Colliers, has indicated that POGOs currently occupy 3.5% of Metro Manila’s office stock, down from 10% in 2019, with most large developers’ leasing portfolios having at most a 5% exposure,” it said.

It also said real estate developers have been limiting their exposure to POGOs. The expected vacancies from the ban “may also pressure rental yields, with broader impacts on real estate firms.”

“Most of these large players have diversified real estate portfolios, so these effects could also be offset partially by better residential sales if interest rates fall as we expect in the second half of 2024 and 2025.”

With this, Fitch said banking-asset impairments from real estate companies would be “relatively contained.”

Fitch data showed that the residential mortgage nonperforming loan (NPL) ratio improved to 7% in the first quarter of 2024 from 9.6% in the third quarter of 2021, though this was still higher than pre-pandemic levels.

It said this “reflects in part a fallout from speculative activity and more lax housing loan credit standards during the POGO boom years in 2016-2019.”

“Since then, many banks have become more averse to lending to POGO workers, given high policy risk,” it added.

Property-related losses due to closures from the ban are also not expected to be significant for banks.

“Even in the event of a greater impact than we anticipate, regulations require banks to demonstrate common equity Tier 1 (CET1) and total capital ratios of 6% and 10%, respectively, after writing off 25% of their real estate exposures. This should ensure that loss-absorption buffers are aligned with their exposure to the sector,” it added.

DBM submits P6.352-T national budget to House

BUDGET Secretary Amenah F. Pangandaman (center) and other officials of the Department of Budget and Management hold a copy of the proposed National Expenditure Program for 2025 on Monday. — PHILIPPINE STAR/RYAN BALDEMOR

By Kenneth Christiane L. Basilio

THE DEPARTMENT of Budget and Management (DBM) on Monday submitted to the House of Representatives its proposed P6.352-trillion national budget for 2025, which increases allocations for education by less than 1% and for defense by 6.4%, while more than doubling the budget for transportation.

However, the DBM slashed the proposed budgets for agriculture, health and social welfare for next year.

The proposed national budget is equivalent to 22.1% of gross domestic product, and 10.1% higher than the P5.768-trillion budget this year.

2025 National Expenditure Program“Education remains the top priority with P977.6 billion, equivalent to 15.4% of the budget, aligned with UNESCO’s (United Nations Educational, Scientific and Cultural Organization) education 2030 framework for action,” Budget Secretary Amenah F. Pangandaman said during turnover ceremonies at the House.

Next year’s proposed budget for the education sector inched up by 0.9% to P977.6 billion from P968.9 billion this year, according to a summary from the Budget department. This covers the Education department, Commission on Higher Education, Technical Education and Skills Development Authority and state universities.

However, education’s share in the 2025 budget fell to 15.4%, compared with 16.8% this year.

The allotted budget for the education sector is not on par with the 10% increase in the proposed 2025 budget and the country’s economic growth, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The P977.6 billion for education barely scratches the surface of the sector’s needs, especially considering the learning crisis exacerbated by the pandemic,” Party-list Rep. France L. Castro told BusinessWorld in a Viber message.

The government should ensure ample funding for more teaching positions to improve education quality, IBON Foundation Executive Director Jose Enrique A. Africa told BusinessWorld.

“The most glaring and most fundamental flaw is that the number of teaching positions isn’t being increased, which means that those on the frontlines of teaching will be as overtasked and overburdened as ever,” he said in a Viber Message.

The Department of Public Works and Highways (DPWH) saw its budget fall by 9% to P900 billion. Of this, P226.7 billion will go to flood management projects, while P140.9 billion will be allotted for road network development.

“The ‘Build Better More’ infrastructure program, through the Department of Public Works and Highways, will be allocated with P900 billion or 14.2% of the proposed budget to finance various public infrastructure [projects],” Ms. Pangandaman said.

In the aftermath of the massive floods caused by Super Typhoon Carina last week, Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said Congress would have to tweak the infrastructure budget, particularly for proposed flood management projects.

“Expert calls for more upland intervention such as dams might not have been reflected as yet in the current budget,” he said in a Viber message.

On the other hand, next year’s budget for the Department of Transportation (DoTr) more than doubled to P180.9 billion from this year’s P73.9 billion.

The increase is due to the need to “develop and modernize… the country’s infrastructure,” according to Ms. Pangandaman.

The DoTr budget would fund key connectivity infrastructure such as the North-South Commuter Railway System and the first phase of the Metro Manila Subway project, she added.

“Metro Manila Subway project Phase 1 is [allotted] P39.3 billion… while the North-South Commuter Railway Commuter System is [allocated] with almost P64 billion,” Ms. Pangandaman told reporters after the turnover ceremony.

Meanwhile, the Defense budget will increase by 6.4% to P256.1 billion next year amid growing tensions with China over contested waters.

The Philippine Army, Air Force, and Navy will collectively receive P204.4 billion under the proposed budget, while P50 billion will go to the Armed Forces’ modernization efforts, according to the Budget department’s summary.

The increase in defense spending due to “escalating conflicts” with China is acceptable and shows the government is consistent in supporting the country’s efforts to modernize its military, Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, told BusinessWorld.

“The AFP (Armed Forces of the Philippines) should emphasize wiser defense expenditure and effective procurement process to accelerate the frugal budget of the government,” he said in a Facebook Messenger chat.

Rocio Salle Gatdula, a defense economist at the University of Asia and the Pacific, said the increased support for the military would help ensure it can counter China’s military capabilities.

“The Philippines needs to continue investing the modernization of its armed forces. Additionally, it is important to maintain a thorough understanding of China’s weaponry to ensure the acquisition of appropriate defense equipment,” she said via Messenger chat.

For the agriculture sector, the government is allotting P211.3 billion, 4.7% less than this year’s P221.7-billion funding. The budget will be used to fund the country’s agriculture modernization efforts and provide cash aid to farmers and fisherfolk.

Of the amount proposed for the agriculture sector, P24.6 billion will go to irrigation services, P10 billion for the rice fund under a law that liberalized the rice industry and P2.8 billion for the agricultural credit program, according to the DBM’s summary.

Next year’s funding for the Department of Social Welfare and Development (DSWD) stood at P230.1 billion, which is 7.6% lower than P248.1 billion in 2024.  It will fund the Pantawid Pamilyang Pilipino Program and social pension for indigent senior citizens, said Ms. Pangandaman.

The health sector, comprising the Health department and Philippine Health Insurance Corp., will receive P297.6 billion for next year’s proposed budget, 3.4% less than P308.3 billion this year.

Senate ratifies bicam report on 12% VAT on foreign digital service providers

SHEIN.COM

THE SENATE on Monday adopted the bicameral conference committee report on a bill imposing a 12% value-added tax (VAT) on digital service providers without a physical presence in the Philippines such as e-commerce giants Amazon, Shein and Taobao.

The reconciled version of the bill reinforces the Bureau of Internal Revenue’s (BIR) power to “impose and collect VAT on digital services and transactions,” Senator Sherwin T. Gatchalian said in a speech before the Senate adopted the report.

The joint explanation of the bicameral conference committee said both Houses of Congress agreed to use the Senate version as “the working draft.”

The committee allowed the Department of Finance (DoF) to set withholding tax rates for companies falling under the P3-million VAT threshold under the Tax Reform for Acceleration and Inclusion (TRAIN) law to protect small online businesses.

Under the measure, nonresident digital service providers and electronic marketplaces must register with the BIR for the remittance of VAT on their services. This will include online marketplaces like Amazon, Shein, Rakuten, Taobao, AliExpress and Temu.

Digital services refer to those provided over the internet or other electronic networks using information technology. These include online search engines, online marketplaces, cloud services, online media and advertising, online platforms and digital goods.

Currently, digital services provided by companies abroad are not subject to VAT, and lawmakers have said this hurts domestic rivals.

“We are committed to paving the way for a level playing field. We believe in the importance of creating an environment where our digital service providers, whether they are nonresident or local, operate under fair and square tax policies,” Mr. Gatchalian said.

Under the bill,  5% of the revenues from digital service VAT — or about P900 million — will be used to support the digital creative industry. — KATA

Philippines ranks 4th in Southeast Asia for IPO proceeds in first half

THE PHILIPPINE STOCK Exchange (PSE) ranked fourth in Southeast Asia for proceeds generated from initial public offerings (IPOs) in the first half of the year, according to a report by multinational professional services network Deloitte.

“Despite only having two new listings during the first half of 2024, the Philippines’ capital market had once again clinched the fourth spot in the region, with both new entrants securing positions in the Top 10 IPOs of 2024 H1,” Deloitte said in its Southeast Asia Mid-Year IPO Snapshot 2024 report.

“The energy and resources industry remains a strong sector for the country’s capital market,” it added.

During the first half, the PSE saw the public listings of OceanaGold Philippines, Inc., a gold and copper mining company, and Citicore Renewable Energy Corp., a renewable energy company. These IPOs were the second and fifth largest in the region, respectively.

The Philippines accounted for 14% or $194 million of the total IPO proceeds raised by Southeast Asian countries, higher than Vietnam’s 3% or $37 million and Singapore’s 1% or $20 million.

However, the Philippines trailed countries such as Malaysia, which accounted for 33% or $450 million of all IPO proceeds raised, as well as Thailand with 31% or $427 million, and Indonesia with 18% or $248 million.

For the first half, Deloitte noted that the Southeast Asia IPO market had 67 IPOs, down by 21% from the 85 IPOs last year.

The region also saw a 59% drop in IPO proceeds to $1.4 billion, and a 71% decline in IPO market capitalization to $5.8 billion.

“Despite a positive growth outlook and increasing foreign direct investment in Southeast Asia, the prolonged geopolitical instability and high interest rates environment have significantly impacted market conditions and investor sentiment in Southeast Asia, leading to a lukewarm record of IPOs in 2024 H1,” Deloitte Southeast Asia Accounting & Reporting Assurance Leader Tay Hwee Ling said.

“The ongoing inflation concerns and efforts to stabilize the global economy suggest that the high interest rate environment could persist into 2024,” she added.

Meanwhile, Ms. Hwee Ling is cautiously optimistic that Southeast Asia’s IPO market will improve beyond 2024, despite being subdued so far.

“As investors and IPO candidates adapt to the new norm of higher interest rates and reduced liquidity, they are becoming more adept at navigating the complexities of geopolitical tensions and the global economic landscape. Looking further ahead, the potential for interest rates to decrease could spur the return of real estate investment trust listings in the region,” she said.

“Additionally, many artificial intelligence (AI) and AI-associated businesses are still in the early seeding stages within the private domain. We anticipate a significant wave of AI IPOs tapping into the IPO capital markets in the coming years, bringing innovation and new opportunities to the market,” she added.

The PSE also saw the public listing of NexGen Energy Corp. in July, nearing the market operator’s target of six IPOs this year. — Revin Mikhael D. Ochave

Meralco Q2 profits up 29% with higher plant availability

MERALCO.COM.PH

MANILA Electric Co. (Meralco) on Monday reported a 29% increase in its second-quarter (Q2) consolidated core net income, reaching P13.12 billion, up from P10.16 billion the previous year.

This growth was driven by higher sales volumes in the distribution business and increased plant availability in power generation, the electric power distribution company said in a statement.

“With the steady growth trajectory of the economy, we are satisfied that Meralco will sustain its robust performance throughout the year,” Chairman and Chief Executive Officer Manuel V. Pangilinan said.

“Beyond the core distribution business, we continue to invest in more generation capacity which will help address, if not eliminate, instances of supply insufficiency in the country’s power grid, and support the growing demand for power,” he added.

Core earnings before interest, taxes, depreciation, and amortization increased by 24% to P21.96 billion.

For the six months ending in June, the power distributor recorded a consolidated core net income of P23.2 billion, up by 21% from P19.2 billion last year. Of this total, the distribution business contributed P12.8 billion, power generation accounted for P6.2 billion, and retail electricity supply and non-electricity businesses generated a combined P4.2 billion.

Consolidated reported net income rose by 26% to P22.4 billion from P17.9 billion last year. Consolidated revenues increased by 6% to P237.5 billion.

For the first half of the year, energy sales volume grew to 26,954 gigawatt-hours (GWh) from 24,792 GWh. The volumes of Meralco and Clark Electric Distribution Corp. increased by 9% and 7%, respectively.

“The six-month sales volumes got a boost from second-quarter sales which hit a new record—with monthly volumes breaching the 5,000 GWh level in May, largely driven by double-digit growth in residential and commercial segments,” the power distributor said.

Residential sales volume rose by 13% to 9,715 GWh from 8,629 GWh last year, driven by warmer temperatures and increased time spent at home by consumers.

Commercial sales volume climbed by 10% to 10,068 GWh from 9,162 GWh, supported by steady consumer demand and expansions in real estate, retail, restaurants, and hotels.

Industrial sales increased by 2% to 7,097 GWh from 6,928 GWh, reflecting the continued recovery of plastics and cement industries, as well as sustained performance in food and beverage and semiconductor sectors.

Singapore-based Pacific-Light Power Pte. Ltd., a subsidiary of Meralco PowerGen Corp. (MGen), saw a 29% decrease in its core net income to PHP 6.4 billion.

San Buenaventura Power Ltd. Co.’s core net income declined by 3% to PHP 1.7 billion, while Global Business Power Corp. reported a 78% increase to PHP 1.5 billion.

MGen’s renewable energy arm, MGen Renewable Energy, Inc., recorded a core net income of PHP 131 million, up by 68%.

Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

Jollibee drops P8-B preferred shares plan, lowers 2024 capex

JOLLIBEE Foods Corp. (JFC) said it is withdrawing its plan to issue up to P8 billion in preferred shares due to strong growth in its domestic business and a decision to reduce its 2024 capital expenditure (capex) budget.

“Following careful consideration of all relevant factors and in the interest of achieving the best value for our shareholders, we have made the decision to withdraw our previously announced public offering of Series C Preferred Shares,” JFC Chief Financial Officer Richard Chong Woo Shin said in a statement to the stock exchange on Monday.

“We will explore other capital-raising opportunities, focused on shareholder value and optimization of our capital structure,” he added.

In March, JFC’s board approved an issuance consisting of five million preferred shares with an oversubscription option of up to three million preferred shares at P1,000 apiece, with a value size of up to P8 billion.

The proceeds were supposed to be used for the refinancing of the company’s Series A preferred shares and other general business purposes.

According to JFC, the additional funding from the planned issuance is no longer needed for the refinancing of the Series A preferred shares due to the “strong profit performance and cash flow generation of its Philippine business.”

The company added that the decision to withdraw the preferred shares offering is in support of the plan to reduce its P23 billion capex budget for 2024 by at least 20%.

JFC previously announced that it had earmarked P20-23 billion in capex funding to bankroll the plan of opening 700 to 750 new stores this year.

The company said the preferred shares plan was also dropped due to expected rate cuts later in the year, which would help secure “more beneficial bank loans at floating interest rates.”

The recent acquisition of South Korean value coffee brand Compose Coffee also influenced the decision to withdraw the preferred shares offer, citing the “profit-accretive contribution” from its consolidation with the fast-food giant.

In early July, JFC announced the acquisition of Compose Coffee for $340 million to strengthen its coffee and tea business. The acquisition is projected to be completed by the first half of August.

“JFC expects these factors and considerations will improve its flexibility in funding and in increasing its leverage position. As a result of the withdrawal, no Series C preferred shares will be offered or sold by JFC,” the company said.

On Monday, JFC shares fell by 0.18% or 40 centavos to P227.60 per share. — Revin Mikhael D. Ochave

T-bill rates rise across all tenors ahead of Fed’s policy meeting

BW FILE PHOTO

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday even as rates inched up across all tenors amid slightly weaker demand and ahead of the US Federal Reserve’s policy meeting this week.

The Bureau of the Treasury (BTr) raised P20 billion as planned from the T-bills it auctioned off on Monday as total bids reached P35.99 billion, or almost twice the amount on offer. Demand this week was lower than the P47.4 billion in tenders recorded for the July 22 T-bill auction.

Broken down, the BTr borrowed P6.5 billion as programmed from the 91-day T-bills as tenders for the tenor reached P12.01 billion. The three-month papers were quoted at an average rate of 5.779%, 3.6 basis points (bps) higher than the 5.743% recorded last week. Accepted rates ranged from 5.759% to 5.799%.

The government likewise made a full P6.5-billion award of the 182-day securities as bids for the tenor reached P12.12 billion. The average rate for the six-month T-bill stood at 6.014%, up by 2.3 bps from the 5.991% fetched last week, with accepted rates at 5.95% to 6.042%.

Lastly, the Treasury raised the planned P7 billion via the 364-day debt papers as demand totaled P11.86 billion. The average rate of the one-year debt increased by 2.7 bps to 6.108% from the 6.081% quoted for the tenor last week. Accepted yields were from 6.04% to 6.16%.

At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.7294%, 6.0390%, and 6.1583%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The T-bills on offer on Monday fetched higher rates across the board due to slower buying momentum as the market turned defensive ahead of the Fed’s policy meeting this week, a trader said in a phone interview.

“A possible 25-bp local policy rate cut as early as Aug. 15 led to some locking in of longer-term interest rates by some investors,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

T-bill yield movements were also driven by expectations of Bangko Sentral ng Pilipinas (BSP) and Fed rate cuts this year, he said.

The Fed is widely expected to keep its target rate at the current 5.25%-5.5% range for the eighth straight time at their July 30-31 meeting. However, markets are awaiting more hints from Fed Chair Jerome H. Powell on the central bank’s easing cycle, which investors expect to begin by September.

Meanwhile, Finance Secretary Ralph G. Recto, who is also a member of the central bank’s policy-setting Monetary Board, last week said the country is on track for a cut in benchmark interest rates this year due to easing inflation, though the timing would be up to the central bank, Reuters reported.

The central bank, which has kept interest rates steady at 6.5% in its last six meetings, has previously flagged a possible cut of 25 bps at its Aug. 15 meeting as it sees inflation easing in the second half.

BSP Governor Eli M. Remolona, Jr. earlier said the Monetary Board could reduce borrowing costs by 25 bps in the third quarter and by another 25 bps in the fourth quarter. Next month’s review is the only meeting scheduled this quarter.

The central bank last slashed benchmark borrowing costs by 25 bps in November 2020 to bring the policy rate to a record low of 2% to boost economic activity during the height of the coronavirus pandemic.

Monday’s auction was the last T-bill offering for July. The Treasury raised P102.1 billion  from the short-term debt papers versus the P100-billion program as it made full awards of all its offerings and even upsized its award at one auction.

On Tuesday, the BTr will offer P25 billion in reissued 20-year Treasury bonds with a remaining life of three years and one month.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product for this year. — A.M.C. Sy with Reuters

Pangilinan group’s DigiCo acquires Multipay, 10% of Bayad Center

THE PANGILINAN GROUP, through DigiCo, is expanding its digital solutions platform by signing agreements to fully acquire Multipay Corp. and a 10% stake in CIS Bayad Center, Inc. (Bayad).

“Having both online and offline solutions, Bayad and Multipay are uniquely positioned to accelerate the country’s shift to digital payments. These companies will improve the payment experience for the Filipino consumer and provide partners with integrated solutions,” DigiCo Chairman Manuel V. Pangilinan said in a statement on Monday.

DigiCo is a digital services company owned by PLDT, its affiliate, power utility giant Manila Electric Co. (Meralco), and Metro Pacific Investments Corp.

“Harnessing the data assets of the MVP Group will enable us to deliver a superior, intuitive, and personalized customer experience, backed by insights that can uplift the way we serve our customers across the MVP Group,” Mr. Pangilinan said.

Under the signed agreements, DigiCo is set to acquire a 10% stake in Bayad, which is a bills payment provider serving over 800 utility, financial, and various billers.

Corporate Information Solutions, Inc., a wholly owned subsidiary of Meralco, owns a 95% share in Bayad.

“Meralco has agreed to sell 10% of its share interest in Bayad to DigiCo, subject to closing conditions,” Meralco said in a separate regulatory filing.

DigiCo is also set to fully acquire Multipay, another digital payment platform. It is a wholly owned subsidiary of software company Multisys Technologies Corp.

The agreements are still subject to closing conditions, PLDT said.

First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message on Monday that the digital payment platforms are expected to benefit from the enhanced digital infrastructure of PLDT.

Seedbox Securities, Inc. equity trader Jayniel Carl S. Manuel said both Multipay and Bayad stand to gain significantly from PLDT’s synergies and the company’s extensive network infrastructure.

“This partnership is poised to enhance the customer experience and expand the reach of digital payment services,” Mr. Manuel said in a message.

For PLDT, Mr. Manuel said that the company is poised to become a key player in the digital ecosystem.

“By integrating Multipay and Bayad Center into its portfolio, PLDT can offer more comprehensive and seamless digital financial services. This move not only diversifies PLDT’s revenue streams but also strengthens its market presence in the rapidly growing fintech sector,” he said. 

At the local bourse, shares in the company closed P11 or 0.74% higher to end at P1,498 apiece on Monday.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

Filipino achievements outside the Olympics

AS ALL the focus on Sunday was on how the Pinoys did in the Olympics — with gymnast Carlos “Caloy” Yulo in particular making the all-around final — not to be overlooked are the achievements of other homegrown talents around the world.

KIM CHIU IN SEOUL
In the realm of television stardom, Filipino actress Kim Chiu has been named Outstanding Asian Star by the Seoul International Drama Awards 2024 for her recent role as the complex Juliana Lualhati in the hit drama Linlang.

Ms. Chiu posted the news on her Instagram account on Sunday. “I am lost for words… beyond thankful, grateful, and extremely happy!!! I can’t believe this is happening,” she said in her post. She went on to thank ABS-CBN, Dreamscape, and her co-stars Paulo Avelino and JM de Guzman.

The actress bested five other nominees in the category: Thai actors Blue Pongtiwat Tangwancharoen and Poompat Iam-samang, Malaysian actress Emily Chan, Singaporean actor Desmond Tan, and Indonesian actress Ochi Rosdiana.

Ms. Chiu will receive her trophy at the Seoul International Drama Awards 2024 awards ceremony at the KBS Hall in Seoul, South Korea, on Sept. 25.

BINI AT THE KCON LA
Girl group BINI made history as the first P-pop group to perform at the KCON LA 2024, a three-day music festival in Los Angeles, California. The event is known as the world’s largest K-pop music festival.

BINI performed their newly released single, “Cherry on Top,” on July 28 and drew cheers from the crowd. Maloi, Stacey, Aiah, Sheena, Gwen, Colet, and Mikha also gave a shoutout to Jhoanna, the only member unable to join due to what ABS-CBN described in a statement as “unanticipated health issues.”

The group’s upcoming concert in the Philippines is Grand BINIVerse, which will be held for two nights on Nov. 16 and 17 at the Araneta Coliseum. — BHL

PNB income up 11% in first half

WIKIMEDIA.ORG

PHILIPPINE NATIONAL Bank’s (PNB) net income grew by 11% year on year to P10.3 billion in the first half on the back of its core businesses and amid “challenges” in the operating environment, it said on Monday.

“PNB’s performance has been on an upward trajectory since the start of the year and we attribute this to the sound execution of our strategies and growth initiatives,” PNB

President Florido P. Casuela said in a disclosure to the stock exchange.

“The stronger focus and collaboration of our business groups have enabled us to serve a broader part of the commercial lending and consumer finance segments. We are happy to help these segments grow and it is made more meaningful by the fact that we just marked our 108th founding anniversary as a financial institution that helps Filipinos reach their aspirations,” Mr. Casuela said.

The bank’s financial statement was unavailable as of press time.

PNB’s net interest income went up by 11% year on year in the first semester as its interest earnings rose by 17%, driven by its loan portfolio and treasury assets amid high rates and increased volume.

“Likewise, the bank was able to temper the impact of higher interest expense on deposits by deploying these deposits to assets with better yields,” it said.

As a result, PNB’s net interest margin improved to 4.37% at end-June from 4.14% a year prior.

Meanwhile, the bank’s other operating income declined by 47.73% to P2.3 billion in the first half from P4.4 billion a year prior in the absence of a one-off gain from the sale of properties realized in the same period in 2023.

On the other hand, operating expenses went down by 4% to P14.3 billion “due to prudent spending despite the continued business growth,” PNB said.

It set aside credit provisions worth P2.1 billion in the period, it added.

PNB’s consolidated assets stood at P1.26 trillion at end-June, up by 4% from the end-2023 level, amid increased loans and treasury assets.

“With its income for the period, the bank augmented its total equity by 6%, translating to an improvement in the bank’s capital adequacy ratio to 17.0% and common equity Tier 1 ratio to 16.2%,” the listed lender said.

PNB’s shares dropped by 25 centavos or 1.02% to close at P24.15 each on Monday. — A.M.C. Sy

The 22-year journey of SOX: A testament to Filipino talent and global compliance

FREEPIK

The 22nd anniversary of the Sarbanes-Oxley Act (SOX) prompts reflection on its journey and its profound impact on the global business landscape. This reflection is especially crucial in light of the recent recognition of the Philippines as a leading destination for Business Process Outsourcing (BPO). The convergence of SOX compliance and the burgeoning BPO industry in the Philippines underscores the nation’s pivotal role in global compliance management, showcasing the exceptional talent and expertise of Filipino professionals.

Since its enactment on July 30, 2002, SOX has played a pivotal role in restoring investor confidence and enhancing transparency and accountability in the financial reporting practices of public companies. It has continually evolved to address emerging challenges in corporate governance and risk management, establishing itself as a cornerstone of regulatory compliance not only in the US but also worldwide. One significant development in recent years has been the emergence of the Philippines as a preferred destination for BPO services, including SOX compliance management. With a skilled workforce proficient in English and a robust infrastructure conducive to business operations, the Philippines has attracted numerous US companies seeking cost-effective solutions for managing and testing SOX controls.

The synergy between US companies and Filipino talent extends beyond cost efficiency; it epitomizes a collaborative approach to global compliance management. By leveraging the rich pool of Filipino professionals, US companies gain access to diverse expertise, testing approaches, and methodologies, thereby enhancing the quality and effectiveness of their SOX compliance initiatives.

Moreover, for Filipino professionals, this presents a unique opportunity to showcase their skills and expertise on a global stage. Working on SOX compliance projects for US companies not only enhances their marketability in the Western business landscape but also significantly contributes to the growth of overseas Filipino workers (OFWs), who play a vital role in the Philippine economy through their remittances.

The symbiotic relationship between US companies and Filipino talent underscores the inter-connectedness of the global economy and the transformative power of collaboration in achieving regulatory compliance objectives. It emphasizes the importance of leveraging diverse perspectives and skill sets to navigate the complexities of regulatory frameworks effectively. Nevertheless, amid the success stories and opportunities, challenges persist. As US companies expand their operations in the Philippines and rely on Filipino talent for SOX compliance, ensuring continuous skill development and adherence to evolving regulatory standards becomes paramount. Investing in training and development programs that keep pace with regulatory changes is essential to maintaining the high standards of compliance expected in today’s dynamic business environment.

Furthermore, while the growth of the BPO industry has been a boon for the Philippine economy, it also underscores the need for sustainable growth strategies that prioritize the well-being and professional advancement of Filipino workers. Balancing the demands of global business with the welfare of employees is essential for fostering a thriving and inclusive workforce ecosystem.

As we commemorate the 22nd anniversary of SOX, let us celebrate the achievements made in the realm of global compliance management and recognize the invaluable contributions of Filipino talent in driving these advancements. By harnessing the collective expertise and dedication of professionals from diverse backgrounds, we can continue to uphold the principles of transparency, accountability, and integrity that lie at the heart of regulatory compliance worldwide.

The journey of SOX over the past 22 years serves as a testament to the resilience and adaptability of regulatory frameworks in an ever-changing business landscape. Through collaboration and innovation, we can navigate the complexities of compliance with confidence, paving the way for a more transparent and sustainable future for businesses and economies around the globe.

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines). 

 

Lujer P. Danao is a member of the MAP and a partner for Risk Advisory and the Clients and Market Head of MOORE Roxas Tabamo & Co.

map@map.org.ph

lpdanao@roxastabamo.com

Fruitas inks Polland Hopia distribution in Cebu, Zamboanga

LISTED food and beverage kiosk operator Fruitas Holdings, Inc. has secured a deal for the exclusive distribution of Polland Hopia brand products in Cebu and Zamboanga, expanding its partnerships and revenue stream.

Fruitas Holdings secured the exclusive distributorship through listed subsidiary Balai ni Fruitas, Inc., which signed an agreement with Polland Hopia brand owner D’ Famous Red Box Corp., the kiosk operator said in a stock exchange disclosure on Monday.

“Balai Ni Fruitas is confident that securing distribution rights for Polland Hopia in Cebu and Zamboanga will not only expand revenue stream but also foster deeper consumer loyalty,” Fruitas Holdings said. 

“In addition, Polland Hopia will be available in Balai Pandesal community stores on a non-exclusive basis,” it added.

Since 1966, Polland Hopia offers mung bean cakes or hopia in various flavors such as mongo, black mongo, chocolate fudge, and ube. 

“These exclusive distribution agreements underscore the trust and confidence that other brands place in us,” Fruitas Holdings President and Chief Executive Officer Lester C. Yu said.

“At the same time, this reflects our unwavering commitment to deliver wholesome, high-quality products that resonate deeply with Filipino consumers, much like Fruitas itself. We look forward to introducing even more innovative offerings from Fruitas in the future,” he added.

Previously, Fruitas Holdings entered into an agreement with Bukidnon Milk Co. (BMC) for the exclusive distribution of the latter’s products in Metro Manila.

BMC sells dairy products sourced from Bukidnon such as premium whole milk, chocolate milk, and yogurt.

“BMC’s offerings complement Fruitas Holdings’ flavorful and fresh fruit juices, providing consumers with an expanded selection of healthy and thirst-quenching drink options,” Fruitas Holdings said.

Balai ni Fruitas, a 75% owned subsidiary of Fruitas Holdings, operates Balai Pandesal, Buko ni Fruitas, and Fruitas House of Desserts.

Fruitas Holdings has over 25 brands in its portfolio such as Buko Loco, Buko ni Fruitas, De Original Jamaican Pattie, Johnn Lemon, Juice Avenue, and Black Pearl.

On Monday, Fruitas Holdings shares fell by 1.28% or one centavo to 77 centavos per share while Balai ni Fruitas stocks rose by 7.79% or three centavos to P0.415 apiece. — Revin Mikhael D. Ochave

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