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Recto’s proposal to sell NAIA land to raise funds draws mixed reactions

Planes are seen at the Ninoy Aquino International Airport (NAIA) in Pasay City. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE SALE and development of the land where the Ninoy Aquino International Airport (NAIA) currently stands could generate much-needed revenues for the government, the country’s top business group said.

On the other hand, some analysts warned that disposing state assets is not a long-term solution to address the country’s debt which stood at a record P14.79 trillion as of end-January.

This after Finance Secretary Ralph G. Recto last week floated the idea of selling the 600-hectare land where NAIA is located after the New Manila International Airport (NMIA) in Bulacan is completed, estimating that it could generate as much as P6 trillion.

“I think it is a good plan. In fact, the government might also want to extend the plan to also cover the Port of Manila,” Philippine Chamber of Commerce and Industry (PCCI) President Eunina V. Mangio said in a Viber message.

“Converting NAIA and the Port of Manila into a mixed-use development and putting a new airport in Batangas will also generate investments and employment in the areas,” she added.

Mr. Recto had noted the NAIA property can then be converted into a business district, similar to Bonifacio Global City.

PCCI’s Ms. Mangio said that the proposal to sell the NAIA land could also decongest Metro Manila, improve traffic, generate additional revenues and result in “better use of the area.”

“Developing another airport in the south outside of Metro Manila, Batangas being an option, may be funded from the proceeds of NAIA’s sale,” she said.

Meanwhile, Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that relying on the proceeds from the privatization of state assets to pay debt is not sustainable.

“Relying on privatization as a strategy to increase revenues is a temporary and lazy solution. The revenues are one-off. We have tried that route before and it did not decisively address the problem of low-tax effort,” he said via Facebook Messenger chat.

Ateneo de Manila economics professor Leonardo A. Lanzona also said this strategy does not address the overall fiscal constraints of the government.

“It needs to be stressed though that this is a short-term solution. While selling assets can provide a quick influx of cash, it might not address the underlying fiscal problems and could exacerbate long-term financial challenges,” he said in an e-mail.

“Selling public assets may result in reduced or compromised public services if the assets being sold are essential for service delivery, such as infrastructure or utilities,” he added.

The government is targeting to generate some P4.3 trillion in revenues this year to fund its priority programs.

As of end-2023, the deficit as a share of gross domestic product (GDP) settled at -6.2%, a tad higher than the -6.1% target set by the government but lower than the -7.3% deficit-to-GDP ratio at end-2022. 

This year, the government’s deficit ceiling is capped at P1.39 trillion or 5.1% of GDP. It is aiming to bring this further down to 3% by 2028.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said the sale of the NAIA land is “premature” given the government has awarded a 15-year concession agreement to operate, maintain and upgrade the capital’s main gateway.

“Furthermore, it is also contingent on the success of the NMIA in Bulacan as a complete and acceptable replacement to NAIA. This may only be determined upon the start of NMIA operations at a still undetermined time in the future, as construction remains underway,” Mr. Ridon said in an e-mail.

Airport development for the NMIA is set to begin by next year. In November, the Transportation department said that the project has reached a 75% completion rate.

“The sale of state assets only makes sense if it is contingent upon a specific investment strategy to further the creation of national wealth, such as investments into higher-yielding investment instruments,” Mr. Ridon said.

“It does not make sense to sell assets as a strategy to service government debt, as this implies that government revenues are insufficient to cover our regular debt service obligations,” he added.

Mr. Sta. Ana said that in order to sustain revenues and boost tax effort, the government must implement tax policy reforms.

“On the other hand, privatization’s main function pertains to industrial policy, competition policy, and investment promotion. While it is a source of revenues, revenues from privatization are non-recurring,” he added. 

Proposals to privatize NAIA and convert it into a mixed-use development have been floated earlier by other government officials, among them former Finance Secretary Carlos G. Dominguez III.

The Finance department is currently fine-tuning tax reform proposals, such as the rationalization of the fiscal mining regime and the Passive Income and Financial Intermediary Taxation Act.

However, Mr. Recto has also said that he does not plan to introduce new taxes yet. — Luisa Maria Jacinta C. Jocson

Value Added: A comprehensive look at the changes made by RA 11976 to taxes

Photo from Freepik / storyset

By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor

Early this year, President Ferdinand R. Marcos, Jr. signed into law the Ease of Paying Taxes (EOPT) Act, or Republic Act No. (RA) 11976 in a bid to bring the Philippine tax administration up to date in the modern era and further strengthen taxpayer rights.

Previously tagged as a priority for his administration, RA 11976 aims to streamline taxation processes and minimize the burden on taxpayers, encouraging them to comply with the tax system and thus increasing the country’s revenue collection. The boost in government revenues provided by the EOPT Act will support the government’s 8-Point Socioeconomic Agenda to enhance economic and social development.

“After the comprehensive amendments to tax policy introduced by the previous administration, we now focus our sights on tax administration with the passage of the Ease of Paying Taxes Act. Recognizing the importance of how the government collects taxes, this measure solidifies our commitment to our countrymen towards a dynamic and efficient tax administration which is responsive to the needs of our taxpayers, both individuals and those who are doing business, adapts to the changing times, and ultimately supports our recovery and growth objectives,” the President said in a statement.

Senen M. Quizon, Principal of Tax & Corporate Services at Deloitte Philippines, told BusinessWorld that the EOPT Act is “a significant step forward in creating a more taxpayer-friendly tax environment. It eases tax compliance by streamlining existing registration processes and allows taxpayers to file tax returns and make tax payments online or manually, anywhere.”

“The EOPT clearly sets the period for the BIR (Bureau of Internal Revenue) to act on claims for refunds and remedies available to taxpayers, which will facilitate the processing for VAT (value-added tax) refunds and erroneously paid taxes. The EOPT also ensures that the BIR will continue to use technology to further ease tax compliance burden, to streamline processes, and to develop an ease of paying taxes and digitalization road map,” he added.

Maria Carmela M. Peralta, Head of Tax at KPMG in the Philippines (R.G. Manabat & Co.), recognized the potential of the new law in enhancing taxpayer convenience and ensure ease of compliance.

“Ease of compliance could be brought about by a number of ways which include streamlining of tax processes, adoption of simplified tax returns, reduction of documentary requirements, and digitalization of the BIR,” she said.

“Hopefully, the BIR will adopt these measures, which will be most welcome given the number of pages tax returns currently have, the long list of documentary requirements for claiming refunds for example, and the time it takes for example in enrolling in the BIR’s electronic filing and payment system (eFPS) or in correcting errors in the taxpayer’s data in the eFPS.”

So, what will the law change?

In order to create a tax system that is responsive and tailored to the needs of each segment, the new law will divide taxpayers into four categories based on their gross sales: micro, small, medium, and large. Internal revenue tax payment and return filing will also be simplified via electronic and manual methods like authorized software providers and agent banks.

Mr. Quizon pointed out that the EOPT did not introduce any significant change in terms of tax compliance obligation among the different categories of taxpayers. “In fact, with the veto of exemption of micro taxpayers from obligation to withhold creditable taxes, the only benefits that are available to micro and small taxpayers are reduced number of income tax return pages from four to two pages, and reduced rate for civil penalties,” he said.

“However, given the mandate under EOPT for the BIR to develop programs and projects to ensure ease of compliance of taxpayers with tax laws and regulations with priority being given to micro and small taxpayers, we expect that the BIR will design and implement programs tailored to address the challenges that taxpayers in different segments face in complying with their tax obligations.”

Such programs would likely be part of the BIR’s plans in developing the Ease of Paying Taxes and Digitalization Roadmap in order to support and help taxpayers by digitizing its services, lowering the amount of documentation needed, and expediting tax procedures. Changing the income tax return (ITR) to only have two pages instead of four was part of this streamlining process.

“The change in the parameter when classifying large taxpayers from amount of tax paid for income tax, value-added tax, excise, corporate income tax, and withholding tax to gross sales with threshold set at P1 billion means that existing large taxpayers that are unable to meet the new criteria based on gross sales may have to be delisted as large taxpayer,” Mr. Quizon added.

“The reclassification of existing large taxpayers with gross sales of less than P1 billion would have an impact on the tax obligations imposed upon them as large taxpayers, such as the requirement to issue electronic receipts or sales invoices and implement electronic invoicing system mandated under Section 237 of the Tax Code and required to be complied with by large taxpayers, exporters, and those engaged in commerce.”

Additionally, to promote the switch to electronic payment channels, the option to pay internal revenue taxes to the city or municipal treasurer who has jurisdiction over the taxpayer was removed. This move also guarantees that taxpayers who do not reside in the Philippines can still access tax registration facilities.

The law harmonizes the regulations for how sales of goods and services are treated for value-added tax (VAT), necessitating a sales invoice for each. The mandatory issuance of receipts for each sale and transfer of goods and services will be increased from P100 to P500.

“Based on the draft regulations circulated by the BIR for its public consultation in February 2024, taxpayers mandated to file tax returns and pay the tax due electronically will be subject to administrative penalties if they have resorted to manual filing and payment. Nonetheless, they will not be imposed with the 25% surcharge for filing at the wrong venue. RA No. 11976 has removed this surcharge,” Ms. Peralta noted.

“Another change is that filing can be made anywhere. Filings are no longer required to be made only with the proper BIR offices having jurisdiction over the taxpayers or with the authorized agent banks within their jurisdictions. As mentioned above, the law has removed the 25% surcharge for filing at the wrong venue. However, it will be prudent for taxpayers to await the issuance of the revenue regulations.”

Ms. Peralta explained that “the major change in the invoice system is that for VAT purposes, sellers of services will report the VAT based on their gross sales. Before RA No. 11796, sellers of services report the VAT on their sales based on collection. Now sellers, of goods and services will report based on gross sales and will be required to issue VAT invoices. These VAT invoices will be the basis for input VAT credits to be claimed by their customers.”

“This change will simplify the preparation of VAT returns. Sellers of services do not need to monitor collections for the purposes of VAT reporting. On the other hand, the purchasers of services do not need to chase the issuance to them of the VAT official receipts for purposes of claiming input VAT credits. However, sellers could have cash flow concerns especially if the amounts involved are significant.”

Based on a number of factors, including the quantity of the VAT refund claim, the tax compliance history, and the frequency of filing the claim, the VAT refunds will be recategorized into low-, medium-, and high-risk claims.

To expedite VAT refunds, an invoicing mechanism will also be put in place. The act also gives the BIR 180 days to handle general refund requests for taxes that were incorrectly or unlawfully collected.

Mr. Quizon said that denials on VAT refund claims are caused mostly by non-compliance with invoicing requirements; and under EOPT, there now will be a uniform system of documenting sales of goods and services, with the invoice becoming the sole basis of output tax liability of sellers, and input tax claim of buyers.

“This will expedite the process of claiming VAT refunds since the same rules and verification process will now apply for both VAT on sale of goods and services with the harmonization of the rules on recognition of input and output VAT on sale of goods and services, and the adoption of invoice as the sole basis for substantiating input tax under EOPT,” he said.

“Moreover, the reform introduced in the EOPT on the invoicing system, such as the removal of ‘business style’ in the invoice, will make it easier for taxpayers to comply with the requirement in substantiating their input tax for VAT purposes.”

Towards a more efficient, more robust tax system

Mr. Quizon noted that EOPT provides the necessary legislative mandate to further boost the BIR’s digitalization initiatives, building on the 10-year Digital Transformation Roadmap already developed by the BIR, which identifies four pillars designed to strengthen the tax organization; modernize the digital backbone of the BIR; enhance its policies, governance, and standards; and elevate taxpayer’s experience and innovate BIR services.

“The tax administration of the future will be heavily dependent on information technology. The EOPT ensures that the BIR is positioned to harness technology for the further simplification of tax compliance and the streamlining of processes. We anticipate that the focus for the future will be acquiring and using data to improve efficiency in tax administration and collection,” he said.

There are still concerns, however. Ms. Peralta pointed out that while the EOPT will help make taxation more efficient and much easier for taxpayers, there are still questions that could need answering. One is the manner for classifying taxpayers, as while the law itself provides for the gross sales as the criterion for classifying taxpayers, it does not provide guidance or the requirements for determining the gross sales or for the process of notifying taxpayers of their classification.

“Another one is on the withholding taxes. The law states that the obligation to withhold arises at the time the income has become payable. Without clear guidelines from the BIR, there could be timing differences between the reporting by the seller of the income for income tax purposes and the time of withholding by the buyer and claiming of expenses. Such differences could lead to scrutiny by the BIR,” she said.

“Another area of concern is the VAT refunds. It seems that the law leaves it to the BIR to determine which claims are low-, medium-, or high-risk claims. Given the statutory construction rule that refunds are construed strictly against the taxpayer, the BIR might not have enough flexibility in classifying low-risk claims and this might not improve the refund process to give the taxpayer convenience.”

Ms. Peralta emphasized that taxpayers should monitor the issuance of the revenue regulations implementing the law to gain a better understanding of such matters.

Mr. Quizon echoed the sentiment: “Taxpayers should review their existing transactions, agreements/contracts and identify areas that will be affected by changes introduced by EOPT. Existing compliance process must be reviewed to ensure that the procedures adopted by taxpayers are aligned with the requirements of the new law.”

“Employees who do compliance work must undergo compliance training to ensure that they understand the requirements of the law and that the company is not at risk for non-compliance. Taxpayers using cash register machine (CRM) or point-of-sale (POS) machine, as well as computerized accounting systems affected by the change in invoicing requirements, must be ready to modify their system to ensure they are compliant and can operate properly upon effectivity of the law.”

Progress in reforming the Philippines’ tax policies

VECTORJUICE-FREEPIK

Taxes are a crucial part of our society and economy as they are the main source of revenue for the government. Without taxes, the country would not have the necessary funds to provide services such as education, healthcare, and public safety.

While the government always relies on taxation as a means to generate revenue and fund public services, tax policies are not static and must adapt to changing economic conditions and societal needs.

Aside from the Ease of Paying Taxes (EOPT) Act, which has been signed to law earlier last January, the Philippines has recently amended and developed other tax policies to enhance fiscal sustainability and modernize tax administration.

Proposed Comprehensive Tax Reform Program

On Feb. 12, the Department of Finance (DoF) has presented a refined proposal for a bill simplifying passive income taxes, known as Package 4 of the Comprehensive Tax Reform Program (CTRP 2024).

The CTRP 2024, a priority measure of the Marcos, Jr. administration, seeks to revamp the tax system in the Philippines to stimulate growth in key financial markets by simplifying the tax structure on passive income and various financial products.

Under Package 4 of the CTRP 2024, several amendments and adjustments to tax rates across different sectors have been proposed. These changes are poised to reshape the taxation framework, impacting both individuals and businesses.

One notable change is the harmonization of the interest income tax at a flat rate of 20%. This move aims to simplify tax compliance and create a more uniform tax structure. Royalties, on the other hand, will adhere to the existing tax code until 2027, after which they will be harmonized and reduced to 15% in 2028.

The dividend income tax will remain unchanged until 2027, with a proposed harmonization at a rate of 10% in 2028. Additionally, the stock transaction tax is set to undergo gradual reduction, decreasing annually by 0.1% from 0.6% to 0.1% by 2028.

Current taxes on financial transactions, including sales, agreements, deliveries, or transfer of shares, will be maintained until 2027 and subsequently removed in 2028.

Tax rates on various insurance policies will undergo changes, with some seeing gradual reductions annually. Policies such as insurance upon property and fidelity bonds will experience a decrease in rates, aimed at promoting insurance penetration and mitigating risks. Furthermore, excise taxes on pickup trucks are proposed to be adjusted, contributing to revenue generation.

The proposed changes to taxes on passive income, financial intermediaries, financial transactions, and excise tax on pickup trucks are projected to yield significant revenues. According to the DoF, these reforms are estimated to generate approximately P12.2 billion in revenues from the third quarter of 2024 to 2028.

CTRP 2024 was approved on the third and final reading by the House of Representatives on Nov. 14, 2022, and is currently taken up in the Senate Committee on Ways and Means.

Extension of Tax Amnesty Program

In 2023, the Congress approved Republic Act (RA) 11956, which extends the Estate Tax Amnesty in the Philippines until June 14, 2025. This extension gives beneficiaries more time to settle any unpaid estate taxes without penalties and interests. The amendment also broadens the coverage of the estate tax amnesty to include estate taxes that have remained unpaid or accrued as of May 31, 2022.

The Estate Tax Amnesty Act aims to provide reasonable tax relief to estates with outstanding tax liabilities. It also encourages compliance by offering immunities and privileges to those who fully comply with the conditions set forth in the Act.

Tax collection on digital services

On the other hand, a proposal taxing digital services, called the House Bill No. 7425, also known as the Digital Services Tax Bill or the Digital Economy Taxation Act of 2020 (DETA 2020 Bill), was initiated to capture the value created through digital transactions.

The bill seeks to impose a 12% value-added tax (VAT) on digital goods, services rendered electronically, digital advertising services, internet-based subscription services, and transactions on e-commerce platforms.

Nonresidents providing digital services would be required to establish representative offices or appoint resident agents in the Philippines. The bill also designates network orchestrators and e-commerce platforms as withholding agents for income tax and VAT purposes.

The House Bill 7425 was approved by the House of Representatives in September 2021, and is currently pending at the Senate. — Mhicole A. Moral

First Gen: Pantabangan plant may shut down sooner than expected

FIRSTGEN.COM.PH

By Sheldeen Joy Talavera, Reporter

NUEVA ECIJA — First Gen Corp. may need to close its 132-megawatt Pantabangan-Masiway hydroelectric power plant (HEPP) earlier than expected due to the decreasing water levels caused by El Niño, the Lopez-led company said on Tuesday.

“It is earlier because we started the year with low elevation,” said Richard P. Difuntorum, complex head of the Pantabangan-Masiway and Casecnan HEPPs, speaking to reporters in both English and Filipino.

“This year [is] mainly because of El Niño,” he added. The shutdown in plant operations usually starts in the third week of April.

He said the operations will resume once the water elevation goes above the critical level, depending on the amount of rainfall in the Pantabangan-Carranglan Watershed Forest Reserve.

According to the company, it conducts maintenance activities whenever it implements plant shutdowns.

Data from the National Irrigation Administration (NIA) showed that the water elevation at the Pantabangan Dam is projected to reach 177.80 meters by March 27, indicating that the company needs to suspend operations.

As of Tuesday morning, the water elevation at the Pantabangan Dam is 179.90 meters, lower than the 180.25 meters recorded the previous day.

This is below the 207 meters required for the Pantabangan HEPP to operate at its full capacity.

The complex operated by First Gen has two components: the 100-MW Pantabangan HEPP component commissioned in 1977, and the 12-MW Masiway HEPP portion commissioned in 1981.

Both plants are part of a multipurpose hydro complex that supplies irrigation water for the vast rice fields of Nueva Ecija, approximately 180 kilometers northeast of Metro Manila.

Currently, the Pantabangan HEPP produces 40 MW, which is about 30% of its installed capacity. 

Despite the potential shutdown in power operations, Mr. Difuntorum said that the discharge of water from the Pantabangan Dam for irrigation will continue.

“The NIA can still release since [the facility] has two tunnels: one for power generation and one for irrigation,” he said.

NIA currently has a daily irrigation requirement of 99 cubic meters per second.

SHUTDOWN IMPACT
Mr. Difuntorum said that there is still enough power supply on the Luzon grid, with many generation companies providing electricity.

“Almost no effect to the grid even if we are out,” he said.

He added that it may not have any impact on electricity prices since the capacity it generates is relatively small compared to the total capacities on the grid.

As of Tuesday, data from the National Grid Corp. of the Philippines showed that the Luzon grid has an available generating capacity of 14,709 MW and a system peak demand of 11,284 MW.

According to the advisory from the Philippine Atmospheric, Geophysical, and Astronomical Services Administration, the El Niño phenomenon across the tropical Pacific Ocean shows “signs of weakening” and is expected to persist until the March-April-May 2024 season.

Meanwhile, First Gen Senior Vice President Dennis P. Gonzales said that the company is looking into setting up solar, wind, and battery energy storage systems alongside its hydropower facilities in Nueva Ecija.

“We’re looking at various renewable technologies including wind, solar, and batteries. So, those are the technologies we’re considering to couple with our projects,” he said in a recent interview.

First Gen is targeting to grow its renewable energy portfolio to up to 13 gigawatts by 2030.

Metro Pacific-led consortium in talks to buy stake in Indonesian toll firm for $750M, sources say

SINGAPORE/JAKARTA — A consortium led by Metro Pacific Tollways Corp. (MPTC), the biggest toll road group in the Philippines, is in advanced talks to buy a minority stake in a unit of its Indonesian peer Jasa Marga, in a deal that could fetch $750 million, two sources with knowledge of the matter said.

MPTC, in which Hong Kong’s investment firm First Pacific Co. Ltd. has a 48.1% interest, is aiming to buy a 35% stake in Jasamarga Transjawa Tol, a unit of state-owned Jasa Marga that manages the operation of the Trans Java Toll Road, the sources said.

A deal could be struck in the second quarter of this year, the sources added, declining to be named as the matter is private.

MPTC declined to comment.

Lisye Octaviana, Jasa Marga’s corporate communications head, said Jasamarga Transjawa’s equity financing activities are still ongoing.

“We targeted it will be completed in the first half of 2024,” she said, adding that the identities of the potential investors cannot be disclosed due to confidentiality agreements.

“What we can emphasize is, we are looking for a credible partner who is able to understand, appreciate and find long-term investment value through the assets of PT Jasamarga Transjawa Tol,” she also said.

MPTC is the biggest private sector toll company in Southeast Asia with investments in Indonesia via Nusantara Infrastructure and in Vietnam’s CII Bridges & Roads Investment, its website shows.

In the Philippines, its toll road portfolio includes the North Luzon Expressway and the Subic-Clark-Tarlac Expressway, among others, according to its website.

The company is part of Philippine-listed conglomerate Metro Pacific Investments Corp., which in turn is majority owned by First Pacific’s Metro Pacific Holdings, LSEG data showed.

Jasa Marga, 70% owned by the Indonesian government, is the first and largest toll road developer and operator in Indonesia, according to its website.

Set up in 2017, Jasamarga Transjawa operates the 676-kilometer Trans Java Toll Road, in which Jasa Marga owns 56%, its website shows. — Reuters

Empowering present and future generations through social programs

Photo from Freepik

Social programs are the most concrete way businesses or governments can give back to their customers or taxpayers. Outreaches to schools, free checkups in barangays, and providing essential goods are some examples of projects that have provided immediate relief to Filipinos and, at times, have significantly contributed to improving their overall well-being and quality of life, especially in times of crisis such as the coronavirus pandemic.

As the Philippines allocates resources towards social policies, they not only uplift the present welfare of Filipinos but also foster a more prosperous and equitable society for future generations. Currently, the Department of Social Welfare and Development (DSWD) spearheads these initiatives, seeking to address the immediate needs of vulnerable populations while also laying the groundwork for sustained growth and development.

The DSWD’s flagship program, the Pantawid Pamilyang Pilipino Program (4Ps), is the national poverty reduction initiative aiming to provide financial assistance to the poorest families in the country. The 4Ps has already helped more than 56,000 Filipino households amounting to more than P177 million in cash grants as of Jan. 31.

The department also implements the Supplementary Feeding Program on child development centers in public schools. Under the program, children enrolled in public elementary and secondary schools are eligible to receive two nutritious meals a day. The DSWD receives funding for this program through Republic Act (RA) 11037 or the Masustansyang Pagkain Para sa Batang Filipino Act.

Meanwhile, President Ferdinand “Bongbong” R. Marcos, Jr.’s Pambansang Pabahay Para sa Pilipino Program (4PH), headed by the Department of Human Settlements and Urban Development, aims to construct over six million houses benefitting nearly 30 million Filipinos. All Filipinos can avail of housing assistance especially those coming from the urban poor, informal settlers, minimum wage earners, and overseas Filipino workers.

Education on all levels, while there may be miscellaneous fees, is also free in the country, granting every Filipino the right to learn. RA 9155, or the “Governance of Basic Education Act of 2001,” provides children with free and compulsory elementary and high school educations while RA 10931, or the “Universal Access to Quality Tertiary Education Act,” makes college education accessible to all Filipinos.

Likewise, the Department of Health implements diverse public health programs targeting infectious diseases, non-communicable diseases (NCDs), and emerging health issues like injuries, mental health, and substance abuse. Initiatives include immunization, disease prevention, and control programs focusing on HIV/AIDS, tuberculosis, malaria, lifestyle diseases, and essential NCDs.

While the present objectives of these social programs may be to alleviate hunger and poverty, and grant access to healthcare, housing and education, investments in public welfare lay the foundation for a future generation characterized by the growth of prosperity and equity.

Research from the Center on Budget and Priority Policies (CBPP) indicates that higher family income correlates with positive outcomes in children’s education, behavior, and health. Consequently, the researchers discovered that programs offering more generous income assistance resulted in improved academic performance among young children in school.

Additionally, providing food stamps and alleviating hunger in disadvantaged families can lead to children’s better health outcomes as adults. Women who had access to food stamps during their early childhood also reported enhanced “economic self-sufficiency,” as evidenced by improved indicators such as employment status, income levels, poverty status, high school graduation rates, and participation in programs.

The CBPP also links housing-related problems that housing assistance addresses to a range of adverse outcomes with long-term consequences showing the importance of shelter to future generations. The research shows that children who are homeless and often relocate are more likely to face academic challenges such as dropping out, grade repetition, or poor test performance while children with housing assistance achieved better scores on tests and were far more likely to graduate.

“Assistance programs… not only help low-income families get by today but also help children thrive in the long run by improving their health status, educational success, and future work outcomes,” the CBPP concluded based on their findings.

Furthermore, according to a study from Harvard’s Quarterly Journal of Economics that examined over 130 policies from the United States, social programs spanning from health and education targeted at children have yielded the highest return on investments in youth of all ages.

By calculating the benefits of programs to citizens and the cost of public welfare to the government, researchers determined that social programs, when done correctly, even turned a profit for the government and its citizens when cost and benefits were factored in.

Moreover, the study identified that social policies like scholarships, free healthcare, and family-oriented activities not only delivered immediate benefits to their recipients but also generated long-term gains for governments through increased tax revenues.

Businesses, through their corporate social responsibilities (CSR), can benefit from social programs as well. Based on data from Harvard Business School, 77% of customers are more motivated to purchase from companies with philanthropic commitments while 95% of employees are more inspired to work at companies “with a strong sense of purpose.” These initiatives enhance brand reputation and employee engagement, contributing to long-term success.

Meanwhile, the American Marketing Association (AMA) suggests that CSRs can also impact brand sales. Results from the AMA show that “Corrective” and “Compensating” CSR efforts provide a boost to the sales of participating brands dependent on the consumers’ perception of sincerity.

“The moderating effect of brand CSR reputation also shows a similar pattern, attenuating the positive effects for both Corrective and Compensating CSR, and improving purchase intention outcomes for Cultivating CSR. These effects were driven in part by subjects’ inferences regarding the sincerity of the brand’s motives behind the CSR initiatives,” the AMA said in their Journal of Marketing.

Concerted efforts by the government or by businesses towards social welfare in the Philippines pave the way for an empowered generation, where every Filipino has the opportunity to thrive. By prioritizing investments in social programs, the nation sets a precedent for sustainable development and inclusive growth, ensuring a prosperous and equitable society for generations to come. — Jomarc Angelo M. Corpuz

DoE awards 500-MW wind contracts to Repower Energy   

A wind turbine is seen in this file photo. — REUTERS

THE ENERGY department has awarded wind energy service contracts with a total capacity of 500 megawatts (MW) to Repower Energy Development Corp. (REDC), the renewable energy developer said on Tuesday.

The 25-year onshore and offshore wind contracts allow the company to build wind farms in Real and Mauban towns in Quezon province, REDC said in a stock exchange disclosure.

The contracts encompass the 100-MW Silang onshore wind farm covering 2,592 hectares, the 100-MW Mauban offshore wind farm covering 3,888 hectares, and the 200-MW Real offshore wind farm covering 14,661 hectares.

REDC will also pursue the 100-MW Pandan Labayat onshore wind project, which will cover 2,025 hectares, in Quezon province.

The projects are situated within the vicinity of the company’s three operating hydropower plants in the area.

The company also operates a large switching station that is directly connected to the grid of the National Grid Corp. of the Philippines.

“Developing our wind-energy capabilities will complement our core capabilities in operating run-of-the-river hydropower plants, enabling REDC to continue enjoying its ongoing multi-year growth in revenue and net income,” REDC President and Chief Executive Officer Eric Peter Y. Roxas said.

For the third quarter, the company recorded an attributable net income of P36.51 million, up 19.3%.

Gross revenues declined by 11.9% to P103.26 million.

REDC is a run-of-river hydropower developer, a subsidiary of Pure Energy Holdings, which has 124 MW of mini-hydropower projects clustered in Laguna, Quezon, Camarines Sur, Bukidnon, and other provinces under development.

Last year, REDC secured clearance from the Department of Energy (DoE) to develop its first wind power projects totaling 200 MW in Quezon province. — Sheldeen Joy Talavera

D.M. Wenceslao income climbs to P7.3 billion

D.M. WENCESLAO and Associates, Inc. (DMW) saw its net income for 2023 rise over three times to P7.3 billion from P2.1 billion the prior year, the listed property developer announced on Tuesday.

The company’s 2023 net income was boosted by one-time gains worth P5.6 billion from the consolidation of a joint venture entity in December, DMW said in a stock exchange disclosure.

Leasing revenues jumped 19% to P2.6 billion, and accounted for 63% of the company’s overall revenues.

The growth was supported by strong take up across DMW’s portfolio and the launch of Parqal, a five-hectare mixed-use campus development in Parañaque City that has 70,000 square meters (sq.m.) of gross leasable area.

“Our flagship mixed-use project Parqal, which opened in September 2023, benefits from rapidly rising foot traffic and strong take-up from quality locators,” DMW Chief Executive Officer Delfin Angelo C. Wenceslao said.

The company’s residential revenues rose by 8% to P1.4 billion, led by “consistent construction progress and incremental units qualifying for revenue recognition.”

“DMW is primed to climb even greater heights this year, riding a tailwind of robust economic growth, resurgence in commercial space demand, and surging mobility,” Mr. Wenceslao said.

The company said in December that it had secured a majority stake in Bay Resources and Development Corp. (BRDC) after subscribing to 232.17 million worth of shares. The subscription increased DMW’s stake in BRDC to 51% from 50%.

In 1992, DMW entered into a joint venture agreement with the Armed Forces of the Philippines Retirement and Separation Benefits System to form BRDC, with each owning a 50% interest.

BRDC currently owns parcels of land in Aseana City and has existing land lease contracts.

DMW said in a separate disclosure that its board had approved the subscription to 1.875 million new common shares of Aseana Water Services Management, Inc. (AWSMI) for P1.875 million.

Following the transaction, DMW’s ownership in AWSMI is now at 75%, making the latter a subsidiary of the listed property developer.

DMW has developed over 400,000 sq.m. of land and buildings and completed over 140 construction and infrastructure projects since its incorporation in 1965. It is also the master developer and primary owner of the 107.5-hectare Aseana City development along the coastal waters of Manila Bay.

On Tuesday, DMW shares improved by 8.33% or 45 centavos to P5.85 per share. — Revin Mikhael D. Ochave

Reinventing CSR for long-term growth

Photo from Freepik

The coronavirus disease (COVID-19) has caused massive disruptions to public health systems worldwide, and its impact has extended to the corporate world as well. As companies navigate the pandemic, their approaches to corporate social responsibility (CSR) have evolved, reflecting a broader awareness of their social, environmental, and economic responsibilities.

Although the foundational principles of CSR have remained unchanged, the pandemic has highlighted new challenges and opportunities for businesses committed to upholding their ethical and social responsibilities. Sustainability and social responsibility have become essential aspects of business strategies, and companies are now encouraged to take into account their impact on the economy, environment, and society.

A report by Deloitte highlights that CSR is no longer seen as just a philanthropic activity, but rather a strategic business imperative that can drive innovation and long-term growth. In fact, 85% of board directors see CSR as an important tool for achieving competitive advantage. Meanwhile, 92% of respondents believe that CSR makes their company more attractive as an employer and increases employee loyalty.

The pandemic has amplified existing societal issues and new challenges, such as healthcare disparities, economic inequality, and environmental degradation. Hence, refining CSR goals allows companies to realign their initiatives with these evolving needs, ensuring maximum impact and relevance.

According to an article published by Harvard Business School, nearly 99% of CSR professionals acknowledge that COVID-19 has impacted their CSR efforts and initiatives, leading to adjustments in budgets and partnerships to address issues like food insecurity, healthcare disparities, education, and more.

Another report by Deloitte suggested that the successful CSR strategy is built around a clear purpose. This purpose should be integrated into the company’s corporate strategy, outlining its ambitions and how it creates long-term value for stakeholders through ESG targets. When companies adopt a purpose-driven approach, they can align their CSR initiatives with their broader business goals, which fosters authenticity and trust among all stakeholders.

In addition, the similar report recommended that companies should analyze the areas where they can create the most value. This involves taking into account the perspectives of suppliers, customers, employees, shareholders, and society as a whole.

Understanding the needs of community

Increasingly conscious of their impact on society and the environment, consumers are looking to do business with companies that share their values. This shift has led to an increased focus towards purpose-driven organizations that prioritize social and environmental responsibility alongside financial success.

A report published by Harvard Business Review said that creating value for the customer, positively impacting society, and inspiring innovation and positive change are key factors that drive an organization’s purpose. As a result, businesses are increasingly expected to contribute to the greater good, whether it’s through charitable giving, sustainability initiatives, or other forms of social responsibility.

According to Deloitte, it is important to identify the primary stakeholders, understand their priorities, and acquire the necessary skills to address their needs. Early involvement of stakeholders allows companies to ensure that their CSR efforts align with the needs of the communities they serve, which in turn, enhances their credibility and establishes long-term relationships.

Businesses can also ensure that their CSR initiatives lead to scalable projects with measurable business impacts by implementing governance measures. Deloitte suggested that conducting regular materiality assessments can help organizations stay mindful of changing stakeholder expectations and societal needs, which in turn enables them to be more responsive and effective in their efforts.

Prioritizing well-being and inclusion

Employees are the backbone of any organization, and prioritizing their well-being is not only the right thing to do but also makes good business sense. During the pandemic, companies have had to demonstrate their commitment to the well-being of their employees, customers, and communities. In response, many businesses have taken steps to support their employees, such as providing leave policies, flexible work arrangements, and mental health support.

According to Deloitte’s “Well-being at Work” survey in 2023, inclusive workplaces foster diverse perspectives and ideas, leading to enhanced innovation and problem-solving. It also promotes a sense of belonging and psychological safety among employees. This, in turn, contributes to a positive organizational culture and higher levels of employee satisfaction.

Furthermore, businesses that are committed to upholding their ethical and social responsibilities are likely to emerge stronger from the pandemic, with a more loyal customer base and a more engaged workforce. — Mhicole A. Moral

Solar Philippines’ Leviste buys 7.55% of Roxas and Co.

SOLARPHILIPPINES.PH

BUSINESSMAN Leandro Antonio L. Leviste bought 7.55% of listed company Roxas and Co., Inc. (RCI) following his recent move to invest P5 billion in Batangas province for various projects.

 In a Facebook post on Tuesday, Solar Philippines Power Project Holdings, Inc. showed a letter sent by Mr. Leviste to the Securities and Exchange Commission (SEC), indicating that he bought 188.89 million shares of RCI, equivalent to 7.55% ownership.

 As of Tuesday, Philippine Stock Exchange data showed that RCI’s public float level is at 44.1%. The company has a market capitalization of P5.05 billion, as well as 2.91 billion listed and issued shares.

 The acquisition came after another Leviste-led company, Countryside Investments Holdings Corp., announced last week a P5-billion investment plan that would focus on energy, industrial, and commercial projects in Batangas.

 The projects will be done along with Solar Philippines. One of the projects of Solar Philippines is the 63-megawatt Calatagan Solar Farm.

 Countryside Investments previously said its investments would help the province following the recent closure of the Central Azucarera Don Pedro sugar mill in Nasugbu that affected over 13,000 farmers and sugar mill workers.

 Various development projects are planned by Countryside Investments in Western Batangas, where the company and its affiliates have landholdings. The projects will be funded by proceeds from the recent share sale of Solar Philippines in SP New Energy Corp. (SPNEC) to Meralco PowerGen Corp. as well as other financing.

 SPNEC was founded by Mr. Leviste but is now controlled by the Pangilinan group, through MGen Renewable Energy, Inc.

 Meralco’s controlling stakeholder, 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. — Revin Mikhael D. Ochave

GCash says direct bank cash-in service to be available in US, Europe soon

GCASH will soon offer its cash-in service through banks in the United States and Europe, the digital wallet company announced on Monday.

“Soon, they (Filipinos abroad) can also experience the same bank cash-in ease and convenience that they enjoy here in the Philippines,” GCash International General Manager Paul Albano said at a launch event.

“We’ll have direct bank cash-in in over 4,000 banks in the US by quarter two [of this year]. Also in Europe, in the UK (United Kingdom), in about 2,000 banks in quarter two,” he added.

Last month, the Bangko Sentral ng Pilipinas approved the expansion of GCash in Europe and the Middle East.

GCash is currently accessible in the US, Canada, Australia, Japan, Italy, Great Britain, United Arab Emirates, Spain, Korea, Taiwan, Germany, Qatar, and Hong Kong.

It will also be available in Singapore, Saudi Arabia, and Kuwait by April.

Through G-Cash Overseas, users with international SIM cards can send money, do bank transfers, buy load credits, pay bills, and send gifts.

The G-Save option, which allows users to open a savings account in the e-wallet, will be available for international users in the second quarter of the year, according to Mr. Albano.

“The problem we’re solving for the Filipinos sending money into the Philippines is the control of their funds,” said Ernest L. Cu, president and chief executive officer of Globe, and chairman of the board of Mynt, the operator of GCash. — Beatriz Marie D. Cruz

Bloomberry settles 10-year dispute with GGAM

RAZON-LED Bloomberry Resorts Corp. said it has settled its decade-long dispute with casino management company Global Gaming Asset Management LLC (GGAM).

In a regulatory filing on Tuesday, Bloomberry said its subsidiaries Sureste Properties, Inc. (SPI) and Bloomberry Resorts and Hotels, Inc. (BRHI) have reached an agreement for a “universal settlement” covering all the pending cases between the parties.

The settlement requires SPI to purchase the 921,184,056 shares in Bloomberry held by GGAM for $300 million.

“At the conversion rate of P56 to $1, this agreed purchase price will amount to P18.32 per share. This purchase will be made through a special block sale through the Philippine Stock Exchange (PSE),” Bloomberry said.

“The settlement is contingent on the lifting of the writ of preliminary injunction and attachment on the GGAM shares in Bloomberry issued by the Regional Trial Court of Makati, as well as the Philippine Depository & Trust Corp. lifting of all suspensions and restrictions on transactions in the shares, and PSE approval of the special block sale,” it added.

Bloomberry said the settlement “will put an end to the dispute of SPI and BRHI with GGAM, which has dragged on for ten years.”

GGAM is the former partner of Bloomberry in managing Solaire Resort Entertainment City in Parañaque.

In 2013, Bloomberry terminated its management deal with GGAM, citing the latter’s supposed material breach of contract.

A Singapore arbitration court in 2019 directed Bloomberry to pay $296 million to GGAM, which was contested by the Razon-led company.

Aside from Solaire Resort Entertainment City, Bloomberry owns and operates Solaire Resort North in Quezon City and Jeju Sun Hotel & Casino in South Korea.

In 2023, Bloomberry recorded an 85% growth in net income to P9.5 billion. Its consolidated net revenue rose by 24% to P48.4 billion.

Bloomberry shares fell by 8.7% or P1 to P10.50 apiece on Tuesday. — Revin Mikhael D. Ochave