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Filipinos trust e-wallets despite issues

CHRISTIANN KOEPKE-UNSPLASH

FILIPINOS continue to trust e-wallets and use them frequently for low-value transactions despite encountering issues with them in the past six months, a survey by Nomura Research Institute (NRI) showed.

“Despite issues encountered, consumers’ behaviors toward e-wallets remain positive among survey respondents. Filipino consumers display remarkable preference for e-wallets, undeterred by the issues encountered in the ever-evolving digital payment landscape,” NRI-Singapore-Manila Branch said in a statement on Tuesday.

NRI conducted an online survey of 477 e-wallet users from various age groups in Metro Manila from Sept. 10 to Oct. 9.

Of the 477 respondents, 40.9% said they encountered integration, technical, and security issues in their e-wallets in the last six months.

The three most commonly encountered issues were downtime, not receiving one-time passwords (OTP), and not being able to open the app.

Despite these issues, 55.4% of the respondents said they were using e-wallets more often than before, while 39% said they were using it at the same frequency as before.

According to the survey, the increase in e-wallet usage came on the back of their convenience versus traditional means of payment (70%), easier cash-in (59%), discounts (43%), and added security features (20%).

Almost all or 95% of the respondents who encountered issues also said they still trust e-wallets as a digital platform.

NRI said this is a product of necessity and convenience, as “the use of e-wallet has already become integral to consumers’ lives, motivated by wider adoption of e-commerce and digital financial platforms in the Philippines.”

Meanwhile, 52.6% said they would continue to use e-wallets at the same frequency as before, with the rest saying they expect to increase their usage. 

The top uses of e-wallets, according to the respondents, were for sending money to family and friends (87%), paying online merchants (83%), and as an alternative to carrying cash for everyday purchases (61%).

The survey also showed Filipinos use e-wallets for low-value transactions, with 48% of respondents using e-wallets for transactions worth P1,000 to P5,000.

“Most of the average transactions are still less than P10,000. This can be attributed to (1) different preference for larger value transactions and (2) transaction limits imposed by e-wallet platforms,” NRI said.

Meanwhile, respondents who said they decreased their e-wallet usage said this was due to security issues (43%), more reliable traditional means (35%), difficult cash-in methods (26%), and the low adoption of cashless payments (9%).

“Despite developments, there are still a few that are concerned with their security while using e-wallets. Difficulty in integration and reliability are also key reasons why some have decided to use e-wallets less,” NRI said.

More than half or 53% of the respondents said the government has insufficient support for e-wallets.

Users noted it is difficult to file complaints for fraudulent activity and there is no penalty for loss or theft of money. There are also no sufficient tools to trace cyber criminals, they said.

Moving forward, users expect improvements in e-wallets related to insurance for lost money (68%) and stricter security policies and features (55%).

“It is clear that the appeal of these digital platforms far outweighs the occasional inconveniences experienced by users. Furthermore, consumers are expressing the growing preference for stronger security measures from e-wallet platforms, indicating an anticipation for more robust financial loss protection,” NRI said. — AMCS

Hybrid work adoption crucial for small businesses, says GoTo

STOCK PHOTO | Image by our team from Freepik

SMALL BUSINESSES and companies must adopt a hybrid workplace to boost productivity and growth and meet the overall demand for flexibility, global mobile device management solution company GoTo said.

In the age of digital transformation, consolidated software capabilities allow enterprises to spend less and focus more on the needs of both employees and customers, Lindsay Brown, vice-president and general manager at GoTo Asia Pacific and Japan, said in an interview with BusinessWorld.

“There are probably eight key IT management capabilities you’d have to get eight software licenses for,” he noted. “Especially as a small business, it becomes very expensive.”

Mr. Brown said digital adoption has grown as a necessity for the survival of any business today. “For a small business, it can end them.”

He added that the increased demand for flexibility across all generations can be observed, catalyzed by the pandemic. “Older employees want flexibility for more time with their family, while the younger ones for multiple jobs.”

Results of the Asia Pacific Workforce Hopes and Fears Survey 2023 showed the Filipino workforce preferring hybrid work (51%) and full-time remote work (24%) arrangements.

The 2023 PhilCare Wellness Index, which studied Gen Z — the digital-native cohort born in the late 1990s and early 2000s, found flexible work arrangement and having multiple sources of income as their priorities.

GoTo, originally known as 3am Labs, started two decades ago in the river-bisected city of Budapest, Hungary when its founder finally refused to drive through traffic from the Buda district to Pest where he worked, Mr. Brown said.

“He created remote software to allow him to access his computer from Buda,” he added, noting that the company eventually included remote support, management, and communications for businesses over the years.

GoTo aims to open such opportunities for small and medium businesses and simplify the complex environment of hybrid work with all-in-one automated IT management and business communications software solutions, Mr. Brown said.

These include remote access and support, conversational ticketing, visual engagement, and remote monitoring and management for its Resolve product, he noted.

It also allows phone and messaging, video meetings, webinars, and contact centers for its Connect platform, he added.

He added that GoTo’s solutions portfolio employs zero-trust security by design. “Any transaction has to be authenticated before it happens, which makes it almost impossible for anyone to get in,” Mr. Brown said, noting the potential data and financial risks associated with digital adoption.

The company also caters to large enterprises in the country like the Philippine National Bank and business process outsourcing company Inspiro Relia, Inc. for off-network support through its Rescue tool, he added.

Mr. Brown said the company has plans to set up servers in Southeast Asia beyond Singapore in the coming months, and continue the growth it has recorded in the Philippines.

“We’ve seen about 65% revenue growth, 30% customer growth, and 40% channel growth [in the Philippine market],” he added. — Miguel Hanz L. Antivola

PEZA clarifies its rules on securing the PEZA Visa

FREEPIK

On Sept. 7, the Philippine Economic Zone Authority (PEZA) issued Memorandum Circular No. 2023-045 otherwise known as Clarifications on the Documentary requirements in securing PEZA Visa (PV). The Memorandum Circular identified three documentary requirements for clarification, namely: 1.) an Affidavit of Understudy Training Program (UTP) and Skills Development Program (SDP), 2.) a Request for Exemption from the Order to Leave (OTL), and, 3.) a Letter of Explanation required for PV renewal applications filed less than 30 days prior to visa expiry.

Before the issuance of this Memorandum Circular, among the requirements for the PV application was the submission to PEZA of the Understudy with Undertaking for technical and supervisory positions which included an Affidavit of UTP. As with any issuance, there arises a question of the appropriateness of a regulation, without necessarily causing unwarranted inconvenience, points which again come to fore given this legal development.

By way of definition, the National Economic and Development Authority (NEDA) in its Implementing Rules and Regulations (IRR) of Republic Act No. 11647 (an Act Promoting Foreign Investments, amending thereby RA No. 7042, otherwise known as the Foreign Investment Act of 1991, as amended), explains the UTP as “a training plan designed to transfer technology or skills by designating at least two understudies per foreign national employed.” The employer selects two next-in-rank Filipino regular employees within the same enterprise, to be trained by the foreign national, who will transfer the technology or skills to the Filipino employees. Once the transfer is successful, the goal is for a Filipino employee to succeed the foreign national. Notably, the IRR issued by NEDA also provides that it is the Department of Labor and Employment (DoLE) which is tasked to monitor and regulate the UTP.

In the said Memorandum Circular, the PEZA also does away with the requirement to submit a letter to the PEZA Director General for PV renewal applications filed less than 30 days prior to visa expiry. Prior to this issuance, PEZA already amended its initial rules on the filing of PV renewal application less than 30 days before the expiry of the visa. The initial rule was that only PV renewal applications filed at least 30 days prior to the expiration of the visa were accepted. PV renewals which were filed less than 30 days prior to visa expiry were not accepted and the foreign nationals were directed to first downgrade their visas before they could apply anew for the conversion of their downgraded 9(a)/temporary visitor visas to PVs. This rule was amended through Joint PEZA-BI Memorandum Circular (JMC) No. 2022-001, otherwise known as the Amended Guidelines Governing the Documentary Requirements and Procedures for the Application, Evaluation and Processing of the PEZA Visa.

The Joint Memorandum provided that the PV renewal applications filed less than 30 days before their respective expiration dates may still be accepted by the PEZA, provided that a letter explaining the justifiable causes for the belated filing is attached to the application. In the Memorandum Circular, PEZA now categorically allows the filing of PV renewal applications within the 30 days prior to the expiry of the valid PV, as it eliminated the requirement to submit the letter of explanation for the belated filing to the PEZA Director General.

Finally, the PEZA now allows the submission of a request for exemption from the OTL for foreign nationals who are required to downgrade their PVs should there be a change in position, title, or job description while working for the same company. Prior to this Memorandum Circular, the Order of Downgrading for these foreign nationals came with a mandatory Order to Leave the country before they can apply for the conversion to a PV for the new position within the original company. This resulted in logistical and financial difficulties for the foreign nationals as they were constrained to leave the country and come back, despite their intention to remain in the Philippines to work. It also proved to be counterproductive as foreign employees who were promoted, or who changed positions, roles or functions would have to stop working temporarily in order to either comply with the OTL or await the resolution of their Motion for Reconsideration requesting for its waiver. The arising scenarios are obviously less than ideal, not to mention assuredly inconvenient, for any affected foreign national.

Now, the foreign national whose PV is to be downgraded by reason of change in employment status due to change in position, title or job description while working for the same company may be exempt from an OTL through the submission of a request letter for exemption from the OTL to be submitted to PEZA and thereafter endorsed to the Bureau of Immigration (BI). The downgrading application must be accompanied by the original and duly accomplished Contract of Employment (or Job Offer) of the foreign national and a Notarized Undertaking to immediately apply for a PV.

This is a welcome development to simplify the immigration processes for efficiency and convenience. It is with hope that this leads to the OTL also being waived for foreign nationals who downgrade their PVs to work for a different company in the Philippines. Although the reason for the OTL is simply a change of employer or visa sponsor, the issuance of an OTL to an individual in a foreign country leaves a negative impression. The issuance of the OTL also runs counter to the promotion of the country’s competitiveness and attractiveness to foreign investors, hence, worth revisiting.

In summary, PEZA’s efforts are commendable for refining and improving the rules on the issuance of the PV. However, as with each new regulation, there is always the balancing between warranted hurdles to convenience versus advocating for measures that serve the public interest and adhere to the ease of doing business.

This article is only for general informational and educational purposes and is not offered as and does not constitute legal advice or opinion.

 

Christianna Manami Y. Salud is an associate of the Immigration department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

cysalud@accralaw.com

(632) 8830-8000

Arts & Culture (11/29/23)

PPO stages outreach concert in Kalibo

AKLANONS can look forward to a night of music as the Philippine Philharmonic Orchestra (PPO) performs in a concert on Nov. 29, 7 p.m., at the Aklan Provincial Capitol, in front of the Godofredo P. Ramos Park, in Kalibo, Aklan. Billed Hala Bira PPO sa Kalibo, the concert will see the PPO, led by Dr. Herminigildo G. Ranera, performing familiar tunes like Mikhail Glinka’s Russian and Ludmilla Overture, Johannes Brahms’ Hungarian Dance No. 5, Peter Ilich Tchaikovsky’s The Nutcracker Suite, Camille Sains Saens’ Danse Bacchanale from the opera Samson et Dalila, selections from Richard Rodgers and Oscar Hammerstein’s The Sound of Music, and Ernani Cuenco’s “Gaano Ko Ikaw Kamahal.” There will be surprise numbers included especially programmed for the Aklanon audience. Three-time Aliw Award winner soprano Gerphil Flores-Libana and tenor and musical theatre actor Arman Ferrer will be the guest performers.

Ayala Museum holds parol workshop

Spend a Christmas SPILL-ed with fun at Ayala Museum decorating a fluid art parol on Dec. 2 from 1-3 p.m. (for children ages five to 12) and 4-6 p.m. (teens and adults). Learn the basics of color theory and the paint pouring process, then experiment with your own color combinations to create a one-of-a-kind Christmas lantern. The Let It Flow workshop is open to participants of all ages. It includes basic art materials for participants, access to the museum’s new educational studios, and one museum admission. For details visit the Ayala Museum’s Facebook page.

Salcedo Auctions reveals year-end sale

SALCEDO Auctions’ year-end sale, “Under the Tree: The Wish List” live and online auction, starts at 2 p.m. on Dec. 2. It will include several pieces of important Philippine art, a selection of antique furniture, and a suite of jewelry and timepieces, among other collectibles. Notable pieces include an early work from BenCab titled Subway Madonna which precedes his Sabel and Larawan series, Geraldine Javier’s The Tree of Knowledge of Good and Evil which comes home after being exhibited internationally in museums and galleries, and Mark Justiniani’s Morning Glow, a voluptuous nude rendered in the artist’s signature strokes. The watch and jewelry room list includes a diamond-studded Cartier Panthère watch in 18k gold, Patek Philippe’s luxury timepiece Aquanaut Chronograph 5968R in a rose gold casing, and fine pieces by Tiffany & Co. and Bvlgari. In-person preview runs until Dec. 1 at NEX Tower, 6786 Ayala Avenue, Makati before the auction begins the next day. For inquiries, e-mail info@salcedoauctions.com.

Joseph Tecson mounts 16th solo exhibition

ON THE white-washed walls of Galleria Nicolas in Greenbelt, Makati, contemporary artist Joseph Tecson has mounted his bold compositions of energized blooms for his 16th solo exhibition. Quatervois highlights his resonance with flora in his father’s budding flower farm. “I want to represent what my dad did in the farm,” he said, on why the attempt to find a silent retreat goes hand-in-hand with honoring his father. Mr. Tecson learned how to paint during a period of incarceration from 2008-2012. The exhibition’s title is indicative of a turning point in his artistic career, ending a battle with his dark past. It is on view until Dec. 4 at Galleria Nicolas in Greenbelt.

Annie Cabigting paintings at the Met Museum

THE Metropolitan Museum of Manila is currently exhibiting a collection of Annie Cabigting’s paintings. The exhibit, When we look at art…,” contains her signature  photorealistic paintings of people looking at art, but it is the first of its kind to showcase her extensive body of work. “Looking at art this way, through photographs and images taken by another viewer, profoundly alters our experience of art,” said Ms. Cabigting, describing her paintings, in her book Something to Do with Art. The exhibition investigates the ways art is experienced, reenacting a viewer’s perspective appreciating art with others. When we look at art… is on view until April 13, 2024, at the Metropolitan Museum of Manila in Bonifacio Global City, Taguig.

CCP, National Museum set up experimental exhibit

THE Cultural Center of the Philippines (CCP) and the National Museum of the Philippines have teamed up to present a collaborative exhibit titled “Selections from the 21st Century Art Museum (21AM) Collection.” On view on the 4th floor of the National Museum of Fine Arts, in Luneta, Manila, it is a continuation of the CCP’s programs to promote its collection to a wider audience by gathering artworks that seek to outline the early trajectories of Philippine contemporary art from the 1960s to the 1980s. The exhibition consists of two sections — “The Possibilities of Luminance” and “Man and Nature.” The former is anchored on the concept of brightness or luminance as an artistic expression while the latter contemplates visual expressions surrounding human and environment, explored through the works of select National Artists for the Visual Arts. “Selections from the 21st Century Art Museum (21AM) Collection” is on view until November 2024 at the National Museum in Manila. It is free and open to the public.

Theater Fans holds merchandise fundraiser

To help with its operating expenses, the Theater Fans Manila site is selling Playbills and theater merchandise that make for great Christmas gifts for theater enthusiasts. Every item is worth a P500 donation to TFM (except for the Off-Broadway playbill for Here Lies Love, which is worth P2,000). Grab/Lalamove fees will be shouldered by the buyer. The extensive range of Playbills include Arthur Miller’s All My Sons, & Juliet, Chicago, How to Succeed in Business Without Really Trying, Next to Normal, Hamilton, Les Liaisons Dangereuses, and Xanadu. There are also official T-shirts from Ang Huling El Bimbo, Rent, Avenue Q, The Vagina Monologues, Carrie, and Beautiful: A Carole King Musical, among others. The list of available merchandise can be found here: List of Playbills (theaterfansmanila.com)

Philippines drops in 2023 Bribery Risk Rankings

The Philippines fell five notches to 119th out of 194 countries in the 2023 edition of the Bribery Risk Matrix, developed by the nonprofit business association TRACE. With the combined and weighted score of four domains,* the Philippines scored 54 out of 100, with a “moderate” risk level.

 

Philippines drops in 2023 Bribery Risk Rankings

How PSEi member stocks performed — November 28, 2023

Here’s a quick glance at how PSEi stocks fared on Tuesday, November 28, 2023.

Peso inches down vs dollar as AMRO cuts PHL GDP forecasts

THE PESO slipped against the dollar on Tuesday after the ASEAN+3 Macroeconomic Research Office (AMRO) reduced its gross domestic product (GDP) growth forecasts for the Philippines.

The local unit closed at P55.40 per dollar on Tuesday, weakening by two centavos from its P55.38 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session lower at P55.435 against the dollar. Its intraday best was its closing level of P55.40, while its weakest showing was at P55.52 versus the greenback.

Dollars exchanged went up to $1.24 billion on Tuesday from $1.19 billion on Friday.

The peso declined against the dollar after AMRO lowered its growth estimates for the Philippines for this year and next, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

AMRO now expects the Philippine economy to expand by 5.6% this year, lower than the 5.9% forecast it gave in its Regional Economic Outlook Update in October.

The latest growth projection is below the government’s full-year 6-7% target and slower than the 7.6% GDP expansion in 2022.

The economy expanded by 5.9% in the third quarter, bringing the nine-month average to 5.5%. Economic growth would have to reach at least 7.2% in the fourth quarter to hit the lower end of the government’s target.

For 2024, AMRO slightly lowered its GDP growth forecast to 6.3% from the 6.5% it gave in October. This would likewise fall short of the government’s 6.5-8% target for next year.

“The peso weakened as global trade prospects brightened following the two-day extension of the truce between the Israeli and Hamas military forces,” a trader said in an e-mail.

An Israel-Hamas truce in the Gaza Strip stretched into a fifth day on Tuesday as the two sides completed the release of Israeli hostages and detained Palestinians and looked poised to free more as the pause in fighting was extended by two days, Reuters reported.

Israel said 11 Israelis had returned to the country from the Gaza Strip on Monday, bringing to 69 the total of Israeli and foreign hostages the Palestinian group has freed since Friday under the truce.

The peso was also dragged down by the general strength of the dollar against other global currencies, Mr. Ricafort added.

On Tuesday, the dollar index, a measure of the greenback against a basket of currencies, fell to 103.07, its lowest since Aug. 31, Reuters reported. The index is down 3% and on course for its steepest monthly decline in a year.

For Wednesday, the trader said the peso could strengthen against the dollar ahead of a likely softer US consumer confidence report.

The trader sees the peso moving between P55.25 and P55.50 per dollar on Wednesday, while Mr. Ricafort expects it to trade from P55.30 to P55.50. — AMCS with Reuters

Stocks up on easing oil prices, window dressing

BW FILE PHOTO

LOCAL SHARES closed higher on Tuesday as investor sentiment was buoyed by easing global oil prices and window dressing before the end of the month.

The benchmark Philippine Stock Exchange index rose by 40.07 points or 0.63% to end at 6,309.57, while the broader all shares climbed by 10.48 points or 0.31% to close at 3,358.70.

“Philippine shares continued their upward momentum, making a challenge towards the 6,400 level, as investors gear up for the last month and prepare for some window dressing before November closes,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. 

The local bourse ended in positive territory amid easing global oil prices, Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The local bourse gained by 40.07 points to 6,309.57 thanks to the easing of oil prices amid the temporary truce between Israel and Hamas, coupled with the potential cut in oil supply by OPEC+ (Organization of the Petroleum Exporting Countries and its allies),” Ms. Alviar said.   

“Easing oil prices could support the growth of the Philippines, especially in the last quarter of the year,” she added.

OPEC+, which includes OPEC countries and other countries such as Russia, is scheduled to have an online ministerial meeting on Thursday to discuss production targets for next year.

On Tuesday, US crude eased 0.13% to $74.76 per barrel and Brent was back below $80, with oil prices swaying between gains and losses ahead of OPEC+ meeting later this week, Reuters reported.

At home, as of Tuesday, year-to-date price adjustments stood at P12.30 per liter for gasoline, P6.00 per liter for diesel, and P1.74 per liter for kerosene.

The majority of the sectoral indices closed higher on Tuesday. Property increased by 90.30 points or 3.35% to 2,780.18; holding firms went up by 31.34 points or 0.52% to 6,007.62; mining and oil climbed by 20.67 points or 0.21% to 9,680.97; and financials rose by 0.53 point or 0.03% to 1,746.25. 

Meanwhile, industrials declined by 118.13 points or 1.32% to 8,808.19, and services inched down by 0.21 point or 0.01% to 1,521.08. 

“The property sector surged the most, advancing by 3.36%, largely influenced by the 4.46% gain of SM Prime Holdings, Inc. and the 3.68% increase of Ayala Land, Inc., positioning them at the top among the index members. Meanwhile, Universal Robina Corp. was at the bottom, losing by 3.39%,” Ms. Alviar said.

Value turnover rose to P5.34 billion on Tuesday with 382.74 million issues changing hands from the P2.68 billion with 445.73 million issues recorded on Friday.

Decliners beat advancers, 106 to 79, while 39 names ended unchanged. 

Net foreign buying reached P670.36 million on Tuesday versus the P123.04 million in selling seen on Friday.

Philippine financial markets were closed on Monday due to a public holiday for Bonifacio Day. — R.M.D. Ochave with Reuters

‘Not right time’ to increase port storage fees — AmCham

PHILIPPINE STAR/EDD GUMBAN

THE American Chamber of Commerce of the Philippines (AmCham) said it does not support increasing port storage fees as the economy continues to recover from the pandemic.

“We have been lobbying against any kind of storage (fee) increases; it is not just the right time,” said Ebb Hinchliffe, AmCham’s executive director, on the sidelines of the Management Association of the Philippines Annual General Membership Meeting on Tuesday.

“You know, we are just coming out of the mess of the pandemic … I think (the government has) got better things to worry about,” Mr. Hinchliffe said.

Last month, the Philippine Ports Authority (PPA) proposed an increase in storage rates in an online public consultation on Oct. 18, according to the Philippine Exporters Confederation, Inc. (Philexport).

In its proposal, the PPA said that it is planning to increase the storage charges by 32% for import, export, and transshipment containers and to add a 150% surcharge on the corresponding storage rates with increase for refrigerated containers.

Philexport, citing the PPA, said the increase in storage charges will ensure optimal use of the yards and encourage immediate withdrawal of containers to prevent congestion.

In its position letter submitted to the agency on Nov. 6, Philexport recommended that the proposal go through a regulatory impact assessment as a standard operating procedure under the Ease of Doing Business law.

Philexport said that the increase is too onerous if the PPA imposes fees on overstaying containers for reasons beyond the shipper’s control, such as during the arming and disarming of E-TRACC devices on containers and downtime periods in the PPA’s IT.

Asked to comment, the PPA had not replied at the deadline.

Meanwhile, Mr. Hinchliffe said that the chamber is currently in the process of joining other business groups in preparing a position paper.

“I think the Joint Foreign Chambers will be sending out a statement,” he said.

Earlier this month, the European Chamber of Commerce of the Philippines also opposed the increase in storage charges, noting that it will make the Philippines less competitive. — Justine Irish D. Tabile

Japanese chamber bats for pre-CREATE investors’ VAT perks to be grandfathered in

THE original value-added tax (VAT) waiver for Philippine Economic Zone Authority locators, which was in force before the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, needs to be restored, the Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCIPI) said on Tuesday.

At a Senate Ways and Means Committee hearing on Tuesday, Shigeru Shimoda, president of the JCCIPI, said the chamber is asking senators to reconsider the imposition of a sunset period for the 5% tax on gross income earned granted to the projects and activities registered prior to the enactment of the CREATE law.

“Attractive incentives should be offered to invite investments in manufacturing to keep up with competitors from neighboring countries,” he said.

“In order to restore confidence in the investment environment in the Philippines, it is essential (for Congress) to reinstate the original PEZA incentives for the companies that had invested in the Philippines before the enactment of the CREATE Law.”

The Finance and Trade and Industry departments recently approved the amendment of Rule 18 Section 5 of the CREATE implementing rules and regulations, allowing transitory domestic market enterprises availing of the 5% gross income tax scheme to register as VAT taxpayers.

Senate President Juan Miguel F. Zubiri has said Japanese companies have threatened to leave the Philippines after encountering value-added tax refund issues after the CREATE Law came into force.

Last week, the House Ways and Means Committee approved the CREATE MORE (CREATE to Maximize Opportunities for Reinvigorating the Economy) bill, which aims to introduce a “simplified and streamlined” refund system.

The measure also seeks to give the President the power to modify, draft and grant incentive packages, without the recommendation of the Fiscal Incentives Review Board.

The House bill has yet to be debated in the plenary before the House gives its final approval, which is needed before the measure can be transmitted to the Senate.

“Incentives are one of the deciding factors for Japanese companies or foreign companies in expanding overseas,” Mr. Shimoda said. “I respectfully say that the Philippines should not miss this opportunity to invite a number of foreign investments.” — John Victor D. Ordoñez

Maharlika must address governance, ‘crowding-out’ concerns — AMRO

THE Maharlika Investment Fund (MIF) has the potential to succeed if properly managed, but must address governance issues and the possible threat to fiscal stability, the ASEAN+3 Macroeconomic Research Office (AMRO) said. 

“With a strong legal framework, the MIF has the potential to be a successfully managed national investment fund,” AMRO said in its latest Annual Consultation Report.

“However, the MIF’s success would also depend on the actual implementation of the law and whether the fund is operated with a robust risk management framework, taking cognizance of the potential risks and governance concerns addressed earlier,” it added.

The revised implementing rules and regulations (IRR) of the law creating the MIF was released earlier this month after being suspended by President Ferdinand R. Marcos, Jr. in October to improve its organization structure.

Shortly after, Mr. Marcos announced the appointment of Rafael D. Consing, Jr. as chief executive officer (CEO) and president of the Maharlika Investment Corp. (MIC), which is tasked to manage the fund.

AMRO said that the MIF is more of a national investment fund as it will invest “mainly within the country to support national development strategies.” 

It said this is in contrast to sovereign wealth funds, which are “state-owned investment funds comprising money generated by the country.” It also noted that sovereign wealth funds typically invest overseas using funds from surplus revenue from oil, natural resources, or fiscal surpluses.

Mr. Consing in a recent briefing said that the MIF is a “sovereign national development fund.”

“There’s a very big difference between a sovereign development fund and a sovereign wealth fund. A sovereign wealth fund typically presupposes the investment of excess financial assets, of which this fund is not, but rather a sovereign national development fund is one wherein it is being invested in the country particularly in terms of developing the needs of the country,” he said.

AMRO said that the fund is expected to enhance investment capital to boost economic growth and job creation, promote infrastructure development, and attract foreign investment.

On the other hand, AMRO also noted the potential risks with the operations of the fund.

“While the new MIF Act has laid down a strong legal framework, at the operational level, the authorities should clearly define its role in infrastructure investment with appropriate governance stipulated to avoid misuse of funds. The MIF should be run by professionals and the board should comprise independent directors,” it said.

“There could be a risk in terms of governance, especially if the fund’s role in infrastructure investment is not clearly defined, which could lead to misuse of funds and lack of accountability,” it added.

It recommended that the fund should have clear guidelines on what assets it can invest in, including “rigorous due diligence and risk assessment” especially for investments in infrastructure projects.

“Given the MIF has to ensure long-term value and promote socio-economic development, there could be a risk that the different goals might be at odds with each other in some investments, for instance, there could be a trade-off between the rate of return and the public good nature of certain projects,” it said.

Mr. Consing earlier said that the fund will focus its investments on key areas such as tourism infrastructure, agro-urbanism, energy security, and digital infrastructure.

AMRO also said government agencies’ contributions to the fund could “crowd out planned expenditure in other areas.”

“Although the contributions to the MIF’s capital from government financial institutions (GFIs) are relatively small compared with the size of their investible funds, there could be some impact on the institutions’ financial position in the event of losses,” it added.

Under the law, the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) are required to contribute P50 billion and P25 billion, respectively, for initial funding of the MIC. The MIC has an authorized capital stock of P500 billion.

Earlier concerns were raised by analysts that the state banks’ contributions could impact their financial stability.

In a Palace briefing on Tuesday, Finance Secretary Benjamin E. Diokno said that he is “confident” that the fund will be operational by the end of the year.

He also confirmed that the remaining vacant positions in the MIC board have yet to be filled.

“I understand the advisory body has submitted the list, but I don’t think there has been an appointment… I have not been informed of any appointment,” Mr. Diokno said.

These include the two regular directors and three independent directors.

Apart from these positions, the MIC board is also composed of the Secretary of Finance as ex-officio chair, the MIC president and CEO as the vice chair, the LANDBANK president and CEO, and the DBP president and CEO. — Luisa Maria Jacinta C. Jocson

Agri-marine estates proposed to ensure adequate food stocks

PHILSTAR FILE PHOTO

THE Department of Agriculture (DA) said on Tuesday that it plans to build a network of agro-industrial and marine estates to ensure the adequacy of food supplies.

In a statement, Agriculture Secretary Francisco T. Laurel, Jr. said he is planning to amend the charter of the Philippine Fisheries Development Authority (PFDA) to make it responsible for developing and managing the facilities.

Mr. Laurel added that tweaking the PFDA’s functions aligns with the goals of the Philippine Rural Development Program and the current administration’s plan to modernize agriculture.

The estates will serve as “one-stop shops” with ports, cold-storage facilities, silos, and warehouses.

“I’ve seen this model successfully implemented in South Korea and Japan. I hope the World Bank can help us realize this vision,” Mr. Laurel said.

According to the DA, the World Bank has indicated that funding sources are available in the form of grants from the Global Environment Facility and the European Union, which support marine protected areas.

He added that agri-fisheries logistics needed to be improved, and called for a “logistics masterplan” for the industry.

“That is one thing I think is lacking in the DA,” he added.

Mr. Laurel said he would designate an assistant secretary to take charge of logistics.

“We need to scale up and get our priorities straight,” he said. “I have technically three-and-a-half years to accomplish these things. The DA, under my watch, will do its best to speed things up.”

Additionally, Mr. Laurel said he was seeking possible adjustments to the DA budget for 2024 to better align with the administration’s farm production goals and to raise incomes of farmers and fishermen.

The DA had earlier proposed a budget of more than P167.5 billion for 2024.

“The government estimates that around 10 million farmers and fishermen live below the poverty line despite agriculture providing jobs for one in every four Filipino workers,” it added. — Adrian H. Halili

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