HEADLINE INFLATION accelerated to a fresh 14-year high in January as food prices continued to surge, fueling bets of further interest rate hikes to anchor expectations. Read the full story.
BANKS did not tap the central bank’s rediscount facility last month as liquidity in the financial system remained ample.
“There were no availments on the rediscounting lines of banks with the BSP under the Peso Rediscount Facility and Exporters’ Dollar and Yen Rediscount Facility (EDYRF) for the period covering 01 to 31 January 2023,” the Bangko Sentral ng Pilipinas said in a statement on Tuesday.
Lenders likewise left the facility untouched in the same month in 2022. The rediscount window only saw availments in April, June and October last year, with cumulative loans hitting P15.3 billion.
The last time the EDYRF was tapped was for a dollar rediscounting loan in 2016.
The central bank’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral.
The BSP’s rediscount facility gives banks access to additional liquidity by letting them post collectibles from clients as collateral.
In turn, lenders can use the cash, which could be in peso, dollar, or yen, to lend more to their corporate or retail clients and service unexpected withdrawals.
Banks did not borrow from the rediscounting facilities in January due to excess liquidity in the financial system after the holidays and amid better asset and loan quality, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Banks also have other funding options other than the BSP rediscounting facilities such as interbank borrowings, deposits, fund-raising via the capital markets such as the issuance of bonds and stocks, among others,” he said.
Outstanding loans issued by universal and commercial banks increased by 13.4% year on year to P10.9 trillion in December, slower than the revised 13.9% growth in November, preliminary data from the BSP showed.
Credit for production activities jumped by 12.1% to P9.56 trillion, slowing from the revised 12.6% growth in November.
Banks extended more loans for real estate activities (13.1%); manufacturing (14.9%); electricity, gas, steam and air-conditioning supply (14.4%); motor vehicles (12.7%); and information and communication (21.6%).
In the same month, domestic liquidity rose by 6.4% year on year to P16.3 trillion in December.
Meanwhile, the banking industry’s bad loans fell for the 10th straight month in December 2022, bringing the nonperforming loan (NPL) ratio to its lowest in 28 months.
Banks’ gross NPL ratio dropped to 3.17% in December, from 3.97% a year ago and 3.35% in November, BSP data showed. This was the lowest ratio in more than two years or since 2.84% in August 2020.
Soured loans declined 11.6% to P399.53 billion in December, from P452.45 billion a year earlier. This was also 2.1% lower than P408.1 billion in November.
FEBRUARY RATES
For February, the applicable rate for peso rediscount loans will be at 7.1148% for 90 loan maturity days, and at 7.7296% for 91-180 days.
Meanwhile, dollar borrowings will be priced at 7.183% (1-90 days), 7.328% (91-180 days), 7.34450% (181-360 days).
Yen-dominated borrowings will be priced at 2.08875% (1-90 days), 2.12% (91-180 days), 2.1775% (181-360 days). — K.B. Ta-asan
PHILIPPINE tech-logistics startup Mober has partnered with Nespresso in the Swiss coffee brand’s sustainability efforts such as switching to a delivery fleet that uses electric vehicles (EVs).
In a statement on Tuesday, Mober said the partnership with Nespresso aims to decarbonize on-ground delivery by shifting to EVs. Mober started delivering Nespresso products from the latter’s warehouse to stores across Metro Manila in December last year.
“We aim to catalyze a transition to zero-emissions mid and last-mile delivery in the Philippines. By switching to EVs, Nespresso is set to eliminate hundreds of tons of carbon dioxide (CO2) emissions yearly, and this is just the beginning for us,” Mober Founder and Chief Executive Officer Dennis Ng said.
Mr. Ng said that shifting to EVs allows the company to operate more efficiently while also contributing to carbon footprint reduction efforts.
“Monitoring the CO2 offset for our EV fleet can serve as a conscious reminder for businesses looking to go green to reflect on using EVs soonest. This will also help us save the data for future use and reach our net-zero goal target,” Mr. Ng said.
According to Mober, it currently has a fleet of 20 EVs and e-trucks, serving clients such as IKEA for last-mile delivery, Nespresso for warehouse-to-store delivery, and SM Appliance Center for same-day delivery.
“Mober’s electric vans can travel up to 230 kilometers, while the range of its electric trucks is 280 kilometers, offering flexibility to meet their clients’ wide logistical needs. EVs run on fast-charging lithium-ion batteries and emit zero carbon dioxide compared to internal combustion engine (ICE) vehicles,” Mober said.
“Moreover, EVs require less maintenance and have lower operating costs, which can help save money in the long run. Companies can book and partner with Mober instead of buying their own EVs to decarbonize their fleet,” the startup added.
Mober said that Executive Order No. 12 issued by Malacañang on Jan. 13, which temporarily imposed a zero tariff on certain imported EVs for five years, will also help support the transition of more retailers and businesses to “green fleets.”
Meanwhile, Mober seeks to deploy 100 EV units within the year and become the largest green logistics provider in five years.
“If Mober could deploy 300 EV deliveries, 1,542 tons of annual carbon reductions could be achieved, which is equivalent to the CO2 savings from a 1-megawatt peak solar photovoltaic project,” Mr. Ng said.
“A delivery driver typically commutes 200 kilometers per day and consumes 16.4 liters of petrol per day, thus emitting 40.2 kilograms (kg) in CO2 emissions for an ICE delivery vehicle. Assuming the same range applied to a single Mober EV delivery vehicle, daily CO2 emissions can be reduced by 14 kg or 35%,” he added. — Revin Mikhael D. Ochave
P&A Grant Thornton, one of the leading audit and business advisory firms in the country today, is set to celebrate its 35th anniversary to mark its rich history, celebrate its current success, and unveil future plans and goals.
Throughout its 35 years of existence, P&A Grant Thornton has since stood out in the field of advisory and audit, first as the “little firm that could”, surprising its growing clientele and competitors. It made its mark as an exuberant young firm in its early years of providing unlimited top-notch service to dynamic organizations, and as an audit and advisory firm brimming with potential for growth and driven by its “go-beyond” mindset.
This year’s anniversary theme is “Shaping a Vibrant Tomorrow”, a phrase descriptive of P&A Grant Thornton’s long-term commitment to spark inspiration among stakeholders, innovate and transform, answer global calls to promote sustainability, and foster stronger collaboration among stakeholders as a catalyst of change.
“Our upcoming 35th Anniversary Celebration marks another poignant milestone in the history of P&A. For us, it is more than just a reminder of our journey throughout the years. It is a striking portrait of who we really are as a company. If one were to look at our history, three qualities stand out – bold perspectives, divergent thinking, and our persistence to always forge new paths,” explained Marivic Españo, Chairperson and CEO of P&A Grant Thornton.
By forging new paths, the Firm envisions a future replete with new partnerships and increased collaboration with government, investors, and other local stakeholders, including those within the Grant Thornton business network.
“At P&A Grant Thornton, we believe that we can meet the future with our strategic capabilities in mind. We will use the influence we have worked hard to achieve in becoming an even more effective role model in the industry and within our community,” added Marivic.
The auspicious event will be held on February 15, 2023 at the Fairmont Hotel in Makati.
Aside from the highly anticipated performance of the Philippine Madrigal Singers, one of the highlights of the event is the special segment dedicated to two prominent figures in the Grant Thornton community: Rodger Flynn, Grant Thornton’s Regional Leader – Network Capabilities for APAC and Peter Bodin, the CEO of Grant Thornton International. They will each give short but inspiring messages in line with P&A Grant Thornton’s anniversary.
P&A Grant Thornton founders – Ben Punongbayan and Jose Araullo – will grace the event. Esteemed Partners will lead the presentation of the current undertakings of P&A Grant Thornton, as well as a vivid blueprint of the Firm’s long-term plans.
Clients of the Firm, new and long-time clientele alike, will be attending the event. A separate program will be held for staff, while the Firm’s offices in Cebu and Davao will also be celebrating the anniversary on separate dates. These events will shine a spotlight on the Firm’s vision for the coming years and its renewal of commitment to provide distinctive service which carries P&A Grant Thornton’s stamp of quality and excellence.
For inquiries and for clients who wish to RSVP for the event, you may reach P&A Grant Thornton at pnagt35thanniv@ph.gt.com.
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DUBAI-BASED Filipino photographer Donell Gumiran is the National Award winner for the Philippines in the World Photography Organization’s Sony World Photography Awards 2023.
The National Awards program is an initiative set up by the World Photography Organization and Sony to support local photographic communities around the world, with 55 countries taking part this year. Over 415,000 images from over 200 countries and territories were submitted to the Sony World Photography Awards 2023 and over 200,000 were entered to the Open competition (from which the National Awards winner was selected).
According to Photo.com, Mr. Gumiran is a Design & Senior Art Director based in Dubai. “Every time I press the shutter, it seems like it’s an extension of my personality,” the site quotes Mr. Gumiran as saying. He has received numerous awards, most recently the Tokyo Foto Award, Japan – Gold 2019. In the Philippines, he was a recipient of the National Commission for Culture and the Arts’ Ani ng Dangal Award in 2018 and 2019.
All National Award winners receive Sony digital imaging equipment and will be included in the Sony World Photography Awards exhibition and book.
New to this year’s Awards are four Regional Awards set up by the World Photography Organization and Sony Europe.
The overall winners in the Student, Youth, Open and Professional competitions of the Sony World Photography Awards 2023 will be announced on April 13 and will go on display as part of the exhibition at Somerset House, London from April 14 to May 1.
This year’s National Awards winners are:
Austria — Fabian Jung
Bangladesh — Protap Shekhor Mohanto
Cambodia — Chan Sithy Heng
Egypt — Abdelrahman Gabr
France — Samia Berbiche
Germany — Andreas Mikonauschke
India — Pradeep Kodimana Ramakrishnan
Indonesia — Mawaruddin Mawaruddin
Japan — Hajime Hirano
Republic of Korea — Gyu Seob Shim
Kuwait — Adil Javed
Malaysia — Eng Tong Tan
Myanmar — Si Thu Ye Myint
Nepal – Rabik Upadhayay
Nigeria — Nukabari Opuama
Pakistan — Yawar Abbas
Philippines — Donell Gumiran
Poland — Mateusz Żurowski
Qatar — Abdulla AL-Mushaifri
Saudi Arabia — Mansoor Mohsen
Singapore — Huazheng Hong
South Africa – Tshabalala Bongani
Sri Lanka — Rajeev Abeysekara
Switzerland — Sandra Handschin
Taiwan — Leo Huang
Thailand — Saravut Vanset
Turkey — Erhan Coral
United Arab Emirates — Oday Shanshal
United States — Angela Perez
Vietnam — Thiện Nguyễn Ngọc
Here’s a quick glance at how PSEi stocks fared on Tuesday, February 7, 2023.
STOCKS continued to decline on Tuesday on faster-than-expected January inflation that fueled expectations of another big rate hike by the Bangko Sentral ng Pilipinas (BSP).
The benchmark Philippine Stock Exchange index (PSEi) went down by 55.35 points or 0.79% to close at 6,881.26 on Tuesday, while the broader all shares index dropped by 18.93 points or 0.51% to end at 3,655.75.
“The local bourse dropped by 55.35 points (-0.8%) to 6,881.26 as the Philippine inflation rate came in higher than the expectation, which could raise the possibility that the Bangko Sentral ng Pilipinas will remain aggressive in its monetary tightening, especially in its upcoming meeting,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.
“The PSEi dropped as it became clear inflation is far from peaking, which has created scope for debt markets to bid up interest rates reflected in the retail Treasury bonds’ (RTB) 5.5-year coupon rate of 6.125% and dashed BSP pivot hopes,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in the Viber message.
Headline inflation accelerated to a new 14-year high of 8.7% in January as food prices continued to surge, the Philippine Statistics Authority reported on Tuesday, faster than the 8.1% print in December 2022 and 3% in the same month last year.
This was the quickest since the 9.1% logged in November 2008. This was also higher than the 7.5% to 8.3% forecast range given by the central bank for the month, and marked the 10th consecutive month that inflation was above the BSP’s 2-4% target for the year.
BSP Governor Felipe M. Medalla earlier said the central bank could hike borrowing costs by 25 or 50 basis points (bps) at their policy meeting on Feb. 16 to anchor inflation expectations.
The Monetary Board raised benchmark interest rates by 350 bps in 2022, bringing its key rate to 5.5%.
Meanwhile, the government raised P162.18 billion from the rate-setting auction for the RTBs on Tuesday, more than its P30-billion program.
Most sectoral indices closed lower on Tuesday except for mining and oil, which rose by 57.64 points or 0.52% to 11,050.18, and holding firms, which climbed by 6.73 points or 0.1% to 6,710.54.
Meanwhile, services dropped by 26.70 points or 1.52% to 1,720.81; property lost 28.83 points or 0.95% to end at 2,991.76; financials declined by 17.13 points or 0.93% to 1,810.78; and industrials went down by 83.71 points or 0.84% to end at 9,849.24.
Value turnover went down to P6.14 billion on Tuesday with 1.03 billion shares changing hands from the P9.95 billion with 1.24 billion issues traded on Monday.
Decliners outnumbered advancers, 97 versus 88, while 51 names closed unchanged.
Net foreign buying reached P590.74 million on Tuesday versus the P1.45 billion in net selling seen the previous trading day. — J.I.D. Tabile
THE PESO sank to the P55-per-dollar level on Tuesday as January headline inflation was faster than expected and amid hawkish signals from the US Federal Reserve.
The local currency closed at P55.085 versus the greenback on Tuesday, declining by 69.5 centavos from Monday’s P54.39 finish, data from the Bankers Association of the Philippines showed.
The peso opened Tuesday’s trading session at P54.65 per dollar. Its weakest showing was at P55.10, while its intraday best was at P54.60 against the greenback.
Dollars traded rose to $1.274 billion from $1.053 billion on Monday.
The peso declined following the release of January inflation data and hawkish signals from a Fed official, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened significantly after the Philippine headline inflation for January 2023 was reported at 8.7%, surpassing market and central bank’s expectations,” a trader said in an e-mail.
Headline inflation was at a 14-year high of 8.7% in January, faster than the 8.1% in December and 3% a year ago.
This also surpassed the 7.6% median estimate in a BusinessWorld poll conducted last week and the 7.5% to 8.3% forecast range given by the Bangko Sentral ng Pilipinas (BSP) for the month.
Meanwhile, Atlanta Federal Reserve Bank President Raphael Bostic told Bloomberg that the Fed may need to lift borrowing costs higher than previously anticipated 25 basis points (bps) given the unexpectedly strong jobs data in January.
The US central bank hiked borrowing costs by 25 bps at its Jan. 31 to Feb. 1 meeting, bringing the fed funds rate to a 4.5% to 4.75% range, the highest since 2007.
The Fed has now hiked rates by 450 bps since March 2022.
For Wednesday, the trader said the peso could weaken further against the dollar on expectations of hawkish remarks from Fed Chair Jerome H. Powell overnight.
The trader expects the peso to move between P55 and P55.25 per dollar on Wednesday, while Mr. Ricafort gave a wider forecast range of P54.90 to P55.20. — AMCS
THE PHILIPPINES is expected to obtain P150 billion in investment pledges during President Ferdinand R. Marcos, Jr.’s official visit to Japan.
“We are expecting that substantial returns in terms of new projects, the value of which we currently estimate at P150 billion, and we estimate too these will generate employment for 8,000 Filipinos,” Philippine Ambassador to Japan Mylene J. Garcia-Albano told ABS-CBN News Channel on Tuesday.
Ms. Albano said Mr. Marcos is set to meet executives from electronics, semiconductor, printer and wiring harness manufacturing companies.
Companies from these industries “comprise the bulk of our industrial relations with Japan,” she said, adding, “They will discuss how the private sector, the Japanese investor companies, the government and other stakeholders can work more closely together to ensure the success of these businesses in the Philippines.”
Foreign Affairs Assistant Secretary for Asia and Pacific Affairs Nathaniel Imperial in an earlier briefing said Mr. Marcos will be attending roundtable and business meetings, as well as a business conference to be held on Feb. 9 and 10.
Ms. Albano also noted the expected “signing of several letters of intent and agreements which are expected to significantly expand Japanese investments.”
Mr. Marcos is expected to sign seven key bilateral deals.
“During the visit, we anticipate the signing of seven key bilateral documents or agreements covering cooperation in infra development, defense, agriculture and information and communications technology — areas that are in the President’s priority agenda,” Mr. Imperial said.
The government is set to sign the exchange of notes on loan agreements for the North-South Commuter Railway project from Malolos, Bulacan to Clark International Airport, and from Manila’s Tutuban station to Calamba, Laguna.
“This will involve around $3 billion worth of loans that will be later signed also by the Department of Finance (DoF),” Mr. Imperial said.
Also on the list are agreements on humanitarian assistance and disaster relief cooperation between the Department of National Defense and its Japanese counterpart.
Japan is the only country with which the Philippines has a bilateral free trade agreement — the Japan Economic Partnership Agreement. Japan is the Philippines’ second-largest trading partner, third-largest export market and third-largest source of exports. — Alyssa Nicole O. Tan
AGRICULTURE industry representatives said the government has not adequately supported farmers in achieving competitiveness against imports, which they called a necessary step before opening up the market under the terms of the Regional Comprehensive Economic Partnership (RCEP).
During a Senate hearing on the world’s largest free trade agreement on Tuesday, United Broiler Raisers Association President Elias Jose M. Inciong said: “What will provide true protection is competitiveness… the reason why we did not become competitive, the reason why we are so prone to imports, the reason why the agriculture sector cannot provide adequate supply is because of the dereliction of duty of the NEDA (National Economic and Development Authority and the DA (Department of Agriculture) in the implementation of the overall design of the WTO (World Trade Organization),” he said.
He was referring to the trade regime the Philippines signed on to in 1995, which guarantees market access for foreign commodities up to a minimum volume.
“There is no path for development for the sector; however, the path is very wide for import development,” he added.
Mr. Inciong compared the current pitch to join the RCEP with the campaign to join the WTO, noting that only features benefiting importers were implemented while provisions specifying domestic support were neglected.
The last major commodity to be opened up to imports was rice. The Rice Tariffication Law opened up rice imports to private parties, who had to pay tariffs of 35% on Southeast Asian grain.
Of these tariffs, P10 billion a year is allocated to the Rice Competitiveness Enhancement Fund (RCEF), which supports the industry’s modernization by funding mechanization, upgraded seed, and rice cultivation know-how, among other things.
Mr. Inciong said the rest of the farm industry as well as fisheries have yet to undergo modernization, and added that database support for the industry remains inadequate.
“Whenever we have hearings here and at the House, on tariffs and the like, 30% of the time, there is a debate on the correctness of the data,” Mr. Inciong said.
“We could produce all of these products but because we did not do our homework, we become more and more reliant on imports, and that will be the scenario in RCEP,” Raul Q. Montemayor, national manager of the Federation of Free Farmers, said.
He noted that the agricultural trade deficit continues to grow despite claims of adequate protection provided by trade deals.
“They told us that there was nothing to worry about because tariffs will not go down, but we have seen over the past few years that the agricultural trade deficit has ballooned to $90 billion,” he said.
Under RCEP, he added, 84% of agricultural tariff lines will have zero tariff protection.
Trade Assistant Secretary Allan B. Gepty said the trade deal only calls for the additional liberalization of 33 tariff lines to four trade partners, with most other commodities already subject to other free trade agreements.
“Mr. Montemayor is correct to say that we have trade deficits, that’s the reality. In fact,… as early as the ’60s, deficit in trade and goods has been creeping in,” he said.
However, “before we characterize deficits, we have to consider that importing is not outrightly wrong,” he added. “As long as what you’re importing is being used for consumption, like food security, then it’s good since you’re giving food to the people.”
Mr. Gepty said that between 2018 and 2020, the Philippines mostly imported, at a deficit, cereals including rice, prepared animal fodder, miscellaneous edible preparations, meat and edible meat offal, and dairy products.
“We are at a deficit because we need them and we don’t have them here, so we import them,” he said. “Importing is good if you will use these inputs to farms or for further production.”
Trade Secretary Alfredo E. Pascual, speaking at the hearing, said that while he recognizes the concerns raised, “it is important to understand the bigger picture and view RCEP in terms of the opportunities it can bring to us.”
“We are situated in a dynamic region of the world and we cannot afford to remain out of its further economic integration,” he said.
“In any case, the government will continue to provide the needed support and level the playing field to help equip and sharpen the capacity of our businesses,” he added.
Mr. Pascual noted that RCEP provides a framework of rules that ensure regulatory consistency.
It creates a “conducive business environment that is key to ensuring the confidence of the business sector, and spurring further economic growth,” he said.
Mr. Pascual believes that the Philippines’ current linkages to the global supply chain may deteriorate if investors and businesses begin to look elsewhere for a better economic environment and opportunities.
“Considering that a number of key trading partners and competitors are also participating in this agreement, delays in Philippine participation will result in the diversion of trade and investments toward countries already within the regional bloc, at the expense of our industry and people,” he said.
“Even our exports could become less competitive, including electronic and agricultural products, as intermediate goods used as inputs for further production and manufacturing become more expensive in comparison to our competitors,” he added.
On the other hand, Mr. Pascual said the trade deal is expected to strengthen links in manufacturing, technology, agriculture, and natural resources with member states, as well as reinforce the participation of micro, small and medium enterprise participation in the global supply chain.
The Department of Trade and Industry (DTI) noted the Philippines’ readiness to accelerate the economic recovery and overall standing in the global trading environment through its accession to RCEP.
Senate President Pro Tempore Lorna Regina B. Legarda, who chaired the sub-committee hearing, said there must be “guidelines, policies, programs, funding, resources, commitments and oversight that will ensure that the agencies who negotiated for this and who are mandated to bring about a robust agricultural sector… will do… their best” upon the country’s accession to the RCEP.
She said the industries affected must be allowed to help draft the guidelines to be followed by the agencies pushing for the trade deal.
“This ratification will not change what’s been there for 40 years but if there is a window of opportunity given to Laos, Myanmar, and we’re the only one not included, I would not want that,” Ms. Legarda said.
RCEP, which started taking effect on Jan. 1, 2022, involves Australia, China, Japan, South Korea, New Zealand and the 10 members of the ASEAN.
The Philippines has yet to join RCEP as the Senate was unable to ratify the agreement before adjourning on Feb. 3. President Rodrigo R. Duterte signed the trade agreement on Sept. 2. — Alyssa Nicole O. Tan
THE classification of economic zone logistics services enterprises (ELSEs) as eligible for incentives under the Strategic Investment Priorities Plan (SIPP) is expected to raise investment in the industry, the Philippine Economic Zone Authority (PEZA) said.
In a statement on Tuesday, PEZA Officer-in-Charge Tereso O. Panga said ELSEs can now avail of incentives under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
The industry was ruled eligible by the Board of Investments (BoI) in Memorandum Circular (MC) No. 2023-001 issued on Jan. 31, which clarified that ELSEs were covered under the 2022 SIPP.
PEZA also issued MC No. 2023-010 while the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 15-2023, both dated Feb. 3, which also ruled ELSEs eligible.
“With the clarification issued by the BoI and BIR, the existing ELSEs can now enjoy their incentives (i.e., zero value-added tax rating on qualified local purchases) pursuant to the sunset provision. For new ELSEs, they may be entitled to the incentives under the CREATE Act,” Mr. Panga said.
According to PEZA, ELSEs are traders supplying production-related raw materials and equipment that cater exclusively to the needs of ecozone locators.
It added that ELSEs provide critical services to export manufacturing companies, which require logistics support for their import and export shipments, raw materials sourcing, inventory management, just-in-time delivery, localization, and process customization.
Mr. Panga said companies providing support to export activities had been barred from availing of incentives prior to the clarification from the MCs.
The MCs affirmed the right to zero VAT rating incentives on local purchases by ELSEs. However, 70% of ELSE output or services should be provided to other registered export enterprises via direct or constructive exports in order to be considered exporters under the CREATE law.
PEZA said there are 340 registered ELSEs which have taken in P11.15 billion worth of investments to date. Japanese ELSEs have taken on P3.50 billion worth of investment.
Some of the registered Japanese ELSEs are Nagase Philippines International Services Corp.; Inabata Philippines, Inc.; Lima Logistics Corp.; Tokai Electronics Philippines, Inc.; and NX Logistics Philippines, Inc.
“Overall, the 884 Japanese locator companies continue to be the biggest investors in the PEZA ecozones accounting for P745.637 billion in investments, or 27.42% of the total investments in PEZA. These companies also generated $15.865 billion worth of exports and 315,619 direct jobs as of November 2022,” PEZA said. — Revin Mikhael D. Ochave
A BILL that requires real estate investment trusts (REITs) to reinvest proceeds from their fundraising activities in the Philippines has been approved at the committee level in the House of Representatives.
The House economic affairs committee approved on Tuesday House Bill No. 6500, which proposes to amend Republic Act No. 9856, or The Real Estate Investment Trust Act of 2009.
Cagayan de Oro Rep. Rufus B. Rodriguez, the author of the bill, said that there is “a need to ensure that the funds invested in these companies are reinvested in the Philippines to secure full domestic participation in the real estate industry.”
The proposed amendment would require a sponsor or promoter to reinvest in the Philippines proceeds realized from the sale of REIT shares “within one year from the date of receipt of proceeds or money by the sponsor/promoter.”
Proceeds subject to the reinvestment rule also include “other securities issued in exchange for income-generating real-estate transferred to the REIT, and any money raised by the sponsor or promoter from the sale of any of its income-generating real-estate to the REIT, in any real estate.”
This includes any redevelopment project and infrastructure projects in the Philippines.
REITs are required to submit a reinvestment plan to the Philippine Stock Exchange and Securities and Exchange Commission upon registration, and must also secure a certification yearly to show that it is compliant with its reinvestment plan.
According to the bill, a reinvestment plan is “a sworn statement duly received by the exchange and the commission, signed by the sponsor/promoter and the principal shareholder of the REIT.”
If signed into law, the proposed measure “would help increase and encourage more investments, employment/jobs, other business/economic activities in the country. Especially if the growth rate/potential in the country is more promising/attractive as a positive factor for investors,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, said via chat.
UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the measure aims to safeguard the industry since it is still in its nascent stages.
“Future amendments may have to deal with the easing of such rules once the industry is deemed more stable or mature. It would be good to look into best practices from other REIT markets in the region that have reached a high level of success,” he said in a Viber message.
Mr. Asuncion added though that the bill “can also be a deterrent since investors would be looking for more flexibility especially in this era of new and higher uncertainty.”
REITs are stock corporations primarily owning income-generating real estate properties. The seven REITs in the Philippines are AREIT, Inc., Citicore Energy REIT Corp., DDMP REIT, Inc., Filinvest Reit Corp., MREIT, Inc., Premier Island Power REIT Corp., RL Commercial REIT, Inc., and VistaREIT, Inc. — Beatriz Marie D. Cruz
