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Trading glitch unlikely to shake index — analyst

REUTERS

By Marielle C. Lucenio

TRADING suspension at the Philippine Stock Exchange (PSE) due to a technical glitch on Tuesday was unlikely to shake the index, analysts said, noting that negative investor sentiment about the matter was irrational.

“We can’t say for sure how this difficulty will unfold, but any negative sentiment is irrational assuming it is just a glitch,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a Viber message. “I don’t see any of the index companies’ income being tied to the PSE glitches.”

The bourse canceled trading after 43 of its 125 brokers failed to connect to its system. Under the rules, trading must be halted if at least a third of its brokers are unable to connect.

“If some big irrational investor sells because of the glitch, I think it’s a buying opportunity,” Mr. Limlingan said. He added that the glitch was unlikely to continue in the next trading days.

Indexes might get shaken due to worried local investors who might stay on the sidelines, said Darren Blaine T. Pangan, a trader at Timson Securities, Inc.

Foreign investors might avoid the PSE and instead put their money in other foreign markets with fewer issues if the glitch is not solved immediately, he added.

“The Philippine Stock Exchange index might have a noticeable decline in performance if it becomes persistent, since confidence in the system might be tarnished,” Mr. Pangan said, adding that it was too early to say whether it would badly affect the index.

Shares would probably fall on Wednesday as traders price in their worries about some provinces near the capital region being placed under a stricter lockdown amid rising coronavirus infections, said Japhet Louie O. Tantiangco, a senior research supervisor at Philstocks Financial, Inc.

The government on Tuesday raised the virus alert in Bulacan, Cavite and Rizal provinces to Level 3 amid the threat of the highly mutated Omicron coronavirus variant.

PSE President Ramon S. Monzon said in a statement on Tuesday the bourse manager was working closely with NASDAQ and Flextrade representatives to identify the root cause of the issue. The problem would be solved soon, he said.

The 30-member PSEi dropped by 81.36 points or 1.14% to 7,041.27 on Monday, its worst start to a year since 2016 as Manila, the capital and nearby cities returned to a stricter lockdown to contain a fresh surge in coronavirus infections. The broader all-shares index lost 40.22 points or 1.05% to 3,777.90.

Donald Trump and his children Donald Jr and Ivanka are subpoenaed in New York probe

U.S. President Donald Trump — REUTERS/LEAH MILLIS/FILE PHOTO

NEW YORK, – New York state’s attorney general is demanding that two of Donald Trump‘s adult children, Donald Trump Jr. and Ivanka Trump, testify in her civil probe into the former U.S. president’s business practices and namesake company.

Subpoenas to the Trumps from the office of Attorney General Letitia James were disclosed in a Monday filing with a New York state court in Manhattan.

Donald Trump has also been subpoenaed to testify under oath.

Lawyers for the family late Monday asked a judge who has overseen disputes related to the probe to quash James’ “unprecedented and unconstitutional” bid for their testimony.

Alternatively, they asked the judge to block the subpoenas until Manhattan’s district attorney finishes a related criminal probe that James joined last May.

James’ subpoenas reflect an escalation of her nearly three-year probe into whether the Trump Organization fraudulently inflated the values of its real estate holdings to obtain bank loans, and reduced their values to lower its tax bills.

The probe has focused on properties including the Seven Springs Estate in Westchester County, New York, a downtown Manhattan office building, the Trump National Golf Club in Los Angeles and the Trump International Hotel and Tower in Chicago.

Alina Habba, a lawyer for Donald Trump, in an emailed statement accused James, a Democrat, of having “weaponized her office” through a “political witch hunt” that violates the former Republican president’s constitutional rights.

“Her actions are a threat to our democracy and I plan to hold her accountable to the fullest extent,” Habba said.

Another adult son of Donald Trump, Eric Trump, was questioned by James’ office in October 2020.

Donald Trump turned over the Trump Organization to his adult sons and the company’s longtime chief financial officer, Allen Weisselberg, when he became president in 2017.

Ivanka Trump also worked for the Trump Organization, before serving in the White House as a senior adviser.

 

‘IMPROPER END-RUN’

James’ civil probe is separate from the criminal probe now led by new Manhattan District Attorney Alvin Bragg into the Trump Organization’s business practices.

Weisselberg and the company pleaded not guilty in that probe in July to charges they ran what a prosecutor called a “sweeping and audacious” tax fraud in which company executives were awarded “off-the-books” benefits over 15 years.

In their Monday court filing, lawyers for the Trumps accused James of trying to circumvent the grand jury process by obtaining testimony in her civil probe that could be used against the family in the criminal probe.

“The subpoenas are an obvious improper end-run around the rules,” the lawyers wrote.

James responded by accusing the Trumps of continually employing “delay tactics” to impede her probe, and that “despite their names” they must follow the same rules as everyone else.

“Our investigation will continue undeterred,” she pledged.

Bragg was sworn in on Saturday as district attorney to succeed fellow Democrat Cyrus Vance, who led that office for 12 years and began his probe in 2018.

Last month, Bragg told CNN that he plans to be personally involved in the criminal probe, and wanted his top lawyers on the case to stay on.

Donald Trump and the Trump Organization separately sued James in December in federal court in Albany, the state capital, to halt her civil probe.

They accused her of trying to “harass, intimidate, and retaliate against a private citizen who she views as a political opponent.”

Donald Trump and his adult children have not been accused of criminal wrongdoing, and James cannot file criminal charges because her probe is civil. – Reuters

Russia, China, Britain, U.S. and France say no one can win nuclear war

MOSCOW/WASHINGTON – China, Russia, Britain, the United States and France have agreed that a further spread of nuclear arms and a nuclear war should be avoided, according to a joint statement by the five nuclear powers published by the Kremlin on Monday.

It said that the five countries – which are the permanent members of the United Nations Security Council – consider it their primary responsibility to avoid war between the nuclear states and to reduce strategic risks, while aiming to work with all countries to create an atmosphere of security.

“We affirm that a nuclear war cannot be won and must never be fought,” the English-language version of the statement read.

“As nuclear use would have far-reaching consequences, we also affirm that nuclear weapons — for as long as they continue to exist — should serve defensive purposes, deter aggression, and prevent war.”

Chinese Vice Foreign Minister Ma Zhaoxu said the joint statement could help increase mutual trust and “replace competition among major powers with coordination and cooperation,” adding that China has a “no first use” policy on nuclear weapons, state news agency Xinhua reported.

France also released the statement, underscoring that the five powers reiterated their determination for nuclear arms control and disarmament. They would continue bilateral and multilateral approaches to nuclear arms control, it said.

The statement from the so-called P5 group comes as bilateral relations between the United States and Moscow have fallen to their lowest point since the end of the Cold War, while relations between Washington and China are also at a low over a range of disagreements.

The Pentagon in November sharply increased its estimate of China‘s projected nuclear weapons arsenal over the coming years, saying Beijing could have 700 warheads by 2027 and possibly 1,000 by 2030.

Washington has repeatedly urged China to join it and Russia in a new arms control treaty.

Geopolitical tensions between Moscow and Western countries have increased over concerns about Russia‘s military buildup near neighbouring Ukraine. Moscow says it can move its army around its own territory as it deems necessary.

Last Thursday U.S. President Joe Biden told his Russian counterpart, Vladimir Putin, that a possible move on Ukraine would draw sanctions and an increased U.S. presence in Europe.

U.S. and Russian officials will hold security talks on Jan. 10 to discuss concerns about their respective military activity and confront rising tensions over Ukraine, the two countries said.

A conference on a major nuclear treaty that was set to begin on Tuesday at the United Nations has been postponed until August due to the COVID-19 pandemic. – Reuters

Germany wants to avoid escalation in EU dispute over green finance rules

BERLIN – Germany wants to avoid an escalation in the dispute about a European proposal to classify both nuclear energy and natural gas as climate-friendly energy sources by abstaining in a vote about the investment plan, government sources said on Monday.

The European Commission’s decision to include gas and nuclear investments in the European Union’s “sustainable finance taxonomy” rules was circulated in a draft proposal late on Dec. 31 – a timing which was criticised by European lawmakers.

During months of heated debate on the proposals, Germany and other EU member states argued that gas investments were needed to help them quit more-polluting coal. Others said labelling a fossil fuel as green would undermine the credibility of the EU as it seeks to be a global leader in tackling climate change.

Emissions-free nuclear energy is similarly divisive. France, the Czech Republic and Poland are among those saying that nuclear power should have a big role in curbing global warming. Austria, Germany and Luxembourg are among those opposed, citing concerns around radioactive waste.

German Chancellor Olaf Scholz’s three-way coalition government, consisting of the centre-left Social Democrats, the ecologist Greens and the business-friendly Free Democrats, is also split on the matter.

During coalition negotiations last year, the three parties were not able to agree on a joint wording regarding the EU‘s green investment rules and therefore did not mention the topic in their coalition deal presented in November.

Behind closed doors, leaders of the three parties agreed to avoid a fight against the European Commission’s compromise proposal and simply abstain in the vote when EU leaders will have their final say at a summit later this year, two people familiar with the decision said on condition of anonymity.

A government spokesperson said earlier on Monday that the three coalition parties rejected the use of nuclear energy in Germany.

But the parties agreed natural gas could be used as a bridging technology for the time being and they would discuss how to proceed with the Commission’s proposal going forward, he added.

The Commission will now collect comments to its draft until Jan. 12 and hopes to adopt a final text by the end of the month. After that, the text can be discussed with EU governments and parliament for up to six months. But it is unlikely to be rejected because that would require 20 of the 27 EU countries, representing 65% of EU citizens, to say “no”. – Reuters

Enjoy merrier malling when you #ScanToPay with PayMaya at SM Supermalls

PayMaya and SM Supermalls gives mallgoers a more rewarding holiday shopping experience when they #ScanToPay with PayMaya QR at participating SM Supermalls nationwide!

PayMaya users have a chance to win PHP 5,000 worth of PayMaya credits when they park, shop, dine, and play at participating SM Supermalls until January 16, 2022.

To earn a raffle entry, SM mallgoers simply need to #ScanToPay a minimum transaction amount with their PayMaya app in any of these participating partners:

• PHP 500 at SM Cyberzone (SM City North EDSA, SM Megamall, SM Mall of Asia, SM Aura Premier, SM Southmall);
• PHP 200 at SM Foodcourt (SM City North EDSA, SM Megamall, SM Southmall);
• PHP 200 at the Mega Food Hall (SM Megamall);
• PHP 200 at the MOA Food Hall (SM Mall of Asia);
• PHP 200 at Food on Four (SM Aura Premier)
• PHP 300 at SM Cinema (all operational branches)
• PHP 250 at SM Bowling (all operational branches); or
• Base parking rate at Pay Parking (select SM Supermalls)

Also, PayMaya users can also get a SUPERCASHBACK – an instant cashback voucher worth PHP 200 – when they reach an accumulated spend of PHP 3,000 in participating partners within the promo period.

Cashback can be easily claimed on the Vouchers page of the PayMaya app. Qualified users will receive their cashback after their valid QR transaction or up to fourteen (14) business days after the promo period.

Visit http://pymy.co/SMRafflePromo for the full promo mechanics and the complete list of participating partners. Raffle Draw will be on January 21, 2022 and name of winners will be announced on January 28, 2022 at social media pages of PayMaya and SM Supermalls.

 


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Apple becomes first company to hit $3 trillion market value, then slips

REUTERS

Apple Inc on Monday became the first company to hit a $3 trillion stock market value, before ending the day a hair below that milestone, as investors bet the iPhone maker will keep launching best-selling products as it explores new markets such as automated cars and virtual reality.

On the first day of trading in 2022, the Silicon Valley company‘s shares hit an intraday record high of $182.88, putting Apple‘s market value just above $3 trillion. The stock ended the session up 2.5% at $182.01, with Apple‘s market capitalization at $2.99 trillion.

The world’s most valuable company reached the milestone as investors bet that consumers will continue to shell out top dollar for iPhones, MacBooks and services such as Apple TV and Apple Music.

“It’s a fantastic accomplishment and certainly worthy to be celebrated,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “It just shows you how far Apple has come, and how dominant it is seen as in the majority of investors’ eyes.”

Apple shared the $2 trillion market value club with Microsoft Corp, which is now worth about $2.5 trillion. Alphabet Inc, Amazon.com Inc and Tesla Inc have market values above $1 trillion. Saudi Arabian Oil Co is valued at about $1.9 trillion, according to Refinitiv.

“The market is rewarding companies that have strong fundamentals and balance sheets, and the companies that are hitting these sort of huge market caps have proven they are strong businesses and not speculation,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

Apple‘s shares have climbed around 5,800% since co-founder and former chief executive Steve Jobs unveiled the first iPhone in January 2007, far outpacing the S&P 500’s gain of about 230% during the same period.

Under Tim Cook, who in 2011 became chief executive following Jobs’ death, Apple has sharply increased its revenue from services like video streaming and music. That helped Apple reduce its reliance on the iPhone to about 52% of total revenue in fiscal 2021 from over 60% in 2018, pleasing investors worried the company relied too much on its top-selling product.

Still, some investors worry Apple is hitting the limits of how much it can expand its user base and how much cash it can squeeze from each user, with no guarantees that future product categories will prove as lucrative as the iPhone.

The rapid embrace of technologies such as 5G, virtual reality and artificial intelligence has also increased the allure of Apple and other Big Tech companies.

In China, the world’s largest smartphone market, Apple continued to lead for the second straight month, beating rivals such as Vivo and Xiaomi, recent data from CounterPoint Research showed.

With Tesla now the world’s most valuable automaker as Wall Street bets heavily on electric cars, many investors expect Apple to launch its own vehicle within the next few years.

“The icing on the cake, which may turn out to be the cake, is the potential for an EV car,” Rhys Williams, chief strategist at Spouting Rock Asset Management said.

Just as Apple‘s market capitalization hits the $3 trillion milestone, its share price as a percentage of the Nasdaq 100 index’s value is bumping up against a key technical level. In recent prior times, the stock price has risen above such a level and then subsequently declined. – Reuters

Jump in deforestation of world’s most biodiverse savanna alarms Brazilian scientists

SAO PAULO – Deforestation last year rose to the highest level since 2015 in Brazil’s Cerrado, prompting scientists on Monday to raise alarm over the state of the world’s most species-rich savanna, a major carbon sink that helps to stave off climate change.

The Cerrado, which is spread across several states of Brazil and is one of the world’s largest savannas, is often called an “upside-down forest” because of the deep roots its plants sink into the ground to survive seasonal droughts and fires.

Destruction of these trees, grasses and other plants in the Cerrado is a major source of Brazil’s greenhouse gas emissions, although it is far less densely forested than the more famous Amazon rainforest that it borders.

Deforestation and other clearances of native vegetation in the Cerrado rose 8% to 8,531 square kilometers in the 12 months through July, Brazil’s official period for measuring deforestation, according to national space research agency Inpe. That is more than 10 times the size of New York City’s land area of 783.84 square km.

“It’s extremely worrying,” said Mercedes Bustamante, an ecologist at the University of Brasilia.

Bustamante also criticized the government for a lack of transparency for announcing the deforestation data on New Year’s Eve.

The added destruction is particularly concerning, scientists say, when considering that roughly half of the Cerrado has been destroyed since the 1970s, mostly for farming and ranching.

“You’re transforming thousands of square kilometers annually,” said Manuel Ferreira, a geographer at the Federal University of Goias.

“Few other places on earth have seen that rapid of a transformation.”

Ferreira said that new plant and animal species are regularly being discovered in the Cerrado and that many are probably being eradicated before they can be studied.

After falling from highs in the early 2000s, deforestation in the Cerrado has been creeping up again since right-wing President Jair Bolsonaro took office in 2019, calling for more farming and development in sensitive ecosystems.

Last month, a Brazilian soy lobby group said that data showed farmers were increasingly using previously cleared land in the Cerrado rather than deforesting wholly new areas to plant the cash crop. More than half of Brazil’s soy farmland is in the Cerrado.

Bustamante and other scientists blame Bolsonaro for encouraging deforestation with his pro-development rhetoric and for rolling back environmental enforcement.

Bolsonaro’s office did not immediately respond to request for comment. He has previously defended his policies as a means to lift the interior of the country out of poverty and pointed out that Brazil has preserved far more of its territory than Europe or the United States.

Deforestation is the most naked and raw indicator of the terrible environmental policy of this government,” said Ane Alencar, the science director at the non-profit Amazon Environmental Research Institute. – Reuters

Factory activity hits 9-month high

REUTERS

PHILIPPINE MANUFACTURING activity inched up to a nine-month high in December on increased orders, IHS Markit said on Monday.

The Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 51.8 last month from 51.7 in November, the highest since 52.2 in March 2021.

A reading above 50 indicates improving conditions for the manufacturing sector while anything below suggest the opposite.

Manufacturing Purchasing Managers’ Index (PMI) of select ASEAN Economies, December (2021)

“The Philippine manufacturing sector remained in a solid position during the closing month of 2021, with the headline PMI at a nine-month high,” Shreeya Patel, an economist at IHS Markit, said. “Supporting this was an improvement in domestic demand and a slight uptick in output, the first for nine months.”

She said the PMI reflected companies’ optimism that demand will continue to improve, prompting them to make advance preparations.

This marked the fourth consecutive month of growth after PMI fell to 46.4 in August after factories were shut due to the two-week strict lockdown in the capital region amid a Delta-driven surge in coronavirus infections.

PMI is the weighted average of five sub-indices — new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).

IHS Markit said new orders continued to increase, encouraging companies to stock up on inventories for the fourth straight month.

“As a result, firms raised their output expectations for the year ahead which improved to a near two-year high. That said, there were still widespread reports of material scarcity and supply-chain disruption,” IHS Markit said.

Increased orders were driven by domestic demand. However, new export orders declined at the fastest rate in four months due to  Omicron variant-driven restrictions in other countries.

Production volumes also grew slightly, expanding for the first time since March.

Meanwhile, manufacturing companies reduced their workforce for the 22nd straight month, although not as much.

“While new orders increased, firms had sufficient capacity to deal with demand. A decline in outstanding business supported this, with backlogs falling at the third-steepest rate in the near six-year history of the survey,” IHS Markit said.

Supply chain issues continued to be a problem as pandemic-related restrictions limited companies’ ability to access inputs.

Meanwhile, scarce materials in December, along with anticipated future demand and price hikes, led companies to stockpile.

“Buying activity rose at the quickest rate for six months while stocks of purchases expanded for the fourth month running,” IHS Markit said.

Both supply chain issues and material scarcity led to higher input prices.

“Supply-side issues and virus-related restrictions threatened the sector once again. Delivery delays were pronounced and often hindered production. Shortages, meanwhile, continued to drive up expenses, despite some signs of a moderation in input and output prices in December,” Ms. Patel said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the recent improvement in the country’s PMI is “one of the bright spots” for the economy.

The economy was further reopened in November, allowing businesses to operate at higher capacity, which then supported manufacturing activities, he said in a Viber message.

But lockdown restrictions in Metro Manila were again tightened starting Monday as COVID-19 cases surged during the holidays.

“This could slow down economic recovery and potentially slow down the PMI manufacturing gauge in January,” Mr. Ricafort said.

IHS Markit said manufacturing companies are optimistic about output for 2022 as they expect higher demand from customers. In December, business sentiment was at its highest since January 2020.

But Ms. Patel also warned that the Omicron variant would likely affect the Philippine manufacturing sector.

“Supply-side issues are likely to persist while case numbers and input price inflation could climb further as we head into the New Year,” she said.

The Health department on Monday reported 4,084 COVID-19 cases, bringing the active case count to 24,992. — Jenina P. Ibañez

Omicron could derail short-term Philippine growth

PHILIPPINE STAR/ MICHAEL VARCAS
METRO MANILA is under Alert Level 3, a stricter form of lockdown, up to Jan. 15 to curb the spike in coronavirus cases. — PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Senior Reporter

A FASTER ROLLOUT of coronavirus disease 2019 (COVID-19) vaccines and public compliance with health protocols have become more urgent as the recent increase in infections threatens to slow down the Philippine economy in the first three months of 2022, analysts said.

The recent surge in cases due to the Omicron variant could impact economic growth in the first quarter, Ruben Carlo O. Asuncion, UnionBank of the Philippines, Inc. chief economist, said

“Although it may not resemble the previous lockdowns, it can be quite a drag,” he said in a Viber message last week.

The government in December raised its gross domestic product (GDP) projection for 2021 to 5.5% after the economy grew faster than expected in the third quarter, leading economic managers to anticipate eased lockdown measures by January.

The government expects the economy to expand by 7-9% this year.

However, Metro Manila was placed under Alert Level 3, a stricter form of lockdown, starting Monday up to Jan. 15 to curb the spike in COVID-19 cases. A council composed of Metro Manila mayors also agreed to enact measures to restrict the movement of unvaccinated people.

As of Monday, the daily COVID-19 tally reached 4,084, for a total active case count of 24,992.

Early studies suggest that the Omicron variant is more contagious but leads to fewer hospitalizations than the Delta variant. The Omicron-driven surge in cases overseas has led other countries to go into lockdown.

Asian Institute of Management economist John Paolo R. Rivera said the Omicron variant poses a threat to the global value chain, which could then cause inflationary pressures and supply constraints.

The deployment of overseas Filipino workers and recovery of the tourism industry could be hampered by the spread of the variant, he said.

“The Omicron can be contained with the protocols, vaccine, and science that we have,” Mr. Rivera said in a Viber message. “Surge will be driven by the irresponsibility and selfishness of individuals who breach protocols instituted to ensure everyone’s safety.”

He said ignoring health protocols could lead to an economic downturn that would affect the poor.

“If the cases surge, first-quarter economic activities might be compromised, derailing again economic recovery.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the recent increase in the country’s debt-to-GDP ratio to 63.1% signals limited government spending resources in case of more lockdowns.

A quicker vaccination rollout would help protect the population against the Omicron variant and keep new COVID-19 cases low to justify more measures to reopen the economy, he said in a Viber message.

“The country has defeated the more deadly Delta variant as manifested by the significant reduction in new COVID-19 local cases amid accelerated vaccination and stringent health protocols. This could be a good signal on the country’s preparedness versus the Omicron variant without letting the guards down.”

Fewer than 50 million Filipinos had been fully vaccinated against COVID-19 as of Jan. 2, which means the government missed its end-2021 target of 54 million Filipinos.

Duterte vetoes creation of human rights institute

PCOO

PRESIDENT Rodrigo R. Duterte directly vetoed five items in this year’s P5.024-trillion national budget, including the creation of a human rights institute.

Mr. Duterte rejected a provision in Republic Act 11639 or the General Appropriations Act (GAA) of 2022 that establishes a human rights institute, saying no “appropriation is provided for the purpose.”

“The creation of an institute, just like other offices, should be subject to a comprehensive review of the mandate, mission, objectives and functions, systems and procedures, programs, activities and projects, as well as the corresponding structural, functional, operational adjustments in an organization, including the necessary staffing and funding requirements,” the President said in his veto message. 

Mr. Duterte also vetoed a provision on the Department of Transportation’s (DoTr) motor vehicle inspection and gender responsive restroom programs, saying the items “should not have found their way in this GAA considering both do not relate to any appropriation in the DoTr’s budget.”

The President also rejected a provision excluding lands owned by state universities and colleges from the comprehensive agrarian reform program, saying this is already covered by Republic Act (RA) No. 6657.

He similarly vetoed a provision that seeks to expand the authorized credit facilities that will manage the Agro-Industry Modernization Program as provided under RA No. 8435 or the Agriculture and Fisheries Modernization Act of 1997. “The provisions of RA 8435, being a substantive law, shall prevail.”

“The vetoed items were not crucial,” Department of Budget and Management officer-in-charge Tina Rose Marie L. Canda told an online news briefing on Dec. 31 in Filipino.

Mr. Duterte last week signed into law the national budget, which is 10% higher than the 2021 budget and is equivalent to 21.8% of the gross domestic product. The government expects economic output to grow by 7-9% this year. — K.A.T.Atienza

PDS plans to launch country’s first digital corporate bonds in February

THE Philippine Dealing System Holdings Corp. (PDS) will launch the country’s first digital corporate bond in February to deepen local capital markets, the Department of Finance (DoF) said.

The issuance will use distributed ledger technology, where transactions are recorded in several sites instead of a centralized database.

Philippine Dealing and Exchange Corp. (PDEx) President and Chief Executive Officer Antonio A. Nakpil said PDS is working with a Singapore-based financial technology company to roll out the digital registry backed by the distributed ledger technology.

“The PDS is aiming to conduct an end-to-end test of the digital registry and depository with market participants by January this year and is targeting its possible live launch with an issuance of a digital bond by late February,” he said.

Mr. Nakpil said the digitalization roadmap for the corporate bond market includes the use of distributed ledger technology, which will be integrated with the PDS online platform.

The platform, or the electronic securities portal (e-SIP), was launched for the primary market last year.

The e-SIP allows the online submission of documents required for PDEx listing and Philippine Depository and Trust Corp. registry services for initial public offerings for corporate bonds.

After the Ayala Land, Inc. pilot last year, in which the company offered its four-year P10-billion bond, four more issuers have onboarded securities and client investors through the online portal.

PDS last month said it was preparing cybersecurity measures as it rolls out its online platform for the secondary market.

Finance Secretary Carlos G. Dominguez III said he supports these digitalization initiatives to deepen the country’s capital markets. But he also expressed concern about hackers.

“I’m telling you this type of digitalization is probably going to be a target for hackers and scammers, and just plain thieves,” he said.

Mr. Nakpil said the PDS is assessing the vulnerability of its systems to potential threats.

The PDS is working with the Bankers’ Association of the Philippines and National Association of Securities Broker Salesman, Inc. to use e-SIP to standardize processes for customers.

“This initiative looks to do away with a tedious process for investors to keep filling up the same forms several times when buying corporate bonds from different brokers,” DoF said. — Jenina P. Ibañez

PHL needs to move tax collection processes online, says ADB report

PHILIPPINE STAR/KRIZ JOHN ROSALES

By Jenina P. Ibañez, Senior Reporter

THE PHILIPPINE government must move its tax collection processes online to cut costs and improve compliance among individuals and businesses, the Asian Development Bank (ADB) said.

ADB Southeast Asia economist Aekapol Chongvilaivan said such reforms will help improve tax revenue collections.

“Our recent report on tax reforms in Southeast Asia emphasizes the need to shift from manual paper-based systems to digital systems to reduce the costs of tax administration and compliance for individuals and corporates,” he said in an e-mail.

In a report A Comprehensive Assessment of Tax Capacity in Southeast Asia, the ADB said a narrow tax base in the region is attributed to its large informal sector.

In the Philippines, economic activities outside the tax systems make up 28% of the gross domestic product.

“There are various reasons for a large informal economy — such as weak tax enforcement, inefficiencies of tax administration, and tax avoidance behaviors among others,” the report said.

The high costs of tax compliance, ADB added, discourages small- and medium-sized businesses from complying with the rules.

“In the context of the Southeast Asian countries, there is a huge opportunity for tax authorities to leverage on tax administration measures that aim to reduce costs of compliance and promote voluntary compliance by simplifying tax registration.”

The report suggested that digital taxation can help governments quickly improve revenues without changing existing rules.

Mr. Chongvilaivan, the co-author of the report, said the Bureau of Internal Revenue’s (BIR) digital initiatives have helped address issues in tax administration and payments.

The ADB is helping the BIR to develop taxpayer online registration and data management, he said.

“(The system) would help enrich taxpayers’ services, thereby reducing their compliance costs and bringing them into tax systems.”

Finance Secretary Carlos G. Dominguez III has said that local government units should digitalize their tax processes after a Supreme Court ruling expanded their share of National Government revenues starting this year.

Mr. Dominguez said local governments will have to develop electronic business registration and renewal as well as local tax and fee assessment and collection.

Both national and local governments should improve revenue generation to make the country’s fiscal resources last during the coronavirus disease 2019 (COVID-19) pandemic, he said.

In December, the Finance chief said that nearly 100% of annual income tax returns were filed online last year, higher than the 90% in 2020 as more Filipinos use digital tools for transactions.

Only 10% of taxpayers filed taxes digitally in 2015, he said.

Co-authored by ADB Taxation Administration Expert Annette Chooi, the report released in December said digital technology will cut transaction costs and improve tax transparency.

“Following the use and adoption of electronic services or e-services, such as e-filing and e-payment, many Southeast Asian countries see an increase in tax collection.”

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