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PHL likely to avoid FATF ‘gray list’

REUTERS/THOMAS WHITE/ILLUSTRATION

By Charmaine A. Tadalan, Reporter

THE Philippines is likely to avoid being “gray-listed” by the Financial Action Task Force (FATF) as it is on track to meet the Feb. 1 deadline to implement a stricter law against money laundering.

The amendments to the Anti-Money Laundering Act (AMLA) will immediately take effect once it is published, a legislator said after the Senate and the House of Representatives ratified the measure on Wednesday.

“In the interest of expeditious implementation of this law, and in order to meet the deadline as imposed by the FATF/APG (FATF Asia Pacific Group), the Panel has adopted the present Act’s immediate effectivity upon the completion of its publication,” Senator Grace S. Poe-Llamanzares said during Wednesday’s session.

The Senate on Wednesday ratified the Bicameral Conference Committee report that reconciled House Bill No. 7904 and Senate Bill No. 1945.

The measure includes real estate brokers and developers as covered persons for single cash transactions worth at least P7.5 million, up from the P5 million proposed in both bills.

Meanwhile, the bicameral panel agreed to delete the Senate’s proposal to increase the reporting threshold of the Land Registration Authority to P5 million from P500,000.

Philippine offshore gaming operators (POGOs) and service providers will also be included provided they engage in transactions in excess of P500,000.

The panel also agreed to limit the tax crimes covered to only tax evasion with a threshold worth at least P25 million, higher than the P20 million proposed by the House and President Rodrigo R. Duterte.

Once enacted, the Anti-Money Laundering Council (AMLC) will be given additional but limited investigative powers, such as the power to apply before a competent court for a search and seizure warrant, and a subpoena.

“This is in adherence to the key recommendation of the FATF/APG while at the same time still maintaining the integrity of the Constitution and our laws,” Ms. Poe-Llamanzares said.

The bill will take effect immediately after its publication in the Official Gazette or in a newspaper of general circulation to allow the AMLC to implement the law before Feb. 1.

AMLC Executive Director Mel Georgie B. Racela said the council has already drafted the implementing rules and regulations (IRR) while the AMLA amendments were being finalized. 

“We have drafted the amendments to the IRR and will submit this to the AMLC for their approval by end of this week,” Mr. Racela said over phone message.  

“Once signed by President Duterte and published in the Official Gazette, we will also publish the IRR. In short, we are taking parallel moves already to beat the February 1, 2021 deadline.”

He noted the AMLC is closely monitoring the measure and has coordinated with the Office of Deputy Secretary for Legal Affairs to ensure it is sent to President Duterte and Executive Secretary Salvador C. Medialdea as soon as possible.

The FATF gave the Philippine government until Feb. 1 this year to enact and implement the changes to the AMLA to address gaps in countering money laundering and terrorist financing. The initial deadline was originally set in October 2020, but was extended due to the coronavirus pandemic.

“Bills pertaining to the amendment of the AMLA have always had a difficult time… because of two seemingly clashing ideals: the virtue of adopting provisions recommended by an international body… and the virtue of preserving our own set of laws and rules,” Ms. Poe-Llamanzares said.

“The present set of amendments show us that it is possible — as it has always been — to find a middle ground.”

The measure also gives AMLC the authority to preserve, manage or dispose of assets pursuant to a freeze order, preservation order or judgment of forfeiture. The AMLC may also implement targeted financial sanctions against the proliferation of weapons of mass destruction and its financing.

The amendment also introduced a new sentence in the “non-intervention of the BIR (Bureau of Internal Revenue)” that will allow AMLC to coordinate with BIR on investigations relating to tax evasion.

“This amended provision aptly provides for AMLC’s ability to pursue investigations in coordination with BIR, while also maintaining AMLC’s independence from BIR and vice versa,” Ms. Poe-Llamanzares said.

The bicameral panel also agreed to include a section on information security and confidentiality to prevent leakage and misuse of information; but deleted the provision that will establish an incentives and rewards system for the informant and the agency.

Trade dep’t revises export targets for 2021, 2022

THE TRADE department revised its export targets for this year and 2022 to reflect the extent of the impact of the coronavirus pandemic and sluggish global demand.

“In this revised set of targets, we will reach $105 billion by 2022, but still growing from $91.7 billion in 2021,” Trade Secretary Ramon M. Lopez said in a statement.

The $105-billion target by 2022 is slightly higher than the $103.9-billion target the Trade department announced on Jan. 3.

Asked why the department revised its targets anew, Mr. Lopez told reporters via Viber: “Lumabas na kasi ’yung January to November. That pushed up the 2020 base year (The January to November data pushed up the 2020 base year).”

He noted the exports decline for 2020 is estimated at 13.5%, as economic activities were halted during the strict lockdown from mid-March to end-May.

“The positive growth of 2% in September and 3% in November last year was not enough to totally offset the decline in the first half of 2020 which was the height of the lockdown. But export numbers continued to improve month on month reaching positive growth by September and November versus their same month previous year numbers,” Mr. Lopez explained.

“We can write off the 2020 numbers, so to speak, but the rebound is expected this year 2021, where we expect to bounce back to a +12.5% in 2021 and +14.8% in 2022,” he added.

The Trade department considers the targets as “fighting targets,” Mr. Lopez said, noting it had “intensive consultations” with each export sector and stakeholder.

“This also means that we shall exert all efforts in terms of policies and support programs to assist the export sector and help them achieve these fighting targets,” he added.

Under the Philippine Export Development Plan (PEDP) 2018-2022 roadmap, goods and services export revenues were earlier projected to reach $122 billion-$130.8 billion by 2022 after a compound annual growth rate of 8.89-9.96%.

The department expects the proposed economic reform legislations, infrastructure, and digitalization programs to boost the country’s export capacities.

The reforms should also “unleash our potential in higher value sectors such as in electronics, automotive, aerospace, IT BPM, copper and the creative industries, plus the potential in halal exports,” Mr. Lopez said. — Arjay L. Balinbin

Consumer firms prepare for recovery this year, but challenges still remain

BUSINESSES are preparing for recovery this year on hopes of a further easing of lockdown restrictions and the rollout of the coronavirus disease 2019 (COVID-19) vaccine, but restoring consumer confidence remains a challenge.

SM Supermalls President Steven Tan said 2021 is expected to be a “year of recovery” after the pandemic battered the retail industry last year.

“Malls are open again but consumer confidence is not yet 100% back to normal. Spending is muted. We are hoping 2021 would be a better year for everyone,” he said at the BusinessWorld Insights online forum on Wednesday.

“The first half would still slowly grow but the second half of the year, when the vaccine comes out, it will slowly go back to normal. We think we will be back to 2019 level by the last quarter of the year,” Mr. Tan said.

Malls were forced to shut down for nearly two months when the government placed Luzon under an enhanced community quarantine (ECQ) in mid-March.

SM Prime Holdings’ rental revenues dropped by nearly half in the first nine months of 2020, due to the mall closures. The listed firm said in a regulatory filing that it waived a total of P17.28 billion in rentals and other charges throughout ECQ.

The strict lockdown restrictions also hurt the fastfood business, which relied mostly on dine-in customers before the pandemic.

“Our business was one of the most impacted business sectors last year and continues (to be impacted) this year. The restrictions and lockdowns as well as age restrictions, prevention of mass gathering are a hindrance to recovering the whole potential of the business,” Golden Arches Development Corp. (GADC) President and Chief Executive Officer Kenneth S. Yang said during the same forum.

GADC, which operates the McDonald’s franchise in the Philippines, expects to see an improvement over last year’s financials as lockdown restrictions are slowly eased and the vaccination program likely to begin in the first half.

“I think with the emergence of the vaccine, this will become helpful and add to consumer confidence to go out. At this time, consumer confidence while improving is still quite low,” Mr. Yang said.

DIGITAL PIVOT
For Mr. Yang, businesses must adapt to how customer behavior changed during the pandemic.

“We have to also modify our businesses, our operations, our channels to satisfy their new expectations,” he said. “If safety is their topmost priority, then you have to have safety solutions so that visits to your restaurant or consumption of your products are reassured.”

Mr. Yang said digital measures are critical for all industries to ensure convenient access for customers.

GADC had already been working on its digital transformation pre-pandemic, which was then accelerated last year.

“What was planned for five years was accelerated all into 2020,” Mr. Yang said, adding that internal operations also had to be connected online for work-from-home measures.

SM Supermalls also had to accelerate the digital transformation. Mr. Tan said SM malls have launched online selling tools and personal shopper assistance services to attract consumers who are stuck at home.

These digital measures mirror the China-style mixed retail method the company is adopting, as SM looks to its counterparts in the region for potential recovery measures.

“(China) has innovated, used technology to rebuild better and become omni-channel very early. A brand has to be shoppable and shippable,” Mr. Tan said.

Companies have accelerated the frequency of managing their cash flow, KPMG Philippines Chief Operating Officer Emmanuel P. Bonoan said at the same event.

“We now review cash flows on a daily basis… we have consultations based on what our cash flows look like. At this time, cash flow is even more important than ever,” he said.

The company’s cybersecurity and digital transformation services have started to pick up, he said.

Mr. Bonoan added that the professional services firm scaled up crisis management meetings, and is investing in training employees.

“Our people have to learn new things and have to get better at the things that they’re doing so you have to make investments in continuous training. While this might last a long time, this situation will pass and you have come out on top of it better than you were when you entered into it.” — J.P.Ibañez

PHL banks continue to face credit risks — S&P

By Luz Wendy T. Noble, Reporter

EMERGING MARKETS such as the Philippines will continue to face credit risks this year, as the central bank is likely to lift regulatory relief measures and the loan payment moratorium expires,  S&P Global Ratings said.

At the same time, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said they are still looking into asset quality developments to gauge when to lift relief measures implemented at the height of the lockdown last year.

“NPLs (nonperforming loans) and restructured loans will continue to increase over the next few quarters as the true impact of the COVID-19 (coronavirus disease 2019) shock on the banks’ borrowers unfolds,” Nikita Anand, an analyst at S&P Global Ratings, said in an e-mail.

“We believe NPL ratio could further climb to about 6%-6.5% by the end of 2021,” she added. The global debt watcher projects the ratio may have risen by 4-5% in 2020 from the 2019 level.

Ms. Anand warned a “sharp rise” in NPL may occur after the second debt moratorium as provided for under Republic Act 11494 or the Bayanihan to Recover as One Act expired on Dec. 31, 2020. 

The Philippine banking industry’s NPL ratio reached 3.81% as of end-November, rising from the 3.72% in October as well as the 2.19% a year earlier, based on BSP data. Bad loans surged 73.6% to P404.687 billion in November from P233.064 billion a year ago.

The restructured loans ratio also increased to 1.31% of total loans as of end-November from 0.38% a year earlier. These loans soared 241% to P139.614 billion from P40.857 billion a year ago.

S&P in a note warned that bad loans will further pick up once regulatory relief measures employed by central banks in developing markets are lifted.

Ms. Fonacier said they “are still monitoring developments on asset quality.”

“Hence, we cannot yet determine the timeline on the lifting of the regulatory relief at this point,” she said in a Viber message.

BSP Governor Benjamin E. Diokno said they will carefully assess the timing of when they will unwind relief measures to ensure it will not cause risks or instability to the financial system.

The central bank said the bad loan ratio may have reached 4.6% as of end-2020. It peaked at 17.6% in 2002 in the aftermath of the Asian financial crisis.

Meanwhile, Ms. Anand said the rollout of COVID-19 vaccines will be used in assessing economic and credit risks of sovereigns.

“Widespread immunization, which certain countries might achieve by midyear, will help pave the way for a return to more normal levels of social and economic activity,” she said. “The improvement in asset quality will depend on economic recovery and stabilization of credit conditions.”

The BSP’s Ms. Fonacier said the country’s vaccination program is a welcome development, noting its “positive impact on business confidence.”

The Banking Sector Outlook Survey of the BSP released earlier this month showed majority of respondent banks expect the NPL ratio to go beyond 3% until 2022, while nearly half of banks see restructured loans to comprise 3-5% of their credit portfolio.

This uncertainty has led to a decline in bank lending growth, which stood at 0.3% in November, the slowest since the 1.9% in September 2006.

COVID-19 pandemic could be source of global crises for years — WEF

THE CORONAVIRUS has exposed the “catastrophic effects” of ignoring long-term risks such as pandemics, and the economic and political consequences could cause more crises for years to come, according to the World Economic Forum (WEF).

The WEF’s annual survey of global risks lists infectious disease and livelihood crises as the top “clear and present dangers” over the next two years. Knock-on effects such as asset bubbles and price instability lead concerns over 3-5 years.

The WEF said most countries struggled with crisis management during the pandemic, despite some remarkable examples of determination and cooperation. That highlights how leaders need to prepare better for whatever the next major shock turns out to be.

“The immediate human and economic cost of COVID-19 is severe,” the WEF said in the report. “The ramifications — in the form of social unrest, political fragmentation and geopolitical tensions — will shape the effectiveness of our responses to the other key threats of the next decade.”

While the impact of the pandemic is dominant at the moment, other events will likely come to the fore, according to the survey. As in previous years, extreme weather is seen as the most-likely risk, just ahead of a failure in climate action. Infectious diseases make the top five for the first time in at least a decade.

Digital inequality and the concentration of digital power are also seen as major concerns, with WEF Managing Director Saadia Zahidi warning of a global “bifurcation in terms of growth and development.”

“There are parts of the world that have digital access and inclusivity and that is where some parts of the workforce — not all — are able to continue, are able to adapt,” she told Bloomberg Television on Tuesday. “But then there’s this other part of the world where we don’t even have basic internet access, basic electricity access, basic water access and that is where recovery and a return to growth will look very different.”

The WEF’s recommendations for boosting resilience include combating misinformation, especially as coronavirus vaccines are rolled out. It cited one example of false information — that ingesting highly concentrated alcohol kills COVID-19 — which caused more than 700 deaths and nearly 6,000 hospitalizations in Iran.

More broadly, it said post-truth politics are “amplifying hate speech, heightening the risk of conflict, violence and human rights violations, and threatening long-term prospects for advancing democracy.”

The forum also recommended “holistic” risk analysis, investing in “risk champions” to encourage international cooperation, and exploring new forms of risk management such as public-private partnerships.

“If lessons from this crisis only inform decision makers how to better prepare for the next pandemic — rather than enhancing risk processes capabilities and culture — the world will be again planning for the last crisis rather than anticipating the next,” the WEF said. — Bloomberg

Makati Shangri-La Hotel to temporarily close

MAKATI SHANGRI-LA Hotel will be temporarily closing down operations starting next month as it yields to financial pressures caused by the lockdown.

The Shangri-La Group said in a statement on Wednesday that the company will be reorganizing its Philippine workforce and operations. It did not announce the length of the closure.

The luxury hotel operating in Makati City for almost three decades will be letting go of an unspecified number of employees, and will be offering compensation, healthcare coverage, and grocery support to former employees until the end of the year.

Shangri-La said that the closure decision was made after low business levels and a prolonged recovery timeline.

Hotels for much of the stricter lockdown declared in March last year to manage the public health crisis were not allowed to operate at full capacity.

Permission for full workforce capacity at general and modified general quarantine areas was given by the end of October.

Makati Shangri-La was one of the hotels given authority to operate for staycations, or what the Tourism department defines as leisure-based hotel stays close to the visitors’ residence.

The company during the lockdown cut costs by reducing salaries at the management level, imposed shorter work weeks, froze hiring, and cut “non-essential” spending.

“We continue to vigilantly monitor local and global developments and look forward to reopening Makati Shangri-La, Manila at a later date when business conditions have improved.”

The Tourism sector was hit hard by measures to contain the coronavirus disease 2019 (COVID-19) pandemic, with revenues last year dropping 83% to P81.4 billion after a significant decline in foreign visitors. — Jenina P. Ibañez

DoE clears six firms to serve customers who opt for ‘green’ energy

By Angelica Y. Yang

SIX suppliers of renewable energy, including entities led by Aboitiz and Ayala businesses, have been granted permits to participate in the country’s “green energy option” program, giving them the lead in offering electricity to consumers who prefer cleaner power sources.

On Wednesday, the Department of Energy (DoE) posted on its website the names of the six eligible companies, namely: Bacman Geothermal, Inc.; First Gen Energy Solutions, Inc.; SN Aboitiz Power-Magat, Inc.; SN Aboitiz Power-Res, Inc.; AC Energy Philippines, Inc.; and the Sparc-Solar Powered Agri-Rural Communities Corp.

Mylene C. Capongcol, director of the DoE’s Renewable Energy Management Bureau (REMB), said the six companies are the first ones to file operating permits for the green energy option program, or GEOP.

“Their applications are evaluated based on the guidelines issued by the DoE,” she said in a quoted in a statement provided by the department’s public affairs office via Viber on Wednesday.

The program, which was launched in 2018, is a voluntary policy mechanism that allows consumers with at least 100 kilowatts (kW) of usage to source their supply from a retail energy supplier (RES), based on a DoE circular issued about three years ago.

Before joining the GEOP, suppliers must secure an operating permit from the DoE’s REMB. A GEOP operating permit authorizes a firm to supply electricity to a qualified end-user.

Asked whether the six firms were the only ones allowed to supply green energy, Ms. Capongcol said: “No, we are not limiting to the six RE suppliers. Our issuance of GEOP Operating Permits follows prescribed criteria as per our issued policy.”

In April last year, the DoE issued the guidelines for suppliers that wanted to participate in the program.

In September, Ms. Capongcol said that the department would be awarding its first operating permit to a retail electricity supplier.

Based on a department circular titled “Guidelines governing the issuance of operating permits to renewable energy suppliers under the green energy option program,” suppliers under the GEOP are required to:

• Comply with the terms and conditions of the operating permit, circular provisions and GEOP rules;

• Submit annual reports to the REMB on or before Jan. 30;

• Ensure that the total power from its facilities are greater or equal to the total kilowatt hour (kWh) sold to its consumers;

• Register in the Wholesale Electricity Spot Market and with the Central Registration Body before supplying power to end-users; and

• Register with the RE Registrar.

The GEOP allows more end-users to access clean power from qualified RE firms.

Former MPIC, Megawide executives join Converge

NEWLY listed fiber internet provider Converge ICT Solutions, Inc. announced on Wednesday the appointment of its two new executives, who are expected to raise the company’s “organizational standards of governance, stakeholder relations, and risk management.”

In a disclosure to the stock exchange, the company named Owen Kieffer Ocampo as investor relations director and Anthony Vergel Velasco as internal audit director.

Mr. Ocampo, who previously served as the investor relations manager of Metro Pacific Investments Corp. (MPIC), is expected to “champion a best-in-class investor relations function” within the company, Converge said.

“He brings in over eight years’ experience, having started his career in 2012 with JPMorgan Chase. In 2013, he joined the Deal Advisory Group of KPMG in the Philippines (R. G. Manabat & Co.) as a supervisor and quickly progressed to managerial roles within his four-year stint,” it added.

Meanwhile, Mr. Velasco previously served as the Megawide group’s chief audit executive.

He also worked as head of the IT audit unit at Security Bank Savings and chief audit executive at 2Go Group, Inc.

Mr. Velasco brings over 21 years of internal audit experience, covering financial, compliance, information system, and operational risk, Converge noted.

The company added that it expects Mr. Velasco to “ensure the effectiveness of the governance and control processes for accomplishing internal audit’s mandate as defined in the internal audit charter.”

Converge ICT Founder and Chief Executive Officer Dennis Anthony H. Uy said Messrs. Ocampo and Velasco will be spearheading initiatives “that raise organizational standards of governance, stakeholder relations, and risk management.”

MPIC is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Arjay L. Balinbin

ERC taps third-party to audit electric cooperatives

THE Energy Regulatory Commission (ERC) has enlisted the services of consulting firm Reyes Tacondong & Co. to audit the electric cooperatives (ECs) on the use of funds for their capital expenditures, in a bid to complement the commission’s evaluation efforts, the regulator said on Wednesday.

In a press release, the ERC said that it has decided to get a third party to audit the ECs to see if they are using their reinvestment fund for sustainable capital expenditures (RFSC) in line with the commission’s rules.

“The bidding process has been completed and the contract has been awarded to the winning bidder,” ERC Chairperson and CEO Agnes VST Devanadera said of Reyes Tacondong & Co. The commission said that it awarded the contract to the chosen consultant because it submitted the highest rated and responsive bid.

EC’s are authorized to collect from member-consumers the funds, which would go to their reinvestment fund. The fund is meant for amortization or debt service of the ECs in the expansion, rehabilitation, or upgrading of their power systems.

“We are duty-bound to promote and protect the consumers’ interest and the impending audit of the ECs’ Reinvestment Fund for Sustainable Capital Expenditures or RFSC will establish whether the ECs’ collection and disbursements thereof indeed benefited the consumers,” Ms. Devanadera said.

Data from the National Electrification Administration (NEA) showed that 109 ECs were able to sustain their positive financial operations before raising reinvestment funds during the fourth quarter of 2019. Also, 109 ECs were able to sustain their positive net worth.

“These two parameters indicate that most of the ECs are financially healthy,” the NEA said in its compliance report on the performance of ECs in the fourth quarter.

On Jan. 8, the ERC announced that it had tapped into a consultant to verify if utility giant Manila Electric Co. returned its reported refunds to its customers. In a previous press release, the commission said that it had awarded the contract to Roxas Cruz Tagle and Co. — Angelica Y. Yang

TDF yields ease as BSP says it will continue lending to gov’t

YIELDS ON term deposits auctioned off by the Bangko Sentral ng Pilipinas (BSP) on Wednesday continued to fetch lower yields as the central bank signaled it could lend more funds for the government’s pandemic response.

Total bids for the central bank’s term deposit facility (TDF) reached P756.711 billion yesterday, higher than the P570-billion offering as well as the P726.615 billion in demand seen last week.

Broken down, the seven-day term deposits fetched bids worth P291.491 billion, going beyond the P210 billion auctioned off by the BSP but lower than the P305.273 billion in tenders logged the previous week.

Accepted rates for the tenor were seen from 1.6% to 1.65%, a narrower range compared with the 1.6% to 1.67% seen last week. With this, the seven-day paper’s average rate dropped 1.45 basis points (bps) to 1.6325% from the 1.647% logged previously.

Meanwhile, demand for the two-week deposits reached P465.22 billion, above the P360 billion on the auction block as well as the P421.342 billion in bids recorded last week.

Lenders asked for yields ranging from 1.6% to 1.6743%, a smaller band compared with the previous week’s 1.6% to 1.7%. This caused the average rate of the 14-day papers to settle at 1.6534%, down by 1.39 bps from the 1.6673% seen on Jan. 13.

The BSP did not offer the 28-day deposits for the 14th straight week. This follows the start of its weekly auctions of short-term bills with the same tenor.

The term deposits and BSP securities are tools used by the central bank to mop up excess liquidity in the financial system and to better guide market interest rates.

Recent signals from the BSP that it will continue to lend to the government if the need arises pulled down TDF yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

“[A] possible increase in BSP’s direct lending to the National Government would reduce the need for the government to borrow from the local market, thereby reducing crowding out effects or reducing competition with other borrowers partly caused the latest easing of the TDF yields,” Mr. Ricafort said in a text message.

BSP Governor Benjamin E. Diokno last week said the National Government can still access direct advances from the central bank. Republic Act No. 11494 of the Bayanihan to Recover as One Act allows the BSP to provide up to 30% or about P820 billion in direct provisions to the National Government to help it finance its response to the coronavirus pandemic

The BSP in December approved a P540-billion zero-interest direct advance to the National Government. This followed a P300-billion reverse repurchase agreement with the Bureau of the Treasury in March and a P540-billion advance in October, both of which have already been paid.

Mr. Diokno said direct advances from the BSP will help the government save on interest payments.

He also said the financing will “not be a permanent feature of fiscal and monetary relationship” and will stop when the economy recovers. — Luz Wendy T. Noble

Growth rate of business name registrations hit 10-year high in 2020

BUSINESS name registrations with the government in 2020 grew by its largest margin in a decade, the Trade department said.

Newly registered businesses reached about 900,000 by mid-December, or 41% higher than the previous year.

“‘Yun ang highest growth rate of 41% since 2010,” Trade Secretary Ramon M. Lopez said in the DiskarTech IPON Galing online event on Wednesday.

Online retailer registrations, he said, grew to 88,000 by the end of 2020 from around 1,700 between January to March.

Businesses have turned to online selling after the government last year imposed the lockdown that lowered foot traffic in malls and other commercial centers.

The Department of Trade and Industry previously said that 38% of around 2,000 surveyed micro, small, and medium-sized enterprises were found to have shut their doors during the stricter lockdown in April and May.

E-commerce company Lazada Philippines said that its daily sales grew by 2.5 times last year, noting that the number of merchants doubled.

The Trade department in 2019 moved its business name registration processes online. — Jenina P. Ibañez

Central bank looking to tighten its watch on lenders’ ownership

THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to bring down the threshold for the transfer of shares of stocks that needs its approval to ensure “proper” and “fit” ownership of BSP-supervised financial institutions (BSFIs).

A Jan. 14 version of the draft circular posted on the central bank’s website also moved the authority to approve these transactions to the BSP from the Monetary Board.

Based on the proposal, the BSP is looking to define control of an enterprise when at least 10% of voting shares of a bank or a financial company is indirect or directly owned or held by an entity. This proposed threshold will be the basis for the transfer of shares of stocks that will need prior approval from the BSP once the circular is approved.

The threshold is currently set at 20% under the BSP’s Manuals of Regulations for Banks and Non-bank Financial Institutions.

“The BSP deems that even at 10%, it is considered significant such that it needs BSP approval,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.

“The Bangko Sentral recognizes the importance of public’s trust in promoting the safety and soundness of individual financial institutions and the financial system as a whole,” the policy statement of the draft circular read.

“It is in this light that it is issuing regulations on the transfer of shares of stocks in BSFIs and the qualifications of holders of said shares to ensure that only individuals and corporations as well as their ultimate beneficial owner/s who are fit and proper shall be allowed to own a substantial or controlling interest in a bank,” it added.

The draft circular likewise says prior approval from the BSP is needed for these transactions. Under current regulations, these are approved by the Monetary Board.

Ms. Fonacier said if the proposal is approved, the BSP Financial Supervision Sector will be in charge of the approval of the transfer of shares of stocks.

Stakeholders are given until Jan. 22 to give their feedback on the draft circular.

An analyst said the proposal would help protect both the financial system and the public.

“This move would further promote further financial stability as well as greater protection of the depositing public, to ensure stronger banking system and also fulfill the mandate of sustainable economic growth over the long-term,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

The central bank has said it will monitor financial stability risks in the banking system amid the current crisis by managing potential systemic risks or events even at the company level. — L.W.T. Noble

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