How PSEi member stocks performed — February 19, 2020
Here’s a quick glance at how PSEi stocks fared on Wednesday, February 19, 2020.
DBM reviewing P80B in budget appropriations in lieu of veto
THE Department of Budget and Management (DBM) has held up the release of funding suspected of being diverted from appropriations for flagship projects under the “Build, Build, Build” program, Senator Panfilo M. Lacson said.
Mr. Lacson said legislators “realigned” at least P80 billion from the infrastructure program in the 2020 budget to fund their “pet projects” under the 2020 spending plan.
“I support the decision of President Rodrigo Duterte and the DBM to withhold the release of these congressional realignments,” Mr. Lacson said in a statement Wednesday.
Budget Undersecretary Laura B. Pascua said the funding hold was laid out in the guidelines released on Jan. 6, the same day President Duterte signed the General Appropriations Act (GAA) of 2020.
“This was part of the release guidelines we issued last January 6,” Ms. Pascua said in a phone message Wednesday.
Mr. Duterte did not formally veto any provisions when he signed the 2020 Budget, raising the possibility that the spending hold represents some sort of informal veto.
In the preceding year’s budget he vetoed provisions worth over P95 billion, declaring them to be unlawful. The 2019 budget was much delayed due to claims of “insertions” — funding items that were included in the spending plan after both chambers approved a harmonized version of the legislation.
“Following the President’s veto message, Congressional changes especially those increasing appropriations for projects, will undergo checking from the implementing agencies for implementation readiness and approval of the President.”
Mr. Lacson during the budget preparation process flagged allegedly unconstitutional appropriations in the P4.1-trillion GAA, which he had relayed to Senator Juan Edgardo M. Angara, who chairs the Senate Finance committee.
Mr. lacson left the matter to the executive branch, either in the form of a veto or to have the DBM withhold funding for questionable projects.
The 2019 budget was delayed for four months due to an impasse between the House of Representatives and the DBM and later with the Senate on post-ratification realignments.
During the preparation of the 2019 budget, the Senate attached its reservations about the alleged insertions, leading to the presidential veto, which reduced the spending plan to P3.662 trillion. — Charmaine A. Tadalan
QC orders construction halt for MRT-7 station at Memorial Circle
THE QUEZON CITY government has ordered a construction halt for part of the Quezon Memorial Circle station of the Metro Rail Transit Line 7 (MRT-7) pending questions about how the monument will be affected.
In a statement Wednesday, the city said Mayor Maria Josefina G. Belmonte suspended the “above-ground structure” of the Quezon Memorial Circle (QMC) station of the P62.7-billion MRT-7 project pending clarification about how the works will affect the city’s “most famous landmark.”
The Transportation department said it is ready to resolve the issue with the city.
The city government said that Ms. Belmonte issued a temporary cease-and-desist order against the “above-ground construction” of the MRT-7 QMC station pending talks with developer San Miguel Corp., contractor EEI Corp. and the Department of Transportation (DoTr).
The city said “environmentalists and historians pointed out that the station was encroaching on the integrity” of the site.
Ms. Belmonte said the city “is in full support” of President Rodrigo R. Duterte’s infrastructure program but it has “grave reservations about the desecration of the famous heritage site, especially as construction was affecting the surface of the park.”
“We want to look for a win-win solution that would protect our open spaces while advancing the welfare of thousands of commuters who will benefit from the mass transport project,” Ms. Belmonte said.
The city government also said Ms. Belmonte has ordered a review of the MRT-7 project, claiming that it has “greatly exceeded the agreed area for construction.”
“Based on the project’s permit and clearance, the contractor indicated 4,997 square meters as its floor area. However, the proposed floor area is more than five times the approved figure,” the city said.
Transportation Assistant Secretary Goddes Hope Oliveros-Libiran said: “We understand that the concern is about the above-ground structure, and that the construction of underground areas may proceed. We will coordinate with the LGU (local government unit) of Quezon City as soon as possible to discuss and clarify this matter. We are certain that at the end of the day, we will be able to strike a balance and obtain a win-win solution.”
Ms. Belmonte said she has initiated talks with stakeholders for clarification and guidance.
The mayor also wanted to hear comment from the National Historical Commission of the Philippines, the National Commission for Culture and the Arts and the Quezon-Avanceña Family, the descendants of the late Manuel L. Quezon, because of QMC’s “historical landmark” status.
The Transportation department reported in January that the MRT-7 project — which will run between North Avenue in Quezon City and San Jose del Monte City, Bulacan — was 50.69% complete.
The P62.7-billion MRT-7 project has three components: a 23-kilometer rail transit system with 14 stations; a six-lane highway between North Luzon Expressway and a planned Intermodal Transportation Terminal (ITT); and the ITT itself that can accommodate 200 buses at a time. Travel time from end to end is estimated at 34 minutes. — Arjay L. Balinbin
Taal eruption, coronavirus outbreak boosts government spending 25%
FINANCE SECRETARY Carlos G. Dominguez III said contingency measures to deal with the eruption of the Taal Volcano and the coronavirus outbreak likely boosted government spending by around 25% year-on-year.
“According to Lea (National Treasurer Rosalia V. de Leon), our national treasurer, we are already up for the first one and a half months, we already up 25% over last year. That’s pretty good,” Mr. Dominguez told reporters Tuesday.
Mr. Dominguez said tweaks to monetary policy will be an appropriate tool in responding to the broader impact of the coronavirus, formally known as Covid-19, based on his discussions with Benjamin E. Diokno, the central bank governor.
The eruption of Taal Volcano in January forced nearby businesses to suspend operations until the ashfall subsided while the outbreak of Covid-19 has affected the tourism industry while disrupting supply chains and dampened overall spending.
The tax take may also suffer during these months, with the government’s two largest tax-collecting agencies detecting weak sales by businesses and a 50% drop in trade volume in the first 15 days of February.
Mr. Dominguez said economic managers are “concerned” about the declines but remain confident that the government will meet its P3.3-trillion revenue collection target for 2020.
He has said the economic impact of the two events is not enough to force the economic team to revise its 6.5-7.5% growth target for the year.
The Department of Budget and Management (DBM) estimates that 51.8% of the 2020 budget was released in the first month of the year, equivalent to P2.124 trillion out of the P4.1-trillion spending plan.
Some P1.826 trillion in allotment releases was disbursed to line departments, accounting for 76.6% of the programmed P2.382 billion for the year.
A total of P66.982 billion was also released for special-purpose funds last month, out of the P467.898-bilion budgeted for the year. These are allocations for specific socio-economic purposes, such as the budgetary assistance to state firms and allocations for local governments, the contingent fund, the miscellaneous personnel benefits fund, the National Disaster Risk Reduction and Management fund, as well as the pension and gratuity fund.
From automatic appropriations, P231.581 billion has been released, or 18.5% of the P1.249-trillion program for the year.
The bulk of the automatic appropriations went to internal revenue allotments (IRAs) for local governments (P162.23 billion), retirement and life insurance premiums (P49.28 billion) and the block grant for the Bangsamoro Autonomous Region in Muslim Mindanao (P15.9 billion).
Releases from the continuing appropriations of last year’s budget stood at P2.964 billion, P1.776 billion of which went to the line departments while P1.188 billion was released to special-purpose funds. — Beatrice M. Laforga
DTI’s Lopez downplays EU human rights findings in GSP+ report
TRADE SECRETARY Ramon M. Lopez said the European Commission should take a second look at the Philippines’ human rights and labor record after the commission raised “serious concerns” in its latest GSP+ report.
“We hope that they really look at the real numbers… right now it’s not even discussed much here kasi wala naman talaga tayong naririnig na violations (because there have been no reports of violations),” he told reporters Monday.
The European Commission expressed concern about the Philippine war on drugs and the President’s veto of the security of tenure bill in its GSP+ monitoring report released last week.
Under the Generalized Scheme of Preferences (GSP+) up to 6,274 Philippine products enjoy zero-tariff entry to the European Union (EU) if the country buys into 27 core international conventions that include human and labor rights, environmental protection and good governance.
The report said the veto of the security of tenure (SoT) bill “came as a surprise” as the bill was designed to tackle abuse of labor contractualization.
Contractualization denies workers a path to permanent employment and benefits, with companies often terminating employment before the six-month deadline to offer employees permanent status. This forces employees to apply again, on a contract basis.
“Even if you took the veto of the SoT bill, that doesn’t mean we don’t observe labor rights,” Mr. Lopez said, adding that he believes a possible replacement of the proposed SoT bill would strengthen the labor sector.
The Trade Union Congress of the Philippines party-list in October filed its own version of the bill, which is intended to criminalize all forms of contractualization.
The GSP+ report also called the possible return of the death penalty for drug offenders “a worrying development” that would violate an international protocol ratified by the Philippines in 2007.
“Persistent ongoing concerns since the last GSP report are the reports of thousands of extrajudicial killings of people allegedly involved in drug trade and use and the lack of proper investigation,” the report said.
Mr. Lopez said the commission should be “updated or briefed about the HR (human rights) situation,” saying that there have been more peaceful arrests.
The Philippine National Police in July said it had killed more than 5,500 people during drug raids. Rights groups and the United Nations Office of the High Commissioner for Human Rights said that the number could be more than 27,000.
Mr. Lopez said he does not know how the European Union stands on the matter of continuing free trade talks with the Philippines.
He said the Philippines continues to be open to a possible free trade agreement with the European Union, and looks to improving the country’s GSP utilization rate.
“So far (what’s important is) we’re able to do the… annual monitoring. We’re able to answer (the commission’s) questions objectively,” he said. — Jenina P. Ibañez
NAIA int’l arrivals dip over 16.7% due to coronavirus
INTERNATIONAL arrivals at the main gateway airport have fallen more than 16.7% since late January due to travel disruptions caused by the outbreak in China of the coronavirus, which is formally known as Covid-19.
In a briefing Wednesday, Manila International Airport Authority (MIAA) General Manager Ed V. Monreal said the decline is equivalent to 300,000 tourists.
“We have tracked down since Jan. 25 up to two days ago, February 17, ang kabawasan po ng mga pasahero sa international base sa aming pagtatala ay umabot na ng over 16% in that particular period (the decline in international passengers was over 16% during the period),” Mr. Monreal said.
Jan. 25 was the date of Lunar New Year in 2020, peak travel season for Chinese holidaymakers.
Foreign arrivals over the period amounted to 1,352,692, down from 1,624,698 a year earlier.
Mr. Monreal said aircraft movements — the combination of takeoffs and landings — were down over 22% after Philippine carriers cancelled service to China, Hong Kong, Macau and Taiwan after the government banned travel to and from those destinations.
The virus continues to depress travel activity overall. The World Health Organization estimated as of Feb. 18 there were over 73,000 confirmed cases worldwide, with 99% are in China. — Gillian M. Cortez
WB preparing $500-M facility to boost PHL’s disaster management
THE World Bank (WB) is preparing to approve about $500 million worth of loans to the Philippines in the second quarter, funding projects that will boost the government’s ability to respond to natural calamities and mitigate disaster risk.
According to World Bank documents, the multilateral lender is poised to lend the Philippines $500 million under the Third Disaster Risk Management (DRM) Development Policy Loan (DPL), for release in a single tranche.
The World Bank’s Board has set an estimated approval date of May 21, 2020.
The World Bank said the Philippine government asked the bank for a disbursing Development Policy Loan (DPL), instead of the initial plan for a DRM DPL with Catastrophic Deferred Drawdown option, “following a highly unusual series of disaster events in late 2019 and early 2020.”
“Through this, the government will be able to strengthen institutional capacity to implement the reforms at the national and local levels. This operation provides timely engagement as the government is in the process of enhancing the institutional framework for DRM through the creation of a new department for disaster risk management and climate resilience,” according to the document.
The Department of Finance will be the implementing agency for the facility.
The World Bank noted that the Philippines’ vulnerabiity to natural calamities poses a risk to its poverty reduction initiatives and could negatively affected economic growth and debt stainability.
It said by enhancing the disaster preparedness of local governments through improved planning, financing and implementation programs, the government is expected to speed up its response and recovery efforts following a natural disaster.
“The government has shown strong leadership in pursuing the DRM agenda and the country has already achieved substantial results, with the support from the two DRM DPLs with a CAT-DDO 1 and 2 (Catastrophe- Deferred Drawdown Option Program). — Beatrice M. Laforga
PPA reports 2019 port income of P7.28 billion
THE government’s income from port operations grew 31% to P7.28 billion in 2019, significantly exceeding the P4.94-billion target amid increased automation and the deployment of more efficient port equipment.
In a statement Wednesday, the Philippine Ports Authority (PPA) said it posted a 2019 net income of P7.280 billion, well above the 2018 result of P5.553 billion.
“As against the target, the actual amount is 47% higher than the target of P4.941 billion,” it added.
PPA said Port Management Offices that turned in “strong performances” last year were South Harbor, Batangas, Davao, Surigao, and Bataan/Aurora.
“The positive deviation comes mainly from lay-up fees, ro-ro fees, domestic dockage fees, pilotage, the utilization of the Vessel Traffic Monitoring System, and other income,” it said.
The port regulator added: “Combining all the growth percentages in the first three years of the current administration, the PPA net income is growing at an annual rate of 17%, the highest revenue growth percentage in any of the last 15 years.”
PPA General Manager Jay Daniel R. Santiago attributed this growth to “various changes” being implemented in the agency.
“The changes range from manual to automated processes, installation of sophisticated, effective, and higher-productivity port equipment, compliance with the world’s best port management practices, and most especially, the shift in the outlook of employees to public service with reliability, integrity, and accountability,” he said.
PPA also disclosed that it will have to revisit its first-quarter performance targets in the next few days “in consideration of the current global concerns,” including the continuing coronavirus disease 2019 (Covid-19) outbreak, the exit of the UK from the European Union, maritime disputes with China, and some safety and environmental concerns, among others.
“Even with the continuing threat of global concerns, ‘business as usual’ is not an option but reducing the risk of these threats coupled with management anchored on best practices and public-service committed government personnel, our gateways connecting to the tourism and trade centers of the world, will remain competitive and responsive to any current global demands,” Mr. Santiago said. — Arjay L. Balinbin
Region 12 domestic workers granted up to P4,000 monthly minimum wage
THE wage board in Region 12, known as Soccsksargen, set a new minimum wage which will take effect on Sunday of as much as P4,000 a month for domestic workers, the Department of Labor and Employment’s (DoLE) regional office reported.
The Regional Tripartite Wages and Productivity Board of Region 12 (RTWPB-12) released Wage Order No. RB XII-DW-02 on Jan. 21 calling for a new minimum wage for domestic workers in the region. The order was published on Feb. 8.
The new minimum wage will be P4,000 in cities and first class municipalities, up from P2,500 previously, and P3,500 for other municipalities, up from P2,000.
The last wage order took effect on Dec. 10, 2017. Wage boards cannot issue new orders for one year after the last order.
DoLE Region 12 said in a statement dated Feb. 10: “The new wage order will take effect on Feb. 23, 2020 or 15 days after its publication.”
The wage order covers “domestic workers, whether under stay-in or stay-out arrangements, such as but not limited to general househelpers, babysitters (yaya), cooks, gardeners, laundry persons, and any person who regularly performs domestic work in one household or on an occupational basis” in Soccsksargen.
Family drivers, service providers, and the like who do housework sporadically are not covered by the order. — Gillian M. Cortez
LGU funding to rehabilitate open spaces set at P2.489B
THE Department of Budget and Management (DBM) said P2.489 billion has been allocated this year to support city governments rehabilitating public open spaces, with the Calabarzon region and National Capital Region (NCR) receiving the biggest share.
The Local Government Support Fund-Assistance to Cities (LGSF-AC) fund requires city governments to use the funding for projects that will develop new or enhance current public space on government land.
The spaces must be free and accessible to the public, and are viewed as important to maintaining sustainable, liveable, and resilient cities.
DBM issued the statement through local budget circular No. 13, dated Feb. 17.
“The eligible types of public open space projects that can be funded under LGSF-AC are parks, plazas, waterfronts, institutional spaces, streetscapes and a network of public open spaces combining types of public open space,” according to the circular.
The DBM said cities should submit requests, along with other requirements, to the DBM if the have any proposals.
NCR funding is P355.27 million, Calabarzon (Region IV-A) P331.287 million, Region VII P265.61 million and Region VI P260.68 million.
DBM warned local governments against using the funds for other purposes which have their own sources of funding, or for financing personnel services.
Earlier, the DBM released guidelines for the P4.875-billion LGSF-Financial Assistance to local government units, with preference declared for infrastructure projects under the “Build, Build, Build” program. — Beatrice M. Laforga
Taxpayer power: A road to ease of doing business
On Feb. 25, businesses, schools and government offices will be closed in celebration of one of the most significant events in Philippine history — the People Power Revolution. It commemorates the day when Filipinos gathered along EDSA, a major public road and a historical stage for those who rallied to restore democracy in the Philippines and end decades of dictatorship. For millions of Filipinos, the protest in EDSA was a reclamation of liberty long denied.
A similar feeling of independence may have been felt by some taxpayers when the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 10-2020 on Feb. 6. This circular suspends the issuance of the Permit to Use (PTU) for Computerized Accounting Systems (CAS), Computerized Books of Account, and its components. The PTU is required before a taxpayer can use computerized accounts in its business operations. Unauthorized use would be subject to penalties.
In prior years, Revenue District Offices (RDOs) could process and issue PTUs. However, due to concerns with the approval process at the RDO level, the BIR decided to centralize the evaluation of PTU applications at the National Office in 2015. Subsequently, PTU applications at the BIR National Office started to pile up.
CAS applications start with the submission of complete documentary requirements. The application will then be assigned to a Technical Working Group (TWG) for a system demonstration that involves a walk through of the CAS. The BIR representatives will test-check if the CAS is compliant with the BIR rules (e.g., invoicing requirements and mandatory fields in the books of account). If any issues are noted, the BIR proposes adjustments to the system, and the applicant-taxpayer is given time to make the necessary rectifications. The BIR may also request for another walk through, if necessary. It is only upon satisfaction of these requirements and procedures that a PTU can be issued. Considering the lengthy procedures and the voluminous number of applications handled at the BIR National Office, the evaluation and release of a PTU could take more than a year.
Finally, in late 2018, the BIR allowed the advance issuance of a PTU number to taxpayers who have substantially complied with the application requirements and can justify the immediate need for deployment of the CAS. Notably, however, this procedure was not covered by a formal BIR circular or memorandum. However, there were taxpayers who successfully secured advance PTU numbers and deployed their systems.
Now, with RMC 10-2020, the pending applications (including those which have undergone system demonstration) for PTU will be handed over to the RDO where the taxpayer is registered. In lieu of a PTU number, taxpayers will receive an Acknowledgement Certificate with Control Number within three days from the submission of documentary requirements. The documents mainly consist of sample print copy of system-generated books of account and principal/supplementary receipts or invoices and a sworn statement with attached summary of system description, commercial invoices/receipts/ document description, forms/records and reports specification executed and signed by the taxpayer or company’s authorized representative/s.
The above requirements are not new to the applicant-taxpayers because most of them should have been included in the original application submitted to the BIR National Office. At most, the applicant-taxpayer may only need to adjust the format to comply with the prescribed sworn statement. Notably, however, the sworn statement under RMC 10-2020 is almost similar to the sworn statement required by the BIR when it allowed the issuance of advance PTUs in 2018.
Unlike before, where the release of the PTU number technically marks the end of the application, the applicant-taxpayer would now be subject to post-evaluation checking, which may be done simultaneously with a regular tax audit under a Letter of Authority.
The BIR is set to issue separate guidance implementing the circular, which would include detailed procedures for the post evaluation checking. Hence, we may expect more detailed guidance, especially since there are items needing clarifications. For instance, the BIR needs to clarify the specific coverage of RMC 10-2020. This is important because new applicants are confused whether they should follow the new documentary requirements and procedures for securing an Acknowledgement Certificate with Control Number given that the RMC suspended the issuance of PTUs. In addition, taxpayers with approved CAS applications but where the PTU is just pending release, are now concerned whether they will be classified as “pending applications” whose docket would be transmitted to the RDOs where they are registered.
On another note, the BIR National Office also needs time to transmit all pending applications to the respective RDOs. It must therefore also be clarified whether RDOs will start accepting and processing the documentary requirements under the RMC even if they haven’t yet received the relevant docket from the National Office.
Many taxpayers have waited a long time to finally get permission to use their CAS, with a few delaying their business plans until approval from the BIR is received. Ease of doing business was promised back in 2018 when Republic Act No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, was enacted. If ease of doing business is indeed the main driver for the issuance of RMC 10-2020, it is reasonable to expect that the BIR will provide positive responses to address the afore-mentioned matters as no taxpayer would want to wait another year or two to deploy their system.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Donabel M. Villegas is a tax manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
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PHL stocks climb on inflows due to virus concerns
By Denise A. Valdez, Reporter
PHILIPPINE SHARES advanced on Wednesday to join its regional peers in attracting buyers due to the flight of money away from highly-affected markets of the coronavirus disease 2019 (COVID-19).
The bellwether Philippine Stock Exchange index (PSEi) added 74.05 points or 1.01% to 7,396.94 yesterday, while the broader all shares index picked up 21.11 points or 0.48% to 4,362.09.
Regina Capital Development Corp. Head of Sales Luis A. Limlingan said investors have placed their money in the Philippines amid a decline in US and Chinese markets.
“Some investors have given the country a chance for bargain hunting as new COVID-19 cases in China continued to fall with markets less focus on the outbreak,” Mr. Limlingan said in a mobile message.
The Dow Jones Industrial Average and the S&P 500 indices both closed lower on Tuesday at 0.56% and 0.29%, respectively, while the Nasdaq Composite index inched up 0.02%.
In China, both the Shanghai SE Composite and the CSI 300 indices fell by 0.32% and 0.15%, respectively.
For AAA Southeast Equities, Inc. Research Head Christopher John Mangun, the improvement of the PSEi is also due to some foreign inflows.
“A lack of selling pressure allowed regular buying to take prices of blue-chip issues higher than usual,” Mr. Mangun said in an e-mail. “This may be because we have been seeing foreign inflows in the last couple of days.”
Foreign investors remained buyers on Wednesday with inflows reaching P62.97 million, although lower from Tuesday’s net foreign buying of P187.65 million.
However, Mr. Mangun said most Asian markets gained due to the slight decline in new COVID-19 cases: Japan’s Nikkei 225 and Topix indices improved 0.89% and 0.37%, respectively, as Hong Kong’s Hang Seng index added 0.46% and South Korea’s Kospi index climbed 0.07%.
In Southeast Asia, Bangladesh’s DSE Broad index and Vietnam’s Ho Chi Minh Stock index gained 0.37% and 0.09%, respectively.
“More foreign inflows in the coming days may lift the general sentiment as heavy foreign selling in the last six months has taken a toll on our market. We may see the PSEi test the 7,475 resistance before the end of the week,” Mr. Mangun said.
Sectoral indices at the PSE all improved on Wednesday. Holding firms rose 83.64 points or 1.17% to 7,229.99; services jumped 16.92 points or 1.16% to 1,471.68; industrials went up 103.40 points or 1.15% to 9,061.88; financials rose 9.95 points or 0.57% to 1,737.25; property climbed 18.69 points or 0.47% to 3,946.66; and mining and oil added 26.41 points or 0.37% to 7,103.79.
Some 621.16 million issues valued at P6.49 billion switched hands on Wednesday, higher from Tuesday’s 503.90 million issues worth P5.33 billion.
Advancers outnumbered decliners, 101 against 91, as 48 names ended unchanged.