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SEC wants more independent directors in bourse

The corporate regulator has issued a circular increasing independent directors to a third of the board of exchanges and other organized markets.

The Securities and Exchange Commission (SEC) said there should be at least four directors representing the interests of issuers, investors and other market participants, with each sector having at least one representative on the board.

SEC Chairman Emilio A. Aquino signed the memorandum circular detailing the rules.

An independent director and sectoral representative must have at least three years of experience or working knowledge of capital markets.

They may be elected for up to 10 years, with a mandatory cooling off period of at least a year after the first five years.

The regulator said the rules were based on “best practices of major and comparable markets in many economies,” where independent directors account for a majority of the board of exchanges.

Present rules require exchanges to have at least three independent directors.

The Philippine Stock Exchange, Inc. has three independent directors on its 15-member board. — Arjay L. Balinbin

Coronavirus infections top 153,000

The Department of Health (DoH) reported 6,216 new coronavirus infections on Friday, bringing the total to 153,660.

The death toll rose to 2,442 after 16 more patients died, while recoveries increased by 1,038 to 71,405, it said in a bulletin.

There were 79,813 active cases, 91% of which were mild, 7.3% did not show symptoms, 0.6% were severe and 1% were critical.

Of the new cases, 3,848 were from Metro Manila, 302 from Laguna, 242 from Rizal, 240 from Cavite and 178 from Bulacan, the agency said.

Nine of the new deaths were from Metro Manila, four from Central Visayas, and one each came from Bicol, Zamboanga Peninsula and Calabarzon regions, it said.

More than 1.8 million people have been tested for the virus, DoH said.

Presidential spokesman Harry L. Roque on Thursday said the Philippines and Russia seek to run phase 3 clinical trials of the Sputnik V vaccine for COVID-19 from October to March. The Food and Drug Administration might approve it by April, he added.

The clinical trial will involve about 3,000 volunteer patients.

The Philippines will also start trials for the Japanese flu drug Avigan as treatment for the coronavirus on Aug. 17, DoH said on Wednesday.

Philippine General Hospital, Sta. Ana Hospital, Dr. Jose N. Rodriguez Memorial Hospital and Quirino Memorial and Medical Center will participate in the Avigan trial.

Meanwhile, scientists said the Philippines could set up a fill-finish facility to prepare and take advantage of the business once the coronavirus vaccine is ready for mass production.

The Philippines could boost its research, training and production line so it can participate at least in the packaging phase of the vaccine, Annabelle Villalobos, a chemist at Central Mindanao University, said at an online forum.

She said setting up a research arm would be crucial to developing the facility for technical support, while more workers should be trained.

Establishing a fill-finish line — formulating the licensed product, filling the licensed product into vials, freeze-drying the drug substance so it can be mixed wiith the licensed product, and testing — would not only prepare the country for the mass production of COVID-19 vaccine but also allow it to process other imported vaccines in the future, Homer Pantua, a researcher at Genentech, Inc. said at the same forum. — Vann Marlo M. Villegas and BML

DepEd defers class opening to Oct. 5

The Department of Education has moved the opening of classes to Oct. 5 from Aug. 24 amid a coronavirus pandemic.

In a statement, Education Secretary Leonor M. Briones said she endorsed the postponement to President Rodrigo R. Duterte after Metro Manila and nearby provinces reverted to a strict lockdown amid a fresh surge in coronavirus cases.

“We shall use the deferment to provide relief to the logistical limitations faced by the areas placed under a modified enhanced community quarantine and to fill in the remaining gaps of the school opening that we are currently addressing,” she said.

Ms. Briones said areas not under strict lockdown must continue their orientation, dry runs and delivery of learning resources.

There will still be no face-to-face sessions when classes start, Ms. Briones said at an online news briefing.

Senator Sherwin T. Gatchalian, who heads the basic education committee, said the postponement should be used to continue preparations for the basic education continuity plan. — Vann Marlo M. Villegas

House to probe PhilHealth

The House committee on public accounts will investigate the P14 billion advance payment made by the Philippine Health Insurance Corp. (PhilHealth) to hospitals for coronavirus treatment.

“We will examine those payments in detail for any sign of fraud and/or overpayment,” Party-list Rep. Michael T. Defensor, who heads the panel, said in a statement on Friday. “We have already asked PhilHealth to submit all supporting documents,”

He said the committee would start with the P1 billion out of the P14 billion, which had been liquidated.

PhilHealth in March enforced the so-called interim reimbursement mechanism that gave health facilities assistance amid a coronavirus pandemic.

An investigation by the Senate earlier showed the mechanism had been used to favor some facilities even if they did not have coronavirus patients.

PhilHealth this week said it had suspended the mechanism pending a review. — Charmaine A. Tadalan

Filipinos say quality of life worsened

More Filipinos found their quality of life got worse in the past 12 months, according to a poll by the Social Weather Station (SWS).

SWS said 79% of adult Filipinos said their living condition had worsened, 12% said it was the same, while 8% said it got better.

“The 79% proportion of Losers in July 2020 is the second highest proportion recorded by SWS,” it said in a statement. “It is next only to the record-high 83% in May 2020.” The net gainers score in July 2020 was -72, slightly better than -78 in May.

SWS said that the net gainers score was “catastrophic” in all areas and was lower among hungry families, those who received government subsidy and less educated.

“By area, the net gainers score is lowest in the Visayas at -75, followed by balance Luzon at -74, Metro Manila at -71 and Mindanao at -65,” SWS said.

The biggest improvement was in Mindanao after its score went up to -65 from -80 in May. — Charmaine A. Tadalan

De Lima seeks bail in illegal drug case

Detained Senator Leila M. de Lima filed another motion for bail in another case involving drug trafficking.

In a 138-page motion, the senator told a Muntinlupa City trial court she was entitled to provisional release because the evidence against her is weak.

Ms. de Lima argued the felon-witnesses used by the prosecution were “not credible and disinterested witnesses,” having been convicted of crimes involving “moral turpitude.”

Some of their testimonies were inconsistent and contradicted other evidence on record, Ms. de Lima said.

She said only 17 of the 37 listed witnesses had been presented by the prosecution to the court.

None of the witnesses have personal knowledge or involvement in the alleged drug trade in prison, she said. The senator also said she did not seek to evade prosecution.

Ms. De Lima and her former aide Ronnie P. Dayan were accused of conspiring to commit illegal drug trade in prison worth more than P10 million.

Mr. Ragos was dropped from the amended information in November 2017, nine months after the charges were file.

The senator has been detained since February 2017 after she was accused of pocketing millions from the illegal drug trade in prison when she was still Justice secretary. — Vann Marlo M. Villegas

Bayanihan II bicam agrees to fund testing, subsidies for poor

The Bicameral Conference Committee seeking to reconcile the Bayanihan II stimulus bill has agreed to fund coronavirus testing and emergency subsidies for low-income households, Senator Juan Edgardo M. Angara said.

The Committee started discussions Friday to harmonize the two versions of the Bayanihan to Recover as One Act, Senate Bill No. 1564 and House Bill No. 6593.

Mr. Angara’s office said the chambers agreed to continue funding for testing and subsidies, a key component of the first Bayanihan law, signed in March. The committee has yet to agree on the levels of funding for these programs.

The committee also agreed to provide P15,000 worth of cash assistance for health workers who contract mild and moderate cases of coronavirus disease 2019 (COVID-19).

The first Bayanihan law did not make the same distinction when it provided compensation to those who contracted COVID-19 and the families of those who died.
The chambers also agreed to provide a one-time grant for teachers and other school personnel in the private sector, who received nothing in Bayanihan I.

One of the major difference the panel has yet to settle is the funding level for assistance to displaced workers, micro, small and medium enterprises, and the transportation and tourism industries.

The Senate version provides for a P140-billion standby fund, which is consistent with the Department of Finance (DoF) proposal; while the House wants P162 billion worth of assistance.

Also among the contentious provisions is the one-year grace period on loan payments in the House version, which was opposed by the central bank and financial institutions. The Senate version only provides for a 30-day moratorium.

Bayanihan II forms part of the DoF’s P180-billion stimulus plan, which also includes the tax relief contained in the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). — Charmaine A. Tadalan

Infrastructure spending falls 4.3% in first half after lockdown construction freeze

GOVERNMENT spending on infrastructure fell 4.3% year-on-year in the first half due to the suspension of construction during the lockdown, which was not offset by catch-up activity when restrictions were lifted in June, the Department of Budget and Management (DBM) said.

The DBM tallied infrastructure and other capital outlays of P297.9 billion in the first half, which nevertheless beat the downward-revised P279.4-billion target set when economic managers reduced growth projections for the year.

The DBM said the decline was largely due to the suspension of works during the enhanced community quarantine between mid-March to May, which are peak construction months before the rainy season sets in.

In June, infrastructure spending rose 44.5% year-on-year to P62.8 billion.

The DBM attributed the higher spending that month to construction, maintenance, upgrading, widening, repair and rehabilitation of roads, bridges, and flood control structures by the Department of Public Works and Highways (DPWH).

It said capital outlays for the modernization program of the Armed Forces of the Philippines (AFP) and payment of claims also contributed to the increased spending.

“It may be noted, however, that the infrastructure program for the period was lower when compared to the previous estimates prior the COVID-19 (coronavirus disease 2019) pandemic due to the temporary stoppage and delays in construction activities due to the various health quarantines imposed and minimum health protocols implemented in various communities,” it said.

In the second quarter, infrastructure spending was P141.9 billion, down 9.1% compared with the first quarter, when the lockdown started, affecting only late March. Year-on-year, the second quarter total was up 6.5%, coming off a low base.

Overall government spending, especially on infrastructure, was dampened in the first half of 2019 as the late passage of the budget that year delayed the implementation of new programs and projects.

The DBM said infrastructure spending, in general, was “muted”due to the suspension of construction and the productivity penalties imposed by health protocols when work resumed.

It said it expects the continued implementation of infrastructure projects of government agencies, along with other state expenditures, to “contribute to a faster economic recovery for the rest of the year.”

This year’s infrastructure spending program was trimmed for a third time last month, to P785.5 billion.

Overall spending for the year was increased to P4.335 trillion from P4.1 trillion originally to account for pandemic expenses and programs intended to pump-prime the economy.

The economy was in recession after posting two straight quarters of contractions, -0.7% in the first three months followed by a record -16.5% in the second quarter. First-half gross domestic product (GDP) growth was -9%.

The government is projecting a 2020 GDP contraction of between 4.5% and 6.6% due to the pandemic. – Beatrice M. Laforga

Bello rejects rumors of end to nurse deployment ban

The deployment ban on health care workers remains in place, contrary to reports that the ban has been lifted, the Department of Labor and Employment (DoLE) said Friday.

“The ban imposed on the deployment of nurses stays,” Labor Secretary Silvestre H. Bello III said in a statement.

Reports that the government has lifted restrictions on sending health care workers overseas are “totally untrue,” Mr. Bello said.

The ban was implemented via Governing Board Resolution No. 9, adopted by the Philippine Overseas Employment Administration (POEA) in April.

This follows an Inter-Agency Task Force (IATF) ruling ordering that the government seek to ensure the adequacy of health care worker numbers as the country grapples with the pandemic.

“The public is hereby warned that any overseas deployment of nurses, unless express authorized by the POEA, is deemed illegal,” he said.

Also covered by the ban are microbiologists, molecular biologists, medical technologists, clinical analysts, respiratory therapists, pharmacists, laboratory and X-ray technicians, nursing aides, medical equipment operators, health supervisors and hospital equipment repair personnel.

The POEA also suspended negotiations for government-to-government deployment of health workers. — Charmaine A. Tadalan

BIR sets 2024-2026 target for online-transaction tax system

The Bureau of Internal Revenue (BIR) said it hopes to establish a dedicated platform for taxing online transactions by 2026 at the latest as part of its 10-year digitalization road map.

The plans are contained in Revenue Memorandum Order No. 27-2020, which also contains a broader plan to expedite many taxation processes and improve the taxpayer experience.
Forming the second phase of the two-part road map, the BIR said hopes to set up the platform for the taxation of digital transactions sometime between 2024 and 2026.

By 2027-2030, the bureau aims to establish a “data-driven collection, audit and enforcement” system, as well as to offer “customized TP (transfer pricing) services.”

“The BIR is tasked to consistently achieve increasing revenue targets to meet equally increasing demands. Hence, BIR needs to improve further its existing capabilities, policies, processes, and systems through digital transformation,” according to the MO, a copy of which was posted Thursday.

The bureau said the road map follows Finance Secretary Carlos G. Dominguez III order to “completely modernize tax administration” and streamline services.

The Department of Finance and the BIR are currently studying how the bureau can capture the 12% value-added tax (VAT) from digital transactions.

Government estimates show VAT collected from the sales conducted online could raise up to P17 billion in fresh revenue.

So far, 3,254 online sellers have registered with the BIR since the bureau issued a circular in June that made registration mandatory. Around 3,148 were individual vendors while 106 were corporations.

BIR Deputy Commissioner for Operations Arnel SD. Guballa said prior to June, the bureau’s data on online sellers was disorganized since there was no designated database for the growing segment.

“Now, the BIR will assign a specific industry code for monitoring compliance in filing and payment,” Mr. Guballa said last month.

Online vendors have until the end of August to register or update their registration without penalties.

The first phase of the digital road map timeline runs from 2020 to 2023, representing initial moves to build a digital culture within the bureau en route to streamlining its services.

This phase hopes to improve the taxpayer experience at the regional office level and through the use of digital registration, filing and payment methods, penciled in for 2020-2021. — Beatrice M. Laforga

Peso strengthens on return of risk-on sentiment

The peso rallied Friday on improved investor risk appetite following a decline in US jobless data.

The peso closed at P48.765 against the dollar Friday after its Thursday finish of P48.84 finish on Thursday, according to data from the Bankers Association of the Philippines.

Week-on-week, the peso rallied from its P49.041 close on Aug. 7.

The peso started trading at P48.83. The low was P48.85 while the high was P48.75.

Dollar volume fell to $599.65 million from P632.1 million Thursday.

Risk appetite improved after recent gains in US markets, though Wall Street closed mixed Thursday following a reduction in jobless claims, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The peso closed stronger amid continued weakness in the dollar after improved global market risk appetite that sent most US stock markets to 5.5 month highs,” he said in a text message.

Meanwhile, a trader said dollar demand waned in anticipation of a weak performance by the US retail industry.

“The peso appreciated due to expectations of weaker US retail sales for July 2020 amid the re-imposition of lockdown measures in several US states,” he said in an e-mail.

In June, US retail sales rose 7.5% after consumption was propped up by US unemployment benefits, according to Reuters. The July data will be released Friday. — Luz Wendy T. Noble

Rural banks adequately capitalized for pandemic shock — BSP

RURAL banks are sufficiently capitalized to weather the economic crisis triggered by the pandemic, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

Mr. Diokno said stress tests and simulations suggest that the rural banking industry can withstand scenarios where they have to write off three months’ worth of interest income on all loans and all fees and commissions.

“This is expected as banks recording high pre-shock capital adequacy ratios. This enabled rural and cooperative banks to yield above-10% minimum capital adequacy ratios after the simulation,” Mr. Diokno said in an online briefing Thursday.

Mr. Diokno also said other scenarios that assumed a 5% to 20% reduction in net interest income over the three months of quarantine left them with healthy capital adequacy metrics.

“The results of this test show that post-shock, capital adequacy ratio of the rural and operative dynamics remain comfortably above 15% over the first, second and third month periods of the quarantine even under a 20% reduction in net interest income,” he said.

As a group, rural and cooperative banks have a capital adequacy ratio of 19.79%, well above the 10% regulatory minimum.

The gross non-performing loan ratio of the rural and cooperative banking industry was at 11.21% at the end of March, down from the year-earlier 11.65%.

The central bank has implemented regulatory relief measures for banks, including the classification of loans to small businesses as reserves, to help them comply with reserve standards while ensuring funding for businesses remains available.

The BSP said smaller lenders have been availing of such relief measures, with 66 rural and cooperative banks lending P1.5 billion as of the week ending July 23, compared to the P1 billion by 39 banks during the week ending April 30.

Meanwhile, 10 rural and cooperative banks registered P100 million worth of loans to large enterprises as reserve compliance.

“Preliminary data show that rural and cooperative banks were at 674 as of December 2009 and are now down to 444 as of end-July 2020,” he said, noting smaller lenders were either closed or absorbed by healthier banks. The industry contraction reflects a process of consolidation encouraged by the BSP. — Luz Wendy T. Noble

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