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‘Worst is not over’: FDI slump seen to continue

The rising number of coronavirus infections prompted the government to reimpose a modified enhanced community quarantine (MECQ) in Metro Manila and nearby provinces until Aug. 18. — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Luz Wendy T. Noble, Reporter

THE SLUMP in foreign direct investment (FDI) inflows in the Philippines is expected to worsen in the coming months, as investors consider the country’s pandemic response and the steep contraction in gross domestic product (GDP) in the second quarter, the International Institute of Finance (IIF) said.

“I believe the worst is not over. COVID-19 (coronavirus disease 2019) cases are still rising, and a new round of lockdown measures has been implemented,” IIF Associate Economist Yuanliu Hu told BusinessWorld in an e-mail.

The soaring number of coronavirus infections in recent weeks prompted the government to again impose a modified enhanced community quarantine (MECQ) in Metro Manila and nearby provinces until Aug. 18.

Net FDI inflows in the first four months of 2020 slid by nearly a third  to $1.98 billion, data from the Bangko Sentral ng Pilipinas (BSP) showed. In April alone, FDI inflows plummeted 67.9% year on year to $311 million in April.

Mr. Hu said the dismal second-quarter GDP will also weigh on investor sentiment, resulting in investment plans either suspended or postponed.

The country’s GDP contracted by 16.5% in the April to June period as many businesses were shuttered amid one of the world’s longest and strictest lockdowns. The economy is now in a technical recession as the first-quarter GDP also slipped by 0.7%.

“Lower FDI will have a direct negative impact on the government’s infrastructure projects and companies that rely on foreign capital,” Mr. Hu said, noting their research showed a close correlation between FDI and investment-related imports.

At this point, Mr. Hu said the ability to control the spread of COVID-19 will be a vital determining factor in attracting FDI inflows.

“For example, in the region, Thailand has relatively good control of the virus and its FDI increased by 76% year on year in the first five months,” he said, adding the Philippines on the contrary has become the epicenter of the outbreak in Southeast Asia.

The Health department on Saturday reported 4,226 new coronavirus infections, bringing the total to 126,885 cases. The Philippines is now the 22nd in the world in terms of the number of confirmed COVID-19 cases.

“To win back investors, the government will need to do more to control the virus and introduce more stimulus plans,” Mr. Hu said.

Senate Bill No. 1564 also known as Bayanihan II that allocates P140 billion for COVID-19 recovery efforts was approved by the Senate in late July. The funds will be used for increased testing and acquisition of medical supplies, cash-for-work program for displaced workers, and benefits for repatriated overseas Filipino workers.

Its Lower House counterpart which allocates a slightly higher P160 billion is pending and is expected to be approved on third reading this week.

Meanwhile, the much bigger P1.3-trillion stimulus package called ARISE (Accelerated Recovery and Investments Stimulus for the Economy) bill has been approved by the House of Representatives in June but remains pending in the Senate.

Real yields appeal in Southeast Asia as inflation monster sleeps

INFLATION FEARS are hotting up around the world, threatening to undermine the attraction of bond markets. But for now, Southeast Asia appears to be relatively immune.

Indeed, the lack of price growth has been a major factor helping to push up the region’s real yields, or nominal bond yields adjusted for inflation. Indonesia’s consumer-price gains slid to the least in two decades in July, while Malaysia and Thailand have both seen deflation for the last four months. The three countries all offer 10-year real yields of above 2%, putting them in the top tier of major emerging markets.

A major factor behind the subdued inflation in the region has been sluggish food prices. These have a relatively high weighting in local inflation baskets: approximately 30% for Malaysia, and around 36% for Thailand and Indonesia, according to data compiled by Bloomberg. The price of rice — the region’s major food staple — may trend lower in the second half due to rising supply from Thailand, Vietnam and India, Fitch Solutions said last month.

One exception to the overall picture of benign inflation is the Philippines, where a report this week showed consumer prices unexpectedly climbed 2.7% in June. That has resulted in the real yields on its 10-year bonds sinking almost to zero.

Investors should be aware that rising consumer prices remain a risk, especially with the spread of emerging-market yields over the US narrowing. Reflationary price pressures have typically started in developed markets and spilled over into emerging ones, according to a study by Bloomberg Intelligence last month. There are plenty of signs price momentum is building, most notably US two-year break-even rates have risen for 14 straight weeks.

In addition to the favorable inflation picture, another factor burnishing the appeal of Southeast Asian bonds from a real yield perspective is the low currency volatility, a key consideration for investors who prefer not to use hedges.

While South Africa, Brazil and Mexico offer notably high bond yields, they also come with some of the most volatile currencies. In contrast, not a single Southeast Asian currency appears among the top seven emerging markets when ranked for three-month implied foreign-exchange volatility.

There are plenty of things for investors to like about Southeast Asian bonds, including positive supply metrics and favorable positioning. Low currency volatility and attractive real yields can be added to that list — so long as the inflation monster stays away. — Bloomberg

MPIC head keen on COVID-19 vaccines

BUSINESSMAN Manuel V. Pangilinan said his group is interested in talking to pharmaceutical companies for a possible reservation deal once a coronavirus vaccine becomes available.

“Recently, we’ve gotten calls from pharmaceutical companies whether we will be interested in making reservations for potentially the vaccines that could be developed, hopefully by them, so we said, ‘Yes we are interested to talk,’” he said at a virtual briefing on Aug. 6.

The hospital unit of Metro Pacific Investments Corp. (MPIC), which Mr. Pangilinan chairs, has been “preparing to purchase the vaccines for distribution in their hospitals,” Philippine Ambassador to the United States Jose Manuel G. Romualdez said in his recent column in The Philippine Star, citing a conversation with the businessman.

Confirmed cases of coronavirus disease 2019 (COVID-19) in the country have reached over 120,000, according to the Health department.

Mr. Pangilinan said the group was doing everything it could to help the government fight the coronavirus pandemic.

“It’s a big effort on the part of the group to help the government. We are part of the process, in our own small way, of addressing the issues related to the virus,” he said.

He was also concerned about the effects of the contraction of the country’s gross domestic product in the second quarter.

“This 16.5% contraction is worrisome. How will the third and fourth quarters behave moving forward? Will it have an impact on people’s ability to spend on telco products? How will the enterprise sector be affected by this contraction? So these are worrisome issues for us because they could very well affect our revenues moving forward,” Mr. Pangilinan said, referring to PLDT, Inc., in which he is president and chief executive officer.

Finance Secretary Carlos G. Dominguez III said last month the government was planning to allocate P20 billion for the purchase of vaccines.

He said the government would need to vaccinate for free a minimum of 20 million Filipinos.

The Philippine International Trading Corp. will be in charge of purchasing the vaccines, which will be distributed by the Health department, Mr. Dominguez said.

Philippine Ambassador to London Antonio Manuel R. Lagdameo has also said the government is interested in the experimental vaccines developed by Oxford University.

China, according to President Rodrigo R. Duterte, will give priority to the Philippines once it successfully develops a vaccine.

In May, the United States ordered 300 million doses of AstraZeneca’s experimental coronavirus vaccine, while the United Kingdom ordered 90 million doses of potential vaccines from various drug makers, including Pfizer, Inc.

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

Lazada keeps people shopping longer with entertainment

DURING its early days, online shopping was straightforward and uncomplicated — one would search for an item, click on it to add to the cart, pay, and wait for it to be delivered — but today, online platforms like Lazada have found that by providing entertainment within their app via games and livestreams is an effective way to engage with customers and turn their clicks into sales.

“If you make the shopping experience more interactive and engaging and more entertaining on e-commerce platform like Lazada, it’s a way for people not only to shop also play, watch, and essentially it’s a way to make them stay longer on the platform,” Neil Trinidad, Lazada Philippines’ chief marketing officer, said in an interview with BusinessWorld on July 24.

Lazada started introducing games and livestream content on its app last year and Mr. Trinidad noted that they’ve seen more sellers do livestreams, something that they’ve seen become commonplace in other platforms like Alibaba in China (Lazada is part of the Alibaba Group).

Livestream content can be from sellers and brands that want to introduce and promote their products to their viewers — these can be in the form of modelling or demonstrating the product or in the form of concerts, workout sessions, do-it-yourself videos, and game shows where shoppers can interact and engage and sometimes win vouchers or items. Lazada’s livestream content is under the LazLife category on the app.

“Livestream is now the new mainstream [in China]. In Alibaba, they’ve been doing thousands of livestreams [a day] and it’s really been sort of its own economy where brand sellers have been able to engage with their audience,” he explained.

The livestream function was added in March 2019 and its first offering was an online concert by English singer Dua Lipa.

In the Philippines, more than a hundred livestreams are conducted every day, and are steadily increasing, which Mr. Trinidad said is a testament to the format’s popularity and its effectiveness in turning clicks to sales.

“The key metrics we’re looking at livestreams is how many views you are getting. Views are very important,” he said.

A cursory look at the app on Sunday morning as this writer was writing this piece showed that there were 10 livestreams ongoing, each getting at least a hundred viewers with some approaching 200.

What’s interesting about these livestreams is that they cut across categories as Mr. Trinidad pointed out that sellers and brands from the electronic segment, fashion, home living, “and everything else” do go on livestreams to promote their wares. And livestreams have become an important part of selling itself as he said that it’s “a great way to build presence” and to introduce oneself to the market.

“We’ve seen that viewers who have watched a livestream returned [to the same store] the following day,” Mr. Trinidad said, adding that it makes it an effective way to get repeat traffic as 40% of those who viewed a livestream returned to the store the next day.

Such is the popularity of livestreams that Lazada created its own live show, Sing It!, where viewers can sing along with celebrities such as Karylle and Yael Yuzon. The show was created during the early days of the lockdown in March and continues every Saturday.

“We created the show while all of us were working from home. We did it in the span of five days,” Mr. Trinidad said. The shows are typically watched by around 80,000 people.

Other shows created by Lazada were Guess It (inspired by The Price is Right) which was introduced last year, and LazTalent, a reality show held in June searching for “the next livestream star,” with Lazada users getting the chance to win P50,000 and a livestream contract with the platform. Lazada also held a benefit concert called Lazada for Good in April for the benefit of frontliners during the pandemic. — Zsarlene B. Chua

PLDT defers plan to redevelop Makati property, cites pandemic

PLDT, INC. is putting on hold the plan to redevelop the company’s Ramon Cojuangco Building (RCB) in a prime spot in Makati City, its chairman said.

“Wala eh (None), that has been put on hold because of the pandemic,” said Manuel V. Pangilinan, who is also the chief executive officer of the telecommunications service provider, when asked for an update on the plan at a briefing on Aug. 6.

RCB is PLDT’s current headquarters in Makati City.

Mr. Pangilinan said last year the company was pushing through with its plan to redevelop its RCB and MGO (Makati General Office) building in Makati City.

He said Japan’s NTT Realty group was “very keen” to redevelop the two buildings.

If PLDT proceeds with the redevelopment of the buildings with NTT Realty, Mr. Pangilinan said the Japanese firm would provide the capital and its redevelopment experience for the project.

He said the company would need one or two local partners that have experience in the Philippines.

PLDT expects to spend P70 billion for its network rollout this year.

The company’s second-quarter attributable net income grew 15.8% to P6.37 billion from P5.5 billion reported in the same period last year, driven by the surge in data and broadband revenues.

“Our strong performance will allow us to further boost our already significant investments. These investments, which total some P260 billion over the past five years, enabled our networks to carry all the additional traffic during these past few months and also to bring new technologies such as 5G,” Mr. Pangilinan said at the briefing.

In the second half of the year, PLDT plans to focus on LTE expansion, transport or backhaul rollout, and ADSL upgrade to fiber.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

Durian industry pushing to be included in China trade deal amid weak domestic sales

DAVAO CITY — It’s durian season in Mindanao and growers are struggling to find a market for their produce — so they’ve set their sights on China.

“This is a major challenge in the fruit industry. Mahirap magpalabas ng mga prutas ngayon (It’s difficult to transport fruits nowadays),” Candelario B. Miculob, former president of the Davao City Durian Industry Council, said in an online interview.

While agricultural products are exempt from quarantine restrictions imposed to mitigate the spread of the coronavirus disease 2019 (COVID-19), Mr. Miculob said they are limited by available land transport services and flights.

Fewer people are going out and social gatherings are still banned or discouraged in many areas, he said.

The annual Durian Festival, held every August to September alongside the Kadayawan Festival in Davao City, is not happening this year after the local government suspended all major events for the rest of 2020.

In the Davao Region, durian growers typically harvest up to 48 metric tons each season.

There are at least four processing plants in the region that can make frozen packs from the fresh produce.

Mr. Miculob said the industry’s sales dropped after the April and May harvest, when a strict form of lockdown was in place nationwide.

The plunge in domestic demand, he said, highlights the industry’s continued push for the government to have durian included in the bilateral trade deal with China — which growers have been calling for since at least 2016.

That year, the industry was able to ship four 40-foot container vans of frozen durian to China, but coursed through accredited countries such as top exporter Thailand.

“We are hoping that the accreditation of Philippine durian to China will materialize soon for us to be able to export to China. Ang pag-asa namin ay sa labas (Our future is in export),” he said.

Mr. Miculob added that having the accreditation will open the door for foreign investors to set up more processing plants in the region.

In 2018, he said, Chinese traders expressed interest in procuring volumes that exceeded local output.

“There is no limit in terms of volume requirement. The only problem is we have limited processing capacity. It is easier to export and it is also advantageous for us,” he said.

Thailand exported $567.29 million worth of durian to China in the four months to April, according to a July 27 Bangkok Post report citing government data.

Malaysia received accreditation for frozen durian to China last year.

For the Philippines, fruits with current access to the Chinese market include banana, avocado and coconut. — Maya M. Padillo

Why getting a flu shot is important during a COVID-19 pandemic

AS HEALTH workers called for stricter protocols to lighten their load in an overwhelmed healthcare system, there is one thing you can do to help: get vaccinated.

A recent webinar called “Protect the Elderly” by the Philippine Foundation for Vaccination (PFV) called to continue immunization during the community quarantines and prioritize the elderly. The webinar focused on the administration of influenza (or flu) vaccines to the elderly, a particularly vulnerable sector.

“Among the vulnerable populations that can benefit the most from these vaccines are the elderly,” said Dr. Liza Gonzales, president of the PFV. “These vaccines protect against infectious diseases that have the potential to weaken the immune system and increase susceptibility to COVID-19. Many studies have documented that a previous viral infection like flu can precede the development of severe bacterial pneumonia leading to hospitalization, and even death.”

Internist and Infectious Disease Specialist Dr. Arthur Dessi Roman gave various reasons as to why the elderly are particularly susceptible to the flu, and thus more in need of the flu vaccine. “As we grow older, our immune system also grows old. Unfortunately, the capability of the immune system to respond is not as good anymore as when we are young,” he said. Among the other reasons he listed were the presence of comorbid illnesses such as heart and lung disease and diabetes. “People with diabetes experience more serious outcomes following a flu infection.” He presented data saying that diabetic patients have three to six times higher risks of being hospitalized due to flu-related causes, four times as high the risk of being admitted to the ICU, and six times as high the risk for death. Other reasons he gave include physical changes such as a weaker cough and gag reflex (the cough response is to prevent contaminants from entering the respiratory tract), poor nutrition, impaired understanding and self-care, increased contact with medical facilities, and the use of medical devices. “All of these things contribute to the reasons why the elderly population are actually at risk of getting infected with a lot of bacteria, viruses, and fungal infections,” said Dr. Roman.

He then highlighted why getting vaccinated against the flu during a pandemic of another sort is still important. “I want to remind everyone that flu vaccination matters even more during this time,” he said.  According to him, being protected against the flu will prevent an infection with symptoms similar to COVID-19 (coronavirus disease 2019), avoiding anxiety and stress. The flu can also weaken the immune system, thus opening the door for a possible COVID-19 infection. He also said that a co-infection with COVID-19 and the flu is possible, which leads to more serious complications.

Finally, he noted that it avoids additional hospitalization and consultations when hospitals are already overwhelmed. He said that in the US, the flu vaccine decreased consultation for flu-related causes by up to 60%. “Staying healthy is your best shot against preventing COVID-19 infections.”

“Receiving the flu vaccine is not just about ourselves,” he said in a mix of Tagalog and English. “Also, remember that getting vaccinated yourself may also protect people around you.”

Contact a doctor to administer the flu shot at your home or some other location, instead of setting up an appointment at the hospital. — Joseph L. Garcia

SEC extends deadline for new manual on governance

THE Securities and Exchange Commission (SEC) is extending the deadline for the submission of a new Manual on Corporate Governance for public companies and registered issuers until the end of next month.

In an Aug. 6 memorandum uploaded on its website, the SEC said the commission en banc had agreed to move the original July 12 deadline of the new manual to Sept. 30 in light of the coronavirus situation in the country.

Upon submission, the new manual must be signed by the company’s chairman of the board and compliance officer, otherwise it will not be considered filed.

Late or non-submission of the new manual may be fined P10,000 as basic penalty and P1,000 monthly penalty, which will accrue until the document is filed.

These rules apply only to public companies and registered issuers that are not publicly listed at the Philippine Stock Exchange. Publicly listed companies are guided by a different code of corporate governance.

To recall, the SEC issued a memorandum circular in December adopting a new Code of Corporate Governance for public companies and registered issuers. In line with this, it required the respective companies to submit a new Manual on Corporate Governance within six months, or by July 12.

The new code seeks to recommend 16 points for corporate governance, which tap into governance responsibilities, disclosure and transparency, internal control and risk management, relationships with shareholders, and duties to stakeholders.

Some of its recommendations are the submission of nonfinancial and sustainability report, and the disclosure of strategic and operational objectives alongside the sustainability initiatives that will support them.

The SEC said the code is in line with its goal of patterning the operations of local corporations with international standards. — Denise A. Valdez

T-bill, T-bond rates to decline

GOVERNMENT SECURITIES on offer this week will likely fetch lower rates amid weaker economic outlook and the possibility of monetary easing.

The Bureau of the Treasury (BTr) plans to borrow P20 billion in Treasury bonds (T-bonds) on Monday, broken down into P5 billion each from the 91- and 182-day debt papers and P10 billion via the 365-day instruments.

On Tuesday, the BTr will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) carrying a coupon of 2.875% and with a remaining life of nine years and 11 months.

Rates of the T-bills could ease by seven to 15 basis points (bps), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message over the weekend.

He said the market is pricing in weaker economic conditions with Metro Manila and other key cities shifted back to stricter lockdown, as well as the record 16.5% contraction in second-quarter gross domestic product (GDP), which “could increase the possibility of further monetary easing measures especially by further cuts in banks’ RRR (reserve requirement ratio) as further support meadow may be needed most by the economy at this time.”

The country officially entered a technical recession after posting two straight quarters of decline. This brought the first-half average to -9%. The economy must post a 2.2% decline at most in second-half GDP to keep the full-year average within the projected 5.5% contraction.

Meanwhile, the central bank has been easing monetary policy to cushion the impact of the coronavirus pandemic on the economy, slashing benchmark interest rates by 175 bps so far this year and trimming the reserve requirement of banks to boost liquidity.

Rates on the Bangko Sentral ng Pilipinas’ (BSP) overnight reverse repurchase, lending and deposit facilities are currently at record lows of 2.25%, 2.75 and 1.75%, respectively.

The RRR of thrift and rural banks were cut by 100 bps last month to three percent and two percent, respectively, and the reserve ratio of universal and commercial banks was slashed by 200 bps in April to 12%.

Meanwhile, a bond trader expects demand for the T-bills will be “less than usual as investors will try to extend to longer tenors given the “higher consumer price index (short term) and slow growth (as recovery is not yet in sight).”

The BTr made a full P20-billion award of the T-bills it offered last week as rates declined across-the-board. Total tenders hit P76.405 billion.

Broken down, the government raised P5 billion as planned via the 91-day debt papers from bids worth P25.51 billion. The average rate fetched went down to 1.221% from the 1.335% logged in the July 27 auction.

It also made a full award of P5 billion in 182-day papers out of P23.585 billion in tenders at an average rate of 1.454%, down from 1.605% previously.

For the 364-day securities, the Treasury fully awarded its P10-billion offer at a lower average rate of 1.749% against 1.758% previously.

The average yield of the 10-year T-bonds may settle between 2.6-2.7%, Mr. Ricafort said, to hit “new record lows.”

“However, an offsetting factor is the record RTB (retail Treasury bond) issuance of P516.3 billion that could siphon off some of the excess peso funds in the financial system,” he added.

The government made a full P30-billion award of its offer of 10-year bonds on July 7 out of total bids worth P59.71 billion.

At the secondary market, rates of 91-, 182- and 364-day T-bills stood at 1.288%, 1.535% and 1.790%, respectively, while the 10-year notes were quoted at 2.693%, based on Bloomberg Valuation Service Reference Rates posted on Philippine Dealing & Exchange Corp.’s website.

The Treasury on Friday raised a record P488.5 billion in fresh funds or new money via the five-year retail Treasury bonds and P27.8 billion from the bond switch offer.

The bonds bear a coupon of 2.625% and will be issued on Wednesday, Aug. 12. The debt papers will be listed on the Philippine Dealing and Exchange Corp.

The government has set a P170-billion borrowing program for August. It will offer P110 billion in T-bills weekly and P60 billion in T-bonds to be auctioned off fortnightly.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 9.6% of GDP this year. It plans to borrow around P3 trillion this year. — B.M. Laforga

PHL rice inventory falls 7.8% in June

THE NATIONAL rice inventory fell 7.8% year on year to 2.40 million metric tons (MT) in June, the Philippine Statistics Authority (PSA) said.

In its Rice and Corn stocks inventory report, the PSA said the year-earlier inventory level was 2.60 million MT. May total 2.80 million MT.

In June, the PSA said rice stocks held by households rose 19.8% year on year to 1.26 million MT while inventory held by commercial warehouses fell 10.7% to 891.40 thousand MT.

Meanwhile, the National Food Authority (NFA) inventories fell 54.9% to 248.33 thousand MT.

Compared to the previous month, the PSA said the national rice inventory fell 14.3%, with household stocks down 17.4%, commercial warehouse holdings falling 6.8%, and NFA depositories declining 22%.

“Of the month’s total rice stocks, 52.4% were in the households, 37.2% were in commercial warehouses, and 10.4% in NFA depositories,” the PSA said.

Meanwhile, corn stocks in June rose 5.3% year on year to 905.52 thousand MT.

Corn stocks held by households rose 20% to 96 thousand MT while the inventories of commercial warehouses rose 3.8% to 809.53 thousand MT.

NFA held no corn stocks for the month.

Month on month, the country’s corn stocks in households fell 38.9% while holdings of commercial warehouses rose 18.5%.

“About 89.4% of this month’s inventory were in commercial warehouses and the remaining 10.6% were in the households,” the PSA said. — Revin Mikhael D. Ochave

BIR issues rules on tax treatment of Islamic banks

THE BUREAU of Internal Revenue (BIR) has issued the guidelines to implement the neutral tax treatment of equivalent transactions between Islamic banks and conventional banks.

BIR Commissioner Caesar R. Dulay issued Revenue Regulations No. 17-2020 dated June 22 to serve as the implementing rules and regulations (IRR) for the tax neutrality provision under Republic Act No. 11439 or “An Act Providing for the Regulation and Organization of Islamic Banks” enacted in August 2019.

The IRR was signed by Finance Secretary Carlos G. Dominguez III on Aug. 5. The rules will take effect 15 days after their publication in a newspaper on Saturday.

“Islamic banking transactions must have a parity of tax treatment of equivalent conventional banking transactions within the provisions of the NIRC (National Internal Revenue Code of 1997), as amended, such that Islamic banking transactions are taxed no more heavily (and no more lightly) than conventional banking transactions,” RR 17-2020 read.

The BIR said the tax treatment of Islamic banking arrangements will be based on the “economic substance rather than their form.”

It said the tax treatment will be the same for Islamic bank arrangements and their counterpart products from traditional banks if they are “economically equivalent.”

“Any reference to interest shall apply to gains or profits received and expenses incurred in Islamic banking arrangements, in lieu of interest income and/or expenses under the conventional banking transactions.”

“Any reference to a disposal or lease of an asset shall not apply to any disposal or lease of an asset by or to a person that is carried out in accordance with Islamic banking arrangements as defined by the Bangko Sentral ng Pilipinas; Provided that the resulting tax effect on the Islamic banking arrangement would approximate or be similar to that applicable to the corresponding conventional banking transactions,” the rules state. 

The BIR said it will issue a separate circular to discuss the tax treatment of Islamic banking arrangements on Murabahah, Tawarruq, Salam, Ijarah, Mudarabah Partnership, Wakalad Investment, Istisna, Musharaka, Sukuk and other transactions.

The bureau said the financial statements prepared by Islamic banks, following the Philippine Financial Reporting Standards, should maintain a system separating the transactions of their Islamic banking arm from conventional banking operations.

It said Islamic banks should also register with the BIR based on existing guidelines on registration of businesses, while traditional banks with Islamic banking windows are also mandated to issue receipts on the profits made from Islamic banking operations. — B.M. Laforga

More brands release face mask versions

WITH THE coronavirus disease 2019 (COVID-19) pandemic still a concern in the country, the value of face masks as protection against cannot be more underscored.

And joining the brands offering their own versions of the trusted face mask here are Under Armour and Nano Wave Mask.

The Under Armour (UA) Sportsmask will be available come September but pre-orders for it can already be placed.

The UA Sportsmask is a reusable, water-resistant performance face mask, designed to optimize breathing and maximum comfort, a common concern particularly for those who want to continue with their active lifestyle despite the limitations of the current situation with COVID-19.

It can be used by people who want to train and exercise for health and wellness amid the pandemic, from serious athletes to casual fitness enthusiasts.

The sports mask has been available in the United States, United Kingdom, and Singapore and is proving to be sought-after. The UA Sportsmask has a suggested retail price of P1,395.

For more information on the pre-order and release dates, follow @AthletesProPH, the official distributor of Under Armour in the Philippines, on Instagram and Facebook.

NANO WAVE MASK
Meanwhile, the Nano Wave Mask is now available in the country with no less than world champion athletes vouching for its functionality and effectiveness as protection.

The Nano Wave Mask is touted to successfully combine function and form, featuring “state-of-the-art materials, a five-layered filtration system and a valve system designed for easy breathing and talking.” It also comes in a variety of colors as well as a full junior range for children.

Filipino World Boxing Organization world bantamweight champion John Riel Casimero is one of those who have come away impressed with the innovative mask, particularly how it is a good complement for his training.

“The Nano Mask is the first mask I can use while I am training in the gym,” he said.

Mr. Casimero is in Las Vegas right now preparing for his next title defense.

One must note that while valved masks are more comfortable to wear and can keep the wearer safe, they do not protect those around them from the wearer. As “the purpose of masks is to keep respiratory droplets from reaching others to aid with source control,” the CDC does not recommend using masks that have exhalation valves or vents. In the Philippines, some locations, like Healthy Options stores, do not allow customers wearing valved masks from entering as part of their safety protocols.

For more inquiries on the Nano Wave Mask, contact Scott Farrell at e-mail Scott@nanowavemask.com or number +63 929 775 6798. — Michael Angelo S. Murillo 

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