THE HOUSE of Representatives on Friday evening approved the proposed P4.1-trillion national budget for 2020 on third and final reading, two weeks ahead of its Oct. 4 deadline.
With 257 affirmative votes and six negative votes, the chamber passed House Bill No. 4228, or the proposed General Appropriations Act for Fiscal Year 2020 the same day it was passed on second reading. It initially planned to have it approved by Oct. 4, with the House and the Senate targeting submitting it to the Office of the President by Dec. 15 for signing into law.
Lawmakers usually reserve Thursdays and Fridays for work in their districts.
The chamber also formed a committee that will make amendments to the budget on Monday, even as Section 58 of Rule 10 of the House provides that “On the Third Reading of a bill or joint resolution, no amendment thereto shall be allowed.”
The committee, chaired by Davao City-3rd district Rep. Isidro T. Ungab, will consist of Batangas-1st district Rep. Elenita Milagros Ermita-Buhain, Albay-2nd district Rep. Jose Ma. Clemente S. Salceda, Quirino-1st district Rep. Junie E. Cua, Negros Oriental-1st district Rep. Jocelyn Sy Limkaichong, Quezon City-5th district Rep. Alfred D. Vargas, Camarines Sur-2nd district Rep. Luis Raymund F. Villafuerte, Jr., Mandaluyong Rep. Neptali M. Gonzales, Leyte-1st district Rep. Ferdinand Martin G. Romualdez, Cavite-7th district Rep. Jesus Crispin C. Remulla, Manila-6th district Bienvenido M. Abante Jr., Iloilo-1st district Rep. Janette L. Garin, and Albay-1st district Rep. Edcel C. Lagman.
President Rodrigo R. Duterte on Sept. 17 certified the proposed national budget as urgent, allowing the chamber to do away with the prescribed three-day interval between second- and third-reading approval.
The government is keen on preventing a recurrence of late budget approval, which this year deprived new projects of funds for much of last semester. That resulted in a disappointing 5.5% gross domestic product growth against an official 6-7% target for full-year 2019.
Mr. Duterte had signed the 2019 national budget on April 15 due to a months-long row between the House of Representatives and the Department of Budget and Management on the adoption of a stricter budget framework, and later with the Senate on irregular fund insertions. He vetoed some P95.3 billion appropriations, reducing the 2019 budget to P3.662 trillion.
The delay also prompted the Development Budget Coordination Committee in a March 13 meeting to slash its GDP growth target for 2019 to 6-7% from 7-8% originally.
Appropriations Committee Vice-Chairman Jose Ma. Clemente S. Salceda earlier said that each congressman will receive P100 million for projects for their constituents.
Cabinet Secretary Karlo Alexi B. Nograles, himself formerly House appropriations committee chair who had a row with the Budget department, said Mr. Salceda needs to clarify his statement. “Tingin ko kailangan klaruhin ‘yan (I think that has to be clarified) with Rep. Joey Salceda; pero (but) I heard some of his interview also sa (in) media and sabi naman nya hindi naman daw (he said that is not) ‘pork’ ‘yan kasi (at all because) those were itemized budget,” Mr. Nograles said in a televised briefing, on Friday.
“If it’s itemized and identified siguro ang sinasabi niya lang hindi naman maiiwasan (maybe all he’s saying is that it cannot be helped) that the representatives of Congress would appeal for budgets that would benefit their districts, their sector or their constituents.”
BANGKO SENTRAL ng Pilipinas Governor Benjamin E. Diokno, seen in a video grab here at a press conference following the March 21 policy review, is widely known for his pro-growth policy bias.
STATEMENTS by Bangko Sentral ng Pilpinas (BSP) Governor Benjamin E. Diokno that another 25 basis point reduction in benchmark interest rates will be considered at the Monetary Board’s sixth policy review for the year on Sept. 26 — Thursday next week — has led private sector economists to expect more moves soon to unravel last year’s tightening.
The BSP has reduced benchmark interest rates by a total of 50 bps so far this year — at its MB’s May 9 and Aug. 8 meetings — slashing rates for overnight reverse repurchase, overnight deposit and overnight lending to 4.25%, 3.75% and 4.75%, respectively.
But that only partially unwinds a 175bp cumulative increase fired off last year in the face of successive multi-year-high headline inflation rates that peaked at a nine-year-high 6.7% in September and October, with the full-year average settling at a decade-high 5.2%.
Inflation has since been on a downtrend, partly after the government liberalized importation of rice — which contributes a tenth to the theoretical basket of goods an average Filipino household consumes, clocking in at a three-year-low 1.7% in August that took the year-to-date pace to three percent, at the midpoint of the BSP’s 2-4% target range for 2019.
“Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno has made it clear that he sees at least another 25bp cut to the policy rate by year-end,” HSBC Global Research economist Noelan Arbis said in a Sept. 19 note, titled: “Philippine Central Bank Watch: On to normalizing rates”, adding that “[t]his is broadly in line with our view.”
“However, he also suggested recently that a rate cut could come ‘before November’, despite the recent rise in global oil prices and cases of African swine fever that could lift food prices domestically,” Mr. Arbis noted.
“This prompts us to move our policy rate cut forecast earlier from 4Q, but our trajectory remains the same. We now expect the BSP to cut its policy rate by 25bp on 26 September and still forecast another 25bp cut in 1Q20, leaving the reverse repo rate at 3.75% by end-2020.”
Also weighing on state economic officials is the need to find the right policy mix to spur economic growth from last semester’s disappointing 5.5% that made it more difficult to hit the government’s 6-7% full-year target for 2019.
Mr. Arbis said “that the BSP is unlikely to reduce rates to ‘accommodative” levels to support growth for now.”
“In our view, leaving the policy rate at around 3.75% provides enough real rate buffer, assuming inflation averages around three percent — midpoint of the BSP’s 2-4% target range — to limit financial stability risks and a build-up in demand-driven inflation,” he explained.
“Meanwhile, it also leaves enough policy space to cut rates further in case of an economic slowdown.”
The central bank chief has also signalled a looming 100 bp cut in banks’ reserve ratio requirement (RRR) that adds to the 200 bp phased cut the was completed at end-July and cuts of the same magnitude last year. While changes in benchmark interest rates can be made only during policy reviews, RRR cuts can take place in any of the BSP’s weekly meetings, Mr. Diokno has said.
“It’s also important to remember that the BSP is engaging in additional easing in the form of RRR cuts, which reduces the need for more aggressive policy rate cuts,” Mr. Arbis said.
“We expect RRR cuts to continue even beyond our outlook for rate cuts in the years ahead. Indeed, the BSP may announce a 100bp RRR cut in 4Q as soon as the 26 September meeting, which may be implemented in a staggered manner.”
Prakash Sakpal, ING’s economist on Asia, in a separate Sept. 20 note said that the “sharp slide in consumer price inflation in August below the central bank’s 2-4% policy target… set another 25bp rate cut in stone…”
“This is one of the two Asian central banks (the other being Bank Indonesia) enjoying significant policy space from 175bp of rate hikes last year,” Mr. Sakpal said.
“We don’t think the BSP will need to use up all that policy leeway unless pent-up government spending fails to revive GDP growth above six percent in the second half of 2019.”
Adding to impetus for another rate cut is the US Federal Reserve’s own second 25 bp cut in Fed funds rate this week which, Michael L. Ricafort of Rizal Commercial Banking Corp.’s Economics & Industry Research Division said in a Sept. 19 e-mail, “sends a strong positive signal about the need to do more cuts in key short-term interest rates as an insurance measure to spur greater economic activities/growth and effectively counter the risks/threats of slower global economic growth/outlook largely due to the lingering US-China trade war”.
“… [T]he latest Fed rate cut effectively reset global monetary policy settings that provide greater flexibility/leeway for other major central banks around the world, including the BSP, to ease their respective monetary policy settings,” Mr. Ricafort said.
“The latest Fed rate cut effectively increases the odds of another 0.25-cut in local policy rates as early as Sept. 16… as primarily justified by the declining trend in inflation and the need to further spur greater economic activities and lead to faster GDP growth…”
He also said that “the slowest growth in universal and commercial bank loans in about 8.5 years and domestic liquidity/M3 growth [that was] among the slowest in seven years would also support further monetary easing by way of a 0.25-cut in local policy rates and/or a cut in the reserve requirement rate of banks as early as September… as any additional peso liquidity infused into the local banking/financial system, as well as lower borrowing/financing rates would increase loans extended by banks for consumers, businesses and other institutions, resulting in faster growth in bank loans, spurring greater economic/business activities and faster… GDP growth”.
Security Bank Corp. Chief Economist Robert Dan R. Roces noted in a separate e-mail that, “[a]s telegraphed by the governor himself, cuts will be meant to pump-prime economic activity for the remainder of the year and for the first quarter of 2020, and we think they’ll be a little less dovish than before given recent geopolitical events”, referring to attacks last Saturday on two Saudi Aramco plants that had cut Saudi Arabia’s oil output by half at 5.7 million barrels a day, slashing a fifth off global production.
Global oil production immediately shot up to hit an intraday peak that was the highest in nearly three decades, before subsequent announcements by Saudi Arabia that it was on track to restoring production eased prices. On Friday, however, Reuters reported that oil prices were on track to jump more than seven percent for the week as a Saudi-led coaling launched an offensive on Yemen’s port city of Hodeidah as the United States worked with Middle East and European allies to build a coalition against Iranian threats after the attack on the Saudi oil processing plants. — withLuz Wendy T. Noble
ALTUS PROPERTY Ventures, Inc., a real estate company that owns and operates a mall in Ilocos Norte, has filed an application to list on the main board of the Philippine Stock Exchange (PSE) at a price of P10.10 per share.
The company plans to list by way introduction at the stock exchange, a mode of listing wherein securities of an unlisted issuer are distributed as property dividends by a listed issuer to its shareholders. The listed issuer is Robinsons Land Corp. (RLC).
RLC is distributing up to 100 million shares as property dividends to all holders of record of its stocks as of Aug. 15, 2019.
Altus and its stockholders will not be offering common shares for subscription or sale in connection with the dividend distribution or the listing. As a result, there will be no proceeds from the exercise.
Based on its prospectus submitted to the Securities and Exchange Commission (SEC), the company owns and operates Robinsons Place Ilocos within the compound of Valdez Center in San Nicolas town of Ilocos Norte.
“The center serves as the biggest commercial and shopping center in Ilocos Norte. The area is generally characterized by a mixture of commercial and mid-rise residential developments,” Altus said.
It described Robinsons Place Ilocos as the first, largest and only full-service mall in the province. The mall is a two-level building that houses a department store, a supermarket, and an appliance store. It also has a hardware store, a toy store and arcade, and a food court.
The land where the mall is built consists of five contiguous lots with a total area of 20,319 square meters. The mall building spans across 20,190 square meters of gross floor area with average occupancy rate of around 100% as of the date of the prospectus.
Under PSE listing rules, a company that applies to list by way of introduction is subject to lock-up requirements prescribed by the exchange. Hence, stockholders who own an equivalent of at least 10% of the issued and outstanding shares of stock cannot sell, assign or dispose of their shares within a period to be determined based on the company’s track record.
Altus said the indicative reference opening price of its common shares at P10.10 apiece was based on the valuation and fairness opinion issued by Navarro Amper & Co., an affiliate of Deloitte Southeast Asia Ltd. An independent advisor’s opinion is required under PSE rules.
AXELUM SETS OFFER PRICE
Meanwhile, Axelum Resources Corp. announced on Friday that it has set the offer price for its initial public offering (IPO) at P5.00 per share.
The offer period of the integrated coconut product manufacturer and exporter will run from Sept. 24 to Sept. 30, with the target listing date on Oct. 7. Axelum will carry the trading symbol AXLM on the main board of the PSE.
The company plans to sell 700 million primary shares and 100 million secondary shares for a P4-billion stock market debut. Market capitalization is estimated to reach P20 billion upon listing.
“The net proceeds from the primary offer will be used to fund the company’s strategic acquisitions, expand its domestic and international distribution networks, install new manufacturing facilities for new products, and improve and expand the company’s existing manufacturing facilities,” the company said.
“A portion of the proceeds will also be utilized to retire the company’s loans, reduce payables, and for other capital expenditure requirements.”
THE MAIN INDEX fell for the fourth straight day, below the 7,900 line, to mark its lowest point in 12 sessions, as investors kept watch of the Financial Times Stock Exchange (FTSE) rebalancing that takes effect on Monday and anticipated another interest rate cut when the Bangko Sentral ng Pilipinas (BSP) conducts its sixth policy review for the year next Thursday, Sept. 26.
The benchmark Philippine Stock Exchange index (PSEi) shed 40.21 points or 0.51% to close at 7,871.11 — down 1.517% from the week-ago 7,992.32 — while the broader all-shares index similarly gave up 10.61 points or 0.22% to end at 4,772.35.
“The market sold down to align with the latest FTSE rebalancing… In addition, investors were still assessing after the second interest rate cut of 2019 by the Federal Reserve,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile phone message.
The Federal Open Market Committee announced on Thursday morning, Philippine time, that it was cutting interest rates by 25 basis points — its second interest rate cut since July — as it cited the continuing need to prop up the US economy.
Timson Securities, Inc. Trader Jervin S. De Celis also cited the FTSE rebalancing as the main driver of the stock market on Friday, saying in a text message: “Our index closed in the negative territory today as investors sold positions due to FTSE rebalancing. Volume is also thin during the morning session due to lack of fresh catalyst to push the index above 8,000.”
“Next week’s event such as BSP meeting may keep investors on the sideline as they wait for the anticipated rate cut.”
Four of the six sectoral indices ended with losses: property by 73.77 points or 1.81% to finish 3,985.76, financials by 13.54 points or 0.75% to 1,786.58, industrials by 41.31 points or 0.37% to 10,938.94, as well as mining & oil by 20.01 points or 0.21% to 9,375.03.
The two sub-indices that gained were holding firms (21.76 points or 0.27% to 7,849.1) and services (3.21 points or 0.2% to 1,588.84).
Friday’s list of 20 most active stocks saw only five that gained: JG Summit Holdings, Inc. by 3.86% to P75.30 apiece; International Container Terminal Services, Inc. by 1.4% to P131.40; Aboitiz Equity Ventures, Inc. by 1.28% to P55.60; Aboitiz Power Corp. by 1.14% to P39.95 and BDO Unibank, Inc. by 0.14% to P140.40 each.
Those that lost included Pilipinas Shell Petroleum Corp. (down 2.64% to P33.15 apiece), Bank of the Philippine Islands (down 2.25% to P91.10 apiece) and Ayala Land, Inc. (down 2.24% to P47.90 each).
Stocks that declined narrowly edged out those that gained 94 to 91, while 62 others ended flat.
Friday saw 2.693 billion shares worth P10.167 billion switch hands, compared to Thursday’s 453.905 million shares worth P4.117 billion.
Investors abroad remained predominantly bearish for the fourth straight day, with net foreign selling more than doubling to P1.065 billion from Thursday’s P398.839 million, the biggest outflow in that period. — Denise A. Valdez
THE meat processing industry is expecting at least a 5-10% reduction in the value of its annual production because of restrictions on processed meat products in selected provinces.
Philippine Association of Meat Processors, Inc. (PAMPI) Vice-President Jerome D. Ong said in a briefing Friday the consumer scare from the reported outbreak of African Swine Fever (ASF) in parts of Luzon will take its toll on the P300-billion meat industry.
“…maybe the P300 billion sector will shrink from anywhere between five to 10%… It will go down to about P270-P285 billion, rough estimate, from which will hopefully recover,” he said.
“Yung dalawang lalawigan na nag-declare ng total ban (the two provinces that declared a total ban), Cebu and Bohol, contribute about 10-15% of national sales ng lahat ng (for all types of) processed meat. So kung hindi mali-lift yung ban, yun yung ine-expect nating minimum na impact sa atin (If the ban is not lifted, that is the impact we are expecting at minimum),” he added.
The governments of Cebu and Bohol have declared a total ban on pork and pork products due to the reports of an ASF outbreak.
PAMPI has called the ban “unnecessary and unwarranted,” claiming the raw pork used by local processors-90-95% of which are imported-only come from ASF-free sources.
“The national economy will be seriously damaged if LGUs (local government units) persist in imposing an unnecessary and unwarranted ban,” PAMPI said.
Mr. Ong said the meat processing industry has 150,000 direct employees, and at least 25% of the meat consumption of Filipinos is from processed meat. He said a total ban on meat products will severely harm both the industry and consumers.
“So it’s not something you can just take away and say ‘Okay lang,’” he said.
The group also said on Friday that several PAMPI members have decided to reduce production for the upcoming Christmas season because of the uncertainty over meat distribution.
Mr. Ong, who is also president and chief executive offer of CDO Foodsphere, Inc., said the company is reducing its production of Christmas ham by 15-20% this year. This is also expected to reduce hiring of seasonal workers.
“If the situation persists, (even) year-round products will be affected,” he said.
PAMPI President Felix O. Tiukinhoy, Jr. added many processors are now “at a loss” on how to plan for the upcoming holidays.
“If these bans persist, should we not produce the Christmas products for the Philippines? …[M]ost of us are still down on production for Christmas ham because we do not know if we will be allowed to push this across provincial boundaries,” he said.
The Department of Trade and Industry and the Department of Agriculture have said that pork that has been certified by the National Meat Inspection Service (NMIS) and distributed by “trusted brands” — including meat used by processors — are safe to consume.
“I’d like to make this appeal to the President to help us make the national government (align policy) with the LGUs, kasi hindi magkakagulo (because there would be no confusion) if there is collaboration coming from the different parts of the government,” Mr. Tiukinhoy said. — Denise A. Valdez
THE Board of Investments (BoI) said it is expecting a “small” benefit from the US-China trade war but is working to capture more investment from relocating firms seeking to evade tariff coverage, particularly the steel industry.
“We will benefit. It will be small compared to other countries — that’s what we need to fix,” BoI Executive Director of Industry Development Services Ma. Corazon Halili-Dichosa said at the Philippine Institute for Development Studies’ 5th public policy conference Thursday.
She cited a World Trade Organization study showing that among ASEAN nations, the Philippines is expected to be the least affected by tariff measures imposed by the US and China.
But Ms. Dichosa said that the Philippines competes with ASEAN member countries exporting similar products to the same economies — the US, EU, China, and Japan.
Companies are fleeing the China in response to US tariffs, but a Nomura study found that most are transferring to larger export economies like Vietnam.
Ms. Dichosa said that BoI has been working to attract more of the investment. She expects the electronics sector to benefit most if the industry extends beyond assembly services to higher value services.
She also expects more investment in steel, which is among the first industries to be impacted by US trade war tariffs, particularly from Chinese steelmakers.
“The Chinese think that ‘maybe if we go to the Philippines and export to the US,’ that will actually solve their problems in terms of accessing the US market for steel products,” she added.
Ms. Dichosa said that ASEAN countries attracting relocating businesses have strong infrastructure and logistics.
“In solving the trade deficit and to see how we can benefit more from the US trade war, we think the best strategy is a robust industrialization strategy,” she said.
She also noted that a Philippine-US free trade agreement is in the works.
Noting that the Philippines will not follow the US and China in adopting protectionist measures, Ms. Dichosa said she backed seamless global trade through the lowering of tariffs, with the exception of some tariffs to “level the playing field.”
The Department of Trade and Industry has recently imposed special safeguard duties on imported cement. — Jenina P. Ibañez
THE finance department said rice effectively continues to enjoy tariff protections, forcing industries that are downstream from rice, such as those that depend on it for feed, to be more efficient to compensate for increased costs.
“Rice continues to enjoy effective tariff protection not enjoyed by other sectors even with the removal of quantitative restrictions (QRs),” it said in an economic bulletin released Friday.
Effective protection rate (EPR) refers to how trade policy and tariffs affect an industry.
“Rice has a 44.4% effective protection rate which means that for every peso of value added, it is accorded a 44.4% price edge over the competing import,” the report said.
As for other agricultural products, corn has an EPR of only 5.8%. it said.
“Unfortunately, the negatively-protected downstream sectors will need to be super-efficient to survive import competition,” it said.
The report said hog farmers needs to be 13.3% more efficient than their competitors overseas while cattle farmers need to be 7.2% more efficient.
“They have no choice but to buy more expensive inputs from rice and prepared feeds,” it said.
Meanwhile, the slaughtering, meat packing, and meat preservation industries
also need to to improve their efficiency to survive global competition.
“The Department of Agriculture (DA) will need to implement rice productivity programs to enhance the sector’s competitiveness. Only when the productivity has increased can the country unwind the high protection and enable downstream industries and consumers some breathing space,” it added.
The Rice Tarrification Law, enacted in March, has removed quantitative restrictions on imported rice from Southeast Asia and imposed a 35% tariff instead. The law also allots P10 billion a year in funding from tariffs to provide seed, machinery, credit and technical assistance to farmers.
The average farmgate price of palay eased 4.4% year-on-year in the fifth week of August to P16.68 per kilogram (kg). In some areas the buying price for palay quoted by private traders has fallen to as little as P7 per kilo, with many traders preferring to source their supply from imports.
The government has resorted to increasing the support price paid to farmers by the National Food Authority (NFA), increasing the NFA’s procurement budget and roping in local governments to buy palay, or unmilled rice, diectly from farmers, because of traders’ unwillingness to pay a “fair” price..
Socioeconomic Planning Secreatry Ernesto M. Pernia said Thursday that the six-month-old law will have to “play out” first and cited the need to wait for market conditions to normalize.
“Rice tariffication is… we just need to let it play out… to normalize,” Mr. Pernia told reporters in chance remarks when asked if the law has been effective.
He also said the farmers are being supported by the P10-billion-a-year Rice Competitiveness Enhancement Fund (RCEF).
“The farmers are complaining, but they are getting subsidy. They are getting subsidy… (RCEF) is a subsidy. They don’t have to pay for that. There’s also a part loan I think. But that is something new. The earlier P10-billion allocation (RCEF) was pure subsidy,” he said.
To keep retail prices low, the NFA said last week that it plans to release 3.6 million bags of imported rice onto the market until early October while increasing its busying price for palay to P19 from P17. — Beatrice M. Laforga
A MEASURE gradually increasing the road users’ tax filed in the House of Representatives is expected to generate P8.12 billion worth of revenue in the first year of implementation, a key legislator said.
House Bill No. 4695, or the “Motor Vehicle Road User’s Tax Act,” according to Rep. Jose Ma. Clemente S. Salceda of the second district of Albay, hopes to update Motor Vehicle Users’ Charges, which have not been revised since 2004.
“This bill actually improves the progressivity of the current MVUC law. First, it provides relief for motorcycle owners, who, because of traffic, have been forced to use motorcycles. These people are not rich, and cannot afford cars. Actually, there are more motorcycle owners than there are owners of all other vehicles under MVUC combined, so this will also reduce bureaucratic strain.” Mr. Salceda was quoted as saying in a statement Friday.
He said the House version is expected to bring in P8.12 billion in 2020, P9.62 billion in 2021, P10.57 billion in 2022, P28.44 billion in 2023, and P32.61 billion in 2024.
Fifty percent of the proceeds will be earmarked for the Universal Health Care programs, under Republic Act No. 11223; while the remaining half will be allocated for public utility vehicle modernization until 2024.
Revenue generated beginning 2025 will be used entirely for UHC programs.
The bill among others proposes to increase MVUC rates to P2,912 on passenger cars with gross vehicle weight (GVW) of up to 1,600 kilogram (kg) in the first year of implementation; P6,552, if weighing 1,600-2,300 kg, P14,560, if over 2,300 kg.
At present, rates range from P1,400-12,000, depending on weight and age of the passenger car for private use; and P900-5,000, if for hire.
Utility vehicles weighing up to 2,700 kg will be levied P3,640 and an additional P0.73 per 100 kg over 2,700 kg; while motorcycles with engine displacement of 400 cc and above with sidecars will be charged P546. Without sidecars, the charge is P437.
This is higher than the P2,000 with additional P0.40 per 100 kg in excess of 2,700 kg for utility vehicles; and the P240 and P300 rates slapped on motorcycles without and with sidecars, respectively.
The bill also provides for the following rates for large vehicles: buses, P3,276, if weighing 4,500 kg with additional P45 per 100 kg above 2,700 kg; trucks and trailers, P3,276, if weighing over 4,500 kg with additional P0.44 per 100 kg over the GVW.
The present system imposes the following rates for trucks and buses: P1,800, plus and additional P0.24 per 100 kg in excess of 2,700 kg.
“While I am convinced that this is a progressive and equitable bill, I am very open to further improvements to this proposal. My committee will consult all the relevant stakeholders.” Mr. Salceda said. The measure forms part of the government’s comprehensive tax reform program.
President Rodrigo R. Duterte in his fourth State of the Nation Address asked the 18th Congress to pass the remaining CTRP packages, particularly the proposal to reduce corporate income tax and rationalize fiscal incentives, increase excise tax on alcohol products and e-cigarettes, centralize real property valuation and assessment and simplify the tax structure for financial investment instruments.
The government has so far passed Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Law, which slashed personal income tax and increased or added levies on several goods and services; RA 11213, the Tax Amnesty Act, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment; and RA 11346, which will gradually increase excise tax on tobacco products to P60 per pack by 2023 from the current P35. — Charmaine A. Tadalan
THE Philippines has applied to join the Cross-Border Privacy Rules (CBPR) system to adopt privacy standards in order to ease data exchange across the Asia-Pacific, the National Privacy Commission (NPC) said in a statement Friday.
The Asia Pacific Economic Cooperation (APEC) CBPR is a voluntary certification mechanism that allows member companies to safely transfer data across APEC economies.
“When businesses become CBPR-certified, they may then transfer personal data in a safe and seamless manner across other certified companies operating in the APEC region, which accounts for about half of global trade. For Philippine companies, this means gaining entry to a much larger market at reduced compliance costs with respect to cross-border data transfers,” Privacy Commissioner Raymund E. Liboro said.
NPC last month submitted the Philippines’ letter of intent to join the system ahead of a meeting by the Electronic Commerce Steering Group (ECSG) in Puerto Varas, Chile.
The Philippines needs to nominate at least one accountability agent to ensure that its certifications are recognized in all member jurisdictions.
NPC said compliance offers both a competitive advantage among companies with the certification as well as trust from their consumers. To help companies gain consumer trust, the CBPR requires them to adopt transparency and a streamlined customer complaint process.
Trade Secretary Ramon M. Lopez in his endorsement letter emphasized how this certification can boost links between Philippine and global companies.
“This would provide our micro, small and medium enterprises opportunities for growth by gaining access across APEC markets and participating in global supply chains which rely on the free movement of data across borders,” he said.
ECSG Chairperson Shannon Coe expects the CBPR certification to improve Philippine-US relations.
“US companies rely on the favorable market and skilled workforce in the Philippines to process data throughout the Asia-Pacific region. The Philippines’ participation in the CBPR System will strengthen the business case for U.S. companies looking to invest in the Philippines, through our bilateral commercial relationship,” she said.
After approval from the Joint Oversight Panel, the Philippines will be the ninth economy to formally join the APEC CBPR, after the US, Japan, Canada, South Korea, Singapore, Mexico, Australia, and Chinese Taipei. — Jenina P. Ibañez
SAN MIGUEL Brewery Inc. (SMB) on Friday broke ground on its P6.7-billion brewery that is expected to jump-start development in Leganes, a suburb in the north of Metro Iloilo City.
San Miguel Corp. (SMC) president and chief operating officer Ramon S. Ang, Senator Franklin M. Drilon, Iloilo Governor Arthur D. Defensor Jr., Leganes Mayor Vicente P. Jaen II and other officials led the ground breaking Friday in the Leganes barangay of Gua-an.
The 40-hectare facility is expected to be completed in two years. It will become SMB’s third production site in the Visayas apart from facilities in Mandaue and Bacolod Cities.
SMB President Roberto N. Huang said that the completion of the facility will allow more convenient and efficient delivery of San Miguel products to the region.
“The management believes that putting up a facility strategically located in IIoilo is instrumental in achieving our vision that is to lead the growth of beverage industry,” SMB president Roberto N. Huang said in his speech.
Mr. Jaen said Leganes has long been awaiting investment.
“San Miguel will… be the driver of other parts of our agenda which is providing quality livelihood, and prioritizing the needy,” he said.
The mayor hopes Leganes can do its part to help Iloilo attract investment and develop a reputation for “worry-free business.”
Mr. Drilon said that the new SMB facility in Iloilo will generate more economic activity and sustain the momentum of economic growth.
“The emergence of shopping malls, hotels, restaurants… in the city is proof of Iloilo’s growing economy and consumer confidence. But this cannot be sustained unless we expand our economy here in with new investments like SMB,” he said.
Meanwhile, Mr. Ang promised to invest more in Iloilo based on his positive experience in setting up the brewery.
“Dito sa Iloilo, napakabuti ng mga politicians dito from the senators, governors, congressmen, mayors, councilors and barangay. Ang SMB pwedeng magtayo ng maraming investments dito. Nakita ko very progressive itong Iloilo, napagaling na negosyante, napakasipag ng mga tao dito. Makakaasa po kayo na we will invest more in Iloilo (Iloilo politicians are performing well… SMB can make more investments here. Iloilo is very progressive with skilled businessmen and a hard-working labor force. You can count on more investment from us),” he said. — Emme Rose S. Santiagudo
SAN MIGUEL Corp. (SMC) said Friday that it obtained approval of the Securities and Exchange Commission for a P10 billion fixed-rate bond issue that forms part of its P60-billion shelf registration.
The permit to sell dated Sept. 19, 2019 covers the five-year Series H bonds which it it will issue on Oct. 4, 2019. The bonds, which are due in 2024, have a fixed rate of 5.55%.
The offer period will start at 9:00 a.m. on Sept. 23, 2019 and will end at 5:00 p.m. on Sept. 27, 2019, or such other date as may be mutually agreed between the company and the joint lead underwriters and bookrunners.
The bonds will list on the Philippine Dealing & Exchange Corp. on Oct. 4.
Based on its offer supplement, SMC plans to use the net proceeds of the issue either to fund the redemption of its outstanding preferred shares or for the refinancing or re-denomination of an existing loan obligation.
Part of the proceeds of the offer may be used to repay the P6,782,115,000 bridge loan that the company may avail of from BDO Unibank, Inc. to initially fund the redemption of its Series 2-B preferred shares.
Part of the proceeds may also be used to repay the P3,092,035,000 short-term loan obligations of the company with Rizal Commercial Banking Corp.
The bond offering is the fourth and final tranche to be issued from SMC’s P60-billion fixed rate bonds shelf registration. The bonds will be issued in minimum denominations of P50,000 each, and in integral multiples of P10,000. They will trade on the secondary market in P10,000 denominations.
On Friday, SMC rose 0.17% to close at P179.10. — Victor V. Saulon
THE Pepsi-Cola Products Philippines, Inc. board has approved a plan to discontinue its snacks business “to focus on and strengthen” its core business lines, the company told the stock exchange Friday.
Aside from the focus on its core business, the licensed bottler of PepsiCo, Inc. and Pepsi Lipton International Ltd. in the Philippines also announced a number of corporate appointments during the board’s regular meeting on Sept. 19.
Oscar S. Reyes, former president and chief executive officer of Manila Electric Co., was appointed chairman of the board’s compensation and remuneration committee as well as the chairman of its nominations and governance committee.
The board also approved the appointment of Rafael M. Alunan III as vice-chairman of the board of directors. Samir Moussa was elected as a member of the board of directors.
Their election or appointment took effect on Sept. 19.
The company manufactures a range of carbonated soft drinks, non-carbonated beverages and snacks that include brands like Pepsi-Cola, 7Up, Mountain Dew, Mirinda, Mug, Gatorade, G-Active, Tropicana/Twister, Lipton, Sting, Propel, Milkis, Aquafina, Premier, Let’s Be, and Cheetos.
The company competes in the ready-to-drink, non-alcoholic beverage and snacks market across the Philippines. The market is highly competitive and competition varies by product category.
The bottler earlier said that it believes the major competitive factors include advertising and marketing programs that create brand awareness, pack/price promotions, new product development, distribution and availability, packaging and customer goodwill.
It faces competition generally from both local and multinational companies across its nationwide operations.
On Friday, shares in the company fell 0.48% to close at P2.08. — Victor V. Saulon
