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ICTSI subsidiary coordinates with Honduras government to improve systems, roads

A SUBSIDIARY of Razon-led International Container Terminal Services, Inc. (ICTSI) said it is expecting to improve its operations at Puerto Cortes in Honduras with improved partnerships with government authorities.

In a statement on Tuesday, ICTSI’s Operadora Portuaria Centroamericana (OPC) said it is coordinating with the Honduran government to improve systems and build road networks to expedite the movement of cargo at the port.

The company said it initiated discussions with the Honduran Customs Agency to align their systems, which will ensure the fast turnover of cargo at the terminal. It added that the discussions resulted in longer operating hours at the Customs office, which will allow more shipments to be processed.

OPC also said the efforts of the Honduran government to expand roads that lead to the port will help it hasten the transfer of goods from the terminal to other areas.

The Honduran port authority likewise opened a truck entry facilitation zone, which OPC said is seen to help ease traffic on the public roads caused by cargo trucks coming from the terminal.

“It is very important that shared efficiencies between us, the port operator and the government are achieved through the improvement of processes, avoiding extra costs for stakeholders and making them more competitive in the local and international market,” OPC Chief Executive Officer Mariano Turnes said in the statement.

The Puerto Cortes logistics gateway, which OPC is operating, serves Central America’s Region IV covering El Salvador, Guatemala and Nicaragua.

The company recently finished a $145-million project to build Pier 6 at the Puerto Cortes and bought new cranes to increase the terminal’s capability to handle larger ships.

ICTSI is looking to start the expansion of the Puerto Cortes container yard and modernize the facilities by installing advanced technologies that will improve its efficiency.

In the first semester, ICTSI posted an attributable net income of $128.5 million, growing 42% from last year due to higher throughputs across its ports.

It is allocating $380 million for capital expenditures this year to fund the upgrading of its terminals in Manila, Mexico and Iraq. — Denise A. Valdez

Sotheby’s takeover by Drahi wins support

FRENCH MEDIA mogul Patrick Drahi’s plan to acquire Sotheby’s received a boost with a prominent shareholder advisory firm coming out in support of the deal.

Institutional Shareholder Services Inc. urged investors to support the $2.7-billion takeover of the auction house by Drahi’s BidFair USA LLC. The advisory firm argued the offer comes at a substantial premium and that no other bids have emerged since the deal was announced in June, despite speculation that others may be interested.

Sotheby’s shareholders may have preferred that the company run a full auction, given previous interest from other parties, ISS said.

“Its choice to not conduct an auction is ironic, given Sotheby’s business,” ISS said in its report Friday.

A representative for Sotheby’s was not immediately available for comment.

ISS noted that the $57-a-share cash bid is a 61% premium over the company’s unaffected share price. Despite that Sotheby’s shares traded above that price on the expectation other buyers would emerge, none have come forward, it said.

“The all-cash offer represents a significant premium to the unaffected price and implies an attractive valuation, no competing offers have emerged, and the company’s projections suggest that it will experience stagnate near-term results on a standalone basis,” ISS said in its report. “As such, support for the merger is warranted.”

BidFair is a wholly owned entity by Drahi, an art collector who controls publicly traded telecommunications business Altice Europe NV, which has more than 30 million customers. Drahi is worth $10.3 billion, according to the Bloomberg Billionaires Index.

Activist investor Dan Loeb’s Third Point is Sotheby’s second-largest holder and plans to support the deal. Loeb led a proxy fight at the auction house in 2014 that saw three new directors appointed to its board, including Loeb, as the result of a settlement. — Bloomberg

Libor undertakers wanted: Wall Street braces for rate benchmark’s end

THE LONDON interbank offered rate (Libor) is dying, warn global regulators, and there’s nothing banks can do to stop it.

Their only choice is to prepare for the end.

That’s where Jason Granet comes in. Plucked from Goldman Sachs Group Inc.’s asset-management unit last year, he now leads a group of bankers and lawyers working day in and day out to ready the lender for the fateful day — still more than two years away — when the world’s most important reference rate is set to be phased out.

The major Wall Street banks — not to mention insurers, money managers, law firms and advisory businesses — are all mobilizing employees around the globe in anticipation of Libor’s demise. The benchmark’s key role in financial markets — at last count it underpins more than $350 trillion of mortgages, loans and derivatives across various currencies — means they’re being pulled from all corners of the industry. For Granet, the objective is clear: ensure that what many say is one of the most significant and complex transitions in the history of modern finance goes off without a hitch at Goldman Sachs.

“My job completely changed,” said Granet, who now reports to Beth Hammack in treasury operations after spending the bulk of his almost 20-year career at the bank overseeing money-market funds. “It’s an international, complex intellectual challenge.”

For decades, the London interbank offered rate was a convenient way to determine the cost of floating-rate debt around the world. It’s calculated from a daily survey of more than 15 large banks that estimate the price to borrow from each other without putting up collateral.

But the trading behind those estimates has dried up, and coupled with the post-crisis discovery of rampant manipulation, UK officials two years ago signaled an end to Libor, saying they’ll stop compelling banks to submit quotes after 2021.

The decision has spurred global regulators to push ahead with their own domestic funding-rate alternatives, and forced financial firms to figure how to extricate themselves from a benchmark so thoroughly entwined in global markets.

At a June roundtable, Goldman Sachs, JPMorgan Chase & Co., Wells Fargo & Co. and others discussed how they’re establishing oversight committees, setting up joint steering groups and recruiting employees to build out their Libor transition capabilities. Consulting companies such as Oliver Wyman & Co. and Accenture Plc are advising clients on how to best manage the shift, while law firms such as Cadwalader, Wickersham & Taft have helped craft fallback language for credit contracts that reference the benchmark.

When Wells Fargo’s Brian Grabenstein became the head of the lender’s Libor transition office last year, he quickly realized that he needed to staff up. He now has a team of a dozen people coordinating meetings with the consumer banking and wealth management groups, among others, and running committees focused on various aspects of the transition — from legal documentation to communications.

He estimates that 200 people at the bank have worked at least 10 hours on Libor over the past month.

“Up until not that long ago, this was not on a lot of people’s radar,” Grabenstein said. “I quickly realized it wasn’t just one person’s full-time role, but in fact it was going to be a number of peoples’ full time jobs.’’

Along with colleague Readie Callahan, who heads communications strategy for the transition team, the pair have crisscrossed the US in recent months, speaking with groups of as many as 50 corporate customers at a time about the shift. Wells Fargo is still working on its strategy to inform retail customers about the change, which will impact products such as adjustable-rate mortgages.

“There’s a growing appreciation for how much work there is to be done,” Grabenstein said.

BEYOND BANKS
It’s not just banks affected by Libor’s end. MetLife Inc., the biggest US life insurer, faces exposure through its $587 billion investment management portfolio. It tapped Jason Manske, head of global derivatives and liquid markets, as transition point man.

The firm was an early adopter of the Secured Overnight Financing Rate (SOFR) — a new benchmark developed by the Federal Reserve Bank of New York as a potential Libor replacement — via its primary market issuance. It’s priced $2.5 billion of SOFR-linked notes since the reference rate’s debut early last year, according to data compiled by Bloomberg.

Still, industry veterans are growing concerned about potential risks to financial stability in the coming years, given the broader market’s slow embrace of products based on alternative benchmarks. Many say the change is comparable in scope to the adoption of the Dodd-Frank reforms following the 2008 financial crisis, while others liken the situation to Y2K, which presented significant operational challenges to Wall Street even if it ultimately proved benign.

Manske, who is a member of the New York Fed’s Alternative Reference Rates Committee designed to smooth the shift to SOFR (pronounced ‘So-fur’), compares the transition’s impact on financial markets to the adoption of the euro two decades ago.

“The euro was dealing with a spot FX rate, forwards and options markets,” Manske said. “This is cross-border, secured versus unsecured, credit spread versus no credit spread, cash and derivatives markets. It’s definitely more complicated than most things the market has done.”

For Goldman Sachs’s Granet, who grew up doing jigsaws, it’s one of the largest, most challenging puzzles he’s ever faced. Along with his four-person team and a dedicated group of lawyers, he’s been focusing in recent months on reviewing portfolio exposure, rewriting contracts and retooling trading systems to incorporate Libor’s anticipated replacements.

The scale of the task means “literally every part of the firm is involved,” Granet said. “Taking a step back, it’s a pretty foundational change to a lot of things that are going on now” in global finance. — Bloomberg

Analysts remain selective on bank stocks

By Marissa Mae M. Ramos
Researcher

ANALYSTS remain selective on bank stocks amid mixed earnings performance and the differing impacts of loosening monetary policy and ongoing trade tensions on their bottom lines.

The barometer Philippine Stock Exchange index (PSEi) traded sideways in the second quarter, gaining almost one percent in the second quarter, slower than the 6.1% growth posted in the first quarter. This was, however, a turnaround from the 9.9% slump recorded the previous year.

In the second quarter, the financials sub-index declined by 2.4% versus a one-percent loss in the previous quarter and the 15% drop in the second quarter of last year.

The decline in the financials counter reflected the performances of the listed banks’ share prices with more than half registering quarter-on-quarter declines. Metropolitan Bank & Trust Co. (MBT) had the largest decline in its share price during the quarter at 10.83%, followed closely by the Philippine National Bank (PNB) at 10.41%.

Other listed banks that saw their share prices decline include the Bank of the Philippine Islands (BPI, -6.77%); East West Banking Corp. (EW, -4.44%); Philippine Business Bank (PBB, -3.91%); Security Bank Corp. (SECB, -1.73%), Asia United Bank (AUB, -0.43%), and Philippine Bank of Communications (PBC, -0.23%).

On the other hand, Rizal Commercial Banking Corp. (RCB) led gainers with a 5.24% climb in its share price, followed by those of BDO Unibank, Inc. (BDO, 4.63%); Philippine Trust Co. (PTC, 4.45%); China Banking Corp. (CHIB, 2.23%); Union Bank of the Philippines (UBP, 0.66%); and Philippine Savings Bank (PSB, 0.35%).

“The main drivers that drove not just the banking stocks, but also the performance of the banks would be the stance of the BSP (Bangko Sentral ng Pilipinas) and the interest rates in counter balancing other economic data points to consider such as GDP (gross domestic product) and inflation,” said Philstocks Financial, Inc. Client Engagement Officer and Research Associate Piper Chaucer E. Tan in an e-mail.

Mr. Tan, who regarded the first-half of the year as a “mixed bag” for the banking sector and the stock market in general, also cited the ongoing trade tensions between the US and China as a constant “offshore catalyst [trickling] down to the bank stocks and to the stock market” that could potentially trigger a global economic recession.

The second quarter saw the BSP cutting policy rates by 25 basis points (bps) as expected following the decelerating headline inflation trend. Likewise, the reserve requirement ratio (RRR) of universal and commercial banks (U/KBs) were trimmed by 200 bps in mid-May.

Meanwhile, the tit-for-tat trade war between the US and China had been ongoing for more than a year. Apart from some momentary respites, it has yet to see any new developments that would suggest a resolution of trade tensions between the two economic superpowers.

Despite these headwinds, banks managed to perform well on the aggregate. BSP data showed the country’s U/KBs booking a cumulative P100.615-billion net income, 30% higher than the P77.364-billion accumulated earnings at the end of the second quarter last year.

Net interest margin (NIM) — the ratio that measures banks’ efficiency in investing their funds by dividing annualized net interest income (NII) to average earning assets — improved to 3.38% in the second quarter from 3.29% in the first quarter of the year and 3.11% in the second quarter of 2018.

Mandarin Securities Corp. Research Analyst Zoren Philip A. Musngi said that SECB stood out among listed banks in the second quarter, citing a “significantly better” 32% year-on-year gain in its net income.

“However, we will still look into succeeding quarters to see if it is indeed a sustainable recovery or just a one-off [gain],” Mr. Musngi said.

Regina Capital Development Corp. Equity Analyst Rens V. Cruz II said PBB and AUB “surprised to the upside” with their net income gains of 96.46% and 89.38% during the period. On the other hand, he pointed to PNB’s 47.98% decline, which “completely breaks the momentum established in the first quarter.”

For China Bank Securities Corp. Senior Research Associate Rastine Mackie D. Mercado, BDO stood out last quarter.

“Of the index banks, BDO reported the highest growth in net income at 53.3% in the first half of 2019. This was driven both by higher NII and non-interest income,” Mr. Mercado said in an e-mail.

“Moreover, BDO’s CASA (current account and savings account) as a percentage of total deposits was at 70.3% in the first half, the highest among the index banking stocks. Trading gains of the bank over the period also normalized, reversing losses incurred in the first half.”

Raul P. Ruiz, first vice-president and head of research at RCBC Securities, Inc., likewise pointed to BDO’s upside.

“Prices of bank stocks under [our coverage] were generally flat to lower in the second quarter with the exception of BDO,” he said.

“[The] [u]nderperformance may have been due to idea… that bank NIMs will fall because of the BSP’s looser monetary policy. However, BDO’s share price increased probably because of the idea that, having the most deposits, it would benefit the most from the BSP’s plan to cut the reserve requirement all the way to 10% in the next few years,” Mr. Ruiz said.

Mr. Ruiz likewise noted PNB’s “above-industry loan and deposit growth rates.”

Apart from the policy rate cut last quarter, the BSP ruled another quarter point trim on benchmark interest rates in its fifth policy meeting earlier this month with hints of another 25-basis point cut before yearend. BSP Governor Benjamin E. Diokno likewise threw in the possibility of an additional RRR cut as early as next month.

OUTLOOK
Similar to last quarter’s performance, prospects for the third quarter were mixed among the analysts interviewed.

“From the third quarter onwards, banks’ earnings growth will be more subdued as the impact of the BSP’s overnight rate cuts will start to be reflected in banks’ asset yields and NIMs,” RCBC Securities’ Mr. Ruiz said.

Regina Capital’s Mr. Cruz was of a similar view, but noted that this should “not yet be significant enough” to cause a year on year slowdown in banks’ net interest incomes.

“On the other hand, the RRR cut will likely only affect the relatively smaller banks, as most of their deposit base are sourced from wholesale and fixed deposits. The bigger banks will continue to incur higher cost of funds since they have higher exposure to CASA deposits,” Mr. Cruz said.

Likewise, Philstocks’ Mr. Tan said that there will be “some slight slowdown” in banks’ earnings as the third quarter is considered historically the weakest quarter of the year.

Nevertheless, Mr. Tan remains “strongly positive” with the banking sector given the positive earnings results in some of the listed banks, adding that its current price-to-book ratio (P/B) of 0.939 times is less than its five-year average P/B ratio of 1.26 times.

“[W]e think that banks will catch up to its average, and this is pretty cheap that investors should really look into if they want to bargain-hunt stocks with cheap valuations and solid fundamentals,” Mr. Tan said.

Mandarin Securities’ Mr. Musngi was likewise upbeat on listed banks: “We are maintaining our positive outlook on bank stocks, particularly the larger/diversified ones,” he said.

“Even though the economic environment remains uncertain, we are still optimistic banks would weather through and show year-over-year growth as they manage their risks/exposures. Bank stock valuations are quite attractive relative to other industries and to historical averages.”

Joylin F. Telagen, research head at IB Gimenez Securities, Inc., said that the global economic situation will remain the main factor that would affect the stock performance of listed banks and the stock market in general.

“I expect that banks’ core business operation will continue to post double-digit growth while non-interest [income] especially trading operation might still be a challenge on the third [quarter] until end of the year,” Ms. Telagen said.

For First Resources Management and Securities Corp. Officer in Charge of Trading and Research Charlene Ericka P. Reyes: “We expect that banks would be able to sustain their earnings growth momentum buoyed by the strong growth in net interest income, accounting for mid-teens loan growth and the continued improvement in net interest margin this year,” she said.

“The non-interest income business of banks may also support their earnings growth for the year driven by the expansion of banks’ non-core business segments, particularly in fee-based income and insurance premiums,” she added.

On bank stocks, China Bank Securities’ Mr. Mercado is “selectively bullish.”

“We would continue to prioritize banks with negative repricing gaps as this ensures that the risk to their NIMs would be minimal,” said Mr. Mercado.

“Individually, the listed banks under the financial index are currently trading below their respective three-year average P/Bs, which may also be indicative of some upside to specific issues.”

On the other hand, Regina Capital’s Mr. Cruz said that the banking sector “is gradually shifting to a neutral stance” for the second half.

“For starters, valuations have spiked since the start of 2019. Secondly, the impressive performance of banks in [the first half of 2019] is already a closed chapter… [with the third and fourth quarters] present different factors to consider — including the 50-bp policy rate cut made in May and August, and the continued liquidity crunch, among others,” Mr. Cruz said.

For RCBC Securities’ Mr. Ruiz: “I’m generally neutral on banks because NIM expansion since at least last year may end due to the BSP’s interest rate cuts.”

Arts & Culture (08/28/19)

What Lies Within: Centre of the Centre

THE Museum of Contemporary Art and Design (MCAD) of the De La Salle-College of Saint Benilde is set to explore speculative and alluring spaces with What Lies Within: Centre of the Centre. The exhibit will feature four artists all of whom will be showing their work in the Philippines for the first time: Mel O’Callaghan (Australia), Laurent Grasso (France), Suzanne Treister (United Kingdom) and Pamela Rosenkranz (Switzerland). Their works encompass all manner of inquiry and examination of contemporary life. The exhibit opens on Sept. 5, at the MCAD, De La Salle-College of Saint Benilde School of Design and Arts Campus, Dominga St., Malate, Manila.

Conversations on Curation

UNDER KWAGO’S publishing and curatorial platform Comma, Roy Voragen and Czyka Tumaliuan started Curator’s Lab to provide a collaborative space to question, investigate, discover and test different approaches to making, showing, experiencing and evaluating exhibitions. On Aug. 29, at De La Salle-College of Saint Benilde, Curator’s Lab will hold a forum, Conversations on Curation, discussing the role curators play in contemporary art. The forum aims to understand the curator’s thought processes and creativity, and how these are transformed and translated into exhibitions and ongoing discourses. “Curator’s Lab is an open-ended inquiry about curatorial practices within the context of contemporary art. We are very thankful for MCAD and DLS-CSB for giving our first gathering a home,” Curators Lab co-founder Tumaliuan said. The speakers are Joselina Cruz, Patrick Flores, Tony Godfrey, and Mayumi Hirano who work in institutions and independently to see diverse viewpoints on curating. “The forum is a good way to bring together artists, curators, and those who are curious about the practice to exchange thoughts and learn from one another,” said Voragen, co-founder of Curators Lab. The forum will be held from 8-11 p.m., with the talks at 8:45 p.m., Joselina Cruz; 9:10 p.m., Patrick Flores; 9:35 p.m., Tony Godfrey; and 10 p.m., Mayumi Hirano, followed by a Q&A at 10:20 p.m. To join, sign-up at http://bit.ly/rsvpcuratorslab. There is a door fee of P500 (students) and P750. The forum will be held at The Loop, 12th floor, SDA Bldg., DLS-CSB, Pablo Ocampo St., Malate, Manila.

‘In Harmony with Nature’

THE Metropolitan Museum of Manila launches “In Harmony with Nature,” an art residency in partnership with the Bank of China, and the Chinese Culture and Art Association. This project engages 10 artists from the Philippines and China to participate in a continuous dialogue on current perspectives through a brief residency of historically and culturally significant places that would juxtapose similarities and nuances of people, place and art expressions. This exchange project will culminate with two group exhibitions in both China and the Philippines with corresponding public programs. The participating artists for this residency project are Manuel Baldemor, Norberto Carating, Rico Lascano, Jonahmar Salvosa, Phyllis Zaballero, Bukuk Chai, Zhixin Cai, Jie Ding, Ping Hao, and She Liu.

West Gallery exhibitions

THE WEST GALLERY has several exhibitions which are ongoing until Sept. 21. At Gallery 1 is Arturo Sanchez, Jr.’s Monuments and the Desire for Immortality; at Gallery 2 is Riel Jaramillo Hilario’s Phenomenology of Magical Thinking; at Gallery 3 is a group exhibit, Working Condition, featuring works by Pope Bacay, Indy Paredes, and Miguel Puyat; and at Gallery 4 is WIPO: This Way. West Gallery is at 48 West Ave., Quezon City.

Jackstones creates property management firm

JACKSTONES, Inc. (formerly NextStage, Inc.) is forming a property management company.

In a disclosure to the stock exchange Tuesday, the Tanenglian-led firm said its board of directors approved last week the plan to incorporate Jackstones Property and Consultancy Services Corp.

The wholly owned subsidiary, it said, will have an initial capitalization of P10 million.

“[It] would serve as a property management company for Jackstones,” the disclosure said.

Jackstones serves as the holding company for projects, property ventures, businesses and assets primarily based in Southeast Asia. Before it was renamed in 2014 from NextStage, Inc., the company was focused on the technology sector.

Established in 1964 as Pacific Cement Co., Jackstones went from managing a cement-related business to handling electronics to becoming the holding firm that it is today.

Ketton Holdings, Inc. of Chairman Mariano Chua Tanenglian came in as investor in Jackstones in 2014, acquiring 70% of the company’s outstanding shares.

Before that, Jackstones’ corporate assets included shares in technology firms Mondex Philippines, Inc.; Technology Support Services, Inc.; Infinit-E Asia, Inc. and Mondex Protector Philippines, Inc.

In the six months ending June, the listed company posted a net loss of P3.19 million, expanding from P2.56-million loss in the same period last year.

In a regulatory filing, Jackstones said the Philippine Stock Exchange lifted the suspension on the trading of its shares in July after being suspended in June 2013.

Shares in Jackstones added P0.02 apiece or 0.65% to close at P3.09 each on Tuesday. — Denise A. Valdez

How PSEi member stocks performed — August 27, 2019

Here’s a quick glance at how PSEi stocks fared on Tuesday, August 27, 2019.

 

Slow RCEF distribution seen hindering farmers

SENATOR Cynthia A. Villar on Tuesday warned against the slow disbursement of the Rice Competitiveness Enhancement Fund (RCEF), a component of the Rice Tariffication Law that seeks to upgrade farmers’ competitiveness.

“If we do not give RCEF a chance to be fully implemented and deliver on its promise to improve the competitiveness of our agriculture sector, I don’t think we can ever make it,’’ Ms. Villar said in a statement.

“In this age of liberalization, our farmers will continue to fear competition because they were not given the chance to improve their ways.”

The committee on agriculture and food with the committees on finance, trade, commerce and entrepreneurship on Wednesday will continue its inquiry on the implementation of the Rice Tariffication Law, or Republic Act No. 11203.

The law calls for RCEF to receive P10 billion a year for the next six years from tariffs collected on liberalized rice imports. The funds will be used to expand farm mechanization and increase farmers’ access to financing, inputs and technical know-how

Ms. Villar said of the first P5 billion released for RCEF, only P1 billion has been credited to farmers.

“Now that Philippine authorities can no longer limit the entry of imported rice, we impose tariffs and collect the amount to spend for programs that will help improve our farmers’ productivity and profitability under the Rice Competitiveness Enhancement Fund (RCEF),” Ms. Villar said.

Ms. Villar also pointed out the Rice Tariffication Law helps meet the Philippines’ 1995 commitment to the World Trade Organization, to do away with quantitative restrictions on rice imports.

“We were under a QR system for 22 years. To my mind, we were given more than enough time to improve but we did not improve. Our farmers and fisherfolk continue to suffer in poverty while smugglers and cartels continue to enrich themselves,” Ms. Villar said. — Charmaine A. Tadalan

Passive income tax bill hurdles House panel

THE BILL simplifying the tax regime for financial investors made it past committee evaluation at the House of Representatives Tuesday.

The House Ways and Means committee approved House Bill No. 304, or the proposed Passive Income and Financial Intermediary Tax Act, (PIFITA) which makes up the fourth package of the government’s comprehensive tax reform program (CTRP).

The panel invoked Rule 10 Section 48 of House rules that allows priority bills that bagged third- and final-reading approval in the preceding Congress to “be disposed of” without public hearings.

“In the previous congress, we had a very long deliberation on this… and now may we now move for the approval of House Bill 304, which is the same as we approved on third and final reading in the 17th congress, subject to minimal amendments and effectivity clause,” said Nueva Ecija 1st district Rep. Estrellita B. Suansing, who is the committee’s vice-chairperson.

The bill proposes a unified 15% income tax rate on interest, dividend, and capital gains from the current range of zero to 30%.

Package 4 of the CTRP also proposes the reduction of the stock transaction tax from 0.6% to 0.1% and the removal of the initial public offering tax.

The measure also seeks to reduce the 12% value added tax to 2% premium tax on health insurance organizations, pension and pre-need insurance.

Among the key amendments in the bill is the exemption from document stamp tax (DST) of non-monetary documents like diplomas, transcripts of records, and other school certifications.

Also exempted from DST are the Oath of Office for barangays, Good Moral Standing Certificates required from the Professional Regulation Commission, affidavits, proxies, Certificates of No Marriage Record, baptismal certificates, and marriage license certificates.

Recently, two CTRP packages were fast-tracked for plenary discussion.

Package 2+ which increases excise taxes on alcohol products and e-cigarettes made it past third and final reading at the House last week.

Meanwhile, Package 2 or the Corporate Income Tax and Incentives Reform Act is in line for second reading. — Vince Angelo C. Ferreras

House panels approve bill easing restrictions on foreign professionals

THE HOUSE committees on Economic Affairs and Trade and Industry have approved a bill which seeks to remove restrictions on foreigners practicing their professions in the Philippines.

Three bills that propose to amend Republic Act No. 7042, or the Foreign Investments Act (FIA) of 1991, were filed in the 18th Congress. However, the version by Tarlac 2nd district Rep. Victor A. Yap or House Bill 300 will be elevated to the plenary for second reading.

“So the bill in the 17th Congress has only slight differences, but the three bills we have now are all the same, so we are basically approving the same version…there were no amendments in any of the bills,” House Economic Affairs committee chair Rep. Sharon S. Garin said Tuesday.

According to the bill’s explanatory note, the measure seeks to reduce to 15 from the present 50 direct local hires as the minimum employment requirement for small- and medium-sized enterprises.

“While the FIA (Foreign Investments Act) allows foreign investors to establish small and medium-sized enterprises with a minimum paid-in capital of $100,000, a small and medium sized enterprise cannot sustain a labor force of 50 employees,” said Mr. Yap in his bill.

The key provision in the bill is the exclusion of the “practice of professions” from the coverage of FIA.

“By allowing foreign professionals to practice in the Philippines, they would be able to bring in technology and know-how from abroad, and help create jobs for locals by attracting businesses that require highly skilled professionals in the country,” according to the bill.

A statement by the Joint Foreign Chambers of the Philippines dated Aug. 22 declared support for the removal of restrictions on foreign professionals.

“Having more foreign professionals practicing in the Philippines can bring new skills, ideas, connections, and integration into global networks of service providers, and support sunrise sectors including creative industries, R&D, medical travel, and retirement,” according to the statement.

However, the Professional Regulation Commission (PRC) said it supports the continued exercise of “national control” over the professions.

“While we understand the intent of the proposed amendment, the PRC is of the view that the practice of professions is still a partially nationalized activity… To remove it absolutely from the Negative List may not be be transparent on the limitation to professional practice by foreigners, and may engender the impression that there exists no restriction at all to their practice,” PRC said in its position paper. — Vince Angelo C. Ferreras

ERC, DoE seeking to harmonize competitive selection rules

THE Energy Regulatory Commission (ERC) has asked the Department of Energy (DoE) for its comment on the draft guidelines for the competitive selection process (CSP) and whether its proposed rules do not contravene the circular earlier issued by the policy-maker.

In a chance interview on Tuesday, ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said the draft guidelines will have stricter provisions, including the blacklisting of power generating companies that failed to deliver on their contractual obligations.

She said she had sat down with Energy Secretary Alfonso G. Cusi asking for his formal letter stating that the draft guidelines do not go against the DoE circular. She said his clearance had been given verbally during their meeting.

The DoE circular is DC 2018-02-0003, which adopted and prescribed the policy for the CSP process in the procurement by the distribution utilities of power supply agreements for their captive market. It was issued in February 2018.

The ERC guidelines have gone through several public consultations but before the issuance, the Supreme Court in May this year ruled that all PSAs forged after June 30, 2015 should undergo a CSP to arrive at the least-cost power for consumers.

The ERC then asked the court to reconsider its decision, but the move was later denied.

Ms. Devanadera said the ERC would also “seriously” look into the composition of the third-party bids and awards committee of the CSP process, which one legislator said might end up coming from the recommended experts of distribution utilities, thus defeating the purpose of having an independent entity during the bidding.

“Ang ginawa namin, hindi na namin siyempre dinagdagan kung ano man ang nasa DoE (What we did is, we did not of course added to what was already in the DoE circular),” she said, adding that the ERC guidelines are more “detailed.”

She also said that the blacklisting of generating companies that failed to deliver supply because of power outages is within the power of the ERC for violators of its rules.

She said she had talked with DoE officials on Tuesday when the House of Representatives heard the budget of the two agencies for 2020.

ERC Commissioner Catherine P. Maceda described the proposed guidelines as “very rigorous.”

“Wala namang conflict [with the DoE circular]. It’s just that, it’s more rigorous,” she said. “It offers very detailed CSP framework.”

Mr. Maceda said the ERC would issue the guidelines as soon as the DoE says that there is no conflict with its circular. — Victor V. Saulon

PCA looking for suitable public land to expand coconut planting

THE Philippine Coconut Authority said it is seeking suitable public land for the expanded planting of coconut trees.

“What we want (is) an inventory of public land where we can plant coconut… (and set up) a registry of coconut trees,” Gonzalo T. Duque, PCA administrator, told reporters.

Data from the Philippine Statistics Authority (PSA) noted that coconut production in the first quarter of the year was slightly up 0.2% to 3.31 million metric tons (MT), year-on-year.

The top coconut producer was Davao Region, which contributed 14.4% to total production. It is followed by Zamboanga Peninsula (13.6%), and Northern Mindanao (12.9%).

“We need virgin coconut plants. We have been looking at the Visayas and Mindanao, and forgetting about Luzon… In three or six years, there will be enough trees,” he said.

Expanded coconut production, he said, might allow the country to take advantage of a European Union ban on palm oil use in biofuels, citing the deforestation caused by palm oil plantations.

The Philippines currently has an oversupply of palm oil from Malaysia and Indonesia, which has adversely affected the coconut industry.

The Department of Agriculture estimates that exports of palm oil to the Philippines by Indonesia and Malaysia have increased by 100% over the last three years.

Mr. Duque said the PCA will push for intercropping coffee and cacao in coconut farms, as well as raising livestock to raise farmer incomes.

“I think many farmers will convert to planting coconut trees given the right incentives. While waiting for their coconuts to bear fruits, they can have some other plants… so that they may earn every season,” he said.

Agriculture Secretary William D. Dar and Senator Cynthia A. Villar have backed intercropping.

Ms. Villar said coffee and cacao have the potential for raising farmers’ incomes by about $200 per month.

Mr. Dar said that he hopes to involve the private sector more with farmers, so both could work together in growing the coconut industry. — Vincent Mariel P. Galang

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