How PSEi member stocks performed — October 3, 2019
Here’s a quick glance at how PSEi stocks fared on Thursday, October 3, 2019.
US worries over mineral access seen opening up investment
A US State Department program to ensure sustainable access to strategic minerals could open up opportunities for investment and new markets for the Philippines, a mining regulator said.
The Energy Resource Governance Initiative (ERGI), run by the State Department’s Bureau of Energy Resources, seeks to ensure sustainable access to 17 rare earth elements and 14 other minerals like copper, lithium, uranium and manganese.
ERGI could “open up other markets for the Philippines and baka may mga (there could be) US companies (who could invest in the Philippines) to explore for and possibly process rare earth minerals, Mines and Geosciences Bureau (MGB) Director Wilfredo G. Moncano told BusinessWorld via phone.
China currently controls the supply of rare earths, which are considered strategic because of their use in advanced battery technologies, which are expected to drive the electric-car industry. They are also widely used in the telecommunications and defense industries.
Chinese control of a key resource has heightened fears in Washington that Beijing might someday retaliate in the current trade war by withholding rare earths, for which it is a major supplier as well as the lowest-cost producer.
Announced in June, ERGI, according to the State Department fact sheet, assumes a possible 1,000% increase in demand for “critical energy minerals” by 2050 and hopes to direct private investment in well-run, sustainable mining industries worldwide with the potential to safeguard US access to strategic materials.
Mr. Moncano estimated that rare earths are 95% controlled by China.
China’s willingness to use rare earths as leverage in the trade war was signalled by President Xi Jinping’s visit to a rare earths plant in May.
Reuters reported on Sept. 27 that nine countries, including the Philippines, are being considered as ERGI partners.
Secretary of State Mike Pompeo met the foreign ministers of the nine countries on Sept. 26 on the sidelines of the United Nations General Assembly in New York.
Asked to comment, Foreign Affairs Assistant Secretary Emmanuel R. Fernandez said that the Philippines has not yet committed to ERGI.
“There was no signing and the Philippines did not commit to anything. The Philippines only attended the briefing,” he said in a text message.
Chamber of Mines of the Philippines Executive Director Ronald S. Recidoro said ERGI is a positive development because the Philippines has untapped mineral reserves.
“The country has significant potential for copper, nickel, and other strategic minerals, which is still largely untapped,” he said in text message.
“Our participation in the initiative could lead to technology transfer and increased interest from major mining investors, which will help grow the mining industry from an economic and technical perspective,” he added.
In September, Analiza R. Teh, undersecretary for climate change and mining concerns of the Department of Environment and Natural Resources (DENR), estimated that the Philippines is mining less than 2% of its potential mineral-bearing land.
“We have 30 million hectares of mining area, [that is only] 2%,” she told reporters on the sidelines of the Mining Conference 2019.
Mr. Moncano said the US is likely to invest in the best-run mining industries with coherent policy in place.
“Ang nakaka-discourage lang talaga sa (The thing that discourages) investors is (the) policy environment,” he said.
Former Environment Secretary Regina Paz L. Lopez banned open-pit mining in April 2017 and was supported by President Rodrigo R. Duterte, thereby denying mining companies a method which they consider the most efficient for extracting minerals.
Mr. Duterte rejected a proposal by the Mining Industry Coordinating Council (MICC) to lift the ban in November 2017.
The MGB has called the possible lifting of the ban a “political decision” and will also largely depend on the recommendation of Environment Secretary Roy A. Cimatu.
The industry is also in the middle of an overhaul of the way it is taxed. Bills increasing the share of the government in mining revenue have been filed in the 18th Congress.
One of the versions proposes a reduction of royalties on large-scale mining within mineral reserves to 3% of gross output from the current 5%, and the introduction of a 1-5% margin-based royalty on those outside mineral reserves.
Senate President Vicente C. Sotto III and Majority Leader Juan Miguel F. Zubiri each filed bills which would increase the government’s share, while Representative Jose Ma. Clemente S. Salceda, chair of the House Ways and Means committee from Albay’s second district, said he will push for the use of 70% by the national and local governments, and 30% for a sovereign wealth fund.
He also proposed to implement an auction system for mining tenements instead of the current “first-come, first-served” basis. — Vincent Mariel P. Galang
Russia interested in exploring for energy, ambassador says
PHILIPPINE Ambassador to Moscow Carlos D. Sorreta said Russia has shown interest in exploring for energy resources in the West Philippine Sea, amid Philippine efforts to attract Russian investment in the energy sector.
Mr. Sorreta said Wednesday, according to a transcript provided by Malacañang, that the Russian authorities brought up the possibility of exploring the area for natural gas. “We’re looking beyond and we’re looking at Russia investing in our energy sector, setting up plants for natural gas,” he added.
He said, “(T)hey’re not a claimant (to the territory). If they come in, it’s really in full recognition of our sovereign rights and our right to explore or not to explore, to exploit, to not to exploit.”
“Russia is a exploration powerhouse… They’re in Africa, they’re in South America. They’re in Southeast Asia. They have the ability to drill under the most difficult conditions,” he said.
Other energy-related issues being considered with Russia include its possible participation the Philippines’ nuclear energy initiatives. Mr. Sorreta said preliminary talks are currently underway.
Mr. Sorreta said that the Philippines still needs to develop a policy that will govern the use of nuclear power. He added, “I hope there’s some move towards (developing) the policy and legal framework. Then… if we’re going to nuclear energy for power generation, we need to fix our research reactor.”
In the 17th Congress, the House of Representatives passed House Bill 8733, the proposed Comprehensive Nuclear Regulation Act, which will create a Philippine Nuclear Regulatory Commission (PNRC) and implement a national policy on the use of nuclear energy. This was passed on third and final reading. The Senate version of the bill was only passed at committee level.
The Philippines is also looking to attract Russian investment in other sectors such as agriculture sector and heavy industry.
“We’re trying to entice them to look at our available land to partner to produce agricultural products… the other thing is industry. They can help — they’re already exporting trucks, the two top brands from Russia are in the Philippines and we hope they will see… our capability to either build components or to assemble,” he said. — Gillian M. Cortez
House resolution seeks to tap CCT funds to procure palay
REPRESENTATIVE Luis Raymund F. Villafuerte, Jr., the Deputy Speaker from Camarines Sur’s 2nd district, filed a resolution to tap P29 billion worth of rice subsidy funds to procure palay, or unmilled rice, and make the social welfare department distribute rice directly instead of cash.
Mr. Villafuerte’s House Joint Resolution No. 16 asked Congress to authorize the use of the rice subsidy meant for beneficiaries of the conditional cash transfer (CCT) program to procure palay, or unmilled rice.
“In order to help local farmers, the DSWD (Department of Social Welfare and Development) is in a position to distribute the rice subsidy under the 4Ps (Pantawid Pamilyang Pilipino Program) in the form of actual kilos of rice, instead of a cash grant. The DSWD is also in a position to help in the buying of palay from farmers, which it can coordinate with the Department of Agriculture (DA). It shall then proceed to distribute rice to the 4Ps beneficiaries who shall receive their rice subsidy from DSWD-designated outlets,” Mr. Villafuerte said.
The price of palay, the form in which farmers sell their harvest, has been declining sharply because rice traders now prefer to acquire their stock from imports, which are cheaper. The government has since been organizing various direct-purchasing initiatives for palay to prop up the price and to ensure farmers get a “fair” return for their harvest.
Currently, on top of the CCT grant of P300 per month, 4Ps beneficiaries who are among the Philippines’ poorest also get P600 a month in cash to buy 20 kilos of rice.
The NFA reported that it has over 200,000 metric tons (MT) of imported rice in its warehouses as of Aug. 22, 2019, and was able to procure 360,657 bags of palay at 50 kilos per bag or equivalent to 209,525 MT.
“The problem of oversupply is expected to exacerbate during the period from September to October which is the peak palay harvest season,” Mr. Villafuerte said. — Vince Angelo C. Ferreras
Palay farmgate price falls 0.6% in mid-Sept.
THE average farmgate price of palay, or unmilled rice, fell 0.6% week-on-week in the second week of September to P16.18 per kilogram (kg), the Philippine Statistics Authority (PSA) said.
In its weekly price update, the PSA said the average wholesale price of well-milled rice fell 0.4% to P38.43 per kg. At retail, it rose 0.02% to P42.27.
The price of palay — the form in which domestic farmers sell their harvest — has been declining for months due to the presence of large volumes of imported grain in the market. Traders have been offering to buy at well below the government support price of P19 per kilo due to the soft market for palay. This has prompted the government to intervene by organizing direct purchasing by local governments, hoping to use public funds to establish a “fair” price for palay. — Vincent Mariel P. Galang
Manila worst-ranked regional city in ‘smart’ list
METRO Manila ranked 94th out of 102 in a “smart city” survey seeking to gauge the use of technology in improving the lives of residents conducted by Swiss business school IMD’s World Competitiveness Center and the Singapore University of Technology and Design.
The study sought to identify how “citizens perceive the scope and impact of efforts to make their cities ‘smart,’ balancing ‘economic and technological aspects’ with ‘humane dimensions.’”
The global index took in the views of 120 residents in each city and solicited their views on their city’s health and safety, mobility, activities, opportunities, and governance.
Metro Manila had an overall rating of C, with AAA the highest and D the lowest.
The study found that the top five concerns of Metro Manila respondents were access to basic amenities, corruption, road congestion, air pollution, and security.
Metro Manila was the worst-ranked Southeast Asian city, with Singapore the top-rated city globally, followed by Zurich, Oslo, Geneva, Copenhagen, Auckland, Taipei, Helsinki, Bilbao, and Dusseldorf.
Of the region’s other cities, Ho Chi Minh City was 65th, Hanoi 66th, Kuala Lumpur 70th, Bangkok 75th, Makassar in Indonesia 80th, and Jakarta 81st.
“Smart cities are growing and blossoming in all parts of the world. Economic realities cannot be ignored: cities in poorer countries face disadvantages, which will require specific actions to correct along the path towards smartness,” said Professor Arturo Bris, Director of the IMD World Competitiveness Center. — Vince Angelo C. Ferreras
Davao amends incentive code to encourage projects outside city center
By Carmelito Q. Francisco
Correspondent
DAVAO CITY — The city government has amended its Investment Incentive Code by adding new perks including tax breaks for projects in “preferred areas” outside the city center and for hiring indigenous peoples (IPs) and persons with disabilities (PWDs).
Approved last week, the new ordinance, according to Councilor Nilo G. Abellera, its author, “aims to provide a favorable and stable business climate consistent with the development needs of the city and will encourage new investments and will provide employment opportunities.”
The amendments are necessary to “make (the Code) more responsive and dynamic, and to harmonize it with the National Government’s initiatives, laws, and regulations on investment-related activities,” added Mr. Abellera in his explanatory note.
Aside from the changes in the composition of the Davao City Investment Incentive Board which expands its membership, among the key changes in the Code include three-year permit fee exemptions and tax deductions for certain costs, including locally-procured materials, as well as preferential treatment for industries listed as priority investment areas.
Projects set up in so-called preferred districts, or areas outside the commercial center of Davao City, will also be granted perks, as will the hiring of IPs and PWDs.
The specific mechanism for the IP and PWD hiring incentive is a deduction from gross income of the wages paid to such employees.
On the other hand, micro, small and medium enterprises currently doing business in industries classified as priority investment areas will be eligible to avail of all incentives granted to both new and expanded businesses.
Qualified social enterprises, which the board will define in the implementing rules and regulations, will be granted a 60% discount on business tax.
The new ordinance also encourages land owners to seek partners or sell their property for conversion into economic zones.
These property owners will be exempt from paying local transfer taxes, among others, while the business registered to run the economic zone will be exempt for two years from real property taxes, excluding the barangay’s share, and will receive help from the city in clearing the property of informal settlers.
Volume of undocumented workers complicating labor deal with Russia
THE continuing illegal recruitment of Filipino to Russia could complicate efforts to secure a Russian amnesty for undocumented workers, the ambassador to Moscow said.
According to a Malacañang statement, Ambassador Carlos D. Sorreta said there were ongoing talks to fast-track a government-to-government labor agreement, which could be endangered by the Philippines’ undocumented-worker problem in Russia.
“Kapag lumalaki lalo ‘yung illegally recruited, ang chances na magkaroon ng amnesty, lumiliit kasi naging masyadong marami ‘yung base na kailangan nilang bigyan ng amnesty (If the numbers of the illegally recruited rise, the chances for an amnesty diminish because they will have to amnesty more people),” he said.
“Kung gusto na natin ng labor agreement, kailangan itigil ‘yung illegal… Kailangan pakita natin sa Russian government na marunong tayo sumunod sa batas. Respetuhin natin ang mga proseso dahil habang wala — habang hindi nangyayari ‘yan, ang hirap po mag-negotiate ng agreement (If we want a labor agreement, we need to stop the flow of illegals. We need to demonstrate to the Russian government that we know how to follow the law. We should respect the process because until that happens, it will be hard to negotiate an agreement),” he added.
President Rodrigo R. Duterte has been seeking a bilateral agreement with the Russian Federation. Most Filipinos in Russia are household service workers, with the market having no legal framework to govern it, though demand is high.
“Filipinos here in Russia are largely in the household sector. Mostly childcare and household service and in terms of number we have about 10,000. And most of them are not properly documented yet. So we’re working to get there,” he said. — Gillian M. Cortez
Tax agency sues 17 companies for failing to pay P700 million in taxes
THE Bureau of Internal Revenue (BIR) yesterday filed criminal complaints before the Department of Justice against several companies for failing to pay a total of P700 million in taxes.
In a statement, the agency said it had issued notices and demands to 17 companies but they refused to pay.
Sued were Ski Construction Group, Inc., which had the biggest unpaid tax of P467.2 million for 2007, and businessmen Felipe L. Gozon and Paolo R. Prieto of INQ7 Interactive Inc., with a total tax liability of P23.48 million in 2006.
Local BMW dealer Prestige Cars, Inc. was also sued for failing to pay P68.4 million of its tax liability for 2007.
Also sued were Cliref Enterprises, for failing to pay P41.664 million and Meteor Shower Trading Co. for its tax liability worth P37.5 million.
“The respondents’ failure and continued refusal to file or pay their long overdue deficiency taxes, despite repeated demands, constitute willful failure to file or pay the taxes due to the government,” the bureau said.
The other companies that were sued were A-Frances Healthy Pharma Marketing Inc. (P21.1 million), Iventures, Inc. (P18,9 million), Lucky Charm Pub & Restaurant Corp. (P11.8 million), Information Products Corp., (P9.6 million), Calcarries International Inc. (P9.1 million) and Ulunday Construction and Development Corp. (P6.9 million).
Also joining the list were JP Med Asian Pacific Inc., (P4.7 million), Underground Logic Inc., (P4.1 million), Tridem Asia Publishing, Inc. (P3.8 million), Eurobrokers International Inc., (P3.1 million), Hernando Auson as sole proprietor of Supreme Lumber and Hardware, (P3.1 million) and Integrated Dynamic Service Inc. (P2.3 million), the bureau said.
Mr. Gozon, former chairman of INQ7, “has yet to receive a copy of the complaint,” GMA Network, Inc. spokesperson Angela Javier Cruz said in a statement. “He is ready to answer whatever charges as soon as he receives it.”
She added that as ex-INQ7 chairman, “he only presided over the meetings of the board and had no involvement or participation in the operations of the company.”
Mr. Gozon resigned from INQ7 in 2017, she said. — BML
Bill to limit holidays for productivity
By Vince Angelo C. Ferreras
Reporter
ALBAY Rep. Jose Ma. S. Salceda has filed a bill that seeks to limit the number of holidays to increase company productivity.
The lawmaker said the country has 21 to 25 public holidays yearly.
House Bill 5032 “proposes to rationalize holidays by limiting regular holidays which are non-working days to seven,” according to the measure’s explanatory note.
“All other holidays shall be made special days, which are working days, but giving the employees an allowance of seven non-working days to commemorate their chosen special days based on their cultural, religious and personal preference,” it said.
There are 10 regular holidays under the law.
Under the bill, special days will be expanded to the Chinese New Year, EDSA Revolution anniversary, lglesia ni Kristo founding anniversary, and the Nativity of the Blessed virgin Mary.
Currently, special days are limited to All Saints’ Day and New Year’s Eve.
The bill requires local government units to only have one local holiday to commemorate its founding, heroes, or patron saint. This means there will only be two local holidays — one for the province and one for the town or city.
American Chamber of Commerce of the Philippines, Inc. Senior Adviser John D. Forbes said he supports the bill. “We commend the initiative of Congressman Salceda in proposing a bold reform,” he said in a mobile-phone message.
“Employers for years have said the country has too many non-working holidays. The proposal will seek to have the Association of Southeast Asian Nations average of 15 holidays. This will improve competitiveness,” he added.
Philippine Chamber of Commerce, Inc. President Alegria Sibal-Limjoco said the bill would be costly for companies.
“Imagine the added cost if I’m in IT-BPO and my clients observe different holidays so I must maintain my operations even on holidays,” he said.
The impact of more holidays for small and medium enterprises is on how to ensure sufficient staff cover, he said.
“They will have less capability to bear additional costs of they need to operate on holidays,” Ms. Limjoco said in a mobile-phone message.
High court says no decision yet on Marcos election suit
THE SUPREME Court yesterday belied a newspaper column that said it had favored the son of the late dictator Ferdinand E. Marcos in his vice presidential election protest.
“There is no definite voting yet or anything that happened in that particular case,” Chief Justice Lucas P. Bersamin told reporters on the sidelines of a summit on the Dangerous Drugs Law.
A column by Federico D. Pascual, Jr. published in The Philippine Star said the high court, acting as the Presidential Electoral Tribunal, had voted 8-6 in favor of Mr. Marcos.
Mr. Marcos lost the vice presidential race by a hair to Ms. Robredo, who is now halfway through her term.
“I cannot confirm or deny that because he must know more than I do. That’s the bad part about it,” Mr. Bersamin said.
The tribunal has deferred acting on the results of a ballot recount in connection with Mr. Marcos’s 2016 electoral protest court spokesman Brain Keith F. Hosaka said this week, without giving a reason.
The Constitution mandates the high court, sitting as an electoral tribunal, to resolve disputes involving the presidential and vice presidential races.
Justice Alfredo Benjamin S. Caguioa earlier submitted a report on the ballot recount in three pilot provinces where massive cheating allegedly occurred.
Mr. Marcos identified the provinces as Iloilo, Negros Oriental and Camarines Sur, which had a total of 5,415 voting precincts in the May 2016 elections.
Mr. Bersamin said last month they were treading carefully in the electoral protest because it was “a matter of public interest.”
In August, Mr. Marcos asked the tribunal to hasten his electoral protest by directing hearing commissioners to set a preliminary conference because the revisions in the pilot provinces had been finished as early as February.
The tribunal in July deferred action on his motion to probe alleged vote-rigging in three more provinces in Mindanao.
It also denied for being filed prematurely the motion of Ms. Robredo to resolve all pending incidents after the revision of ballots.
Mr. Marcos narrowly lost the vice presidential race to Ms. Robredo, who is now halfway through her term.
Ms. Robredo early this week said the high tribunal’s decision on the case will be a test of the country’s electoral process and justice system.
She cited the need to trust the system because this was the electoral process that had given her and other officials of the country the victory in the May 2016 elections.
In the Philippines, the president and vice president are elected separately and may come from different parties. — Vann Marlo M. Villegas
BIR shutters warehouses with hoarded rice
THE Bureau of Internal Revenue has shut down five warehouses in Guiguinto, Bulacan containing more than 400,000 50-kilogram sacks of hoarded rice.
The unregistered storage facilities were leased to different companies but were not registered and had to be shuttered, Internal Revenue Deputy Commissioner Arnel SD. Guballa told reporters yesterday.
The sacks of rice were estimated at “hundreds of millions of pesos” worth per warehouse, he said, adding that the prices of commercial rice will be affected due to oversupply if these were released to the market.
These will be considered smuggled if no import documents are produced, he said.
The sacks of rice were labeled as products imported from Vietnam and Myanmar, according to Finance Assistant Secretary Antonio Joselito G . Lambino II.
Internal Revenue agents also found soya milk products from China.
The five warehouses were owned by Cagayan Corn Products Corp., Pacific Rim Transport and Logistics Inc., UPFC Logistics Corp., AAI Logistics Cargo Express, Inc. and Jcomp Trading and Distribution, the agency said in a statement.
Meanwhile, Mr. Guballa said the bureau was still studying how to tax the e-commerce industry as requested by the Finance department. — Beatrice M. Laforga