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Mayor calls for ‘no backpack’ policy in Davao City’s places of worship

A “NO backpack” policy in all places of worship has been ordered in Davao City to help security forces monitor more easily potential terror threats following Sunday’s bombing of a Catholic church in Jolo, Sulu. “The city mayor has instructed us that churchgoers should no longer bring backpacks in going inside their places of worship for security reasons,” Ret. Gen. Benito T. de Leon, head of the Public Safety and Security Command Center (PSSCC) head said in a statement. In cases where backpacks or big bags need to be brought by churchgoers, the PSSCC asked for the public’s cooperation to submit themselves to inspection. Mr. De Leon also said that they have coordinated with church leaders in Davao to include this call in their announcements. Joint forces of the Davao City Police Office, Task Force Davao, and the Davao police auxiliaries will be deployed to churches.

Classes resume in Tagum City, except in 9 barangays still affected by flooding

CLASSES FOR all levels, both public and private schools, in nine villages in Tagum City remained suspended as of Wednesday due to floods following rains over the weekend. Earlier this week, classes were suspended in the entire city after 15 out of 23 barangays were swamped. The nine most affected barangays are: Bingcungan, Busaon, Canocotan, Cuambogan, Liboganon, Madaum, Mankilam, Pagsabangan, and San Miguel. Other parts of Davao del Norte province and the neighboring Compostela Valley province and Davao City also experienced flooding earlier this week as the tail end of a cold front brought continuous rains in the Davao region. On Wednesday the trough of a low pressure area was affecting the southern section of Mindanao, including Davao Occidental, according to weather bureau PAGASA.

More than 40 NPA members surrender in Jan. — EastMinCom

ARMED MEMBERS of the communist movement, including 29 from the New People’s Army (NPA) and 14 from its allied Militia ng Bayan, surrendered this month, according to the military’s Eastern Mindanao Command (EastMinCom). As of Jan. 27, among those who turned themselves in to military units or local government offices and laid down their arms were mostly from the provinces of Compostela Valley, Davao Oriental, and Bukidnon. Some of those who surrendered were as young as 16 years old. Maj. Gen. Filemon T. Santos, Jr., EastMinCom commander, said they are optimistic that more will follow suit in the coming days. “The surrender of our brothers will surely create an impact on the peace and security situation in the region as it will contribute to the collapse of the (communist) organization,” he said in a statement. “Our effort together with other agencies of government, the different local government units of addressing the root cause of insurgency will continue and expand, more so with the institutionalization of ‘Whole of Nation Approach’ through EO (Executive Order) 70 and Expanded Comprehensive Local Integration Program,” Mr. Santos said.

Nation at a Glance — (01/31/19)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
Nation at a Glance — (01/31/19)

The rewards of sustainability and energy efficiency

The United Nations Development Program (UNDP) contends that unsustainable patterns of energy production and consumption pose a threat to human health and quality of life. They also adversely affect ecosystems and contribute to climate change. Climate change has devastating consequences, such as rising sea levels that threaten to displace millions of people, and weather events becoming more severe and frequent.

“Sustainable energy, however, not only tackles these challenges head on, but is also an engine for poverty reduction, social progress, equity, enhanced resilience, economic growth, and environmental sustainability,” UNDP says on its web site.

The agency is working to increase the global share of renewable energy use, saying that heavy reliance on fossil fuels, as well on coal-fired power plants that are inefficient and outdated, is one of the reasons explaining the energy sector’s high contribution to global greenhouse emissions. There is a lot to gain from making more use of renewables — and less of fossil fuels.

According to a 2016 report by the International Renewable Energy Agency (IRENA), an intergovernmental organization advocating the adoption of renewable energy sources, accelerating the deployment of those sources will do the following things: fuel economic growth, create new employment opportunities, enhance human welfare, and contribute to a climate-safe future.

“Doubling the share of renewables in the global energy mix by 2030 would increase global GDP by up to 1.1% or $1.3 trillion,” the report said, adding that increased investment in renewable energy development is what driving most of the positive impacts on GDP.

The report also estimated that up to 24.4 million direct and indirect jobs will be generated by 2030. “Renewable energy jobs will grow across all technologies, with a high concentration in the same technologies that account for a majority of the employment today, namely bioenergy, hydropower and solar,” it said. Most of these jobs will come from fuel supply, installations  and equipment manufacturing.

Renewables will also benefit human well-being, with the IRENA report saying that doubling their share in by 2030 will help increase global welfare by 2.7%. “If achieved through higher electrification of heat and transport, global welfare would further rise by 3.7%,” the report added.

These benefits, however, are dependent on a number of enabling factors. Among the factors that the IRENA report mentioned are a diversified economy and a sufficient market capacity to absorb the opportunities for job creation, including the training and education needed to foster a skilled and versatile work force. “Economic growth also depends critically on an increase in investments in renewable energy deployment without reducing investment in other economic sectors,” the report said.

UNDP believes that energy efficiency is a key to the transformation of energy systems. It cited the World Energy Outlook 2015, which described energy efficiency as playing a critical role in limiting world energy demand growth to one-third by 2040, while the global economy grows by 150%.

“Energy efficiency can, for example, help to reduce energy expenditure and bring down the per-unit cost of lighting, heating, refrigeration and other services. It can also help reduce pollution and greenhouse gas emissions,” UNDP says.

It further says that energy efficiency offers a unique opportunity to reconcile economic competitiveness with sustainable development, and at the same time, reduces the cost of energy and increases productivity. “Improvements in residential and public sectors, for example, have delivered a wide range of social, environmental and economic benefits, including energy security, job creation, poverty alleviation, improved health, and reduced greenhouse gas emission,” UNDP says.

The International Finance Corp. (IFC), a member of the World Bank Group, noted in a 2012 publication that investment in resource efficiency is important for small and large companies alike. “It helps them strengthen their competitive advantage. Studies have shown that improvements in resource efficiency in energy and water have led to significant cost savings and lower environmental impact,” IFC said.

One example it cited is DuPont, a large American chemical company. The company managed to cut costs by $2 billion in a span of a decade by investing in energy efficient equipment, while reducing its greenhouse gas emissions by 75%.

IFC also said that in that publication that sustainability has become an important factor in business strategies, with both large and mid-sized corporate entities taking a long-term view toward managing environmental and social risks. “Many companies recognize that by addressing environmental and social issues, they can achieve better growth and cost savings, improve their brand and reputation, strengthen stakeholder relations, and boost their bottom line,” IFC said.

It continued: “Strategic integration of sustainability prepares companies to better anticipate and understand long-term trends and the effect of resource use, and to address stakeholder expectations.”

In order to accommodate constraints on natural resources in a way that allows them to make products, services and business models that are innovative, IFC said companies are shaping their business strategies and are  capitalizing on local conditions. “This also provides opportunities to bolster their growth, profitability, and add societal value,” the institution said.

A blueprint for a powered future

The Department of Energy (DoE) has set a grand plan back in 2017, named the Philippine Energy Plan 2017-2040 (PEP), aimed towards preparing the country in the future to generate and secure more energy and address a foreseen growing demand.

According to the DoE’s 2017 annual report published on its Web site, PEP is “DoE’s blueprint to secure the country’s energy future. It was created after a thorough review of the current energy agenda and the inclusion of inputs from regional consultations and [information, education and communication campaigns] conducted by the Department.”

The DoE set a nine-point Energy Agenda to adhere to for the first six years of PEP. According to the second volume of the Philippine Energy Plan that tackles sectoral plans and readings, the Energy Agenda “focuses on securing the country’s reliable supply of energy, as well as ensuring high level of satisfaction among energy consumers and stakeholders”.

The nine-point Energy Agenda are as follows: (1) basic electricity access for all Filipinos by 2022; (2) adoption of a technology-neutral approach to achieve an optimal energy mix; (3) improvement of power supply reliability to meet demand needs by 2040; (4) development of liquefied natural gas in anticipation of the forthcoming depletion of Malampaya Gas; (5) facilitate the completion of transmission projects by 2020; (6) a pro-consumer distribution framework for affordability, choice and transparency; (7) streamlining of domestic policy to cut red tape; (8) privatization of the Power Sector Assets and Liabilities Management Corporation; and (9) promotion of efficient energy use among consumers through Information, Education and Communication campaigns.

In order to guide the department in meeting “indicative targets that have been set forth in its nine-point energy agenda,” the DoE laid down long-term Energy Sector Strategic Directions (ESSDs), which serve “to set the tone of the Department’s policy track for the next 22 years.”

Here are the following ESSDs: ensure energy security; expand energy access; promote a low carbon future; strengthen collaboration among all government agencies involved in energy; implement, monitor, and integrate sectoral and technological road maps and action plans; advocate the passage of the Department’s legislative agenda; strengthen consumer welfare and protection; and foster stronger international relations and partnerships.

Alongside these measures, new policies were initiated. Executive Order No. 30 was signed in 2017, creating the Energy Investment Coordinating Council (EICC), which is tasked to “[establish] a simplified approval process, and [harmonize] relevant rules and regulations of all government agencies involved in obtaining permits and regulatory approvals for the timely and expeditious implementation of big-ticket energy projects”. Those projects will be tagged as “Energy Projects of National Significance”, spanning “from energy resource development, power generation, transmission and distribution network, and other related services.”

The DoE also inked another policy on the “Adoption of Resiliency Planning and Program in the Energy Industry to Mitigate Adverse Effects Brought About by Disasters”. This policy “promotes the mainstreaming of disaster risk reduction programs into energy project planning and investments, and strengthening of existing energy infrastructure.” — Adrian Paul B. Conoza

A robust local office market

Despite slower economic expansion in 2018, the Philippine real estate industry remained resilient as a result of strong demand in its major segments, especially from the office space market that posted the highest recorded take-up in history last year. The upward trend in the office segment is expected to continue this 2019, bringing more confidence for the industry to sustain its growth and achieve another robust year. 

With favorable demographics and the expanding middle-class population, Metro Manila has seen the biggest interest for setting up offices. According to real estate consulting firm Pronove Tai International Property Consultants, 32 new buildings or 845,000 square meters (sq.m.) supply were completed in Metro Manila last year, growing the region’s stock or total existing space by 9% year on year (YoY).

As of Dec. 31, 2018, the Metro Manila office market has a total stock of 10.6 million sq.m. Makati City remained the largest office district with 3.4 million sq.m. share or 32% of the region’s total office stock, followed by Taguig City at 21% and Ortigas Center at 16%.

Among these largest office districts, Taguig City delivered the highest supply in the last four years at an annual average of 280,000 sq.m. Pronove Tai Chief Executive Officer Monique Cornelio-Pronove said that it is inching its way closer to Makati City as it continues to build more.

In terms of demand, Pronove Tai reported that the actual take-up of office spaces in 2018 grew by 22% to 1.1 million sq.m. from 875,000 sq.m. in the previous year.

Information-technology and business-process management (IT-BPM) remains a top demand driver, accounting for 490,000 sq.m. or 46% share of the total leasing transaction. Traditional offices had a second strong showing at 312,000 sq.m., a 67% jump from 2017 transactions.

Despite recording a slight decline from last year due to lack of space in their preferred locations, the Philippine Offshore Gaming Operators (POGO) came as third demand driver at 229,000 sq.m. It is followed by flexible workspaces that posted a significant growth of 258% YoY from 10,000 sq.m. in 2017 to 37,000 sq.m. in 2018.

Due to the strong office space demand, an overall unhealthy vacancy level of 4% in Metro Manila was observed.

Of the seven office districts, only Taguig City had a considerably healthy vacancy level at 7%, according to Pronove Tai. Muntinlupa City logged 3% vacancy, while Makati City and Ortigas City both recorded 1%.

The Bay Area booked the tightest vacancy at 0.4% on the back of strong POGO take-up. In 2018, this office district straddling Pasay City and Parañaque City recorded the best-performing rental growth at 19% YoY.

Quezon City and Mandaluyong City, on the other hand, continued to register high vacancy at 13% and 10%, respectively. The considerable healthy vacancy level is 5%-7%.

“We would like to draw attention to Quezon City which ended 2018 with the highest vacancy,” Ms. Cornelio-Pronove said, noting that the city is slated to deliver the highest supply of 343,000 sq.m. of new office buildings developed largely by SM, Ayala, Eton, and Araneta Group in 2019.

“As such, we see rents and capital values in the district to be pressured,” she said.

Meanwhile, the booming office space market also goes beyond the walls of Metro Manila. Leechiu Property Consultants (LPC), a professional real estate brokerage services company in the Philippines, said that the ever-growing IT-BPM industry impacts acceleration of developments not only in metro, but all over the country.

The firm said that the efforts of the national government to fund infrastructure projects positively impact nearby cities in Metro Manila such as Cavite, Laguna, and Pampanga as these cities become more accessible.

Clark, for instance, recorded the largest office demand outside Metro Manila with 156,000 sq.m., the majority of this demand was in Udenna’s famed Clark Global City.

The firm also noted that Cebu continues to be one of the options of IT-BPM companies expanding outside Metro Manila in which office supply is expected to increase by 45% within the next six years.

Moreover, despite Martial Law status, Davao regained traction in the fourth quarter of 2018, generating 28,000 sq.m. to the office demand.

By and large, data from LPC showed that the office demand in the country for 2018 reached a record-high of 1.5 million sq.m., with Metro Manila accounting for 73% or 1.16 million sq.m. (inclusive of pre-commitment transactions done by tenants for future supply).

Heading into 2019, real estate consulting services firm Colliers International Philippines is expecting the delivery of nearly one million sq.m. of new office space and net take-up of about 910,000 sq.m.

“This should yield a vacancy of 5.3% by end-2019. About 30% of office space due to be delivered in 2019 is pre-leased. Based on 3Q2018 pre-commitment status, we expect Alabang, Makati CBD, Fort Bonifacio, and the Bay Area to record the strongest take up in 2019,” Colliers wrote in its Top 10 Forecast for 2019 report.

And with the continued rise of micro, small, and medium enterprises (MSMEs); the influx of multinational corporations (MNCs) and outsourcing firms looking for plug-and-play offices; and the implementation of a set of policy reforms likely to improve the business climate, Colliers sees Manila’s flexible workspace stock to grow by at least 10% per annum over the next three years.

“Due to stiff competition in the market, we see flexible workspace operators differentiating their features. A number of operators are already incorporating yoga and art classes, gyms, and food and beverage outlets. We believe that co-living is another feature that flexible workspace operators in Manila should consider in 2019,” Colliers said. “Over the next three years, we expect more flexible workspaces to be offered in malls, hotels, and dormitories for professionals.”

For its part, the LPC believes that 2021 will be a milestone year in infrastructure development that would greatly help decongest Metro Manila and open up transportation arteries to the rapidly rising regional centers outside the region including Clark, Cavite, Laguna, and Batangas.

However, the firm projects that the office supply will sharply decline by 2021 and a deficit is forecasted in the following year. Thus, developers are encouraged to complete new projects by 2022 and beyond. — Mark Louis F. Ferrolino

The near future of Philippine office space

Owing to the country’s continued economic growth, powered by growing consumption and ongoing infrastructure development, the Philippines is on the fast track towards prominence among investors in Southeast Asia. In terms of real estate, this could not be truer.

While the Philippines has experienced spikes in inflation for 2018, prices in the property market have not detracted investors from securing prime locations across the country. Many developers have started offering flexible workspaces, master-planned communities, and eco-friendly retail spaces to cater to the changing tastes of the market, finding new opportunities to provide for the Filipino middle class as well as the international investor. These new trends are shaping the future of Philippine real estate, physically transforming the country’s cities and districts towards the future.

“For the Philippine property market in 2019, flexibility will be the name of the game,” global real estate services firm Colliers International wrote on its Top 10 Forecast for 2019.

“The strong demand and evolving preference of tenants is giving rise to flexible workspaces; residential developers are tweaking their projects to cater to Chinese offshore gaming employees and local professionals; and mall operators are more open to foreign food and beverage (F&B) and home furnishing tenants, which we see redefining retail space absorption in 2019. Developers are also cashing in on the thriving property market by aggressively acquiring parcels of land outside of the more established business districts.”

According to Colliers, the property sector remains resilient amid the slower economic growth in the first nine months of 2018, with major segments like office space poised for record-high demand and supply for the year.

Colliers forecasted that for office properties, this means an additional supply of nearly one million square meters (sq.m.) and a net take-up of 900,000 sq.m. in 2019, resulting in 5.3% of vacancy by the end of the year. Flexible workspaces and newer preferences in office space are driving demand for the year, but as tight vacancy looms into 2019, rents are projected to rise by an estimated 9%.

“Coupled with the emergence of a mobile work force and firms’ drive to bring down operating costs, the tight Metro Manila office market has given rise to another office sub-segment — flexible workspace. We see Manila’s flexible workspace stock expanding by at least 10% per annum over the next three years owing to the continued rise of micro, small, and medium enterprises (MSMEs); the influx of multinational corporations (MNCs) and outsourcing firms looking for plug-and-play offices; and the implementation of a set of policy reforms likely to improve the business climate,” the report said.

“Due to stiff competition in the market, we see flexible workspace operators differentiating their features. A number of operators are already incorporating yoga and art classes, gyms, and food and beverage outlets. We believe that co-living is another feature that flexible workspace operators in Manila should consider in 2019. Over the next three years, we expect more flexible workspaces to be offered in malls, hotels, and dormitories for professionals.”

Another factor that contributes to the continued resilience of the office space market is the ongoing expansion of the Philippine property market beyond Metro Manila. Investments in emerging cities are pushing property buyers outward, towards hotspots like Clark Freeport Area, and Cebu, among others.

Offshore gaming companies, which played a huge role in the demand for office space in 2018, are now expanding to these emerging hotspots. Colliers forecasted that such companies will look to take locations in Cebu, Pampanga, and Laguna, where large office spaces remain available.

“A number of offshore gaming firms that have secured licences from the Philippine Offshore Gaming Office and permits from city and local governments are looking for additional space. Initially operating in the Bay Area, these companies have started to operate in other Metro Manila business districts,” the report said.

“These firms have also started to take up office space in key cities outside Manila such as Cebu, Laguna, and Clark in Pampanga. Aside from expansive office space and residential availability, offshore gaming companies need to operate in cities that have airports offering direct flights to China or areas that have direct access to and from Manila. This is one of the reasons why these firms are starting to look at a number of cities in Southern Luzon.”

As of end-September 2018, offshore gaming firms occupied a total of 280,000 sq.m. (3 million sq.ft.) of office space, accounting for 25% of total space absorbed in Metro Manila during the period. For 2019, Colliers sees offshore gaming firms occupying between 200,000 sq.m. (2.2 million sq.ft.) to 300,000 sq.m. (3.2 million sq.ft.) of office space, representing about 20% to 23% of the projected net take-up in 2019.

Ultimately, as infrastructure development remains one of the primary drivers for growth in the property sector, the government’s timely completion of its multibillion-peso infrastructure program will easily define the industry’s landscape in the near future. Cebu, in particular, is on the map for many locators, as the key city begins to see the results of improved transportation and infrastructure connectivity.

“Over the next 12 months, we see property firms taking a more aggressive approach in exploring parcels of developable land especially in the Mandaue and Mactan areas that will benefit from the completion of major infrastructure projects such as the expanded Mactan-Cebu International Airport; the Cebu Cordova Expressway Link; Cebu Bus Rapid Transit (BRT); and the Cebu-Negros bridge,” the report said. — Bjorn Biel M. Beltran

BSP signals ‘prudent’ policy steps up ahead

By Melissa Luz T. Lopez
Senior Reporter
THE CENTRAL BANK will be “prudent” in setting monetary policy this year, with an official hinting that a pause in rate hikes could be in the cards now that inflation has been dropping.
“We are seeing quite a number of disinflationary forces in the economy… [W]e’re now within the target range, which means that the central bank can afford to allow previous policy adjustments to work their way through the system, and also monitor closely its next policy actions,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Maria Almasara Cyd Tuaño-Amador said before the Tuesday Club meeting.
Reading a speech on behalf of BSP Governor Nestor A. Espenilla, Jr., Ms. Tuaño-Amador noted that latest inflation readings have been “encouraging” so far.
Coming from a nine-year-high 6.7% inflation in September and October last year, overall price increases eased to six percent in November and then to 5.1% in December.
Central bank officials now expect 2019 inflation to average 3.2%, well below last year’s 5.2% average to return to the 2-4% target band.
Ms. Tuaño-Amador noted that risks affecting consumer prices are now “balanced,” versus last year’s mix of supply-side pressures that pushed inflation to multiyear highs.
The BSP said monetary authorities are approaching 2019 with “cautious optimism,” citing the country’s economic footing against external risks which could weigh on prospects for sustained expansion.
Key risks to the outlook include “uncertain” timing and magnitude of future rate hikes by the United States Federal Reserve, escalating trade tensions between the US and China which could dampen global economic activity, and disruptive advances in technology.
“To my mind, policy-making in this time of uncertainty entails two things, namely: our ability to build on our strengths and our flexibility to look forward and anticipate emerging challenges,” Mr. Espenilla was quoted as saying.
“Data-dependent monetary policy, guided by inflation forecasts, will be timely and prudent.”
The Monetary Board raised key interest rates five times last year totalling 175 basis points (bp) in order to arrest surging inflation. This brought the key policy rate to 4.75%, the highest in nearly a decade.
The BSP will hold its first rate-setting meeting for this year on Feb. 7. Policy makers decided to maintain benchmark rates in their December review, amid signs that inflation is finally on its way down.
In another development, Mr. Espenilla is back to work as governor since Monday after a three-week medical leave. The central bank chief, who is battling tongue cancer, has been limiting his public appearances and speaking engagements.
Last week, the BSP chief also signalled that the economy is now ripe for fresh cuts in bank reserves as price spikes ease, which may follow two 100bp reductions introduced in 2018. The reserve requirement now stands at 18% of a bank’s total deposits.

Senate body finalizing bill raising tobacco tax

THE SENATE Ways and Means committee aims to report for plenary action by Feb. 6 the bill further increasing excise taxes on tobacco products before Congress takes its Feb. 7-May 19 break.
“We’re looking to sponsor it by next week… But I think the process is also important so we need to hear those who were not able to speak today so I think that’s what Monday’s hearing is for,” committee chair Senator Juan Edgardo M. Angara told reporters after the hearing on the bills seeking to increase tobacco excise tax.
“Hopefully we can sponsor it by Wednesday [next week]… The goal is to sponsor it before Congress (adjourns),” Mr. Angara added, noting “there are still three weeks of session after the break, so that is the time for plenary debate.”
Senators on Tuesday deliberated the “sweet spot” in raising the excise tax on tobacco products that will ensure bigger collections while discouraging more people from smoking.
Mr. Angara told reporters that the committee has yet to agree on a final amount for increased tobacco excise tax rate as it awaits the Department of Health’s (DoH) spending plan for the universal healthcare program.
“It’s still early to say because what we’re doing is, we were looking at it not just from the revenue side, but also the spending side. We don’t want funds to be wasted,” he said.
“I think, realistically, it’s between P37.50 and P90. That’s the universe. I will consult with my colleagues, I will read position papers.”
The DoH and the Department of Finance (DoF) jointly proposed higher tobacco excise tax rates of at least P60 per pack from P35 currently, similar to Senator Emmanuel D. Pacquiao’s Senate Bill No. 1599.
House Bill No. 8677, which bagged third-reading approval last Dec. 3, provided a higher P37.50 per pack tobacco tax rate.
Senator Joseph Victor G. Ejercito’s Senate Bill No. 1605 proposes an increase to P90, while Senator Sherwin T. Gatchalian’s Senate Bill No. 2177 sets it at P70 per pack.
Asked by Messrs. Gatchalian and Ejercito on the “optimal amount” of tobacco excise tax rate that will hike government revenues, Finance Undersecretary Karl Kendrick T. Chua said P73 would not affect demand too much that collections would fall. “Is P60 the optimal?” Mr. Gatchalian asked, to which Mr. Chua replied: “I was told by my staff that up to P73 per pack ‘yung hindi magre-reverse (will not unduly reverse collections)…”
However,Isabela Vice-Governor Antonio T. Albano, retailers and sari-sari store owners raised concern that higher tobacco taxes will disrupt livelihoods, including that of farmers.
“We are appealing because we just had the TRAIN law last 2018 [that raised taxes]… and here we are again,” Mr. Albano said, referring to the first tax reform package that took effect a year ago.
“The farmers are greatly affected and we can see the studies that there was a reduction in tobacco growers already because of the effects of the imposition of taxes. Therefore, we appeal to the good senators… maybe later on, we can further study whether or not we should impose such taxes. But at this moment, tobacco farmers are really the ones affected. We’re talking about tens of thousands of families,” Mr. Albano said.
“Now for the retailer side, because of the low margins we attach to cigarettes in particular and the high cost of inventory for cigarettes, some retailers might be having second thoughts on carrying cigarettes… The manufacturers and the employees of these establishments will be hard hit. If there would be less supermarkets carrying cigarettes, it will do harm to the industry quicker than we think because of higher taxes,” said Philippine Amalgamated Supermarkets Association, Inc. Steven Cua.
For her part, Catherine Calag of the Philippine Association of Stores and Carinderia Owners (PASCO) raised concerns that some sari-sari stores may close due to the higher taxes. “We are really affected. Our income from our stores is no longer enough to support our families… The higher taxes might help government, but we hope it will also help us,” she said in Filipino. — Camille A. Aguinaldo

Tax bureau increases collections from 2017 but misses 2018 target

THE BUREAU of Internal Revenue (BIR) — which contributes about three-fourths of total government tax revenues — grew collections by a tenth last year from 2017, although it fell short of its target by four percent, according to data released at a hearing on Tuesday of the House of Representatives Ways and Means committee.
The bureau missed its P2.044-trillion full-year collection target for 2018 by 4.01% at P1.961 trillion, even as the tax take increased by 10.15% from 2017’s P1.781 trillion.
BIR data showed both income tax and value-added tax (VAT) collections decreased and fell short of targets, and that while excise tax take increased from 2017, it fell short of the 2018 goal. Republic Act No. 10963, or the first of up to five planned tax reform packages which took effect a year ago, slashed personal income tax rates and removed a number of VAT exemptions but either added or increased taxes on a host of other items.
BIR data showed income tax take, which made up half of the bureau’s 2018 collections, fell 4.49% year-on-year at P982.47 billion and 4.14% short of a P1.025-trillion target, while VAT collections slipped 1.91% to P358.27 billion and fell 17.8% short of a P435.88-billion goal.
And while excise tax collections increased by 38.73% to P290.64 billion, they still missed a P332.8-billion goal by 12.67%. “We analyzed the causes for underperformance with regards the excise tax on petroleum. We saw there was an erosion in excise tax collection from locally produced petroleum products due to loss of market share of two of our big oil players, namely: Petron (Corp.) and Pilipinas Shell (Petroleum Corp.),” BIR Assistant Commissioner Alfredo V. Misajon told lawmakers, adding that non-implementation of fuel marking designed to counter smuggling and drink producers’ shift to locally produced sugar from high-fructose corn syrup due to the latter’s higher excise tax under RA 10963 also weighed on collections.
Percentage and other taxes made up for these drops and shortfalls.
“Fuel marking projects with a goal of P10 billion included in our goal for petroleum did not materialize because the program was not implemented,” Mr. Misajon explained.
Turning to lower VAT collections, he cited “reported decreases in revenues… from the sale of goods and services because of the lingering inflation… for quite sometime and of course because of the deterioration of the exchange rate of the Philippine peso.”
Percentage tax collections surged by 48.74% to P113.93 billion and topped a P97.69-billion goal by 16.63%, while other taxes more than doubled to P216.21 billion and exceeded a P152.26-billion target by 42%. Under “other taxes”, however, estate tax take — which the Finance department has long described as a category that has constantly fallen far short of potential collection — topped a P2.38-billion target by 53.12% at P3.65 billion, even as this was 27% less than 2017’s P5 billion, while donors tax take increased by 40% to P3.5 billion, exceeding a P2.23-billion goal by 57.08%.
The BIR has been entrusted with a P3.018-trillion collection target for this year. — Charmaine A. Tadalan

Meralco names incoming president

By Victor V. Saulon
Sub-Editor
MANILA ELECTRIC CO. (Meralco), the country’s biggest power distributor, has named Ray C. Espinosa as its incoming president and chief executive officer (CEO) when Oscar S. Reyes retires in May.
In a disclosure to the Philippine Stock Exchange, Meralco said the company’s board of directors, during a regular meeting on Monday, Jan. 28, approved the appointment of Mr. Espinosa as deputy chief executive officer effective on the same date.
“Mr. Espinosa will assume the position of President and Chief Executive Officer after Mr. Reyes leaves Meralco service on May 28, 2019,” the company said.
The deputy chief executive officer is a new position as Mr. Espinosa did not replace anyone. He reports directly to Mr. Reyes.
The company said Mr. Espinosa has been with Meralco since May 26, 2009. He heads the finance committee of the company’s board.
When Mr. Espinosa, Meralco’s current general counsel, assumes the top post, the company will just be days into its new 50-year corporate life from May 7, 2019. The listed utility, which counts about 6.5 million customers within its franchise area, secured a term extension from the Securities and Exchange Commission on Dec. 19 last year.
Mr. Reyes did not immediately respond to a request for comment on Mr. Espinosa’s appointment as well as his plans after retirement.
Sought for comment, Meralco Senior Vice-President Alfredo S. Panlilio described Mr. Reyes’s performance in the past nine years as “stellar.” Mr. Reyes has been president and CEO since May 29, 2012. He was chief operating officer from July 1, 2010 to May 28, 2012.
“The numbers will show it. I guess there is always a time to move on and I guess this was the right time for OSR,” he said in a text message, referring to Mr. Reyes’s initials.
“We welcome the entry of Ray and look forward to working with him in bringing Meralco to the next level,” said Mr. Panlilio, who also heads Meralco’s customer retail services and corporate communications.
Based on Meralco’s latest information statement which it filed with Philippine Stock Exchange in April last year, Mr. Espinosa finished Bachelor of Science in General Studies at the University of Sto. Tomas, Bachelor of Laws at the Ateneo de Manila University and Master of Laws at the University of Michigan Law School.
Also at that time, he was board member of the four listed companies, namely: PLDT, Inc.; Metro Pacific Investments Corp.; Lepanto Consolidated Mining Corp.; and Roxas Holdings Inc.
In April last year, Mr. Espinosa, who was 61 at that time, was chairman of Philstar Daily, Inc. and BusinessWorld Publishing Corp.; president of Mediaquest Holdings, Inc.; chief corporate services officer of PLDT; and head of PLDT’s regulatory affairs and policy office.
He was also trustee of the Beneficial Trust Fund of PLDT and head government and regulatory affairs and head communications bureau for the Philippines of First Pacific Group.
His other board memberships were Smart Communications, Inc.; Maybank Philippines, Inc.; First Pacific Co., Ltd.; Mediaquest Holdings, Inc.; Cignal TV. Inc.; First Agri Holdings, Inc.; First Coconut Manufacturing, Inc.; Philippine Telecommunications Investment Corp.; Metro Pacific Resources, Inc.; Meralco PowerGen Corp.; and TV5 Network, Inc.
A writeup about Mr. Espinosa in Meralco’s corporate governance report says this about him: “He was a partner of SyCip Salazar Hernandez & Gatmaitan from 1982 to 2000, a foreign associate at Covington and Burling (Washington D.C., USA) from 1987 to 1988, and a law lecturer at the Ateneo de Manila School of Law from 1983 to 1985 and 1989. He ranked first in the 1982 Philippine Bar examination.”
Meralco has yet to file its new information statement. The company will be holding its annual stockholders meeting on May 28, the same day Mr. Espinosa assumes his new position as president and CEO.
On Tuesday, shares in Meralco traded lower by 0.37% to close at P373.60 each.

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