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UPSCALE looks to UP community, Taiwanese partners to boost incubation program

Following the celebration of its second anniversary, UPSCALE, an innovation hub based in the University of the Philippines Diliman, opened applications to join the ninth batch of its in-house incubator, Enterprise.

With the goal of shaping globally-competitive startups, UPSCALE is preparing for their next batch of enterprises by forging new partnerships not only across the UP colleges, but also across country borders.

Widespread partnerships

Among UP’s colleges that have pledged support for UPSCALE’s new project are the College of Engineering and the College of Fine Arts. Enterprise’s next batch of startups can look forward to using facilities from both colleges, such as the College of Fine Arts’ Fablab, as well as training from their faculty and staff.

The Virata School of Business (UP-VSB) has pledged their resources and services towards the proper documentation of startup success stories for business cases, as well as mentoring on topics such as business development and regulatory compliance.

“It’s a given fact that only a minimum few are able to sustain their business,” said Joel Tan-Torres, dean of UP-VSB. “The way probably to ensure better success at sustainability is to work at the fundamentals. It’s not the product alone.”

Beyond the University of the Philippines, UPSCALE has sealed partnerships with other universities and incubators both local and abroad.

In collaboration with Indian social enterprise incubator Villgro Philippines, UPSCALE launched Trailblazers 2020, a 15-month incubation program for social enterprises, with Villgro Philippines. The goal is to strengthen local businesses by teaching entrepreneurs how to develop, scale, and sustain their endeavors.

UPSCALE also signed MOUs with institutions in Taiwan, namely the Southern Taiwan Industry Promotions Center, Industrial Technology Research Institute, Kaohsiung Medical University Incubator, and National Kaohsiung University for Science & Technology.

“Taiwan is a leader in many industries, most notably the electronics industry. We hope to beef up that aspect of our mentoring and support here,” said Dr. Luis Sison, Project Leader of UPSCALE.

Two startups, agritech platform Farmwatch and and healthtech device provider Veris, are currently being co-incubated along with UPSCALE’s Taiwanese partners to further develop their technologies and forge connections with other industry players.

Economy expands 6.4% in fourth quarter, 5.9% in 2018

The Philippine economy posted a 6.4% gross domestic product (GDP) growth in the fourth quarter, the Philippine Statistics Authority (PSA) reported this morning.

The October-December outcome was higher than the revised six percent in the third quarter and 6.3% in the fourth quarter of 2018.

This brings growth in 2019 to 5.9%, slower than 2018’s 6.2%. The latest full-year figure matched the median estimate in a BusinessWorld poll last week but missed the downward-revised 6%-6.5% target set by the government for 2019.

The latest full-year reading was the slowest in eight years or since the 3.7% growth in 2011. It also broke the economy’s seven-year streak of at least six-percent growth.

The industry sector grew by 5.4% in the fourth quarter, slower than 6.6% recorded in the fourth quarter of 2018. For the year, it grew by 4.9% compared to 6.7% in 2018.

Agriculture, hunting, forestry and fishing grew 1.5% in the fourth quarter from 1.8% in the same three months in 2018. This brings the sector’s full-year growth at 1.5%, faster than 2018’s 0.9%.

Services remained the main engine of growth on the supply side as it grew by 7.9% in the fourth quarter, faster than the 6.8% recorded in the same period in 2018. For full-year 2019, it grew by 7.1% versus 2018’s 6.8%.

On the expenditure side, household spending grew 5.6%, faster than 5.3% in the fourth quarter of 2018. It logged in a full-year 2019 growth of 5.8% versus 2018’s 5.6%.

Government spending grew by 18.7% in the fourth quarter from 12.6% in 2018’s comparable three months. However, its 10.5% growth in 2019 was slower than the 13% expansion recorded in 2018.

Private investment, represented in the data as capital formation, posted a 0.4% growth during the quarter compared to 4.9% previously. For 2019, it declined by 0.6% compared to a 13.2% growth in 2018.

Exports of goods and services rose by two percent in the fourth quarter (full-year 2019: 3.2%), slower than 14.4% in the fourth quarter of 2018 (2018: 13.4%). Imports likewise slowed, growing by 0.3% in the fourth quarter (2019: 2.1%) compared to 12.4% in the fourth quarter of 2018 (2018: 16%).

Gross national income – the sum of the nation’s GDP and net income received from overseas – registered a growth of 6.2% in the last quarter of 2019 from 5.7% in 2018’s comparable three months. For 2019, it grew 5.5% against 2018’s 5.9%. — J. E. Hernandez

Farm output fails to hit gov’t target

PHILIPPINE agriculture output grew less than a percent in 2019, failing to meet the government’s target as the African Swine Fever (ASF) outbreak dragged the livestock sector.

The Philippine Statistics Authority (PSA) reported on Wednesday that agriculture output, which contributes about a tenth to gross domestic product (GDP) and a fourth of the country’s jobs, inched up by 0.4% in the fourth quarter, compared to the upward-revised year-ago growth at 1.9%, and the third quarter’s growth of 2.85%.

The fourth quarter figure is way below the Agriculture department’s projection of between 2.5% to 3% growth.

For the full-year, farm output rose by 0.70%, slightly higher than the 0.59% in 2018. However, this was lower than the 2.5-3.5% target range for farm output growth under the 2017-2022 Philippine Development Plan.

“In the last quarter of 2019, the country was badly affected by the ASF, which continues up to this day. On top of that, we were disturbed by natural disasters such as powerful typhoons, Tisoy and Ursula,” Agriculture Secretary William D. Dar said in a text message.

Livestock, which accounted for 16.2% of total output, declined by 8.5% during the fourth quarter, as demand slumped due to the ASF outbreak.

Hogs production fell 9.8% to 597,500 metric tons (MT) during the October to December period, which the PSA attributed to “non-replacement of stocks and continuous reduction in the inventory of swine in Central Luzon.”

Demand for pork also dropped in Cordillera Administrative Region (CAR) and Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon). The monitoring of the movement of hogs in the country also led to lesser disposal of hogs in Cagayan Valley, Central Visayas, and Central Luzon.

For the full year, livestock output fell 1%, led by carabao production which slipped 1.7%.

According to the report submitted by the Philippines to the World Organization for Animal Health (OIE), the ASF outbreak in the country started on July 25, 2019. Data from the Bureau of Animal Industry (BAI) showed that as of Dec. 15, 2019, the number of pigs culled reached 147,334, of which 18% or 26,077 were found to have been infected by the virus.

Total barangays affected by ASF totaled 612 from the provinces of Bulacan, Pampanga, Nueva Ecija, Aurora, Tarlac, Rizal, Cavite, Pangasinan, and in Metro Manila.

CROPS
Crops, which accounted for half of total output during the fourth quarter, went up by 1%. Year on year, crops value increased 1% to P115.764 billion.

For the full year, crops output fell 0.8% versus 1% decline in 2018.

Broken down, palay production grew 4.7% to 7.494 million metric tons (MT) during the fourth quarter, with increased harvested and planted area reported in Cagayan Valley and Western Visayas “due to sufficient water supply.”

“In addition, there was more usage of high-yielding variety seeds coupled with good weather conditions during the cropping period in these regions,” PSA said.

However, palay production for the full year declined 1.3%.

Corn production slid 8.2% to 1.658 million MT during the fourth quarter due to reduced harvested areas in Cagayan Valley and Zamboanga Peninsula as farmers were discouraged to plant corn due to low buying prices. Despite the three-month slump, full-year corn production rose 2.7%.

Philippine Institute for Development Studies (PIDS) Research Fellow Roehlano M. Briones noted the positive performance of palay, or unmilled rice, production.

“Despite the problem in the palay industry, at least the crop sector as a whole was positive,” Mr. Briones said in a phone interview.

Farmgate prices dropped by an average of 5.7% in the fourth quarter, as crops saw an average 11% decline in prices. Palay prices slumped 25% “due to the effect of lower buying price offered by local buyers and traders, presence of imported rice and higher volume of production,” the PSA said.

University of the Philippine School of Economics Professor Ramon L. Clarete said the implementation of the Rice Tariffication Law led to the decline of the price of the staple food.

Meanwhile, poultry production, which accounts for 17% of total agricultural output, saw a 5.4% growth in the fourth quarter. This brought the full-year print to 5.8%, thanks to increased demand for chicken meat, amid the ASF outbreak.

Fisheries production grew by 3.4% in the October to December period, bringing the full-year figure to 1.9%. — VMPG

Performance of Philippine agriculture (Q4 2019)

Performance of Philippine agriculture (Q4 2019)

PHILIPPINE agriculture output grew less than a percent in 2019, failing to meet the government’s target as the African Swine Fever (ASF) outbreak dragged the livestock sector. Read the full story.

Performance of Philippine agriculture (Q4 2019)

Gov’t raises €1.2 billion from euro bond issue

THE government raised €1.2 billion from its offer of two tenors of euro-denominated bonds following strong demand from investors, including the three-year papers priced at a near-zero coupon.

National Treasurer Rosalia V. de Leon said they sold €600 million each for the two tenors, — three years and nine years — causing the government to upsize its issue from the initial plan of a benchmark size issuance worth €500 million.

Based on a report from Ms. De Leon, Finance Secretary Carlos G. Dominguez III said the three-year bonds were priced at a rate of 0.1%, while the nine-year papers carry a coupon of 0.7%, a spread of 40 basis points (bps) and 70 bps over benchmark rates, respectively.

The offer was oversubscribed by more than three times than the initial offer, with total bids coming in at €4.3 billion.

“This is RoP’s (Republic of the Philippines) lowest coupon EUR (euro-denominated) issuance and first ever zero-coupon EUR issuance in the international capital markets,” Mr. Dominguez told reporters Wednesday morning in a Viber message.

Ms. De Leon said the 0.7% coupon for the nine-year papers, despite being a longer tenor, was tighter than the 0.875% fetched for the eight-year bonds they issued in May last year.

“Moreover, given the fair value of our outstanding EUR bond due 2027 (with 7.5 years remaining life) being at 67 bps over benchmark, and given a pickup of about 5 bps for every one-year extension, new nine-year should be priced at around 75 bps, yet we managed to pierce thru our RoP curve by pricing at 70 bps over benchmark. This translates to a negative new issue concession of approximately 5 bps,” she said.

“The offering garnered significant demand from high quality accounts which allowed us to price a record low EUR coupon for the Republic. The successful transaction allowed us to diversify our funding program and minimize our funding costs to support productive spending for infrastructure and social services,” Ms. De Leon added.

Ms. De Leon said the government’s offer was met with strong demand from a diverse group of investors both from onshore and offshore markets.

“We are also reaping the benefits of actively engaging investors prior to going out in the market,” she added.

The fundraising activity is meant to diversify the government’s funding sources as well as serve as a budgetary support for its programs on infrastructure and human capital development, among others, the official said.

The papers are expected to be settled on Feb. 3.

UBS served as the sole global coordinator for the transaction. It also joined Citigroup, Standard Chartered Bank, and Credit Suisse as joint lead managers and joint bookrunners for the issue.

Of the €600 million borrowed via three-year euro bonds, 16% of the bonds were allocated to Asia excluding the Philippines, 4% to the Philippines, 26% to the United Kingdom, 13% to Germany, 12% to France, 5% to Italy, 10% to other European investors, and 14% to the United States, the Treasury said in a statement on Wednesday.

In terms of investor type, 68% went to asset and fund managers, 22% to banks, 4% to central banks, pension funds and sovereign wealth funds, 3% to insurance firms, and the remaining 3% to private banks and other investors.

Of the €600 million worth of nine-year securities, 16% of the bonds were allocated to Asia excluding the Philippines, 6% to the Philippines, 31% to the United Kingdom, 15% to Germany, 6% to France, 13% to Italy, 8% to other European investors, and 5% to the US.

In terms of investor type, 54% went to asset and fund managers, 18% to banks, 3% to central banks, pension funds and sovereign wealth funds, 24% to insurance, and the remaining 1% to private banks and others.

Earlier this week, S&P Global Ratings assigned a BBB+ rating to the issue, Moody’s Investors Service gave a Baa2 senior unsecured rating, while Fitch Ratings assigned an expected rating of BBB. All of these ratings mirror the credit watchers’ respective assessments for the Philippines.

The Philippines returned to the European bond market after 13 years last May, raising €750 million in eight-year papers, upsized from the initial €500-million offer as the total orders reached €3 billion.

On Tuesday, Deputy Treasurer Erwin D. Sta. Ana earlier said they will likely offer other offshore bonds within the first semester.

Mr. Sta. Ana said they are also considering the dollar, panda and samurai markets.

Of the P1.4-trillion borrowing program this year, the government will borrow 25% or around P350 billion from external sources, while the remaining 75% will be sourced from the local market. These borrowings will help fund its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — Beatrice M. Laforga

How does the Philippines’ state of democracy compare with its regional peers?

THE Philippines slipped one place to No. 54 out of 167 countries in London-based think tank Economist Intelligence Unit’s democracy index for 2019, citing the Southeast Asian nation’s “flawed democracy.” Read the full story.

How does the Philippines’ state of compare with its regional peers

Third-quarter 2019 GDP growth scaled down

By Carmina Angelica V. Olano
Researcher

THE PHILIPPINE ECONOMY in the third quarter grew at a slower pace than previously reported, the Philippine Statistics Authority (PSA) said a day before it announces preliminary figures for the fourth quarter and full-year 2019.

Gross domestic product (GDP) — the value of all finished goods and services produced in the country — expanded by six percent in the July-September period, slower than the preliminary 6.2%, the PSA said yesterday.

This brought 2019’s first three quarters’ pace to 5.7% from 5.8% initially, against the government’s revised 6%-6.5% target for the year.

In a mobile phone message, Socioeconomic Planning Secretary Ernesto M. Pernia said he remains hopeful in achieving the 6%-6.5% growth target for 2019 despite the downward revision.

Meanwhile, ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa said in a note to reporters the recent revision dimmed hopes for full-year growth to reach six percent in 2019.

“The streak of years above six percent is currently [at seven] and the fourth-quarter GDP will need to crest 6.8% to pole vault to a six-percent finish and complete the tale of two halves,” he said.

The services sector grew by 6.7% in the third quarter, down from the initially reported 6.9%. Sub-sectors that saw downward revisions were transport, storage and communication (8.2% from 9.1%); trade and repair of motor vehicles, motorcycles, personal and household goods (7.8% from 8.1%); real estate, renting and business activities (4.1% from 4.2%); and other services (4.2% from 5.1%).

On the other hand, financial intermediation increased to 11.2% from 10%.

Agriculture, hunting, forestry and fishing saw a marginal downward revision of 3.05% growth from 3.08%.

Likewise, growth in the industry sector was revised lower by 0.03 percentage point in the third quarter to 5.6% from 5.63%. Contributing to the decline was construction, whose third-quarter growth was revised to 15.4% from 16.3%.

Manufacturing growth was revised upwards to 2.6% from the initial estimate of 2.4%.

Mining and quarrying recorded a smaller contraction at 3.2% from the previous 4.9% slump.

On the expenditure side, downward revisions were made in capital formation (-2.6% from -2.1%) and imports of goods and services (-0.2% from -0.02%).

Meanwhile, higher estimates were noted in household spending (5.95% from 5.91%), and exports of goods and services (0.7% from 0.2%).

Government spending was kept steady at 9.6% growth.

“The ill effects of the BSP’s (Bangko Sentral ng Pilipinas) 2018 rate hike cycle continue to feed through the economy with the latest revision to third-quarter GDP showing a more substantial pullback in investment activity,” ING’s Mr. Mapa said.

“The continued sluggish growth momentum will definitely move the BSP to ease policy rates again in February with the ill effects of the aggressive 2018 tightening phase still being felt in the third quarter of 2019. The recent volcanic eruption and the impending disruption in economic activity from the damage will likely weigh on the recovery momentum further with both fiscal and monetary policy called upon to bolster the economy amidst the higher growth pitch of 6.5-7.5% [for 2020-2022],” he added.

Meanwhile, the ASEAN+3 Macroeconomic Research Office maintained the forecast it gave for the Philippines in October at six percent growth for 2019, according to the January update of its ASEAN+3 Regional Economic Outlook 2020.

Insular Life Assurance Co. Ltd. said in its latest economic outlook on Wednesday that last year’s GDP might have expanded at 5.9%.

Aside from GDP, the PSA revised upwards the gross national income (GNI) in the third quarter to 5.7% from 5.6% previously. The GNI is the sum of the nation’s GDP and net income received from overseas.

The third-quarter 2019 revision comes ahead of today’s release of the preliminary estimate for fourth-quarter and full-year GDP.

A BusinessWorld poll of 20 economists yielded a median GDP growth estimate of 6.4% for the fourth quarter and 5.9% for full-year 2019. — with inputs from Beatrice M. Laforga

PHL slides a notch in global democracy index

THE Philippines slipped one place to No. 54 out of 167 countries in London-based think tank Economist Intelligence Unit’s democracy index for 2019, citing the Southeast Asian nation’s “flawed democracy.”

The think tank said the country has free and fair elections and basic civil liberties are respected. “However, there are significant weaknesses in other aspects of democracy, including problems in governance, an underdeveloped political culture and low levels of political participation.,” it said in an e-mailed report.

Presidential Spokesman Salvador S. Panelo did not immediately reply to a mobile phone message seeking comments.

How does the Philippines’ state of compare with its regional peers

The nation scored 6.64 points out of 10 last year, when global democracy hit its lowest score since the report began in 2006.

No Southeast Asian country was classified as a full democracy, a category dominated by European countries.

Norway topped the global index with a score of 9.87, followed by Iceland (9.58), Sweden (9.39), New Zealand (9.26) and Finland (9.25).

Full democracies assure citizens of civil liberties and political freedoms as well as an effective government and political culture, it said.

The Philippines ranked No. 9 among countries in Asia and Australasia, falling behind Southeast Asian neighbors Taiwan (31), Timor-Leste (41), and Malaysia (43).

The country placed ahead of Indonesia (65), Thailand (68), Singapore (75), Myanmar (122), Vietnam (136), and Laos (155).

The 2019 average global score of 5.44 was the lowest since the index began in 2006.

“The decline in the average global score in 2019 was driven by a sharp regression in Latin America and Sub-Saharan Africa, a lesser one in the Middle East and North Africa region, and by stagnation in the remaining four regions covered by the Democracy Index,” according to the report.

The Asian average stagnated in what the report described as a tumultuous 2019 for the region. Several countries’ scores dropped as a result of the erosion of civil liberties in India and Singapore, increased digital surveillance and ethnic discrimination in China and deteriorating political stability in Hong Kong.

Thailand’s score rose 38 points after its first general election since the 2014 coup d’etat.

The Philippines scored 9.17 points in the electoral process and pluralism category, 7.22 points in political participation, 7.06 in civil liberties, 5.36 in government functioning and 4.38 in political culture. — Jenina P. Ibañez

SEC orders 3 more illegal online lenders shut down

THE Securities and Exchange Commission (SEC) has ordered the immediate shutdown of three more illegal online lenders found to be operating without licenses.

In a statement yesterday, the country’s corporate regulator said it issued a cease and desist order to Peso Tree, Pesoalo and Pinoy Cash Loan on Tuesday. The order covers the company’s owners, operators, promoters, representatives, agents and all persons acting on behalf of the lenders.

“Considering that the Online Lending Operators are not incorporated entities and have no Certificate of Authority to Operate as Lending Companies or Financing Companies, the lending activities and transaction are illegal and have to be stopped immediately by this Commission,” the order said, as quoted in the statement.

The SEC said Peso Tree, Pesoalo and Pinoy Cash Loan had operations through websites, mobile applications, Facebook pages and other online platforms, offering loans to the public.

To do this, a company must secure a certificate of authority as a lending company from the SEC. Failure to do so is a violation of Section 4 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, which says, “no lending company shall conduct business unless granted an authority to operate by the SEC.”

Apart from operating illegally, the SEC Enforcement and Investor Protection Department found that the concerned lenders impose high interest rates and onerous and misleading terms and conditions, and went as far as publicly humiliating their debtors.

“[T]he Commission cannot turn a blind eye on the fact that the Online Lending Operator’s violation in the instant case was aggravated by the fact that they conducted their business in an unscrupulous manner with evident bad faith, by charging their borrowers unconscionable interest rates, subjecting them to inhumane treatment using abusive and degrading language, and similar other harassment strategies in order to collect debts. This has to stop immediately,” the cease and desist order said.

Aside from being ordered to stop operations and take down any advertisement of the businesses, the violation warrants the persons engaged a fine ranging from P10,000 to P50,000 or imprisonment of six months to 10 years, or both.

The SEC has so far released cease and desist orders to a total of 48 online lending companies, excluding the three new ones, as part of its crackdown on illegal operators. — Denise A. Valdez

Yields on term deposits drop on euro bond issue

TERM DEPOSIT yields continued to slip on Wednesday following the government’s issuance of euro-denominated bonds.

Bids for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) totaled P298.656 billion on Wednesday, surpassing the P200 billion on the auction block, according to data from the central bank.

However, this week’s total tenders slipped compared to the P274.15 billion worth of tenders attracted last week against the P160 billion up for sale.

Total bids for the one-week term deposits clocked in at P134.77 billion, going beyond the P80 billion on offer and also beyond the P95.282 billion worth of tenders seen on Jan. 15 against the P60 billion on offer.

Rates for the seven-day papers ranged from 4% to 4.05%, a narrower band compared to the 4%-4.125% seen a week ago. The average rate for the papers clocked in at 4.0301%, down by 5.5 basis points (bps) from last week’s 4.0851%

Meanwhile, bids for the two-week deposits amounted to P76.564 billion, higher than the P60 billion auctioned off by BSP but failing to beat the P103.847 billion in bids seen last week for the P50 billion up for grabs.

Banks sought for returns from 4% to 4.1%, a slimmer band compared to the 4% to 4.15% range seen on Jan. 15. This brought the average rate for the two-week term deposits at 4.053%, falling by 5.35 bps from the 4.1065% seen a week ago.

The 28-day papers were also oversubscribed at P87.322 billion against the P60 billion up for grabs, likewise beating the P75.021 billion in tenders on Jan. 15 for the P50-billion offer.

Lenders asked for yields ranging from 4.044% to 4.13%, a slimmer band compared to the 4.0795% to 4.22% margin seen last week. This caused the average rate for 28-day term deposits to settle at 4.0917%, down 5.85 bps from the 4.1502 traced last week.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower yields may have been on the back of the Bureau of the Treasury’s euro bond offering.

“The renewed decline in BSP TDF auction yields could be partly brought about by the latest euro-denominated bond issuance by the Philippine government that may have partly helped in easing the recent upward pressure on local interest rate benchmarks in the secondary market since the start of 2020,” Mr. Ricafort said in an e-mail.

The government raised €1.2 billion from its offer of two tenors of euro-denominated bonds following strong demand from investors, with the three-year papers priced at a near-zero coupon.

National Treasurer Rosalia V. de Leon said on Wednesday that they sold €600 million each for the two tenors, — three years and nine years — causing the government to upsize its issue from the initial plan of a benchmark size issuance worth €500 million.

The offer was oversubscribed by more than three times than the initial program, with total bids coming in at €4.3 billion.

The three-year bonds were priced at a rate of 0.1%, while the nine-year papers carry a coupon of 0.75%, a spread of 40 bps and 70 bps over benchmark rates, respectively.

On Tuesday, Deputy Treasurer Erwin D. Sta. Ana said it is possible that more offshore bond issuances may be done in the first half of the year, subject to market conditions. Possible offerings may include dollar, yuan and yen bonds, he said. — Luz Wendy T. Noble

Chevron ‘open’ to talks but DoF wants gov’t control of leased lot

CHEVRON Philippines Inc. said on Wednesday that its lease contract with a subsidiary of state-led National Development Co. (NDC) had been beneficial for both the government and the company, with the deal entered into “in compliance with all Philippine laws and regulations.”

The company, the local unit of US energy firm Chevron Corp., made the statement after the Department of Finance (DoF) said on Tuesday that it had found “onerous” provisions in the contract as Chevron Philippines is paying lower-than-market value in rental fees on a state property in an industrial park in San Pascual, Batangas.

On Wednesday, the department said in had recommended to the board of NDC to shut down its subsidiary Batangas Land Co., Inc. (BLCI), with which Chevron Philippines forged the contract, by 2021 to allow the government to take back its 120-hectare or 1.2 million square meter (sq. m.) property.

The DoF said the “sprawling” Batangas property is now valued at around P4.9 billion to P5.3 billion. Chevon Philippines is using the property as an oil import terminal, it said. It called the company’s 74 centavos per sq.m. monthly lease as “measly” for being only 4% of what it said to be the current monthly fair market rental estimate of P17.90 per sq. m.

Chevron Philippines, formerly Caltex (Philippines), Inc., said that as “one of the pioneer energy companies in the Philippines which has been operating here for over a hundred years, our commitment to the Philippine market remains strong.”

“We will maintain open communication with the Government, an important and valued partner, on this matter,” it added.

Based on data from the Department of Energy, Chevron Philippines is the country’s third largest oil company based on market share. As of the first half 2019, it had a share of 7.56% in terms of petroleum products.

The DoF said the NDC had heeded the recommendation of Finance Secretary Carlos G. Dominguez III and decided in December 2019 to terminate the corporate life of property lessor BLCI in 2021.

The department said Mr. Dominguez, as a member of the NDC board, made the recommendation after the DoF uncovered supposed onerous provisions in BLCI’s more than four-decade-old lease contract with Chevron Philippines.

It quoted the secretary a saying that shortening BLCI’s corporate life would finally allow the government to exercise “full ownership, control, and rights over” the lot and other real estate properties occupied by Chevron Philippines. He described the property as prime and strategically located for the country’s future energy projects.

Mr. Dominguez said the government should have exercised these rights as early as 1975, but Chevron Philippines was able to secure preferential treatment to continue occupying and using these properties under the then-Marcos administration.

He said the properties — including the Batangas property — should have been turned over to the government as early as the 1970s, “not only legally speaking but, more importantly, based on the principle that these properties should truly benefit the Filipino people.”

“These companies were given sufficient time to transition and pass on full ownership to the government. It is now high time for the government to exercise its rights,” Mr. Dominguez said.

The DoF said it also found out that the rentals paid by Chevron Philippines over the 44-year period covering 1975 to 2019 amounted to only P146.51 million or about P3 million per year, in addition to real property taxes paid by it under the lease agreement.

The department said US company Caltex was able to acquire the Batangas lot and other prime properties owned by the government under the 1946 Bell Trade Act passed by the United States Congress.

It said under this law, American entities were granted “parity rights” on land ownership in the country as a condition for the US government’s payment of $800 million war damage claims to the Philippines.

“Parity rights had allowed American companies to own land in the Philippines just like Filipinos,” it said.

“These parity rights were extended for 20 years through the Laurel-Langley Agreement signed in 1955 by then-Senator Jose Laurel and Sen. James Langley. Such parity rights ended in 1974,” it added.

It said with the expiration of the 1946 Bell Trade Act, Caltex, and now its subsidiary Chevron Philippines, was granted preferential treatment in continuing to occupy and use various real properties, including the Batangas lot.

It also said a Letter of Instruction issued by then President Ferdinand E. Marcos required the lease-back of the properties occupied by Caltex for a maximum of 50 years from 1975, at minimum rates of 1.5% to 2.5% of the property’s valuation in 1974. — VVS and Beatrice M. Laforga

AMLC, PAGCOR ink deal on money laundering risks

THE ANTI-MONEY Laundering Council said the partnership will tighten its cooperation with PAGCOR on monitoring financial risks. — BW FILE PHOTO

THE ANTI-MONEY Laundering Council (AMLC) inked deal with the Philippine Amusement and Gaming Corp. (PAGCOR) to tighten their cooperation for its feedback mechanism amid money laundering and terrorism financing risks that come amid the rise in internet-based casinos, casino junkets, as well as Philippine Offshore Gaming Operators (POGOs).

In his speech at the signing of the memorandum of agreement (MoA), Bangko Sentral ng Pilipinas (BSP) Governor and AMLC Chairman Benjamin E. Diokno said the MoA with PAGCOR will likewise allow them to collaborate in terms of sharing studies, research, and information in recent emerging trends related to money laundering and terrorism financing.

“The actionable information that we share with each is important in supporting financial investigations,” Mr. Diokno said on Tuesday.

He said the MoA will also allow them to carry out capacity-building measures to address the said threats.

“The latest National Risk Assessment notes a high sectoral money laundering threat among designated non-financial businesses and professions — including casinos which are highly vulnerable,” he said.

Mr. Diokno said the rise in different varieties of casino operations as well as the decrease in transparency of high-rollers or gamblers that consistently bets using a large amount of money resulted to “much vulnerability” in terms of identifying sources and the movement of funds.

“This calls for strict enforcement of and compliance to anti-money laundering and counter-terrorism financing policies-urging the full cooperation of covered persons during the conduct of examinations — especially with the rise of POGOs,” he said.

Under the amended Anti-Money Laundering Act or Republic Act No. 10927 enacted in 2017, casinos are considered as “covered persons.”

In his speech, Mr. Diokno cited PAGCOR’s role to supervise, assess, and monitor whether casinos comply on their obligations as per the Anti-Money Laundering Act, the Casino Implementing Rules and Regulations, among other relevant issuances. He noted that the agency informs AMLC of the results of its inspections.

PAGCOR operates nine casino branches as well as 32 satellite casinos all over the country.

In August, the AMLC fine-tuned rules on administrative cases for casino officials and employees and unveiled a gradation of fines depending on the gravity of violation.

In December, the dirty money watchdog announced they would be pushing for changes to their framework to avoid heightened surveillance over weak anti-money laundering and anti-terrorism financing measures. — Luz Wendy T. Noble

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