PDIC pays P1.18 billion in deposit insurance for closed banks in 2019

January 17, 2020 | 12:01 am

THE PHILIPPINE Deposit Insurance Corp. (PDIC) paid a total of P1.18 billion in deposit insurance last year to 51,278 valid deposit accounts, it reported on Thursday.

In a statement yesterday, PDIC said the amount covered 92.25% of the total deposit insurance claims from the banks that were closed in 2019.

The state deposit insurer took over a total of 11 banks that the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) ordered closed last year.

These banks were the Bagong Bangko Rural ng Malabang in Lanao del Sur, Inc., the Rural Bank of Mabitac in Laguna, Inc., The Palawan Bank (Palawan Development Bank), Inc., Valiant Bank, Inc. (A Rural Bank), the Rural Bank of Basey in Samar, Inc., the Rural Bank of Guihulngan in Negros Oriental, Inc., the East Coast Rural Bank of Hagonoy, Inc., the Rural Bank of Larena in Siquijor, Inc., the Rural Bank of Lemery, Inc., the AMA Rural Bank of Mandaluyong, Inc. and the Maximum Savings Bank, Inc.

“Deposit insurance claims were paid within the target turnaround time of 12 to 42 working days proportioned on the number of valid deposit accounts maintained in the closed bank,” it said.

In 2019 alone, PDIC estimated that insured deposits reached P1.27 billion from 76,650 accounts, based on the payout operations they conducted from 10 closed banks out of the total 11.

PDIC said it was not able to make payouts for the closed AMA Rural Bank of Mandaluyong, Inc. due to the 60-day temporary restraining order (TRO) issued by the Court of Appeals (CA) on Nov. 25.

It said the TRO further delayed the payouts to depositors.

“Prior to the issuance of the TRO, PDIC was unable to immediately pay the claims of depositors of AMA Rural Bank for insured deposits due to the delay caused by the refusal of the bank’s directors and accountable officers and employees to turn over bank records to PDIC. The TRO has further delayed payouts to depositors,” it added.

As of June last year, AMA Rural Bank had total deposit liabilities of P1.4 billion for 8,434 deposit accounts. — B.M. Laforga

How does the Philippines compare with its regional peers in providing a stable electricity supply for businesses?

January 17, 2020 | 12:00 am

How PSEi member stocks performed — January 16, 2020

January 17, 2020 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Thursday, January 16, 2020.

Climate change seen reducing outdoor work, dampening growth

January 16, 2020 | 10:02 pm

EXTREME heat caused by climate change puts the Philippines at risk of losing many hours of outdoor work in industries like construction or farming, dampening economic growth, the McKinsey Global Institute said.

The report, Climate risk and response: Physical hazards and socioeconomic impacts, said that hot and humid countries, stand to lose an average of 8 percentage points in the annual share of effective outdoor working hours due to extreme heat and humidity until 2050.

Unlike significantly hotter and more humid countries like Bangladesh and India, however, heat and humidity in the Philippines does not exceed liveability thresholds, it said.

Globally, the annual outdoor working hours potentially lost to extreme heat and humidity could double to 15-20% of the total by 2050 from 10% currently. The effect of these losses on Gross Domestic Product (GDP) was estimated as 2-3.5% by 2050 from 1.5% today, averaging $4 trillion and $6 trillion in GDP at risk annually.

Countries with lower per-capita GDP encounter more risk to their outdoor work, it said.

“Poorer regions often have climates that are closer to physical thresholds. They rely more on outdoor work and natural capital and have less financial means to adapt quickly,” the report said.

In contrast, northern European countries stand to benefit as tourism shifts in their direction.

The report said adaptation from companies and communities is coming at too slow a pace, as heat stress decreases individuals’ ability to work outdoors, sometimes putting their health and lives at risk.

“Heat reduces labor capacity because workers must take breaks to avoid heatstroke and because the body naturally limits its efforts to prevent overexertion. Increased temperatures could also shift disease vectors and thus affect human health.”

According to preliminary data, the Philippine Statistics Authority (PSA) estimates that 22.9% of the 42.4 million employed Filipinos in 2019 work in agriculture. Construction workers make up 9.8% of the total, while mining and quarrying make up 0.4% of the total.

To protect people and assets, the report said companies can build cooling shelters and adjust work hours for outdoor workers.

Companies adapting to shifts in climate can also harden infrastructure, including raising the elevation level of buildings in flood-prone areas and develop mangrove plantations to protect from storms.

The report released on Thursday was a year-long research effort focusing on the physical risks of climate change.

“Much as thinking about information systems and cyber-risks has become integrated into corporate and public-sector decision making, climate change and its resulting risks will also need to feature as a major factor in decisions,” McKinsey Global Institute Director and Senior Partner of McKinsey Shanghai Jonathan Woetzel said in a statement.

“The intent of this report is to clarify and quantify the level of systemic physical risk that is currently accumulating, so that it can be taken into account by insurers, investors, lenders, governments, regulators, non-financial corporations and individuals as they make strategic decisions.” — Jenina P. Ibañez

DoF to seek lower DST, warns TIEZA could lose travel tax

January 16, 2020 | 10:01 pm

FINANCE Secretary Carlos G. Dominguez III said Thursday he will seek to lower the documentary stamp tax (DST) to restore the Department of Finance’s original program when it proposed legislation that later became the Tax Reform for Acceleration and Inclusion Act (TRAIN).

Mr. Dominguez told members of the Rotary Club Manila during their meeting yesterday that the increase in DST was not part of the Finance Department’s proposals when it was lobbying for TRAIN, which took effect in 2018.

“The increase in the DST was not part of the tax reform program. It was inserted during the bicam (bicameral conference). During the time when you have a bicam the (Department of Finance) is not allowed to speak so that was inserted and unfortunately we were unable to register our objection on that. We definitely don’t agree with it and hope that in some future legislation the DST will be reduced,” he said.

He was responding to an issue raised by a participant at the meeting about higher DST slowing down business growth and raising the costs of doing businesses.

Mr. Dominuez said the DoF will “attempt to reduce it in the future” but since the “process for legislation is long and tedious,” he said “I can’t promise it now.”

Republic Act No. 10963 or the TRAIN Act, which came into force on Jan. 1, 2018, doubled the DST to P3 from P1 previously on documents, instruments, loan agreements and papers.

DST rates on debt instruments were hiked by 50% while the rates on property insurance, fidelity bonds and other insurance, indemnity bonds and deeds of sale, conveyance and donation of real property remained unchanged.

Collections from DST increased last year to P4.7 billion on the back of “higher transaction value and better collection efficiency,” the DoF reported earlier.

ELIMINATION OF TRAVEL TAX
Also during the same open forum, Mr. Dominguez said his department will look into the possibility of eliminating the travel tax, warning the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) to use up its funds and act faster in implementing programs “or the travel tax will be eliminated.”

“The travel tax is in place and definitely we will look at its elimination… In fact I had a meeting with the TIEZA people recently and I noted that they have P14 billion in their account. And I told them if they don’t spend it, I will take it away,” he said after a member of the Rotary Club raised the issue.

According to TIEZA’s website, full travel tax rates for economy and business class flights are at P1,620 currently while first class flights are taxed P2,700.

TIEZA receives half of the total revenue collected from travel tax while the Commission on Higher Education receives 40% and 10% goes to the National Commission for Culture and Arts.

TIEZA approved a total of P5 billion worth of infrastructure projects in December. — Beatrice M. Laforga

Cayetano commits to pass measure to lower shipping fees

January 16, 2020 | 10:00 pm

THE House of Representatives has committed to pass a measure to regulate shipping rates to ultimately lower costs for consumers, Speaker Alan Peter S. Cayetano said.

Mr. Cayetano said the measure will be drafted with major input from the Department of Trade and Industry (DTI).

“Local producers who import raw materials are forced to pay these exorbitant shipping fees, which jack up their production costs, and, in the process, result in higher prices for domestic consumers. Ang pinoprotektahan natin dito in the end ay ang ating mga consumers. (In the end we want to protect consumers). This will also help the government improve its tax collection abilities” Mr. Cayetano said in a statement Thursday.

Mr. Cayetano’s advocacies center around the so-called Presyo, Trabaho, Kita (PTK) program, which focuses on prices, jobs, and earnings. Mr. Cayetano cited the need to pass laws that will have such impacts in the countryside in aid of President Rodrigo R. Duterte’s promise to provide a “safe, secure and comfortable life for every Filipino.”

Mr. Cayetano said Trade Secretary Ramon M. Lopez plans to submit to the House a bill on shipping rates, which the chamber hopes to incorporate with similar pending measures filed with the 18^th Congress.

The DTI was planning to issue a Joint Administrative Order, together with the Department of Transportation and the Department of Finance, on the regulation of fees charged by foreign shipping lines, but later decided to ask the President to issue an Executive Order on the matter.

However, the lack of an enabling law covering the regulation of fees imposed by foreign shipping lines prompted the DTI to draft a bill to give more teeth to the measure.

At least two bills are pending in the House seeking to regulate and standardize fees imposed by foreign shipping lines operating in the country.

Rep. Bernadette R. Herrera-Dy of Bagong Henerasyon Party List filed House Bill (HB) 4316 which aims to standardize charges at both the origin and destination imposed by international shipping firms.

Meanwhile Ang Probinsyano Partylist Rep. Ronnie L. Ong’s HB 4462 proposes to authorize the Maritime Industry Authority (MARINA) to promote fair and transparent destination fees and other shipping charges collected by freight forwarders and agents of international shipping lines. — Genshen L. Espedido

Gov’t urged to find better destinations for OFWs

January 16, 2020 | 9:59 pm

SENATOR Sherwin T. Gatchalian said Thursday that the government needs to find other possible destinations which are safer for household workers following the death of another domestic helper in Kuwait.

“Dapat maghanap pa tayo ng ibang merkado para sa OFW (We need to find other markets for OFWs)“ Mr. Gatchalian said in a briefing, referring to Overseas Filipino Workers.

“May mga bansang mas binibigyang halaga ang ating OFW, doon ang dapat natin bigyan ng prioridad (We need to give priority to other countries that value our OFWs).” He cited the UK and France, among other potential destinations.

The Philippine Overseas Employment Administration (POEA) imposed a total deployment ban on workers to Kuwait after the death of Jeanelyn Villavende. A Kuwaiti autopsy confirmed she died after sustaining multiple injuries. A Philippine autopsy found that in addition, she was sexually assaulted.

The government in 2018 declared a Kuwait deployment which lasted four months after the murder of domestic helper Joanna Demafelis. In May 2019 Malacañang pushed for the review of its memorandum of understanding with the Kuwaiti government after the killing of another Filipina, Constancia Dayag.

Mr. Gatchalian supports the ban, and proposes that it remain in effect until Kuwait addresses labor standards and delivers justice for the deceased OFWs.

“Para sa akin moratorium hanggang magkaroon ng linaw ang issue sa MoA at hustisya (I support a moratorium until we achieve clarity on the MoA and obtain justice),” he said.

He said employers of household workers continue to violate the rights of their workers by confiscating their passports and mobile phones and denying them days off.

Mr. Gatchalian, however, said that the moratorium do not need to cover highly-skilled Filipino workers in Kuwait, who are protected by an official contract.

Asked to comment on bills that will create an OFW Department, Mr. Gatchalian said he deems it is more necessary to focus on bilateral agreements.

“During the last hearing, ’di klaro kung ano ang dahilan kung bakit natin kailangan magpatayo ng Department of OFW dahil may mga ahensya na tayong gumagana. Ang importante lang ang mga bagay na magbibigay proteksyon sa mga OFW, like MoAs, bilateral agreements at mga batas ay pantay pantay para sa lahat (It was not made clear why we need an OFW department because we have functioning agencies looking after these workers. The important thing is agreements with the host countries and a fair justice system.)” — Charmaine A. Tadalan

Gov’t forms anti-hunger task force led by Nograles

January 16, 2020 | 9:58 pm

THE government has formed a task force to eradicate hunger in order to help achieve one of the Sustainable Development Goals (SDG) under the United Nations 2030 Agenda.

Executive Order (EO) No. 101 authorizes the formation of the Inter-Agency Task Force on Zero Hunger, which will be chaired by Cabinet Secretary Karlo Alexei B. Nograles.

“There is a need to carefully coordinate, rationalize, monitor, and assess the efforts of concerned government agencies and instrumentalities to ensure a whole-of-government approach to eradicating hunger and achieving food security,” according to the EO, dated Jan. 10.

The SDGs are a set of 17 targets aimed at ultimately ending poverty and hunger among other forms of deprivation by 2030. They were adopted by UN member states in 2015.

Aside from hunger and poverty, the SDG also seeks to attain good health and well-being, quality education, gender equality, clean water and sanitation and affordable and clean energy, among others.

The SDG agenda was also one of the guiding documents in the drafting of the government’s medium-term development strategy — the Philippine Development Plan 2017-2022.

President Rodrigo R. Duterte designated Social Welfare and Development Secretary Rolando Joselito D. Bautista and Agriculture Secretary William D. Dar as vice chairmen.

Its members will include the secretaries of the Department Agrarian Reform, Department of Budget and Management, Department of Education, Department of Environment and Natural Resources, Department of Health, Department of Labor and Employment, Department of the Interior and Local Government, Department of Trade and Industry, Department of Science and Technology, the National Economic and Development Authority, the Commission on Higher Education, and the Presidential Communications Operations Office.

The Task Force is directed to formulate a National Food Policy, identifying the country’s problem areas in dealing with hunger and related issues, while developing a road map to achieve zero hunger.

The Task Force will be funded initially from the current appropriations of member agencies. — Charmaine A. Tadalan

Poultry prices expected to remain stable following Taal ashfall

January 16, 2020 | 9:58 pm

POULTRY PRICES are expected to remain stable amid calamity conditions just south of Metro Manila, with a full eruption of Taal Volcano in Batangas still not ruled out.

“I don’t expect much impact given that most of Batangas is not affected. (It is) limited to several towns near the volcano,” Philippine Institute for Development Studies (PIDS) Research Fellow Roehlano M. Briones said in a text message.

Batangas is part of the CALABARZON region, which also includes Cavite, Laguna, Rizal, and Quezon. The region is one of the top producers of chicken in the Philippines.

The national inventory of chicken at the start of 2019 was 186.37 million birds, up 6.03% year-on-year. Calabarzon had the second-largest population at about 24 million birds, consisting of 9.33 million broilers, 13.98 million layers, and 2.73 million native or improved varieties. Central Luzon topped the list at 31.764 million birds.

United Broilers and Raisers Association (UBRA) Chairman Gregorio A. San Diego said that the impact of the activity at Taal is not yet being felt by the industry.

“We are still in the process of evaluating the situation but as far as farmgate prices are concerned, we have not felt any impact yet,” he said in a separate text message.

According to UBRA’s weekly monitoring, as of Jan. 10, the price of regular-sized chicken was P72.25 per kilo, down 9% week-on-week, while prime sized chicken averaged P73.67 per kilo, down 9% week-on-week.

Philippine National Bank (PNB) economist Jun Trinidad said in a note that food prices, specifically of chicken and hogs, as well as fish, may rise due to the calamity since the region is a significant contributor.

Finance Undersecretary Gil S. Beltran said that the increase in price will be tempered since there are other regions that can fill demand.

Taal Volcano emitted large volumes of ash on Jan. 12. Alert level 4 is still up, which means that a “hazardous explosive eruption is possible within hours to days” despite the weakening of the ash plume.

The ashfall in the area around Taal, according to the Department of Agriculture (DA), caused P577.39 million worth of agricultural damage, affecting around 2,772 hectares of land and 1,967 animals.

Socioeconomic Planning Secretary Ernesto M. Pernia said that volcanic activity and associated earthquakes have caused P7.63 billion worth of economic damage in Batangas. — Vincent Mariel P. Galang

Palay farmgate price rises 0.1% in mid-December

January 16, 2020 | 9:57 pm

THE average farmgate price of palay, or unmilled rice, rose 0.1% week-on-week in the second week of December to P15.64 per kilogram (kg), the Philippine Statistics Authority (PSA) said.

According to PSA’s weekly palay and corn price update, the average wholesale price of well-milled rice dropped 0.1%, week-on-week to P37.18 per kg, while retail prices climbed 0.02% to P41.45.

The average wholesale price of regular-milled rice fell 0.1% week-on-week to P33.05 per kg, while retail prices fell 0.1% to P36.55.

Palay prices generally weakened in 2019. Year-on-year, the price of palay, the form in which farmers sell their harvest, declined 21.9%. The weakening of prices followed the implementation of the Rice Tariffication Law in March, which removed most restrictions on imported rice.

The average farmgate price of yellow corn grain rose 2% week-on-week, to P12.16 per kg. The average wholesale price rose 0.3% to P21.36. The retail price was stable at P25.86.

The farmgate price of white corn grain averaged P13.22 per kg, down 0.2% week-on-week. The average wholesale price fell 0.6% to P16.90, while the average retail price declined 0.2% to P26.70. — Vincent Mariel P. Galang

Fitch Solutions says drug price controls a threat to pharma multinationals

January 16, 2020 | 9:57 pm

FITCH SOLUTIONS Macro Research said the government’s plan to impose price controls on a list of widely-used drugs will be positive for the market over the long term but will likely threaten the operations of multinational drugmakers, whose business models are based on expensive medicines under patent protection.

Fitch Solutions said the price controls will likely restrict the growth of the pharmaceutical market over the short term.

“Pressure on pharmaceutical prices will continue to threaten the operations of multinational drugmakers in the Philippines. The introduction of a maximum retail price scheme will exacerbate a tough environment, with price controls being applied at all stages of supply chain,” according to a commentary published by Fitch Solutions, a part of Fitch Group.

However over the longer term, it said the price controls will likely be “positive for the market” given the expected increase in sales due to higher demand and greater competition among suppliers.

“If patients and other payers are attracted to the new lower-priced pharmaceuticals, greater demand should attract more suppliers to the Philippine market, which is often overlooked by firms seeking opportunities in Asia Pacific,” it said.

Fitch Solutions said that the proposed scheme will likely affect large drugmakers in Europe and US the most since the price controls will mainly be implemented on newly-introduced products for the treatment of chronic diseases.

It said the scheme may also affect distributors, pharmacies and private hospitals, citing the Pharmaceutical Healthcare Association of the Philippines’ (PHAP) warnings of the negative impact on retailers. It said it may even push manufacturers to rethink their plans to launch new medicines in the Philippine market.

“It could also lead to pharmaceutical companies withdrawing existing products, which would harm the public,” it said.

It said a policy of generics substitution will “over the longer term, as is common throughout the Asia region, (lead to decelerating) market growth… due to increasing cost-containment and initiatives to improve the cost-efficiency of pharmaceutical spending.”

“An increasing focus on cost-effective expenditure will further promote generic substitution rhetoric. As such, generic medicine sales growth will outperform overall market growth over the long term,” it added.

The government is looking to implement a Maximum Drug Retail Price (MDRP) scheme that aims to impose price controls on widely-used drugs.

In an interview with ABS-CBN aired Monday, President Rodrigo R. Duterte said he will sign a draft executive order covering the MDRP scheme.

The Department of Health (DoH) released in September a proposed list of 120 drugs covered by MDRP, which will lead to “a mean price reduction of 56% from the prevailing market.”

Included in the list are drugs addressing hypertension, diabetes, cardiovascular disease, chronic lung diseases, neonatal diseases and major cancers, as well as diseases that have high treatment costs, including chronic renal disease, psoriasis, and rheumatoid arthritis.

The DoH hopes to lower prices of some medicines through the scheme but a group of pharmaceutical firms said the government can reduce prices by buying in bulk and selling them through state hospitals, instead. — Beatrice M. Laforga

IRA ruling could see more functions shifted to LGUs

January 16, 2020 | 9:56 pm

THE government could respond to a Supreme Court ruling increasing local governments’ share of national government revenue by shifting more of its functions to the local level, Finance Secretary Carlos G. Dominguez III said.

Mr. Dominguez said giving local government units (LGUs) more responsibility for tasks currently taken on by the national government was one of the options in response to the so-called Mandanas ruling, which sought to broaden the definition of “national government income” eligible for distribution to LGUs under an allocation called the Internal Revenue Allotment (IRA).

The case, Mandanas vs. Ochoa, takes its name from Hermilando I. Mandanas, a former governor and legislator from Batangas province. Mr. Mandanas in 2012 questioned the basis for determining the IRA pool, noting that local governments were owed about P500 billion in arrears since 1992 due to a more restrictive definition of “national government revenue” which left out revenue earned by the Bureau of Customs.

The Local Government Code entitles LGUs to a share of national government revenue. In July 2018, the Supreme Court ruled that the LGU’s “just share” covered all other forms of national tax, not just internal revenue taxes.

Mr. Dominguez said apart from shifting more functions to LGUs to comply with the ruling, the government is also considering requesting Congress to amend the law, or to declare the ruling “fiscally unsustainable.”

“That will be a very significant chunk of the revenue going to the LGUs,” he said.

“The first option is to comply with decision… however, in order to comply, we will also have to transfer some of the costs that are being incurred by the national government to the local government. You can’t just take the money, you should also take some of the responsibility. So that is being studied right now by the Department of Budget and Management and ourselves (DoF),” he said.

“The second option we have is to request the Congress to change the law and say it should be 30% of what the BIR collects. In that way that will defeat the decision of the Supreme Court.”

“The third option is to declare it fiscally unsustainable, so we won’t have to do it. So this is a legal problem that has become a fiscal problem,” he added.

He said the government has two years to decide before the ruling takes effect. — Beatrice M. Laforga