Category

Property News

Balance of payments in surplus for fifth straight month in March despite ‘hot money’ outflow

By | Property News

THE COUNTRY’s balance of payments (BoP) — which summarizes the Philippines’ economic transactions with the rest of the world for a given period — yielded a surplus for the fifth month in a row as inflows from the national government’s (NG) net foreign currency deposits and the central bank’s foreign exchange operations as well as income from the latter’s investments abroad offset outflows due to NG’s foreign debt payments, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
The central bank reported separately on Friday that foreign portfolio investments — also called “hot money” for the ease by which they are infused and taken out of local markets and which form part of BoP’s financial account — reversed to a net outflow in March from a year ago and the preceding month.
BoP posted a $627-million surplus in March that was a turnaround from the year-ago $429-million deficit and 46.8% more than February’s $467-million surfeit.
That led to a year-to-date $3.797-billion surplus that was a turnaround from the $1.227-billion deficit in last year’s first quarter, and compares to the $3.5-billion deficit the central bank has projected for 2019 and the $2.306-billion gap incurred in 2018.
“The reported BoP position reflected the final gross international reserves (GIR) level of $83.61 billion as of end-March 2019,” the central bank said in a press statement.
“At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to five times the country’s short-term external debt based on original maturity (outstanding foreign debt with maturity of up to a year) and 3.5 times based on residual maturity (outstanding foreign debt with original maturity of up to a year plus principal payments on medium- and long-term loans of the public and private sectors falling due in the next 12 months).
BSP Deputy Governor Diwa C. Guinigundo told reporters via mobile phone message: “… [W]e continue to see very encouraging signs in the first two months of the year that OFW (overseas Filipino worker) remittances and tourist receipts would continue to be robust”, adding that “[i]nflows of foreign loans are expected to have also supported the surplus in the March BoP”.
The BSP reported last Monday that the first two months saw money sent home by OFWs grew three percent year-on-year to $4.784 billion.
“If this trend continues, we should be looking at a better BoP position at the end of the year. It should also validate the financiability of the current account deficit we have sustained in the last few years on account of strong economic performance,” Mr. Guinigundo said.
In an e-mail, Security Bank Corp. Chief Economist Robert Dan J. Roces said that the surplus masks the negative current account that includes trade in goods.
The Philippine Statistics Authority reported on April 11 that the country’s merchandise trade deficit grew 16% to $6.708 billion as of February from the $5.763-billion shortfall in 2018’s comparable two months.
“The surplus reflects the high reserves accumulated by the central bank via the capital account; our gross international reserves at an all-time high and foreign investors are coming back, having poured in around $400+ million as of February,” Mr. Roces wrote.
“However, these mask the negative in the current account which measures among others imports and exports where our imports are high and exports are stagnant,” he added.
“Moreover, OFW remittances, also high for the quarter, are part of the current account which goes to show that the remittances are not enough to cover for the trade gap,” Mr. Roces noted.
“On a positive note, our high capital account means we have enough forex reserves to stabilize the peso. And as long as economic growth stays robust, the export sector gets its support after the budget was signed, and our economic fundamentals remain solid, we see a sustained surplus for the year.”
In a separate comment, Michael L. Ricafort, economist of the Rizal Commercial Banking Corp. (RCBC), said via text: “The improvement in the BoP surplus may be attributed to the sustained pickup in net foreign portfolio/net foreign buying in the local financial markets since the start of 2019 amid easing trend on both local inflation and interest rates.”
“BoP surplus may also reflect the sustained growth in the country’s structural US dollar/foreign currency inflows such as OFW remittances, BPO [business process outsourcing] revenues and foreign direct tourism receipts, as well as foreign direct investment inflows.”
HOT MONEY RETREATS
The central bank also reported on Wednesday that hot money net outflows in March ended four straight months of net inflows.
March saw $739-million net outflows that was a reversal of the year-ago $1.132-billion net inflows, as gross inflows went down a third to $1.732 billion from $2.469 billion and gross outflows nearly doubled to $2.471 billion from $1.337 billion.
“About 66.5% of investments registered during the month were in Philippine Stock Exchange-listed securities (mainly to holding firms, food, beverage and tobacco companies, property firms, banks, and transportation services companies); while 33.4% went to peso(-denominated) government securities and the 0.1% balance went to UITFs (unit investment trust funds),” the BSP said in a separate statement.
“The United Kingdom, the United States, Singapore, Luxembourg and Hong Kong were the top five investor countries for the month, with combined share to total at 80.3%.”
The central bank added that gross outflows “may be attributed to large outflows from peso GS amounting to $939 million for March 2019 vis-à-vis the $154 million recorded in February.”
“The US continued to be the main destination of outflows, receiving 76.8% of total remittances.”
That brought first-quarter flows to a $363.4-million net inflows that were less than half the year-ago $766.05 million, as gross inflows edged up 1.3% to $5.204 billion from $5.137 billion and gross outflows grew 10.7% to $4.841 billion from $4.372 billion.
Sought for comment, RCBC’s Mr. Ricafort replied in a text message: “Some profit-taking activities in March 2019 may have ensued after hefty market gains in January-February 2019, partly triggered by slower global economic growth and outlook amid declines in manufacturing gauges of China, Euro zone and in some developed countries… and declines in China’s exports and imports largely due to the adverse effects of the lingering US-China trade war and uncertainties related to Brexit.”
“[G]eopolitical risks related to tensions between India and Pakistan in March 2019 also triggered some profit taking in the local markets. Some profit taking in the local markets also came after the announcement on increased MSCI weighting of Chinese stocks in global benchmarks,” Mr. Ricafort added.
In a separate comment, Nicholas Antonio T. Mapa, senior economist of ING Bank NV-Manila, said that the outflows could reflect investors’ monetary policy expectations.
“Portfolio flows continue to help determine direction for the peso, with the outflow driven mainly by expectations for monetary policy… March’s depreciation trend mirrored the outflow from both the bond and equity markets with the BSP perceived to take on perhaps a more dovish tone to support flagging growth prospects after their ultra-aggressive rate salvo of 2018 to quell supply-side inflation,” Mr. Mapa said in an e-mailed response to questions.
“We can also note that sentiment can help drive the direction for trading with the first two months of the year seeing stark appreciation pressure for the peso even as interest rate differentials between the US and the Philippines remained unchanged. We’ve noted that foreign exchange direction is driven by both interest rate differentials as well as market-assigned probability to a Fed rate hike and thus the peso can remain stable even if actual differentials are maintained for as long as investors believe the Fed to be on hold for the time being,” he added.
“In the coming months, we can expect the peso to still enjoy some appreciation pressure given that investors are no longer expecting the Fed to hike rates in 2019 given the recent adjustment to the Fed’s outlook on rates. This expectation will help drive the flow of funds to emerging markets like the Philippines even if differentials are unchanged or even narrowed.” — Reicelene Joy N. Ignacio

Economic managers tout infrastructure, reform gains to US businessmen

By | Property News

STATE economic managers flew to Washington D.C. last week to showcase the country’s infrastructure developments and economic reforms, in efforts to woo more foreign firms to invest in the Philippines.
Led by Finance Secretary Carlos G. Dominguez III and Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno, key economic officials made the case before 150 executives from top US banking, investment and financial firms at the Philippine Day Forum held on April 11, the government’s Investor Relations Office said in a press release on Wednesday.
At the forum, Mr. Dominguez said that while the Philippines ranks as among the best performing economies in Asia, mere economic growth is not the final goal of all the government’s efforts.
“We seek a more dynamic and competitive economy to bring down poverty rates and create more opportunities for our people,” he said at the conference held at the sidelines of the spring meetings of the International Monetary Fund and the World Bank.
The Philippine Statistics Authority earlier this month said less Filipinos were mired on poverty in the the first half of 2018. During that period, poverty incidence — the proportion of Filipinos whose incomes fell below the per capita poverty threshold of P10,481 per month — fell to 21% from 27.6% recorded in the first half of 2015.
World Bank Vice-President for East Asia and Pacific Victoria Kwakwa said the country has the “potential to become the next East Asian success story.”
“Its vision to become a prosperous, resilient, middle-class society free of poverty by 2040 is an achievable goal — but one that will require continued reform and investment to open the economy, overcome infrastructure backlog, invest in human capital, and build the resilience of the nation, especially as the threat of climate change increases,” Ms. Kwakwa said in her opening remarks.
The state embarked on an P8-trillion “Build, Build, Build” infrastructure program in an effort to boost economic growth to 7-8% until 2022 from a 6.3% average in 2010-2016. But the first two years of the current administration saw gross domestic product (GDP) growth average 6.45%, and economic managers last month slashed the official GDP growth goal this year to 6-7% from 7-8% due to delayed enactment — just last Tuesday — of the 2019 national budget that left new projects unfunded.
“We are determined to deliver what we say, and to deliver them on time and on budget. All of these infrastructure projects have made the Philippines one of the most attractive destinations of the world,” said Vivencio B. Dizon, president and chief executive officer of Bases Conversion and Development Authority.
The government is pushing for comprehensive tax reform to simplify the regime and generate more revenue to support its infrastructure program and expand social services.
Finance Assistant Secretary Antonio Joselito G. Lambino III said that this is the first time the country overhauled tax system to reduce poverty and inequality and not for deficit or debt reduction.
Signed into law in December 2017, Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act — the first of up to five packages — slashed personal income tax rates in order to put more money in households’ pockets but increased or added levies of various goods and services and removed several value added tax exemptions.
The government is also set to implement RA 11213 or the Tax Amnesty Act, enacted on Feb. 14, that will net more tax delinquents into the fold.
However, Senate President Vicente C. Sotto previously mentioned that it was “doubtful at this point” that the Senate could approve any more tax reforms — which have secured lower house approval — in the remaining May 20-June 7 session days of the 17th Congress. Tax reforms approved by the House of Representatives but still awaiting fiat in the Senate Ways and Means committee entail bills to reduce corporate income tax rates and remove redundant fiscal incentives, simplify the tax structure of the financial sector, centralize real property valuation and assessment; increase government share in mining revenues and even higher excise tax rates for alcohol and tobacco products.
BSP’s Mr. Diokno meanwhile underscored the resilience of the domestic economy to external headwinds, as well as the capacity to sustain robust economic growth. “For the Central Bank, it is a matter of careful commitment and timely action. The economy itself is fundamentally solid. Overall macro-economic conditions provide sound basis for cautious optimism,” he said.
On the sidelines of the event, the central bank chief told Bloomberg Television that a cut in benchmark interest rates will be considered on May 9, when the BSP holds its third policy review for this year. — K. A. N. Vidal

Duterte threatens anew to sack MWSS officials

By | Property News

PHILSTAR/JOVEN CAGANDEBy Charmaine A. Tadalan, Reporter
PRESIDENT RODRIGO R. Duterte has threatened anew to sack Metropolitan Waterworks and Sewerage System (MWSS) officials if the water shortage continues during the El Niño period.
He also said he will appoint Filipino engineers working overseas to replace current MWSS officials.
“There are millions of Filipinos waiting outside…brighter than you. Kaya lang, hindi lang kilala kasi hindi mga politiko (but they’re not popular because they’re not politicians),” Mr. Duterte said at a campaign rally in Cagayan, Tuesday evening.
“I will not hesitate to replace you all.”
The president on March 20 told MWSS officials and water concessionaires to “shape up or ship out” and even threatened to terminate the concession agreements.
He further criticized the regulating body over its failure to prepare for El Niño.
“It comes with regularity…‘yang El Niño na ‘yan. Ilang tao kayo nandiyan (This El Niño comes with regularity, and how many of you are there?). And you do not prepare for it? And when it comes, walang tubig ‘yung mga tao? (The people don’t have water?)”
Mr. Duterte also repeated his warnings against the water concessionaires. “Why do you have to cause problem for the people when there are things that you can do at once… you derail everything in life,” he said.
“Kaya ako, pagka ganun, wala akong pasensya (On matters like this, I don’t have the patience). Either you can hack it or not. If you don’t, sorry.”
The President was supposed to decide on whether to fire MWSS officials on April 15, but Cabinet Secretary Karlo Alexei B. Nograles said this was moved to April 22.
“April 22 na lang, magre-reflect muna siya (He’ll reflect on it first). It will give him a chance also to study everything,” Mr. Nograles said on Wednesday at the Kapihan sa Manila Bay forum, streamed on Facebook.

SC slams OSG on drug-war documents

By | Property News

By Vann Marlo M. Villegas, Reporter
THE SUPREME COURT (SC) said the government’s releasing of documents in connection with its drug war does not pose a threat to national security.
The high court also slammed the Office of the Solicitor-General (OSG) for “arrogat(ing) upon itself the determination of the relevance of the (said) documents.”
“[C]ontrary to the claim of the Solicitor-General, the requested information and documents do not obviously involve state secrets affecting national security. The information and documents relate to routine police operations involving violations of laws against the sale or use of illegal drugs” the SC said in its April 2 resolution directing the Solicitor-General anew to release the said documents.
“These information and documents do not involve rebellion, invasion, terrorism, espionage, infringement of our sovereignty or sovereign rights by foreign powers, or any military, diplomatic or state secret involving national security. It is simply ridiculous to claim that these information and documents on police operations against drug pushers and users involve national security matters,” the high court also said.
SC Public Information Office Chief Brian Keith F. Hosaka announced on April 2 that the high court ordered the OSG to release all documents pertaining to the war on drugs. The resolution was released to media April 17.
The SC in December 2017 ordered the OSG to release the said documents after holding three-day oral arguments on two petitions questioning the constitutionality of the drug war.
This decision stemmed from the petitions of Center for International Law (CenterLaw) and FLAG in 2017 which sought the SC to stop the government’s war on drugs. CenterLaw asked for the issuance of writ of amparo protecting residents of 26 towns in San Andres Bukid, Manila from the war on drugs while the Free Legal Assistance Group (FLAG) raised questions on constitutionality.
The Court subsequently granted an August 2018 request by FLAG to be furnished with copies of the documents.
OSG on Sept. 4 that year furnished FLAG copies of the documents (classified as Category 2) connected only to its petitions, and filed a partial motion for reconsideration in which it claimed that the petitioners are not entitled to Category 1 documents as they contain “sensitive information” which could have national security implications.
Category 1 documents consist of lists of persons killed in legitimate police operations from July 1, 2016 to Nov. 30, 2017, as well as lists of deaths under investigation and of Chinese and Filipino-Chinese drug lords, among others.
“(W)e find that the OSG arrogated upon itself the determination of the relevance of the documents to the issues involved in the present petitions. To reiterate, we have ruled in our Resolution dated 3 April 2018 that the determination of whether particular evidence is relevant rests largely at the discretion of this Court,” the SC stated.
“We do not tolerate the OSG’s unilateral arrogation,” it added.
For its part, the OSG said in a statement April 4 that it “will faithfully abide with the Court’s directive.”
In a related development, the Philippine Drug Enforcement Agency(PDEA) said the conviction rate of drug cases increased in 2018.
PDEA noted there were 41,583 cases filed in court in 2018, of which 13,111 resulted in conviction — 46.82% higher compared with 35% in 2017.
In a statement on Tuesday, PDEA Director General Aaron N. Aquino attributed this to the efforts of PDEA’s lawyers, but also cited cases that were “dismissed or indeterminately delayed because of the failure or negligence of some prosecutors to take advantage and make use of pretrial measures and remedies.”
The PDEA chief also credited his agency’s Project Court Watch program in its efforts on the legal front. — with Vince Angelo C. Ferreras

Sison blames military ‘diehards’ for disruption of peace talks

By | Property News

Communist Party of the Philippines founder Jose Maria C. Sison — PHILSTARBy Vince Angelo C. Ferreras
COMMUNIST PARTY of the Philippines (CPP) founder Jose Maria C. Sison blamed anew the military for the delay in peace talks between the government and communist rebels.
“In the experience of the National Democratic Front of the Philippines (NDFP) in negotiating with the Government of the Republic of the Philippines (GRP), the reactionary pro-US military officers at the highest level have always interfered to stop the peace negotiations,” Mr. Sison said in a statement on Wednesday, April 17.
The exiled communist leader added: “Under every administration from the Ramos regime to the current Duterte regime, peace negotiations are held only for a few months before the reactionary military diehards intervene to pressure their commander-in-chief to slow down or to declare the suspension or termination of the peace negotiations.”
President Rodrigo R. Duterte said last month he is ending peace negotiations and told communist rebels to just talk to the next administration. Recently, the President said he wants a peace panel to be composed of at least two civilians and three military officials.
“Under the pressure of the military, Duterte has terminated and practically killed the peace negotiations since he issued Proclamation 360 on November 23, 2017. And he has proceeded to drive more nails into the coffin of the GRP-NDFP peace negotiations,” Mr. Sison said.
He said one of the reasons behind the military’s intrusion in the peace talks is that the government “cannot obtain the surrender of the armed revolutionary movement of the people through a protracted and indefinite ceasefire.”
Another reason he cited is that the National Democratic Front of the Philippines “is gaining credit for pushing social, economic and political reforms to address the roots of the armed conflict.”
The CPP founder said of the government’s planned localized peace negotiations: “No one would ever be authorized by the NDFP National Council to negotiate with the GRP or its military under conditions completely under the control of the murderous Duterte regime. And no revolutionary in his right senses would ever surrender himself to the brutal and corrupt enemy.”
Sought for comment, Department of National Defense Spokesperson Arsenio R. Andolong said: “The DND and the AFP have always been supportive of the peace talks. Unfortunately, it is Joma Sison and his cohorts who have used the formal peace talks to delay and take advantage of the ceasefire mechanism to regroup and step-up their deceptive recruitment and exploitation of vulnerable sectors.”
Mr. Andolong added, “He and his now tiny band of misguided loyalists had 50 years to really show their love for our country and fellow Filipinos but they failed by engaging in deception and terror.”

Tax reform uncertainty to persist

By | Property News

KJ ROSALESBy Charmaine A. TadalanReporter
THE REMAINING PACKAGES of the tax reform program — a key support of the government’s P8-trillion stepped-up infrastructure development push, will continue to face uncertainty in the new 18th Congress that opens on July 22, according to one legislative leader.
Asked on prospects of future tax reform bills after two earlier measures were watered down after going through the eye of a needle in both chambers of the 17th Congress, Senate President Vicente C. Sotto III said in a mobile phone message on Monday that this and other priorities will be “up for discussion with the executive department after elections.”
“We need to discuss. It’s touch and go,” said Mr. Sotto, who is one of the 12 incumbent Senators who will serve in the 18th Congress.
The country will be voting for a new House of Representatives and half the Senate, besides a host of local government positions on May 13.
A Global Markets Research note released by Nomura International (Hong Kong) Ltd. on April 11 said President Rodrigo R. Duterte will likely have enough allies in Congress to push remaining tax measures after elections, citing his consistently high public satisfaction ratings.
The Department of Finance (DoF) said separately that it will continue to impress on lawmakers — especially newly elected ones — the indispensable role tax reforms play in shifting the tax burden on those who can afford to pay more, increasing collections in the process that will help fund improvements in social services and infrastructure. By law, all tax measures have to emanate from the House.
“We will continue our efforts to convince about the economic benefits of the tax packages,” Finance Assistant Secretary Maria Teresa S. Habitan said in a mobile phone message on Tuesday.
“DoF has been consistent in our advocacy to have the remaining tax reform packages passed by Congress as soon as possible. We believe that the Senate is still able to do its part in making this happen. Otherwise, we will again submit the tax reform packages to Congress,” she also said.
The 17th Congress, now on a Feb. 9-May 19 break for the May 13 midterm elections, will have just May 20-June7 to act on remaining legislative measures. Mr. Sotto had said on March 20 that it was “doubtful at this point” that his chamber could approve any more tax reforms in those remaining session days. Bills left unapproved by both chambers at the end of that period will have to be refiled in the 18th Congress.
Mr. Duterte has so far signed two tax reforms into law, while bills providing three more tax reform packages have bagged final-reading approval at the House of Representatives but remain at committee level in the Senate.
Enacted were Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which slashed personal income tax rates and increased or added levies on various goods and services, besides removing several value added tax exemptions, as well as RA 11213, or the Tax Amnesty Act, which grants estate tax amnesty and amnesty for delinquent accounts that remained unpaid even after being given final assessment by the Bureau of Internal Revenue.
Other tax reforms pending in the Senate Ways and Means committee entail bills to reduce corporate income tax rates and remove redundant fiscal incentives, simplify the tax structure of the financial sector, centralize real property valuation and assessment; increase government share in mining revenues and even higher excise tax rates for alcohol and tobacco products.
Asked if such uncertainty will push Mr. Duterte to intervene again to push tax reforms, Presidential Spokesperson Salvador S. Panelo replied: “Hindi, kasi alam na ng members ng Congress ang mga projects ng Presidente (No need, since members of Congress know the President’s projects).”
“If they’re supportive, they will support it.”
TRAIN was heavily watered down as it went through both the House of Representatives and the Senate, even after Mr. Duterte had talked to lawmakers in early 2017 and made a veiled threat in a State of the Nation Address afterwards about withdrawing support for the candidacy of one Senate leader come elections.
For Ateneo Policy Center senior research fellow Michael Henry Ll. Yusingco, a lawyer, much will depend on Mr. Duterte’s public satisfaction ratings in the second half of his term, which ends in mid-2020.
“I do not think tax reform will be a priority of Congress this year. Maybe it will be tabled early next year, if at all. Depends on the popularity of President Duterte by that time. If his trust ratings remain very high, then the administration may still have a decent chance at pushing tax reform legislation,” he said via e-mail, Monday.
“But if his trust ratings slide down to poor or bad, then the administration will likely abandon any tax reform initiatives. And Congress will not be keen by then to touch this matter for sure.”
Mr. Yusingco added Congress is more likely to focus on charter change and reforms in the water and power sector, in light of the recent crises.

2019 budget cut down to P3.66 trillion after veto

By | Property News

MALACAÑANG on Tuesday said the P95.3-billion allocations President Rodrigo R. Duterte vetoed in the original P3.757-trillion national budget for 2019 were found to be “unconstitutional.”
“Those are the so called ‘insertions,’ ‘riders,’ they are not part of the program by the DPWH (Department of Public Works and Highways), hence, they violate the Constitution,” Presidential Spokesperson Salvador S. Panelo said in a briefing, Tuesday.
Mr. Duterte on Monday signed the national budget into law as Republic Act No. 11260, or the “General Appropriations Act for Fiscal Year 2019.”
He partially vetoed the budget, cutting it to P3.662-trillion, including P95.3 billion under the DPWH budget which Mr. Panelo confirmed were among the post-ratification realignments.
Asked if the vetoed items were among the “last-minute” fund realignments made by the House of Representatives, Mr. Panelo replied “Correct, it is.”
Among others, Mr. Duterte also directly vetoed some appropriations under the Department of Labor and Employment-National Labor Relations Commission, Department of Agriculture, Department of Health and Department of Trade and Industry.
The 2019 budget, which failed to secure year-end 2018 enactment, was transmitted to the Office of the President on March 26 after a row between the House of Representatives and the Senate over alleged realignments made after its ratification on Feb. 8.
Senator Panfilo M. Lacson, Senate Finance committee vice-chairman, said budget is now “pork-free” after the partial veto.
“I am confident the 2019 budget is now-pork free as the Senate leadership made sure that our LBRMO (Legislative Budget Research and Monitoring Office) had scrutinized enough before submitting to DBM (Department of Budget and Management) under (Acting) Sec. Janet (B.) Abuel the list of questionable items,” Senator Lacson said in a statement on Tuesday.
“The economic team in turn promised to go over the list, and more with a fine-toothed comb, including individual insertions made by some senators amounting to at least P20B[illion].”
House Appropriations committee Chairman Rolando G. Andaya, Jr. of Camarines Sur’s 1st District, however, that insertions by some senators could still be “intact”.
“It behooves the Senate to tell the people how much in their insertions were carried in the national budget, and how big is the bacon each senator is bringing home.”
Sought for comment, Political Science Professor Marlon M. Villarin of the University of Sto. Tomas said the recent budget development might affect the President’s rapport with members of the House of Representatives and some local officials.
“Socially, it won’t affect President Duterte’s priority projects because all are programmed well in the 2019 budget,” Mr. Villarin said in a mobile phone message on Tuesday.
“But this will politically affect his relationship both with members of the House and some local gov’t officials who already hoped the President will dispense what their districts need.”
At the same time, “[t]his move by the PRRD doesn’t mean he is siding with the Senate,” Mr. Villarin said, using Mr. Duterte’s initials.
“The President is just being (politically and legally) consistent with his promise to the people that, under his watch, corruption such us illegal fund insertions in the national budget (as practiced by previous administrations) will never be tolerated.” — Charmaine A. Tadalan

Work under way to move up Doing Business list

By | Property News

BW FILE PHOTOTHE PHILIPPINES is targeting an improvement in rank in the World Bank’s annual Doing Business survey to above 95th place by 2020 from 124th out of 190 economies in the 2019 report, as the government said it has been pursuing reforms to improve the regulatory environment for businesses.
Trade Secretary Ramon M. Lopez told reporters on Tuesday the government has now implemented 33 out of 43 reforms designed to further improve ease of doing business in the country.
“We’re happy to note that for this year… we are submitting 43 reform initiatives, and 33 reforms accomplished na. This is again an effort to propel to a much better ranking,” he said as the Quezon City government signed ease of doing business agreements on Tuesday.
These reforms include Republic Act No. 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, RA 11232 or the Revised Corporation Code of the Philippines, and RA 11057 or the Personal Property Security Act of 2018.
Asked about the targeted rank for the Philippines, Mr. Lopez replied: “I would say 90-94 might be a good number; high 80s to 94” explaining that even if just 25-28 of the 33 accomplished reforms will be recognized for the next assessment, that should be enough to push the country above 95th place “na (that was our) best score natin a couple of years ago.”
The World Bank’s Doing Business 2020 report is scheduled to come out in October.
The government of Quezon City — which is used as basis for the Philippines’ doing business rank — signed at the Quezon City hall memoranda of understanding (MoU) with the Land Registration Authority (LRA), Metropolitan Waterworks and Sewerage System (MWSS) as well as water and electricity concessionaires Manila Water Co., Inc.; Maynilad Water Services, Inc. and Manila Electric Co. (Meralco) to simplify processes for registration and permits within the city.
Quezon City Mayor Herbert M. Bautista said the streamlining of processes for construction permits “will make it so much easier for the public to apply for new water connections and for the installation of electric poles.”
The World Bank assesses the doing business competitiveness of countries based on 10 indicators, namely: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Mr. Lopez said Quezon City has already been working on five of the criteria, namely: starting a business, dealing with construction permits, getting electricity, registering property and paying taxes.
He said that while all local governments are encouraged to improve their doing business environment in order to encourage entrepreneurs and attract investors, Quezon City took the lead in signing MoUs because it is the Philippines’ benchmark in the World Bank report.
He also noted that since the World Bank survey has been under way for the 2020 report and will enter the validation stage by early May, the recent MoUs in Quezon City may not be taken into account yet.
“Pero sabi nga namin [But as we said], the reforms and the momentum should continue, even after the survey… We have to continue the momentum of these reforms so that, by the end of the year moving into next year, mafi-feel na ’yung improvements [you could feel the improvements by then],” Mr. Lopez said. — Denise A. Valdez

JG Summit profit declines 35% amid ‘perfect storm’ in 2018

By | Property News

EARNINGS of JG Summit Holdings, Inc. dropped by 35% last year, amid what its President and Chief Executive Officer Lance Y. Gokongwei called a “perfect storm” of high inflation and oil prices, weak peso, and intense competition.
In a regulatory filing, JG Summit said its net income attributable to equity holders of the parent declined to P19.18 billion in 2018, from P29.36 billion in the year prior, due to “weaker Philippine peso against the US dollar, higher financing costs and market valuation losses on financial assets.”
The Gokongwei family’s holding company said consolidated core net income after taxes fell 24% to P22.40 billion.
“We may say that the group braved a perfect storm in 2018. Our cyclical and food businesses were challenged by high inflation and fuel prices, weaker peso, as well as intense competitive dynamics. We are more optimistic in 2019, but we would remain vigilant of various risks and continue strengthening our diverse strategic business units to ensure balanced sources of profitability,” Mr. Gokongwei said in a statement.
Consolidated revenues went up 6.8% to P291.92 billion, driven by solid sales across all segments from Robinsons Land Corp., growth from Robinsons Bank, as well as strong passenger and cargo revenues from budget carrier Cebu Pacific.
At the same time, consolidated cost of sales and services jumped 13% to P193.59 billion, while operating expenses jumped 5.8% to P53.06 billion.
Financing costs and other charges grew 20% to P9.63 billion from P7.83 billion in the previous year, “due to the higher level of financial debt of the parent company and airline business, as well as net increase in trust receipts of the petrochemical business.”
JG Summit also recognized a net foreign exchange loss of P2.85 billion in 2018 from P902.72 million in the year prior, due to the peso’s depreciation against the US dollar.
By business unit, URC saw revenues rise 2% to P127.76 billion, but reported a 15% drop in net income to P9.2 billion due to “(coffee) volume decline and higher selling and distribution costs in BCF (Branded Consumer Food) Philippines; higher input costs in Flour and Feeds divisions; higher operating expenses and lower selling price in Farms division; and net forex loss from the peso devaluation.”
Cebu Air, Inc., operator of Cebu Pacific, reported its net income fell 50% to P3.92 billion in 2018, mostly due to higher operating expenses as a result of increased fuel prices and the weaker peso against the US dollar.
Cebu Air generated 9% rise in revenues to P74.11 billion last year, as passenger revenues went up 9% to P54.26 billion. This was attributed to the budget carrier’s 5.8% hike in average fares to P2,676 last year.
The airline operator also registered a 119% increase in interest income to P401.62 million. It also incurred a P322.58 million hedging loss, as well as P1.63 billion in net foreign exchange losses. Cebu Pacific said it has started creating natural hedges as part of its forex risk management program.
JG Summit also said its petrochemicals segment recorded “flattish” revenues of P42.35 billion, but costs and expenses went up 17% due to higher naphtha cost. The segment’s net income plunged 82% to P1.05 billion in 2018, as a result of higher interest expense from trust receipts.
Robinsons Land Corp. (RLC) grew its net income by 40% to P8.23 billion in 2018, following a 31% increase in consolidated revenues to P29.44 billion.
RLC attributed its strong sales performance to robust same-mall rental revenue growth, contribution from new malls and cinema box office receipts. “Offices sustained its solid performance on the back of rent escalation and new developments; (while) Residential’s remarkable results were attributable to the successful reorganization, improved product development, influx of demand from overseas buyers and new project launches,” the property developer said.
Robinsons Bank generated P6.13 billion in revenues, up 37% year on year, alongside a 37.5% rise in cost and expenses as it continued to expand. The bank’s net income increased by 3.4% to P317.68 million.

Manila Water accepts COO’s resignation

By | Property News

GEODINO V. CARPIO, former Manila Water Co. chief operating officer — VICTOR V. SAULON MANILA WATER Co., Inc. said on Tuesday that it had accepted the resignation of Geodino V. Carpio, its chief operating officer (COO) during the time when the water concessionaire’s customers in Metro Manila’s east zone started experiencing water shortage.
In its disclosure to the stock exchange, the Ayala-led company named Abelardo P. Basilio as acting COO for Manila Water operations.
“The resignation of Mr. Carpio and the appointment of Mr. Basilio will take effect at the close of business hours today (April 16),” the company said.
Manila Water said the 58-year-old Mr. Carpio departed because of “early retirement.” He first faced reporters March 12 to explain the reason for the water woes, which Manila Water said started on March 6.
Mr. Basilio will serve as acting COO concurrently with his roles as group director for strategic asset management and data protection officer.
Manila Water said Mr. Basilio has been with the company for 22 years. He was previously its director of technical services group, group director of the east zone business operations and officer-in-charge head of corporate regulatory affairs group.
“In 1984, Mr. Basilio joined the Metropolitan Waterworks and Sewerage Systems as a young cadet,” the company said, adding that he had gained experience in water utility operations, including hydraulic engineering, water treatment, distribution and network management.
Mr. Basilio has a degree in civil engineering from the University of the Philippines under the university scholarship program. He completed a management development program in Asian Institute of Management, water network design and modelling in Manchester, United Kingdom, and SCADA/Telemetry training in Singapore.
In a text message on April 3, Mr. Carpio said he had been out sick since late March and was thus not updated to answer queries about the company’s water shortage problem.
On March 19, President Rodrigo R. Duterte directed Manila Water and other water stakeholders in a meeting in Malacañang to submit a report explaining the massive water interruption.
Meanwhile, Manila Water reported a 6% increase in its attributable net income to P6.5 billion in 2018, on the back of a 7% jump in revenue from contracts with customers to P19.83 billion. — Victor V. Saulon