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DTI to bring SME Caravan to Antique

Roy — Sun, 15 May 2011 17:43:22 +0000

The Department of Trade and Industry (DTI) will bring business caravan to Antique. The DTI has chosen the province to be one of the sites for the Small and Medium Enterprises (SME) caravan which is slated on the 26th and 27th day of this month.

The trade department is encouraging businesses falling under the category of small and medium enterprises to take part in the said business caravan as it could be of great help for them because they would gain knowledge and skills in the field of their specialization.

The Micro, Small and Medium Enterprises (MSMEs) sector are considered by the national government as the backbone of the country’s economy. They contribute to employment and generate output for the economy. The government considers this sector as a vital link in dispensing new industries to the countryside and providing gainful employment. With this in mind, the government initiated a comprehensive and integrated strategies in sustaining the growth and development of the MSME sector, one of them is the SME Caravan.

Through the SME Caravan, the MSME’s could gain improved access to government and private sector services, particularly in areas where the provision of business services are limited. The caravan also aims to create awareness of SME’s various business development services that are available to them, both from the government and private sector.

During the business caravan, there would be resource speakers who will cover different business topics like Access to Markets, particularly Product Development and Marketing the Business, Packaging and Labeling, Product Costing and Pricing, and How to Participate in Trade Fairs.

For the finance said of business, the Access to Finance module will cover Business Plan Preparations, while the session on Productivity and Efficiency will cover topics such as Good Manufacturing Practices and Food Safety. The module on Entrepreneurship will cover Entrepreneurial Mindset and Opportunity Seeking lectures.

The seminars are free and DTI published information materials on MSMEs will be provided to each seminar participant.

Supporting the DTI in business caravan are different agencies and organizations like the Land Bank of Philippines, Development Bank of the Philippines, Provincial Government, TESDA, OPA, PPDO, DAR, the Sangguniang Panlalawigan and Non-Government Organizations.

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Philippine-China trade and conference fair set on June

Roy — Sun, 01 May 2011 08:56:27 +0000

The China Council for the Promotion of International Trade (CCPIT)-Guangzhou and Philippine Chamber of Commerce and Industry (PCCI) recently signed a cooperation agreement to co-organize the Manila-Guangzhou Trade and Investment Conference slated to be held on June.

The event, which is aimed to further boost the Philippine-China trade and investment relations, is expected to gather around 500 business leaders, industry captains and government officials from both countries.

Part of the activities of the conference will be a product promotion through a virtual trade fair which would feature top export products of China, and business matching activities. There will also be office and factory visits to be arranged for the estimated 200 businesses and industry leaders comprising the Chinese delegation.

PCCI President Dr. Francis Chua said, “The Philippines and Chinese’ economies are open to mutual cooperation in trade and investments. While initially, the idea behind the conference is to promote Chinese-manufactured products for export to the country, we are making it a point to ensure that local enterprises and industries get maximum exposure and gain from the visit of top-level Chinese businessmen. That is why we are arranging business meetings and site visitations on the sidelines of the conference.”

China is the country’s top trading partner with export receipts reaching US$51.39 billion in 2010. Data from the National Statistic Office (NSO) show that the combined markets of China and Hong Kong in 2010 accounted for about 19.52 percent of the Philippines’ total exports.

Guangzhou Vice President of CCPIT Madame Li San Jian said, “China is a very big market. With increasing domestic demand and infrastructure development, Philippine export products such as mineral-and-metal-based resources as well as processed and fresh food products can easily gain entry into the Chinese market.”

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Philippine seeks investment-grade rating

Roy — Fri, 29 Apr 2011 04:51:12 +0000

The Philippine government believes that the country deserves a better credit rating, that is why it is wooing the three major credit rating agencies for an upgrade in its credit scores, amid the improving fiscal situation and external liquidity.

The three credit rating agencies – Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s (S&P), were met separately by finance secretary Cesar Purisima when he went to New York and Washington D.C. recently.

Purisima presented fiscal and monetary data on the Philippines that he believes would encourage them to review and increase the country’s credit scores. Philippines is rated three notches below investment grade by Moody’s and two notches below by Fitch and S&P.

He also said the country has a credit score lower than Indonesia yet the fiscal situations of the two countries are just the same. Purisima also cited the country’s declining debt-to GDP [gross domestic product] ratio and deficit-to-GDP ratio. “Our debt rations and deficit are declining and our financial sector is well managed, and so we deserve better ratings,” he said.

During the meeting with the credit rating firms, Purisima said the three did not give a hint if they would change the country’s credit ratings soon, but he express optimism that the Philippines would finally get an investment-grade credit rating before the end of Aquino’s term.

The finance chief said the country has been able to borrow from the international markets at interest rates comparable to those applied to financing initiatives by investment-grade rated countries. Still, he stressed that getting a credit rating upgrade would be important in getting more foreign investments for the Philippines. “Much more funds will come in to the Philippines if we get investment grade,” Purisima said. He noted that some big-ticket business ventures have been using credit ratings in their decision-making.

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Philippine tuna company acquires US salmon company

Roy — Thu, 28 Apr 2011 13:51:25 +0000

Philippine company Alliance Select Food International Inc. sealed a deal to acquire 100 percent of US company Spence & Co. Ltd., a Massachusetts-based salmon smoking and curing company who specializes in the production of smoked salmon and seafood, prepared in the Scottish tradition of its founder Alan Spence. The company caters to the high-end market in the USA and Europe.

The Alliance, in its disclosure to the Philippine Stock Exchange (PSE), said it had signed an agreement to acquired the US fish company lock, stock and barrel through subsidiary ASFI Choice Foods Inc. for $8.5 million.

Alliance spokesperson Rajat Balain said, “An investment in Spence is another step towards Alliance’s goal of diversifying its product line to enhance shareholder value and ensure future profitability. This will be Alliance’s third smoked salmon venture, making it the largest salmon processor in the region, and will help it establish a beachhead in the lucrative seafood market in the US.”

To partly finance the acquisition of Spence, Alliance will be conducting a stock rights offering. The company already gave the approval for the said offering. The PSE suspended trading of Alliance starting 9 a.m. Tuesday pending the submission of additional disclosure pertinent details on the transaction.

Alliance started commercial operations in General Santos City in Mindanao in 2004, it was formerly known as Alliance Tuna International and engages in tuna processing, canning and export of canned tuna products. It exports to Europe, North America, Asia, Africa and South America as a “private label manufacture,” which means it processes and cans tuna using its customer’s brands.

Part of its overseas expansion in recent years is the company’s aspirations to become a regional food company with a “decidedly Filipino DNA.” Alliance is always on the lookout for opportunities in regional seafood companies with high margins and high-value products.

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Ayala Corp. allots P79 billion for its capex

Roy — Tue, 19 Apr 2011 04:51:18 +0000

Giant conglomerate Ayala Corp. allots a record-high P79 billion for its capital expenditures this year. The company said it is in an excellent position to delve into various investment opportunities. It is particularly eyeing the power and infrastructure sector.

During the annual stockholders’ meeting, chairman Jaime Augusto Zobel de Ayala said that while the company is quite successful in its traditional markets which continue to grow, the favorable economic environment has “also ushered a renewed interest to invest in sectors that are critical to sustaining and raising the country’s growth trajectory, particularly with the government’s emphasis on increased private sector participation in the infrastructure and power sectors.”

He added that the group’s ultimate goal is to broaden its customer to reach and diversify its portfolio in a manner that creates developmental impact and economic value both for the corporation and the society as a whole.

The company first took a plunge in the power industry in 2010. It is now aiming to build its power portfolio using both renewable energy sources and traditional fossil fuels. “We are in the process of developing focused platforms across various technologies such as solar, wind, both large-scale and mini hydro, as well as thermal energy with the intent of balancing cost of energy delivery with sustainable practices,” Zobel said. The group aims to put up power facilities that can generate over 1,000 megawatts of electricity over the next five years.

The conglomerate remains on the lookout for opportunities apart from the power industry, like in the transportation infrastructure space, particularly whose which may have strategic value with other business units.

The company is bidding for a contract to operate and maintain the 17-kilometer Line 3 of the Metro Rail Transit (MRT3), which has an estimated cost of P6.3 billion. The MRT3 is one of the infrastructure projects being offered by the government under the public-private partnership (PPP) program.

Meanwhile, president Fernando Zobel de Ayala, for his part, said the highly diversified conglomerate has a healthy cash level, which stood at P29 billion as of end-December last year. “We maintain a highly flexible funding position that allows us to make sizable investments in new sectors moving forward without impairing value-enhancing initiatives such as our ongoing buy-back program, dividend payouts and meeting our funding requirements.”

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Shane Mosley tweeted in Filipino

Roy — Tue, 12 Apr 2011 21:35:04 +0000

Manny Pacquiao and Shane Mosley will meet each other in a 12-round bout on May 7 for the WBO welterweight championship at the MGM Grand Arena in Las Nevada. So far, the two boxers have been cordial to each and no have ever said any bad thing about the other. Mosley’s promise to know Pacquiao cannot even be considered a diss or trash talk in the sport of boxing.

Now, Mosley is trying a different approach and reaches to the Filipino fans. The black American knockout artist tries to win over some fans from the Philippines by tweeting in Filipino. Mosley, using the Twitter handle @SugarShaneM tweeted “Hindi ko nais maliitin ng isang mandirigmang Filipino ako igalang ang kanilang espiritu.” Loosely translated, the tweet means, “I don’t belittle the Filipino warrior. I respect his spirit.”

Mosley did not stop at that and even sent some love to all Filipinos and tweeted, “Pagpapadala ibig at paggalang sa mga tao ng mga Philippines (Sending love and respect to the people of the Philippines),” and “I tumingin forward sa magandang malinis na laban (I’m looking forward to a good clean fight.)”

Based on the loose construction of the sentences, it could be construed that the boxer is only using Google Translate to translate what he wants to say. Nevertheless, the effort endeared him to Filipino fans who appreciated his efforts and were thrilled to read his tweets in Filipino.

Mosley, the obvious underdog in the upcoming match, tries hard to promote their fight. He has told everyone who were willing to listen that he is no pushover; that he poses a big threat to the dominance of Pacquiao. To those who don’t believe him, the boxer uses his charm and charisma.

His tweets in Filipino made the boxer known to Filipino fans who are happy hear foreigners speak the language. Because of this, they would look forward to the fight and watch Mosley in action against the Pambansang Kamao.

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BSP eases on bank’s qualifying capital requirements

Roy — Fri, 08 Apr 2011 05:05:20 +0000

The Bangko Sentral ng Pilipinas (BSP) relaxes on the requirement on the risk-based assessment of qualifying capital instruments. The BSP amended Circular No. 709 on the Definition of Qualifying Capital Instruments under the Risk-Based Capital Adequacy Framework for Banks and Quasi-Banks by removing the loss absorption feature from among the requirements that an external legal opinion must cover.

The BSP said that Circular No. 709 was issued last January in order to align the criteria of qualifying capital instruments of banks and quasi-banks with those of the Basel Committee of Banking Supervision, particularly the standards on the minimum conditions for inclusion of hybrid tier1 and lower tier2 capital. After review however, the BSP found out that the requirement of an external legal opinion on the compliance of lower tier2 both have subordinate and loss absorption features which were not required.

The new provision, which is Circular No. 716 states, “Only the subordination feature is applicable to lower tier2 instruments while the loss absorption feature applies only to hybrid tier1 instruments. Circular No. 716, which made the requirement less rigid, was signed by BSP Governor Amando M. Tetangco Jr. last March 25.

The BSP amended the existing risk-based capital adequacy framework in compliance with Basel 3 provisions to further improve the quality of bank capital. It has disallowed new issuances of upper tier2 capital but eligible capital instruments under hybrid tier1 capital, upper tier2 and lower tier2 capital based on existing regulations that have been issued as of December 31, 2010 would continue to be recognized under their respective categories until such time that further guidance on this aspect was issued by the BSP.

The BSP said last January that is has specifically adopted the Basel 3 criteria for inclusion of non-common equity components in banks’ capital base as basis for determining capital instruments that could be counted as regulatory capital by Philippine banks from January 1 this year and onwards. Basel 3 revises the existing international capital standards, commonly referred to as Basel 2, and represents the core of international banking reforms that were deemed to address the weaknesses that were made evident during the global financial crisis.

“The adoption of the new criteria for capital instruments is part of BSP’s commitment to continuously institute reforms that will promote a stronger banking system,” said Tetangco.

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Property developer mulls public listing

Roy — Thu, 31 Mar 2011 06:41:57 +0000

ACM Landholdings Inc., a niche property developer founded 18 years ago by two Filipina banking and finance executives based in Hong Kong, is planning to be listed in the Philippine Stock Exchanges to raise as much as P1 billion fresh fund to meet brisk demand for low-to medium-cost housing.

Thus far, ACM has delivered to as close as 10,000 homes in 15 projects in Cavite and Batangas. Company officials said that given the strong demand for housing units worth between P300,000 and P3.5 million, it plans to expand to new areas and even venture into mid-rise residential buildings.

ACM president Antonette de Guzman and Managing director Carolina Osteria, who were also the company founders, said that the company chose to conduct business in a low-profile manner in previous years. Now would be a good time to make its brand better known to a broader market given plans to expand its geographic reach as well as to tap the capital markets.

Osteria noted a 35% growth each year for the company from 2005 to 2009 and added that it would likely breach the P1-billion in revenues this year compared with P600 million last year. Net profit for 2010 stood at P144 million, and is expected to rise to P180 million this year. The company has a return of 18 to 20 centavos (P0.18 to P0.20) for every P1 sales made.

Going public has been in the pipeline for ACM. The company has already considered being listed in the stock market twice in the past, which was in 1997 and 2008, but both were preempted by the Asian crisis and the global financial crisis, Osteria said.

She added the company would like to raise fresh funds for expansion by selling to new investors through a private placement, however, they still want to push through with the planned stock market listing. ACM plans to expand to new areas like Davao and Iloilo, as well as foray into vertical projects and consider opportunities for growth through mergers and acquisitions.

Osteria said ACM might consider an initial public offering size of at least P500 million to as much as P1 billion and bring 30-40 percent of the company to public hands. The company have already started meeting with the PSE to lay the groundwork for the stock market debut.

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DTI intensifies awareness campaign on benefits of FTAs

Roy — Wed, 30 Mar 2011 04:24:19 +0000

The Department of Trade and Industry said that many among our exporters are not really aware of the trade opportunities under the country’s free trade agreements (FTA). That is why it is intensifying its information awareness campaign focusing on the government’s priority exports.

Gregory L. Domingo, DTI Secretary, said that the basic information awareness campaigns from March to November this year will focus on sectors such as motor vehicle parts and vehicles, food, garments and textiles, minerals, coconut products, construction and related materials, wearable, home style and IT/BPO. “More targeted information sessions will enlighten our businessmen to engage or expand their business according to what is viable in our FTA markets,” he said.

The trade secretary stressed that by understanding emerging and new markets, as well as instruments such as the FTA, will help exporters address new challenges in the global business environment. For 2010, the Philippines achieved a record of over $51 billion in export revenues.

At present, the country has FTAs with ASEA, China, Japan, Korea, Australia and New Zealand. An FTA with India is already in the work and due for implementation on the last part of the year. On March 31, a second round of information sessions targeting specific sectors will be launched at the Philippine Trade Training Center (PTTC).

Domingo said export companies have not yet fully utilized the FTAs “because businessmen are not properly informed of the business opportunities that the country has gained from our FTA.” Last year, the agency was able to conduct information campaigns in 11 cities, benefitting some 2,000 businessmen.

International Trade Undersecretary Adrian S. Cristobal Jr. said, “Exploring the FTA markets is one of our core strategies to increase our exports over the next six years and sustain its steady growth. He said that this year’s sectoral sessions will include presentations on market opportunities, including non-tariff measures, in the country’s FTA markets; tariff rates on top exports for each sector under the FTAs, rules of origin, open forum, as well as business testimonials from those who have benefitted from FTAs.

“The FTAs are strategic tools or pathways for growth and competitiveness. Not only do these open markets for our goods and services, but they also compel us, as a people to take a hard look at our economic structures and implement the much needed reforms to put our economy in step with the global environment,” he added.

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Aboitiz group earmarked P49 B for its 2011 Capex

Roy — Mon, 28 Mar 2011 12:16:24 +0000

A total of P49 billion for its capital expenditures (capex) this year is being allocated by the Aboitiz Equity Ventures Inc. (AEV), the bulk of which will be used to fund its proposed coal-powered projects. According to company senior vice president and chief financial officer Stephen G. Paradies, P46 billion of the capex would go to Aboitiz Power Corp. (APC). “This is inclusive of the share of our partners in those power businesses where we have partners. So if you take just our proportionate share of APC, it amounts to P24 billion,” he explained.

Paradies said that the planned capex for APC would be used for the construction of a 300-megawatt coal-fired power plant in Subic, which will be done with their partner. He added that it is being considered that the capacity of the project would be increased to as much as 600 MW, and therefore, the project cost would increase too.

The APC was, according to Paradies, was planning to raise as much as much P51 billion in borrowings to specifically fund two power projects over the next few years. He explained earlier that the company would start arranging syndicated loans for its coal power projects in Subic and Davao starting on the second half of 2011.

For Subic, the planned borrowing could either be P17 billion, if they would stay with the original 300-megawatt coal facility, and P34 billion should they decide to pursue the increased 600-megawatt capacity. For its Davao facility, APC was looking at raising P17 billion for a proposed 300-megawatt coal fired power plant.

The amount cited though, as Paradies clarified, included only the debt portion of the planned projects and would be drawn down by APC in tranches over a certain period. He said for these borrowings, the company was looking at longer tenors of about 12 years.

The Subic coal facility is expected to start construction within the year, according to APC president and chief executive officer Erramon I. Aboitiz, who said that the company was already finalizing its engineering, procurement and construction contracts with Formosa Heavy Industries.

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NSO to conduct survey on businesses establishments

Roy — Mon, 28 Mar 2011 07:13:56 +0000

A survey of the businesses in the Philippines will be conducted by the National Statistics Office (NSO) this year. The project called, the Annual Survey of Philippine Business Industry (ASPBI), will start as soon as the NSO personnel have finished with their training for the conduct of ASPBI, according to NSO-Cordillera Regional Director Olivia Gulla. The aim of the survey is to get the statistical data on the activities of business establishments here in Cordillera.

Gulla said they have just finished with their second level of training. Participants for the training were regional and provincial statisticians and statistical census officers. After their training, they will then, in turn, train those who will be involved with the ASPBI survey in their respective provinces.

NSO Statistician III Jean Floirendo said, the ASPBI survey aims to determine regional revenues or income of business establishment in the region. This would help in determining the productivity and value added indicators of the business industries not only here in Cordillera but to all parts of the country.

Floirendo, who was assigned by the NSO central office to conduct the said training, called on all business establishments in the region to support the said survey, and assured respondents to the survey their reply will be treated with utmost confidentiality.

The questionnaires for the said survey will be distributed on April and the collection of data will commence on May. Among the data involved in the survey are the number of establishments, number of employment generated, compensation each establishment pay their employees, the revenue and the cost of operating such business.

Based on the last completed ASPBI survey done on 21,040 business establishments nationwide, which have employed 20 or more workers, they have provided employment to about 2.74 million Filipinos nationwide, which also provided a total revenue to the government of about P6.9 Trillion.

The manufacturing sector also got the most part of the pie with 21.9 percent of the total establishments surveyed, followed by the wholesale and retail sector with 19.5 percent, followed by the hotel/restaurant and education sector, with 14 and 13.6 percent, respectively.

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New mutual fund unit from Philam group

Roy — Mon, 28 Mar 2011 02:36:24 +0000

The Pami Asia Balanced Fund, the fund management unit of the Philam group, has been given license by the Securities and Exchange Commission to operate as an open-end investment company and to register its entire authorized capital stock consisting of eight million common shares at a par value of P0.45 each. The new mutual fund will invest in a mix of bonds and stocks across Asian emerging markets.

Gina Goco-Morales, the executive vice president of Philam Asset Management Inc. said, “It’s a new fund. Pami Asia Balanced Fund invests 50 percent in Asian equities and 50 percent in Asian fixed income.”

The seed capital for the new fund was provided by Pami. It is also the investment manager and principal distributor of the said new fund. In their documents submitted, Pami will be entering into a sub-management agreement with Amundi Singapore Ltd., which a specialist in global asset management. The new local mutual fund will seek to ensure long-terms growth of the invested funds. This it will do by tapping into the growth potential of Asia. The new investment fund is meant for investors who are looking for “moderate” risk investments. “The fund is positioned as an alternative to other mutual funds and balanced funds that are invested in Philippine securities,” according to the regulatory filing.

The fund’s aim is to provide investors with income and long-term capital appreciation through investment in equities, equity-related securities and debt securities of issuers across Asia-Pacific outside of Japan. The fund specifically aims to cover issuers across China, Hong Kong, India, Indonesia, Korea, Australia, Malaysia, New Zealand, Thailand, Taiwan, Singapore and the Philippines.

The offering price is the net asset value per share plus an entry fee or sales load together with applicable taxes. Minimum investment is $5,000 and additional purchase is possible for at least $1,000

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PSE to launch Maharlika Board by September 2011

Roy — Wed, 23 Mar 2011 18:54:46 +0000

“Maharlika Board” or a separate trading board for the Philippines companies that comply with high governance standards is being planned by the Philippine Stock Exchange (PSE). If plans push through, the “Maharlika Board,” which will be the first of its kind in Asia, will start on September this year. It is part of the government’s program to promote the Philippines as a prime investment destination.

PSE’s corporate governance head Argel Astudillo said, “This board will only include listed companies that achieve the highest standard of corporate governance.” Companies, however, will have to increase their public floats to as much as 30 percent to be included in the Maharlika Board, he added. In addition to that, they will also be required to have at least seven independent directors. Three of these directors must be independent, who will be voted by minority investors.

Aside from the prestige of being included in the “exclusive” trading board, companies that will be listed in the Maharlika Board will receive discounts on listing and maintenance fees paid to the PSE. Astudillo also said that tax perks and other financial incentives may also be given to them.

“We are looking at a public launch of the Maharlika Board in September this year,” Astudillo said. “By the time we launch it, we may or may not have companies listed… but we hope have received indications,” he added.

The Maharlika Board, according to Astudillo, will be loosely patterned after Brazil’s “Nove Mercado,” a board for that country’s most transparent listed firms. He noted a report based on foreign studies that showed investors value companies promoting good corporate governance higher by 20 to 25 percent compared to other firms.

“We want to rebrand our country to show the world that we are serious about focusing on good corporate governance,” Astudillo said. He said the country’s negative image as an investment destination has burdened Philippine financial markets. Controversies such as the 1999 stock manipulation case and insider trading involving listed firm BW resources were among those Astudillo cited.

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SkyCable earmarked P1.5B for its 2011 capex

Roy — Wed, 23 Mar 2011 10:04:57 +0000

SkyCable allotted P1.5 billion funds for its capital expenditure for 2011 for its Cable Television (CATV) business. Half of the said amount will be used for the roll-out of its digital TV service nationwide and the other half for boosting its broadband subscriber growth, according to company marketing head Rodrigo Montinola.

A subsidiary of network giant ABS-CBN Corp., SkyCable has approximately half a million subscribers as of last year, most of which are from Metro Manila. Almost 85 percent of cable users in Metro Manila are already using digibox, which is essential in viewing digital television programs. The CATV firms hopes to increase that number to 95 percent by the end of the year.

SkyCable is also intensifying its marketing effort to increase the number of its broadband subscribers. “We had flat growth from 2006 to 2009. We started growing again only last year, where we had 35,000 subscribers,” Montinola said. “Our target is to grow our broadband subscribers significantly by about 70,000 by the end of this year,” he added.

Montinola also announced the availability of the DigiBox iRecord, a personal video recorder (PVR) set, a top box capable of simultaneously recording two TV programs while the subscriber watches a third. The box has a 320-GB drive that can store up to 145 hours of standard definition video or 85 hours of high-definition (HD) video. This is equivalent to over 70 movie titles, over 100 episodes of one-hour TV shows, or over 80 documentaries of National Geographic HD. The device also allows for slow-motion and frame-by-frame playback of recorded shows.

The company is optimistic that the new service would lure in at least 3,000 users in the first year of rollout. They are eyeing medium to heavy TV users, as well as busy working people who can’t always catch up on the schedules of free or cable TV. Existing subscribers in Metro Manila can get the DigiBox iRecord for a refundable deposit of P4,999 plus P399 service fee of using the Digibox iRecord on top of their monthly CATV fee.

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House body approves simplifying net income tax scheme or SNITS bill

Roy — Sat, 19 Mar 2011 06:42:29 +0000

A bill that is said to “increase tax collections without the enactment of new tax measure” has been approved by the House committee on ways and means.

Authored by Representative Giorgidi Aggabao and Batangas Representative Tomas Apacible, the bill is simplifying the net income taxation scheme (SNITS) that will limit the allowable business deductions from gross revenues for self-employed individuals and professionals to reduce corruption and increase government revenues. It seeks to amend Sections 22, 24 and 34 of the National Internal Revenue Code of 1997, as amended.

“I am very glad that the committee on ways and means has approved the SNITS bill for individual engaged in business or exercise of a profession. It will simplify the tax audit even as it enlarges the taxable base for the aforementioned taxpayers,” Aggabao said.

The SNITS bill has three objectives namely:

Limit through specific statutory provisions, deductions to gross income of only eight allowable expenses;

eliminate the sui generis deduction of “ordinary and necessary trade, business or professional expenses” such as travelling expenses, entertainment, amusement, recreation expenses and other wide variety of expenses that have spawned problems of drawing an exact line of demarcation between legitimate business expenses and personal expenses;

and eliminate losses, bad debts, pension trusts and premium payments on insurance which are basically personal expenses.

Under the status quo, Aggabao said deductions from gross income are permitted for 10 expenses namely: ordinary and necessary trade, business or professional expenses; taxes; losses; bad debts; depreciation

With the new bill, the deductions from gross income shall only be only for eight expenses, which are: salaries and wages; supplies and utilities; rentals; interests; taxes; depreciations; research and development; and charitable contributions.

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Banco Filipino closed doors to depositors “temporarily”

Roy — Wed, 16 Mar 2011 01:59:29 +0000

Banco Filipino Savings and Mortgage Bank branches in the country were closed yesterday after experiencing heavy withdrawals from its depositors worried about its financial health. The thrift bank has 62 branches in the Philippines, with a total of P17 billion worth of deposits.

Banco Filipino vice chair Perfecto Yasay assured depositors that they bank is still in operation, denying reports that it had taken a unilateral bank holiday. Since Monday, there were talks that some Banco Filipino branches in provincial areas had not opened and that their manager’s checks had bounced.

The bank also blames the Bangko Sentral ng Pilipinas for its financial woes, citing the non-implementation of a rebuilding plan that would require P25 billion in liquidity infusion from the banking regulator. Yasay said the P25 billion infusion was part of the BSP obligation to the bank.

Banco Filipino was shut down by the then Central Bank of the Philippines, which was BSP’s predecessor, during the Marcos regime in the 1980s, but was reopened in 1994 after the Supreme Court ruled its closure as arbitrary.

The BSP said it already asked Banco Filipino to clarify its financial situation, following reports that it had declared a voluntary “bank holiday.” The banking confirmed that it had received reports and complaints from the bank’s depositors from various parts of the country. “Accordingly, we have sent a letter addressed to the management of Banco Filipino asking them to explain the bank’s status to its clients and to the BSP. We are now waiting for their official response,” BSP said.

Amidst the requests for explanation, Yasay reiterated the need for the BSP to immediately implement the approved P25-billion business plan as ordered by the Makati Regional Trial Court. He also said that the court has prohibited the BSP and the Monetary Board, its officials and agents, from committing any act prejudicial to the operations of the bank.

He assured the depositors and the public in general, that as soon as they receive official notice on the action taken by the BSP and Monetary Board, that they will be advised.

Meanwhile, Philippine Deposit Insurance Co. president Jose Nograles that their office has the mandate to take over the operations of Banco Filipino, but as of date, they have not yet received any order from the BSP to do so.

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Vista Land earmarked P45B for its 3-year capex

Roy — Mon, 14 Mar 2011 23:47:05 +0000

Vista Land and Lifestyles Inc. reported that it has earmarked P45-billion for capital expenditure plans for the next three years. Vista Land chief executive officer Benjamarie Serrano said, “We are in the midst of an aggressive expansion program that will entail significant capital expenditures over the next three years and beyond.”

The company’s capital outlays for 2010 were places at more than P10 billion. It pegged an average annual budget for P15 billion for its 2011 to 2013 capital expenditure plan, in order to fast-track the development of four large-scale property projects and to unlock more values from strategically located properties in Mega Manila.

These four major projects of the company, are the: Evia in the Alabang-Las Piñas area; Lakefront in Sucat, Parañaque; Sta. Elena in Sta. Rosa, Laguna; and Crosswinds in Tagaytay.

Evia is an Italian-inspired master-planned communities spanning more than 600 hectares. So far, three residential estates have already been completed in the said project: Portofino which is under the company’s upscale brand, Brittany; Ponticelli by its mid-range brand Crown Asia; and Cerritos which caters to the affordable market segment.

Lakefront is 60-hectare property in Sucat which boasts of a commercial hub call The Wharf. It houses convenience store, spa and beauty salon, restaurants, a bank and some offices. The development in the Lakefront includes San Francisco-inspired subdivisions La Posada and Marina Heights, and the mid-rise buildings Presidio and Marfori. Vista Land recently signed a joint-venture deal with Hospitality International Inc. to offer services apartments to vacationers.

Vista Land says it plans to finance all its property development programs through a combination of internal cash flow and debt. Chief finance officer Paolo Villar said, “Our firm’s balance sheet is solid and we have sufficient room to lever up. We will evaluate various financing options available to the company and decide on the most suitable cost-effective method of funding at the appropriate time.”

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Coffee Fund to finance coffee production to be set-up

Roy — Sun, 13 Mar 2011 16:36:46 +0000

To meet the local coffee demand of 64,000 metric tons (MT), a Coffee Fund to finance production is being set up by the Land Bank of the Philippines and (LBP) and coffee grower Corporate Holdings Management Inc. (CHMI).

President Noel S. Gonzales of CHMI said, “Any business will not survive without funding from banks. We can’t finance 100 percent of the equity for our production which is why we’re setting up a Coffee Fund with Land Bank for the Industry.” CHMI is now the largest coffee grower in the Philippines with 200 hectares of coffee plantation.

The template for financing coffee production being set up by CHMI with LBP will standardize financing for the coffee industry, according to Gonzales. He said this will attract commercial banks and other financiers to accommodate coffee growers. Usually, they veer away from this because of the industry’s many inherent risks, like calamity threats, production inefficiencies, and lack of markets.

Gonzales also said that there must be a guarantee loan fund to be set up by the government for agricultural production. “We will also need a guarantee from the government so that banks will lend without collateral. The government can guarantee 85 percent of the loan. The rest is still taken as a risk,” he said.

For its part, LBP, through its vice-president Liduvino S. Geron, said they have a mandate to prioritize agricultural production, especially coffee. “Among the crops, coffee is the nearest to Land Bank. It’s one of the high value crops. We have launched the Food Supply Chain program to promote value chain financing. We’re trying to link producers with millers, processors, and markets, and we’ll provide loans for these. We are prepared to finance post harvest, irrigation, transport, and warehousing facilities to ensure the produce and commodities reach markets.”

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Why time deposit is still a viable investment option

Roy — Mon, 28 Feb 2011 14:44:59 +0000

Jesus Vicente-Garcia, executive vice-president and branch banking head of Philippine Veterans Bank, believes that time deposit remains to be one of the simplest, safest and most rewarding investments . Despite the many investment options available in banks, Garcia explained that a time deposit is a sound option to grow one’s investment because it enjoys higher interest rates.

Compared to a regular savings account, a time deposit is assured of a maximized return. Garcia illustrated a P500,000 investments on Veterans Bank’s Maxi-Return Time Deposit as an example. In their time deposit, a monthly compounding interest rate of six percent will net for the depositor an interest amount of about P174,000 at the end of five years. The actual interest amount will depend on the date the time deposit was opened.

The bank EVP was quick to add that the interest rate isn’t the only reason why a time deposit is a viable option. He said, “Aside from the high interest rate that you’ll get on your time deposit, it’s also a safe way to grow your money. Your investment is intact from the start as a time deposit is not driven by market factors like investment in stocks, or in mutual funds, or UITFs (unit investment trust fund).”

Garcia also added that time deposits are covered by the Philippine Deposit Insurance Corp. (PDIC) guarantee. Being a traditional bank product, they guaranteed up to P500,000 per depositor. UITFs are not covered by PDIC guarantee.

Short term time deposits are advisable for entrepreneurs who would like to get higher interest rates than a regular savings account, yet allow them flexibility to have the funds available should they need them in their business. A long term time deposit, on the other hand, is best for those who can afford to have money tied up for a long time, and without immediate need. Longer terms obviously would higher interest rates.

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BSP issued circular increasing bank’s SBL

Roy — Sun, 13 Feb 2011 09:54:20 +0000

A new circular containing the guidelines on the additional single borrower’s limit (SBL) for exposures of banks to proponents of major infrastructure or development projects, oil companies and trust corporations. According to BSP Governor Amando M. Tetangco, Jr., the new guidelines amended the regulation on SBL under the provision of the Manual of Regulation for Banks and the Manual of Regulation for Non-Bank Financial Institutions.

The circular stated that the total amount of loans, credit accommodation guarantees may be increased by an additional 10 percent of net worth of such bank as long as the additional liabilities are adequately secured by trust receipts, shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable goods which must be fully covered by insurance.

The BSP governor noted an additional 25 percent SBL for exposures of banks to infrastructure and development projects qualified under the Public-Private Partnership (PPP) program of the Aquino government. The total exposure of the bank to any borrower pertaining to such PPP infrastructure and development projects, Tetangco said, should not exceed 25 percent of the net worth of such bank and the same will only be allowed for a period of three years.

Aside from the PPP projects, the circular also provided an additional 15 percent SBL to be granted to finance oil importation of oil companies that are not subsidiaries or affiliates of the lending bank engaged in the energy and power generation. The credit risk concentration arising from total exposures to all oil companies should be considered by the bank in its internal assessment of capital adequacy relative to its overall risk profile and operating environment. It should also be incorporated in the internal capital adequacy assessment process (ICAAP) document.

Before the new circular was issued, each bank’s exposure to a single borrower was limited only 25 percent of its capital. BSP however decided to ease the requirement to ensure there is adequate supply of oil and petroleum products in the country, as well as to support the major infrastructure and development projects under the Aquino administration’s PPP scheme.