PHILDEVFINANCE (old news): January 2011

Monday, January 24, 2011

GSIS pensioners to get Landbank ATM cards in March

GSIS pensioners to get Landbank ATM cards in March

Pensioners can expect their Land Bank of the Philippines (Landbank) ATM cards to be available by March, the Government Service Insurance System (GSIS) said on Friday, as it released guidelines on how to claim the cards.

GSIS inked an agreement with Landbank last December, so its more than 200,000 pensioners nationwide can use the bank’s automated teller machines (ATM) to withdraw their monthly or accrued pension benefits and pension loan proceeds.

The pension fund, then headed by former General Manager Winston F. Garcia, chose the Union Bank of the Philippines as its sole partner bank in 2003, dropping Landbank, where it had maintained its account.

GSIS will be releasing letters to all pensioners in March, informing them of their choice to move their pension accounts to Landbank. Text messages will also be sent out to inform them when their ATM cards will be ready for pick-up.

Pensioners who wish to transfer their accounts to Landbank have to personally claim their ATM cards at the Landbank branch indicated in their letters. Authorized representatives will not be allowed to claim the cards, as pensioners have to input their PIN code and fill out forms for their cards’ activation.

However, non-ambulatory pensioners may inform their respective Landbank branches to deliver their ATM cards instead.

Pensioners who prefer to keep their accounts in UnionBank need not claim their Landbank ATM cards. Their pensions will continue to be deposited in UnionBank.

"Pensioners are not required to transfer their pension accounts to Landbank," GSIS Vice President Ella E. Valencerina told BusinessWorld in a phone interview yesterday. "We just want to give our pensioners another option. Some have long been clamoring for an additional servicing bank."

She explained that UnionBank has low presence in some provinces, making it difficult for pensioners to get their GSIS benefits.

"Landbank has the most extensive branch network in the banking industry with branches in all of the country’s 80 provinces. In addition, Landbank has one of the widest ATM networks nationwide, which will allow pensioners to transact at no cost," GSIS said in a press release yesterday.

GSIS is currently wrapping up the pilot-testing of the GSIS-Landbank tie-up in Batangas. The Batangas regional office has 14,000 pensioners under it.

"We chose to run the pilot-testing in Batangas because UnionBank has few branches there," Ms. Valencerina said.

She hailed the progress of the pilot-testing, saying 35% of pensioners under the Batangas region have already claimed their Landbank ATM cards.

Ms. Valencerina didn’t give a target percentage, though, saying, "The Landbank ATM cards aren’t supposed to replace the UnionBank ATM cards. Pensioners have a choice between the two, depending on which is more convenient for them."

Given the results of the pilot-testing, she said the nationwide roll-out of the Landbank tie-up was on-schedule for March.

"We expect all pensioners to have their Landbank ATM cards available by the second quarter of this year," Ms. Valencerina said. -- Diane Claire J. Jiao

--
---------------------------------------------
CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline: +63495010127 Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
PHILDEVFINANCE - http://phildevfinance.posterous.com http://phildevfinance.wordpress.com
CONSULTING - http://www.carlosani.com
My Clippings - http://www.myclipps.posterous.com
------------------------------------------

Thrift banks paint rosy outlook for 2011

Thrift banks paint rosy outlook for 2011

BY ANN ROZAINNE R. GREGORIO

THRIFT BANK officials painted a rosy outlook for their sector this year on the back of consumers’ confidence in the domestic economy and a low interest rate environment.

Banks are expected to issue more auto loans this year .-- BWFILE photo
They said auto and housing loans, same as last year, are still expected to drive the expansion of their loan portfolios this year.

“For 2011, [BPI Family Savings Bank is] looking at a strong growth [for loans]. I expect a minimum increase of 11 or 12% both for the industry and our bank and that’s primarily driven by a very confident consumer base and low [interest] rates, which I think will continue until at least the first half of the year,” BPI Family Savings Bank President Teodoro K. Limcaoco told BusinessWorld in a telephone interview last week.

The real estate market and car sales are expected to continue to grow at a fast clip this year, he pointed out.

“One of the factors in the increase of loans this year will be the real estate market because there is still a significant housing backlog and we are seeing various local and national developers come out with a lot of products,” he said. “We are ready to support them (real-estate developers).”

Mr. Limcaoco also said the 29% sales growth reported by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) in the 11 months to November 2010 may not be replicated this year but the number of units sold this year could exceed the number of units sold last year.

As of end-November, CAMPI recorded sales reaching 153,163 units, around 29% higher than a year ago.

Bangko Sentral ng Pilipinas data show thrift banks’ real estate loans in the first half amounted to P107.33 billion, 2.85% up from the same period a year ago, while auto loans amounted to P54.620 billion, up by 13.75%.

Philippine Savings Bank President Pascual M. Garcia III said in a text message that the thrift banking industry is “expected to grow by double digits this year on expectations of buoyant consumer demand for cars and mortgages.”

“I think the industry can grow [by] 10% this year against last year,” he said.

For PSBank, Mr. Garcia said he expects a “12% loan growth this year” as the bank focuses on building up its consumer loans segment.

HSBC Family Savings Bank President and newly-elected Chamber of Thrift Banks President Patrick D. Cheng also expects a double-digit growth in loans for thrift banks this year.

“A double-digit growth in loans is attainable this year as consumers take advantage of the low-interest rate environment and as we expect a big demand for loans from entrepreneurs as they take advantage of the improved economic environment,” Mr. Cheng told BusinessWorld in an e-mail.

RCBC Savings Bank (RSB) President Rommel S. Latinazo echoed the positive outlook of other bank officials on loan growth this year.

“We expect our consumer loans to increase in 2011 as we expect business confidence to surge, which would result in continued business expansion,” he said, but declined to state figures.

Mr. Latinazo also OFW families are expected to buy more cars, boosting banks’ car loan portfolios.

“Demand for retail housing loans is likewise expected to remain strong this year mainly attributable to the continuing inflows of OFW remittances and generally low interest rates,” he said.

Remittances summed to to $17.069 billion as of November, 8.2% higher than the $15.780 billion in the same 11-month period a year ago.

For his part, Sterling Bank of Asia’s Senior Vice President and Chief Operating Officer William C. Whang in an email said “we expect loans to grow this year based on the government’s projection that the economy will continue to grow (albeit at a slower pace), which translates to more business activity and consumer consumption or spending.”

The economy grew by 7.5% in the first three quarters of 2010. The government has targeted a 5 to 6% growth in 2010, but aspires for a 7 to 8% expansion.

Mr. Whang agreed that demand for consumer loans be driven by real-estate, automobile and personal loans while demand for commercial loans would come from businesses that will be involved in government-led and supported projects.

Rural banks consolidate into GM Bank of Luzon

Rural banks consolidate into GM Bank of Luzon

RURAL BANKS GM Bank, Inc. and Bangko Luzon, Inc. have consolidated to form a new rural bank to make operations more efficient and reach more clients.
The Bangko Sentral ng Pilipinas (BSP) said in Circular Letter No. 006 dated January 18, 2011 that the Securities and Exchange Commission had given the greenlight for the articles of consolidation of GM Bank and Bangko Luzon on November 9.

“Effective 1 December 2010, the banking activities and transactions of GM Bank, Inc. and Bangko Luzon, Inc have been consolidated under the corporate name GM Bank of Luzon, Inc.,” the central bank said in the circular letter.

In a telephone interview yesterday, Tomas S. Gomez IV, president and chief executive officer of GM Bank of Luzon, said the banks consolidated to form a new bank to make their operations more efficient and to expand their reach.

Mr. Gomez was GM Bank’s president and chief executive officer.

Bangko Luzon was GM Bank’s affiliate bank before the consolidation, according to the GM Bank website. The former was based in San Isidro, Nueva Ecija while the latter was based in Cabanatuan, Nueva Ecija.

GM Bank was itself the consolidation of two Nueva Ecija-based banks, Community Rural Bank Inc. and the Muñoz Rural Bank Inc.

“[The consolidation] was done for better operational efficiencies. The banks have common shareholders so we felt we would be able to generate better economies of scale by having one entity,” Mr. Gomez said.

“The controlling shareholder of the banks is the same that’s why we decided to go together,” he also said.

He declined to identify the controlling shareholder.

Mr. Gomez said the consolidation of the banks has created 32 branches for the GM Bank of Luzon, with 25 coming from GM Bank and seven from Bangko Luzon.

He said the bank plans to increase its presence by opening five new branches this year.

Three branches, he said, will be located in Pangasinan, while two will be opened in Nueva Vizcaya.

“We would also like to increase our portfolio in agriculture lending, SME (small, micro and medium) loans and microfinance,” he said.

The bank, he said, is also looking at starting a consumer loan portfolio since most of its business is focused on financing individuals setting up their own businesses.

The BSP is encouraging rural banks to merge and consolidate to form stronger institutions. The government has set-up a P5 billion fund to spur mergers and consolidation in the rural banking industry. -- Louella D. Desiderio

BSP issues circular revolutionizing trust industry

BSP issues circular revolutionizing trust industry
by Roderick T. dela Cruz

Bangko Sentral made public Sunday a directive that is expected to revolutionize the trust industry, by separating trust corporations from banking operations.

The circular, signed by Bangko Sentral Governor Amando Tetangco Jr. on Jan. 19, allows banks and non-bank financial institutions to establish trust corporation as separate entity with a minimum paid-in capital of at least P300 million.

A trust company is an organization that acts as trustee, fiduciary or agent that manages financial assets of other people such as stocks, investments in government securities, bank deposits and highly liquid and investment grade securities, loans and other credit accommodations, real estate properties and other assets. It also acts as financial consultant, investment adviser or portfolio manager.

The circular states that a trust corporation may be a separate subsidiary or an affiliate of a bank or a non-bank financial institution as long as the investing bank or the non-bank financial institution will no longer engage in trust business through any of its department.

The circular limits banks and non-bank financial institutions to acquire or invest in the equity of not more than two trust corporations.

Universal banks can acquire up to 100 percent of the total subscribed capital stock of a single trust corporation, but commercial banks are limited to only 49 percent. Thrift, rural or cooperative banks can invest up to 40 percent in a single trust corporation.

Universal and commercial banks cannot invest more than 25 percent of their total net worth in a single trust corporation. For aggregate limits, universal bank can invest only up to 50 percent of its net worth in a maximum of two trust corporations while commercial banks can only invest 35 percent.

Bangko Sentral requires trust corporations to pay a non-refundable license fee of P500,000 and an annual supervision fee of 1/32 of 1 percent of the average monthly balance of assets under management.

The company is required to maintain a minimum unimpaired combined capital account of P300 million, or any amount that may be prescribed by the Monetary Board in the future for assets under management up to P20 billion

For assets under management with more than P20 billion, a higher capital is required and computed as a percentage of the book value of the total volume of assets under management.

This means that on top of the P300 million, trust corporations must allocate additional amount representing 6 percent of its total assets in the range of P20 billion to P100 billion; 8 percent for P100 billion to P250 billion; 10 percent for P250 to P500 billion and 12 percent for more than P500 billion.

“For purposes of investing the allowable assets, the trust corporation shall not commingle their proprietary funds or assets with the assets under management, and invest the same in their own unit investment trust fund or other trust products,” Bangko Sentral said.

Banks’ bad loans to total loans ratio down to 3.07% in Nov.

Banks' bad loans to total loans ratio down to 3.07% in Nov.
By Michelle Remo
Philippine Daily Inquirer
First Posted 20:12:00 01/23/2011

Filed Under: Banking, Economy and Business and Finance, business
MANILA, Philippines—The proportion of bad debts to the total loans extended by universal and commercial banks shrank further in November, the Bangko Sentral ng Pilipinas reported Friday.

The BSP said banks registered a non-performing loans (NPL) ratio of 3.07 percent by the end of November, down from 3.26 percent in the same month last year.

This came about as bad loans settled at P83.33 billion, falling by 2 percent from P85.17 billion, while the banks' total loan portfolio increased by 3.8 percent to P2.71 trillion from P2.61 trillion a year ago.

Regulators said the drop in the level of exposure of universal and commercial banks to soured loans despite an increase in their lending indicated that the banks had been observing prudent lending standards.

They also said that improved economic conditions enhanced the ability of borrowers to pay their debts.

According to industry definition, a loan is considered a bad debt if it has remained unpaid over 30 days upon maturity.

The central bank also reported that the non-performing assets (NPAs) of these banks fell by nearly 5 percent to P210.52 billion in November last year from P221.25 billion a year ago.

NPAs are the sum of bad debts and the collective value of real and other properties acquired (ROPA) by the banks due to loan defaults.

During the period, the banks also posted a decline in their NPA ratio—the proportion of NPAs to the total assets of banks—to 3.46 percent from 4.04 percent in the previous year.

The central bank said the minimal exposure of universal and commercial banks to bad loans and assets was one of the highlights of the local banking industry's performance throughout the latest global economic turmoil.

Unlike their Western counterparts, universal and commercial banks in the country have been virtually unscathed by the crisis partly because of efforts to keep away from the temptation of careless lending.

Nonetheless, some economists said the very small exposure to bad assets showed there was much room for banks in the country to lend more aggressively.

The economists noted that banks could lend more, given their huge liquidity, even without exposing themselves to a significantly higher level of bad debts.

They said the more than P1 trillion in cash parked by the banks in the BSP's special deposit account facility could help sustain a robust economic growth if a portion of this would be used to finance consumption and investments.

Industry players said in response to the economists' observation that banks were willing to lend more, but there had to be more opportunities for credit, specifically sound investment activities that could be financed with bank loans.

PDIC brings responsible banking campaign to Dumaguete

PDIC brings responsible banking campaign to Dumaguete

THE Philippine Deposit Insurance Corporation (PDIC) has reached another milestone in its nationwide campaign on responsible banking as it successfully conducted the "Be a Wise Saver" roadshow at the Silliman University in Dumaguete City.

The PDIC-led advocacy roadshow, participated in by some 800 banking majors and other college students and their teachers from nine tertiary schools, seeks to educate the public on basic banking know-how that help make for more informed financial decisions such as in the choice of bank and the choice of appropriate banking products.

Greet your friends and families this Sinulog season. Sun.Star covers Sinulog 2011 live!

The "Be A Wise Saver" campaign promotes the 7 Habits of a Wise Saver, which aim to protect savers from fraudulent schemes.

The Seven Habits are: know your bank, know your bank products, know your bank's services and fees, keep your bank records safe and updated, transact only inside the bank with authorized bank personnel, be informed about PDIC deposit insurance, and be cautious.

PDIC Vice President for Corporate Affairs Maria Leonida Fres-Felix led the activity in Dumaguete City, the second city in the Visayas and the fourth province visited by the advocacy campaign since December 2009.

She said the Wise Saver roadshows are aimed at equipping the public with the right information, effectively adding another layer of protection for depositors.0

DUMAGUETE. Around 800 college and university students are informed of the importance of safe and responsible banking during the "Be A Wise Saver" roadshow conducted by the Philippine Deposit Insurance Corporation (PDIC) at Silliman University, Dumaguete City. (Contributed photo)
The activity was co-hosted by the Silliman University's College of Business Administration at the Luce Auditorium, and joined by other schools in Dumaguete City, namely: the Negros Oriental State University, Foundation University, St. Paul University, Metro Dumaguete College, Colegio de Sta. Catalina, Magsino College, AMA Computer College, and the Asian College of Science and Technology.

PDIC President Jose C. Nograles led the efforts in June 2009 to bring together the Bangko Sentral ng Pilipinas and the local banking industry represented by the Bankers Association of the Philippines, the Chamber of Thrift Banks, the Rural Bankers Association of the Philippines, the Bank Marketing Association of the Philippines, including the Department of Trade and Industry, to promote wise and responsible banking among the general public.

PDIC's partners who participated in the Dumaguete roadshow as speakers are Ma. Belinda Caraan, BSP acting deputy director and head of the Financial Consumer Affairs Group; Wilfredo Talastas of the Bankers Association of the Philippines; Tertuliano Pacaña of the Chamber of Thrift Banks; and Vittorio Almario, vice president for Mindanao of the Rural Bankers Association of the Philippines.

The PDIC launched its Financial Literacy Program (FLP) five years ago -- the first ever school-curriculum based financial literacy program in the country and the first such project initiated by a deposit insurer in the Asian region.

It is a nationwide advocacy that educates the young people on the value of saving, the impact of savings mobilization to economic growth, and PDIC's role in helping maintain stability in the banking system by incorporating these insights into the school curriculum.

The project is in partnership with the Department of Education and the Commission on Higher Education. Around seven million students benefit from this project every year. (PR)

2 networks, one mobile currency needed for both Smart and Globe

2 networks, one mobile currency needed for both Smart and Globe
By EMMIE V. ABADILLA

January 22, 2011, 12:58am

MANILA, Philippines – The country’s telecom duopoly, Smart Communications Inc. and Globe Telecom Inc. need to unify their mobile currencies, Smart Money and GCash, in the future.

“It’s heresy but we need to work together and interconnect. We can’t have two mobile currencies circulating,” Globe President Ernest L. Cu told the Mobile Money Transfer Asia Pacific conference at the Hyatt Regency Hotel, Manila.

While Smart and Globe can maintain two different networks, they should have just one mobile currency, he stressed. “We are not talking about electronic load anymore, we’re talking of cash. It will be another challenge because we are competitors.”

However, at this point, Smart and Globe have not started any discussions on the matter. The Globe President says he will initiate the unification of the mobile currencies ‘when I hear a clamor for it.’

Over the next half decade, more people in Asia expect that the payment channel for mobile will become more important than bank branches. Most Asians think that mobile payments will grow dramatically along with the use of more smart phones.

Smart alone processes P13 B worth of transactions per month for its mobile financial services platform, according to co-founder and Chief Wireless Advisor Orlando B. Vea.

“We’ve barely scratched the surface in terms of mobile money. We are going global on the strength of our partnership with Mastercard and getting into cross industry initiatives.”

CGAP Technical Guide, “Advancing Savings Services: Resource Guide for Funders"

MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Drafts Technical Guide, "Advancing Savings Services: Resource Guide for Funders"

by MicroCapital on Friday, January 21, 2011 at 1:30pm
CGAP (Consultative Group to Assist the Poor), an independent policy and research center that is housed at the World Bank Group, recently drafted a technical guide entitled "Advancing Savings Services: Resource Guide for Funders" that is intended to help donors and investors understand savings mobilization as it relates to microfinance. While microfinance institutions (MFIs) have traditionally focused on lending, the sector is seeing an increase in the number of MFIs that offer diversified products and services, including savings. Investors that have funded the conventional lending services of MFIs have become more interested in savings and require more knowledge on how to support savings mobilization. According to the guide, in order to expand savings, investors should support the initial investments needed to scale up savings services and train personnel as well as help in building the capacity of regulatory and supervisory bodies. CGAP's guide includes information pertaining to the demand and supply of savings as well as regulation and supervision. The guide also advises funders on how to evaluate their own organization's capacity to support savings mobilization and how to use different funding instruments to achieve their goals.

Development of the guide began in February 2010 following a workshop that was attended by funders and other stakeholders in the field to discuss how donors and investors can contribute to savings mobilization. The guide also builds on studies conducted by CGAP and other institutions. CGAP has released the guide for public review with the hopes of gaining further input and suggestions before releasing the final version. The deadline to submit comments is February 1, 2011 [1].

By Julie Moksim, Research Associate

About CGAP (Consultative Group to Assist the Poor): Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center that was established in 1995 and is dedicated to facilitating the provision of financial access to poor people worldwide. CGAP is supported by approximately thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.

[1] CGAP (Consultative Group to Assist the Poor): "Advancing Savings Services: Resource Guide for Funders", http://www.cgap.org/p/site/c/template.rc/1.9.48183/#reviewsList

Ownership of funding firms

Ownership of funding firms

By Raul J. Palabrica
Philippine Daily Inquirer
First Posted 23:43:00 01/20/2011

Filed Under: Financial & Business Services, Laws
FINANCING COMPANIES in the country have one less regulatory requirement to worry about.

In an opinion rendered recently by Justice Secretary Lilia De Lima, she stated that foreigners could already own up to 60 percent of the capital of these companies.

By way of background, financing companies are corporations organized for the purpose of, among others, extending credit facilities to consumers and commercial enterprises.

The definition does not cover banks, investment houses, savings and loan associations, insurance companies, cooperatives and other financial institutions that are governed by special laws.

Financing companies engage in quasi-banking activities, such as direct lending, discounting of commercial papers and a myriad of other funding acts (outside of the formal banking system) that make capital available to those who need it.

The most common experience of Filipinos with financing companies is in the acquisition of what many consider as a sign of financial success—a brand-new car. Unless paid in full, its purchase is usually done through a financing company.

Ownership

In her opinion, De Lima pointed out that initially, under Republic Act No. 5980, financing companies were partially nationalized, that is, at least 60 percent of their capital was required to be owned by Filipino citizens.

Foreigners can own up to 40 percent of the capital, and their representation in the board of directors should be proportionate to their actual or allowable investment.

With this limitation, these companies came under the coverage of the Anti-Dummy Law, which bars foreigners from intervening in their management, operation, administration or control in any capacity, even without compensation.

The prohibition does not, however, apply to “technical personnel whose employment may be specifically authorized by the Secretary of Justice.”

The ownership constraint was later changed by Rep. Act 8556, which provides that “at least 40 percent of the voting stock” of these companies should be owned by Filipinos.

With the amendment, the investment opportunity for foreigners was expanded from 40 to 60 percent and the minimum capitalization requirement for Filipinos was correspondingly reduced to 40 percent.

Employment

De Lima explained that the intention of the legislature to liberalize the financing business is clear from the change in the mandatory ownership structure.

This desire is further underscored by the fact that the standpoint from which such ownership proportion shall be determined was changed from “capital” to “voting stock.”

She pointed out that capital “refers to the entire property or assets of the corporation which includes the amount invested by the stockholders plus the undistributed earnings less losses and expenses.”

Voting stock is “a stock that entitles the holder thereof the right to vote in the election of the directors of the corporation and on matters that are put to vote.”

The net effect of these changes is to remove financing companies from the list of companies that are required to have at least 60 percent Filipino capital ownership before they can be allowed to organize and operate in our country.

Since the financing business is no longer considered “nationalized,” the financing companies are already excluded from the coverage of the Anti-Dummy Law.

Thus, according to De Lima, they can employ foreign nationals to manage their business without securing prior permission from the Secretary of Justice for such action.

Lending

Lest it be misunderstood, the subject opinion applies only to financing companies, not to lending companies.

Although both companies engage in the business of lending or extending credit facilities, they are governed by different laws and regulations because of differences in the nature and scale of their operation.

Financing companies are involved in medium-sized transactions (as against big-ticket deals that run to hundreds of millions of pesos), while lending companies are mom-and-pop entities that lend money— that usually do not exceed P50,000—to small-scale businesses or people with limited income, such as, market vendors and pensioners.

While financing companies are allowed to raise funds from various sources, i.e., through money market operations and sale of bonds, lending companies are not similarly authorized.

They cannot solicit investments or incur loans from more than 19 lenders including their shareholders. Their funding source is practically limited to the pockets of their stockholders.

On account of their target market and limited funding, most lending companies hold office near commercial areas or where there is a high density of pedestrian traffic.

The law requires the majority (or 51 percent) of the voting capital stock of these companies to be owned by Filipino citizens. The rest of the equity may be owned by foreigners whose countries grant reciprocal rights to Filipinos.

The nationality requirement is aimed at ensuring that grassroots-level financing remains in Filipino hands in the same manner that, except for certain capital criteria, the retail trade business is reserved for Filipinos.

Koreans and Indians, please take note.

(For feedback, please write to rpalabrica@inquirer.com.ph.)

Thursday, January 20, 2011

Banks now offering 25-year housing loans

Banks now offering 25-year housing loans
By CHINO S. LEYCO
January 17, 2011, 7:14pm

MANILA, Philippines — The Department of Finance (DoF) said Monday that some local banks are now willing to provide housing loans of up to 25 years after the government successfully sold longer-dated debts.

Finance Secretary Cesar V. Purisima said, in an interview, that some local banks came to him and have showed interest in introducing housing loans that are payable in 25 years.

“Banks now are telling me that they’re looking at offering consumers 25-year housing loans. Before, loans outside Pag-IBIG [Home Development Mutual Fund] can only be 15 years,” Purisima said.

In December last year, the Aquino government issued debt notes maturing in 2035, in the process creating a new benchmark rate for 25-year bonds.

“Now with this, there is no reason why banks cannot offer a 25-year housing loans. This is good for our people because the amortization will be much affordable with a low interest rate,” Purisima said.

Data from the Banko Sentral ng Pilipinas (BSP) showed that residential real estate loans went up by 10 percent year-on-year in the third-quarter of 2010.

The central bank revealed big banks and the medium-sized thrift banks’ residential real estate loans against the previous quarter ending in June, rose 3 percent while its ratio to total loan portfolio stood at 6.5 percent, almost the same a year ago.

By industry, thrift banks held a bigger portion of the total residential real estate exposure of the banking system at 51.3 percent or P91.8 billion, while universal/commercial banks accounted for the remaining 48.7 percent or P87 billion.

At end-September, the country’s consumer loans, which included housing, grew by 11.82 percent to P447.44 billion in the first nine months of 2010, from P400.13 billion a year earlier.

BSP to fast-track 'bancassurance' approvals

BSP to fast-track 'bancassurance' approvals
By LEE C. CHIPONGIAN
January 18, 2011, 6:00pm

MANILA, Philippines — Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. could have sole authority to approve banks’ requests to go into bancassurance to speed up the application and approval process.

Sources said the Monetary Board last week reviewed proposals to delegate authority to Tetangco to act on bancassurance applications.

The reason behind the proposal was that BSP already has established and standardized policies for bancassurance and the delegation of authority would not affect procedures, requests evaluation and the approval process.

Bancassurance give banks more business and expand the network for the insurance sector. Banks have to request BSP’s approval to cross-sell within their head office and branch network insurance products of their insurance subsidiary or affiliate.

In recent years, the central bank noted an increase in bancassurance requests and applications in tandem with the growth of the insurance sector. In their applications to the BSP, banks said bancassurance complement the range of the products they offer to their clients and improve their customer base.

Last year, the BSP reviewed 23 applications and approved 22. These were requests to engage in bancassurance by Bank of the Philippine Islands, Citibank N.A., Philippine National Bank, Metropolitan Bank and Trust Co., Banco de Oro Unibank and Allied Banking Corp.

BPI had the most number of bancassurance applications with 12, of which 11 had been approved and one request to cross-sell still under evaluation. PNB submitted four requests for bancassurance while Citibank applied for three, BDO with two and Metrobank and Allied Bank asked BSP for just one bancassurance undertaking.

BPI, the country's third biggest, has sought central bank approval to cross-sell several insurance products following the creation of BPI-Philam Life Assurance Corp., a partnership between BPI and Philam Life after the former sold 51 percent in Ayala Life Assurance.

BPI-Philam Life, formerly Ayala Life, is the bancassurance of BPI. Philam Life, the biggest insurer with 250,000 agents, is a unit of the AIA Group. Ayala Life, in the meantime, is the sixth largest out of 32 life insurers. Philam Life entered into a joint venture with BPI in November 2009 to take advantage of the bank's 800 branches.

Wednesday, January 19, 2011

Smart, Globe see surge in mobile money payments

Smart, Globe see surge in mobile money payments

By Mary Ann LL. Reyes (The Philippine Star) Updated January 19, 2011 12:00 AM

MANILA, Philippines - Leading mobile phone service providers Smart Communications and Globe Telecom both expect their respective mobile money payment businesses to expand significantly due to the growing pervasiveness of cellular phones among Filipinos.

Smart expects that from about $30 million to $45 million (about P13 billion) per month last year, Smart Money mobile transactions (excluding purchase of air time and cellphone load) will grow 10 to 15 percent this year.

As this developed, Globe president and CEO Ernest Cu said there will come a time when their mobile commerce service GCash and its counterpart Smart Money will have to “interconnect.”

“We cannot have two kinds of currency. Later on, there will be a need to interconnect. It should be one kind of mobile money currency but interchangeable,” he said in an interview.

During yesterday’s Mobile Money Transfer Asia Pacific Conference, Smart chief wireless advisor Orlando Vea said while the transactions processed over their mobile financial services platform (Smart Money) appears significant, they have barely scratched the surface of mobile money’s true potential.

He said Smart is aiming to bring mobile money across industries by leveraging on the strong ties that they have with affiliated infrastructure and utility companies.

“In the next few years, we will embed mobile money services into other industries beyond banking and financial services,” Vea said.

He said Smart, as a member of the Philippine Long Distance Telephone Co. (PLDT) and Metro Pacific group, is uniquely positioning in the Philippines and globally to extend communication services, including mobile payments to other industries.

“Smart’s affiliate companies in this group include, among others, the major power distribution company (Manila Electric Co.), one of two major water distribution companies (Maynilad), the largest tollways operator (Manila North Tollways Corp.), one of the largest television and satellite broadcast networks (TV5 and Cignal), and the biggest hospital chain (which includes Makati Medical Center). Mobile payments will be a key enabler and enhancer of business for these companies,” he said.

He added that prepaid electricity and water are among the applications they are now developing.

Smart Money users in the Philippines at present can pay at over 25,000 Mastercard merchants and withdraw cash from over 9,000 bank ATMs all over the country. They can also encash mobile money through “money-in, money-out” centers which include pawnshop chains like Cebuana Lhullier and Palawan Pawnshop and networks of retail stores like Hapinoy Stores.

“And key to our mobile money ecosystem is the network of more than 1.3 million Smart load retailers all over the country who are users of Smart Money and also function as merchants,” he said.

For his part, Cu said the inherent telco strengths in distribution and mass marketing coupled with enhancement capabilities in banking and microfinance can empower the creation of strong fundamentals that will drive growth of the mobile money industry.

He also noted that Banko, the mobile microfinance bank created by Globe, Ayala and BPI, disbursed P1 billion in loans last year to about two million customers with 30 microfinance institutions as partners. The loans are from P500 to P1,000 per client on the average.

Banko, which has five branches at present, has also commenced retail pilot lending. “While before, Banko was engaged only in wholesale lending, it is now undertaking both wholesale and retail lending,” Cu revealed.

Also yesterday, Edgar Dunn & Co. managing director Lance Blockley revealed the results of a recent study conducted among 600 payment professionals worldwide.

At present, he said mobile products rank low in importance for today’s payment transaction landscape, with 85 percent of respondents worldwide saying credit cards still rank high in terms of importance.

But among the respondents from Asia, 48 percent believe that mobile transfers will experience the greatest growth in importance over the next five years.

In terms of payment chancels, 59 percent of the respondents from Asia said mobile is important.

The survey also revealed that smartphones will drive growth in mobile payments channel but basic phones will still play a key role in the Asian region. It also disclosed that network operators/telcos are expected to play a key role and are becoming more influential than card issuers and other payment schemes.

According to the same survey, the ubiquity of mobile telephony drives the mobile payment channel. In terms of importance, the ability to make mobile P2P (person-to-person) payments and the ability to make mobile international remittances rank high.

Blockley said Asia has become a leading region in the world for mobile payments, and that in the Philippines, both GCash and Smart Money have experienced significant adoption rates.

Another survey by EDC showed that the Philippines, China and the US are the three largest markets for mobile money transfers in 2010. The same EDC survey revealed that mobile money transfers will experience tremendous growth over the next six years. By 2016, total mobile money transactions will reach $126 billion, with Southeast Asia accounting for $30.1 billion.

Tuesday, January 18, 2011

Reminders on yearend corporate filings

Reminders on yearend corporate filings

Corporate entities are acutely aware that they are required to file annual financial statements as well as periodic and annual tax returns for the various tax types for which they are registered.

Publicly listed corporations, or those whose securities are registered under the Securities Regulation Code with the Securities and Exchange Commission (SEC), have entire staff devoted to ensuring that the company complies with all the filings and disclosures required by the SEC and the Philippine Stock Exchange.
However, other annual reportorial requirements that need to be filed with the SEC are usually filed late or not at all.

In case the same are filed on time, the accuracy of the information contained therein is not always thoroughly assured.

Non- or late filing of reportorial requirements with the SEC subjects the company to monetary penalties.

However, the more compelling reason for corporate entities to ensure that they promptly file accurate reportorial requirements is that such compliance is a prerequisite for the approval of applications filed with the SEC.

Under the current SEC policy, the examiner will not even receive any application for pre-processing unless a monitoring report on non- or late filing of reportorial requirements is issued by the Law and Regulation Division and the corresponding penalties, if any, are paid.

Reports for previous years that were not filed need not be submitted, provided that the penalties are paid.

However, the SEC requires that the reports for the current year be filed.
The confirmation of payment of penalties must be submitted, together with the application and supporting documents, in order for the examiner to formally receive said application, review the same, and issue the order of payment for the filing fees.

Only upon payment of the filing fees will the SEC officially consider the application filed.

The annual reportorial requirements that must be filed with the SEC include the following:

Financial statements -- All corporate entities with authorized capital stock or paid-up capital, whichever is lower, of at least P50,000 are required to submit financial statements duly audited and certified by an independent public accountant and stamped "received" by the Bureau of Internal Revenue within 120 days from the end of its fiscal or calendar year.

To facilitate the orderly submission of audited financial statements (AFS), the SEC has, in recent years, issued circulars prescribing the filing of AFS on specific dates beginning mid-April, depending on the last digit of the entities’ SEC registration or license number.

Corporate entities whose fiscal year ends on a date other than Dec. 31 have to comply with the original 120-day filing period reckoned from the end of said fiscal year.

Where the authorized capital or paid-up capital, whichever is lower, is less than P50,000, the financial statements need not be audited but, instead, attested and sworn to by the company treasurer.

Corporations planning to undertake certain transactions during the current year, wherein the AFS for the preceding year will be the basis for such transaction, should already advise their auditors that the AFS needs to be prepared using certain formats prescribed by the SEC.

For instance, a corporation considering an increase in its authorized capital for the purpose of declaring stock dividend is required to submit, together with other documentary requirements, the AFS for the preceding year prepared in long-form format, including a five-year analysis of the retained earnings account as well as a reconciliation of the retained earnings available for dividend declaration.
In the case of an absorbed corporation in a merger with issuance of shares or creation of Additional Paid-In Capital (APIC), the AFS should also be prepared in long-form format.

General information sheet (GIS) -- Stock as well as non-stock corporations are required to submit General Information Sheet containing, among others, certain company information as well as information on its officers, directors and stockholders within 30 calendar days from the date of its annual stockholders’ meeting (ASM).

If no meeting is held, the corporation should submit the GIS together with an affidavit of non-holding of meeting within 30 calendar days from the date of the scheduled annual meeting (as provided in the by-laws).

However, should an annual stockholders’ meeting be held thereafter, a new GIS should be filed.

Foreign corporations such as branch, representative office, regional operating headquarters or regional headquarters with SEC license to do business in the Philippines shall also be required to submit GIS within 30 calendar days from issuance of their license and, thereafter, within 30 calendar days from the anniversary date of the issuance of said SEC license.

Branch securities deposit -- A branch of a foreign corporation licensed by the SEC to do business in the Philippines is required, within 60 days from the issuance of said license, to deposit with the SEC for the benefit of creditors securities with an actual market value of at least P100,000.

Acceptable securities include government debt instruments, equity instruments (shares of enterprises registered under the Omnibus Investments Code, shares listed in the stock exchange, etc.) or any combination of government and equity instruments.

Moreover, within six months from the close of the fiscal year of the branch, the branch will be required to deposit additional securities equivalent in actual market value to 2% of the amount by which the branch’s gross income for said year exceeds P5 million.

The SEC shall also require deposit of additional securities if the actual market value of the deposited securities decreased by at least 10% of their actual market value at the time of deposit.

The most common securities deposited with the SEC are in the form of long-term treasury bills (T-bills).

While bank requirements may vary, the usual process to secure T-bills is as follows:

1. The purchasing bank will purchase T-bills and debit the branch’s account with said bank (The purchasing bank will require the branch to open a bank account for settlement).

2. The purchasing bank will then issue a Confirmation of Sale of T-bills.

3. The custodian bank (another bank that the purchasing bank has an arrangement with) will request from the Bureau of Treasury (BoT) to earmark the T-bills in favor of the SEC for the account of the branch.

4. The custodian bank will then issue a confirmation that the T-bills have been earmarked in favor of the SEC and held and kept safe by the custodian bank.

The Confirmation of Sale of T-bills, a confirmation that the same have been earmarked by the BoT in favor of the SEC, and covering letter will then be submitted to the SEC in compliance with the branch securities requirement.
While the submission of the foregoing reportorial requirements may seem tedious and cumbersome, corporate entities will be well-advised to devote time and resources to ensure that said reports are filed in a timely and accurate manner.
By doing this, they can ensure that any future applications with the SEC are not delayed because of non-compliance issues raised by the SEC Law and Regulation Division.

(The author is a tax manager at Punongbayan & Araullo, a member firm within Grant Thornton International Ltd. For comments and inquiries, please e-mail Tata.Panlilio@ph.gt.com or call 886-5511.)

Monday, January 17, 2011

responsAbility to launch fund for ‘base of the pyramid’ market

responsAbility to launch fund for 'base of the pyramid' market

Microfinance Focus, January 17, 2011: Swiss based social investment firm, responsAbility is launching responsAbility Ventures I, a venture capital fund for investing in companies with development impact at the base of global income pyramid.

responsAbility Ventures I holds a portfolio of companies in areas such as energy supply, agriculture and ICT that are relevant in terms of development.

The fund raised 15 million USD at first closing and 2.35 million USD for its related Technical Assistance Facility, and is currently taking subscriptions starting at 250,000 USD from interested qualified investors.

The fund was developed in collaboration with development cooperation Helvetas, the DOEN Foundation in the Netherlands, and is supported by the Swiss State Secretariat for Economic Affairs (SECO), the Swiss Agency for Development and Cooperation (SDC), and the SNV Netherlands Development Organisation.

PS Bank sees 100K new MasterCard holders in 2011

PS Bank sees 100K new MasterCard holders in 2011
Wednesday, 12 January 2011 19:28 Jun Vallecera / Reporter

THE anecdotal evidence is that the local debit-card market is growing and banks like the Philippine Savings Bank have become the latest to exploit an industry generating unverified billions of pesos in business every year.

In a briefing, Ismael S. Reyes, PS Bank first vice president and head of branch banking, told reporters they started with some 21,000 PSBank/ MasterCard cardholders when they soft-launched the program in October last year.

The hope is that around 100,000 new card holders should have been recruited to use its latest product offering by October this year, PS Bank vice president for marketing Antonio Jude Martin P. Montinola also said.

“We have not set a target volume for this year. We just want to sell the product,” Reyes said.

According to him, the banks target people who already are credit-card holders as the idea of using plastic cards as substitute for money is not only safe but convenient as well.

Credit and debit cards both extend convenience and security for their users but differ in the sense that the former allows one to spend a given amount (called the credit limit) without actually earning it first, while the latter allows one to spend only to the extent of having put value into the card in the first place.

That is why a debit card is also called a prepaid card by issuers as well, Reyes explained.

Debit cards are perfect for managing the allowance of family members or for departing overseas Filipino workers (OFWs) for sending money back to their families.

This can be done by first linking the accounts of OFWs to that of family members so that remitting one’s foreign earnings is as easy as transferring funds from one account to another, Reyes explained.

Debit-card holders may also use them to pay utilities and other bills, for shopping online or even for dining out with friends and families.

One can be opened for a one-time opening balance of only P500 and a dormant card can last for five years before these are taken out of the system, officials said.

Debit cards are not deposits so they are not covered by the Philippine Deposit Insurance Corp., which guarantees the return of up to P500,000 per depositor.

Debit-card balances are also noninterest-bearing accounts so these do not generate interest earnings for their owners.

But reloading the cards can be done in any PS Bank branch of which there are 380 nationwide, Reyes said.

PNB set to rival top private banks

PNB set to rival top private banks
Sunday, 09 January 2011 18:24 Jun Vallecera / Reporter

THE Philippine National Bank (PNB) is prepared to spend some P400 million over two years to position itself again as lead consumer bank, starting with cosmetic changes.

Some 70 of its branches have already been refurbished and its personnel trained to attract as many retail borrowers as they could find as the lender puts more emphasis on consumer loans than on its corporate clients.

It should cost the bank some P5 million to refurbish each branch and begin a new life.

The broader goal is to rank higher than competitors in the field who have since wrested from PNB its position of dominance in the remittance, retail banking and insurance, for example, newly installed PNB president Eugene S. Acevedo said on Friday.

“Our focus will be on consumer finance for 2010,” the former physics major and Citibanker said.

Acevedo has led PNB since May last year but has deliberately stayed low to focus on the rebranding effort till just now.

He has brought with him an almost entirely new marketing team to help him achieve the turnaround.

It bothered the self-confessed provinciano from Tandag, Surigao del Sur, that most people are surprised the bank has a very competitive consumer banking product that rivals some of the best in the market at the moment.

He noted, for instance, that some of their dollar depositors withdraw some of what they have and cross the street to convert their foreign currency with a rival bank with a yellow and blue logo.

“Our foreign currency exhange rate was for a long time the best in the market before our clients crossed the street to convert what they deposited with us. But now we are competitive again,” Acevedo said without citing his conversion rate.

The immediate goal also is to gain back supremacy at the multibillion dollar remittance business where PNB is ranked third best at the moment.

PNB has a housing-loan product that should cost borrowers only 7.5 percent, higher than that offered by a foreign rival extending the same loan for only 5.9 percent.

Even more important is the bank’s self-declared war against long lines or WALL project that in the recent past haunted management and made its services notoriously slow for many clients, both actual and potential.

Acevedo cut the long lines by allowing frontline tellers to share a common computer password so that anyone is free to service clients at any of the other open booths.

As a consequence of the rebranding program, Acevedo said anyone can now come in, transact business with retrained personnel and complete it within three to five minutes from entering the premises.

When the rebranding and retraining process shall have been completed, some 170 more branches will have been repositioned or moved.

To dominate the remittance business again, Acevedo made alliances with foreign units to boost the bank’s 16th or 17th current ranking.

Having already reported a net income of P2.4 billion in the first nine months of 2010, Acevedo confidently said he can post a full-year income growth of 10 percent to more or less P2.64 billion.

LandBank closure sparks fear in MSU campus

LandBank closure sparks fear in MSU campus
Tuesday, 11 January 2011 19:35 Bong D. Fabe / Correspondent

CAGAYAN DE ORO CITY—The impending closure of the Land Bank of the Philippines’ (LBP) extension office inside the Mindanao State University in Marawi City has sparked fear and tension among students and teachers of the premier state university in Mindanao.

LBP-MSU will official cease operation at the end of office hours on Feb. 18.

LBP-Marawi branch manager Acmad Grande Mamacotao said the MSU extension office is the least performing unit of all the bank’s extension offices, thus the need to close it as maintaining its operation is becoming more a liability rather than an asset.

All LBP-MSU branches have been advised to transact business at the main branch in downtown Marawi City.

But most of the Christian students, teachers and staff of the MSU expressed apprehension and fear with the impending closure of the bank’s branch inside the campus.

They said their security in downtown Marawi is not assured and that there is a great danger that they might be kidnapped while transacting business in the bank’s main branch in the downtown area.

Trying to allay fears of the apprehensive students, teachers and staff of the MSU, Mamacotao said that they will leave two Automated Teller Machines (ATMs) inside the MSU campus.

Taking the cudgels for the students, teachers and staff, MSU System president Dr. Macapado Muslim wrote Finance Secretary Cesar Purisima not to close the bank’s branch inside the MSU.

Purisima is concurrent chairman of the bank’s board of directors.

Ball starts rolling for PhilPaSS

Ball starts rolling for PhilPaSS

Thursday, 13 January 2011 00:00

THE Philippine economy currently revolves around the more than $1 billion in remittances monthly from Filipinos who reside or work abroad. These money transfers bring in the foreign currencies that build up the country’s reserves and at the same time feeds consumer spending that is currently the main driver of growth in the gross domestic product.

The government estimates remittances account for up to 11 percent of local output. The government thus scored a touchdown in its effort to spread the use of the Philippine Payments and Settlement System (PhilPaSS) Remit system the use of which was fully opened to banks in October last year.

Rural banks commended the move since it reduces the cost of money transfers they pay agent banks of foreign financial institutions where the remittances are placed while recipients of the foreign transfers will be freed from the payment of back-end fees from the foreign bank agents.

More Filipinos are thus encouraged to send money through banks with the huge cost reductions in the use of the formal banking system for remittances.

Banks charge somewhere between $8 and $12 for money sent from the US. So-called advice-and-pay remittances typically cost $12 if delivered within Metro Manila and $15 outside Metro Manila.

The use of the PhilPaSS system, which settles payments on real time, means that Filipinos remitting money to their families in the country would have their fees reduced from P100 up to P550 per transaction to just P50. The Bangko Sentral ng Pilipinas (BSP) charges banks only P5 per transaction for the use of PhilPaSS.

The BSP earlier waived fees on the use of PhilPaSS system that lasted for six months to promote its use. Significantly, the BSP also removed the P20,000 access fee and P10,000 annual license fee on rural banks to join PhilPaSS, thus improving access to clients, who are mostly beneficiaries of overseas Filipino workers, of faster and cheaper money transfers.

The BSP had signed an agreement late in 2009 with the Rural Bankers Association of the Philippines, Association of Bank Remittance Officers Inc., Bankers Association of the Philippines and the Chamber of Thrift Banks to establish the network for the use of PhilPaSS for interbank remittance transfers.

PhilPaSS, which settles payments in, primarily eliminated the cost of courier services to transfer funds.

Twelve banks are already onboard the program and these are: Allied Banking Corp., Asia United Bank, Banco de Oro Unibank, Bank of the Philippine Islands, China Bank, Metropolitan Bank Corp., Philippine National Bank, Philippine Savings Bank, Rizal Commercial Banking Corp. and United Coconut Planters Bank, and the state-owned Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LandBank).

Rural banks receive collateral benefits for joining PhilPaSS such as accessing Philippine Clearing House Corp. services in managing their investments in government securities, participate in the currency market, wider use of ATM networks and participation in the interbank market. The system also allows rural banks to transact with depository banks in boosting their demand deposit accounts with the BSP. The BSP estimates that, on the average, 66 million money transfer transactions are made every year and about 8 percent of these are through “credit to other banks” that entails added costs without the PhilPaSS. The scheme is expected to result in savings among Filipinos of at least P75 million in annual remittance fees.

Latest BSP figures show the total value of financial transactions through PhilPaSS grew by 17.9 percent until the third quarter of last year to P51.8 trillion from P43.9 trillion in transactions a year ago. That accompanied a 1,120-percent growth in the amount of remittances; 253.5-percent increase in delivery-versus-payments; the 69.1-percent rise in electronic delivery-versus payments; 4.8-percent and 16.5-increases in the transactions of the cash department and treasury departments of BSP; 4.8 percent improvement in interbank deals; 6.3 percent growth in Mega-link transactions; and 7.3-percent increase through the Philippine Clearing House Corp.

PhilPaSS is a genuine government hat trick that is expected to further spur growth of remittances as more Filipinos abroad use the formal system to send money to the country.

Tax return requirement for loans endorsed

Tax return requirement for loans endorsed

Thursday, 13 January 2011 00:00

BY KATRINA MENNEN A. VALDEZ REPORTER

THE Department of Justice (DOJ) has endorsed a plan to require borrowers to provide their income tax returns when securing bank loans.

Department of Finance (DOF) Secretary Cesar Purisima told Global Source, a US-based think tank, that the agency is in talks with the Bangko Sentral ng Pilipinas (BSP) on the use of tax returns as basis for granting loans.

“We have already gotten an opinion from the [DOJ] saying that banks can be held liable for conniving,” Purisima said.

“The BSP is not yet on board, but we already got the DOJ to support our position. So hopefully we can file a case against a bank president,” he said.

“The DOJ opinion would likewise allow us to impose upon banks not to use any book but the [income tax return] in determining the viability of the borrowers’ capacity to pay,” he said.

The opinion of the DOJ clears the way for filing criminal charges against those in banking and financial institutions who entertain borrowers using financial statements that don’t reflect the latter’s tax returns.

“It is no longer a secret that corporations use two books, one for the government and the other one for the banks. We are [of] the opinion that it is prohibited under the present law,” Purisima, who hailed from one of the country’s top auditing firms, said.

Remittances to fuel economic growth

Remittances to fuel economic growth
Exports seen to remain weak this year

By Riza T. Olchondra
Philippine Daily Inquirer
First Posted 21:37:00 01/16/2011

Filed Under: Remittances, Economy and Business and Finance
MANILA, Philippines—Remittances will still be the main source of consumption for the Philippines, which is expected to become more dependent on domestic demand as exports to high-income countries remain weak.

“We still see the main source of consumption continuing. These will be remittances, and we hope still, some increases in exports. And of course now, an increase in the investment rate,” Economic Planning Secretary Cayetano W. Paderanga told reporters.

Paderanga did express hope that price increases would not be so sharp to the point that consumers’ purchasing power would be dampened.

He added that while major investments expected from public-private partnerships would take time as the bidding still had to be conducted, initial activities related to such projects could already boost certain sectors.

“That [remittances and manageable price increases] will all lead to continuing consumption demand, which will lead also to continuing growth in the sectors that have been growing in the past few years. We just hope we can add to that through other sectors, such as tourism,” Paderanga said.

Higher disposable income could also go to savings instead of consumption or spending. Paderanga expressed optimism, however, that spending and investments would increase with higher disposable income.

“For the moment, we might want to go beyond that. We want the investment rate to be higher than the savings rate,” Paderanga said.

According to the World Bank’s Global Economic Prospects (GEP) 2011 report, worker remittances are critical for a number of countries in East Asia, where such income flows from the expatriate labor force can amount to substantial shares of GDP. Inflows continued during the worst of the recession in 2009 and are estimated to have increased 6.4 percent for developing East Asia in 2010.

Although China leads the remittances table in the region, such flows account for only 0.9 percent of the country’s GDP.

Saturday, January 15, 2011

Manila co-ops swamp BIR with complaints

Wednesday, January 12, 2011

METRO CO-OPS SWAMP BIR WITH COMPLAINTS AT 1ST LEG OF FORUM BY CONGRESS OVERSIGHT COMMITTEE ON COOPERATIVES

It's complaints galore.

That sums up the reaction of representatives of cooperatives coming from the north sector of Metro Manila to the manner the Bureau of Internal Revenue is implementing the issuance of Certificates of Tax Exemptions to cooperatives, pursuant to the tax exemption provisions for cooperatives under R.A. 9520.

This was during the launch yesterday (Jan. 12, 2011) of the "Tax Forum and CDA Charter Consultation with the Cooperative Sector." Meant to be a series of events to be conducted nationwide, yesterday's launch (which also serves as the first leg of the series of events) was held 1-5 p.m. at the Grand Theater of Amoranto Sports Complex in Quezon City.

These are being conducted by the Senate Committee on Cooperatives; House Committee on Cooperatives; Joint Congressional Oversight Committee on Cooperatives, in cooperation with the Bureau of Internal Revenue and the Cooperative Development Authority.

Among the complaints include that from a cooperative in Panabo, Davao which was still being required by the local BIR people to submit the list of cooperative members, data on the amount of the members' share capital, and the members' Tax Identification Numbers. This is despite the fact that BIR had issued a subsequent Order, waiving the submission of TIN.

Another is that from a cooperative in Central Luzon, which was issued a Letter of Authority by the BIR last Nov. 2010 for the audit of the cooperative's BIR Tax Returns for 2009. However, there is no accompanying Authorization from the CDA for the BIR tax audit. It was reported that when the cooperative checked with the CDA Region III, there was no application filed by the BIR, for CDA authorization of the said tax audit. This, it is said, is in contravention of RA 9520.

Another cooperative in Metro Manila, which failed to produce and make available its books of accounts to BIR, (apparently due to lack of CDA authorization for the tax audit), was instead issued a subpoena by the BIR, failure of the cooperative officer to answer and comply with the subpoena would make him/her liable in a criminal case. So, it was reported.

The launching of the forum series was led by Sen. Juan Miguel F. Zubiri, chairman of the Senate Committee on Cooperatives and Coop-Natcco Partylist Rep. Jose R. Ping-ay. They were joined by Sen. Ferdinand "Bongbong" Marcos, Jr.

Representing the BIR were Atty. Marissa Cabreros, Assistant Commissioner, Legal Division of BIR; and Atty. Rainer Camba, Action Lawyer, Law Division of BIR.

On the part of CDA, present were newly-inducted Chairman, Dr. Emmanuel Santiaguel, and Atty. Niel Santillan, executive director.

The strong, adverse reaction by the representatives to the BIR implementation of the issuance of Certificates of Tax Exemption, overwhelmed the activity, and overshadowed the fact that this was also meant to serve as a consultation process for the two Senate bills, proposing amendments to the charter of the Cooperative Development Authority.

The cooperative officers present also noted the 'non-committal' answers/responses coming from BIR assistant commissioner Marissa Cabreros, in response to requests from Sen. Zubiri and Rep. Ping-ay to respond to issues raised by cooperatives. They expressed their reaction that the BIR representatives sent to the forum appears not authorized to decide on issues raised. Their stock answer was like this - "I will bring this matter to the attention of BIR Commissioner so and so.."

What is duly noted by the participants of the forum is that,while everybody seated in the panel said his piece, the new CDA chairman was not even asked to say something, a greeting, a welcome remark to the participants. Granted that he was only 3 days on the job and he was not expected to answer specific issues raised about CDA, the participants at least expected a greeting from him. Or at least, on his own, he should have said something. Well..

Sen. Migz Zubiri also asked the BIR to send their local Regional District Officers during the subsequent forums, as they are the ones directly involved in assisting cooperatives on the ground level.

Watch out for the next legs of the forum series, the next of which is reportedly to be conducted for cooperatives in the southern part of Metro Manila. Next time, we will try to write about something about the proposed amendments to the CDA charter. So, there. (END)