PHILDEVFINANCE (old news): November 2011

Monday, November 28, 2011

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Saturday, November 26, 2011

50 microinsurance products service 2M ‘underserved’ Pinoys

50 microinsurance products service 2M 'underserved' Pinoys

TUESDAY, 22 NOVEMBER 2011 19:49

THE microinsurance space is finally an expanding universe in the
Philippines, with the industry now offering 50 microinsurance products
to date, the government said on Tuesday.

Microinsurance, also called sachet insurance by industry practitioners
because even the poor may now have risk cover that only the more
financially well off could afford before, may be a relatively young
industry but it already extends benefits to two million Filipinos who
are members of so-called mutual benefit associations or MBAs around the
country.

According to the Department of Finance, the various MBAs offer mostly
miroinsurance products to their members, a development that has
effectively raised the country's so-called insurance penetration rate,
considered one of the lowest in the region.

Finance Undersecretary Gil Beltran, who reports on the subject today at
the start of the ASEAN Insurance Congress in Singapore, said some two
million MBA members already enjoy risk cover via the 19 insurance
companies and 17 MBAs that offer the service at present.

According to Beltran, 14 of the 19 MBAs are wholly engaged in
microinsurance and that the government has approved 50 microinsurance
products to date.

Of the total number, 33 were life microinsurance cover and 17 were
non-life microinsurance cover.

Beltran said the numbers result from the government's continuing effort
to capture even the so-called unserved and underserved Filipinos in the
microinsurance space and forms part of the larger goal to promote
financial inclusion in the country.

He said if the much earlier microcredit program pushed by government
addressed the financial needs of the unserved and underserved Filipinos,
the microinsurance program should provide cover for future unforeseen
and unexpected contingent events that threaten life, limb or even property.

Beltran also said the country's microinsurance program is at that stage
of development where the Economist Intelligence Unit, in a study on
microfinance in the Philippines in 2010, ranked the country number one
of 54 countries in terms of putting up the regulatory framework needed
to make the industry viable or attractive.

The same study ranked the Philippines number two in overall microfinance
business environment, number four in institutional development, and
number 18 in investment climate.

Private practitioners earlier estimated the domestic microinsurance
space to be worth at least P2 billion.

The non-life component of that market was estimated to be worth at least
P200 million.

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Friday, November 25, 2011

The increasing role of workers’ cooperatives

THINKING GLOBAL

The increasing role of workers' cooperatives

By: Dr. Bernardo M. Villegas

INQUIRER.net
12:31 am | Friday, November 25th, 2011

There are many ways of skinning the capitalist cat. Instead of the
Marxist cry for workers to unite to destroy the free enterprise system
and replace it with Socialism, there is the rising trend towards workers
forming cooperatives to engage in all types of business. I am glad to
see more workers' cooperatives in the Philippine business scene.

My recent two-year residence in Spain gave me a glimpse of what could be
a most powerful instrument to attain the aspiration of the Philippine
Development Plan, 2011 to 2016 of "inclusive growth." As the country
finally achieves authentic industrialization, with more and more workers
being absorbed in the various industry sectors of mining, manufacturing,
construction, and public utilities, the fledgling workers' cooperatives
that are now beginning to appear in Philippine business can blossom into
powerful conglomerates such as the Mondragon Cooperative, a workers'
cooperative in Spain started more than fifty years ago by a Catholic
priest. Mondragon ranks among the top ten largest businesses in Spain
with the most diversified investments in banking, manufacturing,
retailing and real estate. I met some of the top executives of this
famous workers' cooperative (which started in Northern Spain), who
briefed me on the phenomenal growth of their organization, which
implemented to the letter the principles of empowering workers found in
the social encyclicals of the Catholic Church. In fact, its founder's
process of beatification is now ongoing.

I am glad that the final definition of the role of workers' cooperatives
in Philippine business is now coming to a head as the Labor Code is
being updated. The proposed amendment of the "Rules Implementing
Articles 105 to 109 of the Labor Code" by Secretary of Labor Baldoz has
created a perfect opportunity to enlighten all the stakeholders of
business about the nature and essence of workers cooperatives. As
defined under Article 23 (t) of RA 9520, a workers' cooperative is "one
organized by workers, including the self-employed, who are at the same
time the members and owners of the enterprise." More specifically, it is
a social enterprise that is managed by the members who offer labor as
their services to different companies, institutions or entities. In
effect, these members are self-employed individuals who enter into
commercial agreements with corporations and institutions through the
cooperative that they have duly formed and organized.
Through a workers' cooperative, the members are enabled to render work
or labor as the product, service or business thereof, and in return, not
only do these individual members earn from their own labor, but also
benefit from the labor or work of the other members. This form of
business is clearly in keeping with the essence of a cooperative, which
is an organization voluntarily formed by individuals for their mutual
benefit and support, who equitably share in the capital, participate in
the services and become entitled to a fair share of the benefits, as
well as in the other consequences of the undertaking.
Workers' cooperatives have been in existence since the 1930s, initially
formed by hat makers, bakers and garments workers. At present, workers'
cooperatives are globally recognized, with hundreds established in
Europe, North America, South America, the Middle East and India. Among
the more famous ones, in addition to the Mondragon Cooperative in Spain,
are Cheque Dejuener and Acome in France, Kantega in Norway, Suma
Wholefoods in the UK, Egged-Israel Transport Cooperative Society in
Israel, Indian Coffee Houses in India, and Cooperativa Drapner RL and
Cooperativa Nacional de Ahorro y Prestamo in Venezuela. Italy has about
8,000 existing workers' cooperatives. In North America, workers'
cooperatives have organized the United Sates Federation of Workers
Cooperatives and the Canadian Workers Cooperatives Federation.
Workers' cooperatives are clearly contemplated in the 1987 Constitution
of the Philippines, which recognizes the rights of workers to form
organizations, associations or cooperatives for their common benefit.
There is need, however, for the Labor Code of the Philippines to
explicitly recognize the existence of workers' cooperatives. In the
already antiquated Labor Code, there is an almost exclusive focus on the
relationships between employers and employees, failing to take into
account situations in which entities and institutions enter into
commercial agreements with laborers who are self-employed workers. In
view of the growing demand for and supply of this form of contractual
relationship, it is necessary to amend certain provisions of the Labor
Code to effectively include, recognize and protect the rights of these
self-employed laborers who rightfully belong to a workers' cooperative.
The revision of the Labor Code should, therefore, include an amendment
of Article 211 under Chapter I, Book V, on Labor Relations. The
following State policy should be added: "(h) to promote and foster
social enterprises, such as but not limited to cooperatives and
associations formed by contingent, self-employed or non-regular
employees for the protection of their rights and the promotion of social
justice and development." This proposed amendment will assure
industrial peace because it will provide for clear guidelines for
business-to-business negotiations between the members of the
cooperatives and the corporations, entities or industries in need of
labor services.
Secondly, there should be an additional Article in the Labor Code under
Chapter III, Payment of Wages in Title II, Book III, after Article 106
and 107, addressing the workers' cooperative in particular. The
amendment reads as follows: "Whenever a person, partnership, association
or corporation which, not being an employer contracts with a workers'
cooperative, for the performance of any work, task, job or project, the
workers of the said cooperative shall be paid in accordance with the
provisions of this Code. A "workers' cooperative" is one organized by
self-employed workers who are at the same time the members and owners of
the enterprise. The workers' cooperative shall not be deemed the
employer of its owner-members but shall be the organization that will
ensure that the minimum standards and benefits as required by law are
provided to its owners-members.
A third amendment is proposed of Article 82 under Chapter I (Hours of
Work) in Title I, Book III, of the Labor Code to explicitly include
members of workers' cooperatives in the provision: Article 82. Coverage
– The provisions of this Title shall apply to workers in all
establishments and undertakings whether for profit or not, but not to
government employees, managerial employees, field personnel, members of
the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and
workers who are paid by results as determined by the Secretary of Labor
in appropriate regulations. "As used herein, 'workers' refers to those
who derive their livelihood chiefly from the rendition of work or
services in exchange for compensation, which shall include members of a
workers' cooperative performing a job, task or duty for a person,
corporation, association, entity or institution."
The proposed amendments will take cognizance of the evolving nature of
the employer-employee relationship that has to respond to the needs of
global competitiveness and the increasing sophistication and education
of workers in the Philippines. For those interested in a concrete model
of a workers' cooperative that already has 34,000 workers-owners and
services some 200 businesses in the Philippines engaged in agribusiness;
merchandising and quick service; auxiliary, property and other
institutions; manufacturing and special projects; logistics; and
telecommunications, access the website of Asiapro-Cooperatives,
www.asiapro.coop.
For comments, my e-mail address is bernardo.villegas@uap.asia.

Special course set for co-op officers

(The Philippine Star) Updated November 25, 2011 12:00 AM Comments (0)

MANILA, Philippines - In compliance with the rules of the Cooperative
Code, embodied in Sec 6 Rule 7 of the IRR effective June 15, 2010, all
officers and board directors of cooperatives must undergo the mandatory
and required training requirements in order for them to qualify for
future elections.

With its strict enforcement comes 2012 and address many of those who
have not complied with this requirement, the Center for Global Best
Practices will hold a special seminar entitled "The Law and IRR for
Cooperatives", on Dec. 8 and 9 at The Edsa Shangri-La Hotel, Mandaluyong
City.

This two-day comprehensive seminar will focus on the pressing needs of
the officers, board directors, mediators, arbitrators and lawyers of
cooperatives. The program will include an in-depth look at Cooperatives,
covering areas such as Cooperative administration, rights,
responsibilities, privileges and best practices rules and policies one
should include in its manual. In addition, essential issues and pointers
on special types of Cooperatives will be given. This program is
accredited by the Supreme Court for Mandatory Continuing Legal Education
(MCLE). Lawyers attending this event will earn MCLE points. For details
and a complete list of seminars, you may log on to or call (02)
842-7148/ 59 and 556-8968/ 69, Cebu lines (+63 32) 512-3106 or 07 and
Baguio at (074) 423-5148.

This special program will feature Niel Beni-Oni A. Santillan, who is the
executive director of the Cooperative Development Authority (CDA).

His experience spans a total of 20 years in the organization both as a
regulator and an educator to many cooperatives in helping them comply
with its regulatory requirements in order for them to continue to enjoy
the many incentives available. His advocacy is growing the cooperative
movement in the Philippines as a model of development and growth for the
country and its economy.

Thursday, November 24, 2011

Microinsurance makes headway

Microinsurance makes headway
By: Ronnel W. Domingo
Philippine Daily Inquirer
1:22 am | Wednesday, November 23rd, 2011

Microinsurance in the Philippines could become as successful as
microcredit as it is expected to gain ground amid increasing number of
providers and rising demand, Finance Undersecretary Gil S. Beltran said
Tuesday.

According to a report that Beltran prepared, there has been an increase
in the number of microinsurance products, with some coming from
established insurance companies.

Other providers of low-premium insurance include cooperative insurance
societies, mutual benefit associations, pre-need companies and health
maintenance organizations.

Beltran said that in the Philippines—considered to be one of the more
developed microinsurance markets in the world—products are being
delivered through nontraditional means by partnerships with
microfinancing institutions, as well as through microinsurance agents
and brokers.

"Compared to commercial (mainstream insurance) products, microinsurance
products are affordable, involve simple contracts, have relaxed terms
and conditions," he said. "Some providers even offer policies that are
tailor-fit to the buyers' needs."
Also, lower capitalization requirements for microinsurance providers as
well as relaxed licensing requirements for agents are expected to foster
an enabling environment for the business, Beltran said.
"To ensure greater client protection, the government is working with
stakeholders toward the formalization of informal insurance providers,
institution of mechanisms for redress and grievance, and encouragement
of the use of alternative means to resolve disputes," he added.

Monday, November 21, 2011

Citibank launches Internet service for ‘emerging affluent’

Citibank launches Internet service for 'emerging affluent'

WEDNESDAY, 16 NOVEMBER 2011 18:38 JUN VALLECERA / REPORTER

CITIBANK in Manila has put up a publicly accessible planning tool that
anyone with access to the Internet can get free of charge to help
people, even non-Citibank clients, plan their financial future.

Citibank announced the online service on Wednesday as part of its
program to attract as many of the country's estimated five million
individuals marked earlier as the emerging affluent but whose banking
needs have not been effectively serviced by any of the existing
brand-name institutions.

One need only reveal a particular goal at some point in the future,
detail a little of one's current financial circumstances and the tool
spews out the financial numbers one is required to execute to attain a
given goal, say a vacation holiday in an Indian Ocean island or a
financial nest egg from which to live a comfortable lifestyle upon
retirement.

"No matter our age or stage in career, we all have financial goals, and
at Citi, we're here to help our clients design the roadmap that will
take them from where they are now to where they want to be," said Sergio
Zanatti, Citi's consumer business manager in the Philippines.

The publicly available financial planner has captured the interest of
Bangko Sentral ng Pilipinas officials whose leadership has since pursued
a financial literacy campaign to raise widespread awareness of
responsible financial behavior and promote a culture of savings among
Filipinos.

Emerging affluent Filipinos were earlier estimated to number more or
less five million, representing individuals with investible assets of
$10,000 up to $100,000 they want the banks to manage on their behalf.

In the region, they are believed to number at least 500 million
individuals and a prized market for banks like Citi that have the
expertise, the tools and the network to tap them for the potential they
represent.

Citi corporate affairs director Aneth Lim said the emerging affluent
sector is just one of a recent string of innovations and discoveries the
global lender has tapped the past 109 years to promote loyalty among
clients.

Lim acknowledged the emerging affluent sector may be a new resource for
the bank but one that is definitely a finite one.

"We introduced wealth management in the Philippines in the 1990s and we
have been successful in assisting our clients in protecting and managing
their wealth. We are now expanding our reach by extending our services
to the emerging affluent, but this time with a focus on growing their
wealth," Zanatti said.

MSMEs seek informal lenders for assistance

TUESDAY, 15 NOVEMBER 2011 19:40 DENNIS D. ESTOPACE / REPORTER

AMID the drop in formal sector lending in the past decade, micro, small,
and medium enterprises (MSMEs) turned more to informal sources of cash,
a 2009 survey recently released by the Asian Institute of Management
reported.

Data from 1,740 respondents noted that while majority of the country's
MSMEs consider access to credit to be important in their operation, a
document survey by the Asian Development Bank (ADB) bared formal sector
lending has dropped from a high of nearly 20 percent of the total loan
portfolio in 2008 to a mere one percent by 2010.

"There is still room to grow for SME financing, especially in the
micro-small segments," Niny Khor of the ADB economics research
department said in her presentation at an AIM-sponsored forum Tuesday.

Citing the ADB 2011 SME financing survey, Khor said that this room is
built on a significant increase in bank branches from 1980 to 2010 and
that the total amount of bank loans increased through the global
financial crisis.

"Universal and commercial banks [UKBs] remain as the primary source of
MSME funds," Khor said, adding that this accounts "for over 72 percent
of the total amount lent to the sector."

Last year, Khor said that the average UKB released about P6 billion
($134 million) to MSMEs in direct loans.

"While this is seven times the average of thrift banks, thrift, rural
and cooperative banks have managed to increase their market share to 27
percent last year from just 16 percent more than a decade ago."

Nonetheless, the graph based on the author's calculations using Bangko
Sentral ng Pilipinas (BSP) data showed total bank loans to MSMEs as
share of total loan portfolio net of exclusions declined.

Still, the decline from UKB lending reached its 1999 level of 20 percent
while thrift, rural and cooperative banks' lending has declined below
the levels they posted prior to a new millennium.

Khor's data coincide with the AIM survey that showed majority of the
respondents (35 percent among micro-enterprises and 34 percent among
small and medium businesses) consider access to credit to be important
in their operations.

Majority, too, tapped their savings accounts for the largest financing
requirements of their businesses.

Interestingly, relatives, immediate family, friends and usurers were
tapped as sources for loan or credit before these businesses went to
rural banks, other financial institutions and government banks.

More than half (54 percent) of micro-enterprises and majority (74
percent) of small and medium businesses said they borrowed from informal
sources because these had no or very little interest.

These capitalists also cited that they went to such sources because the
transaction was fast; no or fewer guarantee requirements were needed;
they are required to pay only when able or offered flexible payment
schemes; and there was no collateral needed.

Majority of the respondents said they didn't need much when they started
a business, citing that low capital was the top-most consideration.

Thirty percent of the enterprises surveyed by AIM started with less than
P150,000 capitalization.

The AIM Policy Center, which conducted the survey, said that there is a
need "to match the requirements of the financial institutions to the
capacity of the MSMEs to produce such requirements for loan availments."

GSIS-SSS merger pushed

THE GOVERNMENT Service Insurance System (GSIS) and the Social Security
System (SSS) should be merged to better serve active members and
pensioner, a think tank said on Friday.

"The government must unify the GSIS and the SSS for a greater delivery
of service to its members," said Bach M. Macaraya, president of
Philippine Society for Labour and Social Security Law, Inc. (PHILSI),
said in a forum on Friday titled "The Uncertain Road: Social Security in
Globalizing Asia and the Philippines."

PHILSI is the local chapter of Geneva-based International Society for
Labor and Social Security Law. SSS is the pension fund for private
sector workers, while GSIS is its counterpart for the public sector.

The integration, Mr. Macaraya said, will allow the pension funds to cut
on costs and as a result come up with a larger amount of investible fund
to settle liabilities.

"A bigger system would result in a higher income as there are more
revenue streams or more contributions collected, which would equal to
higher income or more money to be used to for investments," Mr. Macaraya
said.

Ibarra A. Malonzo, SSS commissioner and head of coverage and collection
committee, in a separate interview, welcomed the idea, saying the
integration will "provide a bigger stream of revenues for the two funds
and provide for the pension needs of future retirees"

The cost of operation of SSS is around 10% of its total income, he said.

The private sector pension fund earned P13.14 billion in the first
semester, while profits of GSIS as of October amounted to P56 billion.

In addition to beefing up funds, Mr. Malonzo said the merger will extend
the groups' actuarial life. The actuarial life of SSS is estimated at
until 2039, while GSIS until 2045.

Although the concept is ideal, Mr. Malonzo, said it will take around two
decades before both entities could be unified.

Mr. Macaraya, for his part, noted that the integration will need to
undergo congressional approval. -- A. R. R. Gregorio

Sunday, November 20, 2011

BIR to go after Indian money lenders to hike tax take

Philippine Daily Inquirer
7:55 am | Sunday, November 20th, 2011

KIDAPAWAN CITY, Philippines—The Bureau of Internal Revenue (BIR) plans
to go after Indian nationals involved in money lending activities but
admitted that it would not be easy to collect taxes from them.

Venerando Homez, revenue district officer, said at least a dozen Indian
nationals were suspected of involvement in money lending activities,
mostly to small entrepreneurs here.

Homez said they were certain the Indian nationals were not paying taxes
and did not have business permits.

At least a dozen Indian nationals lending capital to small business
establishments, particularly restaurants, sari-sari stores and vegetable
vendors can be seen roaming around the major thoroughfares in the
afternoon to collect the daily payments from the debtors, he said.

But Homez said their problem was how to build up cases against these
Indian nationals.

"Only the Economic Intelligence Investigation Bureau (EIIB) based in the
BIR main office has the authority to reprimand or invite foreign money
lenders operating in various places in the country," he said.

The problem was that this office has been dissolved, Homez said.

The only recourse, Homez said, was for the BIR to get the testimonies of
those who had borrowed money from the Indian money lenders.

"We will be facing a difficult task but we will do our best to run after
these Indian nationals in Kidapawan and other towns in North Cotabato,"
Homez said.

In Davao City, Vice Mayor Rodrigo Duterte urged Indian nationals to
follow the law if they want to stay in the country.
Earlier, Indian nationals there had complained of arrest by immigration
agents.

"It's the right of the country to protect itself against undesirable
aliens, so my advice to you is just follow the law and you"ll be safe,"
Duterte said.

It was not clear how many Indian nationals live in Davao City.

Even the Bureau of Immigration admitted it was having difficulty in
determining their real number because some of them reportedly entered
the country through the backdoor.

"There have been reports that some of them entered the country through
Sabah and they remain unaccounted for, hence, the raids in the past
weeks," Duterte said. Williamor Magbanua and Germelina Lacorte, Inquirer
Mindanao

Friday, November 18, 2011

No increase in PhilHealth contributions

By JENNY F. MANONGDO

November 18, 2011, 7:27pm

MANILA, Philippines — The Philippine Health Insurance Corporation
(PhilHealth) Friday assured that no taxes will be imposed on premium
contributions of its members. At the same time, officials said there
will be no increase in the premium contributions even as officials plan
to enhance member benefits in the next eight months.

"Our employed members' contributions are based on a salary schedule. The
latest range of contribution rates we prescribed took effect January 1,
2007 and until now, this contribution schedule is being followed," Dr.
Eduardo P. Banzon, PhilHealth president and CEO said.

Reports say the Bureau of Internal Revenue (BIR) is eyeing the
imposition of taxes on voluntary contributions to social security
agencies including PhilHealth.

But Banzon said there is no need to pay for an additional P1,000 per
month as voluntary contribution.

"At present, we do not have a mechanism that will allow members to
voluntarily pay premiums over and above the premium ceilings that we
have prescribed, in anticipation of being entitled to higher benefits.
This is how social solidarity works and this remains among the pillars
on which the NHIP stands," Banzon said.

Banzon also assured members that there will be no increase in
contribution premiums in the next few months even as PhilHealth will
enhance both in patient and out patient benefits.

"Sustaining the enhanced benefits in general and moving forward with
Universal Health Care (UHC) will eventually require an increase in
premium, a move that is critical for attaining the goals of the UHC
which is to provide financial protection against ill health and reducing
household out-of-pocket health spending," Banzon said.

Coop Bank mergers get support from BSP, PDIC and LBP

BY NEIL JEROME C. MORALES, Reporter

Coop Bank mergers get support from BSP, PDIC and LBP

MONETARY authorities target facilitating mergers, acquisitions and consolidations of the existing 40 cooperative banks in the country to come up with just five to six strong and large cooperative banks.

This, after the Bangko Sentral ng Pilipinas (BSP), the Philippine Deposit Insurance Corp. (PDIC) and the Land Bank of the Philippines signed yesterday an agreement to give incentives for joint ventures in cooperative banks.

“Right now, we have 40 cooperative banks. Many of them are problematic,” BSP Deputy Governor Nestor A. Espenilla, Jr. told reporters on Wednesday.

“The outcome of this is from 40 cooperative banks, we may end up with maybe five or six, less than 10 banks, regionally based, well-capitalized and well managed,” Mr. Espenilla added.

The Strengthening Program for Cooperative Banks (SPCB), which will run until August 2012, will allow cooperative banks to have a solid capital position and expand their network in the countryside.

“The SPCB was conceptualized to bring about larger and stronger cooperative banks by encouraging mergers, consolidations and acquisitions by eligible strategic third party investors (STPIs) under specific set of guidelines,” BSP Governor Amando M. Tetangco, Jr. said in his speech.

Under the program, the perks include a financial assistance from the PDIC and the Landbank.

State deposit insurer PDIC and Landbank might provide equity into banks in the form of perpetual, non-cumulative preferred shares that convertible to common shares at the end of 10 years.

Investors should then buy out the governmentís shares after 10 years.

To qualify for the perks, one or more eligible STPIs should merge or consolidate with or acquire one or more cooperative banks or those banks that are capital deficient.

Mr. Espenilla said: “Strong banks have no incentive to bail out a problematic bank. This is where the PDIC and BSP will come in [because] we will contribute equity through PDIC to eliminate negative capital.”

Eligible STPIs may be cooperative banks, thrift banks, rural banks, primary cooperatives or federations of cooperatives provided that have a good standing in the BSP and PDIC.

“The 30 of 40 cooperative banks have expressed their interest to participate in this program,” Cresente C. Paez, representative for party list COOP-National Confederation of Cooperatives (NATCCO), said in an interview yesterday.

Mr. Paez said this will strengthen banks that service to two million clients, most of which are poor and high risk people in the agriculture sector.

The central bank, for its part, will provide regulatory support for the mergers and acquisitions.

The regulatory aid includes flexibility in the opening, conversion and relocation of bank offices; more liberal guidelines that would allow staggered booking of required valuation reserves; waiver of penalties; and the restructuring of existing rediscounting and emergency loans with the BSP.

“For this program, the Landbank will provide P300 million for equity investment and up to P1 billion for credit facility available to surviving banks,” Landbank President Gilda E. Pico said in her speech.

For its part, COOP-NATCCO can also act as a strategic partner and is willing to raise as much as P100 million, Mr. Paez said.

Furthermore, two foreign cooperative banks have expressed interest to participate in the merger and acquisition of local cooperative banks.

Mr. Espenilla said DGRB, or the German Cooperative and Raiffeisen Confederation of Germany and the Rabobank of Switzerland are interested to provide financial support through equity or perhaps loans.

Mr. Paez concurred, saying that talks began early this year. He added that foreign banks can also share their technical knowledge on cooperative banks.

Cooperative banks lend to farmers and fisherfolks to aid the growth of the farm sector, which accounts for roughly a fifth of the domestic economy and a third of the country's workforce.

As of end-March, there were 40 operating cooperative banks in the country with P15.9 billion in resources, data from the BSP show.

Last February. the Monetary Board has approved the rules and regulations for cooperative banks under Republic Act 9520, otherwise known as the Philippine Cooperative Code of 2008.

The issuance takes into consideration the unique character of cooperatives while aligning the rules and regulations with other types of banks, with the end goal of strengthening cooperatives as vehicles for social and economic progress.

The BSP has provided liberalized rules to level the playing field among cooperative banks and other types of banks.

--  --------------------------------------------- CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net Email: carlosani@seedfinance.net  Landline Phones: +63495010127  and +63495762924    Cellphone: +639152919580  DEVJOBS - http://www.devjobsmail.com  PHILDEVFINANCE - http://phildevfinance.posterous.com   CONSULTING - http://www.carlosani.com  My News Clippings - http://www.myclipps.posterous.com  Family website:  http://www.anifamily.net ------------------------------------------

Wednesday, November 16, 2011

Rural banks to join BSP payment system

By Lawrence Agcaoili (The Philippine Star) Updated November 16, 2011
12:00 AM Comments (0)

MANILA, Philippines - Major rural banks are looking at coursing their
financial transactions through the central bank's Philippine Payments
and Settlements System (PhilPaSS) to expand their services to
beneficiaries of overseas Filipino workers (OFW) remittances
particularly in the countryside.

Ian Pama, president of the 600-strong Rural Bankers Association of the
Philippines (RBAP), said that major players in the rural banking
industry are set to course their financial transaction through the
PhilPaSS over the next six to 12 months as part of the many innovations
that would be undertaken by the association.

"RBAP has a strategic role to play if and when the organization decides
to use the system. Should RBAP members decide to use the system, then we
can offer cheaper, if not the cheapest transaction fees without
incurring any losses," Pama said.

So far, he pointed out that none of the country's more than 600 rural
banks have made use of the electronic payments and settlement system of
the BSP. PhilPaSS is an online and real-time gross settlement payment
system administered by the central bank to facilitate payment
transactions between banks.

He added that about 12 universal, commercial, and thrift banks are
coursing their OFW remittances through the PhilPaSS and are reaping the
cost advantages.

"While remittance centers are a dime a dozen, there is still a way for
us rural bankers to enter the industry by offering a faster yet
affordable service to our clients in the countryside who are also
beneficiaries of many OFWs. This is where the PhiPass remitting system
comes in," Pama said.

The PhilPaSS-Remit system is part of the advocacy of the BSP to help
Filipinos abroad and their beneficiaries by providing a safer, faster,
and cheaper means of remittance. The project is one of the initiatives
undertaken by the BSP in coordination with the Association of Bank
Remittance Officers Inc. (ABROI) through a memorandum of agreement (MOA)
in December of 2009 but was implemented in the second quarter of last year.

The BSP has encouraged banks and financial institutions to course OFW
remittances through the central bank's electronic payment and settlement
system so that beneficiaries of Filipinos working abroad could enjoy
lower fees.

The BSP said the settlement of OFW remittances through the PhilPaSS
Remit System would result in savings of between P100 and P500 per
transaction as current system charges between P150 and P550 per
transaction. OFW families are expected to save at least P92 million to
as high as P922 million due to the faster and cheaper delivery of
remittances to the beneficiaries at a lower rate of P50 per transaction
instead of the current range of between P100 and P550 per transaction.

OFW remittances grew by 8.2 percent to a record level $18.76 billion
last year from $17.35 billion in 2009 due to the continued demand for
skilled Filipino workers abroad as well as the expansion of remittance
centers abroad giving OFWs more options to send money to their loved
ones in the Philippines.

Last April, BSP lowered its OFW remittance growth forecast to seven
percent or $20.1 billion instead of the original target of eight percent
or $20.2 billion this year due to the tensions in the Middle East and
North African (MENA) states and the disasters in Japan. Next year, it
expects a slower growth of five percent or $21.2 billion.

Philippines is Number 1 in the Microfinance Regulatory Framework and Practices

Global Microscope: PHL Tops Microfinance Regulatory Framework and Practices
From MCPI Ugnayan newsletter

The Economist Intelligence Unit's study on Global microscope on the
microfinance business environment 2011 ranks the Philippines at the top,
with Pakistan, in Regulatory Framework and Practices category globally.
This assessment suggests a strong regulatory environment and good
possibility for microfinance institutions to enter the industry and
operate well.

The Philippines is also number one in regional rankings for East and
South Asia; and sixth overall in microfinance business environment
rankings. The result is indicative of the strong Regulatory Framework
and Practices and Supporting Institutional Framework of the country.
Stability was an adjustment factor on the scores of the 55 countries in
the study.

Indicators for the assessment are regulation and supervision of
microcredit portfolios, formation/operation of non-regulated microcredit
institutions, and regulatory and supervisory capacity for microfinance
among other gauge in the Regulatory Framework and Practices category.
Supporting Institutional Framework indicators include transparency in
pricing and dispute resolution which are principles of client
protection, and credit bureaus.

---------------------------------------------
CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline Phones: +63495010127 and +63495762924
Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
PHILDEVFINANCE - http://phildevfinance.posterous.com
CONSULTING - http://www.carlosani.com
My News Clippings - http://www.myclipps.posterous.com
Family website: http://www.anifamily.net
------------------------------------------

SMEs, overseas workers to boost HMO sales

MAXICARE HEALTHCARE Corp., a health care management organization (HMO),
is looking to boost membership to at least a million registrants within
two years as it upgrades facilities and expands networks, ranking
officials yesterday said.

"By 2013, we are looking at a one-million membership target," said Jose
Pastor Z. Puno, Maxicare president and chief executive said in a press
launch of the company's new corporate headquarters in Makati City.

The new facility consolidates the firm's operations under one roof,
At present, the company serves more than 600,000 members nationwide.

The company's future growth will be driven by the health coverage
purchased by small-to-medium enterprises (SMEs) for their employees, a
market which currently account for around 20% of the Maxicare's plans,
Mr. Puno said.

Further, the company is looking to attract overseas Filipino workers
(OFWs) to avail themselves of the health plans.

"There are still a lot of areas that we have to tap. OFWs are a
lucrative source, and we have been looking at that market for a long
time," Mr. Puno said.

"OFWs have priorities, they provide for the basic requirement for their
families, and one of them is healthcare. Hopefully, in time, we will be
able to develop that market," he added.

In addition to its flagship HMO service for corporate clients and SMEs ,
Maxicare offers an array of plans for families and individuals, and an
plan to be used solely for emergency purposes.

The company said future growth will also be boosted by its vast network
of providers, its seven customer care and 11 primary care centers, and a
comprehensive health program.

"We have achieved great success over the years and in our upcoming 25th
anniversary next year, we want to ensure that we will continue to
provide the best healthcare program to our current and prospective
members. That is why we have been enhancing our service offerings and
upgrading our facilities," Mr. Puno added.

But despite its reported leadership in the HMO industry, the company is
not eyeing a public listing yet.

"It's not really a big issue for us. We know that the company is ripe
for an IPO (initial public offering), but at this point, it is not a
priority," Mr. Puno said.

Maxicare, established in 1987, claims to have served over 800
corporations along with SMEs, individuals and families, who together
account for 600,000 card holders at present.

Further, it has a network of over 25,000 doctors, 3,700 dental providers
and 950 hospitals and clinics nationwide, 65% of which are tertiary
institutions.

The company incurred P76 million in net income last year, with P3.63
billion in earned membership fee revenues, according to a press statement.

Maxicare is a member firm of the Equicom Group. -- FJGDLF

BIR: Pension, health contributions subject to tax

BIR: Pension, health contributions subject to tax
Funds considered to be taxable investments

By: Ronnel W. Domingo

Philippine Daily Inquirer
1:04 am | Wednesday, November 16th, 2011

Contributions to pension, housing and health funds amounting to more
than required by law are subject to income and withholding tax effective
last July 1, according to the Bureau of Internal Revenue.

The BIR has issued Revenue Memorandum Circular No. 53-2011, which
affirms and clarifies an earlier ruling.

The BIR directive states that voluntary contributions to the Social
Security System, Government Service Insurance System, Home Mutual
Development Fund (Pag-IBIG Fund) and the Philippine Health Insurance
Corp. (PhilHealth) are subject to tax.
The BIR said that such contributions are considered investments and are
thus taxable, adding that it would no longer entertain any requests for
tax exemption on these contributions.

"It has been observed that the grant of income tax exemption to SSS,
GSIS, (PhilHealth) and Pag-ibig contributions in excess of the mandatory
contributions is being abused," Internal Revenue Commissioner Kim S.
Henares said in an earlier circular.

By law, for example, a Pag-IBIG member is required to contribute P100 a
month while a PhilHealth member must put in one percent of one's salary
for those earning up to P1,500 a month or 2 percent for those who earn more.

On top of that, Pag-IBIG's new program allows members to contribute
voluntarily an additional P1,000 a month, PhilHealth also has a similar
program.
These additional "contributions can be gleaned as a form of investment,"
Henares said. "The money being invested by the employees in these
programs is not being taxed."
Also, employers who are mandated to withhold taxes of their employees
find it difficult to comply since voluntary contributions may not always
pass through them, she added.
To further clear the air, the BIR decided to revoke four rulings it
issued earlier.
These directives—Ruling No. 002-99, DA-184-04, DA569-04, and
DA-08706—exclude the subject contributions from a taxpayer's gross
income. In effect, the four earlier rulings virtually exempted such
contributions from income tax.

New rules on deposit insurance issued

ALL OBLIGATIONS of a depositor with a closed bank will be deducted from
the depositor's total deposits with a bank before the amount of
insurance will be determined, Philippine Deposit Insurance Corp. (PDIC)
said.

THE COUNTRY's deposit insurer, Philippine Deposit Insurance Corp. issued
new rules in determining the insured deposits from closed banks. -- BW
FILE PHOTO

Regulatory Issuance No. 2011-04, issued by the state deposit insurer and
published in a news daily yesterday, enumerated the obligations of PDIC
after a bank closure for computing the deposit insurance due a depositor.

"For purposes of computing insured deposit, all obligations of the
depositor with the closed bank, as of bank closure, shall be net out
from the depositor's total deposits with said bank," the issuance read.

"The net out is solely for the purpose of determining the net deposit
covered by deposit insurance and does not constitute as payment for any
of the obligations of the depositor..." it further said.

"After netting out, the balance of the deposit, if any, shall be subject
to deposit insurance coverage, which in no case shall exceed P500,000."

A legitimate depositor of an insured bank, is entitled to an insurance
coverage of PDIC worth P500,000. If the amount of deposits of an account
holder exceeds P500,000, the amount out of the maximum deposit insurance
coverage is considered "uninsured deposit."

PDIC said loan oblgations, money accountability, and other sums due from
the depositor shall be netted out from the depositor's total deposits
with the bank.

Monday, November 14, 2011

PNOC chooses LandBank to manage P141M energy fund

WEDNESDAY, 09 NOVEMBER 2011 19:58 PAUL ANTHONY A. ISLA / REPORTER

THE state-run Philippine National Oil Co. (PNOC) said on Wednesday that
it has tapped the Land Bank of the Philippines as the program and fund
manager of its Decentralized Energy System Project Fund (DESPF).

The PNOC said the DESPF is a financial support mechanism for the
commercialization of renewable and other off-grid energy technologies in
the Philippines.

At present, the PNOC said it is managing the funds that now amounts to
P141 million to promote development and commercialization through
financial assistance, investments and consultancy services to businesses
engaged in the manufacture, marketing, utilization of decentralized
energy system technologies and products.

Antonio Cailao, PNOC president and chief executive, said the company
decided to place the fund in an interest-earning and principal-protected
investment with LandBank because of its existing renewable-energy loan
program that supports the government's call to develop renewable and
alternative energy sources.

Cailao said the fund will prioritize projects that will be referred by
PNOC, and will also form part of LandBank's pool of funds to finance
existing renewable energy and other energy-related projects.

The PNOC said the Decentralized Energy System Project started in 1987,
with a P62-million grant from the European Union, with PNOC's former
subsidiary Energy Development Corp. (EDC) as the project's implementing
agency.

The PNOC said the project financed some 26 loans covering DES
technologies such as photovoltaics, biogas, agri-dryers, coal
briquettes, solar water heaters and energy conservation technologies.

As the project became sustainable, EU's financial support ended in 1995,
with a five-year transition period. In 2001 the government gave its full
commitment and responsibility to sustain the project.

In another development, the PNOC said its renewable energy
arm—PNOC-Renewables Corp. (PNOC-RC) —has signed a memorandum of
understanding with the University of the Philippines (UP) for the
research and development of new and renewable-energy sources within the
various UP campuses.

Under the MOU, PNOC-RC will conduct feasibility studies on utilizing
solar, biomass and other renewable energy in the UP campuses, develop
prototype pilot renewable energy projects in the UP system, and conduct
energy audits of UP buildings, among others.

PNOC-RC will also help UP evaluate the renewable energy potential of the
different campuses and properties to determine if these can be tapped
commercially for resource generation, which includes, but is not limited
to the geothermal energy and biomass potential of the Los Baños campus
in Laguna, and the solar energy potential of the Diliman Campus.

PNOC-RC said UP will provide them access to its scientific and technical
resources, including expertise from its UP faculty and staff.

PNOC-RC was formed in 2008 as a wholly-owned subsidiary of PNOC. It is
tasked to promote and undertake research, development, utilization,
manufacture, sale, and marketing among others, of new and renewable,
non-conventional, and environment-friendly energy sources and systems.

Cebuana Lhuillier to use mobile phones for remittance business

TUESDAY, 01 NOVEMBER 2011 19:46 JUN VALLECERA / REPORTER

THE Cebuana Lhuillier brand, increasingly known more for its remittance
business than for the pawnshops it has built over the years, seeks to
strengthen its franchise by moving much of the services from its
bricks-and-mortar units at present to the mobile phone platform very soon.

The shift, PJ Lhuillier Services Corp. president and chief executive
officer Jean Henri D. Lhuiller said in an interview, should help the
company achieve greater efficiency and a larger share of the remittance
market down the line.

Already, he said, the company asked the Bangko Sentral ng Pilipinas to
permit it to extend a number of financial services in the manner first
exploited by rivals Globe Telecom and Smart Communications with their
GCash and Smart Money brands.

"Once we get the license from the BSP, our clients will be able to do a
number of transactions via their cellular phones," Lhuillier said.

For now, Cebuana Lhuillier clients have to satisfy themselves with what
is possible under a recently forged agreement with the home grown mobile
phone maker My/Phone, such as inquiries on loan status or schedule,
inquiries on remittance rates, top up phone credits or load, bills
payments including tuition on two local colleges for the moment or make
premium payments for insurance, donate to a charity or pay for online
purchases.

But with the BSP license, Cebuana Lhuillier may act as payout agent for
a number of remittance companies besides the one it is operating.

According to Lhuillier, the mobile phone component should complement the
services it has forged with Zoom Technologies which have been providing
them with the telecommunications products they need in the internet
space for maybe three years now.

"So all of these services should be available both online and in the
form of SMS," Lhuillier said.

He related PJCS once tried to forge a partnership with the Philippine
Postal Corp. and mine its wealth of relationships with more than 1,000
local government units across the country.

The intent was to boost the state-owned firm's snail mail services with
new technology solutions such as had been done by the Land Bank of the
Philippines in recently partnering with a privately-held postal
corporation in Japan.

"We tried to do that here but have not been successful. Privately held
couriers are easier to deal with than state-owned," Lhuillier said.

The Land Bank model seeks to tap the remittance potential of rural
Japan-based overseas Filipinos who often have to travel hours or leave
work temporarily to get to a remittance office.

Privately-owned postal units in Japan could be everywhere in that
country and remain open on a 24/7 basis.

Pinoy condo-buying style changing, CBRE study claims

SUNDAY, 13 NOVEMBER 2011 17:46 RIZAL RAOUL REYES / CORRESPONDENT

THE proliferation of high-density vertical subdivision complex in Metro
Manila in the last five years has changed the first-home preferences of
newly formed households, according to property management and consulting
firm CB Richard Ellis (CBRE) Philippines 

Victor Asuncion, CBRE Executive Director for Research and Consultancy at
CBRE Philippines, said the company is conducting a five-year study which
started this year until 2016 to track approximately 135,000 condominium
units for completion. About 31-percent of this stock is sold at a price
range of P40,000 to P80,000 per square meter. These are predominantly
studio and one -bedroom units with an average floor area of 30 to 40
square meters.

He said mid-market condominiums are relatively new to the market given
that the earlier condominium projects come with bigger sizes and are
sold at a higher price. Before mid-market condominiums became a big hit
among property buyers, ownership is limited to the upper class given its
restrictive acquisition cost. "However, the advent of mid-market
condominium in the fringe of the business districts across Metro Manila
has opened up a broader base market," he said in his presentation during
the recent year-end briefing of CBRE Philippines held in Makati City.

"The new trend in housing or accommodation is accessibility. First home
buyers are now ready to forgo ownership of house and lots in the suburbs
in exchange for short travel from home to work and any other necessities
e.g. school, shopping centers and tertiary hospitals. In addition,
affordable condominiums now found in Metro Manila have made the idea of
buying over renting a house a sound option," added Asuncion.

Unlike in previous cases when buying a condominium unit is not
acceptable home investment for the mid-market, Asuncion pointed out that
first-time buyers are now more open to acquiring an affordable condo
unit as their new homes. 

Home loan fixed rates has also reached 5.75 percent one-year fixed rate
for repricing which makes payments affordable to as low as P10,000
monthly, depending on the project details. 

In view of the scarcity of land in Metro Manila for housing
development, Asuncion said even the government has embraced the concept
of affordable condominium development for the mid-market by way of
providing development loan facility to developers and cheap end-use
loans to borrowers. 

He said buyers of affordable condominiums can now avail of long-term
housing loans to purchase condo units for as much as P2.5 million per
unit with mortgage rates of 11 percent. 

"Property developers are now recognizing the market range and debt of
affordable condominiums for the urban dwellers. Thus, we expect more of
these type of condominium project coming up for the broad mid-market
class," said Asuncion.

Asuncion said supply of affordable condominiums will definitely
out-phase demand but will not cause a glut similar to the events of
1997.  He said property developers have learned  from their experiences
and will only break ground on projects upon getting at least 50-percent
commitment form buyers. "Hence, we expect a growth of this product niche
in the near future particularly in Metro Manila and other key urban
centers like Metro Cebu and Metro Davao," said Asuncion.  

SEC prepares capital market dev’t plan

SEC prepares capital market dev't plan

THE SECURITIES and Exchange Commission (SEC) is drafting a capital
market development plan (CMDP) blueprint for year 2011-2016 that will
likely address key issues such as taxation and investments.

"The CMDP is a subset of the national development plan, which is being
prepared by the National Economic and Development Authority," Virgilio
V. Salentes, director of SEC's economic research and information
department, said in an interview late last week.

He said the development plan is aimed at improving, and expanding the
capital market.

"[We are doing this] to know how far or close are we even to other
[markets] in ASEAN region. So that, we could at least meet the benchmark
in terms of the direction [of the capital market] and level of
maturity," he said.

Mr. Salentes, who is in-charge of the over-all secretariat, said there
are four technical working groups, co-chaired by consultants from the
private sector, in the area of equity, fixed income, taxes, and
alternative products.

He, however, could not give specific details on the proposals since the
four technical working groups have yet to submit their proposal by the
end of the month.

"The original plan is it will be launched on March 2012. We have started
working last October," he said. "It will be then submitted to Finance
Secretary Cesar V. Purisima and it will be endorsed to President Benigno
Simeon C. Aquino III."

He, however, said that contents of the CMDP would include some of the
points that were raised and proven effective in the CMDP for year 2005-2010.

"They could pursue the fallouts in the previous plan, depending on the
recommendation. Or they could retain and strengthen those which are
proven effective," he said.

The CMDP 2005-2010 blueprint had 11 key objectives, such as urging the
government to promote long term investment and correct uneven tax
preferences affecting competitiveness; enhanced listing and expansion of
traded products such as the Philippines Stock Exchange (PSE) targeting
10-12 companies listing per year; and SEC allowing listing by the way of
introduction, among others.

Mr. Salentes said some of key proposal in the new CMDP would likely
delve on Real Estate Investment Trust (REIT) and taxation, adding those
policies that will need legislation would be lobbied in the congress.

Manuel N. Tordesillas, president of the Investments House of the
Philippines and the co-chair in the technical working group on
alternative products, said the group is currently developing proposals
that would assist SEC and PSE to come up with rules on issuance of
exchange traded funds.

"The technical working group is specifically developing recommendations
and ideas with respect to assisting the SEC and PSE to come up with the
rules that will regulate the issuance of exchange traded funds," he said
in an email sent to BusinessWorld on Saturday.

Exchange traded funds are securities that track an index, a commodity or
a basket of assets like an index fund, but trades like a stock on an
exchange.

"The group will also promote the actions of the Bankers Association of
the Philippines and Bangko Sentral ng Pilipinas to reconcile the rules
on the issuance by banks structured products such as derivatives,
together with the Securities and Exchange Commission to make them
consistent with the rules under the Securities Regulation Code on
options and warrants," Mr. Tordesillas said.

"Finally, the technical working group will make recommendations to the
Capital Markets Development Council to further enhance the development
of alternative investment products such as REIT, asset securitization,
and others that may qualify under PERA (Personal Equity and Retirement
Account)," he added.

PERA law or Republic Act 9505, was signed in 2008 to encourage people to
save up for retirement.

Sought for comment, market analyst Astro C. del Castillo, managing
director of brokerage firm First Grade Holdings, Inc., said investors
protection should be heightened in the new CMDP.

"The government should encourage more investments from the people and
the people investment's should be protected, particularly rights of the
minority shareholders," Mr. Castillo said in an interview late last
week. -- Cliff Harvey C. Venzon

BSP extends relief to banks

REGULATORY RELIEF measures have been granted to thrift, rural, and
cooperative banks in Luzon and the Visayas to enable them to similarly
assist and ease the financial burden of bank customers adversely
affected by tropical storm Pedring (international code name: Nesat)
which devastated several parts of the country in late September, the
Bangko Sentral ng Pilipinas (BSP) said on Friday.

Areas eligible for the relief measures were based on those identified by
the National Disaster Risk Reduction and Management Council on Oct. 10,
the central bank said in statement.

These are Metro Manila: Caloocan City, Malabon City, Manila City,
Marikina City, Muntinlupa City, Navotas City, Parañaque City, Pasay
City, Pasig City, Pateros, Quezon City and Valenzuela City; Cordillera
Administrative Region: Abra, Apayao, Benguet, Ifugao, Kalinga and Mt.
Province; Region 1: Ilocos Norte, Ilocos Sur, La Union and Pangasinan;
Region 2: Cagayan, Isabela, Nueva Vizcaya and Quirino; Region 3: Aurora,
Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac and Zambales; Region 4-A:
Batangas, Cavite, Laguna, Quezon and Rizal; Region4-B: Occidental
Mindoro, Oriental Mindoro and Romblon; Region 5: Albay, Camarines Norte,
Camarines Sur and Catanduanes; Region 6: Antique and Iloilo.

Similar relief measures were extended to thrift and rural/cooperative
banks in areas that were affected by landslide/flooding in December
2010, the BSP said, and previous typhoons such as Mina (Nanmadol),
Juaning (Nock-ten), Cosme (Halong), Frank (Fengshen), Ondoy (Ketsana),
Pepeng (Fengshen) and Juan (Megi).

The BSP said as approved on Oct. 21 by the Monetary Board, its
policy-making body, the temporary relief measures are:

• excluding existing loans of borrowers in affected areas from the
computation of past due ratios provided these are restructured or given
relief;

• reducing the 5% general loan loss provision to 1 percent for
restructured loans of borrowers in the affected areas;

• non-imposition of penalties on legal reserves deficiencies with head
office and/or branches in the affected areas;

• moratorium on monthly payments due to BSP for banks with ongoing
rehabilitation programs;

• subject to BSP approval, booking of allowance for probable losses on a
staggered basis over maximum of five years for all types of credit
extended to individual and businesses directly affected by the calamity;

• non-imposition of monetary penalties for delays in the submission of
supervisory reports;

• allowing banks to provide financial assistance to their officers and
employees who were affected by the calamity including those assistance
that may not be within the scope of the existing BSP-approved Fringe
Benefit Program;

• granting of a 60-day grace period to settle the outstanding
rediscounting obligations as of 24 September 2011 with the BSP of all
rediscounting banks in the affected areas; and

• allowing banks to restructure with the BSP, on a case-to-case basis,
the outstanding rediscounted loans of borrowers affected by the calamity.

"The measures will be in effect for a defined period and covered by
additional specific and other prudential conditions," the BSP said.

BSP says it may revamp banks' required reserves

Manila central bank says it may revamp banks' required reserves

MANILA, Nov 13 (Reuters) The Philippine central bank is seeking comments
from local lenders on a plan to modify the current regime of reserve
requirements, a move aimed at aligning rules with international
standards and not to tighten or loosen policy, officials said.

The Bangko Sentral ng Pilipinas (BSP) is planning to revise the
structure of banks' required reserves, now at a total 21 percent, by
merging liquidity and statutory reserves into one category, and may stop
paying interest on these funds parked at the central bank.

Authorities are also considering to stop the practice of allowing banks
to classify cash kept in their bank vaults as part of reserves,
according to some bankers who have seen the proposal.

"There is a consultation primarily to simplify and rationalise the
reserve requirement structure, emphasis on structure," BSP Deputy
Governor Nestor Espenilla said in a mobile text message on Sunday.

"Nothing is firm yet since market comments are still being solicited.
But the initiative should not to be confused with monetary
tightening/loosening action," he said.

The 21 percent reserve ratio of banks is broken down into 10 percent
statutory and 11 percent liquidity. The central bank now pays 4 percent
per annum on up to 40 percent of deposits maintained by banks as
statutory reserves.

Interest paid by the central bank on liquidity reserves are based on the
rate of comparable government securities less half a percentage point.

Some bankers are concerned that taking away the liquidity reserve
category may lead to higher financial intermediation costs, with the
funds now pegged to market rates. But the central bank said there was
likely to be negligible impact.

"We computed that, very small share. Our proposals are based on complete
staff work," Deputy Governor Diwa Guinigundo said in a mobile text
message to Reuters.

"These proposals are consistent with the fundamental principle that
reserve requirement is a prudential policy and that distinctions should
be done away with," he said.

"Not remunerating the banks for their reserve deposit is allowed under
the law. Very few central banks are paying banks on their reserve
deposits," Guinigundo said.

Some bankers say the central bank may have to lower the reserve ratio if
it wants to stop paying interest on the funds, as is the practice in
other countries.

The BSP raised the reserve ratio by a total of 2 percentage points in
June and July in a bid to bring it back to its preglobal crisis level.

Wednesday, November 2, 2011

PERA tax rules ‘workable’

BY DIANE CLAIRE J. JIAO, Reporter

PERA tax rules 'workable'

THE LATEST DRAFT of Personal Equity and Retirement Account (PERA) tax
rules has been welcomed by the private sector, paving the way for an
official issuance by the Bureau of Internal Revenue (BIR) next month.

Capital Market Development Council members who met last week to review
the still-unnumbered revenue regulation had no opposition to the tax
bureau's proposals, CMDC executive director Rescina S. Bhagwani said.

"The private sector finds the latest draft revenue regulation on PERA
workable, needing only minor clarifications," Ms. Bhagwani said in an
e-mail.

The CMDC proposed "minor edits" to make the language clearer but the
rules have already been "found acceptable," she added.

The BIR posted the draft on its web site last month to solicit feedback
before the Department of Finance (DoF) gives its final approval.

Tax rules are the last thing needed to roll out the PERA law or Republic
Act 9505, which was signed in 2008 to encourage people to save up for
retirement. Implementing rules and regulations were issued in 2009 by
the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.

Tax Commissioner Kim S. Jacinto-Henares said the rules are now pending
DoF approval and could be issued next month.

"The PERA rules will most likely be published in mid-December, to be
effective Jan. 1, 2012," she said in a telephone interview yesterday.

The private sector has long been waiting for the implementation of the
PERA law, described as a crucial tool to deepen the country's capital
markets. Under the retirement plan alternative, a resident Filipino can
contribute a maximum of P100,000 to a PERA account, while overseas
Filipino workers (OFWs) are allowed up to P200,000. A total of five PERA
accounts can be held.

PERA contributions will be exempted from a host of taxes such as the
final withholding tax on interest, capital gains tax on the sale of
bonds and shares, 10% tax on cash and property dividends and regular
income tax.

PERA holders are also entitled to an annual tax credit equivalent to 5%
of all their contributions for the year. Resident Filipinos can charge
this against their income tax liability. OFWs, exempted from paying
income taxes, can use the credit to offset any other national internal
revenue tax liability.

Given the array of tax breaks available, the BIR mandated in the
proposed guidelines that all PERA holders submit proof of income in a
bid to ensure that contributions are taken solely from their earnings.

This requirement is new and beyond the provisions stated in the PERA
law, Philippine Chamber of Commerce and Industry tax committee
chairperson Tammy H. Lipana said in a text message during the weekend.

"This may make it difficult for some people to avail of this retirement
scheme. For example, [for] people who earned or saved funds many years
ago, they may not be able to show proof of earnings anymore. Hence, they
can't invest in PERA products," she said.

Some occupations may also not provide proof of income and a number of
people could find the procedure a hassle, Ms. Lipana added.
Ms. Bhagwani said the provision was a sticking point during the CMDC
review but members accepted it given the need to prevent people from
parking money in PERA accounts to avoid paying taxes.

"Without this rule, people can just put all their money in their PERA
accounts and the accounts of their siblings and friends to make them
exempt from taxes on income and investment income," she said.

"The new rule may be a restriction, but it is not a dealbreaker. I am
optimistic that PERA will be widely taken up by the private sector," Ms.
Bhagwani added.

The PERA law is expected to attract an estimated eight million
Filipinos, especially OFWs and self-employed individuals who are not
required to contribute to the government-run Social Security System and
the Government Service Insurance System.

House Okays changes in Insurance Code

By Jess Diaz (The Philippine Star) Updated November 02, 2011 12:00 AM

MANILA, Philippines - The House of Representatives has approved on
second reading several amendments to the Insurance Code, which aim to
further develop and strengthen the insurance industry.

The chamber passed a consolidated bill endorsed by the committee on
banks and financial institutions, which Leyte Rep. Sergio Apostol chairs.

The bill is a fusion of four similar measures authored by
Representatives Hermilando Mandanas of Batangas, Juan Edgardo Angara of
Aurora, Teodorico Haresco of the party-list group Ang Kasangga, and
Joseph Victor Ejercito of San Juan.

The consolidated version, Bill 4867, expands the definition of "doing an
insurance business to include the practice of self-insurance by any
person or entity extending life insurance or similar protection to
his/her/its borrowers, depositors, clients, or third parties."

It deems irrevocable the designation of a beneficiary in the event the
insured does not change the beneficiary during his lifetime.

The bill provides that the interest of a beneficiary in a life insurance
policy shall be forfeited when the beneficiary is the principal,
accomplice, or accessory in willfully bringing about the death of the
insured.

In such case, the share forfeited shall pass on to other beneficiaries,
unless otherwise disqualified. In the absence of other beneficiaries,
the proceeds shall be paid in accordance with the policy contract, and
if the policy contract is silent, the proceeds shall be paid to the
estate of the insured.

The measure allows payment of insurance premiums and loan obligations by
government employees through salary deduction.

It also provides for regulations on micro insurance, which the bill
defines as "any activity providing specific insurance that meets the
needs of the low-income sector for risk protection and relief against
distress, misfortune and other contingent events."

It requires a domestic insurance company to have a paid-up capital by
Dec. 31, 2012 of P175 million if it has less than 40-percent foreign
equity, P350 million if its foreign equity is 40-percent to 59-percent
foreign equity, and P500 million for an insurance company with at least
60-percent foreign equity.

The measure adds new forms of admitted assets such as mutual funds, real
estate investment trusts, salary loans, unit investment trust funds, and
special deposit accounts and other assets that are deemed by the
Insurance Commissioner to be readily realizable and available for the
payment of losses and claims at values to be determined by him.

It also grants the Insurance Commissioner the authority to register
self-regulatory organizations whose operations are related to or
connected to insurance.

SB Corp. ODA project cited by ADB

Last Updated on Monday, 24 October 2011 09:56

The Asian Development Bank (ADB) in a recent report cited the Small
Business Corporation's (SB Corp.) Small and Medium Enterprise
Development Support Projects as the only successful and highly efficient
out of its seven completed loan- funded projects in the country. SB
Corp. was also among the four successful and three effective projects.

The rating came from the performance assessment of ADB-funded projects
during the Quarterly portfolio performance review by ADB and also draws
on the findings of the recently concluded 19th ODA Portfolio Review
conducted by the National Economic and Development Authority (NEDA).

The report states that project's successful rating is based on its
positive institutional impacts and instrumental to this success is SB
Corporation's healthy institutional and operational structure coupled
with clear, effective laws which have helped it conduct lending
operations effectively.

The project has helped SB Corp. expand its outreach, improve the
efficiency of its loan operations and strengthen the quality of its
portfolio. Also an integral part of the project is a technical
assistance intended to enhance the Corporation's institutional capacity
by reorganizing its management structure, introducing a credit scoring
model, developing a management information system and improving its
products. Through the technical assistance SB Corporation was able to
develop its own Borrower Risk Rating (BRR) Tool which was later
disseminated to its partner financial institutions (PFIs). The BRR tool
helps PFIs evaluate, monitor and manage SME loans and improve the
overall quality of their loan portfolio.

Earlier this year SB Corp. was also awarded with a Good Practice Award
(GPA) by NEDA for its Borrower Risk –Based Lending Approach.