PHILDEVFINANCE (old news)

Saturday, March 12, 2011

Draft rules seek to limit PERA revenue losses

Draft rules seek to limit PERA revenue losses

DRAFT RULES implementing Republic Act (RA) 9505 or the Personal Equity and Retirement Account (PERA) Act of 2008 strictly limit annual contributions to reduce revenue losses from perks mandated by the law.

The regulations also specify who can apply for tax credit certificates (TCCs) to ensure that TCCs are not fraudulently used.

The draft, prepared by a technical working group at the Capital Market Development Council (CMDC) and up for a discussion later this year, state that annual contributions cannot go beyond P100,000 for an individual Filipino working and residing in the country and P200,000 for those working abroad.

Five PERAs can be maintained at any one time but the annual contributions must not exceed P100,000 or P200,000.

Resident Filipinos, meanwhile, cannot apply for TCCs to claim a 5% income tax credit provided under RA 9505. OFWs, however, can do so to reduce their internal revenue tax liabilities.

The draft revenue regulations, dated Feb. 15, supersede those dated Dec. 9, 2009 that allowed annual contributions higher than P100,000 and P200,000.

The older draft also stated that resident Filipinos could apply for a TCC, which they could use to reduce their income tax liabilities, while OFWs may use their TCCs to pay for any internal revenue tax.

Rescina S. Bhagwani, CMDC executive director, told BusinessWorld the annual contributions were deliberately capped at P100,000 and P200,000 to limit revenue losses for the government.

In addition to the tax credit equivalent to 5% of contributions, PERA investment and reinvestment income is also exempted from a slew of taxes such as the final withholding tax on bank deposits, 10% tax on cash or property dividends, and the stock transaction tax on shares traded through the stock exchange.

"[The rules are intended] to avoid the abuse of tax incentives because in PERA, as you know, everything has incentives: the initial you amount you put in, and the moment that amount is invested, that also has [tax perks]," Ms. Bhagwani said.
Finance Undersecretary Gil S. Beltran, in a separate interview, said: "If for example, you earn high, wouldn’t you want to invest more money [into a PERA] so your investment will earn more and then enjoy also more tax incentives?"

While resident Filipinos cannot apply for TCCs, they can get a certification from their administrators on their contributions which will be used by employers to adjust withholding taxes on compensation income.

Self-employed individuals and OFWs are the only ones who can apply for TCCs.
"[The] BIR is saying there seems to be a lot of fraud happening in the use of TCCs. The TCCs can be sold, so we want to avoid that," Ms. Bhagwani said.

Tax Commissioner Kim S. Jacinto-Henares said the CMDC was allowed to draft the new regulations because it was insistent that RA 9505 be finally implemented.

The PERA law was enacted in August 2008 to encourage Filipinos to save up for retirement. Implementing rules pertaining to PERA administrators and custodians were issued in October 2009 by the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission (SEC), but the law could not be implemented sans BIR regulations governing the law’s tax provisions.

The CMDC has forwarded its draft to the BIR for review. "Hopefully it will be finalized during CMDC’s next meeting in May," Ms. Bhagwani said.

CMDC counts among its members the Finance department, central bank, SEC, Insurance Commission and private sector groups such as the Bankers Association of the Philippines and the life and non-life insurers industry groups.

Ms. Jacinto-Henares said she had yet to see a copy of the draft, which should also "consider the monitoring of PERA accounts."

"A PERA contributor is allowed to maintain five PERA accounts anywhere in the country. Just imagine how the BIR will be able to monitor each and every account to see if they are following the instructions not to exceed the allowable amount," she said.

Lina P. Figueroa, a principal at Punongbayan and Araullo, said capping the annual contributions "may discourage people from investing in PERAs."

She also questioned the planned issuance of TCCs to OFWs, noting the latter "are already exempted from income tax" and may have no use of the certificates.

Still, Ms. Figueroa said the draft had addressed "main issues" and raised the prospect of the PERA law finally being implemented.

The Finance department considers RA 9505 as a revenue-eroding law and has estimated annual losses of P12 billion once it is implemented.

"Obviously it has an impact on our revenue generation... but we also want to encourage Filipinos, especially OFWs, to invest their money so that the country can use them in its projects to improve the economy," Mr. Beltran said.

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RCBC eyes P4.4B in capital

RCBC eyes P4.4B in capital

THE RIZAL Commercial Banking Corp. (RCBC) said it still needs to raise as much as P4.4 billion in capital this year even after raising P2.1 billion from a share sale to the International Finance Corp. (IFC).

RCBC President Lorenzo V. Tan told a press briefing yesterday the bank wants to raise a total of P6-6.5 billion this year to finance acquisitions and an expansion in its lending operations.

“Of the bank’s plan to raise P6 to P6.5 billion, there is a remaining P4 to P4.4 billion that we plan to raise through a share sale with a single investor,” he told reporters after RCBC, the country’s fifth largest bank, and IFC, the private sector investment arm of the World Bank, signed an agreement covering the share sale yesterday.

Mr. Tan said the share sale to raise P4-4.4 billion should take place in April at the earliest or May at the latest. He did identify the investor.

“[We are raising capital] to prepare for Basel 3, boost our organic growth as we try to open 15 branches a year and give us capital to make attractive acquisitions,” Mr. Tan added.

He pointed out the sale of 73.45 million common shares to the IFC -- valued at P2.1 billion and equivalent to a 7.2% stake in the bank -- was just the first leg of the bank’s Tier 1 capital-raising effort for the year.

Other large Philippine banks have raised Tier 1 capital in preparation for the Basel 3 standards, which were crafted to make banks stronger against stresses such as those seen during the financial crisis.

John G. Deveras, RCBC first senior vice-president and head of strategic initiatives, said IFC bought the shares at roughly P29 apiece.

RCBC shares closed at P27.50 each yesterday, 85 centavos higher than on Tuesday, when the bank disclosed its agreement with IFC to the stock exchange.

For his part, Jesse O. Ang, IFC resident representative, said “the Yuchengco Group of Companies is a prominent group not just in banking... The group has a major role in the country’s development.

We are pleased to have the opportunity to work with them.”

RCBC is a member of the Yuchengo Group.

“The fact the bank is moving into microfinance to cater to the underserved sector -- and it has a wide reach -- [makes it an ideal partner for IFC],” he added.

IFC is partnering with local banks to help these institutions expand their lending operations.

In response, Mr. Tan said “we have always considered our microfinance business to be a strong complement to the commercial bank’s lending operations.”

RCBC targets to disburse P300 million worth of microfinance loans this year, up from the P102 million released from July 2009 to December 2010.

The bank ventured into microfinance -- the first large bank to do so -- in July 2009 after buying Jose P. Laurel Rural Bank, Inc. based in Batangas in February 2009 and Merchants Savings & Loan Association, Inc., which had branches in Mindanao, in May 2008.

Asked about IFC’s plans, Mr. Ang said: “IFC is open to acquisitions and investments. We see a role in various financial institutions because they have a broad reach and they are excellent vehicles to provide credit to key populations. We will work with other institutions by investing in the form of equity or a risk-sharing facility.”

“We will look into the whole spectrum of financial players and niche institutions specializing in microfinance. We will also look at rural banks as they are closer to certain constituents we are interested in,” he added.

Mr. Deveras said “IFC’s investment brought RCBC’s Tier 1 capital adequacy ratio (CAR) to 13.4% and its combined CAR to 18.5%, well-above the central bank’s 10% minimum requirement.”

He also said the other investor expected to contribute as much as P4.4 billion in fresh capital to RCBC will claim a 13.5% stake in the bank. As a result, IFC’s holdings will be diluted to 6.9%.

Asked about RCBC’s acquisition plans, Mr. Tan said, “there is nothing [definite] but we have a few on our table... these are small banks.”

RCBC is the second large local bank where the IFC has made an investment.

IFC and the IFC Capitalization Fund invested $150 million in Banco de Oro Unibank, Inc. (BDO), the country’s largest, in April last year.

IFC has also made an investment in the Planters Development Bank.

It has also closed risk sharing agreements with BDO and the Bank of the Philippine Islands, the country’s third largest bank, for their sustainable energy finance programs. -- A. R. R. Gregorio

Thrift banks cheer BSP move raising capitalization levels

Thrift banks cheer BSP move raising capitalization levels
By Michelle Remo
Philippine Daily Inquirer
First Posted 21:19:00 03/09/2011

MANILA, Philippines—Competition in the country’s thrift banking industry is already stiff and the entry of new players may have an adverse rather than beneficial effect, industry officials said Wednesday.

As such, the Chamber of Thrift Banks (CTB), the umbrella organization of thrift banks in the country, said regulators moved in the right direction by effectively discouraging the entry of new industry players via the imposition of higher capitalization requirements for entities wanting to enter the sector.

“Competition in thrift banking continues to heat up as commercial banks go into our niche market,” CTB president Patrick Cheng told reporters.

Therefore, Cheng said, entry of more competitors in the thrift banking sector indeed has to be addressed.

As banks become more competitive, more of them offer new products and services to reach out to more clients. Consistent with this trend are recent moves by universal and commercial banks to tap smaller corporate and individual clients who used to be largely serviced by thrift banks.

This is the reason existing thrift banks said discouraging more competition, such as by making it more difficult for new entities to enter the thrift banking industry, is a welcome move.

Smart launches P500 phone

Smart launches P500 phone
By Paolo Montecillo
Philippine Daily Inquirer
First Posted 16:11:00 03/10/2011

MANILA, Philippines—Dominant carrier Smart Communications Inc. is bringing one of the world’s most affordable phones to the country to reach the people at the “base of the pyramid” that still do not have access to basic telecommunications services.

In a briefing on Thursday, Smart announced the launch of its “Panalo Phone,” which would sell at a price of P499 each. The new phone, which comes in two models made by the Chinese brand ZTE and local phone maker Cherry Mobile, is set to hit the market by March 21.

It will be sold through Smart’s budget brand Talk N’ Text, which only offers prepaid accounts.

Close to nine in 10 Filipinos today already have mobile phones, but the company said it would target the “D” segment of the market, made up of about 11 million Filipinos that still could not afford mobile phones.

“Offering quality services and making them affordable and accessible to what they now call the base of the pyramid is built into Smart’s DNA. This is where and how we grow,” the company’s chief wireless advisor Orlando B. Vea said.

The Panalo Phone, which comes with a Talk N’ Text SIM card that cannot be removed, comes preloaded with “Araw-Araw Text 10,” one of the brand’s new promos that allow users to send 40 text messages to other Talk N’ Text subscribers and another 25 messages to users of other networks.

“This allows us to offer real value to this fresh market of potential mobile subscribers,” Smart wireless consumer division head Danilo Mojica said.

The Panalo Phone allows for 2G connectivity for basic call and text services, an FM radio receiver, a flashlight and a basic monochrome screen.

Aside from the device itself being affordable, Smart said it would develop new “bucket-priced” promos specifically for Panalo Phone users.

“This is key to our overall strategy of slicing and dicing the market and making sure we have a unique and relevant product to offer this particular segment,” Mojica said.

Friday, March 11, 2011

RuMEPP poverty alleviation program reaches to provinces of Philippines

RuMEPP poverty alleviation program reaches to provinces of Philippines

Microfinance Focus, March 9, 2011: The Rural Micro-Enterprise Promotion Programme (RuMEPP) in its efforts to support rural poverty reduction has served 19 targeted provinces through the implementation of a poverty alleviation program in Philippines.
Jonathan Tagalo Jr., RuMEPP Provincial Officer during the workshop on Micro Enterprise Development in Agusan del Norte in Butuan City said, “Of the 19 province beneficiaries, four come from Caraga Region, thus, all provinces in the region are beneficiaries of this poverty alleviation program.”

The program is aimed to raise the incomes and improve the livelihoods of poor rural people by providing them with loans and other financial services, and business development services such as capacity-building, market linkages and product development.

The objective of the program is to see increasing numbers of new and existing rural microenterprises expanding and operating profitably and sustainably. Investments will support microfinance and credit, microenterprise promotion and development, and programme and policy coordination.

RuMEPP is a seven-year poverty alleviation project of the International Fund for Agricultural Development (IFAD) based in Rome, Italy and the Government of the Philippines with the Department of Trade and Industry (DTI) as the lead agency and the United Nation Office for Project Services (UNOPS) as cooperating institution.

Thursday, March 10, 2011

Microinsurance gets rolling in rural areas

Microinsurance gets rolling in rural areas

AS most rural residents, which comprise a near majority of the population, are still without the benefit of insurance coverage, the potential of the micro insurance business is boundless. But what is needed is an earnest effort from both the government and the private sector for an education drive in the countryside.

The Bangko Sentral ng Pilipinas (BSP) and the Insurance Commission (IC) recently released the guidelines for the provision of micro insurance through the rural banking system to take the place of mostly informal insurance schemes in rural communities.
An ironic situation exists in the country where the most vulnerable to natural calamities are the least insured. The government is mandated to provide insurance coverage to those who have the least means to obtain them but it does not have enough resources for such service, thus the need for the private sector to lead in the microinsurance market. Even counting the informal schemes such as the so-called paluwagan among mostly cooperatives, the penetration of insurance services in the rural areas is very low.

IC data showed only 13.9 percent of the population last year was covered by some form of insurance. Among the poor, only 2.9 million of the 27.6 million Filipinos below the poverty line have some form of cover for their future. Since most of the clients of rural banks are farm workers and are considered the most susceptible to weather changes—they being the most in need of ample insurance cover—banks in the countryside would be the best conduits for microinsurance.

With the recently released guidelines, rural banks can now offer microinsurance services to all borrowers and depositors including their family members as dependents. Rural bank clients qualify for microinsurance services if they have a savings account with an average daily balance of P15,000 or below that would cover majority of depositors among rural banks. Estimates made by the BSP showed the microinsurance service can raise P2.5 billion annually even on premiums of as low as P1 a day with potential client base of seven million rural bank depositors.

Microinsurance is an integral service that protects not only the insured rural folk but also the availability of lending since banks will have less to worry about with the radical shifts in weather affecting farm businesses and loan exposures.

Crop insurance, as an example, provides farmers affected by natural calamities the seed money to restart their businesses. The new IC circular states that all insurance firms, cooperatives, and mutual benefit associations licensed by the commission may sell microinsurance products, which may consist of one type or several products—life, nonlife and health—bundled together.

It also requires microinsurance agents to be licensed by the commission. These agents, however, need not take the regular licensure exam but must undergo a special training program and pass a qualifying exam. To get the ball rolling for microinsurance, the Department of Finance (DoF) and the IC have launched a campaign to promote microinsurance awareness in the country.

The collaboration between the national government and local government units (LGUs) is seen as a key move to promote risk protection in the rural areas. Aside from the government initiative, the United States Agency for International Development (USAID)-backed Microenterprise Access to Banking Services (MABS) program of the Rural Bankers Association of the Philippines (RBAP) held series of forums to propagate the microinsurance business in the countryside primarily through the training of its bank members.

RBAP-MABS seminars and workshops provide rural banks with information on initiating the process to become licensed microinsurance agents. The RBAP has partner-insurers for its member banks established insurers AA International, Country Bankers Life Insurance, Philippine Prudential Life, PhilAm Life, Pioneer Insurance, Malayan-Grepalife and MicroEnsure Philippines.

The propagation of microinsurance would only redound to the benefit of majority of Filipinos but a serious effort must be made to convince them that insurance is not only for the rich.

A private-public partnership is needed towards this end.

Wednesday, March 9, 2011

BSP: ARMM bank loans defeat financial inclusion

BSP: ARMM bank loans defeat financial inclusion
03/09/2011 | 08:53 PM

The Bangko Sentral ng Pilipinas (BSP) has reported a steady decline in the loan portfolio of banks in the Autonomous Region in Muslim Mindanao (ARMM), stumping the central bank’s financial inclusion program.

In a report, the BSP noted a marked downtrend in the loan portfolio ARMM banks within a 10-year stretch, down by 124 percent to P601 million as of end-June 2010 from P1.348 billion in 2001.

On the other hand, the Mimaropa area of Mindoro, Marinduque, Romblon, and Palawan posted a 20-percent rise in loans to P5.042 billion from P4.197 billion in the same comparable period.

ARMM and Mimaropa belong to 14 of 17 regions that, according to the BSP report, show below-average scores in bank density ratios. Both regions were at the bottom of the BSP report.

The findings have raised questions on the effectiveness of the BSP and the national government’s financial inclusion program, which aims to extend financial services to as many Filipinos as possible.

In the face of these data, BSP Gov. Amando Tetangco Jr. said monetary authorities continue to provide “a regulatory environment that is responsive and open enough to encourage financial institutions to provide credit to the underserved and unbanked sectors of the society, while ensuring that these financial institutions are cognizant of the risks they are taking."

"We have expanded the product lines, encouraged mobile banking, and will soon release updated anti-money laundering rules, realizing that for microfinance institutions the standard AML approach may not be appropriate," Tetangco added.

The central bank chief also said the BSP has begun to fortify consumer protection programs, disclosure practices, and financial literacy programs of banks to protect the underserved sectors, which unscrupulous institutions and individuals often exploit. — PE/VS, GMA News

Filing of 2010 annual info returns optional, says BIR

Filing of 2010 annual info returns optional, says BIR

abs-cbnNEWS.com
Posted at 03/09/2011 12:08 PM | Updated as of 03/09/2011 7:08 PM

BIR wants AIR, not SALN, from rich taxpayers

MANILA, Philippines (UPDATE) - The Bureau of Internal Revenue (BIR) has given taxpayers leeway by making the filing of annual information returns (AIR) for 2010 optional.

"This will give affected taxpayers time to acquaint themselves with this new requirement and see how they can best effectively comply with the same. This will also allow the BIR to monitor its implementation on a pilot basis and make the necessary adjustments where needed," said BIR Commissioner Kim Henares announced during the launch of the Large Taxpayers Service (LTS) tax campaign program on Monday.

Henares also denied a Philippine Daily Inquirer report that they are asking private citizens to file a "personal" Statement of Assets and Liabilities and Net worth or SALN, which is required only of government employees.
"Hindi po tama na nagre-require kami ng statement of assets and liabilities," she said.

The BIR earlier issued Revenue Regulation (RR) 2-2011, requiring individuals, estates and trusts to file their Income Tax Returns (ITR) "together with the AIR or BIR Form No. 1705, which shall include such income subject to final withholding tax and those exclusions from gross income."

Some taxpayers had objected to the order, saying it would be difficult to report income they did not know they had to record.

Henares said the filing of AIR will be voluntary this year, but mandatory next year.

The mandatory filing of AIR aims to address 2 issues. These are the non-inclusion of famous and wealthy personalities in the list of top individual taxpayers, and the impending government requirement of ITRs as basis for the granting of loans and licenses, among others, Henares said.
Those that are required to file an AIR include:

pure compensation income earners whose annual taxable income derived from within the Philippines exceeds P500,000 tax and on which income the correct income tax has been correctly withheld;
individuals, estates and trusts whose sole income has been subjected to final withholding tax in excess of P125,000 annually, whether remitted or not to the BIR; and
individuals whose sole income is exempt where the aggregate amount exceeds P500,000 annually.
The deadline for filing is April 15 each year for those filing the ITR and AIR, and May 15 for those filing just the AIR.

The BIR is hard pressed in boosting collections to plug the country's budget deficit, which reached a record P314 billion or 3.7% of gross domestic product (GDP) last year.

This year, the government wants to narrow the shortfall to P290 billion or 3.2% of GDP.

LTS campaign

Meanwhile, the Large Taxpayers Service (LTS) division of the BIR, which is tasked to collect at least 60% of the tax agency's goal, is confident it could meet its target this year.

The LTS launched on Wednesday a campaign to shore up its collections, and priority programs include the use of Computer-Assisted Audit Techniques and Tools System, Risk-based Audit, e-Taxpayer Account Management Program Project, and e-Authority to Remove Imported Goods Processing.

The LTS is expected to collect over P457 billion of the BIR's P940 billion goal this year.

“The goal allocation for the LTS may look gargantuan but it is doable," said LTS Assistant Commissioner Zenaida Garcia. - With a report from Karen Flores, abs-cbnNEWS.com

BSP tells banks to shape up, or face scrutiny

BSP tells banks to shape up, or face scrutiny

Banks should focus on risk management and good governance to sustain the Philippines’ financial sector, or face more intensive scrutiny, a Bangko Sentral ng Pilipinas (BSP) official on Thursday said.

In an interview, BSP Deputy Gov. Nestor Espenilla Jr. said authorities would discuss with banks the “appropriate" governance standards under Basel III, a new agreement to reform the banking industry to avoid a repeat of the 2008 global financial crisis.

The central bank will likely implement the good governance standards within the year, Espenilla said.

Banks that will not heed the BSP better brace themselves for more intensive scrutiny, he added.

Bank authorities are set to implement the second phase of reforms pertaining to capital ratios under Basel III.

The central bank has already issued guidelines on the risk-based capital adequacy framework that would help Philippine banks comply with the higher capital standards.

Last month, the BSP adopted new criteria for capital instruments after issuing a moratorium on the fund-raising activities of banks until Dec. 31 last year.

Under the Basel III standards, banks must hold a core tier-one capital of 4.5 percent from 2 percent under previous agreements.

Capital conservation buffer

A further capital conservation buffer would also be required, bringing to 7 percent the total capital-to-assets ratio that banks must hold, the central bank said.

Banks would have less than five years to comply with the minimum ratios, and until January 2011 to meet the buffer requirements.

Banks are currently required to have common equity equal to 2 percent of total assets and 4 percent tier-one capital.

Basel III gave banks until the end of 2017 to comply with the tighter definitions of capital, and a new short-term liquidity standard would not be implemented until 2015 begins.

While a separate long-term liquidity rule has been shelved under pressure from the banking industry, the short-term rule was expected to be in effect earlier.

The two liquidity rules would require banks to hold enough cash and easily cashable assets to meet liabilities. — JE/PE/VS, GMANews.TV

With P110B in retained earnings, PhilHealth won't go bust — Recto

With P110B in retained earnings, PhilHealth won't go bust — Recto
JERRIE M. ABELLA, GMA News
02/17/2011 | 11:57 PM

Sen. Ralph Recto on Thursday criticized the Philippine Health Insurance Corp. (PhilHealth) for feeding the public the "disinformation" that it would go bankrupt should its retained earnings be used to address the country's healthcare infrastructure shortage.

"With retained earnings of P110 billion, there's no way that PhilHealth will fall to the ground as professed by the treasury department of the agency," said Recto, chair of the Senate Ways and Means committee.

"Malaking kalokohan 'yan, na malulugi sila (That's a big lie, that they will lose money)," he added.

Recto filed Senate Bill 2653, which seeks to earmark half of PhilHealth's retained earnings or reserve funds for the Department of Health's Health Facilities Enhancement Program (HFEP).

According to the senator, PhilHealth will further commit a great disservice if it increases the premiums paid by members, "while clutching eagle-like to its retained earnings."

"They will increase the members' contributions when they have more than enough funds to expand coverage and subsidize low-income poor workers," Recto explained.

PhilHealth, however, may keep its closely guarded retained earnings and not allocate it to address the deficit in healthcare infrastructure, as long as the funds would be used to increase the benefits of members.

"You can't be instantly charitable (to poor members) when you don't want to open your retained earnings for a noble purpose — like reducing the shortage in healthcare infrastructure like barangay clinics and hospitals, which would benefit a great deal of people," he said.

PhilHealth will fall

Evangeline Racelis, PhilHealth senior Treasury manager, had said in a previous Senate hearing that the agency would fall if the proposed measure of Recto's SB 2653 were enacted into law.

The DOH will fund HFEP with P7.143 billion out of this year's budget, saying it needs about double or triple the amount to wipe out the backlog in healthcare infrastructure.

HFEP aims to enhance the capacity of primary healthcare facilities such as barangay health stations, rural health centers, and government hospitals, which is at the frontlines of the public healthcare system.

No less than the top officials of PhilHealth had claimed that the state agency has retained earnings of about P110 billion during previous budget hearings in the Senate, Recto said.

"It is time to tap these funds and put them to better use. The DOH and PhilHealth should complement each other in improving the delivery of healthcare services to the people," he said.

As of June 2010, PhilHealth has 21.65 million registered members, the bulk — 7.41 million — of which comes from the private sector.

Their contributions range from P50 for those receiving P4,999.99 and below, and as much as P375 for those receiving
P30,000 and more.

The DOH has proposed to increase PhilHealth members' contributions to 3.5 percent, from the 2.5 percent, of salaries. — VS, GMA News

RCBC in talks with new investor on P4.4-B deal

RCBC in talks with new investor on P4.4-B deal
03/09/2011 | 06:32 PM

Talks are ongoing between Rizal Commercial Banking Corp., one of the country’s 10 largest banks, and an investor who is placing P4.4 billion in the Yuchengco-led bank.

The negotiations will likely be over, the transaction closed in the next few weeks, RCBC president, and CEO Lorenzo Tan said Wednesday without naming the investor.

The deal comes on the heels of another transaction with the International Finance Corp., which infused P2.1 billion into the bank. The private investment arm of the World Bank, IFC leans toward banks that serve the underbanked or the unbanked sectors of the population.

The latest deal RCBC is trying to close is part of the bank’s over overall drive to strengthen its tier-one capital, or shareholder equity, by P6.5 billion.

The new investor will account for a 13.5-percent stake in the bank, said Joni Deveras, head of RCBC Strategic Initiatives. This will eventually give IFC a 6.5-percent in RCBC.

On Wednesday, IFC and RCBC signed a purchase deal involving 73 million bank shares worth P2.1 billion and valued at $48.4 million. Once complete, transaction arranged by Citibank buys IFC a board seat in RCBC.

Tan said RCBC’s “fund raising drive" will help "fund our growth, prepare us for Basel III and give us the capital to acquire [other banks] if there are any acquisitions." RCBC plans to open 15 new branches this year.

IFC resident representative Jesse Ang said they invested in RCBC because of the bank's growing exposure in microfinance and the small and medium enterprise sector of the business.

"The bank is moving in the area of the underserved, which is microfinance. The fact that RCBC is focused in this like-mindedness is why we are partnering with them," Ang said.

IFC is investing $200 million to $300 million a year on top of its $1-billion exposure in the Philippines, Ang said. — VS, GMA News

Eighty Cooperatives in the Philippines Express Interest in Purchasing Weather-Index Microinsurance Product from CLIMBS

Eighty Cooperatives in the Philippines Express Interest in Purchasing Weather-Index Microinsurance Product from CLIMBS

by MicroCapital on Wednesday, March 9, 2011 at 10:16am

Eighty cooperatives in the Philippines have reportedly expressed interest in purchasing a weather-indexed microinsurance product from Coop Life Insurance & Mutual Benefit Services (CLIMBS) to protect them from the attenuating impact to their loan portfolios that can be caused by extreme weather conditions [1].

The product serves as protection against the inability to repay loans due to losses caused by extreme weather events, namely typhoons, which are common in the Philippines. A set of weather indices has been created for each of the 1,700 municipalities nationwide so that – should conditions, such as wind gust or rainfall, exceed the predefined weather index trigger point for a municipality – the cooperatives in that location will receive a payout.

The offering is a result of a collaboration between Coop Life Insurance & Mutual Benefit Services (CLIMBS) of the Philippines; Munich Re, a resinsurance company established in 1880 in Munich; and Deutsche Gesellschaft fur Technische Zusammenarbeit GmBH (GTZ), a development arm of the German government. CLIMBS is owned by approximately 1,000 cooperatives, cooperative banks and cooperative federations and provides life, property and health insurance products.

By Jacqueline Foelster, Research Associate

About Coop Life Insurance & Mutual Benefit Services (CLIMBS): Coop Life Insurance & Mutual Benefit Services (CLIMBS) is a cooperative life insurance company founded in 1971 in the Philippines. It is owned by approximately 1,000 cooperatives, cooperative banks and cooperative federations and provides life, property and health insurance products. As of 2009, CLIMBS has total assets of PHP 325 million (USD 7.5 million).

About Munich Re: Munich Re is a reinsurance company established in 1880 in Munich, Germany. It provides insurance advisory services, reinsurance, primary insurance and health insurance. Its assets are managed by Munich Ergo Asset Management (MEAG). As of 2009, Munich Re has an investment portfolio of EUR 182 billion (USD 256 billion), return on equity (ROE) of 11.8 percent and return on assets (ROA) of 4.3 percent.

About Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ): GTZ is a federally-owned organization that was founded in 1975 in Germany. It operates in 128 countries to promote sustainable development by providing financial advisory services and funding.

Sources and resources:

[1] Artemis, “Eighty cooperatives expected to buy parametric microinsurance product in the Philippines”, http://www.artemis.bm/blog/2011/02/24/eighty-cooperatives-expected-to-buy-parametric-microinsurance-product-in-the-philippines/

MicroCapital.org Article, October 19, 2010, “Coop Life Insurance & Mutual Benefit Services (CLIMBS), Munich Re, GTZ Partner to Create Microinsurance Product in the Philippines”, http://www.microcapital.org/microcapital-brief-coop-life-insurance-mutual-benefit-services-climbs-munich-re-gtz-partner-to-create-microinsurance-product-in-the-philippines/

MicroCapital Microfinance Universe Profile: Coop Life Insurance & Mutual Benefit Services (CLIMBS), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Coop+Life+Insurance

MicroCapital Microfinance Universe Profile: Munich Re, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Munich+Re

MicroCapital Microfinance Universe Profile: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Deutsche+Gesellschaft+f%C3%BCr+Technische+Zusammenarbeit+GmbH+%28GTZ%29

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

responsAbility Social Investments of Switzerland Makes Loans Totaling $3m to 3 MFIs in the Philippines, Cambodia and Indonesia

responsAbility Social Investments of Switzerland Makes Loans Totaling $3m to 3 MFIs in the Philippines, Cambodia and Indonesia

by MicroCapital on Tuesday, March 8, 2011 at 9:05pm

responsAbility Social Investments AG, an investment company based in Switzerland, recently reported to MicroCapital that it has made loans totaling the equivalent of USD 3.06 million to microfinance institutions (MFIs) in Cambodia, the Philippines and Indonesia [1].

The responsAbility Microfinance Leaders Fund (rAMLF), a microfinance investment vehicle (MIV) managed by responsAbility, invested USD 1 million in Amret, a Cambodian MFI. In 2009, AMRET reported to the US nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 71.4 million, a gross loan portfolio of USD 53.4 million, approximately 217,000 borrowers, return on assets (ROA) of 4.47 percent and return on equity (ROE) of 21.2 percent.

rAMLF also loaned the local currency equivalent of approximately USD 500,000 to TPC, a Cambodian MFI. In 2009, TPC reported to MIX total assets of USD 28.3 million, a gross loan portfolio of USD 17.5 million, 91,200 active borrowers, return on assets (ROA) of 1.46 percent and return on equity (ROE) of 8.29 percent.

The responsAbility Global Microfinance Fund (rAGMF), a second MIV managed by responsAbility, invested USD 1 million in Sathapana, a Cambodian MFI. In 2009, Sathapana reported to MIX total assets of USD 43.5 million, a gross loan portfolio of USD 39.7 million, approximately 36,200 borrowers, return on assets (ROA) of 4 percent and return on equity (ROE) of 26 percent.

rAGMF also loaned the local-currency equivalent of approximately USD 250,000 to Gata Daku, a cooperative in the Philippines. Gata Daku has not reported to MIX since 2007 and does not disclose financial information on its website.

rAGMF also loaned the local currency equivalent of approximately USD 305,000 to Koperasi Mitra Dhuafa (Komida), an Indonesian MFI. In 2009, Komida reported to MIX total assets of USD 3.8 million, a gross loan portfolio of USD 2.5 million, return on assets (ROA) of 1.91 percent and return on equity of 9.93 percent.

By Jacqueline Foelster, Research Associate

About responsAbility Social Investments AG: Founded in 2003, responsAbility Social Investments AG is a Swiss investment company whose products aim to enable investors to earn a financial return while assisting people in emerging markets to access information and markets in sectors such as microfinance, small and medium-sized enterprise (SME) financing, fair trade and independent media. According to calculations based on data from the Microfinance Information Exchange (MIX) from 2009 and 2010, responsAbility manages approximately USD 800 million in total assets. responsAbility is backed by Swiss financial institutions and a social venture capital company as founders and shareholders including Baumann & Cie, Banquiers, Credit Suisse, Raiffeisen Schweiz, Swiss Re, Bank Vontobel AG as well as George Avenue.

About responsAbility Microfinance Leaders Fund (rAMLF): rAMLF invests in large microfinance institutions (MFIs) through debt securities and equity investments. LuxFLAG, an independent organization that certifies that microfinance vehicles actually invest in the microfinance sector, renewed rAMFL’s label as of April 2010.

About responsAbility Global Microfinance Fund (rAGMF): rAGMF is a microfinance investment vehicle (MIV) managed by responsAbility that invests in microfinance institutions (MFIs) and other MIVs, mostly through short- to medium-term debt securities. rAGMF also invests up to 10 percent of its assets in the equity of MFIs. In April 2010, its annual label was renewed by the Luxembourg Fund Labeling Agency (LuxFLAG), an organization that investigates whether investment vehicles actually support the microfinance sector. rAGMF reported to the Microfinance Information Exchange (MIX), the microfinance information clearinghouse, that it had USD 474 million in fund assets as of 2010.

About AMRET: AMRET, formerly known as Ennetean Moulethan Tchonnebath (EMT) “credit in rural area”, was established in Cambodia in 1991 as a project of French NGO Groupe de Recherche et D’Echange Technologiques (GRET). Transformed into a private limited company in 2000, AMRET received its license to operate as a microfinance institution (MFI) in 2001. AMRET currently operates in 14 provinces, most of which are situated in the center and southern parts of the country. In 2009, AMRET reported to the US nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 71.4 million, a gross loan portfolio of USD 53.4 million, approximately 217,000 borrowers, a deposit balance of USD 2.9 million, 3,100 depositors, return on assets (ROA) of 4.47 percent and return on equity (ROE) of 21.16 percent.

About Thaneakea Phum Cambodia Limited (TPC): TPC was launched in 1994in Cambodia as part of the Small Enterprise Development program of US-based nonprofit organization Catholic Relief Services (CRS). In 2002, CRS/TPC officially incorporated as a limited liability company named Thaneakea Phum (Cambodia) Limited. In 2003, TPC received its license from the National Bank of Cambodia to operate officially as a microfinance institution. In 2009, TPC reported to US-based data provider Microfinance Information Exchange (MIX) total assets of USD 28.3 million, a gross loan portfolio of USD 17.5 million, 91,200 active borrowers, return on assets (ROA) of 1.46 percent and return on equity (ROE) of 8.29 percent.

About Sathapana: First established as a nonprofit organization (NGO) called Cambodian Entrepreneur Building Limited (CEB), Sathapana Limited registered in 2001 under its current name with the National Bank of Cambodia (NBC) as a microfinance institution (MFI). In 2009, Sathapana Limited reported to the US nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 43.5 million, a gross loan portfolio of USD 39.7 million, approximately 36,200 borrowers, return on assets (ROA) of 4 percent and return on equity (ROE) of 26 percent.

About Gata Daku: Gata Daku was founded as a cooperative in 1992 by a group of farmers concerned with the lack of income-generating activities in their area. It offers both savings and loan products. Gata Daku has not reported to the US-based data provider Microfinance Information Exchange (MIX) since 2007 and does not otherwise publish its financial information.

About Koperasi Mitra Dhuafa (Komida): Komida was established in 2004 in Jakarta, Indonesia. Having received training from Grameen Bank, a microfinance bank established in Bangladesh, Komida provides loans to underserved individuals in an effort to empower poor communities through its subsidiary Yayasan Mitra Dhuafa (Yamida). In 2009, Komida reported to MIX total assets of USD 3.8 million, a gross loan portfolio of USD 2.5 million, return on assets (ROA) of 1.91 percent and return on equity of 9.93 percent.

Sources and resources:

[1] Data submitted by responsAbility Social Investments AG to MicroCapital, March 2011

MicroCapital Microfinance Universe Profile: responsAbility Social Investments AG, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility

MicroCapital Microfinance Universe Profile: responsAbility Microfinance Leaders Fund (rAMLF), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility+Microfinance+Leaders+Fund+%28rAMLF%29

MicroCapital Microfinance Universe Profile: responsAbility Global Microfinance Fund (rGMF), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility+Global+Microfinance+Fund+%28rAGMF%29

MicroCapital Microfinance Universe Profile: AMRET, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=AMRET

MicroCapital Microfinance Universe Profile: Thaneakea Phum (Cambodia) Ltd. (TPC), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Thaneakea+Phum+%28Cambodia%29+Limited

MicroCapital Microfinance Universe Profile: Sathapana, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sathapana

MicroCapital Microfinance Universe Profile: Gata Daku, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Gata+Daku

MicroCapital Microfinance Universe Profile: Koperasi Mitra Dhuafa (Komida), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Koperasi+Mitra+Dhuafa+%28Komida%29

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/tiki-index.php

Private citizens earning P.5M must file SALN by April 15

Private citizens earning P.5M must file SALN by April 15
By Daxim Lucas
Philippine Daily Inquirer
First Posted 04:04:00 03/09/2011

MANILA, Philippines—Every private citizen earning at least P500,000 annually will now have to file the equivalent of a statement of assets and liabilities and net worth (SALN)—previously required only of public officials.

The Bureau of Internal Revenue (BIR) said the new rule was meant to give regulators “the whole income picture of [an individual] taxpayer” and to help improve collections by clamping down on tax evasion.

The order, Revenue Regulation No. 2-2011, was signed and issued on March 1 by Finance Secretary Cesar V. Purisima.

Every citizen making at least P38,461 a month (assuming he receives 13 months’ worth of salaries each year) will be required to file a personal SALN to justify his or her gross income to the BIR.

Beginning with the 2010 tax year—for which the deadline is on April 15—individual taxpayers, estates and trusts must completely detail to the authorities their passive income, which includes interest income, royalties, dividends, as well as all kinds of prizes and winnings.

Income from the sale or exchange of real estate must also be detailed, along with properties received through “gifts, bequests and devises.”

Finally, individual taxpayers must also disclose to the BIR everything that they receive in the form of fringe benefits, proceeds of life insurance policies, returns on premiums, retirement benefits, pensions, gratuities, stock transactions and all other sources.

“This would address the issue of why some of the top 40 Forbes richest [Filipinos] are not on the list [of top taxpayers],” BIR Commissioner Kim Jacinto-Henares told the Inquirer.

Rampant tax evasion

Sources familiar with the rationale for the move said the regulation was an attempt to clamp down on rampant tax evasion, especially among the more affluent members of society.

“Many of the people on the BIR’s [existing] list of the top 500 taxpayers are basically ranking company officials and entrepreneurs,” said an audit industry executive who requested anonymity because his clients are among those that will be affected by the new rule.

“What they’re trying to do is to really understand the extent of people’s incomes and see if they’re really reporting everything,” the executive said.

Concerns about timing

Another industry official—pointing to the BIR’s prescribed reporting format, which is basically a personal income statement and balance sheet for each taxpayer—described it as a “SALN for private individuals.”

“I think it is within BIR’s right to do this, and they should do this,” the official said. “But we have concerns about the timing.”

He said individual taxpayers, estates and trusts had only a little over one month to comply with the new order before the annual tax deadline on April 15.

“It is a completely new regulation, and it comes too close to the deadline,” the official said. “Many will surely be unable to comply in time.”

Thrift banks continue to gain strength

Thrift banks continue to gain strength

THRIFT BANKS gained an even firmer financial footing last year, as resources, deposits and loans surged while the number of branches increased, a Chamber of Thrift Banks (CTB) official said.

Their non-performing ratio (NPL) -- the proportion of soured loans to total loans -- remained elevated, however.

“The thrift banking industry remained strong last year, indicated by the increase in our lending activity, deposit generation, total assets and branch networks,” CTB and HSBC Savings Bank (Philippines), Inc.

President Patrick D. Cheng told a press briefing yesterday.

CTB represents the country’s thrift banks. It has 55 members.

As of end-November, thrift banks’ assets grew by 7.68% to P577.81 billion.

Deposits rose by 7.06% to P464.88 billion as of November. Thrift banks currently serve more than 3.9 million deposit accounts.

“The sustained growth in deposits mirrors the public’s increased confidence in the system as well as the banks’ more aggressive marketing efforts,” Mr. Cheng said.

The industry’s lending activity also remained active last year as it climbed by 7.81% to P336.15 as of end-December.

“The [increase showed] a sustained core lending activity... to avowed niches of operation which are the housing and consumers segment amid tight conditions in global financial markets,” Mr. Cheng said.

As of end-2010, while the number of thrift bank head offices stood at 73, unchanged from a year ago, the number of branches increased to 1,346 from 1,260 in 2009, bringing the total number of thrift bank offices to 1,419 from 1,333 a year ago.

The industry’s NPL ratio as of end-November, meanwhile, stood at 8.3%, up from 7.9% from the previous year.

Real and other properties owned or acquired (ROPA) grew by 4.7% to P26.92 billion a year ago.

For this year, Mr. Cheng said the CTB will continue to focus on micro, small and medium enterprises.

“As people feel good about the state of the economy, they want to spend their money wisely and they want to engage in putting up businesses. CTB wants to seize this opportunity by continuing to generate deposits, creating more opportunities for lending, implementing more aggressive marketing programs, and increasing the public’s confidence in thrift banks,” Mr. Cheng said. -- Ann Rozainne R. Gregorio

IFC to acquire 7.2% stake in RCBC

IFC to acquire 7.2% stake in RCBC
By Doris Dumlao
Philippine Daily Inquirer
First Posted 00:17:00 03/09/2011

MANILA, Philippines—The International Finance Corporation, the private sector investment arm of the World Bank group, is acquiring a 7.2 percent stake in the Yuchengcos' Rizal Commercial Banking Corporation (RCBC) as part of the multilateral firm's expansion in the Philippine banking sector.

In a disclosure to the Philippine Stock Exchange on Tuesday, RCBC said it recently received approval from the Bangko Sentral ng Pilipinas to sell to the IFC 73.45 million common shares.

Based on RCBC's closing price of P26.65 per share on Tuesday, the block has a market value of about P1.96 billion, albeit the actual selling price per share was not disclosed.

Of the total shares to be sold to IFC, 50.43 million shall consist of treasury-held common shares and 23.02 million shall be unissued common shares out of the bank's authorized capital.

The investment will give IFC one board seat in RCBC.

IFC has said it plans to come in as a strategic investor in key Philippine banks that need to beef up core capital ahead of stricter global capital adequacy requirements.

IFC wants to increase its stake in the Philippine financial sector and the need for banks to hike core or tier 1 capital to prepare for Basel 3 capital adequacy requirements was seen presenting a good opportunity.

At present, IFC has a minority stake in two other banks — tycoon Henry Sy's Banco de Oro Unibank, the country's largest bank, and the Tambuntings' Planters Development Bank, which is a leading player in small and medium enterprise lending.

ONB plans to acquire rural banks in Visayas

ONB plans to acquire rural banks in Visayas

By Michelle Remo
Philippine Daily Inquirer
First Posted 00:14:00 03/09/2011

MANILA, Philippines—One Network Bank (ONB), one of the top rural banks in the country and the biggest in Mindanao, intends to acquire smaller industry players in the Visayas to establish its presence in more promising areas outside Metro Manila.

ONB had initially planned to expand in the Visayas via the establishment of its own branches. Now, according to its president, the bank is considering acquiring one or more existing rural banks in the area.

At present, ONB’s 80 branches and 104 automated teller machines are all in Mindanao.

Alex Buenaventura, president of ONB, said in an interview with the Inquirer that the plan to acquire rural banks based in the Visayas was partly inspired by the incentives being offered by regulators to banks that would acquire smaller members of the industry.

The Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corp. recently implemented a program—the Strengthening Program for Rural Banks—providing, among others, regulatory relief and loans to banks that will acquire banks with low capitalization.

Buenaventura said he met recently with representatives from a group of rural banks in the Visayas and discussed with them the prospects of consolidation.

He said some rural banks in the Visayas had expressed interest in consolidation to establish stronger financial institutions that could better serve the financial services needs of clients form rural areas.

“Through consolidation, rural banks will be able to generate bigger capital that is necessary to deliver comprehensive services to clients. Consolidation will help rural banks better compete with commercial banks,” Buenaventura said.

Islamic Banking plan returned to the backburner

Islamic Banking plan returned to the backburner

THE Metrobank group, which had wanted to foray into Islamic banking through investment arm First Metro Investment Corp., is shelving this plan for now due to certain restrictions in the charter of state-controlled Al-Amanah Bank, the only bank with the Congressional franchise to engage in Islamic banking in the country.

Industry sources said that FMIC had enlisted a big foreign Islamic institution to back up a potential bid to acquire Al-Amanah, if and when the Development Bank of the Philippines was ready to bid out the bank. FMIC would have been willing to cede majority control to the foreign partner, which has the expertise to engage in this type of banking that shuns charging or accepting interest payments for the use of money.

But alas, the charter of Al-Amanah has a 40-percent foreign equity ceiling, which was not palatable to FMIC’s potential partner. So unless FMIC gets a new foreign partner that’s willing to settle for a significant minority stake—or Al-Amanah’s charter gets amended (which is a more tedious process)—the Islamic banking dream is on the backburner for now.—Doris C. Dumlao

Tuesday, March 8, 2011

INSURERS INTERESTED IN ‘THREE-IN-ONE’ MICROINSURANCE

March 8, 2011 11:38
INSURERS INTERESTED IN 'THREE-IN-ONE' MICROINSURANCE

February 8, 2011 by Microfinance Africa

BY Diane Claire J. Jiao, Business WOrld Online -

EIGHT non-life insurance companies have expressed interest in the
"three-in-one" microinsurance product approved by the government last
Monday.

The Philippine Insurers and Reinsurers Association (PIRA), which groups
87 non-life insurers, said this number could still rise, hailing
microinsurance as the "next big step" for the insurance industry.

"We are just about to release the circular about the prototype product
to our members," Mario C. Valdez , PIRA general manager, told
BusinessWorld in a phone interview yesterday.

"However, five companies have already inquired about it, while three
others are looking to expand their existing microinsurance product line."

Mr. Valdez declined to name the companies, though, as the Insurance
Commission (IC) will still have to approve companies' respective
products before these can be offered in the market.

The Department of Finance and the National Credit Council, along with
the German Agency for International Cooperation (GIZ) and the Asian
Development Bank, have been developing prototype products in a bid to
boost microinsurance in the country.

IC approved on Monday the non-life prototype product dubbed Buhay,
Bahay, Kabuhayan.

The product is designed to give P10,000 worth of coverage against death
from accidents or damage to property/business from natural calamities.
Consumers can buy up to three units for a total coverage of P30,000. A
Buhay, Bahay, Kabuhayan contract is good for a year.

"Microinsurance is the next big step for our industry. It's such a large
market that we can tap, probably worth P2 billion," Mr. Valdez said.

The non-life microinsurance market is presently estimated at just P200
million.
He said Filipinos from the low-income sector have realized the value of
insurance, especially after tropical storm Ondoy wreaked havoc in Luzon
in 2009.

"We are also complementing the prototype product with financial literacy
campaigns nationwide, to encourage more people to purchase insurance,"
Mr. Valdez added.
While the basic terms and conditions were already set in Buhay, Bahay,
Kabuhayan, the government gave room to insurers to price the premiums of
the product themselves.

"If they have an efficient business model, they can afford to price the
products lower. Usually, companies tie up with microfinance institutions
so they can reach more people," GIZ Senior Finance Adviser Dante Portula
told BusinessWorld yesterday. "The pricing is where they will compete."

He added that insurers could tweak the prototype and add their own
features to it, as long as it complied with the terms set by IC for all
microinsurance products.
According to IC's Insurance Memorandum Circular 1-2010, the amount of
premiums computed on a daily basis should not exceed 5% of the current
daily minimum wage rate of non-agricultural workers in Metro Manila.

"Insurers have to get the approval of the Commission for their new
product offerings. However, since the terms and conditions of Buhay,
Bahay, Kabuhayan were already pre-approved by IC, non-life insurers can
expect faster processing for their microinsurance products," Mr. Portula
said.

The next step now for donor institution GIZ is to support the PIRA
members who will venture into microinsurance, he shared.

"We will help link insurers to different distributing partners, like
microfinancing institutions, schools, religious organizations and
pawnshops," Mr. Portula said.

REGULATOR APPROVES PIONEER MICROINSURANCE PROGRAMS

REGULATOR APPROVES PIONEER MICROINSURANCE PROGRAMS
March 6, 2011 by Microfinance Africa

From Manilla Bulletin

MANILA, Philippines – The Insurance Commission recently approved Pioneer Life’s micro-insurance programs – Group Credit Life Microinsurance and Group Personal Accident Microinsurance (long and short scale). Pioneer was one of the first to receive approval based on Insurance Memorandum Circular 01-2010, which emphasizes “the need for microinsurance, promoting its importance, defining its features and implementing regulations to ensure the safe and sound provision of microinsurance products to the poor.”

Pioneer has been spearheading industry efforts to make insurance available to the mass market, creating programs that are within reach of low income workers. It began conducting financial wellness sessions in 2006, to groups of both adults and the youth, sharing basic concepts of saving and investment. By 2008 Pioneer introduced savings and insurance products that are affordable and easy to acquire.

Microinsurance was the logical next step. “Our vision is to become a model Filipino enterprise,” shares President and CEO of Pioneer Life Lorenzo Chan Jr. “In order to do that we have to go beyond serving the standard A-B and corporate markets. For us, microinsurance is a natural progression to bring a useful product to people who need it most.”

In partnership with NGOs and institutions offering microfinance, Pioneer has been offering microinsurance programs that meet the peculiar needs of this market such as the need to be covered for accidents, fire and flood. This early, the claims made by beneficiaries have helped keep kids in school and widows get back on their feet. “Microinsurance is an opportunity for us to make the customer our universe,” says Pioneer Life VP for Microinsurance Geric Laude. “We develop our programs only after we truly understand what their needs are.”

With the Insurance Commission’s approval of its programs, Pioneer is set to move fast forward towards a sustainable microinsurance business.

Philippine Government Honors WOCCU

Philippine Government Honors WOCCU

Presidential Office Cites Development Support

WOCCU, which developed credit unions in the Philippine from 1997 to 2010, recently received a citation from the Philippines government for its efforts.

MADISON, Wis. — Former President of the Republic of the Philippines Gloria Macapagal-Arroyo has awarded World Council of Credit Unions (WOCCU) a presidential commendation in recognition of its credit union development work in the island nation. The honor commends WOCCU for "its steadfast support, vital partnership and full cooperation with the Philippine government...and to the upliftment of the lives and welfare of the Filipino people."

"We're honored by the recognition WOCCU has received for its work in the Philippines," said Pete Crear, WOCCU president and CEO. "We hope our efforts in support of Philippine credit union development have made a significant difference in the lives of the members they serve."

The citation specifically recognizes the ways in which WOCCU's work supported "Beat the Odds," a long-term social and economic initiative by Macapagal-Arroyo, whose term ended June 30. The Cooperative Development Authority (CDA), part of the Philippines' Department of Finance, praised WOCCU for its technical support and financial assistance, particularly in identifying institutional gaps and furthering CDA's capabilities in light of credit union legislation passed several years ago.

"WOCCU also assisted CDA in the development and enhancement of new tools, systems and mechanisms, allowing us to provide quality service to the cooperative sector in the Philippines," wrote Lecira Juarez, chairperson of CDA and graduate of WOCCU's Credit Union Empowerment and Strengthening (CUES) executive training programs, in a letter accompanying the presidential citation. The honor was first announced just prior to the end of Macapagal-Arroyo's term in June.

WOCCU provided development assistance to credit unions in the Philippines from 1997 to 2010, focusing on model credit union building and institutional branding. WOCCU's Philippines program also promoted savings and credit education for poor women entrepreneurs, created the Model Credit Union Network and provided executive-level training of CDA staff to help prepare the agency to assume its role as regulator of the Philippine credit union sector.

In 2002, the National Credit Union Foundation honored the CUES program in the Philippines with the prestigious Herb Wegner Memorial Award. The honor was presented that February at Credit Union National Association's Governmental Affairs Conference in Washington, D.C.

According to WOCCU's 2009 Statistical Report, 1,276 credit unions in the Philippines served 2.2 million members last year.

Interest-Free Shari’ah Microfinance Program Developed by US-based MFI

MICROCAPITAL BRIEF: Malaysian Islamic Banking Team Visits Interest-Free Shari'ah Microfinance Program Developed by US-based MFI

by MicroCapital on Monday, March 7, 2011 at 1:03pm

A team from the Islamic Shari'ah Research Academy, a Malaysian outfit aimed at providing avenues for the development of Islamic finance recently visited an interest-free microfinance program based on Islamic lending principles that was developed by Helping Hand for Relief and Development (HHRD), a US-based humanitarian relief and global development outfit that operates in 16 countries in Africa and the Middle East. The team, headed by Dr Lal Akram Din, chairman of the academy, came to Islamabad, Pakistan, to learn how HHRD incorporates Islamic practices such as murabaha, a form of interest-free loans, into its microfinance programs.

Dr Din reportedly suggested that Malaysian microfinance institutions (MFIs) could benefit by implementing some of the practices employed by HHRD.

HHRD launched its interest-free microfinance program in 2005 in response to an earthquake that affected northern parts of Pakistan and parts of Azerbaijan. Although little information is available on the organization or its microfinance program, HHRD reportedly issued loans to poor people ranging from PKR 20,000 (USD 234) to PKR 100,000 (USD 1,169) in 2005 to assist in the foundation of new businesses and to otherwise sustain the livelihoods of individuals affected by the earthquake.

As of 2009, HHRD reported USD 2.69 million in total assets and total revenues of USD 6.32 million for 2009 [1,2].

By John Howard-Smith, Research Associate

About Helping Hand for Relief and Development (HHRD): Based in Detroit in the US state of Michigan, Helping Hand for Relief and Development (HHRD) is a humanitarian relief and development outfit that incorporates Islamic ideals and practices such as murabaha, a form of interest-free loans, into its operations in 16 countries in Africa and the Middle East. HHRD aims to eradicate poverty and social injustice through various programs based including services for orphans, natural disaster relief, vocational training for women and interest-free microfinance. As of 2009, HHRD reported USD 2.69 million in total assets and total revenues of USD 6.32 million for 2009.

[1] The News: "HHRD Microfinance Programme Lauded", http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=33455&Cat=6&dt=2%2F28%2F2011

[2] The Free Library: "HHI Launches Interest-free Microfinance Scheme in Quake-hit Areas", http://www.thefreelibrary.com/HHI+launches+interest-free+micro-finance+scheme+in+quake-hit+areas.-a0204097707

MicroCapital's Microfinance Universe profile: Helping Hand for Relief and Development (HHRD), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Helping+Hand+for+Relief+and+Development

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/