Sunday, October 9, 2011

A bank in your pocket

WEDNESDAY, 05 OCTOBER 2011 19:24

EXECUTIVE LOUNGE / THIRD LIBREA

THE pace of change in technology development is truly amazing. And the
trend seems to be to provide consumers with what they need when they
want it, wherever they want it. Back in the day, we had to rent VHS and
Betamax tapes from the local video store to watch movies in the comfort
of our home. Now, we can access on-demand digitally-delivered videos
with just a few clicks of your mouse.

And not too long ago, we had to endure long queues at our banks simply
to update our bank balance, to transfer funds or to withdraw cash. So
many changes have happened to the banking industry in terms of
technology that we have to wonder what's next.

As the Internet moves from desktops to mobile phones, useful mobile
banking (not just SMS banking) will truly take off. Rich mobile banking
applications will be developed to harness the capabilities of the newest
mobile phones, and the continuously improving speed and bandwidth of
mobile Internet access will facilitate the change. Soon, any transaction
that can be made with or through a bank—particularly between different
banks—should be available from a mobile phone.

The major telcos in the Philippines are already performing quasi-banking
functions as money transfer agents. They are making significant inroads
in the OFW remittance and money transfer business. Some retail
establishments also now accept payments through these telcos, creating
debit card-like transactions that match what some banks currently offer.

Considering this, allow me now to make a fearless forecast: In less than
a decade, telcos today will be our consumer banks. Access to your bank
accounts will just be a pocket away, the entire day—even during
holidays. Financial institutions will scramble to acquire
mobile-communication infrastructure in much the same way that banks
today acquire other banks to expand their branch network. Some of the
functions of the National Telecommunications Commission and the Bangko
Sentral ng Pilipinas will merge for the purpose of improving the
regulation of digital money. If I were a bank, I would seriously
consider investing in or controlling a telco in the next 10 years before
my float business disappears.

The possibilities are endless. Imagine a future where interbank
transfers through mobile phone applications, will be as easy as
interbranch transfers, through internet banking services today, when all
establishments can accept wireless mobile payments in addition to cash,
debit and credit cards, and when it will no longer be necessary to go to
a bank branch or even an ATM. Imagine telcos expanding their current
digital-cash offerings—banking regulations willing—to the point where
they can support seamless direct transfers to or from traditional bank
accounts, grant credit and sell investment products.

Think of your phone functioning as an all-in-one debit/credit card. The
point of sale terminals of various establishments can communicate
wirelessly with your mobile phone to determine whether to debit your
digital-cash account—if it has funds—or to provide credit—if your
digital-cash account is running low.

Envision your phone allowing you to transfer digital cash to a mutual
fund or other investment account managed by your cash-heavy telco's
Trust department. Essentially, your phone will become your wallet. It
will be just like having your bank in your pocket.

Obviously, some work needs to be done for this vision to become a
reality. Better mobile identity management and know-your-customer
practices and foolproof wireless transaction security are keys to this
future.

Reliable interoperability standards for transferring cash between
different telco digital cash and old-school bank accounts will also be
necessary although we can say that this has already been addressed in
principle by the major ATM switching networks.

Current regulations on e-banking and electronic money may need to be
reviewed to ensure that safeguards and remedies for consumers and
providers of mobile-banking services are ready for the future. Banks
will also need to accept that in time, more and more consumers will come
to expect instant transfers. If this vision becomes real, demand for
non-corporate checking accounts will become extinct and float income
will be replaced by transfer fees.

As for us consumers, can we trust our mobile phones for our monetary
transactions?

Clearly, there are some barriers that need to be overcome. But as sure
as analog theater has evolved to digital media, consumer banking will
have a pervasive presence in our mobile phones. I eagerly await that time.

(The author is the chief information officer and a partner with the
Advisory Services Division of audit, tax and advisory firm Punongbayan &
Araullo. For comments or questions, e-mail Third.Librea@ph.gt.com.)

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G-Xchange, Japanese firm partner to boost OFW remittance

SUNDAY, 02 OCTOBER 2011 18:53 JUN VALLECERA / REPORTER

G-XCHANGE INC., the fully-owned remittance unit of Globe Telecom, has
partnered with Japan's Softbank Payments Service Corp. in an alliance
seen to boost the flow of remittances between Manila and Tokyo.

The agreement links Globe Telecom's GCash remittance brand with Softbank
Corp.'s fund-transfer facilities and the competitive rates they offer to
clients in Japan and around the world.

Softbank Payments Service is a subsdiary of Softbank Corp., a leading
telecommunications and media company in Japan.

Softbank Payments Services president and chief executive officer
Shinichi Ata, in tandem with its Manila partners, announced the alliance
in a statement sent by email on Sunday following the completion of its
registration in Japan under that country's Act on Financial Settlements.

The agreement permits the remitting units to engage in the trassmission
or receipt of Japanese yen and Philippine peso to and from each other.

A customer using GCash Remit in the Philippines may deposit money in
Japanese yen in advance and remit a given amount in pesos from the
deposit to the Philippines on a 24/7 basis by using either a personal
computer or a Smartphone.

The remitting units commit to deliver the remittance to recipients as
quickly as inside of 10 minutes in some 18,000 pick-up outlets
throughout the Philippines, or directly through a mobile phone
previously enrolled with Globe's GCash mobile money platform or
alternately to one's account in a bank.

According to the statement, clients are charged a minimum of ¥500
Japanese for each transaction up to ¥10,000 equivalent, considered the
lowest in the industry.

Remittances exceeding ¥10,000 up to ¥30,000 are charged a fee of ¥700
and anything above ¥30,000 are charged ¥1,350.

Globe Telecoms said the remittance tie-up will benefit Filipinos living
in Japan who may now send their earnings back to the Philippines quickly
in a secure and convenient manner.

Softbank vowed to extend the same quality services not only in the
Philippines but to other destinations in the region.

The move should help facilitate the flow of more remittances from Japan
and in many other places around the world where Filipinos have worked
for many years.

Some $20 billion worth of remittance have been expected this year by
regulators who previously forecasted resilient remittance growth
averaging at least seven percent this year no matter the disruptions in
countries in the Middle East and North Africa where a large population
of overseas Filipino workers abound.

Davao farmers get needed info via SMS

THURSDAY, 06 OCTOBER 2011 18:59 KEITH BACONGCO / CORRESPONDENT

DAVAO CITY—Farmers here do not have to run to the City Agriculture
Office (CAO) at the heart of the city if they need assistance and updates.

Since mobile phones are available even in the most remote barangays,
agriculture technicians are now just a text away.

Leonardo Avila III, CAO chief, said this city is the first in the
country to use the short message service (SMS) called Infoboard to
assist the agriculture sector.

Avila said the implementation of the system is in partnership with Smart
Communications as part of its corporate social responsibility.

He said they are using the technology in sending advisories to farmers
such as price updates on commodities and some important notices from the
agriculture department.

Every month the CAO receives an average of 5,000 queries from farmers in
far-flung barangays, the CAO chief said.

Avila cited a case of caterpillar infestation in Calinan early this year
when a farmer sought their help through SMS.

"After we got the message, we immediately dispatched our field
technician to the field to assist the farmer in containing the
infestation. The immediate response prevented a further infestation of
other crops," he told reporters.

Green caterpillar infestation must be contained in the initial stages
because it multiplies very fast, he said.

To be able to receive advisories and get immediate response from the
CAO, Avila advised farmers to manually register their Smart mobile
phones to their field technicians.

"The registration is free; they can come to our office. The advisories
we are sending them are also free. But if they will send on inquiry to
us, it's just P1 per text message," he said, saying the city has 50
technicians who are readily available to assist the farmers.

Since not all farmers in the far-flung areas have mobile phones, Avila
said his office is still negotiating with Smart Communications to offer
cheap mobile phones to farmers.

"This system is commonly used in schools and universities today. And I
have friend at the company so I asked him if we can use the system to
the farmers," he said, adding the system was introduced to the farmers
in November last year.

Around 3,000 farmers have already subscribed in the Infoboard, Avila said.

Life insurers planning to consolidate

TEN LIFE insurance companies plan to consolidate next year to meet the
government's paid-up capital requirement, the country's insurance chief
said.

"About 10 [life insurance] companies are thinking of consolidating to
meet the P250-million minimum paid-up capital requirement by Dec. 2012,"
Insurance Commissioner Emmanuel L. Dooc told reporters yesterday.

The plan has gotten the approval of some of the firms' boards, he claimed.

He, however, declined to name the companies but said these belonged to
the lower half of the Insurance Commission's ranking of life insurers in
terms of total premiums.

Finance Dept. Order 27 issued in 2006 required insurers to have P175
million in paid-up capital this year and P250 million next year.

Mr. Dooc said the life insurers that plan to consolidate will establish
"one new company" that should be fully operational by "June 2012." -- ARRG

BIR says Pag-IBIG exempt from tax, but not members

THE BUREAU of Internal Revenue (BIR) has set the tax treatment of the
Home Development Mutual Fund (Pag-IBIG) in line with the housing
agency's charter.

The bureau affirmed the tax-exempt status of Pag-IBIG in its Revenue
Memorandum Circular No. 43-2011, dated Sept. 28.

"No tax measure of whatever nature enacted shall apply to the Fund...
Any tax assessment against the Fund shall be null and void," Home
Development Mutual Fund Law of 2009 or Republic Act No. 9679 stated.

All assets, properties, benefit payments, contributions and accruals of
Pag-IBIG will also be exempt from taxes. The income and investment
earnings from these are not taxable as well, the law added.

The charter was signed into law in July 2009 and its implementing rules
and regulations were made effective beginning last year.

However, in the case of documentary stamp taxes (DST), while Pag-Ibig is
exempt from the obligation, the other party in the transaction is not.

"The other party to the taxable document who is not exempt shall be the
one directly liable to pay the said documentary stamp tax," the BIR
issuance read.

"The DST is a tax on on transactions. While the Pag-IBIG is an exempted
party, the transaction is not, so the other party will have to pay the
tax," BIR Commissioner Kim S. Jacinto-Henares said in a phone interview
yesterday.

These transactions subject to DST include loan agreements, the issuance
of stocks, the transfer of shares and the like.

Pag-IBIG members, therefore, will still have to pay DST when they take
out loans from the Fund, Ms. Henares confirmed.

The BIR is the government's main revenue-generating agency, responsible
for 70% of state revenues. It is tasked to collect P940 billion this
year. As of August, it already collected P619.713 billion. -- Diane
Claire J. Jiao

BIR clarifies how deposits by co-op members are taxed

THE BUREAU of Internal Revenue (BIR) has reiterated that cooperatives
are not required to withhold taxes on members' interest income from
savings and time deposits.

It has issued Revenue Memorandum Circular No. 47-2011, dated Oct. 5 that
affirmed that interest from savings and time deposits of cooperative
members are not subject to the 20% final withholding tax.

"The memorandum circular was issued to provide all cooperatives with a
guide that only banks are subject to the 20% final withholding tax on
the interest income of deposits," said BIR Commissioner Kim S.
Jacinto-Henares in a phone interview yesterday.

According to Sec. 24 (B) of the National Internal Revenue Code, a 20%
final withholding tax is imposed on the interest from deposits or yield
from deposit substitutes, trust funds and similar arrangement.

The BIR said this provision does not apply to cooperatives, as members'
deposits with the cooperatives are not currency bank deposits nor
deposit substitutes.

A cooperative is an association where members have a common bond of
interest and have voluntarily joined together to achieve social,
economic and cultural ends.

Republic Act 9520 or the Philippine Cooperative Code of 2008 provides
that "Duly registered cooperatives... which do not transact any business
with non-members or the general public shall not be subject to any taxes
and fees imposed under the internal revenue laws and other tax laws."

For cooperatives transact with both members and non-members, only
transactions with members are not taxed. -- A. R. R. Gregorio

PCIC to release P334-M loans for Luzon farmers

WEDNESDAY, 05 OCTOBER 2011 19:37 CAI U. ORDINARIO / REPORTER

AFTER the onslaught of Typhoons Pedring and Quiel, the Philippine Crop
Insurance Corp. (PCIC) disclosed that it will be expediting the release
of P334-million credit to Luzon farmers whose crops were damaged by the
twin typhoons.

In a report to Secretary Proceso J. Alcala, PCIC President Jovy C.
Bernabe said the amount is the biggest payout the agency will be making
to date. This is done in response to the severity of the twin typhoons
and as an expansion measure of PCIC's insurance coverage in the past year.

"Fast-tracking the indemnity payments will enable particularly rice and
corn farmers to recover their losses and replant again," Bernabe said in
a statement.

Bernabe said their preliminary assessment showed about P333.93 million
worth of crops, mostly palay, were insured in 30 provinces covering the
entire Luzon.

The typhoons affected 26,794 insured farmers and a combined insured farm
area of 40,138 hectares.

Apart from the speedy release of the crop insurance claims of Luzon
farmers, Bernabe said they will also reactivate their adjusters in the
private sector to help the PCIC cope with the huge task of verifying the
crop insurance claims of farmers.

Apart from the PCIC, the DA is also extending other assistance to
affected Luzon farmers. Alcala already instructed the National Food
Authority (NFA) to buy storm-damaged palay to provide farmers enough
money for their daily needs.

The DA will also be providing free certified seeds from the DA seed
buffer stock to help farmers replant as soon as possible. This will help
make a "Quick-Turn-Around" palay production program to recover losses
due to the typhoons.

"The DA will link up with agribusiness enterprises, particularly
fertilizer and seed companies, to encourage them to implement a
plant-now, pay-later scheme, coupled with a rice marketing tie-up with
the NFA," Alcala added.

He said despite the severity of the typhoon damage, particularly on
palay farmers, he remains firm in saying that there is no need to import
additional rice for 2011.

The DA already created an interagency task force to assess and validate
the actual damage, particularly on palay, corn and high-value crops.
Alcala said this effort will complement the ongoing October 2011 palay
production survey which is conducted every quarter by the DA's Bureau of
Agricultural Statistics.

The survey results will include the final estimate of the third-quarter
palay production, the projected fourth-quarter palay production based on
standing crop, and projected 2012 first-quarter production based on
farmers' planting intentions.

ADB grants P17.1M for enterprise development projects in Zambales

THURSDAY, 06 OCTOBER 2011 18:24 HENRY EMPEÑO / CORRESPONDENT

IBA, Zambales—The Asian Development Bank (ADB) has approved some
P17.1million worth of livelihood assistance funds to be given to coastal
communities in this province under the bank-funded Integrated Coastal
Resource Management Project (ICRMP).

Dr. Rene Mendoza, provincial agriculturist of Zambales, said several
non-governmental organizations and people's organizations here will be
receiving equipment, facilities and materials for predetermined
livelihood projects that the ADB has approved under the enterprise
development component of the ICRMP.

The projects were approved after the community groups here, with the
assistance of the Provincial Agriculture Office (PAO), prepared and
submitted project proposals for cooperative enterprises to the
Department of Agriculture, which assessed the proposals.

The beneficiaries come from the coastal towns of Sta. Cruz, Candelaria,
Masinloc, Palauig, Iba, Cabangan, San Felipe, San Antonio and Subic.

 Zambales is said to be the first province in the Central Luzon region
to receive funding under the Enterprise Development and Income
Diversification component of the ICRMP. The other components are Policy
and Institutional Strengthening and Development; ICRM and Biodiversity
Conservation; and Social and Environmental Services and Facilities.

Among the initial projects already approved for funding are rice
retailing and meat and fish processing facility in Subic town, which is
up for funding of P464,467.39; tilapia production in San Felipe,
P204,375.40; iodized salt processing and mud crab fattening projects in
Palauig, P387,074.85; and hog fattening farm in Sta. Cruz, P478,518.20.

Reynaldo Reoligio, Zambales provincial aquaculturist, said the Zambales
PAO will also be responsible for monitoring and providing further
administrative and management assistance to the recipient organizations
to ensure that the projects will prosper.

The assistance program requires that the recipient organization, upon
earning back the full capital invested, can only retain 50 percent of
the amount. The other half would have to be donated to a municipal
federation of farmers or fishers to fund more local entrepreneur
projects, Reoligio said.

Mendoza said these projects "augur well for the program of Gov. Jun
Ebdane to develop the agriculture sector in the province."

He added that under the Ebdane administration, the PAO has become more
active in assisting farmers and fisher folk throughout Zambales on
projects and activities that enhance their livelihood and industry.

"After the governor approved a half-million increase in our department's
budget, we have also improved our mobility and facilities and became
more capable in rendering services under our mandate," Mendoza noted.

Recently, the PAO has also facilitated the distribution of 60 gill nets
to fishers' cooperatives in the towns of Palauig and Masinloc and the
distribution of 432,000 tilapia fingerlings that were dispersed by local
government units in the province's rivers and lakes.

Before this, the Department of Environment and Natural Resources also
distributed 10 motorized patrol boats to local government units here
under the ADB-funded ICRMP to support activities in coastal-resources
management.

The Department of Environment and Natural Resources said that
forthcoming ICRMP projects in Zambales would include the mapping and
establishment of marine-protected areas to address the problem of
overfishing, the establishment of a research center and monitoring
station at the Ramon Magsaysay Technological University, and the
implementation of infrastructure and social-development projects in
consonance with the DENR's "Ridges to Reefs" resource protection program.

Thursday, October 6, 2011

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Guestblog by Gladiator

Monday, October 3, 2011

Empowering workers as business owners

Business and Society

Empowering workers as business owners

By BERNARDO M. VILLEGAS

October 3, 2011, 2:26am

MANILA, Philippines — 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 they 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, participates 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 U.K., 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' refer 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 email address is bernardo.villegas@uap.asia.

Banks Should Lend More – Tetangco

By LEE C. CHIPONGIAN

October 3, 2011, 2:08am

MANILA, Philippines — The central bank thinks the banking sectors'
lending activities are still moderate, that the room for growth is
enormous but then this potential for expanding loan exposures is being
approached rather tentatively.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said
the industry's intermediation or making available funding and finances
to businesses, corporations and individuals could still improve, or grow
higher than the current pace of growth. At the end of July, bank lending
increased 19.1 percent year-on-year, the highest since April 2009.

"Economic growth is helped by the (financing) intermediation done by
banks but there is room for additional lending by banks which would help
the economy to grow more," Tetangco told participants of the mid-year
Philippine investor relations briefing last Friday.

Bank of the Philippine Islands President Aurelio Montinola III, also
head of the Bankers Association of the Philippines, also noted that at a
19-percent growth level, bank lending is about four percent vis-à-vis
the size of the economy as measured by gross domestic product.

Montinola said the loans sector has improved and continues to enhance
lending services. "In the past you have SMEs complaining that they are
not receiving the funding but now they're happy especially since they
are getting low borrowing rates."

Montinola, however, said that banks have much more to do to grow the
business since only 25 percent of the total population has, in one form
or another, some banking transactions such as deposits, loans or tapping
remittance services. Still, he said the loans-to-deposit ratio is on the
low side.

To some extent, he said the BSP has done its job of encouraging lending
growth and the business of banking generally. "We have been aided by
infrastructure related additions to the single borrowers' limit, branch
banking liberalization, a broadened foreign currency investment
capability for thrift banks, and most of all financially inclusive
initiatives in the SME and micro finance sphere," Montinola said.

The BSP has long suspected that a higher bank lending growth may be
restricted by the less risky and costly alternative of parking bank
funds with the central bank through open market instruments such as
special deposit accounts (SDAs).

But according to a continuing BSP study, SDA placements, which as of the
second week of September have reached P1.65 trillion from P1.23 trillion
at the end of 2010, actually do not hinder the growth of bank lending.

The study noted that there are no concrete conclusions yet but the
initial findings show that SDAs continue to be effective in managing
domestic liquidity. It has become one of the BSP's key monetary policy
tools, despite it being a liability, and so far it has been effective in
dealing with liquidity concerns, such as rapid flow of capital into the
country.

Still, BSP is concerned that bank lending are still being affected by
SDAs and they want to eliminate suspicions that SDAs are limiting bank
lending growth. An official source said the aim is to establish the
relationship between SDA placements and bank lending activities.

Saturday, October 1, 2011

UCPB lends Daneco P326M

THURSDAY, 29 SEPTEMBER 2011 20:09 JUN VALLECERA / REPORTER

THE United Coconut Planters Bank has extended a P326-million loan to the
Davao del Norte Electric Cooperative or Daneco whose franchise area on
Mindanao island is host to a number of fast-growing, mainly
tourism-related enterprises with a strong appetite for power.

The loan represents the bank's third such facility for the power sector
and the largest thus far, the two earlier loans having the combined
value of only P110 million or about a third the size of the Daneco
transaction.

The 10-year loan will finance the upgrade of the power distributor's
facilities and double the capacity of two of its 10 substations from 10
mega volts (MVA) to 20 MVA and at the same time, rehabilitate its power
lines, transformers and other distribution facilities and equipment.

Also, the upgrade will benefit the 125,900 households, commercial and
industrial establishments, government offices and public utilities in
Southern Mindanao that get their electricity from Daneco.

All this was made possible because the loan carries a guarantee from the
Local Government Unit Guarantee Corp. or LGUGC, a privately-owned
corporation established by the Bankers Association of the Philippines,
the Development Bank of the Philippines and the Asian Development Bank
which extends guarantee cover on loans for local development.

With the LGUGC cover in place, UCPB is reasonably given assurance the
10-year loan will be paid on the remote likelihood that Daneco is unable
to service its outstanding obligations.

The UCPB loan formed part of LGUGC's regular guarantee program.

The LGUGC also administers the Electric Cooperative-Partial Credit
Guarantee (EC-PCG) program which is a special program put up by the
World Bank meant to encourage the large commercial banks to support
rural electrification by financing the expansion and rehabilitation of
the distribution facilities of electric cooperatives.

The World Bank extended the government of the Philippines a grant worth
$10 million for this purpose.

Daneco is one of the biggest electric cooperatives in the country; it
distributes electricity to 374 barangays in Davao del Norte, Tagum City,
the Island Garden City of Samal and Compostella Valley.

Power usage in these areas has been growing at an average of eight
percent a year on account of the rise in business activities and the
increase in the number of households there.

In particular, the Island Garden City of Samal, with its many fine
white-sand beaches, Dugong sanctuary and numerous other natural
attractions, has been experiencing a surge in investments in
tourism-related infrastructures and in residential property developments.

Davao del Norte and Compostella Valley are the Philippines' leading
producers of banana, a major export crop that generated $250 million in
foreign-exchange earnings for the country last year. The former is also
one of Mindanao's main rice granaries.

Mobile payments competing with cards, checks

By Ted P. Torres (The Philippine Star) Updated September 27, 2011 12:00
AM Comments (0)

MANILA, Philippines - Mobile payments will make up 15 percent of all
cashless transactions globally, reducing further the use of checks and
plastic money or credit cards.

The World Payments Report 2011 also indicated that mobile payments would
grow globally from 4.6 billion to 15.3 billion transactions between 2010
and 2013 – at a rate of 48.8 percent per year.

The Royal Bank of Scotland, the European Financial Management
Association (EFMA), and Capgemini are the co-authors of the payments report.

The non-profit EFMA encourages research and disseminates knowledge about
decision-making in all areas of finance, and is made up of academics,
practitioners and students from Europe and the rest of the world
interested in the practice of sound financial management techniques.
Operating in 40 countries but headquartered in Paris, France, Capgemini
is a global consulting firm that emphasizes people-centered approaches
through technology.

The World Payments Report 2011 further reported that cards remain the
preferred method of non-cash payments, with a market share of more than
40 percent in most markets. In contrast, check usage around the world
accounted for just 16 percent of all non-cash transactions in 2009, and
it is expected to shrink on an annual basis.

According to the research firm Gartner, in just one year the value of
payments made via mobile devices worldwide has increased 75.9 percent,
or from $48.9 billion in 2010 to $86.1 billion in 2011.

The total value of the mobile payments market is forecast to reach $670
billion by 2015.

In fact, three million impoverished people living in Africa and South
Asia will gain access to a cashless banking experience, with the help of
the United Nations Development Programme (UNDP).

United Kingdom-based technology firm Movirtu's commitment to support the
Business Call to Action (BCtA), a global initiative supported by UNDP
and other international organizations, aims to encourage private sector
efforts to fight poverty.

Instead of sharing a phone number with family members or neighbors,
those provided with a Movirtu cloud phone number will be able to use any
mobile phone to log in with their own unique number to make and receive
individual calls and access critical information and services such as
banking or agriculture support.

Movirtu plans to bring the phone technology to at least 12 markets in
Africa and South Asia by early 2013, giving at least 50 million people
in both continents access to the technology.

In the Philippines, basic mobile phone banking services among the rural
banks is valued at P12 billion ($250 million) in the past five years.
Data from thrift and commercial banks are still unavailable.

Meanwhile, Capgemini said the entry of the US market to the mobile
payment bandwagon would be a critical factor.

Capgemini banking principal Deborah Baxley reported that 2011 is the
breakthrough year of the US market for mobile payments.

Reports show that Google launched its electronic wallet, made available
on the Sprint Nexus S 4G phone. Initially, the Google Wallet app will
let consumers pay by tapping their Citi MasterCard account, but the
service will soon support Visa, Discover and American Express.

Isis, a mobile payment joint venture formed by AT&T,T-Mobile and
Verizon, announced in July that Visa, MasterCard, Discover and American
Express are backing the venture. Isis will get its first big trial
during the first half of 2012 in Salt Lake City. Visa and other
companies are scrambling to get their digital wallets to market and
industry experts expect Apple to announce something soon.

Meanwhile, in a conference held in Nairobi, Kenya led by the MMT Global
Gateway, it was surmised that mobile payment market for goods and
services, excluding contactless NFC transactions and money transfers, is
expected to exceed $300 billion globally by 2013.

The combined market for all types of mobile payments is expected to
reach more than $600-billion globally by 2013.

Mobile money participants agreed that whether it is in the fields, or
buying the most expensive airline ticket, designers cloth or a simple
newspaper on the streets, mobile money presents itself as a the wild
card of economics. The conference participants were mobile money
pioneers of global mobile giants such as Safaricom, Zain, MTN, Orange
and Orascom.

BPI microfinance bank ventures into microinsurance

MOBILE MICROFINANCE bank BPI Globe BanKO will begin offering
microinsurance after partnering with two other subsidiaries of the Bank
of the Philippine Islands.

In a statement, BPI Globe BanKO said it has partnered with BPI Philam
Life Assurance Corp. (BPI-Philam) and BPI-Mitsui Sumimoto Insurance
Corp. (BPI/MS) to offer insurance products that are affordable and
targeted at low-income earning Filipinos.

BPI-Philam, the bancassurance arm of BPI, is an alliance between BPI and
the Philippine American Life and General Insurance Co., the country's
biggest life insurance company.

BPI/MS is a joint venture between BPI and Mitsui Sumimoto Insurance Co.,
a non-life insurance company based in Japan.

BPI Globe BanKO on Friday launched three microinsurance products,
namely, PondoKO, PuhunanKO and PaniguroKO.
PondoKO entitles an individual to life insurance and to a 1% interest
rate per annum on his or her deposit once this reaches P2,000.

In the event of death -- regardless of the cause -- his or her
beneficiary will get five times of the amount of cash in the account.

PuhunanKO provides both life insurance and loan coverage. An individual
who purchases this will entitle his or her beneficiary to P10,000 and to
100% loan coverage in case he or she dies.

PondoKO and PuhunanKO are offered in partnership with BPI-Philam.

PaniguroKO, offered in partnership with BPI/MS, gives the account holder
access to a life insurance policy that costs only P365 for a one-year
coverage.

With PaniguroKO, an account holder is entitled to a P50,000 coverage for
accidental death, P5,000 assistance in case of fire and P2,500
assistance in case of flood, typhoon and earthquake. This insurance can
be purchased through mobile phones, thus doing away the need to fill out
documents.

"Through BanKO's 'banking the unbanked' concept, the market that other
banks have failed to reach will be given options and this is a very good
way of giving back. We at BPI-Philam are hoping that more from the lower
income segment will be empowered and will appreciate the need to save,"
Stephen James Clark, BPI-Philam president and chief executive officer,
was quoted as saying in the statement.

"Getting an insurance used to be expensive or at least that's what a lot
of people think, especially those who are not familiar with it. Through
the BanKO-BPI/MS partnership, we hope more people will realize the value
in securing one," Mr. Takaaki Ueda, BPI/MS president and chief executive
officer, was also quoted as saying in the same statement.

In the same statement, BPI Globe BanKO said it had partnered with the
German Agency for International Cooperation to conduct financial
literacy seminars nationwide. This is in line with the bank's objective
to educate depositors on the importance of insurance. The seminars will
begin in the fourth quarter of this year and will run up to next year.

BPI Globe BanKO is a savings bank that handles the mobile microfinance
operations of BPI, the country's third largest in terms of assets.

It is a shared venture between BPI, Ayala Corp. and Globe Telecom, Inc.
The bank uses Globe's GCash platform to electronically transfer funds to
microfinance institutions and individual borrowers. -- Ann Rozainne R.
Gregorio

Thursday, September 29, 2011

15% interest offered on agriculture loans

TUESDAY, 27 SEPTEMBER 2011 18:38 JENNIFER A. NG / REPORTER

ELIGIBLE small farmers and fishers will now be able to avail themselves
of loans for either agricultural production or microfinance that carry
an annual interest rate of 15 percent.

The Agricultural Credit Policy Council (ACPC) said this is now possible
after it approved the implementation of the depository mode scheme of
the Agro-Industry Modernization Credit and Financing Program-Cooperative
Banks Agri-Lending Program.

According to ACPC Executive Director Jovita M. Corpuz, they were able to
eliminate one layer in the current wholesaler-retailer scheme, which
allowed the attached agency of the Department of Agriculture (DA) to
further lower the interest rates.

"The depository mode scheme offers a pass-on rate to borrowers at a
maximum of 15 percent per annum. This is much lower than the interest
rates offered in our other programs," Corpuz said in a statement.

Under the depository mode scheme, she said eligible cooperative banks
will be given a stable, low-cost funding support, in the form of special
time deposits, which will have a one-year maturity with a maximum
interest of 3 percent per year.

"The earnings from these special time deposits can be used to finance
loans for small farmers and fisherfolk, in addition to the banks'
existing appropriate and incremental agricultural loan portfolio,"
Corpuz said.

Corpuz also said should there be any "material adverse change" in the
financial condition or in the regulatory assessment of the cooperative
bank, the special time deposit is "due and demandable at any time."

As part of the guidelines, participating cooperative banks must also
disburse the proceeds of the special time deposits to eligible
farmers/fisherfolk borrowers within 90 days from the receipt of the deposit.

An initial fund of P400 million has been allocated for the program,
which will be implemented in areas where participating cooperative banks
operate. Rice, corn, fishery and other high-value crops prioritized by
the DA will be financed under the program.

The ACPC is composed of the chiefs of the Departments of Agriculture,
Finance and Budget and Management, the Bangko Sentral ng Pilipinas and
the National Economic and Development Authority.

Monday, September 26, 2011

Security Bank plans unit

Posted on September 25, 2011 09:42:40 PM

Security Bank plans unit

SECURITY BANK Corp. will not be adding the branches of Premiere
Development Bank (Premiere Bank), which it is acquiring, to its own as
it wants to spin it off as its thrift bank arm.
"Premiere Bank will keep its thrift bank license, and will be the thrift
bank arm of Security Bank," said Joey E. Mape, Security Bank senior vice
president for the financial control division, in a phone interview last
week.

Premiere Bank will be turned into a subsidiary "housing" Security Bank's
consumer lending business, he said.

Mr. Mape also said Security Bank will continue to pursue its branch
expansion plans.

Security Bank, a universal bank and eleventh largest among the country's
banks as of the second quarter, entered into a share purchase agreement
with Premiere Bank last June, with the former acquiring 98% of the
latter's outstanding capital stock for P1.3 billion.

The agreement is still subject to the Bangko Sentral ng Pilipinas' (BSP)
approval.

Security Bank's application to purchase Premiere Bank was submitted to
the central bank last July, Mr. Mape said, but amendments were made to
the share purchase agreement.

He did not elaborate on what these changes were.

"Within the first week of October we should be able to submit the
complete documents to the BSP. Once everything is submitted, we could
secure the approval after one or two months," he added.

Once the BSP's approval is secured, he said, members of Premiere Bank's
board of directors and different committees would be changed.

The bank would be renamed and a new president appointed. Its employees
would be retained.

At present, the two bank's officials are holding meetings to determine
how to best integrate the two banks' systems.

Still, Security Bank has started to oversee Premiere Bank's operations
and to check its "manual processes."

"Operations of Premiere Bank are still under the old management while we
wait for the central bank's approval, though we are overseeing their
operations and there are transactions they need to be approved by us,"
Mr. Mape said.

"We are identifying Premiere Bank's best practices that would be
retained by the bank and of course those that would be changed," he added.

There are also plans to change Premiere Bank's accounting system to
allow it introduce certain products to clients.

Asked how Premiere Bank would contribute to Security Bank's earnings,
Mr. Mape said, "it is hard to determine as we are still in the planning
stage."

Security Bank has 132 branches nationwide, while Premiere Bank has 38
branches located within the Metro Manila and CALABARZON (Calamba,
Laguna, Batangas, Rizal and Quezon) areas.

Security Book posted a net income of P2.4 billion in the first half of
the year, 33% higher than the P1.8 billion it earned in the same period
last year. -- Ann Rozainne R. Gregorio

Sunday, September 25, 2011

Can microenterprises work in tourist zones?

Can microenterprises work in tourist zones?
By: Amadís Ma. Guerrero
Philippine Daily Inquirer
11:31 pm | Saturday, September 24th, 2011

A KAYAK instructor shows the proper way to handle an oar. Kayak clinics
may charge as much as P500 per person per day
Palawan, Oriental Mindoro and Camarines Norte are among the most
captivating of our provinces, filled with coastal areas, beaches and
resorts, rivers and streams, venues for adventures aqua sports, and
attractive to tourists both foreign and domestic.

In selected towns near the sea, bays and rivers, sports like kayaking,
along with related activities, can be harnessed – in fact, are being
harnessed – to provide livelihood and augment the income of local
residents, including farmers, fisherfolk, indigenous peoples and
unemployed but trainable persons.

Equal importance is being attached to protection of, and care for, the
environment in the face of destructive forms of livelihood like dynamite
or cyanide fishing.

Local government units (LGUs) and non-government organizations (NGOs)
are among those behind these developing micro enterprises. And their
guiding philosophy is yet another KKK: Kasiyahan (Recreation), Kabuhayan
(Livelihood), and Kalikasan (Nature).

Camarines Norte, for example, faces the Pacific Ocean and has seven
islands. One town mayor has approached the Philippine Kayaking
Association for a livelihood-environment project. The town is ideal for
surf kayaking.

In Oriental Mindoro, another town is developing under its mayor a white
water kayaking livelihood project which will benefit Mangyan
constituents who will be trained as kayaking guides.

"And residents in this town in [Central] Palawan want us to explore the
river as part of their tour packages," says Andrea (Didi) Camara,
secretary-general of the kayaking association and vice-president of is
corporate arm, Sun & Sea Sports Systems, Inc. So the focus here is on
river kayaking.
"It's more of an advocacy for us," adds Camara. "But it also sustains us
because we charge professional fees and supply some of their water
sports requirements. We are doing a lot of support in training. We train
the beneficiaries through the support of these LGUs."

Package tours have been identified as an ideal source of livelihood that
can be or is being developed. The residents will derive their income
from kayaking, from kayaking clinics, from rentals of equipment, and as
tour guides.

For a day package tour, the beneficiaries can charge from P700 to
P2,000. Rentals of a kayak may range from P250 to P400.

"For kayak clinics," Camara points out, "they could charge as much as
P500 per person per day, depending on the area or duration, or the level
of instruction."

It is the LGUs and the NGOs who will draw up the budgets.

"The beneficiaries will organize and definitely kikita sila [they will
earn]," the kayaking specialist predicts. "It always starts as an
alternative and eventually develops into a main source of income."
At the same time, kayaking is not a stand-alone activity, and will be
integrated into other outdoor and adventure activities.
"It's a way of helping the economy and indirectly and directly
protecting the environment," Camara concludes.

Saturday, September 24, 2011

Recession panic grips world markets

Everyone is now fearing a global recession!

Recession panic grips world markets

(The Philippine Star) Updated September 24, 2011 12:00 AM Comments (75)

MANILA, Philippines - World markets buckled under a frenzied sell-off
Thursday as investors panicked, believing the global economy was headed
for another slump that policymakers may be ill-equipped to prevent.

From New York to Tokyo, it was a brutal day for investors as countless
billions of dollars were wiped off the value of companies globally.

In Manila, the benchmark 30-company Philippine Stock Exchange index
(PSEi) settled at its lowest level in three years as investors turned to
safer US dollar and government bonds. The peso, meanwhile, briefly
touched the P44 to $1 level before recovering at P43.58 from Thursday's
P43.77.

The PSEi plummeted 210.14 points or 5.13 percent to close at 3,885.96,
logging its biggest drop since Oct. 27, 2008.

The 30 firms that make up the Dow Jones Industrial Average alone lost
$103 billion of their value or around 3.5 percent while major indexes in
Europe, Asia and Latin America commonly suffered losses of around five
percent.

The seeds for the turmoil appear to have been planted Wednesday, when
the Federal Reserve warned an already tepid US recovery faces serious
risks, even as the bank appears to be running low on policy remedies.

"It's the ever-increasing threat of another recession that is really
spooking investors," said analyst Simon Denham at Capital Spreads.

But concern about the fate of the world's largest economy only
heightened long-running fears that key pillars of the global economy are
cracking under the strain of debt and slow growth.

The Dow lost 391 points to finish the day at 10,734, a level only seen
once in the last year.

London's FTSE-100 index closed down 4.7 percent, Brazil's Bovespa was
down 4.8 percent and Hong Kong's Hang Seng closed down 4.9 percent to
its lowest finish since July 2009.

As representatives from the world's major economies gathered in
Washington for a regular meeting of the G20 and the International
Monetary Fund (IMF), there were increasing doubts that Europe can
overcome political difference and decisively tackle its long-running
debt crisis.

"Bad economic news from the United States and Europe, compounded by
political paralysis and the risk of a serious policy mistake, continues
to roil markets," IHS chief economist Nariman Behravesh and IHS Global
Insight economist Sara Johnson told clients.

The heads of the World Bank and IMF warned that Europe and the US risked
"suffocating" the global economy if they did not get control of their
economies.

Danger zone

World Bank president Robert Zoellick called for action, warning: "The
world is in a danger zone."

The IMF's Christine Lagarde said that risks to the global economy had
increased, "but there is a way forward, if countries act now, act
boldly, and act together."

But across the globe investors voted with their feet, pumping money into
perceived safe-haven assets, notably the dollar and US government debt.

The euro fell to its lowest level since January against the dollar, at
$1.3462 at 2130 GMT, while the yield on the 10-year Treasury note sank
to a new record low, indicating sky-high demand.

Michael Hewson of CMC Markets said "European markets have plunged today
on a trifecta of different factors, starting with disappointment about
last night's measures by the Federal Reserve as well as its downbeat
assessment of the US economy."

He added that "fears about a slowdown in China on disappointing HSBC
manufacturing PMI, which contracted for the third month in a row, and
disappointing eurozone, French and German manufacturing PMI's data,"
also weighed on sentiment.

It was stocks that bore the brunt of that flight to safety.

Tokyo shed 2.1 percent and Shanghai lost 2.8 percent.

Jitters

In the Philippines, anxieties over the US sliding back into recession
and Italy and Spain heading for bailouts left shares tumbling.

The main composite index is now 10 percent below its end-2010 level with
global markets issuing a vote of no confidence in the management of the
world's two largest economies the US and the Euro zone. Year-to-date
loss has reached 7.5 percent.

All sub-indices were in the red, led by mining and oil which slid by
9.87 percent followed by property which lost 6.08 percent.

The broad All-Share index likewise plunged by 4.6 percent. Of the stocks
traded, 166 turned up losers as against 13 gainers, with 15 unchanged. A
total of 13.87 billion shares changed hands valued at P8.19 billion.

"Growing concerns on the global economic slowdown is scaring the market.
Most investors are worried that the recession fears will turn out to be
a nightmare for the market. Most opted to sell down the market and shift
to safer investment instruments," said Astro del Castillo, managing
director at First Grade Holdings Inc.

"The US is wrestling with its debt concerns and poor growth while
Europe's sovereign debt crisis threatens to bankrupt Greece and place
Italy in a similar position. For the moment, market performance hinges
largely on global issues but discerning investors should watch oversold
stocks, careful for signs of recovery," AB Capital Securities said in
its online market report.

Foreign investors remained on the sell side and posted a net selling
amount of P267.6 million. Among yesterday's top losers were Semirara
Mining, Philex Mining and Atlas Mining, Lepanto.

The most actively traded stocks were PLDT and Metrobank.

Meanwhile, volume at the Philippine Dealing & Exchange Corp. (PDEX) was
heavy at $964.84 million from $1.356 billion last Thursday.

Traders pointed out that central banks in the region including the
Bangko Sentral ng Pilipinas (BSP) have been intervening in the foreign
exchange markets to stem the decline in local currencies against the US
dollar.

The US Federal Reserve on Wednesday warned of significant risks to the
already weak US economy and launched a new plan to lower long-term
borrowing costs and bolster the battered housing market.

The US Fed announced it would sell $400 billion of short-term Treasury
bonds to buy the same amount of longer-term US government debt as part
of efforts to boost growth that slowed to a crawl over the first half of
the year.

Protectionism looms

In Washington, the WB's Zoellick said protectionism and populist
policies in the developing world could rise as countries face increasing
head winds from a growing European sovereign debt crisis and a weakening
economic recovery in the US.

Zoellick warned another crisis was building at a time when the budgets
of many developing economies had not fully recovered from the 2008
financial storm, adding to their fiscal strains.

He told Reuters in an interview more than half of developing countries'
budgets have deteriorated by two percent of gross domestic product since
2007, and more than 40 percent of developing nations now have government
deficits in excess of 4 percent of GDP.

"If the situation deteriorates further, then developing countries'
growth could turn down, their asset prices could drop and then their
non-performing loans could increase," Zoellick said.

"With these pressures and prospects we have to anticipate possible
protectionist pressures, beggar-thy-neighbor policies and a risk of a
retreat to populism," he added.

While he still believed advanced economies could avoid a double-dip
recession, Zoellick said his concerns were growing unless they acted
forcefully to tackle their problems.

"A crisis made in the developed world could become a crisis for
developing countries," he said. "Europe, Japan and the United States
must act to address their big economic problems before they become
bigger problems for the rest of the world. Not to do so would be
irresponsible."

Developing economies, he said, had grown more resilient over the past
decade and were in a better position to withstand another crisis but
they were still concerned about the spillover effects from troubled
advanced economies.

Some of the largest impacts to poorer countries would be felt through a
decline in global demand, which would affect trade and commodity prices.

Zoellick said $6.1 trillion was wiped out globally in stock market
declines over the past couple of months, which is equivalent to 10
percent of global GDP.

A meeting of finance leaders from emerging market economies China,
India, Russia, South Africa and Brazil in Washington on Thursday called
for 'decisive action' by advanced countries to tackle the deterioration
in their economies.

"The best role for the BRICS countries is the same as the best role for
any country, which is to focus on what they need to do at home to get
through the current financial dangers and to move on to long-term
growth," he said.

Zoellick said he was paying close attention to consumer and business
confidence in emerging economies. Zinnia de la Peña, Lawrence Agcaoili

Agriculture dep’t to expand goat project to N. Samar

Agribusiness News

Posted on September 21, 2011 09:38:29 PM

Agriculture dep't to expand goat project to N. Samar

TACLOBAN CITY -- The Department of Agriculture will expand its
goat-raising project to Northern Samar following its successful
implementation in pilot areas in Eastern Visayas.

Wilson A. Cerbito, Department of Agriculture regional technical director
for research and regulations, said that based on their latest inventory
this year, the number of goats in eight pilot towns and cities in the
region went up to 1,722 this year from 811 in 2008.

"The population must be higher than reported considering that we only
counted animals that were not sold during the day of inventory," Mr.
Cerbito told BusinessWorld.

He said the project, which is implemented under the Rural Enterprise
Development (RED) approach, will be introduced in San Roque, Northern
Samar this week.

"The local government there is interested to adopt the project. We will
conduct an orientation. We have been pushing this project to local
officials so they can adopt this protocol," said Mr. Cerbito who is also
the national and regional focal person of the RED project for goats.
Mr. Cerbito said that government interventions in goat production
include upgrading of native stocks, improving housing, proper feeding,
providing herbal medicine and providing a hybrid breeder.

The farm department also extended financial support and marketing
assistance to 180 farmer-partners in 25 villages of Tabango, Leyte,
Villaba, Ormoc City, Matag-ob, Jaro, Sta. Fe, and Tacloban City in
Leyte, and Calbayog City in Samar.

"The project is done in these areas but it is now continued by the
farmer's associations. We continue to monitor their activities and
assist them on their special needs," Mr. Cerbito said.

The RED approach encourages local government support to make goat a
priority commodity, identify community problems and draft solutions.
"The farmer partners were provided with technology and entrepreneurial
trainings. They were exposed to various goat production methods in
different areas through an educational tour, participation in goat
congresses, trade fairs and festivals," Mr. Cerbito said.

"After building awareness of farmers, they were then given the leeway in
choosing technologies that could solve their individual farm problems,"
he added.

The RED project has been implemented in Regions 1, 2, 3, and 8.
Different interventions have raised goat population in pilot areas from
3,290 in 2008 to 6,108 this year.

The main goal of the RED project is poverty alleviation and
to transform the traditional way of goat raising into an enterprise. --
Sarwell Q. Meniano

Friday, September 23, 2011

‘Ghost’ borrowers drained ACEF fund

'Ghost' borrowers drained ACEF fund

Published : Friday, September 23, 2011
Written by : JEFFERSON ANTIPORDA REPORTER

A BIG part of the P10-billion Agricultural Competitiveness Enhancement
Fund (ACEF) went to "ghost" borrowers, and the government can no longer
recover the billions of pesos given as agricultural loans to
non-existing companies, a senator revealed on Thursday.

According to Sen. Franklin Drilon, one-fourth of the ACEF fund, or P2.5
billion, were given to ghost borrowers.

ACEF was a special purpose fund intended to help farmers and cooperatives.

A Commission on Audit (COA) report said that the Department of
Agriculture (DA) granted loans to hundreds of companies from 2000 to 2009.

Drilon said that COA could not locate these borrowers, adding that he
suspected that business ventures were opened just to get loans from the
multi-billion government credit line.

According to him, these companies may have colluded with Agriculture
officials in acquiring the loans, which required no collateral.

"The government [was] clearly prejudiced in this case because the amount
could not be collected anymore since these [were] clearly ghost
borrowers," said Drilon, chairman of the Senate finance committee.

The audit commission said that letters of confirmation were sent to the
borrowers but these "yielded negative results." Of the 264 confirmation
letters sent to the borrowers, 140 did not reply for balances totaling
P2.1 billion and 27 with balances of P370 million returned the letters
to the agency due to various reasons.

Beneficiaries that borrowed a total of P66.4 million, meanwhile, failed
to pay back their loans due to the closure of the companies affected by
typhoons and firms that no longer exist.

According to the audit agency, P1 million in loans may not be collected
anymore because of death, insufficient address or unknown identity of
the borrower.

Sen. Edgardo Angara, meanwhile, challenged the Agriculture department
and the Senate Oversight Committee on Agriculture to conduct a full and
fair audit of ACEF funds after reports alleged that he was one of those
who benefitted from the fund.

"I call for—and welcome—a performance audit of the ACEF. They should
publish all the names of the beneficiaries of ACEF, from day one to
present, whether individuals, corporations, provinces or universities,"
said the former Senate President, a one-time Agriculture secretary.

He added that it would not be difficult to trace where the money went
and how it was used.

Angara's home province of Aurora received P300 million from the ACEF,
including P100 million for the Aurora State College of Technology's
(ASCOT) Enhancement of Technology-Based Agribusiness Industry in 2007,
and P200 million for the Baler-Casiguran Road in 2008.

According to the senator, the funds allotted for the Aurora projects
were channeled to the right beneficiaries and were properly spent.

BSP approves opening of 122 bank branches in Q2

By Lawrence Agcaoili (The Philippine Star) Updated September 23, 2011
12:00 AM Comments (0)

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has given
universal, commercial, thrift, and rural banks the greenlight to open
and reopen a total of 122 branches, other banking offices, and
microbanking offices all over the country in the second quarter of the year.

BSP Deputy Governor Nestor Espenilla Jr. issued Circular Letter 2011-065
containing the approved appplications of banks for new banking offices
and opened or re-opened banking offices from April to June this year.

The BSP approved the application of Citibank NA to open another banking
office in Taguig City while Metropolitan Bank and Trust Co. of taipan
George SK Ty was allowed to open a branch in San Pedro, Laguna and San
Fernando City in La Union.

State-owned Development Bank of the Philippines was allowed to open
branches in Vigan, Batangas City, Sta. Cruz in Laguna, and Carcar City
while Security Bank Corp. was given the greenlight to open branches in
Alicia in Isabela and Sta. Maria in Bulacan. Maybank Philippines was
allowed to set up two new branches in Taguig City.

The BSP also approved the applications of Philippines Savings Bank, RCBC
Savings Bank, Philippine Business Bank Inc., Cuyapo Rural Bank Inc.,
Insular Rural Bank, One Network Rural Bank Inc., Philippine Rural Bank,
Bangko Nuestra Sra Del Pilar, Tamaraw Rural Bank, Rural Bank of Lebak,
RTB Bank Inc., Tiaong Rural Bank, Rural Bank of Cauayan, AMA Bank, Rural
Bank of Camalig, St. Michael Rural Bank, Sunrise Rural Bank, Summit
Bank, and Vision Bank to open new branches.

The BSP has given universal, commercial banks, and thrift banks until
October 11 to file their applications to set up new branches in
restricted areas that include the cities of Makati, Mandaluyong, Manila,
Paranaque, Pasay, Pasig, Quezon, and San Juan.

The 90-day period for filing of branching applications under Phase 1 of
the two-phased lifting of the moratorium on the establishment of bank
branches in the eight "restricted areas" of Metro Manila started last
July 14.

Last June, the BSP approved a two-phased liberalization approach that
would fully lift the bank branching restriction in key cities in Metro
Manila starting 2014 to promote a competitive market environment
conducive to a better and improved quality of financial services delivery.

Under the first phase, second-tier universal and commercial banks and
thrift banks that have less than 200 branches in restricted areas as of
December last year would be allowed to apply and establish branches in
the restricted areas until June 30, 2014.

To qualify for restricted area branches, a universal or commercial bank
must have a combined capital accounts of at least P10 billion while a
thrift bank should have at least P3 billion. Banks with lower combined
capital accounts would still be allowed to establish branches as long as
they execute an undertaking to build up capital for a maximum period of
not later than end June 2014.

Financial Inclusion: The Trust Factor

September 22, 2011 in Center for Financial Inclusion | Tags: Financial
Inclusion, Mobile Money

Posted by Beth Rhyne

When 35 experts come together to talk about how to achieve financial
inclusion, one area of common agreement turns out to be the importance
of trust.

On Monday I participated in a conversation organized by Visa and The
Atlantic magazine as a side event to the Clinton Global Initiative. The
conversation included microfinance providers, researchers, diplomats,
journalists, donors, and technology providers. A discussion among so
many people of diverse perspectives is anything but linear, even with
excellent facilitation by Steve Clemons, Editor-in-Chief of
AtlanticLIVE. I had to pay close attention as the talk sped around the
table. As I listened, I was struck by how often the remarks turned on
the theme of trust.

At issue was this question: Why is the take-off of cell phone banking
moving so slowly? There are dozens of mobile banking pilots around the
world, but only a handful have reached scale. Visa itself is making a
big bet on mobile payments with its recent purchase of Fundamo, a mobile
banking platform based in South Africa.

A number of answers to the question involve trust.

Low-income people in low-income countries who are excluded from
mainstream financial services rely instead on informal systems – like
rotating savings and credit societies, moneykeepers, and truck drivers
who carry money from place to place. Some people argue that trust is the
key to these informal systems because the participants know each other,
speak the same language, and can follow up directly if anything goes
wrong. Others believe that informal systems are in fact not very
trustworthy, and hypothesize that people will change behavior as soon as
they gain sufficient trust in more formal systems.

For clients, trust involves confidence that transactions will take place
as intended. This confidence is particularly important for electronic
transactions: think of feeding money into an ATM and trusting that it
will be properly recorded to your account. It also involves trust in the
provider as a fair player, with no hidden fees and prices perceived as fair.

How can formal providers gain enough client trust to cause clients to
shift, especially when working with electronic payments? Having a
trusted brand may be an asset. Visa, for example, is trusted by card
users for its reliability. Will that brand value transfer to new clients
who have never used a Visa card? Maybe microfinance institutions (MFIs)
can help increase the comfort levels of their clients with new
transaction channels. MFIs have direct personal relationships with
clients. They could construct settings in which clients could test out
new technologies for themselves.

It is interesting to observe how quickly people have taken to cell
phones for communications, possibly because for a phone call, trust is
established the moment you hear the other person's voice on the line,
and because the device can be tested without significant risk to the
client, which is not often the case where money is involved. Younger
people are more likely to have already become comfortable with
electronic devices, but that trust does not necessarily carry over to
financial institutions. Some discussants noted that banks are not among
the most-trusted companies.

Trust enters the picture at the regulatory level, too. Regulators must
be able to trust the providers they license to operate safely and
according to standards, with adequate safeguards to the funds in their
care. Financial services providers argue that they have more effective
mechanisms for clearing and settlement, fraud control and problem
resolution than telecoms companies, because the telecoms companies have
not previously confronted those problems. This is an argument used by
financial institutions in favor of regulations for cell phone banking
that require partnerships with financial institutions – that financial
institutions can be more trusted to handle financial transactions and
ultimately financial intermediation responsibly.

Trust came up in the conversation in one other way. For providers that
promote themselves as socially responsible, their investors and even
employees need to trust that the company is serious about achieving a
worthwhile social bottom line.

When the evening ended, I thought back fondly to Pancho Otero, the
founder of Prodem and first CEO of BancoSol. He liked to say that in
microfinance, trust resides in the eye-to-eye contact between loan
officers and their clients. It's a romantic view, but it holds a certain
amount of truth.

DA to resume lending under ACEF

By Marianne V. Go (The Philippine Star) Updated September 23, 2011 12:00
AM Comments (1)

MANILA, Philippines - The Department of Agriculture is set to resume
lending operations for the Agriculture Competitiveness Enhancement Fund
(ACEF) after approving new implementing guidelines for the funding program.

In a press conference, Agriculture Secretary Proceso J. Alcala said that
while some anomalies have been discovered regarding the previous use of
the ACEF, there remains at least P1.9 billion for continued grants and
loans.

Alcala had suspended the ACEF program early this year to review the
program following complaints and reports of anomalies.

Under the new guidelines, from the previous allocations of 60 percent
for loans, 30 percent for grants and 10 percent for scholarships, the
new allocations would be 30 percent for loans, 60 percent for grants and
10 percent for scholarships.

Unlike in the past when ACEF loans were interest and collateral-free,
Alcala said the loans would now carry a minimal four-percent interest
and borrowers would be required to enter into a so-called "table mortgage".

Additionally, Alcala said, approval of loans would now have to be
collectively approved by the DA secretary as well as the heads of the
Senate and House committees on agriculture.

In the past, Alcala said, only the DA secretary could approve loans
worth P15 million and below.

Agriculture undersecretary for administration and finance Antonio A.
Fleta said a total of P8 billion has been released in the form of grants
and loans. Of this amount, P3 billion were in the form of grants and P5
billion in the form of loans.

Fleta said grants, by their nature, do not have to be repaid, but it
does not mean that those previously granted are anomalous.

Of the P5 billion in loans, P1 billion is owed by the troubled
Quedancor, an agency under DA, Fleta said adding that they are now
trying to work out how Quedancor can pay back the amount.

As for the remaining P4 billion in loan releases, Fleta said the
collection rate is a mere 26 percent. He said at least 110 borrowers,
are in arrears, while 18 have already asked for a restructuring of their
loans.

The ACEF, Alcala explained, continues to be replenished from the
proceeds of the MAV (minimum access volume) tariff collections and well
as some repayments.

Meanwhile, Sen. Francis Pangilinan, chairman of the Senate committee on
agriculture and food said he will investigate irregularities in the use
of the ACEF that according to one news report drained the P10 billion fund.

Pangilinan said that "under the law, it is the COCAFM (Congressional
Oversight Committee on Agriculture and Fisheries Modernization) that is
tasked to administer the fund.

ACEF is a fund to help farmers and fisherfolk and agricultural
entrepreneurs become competitive.