PHILDEVFINANCE (old news)

Wednesday, July 20, 2011

'The Law, the Supreme Court and Changing Times.' (Part V) - Enrile-Belmonte constitutional initiative

'The Law, the Supreme Court and Changing Times.' (Part V) - Enrile-Belmonte constitutional initiative

CROSS ROADS (Toward Philippine Economic and Social Progress) By Gerardo P. Sicat (The Philippine Star) Updated July 20, 2011 12:00 AM Comments (1)

Changing times in the face of unchanging laws defines the conflict of the ages: reform vs. status quo, a more prosperous future vs. prosperity for the few, have-nots vs. haves. The restrictive economic provisions of the constitution represent the unchanging laws. The demands for economic reform constitute the pressure to adjust to the needs of the times.

Along this line, Thomas Jefferson’s wise words resonate:

“I am not an advocate of frequent changes in laws and constitutions. But laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change in circumstances, institutions must advance also to keep pace with the times.”

Our institutions are handled by men who, no matter how we choose them, are capable of errors of judgment like all of us. It is true of the men we elect as well as the men that elected men appoint. Therefore it is true of those who make judgments about the way to interpret our laws.

“The cost of wrong decisions.” Within the realm of the Supreme Court, there have been outstanding examples of such errors in judgment that produced unfortunate results for the nation. On appeal, the court sometimes corrected itself. But when the losing party gives up on a case that had immense negative impact upon the nation, most of us suffer the ultimate loss.

When the Supreme Court intervened to direct a major petrochemical project of a foreign investor group to transfer the location of its project from Batangas to Bataan, the foreign investor group, appalled by the interventionist nature of the courts in a business issue, withdrew entirely from the scene. Today and more than 20 years later, the country is still trying to set up the industry that the country failed to establish. Many jobs and new industries failed to happen because the investment did not go through.

When the Supreme Court awarded the privatization sale of the Manila Hotel to a Filipino group, the argument employed was to enable a national historic asset from being held by a foreign group. From the line of sight of Jose Rizal’s monument at the Luneta Park today, the Manila Hotel looks like a failing second class hotel. Compare this with the Peninsula Hotel in Hong Kong and the Raffles Hotel in Singapore – two uniquely historic hotels. The latter are fine examples of hotels owned, run and managed by well-financed professional hoteliers engaged in the business of hotels.

In a recent 2005 decision involving foreign investment participation in mining, the Supreme Court made it possible for foreign direct investments to participate in the development and exploitation of natural resources. Through the use of a brilliant even if tortuous reasoning, the court saved the day by reversing itself. But many years had already passed during which significant growth of the Philippine mining industry could have happened.

“The Supreme Court’s definition of capital.” Recently, the Supreme Court made a ruling on the 60-40 equity rule that defines the meaning of capital in the restrictive economic provisions of the constitution. The court said that capital in the context of the issue at hand referred only to the voting shares of a corporation. This means the common stock.

Taking notice of the capital structure of PLDT, the total outstanding shares of the corporation comprise of 22.15 percent in common, or voting, shares and 77.85 percent in preferred shares. Of the common stock, a total of 35.73 percent is held by Filipinos. The rest, or 64.27 percent of the common stock, is owned by foreigners. Of the preferred stock, a total amount of 99.44 percent of the outstanding preferred shares is owned by Filipinos and 0.56 percent by foreigners.

By this reasoning, the capital consisting of preferred shares was of no account in the 60-40 equity rule. Under this interpretation, the PLDT shares owned by foreigners would be far above the 40 percent called under the rule, since foreign shares are 64.27 percent. This would preclude the purchase of an additional 6.3 percent of the total common stock by PLDT, which was the main issue at hand in the problem that was before the court.

Actually, the Supreme Court took cognizance of the structure but directed the Securities and Exchange Commission to study this for compliance and for exacting the appropriate penalties for infraction against the capital requirement.

There is a problem here. It was the SEC as regulator that allowed the practice of taking a liberal interpretation of the capital requirement to take root. How is one to penalize infractions against the rule? Should the blame then be on SEC for allowing a different state of affairs? How could private investors be penalized for following the rule of the regulator to begin with?

“SEC practice was different from the Supreme Court definition.” Under the SEC regulation, however, PLDT would be very much within the 60-40 rule of equity. The Securities and Exchange Commission, the regulatory body that deals with such issues, has ruled before that 60-40 rule of Filipino to foreign equity was to be interpreted as the combined common and preferred shares outstanding. These were physical number of shares outstanding, not shares weighted by value.

SEC adopted this definition as a means of permitting a higher volume of foreign capital inflows into the country. Was there a policy decision at the top of the government, for which an order or interpretation was given so that more foreign capital could be attracted under a more liberal interpretation of the 60-40 rule?

Be that as it may, the SEC as regulator having defined the nature of the capital ownership for purposes of dealing with the 60-40 equity rule, it became the practice in the financial industry to use this definition. Foreign capital infusion in relation to industrial expansion projects, in large industries and in public utilities as well as regulated industries, used this design in the financial packaging.

Such practice has been used in financial institutions that intermediate large savings and wealth instruments to invest in securities of major enterprises in the country. The practice has taken root within the financial system.

“Disruptive impact on development.” This is where the Supreme Court ruling has a disruptive impact on the country’s capital market. By unsettling the capital structure of the major public utilities, the whole financial system is partly shaken up because it also invests in these corporations. The future implication is for the divestment of some foreign capital. This could lead to forced sale of capital assets to domestic groups with capital.

But the times have called for the country to seek an expansion of foreign capital to supplement the nation’s investment needs. Moreover, the court’s move cannot possibly lead to an effect in the other direction – meaning more inflows of foreign capital – since the measure upsets the foreign investment climate. Once again, it demonstrates the oft common complaint against us – changing of the rules of the game.

This decision of the Supreme Court typifies the notion that I described in the last week’s column. As a nation we are faced with many rules that make us unproductively very busy. The outcome could even be worse. It sets us back in our development. It is not only unproductive but is, sadly, destructive of the little gains achieved in attracting foreign capital.

Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/

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

BPI sees rapid growth in e-banking

BPI sees rapid growth in e-banking

By Ted P. Torres (The Philippine Star) Updated July 20, 2011 12:00 AM Comments (0)

MANILA, Philippines - The adoption of electronic banking, particularly Internet banking, will continue on its strong upward growth over the next few years, according to a top official of the Bank of the Philippine Islands (BPI).

In the past 10 years, the combined rate of growth of electronic banking for BPI registered at almost 12 percent.

BPI senor vice president and consumer banking group Natividad N. Alejo said enrollments to the BPI 24/7 Express Online Banking has grown 35 percent in the first six months of 2011 compared to the same period in 2010.

“We had over 700,000 enrollments year to date,” Alejo said.

In the first year after introducing electronic banking, roughly 70 percent of the transactions were manual and 30 percent e-banking. But to date, 66 percent of transactions are now accounted for by e-banking and 34 percent manual transactions.

E-banking includes, among others, automated teller machine (ATM), customer transaction account (CTA), telephone banking, Internet banking and mobile banking.

CTA is the electronic machine situated inside BPI branches, which reduces over-the-counter transactions. Alejo said 300 BPI branches already host CTAs, which reduces human intervention, and teller time by 30 percent, and reduces the use of forms.

Transactions generally undertaken through e-banking are funds transfer, bills payments, airtime load for mobile phone and balance inquiry.

BPI has also rolled out 100 cash-accepting ATM machines.

The bank official, however, revealed that cash-accepting machines are not within their priorities at the moment.

BPI has a combined 809 branch network including kiosks and other self-serving channels. It has a deposit base of 4.3 million at the end of 2010, from a mere 2.5 million the year before. By the end of the year, it is expected to reach a record five million, with a little over one million directly correlated to the remittance business.

PH should get more investments to merit credit rating upgrade – Fitch Ratings

PH should get more investments to merit credit rating upgrade – Fitch Ratings
By: Michelle V. Remo
Philippine Daily Inquirer
8:49 pm | Tuesday, July 19th, 2011

MANILA, Philippines — Fitch Ratings said the Philippines should attract more investments and accelerate growth of the overall economy to get another credit-rating lift and hit investment grade.
Andrew Colquhoun, Fitch head for Asia Pacific sovereigns, said the country could get another credit-rating upgrade within the short term, given favorable developments, such as the improving fiscal situation of the government, benign inflation, and relatively stable banking sector.
However, he said the outlook on the latest credit rating for the Philippines has been "stable" rather than "positive" because the country should still show it could further speed up growth of its economy, largely through investments, so that the average income of Filipinos eventually match those of other emerging economies.
A "stable" outlook shows the latest credit rating is likely to be maintained within 12 to 18 months unless significant improvements in the requirement macroeconomic fundamentals are achieved.
On the other hand, a "positive" outlook signifies a better chance for an economy to get a credit rating upgrade with the short term.
Just last month, Fitch raised the country's credit rating from "BB" to "BB+". This is tantamount to an increase from two notches to just one notch below investment grade.
The government's economic officials are hoping for another credit rating upgrade within the short term, saying the country deserves it given favorable fundamentals and capability to service maturing obligations. They said an investment grade would help the country earn more respect, and perhaps investments, among the international creditor and investor community.
Government officials opined that the Philippines' latest credit rating, although already an improvement, was still below what the country deserved. They cited the country's rising reserves of foreign currencies, among others, which show enhanced capability to settle maturing debts to foreign bond holders and creditors.
Some countries, such as Indonesia, have the same fundamentals as those of the Philippines but have better credit standing, according to them. Indonesia also has a BB+ rating from Fitch, but enjoys a "positive" outlook.
In response, Colquhoun said the country should generate more investments and accelerate growth of the economy if it wanted another credit rating upgrade.
He cited the country's average gross domestic product growth of 4.9 percent over the past five years, which was still lower than Indonesia's 5.7 percent.
Colquhoun added that the investment-to-GDP ratio of the Philippines stood at only 16 percent, while that of Indonesia's has been at 30 percent.
Moreover, per capita income in Indonesia has reached the $3,000 level, while that for the Philippines has remained at $2,000.
Nonetheless, Colquhoun has acknowledged the Philippine government's improving fiscal situation, which is one of the important factors affecting credit ratings.
Fitch expects the Philippine government's budget deficit to stay this year within the target ceiling of 3.2 percent of gross domestic product.

CCT program improves education, health of beneficiaries - studies

CCT program improves education, health of beneficiaries - studies

By Helen Flores (The Philippine Star) Updated July 20, 2011 12:00 AM

MANILA, Philippines - The government’s conditional cash transfer (CCT) or 4Ps program significantly improved the health, nutrition and education of children of low-income families, Social Welfare Secretary Corazon Soliman said yesterday, citing studies conducted by the Social Weather Stations (SWS) and Ateneo de Manila University.

Soliman said a spot-check evaluation by Ateneo in February 2010 among 760 beneficiaries of the 4Ps program showed big improvements in school attendance and use of health services such as immunization, nutrition and maternal health services among the beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps) in Northern Samar.

She said an average of 4.7 antenatal visits was noted among pregnant women, 62 percent of children 1-2 years old received full immunization while children aged 6-14 years received deworming pills in the last four years.

Soliman said a recent study by the SWS, meanwhile, revealed that enrollment rate for beneficiaries 6-14 years old is high at 96 percent.

“Compliance with attendance among school age beneficiaries is also high at 88 percent,” Soliman told a press briefing.

She said this means that out of approximately five million children registered in the program, 88 percent are able to attend classes 85 percent of the time.

Soliman said impact studies of the SWS and Ateneo also showed that more students and parents attend extra-curricular activities, students come to school with better clothing, project materials and food, making them more active in classrooms.

“It is also noteworthy that Pantawid Pamilya plays a major role in reducing child labor especially in rural areas because many poor parents are now able to send their children to school,” the DSWD chief said.

The studies, however, did not cover the expansion of the CCT program.

In a related development, the DSWD-National Capital Region (NCR) began providing capital assistance and income-generating opportunities in the form of loan or seed fund to two batches of beneficiaries of 4Ps in Metro Manila.

DSWD-NCR director Ma. Alicia Bonoan said some 325 CCT beneficiaries were granted capital assistance amounting to P559,000. The family beneficiaries were from the cities of Caloocan, Manila, Navotas, Pasay, Quezon and Taguig, Bonoan said.

She said a majority of the recipients invested their loaned capital in charcoal making which has been a major source of income in the community, while the others ventured into buy and sell and mini sari-sari stores.

4Ps provides cash subsidy of P1,400 monthly to each qualified household beneficiary. The cash subsidy is to be used for the educational and health needs of a qualified poor family with a pregnant woman and children aged 14 and below.

Monday, July 18, 2011

Number of banks down to 746

Number of banks down to 746

By Lawrence Agcaoili (The Philippine Star) Updated July 18, 2011 12:00 AM Comments (0)

MANILA, Philippines - The total number of banks operating in the Philippines declined in the first quarter of the year as the Bangko Sentral ng Pilipinas (BSP) stepped up its campaign against problematic banks while major players in the banking industry continued to consolidate.

Data released by the central bank showed that the number of banks stood at 746 in the first quarter of the year or 12 banks fewer than the 758 as of end-December last year. The number of banks was also 33 less than the 779 banks that operated in the same quarter last year.

BSP Deputy Governor Nestor Espenilla Jr. said in an interview with reporters that the decline in the number of banks in the first quarter of the year could be attributed to the exit of weak players in the banking system as well as the continued mergers and consolidation of major players.

“Yes we regularly close banks that do not perform based on standards,” Espenilla stressed.

Data showed that the number of universal and commercial banks was steady at 38 while the number of thrift banks was also unchanged at 73.

However, the number of rural banks decreased to 635 in the first three months of the year compared to 667 in the same period last year and 647 as of end-December due primarily to the closure of weaker banks.

The banks closed down by the BSP from January to March this year was led by the Aguirre-owned Banco Filipino Savings and Mortgage Bank that was placed under the receivership of the state-run Philippine Deposit Insurance Corp. (PDIC) last March 17.

Other banks closed by the BSP and taken over by PDIC in the first quarter of the year include Rural Bank of Tampakan (South Cotabato) Inc., Rural Bank of Agno (Pangasinan) Inc., Growers Rural Bank Inc., Rural Bank of Manjuyod (Negros Oriental) Inc., GMA Rural Bank of Cavite Inc., Rural Bank of Bingawan (Iloilo) Inc., Rural Bank of Mapandan (Pangasinan) Inc., Rural Bank of Norzagaray (Bulacan) Inc., Rural Bank of Zapote (Las Piñas City) Inc., Ibalon Rural Bank (Tabaco, Albay) Inc., and Rural Bank of Baler (Aurora) Inc.

The BSP reported that the number of branches of universal and commercial banks, thrift banks, and rural banks increased by 240 to 8,124 in the first quarter of the year from 7,884 in the same period in last year.

“What is important is that customers are served,” Espenilla added.

Encash deploys 300 ATMs in 3 years

Encash deploys 300 ATMs in 3 years

(The Philippine Star) Updated July 18, 2011 12:00 AM Comments (0)

MANILA, Philippines - Electronic Network Cash Tellers, Inc. (Encash) has now deployed a total of 300 ATMs in just three years of its operations as the company aims to blaze new trails that include a possible initial public offering (IPO) to bolster its business model.

Encash president Eric J. Severino bared this during the celebration of the company’s landmark deployment of 300 ATMs with a party at Commons restaurant two weeks ago. Severino said that the availability of Encash ATMs in the rural areas makes it possible for the underserved to finally have convenient access to their finances.

Government pensioners, recipients of the Philippine government’s 4Ps Program, teachers and OFW relatives which are recipients of remittances benefit greatly from the presence of these ATMs, as do students and employees in the private sector.

Encash continues to cement partnerships with other entities in order to expand its operations and continue with its vision to provide remote communities with access to their finances.

“We are happy that our efforts have been recognized by MegaLink. We commit to continue with our mission to serve the Filipino community,” Severino said.

The Encash business model ensures that it provides convenience for all. Cardholders are charged a minimal convenience fee which is considerably less than what they spend to reach the nearest ATM in the city or the largest town. The convenience fee is then shared between Encash, its rural bank and cooperative partners, as well as Megalink and the banks that issued the ATM card.

As the country’s first independent ATM deployer, Encash received the Top Onsite ATM award for its ATM deployment in GM Bank. This was held during the annual MegaLink Performance Award last May 24. The awarding ceremony was held at The Anvil, BDO Corporate Center in Makati City.

Encash’s ATM network is the second largest in MegaLink, second only to Banco De Oro. In its three years of existence, Encash has expanded its network to 300 ATMs in the rural areas - a feat by any standard. Encash specializes in deploying ATMs in rural areas not deemed viable by commercial banks. Its partners comprise of 148 rural banks and cooperatives.

ACEF credit assistance to resume

ACEF credit assistance to resume

BY JAMES KONSTANTIN GALVEZ REPORTER
THE Department of Agriculture said it will soon resume providing credit assistance to organized groups of farmers, fisherfolk, and agri-fishery entrepreneurs through the so-called Agricultural Competitiveness Enhancement Fund.

In a recent TV interview, Agriculture Secretary Proceso Alcala said the department has completed the draft of the new ACEF implementing guidelines.

One of the main highlights is that final loan approvals will no longer be the exclusive authority of the DA secretary, but will include the concurrence of the chairpersons of the committees on agriculture and food at the Senate and House of Representatives.
Created in 1996 under Republic Act No. 8178, ACEF is financed by the duties or taxes levied on imported farm products, except rice. The fund is a form of support put up after the Philippines removed quantitative restrictions on farm imports.

When he assumed the agriculture portfolio in July 2010, Alcala suspended the processing and approval of ACEF loans, pending review of its policies and guidelines amid allegations of misuse.7:20 AM 7/18/2011

Saturday, July 16, 2011

BSP targets P1B in loans under credit guarantee program

BSP targets P1B in loans under credit guarantee program

CEBU CITY -- The Bangko Sentral ng Pilipinas (BSP) wants bank loans guaranteed by trust funds put up by cooperatives and local governments to rise to P1 billion by the end of 2012, a senior central bank official said on Friday.
"We target to reach around P1 billion in total loans under the Credit Surety Fund [program] by December 31, 2012," BSP Deputy Governor Diwa C. Guinigundo told reporters at the sidelines of the 2011 BSP Awards and Luncheon for Stakeholders in the Visayas Region on Friday.

The target, substantially higher than the P152 million recorded as of June 30, could be achieved by increasing the number of Credit Surety Funds (CSFs) across the country, Mr. Guinigundo said.

The establishment of CSFs, however, depends on the preparedness of cooperatives as well as support from local governments.

There are 16 CSFs are present. CSFs are set to be launched in Benguet, Oriental Mindoro, Palawan, Misamis Oriental and Baguio within the year.

The central bank spearheaded the creation of the Credit Surety Funds among cooperatives and local governments.

The program, which commenced in July 2008, involves the creation of a trust fund from the contributions of a participating cooperative and a counterpart from the provincial government.

The fund will be used to guarantee the bank loans of small businessmen, who normally would not have been able to do so as they lack collateral and credit records.

The central bank has committed to accept for rediscounting the loans granted under the CSF program.

Mr. Guinigundo encouraged banks and cooperatives to be more involved in the program. "This is a good program aimed at improving the credit worthiness of [micro, small and medium enterprises]," he said.

Under the program, cooperatives can pool a minimum of P100,000 and they can get loans that are "worth 10 times their contribution," Mr. Guinigundo added.

He explained: "Under a normal loan, their contributions or ’collateral’ would result in a loan that is a fraction of their pooled money. Under the credit surety fund, they get a multiple." -- Antonio Siegfrid O. Alegado

A Fresh Perspective on Mobilizing Micro–Deposits

A Fresh Perspective on Mobilizing Micro–Deposits

by John Owens

on Tuesday, June 28, 2011 at 9:12am

Micro-deposit generation is a key strategy in building more stable banks to support their credit operations and service the savings needs of the public, particularly the lower income groups. Banks unable to execute an effective micro-deposit strategy are risking being left behind in the marketplace, especially if they do not consider the perspective that broadening their micro-deposits base could provide them a solid foundation for achieving overall growth. This is one of the lessons learned during one of the sessions of the 2011 RBAP-MABS National Roundtable Conference held at the Hyatt Hotel on May 23-24, 2011.

Three speakers spoke on the topic "A Fresh Perspective on Mobilizing Micro-deposits". Mr. Gerardo A. Butardo, Deputy Director of the MSME Finance Specialist Group of the Bangko Sentral ng Pilipinas (BSP) Supervision and Examination Sector, represented the regulators' point of view. Representing the bankers' views and sharing their experiences with mobilizing micro-deposits were Lt. Gen. William K. Hotchkiss III (Ret.), President of Cantilan Bank, and Mr. Joel Luna, 1st Valley Bank's Pagadian branch manager. The bankers' experiences showed the participants how micro-deposits benefitted the banks' operations and significantly expanded their deposit base.

Mr. Butardo discussed how banks could take advantage of the recent expansion in the definition of microfinance to include micro deposit services, among others, under Circular 694 (Appendix 45, MORB). As defined by regulations, micro deposit products cater to the needs of the basic sectors, low-income clients, and those that are un-served or underserved by the financial system.

Some of the important features of a micro-deposit product as defined by the circular are:

Average daily savings account balance not exceeding PhP15,000;

Minimum opening and maintaining balance not exceeding P100; and

Not subject to dormancy charges.

Mr. Butardo also stressed the advantages that micro-deposits offer:

Micro-deposits can be transacted at Micro-Banking Offices (MBOs).

Micro-deposits are not just for micro-borrowers since it can be offered to anyone.

Micro-depositors can be micro-insurance clients, too.

Conference participants listened to bankers Gen. Hotchkiss (see presentation) and Mr. Luna (see presentation) share their banks' success stories in becoming billionaire banks. Both stressed that a key to their bank's growth is their successful effort in deposits generation, starting with small savings that they actively sought from local communities and student savers.

In both banks, micro-deposits comprise over 90% of the total number of deposit accounts. While contributing only an average of about 10% to bank-wide deposits, these micro-deposits have been a stable source of funds for the banks. Both bankers also emphasized that micro-deposits bring other benefits to the bank like the passenger traffic that these deposits generate. A healthy stream of customer traffic in bank branches reassures the general public, builds trust, and creates a positive image of the bank. Both bankers stressed that investments in promoting micro-deposit are worth it.

What are some of the activities that Cantilan Bank and 1st Valley Bank engage in?

As a way of building trust and informing the community members about what the bank can offer them, both banks join community activities such as town fiestas, school events, summer workshops for students, feeding programs, foundation day and sport events, medical outreach missions, and other school-related events. During those community or school events, bank personnel man their booths where informational materials and lock boxes or savings boxes are displayed. These lock boxes or savings boxes are given free to those interested in opening a savings account.

Gen. Hotchkiss shared an observation that people in rural areas save more than those in urban areas. Cantilan Bank has been able to generate a lot of deposits from 3rd and 4th class municipalities.

The samples of 1st Valley Bank's "wais box for wise savers" stirred much interest among the conference participants. The box is made of cardboard, and the key to its padlock is kept in the bank. 1st Valley Bank has already issued more than 45,000 boxes to its clients as part of its effort in mobilizing small deposits.

The session on micro savings elicited a lot of interest in the audience. What does a bank need to do? Does it need to seek approval from the BSP? The short answer is: as long as the micro-deposit product is within the guidelines, there is no need for BSP approval. However, the policies related to micro-deposit services should be added to the bank's product manual.

Since the USAID-supported RBAP-MABS program started in 1998, savings mobilization has been a key element to the program's capacity building approach to participating banks. The achievements of both 1st Valley Bank and Cantilan Bank in savings mobilization, along with the initiative's contribution to these banks' overall growth, prove that this other "half" of financial intermediation must not be forgotten.

Microfinance: New Paradigms Built on Age-old Fundamentals

Microfinance: New Paradigms Built on Age-old Fundamentals
by Mabs Phils on Tuesday, June 21, 2011 at 11:49am\

RBAP-MABS Research & Project Monitoring Consultant Ferdinand Sia shares his learnings from Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Espenilla Jr.’s keynote address at the 2011 RBAP-MABS National Roundtable Conference

The 2011 RBAP-MABS National Roundtable conference held on May 23-24 opened with a Keynote Address by BSP Deputy Governor Nestor Espenilla Jr. His speech carried the theme that new products, delivery channels and more players in microfinance will benefit both banks and consumers, but fundamentals remain important.

Espenilla said that the Philippines is in the midst of a new paradigm of a solid network of stable, self-sustaining and dynamic rural financial institutions that are capable of adapting to new technologies to better serve the under-banked. He recalled the industry’s atmosphere about fifteen years ago, when microfinance was offered only by a handful of banks through groups and center meetings. Today, microfinance includes housing loans and many other new products and services that can be paid through electronic money.

Mr. Espenilla cited three major changes that happened in microfinance in the last decade and a half, along with the corresponding actions that the BSP took to cope with them. First is the involvement of more diverse players in the industry, as telecommunications companies and network service providers entered the domain traditionally served only by banks. This milestone was supported by the BSP’s Circular 649 and 734, which are mainly on electronic money (e-money), e-money issuers and e-money network service providers. These new circulars paved the way for e-money retail payments and the creation of a mobile banking ecosystem, and ensured consumer protection, financial stability and integrity.

Second, products and services have increased in breadth partly arising through increased competition. Diverse products are good for the consumers as they get more options to better suit their needs. Broader products are also good for service providers as they increase and diversify revenue streams. BSP’s circulars 678, 680 and 683 made the offering of housing microfinance, micro-agri loans products and microinsurance possible.

The third major change was the development of new delivery channels – mobile phones, internet, banking kiosks and retail merchants – which save travel time and cost for bank clients. To support this change, the BSP released Circular 694, which provides rules and regulations for micro-banking offices (MBO). The collection of bank branches, ATMs, MBOs, merchants, store-fronts and e-money cash agents will make financial services more accessible to clients even in far-flung areas.

In addition, the BSP also updated anti-money laundering rules and regulations to address obstacles in serving the unbanked population. With the new rules, customers known by the bank as having small account balances and low value transactions will be classified as low risk, allowing banks to offer a more customer-friendly acceptance process. Moreover, the BSP also allowed for the outsourcing of customer identification or KYC (know your customer) requirements to make the process faster.

Through all the significant innovations in the microfinance industry, Mr. Espenilla stressed that age-old business and banking fundamentals still need to hold for the industry to succeed in taking advantage of this paradigm shift. The BSP, for its part, has initiated Circulars and actions to encourage sound fundamental business conditions.

First, institutions must be fortified because only strong institutions will survive to enjoy the benefits from the new products and services. A strong institution requires improved governance, strong balance sheet and sound business plans. BSP Circular 696 defines minimum capital requirements for new banks, banks converting to another category, and banks relocating their head office to another location. The circular is expected to help rural banks better manage risks, reduce non-performing assets, and promote greater transparency and market discipline.

Second, a clear business model will ensure sustainable business offerings, which means offering products to credit-worthy clients, subscribing to sound business policies, and underwriting standards. Lastly, serving clients and protecting their interests should be an essential part of any bank’s business strategy. These include providing transparent information about products and services as well as improved disclosure policies. The BSP is now supporting this initiative and has been supporting various financial education campaigns to support this.

The Philippines’ efforts on microfinance have been lauded by Economist Intelligence Unit and the World Economic Forum, thanks in part to the BSP’s continued support for microfinance through circulars and initiatives. This unwavering support has allowed for the Philippine microfinance industry to continuously grow amidst challenges and difficulties, and the promise continues to live on to extend financial services to more of the country’s unbanked and underbanked.

Friday, July 15, 2011

Life after PCA

Life after PCA

IN recent years we at Unlad Rural Bank have been visited by liquidity problems that got in the way of an efficient delivery of financial services to our clients. Our capital accounts were under critical stress and finally in 2004 it caved in under the weight of years of income losses. Suddenly, the issue of putting things to right shifted from critical to desperate. What were we to do?

This was what happened. In a three-year period beginning 2002, our total resources were still effectively expanding, the same having grown from P40.047 million to P42.921 million the following year and finally to P43.662 million by 2004. But if resources were growing, so did our deposit liabilities. Naturally, our capital accounts went from P763.823 million in one year to P916.934 million the following year before it was completely eroded to negative P626.939 million in 2004. These were the years when income losses were as high as P3.343 million in a year and we were desperate to find ways to stop the bleeding for good.
These numbers clearly qualified us to be placed under the prompt corrective action or PCA program implemented by the Bangko Sentral ng Pilipinas in tandem with the Philippine Deposit Insurance Corporation. And these were numbers we sustained even as we also had to deal with quite a number of more domestic issues that similarly demanded our time and energy. For instance, there was this long standing legal tussle with key shareholders of Unlad Rural Bank that started in 1987 but was finally resolved in the bank’s favor after 13 years when the Supreme Court ruled with finality in 2010.
There was also grave oversight on the part of the former managers of our bank whose end result aggravated our financial condition. We accumulated ROPA, the certificates of sale or COS of which they registered but somehow forgot or neglected to consolidate. The tax liabilities on these ROPA also were not paid no matter the annotation on the COS. Thus, the accumulated surcharges and penalties complicated our effort to consolidate the properties that in 2002 already totaled more than P23 million.
It must also be said the contributions that should have been made to our retirement fund during this period of stress were some of the more significant ill-effects of the bank’s inability to post profits. We stopped adding to the retirement fund even as contingent service liabilities to the aging employees kept rising.
By 2004, and as a result of the slow disposition of our acquired assets and as a result of the continuous outflow of funds required to consolidate the various ROPA, our capital accounts finally posted a deficiency of P626.939 million. We were literally at the end of the accounting rope. You can just imagine the barrage of correspondence coming from the BSP expressing serious concern on the financial condition of the bank. You must also imagine what it was like for the existing management team in terms of pressure and workload.
So in other words we were ripe for the PCA whether we wanted it or not.
This program was designed to stop whatever harm was done to the bank’s books at that point. Guidelines mandated banks under BSP supervision to come under PCA whenever the capital adequacy ratio or CAR fall below 10 percent, the tier one risk-based ratio hit six percent and the leverage ratio at five percent.
PCA also applies whenever our CAMELS rating—representing capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risks—falls below “3” or whenever our management component rating also falls below “3.” Under the same regulatory guidelines, the PCA also kicks in whenever regulators determine there is more-than-normal risk for any bank to topple over. In any case, the BSP made all these very clear to us when they sent us a formal notice we were already in more-than-normal risk of collapsing as a going concern.
Recovery through best practices
Fortunately for us, we have a good management team that crafted a rehabilitation program we knew could help us turn the bank around and convince the regulators of the merits of the program at the same time. The rehabilitation program required the adoption of a four-point plan that immediately addressed the severe liquidity issues we were facing, helped us stanch the financial bleeding in the identified areas, soothe the regulatory concerns of the BSP and think up ways to sell assets we still have in a hurry.
First, we launched a salary and microfinance loan program we knew will immediately address the poor operating income we were having. This had the desired impact on cash flow.
Then we identified those assets we can quickly sell. The objective was to form an attractive cache of properties we can sell in a jiffy.
At the same time, we learned to cope with the barrage of correspondence from the BSP whose auditors were all over our books of accounts. We learned to be patient and cooperative with the regulators. Our people were astute enough to read through the bureaucratic language of concerns that oftentimes taxed the patience of our management. We also understood what the BSP auditors were saying beyond the official language used to convey to us that we were in very real danger of toppling over.
In other words, we read through their intentions and understood the regulatory limits.
These points helped us through the trying times, encouraged us to push forward, made us find more creative or innovative ways to lick our problems. We persisted. At the end of it we won.
Today Unlad Rural Bank lives up to its name, both for the bank management and it’s employees and most importantly to the communities we serve.
This could not have been done without implementing the 4 points of best practices that we ourselves adopted. Mas maunlad na ang Unlad Rural Bank.

Tuesday, July 12, 2011

Banks post fastest loan growth in 25 months

Banks post fastest loan growth in 25 months

By Lawrence Agcaoili (The Philippine Star) Updated July 12, 2011 12:00 AM Comments (1)

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday that banks operating in the Philippines posted the fastest loan growth in 25 months after expanding 18.8 percent in May due to increased domestic economic activities.

BSP Governor Amando Tetangco Jr. said in a statement that bank loans reached P2.544 trillion as of end-May, or P403 billion higher than the P2.141 trillion as of end-May last year.

“The steady pace of domestic economic activity and stable financial conditions supported the credit expansion in May,” Tetangco stressed.

Tetangco pointed out that loans have been growing steadily at double-digit rates of 11 percent in January, 12.3 percent in February, 14.1 percent in March, 14.2 percent in April and 18.8 percent in May.

He added that the increase last May was the highest rate recorded since April 2009.

Economic managers, through the Cabinet-level Development Budget Coordination Committee (DBCC), see the country’s domestic output, as measured by the gross domestic product (GDP), growing between seven percent to eight percent this year and next year.

The Philippines posted its strongest growth in 34 years as GDP posted a surprising growth of 7.6 percent last year after slackening to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis.

As expected, the country’s GDP growth slowed down to 4.9 percent in the first quarter of the year from the revised 8.4 percent in the same quarter last year due to government underspending as well as the weak global trade.

Despite the economic slowdown, loans extended to production activities grew 20.5 percent to P2.314 trillion as of end-May from P1.92 trillion in the same period last year as corporate borrowers sourced more loans from banks to bankroll their expansion programs.

In terms of growth, data showed that loans to the mining and quarrying sector posted the biggest growth of 223.5 percent, followed by electricity, gas and water with 52.7 percent.; real estate, renting, and business services with 21.3 percent.; financial intermediation with 20.4 percent; and the manufacturing sector with 20.2 percent.

In terms of amount, the manufacturing sector got the biggest share with P426.97 billion followed by the real estate, lending and business services with P397.25 billion; the agriculture, hunting, and fisheries sector with P349.38 billion; wholesale and retail trade sector with P272.96 billion; and the electricity, gas, and water sector with P239.33 billion.

Data showed that the growth in the loans extended for household consumption was a steady 14.9 percent to P201.69 billion in end-May from P175.53 billion in the same month last year.

The BSP chief pointed out that authorities would ensure appropriate monetary and financial conditions for continued credit expansion while promoting the BSP’s primary mandate of maintaining price stability.

“Going forward, the BSP will contiue to watch evolving credit and liquidity conditions closely to en sure that bank lending growth continues to reflect the pace of domestic demand while at the same time maintaining overall price an d financial stability,” Tetangco added.

Monday, July 11, 2011

BIR buys time to soften revenue impact of PERA

BIR buys time to soften revenue impact of PERA

THE government is deferring implementation of the Personal Equity Retirement Account Act on fears the law would be used as a means to avoid tax payments, the Bureau of Internal Revenue said.

Commissioner Kim Jacinto-Henares told reporters that the revenue regulation for Republic Act 9505 would be issued by the end of the month at the earliest instead of June 30 as originally planned as the bureau is still identifying the citizens entitled to claim tax credits under the law.
“There is still a problem that needs to be resolved in drafting the RR for the PERA Law. You see, PERA enables the citizens, residents or otherwise to claim tax credit from us. But how do we determine as to who are qualified to avail the same?” she said.
The PERA Law should have taken effect on January 1, 2009, but its implementing rules have languished at the “conception” stage because of the BIR’s reluctance. A fifth or some 6.2 million of the country’s labor force is not covered by any type of retirement plan.
The bureau chief said that “tax credit” as a form of tax exemption is susceptible to misuse.
“Our concern is with regard to non-resident citizens. Who are these people, how do we document them. Otherwise, everyone could claim that they are overseas Filipino workers, and hence entitled to avail of the tax credit,” Jacinto-Henares said.
Estela Sales, BIR deputy commissioner for legal and eforcement, said the bureau is coming up with measures to ensure that only those qualified may enjoy tax relief.
Data from the Department of Finance showed that the government would incur a revenue lesion of P12 billion upon the first year of implementating the PERA law.
Under the law, a contributor is entitled to tax deduction of five percent provided that they invest in Philippine financial instruments.
To qualify for a tax deduction of 5 percent in the case of a Filipino citizen, the investment of a qualified PERA holder shall not exceed P100, 000 a year. If married, each spouse may invest up to P100,000 a year.
In the case of an overseas Filipino, a higher investment cap of P200,000 is imposed every year. If married and both spouses are overseas workers, each spouse is entitled to a maximum investment of P200,000 per year to qualify for tax credits.
KATRINA MENNEN A. VALDEZ

Express Bank violated rules – BSP

Express Bank violated rules – BSP

By LEE C. CHIPONGIAN
July 11, 2011, 1:30am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP), which has assisted the Department of Finance's (DoF) pursuit of legal charges against the Local Water Utilities Administration (LWUA) and its unauthorized cash infusion in Laguna-based Express Savings Bank, said the thrift bank violated several rules and regulations that ultimately led to its closure last week.

In a letter to DoF Secretary Cesar V. Purisima, BSP Deputy Governor Nestor A. Espenilla Jr. said the BSP had "categorically" denied Express Bank's request for approval of the proposed acquisition by LWUA of a majority shares of stock in the bank, formerly owned by the clan of businessman William T. Gatchalian.

Espenilla said that despite the rejection of the proposed investments and cash deposits, LWUA, which was then headed by former congressman Prospero Pichay, transferred P400 million of government money in Express Bank. This capital infusion was booked in the deposit for stock subscription account.

"(Also) the Gatchalian family already turned over the management of Express Bank to a new set of board of directors composed of LWUA-appointed directors," Espenilla added.

Last April, Purisima and the DoF filed criminal charges against Pichay and other LWUA officials for the "anomalous" acquisition of the thrift bank which was then owned by the Gatchalian family and its corporate vehicle, The Wellex Group. Based on BSP data, before the LWUA cash infusion, the Gatchalian family owned 86.68 percent of the bank.

Espenilla said that they have not approved LWUA's acquisition of 59.99 percent of shares, thus diluting The Wellex Group's stocks to 26.85 percent.

The Monetary Board also denied the request for the transfer of shares of the bank's voting equity to LWUA on June 2009. The BSP likewise did not approve the new set of the Board of Directors of Express Bank, which elected Pichay as chairman.

What the BSP directed Express Bank to do, was to hold LWUA's equity investments as a trust fund which should "not be used in the business of Express Bank and should neither be reflected in the books of Express Bank."

LWUA is a government-owned and controlled corporation.

The DoF said the equity investment of LWUA to the thrift bank was not in pursuit of its mandate as a specialized lending institution.

"The funds to be used for acquiring major stockholdings in Express Bank can be utilized instead by LWUA in providing the much needed funding by several water districts, which cannot access funds from the government financial institutions and private financing institutions," said Espenilla, quoting a DoF opinion.

Espenilla said other violations that the Express Bank committed includes the acceptance of government deposits without approval from the BSP.

They have ordered the bank to return the cash deposits of the LWUA and other local water districts however this directive has been ignored. The "blatant disregard of existing (BSP) rules and regulations," the BSP official said, put government funds at risk.

Last week, the Philippine Deposit Insurance Corp. (PDIC) issued a statement that the Monetary Board has placed Express Bank under receivership. The PDIC took over the bank's assets on July 8 based on MB Resolution No. 987B.

Express Bank operates four branches in Laguna. As of March 31, PDIC said the thrift bank have total deposit liabilities of P608.36 million consisting of 2,673 accounts.

Sunday, July 10, 2011

Target: 2M jobs from MSMEs

THURSDAY, 07 JULY 2011 22:22 MAX V. DE LEON / REPORTER

THE government has launched the SME Development Plan (SMEDP) for 2011 to
2016 that seeks to generate 2 million additional jobs from the micro,
small and medium enterprise (MSME) sector by the end of the Aquino
administration.

Trade Undersecretary Merly Cruz said the SMEDP rests on four pillars:
the enabling business environment, access to finance, access to markets,
and production and efficiency.

"This year, our target is to generate 340,000 new jobs [from the MSME
sector]. We also target to increase the sector's gross value added to 40
percent from the current 37.5 percent," Cruz told reporters at the
sidelines of the SME Summit at the Philippine International Trading
Center in Pasay City on Thursday.

To help achieve this target, the DTI has already reduced the application
period for business name registration to 15 minutes. The DTI and the
Department of the Interior and Local Government are also improving the
business-permit licensing system of the local government units.

In terms of access to financing, Cruz said the SB Corp. is now
developing the risk-based financing that allows MSMEs to secure loans
without collateral. Government financial institutions are also rolling
out their "green financing" program for the sector.

To augment their access to market, the government will start putting up
the Tindahang Pinoy in major cities in the different regions. Tindahang
Pinoy will be put up initially in Clark, Cebu and Davao.

Also, the DTI and the Department of Tourism will start distributing
brochures to hotel rooms so the guests only need to fill out order
forms. Their orders will then be sourced from the Tindahang Pinoy.

In the near future, Cruz said Tindahang Pinoy would be offered for
franchise to entrepreneurs so it would be totally private sector-driven.

Poverty in PHL worsens

Poverty in PHL worsens

WEDNESDAY, 06 JULY 2011 21:36 CAI U. ORDINARIO / REPORTER

Despite the government’s efforts to expand its Conditional Cash-Transfer Program and implement other projects to help the poor, the Philippines continues to experience some of the worst cases of poverty in the region, according to the World Bank in a study that covered the years 2003 to 2009.
Still, the Bank held out hope for the country, noting the early gains of the Aquino administration in tackling corruption and improving the investment climate.

The study ranked the Philippines slightly better than Vietnam and Cambodia.

In its Philippine Quarterly Update, the Washington-based lender reported that poverty in urban areas was “worsening rapidly” due to increased population and lower incomes.

“Poverty, and especially poverty dynamics, in the Philippines remains worse than its neighbors. Spatially, poverty remains highly concentrated in rural areas and in terms of sectors, households that rely on agricultural income are significantly more likely to be poor than other households,” the bank said.

“From 2006 to 2009, poverty in urban areas increased more rapidly, became more severe, and contributed more to the continuous increase in poverty. Across regions, 10 of the 17 administrative regions experienced an increase in poverty incidence,” it added.

Despite a more resilient economy, some 2.4 million Filipinos became poor from 2003 to 2006 and 1 million more from 2006 to 2009.

With this, the World Bank said compared with other countries in the region, using the international poverty line of $1.25 per day, the Philippines only rates better than Cambodia.

Using the $2 per day poverty line, the Philippines is only better off than Vietnam and Cambodia, it added.

“The Philippines fares lower than Malaysia, Thailand and China. China‘s $1.25 a day poverty had declined dramatically over two decades to a third of what it was in 1993,” the bank said.

Poverty incidence in rural areas is about twice as high as the national average and more than three times that in urban areas, according to the report. The World Bank estimated that poverty incidence in rural areas reached as much as 39.4 percent of the population in 2009, higher than the 13.2 percent of the population recorded in urban areas.

Poverty incidence in rural areas was at 39.5 percent of the population in 2006 up from 38.1 percent in 2003, while poverty incidence in urban areas was recorded at 12.9 percent in 2006 from 11.3 percent three years earlier.

While the poverty gap and the severity of poverty in the Philippines declined over the years in rural areas, it worsened in urban areas.

Poverty gap in urban areas, the report stated, widened to 3.1 percent of the poverty line in 2009 from 2.7 percent in 2003, while it declined to 11.2 percent from 11.6 percent over the same period in rural areas.

“These suggest that although poverty is concentrated in rural areas, poverty in urban areas is worsening rapidly,” the bank said.

One of the ways by which the Philippines can address poverty, the bank said, is by developing the services sector, which has the potential to become a key player in generating decent employment and increasing incomes.

But to unleash the full potential of the sector, the government must first address the constraints to the sector through broad-based policies, it said.

These policies must help provide higher quality education to meet the demand for skills of the sector, improve infrastructure, and remove investment climate distortions that prevents firms from investing.

“The services sector has the potential to play an important role in promoting inclusive growth in the Philippines. The sector is already large and has been an important driver of employment and GDP [gross domestic product] growth,” it said.

Meanwhile, the World Bank said it is maintaining its growth forecast for the Philippines at 5 percent this year and 5.4 percent for 2012 on expectations that investments, private consumption and the services sector will strengthen.

The report, however, said economic growth could be higher as the strong focus and early gains of the Aquino administration in tackling corruption and improving the investment climate could boost domestic investment.

The World Bank said net exports are projected to recover due to a combination of a technical rebound in exports that were affected by Japan’s triple tragedy combined with a potential boost in exports of goods, services, and labor as Philippine companies and workers contribute to the reconstruction of affected areas.

“Prospects on the supply side remain favorable with manufacturing and construction projected to benefit from the end of the trade disruption linked to Japan’s post-disaster reconstruction, as well as the solid growth forecast for the business-process outsourcing,” World Bank Philippines senior economist Eric Le Borgne said.

The World Bank also stated that one year into office, the Aquino administration has taken important reforms toward achieving inclusive growth, which include improving the transparency of the public-sector budget and launching the Public-Private Partnership program to address infrastructure bottlenecks.

“The report recognizes the significance of the reforms undertaken by the administration, and how these measures provide stability as we pursue inclusive growth. This is another manifestation of the thorough scrutiny of public policies and programs we have undergone, and the positive conclusion arrived at after due diligence and study,” Presidential Spokesman Edwin Lacierda on Wednesday.

(With Mia Gonzalez)

Tetangco: Microfinance lending up 6% to P6.6B

Tetangco: Microfinance lending up 6% to P6.6B
07/06/2011 | 09:35 PM

Microfinance lending in the country expanded by roughly P7 billion Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said Wednesday, citing latest data available.

Tetangco said 882,692 borrowers availed themselves of P6.6 billion in microloans approved in 2009. Some cooperative banks, rural banks and thrift banks comprised the financial institutions then with microfinance functions.

“There are now over 200 banks currently providing microfinance services to over 900,000 clients with P6.5 billion in loans outstanding and P3 billion in savings," the BSP said.

Over 20 BSP circulars have been issued to promote microfinance.

A BSP circular defines microfinance loans as “small loans granted to the basic sectors, as defined in the Social Reform and Poverty Alleviation Act of 1997 (RA 8425) and other loans granted to the poor and low-income households for their microenterprises and small businesses."

The BSP also said, in Circular No. 272 series of 2001 that microfinance loans “are granted on the basis of the borrowers’ cash flow and are typically unsecured."

At P150,000 the maximum principal amount of microfinance loans is equivalent to the capitalization ceiling of microenterprises under R.A. 8425.

Microfinance was formally recognized in the country as a banking activity with the passage of the General Banking Law in 2000.

The BSP said that over the past 10 years, “microfinance has become a mainstream activity in the banking sector, and microfinance supervision has been institutionalized." — ELR/VS, GMA News

Filipinos have P5 trillion in banks; Q1 deposits grow 8.9%

Filipinos have P5 trillion in banks; Q1 deposits grow 8.9%
07/07/2011 | 06:46 PM

More Filipinos trust the banks to keep their money safe, according to the Philippine Deposit Insurance Corp. (PDIC), citing the P411-billion rise in deposits during the first quarter.

PDIC president Valentin Araneta said Filipinos now have P5 trillion tucked away in bank vaults nationwide, and that bank deposits grew 8.9 percent in January to March.

"The continued growth of bank deposits is indicative of the continued confidence of the public in the banking system and the Filipinos’ predisposition to save for the rainy days," Araneta said.

Most of the deposits, or 88.2 percent, are with the universal and commercial banks. The thrift banks have 9.3 percent of the total deposits and rural banks hold the balance of 2.48 percent.

Deposits insurer PDIC has 97 percent of all the deposit accounts covered. Most of these have a balance of P500,000 or less.

Individual depositors own 56.2 percent of all the accounts, with the rest under the name of private corporations and government offices.

More than 47 percent of the accounts are savings deposits, 33.7 percent are time deposits, and 19.1 percent a checking accounts.

35 more banks keen on joining remittance facility for OFWs

35 more banks keen on joining remittance facility for OFWs

By Lawrence Agcaoili (The Philippine Star) Updated July 10, 2011 12:00 AM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said 35 more banks are interested in joining the remittance facility for overseas Filipino workers (OFWs) under the central bank’s Philippine Payments and Settlements System (PhilPaSS).

BSP Governor Amando M. Tetangco Jr. said the additional banks would help beef up the existing number of 12 banks using the PhilPaSS Remit system that facilitates the settlement of remittances from overseas Filipino in a safer, faster and cheaper way.

“So far, 12 banks are using PhilPaSS Remit and 35 more banks want to join the system,” Tetangco revealed.

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

“We are particularly proud that we have been able to lower remittance charges of overseas Filipinos by fostering healthy competition among service providers,” the BSP chief added.

The BSP said the settlement of OFW remittances through the PhilPaSS Remit System would result in savings of between P100 and P500 per transaction as current system charges between P150 and P550 per transaction.

OFW families are expected to save at least P92 million to as high as P922 million due to the faster and cheaper delivery of remittances to the beneficiaries at a lower rate of P50 per transaction instead of the current range of between P100 and P550 per transaction.

The PhilPaSS Remit system is one of the initiatives undertaken by the BSP in coordination with the Association of Bank Remittance Officers Inc. (ABROI) through a memorandum of agreement (MOA) in December 2009 but was implemented in the second quarter of last year.

Tetangco said the system boosted the total value of financial transactions that passed through PhilPaSS by 43.6 percent to P71.18 trillion in the first quarter of the year from P49.56 trillion in the same quarter last year.

PhilPaSS is an online and real-time gross settlement payment system administered by the central bank to facilitate payment transactions between banks. The large value handled by the system represents money in circulation that is being repeatedly processed by banks.

“The BSP’s payments and settlements system remained consistently safe, efficient, and reliable, thereby boosting confidence further in our financial system. Over the years, our real time gross settlement system or PhilPaSS has been moving funds faster and better,” he said.

He added that the volume of PhilPaSS transactions surged 34.8 percent to 271,550 in the first quarter of the year from 201,383 in the same period last year due mainly from OFW remittances transactions processed and settled through the PhilPaSS Remit system.

Compared to none in the first quarter of 2010, the central bank data showed that a total of 71,212 OFW remittance transactions involving P2.89 billion were coursed through the PhilPaSS Remit system in the first quarter of this year.

BIR to tighten rules on pros, self-employed

BIR to tighten rules on pros, self-employed

By Iris C. Gonzales (The Philippine Star) Updated July 10, 2011 12:00 AM Comments (2)

MANILA, Philippines - The Bureau of Internal Revenue (BIR) will tighten its rules on professionals and self-employed individuals to boost tax collections by P140 billion a year, Commissioner Kim Henares said over the weekend.

She said the agency hopes to improve revenue collections from this group of earners, noting that professionals and self-employed individuals earn a lot but some do not remit taxes.

Finance Secretary Cesar Purisima said in a separate interview that at present, there are roughly 700,000 professionals and self-employed individuals. He said government is able to collect only P7 billion from this segment.

On the other hand, he said if the government is able to raise collections from these individuals to P200,000 each, tax revenue from this segment would increase to P140 billion.

Henares said there would be stricter monitoring of the income-generating activities of these individuals. Professionals and self-employed individuals such as doctors and lawyers do not always issue receipts, based on the findings of the BIR.

The BIR has been having a difficult time plugging the budget deficit. Last May, the agency collected P88.15 billion or 1.7 percent below the target of P89.72 billion for the period.

However, compared to revenues in May last year of P79.05 billion, the BIR’s collections last month were 11.5 percent or P9.10 billion higher.

Henares recognized that there are a lot of measures that still needs to be done.

The May collections brought the BIR’s five-month revenues to P391.09 billion, 13.7 percent or P46.99 billion higher than year-ago collections of P344.10 billion.

For the whole year, the BIR is tasked to collect P940 billion or higher than last year’s goal of P860 billion.

Government job website offers more than 55,000 vacancies

Government job website offers more than 55,000 vacancies

By Sheila Crisostomo (The Philippine Star)
Updated July 10, 2011 12:00 AM

MANILA, Philippines - More than 55,000 jobs await unemployed Filipinos or those seeking better opportunities based on postings on the Phil-Job Net website, Labor Secretary Rosalinda Baldoz said yesterday.

Phil-Job Net (http://phil-job.net) is the government’s official job portal. It is managed by the Department of Labor and Employment (DOLE).

Baldoz said employers and licensed recruitment agencies posted the job vacancies in res-ponse to the government’s call for the private sector to help mitigate job-skills mismatch.

Baldoz added the portal also aimed to “strengthen labor market information services for job seekers.”

She said the portal is undergoing “re-engineering to make it more user-friendly and comprehensive.”

Some 160,000 job applicants have registered on the website.

Baldoz has directed DOLE regional officers to help encourage more people to use the portal, especially with Saudi Arabia’s announcement of a freeze in hiring of Filipino household service workers (HSWs) or domestic helpers.

The development followed the breakdown of negotiations between Saudi Arabia and the Philippines concerning the latter’s demands for a $400 minimum monthly salary for Filipino domestic helpers as well as submission by prospective Saudi employers of vicinity maps of their residences and their opening of bank account to ensure that they would be able to pay Filipino workers’ salaries.

In restricting the hiring of Filipino workers, Saudi Arabia also wants to provide employment to some 500,000 locals.

The hiring restriction is expected to affect some 35,000 Filipino domestic helpers.

According to DOLE’s Bureau of Labor Employment director Maria Criselda Sy, 1,191 of the 55,068 job vacancies are for HSWs that were posted by employers and recruiters in the Philippines and abroad.

“This shows that there are options available for a wide variety of skilled, qualified, and even multi-skilled workers,” Sy said.

But she underscored the need for job seekers to “hone up, upgrade or retool on the proper school” so that they would qualify for the available jobs.

Sy added that recruiters have posted job opportunities for HSWs in Romania, Singapore, Oman, Qatar, Kuwait, Malaysia, the United Arab Emirates, and “surprisingly, even from Saudi Arabia itself.”

Sy also said that there are 7,606 “skills-for-hire” being advertised through the website.

She said this indicates the “growing practice by a wide variety of skilled workers to ‘advertise’ their search for jobs and their qualifications in the Phil-JobNet system.”

A BLE report showed that among the job vacancies being advertised on the website are customer service assistants, call center agents, production or factory workers, cashiers, carpenters, data encoders, pharmacists, domestic helpers, and sales clerks.