Bangko Sentral mulls raising microfinance loan ceiling

November 25, 2011 5:54pm

The ceiling on microfinance loans — at P150,000 since 2003 — could soon be raised to give entrepreneurs better access to credit, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

"Although monitoring of microfinance loan is quite strict, a microfinance loan does not require collateral. [Increasing the ceiling] will have an advantage to low-income earners who want to engage in business," BSP Deputy Gov. Nestor Espenilla explained.

Last year, P13 billion in microfinance loans were issued to about 2.3 million borrowers. The size of the average loan per microentrepreneur was lower at P5,650.

“Beyond the wholesale and high-end retail markets, the growth of microfinance and non-traditional delivery channels is something we are most proud of. The banking system is much more inclusive today with almost 980,000 [979,353] microfinance borrowers at a portfolio of P7.3 billion covering over 200 [202] banking institutions,” BSP Gov. Amando Tetangco Jr. said in a recent convention.

The BSP issued Circular No. 409, series of 2003 to set the ceiling, while a series of other circulars diversified the type of microfinance loans to include housing, agriculture, and microinsurance purposes.

In particular, BSP Circular 678 widened the scope of microfinance by allowing qualified loans up to P150,000 for home improvement and up to P300,000 for lot acquisition and house construction.

Another issuance, Circular No. 680, allowed authorized banks to offer micro-agri loans to small farmers. —ELR/VS, GMA News


http://bit.ly/uZAD8W

What to say to cash-rich, debt-free Pacman

EXECS TALK

By: Dax Lucas, Margie Quimpo-Espino
Philippine Daily Inquirer
10:30 pm | Saturday, November 26th, 2011

What Saranggani Representative Manny Pacquiao owns today is more than what 95 percent of Filipinos will ever have – a house in Forbes Park that reportedly cost P388 million, properties in Los Angeles, a residence in Brentville, expensive cars, businesses, and loads of cash, among others.

Endorsements left and right abound, with some price tags reaching about P50 million, and more are coming.

For now he is the richest lawmaker in the country, or he’s the only one who declared his statement of assets and liabilities and net worth at P1.13 billion as of Dec. 31, 2010.

But rumors of his expensive ways abound – taking an entourage via a private plane anywhere in the United States, having his own bus when he travels during his fights or workouts, betting big in cockfights.

Bulk of his wealth comes from his winnings of the past few years plus the percentage of the pay-per-view buys, closed-circuit tickets, gate receipts and merchandise sales.

SundayBiz sought some unsolicited advice for Pacman – what would you say to rich and debt-free Manny?

If he listens to some of these, he may not go the way of Mike Tyson, who went bankrupt, or some other boxers and star athletes who died poor after being very rich.

Put it in BDO

TESSIE Sy

Put it in equity, in property and of course, BDO! (SM owns the bank, one of the biggest in the country.)

Tessie Sy
Chair, SM Foundation

Get an investment consultant
I would advise him to see an investment consultant who can help him plan his portfolio so he can spend what he wants but not risk losing everything with a bad decision.

Next, I would put up a foundation like Bill Gates/Warren Buffett and share my wealth to help solve a problem, say education or public health. But a real solution that is sustainable and not a one time thing.

Third, I would look for a business for my family to get into so they stop asking for doleouts and so they will learn how to earn their own money.

Last, I will plan for retirement from boxing and concentrate on being a remarkable congressman.

CHIT Juan

Chit Juan
Social Entrepreneur
ECHOstore sustainable lifestyle

Acquisitions
A cash-rich, debt-free institution has several options:

Expand its core business if he sees more growth potential in it.

Be on the prowl for strategically relevant acquisitions.

Buy back its shares if its stock is undervalued.

The one thing it must not do is mindlessly acquire companies that have no strategic significance to its business in the hope that it can flip these holdings at a quick profit.

Joey A. Bermudez
Chair of Maybridge (Asia) Inc.
Past president of the Management Association of the Philippines

Meet the objectives
From the many times I have heard Pacman speak, my sense is that he has three financial objectives.

One is to provide a very high quality of life for the current and future generations of his family.

Second, I believe he would like to use some of his wealth to help alleviate poverty in the Philippines.

Third, he would like to have a separate source of funds from which to indulge in his personal hobbies and make bets on higher risk investments and ventures.

My first advice would be to divide the enormous wealth he has into these three parts; each of which will have its own investment and management strategy. His vision for his family, and the kind of upliftment he would like to make in our society should be as clear and as specific as possible.

Family. He should quantify the costs and resources needed to provide a very comfortable life for his family today, and for succeeding generations. There will be annual costs (education, health, some luxuries, etc.) and large one-time costs (house, capital for a new venture, etc.). The investment approach for the “Take Great Care of My Family” fund should be for preservation, continuity and stability. The right investments would be in cash or bonds denominated in strong currencies or backed by highly stable companies and countries.

Philanthropy. Once again he should estimate the resources required for the kind of philanthropic projects that he would like to pursue.

I would strongly recommend that he follow the model developed by Bill Gates. He and his wife Melinda made a 5- and 10-year plan, and were therefore able to pinpoint specific areas where to achieve concrete and sustainable results.

Bill Gates set up a trust structure and hired a professional and very competent team to manage his foundation.

If anyone approaches the Pacman for support, he can refer them to the management team. It will go through a certain process and increase the chances that Pacman will be able to make the greatest difference in vital areas to alleviate poverty in our country.

This foundation and his legacy will be crystal clear, and will continue to help the poorest and most defenseless of our country beyond Pacman’s lifetime.

Personal hobbies and higher risk investments. This is Pacman’s discretionary or “do whatever he wants with it” fund. This is where he can draw funds to buy himself a nice sports car, or invest in higher    risk but also higher reward ventures, equities, bonds, etc.

DONNIE Tantoco

He can be more daring with this fund because he has already provided very well for his two other responsibilities or objectives which are his family and his country.

This is how I would advise him to manage the considerable and hard-earned wealth that he has today. He should divide his money by objective or vision; and use a structure and investment approach that best suits each objective.

Donnie V. Tantoco
President, Rustan’s Supercenters Inc.

Surround himself with right people
He should surround himself with people who can preserve or grow what he has in the proper way. No need to rush and aim for quick big bets since the base is already huge to begin with. A professional financial advisor who can talk to him in the same wavelength is definitely a must-do.

Defining a significant portion of his wealth to help others in a structured way is wise.

Ferdz de la Cruz

FERDZ de la Cruz

Manila Water Group director for East Zone Business and concurrent Corporate Strategic Affairs head

Life insurance
Mr. Pacquiao is a perfect example of a Filipino who had humble beginnings but made it big, in fact bigger than what he thought he would ever become. He is at the peak of his career and probably will be even more successful years ahead.

But just like every good thing, one day, he will have to hang up his gloves. Apart from his legacy in the annals of global boxing history, he has well created a big estate for his family along the way. The world created a product that conserves one’s estate, that insures the most important asset which is the breadwinner, and one that creates money where none existed before.

This is the beauty of life insurance which protects more than 10 times one’s annual income. Instead of buying Hermes’, getting a “bagful” of life insurance is the incomparable lasting gift for the people dearest to him, his loved ones.

Peter G. Coyiuto

Peter G. Coyiuto
President and chief executive officer
First Life Financial Co. Inc.

Depends on goals
According to tycoon Manuel V. Pangilinan, Pacquiao should examine closely what he intends to achieve with his assets and juxtapose this with what he is willing to do to achieve those goals.

“That’s pretty much, for me, an individual decision,” Pangilinan says. “It depends on several factors. It depends on his risk [profile].”

The head of the PLDT conglomerate declined to provide specific advice for the boxer, but noted that there is “an entire spectrum” of potential asset management methods and vehicles, depending on Pacquiao’s stomach for risk.

“At the end of the day, it depends on whether he’s a risk taker or if he’s risk averse,” Pangilinan says.

He notes, however, that Pacquiao’s main earning asset – his physical abilities as a champion athlete – is a finite resource that will, at some point in the future, exhaust itself naturally.

“So, you have to plan for your future based on that ‘shelf life,’ so to speak,” he says.

Manuel V. Pangilinan

MANUEL
V. Pangilinan

Tycoon, head of major firms like PLDT

Healthy mix
The head of San Miguel Corp. – the boxer’s other main commercial sponsor in the Philippines – notes that Pacquiao should have a healthy mix of investments in his portfolio, just like the way the smartest investors manage their assets.

According to SMC president Ramon Ang, the boxer may want to set aside a small portion of his assets for relatively riskier investments like the stock market, while keeping the bulk of his assets in long term investments, like bonds and real estate.

RAMON Ang

“Maybe a small portion should be allocated for investments with faster turnaround times, which tend to be riskier,” he says. “But a large amount should be set aside for the long term future, like when he retires years from now.”

Ang says that the boxer’s investments in prime real estate – like his recent purchase of a mansion in Forbes Park – are good moves which will reap benefits down the road.

“It’s all about being smart about your money, and he has shown that he can do that,” he says.

Ramon Ang President, San Miguel Corp.

http://bit.ly/saUqE2

Philamlife sells pre-need, healthcare units to STI group

By Liza Reyes, ABS-CBN News

Posted at 09/04/2009 1:02 PM | Updated as of 09/06/2009 3:47 AM

 

MANILA - Local financial services firm Philippine American Life and General Life Insurance Co. (Philamlife) has sold its stakes in its pre-need and healthcare units as part of its continuing efforts to focus on its core businesses.

According to Philamlife, Filipino-owned firms Systems Technology Institute Inc. (STI) and Philippines First Insurance Co. Inc. (PhilFirst) are set to acquire Philam Plans and PhilamCare through a share-sale agreement.

Both deals are still subject to regulatory approvals. Deutsche Bank was the sole adviser in both transactions.

The announcement did not include the terms of the deals.

This is the second set of deals that Philamlife, a leader in the local life insurance industry, has announced since its fate as a subsidiary of American Insurance Group (AIG), the world's largest corporate mess, has turned.

Philamlife was put on the auction bloc last year to help pay for AIG's massive loans. It was eventually spared after the global strategy changed into pooling Philamlife with other Asian assets of AIG under American International Assurance Co Ltd (AIA).

With the sale of its pre-need and healthcare units, and previously its thrift banking arm and leasing unit, Philamlife is now focused on its diversified insurance and investment businesses.

Philamlife has beefed up its insurance business by expanding its distribution network through a 51% recently acquired stake in Ayala Ayala Life Assurance. The 2 now have a bancassurance partnership.

Synergies

The sale of Philam Plans to the STI group creates a new twist to the usual business model of pre-need firms. Usually, a pre-need firm is part of a portfolio of products of a financial or property conglomerate.

For years, the pre-need industry has been hit  by bankruptcies and legal troubles as some firms, including the industry's key players, failed to meet their financial obligations to clients.

The pre-need woes have snowballed into lesser sales in the insurance industry, which is erroneously considered to be in the same business as pre-need.

Philam Plans, however, is one of the 22 surviving pre-need firms. It said in its website that it has a liquid trust fund of P29 billion. It is now the leader in the pre-need industry
It has over 300,000 plans in force, according to its website. Of these, educational plans are its key product.

With the sale of Philam Plans to STI, a synergy is formed.

STI, an eductional institution, could now effectively integrate financing, through educational pre-need plans in its product portfolio.

"While other pre-need plan firms rely on third-party schools for the provision of education, STI provides the education services itself. It can also increase Philam Plans's product portfolio by accessing STI's network of education services," STI Executive Committee Chairman Eusebio Tanco said.

At present, STI operates a network of 95 tertiary schools which offer information technology, engineering, healthcare, business administration, and hotel management courses.

Health care

The sale of PhilamCare is also seen as a good fit for the 2 Filipino-owned firms, given STI's presence in the health care business.

PhilamCare is one of the country's leading health maintenance organizations, offering healthcare products and services to about 160,000 cardholders.

A couple of years ago STI, which started as a school focused on Information Technology, has branched out into offering courses in the medical services field.

STI, through affiliates, also operates the De Los Santos-STI (DLS-STI) MegaClinic in Mandaluyong city, the DLS-STI Medical Center in Quezon city, and the DLS-STI College of Health Professions. The education service provider also manages the Dr. Fe del Mundo Medical Center.

"We believe STI can further enhance PhilamCare's growth since we are in the process of developing our network of health care professionals and affiliated hospitals and clinics nationwide," STI President and Chief Executive Officer Monico Jacob said.

For his part, Philamlife Vice Chairman Jose Cuisia said: "The divestment of PhilamCare is part of our strategy to focus on our core life insurance and wealth management operations, as we move towards becoming part of the AIA Group."

STI group

The STI group was founded in 1983 by 4 enterprising friends: Augusto C. Lagman, Herman T. Gamboa, Benjamin A. Santos and Edgar H. Sarte. Starting with just 2 schools in the 1980's, then called Systems Technology Institute was addressing the increasing demand for computer professionals. At the time, the information technology (IT) was just booming.

Twenty five years after, STI has grown to more than 100 campuses here and abroad. It has also expanded its network to provide education at the basic, secondary, and tertiary levels. It has one of the largest networks of nursing colleges in the Philippines.

The STI group is now led by individuals well-known in the business industry. On the board are Eusebio Tanco (a stockbroker, investment banker, insurer, property developer and educator) and Monico Jacob (former head of National Housing Authority, Pag-IBIG Fund, Petron Corp, and Philippine National Oil Company)

STI's portfolio includes an overseas recruitment and staffing agency, Global Resource for Outsourced Workers, Inc. (GROW), a stake in Bank of Commerce, and in Philippine Insurance Co. (PhilFirst).

One of the parties in the transaction with the Philamlife Group, PhilFirst is a provider of non-life insurance coverage to individuals and corporations. It is said to be the first domestic non-life insurance company, founded way back in 1906.

http://bit.ly/tgFQUq


 

BIR taxing voluntary contributions to SSS, GSIS, Pag-IBIG, PhilHealth

EARL VICTOR ROSERO and MARLON ANTHONY R. TONSON

11/18/2011 | 05:16 AM

After tollways, government-backed bonds, professional fees, and retirement funds, the Bureau of Internal Revenue (BIR) has set its sights on collecting taxes on ordinary citizens’ payroll deductions made for their contributions to housing, health and pension funds.

BIR Commissioner Kim S. Jacinto-Henares claimed that, “It has been observed that the grant of income tax exemption to SSS, GSIS, PhilHealth, and Pag-IBIG contributions in excess of the mandatory contributions is being abused."


The BIR has admitted a collection shortfall of P35 billion this year. So starting last July, the BIR is collecting taxes on voluntary contributions made by citizens to the Social Security System (SSS), Government Service Insurance System (GSIS), Philippine Health Insurance Corp. (PhilHealth), and Home Development Mutual Fund (“Pagtutulungan sa kinabukasan Ikaw, Bangko, Industriya at Gobyerno" or Pag-IBIG Fund).

GMA News TV program “On Call" interviewed BIR Assistant Commissioner for Legal Service Marissa O. Cabreros on Revenue Memorandum Circular (RMC) 53-2011 which states that voluntary contributions to the SSS, GSIS, HDMF, Pag-IBIG and PhilHealth are subject to tax.

The BIR said that such contributions are considered investments and thus taxable and the bureau will no longer entertain any request for tax exemption on them.

The BIR considers as “investments" the contributions made over and above those mandated by law, particularly because the benefits that members of these institutions are bound to receive – such as pension or loans extended – will be enhanced.

Voluntary contributions entitle members to avail of extra retirement, sickness, or unemployment benefits beyond regular or usual financial assistance extended to the members who only make mandatory contributions.

“Kung sasabihin po natin na exempt pati din yung voluntary, nawawalan ng tax po yun kasi kumbaga the exemption is no longer dictated by law but dictated by the income earner," explained BIR Assistant Commissioner Marissa Cabreros in an interview with GMA News which was aired on “24 Oras", “SONA" and “Saksi".

New relevant BIR Circulars

Last Nov. 4, the BIR issued RMC 53-2011, to clarify that RMC 27-2011 does not apply to contributions made before July this year.

RMC 27-11 was issued July 2, 2011 and subjects to withholding tax on compensation the voluntary contributions to SSS, GSIS, PHIC and HDMF only covers all voluntary contributions made beginning July 1 of this year.

RMC 27-11 also revoked BIR Ruling Nos. 002-99, DA-184-04, DA-569-04 and DA-087-06 – all of which are earlier rulings exempting such contributions from income tax.

RMC 53-2011 further clarified that only the mandatory or compulsory contributions of employees made to SSS, GSIS, PHIC and HDMF are exempt from income tax and consequently, from the withholding tax on compensation.

The voluntary contributions in excess of compulsory contributions are now considered taxable gross income subject to income tax and withholding tax on compensation.

Thus, the exemption from withholding tax on compensation referred to in Section 2.78.1(B)(12) of Revenue Regulations (RR) No. 2-98 shall apply only to mandatory/compulsory SSS, GSIS, Medicare and Pag-IBIG contributions – and not voluntary contributions.

Contrary to laws and implementing rules?

But the new BIR rule does not apply to contributions of PhilHealth members because contribution cannot exceed its mandated ceiling of P1,200 per year.

Likewise for GSIS and SSS contributions, these amounts are automatically deducted from the salaries of government employees as well as workers in the private sector. In other words, no voluntary contributions.

Businessmen, however, can become voluntary members of the SSS but they cannot raise the amounts of their contributions year in and year out.

RA 8282 (Social Security Law) in Sec. 16. states that “[a]ll laws to the contrary notwithstanding, the SSS and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings… shall be exempt from any tax, assessment, fee, charge, or customs or import duty; and all benefit payments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges."

Moreover, the said law “No tax measure of whatever nature enacted shall apply to the SSS, unless it expressly revokes the declared policy of the State in Section 2 hereof granting tax exemption to the SSS. Any tax assessment imposed against the SSS shall be null and void."

Rule IX, Sec. 3 of the Implementing Rules and Regulations of RA 9679 (Home Development Mutual “Pag-IBIG" Fund Law of 2009) states that “[a]ll laws to the contrary notwithstanding, all contributions collected and all accruals thereto and income or investment earnings … shall be exempt from any tax, assessment, fee, charge, or customs or import duty; and all benefit payments made by the Fund shall likewise be exempt from all kinds of taxes, fees or charges."

RA 8291 (GSIS Act of 1997) provides in Section 39 that “It is declared policy of the State that …contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employers," and “[a]ccordingly, notwithstanding any laws to the contrary, the GSIS, its assets, properties, revenues including all accruals thereto, and benefits paid, shall be exempt by virtue of this Act from all taxes, assessments, fees, charges and duties of all kinds."

The same section: “These exemptions shall continue unless expressly and specifically revoked and any assessment against the GSIS, as of the approval of RA 8291, are hereby considered paid," and that “[a]ll laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are deemed repealed, superseded and rendered ineffective and without legal force and effect."

"Moreover, these exemptions shall not be affected by subsequent laws to the contrary, unless (Section 39 of RA 8291) is expressly, specifically and categorically revoked or repealed by law and a provision is enacted to substitute or replace the exemptions grant."

Other recent tax moves

Henares’ new issuances on the taxation of voluntary contributions to pension and mutual funds is not her first time to reverse established policies.

The incumbent BIR chief issued BIR Ruling No. 370-2011 which “confirmed that the 20 percent final withholding tax is applicable to the so-called PEACe bonds."

This issuance reversed BIR Ruling No. 20-2001 dated May 31, 2001 which did not consider the PEACe bonds as deposit substitutes and therefore not subject to 20 percent final withholding tax.

Another new BIR regulation issued only last October 27 pertained to the Personal Equiy Retirement Account (PERA) Law or Republic Act No. 9505 , which was intended to encourage investment and saving among the middle class and overseas Filipino workers.

RA 9505 took effect on November 1, 2008. It granted tax exemptions to PERA accounts with up to P100,000 or P200,000—depending on the type of types of account holders. The tax exemption provisions are:

SEC.9. Tax Treatment of Investment Income. – All income earned from the investments and reinvestments of the maximum amount allowed herein is tax exempt.

SEC.10. Tax Treatment of Distributions. – All distributions in accordance with Section 12 hereof are tax exempt.

Nearly three years after RA 9505 became a law, Finance Secretary Cesar Purisima issued Revenue Regulations (RR) 17-2011 implementing the tax provisions of RA 9505. Henares recommended approval.

RR 17-2011 enumerates the taxes the PERA is exempt from although the law itself does not enumerate any. It also provides that “non-income taxes, if applicable, relating to the investment income of the PERA Account of a Contributor, shall remain imposable," and those listed as imposable are value-added tax, documentary stamp tax, stock transaction tax, and percentage taxes. — ELR, GMA News

SMEs seek informal lenders for assistance

Tuesday, 15 November 2011 19:40 Dennis D. Estopace / Reporter 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

http://bit.ly/suPSyk

‘Biggest free trade zone’

Editorial

Philippine Daily Inquirer 
2:43 am | Tuesday, November 15th, 2011 

 

Last Friday, before leaving for the 19th Leaders’ Summit of the Asia-Pacific Economic Cooperation (Apec) forum in Honolulu, President Aquino said that the meeting would help solve the problems of the Philippines. He mentioned in particular economic growth, job creation, regulatory reforms, competitiveness and protection from the turbulence that has swept the European Union.

Well, indeed he may be getting some ideas on how to solve the problems of the country from the strategies, proposals and other information that he will gather at the Apec summit. The biggest proposal presented at the Apec meeting is the Trans-Pacific Partnership (TPP), a framework for a vast trade agreement spanning the Pacific which could develop into the world’s biggest free trade zone and dwarf the European Union.

Already 12 nations, including Japan, the world’s third largest economy—and, only on Monday, Canada and Mexico—have become members of the TPP. That’s a big boost to an economic organization that could serve as a counterpoise to China, a developing economic giant that could overtake the United States as the world’s biggest economy and completely dominate economic affairs in the Pacific.

As of now, the TPP trade bloc includes Japan, Chile, New Zealand, Brunei and Singapore, and possibly later, the United States, Australia, Malaysia, Vietnam and Peru. The Philippines, if it has not yet done so, should join the free trade bloc. Indonesian President Susilo Bambang Yudhono has said that the TPP could be the Asian pillar in the global economy. If the TPP could help develop economic equilibrium in Asia-Pacific and East Asia, the participation of the United States could be a mainstay that would ensure that the region would grow economically.

One problem in the formation of the TPP is the reluctance of China to join it. It has described the plan as “over-ambitious” and Chinese President Hu Jintao has said that Beijing has to “play by the rules” in international trade and the protection of intellectual property. China has also differed with the United States on rules about trade by state-owned enterprises.

Some quarters have remained optimistic that while China has some objections, it will ultimately join the TPP. For instance, Peter Petri, an expert of the East-West Center think-tank, said, “it’s very important for China to join eventually, and China has left that possibility open.”

Opposition also comes from farm groups in the United States and Japan which have expressed alarm that they would be swamped by global competition. These fears, which are not entirely groundless, will have to be addressed if the TPP is to attract more nations and get off to a good start.

The TPP, by promoting free trade, could spur global economic growth. With Europe moving toward recession, a fast-growing Asia-Pacific region could be an engine for faster global economic growth. Forecasts of the International Monetary Fund have said that Asia is expected to grow 8 percent next year, about four times faster than the United States. In the narrower, local perspective, Philippine membership in the TPP could help it cope with the major problems of spurring economic growth, creating jobs, instituting regulatory reforms and promoting competitiveness. With a stronger economy, the Philippines could protect itself more effectively from the turbulence that is rocking the United States and the European Union.

http://bit.ly/v4tGH6 

New payment app aims to make shopping easier

NATASHA BAKER, Reuters

11/14/2011 | 07:40 PM

TORONTO — Ready to ditch your wallet, cash and credit cards? A mobile payment app lets users make purchases with their smartphone without taking the device out of their pocket or purse.

Developed by electronic payment startup Square, the app called Card Case allows customers to pay for products and services at local merchants automatically by simply providing their name to complete the transaction.

"You walk in, say your name, and walk out. It's a seamless payment experience," said Megan Quinn, director of products for Square.

The app automatically opens a tab when it detects that a customer is within 100 meters (328 feet) of a business, as long as they've enabled the functionality in the app and approved the business.

The user's arrival, along with their name and photo, is announced on the merchant's app giving them the ability to charge products and services to the customer's credit card.

"You can pay without ever reaching for your purse, taking out your wallet, or even your phone," said Quinn. "It requires no new or unusual customer behavior — you don't have to wave your phone, or preload money."

By giving the merchant access to customers' names up front, and removing the transactional aspect, the company hopes to provide a personal touch, helping customers feel like regulars even at unexplored shops.

"We've removed the mechanics of the transaction and brought it back to the relationship and conversation between the merchant and their customer," Quinn explained, adding customers tend to return to places where they feel comfortable.

Over 20,000 merchants have signed up for the app across the United States in eight weeks, including coffee shops, bakers, barbers and even farmers market stalls.

Although other companies have announced mobile payment apps, many have implemented Near Field Communication (NFC) technology, which uses a chip in smartphones to send encrypted payment data when the phone is waved in front of the merchant's reader.

Last week, PayPal announced an update to their Android app that uses this technology to allow users to swap payments between each other by tapping their phones together. The Google Wallet app available for the Nexus S, uses the technology to allow payments anywhere MasterCard PayPass is accepted.

"NFC is an interesting technology that has the potential to power many interesting new applications," said Quinn. "We just don't think it's necessary to help small businesses grow."

There is currently no NFC chip included in iPhones, and NFC equipment amongst merchants is not yet mainstream.

Card Case, available for iOS and Android smartphones is only available in the United States, but the company plans to expand to international markets in 2012. — Reuters

http://bit.ly/sZgBTs

New-old UCPB boss alarms coco farmers

Exec linked to Eduardo Cojuangco Jr. takes over bank Tuesday

By Fernando del Mundo
Philippine Daily Inquirer
11:34 pm | Monday, November 14th, 2011 

A former head of United Coconut Planters Bank (UCPB) accused of arranging allegedly questionable megadeals for companies linked to Eduardo “Danding” Cojuangco Jr. is again taking control of the state-owned bank for coconut farmers, alarming industry activists.

Without fanfare, Malacañang last month announced that President Benigno Aquino III had appointed Jeronimo Kilayko as president and chief executive officer of UCPB. He was the bank’s chairman and CEO during the short-lived Estrada administration (July 1998-January 2001).

Kilayko takes over from Ramon Y. Sy, who is stepping aside Tuesday amid a Senate inquiry into allegations that P30 billion in UCPB assets had been squandered since the Estrada years,  prompting the bank to secure rehabilitation funding from state-run Philippine Deposit Insurance Corp. (PDIC).

“They’re running the bank to the ground,” fumed Senator Ralph Recto.

While Sy has turned the bank around in the last three years, leaving it with assets of P1.5 billion, Kilayko’s assumption at the helm of UCPB Tuesday, when its board meets to put an imprimatur to Mr. Aquino’s appointment, has worried industry activists.

“This is dangerous,” said Joey Faustino, executive director of the Coconut Industry Reform Movement (COIR) which is at the forefront of a campaign to alleviate the plight of some 3.4 million impoverished coconut farmers and workers.

Faustino pointed out that when Kilayko, along with Lorenzo Tan, then president and chief operating officer, ran the bank, the  UCPB extended billions of pesos in loans to companies connected with Cojuangco, an astute politician and shrewd businessman with a reputation of Pac-man, the computer game in which the player gobbles up everything in its path.

Romeo Royandoyan, head of the farmers’ advocacy group Centro Saka, said Kilayko represented the interests not of the farmers but of Cojuangco, who as head of the bank during the martial law years used its funds to buy 51 percent of San Miguel Corp. (SMC).

“Why did Malacañang allow an appointment that is against his matuwid na landas,” Royandoyan said, referring to the President’s reformist campaign slogan “straight path.”

Asset reform 

Already, a Catholic Church-led multisectoral group has expressed concern that 17 months into his presidency, Mr. Aquino had not put substance to his campaign promise to promote social justice, notably in agrarian reform, as a centerpiece program to alleviate poverty.

“There is no social justice without asset reform,” said Christian Monsod, one of the leaders of the broad-based antipoverty coalition.

Apprehensions about Kilayko’s appointment center on unresolved issues surrounding shares of stocks in SMC, a  highly diversified conglomerate, acquired by using funds from a coconut levy imposed during the martial law years under Ferdinand Marcos.

Critics said the levy funded the profligate programs of the dictator’s wife Imelda. Among many others, the levy collection was used to hold a lavish international film festival and the construction of the Coconut Palace for the 1981 visit of Pope John Paul II, who refused to stay in seaside opulence amid so much poverty in the nation.

Major supporter

In 1983, while he was UCPB president, Cojuangco, Mr. Aquino’s uncle and a major financial supporter during his run for the presidency last year, acquired the SMC shares for P2 billion.

The shares were sequestered by Corazon Aquino, the President’s mother, in a bid to recover ill-gotten wealth after the Edsa People Power Revolution in 1986 forced the dictator into exile in Hawaii, along with Cojuangco.

The businessman returned in November 1991, seven months before the end of the first Aquino administration. He denounced the “frivolity and baselessness” of the charges against him and vowed to vindicate himself in courts.

Stocks now worth P200B

The SMC block of shares is now worth more than P200 billion—enough to lift the coconut industry from the depths, the main reason advanced for the collection of the levy although very little of it went to the poor farmers.

In April, the Supreme Court, in a ruling denounced by a dissenting justice as the “the biggest joke to hit the century,” awarded 20 percent of the SMC block of shares to Cojuangco after a quarter century of judicial battles.

Sequestration of the Cojuangco shares was lifted following the court ruling, the Philippine Daily Inquirer was told.

The rest of the SMC holdings, designated as CIIF shares after the Coconut Industry Investment Fund under which they were acquired, are awaiting final adjudication by the high tribunal on an ownership issue.

However, the CIIF block of shares was converted from common to preferred in 2009 with each share valued at P75 in one of the last decisions presided over by Chief Justice Reynato Puno before he retired. It was a great loss to the farmers, as SMC shares had gone to as high as P150 per share.

Puno is now a director in the SMC board. He was deputy to then Solicitor General Estelito Mendoza during hearings questioning Marcos’ imposition of martial law in 1972.

Mendoza is Cojuangco’s chief counsel in the litigation of the SMC shares allegedly acquired in violation of the tycoon’s fiduciary trust as head of UCPB and the CIIF oil mills in an elaborate coconut monopoly scheme.

Coconut monopoly

UCPB has received more than P7 billion in quarterly dividends from San Miguel as a result of the conversion of the CIIF block of shares to preferred shares, according to a senior Aquino administration official. SMC has the option to redeem more than 750 million of the CIIF shares under the deal next year.

The dictator Marcos had set up the monopoly with Cojuangco, the late Maria Clara Lobregat who headed the federation of coconut planters and then Defense Secretary Juan Ponce Enrile, following the declaration of martial law.

It was funded by the coconut levy imposed in a series of presidential decrees issued beginning in 1973 as a consumer subsidy avowedly to ameliorate the condition of the farmers and modernize the industry.

The first decree expanded a premartial law levy of 55 centavos per 100 kilos of copra under an investment program to P15/100 kilos. It was raised to as much as P100/100 kilos to fund various investments in related coconut activities.

With all the money floating around, Cojuangco in 1975 arranged the acquisition of First United Bank (FUB), owned by the family of his cousin, Corazon Aquino. It became UCPB.

At the time, the Aquino-Cojuangco branch of the clan had been hit by a double whammy. Corazon’s husband, the opposition leader Benigno Aquino Jr., was in jail (he was assassinated in 1983 on his return from US exile) and the family’s sugar plantation, Hacienda Luisita, had been hit by falling world prices for sugar.

An audit after the ouster of Marcos showed that the levy collection had reached P9.7 billion. But billions more were pocketed by traders.

Déjà vu

A case of déjà vu haunts reform groups in the coconut industry with Kilayko’s reappointment.

In 2003, an in-house audit ordered by the late Haydee Yorac, the highly respected chairprson of the Presidential Commission on Good Government (PCGG), revealed that over P4 billion in “behest loans” were extended during the Tan-Kilayko years at UCPB.

The audit showed that UCPB lent P1.4 billion to Lucky Star Holdings Inc., P2 billion to Asturias Holdings and P700 million to Skyssets Inc.—companies linked to Cojuangco and Ramon Ang, chair and president of San Miguel, respectively.

Skyssets was a lease-aircraft operator. Asturias and Lucky Star secured the loans to build cement plants in Pangasinan and Batangas provinces. Their operations had nothing to do with ameliorating the plight of the coconut farmers, for which the government had acquired UCPB.

The three companies were said to have no track record of profitability, had insufficient collateral and doubtful prospects for repayment. No diligence audit was conducted on the transactions, according to the PCGG-initiated audit. Ang, along with Kilayko, then said that the loans were all legitimate and were fully secured by collateral, including prime properties and shares in major corporations.

Behest loans

The loans were part of the P10 billion in behest loans granted to Cojuangco-linked companies since 1999, according to PCGG papers obtained by the Inquirer in 2003.

They also included a P900-million lease-purchase agreement Kilayko signed on Oct. 16, 1999, involving  Indophil Oil Mills Inc., Southern Oil Mill Corp., PCY Oil Manufacturing Corp., Metroplex Commodities Inc. and Countryside Millers Inc.

These private oil mills were more than 20 years old and were to be mothballed. At the time, the six CIIF oil mills owned by the government were already underutilized as copra production was on the downswing.

“It is this penchant for fraudulent schemes, shown by Cojuangco’s pre-Edsa I history and confirmed to the present by this CIIF transaction, that more than ever puts public assets in danger of dissipation,” the PCGG then said.

“One can only imagine what private respondents can do if they already have full control of UCPB.”

The PCGG exposé in 2003 came as the bank tottered, forcing it to seek P20 billion from PDIC. The rescue package, including a P10-billion equity acquisition, has since reached P30 billion, the Inquirer has learned.

Faustino said he understood the loans to Asturias, Lucky Star and Skyssets were repaid using proceeds from the sale of 7 percent of Cojuangco’s sequestered SMC assets.

When he, Royandoyan and Vic Fabe exposed the deal, they were fired by Camilo Sabio who took over the PCGG upon the death of Heidi Yorac in 2005. The three had been Yorac’s appointees to the UCPB board.

“What happened before could happen now,” Faustino said, pointing out that the UCPB board is now dominated by Cojuangco’s people. “It’s only a matter of time.”

http://bit.ly/uHS0d4

BDO is still biggest bank with P1.05T in total assets

Metrobank tops in equity with P104.27B

By: Doris C. Dumlao
Philippine Daily Inquirer
2:00 am | Monday, November 7th, 2011

Tycoon Henry Sy-led Banco de Oro Unibank remained as the Philippines’ biggest bank, ending September with P1.05 trillion in consolidated resources.

Metropolitan Bank and Trust Co. trailed BDO by about P135 billion in balance sheet size as the banking unit of taipan George Ty ended the first nine months of 2011 with P917.82 billion in consolidated resources, based on the banks’ statements of financial condition.

Ayala-led Bank of the Philippine Islands, the third-largest bank, ended the first three quarters with P778.98 billion in total resources.

BDO was still also the country’s biggest lender with P613.32 billion in net loans and receivables, followed by Metrobank’s P419.82 billion and BPI’s P414.95 billion in loan portfolios.

Apart from building the largest loan book, the Sys’ banking arm likewise has access to the largest deposit at P819.77 billion. Metrobank’s deposit base stood at P657.42 billion, followed closely by BPI’s P625.66 billion.

Among the big three, however, Metrobank has the largest capitalization as its total stockholders’ equity hit P104.27 billion compared with BDO’s P88.88 billion and BPI’s P83.11 billion.

In the first nine months of the year, BDO grew its net profit by 19 percent year on year to P7.6 billion, which translated to an annualized return on common equity of 11.8 percent.

BPI, for its part, expanded its nine-month net profit by 6 percent to P9.6 billion, resulting in a return on equity of 15.5 percent.

Metrobank has yet to release its nine-month operating results.

http://bit.ly/vO1K6Y

Inflation surged to 5.2% in October

Increase due to food price spikes caused by typhoons

By: Riza T. Olchondra
Philippine Daily Inquirer
11:43 pm | Friday, November 4th, 2011 

The annual inflation rate accelerated to 5.2 percent in October from 4.8 percent in September on the back of price increases in heavily weighted food items, the National Statistics Office said yesterday.

Economists attributed the higher food prices to farm damage and transport disruptions due to recent typhoons but expected the inflation rate to stay within the Bangko Sentral ng Pilipinas’ (BSP) target range. Hence, economists said, they would not expect any changes in monetary policy.

“Third-quarter performance will be slightly better than [the second quarter] but the rise in inflation can be attributed to cost-push factors such as supply constraints and rise in production input cost—not demand-pull factors associated with the economic growth and recovery. I think the BSP will maintain policy rates because the average inflation is still within the 3 to 5 percent range,” according to Cid L. Terosa, economist at the University of Asia and the Pacific.

Former budget secretary Benjamin E. Diokno, now with the UP School of Economics, also said he saw no concern over inflation or a need to change monetary policy.

“I expect inflation to taper off as a result of slower economic growth, falling oil prices and appreciating peso. January to October prices averaged 4.8 percent, well within the BSP target range. As a result, I expect no change in monetary policy,” Diokno said.

The increase in the October consumer price index under the new 2006 base year series compares with analysts’ forecasts of 5 percent in a Reuters poll. The new data series was first released in July.

The index under the old data series with 2000 as the base year rose an annual 5.3 percent, accelerating from the previous month’s rise of 4.6 percent, the NSO said.

The BSP had forecast annual inflation in October at between 4.5 percent and 5.4 percent, using the old series based on 2000 prices.

The central bank, which uses an inflation-targeting model to set policy, wants to keep average inflation for this year and next year at 3 to 5 percent. It uses the old 2000 data series to measure the target for 2011, and will switch to the new series next year.

The central bank said on Thursday it saw no need to adjust monetary policy even as the economic outlook for Europe and the United States worsens, though it was prepared to respond if necessary to stimulate the economy.

Last month, the central bank kept interest rates steady for the fourth meeting in a row and cut its inflation forecasts for 2012 and 2013 to 3.05 percent and 3 percent from 3.4 percent and 3.23 percent, respectively, both at the bottom of a 3- to 5-percent target range.

Analysts widely expect the Bangko Sentral to keep interest rates steady at 4.5 percent until early 2012 to support growth.

The government has cut its 2011 growth forecast to 4.5 to 5.5 percent from 5 to 6 percent and its 2012 growth forecast to 5 to 6 percent from 5.5-6.5 percent. With a report from Reuters

http://bit.ly/tP5TiX

PERA tax rules ‘workable’

Posted on November 01, 2011 10:15:42 PM

BY DIANE CLAIRE J. JIAO, Reporter

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

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


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


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


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


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


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


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


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


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


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


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


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


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

Some occupations may also not provide proof of income and a number of people could find the procedure a hassle, Ms. Lipana added.


Ms. Bhagwani said the provision was a sticking point during the CMDC review but members accepted it given the need to prevent people from parking money in PERA accounts to avoid paying taxes.


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


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


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

http://bit.ly/ujm6w5