October 26, 2007

Draw clsoe to God, and God will draw close to you.

-James 4:8 (NLT)

BIR to pursue cases against banks remiss in their DST obligations. The Bureau of Internal Revenue (BIR) will pursue the cases it has filed against banks which have been delinquent in their documentary stamp tax (DST) obligations even if these banks file for tax amnesty, the agency’s top official said yesterday. BIR commissioner Lilian Hefti said the agency will let the courts decide on whether banks with pending DST payments are eligible for tax amnesty. This means that the BIR will object if banks ask the courts to drop the cases against them now that the Tax Amnesty Law of 2007 is in effect, Hefti said. Pstar

LandBank opens second US branch. State-owned Land Bank of the Philippines (LandBank) has opened a second full-service branch in the United States through which the bulk of the year’s estimated $14-billion overseas Filipino remittances would pass. "With these two remittance offices, we hope to address the needs of overseas Filipinos based in California for a more accessible and faster means of sending their hard-earned money to their loved ones back home," LandBank president and chief executive officer Gilda Pico said in a statement. Pico opened the bank’s San Francisco branch along with Finance Secretary Margarito Teves, who earlier attended the annual meetings of the International Monetary Fund/World Bank Group in Washington, D.C. LandBank’s other full service branch is in Panorama City, also in California. Bmirror p3

RCBC posts P2.52-B income. Rizal Commercial Banking Corp., the country's fourth-largest private universal bank by capital, registered a consolidated net income of P2.52 billion in the first nine months of 2007, a 117.6-percent growth from P1.16 billion a year earlier.  Bmirror pB2

Exchange rate not the only factor — BSP. Exporters, overseas Filipino workers (OFWs) and other dollar-earners should look beyond the appreciating peso, and see what they can do about the aspects of competitiveness within their control, a ranking official of the Bangko Sentral ng Pilipinas (BSP) said in a recent interview. "Competitiveness is not dependent only on foreign exchange concerns. It is all about infrastructure, and that does not include only roads, bridges or utilities, but also human capital. In our case, it’s financial infrastructure or those that channel financial resources from one sector to the other," Bangko Sentral Deputy Governor Nestor A. Espenilla, Jr. said on the sidelines of the 33^rd Philippine Business Conference last Wednesday. The peso, which has risen nearly 12% since end-December last year, yesterday closed at P44.04 to the dollar, compared to P44.28 last Wednesday. The local currency averaged P44.061 yesterday, compared to P44.129 the preceding day. It hit a high of P44.03 in mid-trades yesterday, compared to P44.05 last Wednesday. Exporters have said they could remain competitive at P48:$1. Bworld p1

Derivatives rules to minimize investor risks — central bank. The Central bank will lay out clear rules on the marketing of financial derivatives and the matching of derivatives with investors to protect the public, an official said yesterday. In particular, banks will be required under the rules to disclose risks, said Nestor A. Espenilla Jr., Bangko Sentral ng Pilipinas assistant governor. "Our proposed guidelines aim to contribute to the framework for an organized derivatives market and help protect the investing public by providing sales and marketing guidelines including client suitability procedures and risk disclosure requirements for banks offering derivatives," he said in a speech at the Philippine Business Conference last Wednesday. Bworld p3 (related story in Pstar)

Share prices flat in listless trade; PLDT slips. Share prices closed flat in listless trade yesterday, with investors staying on the sidelines ahead of a possible interest rate cut by the US Federal Reserve. Gains in the broader market were offset by selling in blue-chip Philippine Long Distance Telephone Co. (PLDT), dealers said. The composite index gained 0.11% or 4.31 points to 3,767.78 after moving between 3,764.18 and 3,772.78. The broader all-share index added 0.02% or 0.51 point to 2,340.33. Bworld s2/p1

NG reports P183-B primary surplus. The National Government had a primary surplus of P182.7 billion in the first nine months of the year, lower than program of P192.6 billion for the period ending in the third quarter. According to the Bureau of the Treasury (BTr), the January-September primary surplus was 9.9 percent off the program and 10.5 percent lower compared to same period last year of P204 billion. The amount was arrived at by computing total revenues of P812.3 billion against expenditures — net of interest payments — of P629.6 billion. The program for the third quarter was P837 billion for revenues and P644.4 billion for expenditures. MBulletin

Competitiveness watch list issued. The National Competitiveness Council (NCC) on Thursday unveiled a watch list of key indicators of competitiveness during the second day of the 33^rd Philippine Business Conference and Expo at the Manila Hotel that ends this afternoon. The watch list is designed to put more focus in the country’s bid to catch up with and eventually outperform its more competitive neighbors, especially generating more businesses at home and luring more foreign investments. Businessmen and government officials acknowledged that much work remains to be done in the eight components of the competitiveness "scorecard," namely: boosting human resources, public and private sector management, energy cost competitiveness and sufficiency, monitoring transaction flows, enhancing access to finances for small businesses, infrastructure development, strengthening the judiciary and the Ombudsman, as well as special legislative concerns. Bworld p1 (related stories in Inquirer, Mbulletin, Malaya, Mtimes)

Peso ends at new 7-year peak. The peso closed at a seven-year peak yesterday, bucking the nervousness in global markets after weak earnings and housing data from the US. The peso closed at a new record of P44.04, 24 centavos stronger than Wednesday’s P44.28 and taking its gains in the past six weeks to more than 6%. The peso was last seen at $1:P44.03 in July 2000. The local currency opened at P44.17, went as low as P44.18 and as high as P44.03 per dollar, but the central bank intervened to curb the peso’s appreciation, another trader said. Bworld s2/p1 (related stories in Mbulletin, Malaya, Inquirer)

Peso resumes record climb. The peso hits another record seven-year high against the US dollar with the greenback weakening and another Fed rate cut in the offing, traders said. The peso appreciated by 24 centavos to P44.04 yesterday from P44.280 on Wednesday, according to the Philippine Dealing System (PDS). "A globally weak US dollar and expectations for another rate cut by the Fed when they meet next week is supporting the appreciating peso trend," Metropolitan Bank and Trust Co. (Metrobank) said in a market commentary. MTimes, pB1

Credit upgrade likely in ’08, says UBS. Investment banking giant UBS expects a sovereign credit upgrade for the Philippines next year, citing the drop in the country’s debt stock, the peso’s rise, and successful privatization efforts. Although revenue agencies fell short of their collection targets in the first half of the year, the government hopes to make up for this shortfall by selling big-ticket assets. The national government -- as distinguished from the overall public sector -- aims to keep its budget deficit at no more than P63.0 billion this year and balance the budget next year. Inquirer, Mstandard

MVP’s unsolicited advice: Give peso a soft landing. Telecom executive Manuel V. Pangilinan urged the government to craft a glide path of the peso to guide businessmen on their business plans. "It would be a reasonable exercise for the government to consider ways to create a soft landing for the peso by allowing it to rise at managed, if not also predictable, fashion. A guided predictability will allow businesses to plan and operate better," he said in his keynote speech to the three-day 33rd Philippine Business Conference and Exposition. Pangilinan warned that while the government "has taken the first steps to prevent any further unwarranted rise of the peso… the situation has reached the point of national urgency that coalitions of overseas workers and exporters have already broached the idea of dual exchange rates—not a good idea." Bmirror p1, Pstar, Tribune

Energy, governance, trade top business wish list to Palace. Filipino businessmen will present to President Arroyo on Friday their wish list containing legislative proposals and reforms they hope will be instituted up to next year for the country to improve its competitiveness as an investment destination. An advance copy of the wish list embodied in the 33rd Philippine Business Conference (PBC) Resolutions and Public-Private Partnership (PPP) Agenda obtained by the BusinessMirror showed that local businessmen are calling for immediate action in the areas of governance, energy, trade and industry, agriculture, tourism, education, environment, and competitiveness. The PBC resolution is the result of months of work by regional business groups under the umbrella of the Philippine Chamber of Commerce and Industry (PCCI) in gathering and consolidating all the concerns of Filipino businessmen nationwide. BMirror p1

Tan wins another round vs PCGG. The Supreme Court (SC) has denied the petition filed by the Presidential Commission on Good Government (PCGG) seeking to nullify a resolution of the Sandiganbayan requiring its records officer to produce documents needed by businessman Lucio Tan and several others to support their case seeking the nullification of the sequestration order involving their shares of stock in Allied Banking Corp.and other properties. In a seven-page decision penned by Associate Justice Angelina Sandoval-Gutierrez, the Court’s First Division dismissed the claim of petitioner PCGG that it is immune from the subpoena process of the Sandiganbayan or any other court as stated under Section 4 (b) of Executive Order 1, which created the PCGG. Bmirror, Mtimes p2

Filipino employees’ compensation up by 3.4% in Q2. Individual total compensation of Filipino employees in the second quarter increased by 3.4 percent due to increases in per-employee compensation in the finance, electricity and water, trade, and manufacturing industries, according to the National Statistical Coordination Board (NSCB). The latest Quarterly Economic Indices (QEI) of the Philippines released by the NSCB showed that total compensation per employee increased by 7.3 percent in the finance industry; 6.1 percent in electricity and water; 3 percent in trade; and 1.7 percent in manufacturing. The NSCB, however, said in a statement that total compensation, which represents the salaries and wages paid out by all industries in cash and in kind, declined to 4.1 percent from 7.1 percent in 2006. BMirror p3

Zambo is PNB regional credit center. Ranking officials from the Philippine National Bank (PNB) central office in Manila have recognized the potentials of this city as a business and financial center in the entire Zamboanga Peninsula as they assured continuous and efficient service to local residents. PNB president and chief executive officer (CEO) Omar Bayron Mier visited Zamboanga on Tuesday and met with clients and qualified investors of the bank’s credit facilities. The group also assessed the feasibility of setting up a regional credit center in this city, a facility that will further boost the city’s capacity for development and growth. Bmirror p1

RP’s global connectivity rank declines. The Philippines slipped by seven notches to 38th place in the 2007 Globalization Index, an annual study produced by A.T. Kearney and Foreign Policy which assesses the extent to which nations are becoming globally connected. The 2007 Globalization Index included 10 new economies for a total of 72 countries surveyed. The index accounts for 97 percent of the world’s gross domestic product and 88 percent of the world’s population. The index measured 12 variables grouped into four categories: economic integration, personal contact, technological connectivity and political engagement. This year’s index examines data from 2005, the most recent year from which data is available. The country registered its lowest rank in economic integration, particularly in foreign direct investments (FDI), where it was ranked 63rd out of 72 economies. However, in terms of trade, the country was ranked 24th, pushing up the country’s economic ranking to 41st in the world. Bmirror p1 (related story in Mtimes pB1)

Net funds frozen by AMLC reach P414 million as of September. Funds frozen by the country’s anti-money laundering watchdog have continued to mount as government agencies and financial institutions tighten their guard against suspicious transactions. A report by the Anti-Money Laundering Council as of Sept. 30 showed that local courts have frozen a total of P1.4 billion in bank funds and insurance proceeds since the council was formed in 2001. This sum consisted of P1.2 billion in peso accounts, P4.4 million in yen accounts, P3.6 million in dollar accounts, P1.5 million in Hong Kong dollar accounts and P1,000 in euro accounts. However, some P960 million has been unfrozen and returned to investors, reducing the total frozen funds, in net terms, to just P414 million. The number of suspicious transactions reported by covered institutions continued to rise, with around 3,000 reported from January to September. Bworld s2/p3

Trading places?  (Not Business as Usual by Margaret Jao-Grey).   The country’s top two savings banks have adopted different strategies in growing its consumer-banking business. BPI Family Bank is focusing on bringing down interest rate and widening the payment period, while Philippine Savings Bank is focusing on speeding up the time it takes to process a loan. Take the auto loan, which traditionally crests during the fourth quarter. BPI offers an 18-percent annual rate over a period of six years, when everybody else is talking five years. PSBank can process the car loan faster than everybody else, or within 24 hours; if it doesn’t, it offers the client a P24,000 rebate on the loan approved. Interestingly, BPI’s decision to concentrate on interest rate is more in keeping with the long years of banking experience of PSBank president Pascual Garcia III, while PSBank’s fast-food crossover strategy is more in keeping with the consumer goods experience of BPI Family’s president Alfonso Salcedo, who cut his teeth selling Camay soap and Vicks Vaporub for the Philippine and Japanese operations of Procter & Gamble. BusinessMirror pB1

(Excerpts from Emil Jurado’s column, Mstandard) It is good that Internal Revenue Commissioner Lilian Hefti is pursuing the long-delayed resolution of cases against banks that owe the government billions of pesos in unpaid documentary stamps on special savings accounts, particularly dollar deposits. This issue has long been pending since the 1990s because the Bankers Association of the Philippines has questioned its DST liabilities. One of the reasons given was that the government could cause the flight of foreign capital. As shown by events, nothing of that sort has happened. What is important is that the bureau must do what is proper by making the banks pay up. If local savings peso deposits are taxable, why should foreign exchange deposits be exempted from document stamp liabilities? Are these banks so special?

Cheers to microfinance. (Excerpts from Servant Leader, Fr. Anton Pascual, Bmirror) It is evident that microfinance can be an effective instrument to put into practice what the Church advocates as "preferential option for the poor." There are several parishes today with microfinance programs. Caritas Manila also has Caritas SALVE (Caritas Savings and Loans with Values Education), and a number of church cooperatives are also involved in microfinance. However, while there is microfinance on one side, there are also "instant-money or easy-profit schemes" on the other. There is multilevel marketing, pyramiding and so-called investment houses that try to hook you with fancy terms and the lure of earning big bucks easily. Countless have lost hard-earned money to such "investments." These schemes will often bait you with decent profits at the start of your relationship. They’ll let you taste and enjoy the prospect of earning big with very little effort. Then comes the invitation to invest more money. And then they’re gone, along with your money. If an offer promises big profits, fast return on your investments, or quick cash with little or no effort, then it’s too good to be true. Be suspicious. Something’s not right. Better go with microfinance instead and earn a decent living. Bmirror p4

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