PEZA-backed Robinsons Cybergate Cebu opens

(The Philippine Star) Updated January 15, 2010 12:00 AM

MANILA, Philippines - Cebu City, ranked by Tholons International as the number one city among the world’s Top 50 Emerging Global Outsourcing Cities, is the host of Robinsons Land Corporation’s latest mixed-use project, Robinsons Cybergate Cebu.

While Cebu is also considered premier tourist destination, it is the second most popular destination of business process outsourcing (BPO) companies, next to Metro Manila, since it provides the infrastructure, amenities and the balanced lifestyle that draws BPO companies to set shop.

Opened last Dec. 9, 2009, Robinsons Cybergate Cebu is a seven-story mixed-use development with dining options, a medical and wellness component designed to supplement the services offered by the adjacent Chong Hua Hospital and other medical facilities and three floors for office. The new medical-commercial development sits on a 5,000-square meter lot and will have a gross leasable area of 12,500 square meters. It will have a total of 55 shops and restaurants as well as 35 wellness

clinics.

The PEZA-accredited project located along J. Llorente St. corner Don Gil Garcia St. and facing Fuente Osmena Circle will be offering a complete work, relax, distress environment. The building is also equipped with full back-up power generators and utilizes the flexible VRF/VRV air-conditioning system perfect for companies who are conscious about work hours flexibility and cost savings.

Given its location at the heart of Metro Cebu, Robinsons Cybergate Cebu has unmatched accessibility and within the vicinity of Cebu’s major universities and colleges that provide an annual college graduating pool of 20,000 allowing ease in recruitment and potential employment.

For inquiries on Robinsons Cybergate Cebu office space leasing, call (02) 395-2177; (032) 255-5590 or email at office.buildings@-robinsonsland.com

ALI, president awarded by Asiamoney

(The Philippine Star) Updated January 16, 2010 12:00 AM

Aquino

MANILA, Philippines - Ayala Land, Inc. (ALI) was awarded the Best Large Cap Corporate in the Philippines for 2009, among companies having a market capitalization of over $2 billion, by Asiamoney magazine. The magazine also named ALI president Antonino T. Aquino as the Best Executive in the Philippines in its recent poll.

“We are honored and very grateful for the recognition given by such a prestigious publication as Asiamoney. We have put great effort into overcoming challenges in 2009 and these awards validate the success of those efforts,” said Aquino.

Asiamoney is a monthly financial magazine that has been an important source of intelligence and information for corporate executives and the investment community in Asia since 1989. It is a division of the Euromoney Institutional Investor Plc, a respected global media group.

In an article published on the magazine’s website, ALI was cited for taking “a strategic change of direction” and expanding into the economic housing segment in order to broaden the company’s market penetration. According to the article: “It is a move that makes sense as the bulk of the country’s real estate demand lies in this segment…”

Asiamoney also recognized Aquino for his work in implementing the strategic changes, after just eight months at the helm, to propel the company’s growth in the coming years. “The president of Ayala Land has wasted no time in changing its strategic focus, making it more effective and sensitive to the market,” said the article.

Aside from venturing into economic housing, the company is entering into new geographies and expanding its base of master-planned and mixed use growth centers. It will complement this with small-format retail developments.

Recent initiatives along these pursuits include its partnership with the National Housing Authority for the development of the 29-hectare North Triangle property in Quezon City. ALI also entered into a letter of agreement with the city government of Olongapo and the Subic Bay Metropolitan Authority to master-plan the seven-hectare Olongapo City Triangle near the Subic Bay Freeport Zone’s main gate.

The company is ramping up its project launches for this year.

Aquino strongly advocates the integration of the company’s social and environmental goals with its business goals. ALI is at the forefront of sustainable development and leads in applying practices to lessen its environmental footprint. For example, it successfully implements solid waste management initiatives in the Makati business district, Bonifacio Global City, Nuvali and in all its malls

.

Ayala Land has been recognized for excellence by other award-giving bodies the past year.

OFW remittances up 11.3% in November

By Lawrence Agcaoili (The Philippine Star) Updated January 16, 2010 12:00 AM

MANILA, Philippines - Money sent home by Filipinos abroad accelerated to its fastest level in 14 months due to the continued deployment of skilled workers abroad, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. reported yesterday.

Tetangco said remittances from overseas Filipinos grew by 11.3 percent to $1.459 billion in November last year from $1.311 billion in the same month in 2008.

He pointed out that this was the highest year-on-year expansion since October 2008 when overseas Filipino workers’ remittances jumped by 16.9 percent.

“The continued deployment of skilled Filipino workers abroad has remained the driving force behind the steady stream of remittance flows,” Tetangco said.

He added that the higher transfer of funds in November could also be partly attributed to the strong support of OFWs to the rebuilding efforts of families and relatives whose properties were damaged by tropical storm Ondoy and typhoon Pepeng.

In all, OFW remittances climbed by 5.1 percent to $15.78 billion as of end-November last year from $15.019 billion as of end-November in 2008. Major sources of remittances were the US, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany.

The BSP chief also attributed the strong growth to the continued expansion of remittance transfer facilities that has helped capture a large share of the global remittance market.

“The enhancement of commercial banks’ operations overseas and the introduction of new products and services have continued in addressing the banking needs of overseas Filipinos and their beneficiaries,” Tetangco said.

The number of commercial banks’ established tie-ups, remittance centers, correspondent banks, and branches or representative offices abroad increased to 4,153 as of end-September last year from 3,015 as of end-2008.

The growth in the first 11 months of last year already surpassed the revised four percent growth being eyed by the BSP. It expects OFW remittances to grow four percent to a record level of $17.1 billion in 2009 from $16.4 billion in 2008.

The central bank was originally looking at a zero growth but later revised the outlook due to the steady deployment of Filipino workers abroad and the increase access to formal remittance channels.

OFW remittances are expected to grow faster at six percent next year especially with the signing of a memorandum of agreement between the BSP and member banks of the Association of Bank Remittance Officers Inc. (ABROI).

The agreement calls for the use of the central bank’s Philippine Payments and Settlements Systems (PhilPaSS) to send the remitted money to the beneficiaries’ accounts
in other banks.

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.

After SM sale, City Hall to double prices of SRP lots

By Linette C. Ramos



AS a result of the sale of lots to SM Prime Holdings Inc., the Cebu City Government will increase by 100 percent the selling price of the remaining South Road Properties (SRP) lots, which may take effect this month.

Mayor Tomas Osmeña said yesterday he will recommend to the City Council to increase the lot prices because the value of the property is expected to double once SM Prime starts construction later this year.

Click here for stories and updates on the Sinulog 2010 Festival.

He said this is also the City’s way of protecting SM Prime’s investment since it will not be easy for the competition to come in.

Now that the City is P677 million richer, he promised that the down payment will be used as “equalizer” funds for north district barangays that did not get as many projects as those in the south.

Part of the payment will also be used to expand and renovate the Saint Anthony Mother and Child Hospital in the south district and to increase the City’s financial assistance to the Emergency Rescue Unit Foundation (Eruf).

From P3 million a year, Osmeña intends to increase the City’s financial assistance to Eruf to P6 million to P8 million.

“We now have money to fund the third supplemental budget. It’s going to be an equalizer fund to balance what the north and south district barangays got because some barangays feel they got less than the others,” he said.

In his speech during the signing of the deed of conditional sale of the SRP lots yesterday, the mayor said that SRP lot prices will double and the increase will take effect soon.

“The development and purchase of SM of the property will immediately mean a few things that would be very significant to the City because I will recommend to the City Council that the prices of our remaining property in the SRP will now be double... because that is precisely what’s going to happen when you see the development of SM going up,” said Osmeña.

Once approved by the council, interior lots that cost P8,000 per square meter will now be sold at P16,000 per square meter and those located along the road will go up from P11,000 per square meter to P15,000 per square meter.

“This is also our way of protecting the initial investment of SM and we are here to see to it that you made the right decision,” the mayor said.

He said the City will not be selling any more lots after the SM deal because the City will have enough to pay for the loan obligations for the SRP.

But if the buyers are willing to buy the lots at double the price, the City will entertain their offers.

The City has a pending offer from Bigfoot Properties to buy a 4.6-hectare area at the SRP and Osmeña said he could wait to close the deal before the City increases the prices of the lots.

“Bigfoot has a favored status because they’re entering into a new type of industry that has a tremendous potential. Money is not important anymore... we’re looking for economic growth and Bigfoot is one of the willing partners who is willing to gamble in the movie industry. We can wait until their offer is accepted and then we’ll double the prices,” he added.


Published in the Sun.Star Cebu newspaper on January 15, 2010.

SM seals SRP stake

By Linette C. Ramos



CEBU City Hall earned its first billion from the South Road Properties (SRP) yesterday after it closed the sale of a 30-hectare lot to SM Prime Holdings Inc. worth P2.7 billion, three years after the negotiations started.

By 2012, the SRP will be home to the biggest shopping mall in the Visayas and Mindanao with a gross floor area of 25 hectares, SM Prime Holdings President Hans T. Sy said yesterday.

Click here for stories and updates on the Sinulog 2010 Festival.

SM Prime will invest at least P20 billion for a mixed-use development project facing the sea, which will include a convention center, hotels, residential condominiums, a school and a hospital.

After they signed the deed of conditional sale yesterday afternoon, Sy turned over to Mayor Tomas Osmeña a P406-million check to complete its down payment of P677.4 million. This represents 25 percent of the contract price of P2,709,712,000.

The P270.9-million bid bond paid earlier will form part of the down payment.

This is Cebu City Hall’s second sale at the SRP, after its deal with Filinvest Land Inc. (FLI).

SM Prime will make four quarterly payments this year that will amount to P433 million so that by the end of 2010, SM Prime will have paid the City a total of P1.11 billion.

Enough

“This is the start for us. We will roll up our sleeves and we will definitely deliver a project that all Cebuanos will be proud of. This is really a project that we envisioned that will attract not only Cebuanos but also those from Visayas and Mindanao and even from Luzon,” Sy said.

With the P677-million down payment, the City has so far earned P1.04 billion from the SRP, which includes Filinvest’s P348-million down payment last year and Bigfoot Properties’ lease payment of P15.2 million for the past two years.

Osmeña said the City’s income from SM Prime and the City’s sale and joint venture contracts with FLI will be enough to cover the loan payments for the SRP until 2025, so the City does not need to sell any more properties after the SM deal.

“It is anticipated that the City will not have to sell additional property to meet our debt service because with the installments coming in from SM and Filinvest and the other revenues we will be generating from the joint venture, I think it will be more or less enough to meet the debt service for the entire SRP,” he said in a speech after the turnover of the check.

For this year alone, the City stands to earn P1.11 billion from SM Prime, P298 million from FLI and P7.7 million from Bigfoot, which will be more than enough to cover its loan obligation of P693.3 million to Land Bank of the Philippines for 2010.

Since 1996, the City has so far paid P3.32 billion for its SRP loan.

As specified in the contract, SM Prime will pay the balance of P2,032,284,000 over a period of six years in quarterly installments, with a five percent annual interest.

Plans

Vice Mayor Michael Rama, city councilors and department heads witnessed the signing of the deed of conditional sale at SM City Cebu conference hall yesterday afternoon.

During the event, Sy presented yesterday their plans for the property and said they will break ground later this year, with construction work continuing in the next eight years.

The first structure to rise will be the shopping mall with a gross floor area of 250,000 square meters, which he said would be similar to the Mall of Asia in Pasay City.

The construction of a hotel with a minimum floor area of 60,000 square meters and the convention center with a minimum floor area of 20,000 square meters will follow.

After five years, Sy said they may consider starting the residential condominiums, the school and hospital.

SM Prime vice president Ronald Tumao said that what attracted them to the SRP is its location, being the only property in the city with “a real sea view.”

The signing of the contract came after the City Council called for a special session yesterday morning so they can approve the resolution authorizing the mayor to sign the documents.

After making minor amendments in the contract, the council approved the resolution, saying the sale of the property went through “a transparent competitive selection process through a Swiss challenge.”

Since the components of SM Prime’s development were not included in the contract, the council agreed to make the documents of SM’s unsolicited proposal an integral part of the sale contract.

Of the 240-hectare area of reclaimed land in the SRP, only around 150 hectares are left, which includes the roads and other service areas.

The City sold a 10.6-hectare lot to FLI last year and entered into a joint venture agreement to develop another 40 hectares.

A three-hectare area is being leased to Bigfoot for 20 years.

Properties were also donated to the University of the Philippines (5.17 hectares), the Department of Public Works and Highways (4.8 hectares) and the Department of Health (2 hectares).


Published in the Sun.Star Cebu newspaper on January 15, 2010.

Realtors see good year ahead

By Nancy R. Cudis



IF the increasing amount of OFW remittances in the country is sustained and the local demand for housing continues, a group of real estate practitioners are expecting their industry to be performing well in 2010.

Philippine Association of Realtors Board Inc.-Cebu Realtors Board Inc. (Pareb-Cereb) president Emily Cabillada said 2009 has been a good year for the real estate industry despite the effects of the global financial crisis on some overseas Filipino workers (OFWs).

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“In fact, 2009’s performance in terms of sales is better than that of 2008,” she said.

Sales increase

She estimated an average of 10 to 15 percent increase in sales in Cebu last year, although she said some developers doubled their sales compared to 2008.

Cabillada attributed the increase to easy payment schemes through banks and Home Development Mutual Fund (Pag-Ibig) and a huge number of buyers coming from the
OFW sector.

The Bangko Sentral ng Pilipinas (BSP) has announced that the money sent home by Filipinos working abroad rose to a monthly record of $1.5 billion in October 2009.

This brought the 10-month level to $14.3 billion, representing a 4.5 percent year-on-year growth.

Remittances

The BSP said that OFWs sent more money to their families whose properties were damaged by typhoons Ondoy and Pepeng.

Major remittances for January to October came from the United States, Canada, Saudi Arabia, Britain, Japan, Singapore, United Arab Emirates, Italy, and Germany.

Cabillada said that a lot of OFW buyers of real estate in Cebu are based in the US.

At the same time, the locals compose a good market for low-end to mid-end housing projects, she added.

“There are many people who want to invest in condominiums, for instance, because they can have them rented or use them personally. Several of our buyers for a P1.8 million to a P2.5 million condo unit are professionals working in business process outsourcing companies with a lot of disposable income,” she said.

Some of these professionals are migrants from other provinces who are looking for greener pastures here.

This, coupled with the growing population, prompted Cabillada to raise the need for more housing projects to answer the demand.

She warned buyers, though, to be careful of bogus agents, saying that buyers can easily report violations committed by a licensed agent and the Philippine Regulation Commission can impose penalties upon the implementation of the Real Estate Service Act this year.


Published in the Sun.Star Cebu newspaper on January 07, 2010.

Subdivision developers target 20% growth

By Katlene O. Cacho



THE Subdivision and Housing Developers Association (SHDA) 7 is targeting a 20 percent growth in the housing sector this year, an official of the group said.

SHDA 7 president Rey Ralota said the expansion of call centers in the city, the remittances of the overseas Filipino workers (OFW) and the local market have continued to become the dominating factors on the growth of the sector in the region.

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“Cebu has become attractive to its neighboring provinces as they see it as their ‘second home’,” Ralota said in an interview with Sun.Star Cebu yesterday.

He said the sector exceeded its 15 percent target growth last year as member-developers reported a 17 percent growth. SHDA 7 was able to develop about 3,000 low-cost and socialized housing projects last year. These were all sold out.

Low interest rate

Aside from the big market, Ralota said Pag-ibig’s low interest rate of six percent has also helped the growing housing needs in the region last year.

“The government has been receptive to the industry. It has extended its support by helping the masses acquire their own homes with such low interest rates,” he said.

He said that the projected growth of 20 percent set for this year is a conservative forecast as the 2010 elections is fast approaching.

“We are hoping to reach that target but results of the national elections is vital,” he said.


Published in the Sun.Star Cebu newspaper on January 14, 2010.

Poor infra, lack of water bug bizmen

By Debra Magallon-Estero



ACKNOWLEDGING Cebu's potential as an investment destination, the Cebu Business Club (CBC) this year will focus its activities that will help address infrastructure and water supply problems.

"Cebu is a good investment destination but is suffering from lack of infrastructure, and this is a serious problem," CBC president Dondi Joseph told reporters Monday after a press conference announcing the holding of presidential forum hosted by Cebu's three major business groups this month.

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Aside from the rundown roads in Cebu, one of the most critical concerns that need to be addressed is the water supply in Cebu, Joseph said.

He said he recently talked to Manila Water Company Inc. president Rene Almendras who told him that considering the onset of another El Nino this year, Cebu is expected to have little rainfall this year or even even less than it had last year.

"(With this) Cebu's water supply is critical in the next three years," Joseph said.

Aside from the water situation, the CBC will also continue to promote sustainable development and reiterate its stand on clean coal technology as the next best alternative to address Cebu's power conditions.

But Joseph said the club will also continue its call to the Department of Energy (DOE) to allow the Wholesale Electricity Spot Market (Wesm) in the Visayas to start its operations.

Last week, CBC released to media its official statement on the power situation in Cebu following an energy and environment summit it organized last month.

In its position paper, the CBC called for the "immediate implementation" of Wesm and for DOE and the National Economic Development Authority (Neda) to "immediately conduct a formal study of Cebu's future power requirements."

Within the first quarter of 2010, CBC will also organize a forum on urban planning and infrastructure while in the latter part of the year, the group will organize a talk focusing on the reproductive health bill and education.


Published in the Sun.Star Cebu newspaper on January 13, 2010.

Osmeña: Real estate financing fiasco

Antonio v. Osmeña
Estatements

THE ridiculous failure of the subprime mortgage program has brought about a worldwide economic crisis, causing millions of home foreclosure in America. It will probably take five years for the American economy, specifically the real estate industry, to recover.

Interestingly in Cebu, subdivision development has mushroomed.

The CEOs who are responsible for the execution of developing residential subdivisions all over Metro Cebu believe that there is a continuing demand to own a home. There seems to be vague information about the forces influencing real estate supply and demand.

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Property owners who are enthusiastic to make their land productive need to combine the units of labor and capital to avoid mortgage foreclosure.

The landowners need to consider an analysis of the real estate market such as: (1) changes in number of population and family composition; (2) wage levels, employment opportunities, and stability of income; (3) personal savings, supply of mortgage funds and interest rates; (4) rent levels, vacancies, and rent controls; (5) taxation and land use control; (6) supply of land, cost of land, labor, and building materials; and (7) changes in the arts and building obsolescence.

These days, a home, like any other consumer good, may be purchased on time. Mortgage credit is based largely on stability of future income rather than on accumulated savings.

The advantages of borrowing to buy a home are generally most measurable in monetary terms. The home is one of the most essential parts of family life and the returns that flow from home ownership are rightfully classified as “psychic income” or amenities. To the Filipino way of life, home ownership is deemed very important that home purchase plans, largely mortgage-financed, and often government-approved mortgage, are accepted as a national policy. Unfortunately, the “easy” purchase plan, often government-backed and secured (like the Pag-ibig Fund), has tempted many families into prematurely undertaking the responsibilities of home ownership. To their sorrow, they learn that home ownership is an important venture and must be carefully planned.

Mortgage credit policy may be called the barometer of the residential real estate market. Most homes are bought on credit. Terms, therefore, are an important part of a purchase transaction and often influence the transaction price.

The political will of Bangko Sentral plays an important factor in the stability of real estate financing. The Asian economic crisis of 1997 caused the interest rate to balloon to 35 percent, causing many real estate developments to collapse.

Will the stable interest rate during the Arroyo administration continue after the 2010 elections? Most realty developers borrow funds based on the principle of trading on the equity.

In conformity with this principle, it is economically advisable to borrow funds when the use of such funds brings a higher rate of return than the rate, or cost, of borrowing.

However, even if care has been taken to ensure that the project to be financed is well conceived and reliance to meet the loan obligations is placed not only on the income-producing power of the property but also on the financial integrity and ability of the borrower, political instability and a repeat of an Asian economic crisis could fold down the project. Since there is no valid, long-range government planning, land developers tend to foretell events by crystal ball gazing and find “economic forecasting” unreliable because the present economic model has reached its obsolescence. Unfortunately the real estate activity has experienced political cyclical swings that have been recurring since the early 1970s. This real estate cycle indicates a definite relationship between real estate and general business activity.

CCCI expects to start over on Cebu ecozone bill: head

By Debra Magallon-Estero



FOLLOWING the cancellation of the public hearing of House Bill 1319, which seeks to create the Cebu Economic Development Zone (CEDZ), the Cebu Chamber of Commerce and Industry (CCCI) believes there is no longer enough time to push for the passage of the bill under the present administration.

“We’ll have to start all over again with some amendments,” said CCCI president Samuel Chioson after admitting that the remaining time available until the 14th Congress goes on recess on Feb. 5, is “no longer workable,” especially when HB 1319 is not among the priority bills that the Senate wants to push.

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Legislators will resume sessions as the 15th Congress in June under a new administration following the May elections.

The House Bill is now pending before the Senate Committee of Economic Affairs chaired by Sen. Pia Cayetano after it was passed in the House on Feb. 24, 2009 and transmitted to the Senate on Feb. 26, 2009.

Should the CEDZ bill fail to make it through the Senate, Chioson said it will be the second time that the bill will be re-filed.

The CEDZ bill was born out of researches made by the CCCI economic zone study group formed in April 2006 under the leadership of then CCCI president Francis Monera.

CCCI said the creation of an economic zone out of the whole Cebu Province would make the province a self-sustaining industrial, commercial and investment center.

A year later, in July 2007, eight Cebuano congressmen collectively filed House Bill 1319.

At the same time, Rep. Eduardo Gullas (Cebu, 1st district) also filed House Bill 14, which creates the Cebu Economic Development Zone Authority (Cedza).

Chioson also said that considering this development, the chamber is now again studying what particular amendments to the bill will be made.

Former chamber president Anastacio Muntuerto Jr. now sits as the chairman of the CCCI core group that will be studying the potential changes that can be included once the CEDZ bill is re-filed.

Much to expect in 2010

Written by Margaret Jao-Grey / Not Business as Usual

Sunday, 03 January 2010 20:32

There’s much to expect this year. Here are a few: • Expect cheaper goods from China with the implementation of the China-Asean Free Trade Agreement. Basically, this means that China and the five founding members of Asean, one of which is the Philippines, will allow the free trade (read: zero tariff) on  7,000 commodities or 90 percent of goods traded with China for the next three years. The other Asean countries will share the same benefits only in 2013. Okay, okay, so China isn’t including what it considers sensitive products such as textiles and electronics. This also means China will give Asean companies preferential access into China’s services market (read: think tourism, English teaching as well as ecomedical and retirement care services). • Expect a realignment in the country’s top largest banks with the entry of the soon-to-be-merged Philippine National Bank and Allied Bank. Said another way, one of the country’s current top three banks will have to move down at least one notch. The current largest banks in the bank at the moment are Banco de Oro (BDO) Universal Bank, Bank of the Philippine Islands (BPI) and Metropolitan Bank and Trust Co. (Metrobank). BDO is majority owned by Henry Sy, the country’s richest man; BPI is owned by the Zobel de Ayala family, whose patriarch—Jaime Zobel de Ayala—is the country’s second-richest man; Metrobank is controlled by George S.K. Ty; while PNB-Allied is owned by Lucio Tan. • Expect more capital market activity with the implementation of the Personal Equity Retirement Account (Pera) Law. Naturally, government financial institutions (GFI) such as the Development Bank of the Philippines and Land Bank of the Philippines will be at the forefront of Pera. Basically acknowledging that current pension funds—the Social Security System for private employees and the Government Service Insurance System for public employees—will not generate enough for retirees to live comfortably by, Pera is a savings investment alternative that individuals, including overseas Filpino workers, can  use to save and put away money for their future or retirement. The maximum annual contribution for an individual is P100,000 and for overseas Filipino workers, P200,000. The minimum investment holding period is five years. Aside from GFIs, other government agencies can be accredited as administrators of Pera funds too. • Expect public schools to teach some subjects in the regional dialect rather than in English as part of the Department of Education’s pilot lingua franca program. This means schoolchildren in the Ilocos region to be taught in Ilokano and the children in the Visayas to be taught in Cebuano, using instructional materials in major regional dialects starting June. By using the language they use at home, it is hoped that children will learn more and will stay in school instead of dropping out. • Expect a lot more construction work (read: more jobs, more suppliers) with about P530 billion in still-unreleased funds that has been programmed in the 2010-2013 budgets. This amount is for the implementation of 71 projects worth P131 billion and for the civil works of 39 projects worth almost P400 billion—most of which are still in the preconstruction stage. These are, of course, on top of new projects listed in the 2010 national budget.

Pre-need firms see ‘brighter days’ with passage of law

Companies

Written by Miguel Camus / Reporter

Sunday, 03 January 2010 20:34

The passage of a new law that will govern the operations of pre-need companies—and impose sanctions on erring firms—is being hailed by industry players as the start of “brighter days” for the sector. On December 4, President Arroyo signed into law Republic Act 9829, also known as the Pre-Need Code of the Philippines. Federation of Pre-Need Plan Companies Inc. (FPPCI) president Caesar T. Michelena believes that the pre-need business—which suffered a string of controversies since 2005—is on the road to recovery. “The Pre-Need Law provides stability to the industry because it legitimizes and puts into place the necessary measures needed by the industry, Michelena said in a statement, as he noted that the law will lay to rest fears of instability in the pre-need industry. The code seeks to protect planholders and ensure the viability of an industry that has been weakened by a spate of bankruptcies and failures fueled by the worldwide economic slowdown. Sales of the industry have been on a downward trend for the past four years due to loss of investor confidence. A key provision in the law is the transfer of regulatory jurisdiction over pre-need firms from the Securities and Exchange Commission to the Insurance Commission (IC). Michelena said the federation welcomes the transfer of regulatory jurisdiction to the IC, pointing out that the latter is more technically qualified to oversee the operations of the multibillion-peso industry. Among the other notable provisions of the law is the adoption of the fit and proper rule which gives the IC the power to prescribe the qualifications and disqualification of directors of pre-need companies. To avoid conflicts of interest, the code prohibits directors and their relatives within the fourth degree of consanguinity in their personal capacity to have direct or indirect investments in excess of P5 million in any corporation or undertaking in which the pre-need firm’s trust has an investment. To safeguard the interest of planholders, no part of the assets in the pre-need firm’s trust fund can be used for any purpose other than for the exclusivebenefit of investors. To ensure the delivery of the guaranteed benefits and services of a pre-need plan contract, a trust fund will be established for every plan category. A portion of the installment payment will be deposited by the pre-need company in the trust fund, the amount of which will be based on a viability study of the pre-need plan. The law states that pre-need companies must have a minimum paidup capital of P100 million to lessen the risk of instability. The code also imposes strong criminal and administrative penalties on directors and officers for self-dealing and conflict of interest transactions. “No pre-need company shall refuse, without just cause, to pay or settle claims arising under coverages provided by its plans nor shall any such company engage in unfair claim settlement practices,” the law states. In case the insolvency or bankruptcy is a mere coverup for fraud or illegality, the planholder may institute the legal action directly against the officers and/or controlling owners of the pre-need company. For transparency, a pre-need firms is required to publish in two newspapers of general circulation a full synopsis of its annual financial statements, including the trust fund annual statement showing fully the conditions of its business, and setting forth its resources and liabilities in a standardized format to be designed by the IC. The code also requires disclosure of the investment of the company’s trust fund.

Atiga for Asean-6

Written by Estrella Torres / Reporter

Sunday, 03 January 2010 21:41

SIX member-countries of the Association of Southeast Asian Nations (Asean) can now trade 99.11 percent of all their products across their borders at zero tariffs, with 7,881 tariff lines having gone down to zero rates beginning on January 1 under their regional trade deal. The Asean secretariat in Jakarta announced these countries are the Philippines, Brunei, Indonesia, Malaysia, Singapore and Thailand—the founding members—bringing the total tariff lines traded to 54,457 or 99.11 percent. The tariff regime for Asean-6 is part of the Common Effective Preferential Tariffs for the Asean Free Trade Area (CEPT-Afta) signed in 1993. The deal, now known as the Asean Trade in Goods (Atiga), was amended in November 2007, implementation beginning this month. Dr. Surin Pitsuwan, Asean secretary-general, said the tariff elimination by Asean-6 is part of the members’ commitment to fully open intra-Asean trade and that it is also a step toward establishment of a single market economy by 2015 under the Asean Economic Community (AEC) Blueprint. He said the actual impact and how much this final installment will be translated into savings for consumers depends on the market dynamics of the respective countries. “We sincerely hope that all parties will act to ensure that the man on the street will benefit from these reductions in tariffs.”   He assured downstream producers they stand to gain in the tariff regime. “Lower cost of inputs will allow the business community a wider choice of goods, and in the process, they will move toward becoming more competitive globally, as envisaged in the AEC Blueprint.” With the tariff reduction, the average tariff rate for these six countries is expected to further decrease from 0.79 percent last year to just 0.05 percent this year. In 2008, intra-Asean import value of commodities for these 7,881 tariff lines amounted to $22.66 billion or 11.84 percent of Asean-6 import value within the bloc. The tariff lines newly covered include final consumer products such as air conditioners, chili, fish and soya sauces; as well as intermediate materials such as motorcycle components and car cylinders, iron and steel, plastics, machinery and mechanical appliances, chemicals, prepared foodstuff, paper, cement, ceramic and glass. The Atiga allows tariffs to be reduced to zero only in 2015 for the remaining four member-countries—Cambodia, Laos, Burma (Myanmar) and Vietnam.  This year, these four members will see tariff reductions under the CEPT-Afta commitments to 5 percent, where the average tariff rate will decrease from 3 percent in 2009 to 2.61 percent. Meanwhile, Surin said Asean is now working to formulate streamlined and simplified customs procedures for clearance of goods and eliminating nontariff measures. Surin said the regional bloc also seeks to establish a better intellectual-property rights (IPR) regime as well as the removal of all the hurdles to the movement of professionals and skilled workers across the region.