INDOM, ELEONOR G.

BSMA-3C

BSP sees steady remittance growth

MANILA, Philippines — Remittances are expected to continue growing despite the setbacks arising from
the ban on deployment to Kuwait as well as the imposition of higher fees on remittances, the Bangko
Sentral ng Pilipinas (BSP) said yesterday.

BSP Deputy Governor Diwa Guinigundo said remittances from overseas Filipinos are expected to expand
by four percent this year, continuing to be a major source of foreign exchange for the country.

Guinigundo said the decision of Malacañang to ban the deployment of Filipino workers to Kuwait would
have minimal impact as the cash remittances from Kuwait account for only about three percent of the
total.

“On the ban on deployment of OFWs to Kuwait, the impact may not be significant. Prospective workers
may still be deployed to other countries with demand for Filipino workers,” he said.

Last Jan. 19, Labor Secretary Silvestre Bello III issued Administrative Order 25 ordering the Philippine
Overseas Employment Association (POEA) to stop the processing and issuing of overseas employment
certificates to all Kuwait-bound workers as President Duterte cited the cases of sexual abuse of Filipino
domestic workers.

Latest data from the central bank showed cash remittance coursed through banks climbed four percent to
$25.32 billion from January to November last year compared to $24.34 billion in the same period in 2016.

On the other hand, personal remittances including house-to-household as well as capital transfers rose
5.1 percent to $28.24 billion from $26.88 billion.

Amid the steady growth, Guinigundo said the amount of personal and cash remittances from Filipinos
abroad would continue to exceed receipts from the business process outsourcing (BPO) sector.

Revenues of the BPO sector grew 8.5 percent to $16.9 billion in the first nine months of last year and
likely ended 2017 with $22 billion, while remittances amounted to $25.32 billion from January to
November last year.
INDOM, ELEONOR G. BSMA-3C

SEC sets conditions for initial coin

offerings
MANILA, Philippines — The Securities and Exchange Commission stressed that initial coin offerings
(ICOs) must be registered with the SEC.

In a briefing yesterday, SEC commissioner Emilio Aquino said unlike China and South Korea, the
Philippines is allowing ICOs as long as the entities offering crypto currencies comply with the SEC’s
registration and disclosure requirements.

“The mindset of the commission has always been to foster innovation, but they need to register,” Aquino
said.

He said the SEC’s mandate is to protect investors.

Aquino said these cryptocurrencies are now considered new frontiers.

“A lot of our kababayans want to invest in cryptocurrencies,” he said.

SEC said cryptocurrencies are securities because they include an investment contract whereby a person
invests his money and is led to expect profits.

Under the Securities Regulation Code (SRC), companies must first register with the SEC before they can
offer securities.

Virtual or cryptocurrency, which is fast becoming popular around the globe, refers to a digital
representation of value issued and controlled by its developers. It is becoming more commonly used and
accepted all over the world.

An ICO, meanwhile, is the first sale and issuance of a new virtual currency to the public usually for the
purpose of raising capital for start-up companies or funding independent projects.

The SEC had issued a cease and desist order against the ICO of Krops, an agriculture mobile app
founded by businessman Joseph Calata.

Krops failed to register its tokens with the SEC.

Aquino said Calata may file a motion to lift the CDO.

INDOM, ELEONOR G. BSMA-3C

LGUs urged to develop own ecozones

MANILA, Philippines — The Philippine Economic Zone Authority (PEZA) is urging local government units
(LGUs) to develop their own economic zones to make them strong enough to weather changes in a
possible shift to a federal form of government.

PEZA director general Charito Plaza said her agency is talking to local and foreign banks to provide credit
facilities to economic zone developers, particularly the LGUs.

“This is actually our share in PEZA for the realization of the federal form of government wherein our
province and LGUs will be empowered and enriched,” Plaza said.

“They will be prepared to be self-reliant because they will have their own economic zones. Industries and
jobs will already be spread out,” she added.

The Duterte administration has been actively pushing for the country to shift to a federal form of
government.

State think tank Philippine Institute for Development Studies earlier warned that some LGUs may not be
strong enough to weather the change as not all have the financial capacity.

Under a federal system, taxing and spending powers are devolved to federal states, giving them a free
hand on the use of the budget.

State governments will also have exclusive powers within their jurisdictions over police, fire protection,
early childhood education, water supply and sanitation, waste management, road traffic management and
parks.

Plaza said having an economic zone would usher in economic empowerment to an LGU as it would bring
in investments, provide job opportunities for residents, and higher revenue generation.

Plaza said many LGUs in the country have already expressed interest in creating economic zones of
various types.

She noted, however, that funding has been a major issue among LGUs.

Plaza earlier said PEZA would embark on an aggressive expansion of public economic zones across the
country as part of plans to bring economic development to the countryside.

PEZA is looking at building two new public economic zones per region, or a total of 36 across the country.

Public economic zones are cheaper than private owned economic zones in terms of rent, according to
Plaza.

Of the more than 370 PEZA-administered economic zones in the country to date, only four are owned by
PEZA while the rest are owned by the private sector. Existing public economic zones are in Cavite,
Mactan, Baguio and Pampanga.
INDOM, ELEONOR G. BSMA-3C

UCPB lending arm extends P9-B loans

to coco farmers
MANILA, Philippines — UCPB said its social development arm has disbursed P9 billion in loans to farm
households in 62 coconut producing provinces over the past 23 years.

UCPB-CIIF Finance and Development Corp. continued to pursue its mandate of delivering much-needed
credit to the countryside, benefitting 436,067 farm households since it started lending in 1995.

For 2017 alone, the company released P602 million in new loans to 10,499 farmers in 30 coconut
provinces to finance livelihood projects to allow farm households to generate extra earnings and augment
their income.

UCPB said the projects were mainly short-gestation ones that provided quick returns such as cash crop
cultivation, livestock raising, commodities trading, and village-based processing of coconut by-products
like coconut sugar.

UCPB-CIIF Finance president Edgardo Amistad said the 94 percent collection rate indicated that most of
the farmers earned enough from their livelihood projects last year.

UCPB organized UCPB-CIIF Finance in 1994 to give coconut farmers access to credit, allowing them to
engage in alternative livelihood activities to supplement their farm income.

Coconut farmers have among the lowest income in the Philippine agriculture sector with their small farms,
ranging in size from one hectare to five hectares, yielding average earnings of from P15,000 to P40,000
per hectare per year.

Owing to their small size, remote location and the higher risks of micro-enterprises, coconut farmers have
difficulty accessing credit from formal sources for their livelihood activities.
INDOM, ELEONOR G. BSMA-3C

Security Bank, MUFG to help promote

Philippines
MANILA, Philippines — The Board of Investments (BOI) has entered into a partnership with Security
Bank Corp. and Bank of Tokyo-Mitsubishi UFJ Ltd. (MUFG) to promote investments in the Philippines.

SBC and MUFG have agreed to jointly assist in fostering economic and industrial linkages between
investors and corporations by conducting various investment seminars and business-matching activities.

Security Bank and MUFG will facilitate exchange of information and best practices between Philippine
and Japanese investors, which is expected to translate into economic development for both countries.

“We will link our Philippine clients to MUFG’s customers in both the Philippines and Japan in order to
open more opportunities and forge partnerships. We know that this relationship will help expand
businesses and further develop the economy,” Security Bank president Alfonso Salcedo Jr. said.

The MOU aims to generate investments in the industries listed in the Philippines’ 2017-2019 Investment
Priorities Plan (IPP).

The IPP is a list of priority investment activities that may be given incentives by the BOI.

MANILA, Philippines — The Board of Investments (BOI) has entered into a partnership with Security
Bank Corp. and Bank of Tokyo-Mitsubishi UFJ Ltd. (MUFG) to promote investments in the Philippines.

SBC and MUFG have agreed to jointly assist in fostering economic and industrial linkages between
investors and corporations by conducting various investment seminars and business-matching activities.

Security Bank and MUFG will facilitate exchange of information and best practices between Philippine
and Japanese investors, which is expected to translate into economic development for both countries.

“We will link our Philippine clients to MUFG’s customers in both the Philippines and Japan in order to
open more opportunities and forge partnerships. We know that this relationship will help expand
businesses and further develop the economy,” Security Bank president Alfonso Salcedo Jr. said.

The MOU aims to generate investments in the industries listed in the Philippines’ 2017-2019 Investment
Priorities Plan (IPP).

The IPP is a list of priority investment activities that may be given incentives by the BOI.
PetroEnergy raises P758M from
stock rights offer
LISTED PetroEnergy Resources Corp. (PERC) said it raised about P758.3 million following the
completion of its stock rights offering this month, the proceeds of which were earmarked to
finance renewable energy (RE) projects in the pipeline.

In a disclosure on Monday, PetroEnergy announced the completion of the 1:2.6 stock rights
offering of 157,975,512 common shares at P4.80 per rights share to all stockholders as of record
date of January 12.

The final offer price was set at a discount of 20 percent over the P6.00 volume weighted average
(VWAP) price of PERC for the last 10 trading days from December 19, 2017 to January 5.

The tentative listing of the common shares from the stock rights is on February 2, subject to the
approval of the requirements from the Philippine Stock Exchange (PSE).

PetroEnergy secured last December a notice of approval from the local bourse for its stock rights
offering this month, which entitled each stockholder to subscribe to one rights share for every 2.6
common shares held. The rights offer period ran from January 22 to 26.

PetroEnergy is a publicly listed energy company under the Yuchengco Group of Companies that
is engaged in upstream oil exploration and development. Founded in 1994, its main businesses
are geothermal, petroleum, solar, and wind.
Reduced perks to offset corporate tax cut
impact
Lower corporate income taxes should come with a reduction in business incentives to limit the
impact on government revenues, the Finance department said.

Finance Undersecretary Karl Kendrick Chua said that least P26 billion had to be raised for every
percentage point cut to the corporate income tax rate, which the government is planning to
reduce to 25 percent from 30 percent under Package Two of its Comprehensive Tax Reform
Program.

Package Two, which was forwarded to Congress earlier this month by the Finance department,
also calls for the modernization of the incentives system via measures such as the designation of
the Fiscal Incentives Review Board as overall administrator of all investment promotion agencies
(IPAs).

Chua said the government also wants legislators to repeal 150 special laws that complicate the
grant of fiscal incentives, replacing these with an omnibus law that would provide for a single
menu of perks applicable to all IPAs.

The Finance department is in favor of setting a revenue trigger — equivalent to 0.15 of gross
domestic product — for a staggered reduction in corporate income taxes.

“Every one percent reduction requires P26 billion in counterpart revenues to keep revenue
neutrality,” Chua said.

Finance Secretary Carlos Dominguez 3rd stressed that the corporate income tax could only be
lowered if there was a corresponding drop in terms of incentives granted.

“Our plan is to lower the tax rate for corporations from 30 percent to 25 percent. But our
proposal to the Congress is to allow us to do that only if there’s a reduction in the amount that we
provide for incentives,” he said.

To improve compliance, Chua said the Finance department was proposing a simplification of tax
rules for corporations, fewer tax forms and procedures, a review of the National Internal
Revenue Code to improve general anti-avoidance regulations and transfer pricing and costs, and
a cut in the optional standard deduction from 40 percent to 20 percent of gross income.

As for incentives, these should be performance-based with clear measures of actual investment,
job creation, countryside development, exports, and research and development.

Incentives should also be targeted to minimize leakages and distortions and, more importantly,
time-bound so that the perks are not granted forever to businesses, Chua added.

For companies currently enjoying incentives of more than 10 years, the Finance department is
proposing a grandfathering provision where the perks will continue to be enjoyed for two more
years after Package Two becomes a law.
Marginal gain lifts PSEi to new
record
THE stock market gained less than a fifth of a percent on Tuesday but this was enough for
another record high — the eighth so far for the year.

The benchmark Philippine Stock Exchange index (PSEi) rose by 0.19 percent to close at
9,058.62, up 17.42 points from Friday’s previous all-time peak of 9,041.20. The index hit as high
as 9,078.37 in intraday trading.

The wider All Shares, meanwhile, eked out a 0.07-percent or 3.68-point gain to 5,273.

“The rally by some telcos provided the lift. PLDT and Globe rallied strongly, taking (Globe
parent firm) Ayala Corp. with it,” COL Financial, Inc. chief technical analyst Juanis Barredo
said.

“Perhaps talks of a possible delay in third telco bid or the arguments against it with regards to
security helped these stocks recoup,” he added.

“However, there were more declining stocks for the day than advancers, showing some
corrective and rotational efforts….”

Globe Telecom shares ended the day up 8.76 percent up or P153 at P1,899 apiece, while PLDT,
Inc. rose by 6.52 percent or P98 to P1,601. Ayala Corp., gained 4.13 percent or P43 to P1,083
per.

IB Gimenez Securities, Inc. research head Joylin Telagen said investors had turned optimistic
about the telecommunications sector, which was being battered by the government’s insistence
on naming a rival to PLDT and Globe.

Telagen also noted global growth improvements, the government’s efforts to boost infrastructure
spending and the implementation of the Tax Reform for Acceleration and Inclusion law.

Only the industrial and property sectors recorded declines on Monday, falling by 0.61 percent
and 0.55 percent, respectively.

Nearly 1.27 billion issues valued at P8.87 billion changed hands.

Losers led winners, 116 to 95, while 55 issues remained unchanged.

SBS buys additional stake in unit
for P351M
SBS Philippines Corp. said on Monday that it was hiking its stake in subsidiary Lence Holdings
Corp. via the acquisition of additional shares for a total consideration of P351 million.

The company told the Philippine Stock Exchange it would subscribe to an additional 52 million
shares priced at P6.7625 apiece to help Lence fund the acquisition of a warehouse facility from
The Coca Cola Export Corp. (Philippines).

The subscription and full payment is set to be concluded on February 5, 2018.

“The additional share subscription is intended as added capital infusion in LHC to partially
finance the closing of the acquisition of a warehouse facility property comprising of land,
buildings, and fixed assets,” it said.

In early January, the company entered into a share purchase agreement with Coca Cola Export
Corp (Philippines) for the acquisition of a 100 percent stake in Benesale Land, Inc. for P520
million. Benesale owns a five-hectare piece of land in Calamba, Laguna. The transaction
included warehouse facilities and machineries in the said area.

“The facility is being considered to be used principally in the warehouse and distribution
operations of the Corporation to serve as a key distribution center for regional market customers
south of Metro Manila,” SBS said on January 4 about the Benesale acquisition.

On the fund injection into Lence Holdings, SGS said the additional capital would not only help
the SBS Group control residual risks in not owning major logistic facilities, it is also seen as a
good investment opportunity to broaden the company’s asset base.

“The arrangement will also allow the lease or use of the other areas for additional business
building projects of SBS group. This arrangement permits the company to grow and diversify its
income streams,” it said.

SBS is a listed chemical products importer, wholesaler, and distributor that has diversified into
the property business.
Stock market seen trading above
9,000
The stock market could trade above 9,000 this week if foreign investors continue to load their
portfolios, an analyst said.

The benchmark Philippine Stock Exchange index (PSEi) broke past 9,000 on Friday, adding
42.03 points or 0.47 percent or close at 9,041.20, its 7th all-time high for the year.

The wider All Shares, meanwhile, grew 0.33 percent or 17.05 points to finish at 5,262.30.

“If we see an increase in foreign capital next week, we may maintain our momentum and stay
above 9,000,” Eagle Equities, Inc. research head Chris Mangun said.

However, the possibility of a pullback or profit-taking is likely “as we are currently up 5.7
percent for the month,” Mangun noted, with trading moving back to 8,900 territory.

“Blue-chip issues continue to show leadership which is why I still have a very bullish
sentiment…,” he said.

“Any dip in our market should be treated as a buying opportunity. I have no doubt that 2018 will
be a great year for the PSE (Philippine Stock Exchange) and the current gains indicate that this is
just the beginning,” Mangun added.

A broker said investors would also be looking at the results of a US Federal Reserve policy
meeting this week. The US central bank is widely expected to keep rates steady during the Jan.
30-31 meeting, with the first of an expected three adjustments this year likely to be announced
next month.

Online brokerage firm 2TradeAsia, meanwhile, said the index’s two attempts to move past 9,000
last week could be a prelude to a potential base-building that would support a long-term trend.

“Breathers should be regarded as opportunities to position gradually on stocks slated to perform

this year,” it added.

Investors should consider buying into infrastructure, holding firms, consumer and retail,
property, banks, logistics and electronics companies as these are benefiting from the country’s
economic growth, 2Tradesia said.

“Meanwhile, regulatory hurdles are challenges for power, energy, water, telecommunications,
and gaming,” it noted.