BSP issues digital banking license for Overseas Filipino Bank

Robie de Guzman   •   April 5, 2021   •   940

MANILA, Philippines – The Overseas Filipino Bank (OFBank) has officially become the first branchless digital-only bank in the country’s history after securing a digital banking license from the Monetary Board of the Bangko Sentral ng Pilipinas (BSP), the Department of Finance (DOF) said.

OFBank, a wholly-owned subsidiary of the Land Bank of the Philippines (LANDBANK), secured a digital banking license last March 25, the DOF said in a statement on Monday.

Prior to that, the bank was able to commence its banking operations in June last year using its then-existing license to operate as a thrift bank.

OFBank, under Executive Order (EO) No. 44 signed by President Rodrigo Duterte in September 2017, was created to establish a policy bank dedicated to providing financial products and services tailored to the requirements of overseas Filipinos.

“This milestone in the country’s banking history not only fulfills President Duterte’s campaign pledge to create a bank that caters to overseas Filipinos but will also help the Philippines leapfrog to the digital economy,” Finance Secretary Carlos Dominguez III said.

“When President Duterte said he would create a bank that would serve overseas-based Filipinos, he wanted a bank that would be a trailblazer in terms of modernizing and expanding the scope of the services it offers to them,” he added.

OFBank was launched virtually in June last year amid the COVID-19 pandemic as the Philippines’ first branchless and digital-centric government bank, the DOF said.

While fine-tuning its operations, systems, and processes to enable its official transition into a digital bank, OFBank operated as a thrift bank, the DOF said.

In December 2020, the BSP issued Circular No. 1105 containing the guidelines on the establishment of digital banks, clearing the way for OFBank to apply for a license as a digital bank.

OFBank offers four digital products and services that include a digital onboarding system with artificial intelligence (DOBSAI), which allows the real-time opening of a mobile banking deposit account on supported iPhone or Android devices.

Aside from deposit savings accounts, OFBank’s digital services also include fund transfers, bill payments, and applications for multi-purpose loans, the DOF said.

OFBank’s global digital reach spans 112 countries, with its clients able to access online the services of 763 merchants onboarded in its mobile application via the LinkBiz.Portal, it added.

P3B revenues collected from pork imports under reduced tariff, increased MAV system

Robie de Guzman   •   November 23, 2021

MANILA, Philippines – The Bureau of Customs (BOC) has posted collections amounting to P3 billion from swine meat imports under a reduced tariff system, the Department of Finance (DOF) said.

In a statement, the DOF said that the BOC reported 197 million kilograms (kg) of pork imports from April 7 to Nov. 12 this year.

However, the bureau estimated that it has foregone some P3.4 billion in revenues as of November due to the decreased tariff scheme.

The reduced tariff system was implemented in the second quarter of this year to boost the supply of pork and stabilize its retail prices in the domestic market.

To recall, President Rodrigo Duterte had issued a series of executive orders (EOs) that took effect starting April 7 to lower pork import tariffs and increase the allowable import volumes of the meat to help stabilize the domestic supply and prices of this food staple for the benefit of Filipino consumers.

Executive Order (EO) No. 128, which lowered pork import tariffs to 5 percent within its minimum access volume (MAV) and 15 percent outside MAV for the first three months, was in effect from April 7 to May 14.

EO 134, which superseded EO 128, set tariffs on pork imports under the MAV to 10 percent for the first three months, and 15 percent in the next nine months.

For imports outside the MAV, the tariffs are 20 percent for the first three months and 25 percent in the succeeding nine months.

The one-year effectivity of EO 134 began on May 15, 2021.

“To compute for the effect of the two EOs, we multiplied the dutiable value of meat by 25 percent—less 5 percent and 15 percent—which were already paid for EO 128, and multiply the dutiable value by 20 percent and 15 percent for EO 134. The result showed a revenue loss of P3.4 billion,” BOC Commissioner Rey Leonardo Guerrero said during a recent meeting with DOF.

Guerrero said the volume of pork imports started spiking in March and continuously grew in April to May, but dropped starting June.

The volume of pork imports in April, the month when the two EOs took effect, grew 500.46 percent, from 4.07 million kg in the same month last year to 24.45 million kg.

“This dramatic increase in pork import volumes continued in May, when a total of 36.5 million kg entered the country, representing a 506-percent hike from the 6.02 million kg imported during the same period in 2020,” the BOC said.

In June, the bureau said that pork imports reached 33.62 million kg, which was 531.39 percent more than the 5.32 million kg brought into the country during the same period last year.

“Pork imports continued its steady drop in July, when volumes totaled 31.18 million kg, which was 370.4 percent more than the 6.63 million kg, recorded in the same month of 2020,” it added.

The agency also noted that in August, pork imports increased 271.59 percent year-on-year, and dropped to 164.55 percent in September and 78.47 percent in October.

The volume of pork imports was 6.41 million kg in August 2020 and 23.82 million kg in August 2021; 9.73 million kg in September 2o20 and 25.73 million kg in September 2021; and 10.85 million kg in October 2020 and 19.36 million kg in October 2021.

From November 1-12, pork imports of 7.47 million kg were lower by 11.64 percent compared to last year’s 8.46 million for the same period.

BSP urges public to use digital money for cash gifts

Robie de Guzman   •   November 22, 2021

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) on Monday called on the public to use their digital wallets when sending cash gifts this holiday season.

​The BSP said that the use of digital money as an alternative means of giving cash gifts is “highly recommended to reduce physical contact and virus transmission between giver and receiver” amid the persisting threat of COVID-19.

“Digital wallets offer a safe, secure, efficient, and convenient way to transfer funds to family and friends during this season of giving,” BSP Governor Benjamin Diokno said in a statement.

The central bank said the widespread use of digital money is in line with its digital payment transformation and financial inclusion goals.

Citing latest reports, the BSP said it has achieved its target of reaching 20 percent of digital payments volume by 2020, largely driven by high-frequency, low-value retail transactions through electronic fund transfers.

“The BSP remains committed to catalyzing digitalization of payments and digitizing at least half of all transactions by 2023 in its push to promote a more inclusive and tech savvy Philippine economy,” it said.

Suspension of fuel excise tax ‘detrimental’ to PH economic recovery – DOF

Robie de Guzman   •   November 15, 2021

MANILA, Philippines – The proposed suspension of excise taxes amid rising fuel prices will be inequitable and will threaten the country’s recovery and growth prospects, the Department of Finance (DOF) said Monday.

DOF Undersecretary and chief economist Gil Beltran issued the statement following calls by some groups for the suspension of fuel excise taxes after prices of petroleum products spiked for several consecutive weeks.

“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” Beltran said.

“A more equitable way to address the impact of higher fuel prices is to provide targeted support to the vulnerable groups, particularly the transportation sector, which the government has already committed to do,” he added.

The DOF estimates that suspending all fuel excise taxes and value-added tax (VAT) on fuel excise will result in foregone revenues amounting to P147.1 billion or around 0.7 percent of the gross domestic product (GDP) in 2022.

If the tax suspension covers only the fuel excise taxes and the VAT on fuel excise under Republic Act (RA) No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the government is estimated to lose P119.5 billion or around 0.5 percent of GDP in the same year, it added.

While consumption will be slightly higher at an estimated incremental of 0.6 to 0.7 percentage point, growth will actually be lower by 0.1 to 0.2 percentage point, if the excise tax and VAT on it are suspended, the department further stated.

Beltran also stressed that higher income households are estimated to benefit from the suspension more than lower income households.

“With the suspension of fuel excise taxes, we will lose the improvements we made under TRAIN in making the tax system more equitable, in which those who are more financially capable pay more taxes,” he said.

The DOF noted that higher income households are estimated to benefit 60 percent more than lower income households from the suspension of fuel excise taxes.

With the tax relief that would accompany the suspension of fuel excise taxes, the disposable income of the top 10 percent of households is estimated to increase by around 0.63 to 0.82 percent on average in 2022, it added.

Meanwhile, the disposable income of the bottom 50 percent of households is estimated to increase by only around 0.34 to 0.45 percent.

Beltran said a more equitable way to address the impact of higher fuel prices is to “provide targeted support to the vulnerable groups, particularly the transportation sector.”

The government earlier said it will release P1 billion fund for cash grants to 178,000 public utility vehicle drivers for the remaining months of the year through the Land Transportation Franchising and Regulatory Board (LTFRB).

Once spent, the cash grants are estimated to result to an incremental P2.9 billion pesos-worth of growth in the economy, the DOF said.

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