DOF sees capital markets leading Phl economic recovery

Maris Federez   •   May 26, 2021   •   497

 

MANILA, Philippines — The Department of Finance (DOF) is confident that the government’s initiatives in strengthening the country’s capital markets will lead to a stronger Philippine economy.

In a statement released on Tuesday (May 25), DOF Secretary Carlos Dominguez III has stated that “the reforms being initiated and pushed by the Duterte administration to further deepen the Philippines’ capital markets will let the economy emerge stronger and more resilient in the aftermath of the prolonged COVID-19 pandemic.”

The statement also quoted Dominguez saying that “these reforms aimed at building a ‘truly broad-based and inclusive financial system fit for the 21st century’ include the proposed Capital Market Development Act and simplifying the taxation of passive income and financial services and transactions.”

The Finance chief noted that these reforms require the approval of Congress.

He, however, added that the DOF and the Capital Market Development Council (CMDC), which he chairs, have initiated several measures to make the processes in the financial system more efficient and accessible to both bond issuers and retail investors.

Among these initiatives is the recent launch of the electronic Securities Issues Portal (e-SIP) by the Philippine Dealing System (PDS), which had Ayala Land Inc. (ALI) as its pioneer corporate bond issuer.

Another initiative is the introduction of mobile software such as the Bonds.PH and Overseas Filipino Bank apps, which have allowed the Bureau of the Treasury (BTr) to widen its reach to individual investors in offering government bonds.

“All these efforts should open the door to a steady stream of new listings and new investment products. We are very optimistic to bounce back from the COVID-19 crisis stronger and more resilient than ever. The capital markets, I believe, will lead us in this recovery,” Dominguez said at the opening of the virtual Initial Public Offering (IPO) Forum organized by the Philippine Stock Exchange (PSE).

The online forum, held as part of the PSE’s information campaign on the amended listing rules of its Main, and Small, Medium, and Emerging Boards, discussed the advantages and expansion opportunities for small, medium enterprises (SMEs) in the stock market.

The DOF said, “the proposed Capital Market Development Act now pending in Congress seeks to develop a sustainable corporate pension system to help secure the future of Filipino workers and their families while making more capital available in the financial sector to stimulate economic growth.”

Another priority measure that the DOF is lobbying Congress to pass this year is the bill simplifying the taxation of passive income and financial intermediaries, the DOF said.

Passive income is any income that requires no effort to earn and maintain and where the earner expends little effort to grow the income. It includes rental income and any business activities in which the earner does not materially participate.

A financial intermediary, on the other hand, is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, pooled investment funds, and stock exchanges.

Dominguez said this proposal that aimed at reducing the number of combinations of tax bases and rates in the financial sector from 80 to about 40, represents Package 4 of the Duterte administration’s Comprehensive Tax Reform Program (CTRP).

“Package 4 aims to shift from the traditional bank-centric funding to capital market financing. It will help us provide long-term funding for our infrastructure program,” Dominguez said. “With their high multiplier effect, infrastructure investments will be the cornerstone of our economic recovery.”

Dominguez also assured that as CMDC chairman, he is committed to doing his utmost for “better investor protection, improved corporate governance, the centricity of shareholders, and broader investor participation.”

PH, India seeking ways to boost ties in infra development, digital tech — DOF

Robie de Guzman   •   January 4, 2021

MANILA, Philippines The Philippines and India are exploring ways of enhancing their economic ties, particularly in the areas of financial and digital technologies and infrastructure development, the Department of Finance (DOF) said.

In a statement, the department said Finance Secretary Carlos Dominguez III and India Ambassador to the Philippines Shambhu Kumaran met recently to discuss both countries’ interests in strengthening their cooperation in the fields of banking and finance.

The DOF said that during his virtual courtesy call, Kumaran offered India’s expertise in setting up the country’s broadband network as well as the national identification system.

Dominguez welcomed the ambassador’s offer of assistance and invited Indian companies to participate in the upcoming rollout of a shared cyber-defense plan for Philippine state-run banks and their subsidiaries, the department added.

The finance chief likewise expressed his appreciation for India’s interest in helping the government implement its digital transformation programs that aim to expand financial inclusion among Filipinos, upgrade the delivery of frontline government services, and further curb corruption among government officials.

Kumaran said Indian companies are interested in taking part in the Duterte administration’s “Build, Build, Build” program but are “in need of more information on the various opportunities available to them under the President’s centerpiece infrastructure modernization plan.”

“To assist prospective investors on this concern, Secretary Dominguez and Ambassador Kumaran agreed to help organize a webinar or online workshop where the Philippines can showcase the various opportunities open to India’s companies on infrastructure development, as well as other possible areas of cooperation between Filipino and Indian firms,” the DOF said.

It was also mentioned during the meeting that an Indian company – GMR Infrastructure Limited – is already taking part in the “Build, Build, Build” program and has performed “impressively” in operating the Mactan Cebu International Airport (MCIA) and expanding the Clark International Airport (CIA).

The Philippines and India rekindled their bilateral ties with the official visits of President Duterte to India in 2017 and 2018, which were followed by a state visit of Indian President Ram Nath Kovind to the Philippines in October 2019, the DOF said.

India and the Philippines established their diplomatic relations on November 16, 1949.

BIR collected P582-M from 196 closed establishments – DOF

Robie de Guzman   •   December 15, 2020

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has collected a total of P582.5 million in taxes from shuttered establishments in the first 11 months of the year, the Department of Finance (DOF) said Tuesday.

In a statement, the DOF said the BIR collected this amount from January to November this year from 196 commercial establishments that were padlocked for failure to either register or pay the correct amount of taxes.

The operations conducted against the padlocked establishments were pursuant to Revenue Memorandum Order (RMO) No. 3-2009, otherwise known as the Oplan Kandado Program, the agency said.

In his report to the finance department, BIR Deputy Commissioner Arnel Guballa said the bureau collected an additional P34.5 million in taxes in the last quarter from another 18 commercial establishments that were padlocked under its Oplan Kandado program.

With this, from the previous amount of P547.9 million collected under this program from 178 establishments that were closed down in the first nine months of 2020, the DOF said the total amount has increased to P582.5 million as of November this year.

Guballa also reported that the 103 complaints involving an estimated P4.96 billion in tax liabilities that it filed before the Department of Justice are now under preliminary investigation.

Last year, the BIR collected a total of P1.92 billion under its Oplan Kandado program as a result of the temporary closure of 743 establishments for various violations of the National Internal Revenue Code.

BIR’s performance under the Oplan Kandado program in 2019 was a 218.88-percent improvement over its 233 closures of establishments reported in 2018 and a 140.76-percent increase in collections amounting to P799.47 million during that year, the DOF said.

No suspension of excise tax on fuel this year – Malacañang

Marje Pelayo   •   May 28, 2018

MANILA, Philippines – Malacañang on Monday, May 28, said there is no suspension of the implementation of excise tax on fuel this year.

This, following announcement by the Department of Finance (DOF) that if the price of oil in the world market spiked to $80 dollars per barrel for three months, the implementation of fuel excise tax will be suspended in January 2019.

DOF argued that such suspension is included in the provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“It will be the next tranche in 2019 that we will suspend and it’s also hard for us to suspend mid-year because you have already projected in your appropriations, in your revenues and in your budget, those things that you will fund,” said Asec. Paola Alvarez of DOF.

The Finance Department claimed that TRAIN only contributes 0.4 percent in the overall inflation rate in the country.

The driving forces of inflation, according to DOF, are better tobacco compliance, crude oil price in world market, devaluation of peso versus US dollars, profiteering, and additional purchasing powers for consumers due to free tuition and lower personal income tax.

The agency added that it is doing everything it can to alleviate the effects of inflation such as enhanced conditional and unconditional cash transfers, importation of cheaper fuel from other countries such as Russia and stricter price monitoring in markets.

Also, DOF said, it will require Congress to pass another law in order to suspend the TRAIN law.

On the other hand, Malacañang believes that such suspension measure will not prosper in Congress because it will largely affect the ongoing programs of the government.

Some of these programs are the free tuition in state universities and colleges, the Expanded Health Care program and the Build! Build! Build! infrastructure program.

“I hope Congress does not do so because mayroon na talagang projected expenditure for the expected rise in takes but ang hinihingi lang natin ay pag-intindi mula sa taumbayan na masakit po talaga ito pero kung ititigil naman po natin … pare-pareho tayong malulugi,” explained Presidential Spokesperson Secretary Harry Roque.

(I hope Congress does not do so because there is already a projected expenditure for the expected rise in takes.  But all we ask for is the public’s understanding that this will really hurt, but if we stop it now…we will all stand to lose.) — Rosalie Coz

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