Monthly Archives: July 2015

Inflation could have fallen below 1% in July — BSP

Mr. Tetangco said in a text message that July’s inflation rate “could remain low and settle within 0.5%-1.3% range.”

“Downward pressure could come from the lower local pump prices and power rates for the month,” Mr. Tetangco said.

If realized, the lower end of the central bank’s estimate would mark another record low for the increase in prices of widely used consumer goods based on 2006 prices.

The higher end, meanwhile, is slightly faster than the 1.2% pace seen last month.

“The BSP will continue to monitor domestic and global developments to ensure that the policy stance remains supportive of price stability conducive to a balanced and sustainable economic growth,” Mr. Tetangco said.

Inflation in June brought the average rate last semester to 2%. The Monetary Board last June 25 cut its inflation forecasts this year and next to 2.1% from 2.3% and to 2.5% from 2.6%, respectively, within a 2%-4% inflation target for both years.

The Monetary Board last June 25 also kept policy rates unchanged for the sixth time in a row given well-anchored inflation expectations and strong domestic demand. Overnight borrowing and lending rates remained at 4.0% and 6.0%, respectively, special deposit account rates at 2.50%, while banks’ reserve requirement ratios were left unchanged.

Policy rates will be up for review when the Monetary Board meets for the fifth time this year on Aug. 13.

An economist said the market can expect the BSP to keep rates steady next month.

“The BSP can possibly afford to keep interest rates on hold for the course of the year even if the Fed (Federal Reserve) begins its rate hike cycle, possibly in September,” Nicholas Antonio T. Mapa, Bank of the Philippine Islands Research Officer for Market Research and Strategy, said via e-mail.

“Of course, the BSP remains flexible to adjust monetary policy in the future, if conditions warrant. Just like the Fed, [Mr.] Tetangco knows any good monetary policy is crafted based on latest economic data,” he added.

“But one thing we can be certain of is that these adjustments will be communicated effectively to the market when the BSP will indeed need to adjust monetary policy.”

Manila Electric Co. (Meralco) said this month overall power rates will go down by around P0.0225 per kilowatt-hour (/kWh) as the 0.20/kWh hike in generation charge was offset by the lower distribution tariff approved by the Energy Regulatory Commission (ERC).

ERC said it granted Meralco’s request to implement lower tariff on distribution, supply and metering, allowing the distributor to adopt an average rate of P1.3810/kWh starting this month, 11.26% lower than the current P1.5562/kWh and was likewise below the P1.3939/kWh proposed by Meralco in June.

Thus, households consuming an average of 200 kWh per month — which comprise around 75% of Meralco’s customer base — will pay P4.50 less. Those consuming 300 kWh, 400 kWh and 500 kWh will see P19, P42 and P89 bill reductions, respectively.

Oil firms have also slashed pump prices four times this month as of today. Gasoline prices went down by P2.05-P2.20 while diesel and kerosene prices were likewise reduced by P3.20-P3.25 and P2.90, respectively.

The Philippine Statistics Authority is scheduled to report official July inflation data on Aug. 5. — Mikhail Franz E. Flores

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Not enough land for housing

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By Othel V. Campos | Jul. 19, 2015 at 11:40pm [ manilastandardtoday.com ]
Property developers expressed concern over the lack of available land to address the massive housing requirement of a growing Philippine population. 
The Organization of Socialized Housing Developers of the Philippines Inc. said just about 2.52 percent of the total land in the country had been mapped out as suitable for housing development in 2012 from 1.27 percent in 2003. 
“Unless a socially acceptable definition and policy is adopted, the proposed measure must be held in abeyance,” the group said in a position paper in response to the proposed National Land Use Act. 
The total land area in the country, according to government data, is estimated at 30 million hectares, including 14.2 million hectares or 47.32 percent considered alienable and disposable area and 15.8 million hectares or 52.68 percent classified as forestland. 
The total built-up area, considered to be part of forestland, is 2.52 percent or 755,009 hectares. Built-up areas are those with structures like roads and other infrastructures. 
The group cited a need to revisit the proposed policy of protecting prime agricultural lands in the NLUA due to the growing housing needs and other competing interests. 
It noted that despite increasing land allocation for agricultural use, the  sector’s contribution to the gross domestic product was still smaller compared with Southeast Asian neighbors like Malaysia, Thailand and Vietnam. 
Industry projections show Philippine housing needs up to 2016 would reach 5.53 million units and require about 43,726 to 73,043 hectares, depending on the use of land resources, whether vertical or horizontal. The estimate includes socialized housing. 
Socialized housing covers residential subdivision and medium-rise condominium units below P1.2 million, while economic housing covers subdivisions and medium-rise buildings sold above P1.25 million but not more than P3.2 million. 
The group is serious in resolving the 5.5 million housing backlog and build as much as 500,000 units each year for the next 20 years. 
The property builders said the government should support the creation of as much as 10 million housing units by 2025 because the problem was taking its toll on the people’s economic and social growth. 

Philippine housing backlog stood at close to 4 million, with over 75 percent classified as informal settlers living in urban centers.
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LRA allows titleholders online access

MANILA, Philippines – The Land Registration Authority (LRA) will soon allow the public to validate the location of their titled property, inform property owners about Registry of Deeds action on their property by way of short messaging service  (SMS) or text message, and give them the opportunity to trace their titles’ history and legitimacy through computerized information.

Within the year, the LRA will launch three additional services – the Lot Location Service (LLS), Title Transaction Alert (TTA), and Title Trace Back (TTB) – under the Land Titling Computerization Project (LTCP).

LLS lets the public verify land title locations, and possible errors and inconsistencies in the technical description of their titles. The TTA alerts landowners via SMS whenever their titles are accessed at the Registry of Deeds. The TTB enables them to trace their title’s history and verify its legitimacy without having to go through the current rigorous processes.

Bunched together under the e-Titling Project, the LTCP provides the public with an efficient, reliable and expeditious service that also maintains a secure and accurate record of titles, including identification of fake land titles. The project was launched in 2013 but still has to be fully implemented.

Under the LRA Computerized System which was developed under the Land Title Computerization Program (LTCP), titleholders may also upgrade paper titles to e-titles to make it difficult to tamper with. eTitles are generated from the system, while an owner’s duplicate certificate of title is printed in the LRA-controlled judicial form.

The LRA felt the need to apply digital solutions to perennial problems encountered in land titling due to occurrences of anomalies such as double titles due to lack of validation, and erroneous technical descriptions of properties, among others. The LRA Computerized System was instituted to provide greater security and convenience with regards to land-titling applications and processes.

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E-Titling will be one of the main issues to be taken up in the TOPS-LRA Summit 2015, a joint activity of The Organization of Property Stakeholders (TOPS) and the LRA. The event will be held on July 28  at Fairmont Hotel in Makati City from 8 a.m. to 7 p.m. with the theme ”Measuring Our Gains and Meeting the Challenges Ahead.”

TOPS is a broad-based group of organizations including real estate developers and brokers, banks and other financial institutions, and government agencies involved in the multi-billion peso property sector. TOPS aims to develop coordination, cooperation and collaboration among its member organizations and the government for improvement in property registration processes and other matters involving real estate, chattel and other property transactions.

Interested participants may register for a slot via topsinc.ph. Alternatively, contact Pauline Nepomuceno at 0936-9516038 or email topsinc@yahoo.com.

RE Developers: Protecting the Environment with Tax Issues

More than six years from the issuance of the Renewable Energy Act of 2008 and its implementing rules and regulations (IRR), the Department of Energy (DoE) has already awarded a total of 664 renewable energy contracts, as of the end of April 2015. Some 240 contracts are still pending approval by the department.

Aside from the business potential of RE sources, most companies are also entering into RE development due to the fiscal/tax incentives available under the RE Law. Under the IRR of the said law, the Bureau of Internal Revenue (BIR) shall, in coordination with DoE, Department of Finance, Bureau of Customs, BOI and other concerned government agencies, promulgate revenue regulations governing the grant of fiscal incentives. Unfortunately, several years from the issuance of the IRR, the BIR has yet to issue the guidelines for the implementation of the tax incentives under said Act. Thus, with the rising number of RE contracts being awarded, the government must look into the long overdue revenue regulations implementing the fiscal incentives.

Among other things,implementation of the following tax incentives available to RE developer must be clarified in the said revenue regulations:

Income Tax Holiday (ITH) incentive on additional investment. Under the law, new investments in RE project shall be entitled to seven years ITH from start of commercial operation. Additional investment shall be entitled to not more than three times the period of initial availment. The ITH for additional investments in an existing RE project shall be applied only to the income attributable to the additional investment, which may or may not result in increased capacity.

Thus, the revenue regulations must provide the formula to compute that income attributable to the additional investment. For increased capacity, how should the base figure be computed? Is it based on the highest sales in the last three years, or just based on the last year’s capacity? For additional investments that do not result in increased capacity, how should the income attributable to that investment be computed? Should it be based on increase in net income?

Corporate Tax Rate of 10%. After the allowed period of availment of the ITH, the registered RE developer shall pay a corporate tax of 10% on its net taxable income, as defined in the National Internal Revenue Code (Tax Code) of 1997, as amended by Republic Act No. 9337. However, the said RE developer shall pass on the savings to end users in the form of lower power rates, pursuant to a technical study by the DoE.

Yet no results of any technical study to determine the extent of savings and how the pass-on mechanism would work has been presented by the DoE. Since there may be RE developers whose ITH incentive period has or shall already expire, mechanisms or guidelines on how to implement this incentive should already be in place. Among other things, the mechanism must provide the basis for the lower power rates. Should it be determined based on the current period’s rates? Or should it be based on previous period rates charged to end users?

Tax credit on domestic capital equipment and services related to the installation of equipment and machinery. Subject to certain conditions, a tax credit equivalent to 100% of the value of the value-added tax (VAT) and customs duties that would have been paid on imported RE machinery, equipment, materials, and parts shall be given to a registered RE developer who purchases these from a domestic manufacturer, fabricator or supplier.

As provided in the IRR, the BIR shall promulgate a revenue regulation governing the granting of tax credit on domestic capital equipment. But again, no issuance has been issued yet. Thus, issues on how and where the application shall be made — can this be utilized against any tax due? — among other things are not clear yet.

Zero-percent VAT on sales and purchases; duty free importation. Sale of fuel from RE sources or power generated from RE, as well as local purchases needed for the development, construction, and installation of the plant facilities of RE developers, shall be subject to 0% VAT. However, for imporations, the law provides that importation of machinery and equipment, and materials and parts thereof, including control and communication equipment, shall be exempt only from tariff duties within the first 10 years from the issuance of a Certificate of Registration to an RE developer. The law does not provide VAT exemption for importation.

Thus, input tax from importations of RE machinery or equipment shall be an additional cost to the RE developer. Being attributable to zero-rated sales, such shall be available as tax credit or be applied for refund. However, with the current trend now on the applications for refund, RE developers must still weigh the cost and benefit of such an application.

These are just some of the issues that the issuance of the revenue regulations can very well address. To further tap the unending potential of renewable energy sources available in our country, our government must provide clear implementing revenue regulations on the availment of tax incentives. Having this in place shall mean protecting the environment and assuring our country of additional sources of energy.

Ma. Lourdes Politado-Aclan is a senior manager with the Tax Advisory and Compliance division of Punongbayan & Araullo.

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Land claimants plant trees to disrupt power lines–NGCP

It’s not a simple case of wanting to tear down the trees and destroy the habitat.

The unbridled tree vegetation under the power lines of the National Grid Corp. of the Philippines (NGCP) can topple its power transmission and cable lines, the agency argued in its appeal to the Department of Energy (DOE).

The NGCP has asked the DOE to resolve the perennial right-of-way (ROW) problem in Lanao provinces, where Agus hydroelectric plants (HEP) are located.