Real Estate Loan - no bubble

1. Philippine banks had P2.078 trillion in total real estate exposure as of end-December, 14.7% more than the P1.812 trillion in 2016.Growth eased from the 19.5% pace recorded in 2016.

Notes: Maybe...people who can afford loans already bought house...seeing the trend..will it go down this year? I guess so....besides...interest rate may go up...who dares to loan more...but...still to many people don't have house yet...it won't collapse suddenly right?....OFWs are still buying...

2. Lending for commercial property accounted for two-thirds of the total at P1.193 trillion, up by 17% from P1.019 trillion extended in 2016. On the other hand, home loans grew 14.8% to reach P608.142 billion, versus P529.904 billion in 2016.

Notes: commercial? office and retail stores?...

3. Loans accounted for 20.6% of the banks’ total real estate portfolio, lower than the 20.77% share posted in 2016. Despite the pickup in lending, bad debts grew by a modest 2.2% to P29.46 billion, accounting for just 1.64% of total loans. The BSP requires banks to keep their real estate exposure to a maximum of 20% of their loan books, as part of risk management.

BISTRO Group

It runs premium casual dining brands like Italianni’s and TGIFriday’s in the Philippines more than 20 years ago.

It has 18 concepts and 70 branches and opens 10~12 branches annually.

It also provides franchise for its brands such as Bulgogi Brothers Denny’s, Baker & Cook, Fish & Co., and Ka Tunying’s Café. The Bistro Group currently operates all its restaurants, but is building its brand through franchising.

SMC, 2GO, ENDO, Dunkin' Donuts, Consumer Spending

1. SMC Global Power Holdings Corp. is buying 640 MW Coal-Fired Thermal Plant located in Masinloc, Zambales from AES.

Notes: Biggest power generation firm in the Phil?

2. 2GO Group Inc. said it registered a loss of P310 million last year compared to a P344 million income the previous year. Non-shipping continued to increase as a proportion of 2GO’s business and accounted for 61 percent of total revenues in 2017, with shipping accounting for the other 39 percent

Notes: Looks like shipping is not that attractive yet. E-commerce is also growing but not good enough unlike other countries. SM mentioned that it will take long time (10 yrs?) but i don't think so. 

3. President said he is open to a “compromise” on the issue of labor contractualization.

Notes: DOLE already filed new version to OP...not yet signed...and open to talk? Looks like it will not be a very strict version...relieving all the labor intensive industries...especially manufacturing..good news...

BLOOM, NOW, Life Time Cellphone Number, EV

1. Enrique Razon’s Solaire Resort & Casino has received Forbes Travel Guide’s highest rating – Five Stars – for the second consecutive year.

Notes: Oh...wanna visit there one day...quite expensive compared to other hotels in the Manila...

2. NOW Telecom Inc. franchise extended until 2043. The bill expands the nature and scope of the franchise to wireless telecommunications systems, including mobile, cellular and fiber optics.

Notes: It's a separate unit with the listed NOW Corp.(NOW) even though the major owners are same. NOW owns around 19% only for now...maybe later, they gonna merge or do something...

Let's see who wins the bid...and what foreign company will join....

Growing LPG Market in the Philippines

It looks like Philippines don't use LNG for cooking at home. There is not pipeline even in the Manila. Some newly built condos ban using LPG (only Electric ) but still it has big potential even in rural areas, I think. Eventually, all Filipino may use LPG or Electricity for cooking...not wood.

Only several listed companies are doing this business....PPC, PCOR, COSCO, PNX...I'm not sure SHLPH is also engaged in this business...

Notes : The data is as of March, 2017.

1. Supply : 2 refineries, 6 importers, 28 import facilities, around 200 filling plants, more than 100 brands.

2. As the economy grow...demand will grow more...since there are not much alternative cooking fuels...

System Loss, China Loan, PPC

1. ERC lowers system loss cap to 6.5%  from 8.5% for 2018. The cap will be further lowered gradually until it reaches 5.5% in 2021.

Notes: MER's system loss performance is 6.05%. While AP...two of it's power distribution firms has higher than 6.5%....Catobato Light (8.34%), Davao Light (7.18%)...AP may get affected right away...in the long term...both company will be affected...requiring more investment to improve the loss....hmmmm.

Notes: I think they can still make up using other power generation revenues and increasing power consumption...but still loss is loss...TT

2. Government will pursue loans from China despite its price tag of 2-3 percent per annum, even if Japan can offer funding at interest rates between 0.25-0.75 percent.

Notes: Nothing free ha...but can i borrow with that interest rate personally? :)

3. Pryce Properties Corp. (PPC) is building at least 15 new LPG refilling plants in Visayas and Mindanao to make its products closer to consumer markets. All the expansion projects will be finished till 2019.

Notes: It recorded a good income/revenue in 2017. VisMin's volume growth was 22%..while Luzon was 4%..Is it because of PPC's market share or...general volume growth...maybe both.

PSE correction history

Notes: Nobody knows how deep and long the corrections will affect. In many cases, we don't even know if it's correction or crash down. There are many symptoms why we should be cautious for the mean time, but even this one....nobody knows...SAD.

The data is from COL Financial.
Using the formal definition of a stock market correction, which is a drop of more than 10% but less than 20%, we identified seven episodes of corrections. Based on the seven episodes, the median magnitude is 13%, while the median duration from peak to trough is four months. On a more optimistic side, there have been shallower corrections of 11% that took only two months to complete.

Date		Magnitude	Duration (month)
Jan-92	Mar-92	13%	2
Feb-05	Apr-05	11%	2
Oct-10	Feb-11	12%	4
Jul-11	Sep-11	11%	2
Apr-13	Dec-13	17%	8
Mar-15	Jan-16	16%	10
Jul-16	Nov-16	15%	4

Interconnection Charge, RRR, Hot Money

1. Senate Bill 1636 or the Lifetime Cellphone Act

Senators proposed removal of interconnection fees charged by telecommunications firms for all calls and SMS messages.

Notes: It may reduce the burden for users to transfer to 3rd player. It might have the biggest effect for existing telcos, I think. On top of all the infra  and regulation related support from the government...

2. Reduced RRR (Reserve Requirement Rate) will further weaken Peso.

Notes: Higher estimated inflation(4.34%). More liquidity, TRAIN, Weak Peso...looks like money supply to the market will pick up....but how long?

3. NET hot money inflow in Jan 2018 was $162 million. Jan 2017 was $301 million and Dec 2017 was $457 million. 

Notes: At least it was not outflow.

MARKET ISSUES

[last partial update : 02/28/2018]

Macro and Overseas
(a) US interest rate : 1.25 ~ 1.5%, May increase 3 times in 2018
(b) US 10 yr bond : around 2.9....uptrend..now..When it will hit 3.5%?
(c) Crude Oil Price : around $61.54, Can maintain around $60?
(d) Phil Inflation : 4% in Jan, 2018...need to check several months.
(e) Phil Interest Rate: 3%
(f) Phil GDP : 6.7% in 2017....might be stable/outperform over the next years..
(g) Comprehensive Tax Reform Program : SEZ registered companies will be affected?
(h) China 2017 GDP growth : 6.9%...is it a turning around? fundamental will be stable in 2018 also...
(i) FX : 52.35...still uptrend...when it's gonna stop? 55? 56? Who earns dollars?
(j) OFW remittance : $28.1 billion in 2017, 4.3% increase from 2016
(k) Trade War: will ignite? I don't think so.

RRR, Oil Price

1. BSP reduced Reserve Requirement Ratio (RRR) to 19% from 20%. It will be effective on March 2, 2018. It will gradually lessen its reliance on reserve requirements for managing liquidity in the financial system. This 1% will free around 90 billion pesos.

Notes: BSP said...it has other methods to control..what are they? more money in the market....will support growth...is it good for stock also? or only good for banks? how bout inflation? when they gonna raise interest rate? Some say...BSP may raise 0.75% this year...

2. US shale producers are ramping up output. Russia/Saudi agreed on the need to cooperate to prop up prices.

Oriental Petroleum and Minerals Corporation (OPM)

1. Company Information
Company Name	Oriental Petroleum and Minerals Corporation (OPM)
Sector	Mining and Oil		Incorporation Date		Dec 22, 1969
Subsector	Oil		Number of employees		(Group Total)
Board of Directors	Chairman: James L. Go, President: Robert Coyiuto, Jr.
Website / E-mail	orientalpetroleum@digitelone.com / http://www.opmc.com.ph
2. Stock Information (Class A)
Total Assets	90,615,558 USD	Market Capitalization		1,440,000,000.00
Total Liabilities	2,691,068 USD	Outstanding Shares		120,000,000,000
Retained Earnings	2,625,188 USD	Listed Shares		120,000,000,000
Listing Date	Oct 14, 1970	Issued Shares		120,000,000,000
Board Lot	100,000	Free Float Level (%)		0%
Par Value	0.01	Foreign Ownership Limit
3. Major Stock Holders (common shares)
Consolidated Robina Capital Corp R. Coyiuto Securities, Inc. Prudential Guarantee & Assurance J.G. Summit Holdings, Inc.				18.53 12.07 6.67 0.88
4. Company Descriptions and Business Development
Notes 1. Related Companies: JGS 2. It has 80 billions of Class B shares also. 3. Chairman is buying shares.....it changed 2nd purpose of by-laws to engage renewable energy.
Overview OPM's petroleum revenues and production and related expenses are derived from SC 14 Contract Area, which is composed of four blocks, namely, A (Nido), B (Matinloc), C (Galoc & West Linapacan) and D. Of these blocks, only blocks of Nido, Matinloc and Galoc are in operation. West Linapacan is currently under evaluation for re-activation after it was shut-in in 1991 due to water intrusion, and Block D is designated as the retention block.

JFC, ATN, PTT, Tax Amnesty

1. JFC to Increase Ownership of Smashburger to 85%.  The consolidation of Smashburger into JFC will increase its worldwide store network by 365 stores or +9.6% to 4,162. This will also expand JFC’s geographical presence from 16 countries to 21 adding Costa Rica, Egypt, El Salvador, United Kingdom (England and Scotland), and Panama.

The consolidation of Smashburger into JFC will increase JFC’s store network in the US by 5-fold, from 83 to 417 and will expand its presence to 39 states in the US from current 10 states. It will also increase JFC’s store network in Canada, from 2 to 8.

Notes: Its revenue in 2014...was around 228 million dollars according to Forbes. Looks like its revenue dropped a little...averaging around 200 millions dollars..how much is it in peso? 200 x 50 = 10 billion pesos? JFC revenue in 2016 was around 115 billion pesos...

2. ATN will register its 2,560,000 square meter property registered under TCT-463732 in the name of its fully-owned subsidiary Palladian Land as a Ecozone. 

3. PTT Philippines Corp. plans to add a convenience store business aside from the current oil retailing and a chain of coffee shops. Cebu Pacific’s order from PTT comprises 60 percent of aviation fuel business and 25 percent of the entire business volume. The company is eyeing  to build about 30 more retail stations this year. These  will be located in Luzon and Southern Visayas. The company  also eyes  10 new Café Amazon coffee shops in Luzon. PTT currently has 122 gasoline stations located in various parts of Luzon and Central Visayas. 

4. Taxpayers who wish to avail of the benefits of tax amnesty will only be required to pay 5 percent  of his or her total net worth instead of the total tax deficiency. 

Preferred Stocks

There are two (2) types of stocks in terms of RIGHTS.

1. Common Stock: A common stockholder exercises control through voting rights during annual or special stockholders’ meetings.

2. Preferred stock: It is a security whereby the holder has a higher claim on the assets and earnings of the company. It combines features of debt (dividend) and equity (price appreciation).

Non-voting : It has no voting rights.

Cummulative Dividends: If the company missed dividends payment in the past, the owed dividends should be paid first even compared other preferred shares.

Convertible: The holder has the option to convert the preferred shares into a fixed number of common shares.

Callable: The issuer has the right to call in or redeem the stock at a preset price.

Free Float Level

The level is actually the percentage of a company’s outstanding shares that are not held by strategic shareholders. 

Based on the SEC’s definition, “significant share holdings of 10 percent or more” of the total issued and outstanding shares of a company were considered “strategic” and thus, excluded in the public float of the company. The minimum public ownership requirement for listed company is 10% as of now.


Notes: In general, big funds don't like to buy stocks of the low free float level since it's hard to sell when they want to sell. PSE also consider free float level when they include a company to a main and sub index. 

PSE Trading Hour

TRADING HOURS

09:00 ~ 09:15	Pre-Open	You can enter, modify or cancel orders but no matching occurs
09:15 ~ 09:30	Pre-Open No-Cancel	You can enter orders but cannot modify or cancel.
09:30 ~ 11:57	Trading
11:57 ~ 11:58	Pre-Close
11:58 ~ 12:00	Pre-Close No-Cancel	You cannot modify or cancel orders.
12:00 ~ 13:30	Break	Lunch Break
13:30 ~ 15:17	Trading
15:17 ~ 15:18	Pre-Close Auction	No matching of orders occur
15:18 ~ 15:20	Pre-Close No –Cancel	You cannot modify or cancel orders.
15:20 ~ 15:30	Run-off	You can only enter order at the Closing Price.

PSE - Sector Index Changes

Some stocks will be added/removed.
The change will be reflected on Feb 19, 2018.

1. Honding Sector
AC, AEV, AGI, ATN, ATNB, COSCO, DMC, GTCAP, JGS, LIHC, LPZ, LTG, MPI, PA, SM, SMC, TFHI

Notes: LIHC, PA, TFHI will be removed

2. Financial Sector
AUB, BDO, BPI, CHIB, EW, MBT, MED, PNB, RCB, SECB, UBP

Notes: MED will be removed

3. Property
ALCO, ALI, ARA, BEL, BRN, CEI, CPG, CYBR, DD, FLI, GERI, HOUSE, MEG, MRC, PRMX, RLC, SLI, SMPH, VLL

Notes: RLT will be added. ARA, CYBR, MRC will be removed

PSE Index

Main Index consists of top 30 companies. PSE review it twice a year.

1. Per Group with rough weight
SM Group     : SM(12.93%), SMPH(8.06%), BDO(7.27%)               = 28.26%
Ayala Group : AC(6.22%), ALI(8.16%), BPI(5.57%), GLO(1.29%) = 21.24%
JGS Group : JGS(5.30%), RLC(1.03%), RRHI(1.23%), URC(3.72)  = 11.28%
MPI Group : MPI(2.00%), MER(1.87%), TEL(4.05%)                      = 7.92%
GTCAP Group : GTCAP(2.75%), MBT(3.73%)                                 = 6.48%
Aboitiz Group:  AEV(4.56%), AP(1.37%)                                          = 5.93%
JFC Group : JFC(3.24%)                                                                      = 3.24%
AGI Group : AGI(1.60%), MEG(1.33%)                                             = 2.93%
ICT Group : ICT(2.81%)                                                                      = 2.81%
SECB Group: SECB(2.74%)                                                                = 2.74%
DMC Group : DMC(1.24%), SCC(1.00%)                                          = 2.24%
SMC Group: SMC(1.26%), PCOR(0.52%)                                          = 1.78%
LTG Group: LTG(1.55%)                                                                     = 1.55%
COSCO Group: PGOLD(1.13%)                                                         = 1.13%
LPZ Group : FGEN(0.46%)                                                                 = 0.46%

2. Changes
Recently removed : EDC, EMP, BLOOM
Recently added : RRHI, PGOLD

Fiscal Incentives - RA 10708 - Tax Incentives Management and Transparency Act (TIMTA)

In order to establish a mechanism that will effectively account for the foregone revenues through the grant of tax incentives to a number of businesses and activities, RA 10708 was enacted on December 9, 2015. The salient features of the law are as follows:

1. RA 10708 requires all registered business entities to file their tax returns and pay their tax liabilities, on or before the deadline as provided under the NIRC, as amended, using the electronic system for filing and payment of taxes of the BIR. For registered business entities availing of incentives administered by the Investment Promotion Agencies (IPAs), they shall file with
their respective IPAs a complete annual tax incentives report of their incomebased tax incentives, value-added tax and duty exemptions, deductions, credits or exclusions from the tax base as provided in the charter of the IPA concerned, within thirty (30) days from the statutory deadline for filing of tax returns and payment of taxes. In turn, the IPAs shall, within sixty (60) days from the end of
the statutory deadline for filing of the relevant tax returns, submit to the BIR, their respective annual tax incentives reports based on the list of the registered business entities which have filed said tax incentives report.

Fiscal Incentives - Exemption from Donor's Tax

Several statutes were also passed which exempt certain donations from the payment of donor’s tax and treat such donations as allowable deductions from the donor’s gross income, primarily intended to encourage donations to beneficiaries thereby enhancing their capability of fulfilling its purpose and objectives.

These include
RA 10066 (National Cultural Heritage Act of 2009),
RA 10072 (The Philippine Red Cross (PRC) Act of 2009),
RA 10073 (Girl Scouts of the Philippines Charter of 2009),
RA 10165 (The Foster Care Act of 2012),
RA 10174 (The Climate Change Act of 2009),
RA 10390 [An Act Revitalizing the People’s Television Network, Inc. (PTV)] and
RA 10650 (Open Distance Learning Act).

Fiscal Incentives - Duty Free Importations

A number of legislation were enacted during the 15th and 16th Congress (July 2010-March 2016) which grants exemption from payment of taxes and duties on various types of importations.

These include
RA 9490 (The Civil Aviation Authority Act of 2008),
RA10068 (Organic Agriculture Act of 2010),
RA 10121 (The Philippine Disaster Risk Reduction and Management Act of 2010),
RA 10349 (The New Armed Forces Modernization Act) and
RA 10747 (Rare Diseases Act of the Philippines).

The exemption from taxes and duties on importation is designed to promote and assist the hasten
development and improvement of the aforementioned sectors by being able to bring in additional equipment and resources without incurring additional expenses.

Fiscal Incentives - RA 10693 (NGOs)

RA 10693 which was enacted on November 3, 2015 provides for a preferential tax rate of two percent (2%) to duly registered and accredited Microfinance nongovernmental organizations (NGOs) on their gross receipts from microfinance operations in lieu of all national taxes.

The preferential tax treatment shall be accorded only to NGOs whose primary purpose is  microfinance and only on their microfinance operations catering to the poor and low-income individuals in alignment with the main goal of this Act to alleviate poverty. The non-microfinance activities of Microfinance NGOs shall be subject to all applicable regular taxes.

Fiscal Incentives - RA 10026 (Local Water Districts)

RA 10026 which lapsed into law on March 11, 2010 grants income tax exemption to Local Water Districts (LWD). Said exemption similarly situates LWDs with other GOCCs that are exempt from the payment of income tax per Section 27 of the NIRC, as amended. The amount that would have been paid as income tax and saved by LWDs shall be used for capital development expenditure in order to expand water services coverage and provide safe and clean water in the provinces, cities, and municipalities.

Fiscal Incentives - RA 10754 (PWDs)

RA 10754 which was enacted on March 23, 2016 entitles the persons with disability (PWDs) to at least twenty percent (20%) discount and exemption from the VAT, if applicable, on the following sale of goods and services for the exclusive use and enjoyment or availment of the PWD (medicines; professional and medical and dental fees; transport fares; services in hotels, restaurants and recreation centers; admission fees in theaters and other places of leisure; and funeral and burial services for the death of PWDs).

Further, PWD, who are within the fourth civil degree of consanguinity or affinity to the taxpayer, regardless of age, who are not gainfully employed and chiefly dependent upon the taxpayer, shall be treated as dependents under Section 35 (b) of the NIRC, as amended.

Fiscal Incentives - RA 9994 (Senior Citizen Act)

RA 9994 or the Expanded Senior Citizens Act of 2010 (February 15, 2010) amends the benefits and privileges of the elderly that were not previously included in RA 7432 or the Senior Citizens Act of 1992.

Pursuant to RA 9994, senior citizens are entitled to the following tax and non-tax incentives:

1. 20% discount and exemption from the VAT on the sale of goods and services (medicines; professional and medical and dental fees; transport fares; services in hotels, restaurants and recreation
centers; admission fees in theaters and other places of leisure; and funeral and burial services for the death of senior citizens);

2. Exemption from the payment of individual income taxes of senior citizens who are considered to be minimum wage earners in accordance with RA 9504 (An Act Amending Section 22, 24, 34, 35, 51, and 79 of the NIRC, as amended).

Fiscal Incentives - RA 9679 (HDMF)

RA 9679 or the Home Development Mutual Fund (HDMF) Law of 2009 intends to strengthen the “Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno” (Pag-IBIG) Fund by establishing, developing, promoting and integrating a nationwide, sound and viable tax-exempt mutual provident savings system suitable to the needs of the employed and other earning groups, with mandatory contributory support of their employers in the spirit of social justice and the pursuit of national development.

The HDMF Fund, most commonly known as the Pag-IBIG Fund, is a unified endeavor that aims to provide an affordable housing and shelter system to its members.

To attain this, the HDMF Law of 2009 provides that all of its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom, as well as supplies, equipment, papers or documents shall be exempt from any tax, assessment fee, charge or custom
or import duty; and all benefit payments made by the Pag-IBIG Fund shall likewise be exempt from all kinds of taxes, fees, or charges, and shall not be liable to attachment, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or
persons entitled thereto, except to pay any debt of the members to the Fund.

Fiscal Incentives - RA 9576 (PDIC)

RA 9576 (April 29, 2009) which amends certain provision of RA 3591 or the Philippine Deposit Insurance Corporation (PDIC) Charter, as amended, grants institutional and financial strengthening measures to the PDIC with the intention of further strengthening the mandatory deposit insurance
coverage system to generate, preserve, maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations.

RA 9576 provides that “all tax obligations of the Corporation for a period of five (5) years reckoned from the date of effectivity of the Act (June 1, 2009), shall be chargeable to the Tax Expenditure Fund (TEF) in the GAA, pursuant to the provisions of EO 93 series of 1986:
Provided that, on the sixth year (6th ) and thereafter, the Corporation shall be exempt from income tax, final withholding tax, value added tax on assessments collected from member banks, and local taxes”. All notes, debentures, bonds, or such obligations issued by the PDIC are also exempt from taxation both as to principal and interest, and shall be fully guaranteed by the government.

Fiscal Incentives - RA 10744 (Credit Surety Fund)

RA 10744 accords the Credit Surety Fund (CSF) Cooperatives the same tax privileges as cooperatives registered with the CDA.

The law defines CSF as a fund generated from the contributions of well-capitalized and well-managed member-cooperatives/non-governmental organizations (NGOs), - local government units (LGUs), government financial institutions (GFIs) and other institutions/government agencies.

Fiscal Incentives - RA 9520 (Cooperatives)

RA 9520 entitled “An Act Amending the Cooperative Code of the Philippines” also known as the Philippine Cooperative Code of 2008 (February 17, 2009) provides for a strengthened and more comprehensive law on the promotion and development of the country’s cooperatives.

The law provides for the following incentives:

1. Duly registered cooperatives under the Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under internal revenue laws
and other tax laws; and

2. Cooperatives transacting business with both members and nonmembers shall not be subject to tax on their transactions with members. In relation to this, the transactions of members with the
cooperative shall not be subject to any taxes and fees, including but not limited to final taxes on members’ deposits and documentary tax. Notwithstanding the provisions of any law or regulations to the contrary, cooperatives dealing with nonmembers shall enjoy the following tax exemption:

Fiscal Incentives - RA 9513 (Renewal Energy Act)

RA 9513 or the Renewable Energy Act of 2008 was enacted on December 11, 2008. It provides the framework of the government to acceleratethe exploration and development of renewable energy (RE) resources such as, but not limited to, biomass, solar, wind, hydro, geothermal and ocean energy
sources, including hybrid systems.

Through the adoption of sustainable energy development strategies, the government aims to achieve energy self-reliance and reduce the country’s dependence on fossil fuels and at the same time minimize the country’s exposure to price fluctuations in the international markets, the effects of which spiral down to almost all sectors of the economy.

RE developers, including hybrid and cogeneration systems as duly certified by the Department of Energy (DOE), in consultation with the BOI, shall be entitled to the following incentives:

1. ITH for seven (7) years; additional investments entitled to ITH not to exceed three (3) times the period of the initial availment;

2. Duty-free importation of RE machinery, equipment and materials within the first ten (10) years upon the issuance of a certification to an RE developer and subject to certain conditions;

Fiscal Incentives - PD 538 (As Amended by PD 1491) - PHIVIDEC

PD 538 [Creating and Establishing the PHIVIDEC Industrial Authority (PIA) (August 19, 1974)], as amended, provides for the establishment of strategic areas with appropriate infrastructure facilities that will encourage and facilitate the establishment of industries which in turn will contribute to economic and social growth.

The creation of the PIA shall also encourage, promote, and harness the full potential and capabilities of veterans and Armed Forces of the Philippines (AFP) retirees so that they could participate fully in the enhancement of the economic development of the country. PD 538, as amended provides for the following incentives:

1. Exemption from customs duties, internal revenue taxes, local tax ordinances, and wharfage dues of raw materials, supplies, articles, equipment, machinery, spare parts and wares of every description brought after January 1, 1997 through piers or wharves constructed by the importer with his or its private funds; and

2. In addition to tax privileges accorded to enterprises operating in the PHIVIDEC Industrial Areas which are likewise registered with the BOI, all industries or firms operating in the Areas shall be exempt from the payment of local taxes to the barrio, municipality, city or province.

Notes: Philippine Veterans Investment Development Corporation (Phividec)

Fiscal Incentives - EO 1037 (Philippine Retirement Act)

EO 1037 (July 4, 1985) created the Philippine Retirement Authority (PRA), a corporate body with the primary objective of promoting and developing the Philippines as a leading retirement destination for foreign nationals and overseas Filipinos as well as former Filipino citizens by providing them the best quality of life in the most attractive package. A retiree-participant is entitled to the following incentives:

1. Exemption from customs duties and taxes for one time importation of personal effects, appliances, and household furniture worth US$7,000.00 which should not be of commercial quantity and
must be availed of within 90 days upon issuance of a Special Resident Retiree’s Visa;

2. Exemption from payment of travel tax provided the retiree has not stayed in the Philippines for more than one year from the date of his last entry into the country; and

3. Tax-free remittance of pensions and annuities to the Philippines.

Fiscal Incentives - EO 93 (GOCCs)

This law generally withdrew the tax and duty privileges of government and private entities.

In lieu of the withdrawn tax and duty exemption of government entities, the grant of tax subsidy was introduced and institutionalized by the said EO. Under this system, an entity is granted tax subsidy, chargeable against the General Appropriations Act (GAA), to be used as payment for its tax and duty
obligations. The withdrawal of tax exemptions was deemed essential because of the need to generate more revenues for economic development purposes.

Fiscal Incentives - RA 7718 (amendment of BOT Law)

RA 7718 which was approved on May 5, 1994 is another law which provides investment related incentive. This RA amends certain sections of RA 6957 (BOT Law) and adds an incentive provision whereby projects in excess of P1 billion shall be entitled to the incentives granted per EO 226 upon
registration with the BOI. Non-tax incentives include access to a wide array of business prospects nationwide, plus the assurance of each prospect’s viability and access to new sources of funding.

Fiscal Incentives - RA 7844 (Export Development Act)

Another major investment related law is RA 7844 or the Export Development Act of 1994 December 21, 1994). RA 7844 was enacted to promote and evolve export development into a national effort and make locally produced goods internationally competitive and to generate more foreign exchange.

In addition to the existing incentives provided by the BOI per EO 226, the following tax incentives shall likewise be granted to exporters:

1. Tax credit for imported inputs and raw materials primarily used for the production and packaging of export goods, which are not readily available locally, for five (5) years.

2. Tax credit for increase in current year export revenue computed as follows:
a. The first 5% increase in annual export revenue over the previous year would mean a credit of 2.5% to be applied on the incremental export revenue converted to pesos at the current rate;
b. The next 5% increase would be entitled to a credit of 5.0%;
c. The next 5% increase would be entitled to a credit of 7.5%;
d. Any increase in excess of 15% would be entitled to a credit of 10%.

Such tax credit is only granted for the year when the performance is achieved. Export revenues used in the calculation of such tax credits shall be subject to verification as prescribed under the implementing rules and regulations.

Fiscal Incentives - RA 9593 (Tourism Act)

The enactment of RA 9593 (May 12, 2009) or the Tourism Act of 2009 recognizes the importance of tourism as an indispensable element of the national economy.

RA 9593 provides for the creation of three corporate entities attached to the DOT and under the supervision of the Secretary of Tourism for program and policy coordination, namely the: Tourism Promotions Board (TPB), Duty Free Philippines Corporation (DFPC) and Tourism Infrastructure and Enterprise Zone Authority (TIEZA). The TPB shall be responsible for  marketing and promoting the Philippines domestically and internationally as a major global tourism destination while the DFPC is authorized to operate the duty- and tax-free merchandising system in the Philippines to augment the service facilities for tourists and to generate foreign exchange and revenue for the government. On the other hand, the TIEZA shall designate, regulate and supervise the Tourism Economic Zones (TEZs) as well as develop, manage and supervise the tourism infrastructure projects in the country. These entities are exempted from the payment of corporate income tax, as provided under the NIRC, as amended.

In addition, the following incentives, at the discretion of the TIEZA board, may be granted to registered tourism enterprises within the TEZs:

1. ITH;

2. Five percent (5%) tax on gross income earned for new enterprises, in lieu of all other national and local taxes, license fees, imposts and assessments, except real estate taxes and such fees as may be
imposed by the TIEZA;

Fiscal Incentives - RA 9728 (Freeport Area of Bataan)

RA 9728 (October 23, 2009) provides for the conversion of the existing Bataan Economic Zone located in the Municipality of Mariveles, Province of Bataan into a special economic zone and freeport to be known as the Freeport Area of Bataan (FAB). It will be under the management of the Authority of the Freeport Area of Bataan (AFAB).

It should be noted that the Bataan Economic Zone was previously under the umbrella of the PEZA.

Registered enterprises operating within the FAB shall be entitled to the existing pertinent fiscal incentives as provided under RA 7916, as amended by RA 8748 or those provided under EO 226, as

amended.

The fiscal incentives shall, however, be terminated after a cumulative period of twenty (20) years from the date of registration or start of commercial operation.

Fiscal Incentives - RA 9490, as amended by RA 10083 - ASEZA

RA 9490 enacted on June 29, 2007 creates the Aurora Special Economic Zone to be managed and operated by the Aurora Special Economic Zone Authority (ASEZA). Registered enterprises located therein, to the extent of their activity/project, can avail of the following incentives:

1. ITH;

2. Net Operating Loss Carryover (NOLCO);

3. Exemption from the payment of all national and local taxes, except the real property tax on land owned by developers. In lieu thereof, they shall pay a tax equivalent to five percent (5%) of their gross income;

Fiscal Incentives - RA 7903 and 7922 - Zamboanga, Cagayan SEZ

RA 7903 (February 23, 1995) creates the Zamboanga City Special Economic Zone while RA 7922 (February 24, 1995) creates the Cagayan Special Economic Zone and Freeport. Incentives, benefits, and other privileges presently enjoyed by business establishments within SSEFZ shall also be granted to enterprises located in these zones. In addition, these establishments are entitled to incentives under EO 226 or PD 66.

Fiscal Incentives - RA 7227, as amended by RA 9400 - Clark SEZ

Initially, the enactment of RA 7227 or the Bases Conversion and Development Act provides for the creation of the Subic Special Economic and Freeport Zone (SSEFZ). RA 7227 likewise authorized the President, subject to the concurrence of the local government units directly affected, to
create through executive proclamation other SEZs in the areas.

Thus, the Clark Special Economic Zone (CSEZ) was created by virtue of EO 80 (April 3, 1993), the John Hay Special Economic Zone (JHSEZ) per Proclamation 420 (July 5, 1994), the Poro Point Special Economic Zone (PPSEZ) per Proclamation 216 (July 27, 1993) and the Bataan Technology Park (Morong Special Economic Zone or MSEZ) through Proclamation 984 (March 26, 1997). Enterprises inside these ecozones are entitled to incentives which include the following:

1. Exemption from national and local taxes. In lieu of these taxes, they shall pay a tax equivalent to 5% of their gross income; and

2. Tax and duty-free importations of raw materials and capital equipment.

However, SC nullified JHSEZ and CSEZ's tax incentives on the constitutionality issues.

Fiscal Incentives - RA 7916, as amended by RA 8748 - PEZA

RA 7916 or the Special Economic Zone Act of 1995 (February 24, 1995) provides the framework for the transformation, formation and monitoring of certain designated areas in the country called special economic zones (ecozones) where companies and industries establishing their operations therein are given incentives and privileges.

Enterprises locating or operating within the ecozones shall register with the Philippine Export Zone Authority (PEZA) and are entitled to similar incentives granted as provided for under PD 66 or those provided under Book VI of EO 226. These incentives include:


1. Exemption from the payment of all national and local taxes, except the real property tax on land owned by developers. In lieu thereof, they shall pay a tax equivalent to five percent (5%) of their gross income;

Fiscal Incentives - Executive Order (EO) No. 226 - BOI and SEZ

Notes: New version of Fiscal Incentives by DOF filed to Congress as of Feb 2018. Need to check what and how much changes will come.

To attract foreign and domestic investors into the country, the government usually offers various tax incentives, principally through the Board of Investments (BOI) pursuant to EO 226, as amended, otherwise known as the Omnibus Investments Code of 1987.

One important facet of the law is the provision of incentives, fiscal and non-fiscal, to preferred areas of investments, pioneer or non-pioneer, export production as well as rehabilitation or expansion of existing operation.

Pioneer enterprises are registered enterprises engaged in the manufacture, processing or production of commodities or raw materials that are not yet being produced in the Philippines on a commercial scale.

Incentives granted to registered enterprises, depending on their category, may include income tax holidays, tax credits on raw materials, supplies and semi-manufactured products, additional deduction from taxable income for labor expense, additional deduction from taxable income for necessary and major infrastructure works, exemption from wharfage dues and export tax, duty, impost and fees, hiring of foreign laborers, simplified custom procedures and other tax incentives.

AEV, UBP, AC, AGF

1. AEV will sell 51% stake in PETNET to City Savings Bank, Inc. (CitySavings) and Union Properties, Inc. (UPI)

Note: UBP owns CitySavings and UPI. 

Notes: The name is a little bit confusing...CitySavings Bank and another listed bank, CityState Savings Bank...(CSB)...which is not related with AEV.

Notes: PETNET provides Western Union network in the Philippines and CitySavings's loan facility.

Since 2015 acquisition, it attributed 8.16 billion consolidated net income as of end 2016. How bout 2017? no result yet but...it's not a small business...hmmm...

2. AC acquired 96% of National Teachers College (“NTC”) which has 10,000 students. 

Notes: I can't understand why they should chose education business. Is it a cash cow business? or just ease business? 

3. AGF will change company name and symbol to Ferronoux Holdings Inc. (FERRO)

Housing Backlog

Many real estate development or marketing companies segregate housing units as follows.

(in million pesos)

Socialized	Economic	Low-cost	Medium-cost	Open-market
0.45 and below	0.45 ~ P1.25	1.25 ~ 3	3 ~ 4	Above 4

The backlog is likely to balloon to almost 6.3 million households in the socialized (1.6 million), economic (2.6 million) and low-cost (0.6 million) segments, including the households that will not be able to qualify for financing the purchase of housing units (1.5 million).