Philippines News - January 2018

hello everyone,

Here’s some select articles about Philippine Real Estate and our Economy from various newspaper correspondents that matters for your reference.  Take note that these articles when assessed actually guides us locally what direction the economy is going, what kind of issues our government is going through and generally, and how this affects our real estate market.  News directly affects investors / businessmen on their assessment of what business decision to make, this could be from the stock market ( which is a good barometer ) to daily activities ( hiring of workers, construction supply chain, and other economic variables.

here's an article from businessworld.com as produced by Oxford Business Group : Philippines :  Year in Review 2017

 

Rising domestic and external demand helped make the Philippines one of Asia’s best-performing economies in 2017, with many key sectors posting high levels of growth.

Driven in part by a rise in exports, as well as strong domestic consumption and public sector investment, the economy continued to sustain the high rates of growth seen last year, expanding by 6.4% and 6.7% in the first and second quarter, respectively, before accelerating to 6.9% in the third quarter, according to official data.    

At a media briefing in mid-November, Ernesto M. Pernia, the Secretary of socioeconomic planning, said the government was confident GDP growth would reach the forecast year-end target of between 6.5% and 7.5%, with year-to-date expansion running at 6.7%.

While this falls slightly short of last year’s growth, which stood at 6.8% for the year and 7.1% in the third quarter, Pernia said the Philippines remains one of the top-performing Asian economies, second to Vietnam (7.5%) and ahead of China (6.8%).

INDUSTRY, SERVICES AND CONSTRUCTION AMONG STRONG PERFORMERS

Overall growth was driven by strong performances in some of the Philippines’ key sectors.

Services, which accounts for more than 50% of GDP, saw its rate of growth mirror that of the broader economy, expanding by an average of 6.7% over the first nine months of the year, compared to 7.5% a year earlier. Growth in the industrial sector, meanwhile, expanded by 7.1% between January and October, 1.4 percentage points down on last year. 

Growth in construction totalled 6.5% year on year over the first three quarters of 2017. Although this was down on the 14.9% expansion recorded over the same period in 2016, the sector looks set to benefit from accelerated public spending on infrastructure, under the government’s new Build, Build, Build program. Overall state spending rose 10% year on year over the January-to-October period, with a large proportion directed towards infrastructure development.

Another key component of the economy, the business process outsourcing (BPO) sector, maintained a steady flow of investment, though the capital stream was tempered by caution regarding external factors. These include a slowing of the economies of some key markets and concerns about US pressure on BPO clients to bring their businesses back onshore.

Though competition in the sector is increasing, the Bangko Sentral ng Pilipinas (BSP), estimated in mid-November that the BPO industry would generate revenue of $24.5 billion in 2017, up on the $22.9 billion earned in 2016.   

External factors also had a negative impact on agriculture this year. While growth reached 4.9% in the first quarter and 6.3% in the second, adverse weather conditions saw this rate fall to just 2.5% in quarter three, and expectations are that growth in the last three months of the year will also be affected.

RATES, INFLATION HOLD STEADY

The economy’s strong showing throughout 2017 has been supported by the relatively low cost of funds.

On Nov. 9 the BSP decided to hold its key benchmark rate steady at 3% for the seventh meeting in a row. The bank’s overnight lending rate remained at 3.5% and the overnight deposit rate at 2.5%.

While maintaining its accommodative lending rates, the BSP may look to marginally tighten monetary policy in the new year, having flagged a modest increase of inflation in its forecast for 2018.

The country’s year-end inflation expectations are steady at 3.2%, while the bank expects prices to rise by 3.4% next year, with higher energy prices tipped to put upward pressure on the consumer price index.

ASEAN produces new business agreements, tax reform stimulates spending

The Philippines was given a further boost in 2017 by holding the chair of ASEAN.

At the most recent ASEAN summit in November, the Philippines committed to a series of bilateral agreements with countries including the US, Russia, Japan, Canada and Australia. It also signed 14 cooperation agreements with China, with deals ranging from infrastructure cooperation to the development of industrial parks.   

Another key economic development was the proposed overhaul of the tax system. The Tax Reform for Acceleration and Inclusion (TRAIN) looks likely to come into force in 2018, after being drafted and tabled before Congress in 2017.

Among the changes is a broadening of the value-added tax (VAT) base to include more goods and services, annualized increases in fuel costs, higher excises on vehicles and taxes on sugared products.

Offsetting these revenue measures are steps streamlining tax collection, including the self-employed being required to make payments annually, rather than quarterly; raising the yearly VAT exemption threshold for small businesses from P1.9 million to P3 million; and lowering personal income tax for many Filipinos by raising bracket ceilings.   

While the widening of the scope of VAT may impact inflation in the shorter term, the tax breaks on offer for many low- and middle-income earners could further stimulate domestic spending, supporting economic growth after the initial effects of higher goods and services levies have been assimilated.

These tax changes, along with strong private sector activity, and government plans to increase infrastructure and development spending, are expected to contribute to further growth, with the BSP forecasting GDP will expand by 7% to 8% per annum through to 2022.   

here's an article from business.inquirer.net correspondent Sara Mae D. Mawis :

The OFWs' Purchasing Power over Real Properties :

The Land Registration Authority (LRA) requires the submission of the following documents to cause the transfer of the registration of the real property under the Overseas Filipino Worker’s (OFW) name:

 

Certificate Authorizing Registration (CAR) or Tax Clearance Certificate (TCC) from the Bureau of Internal Revenue;

Deed of absolute sale;

Clearance from the Department of Agrarian Reform;

Owner’s duplicate copy of the title to the registered land;

Realty tax clearance;

Certified true copy of tax declarations; and

Transfer tax receipt

 

If the OFW were a naturalized foreign citizen, he shall likewise be required to submit to the LRA a sworn statement showing the following: (a) date and place of his birth; (b) names and addresses of his parents, spouse, and children, if any; (c) area, location, and mode of acquisition of his land-holdings in the Philippines; (d) his intention to reside permanently in the Philippines; (e) date he lost his Philippine citizenship; (f) country of which he is presently a citizen; (g) such other information that may be required by the Secretary of Justice in relation to Batas Pambansa Blg. 185.

 

Meanwhile, the OFW shall submit the following documents for the transfer of title to a condominium unit in his name: (a) BIR CAR or TCC; (b) deed of absolute sale; (c) management certificate; (d) owner’s duplicate copy of the title to the unit; (e) realty tax clearance; (f) certified true copy of tax declarations; and (g) transfer tax receipt or clearance.

 

The subsequent registration of the condominium unit or land in the OFW’s name does not operate to vest ownership upon him of the subject land.

 

In Wee v. Mardo, the Supreme Court held that registration of a piece of land under the Torrens System does not create or vest title because it is not a mode of acquiring ownership.

 

The Supreme Court further held that a certificate of title is merely an evidence of ownership or title over the particular property described therein.

 

Such title cannot be used to protect a usurper from the true owner, nor can it be used as a shield for the commission of fraud. Neither does it permit one to enrich himself at the expense of others.

 

Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.

 

Failure to cause the transfer of title to the land or condominium unit in the OFW’s name under the Torrens system may cause conflicts of title to real estate and will not prevent innocent third persons to whom said real property may be fraudulently sold from claiming their ownership thereto.

 

In Spouses Peralta v. Heirs of Abalon, the Supreme Court held that the main purpose of the Torrens System is to avoid possible conflicts of title to real estate and to facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that should impel a reasonably cautious man to make such further inquiry.

 

The Supreme Court likewise held that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor. Moreover, the law will in no way oblige him to go beyond the certificate to determine the condition of the property.

 

As may be agreed upon by the parties, the OFW shall pay the following taxes for purchasing the land or condominium unit: (a) capital gains tax, which is 6 percent of the purchase price, within 30 days after such sale; (b) documentary stamp tax, which is 1.5 percent of the purchase price or fair market value, whichever is higher, within five days after the close of the month when the taxable document was made signed, issued, accepted, or transferred, or upon remittance by collection agents of collection from the sale of loose stamps; (c) transfer tax, which is 0.5 percent of the purchase price; and (d) registration fee, which is 0.25 percent of the purchase price.



here's an article from rappler.com correspondents, Chris Schnabel and Chrisee Dela Paz : 

The Philippine Biggest Business Deals in 2017 

The country’s economic renaissance continued in 2017, and the top dogs of Philippine business – the conglomerates – have taken full advantage.

They have been wheeling and dealing, creating partnerships, merging and acquiring everything from digital payment platforms to logistics to coal-fired power plants.

While some observers may shrug it off as just the big boys moving money around, it is worth taking note of because the conglomerates affect so many aspects of Philippine life, from banking, food, telecommunications, even electricity.

What gets decided in the most exclusive boardrooms in the nation eventually affects how people live all across the archipelago.

Here is a look back at the standout deals of 2017.

Ayala Corp and Globe Telecom’s joint venture with Ant Financial

It is perhaps the most recognizable deal of the year, if only for the stardust that Alibaba Group’s founder Jack Ma brought to it.

The deal saw Alibaba unit Ant Financial – the world’s most valuable financial technology firm – take up a 45% stake in Globe Telecom’s Mynt, with Globe taking a matching stake. The remaining 10% was taken up by Globe’s parent firm, Ayala Corporation.

The impetus behind the deal was to scale up Mynt’s digital wallet, GCash, and allow it to dominate the country’s nascent digital payments industry using Ant Financial's technology and know-how.

“The Ant deal will allow us now to have more capital in driving financial inclusion through proliferation of mobile payment, micro lending, and other services,” Globe CEO Ernest Cu said earlier this year.

Its main fruit so far has been the launch of GoPay, GCash’s QR code scan-to-pay feature – the launch of which even saw Jack Ma fly into the country to oversee it personally.

For consumers, this means that one can now pay for items using nothing but their mobile phone at partner outlets.

Mynt is also moving in terms of scale, with the firm saying it now has round 4,000 QRs deployed nationwide has partnered with some high profile retail players to accept the feature. These include Ayala Malls, Robinsons Department Store, SM Malls, Megaworld Lifestyle Malls Cinemas, Puregold, Ministop, and NCCC Malls.

Other places where GCash can now be used to pay include the Max’s Group of Restaurants, and clothing shops under the SSI Group and the Bench Group.

A Changing Retail Landscape

The deal headlined a wider theme of conglomerates diving into digitalization.

Beyond the Ant Financial partnership, the Ayala Group also acquired 49% of online shopping platform Zalora to bolster its presence in e-commerce as well as the logistics system that underpins it.

Keeping pace, the Gokongwei Group through JG Summit has also invested in Singapore-based Internet platform Sea Limited with a $550 million round earlier this year. Sea Limited, formerly Garena, operates the Shopee e-commerce website and is one of Southeast Asia’s unicorns, or firms valued at over $1 billion.

The Gokongwei Group’s other holding firm, Robinsons Retail Holdings Incorporated, also took a 20% stake in online beauty platform BeautyMNL in order to expand and strengthen its presence in the beauty market and e-commerce space.

As for brick and mortar retailing, Phoenix Petroleum’s Dennis Uy turned heads this year by acquiring the local franchise of Family Mart from the Ayala Group and the SSI Group.

The rationale behind the acquisition was to boost Phoenix Petroleum’s main retail business and its current network of 518 as stations nationwide.

SMC’s near $2 billion acquisition of Masinloc power plants

Another head turner was San Miguel Corporation’s (SMC) purchase of the Masinloc coal power facility in Zambales from American firm AES Corporation and Thailand-based Electricity Generating PCL.

Coming right at the tail-end of the year, the $1.9 billion deal was the biggest deal of this year and one of the biggest in Philippine business history.

“The additional power assets provide us an opportunity to increase our footprint in clean coal technology that provides reliable and affordable power, particularly in Luzon,” said SMC President and COO Ramon S. Ang, during the deal’s announcement earlier this month.

Indeed, the move – if approved by the Philippine Competition Commission – will make SMC the country’s largest power player, adding 975 MW to its existing installed capacity of 3,340 MW.

The acquisition may also see the company alter its power strategy.

Prior to the deal, SMC Global Power had planned two 600 coal-fired power plants: one in Pagbilao, Quezon planned for 2021, and the other in Mariveles, Bataan planned for 2020.

SMC recently disclosed to the stock exchange that both projects are on hold due to the acquisition.

Questions also remain about how SMC will finance the ambitious deal. The company also disclosed to the stock exchange that it intends dive into the capital markets to borrow up to 70%, or around $1.3 billion of the amount.

Making Headlines

The SMC acquisition was not the only reason Ang, who has a well-worn reputation for big deals, hit the headlines.

In July of this year it emerged that he was eyeing a majority stake in the Inquirer group, which controls the Philippines Daily Inquirer, the country's top newspaper.

This came as the Prieto family had been the subjective of repeated threats from President Rodrigo Duterte. The deal eventually went through in November of this year, with Ang promising that the Inquirer would continue to uphold the highest journalistic standards and make a difference in the society it serves. 

SM's investment in 2GO

With mom-and-pop stores and big retailers able to launch e-commerce sites relatively easily, a new opportunity arises for logistics to fill their modern supply chain needs. SM Investments Corporation, the Philippines’ dominant retailer, was one of the local conglomerates who first realized this opportunity.

Back in April, SM Group marked its entry into logistics after it bought a substantial stake in the country’s largest logistics provider 2GO Group Incorporated.

The Sys, whose patriarch has been the Philippines’ richest man for a decade, paid $124.50 million - or around P6.2 billion - to own 34.5% of 2GO's parent company, Negros Navigation Company Incorporated (NENACO).

The acquisition is part of SM Group’s strategy to cash in on the fast-growing e-commerce, which has been threatening malls' foot traffic. SM has a portfolio of 67 malls in the Philippines to date.

Before buying into 2GO, SM Group had taken initial steps into e-commerce by partnering with online platform Lazada.

Delving into Logistics 

Other local conglomerates have also placed their bets on the logistics sector.

Metro Pacific Investments Corporation (MPIC) has invested a total of P2.45 billion to build its own logistics business. Since 2016, the Manuel Pangilinan-led conglomerate has acquired 4 small logistics companies: Basic Logistics Corporation, A1 Move Logistics Incorporated, Philflash Logistics Incorporated, and BasicLog Trading and Marketing Enterprises.

In January 2017, MPIC also bought Ace Logistics Incorporated for P280 million.

Other than MPIC and SMIC, Ayala Corporation has also made moves of its own into e-commerce by acquiring online fashion platform Zalora, in a bid to create online and offline retailing synergies.

Japan Tobacco acquiring Mighty Corp

Embattled Mighty Corporation was bought out by global giant Japan Tobacco (JT) for about $1 billion to partly help the local cigarette firm settle its P30-billion tax evasion case.

The government had accused Mighty – the Philippines' number two cigarette manufacturer – of using fake tax stamps to get out of paying excise taxes.

The Department of Finance had even described the case as the country's biggest ever tax settlement.

JT, whose brands include Winston and Camel, has long been scouting for international markets to counter declining sales in Japan due to the intensifying competition in the e-cigarette market.

Mighty holds 23% share of the Philippine cigarette market. Before the Mighty deal, JT had announced it was buying Indonesian cigarette maker PT Karyadibya Mahardhika and its distributor for $677 million. 

here's an article from Interaksyon.com c/o Businessworld correspondent, Elijah Joseph C. Tibayan 

Peso among "Most Stable" in Asia despite Losses in 2017 - Department of Finance

MANILA – The Department of Finance (DoF) said the peso remained among the “most stable” currencies in Asia and “finished strongly” in 2017 despite a 0.5% depreciation against the dollar.

The peso capped 2017 below the 50-per-dollar level — clawing back losses after staying within that territory to fall to multi-year lows for the most part of the second half of 2017 — to close at P49.85 against the greenback on Dec. 29, the year’s last trading day. In 2016, the local currency’s finish was P49.60 per dollar.

“The Philippine peso finished strongly in 2017 with a slight 0.5% depreciation and moved within a tighter band compared to other Asian currencies,” the Finance department said in its latest economic bulletin released on Friday.

In arguing that the peso was among the “most stable”, the DoF cited volatility measures used by Bloomberg that showed the average volatility for Asian currencies was 1.5% while the peso’s “deviation from the mean averaged 0.9%.”

“The most stable were the Vietnamese dong (0.29%), HK dollar (0.3%), Indonesian rupiah (0.44%) and the Philippine peso (0.9%),” read the bulletin.

 

With the 0.5% loss against the dollar last year, still the peso was Asia’s third worst performer for 2017 after the Hong Kong dollar, which lost 0.75% against the greenback, and the Indonesian rupiah which depreciated by 0.61%.

Economic managers of the Duterte government had earlier pencilled in an assumption of P48 to P50 against the dollar for 2017. For 2018 to 2022, the interagency Development Budget Coordination Committee (DBCC) assumes an exchange rate of P49 to P52 against the dollar, adjusting it from an earlier projection of P48-P51. Budget Secretary Benjamin E.

Diokno had said in December in the wake of the Dec. 22 DBCC meeting that “a peso depreciation is actually favorable to our fiscal position.”

On the average, Asian currencies rallied by 4.97% against the dollar with the gains led by the Korean won (11.48%), the Malaysian ringgit (9.80%) and the Thai baht (9.10%).

“The peso avoided hefty appreciation that occurred elsewhere in Asia and boosted export competitiveness amid the recovery of global markets. The 12 Asian currencies appreciated by almost 5% in stark contrast to three currencies that depreciated slightly,” the DoF said.

The peso’s finishing “strongly” in 2017 was “due to sustained strong macroeconomic fundamentals backed by prudent fiscal and monetary policy and continuing economic reforms,” the DoF said.

“This occurred as the legislature passed the first package of tax reforms, the BSP (Bangko Sentral ng Pilipinas) adopted foreign exchange liberalization measures and the Fed continued monetary policy normalization,” said the DoF.

The tax reform program overhauls the 20 year-old national tax code, cutting personal income tax rates, estate and donor’s taxes; removing some value-added tax exemptions; raising excise taxes on fuel, automobiles, coal, and minerals; introducing a sweetened beverage tax and a cosmetic procedure tax; and, raising taxes on foreign currency deposit units, documentary stamps, stock transactions, and capital gains outside the stock exchange.

The BSP meanwhile also raised the amount of dollars that Philippine residents may purchase from the banking system without supporting documentation for legitimate transactions from $120,000 to $500,000 for individuals and $1 million for corporates.

“Sustaining the country’s good macroeconomic fundamentals is essential to maintaining stable currency markets. Likewise, reform programs (e.g., forex liberalization) create an environment more beneficial to economic growth,” said the DoF.

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robert

Robert G. Sarmiento Properties

Professional Affiliation :

Philippine Association of Real Estate Boards

Member, City of Taguig Real Estate Board 2016, 2017

Real Estate Broker’s Association of the Philippines 2000 - 2015

President, Greenhills Chapter 2008, 2009

Philippine Association of Real Estate Boards

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robert
Robert G. Sarmiento Properties

Professional Affiliation :

Philippine Association of Real Estate Boards

Member, City of Taguig Real Estate Board 2016, 2017

Real Estate Broker’s Association of the Philippines

President, Greenhills Chapter 2008, 2009

Philippine Association of Real Estate Boards 2000-2015

San Juan Mandaluyong Chapter 1998, 1999

PRC # 6569

Lecturer’s License # 0294

02 5148481 ( direct line )

+ 632 5536051 ( trunkline )

+ 632 4781316 ( telefax )

+ 632 8561365 ( line 3 )

+ 632 8041701 ( line 4 )

+ 63 917 5364829 ( globe )

Email : roberts@surfshop.net.ph

Website : 
www.robertgsarmiento.com

Website: http://condosphil.wordpress.com

Website: www.philippinecommercialproperties.com

Website: http://philippinewarehouses.wordpress.com

Website: http://philippineoffices.wordpress.com

Website: http://philippinetownhouse.wordpress.com
 

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