Business
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WEDNESDAY, OCTOBER 26, 2016 extrastory2000@gmail.com
Govt plans to raise VAT exemption threshold By Gabrielle H. Binaday
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HE government plans to increase the value added tax exemptions enjoyed by micro, small and medium enterprises, a Finance official said Tuesday.
MERALCO FORUM. MPower, the retail electricity supplier of Meralco, along with Meralco Power Academy and Meralco Energy Inc., holds an energy efficiency partner forum for over 80 MPower customers at the Marco Polo Ortigas Manila. Joining the forum are (from left) United Nations and Industrial Development Organization national project coordinator Oscarlito Malvar, Unido certified national expert on EnMS Rommel Benig, Optien principal energy consultant Richard Morrison, Meralco Power Academy program director Eugene Araullo and MPower strategic account manager Conrado Fabros.
Govt reviews catastrophe insurance bid By Gabrielle H. Binaday THE Insurance Commission will revisit its compulsory catastrophe insurance proposal to align with the new administration’s priorities amid climate change. Insurance Commissioner Emmanuel Dooc said the agency would review the proposal on the mandated compulsory catastrophe insurance coverage for middleclass residential buildings and small and medium enter-
Lopez: IPs will not be evicted By Anna Leah E. Gonzales ENVIRONMENT Secretary Regina Lopez assured Tuesday indigenous people from Mindanao, who have been holding a series of protest actions in Metro Manila, that they will not be evicted from their ancestral lands. “No one will be evicted from your land. That is your exclusive right,” Lopez told the IPs, as they continued to protest against what they claimed as the continued plunder and militarization of ancestral lands across the country. Lopez directed Undersecretary Isabelo Montejo to look deeper into the issues being raised by the IPs. The Environment chief also said the government would engage the IPs in the National Greening Program, the government’s massive reforestation initiative that doubles as a poverty alleviation measure. “We want to include you in our National Greening Program so that you can have economic activities in your areas and you’ll have money,” Lopez said. She urged them to help the government in protecting the resources in their ancestral lands. “You should protect the resources in your ancestral lands so that your rivers will continue to be clean,” Lopez said. On the clamor of the IPs to stop mining in their areas, Lopez said she had already issued a moratorium on new mining projects. Lopez added the department would pursue an immediate investigation on issues allegedly being perpetrated by mining companies against the lumads and other minority groups in the country.
prises. “I believe they are considering other options, (and) I think we have to discuss it with them, with the leadership,” Dooc said. “We know that the plate is full and that there are many ongoing initiatives, but we hope that this matter should also be addressed,” he added. The Insurance Commission earlier said it would push for the passage of the mandatory catastrophe pool insurance law that would aid households and small and medium enterprises in times of calamity. “Definitely, yes. I mentioned it to the Secretary [of Finance] but he was just listening. I’ll pursue it now that he is in the office,” Dooc said. Finance Secretary Carlos Dominguez III said he would study the proposal when asked earlier asked about it. The draft executive order, when signed into law, would require all households and SMEs to get insurance protection from possible damages caused by di-
sasters, such as earthquakes and floods. Under the proposed catastrophe insurance pool, insurers will underwrite the policies according to their corresponding subscriptions. The proposed draft EO had been recommended by the Department of Finance to the Office of the President last year. Then President Benigno Aquino III, however, did not sign the EO. Dooc said while the EO was the fastest process to implement the insurance pool, the IC was also open to legislative measures. “The immediate need is for an issuance of an EO to accelerate the process but in the long term we will need a legislation,” Dooc said. The economic exposure of the Philippines to natural threats is the highest in the world in terms of their share to the gross domestic product, according to London-based insurance specialist Lloyd’s.
“As a percentage of its average annual GDP [gross domestic product], Manila’s economic exposure is the world’s largest [50.28 percent],” Lloyd’s said, citing the results of City Risk Index, a study it conducted with the University of Cambridge Judge Business School. The index is the first analysis of economic output at risk (GDP at Risk) in 301 major cities from 18 man-made and natural threats over a 10-year period (2015 to 2025). The index estimated that a total of $4.6 trillion of projected GDP was at risk due to man-made and natural disasters in cities around the world. Lloyd’s Asia-Pacific managing director Kent Chaplin said natural threats accounted for over 90 percent of Manila’s economic exposure. About $109 billion or over half of the Philippines GDP was at risk, the highest percentage in the Lloyd’s City Risk Index in percentage terms.
Finance Undersecretary Antonette Tionko told reporters at the sidelines of a Senate hearing on tax reforms the plan was to increase the VAT exemption threshold on the sale of goods and properties from P1.9 million to P3 million. A company’s gross annual receipts/sales on the sale or lease of goods or properties or performance of services not exceeding P1,919,500 are subject to 3-percentage tax. An amount higher than that is subject to 12-percent VAT. Tionko said the higher threshold was expected to help MSMEs. “If we make it [threshold] P3 million, if the amount of your sales is not over P3 million, then you’re not subject to VAT. So it’s just to even it out. It’s more beneficial for them,” he said. Tionko said while the proposal could result in revenue losses for the government, its main objective was to simplify the compilation process for SMEs and to safeguard them from possible effects of the other proposed tax measures such as increasing the excise tax on petroleum products and broadening the VAT base. “We don’t have the exact figures [for losses]. It’s probably not a lot. It’s gonna be more with the P3 million threshold. Because it’s simplifying things for them to make it efficient,” Tionko said. Finance Undersecretary Karl Kendrick Chua said the agency was also looking at
lifeline subsidies for low-income electricity consumers to protect senior citizens and persons with disabilities from the impact of the proposed increase in the excise tax on petroleum products. He said the proposed social protection measures were being fine-tuned as a part of the Tax Reform for Acceleration and Inclusion Act. “The protection really comes from the increase in their VAT threshold to P3 million, so that the micro and small enterprises with gross sales of at most P3 million will not be affected by the broadening of the [VAT] base. They will of course still pay their percentage tax,” said Chua. Chua said changing the form of benefits for the vulnerable sectors from outright exemptions, which favored both the rich and the poor, to targeted social protection measures would help plug the massive leakages in the VAT system. “We very much respect and would like to help the poor and vulnerable people who would be affected, but we think that a better system to do it is through the expenditures side, not the tax side,” Chua said. “This is so that we can avoid the leakages and in fact transfer the leakages that we [plug] to provide better services,” he said. Chua said indigent senior citizens would also be protected by providing them with higher social pensions, while PWDs would get expanded health insurance coverage and other benefits.
Foreign companies keen on Vietnam’s state brewers By Jenny Vaughan HANOI, Vietnam―Sloshed back at rowdy open-air “bia hoi” day and night, beer is Vietnam’s tipple of choice and now its cashstrapped government is drawing on the nation’s penchant for lager to raise billions of dollars by selling stakes in state-owned brewers. The unprecedented divestments in two state crown jewels, the makers of the much-glugged Saigon and Hanoi beers, are expected to net as much as $2.2 billion. The sale comes as part of longpromised reforms to privatize bloated state firms, which official figures show contributed about one third of the country’s GDP last year. It is hoped the reforms will set the communist country back on track to meet its ambitious economic targets and jumpstart growth which has slowed this year. For Vietnam’s government, beer is a logical place to start. With a population of 93 million people, the country is one of Asia’s leading swillers of beer. Vietnamese consumed more than three billion liters of the cold stuff last year, according to Euromonitor marketing firm. That thirst has piqued interest from foreign brewers, eager to tap growth markets at a time when sales in many developed markets in Asia are forecast to plateau. “Vietnam has one of the fastest growing beer consumption markets in the world, and that’s ob-
This picture taken on February 19, 2016 shows an employee pulling draught beer for patrons at a beer bar in Hanoi. Sloshed back at rowdy open-air “bia hoi” day and night, beer is Vietnam’s tipple of choice and now its cash-strapped government is drawing on the nation’s penchant for lager to raise billions of dollars by selling stakes in state-owned brewers. AFP
viously an appeal,” said Kevin Snowball, CEO of PXP Vietnam Asset Management in Ho Chi Minh City. Down it, down it The government said this month the two companies, Habeco and Sabeco, would be listed in the first three months of 2017 and would be open to local or foreign bidders. For the Vietnamese who crowd into the open-air bia hoi markets during lunch, dinner and for some, in between, privatization promises to keep the good times rolling―as long as the
buyouts don’t mess with flavor. “I don’t want beer Hanoi to be affected by the taste of Carlsberg, I don’t want beer Saigon to become so similar to a Sapporo... the key is to keep the distinctive taste of the beer,” said Duc Thang, 48, speaking over a glass of cold brew. Like millions of others across the country, Thang comes to the bia hoi to unwind. “At a bia hoi you can talk about so many things―you can chit-chat, talk business, family problems. It’s easier to talk when you have one or two beers.”
Some major names already have a foothold here―Heineken has about 17 percent of the market, competing with other players like Carlsberg and Sapporo―and reports say Thailand’s ThaiBev and Singha Beer may now be ready enter the fray too. But the sales could instantly transform a foreign buyer into a top brewer: Sabeco enjoys about 45 percent market share, while Habeco has 17 percent, according to Euromonitor. The government says it will sell its 90 percent stake of Sai-
gon Beer Alcohol Beverage Corp (Sabeco) for $1.8 billion, and its 82 percent stake in the Hanoi Beer Alcohol and Beverage Joint Stock Corp (Habeco) for $400 million. Both companies declined to speak to AFP. ‘The right time’ Economists say the government is selling the stakes because it is thirsty for cash. Public debt hit 62 percent of GDP this year according to official figures, and is climbing closer to the governmentsanctioned debt ceiling of 65 percent of GDP. “It’s the right time for the government to consider selling a number of state-owned companies to get more for the budget,” economist Pham Chi Lan told AFP. Selling off controlling stakes is also expected to help clean up corporate governance and boost productivity, which have not happened with piecemeal selloffs in the past. “Many of these benefits will only come if there’s a strategic investor that really takes on a majority stake,” said Sebastian Eckardt, lead economist for the World Bank in Vietnam. Some credit a new regime of communist leaders in power since April with making good on promises to privatize, but will wait to raise a glass until the deals are done. “We’re very positive on this, as long as it happens, because it’s been talked about for a very long time,” said Snowball. AFP