The Department of Finance (DoF) said yesterday the Philippines will not face any sanction or punishment from any international creditor if it fails to meet the two percent deficit-to-gross domestic product ratio that the Development Budget Coordination Council (DBCC) set.

“No punishment. We don’t borrow anymore from them,” Undersecretary Gil Beltran told the Daily Tribune in an interview recently.
It can be recalled that the DBCC has set a two percent deficit to gross domestic product (GDP) deficit.
DBCC, which is made up of DoF, Department of Budget and Management, National Economic and Development Authority and Bangko Sentral ng Pilipinas, is a four-agency department that oversees and manages the economy.
Earlier, Beltran said meeting the budget deficit hinges on the Bureau of Internal Revenue’s ability to meet its target collection.
The government wants to limit the budget deficit to percent of GDP in 2013 until 2016.
With an annual GDP between P6.7 trillion to P7.1 trillion for the last few years, a two percent deficit-to-GDP will be around P240 billion or less.
In recent history, it was Ireland that registered the highest deficit-GDP-ratio at over 14 percent in 2000, according to former Finance secretary and now Philippine Stock Exchange chairman of the board Jose Pardo.
However, the DoF seems worried it will be able to meet the target deficit as the number for end-March of P66.47 billion was already more than double of how much was registered in same period last year.
“Although there is no penalty from any entity, a huge deficit will mean that we lack fiscal discipline. We cannot push it to the limit if the DBCC number will not be met,” another source, who refused to be named, told The Tribune.

Combined non-performing loans (NPLs) of rural banks (RB) and cooperative banks ballooned to 11.57 percent of their total loan portfolio (TLP) of P127.47 billion as of end-2012, data from the Bangko Sentral ng Pilipinas (BSP) revealed.
Latest data proved that the NPL of rural and coop banks grew a bit from 10.14 percent as of end-2011.
Banks’ loan loss reserves for NPLs rose significantly to 61.74 percent for end-2012 compared to 53.26 percent as of June 2012.
Rural and cooperative banks’ loans represent 2.74 percent and 0.30 percent, respectively, of banking system’s TLP as of end-2012.
RBs posted a 10.65 percent NPL ratio as of same period. This was higher than the 10.32 percent registered as of end-2011, BSP data said.
RBs’ loan loss reserves for NPLs increased to 59.47 percent as of end-2012 from 50.98 percent in June 2012.
For coop banks, the industry registered a 19.84 percent NPL ratio in December 2012. The figure is more than double the 9.49 percent NPL registered in June 2012.
The BSP attributed the increase to powerful storms that hit the Philippines last year—Hener, Habagat and Helen.
The BSP assured the public that it will continue monitoring strictly the NPLs of all bank classifications in the Philippines.
The strict monitoring aims to ensure that credit underwriting standards remain high in a low interest rate environment of the country.

Many local manufacturers remained in the survival mode despite the peso sliding back to 42 level, a letter to the Philippine Exporters Confederation (PhilExport) obtained by The Daily Tribune revealed.
Oscar Barrera, who represents PhilExport in a recent competitive currency forum (CCF), believes that local businesses sell more products even at low prices to compensate for reduced earnings.
“When a businessman is experiencing lower profits, his survival instinct is to sell more, as long as his revenue is greater than his cash costs of production or direct variable costs.
And even if he is already losing cash, he will try to survive by borrowing until his bank finally forecloses on his properties. He will continue to pray and hope that things will turn around,” Barrera told PhilExport president Sergio Ortiz-Luis.
He said although the peso strength has tempered, the long appreciation of the peso against the dollar continued to hurt exporters even as the country’s exports revenues rose measly in March 2013.
“Our major exports are on contracts, so volumes may still be going up even though exporters are already losing due to strength of peso,” he explained.
Barrera, the PhilExport trustee for the chemicals sector, expressed concern that these manufacturers would find it increasingly difficult to survive given the peso value against the dollar.
A source at the export sector said although impossible, it is ideal that the exchange rate should be around P43.20 to $1.
The peso has been closing at 42-level for the past two weeks. Last May 21, it reached its highest at P41.17 from P41.14 average rate in April.
A survey conducted by PhilExport on the effects of the strong peso showed that a number of small and medium enterprises exporters and agriculture firms preferred higher range of foreign exchange at P42 to P44 to $1.
To help stem the peso appreciation, Barrera underscored the need for the Philippines to impose capital controls on inflows similar to the one being planned by Thailand.
He recommended imposing “tobin” tax on hot money used in speculative investments in the stock and currency markets or a holding period of foreigners’ remittances out of the country.
Barrera said the removal of controls on outflows provides reassurance to the hot money speculators of complete freedom of entry and exit.
Moreover, Barrera believes that foreign direct investments (FDIs) are bypassing the country because there are very few profitable projects.
Apart from scarce power, labor costs and lack of logistic public infrastructure, he said the overvalued peso discourages any local value added inputs because imported inputs are artificially cheaper.

The Court of Tax Appeals en banc has affirmed the CTA’s second division decision that found Dr. Joel Mendez guilty of tax evasion.
Mendez owns and runs five skin and weight loss clinics: Mendez Body and Face Salon and Spa that had two branches in Quezon City, the Mendez Body and Face Clinic in Greenbelt, and the Weigh Less Center in San Fernando, Pampanga and in Dagupan, Pangasinan.
He also tapped several showbiz celebrities as endorsers. However, he did not file his income tax returns in 2001 and 2002 and underdeclared his income in 2003.
The CTA’s second division found Mendez guilty beyond reasonable doubt of violating section 255 of the NIRC or failing to make or file his tax return in 2002 and failing to supply the bureau with correct and accurate information in 2003.
“The Court En Banc, therefore, sustains the ruling of the Second Division finding petitioner Mendez guilty beyond reasonable doubt of failure to make and file a return for 2002…the prosecution was able to prove that petitioner Mendez earned substantial income in 2003 but petitioner Mendez’s ITR (Income Tax Return) shows a net loss incurred in 2003…for all the foregoing, the Court En Banc finds that the prosecution has clearly established the above-prescribed elements for violation of Section 255 of the NIRC of 1997 as amended,” the CTA en banc decision said.
The decision was penned by Associate Justice Olga Palanca Enriquez. Seven concurred with the decision—presiding justice Ernesto D. Acosta, associate justices Juanito C. Castaneda Jr., Lovell R. Bautista, Erlinda P. Uy, Esperanza R. Fabon-Victorino and Cielito N. Mindaro-Grulla. Associate Justice Caesar A. Casanovo dissented while Associate Justice Amelia R. Cotangco-Manalastas was on leave.
The CTA second division found Mendez guilty of two counts of violating section 255 of the NIRC and sentenced him to two to four years in prison and ordered to pay a fine of P20,000.
The BIR presented 20 witnesses and several documents such as lease contracts and registration papers of Mendez’s clinics among others.
“Finding no reversible error, the Court En Banc affirms the assailed decision dated Jan. 5, 2011 of the second division,” the court said.

As the new debt instrument is set to be launched by fourth quarter, there are still no development regarding the new government security coming from the Bureau of Treasury (BTr), the agency that will issue the sovereign note.

National Treasurer Lea de Leon has no much reply when The Tribune asked her what will be the tenor, coupon rate, spread and how much does the new instrument will yield for the national government.
Even the date when it will be released is now being denied when it was asked if it will surely be launched by the fourth quarter.
“No definite schedule yet. None yet,” De Leon told the Daily Tribune.
It was learned through some sources that at least P10 to P12 billion is needed to get the remaining 52 percent at the MRT-3.
In 2010, the national government coughed out P7.87 billion to pay the MRT Corp. of the Sobrepenas, the operator of the metro train.
However, De Leon hasn’t admitted that the money to be raised from the new debt instrument will be used to pool money to get the remaining 52 percent share outside the control of Manuel Pangilinan through Metro Pacific Investments Corp. (MPIC).
“Not really,” was her answer when The Tribune asked if the amount to be raised by BTr will be used to get the 52 percent share at the mass transit system.
Originally, the firm of Pangilinan wanted to buy all the stakes at MRT amounting to around $1 billion in November 2011 but only 48 percent was given to the firm.
It has never been admitted by BTr that the amount to be raised from the new debt note will be used to buy back the shares still owned of by firms other than MPIC.
MRT-3, built in 1999, has 13 stations along its 16.95 kilometer track which passes through Makati, Mandaluyong, Pasay and Quezon City.
While originally intended to decongest Edsa, the MRT-3 has been only partially successful in decongesting the main highway of the country. Congestion is further aggravated by the rising number of motor vehicles.

Citi’s partnership with Action Against Hunger (ACF International) has won the prestigious Judges’ Choice at the 2013 Paybefore Awards.
The annual awards program recognizes excellence in the worldwide prepaid and emerging payments industry.
Citi partnered with ACF International in customizing a prepaid card solution for a cash-based emergency intervention program.
In 2012, during the wake of typhoon Sendong, ACF approached Citi for a solution to provide emergency aid to over 2,000 affected families.
Contributions from ACF’s major donors must be used exclusively to purchase food items in order to ensure that the financial aid was channeled towards alleviating hunger in a crisis situation.
ACF wanted to ensure there will not be misappropriation of funds from its donors.
Citi customized the Citi ACF International Action Against Hunger Prepaid Card which supported ACF’s high standards of accountability and transparency.
Citi established a closed-loop system that enabled ACF to disburse the funds within a month of the calamity.
“It was a great opportunity for Citi to leverage our platform in the assistance of disaster-stricken beneficiaries. We were able to develop and implement the program in a short two weeks and the acceptance rate for all issued cards was 100 percent, providing essential support for vulnerable families,” said Citi country officer for the Philippines Batara Sianturi.
According to Demosthenes Militante, Food Security and Livelihood Coordinator for ACF International, having experienced some challenges in the use of prepaid cards in the past, we have been very impressed by the reliability of Citi’s program — the specific customization and the speed of implementation.

Armscor Shooting Center Inc. (ASCI), a wholly-owned subsidiary of firearms and ammunitions manufacturer Arms Corporation of the Philippines (Armscor) recently inaugurated a new booking center at the main Armed Forces of the Philippines (AFP) Commissary and Exchange Store (AFPCES) at Camp Aguinaldo in Quezon City.
The launch of the AFPCES booking center followed an earlier memorandum of agreement between the AFP and ASCI that entitles active and retired military personnel to a 15 percent discount on all Armscor-manufactured firearms.
Additionally, 1,000 caliber 45 GI pistols have also been allocated at a reduced price of P15,000 (25 percent discount) available at all Armscor Shooting Center branches and via the AFP Commissary.
The presence of the booking center in the AFP Commissary is part of Armscor’s corporate social responsibility program, as it makes the products more accessible and convenient for all military personnel, with plans to launch booking centers in the 33 AFP commissaries located in major camps nationwide.
“Extending a 15 percent discount on all Armscor products to active and retired military personnel is our modest contribution to the AFP’s Bayanihan: Internal Peace and Security Plan,” disclosed ASCI president Gina Marie Angangco, herself a reservist officer of the AFP.
“Today, we extend this help to all customers of the AFPCES,” she said, adding that the special promo discount on the caliber 45 GI pistols is in line with the AFPCES vision to make products more affordable for its members.
AFP chief of staff Gen. Emmanuel Bautista noted the critical role quality firearms play in helping the military perform its mandate of protecting the people and securing the State.
Bautista lauded the support of Armscor by making quality firearms affordable to AFP personnel, expressing hope for more collaborative undertakings between the AFP and the local manufacturer in the future.
Armscor is the biggest arms and ammunition manufacturer in the whole of Southeast Asia, with products exported in over 60 countries all over the world.

The Philippines will host global industry leaders in the annual International Outsourcing Summit (IOS) in October, according to the Information Technology and Business Process Association of the Philippines (IBPAP).
Themed “Unlocking Possibilities, Creating New Vistas,” this year’s summit will focus on the implications of the global power shift, and how developing economies are paving the way for innovation and expanding business opportunities.
“For the past five years, IOS has played a significant role in supporting the development of the information technology and business process management industry and its various sectors by enhancing discourse, fostering partnerships and promoting knowledge-sharing on issues that matter to all of us,” said Jose Mari Mercado, IBPAP president and CEO.
The summit will be held Oct. 6 to 8 at Makati Shangri-La.
To stay competitive, companies are tapping highly-skilled global talent from various locations to deliver key services for segments such as animation, healthcare information management, contact center, software development and game development.
International research firm Everest Group said the Philippines is gaining ground in the field of software development and information technology outsourcing.
The Philippine healthcare information management sector also achieved highest growth among the sectors with $430 million in revenues for 2012.
The country also leads in the voice or contact center sector, growing 21 percent last year.
Game development, on the other hand, is becoming an integral component of Canada’s new digital economy with $2.3 billion in revenues in 2012, according to the Entertainment Software Association of Canada.
In the animation sector, India’s growth is estimated at 15-20 percent per annum with revenues at $247 million and 80,000 in workforce.
During the summit, high-level executives, analysts and domain experts will examine global issues from the perspective of the countries or regions which they represent.
Panel discussions and executive briefings will highlight the role of emerging economies on the industry. Delegations will also gain networking opportunities  and insights from business matching sessions and the exhibition.
“This year’s IOS will be another milestone for Philippines. Industry stakeholders, both from developing countries and economic giants, will lend their perspectives on the innovative services and niche areas that build on the global IT-BPM momentum. We will also consider culture and the transformation of work as well as the industry’s impact on specific locations,” Mercado said.
Delegates attending the summit are encouraged to register early to take advantage of early bird rates until July 21.

Visiting ministers and delegates to Covidien’s plant were briefed on advanced medical technology that will provide better access to life-saving devices for stroke patients.
A delegation of trade and economic ministers from the Association of Southeast Asian Nations (Asean) region recently toured Covidien’s state-of-the-art manufacturing, research and development facility in Irvine, California.
Covidien, a leading global provider of healthcare products, manufactures neurovascular devices at the facility, which are used around the world as part of minimally-invasive surgical procedures to treat and save the lives of stroke victims.
Following the tour at the facility, Lim Hong Hin, deputy secretary-general of Asean for Asean Economic Community said, “It was important to visit this facility in order to learn about some of the most advanced technologies in the medical device industry, and how these can contribute to bettering the health and lives of many people in our region.”
Organized by the US-Asean Business Council of Washington, DC, the group is visiting several enterprises in the US, but Covidien’s plant is the only healthcare manufacturing facility visited by the delegation during their weeklong trip.
Harry de Wit, President, Asia, Covidien said, “We are honored that this delegation of senior ministers from 10 markets in Asia chose to visit our facility to see first-hand the innovation and skill that goes into the production of these intricate medical devices. As part of the visit, we briefed the Ministers on some of our groundbreaking products, such as a device used to treat patients with complex brain aneurysms.”
He said, “Several of the products manufactured at our facility are already used by neurointerventionalists in some markets in Asean. These products have the potential to limit or prevent the damage a stroke can have on the brain. Access to these products is a major shift in neurosurgery — it moves us from open surgery to minimally invasive techniques. I hope this visit will further open the door for these life-saving technologies in the Asian markets.”

Globe Telecom was shortlisted as Best Place to Work at the Asia Communications Awards.
“Our nomination as a finalist in the Best Place to Work category is an affirmation of the company’s Employee Satisfaction Index which rose to a record high of over 75 percent in 2012,” notes Renato Jiao, head of Globe Human Resource Group.
“We have always believed that happy and engaged employees will always find ways to keep customers delighted who in turn bring more business to Globe and thus creating more value to our satisfied shareholders,” added Jiao.
Aside from being a finalist in the Best Place to Work category, the leading telecommunications company earlier garnered three nominations at the Asia Communications Awards in two categories namely the Best Brand Campaign and Best Customer Service Initiative.
This is the first time that Globe is entering the Asia Communications Awards competition, which gives recognition to achievements of Asian telecommunications companies and the individuals responsible for the innovations, achievements and new services that build the industry.
The leading telecommunications firm got two nominations in the Best Brand Campaign category for its “Globe Gets Me” campaign and Tattoo Broadband’s “Marked For Greatness” campaign. This category gives recognition given to the organization that has been most effective in creating a compelling brand for its products or services in one or more branches of the media.
Globe Telecom’s Customer Service Innovation on Social Media has also been nominated in the Best Customer Service Initiative category, which gives recognition to the entry with a well-designed and successfully implemented customer care strategy that produced tangible and quantifiable results measured in terms of financial results or quantifiable improvements in customer experience.
The winners at the Asia Communications Awards will be announced at an awards ceremony on June 20 in Conrad Centennial, Singapore.