Manila, June 29, 2003 (BULLETIN) Peso closed at P53.64/$

The peso closed at P53.64 to the US dollar last Friday at the Philippine Dealing System of the Bankers Association of the Philippines. The weighted average rate stands at P53.706.

BSP may ease liquidity reserves

The Bangko Sentral ng Pilipinas said the interest rate cut by the US Federal Reserve had given it flexibility to consider adjusting the liquidity reserve requirement for commercial banks to boost the money supply. But Governor Rafael Buenaventura said the central bank’s Monetary Board — which meets on July 2 — may keep overnight policy rates unchanged despite the Fed’s trimming of US rates on Wednesday by a quarter percentage point to 45-year lows. “The Fed cut gives us that flexibility but the bias on interest rates is neutral,” Buenaventura said. On March 20, the BSP raised the liquidity reserve requirement for commercial banks to eight percent from seven percent to prevent speculation in the peso after the outbreak of the Iraq war. The central bank has maintained its overnight borrowing rate at seven percent and the lending rate at 9.25 percent for the last 15 months. Consumer prices rose 2.7 percent during the year to May, the lowest 12-month inflation rate since January.

FPHC LTCPs rating adjusted

Philippine Rating Services Corporation (PhilRatings) has changed its rating for First Philippine Holdings Corporation’s (FPHC) R800 million long-term commercial papers (LTCPs) from PRS A to PRS Baa. The outstanding LTCPs will mature in three tranches, as follows: R280 million each in November and December 2003 and R240 million in January 2004. In a disclosure to the Securities and Exchange Commission, dated May 22, 2003, FPHC stated that FGHC International (FGHCI), its wholly-owned Cayman Island subsidiary, settled its USD 5 million Floating Rate Notes due on the same date. For FGHCI’s US$70 million facility maturing also on May 22, a partial payment in the amount of US$10 million plus interest up to the said date was made. Lenders have agreed in principle to amend the repayment date for this facility to June 30,2003. This facility is guaranteed by FPHC.

Withholding tax rules amended

The Bureau of Internal Revenue (BIR) has amended the consolidated withholding tax regulations relating to the filing and remittance of taxes withheld. One of the changes is the inclusion of income payments to suppliers of agricultural products to be subjected to one percent creditable withholding tax. This is a new withholding tax provision under Revenue Regulation 2-98 as amended by Revenue Regulation 17-2003. Revenue commissioner Guillermo L. Parayno has directed all regional directors to conduct seminar-workshops regarding this amended withholding tax regulation particularly on the one percent creditable withholding tax. The BIR would also allow the deferment of the filing and remittance of taxes withheld on income payments made to suppliers of agricultural products under revenue regulation 2-98 as amended by revenue regulation 17-2003 for June from July to August 2003. Taxes withheld for June can be filed and remitted without penalty, simultaneously with those for July on August 11, 2003.(EHL)

McDo’s employes stocks exempt

The Securities and Exchange Commission (SEC) has approved the exemption of McDonald’s Corporation’s proposed issuance of shares of stocks to the employes of its Philippine affiliate Golden Arches Development Corp. (GADC) from the registration requirements of the Securities Regulation Code. The issuance involve 18,500 shares of stock with an option price of $ 14.31 per share and is in line with the company’s Omnibus Stock Ownership Plan. Under Section 10.2 of the SRC, the Commission may exempt the transaction if it finds that the requirement of registration under the Code is not necessary in the public interest or for the protection of the investors such as by reason of the small amount involved or the limited character of the public offering. In this case, the SEC said the subscription is limited only to the employees of GADC, the master licensee of McDonald’s in the Philippines. There are only 83 optionees to the issuance, the SEC added.

‘Tiangges’ taxation supported

The unregulated big-time “tiangges” in shopping malls are depriving the government of valid taxes and thus, are a vain to the economy. This is the opinion of the Quezon City Chamber of Commerce & Industry in support of what its mother organization, the PCCI, has been stressing all along. And this is to urge the BIR to implement RR 16-2003, among others, for “tiangges” to pay VAT and other sales taxes. QCCCI says it’s about time DTI also regulate “tiangges” so that their status as retail stores can be clearly defined for purposes of taxation. “Tianges” exhibitors and organizers insist they are seasonal retail outlets and occupy temporary stalls. One reason why they do not issue official receipts or pay VAT. Nathan C. Zulueta, QCCCI president, noted that “tiangges” and night market stalls must be properly regulated because they are unfairly competing with legitimate, duly registered establishments. “Tiangges” sell their items 30 percent lower. There are known bigtime “tiangges” areas in Quezon City but are more prevalent all-year round in the Greenhills area. Zulueta said “tiangge” operators charge P60,000 per stall for 30 days, and can go up to R150,000 during the Christmas season.

Reported by: Sol Jose Vanzi

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