Longer fun in the Philippines

IN AN EFFORT to stimulate foreign tourism, the Bureau of Immigration has recently amended its guidelines on visa-free entry into the Philippines. This past August, visa-free entry privileges of foreign nationals from 151 countries with bilateral agreements or diplomatic ties with the Philippines have been extended from 21 days to 30.

Under the new policy, nationals from the list of non-restricted countries travelling to the Philippines for business or leisure are allowed to enter the country without an entry visa and stay for a maximum period of 30 days. Foreigners may avail of the visa-free privilege if they hold valid outbound tickets and passports that are valid for a period of at least 6 months beyond the contemplated period of stay in the Philippines.

In general, the 30-day visa-free stay may be extended. The first extension will be valid for 29 days. Thereafter, succeeding extensions for one or two months can be secured. Any foreigner whose total period of stay in the Philippines has exceeded one and one-half years will be required to secure approval from the Commissioner of the Bureau of Immigration for an additional extension of his authorized period of stay.

As far as restricted nationals are concerned (i.e., those not from the 151 listed countries), they will still be required to secure an entry visa from the appropriate Philippine Embassy or Consulate abroad before they can be allowed to enter the country.

With the longer visa-free entry stay, the government can expect an increase in visitor arrivals and tourist spending in the Philippines. In economic terms, this translates to a more dynamic growth in trade, capital investment and employment. As a robust industry, Philippine tourism has been able to generate an average of $2.48 billion per annum during the five-year period from 1993-1997. Based on the economic impact research of the World Travel and Tourism Council (WTTC), the industry has contributed P194.7 billion to the Philippine economy in 2011 or 2.0% of the country’s GDP. In 2011 alone, the Philippines generated P159.9 billion in visitor exports or total spending within the country by international tourists for both business and leisure trips. It is expected to attract 5,238,000 international tourist arrivals by 2022, generating expenditure of P417.3 billion.

As for employment, the travel and tourism industry was able to contribute 3,547,500 jobs in 2011 or 9.6% of total employment. When apportioned, 778,000 of these jobs deal directly with tourists, while a greater margin is created in allied industries. Travel and tourism includes jobs from hotels, restaurants and airlines, grand tour and excursion companies, catering trade, travel agents, tour operators, cruise ship operators, specialized retailing, ancillary airport employment and taxi services. Other than jobs created directly by travel and tourism, this employment opportunity ripples to other sectors of the economy as well. For instance, indirect impact is felt in the manufacturing and wholesale/retail trade sectors that benefit from the supply-chain effect, and in the construction sector, which posted revenue returns from investment spending for new tourism assets and leisure facilities. By 2022, tourism is forecasted to support 4,448,000 jobs or 9.5% of the country’s total employment (Travel and Tourism Economic Impact 2012: Philippines, WTTC).

To an average Filipino, job generation may signify a more inclusive participation in the economic wealth of the nation. This could mean a more equitable distribution of income trickling down to the masses rather than being concentrated to a few. With employment comes sustainable household income. In the economic equation, such financial advancement brings improved living standards -- a catalyst to societal transformation from the depths of poverty.

Only time can tell if the liberalization of tourist entry policies will bring in the needed revenue to boost the economy. As for now, tourism remains as the sunshine industry to contend with. With an extended 30-day visa free privilege, a longer sojourn by foreign visitors may bring substance to the government’s tourism campaign, “It’s more fun in the Philippines”.

Harold S. Ocampo is a director at the tax services department of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers global network. Readers may send feedback to harold.s.ocampo@ph.pwc.com.

Views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from such article; the author will be personally liable for any consequent damages or other liabilities.

source:  Businessworld

Debt servicing down 40%

GOVERNMENT debt servicing dropped by almost 40% annually in August due to a decline in principal payments made in the month, data from the Bureau of the Treasury showed.

The government spent a total of P40.888 billion to cover its principal and interest payments to its creditors in August, 38.32% less than the P66.294 billion recorded in the same month last year.

Principal payments made in the month declined by 51.25% to P22.658 billion against the P46.478 billion disbursed in August 2012.

The bulk of this amount was paid to foreign lenders at P22.564 billion while the remaining P94 million went to domestic creditors.

Meanwhile, interest payments made in August likewise declined by 8% to P18.23 billion from the P19.816 billion paid in the same month last year.

Of this total, the government paid P12.613 billion in interest to local lenders, and P5.617 billion went to external creditors.

In the breakdown, of the interest payments to domestic lenders, P11.316 billion went to holders of fixed-rate Treasury bonds.

Holders of retail Treasury bonds were also paid P1.213 billion while Treasury bills holders accounted for P75 million. The remaining P9 million went to interest payments for other domestic liabilities of the government.

From January to August, debt payments totaled P425.085 billion, 16.92% less than the P511.684 billion disbursed in the same period last year, the data showed.

Principal payments made in the first eight months dropped by more than a third year-on-year to P196.21 billion from last year’s P290.569 billion.

Of this total, P98.627 billion was paid to local creditors while P97.583 billion went to foreign creditors.

Interest payments in the eight months ending August, meanwhile, rose slightly to P228.875 billion from the P221.115 billion recorded in the same period in 2012.

Disbursements to domestic lenders accounted for the bulk of this total at P151.941 billion while the remaining P76.934 billion went to foreign lenders.

A significant portion of the national budget goes to interest payments on debt, while principal payments are off-budget items covered by debt refinancing.

Public spending reached P133.2 billion in August, bringing the eight-month tally to P1.222 trillion, 12.63% higher than the P1.085 trillion disbursed in the same period last year.

According to the national budget, the government is programmed to spend P767.394 billion for debt servicing this year, with P435.185 billion allotted for principal payments and the remaining P332.209 billion, for interest payments.

In 2012, the government spent a total of P729.774 billion to service its debts, slightly more than the P722.75 billion disbursed the year before.

The national government’s outstanding debt grew by 6.9% year-on-year to P5.451 trillion as of June, up from the P5.101 trillion recorded as of the same month in 2012. -- Bettina Faye V. Roc

source:  Businessworld

Presidential Kitty

There is the P7.5-billion Calamity Fund, the P6-billion Presidential Social Fund, the P1-billion Discretionary Fund, the emergency response fund of the departments, even Philippine Charity Sweepstakes Office (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR) funds.

Not to mention the Malampaya Fund.

And not the DAP Fund.

2014 @ 11%: The new SSS rate you need to know

SSS will increase contribution rates and maximum monthly salary credit starting January 2014.

Employers and employees need to take note of the new Social Security System (SSS) rule starting next year that will implement a 0.6 percent increase in its current 10.4 percent monthly contribution rate. The new rate will be 11 percent effective January 2014. It will also increase the maximum monthly salary credit from P15,000 to P16,000.

“The 0.6 percent increase will be divided equally between employees and employers, with the latter to pay 7.37 percent, while the former will pay 3.63 percent based on the applicable monthly salary credit. Self-Employed and Voluntary Members will shoulder the entire 11-percent contribution rate,” SSS President and Chief Executive Officer Emilio S. de Quiros, Jr. said. “This contribution rate increase is part of the SSS Reform Agenda that seeks to lengthen gradually the actuarial life of the Social Security Fund,” he added. “It also aims to reduce the unfunded liability of SSS, which was at P1.07 Trillion as of December 2011 and increases by about eight percent annually.”

An unfunded liability exists when the present value of a pension fund’s contributions and assets is insufficient to cover the present value of future benefit payments and operating expenses. Such situation occurs because the benefits that a member receives or is entitled to far outweigh the accumulated contributions, including interest.

“Increasing the contribution rate would result in bridging the gap between contributions and benefits,” de Quiros added. Aside from the 0.6 percent increase in the contribution rate, President Aquino also approved an increase in SSS’ maximum monthly salary credit (MSC) from P15,000 to P16,000. The MSC is the compensation base that determines both the amount of monthly contributions to be paid by the member and the amount of benefits to be derived. With the 11 percent contribution rate, the monthly contribution will be P110 for the minimum MSC of P1,000; P550 for the minimum MSC of P5,000 for OFWs; and P1,760 for the maximum MSC of P16,000.

“The new maximum MSC at P16,000 means that a greater portion of the members’ incomes are covered in their SSS contributions,” de Quiros explained. “Higher contributions eventually mean higher benefits in the future.”

source:   Entrpreneur Philippines