BAP open to scuttling costs for small transactions
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HE Bangko Sentral ng Pilipinas (BSP) disclosed on Monday that the Bankers Association of the Philippines (BAP) was receptive to bringing down transaction costs in lieu of lowering the reserve requirement ratio (RRR). On the sidelines of a forum hosted by the Philippine Chamber of Commerce and Industry (PCCI) on Monday, BSP Governor Felipe M. Medalla said they will be working with the BAP to make transactions free of cost for small amounts. Medalla said paying P5 to P10 per
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transaction or as much as P15 to P20 per transaction is significant, especially relative to small transactions of around P200 to P500. The BSP is hoping that bringing down the RRR would encourage banks to waive the fees for these amounts. “A recent example of this stronger guidance was provided in last week’s bankers’ night when we said we will reduce the RRR. We hope in return, the banks will waive all fees for small transactions when people make bank to bank payments,” Medalla said in his speech on Monday.
“We’re literally bribing the banks to subsidize the small transactions. And from what I hear, the Bankers Association, they are receptive to this and I look forward to more and more digital payments especially by the poor using their accounts, which have grown significantly because of InstaPay and so on,” he added. Medalla said the cut in the RRR could be to work toward bringing it down to 10 percent which is the target, or even down to single-digit rates. However, this cut may not be
done in just one reduction. He said the reduction may be done in several cuts and will be subject to the slowdown in the inflation rate. The cuts may only happen if the inflation rate is “clearly moving toward the targets” to avoid confusing the market. The BSP is still tightening monetary policy and is one of the central banks that posted the highest rate increases. To date, the Monetary Board has raised interest rates by 400 basis points. See “BAP,” A2
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BSP SETS JAN ’24 GOAL FOR FATF GRAY LIST EXIT w
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Tuesday, February 28, 2023 Vol. 18 No. 136
P25.00 nationwide | 2 sections 28 pages |
By Cai U. Ordinario
CBRT 1st leg of Cebu urban renewal plan, says Marcos
@caiordinario
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ESPITE missing its exit from the Financial Action Task Force’s (FATF) gray list, the Bangko Sentral ng Pilipinas (BSP) is still bent on accomplishing this by January 2024. On the sidelines of a forum hosted by the Philippine Chamber of Commerce and Industry (PCCI) on Monday, BSP Governor Felipe M. Medalla told reporters that countries who exited the gray list had to “do a lot” and that it took them years. The FATF flagged the country for supposed inadequacies in the effectiveness of the targeted financial sanctions framework (TFS) for both terrorism financing and proliferation financing. “Right now, the key month is January next year because that’s the time they will review it. Hopefully, we’ll be out [of the gray list]. But, of course there’s a possibility that it will take longer to get out. Some countries took four years to get out and they had to do a lot,” Medalla said. Medalla said one country, Pakistan, was only able to exit the gray list after hiring 3,000 more workers to follow up all the investigations and file cases on terrorist financing. “We hope we are able to satisfy them with just better enforcement. We may have to hire people but obviously, it’s not going to be the AMLC [Anti-Money Laundering Council] that will hire people. Because if your problem is prosecution, filing cases, that has to be a line agency that has to do that,” Medalla said. Earlier, Medalla said the main challenge in exiting from the gray list is enforcement since the country has already passed the necessary legislation, except for the amendment of the Bank Secrecy Law. He stressed that currently, there are few Filipinos being prosecuted and convicted for terrorism financing and proliferation financing.
By Samuel P. Medenilla @sam_medenilla
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PRESIDENT Ferdinand R. Marcos Jr. leads the groundbreaking of the Cebu Bus Rapid Transit (CBRT) Project-Package 1 along Fuente Osmeña Circle in Cebu City on Monday February 27, 2023. PNA PHOTO/ REY S. BANIQUET
RESIDENT Ferdinand R. Marcos Jr. said the soon to be constructed Cebu Bus Rapid Transit (CBRT) will serve as the cornerstone of the urban renewal initiatives in Cebu City. At the ground breaking ceremony of the Package 1 of the project last Monday, Marcos said the Urban Realm Enhancement projects in the city will be focused “along the BRT.” “This will include the building of structures that promote nonmotorized modes of travel, like walking, like bicycle lanes,” Marcos said. The first phase of the project will include the construction of a 2.38-kilometer (km) segregated bus lane with four bus stations as well as a 1.15-km pedestrian improvement, which will link the CBRT System to the Port of Cebu. The Chinese contractor Hunan Road and Bridge Construction Group Co.Ltd. was awarded the almost P1-billion Package 1 of the CBRT last November. The CBRT is a three-phase project with a P16.3-billion funding approved by the World Bank and the French Development Agency in 2017. See “CBRT,” A2
PRIVATIZATION TO RAISE P130B FOR MAHARLIKA FUND By Butch Fernandez @butchfBM
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ENATORS prodded economic managers on Monday to move fast on the privatization of assets that they described as “less controversial” sources of seed funding for the proposed Maharlika Investment Fund (MIF), encouraged by an initial priority list that was provided them, which could raise a total of P130 billion in three years. At the third joint hearing led by the Senate Banks committee chaired by Sen. Mark Villar, officials of the Department of Finance were asked to list down the big-ticket assets that are deemed
convertible into cash for funding MIF in the next three years. This, as Sen. Sherwin Gatchalian noted that with P130 billion, there should no longer be a need to require government financial institutions to put up the initial fund for Maharlika. More especially, added Gatchalian, there should be no need to bother the Bangko Sentral ng Pilipinas (BSP) to pour in its dividends into the fund, given projections that this would delay the mandated capitalization buildup of the BSP by nine years. Asked for the initial priority list of doable privatization initiatives, officials cited mining rights, seen to bring in P100 billion; followed by the Food Terminal Inc.
(FTI) site in Taguig City, seen to fetch an estimated P22 billion; and other sources, P8 billion. Also at the hearing, BSP officials were asked how they arrived at the conclusion that they can live with a nine-year delay in their capitalization buildup timeline, given the real risk that shocks could emerge that would require a central bank with enough financial muscle to respond quickly and adequately. “What calculations did you make that made you willing to delay your capitalization buildup by nine years” if the BSP is mandated by the proposed Maharlika law to pour in its dividends into the Fund? asked Gatchalian. See “Privatization,” A2
See “BSP,” A2
PESO EXCHANGE RATES n US 55.0140 n JAPAN 0.4034 n UK 65.7912 n HK 7.0099 n CHINA 7.9009 n SINGAPORE 40.7662 n AUSTRALIA 37.0079 n EU 58.0673 n KOREA 0.0419 n SAUDI ARABIA 14.6630 Source: BSP (February 27, 2023)