Same dog, different collar

It’s difficult to ignore the full-page Tax Watch ads that the Department of Finance has been publishing in this paper, which were meant to show discrepancies between a company’s earnings and the taxes it files.

In the latest installment of the series, the DOF partnered with the Bureau of Customs and revealed the top car importers in 2012. Not surprisingly, one luxury car importer—which has reportedly been on the crosshairs of Internal Revenue Commissioner Kim Henares to the tune of almost P2 billion—made the list because of the success of its well-established car brand.

A quick look at the figures will justify Henares’ enthusiasm: The company’s declared cost, insurance and freight (CIF) value in 2012 was a little under P600 million. But according to automotive industry data gathered from the Chamber of Automotive Manufacturers of the Philippines Inc., the same company sold 715 units during the year. This seems to indicate that you can get a brand new, luxury imported vehicle now for about P840,000. Hmm.

So what’s the best thing that a company in the BIR’s crosshairs can do? Open another company, of course. Based on SEC documents, this newly formed luxury car importation company has pretty much the same board members as the old one in question, give or take a few relatives and top executives. Indeed, there are a couple of ways to solve a problem. Eventually, however, this may put them back to square one. Daxim L. Lucas

Vietnam’s BGC

Aside from its offshore water utility ventures, the Ayala conglomerate is on its way to replicate the Bonifacio Global City (BGC) property development model in Vietnam.

A memorandum of agreement has been signed among Ayala Land Openasia Holdings, Tien Phuoc, Gaw Capital’s Denver Power Ltd. and Tran Thai Lands Co. to invest and develop a property in Thu Thiem, an urban project in Ho Chi Minh City.

Ayala Corp. chair and chief executive Jaime Augusto Zobel de Ayala aka “Jaza” recently announced on his Facebook page that this was an area that could be described “as the future Bonifacio Global City in Ho Chi Minh.”

A former military camp, the sprawling BGC is now a major central business district in Metro Manila with fast-rising capital values and rental rates.

And as the Ayala group scales up its interest in Vietnam, the conglomerate saw it fitting to open a representative office in Ho Chi Minh City two weeks ago. The group’s office at Vincom Center marks the presence of Ayala in the city’s central business district and will house the representative offices of Ayala Corp., Manila Water and Ayala Land’s joint-venture entity Ayala Land Openasia. Jaza’s brother, Fernando Zobel de Ayala, president and chief operating officer of the conglomerate, flew to Vietnam to inaugurate the new office.

The Ayala group set a foothold in Vietnam in 2007, beginning with Manila Water’s management contract with Saigon Water Co. and the subsequent equity investments of Ayala and Manila Water now totaling about $134 million in five operating companies. Doris C. Dumlao

The stork arrives

Finance Secretary Cesar Purisima is now a father. Perceived to be a workaholic, Purisima, now in his 50s, has another duty to attend to aside from being a husband and a lead manager of the country’s fiscal position. Purisima’s wife, 38-year-old Corrie dela Cruz Purisima, delivered their first born on Jan. 19. The baby boy is named Gabriel Cesar Fidel and weighed 7.8 pounds at birth.

“Corrie and I are proud to announce the arrival of our most awaited first-born son,” Purisima said in a shoutout posted on his Facebook account. Keen about being a supportive dad and a good provider, Purisima said in a recent chat with reporters that he would have to start saving more for his child’s future.

Purisima, who attended the Kellog School of Management of Northwestern University in the United States, said he has already projected the cost of sending his son to a graduate school abroad in case he will want to study offshore.

In computing, Purisima took into account estimated inflation for the next 20 years or so and arrived at a figure of about $1 million.

“That’s huge. I will have to start saving more,” he said.

With the demands of parenthood, both financial and nonfinancial, and Purisima’s intention to support even an expensive education for his son, many believe the finance chief, like some former government economic officials, will not want to work in government anymore after President Aquino’s term ends in 2016.

Many believe he will also pursue a job in investment banking or any other higher-paying career in the private sector after his six-year term as finance secretary.  Michelle Remo

Re-bidding of VMC notes

The state-owned Land Bank of the Philippines is set to conduct another auction for the Victorias Milling Corp. convertible notes that it bid out last December. Landbank has made a public offer to sell 165.02 million VMC convertible notes for a minimum bid of P286.71 million.

A source from the bank said the bidding did not lack in investor interest as there were six parties—all of them already existing investors in VMC—that wanted to vie for what remained of the state-owned bank’s interest in the sugar firm. “It was not clear in the [terms of reference] the timeframe within which the winning bidder should pay,” the source said, explaining why Landbank would have to restart the bidding process.

The convertible notes carry an interest rate of 8 percent a year, which is attractive from an investors’ perspective given the decline in interest rates to record lows. Interest and principal amounts are payable at the end of 2018. Landbank’s convertible notes, if converted into equity in the years ahead, will be equivalent to about 3 to 4 percent of VMC.

VMC is set to hold its annual stockholders’ meeting on Feb. 4 at the Victorias Golf and Country Club, Victorias City, Negros Occidental. Unlike in previous years when it was able to hold stockholders’ meetings in Metro Manila, this time VMC had to conduct its annual meeting where its head office is located, as required by the Securities and Exchange Commission. Doris C. Dumlao

Seeking acceptance

The trading restrictions adopted by the Securities and Exchange Commission may have prevented the Philippine Stock Exchange from joining an integrated Southeast Asian trading union.

Corporate regulators have a solution in mind, but it is not within easy reach.

For now, the PSE can’t join the Southeast Asian trading union unless the SEC is admitted to a mutual recognition scheme that would render as valid the onshore trades of foreign securities and vice versa. That means harmonizing rules with regional peers.

While supportive of the trading union, SEC Chair Teresita Herbosa said the solution would be for the SEC to join the International Organization of Securities Commissions (IOSCO), an association of organizations that regulate the world’s securities and futures markets. But joining isn’t easy and not likely to happen within this year, Herbosa said.

“We have to go through a rigorous process, submit our application. There are a lot of hurdles,” she said.

The primary objective of IOSCO is to promote the exchange of information. Unfortunately, Herbosa said the Philippines was one of the few countries with stiff bank secrecy laws. As such, she said the SEC must find a “gateway” to IOSCO given existing limitations.

“We’ll be presenting a novel approach,” she said, adding that the SEC was committed to support PSE’s participation in a regional market. “Our deadline is 2015 (in line with the creation of the Asean Economic Community). That’s when we have to be part of the capital markets.” Doris C. Dumlao

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