LISTED COMPANIES’ plans to set up real estate investment trusts (REITs) could be delayed as the tax bureau is insisting that corporate regulators amend rules implementing Republic Act (RA) 9856.
The law, which took effect last December but has yet to be implemented, establishes the framework for the creation of REITs -- corporations that use a pool of investor funds to purchase and manage real estate assets.
The Securities and Exchange Commission (SEC) last May approved RA 9856’s implementing rules. The Bureau of Internal Revenue (BIR), however, has held off issuing the relevant tax guidelines, insisting that the regulator order REITs to sell more shares to the public.
"What we want is for SEC to amend the rules. We have already asked them but they have yet to reply to us. They have to amend it first," BIR Commissioner Kim S. Jacinto-Henares said.
The Finance department, which has raised concerns over foregone revenues from incentives granted by RA 9856, wants the SEC to raise the amount of REIT shares to be offered to the public to at least 50% from 33.3%.
"This is to make sure that we develop the capital market," Ms. Jacinto-Henares said.
SEC officials were not immediately available for comment.
Finance Secretary Cesar V. Purisima yesterday said: "I asked [SEC chairman] Ms. [Fe B.] Barin to convene the commission and tackle my request because without it (the 50% public float), there will never be capital recycling which is the main goal of REIT."
Among others, the public float should be increased to 67% in three years, Mr. Purisima said.
"I believe the REIT will not push through without the BIR implementing rules...," he added.
Property giants have expressed interest in REITs. Last week, Ayala Land, Inc. said it would set up AyalaLand Commercial REIT, Inc. SM Prime Holdings, Inc. and Robinsons Land Corp. have also said they would tap the sector.
Corazon B. Guidote, SM Investments Corp. investor relations chief, yesterday said the company had no choice but to wait for the BIR to issue the relevant tax rules.
K+12 won’t happen until after Aquino term
The K+12 is going to be K+6+4+2.
Simply put, there will be six years of elementary school, four years of junior high school and two years of senior high school.
That was the plan that the Department of Education (DepEd) unveiled Tuesday to put the country’s basic education up to speed with the rest of the world, meaning 12 years from the current 10 years.
It’s not going to happen though until the Aquino administration’s term is over in 2016, when funding and transition measures are put in place, DepEd officials said.
Education Secretary Armin Luistro unveiled the 12-year model called K-6-4-2, the basic education cycle the department had been working on to fulfill a campaign promise by President Benigno Aquino III, to coincide with World Teachers’ Day.
The program includes, not counting kindergarten, six years in elementary (Grades 1 to 6), four years in junior high school (Grades 7 to 10) and the additional two years in senior high (Grades 11 to 12) for specialized learning of employable skills.
The DepEd plans to create a K+12 Task Force, chaired by the department but with representation from different stakeholders, to flesh out details of the program’s phased implementation.
4-year transition
Curiously, Mr. Aquino did not mention the plan when he spoke before some 5,000 teachers earlier Tuesday.
As the implementation plan integrates a four-year transition program, the first batch of senior high school students is expected to be in the system by school year 2016-2017, officials said.
“The two years of senior high school intend to provide time for students to consolidate acquired academic skills and competencies. The curriculum will allow specialization in science and technology, music and arts, agriculture and fisheries, sports, business and entrepreneurship,” Luistro said in a news conference.
Planned since 1925
Citing the dismal performance of Filipino graduates, Luistro said the program hoped to lift the quality of Philippine education to international standards and graduate 18-year-olds holistically mature for employment.
This plan has been on the drawing boards since 1925, Luistro said.
The Philippines now is the only country in Asia with a 10-year education cycle, he said, falling behind compliance with international accords on education equivalency.
“We envision that our graduates will acquire mastery of basic competencies, be more emotionally mature, be socially aware, proactive and involved in public and civic affairs and be adequately prepared for the world of work, entrepreneurship or higher education, and be legally employable for better earnings,” Luistro said.
Luistro’s announcement capped two months of discussions with academics, education reform advocates and DepEd officials and marked the start of regional consultations that would culminate in a national summit early next year.
Law amendment
Government will then decide whether to pursue the plan, which officials said would also require the amendment of a 1982 law fixing basic education to at most 11 years.
Critics argued that the two-year extension was premature given the still unresolved shortages in classrooms, study materials, teachers and other resources, along with a high dropout rate.
K+12 supporters said that the extended cycle aimed to give students more time to study a curriculum that was crammed in the current 10 years.
“The biggest resource you are adding is time. Ten years is not enough. If we’re so smart going to 10, how come we’re not rich? How come we’re not more successful? We’ve fooled ourselves into thinking we can do it in 10 years,” said former Education Undersecretary Juan Miguel Luz.
Under the present system, Filipinos have to learn 20 percent more worth of lessons per year than children their age in other countries, he said.
Filipinos in general score dismally in achievement tests, and in international exams in math and science.
Stocks Rise on Service-Industry Data, Bank of Japan's Move
U.S. stocks climbed, sending the Standard & Poor’s 500 Index to the highest level since May, after American service industries expanded more than forecast and speculation grew that the Federal Reserve will join Japan’s efforts to stoke economic growth.
Boeing Co., Bank of America Corp. and DuPont Co. rose more than 3 percent, leading gains in the Dow Jones Industrial Average following the Institute for Supply Management’s report and the Bank of Japan’s announcement that it will cut rates and buy bonds. Banks rallied as JPMorgan Chase & Co. said they will likely beat third-quarter profit estimates. Chevron Corp. rose 2.6 percent after the oil company said it will buy back stock.
The S&P 500 rallied 2.1 percent, the most since Sept. 24, to 1,160.75 at 4 p.m. in New York. The index must gain 0.4 percent to reach its level on May 5, the day before the 20- minute crash that briefly erased $862 billion from the value of U.S. shares. The Dow advanced 193.45 points, or 1.8 percent, to 10,944.72. Both measures reached the highest levels since May.
“Investors are voting they’re a little more comfortable with the business outlook,” said Peter Sorrentino, who helps oversee $13.3 billion at Huntington Asset Advisors in Cincinnati. “Investors are trying to get out of currencies and into anything else that will retain wealth while monetary authorities try to bludgeon currencies down.”
Treasury 30-Year Bond Declines on Bet That Fed Will Buy Shorter Maturities
Treasury 30-year bonds fell on speculation the Federal Reserve will buy shorter-maturity debt if policy makers expand purchases of government securities to sustain the economic recovery.
The two-year Treasury yield matched a record low before an employment report Oct. 8 forecast to show no change in overall payrolls. Fed Chairman Ben S. Bernanke said yesterday the first round of asset purchases, called quantitative easing, improved the economy and more buys would help the economy. The Fed bought $5.19 billion of U.S. notes due from September 2016 to May 2017 today in a program of reinvesting mortgage-holding proceeds.
“The Fed is likely to buy Treasuries concentrated in the intermediate part of the curve,” said Richard Bryant, senior vice president in fixed income at MF Global Inc. in New York, a broker of exchange-traded futures. “In buying back Treasuries, they are unlikely to extend much of their purchases past the 10- year. The market is out in front of the Fed to a decent degree.”
The 30-year bond yield rose 3 basis points, or 0.03 percentage point, to 3.74 percent at 4:28 p.m. in New York, according to BGCantor Market Data. It earlier touched 3.76 percent, the highest level since Sept. 30. The price of the 3.875 percent security due in August 2040 fell 17/32, or $5.31 per $1,000 face amount, to 102 14/32.
The yield on the benchmark 10-year note slipped 1 basis point to 2.47 percent. It touched 2.43 percent, the lowest level since Aug. 25. Two-year notes yielded 0.3987 percent, matching the record low set yesterday.
Crude Oil Rises on Port Closures, Speculation of Growth in U.S.
Oil dropped from a five-month high in New York after an industry-funded report showed increased inventories of crude in the U.S., the second-largest energy consuming nation.
Futures gave back some of yesterday’s 1.7 percent advance after the American Petroleum Institute said stockpiles increased by 4.44 million barrels last week, the biggest gain in five weeks. An Energy Department report today may show supplies rose by 413,000 barrels, according to a Bloomberg News survey.
The November contract declined as much as 31 cents, or 0.4 percent, to $82.51 a barrel in electronic trading on the New York Mercantile Exchange, and was at $82.54 at 9:11 a.m. Sydney time. Yesterday it advanced $1.35 to $82.82, the highest settlement since May 3. Prices are up 4 percent this year.
Oil surged yesterday on speculation that central banks will keep stoking economic growth and as the dollar fell against the euro. A weaker U.S. currency bolsters commodities as an alternative investment.
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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