Some Common Mistakes People Make When Planning for Retirement

Focus on Dreams of Retirement 

Retirement could be some several years ahead but how you handle your finances would determine how efficiently you could manage your post-retirement life. Focusing on dreams of retirement could be the initial step, where planning and working towards your dream goals could eventually lead you there. Often there seems to be some errors which can be avoid in reaching your goal.

Refraining from creating a retirement road map

A retirement road map needs to be done in order to know what the person may want to do, how much is needed to save and how one would intend achieving their goals. The best way to map the retirement plan is to envisage what the retired years ahead would look like, which will provide an idea on how to be prepared for the same.

No knowledge on how much is needed at the time of retirement 

An individual at the age of 55 has plans of retiring at 60 and has saved around 50 lakhs for his retirement. But in order to maintain his present lifestyle for the future, he needs to have a saving of at least Rs 3 crores. Having just five years to retire with shortage of Rs 2.5 crores, he may face difficulties in the future.

Not investing early 

Mr A and Mr B had followed a disciplined process of investing and both had invested Rs 10,000 each year. But Mr B had started investing at the age of 25 and had stopped at the age of 35 while Mr A had started investing at the age of 35 and had continued till the age of 65. When both of them retired at 65, Mr B would have as much as 2.5 times the amount as Mr A inspite of him investing for only 10 years in comparison to Mr A who had invested for 30 years. This is known as the power of compounding. The effect of compounding is appreciated when adequate time is given for the money to grow. The sooner one starts saving, the earlier you can retire.

Not including the possibilities like health care expenses in retirement plan 

Medical expenses during retirement are the most common possibility which is needed to be taken in consideration. A single medical bill could drain out the savings in one go. One should ensure that some emergency funds are assigned to handle the health care expenses in old age. Post retirement, ensure on the factors of the costs of medical insurance and health care expenses and plan for retirement corpus.

Avoiding in making intelligent investment decisions 

Mr A had invested in a bank FD which offered a 9% return and though it seemed to match inflation rate, he did not check into account the impact of taxes on his returns. Being in the 30% tax bracket, his net return fell a bit over 6% less than the inflation rate. Investments can be done in company shares or equity mutual funds which would give the inflation a beating return in the long term that will help in hastening up the retirement corpus growth as well as get started with lower monthly savings. While planning for retirement, it is essential to apprehend where one would want to be, to know what one needs to do to reach their goal.

Philippine Crop Insurance Corp released Php54.7M insurance claims in CV

Insurance claims paid out by state-run Philippine Crop Insurance Corp. (PCIC) to insured farmers in Central Visayas affected by calamities reached Php54.7 million as of end-November this year. Also, the PCIC free insurance coverage for farmers affected by super typhoon Yolanda in 2013 is only until this year, as decided by its board.

Citing official data, PCIC Regional Manager Crescencio Deligero Jr. said the agency distributed indemnity checks to a total of 7,282 farmers in Region 7. Indemnity is the compensation for damages or losses.

As of November, Deligero said the agency has insured a total of 207,806 farmers, already exceeding its target to insure 153,000 this year. The claims paid out by PCIC include all its insurance lines: rice, corn, high-value crops, livestock, non-crop agricultural assets and term insurance package.

Bulk of the claims were paid for rice and corn at Php24.6 million and Php21.5, respectively.wherein most of the reported losses were due to the typhoons that previously hit the region and the effects of the ongoing El Niño phenomenon.

The state-run agricultural insurer has allocated Php60 million this year for 47,278 farmers in northern Cebu which was heavily hit by Yolanda. As of last month, claims by 1,908 farmers who were covered by the free insurance reached Php13.7 million.

The insurer also offers farmers free coverage in its Registry System for Basic Sectors in Agriculture and the Agri-Fishery Insurance Program of the Cebu provincial government.

Disaster-prone PH sees rise of microinsurance

Wider range of affordable products helped further expand microinsurance coverage in the country to 31.1 million in 2014, a report published by the German International Cooperation (GIZ) showed.
GIZ’s Regulatory Impact Assessment of Microinsurance in the Philippines published last month noted of a growing number of insurance companies that had ventured into microinsurance.

“Out of the 138 insurers in 2014, 63 are engaged in some form of microinsurance, from 52 of 138 in 2012. Microinsurance has become an important addition to the insurer’s markets and in 2014 it represented 62 percent of all insurance coverage with 1.9-percent share of total premiums, up from 47 percent of industry insurance coverage and 2-percent share of total premiums in 2012,” the report cited.

Alongside the increase in firms engaged in microinsurance was a rise in the number of agents selling these cheaper alternatives. “The number of microinsurance agents licensed and active has grown to 170 at the end of 2014. There are 122 individual agents and 48 rural bank agents (although an additional 13 rural banks are fully licensed to offer microinsurance as agents, though they are not yet actively selling microinsurance products).”

As a result of more microinsurance players, “the number and diversity of products has improved considerably,” the report said.

“As of end-2014, 162 products were registered out of which 81 are life products and 81 non-life. This is a sharp increase compared to 2009 when only 18 products … had been approved,” it said.
Hence, a larger number of Filipinos bought microinsurance coverage last year, bringing the 2014 microinsurance penetration to 31.1 million, up from 19.8 million in 2012 and 2.9 million in 2009.
It helped that many Filipinos also found how microinsurance works after being devastated by natural calamities and disasters, GIZ said in a statement.

“Insurance providers have responded effectively after Typhoon ‘Yolanda’ (international name: Haiyan) in November 2013, paying out more than one hundred thousand microinsurance claims within the first three months, amounting to approximately half a billion pesos. The average amount per claim paid was P4,777,” it noted.

“Clear policy direction and proportionate regulatory guidelines provide the driving force to insurance market development. It provides certainty for the industry to invest in microinsurance activities. It gives public confidence to trust microinsurance products. The good numbers in microinsurance, as elaborated in the report, is a product of multi-stakeholders dialogue and cooperation.” Insurance Commissioner Emmanuel F. Dooc was quoted by GIZ as saying.

“The Philippines is a leader in inclusive insurance measures among countries in Asia. The country has proven that microinsurance works and could be sustainable using full market-based approach. The role of government in providing clear policy directions has enabled the private sector and other stakeholders to contribute to the advocacy of microinsurance market development,” said Finance Undersecretary Gil S. Beltran.

Last October, the Insurance Commission came out with the Enhanced Microinsurance Regulatory Framework, which was aimed to “enhance the regulatory environment for microinsurance in order to broaden the scope and deepen the outreach of microinsurance providers without sacrificing their viability and sustainability, and protect the consuming the public.”

-- Inquirer.net

Expensive nonlife-insurance policies as house abandons tax-rate cuts

Philippine Insurers and Reinsurers Association (Pira) is no longer hoping the proposed bill on the lowering of tax rate on nonlife-insurance products will ever be enacted under President Aquino. Pira Chairman Michael Rellosa said many of the country’s legislators are already in campaign mode, as indicated by the lack of quorum at the House of Representatives the past few months.

The proposed bill that will lower the tax on nonlife-insurance products had been pending during the 16th Congress, no matter the strong support from Insurance Commissioner Emmanuel F. Dooc.

The tax imposed on nonlife-insurance products in the Philippines is said to be the highest in the world, equal to 24.5 percent of the total premium paid for nonlife-insurance products, and 26.5 percent for fire insurance.

Nonlife-insurance products are levied a 12-percent  value-added tax and another 12.5-percent documentary-stamp tax. Fire insurance is slapped an additional 2-percent fire service tax. On top of these taxes, local governments also impose 0.15 percent up to 0.17 percent in municipal tax for property insurance.

Singapore only imposes a tax of 7 percent on nonlife-insurance policies, while Thailand imposes 11.3 percent.

Finance Secretary Cesar V. Purisima was earlier reported to have opposed the lowering of the tax, although he once supported the proposed 5-percent tax on nonlife-insurance products, which was a compromise with the insurance industry, which earlier proposed for a 3-percent tax.

The lowering of the tax on nonlife-insurance products would have been appropriate with the previous lowering of taxes by the Arroyo administration on life-insurance policies, with the old tax of 5 percent being lowered further to only 2 percent to boost the competitiveness of the country’s life-insurance industry.

Rellosa said the lowering of the tax on nonlife-insurance premium would also have been in line with the government’s new policy of promoting microinsurance as a tool for the financial inclusion of the poor, because most microinsurance products are nonlife-insurance products that provide cover for property loss.

But, as  it turns out, with the shelving of the measure on  nonlife-insurance  products, these were touted as the poor man’s protection against loss of property and income during times of natural calamities.

Such will continue to be levied a very high tax rate of 24.5 percent.

-- Business Mirror

Insurance firm bares first infra investment in Philippines

Sun Life Philippines is entering its first infrastructure investment as the life insurer continually seeks for long-term assets, an official said. “As an insurance company we’ve always been in search for long-term assets,” Sun Life Chief Investments Officer Michael Gerard Enriquez said in a press conference Wednesday.

The company has announced its first foray into power generation in Mindanao. “What better way to invest our excess cash and help in nation building by looking at some of infrastructure projects,” Enriquez said.

Enriquez revealed the company is in the process of closing its first financing deal for a 600-megawatt coal-fired power plant in Mindanao, which is expected to be operational by the third quarter in 2018.

Enriquez declined to give further details yet.

On another matter, Sun Life President and CEO Rizalina Mantaring said the life insurer has set a target to insure five million individuals over the next five years from the current 1.2 million.

The target is part of its goal to boost the financial literacy among Filipinos as insurance penetration in the country currently stands at less than 5%. When micro-insurance is included, the penetration rate is at 20-30%.

“We want to reach to all segments of the population especially those who need it more,” Mantaring said in an interview.

The Canadian company announced that it achieved its five-year plan ending 2015 which includes reaching 5,000 financial advisors, Php5 billion in annualized first year premiums, Php5 billion in net income and Php50 billion in assets under management.

Sun Life ended the first half of 2015 with total premium income of Php16.3 billion, ranking first in the Philippines life insurance sector.

-- Philstar

Microinsurance products for local farmers pushed

To help farmers quickly replant damaged crops due to extreme weather conditions and, thereby, help temper food inflation, the Department of Finance’s chief economist is pushing for the immediate rollout of the Insurance Commission’s agriculture microinsurance or “MicroAgri” framework.

In an economic bulletin on Friday, Finance Undersecretary Gil S. Beltran said the rise in inflation to 1.1 percent in November from the record-low of 0.4 percent in the previous month “can be attributed to the sharp rise in vegetable prices as a result of Typhoon ‘Lando,’” that hit many parts of Luzon, including farms and plantations, last October.

“The increase in vegetable prices contributed 0.4 percent to the total inflation rate” in November, Beltran said.

Last month, the faster increases in the prices of corn, fish, meat and vegetables offset the slower rise in the prices of cheese, eggs, milk, non-alcoholic beverages and rice, the National Economic and Development Authority said on Friday.

As farmers had already been replanting crops destroyed by “Lando,” Beltran said he expected the typhoon’s adverse impact on prices to wane.

He said supporting farmers to quickly recover from natural disasters and calamities was important to temper food inflation.

“This emphasizes the need to immediately launch the MicroAgri framework and start marketing new microinsurance products for farmers. In the future, the new microinsurance product will enable farmers to undertake replanting quickly,” he said.

In October, the Insurance Commission issued MicroAgri, which “provides a clear-cut policy on agriculture insurance to encourage the private microinsurance providers to innovate and design products tailor-fitted to the needs of agricultural clients.”

With the MicroAgri framework in place, the Insurance Commission was hoping to “promote and encourage the provision of agriculture microinsurance products and services that are simple, affordable and accessible to the vast of the population dependent on agriculture.”

The Insurance Commission wants to leverage on the country’s strength in microinsurance—the Philippines is widely regarded as a model in microinsurance penetration, with 28 million of the 32 million insured Filipinos to date covered by cheap microinsurance plans.

-- Inquirer.net

Life is Unpredictable

For you who are planning for retirement fund till eternity, bad news. My cousin passed away recently at 41 years old. Rest in peace...

Not to fret, our life expectancy are increasing:

Life Expectancy at Birth

*Data from 1980 onwards refer to the resident population.
Data for 2014 are preliminary.

- See more at: http://www.singstat.gov.sg/statistics/visualising-data/charts/life-expectancy-at-birth#sthash.4puPpFz1.dpuf

This reminds us that it is an art to live every day like it is your last, and plan your finance like you live forever. To learn this art is a lifelong journey.

Averagely, we are expected to live to >80 years old. Who knows how long our journey will be? Go chase your rainbow!

Consumer Loans are still rising

Money lent to households grew by nearly 20% for the second quarter of the year with more consumers borrowing from banks to buy cars and obtain instant cash, the Bangko Sentral ng Pilipinas (BSP) said. The demand for loans to finance their personal needs continued to expand in the first half of the year and that consumer loans of universal, commercial and thrift banks stood at Php959.2 billion at the end of June this year.

This was a 19.29-percent rise from the Php959.2-billion total consumer loans seen a year earlier. Compared, meanwhile to the previous quarter, the end-June consumer loan figure is 2.8 percent higher than the Php932.8 billion seen in end-March this year.

“This sustains the quarter-on-quarter growth in consumer loans that started in 2008,” the BSP said.

Consumer loans are typically extended to individual clients of banks looking to purchase cars and underwrite home mortgage payments, among other purposes.

“Consumer loans increased quarter-on-quarter in June due to an increase in auto loans, credit card receivables and salary loans,” the BSP said. “Residential estate loans, on the other hand, declined marginally during the period.”

Salary loans, or advance payroll credits taken out by employees, saw an increase of 89.6% to P84.6 billion for the second quarter compared to the Php44.6 billion in the comparable period last year, and up by 11.1% from end-March.

Loans for housing lots, meanwhile, stood at Php409.2 billion for the period, higher by 17.3% from last year’s Php348.7 billion. However, this was lower by 0.6% from the Php411.4 billion recorded in the first quarter.

Car loans also reached Php259.4 billion for the second quarter, higher by 25.3% from the same period last year, and up by 6% from the Php207 billion given out by the banks in from January to March. Debts incurred via credit cards stood at Php166.5 billion, up by 5.9% from June 2014.

Other consumer loans saw a 14.8% decline for the quarter to Php39.6 billion from a year ago.

Despite the increase in consumer credit, banks were also able to trim the share of bad debts to their total loan portfolio while increasing their security cover from credit losses, the BSP said.

Non-performing loans - obligations left unpaid for at least 30 days past due date - stood at 4.5% of the banks’ total consumer loans, lower than the 4.9% in the first quarter. This comes alongside a 61.2% allocation for loan loss reserves on bad debts.

The central bank added that the 16.7% share of consumer loans in the commercial and thrift banks’ total loan portfolio stood the lowest among the ASEAN 5 economies, namely Malaysia’s 57.1%, Indonesia’s 28.3%, Thailand’s 27.9%, and Singapore’s 25.9%.

The BSP monitors the quality of all types of bank loans to ensure a high credit system for financial stability.

Bonds send ominous signs no matter where in the world

Ask any bond trader in Tokyo, London or New York what their view on the global economy is, and you’re likely to get a similar, decidedly downbeat answer.

That’s not just because fixed-income types are a dour bunch at the best of times. A quick scan across government debt markets suggests that investors are pricing in the likelihood that growth and inflation around the world will remain tepid for years to come.

In Europe, bonds yielding less than zero have ballooned to $1.9 trillion, with the average yield on an index of euro-area sovereign notes due within five years turning negative for the first time. Worldwide, the bond market’s outlook for inflation is now close to levels last seen during the global recession. And even in the U.S., the bright spot in the global economy, 10- year Treasury yields are pinned near 2 percent-- well below what most on Wall Street expected by now.

“Where are the animal spirits to turn us around?” said Charles Diebel, the London-based head of rates at Aviva Investors, which oversees about $377 billion. What you see in the bond market is “a lack of confidence in the future.”

Diebel says his firm favors sovereign bonds issued by countries that are loosening monetary policy and betting against debt from nations that produce commodities.

Deflation Risk

With the risk of deflation lingering in Europe, China slashing interest rates to combat flagging growth and a raft of indicators fueling concern the U.S. economy is losing steam, it’s not hard to understand why many investors are pessimistic. And the persistent demand for the safety of government bonds also raises thorny questions about whether the Federal Reserve should be raising interest rates when central banks in Europe, Asia and many emerging markets are struggling to revive their own economies.

Appetite for safe assets is so strong in Europe that about 30 percent of the $6.3 trillion of sovereign bonds in the euro area have negative yields, index data compiled by Bloomberg show. That means buyers who hold to maturity are willing to accept small losses in return for the promise that most of their money will be returned.

In the past week alone, yields on about $500 billion of the bonds fell below zero, pushing the average yield for the region’s bonds due within five years to minus 0.025 percent, the lowest on record, data compiled by Bloomberg show.

More QE?

A big part of the push has to do with stubbornly persistent concerns over the state of affairs in Europe. For the 19 nations that share the euro, consumer prices were flat in October after falling 0.1 percent in September. In Germany, the region’s biggest economy, exports in August tumbled by the most since the 2009 recession, while factory orders and industrial production unexpectedly declined.

Among bond investors, that’s bolstered the view the European Central Bank will need to step up its quantitative easing to stimulate demand.

“Even after successive rounds of QE there is no sign of inflation anywhere out there,” said David Tan, the London-based global head of rates at JPMorgan Asset Management, which oversees more than $1.7 trillion. “We still face massive growth headwinds” and that will support demand for even low-yielding bonds.

Worries that lackluster growth will linger aren’t limited to Europe. Bond traders have pushed down 10-year yields in China to 3 percent for the first time since 2009 as the central bank cut rates six times in less than a year to spur what’s poised to be the weakest growth in a quarter century.

New Normal

In the U.S., yields on benchmark Treasuries were 2.13 percent in Asian trading on Monday, less than where they were at the start of the year and well below the 3 percent threshold that forecasters in a Bloomberg survey in January called for by year-end.

Bond investors have snapped up U.S. government debt as reports from new home sales to consumer prices have disappointed. Americans themselves have also pared pared back inflation expectations over the next 5 to 10 years to an all- time low, according to a University of Michigan survey released last week.

The economy is “looking relatively subpar,” said Thomas Tucci, the head of Treasury trading at CIBC World Markets Corp. in New York. “Japan, China, Europe are not growing at the levels they used to. You have to ask, where is the engine?”

Last month, the International Monetary Fund cut its global growth forecasts for 2015 and 2016 as weak commodity prices drive a slowdown in emerging markets. The IMF now forecasts growth of 3.1 percent this year. In the half decade before the financial crisis, annual growth was at least 4 percent a year.

The world’s richest nations also remain threatened by deflationary pressures, according to the Washington-based organization.

Japanese Lessons

Bond traders agree. In the developed world, they see inflation averaging 1.01 percent in future years, based on index data compiled by Bank of America Corp. Rarely has that measure fallen lower since the last recession ended.

Against that backdrop, a growing chorus of voices say the Fed may be moving too soon, especially after policy makers signaled they would consider tightening at their next meeting in December. Based on futures trading, the likelihood of the Fed raising rates by year-end is 50 percent. The central bank has held borrowing costs near zero since 2008.

Among those advising patience are Mizuho Asset Management’s Yusuke Ito, who says the Fed risks repeating the Bank of Japan’s mistakes by trying to head off inflation when it doesn’t exist. Policy makers there, who have struggled with deflationary pressures for two decades, raised interest rates in 2006 and 2007, only to reverse course in 2008.

“Growth is not strong enough to generate inflation,” said Ito, a Tokyo-based senior money manager at Mizuho, which oversees $41 billion. If the Fed lifts rates, “it’s going to stall growth.”

-- Bloomberg

Mergers way into Indonesia banking sector

FOREIGN BANKS that have been frustrated trying to break into one of the world’s most-profitable countries for banking, Indonesia, now may have a way. Buy two lenders, merge them -- you may get management control while Indonesia gets to cut its weakest players and consolidate its banking sector.

After Indonesia imposed rules three years ago that limited foreign ownership of its banks to 40%, the ground shifted again this year. Regulators started saying that bidders could go above the threshold if they bought and merged two local lenders. At least two deals, by China Construction Bank Corp. and Korea’s Shinhan Bank, have been given the go-ahead.

“It may be an odd way of being allowed to enter the market, but maybe it’s a relatively small price if you are taking a long-term perspective on Indonesia,” said Mark Young, the Singapore-based head of Fitch Ratings’ Asia-Pacific financial institutions group.

“This market is something that any regional bank that has ambitions would look to enter.”

MOST PROFITABLE

Indonesia is among the most profitable lending markets in the world. The country’s four largest banks, with market value exceeding $5 billion, have a return on equity of 20.4%, the highest among similar-sized banks in the 20 biggest economies of the world, data compiled by Bloomberg show.

The banking sector’s average net interest margin of 5% is more than double that of Southeast Asian neighbors Singapore and Malaysia, the data show.

Loan growth is expected to accelerate as much as 13% next year, according to Indonesia’s banking regulator, Muliaman Hadad, chairman of the Financial Services Authority.

Yet the problems and costs of merging two banks’ differing operational systems and family owners who may not want to fully cede management control make such acquisitions tricky, said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd.

In addition, Basel rules requiring more liquidity buffers for banks mean lenders could be spending precious capital for an acquisition that may not end up delivering results for years -- especially in an economy that is heavily tied to commodities, which are currently in a down cycle.

“It might be double the trouble actually,” said Antos.

“A 2-for-1 sale is something that you find in a retail shop, not in a banking sector. It’s not a bad idea in theory, but the reality is going to be very tough.”

Valuations of Indonesia’s smallest banks have risen in the past year as indications emerged that regulations were shifting. Shares of the 10 smallest lenders listed in Indonesia have risen an average 38% in the past 12 months.

By comparison, the top 10 have fallen an average 29% in value.

China Construction Bank said in September it would become the controlling shareholder of Jakarta-based Bank Windu Kentjana International, which handles trade financing and foreign currency from 78 outlets primarily on the island of Java, after the Indonesian bank bought Bank Antardaerah in July, a small commercial bank with 30 offices in Java, Bali and Lombok.

China Construction Bank said the acquisition would help it offer infrastructure lending in Indonesia as well as financing for cross-border settlements to facilitate trade with China.

“This is a critical step for CCB in entering the Indonesian market,” Qi Jiangong, CCB’s deputy general manager for strategic planning and investment, said at the Sept. 18 signing ceremony in Jakarta for the purchase. “Indonesia has always been a high priority market for CCB’s overseas development.”

SHINHAN BANK

Shinhan Bank also received approval to buy more than 40% in two Indonesian banks it purchased in stages.

Shinhan said it signed a deal for 40% of Jakarta-based commercial lender Bank Metro Express PT in 2012, though it got Indonesia’s approval for the purchase only this year when it sought to buy Surabaya-based small-business lender Centratama Nasional Bank.

The deal is also paving the way for Bank Negara Indonesia to open its first branch in Seoul.

The new rules allowing majority stakes make more sense for foreign buyers than buying minority stakes, said Kevin Kwek, an analyst at Sanford C. Bernstein & Co. in Singapore.

“At 40% or below, you are merely buying an exposure to growth,” he said. “Without effective control, there is a limit to how much a foreign buyer can bring in expertise, know-how and a host of other intent to drive value out of an acquisition.”

After failing to win regulatory approval for a majority stake in 2013, Singapore’s DBS Group Holdings Ltd. scrapped plans to buy PT Bank Danamon Indonesia.

PUSHING CONSOLIDATION

Indonesia, with 118 commercial banks, is pushing for banking consolidation. With its top 10 banks accounting for more than 60% of total assets, the country is trying to weed out the bottom performers.

The Financial Services Authority’s Hadad said last year that the regulator would push small lenders to merge or seek strategic investors, as well as increase industry oversight by tightening non-performing loan levels.

“For consolidation, it’s not enough for them to acquire just one bank,” Irwan Lubis, the regulator’s deputy commissioner of banking supervision, said on Sept. 18.

The CCB deal “should be a lesson for other investors interested in acquiring Indonesian banks. Hopefully with this example, they will know what to do next.”

He said regulators would consider previously stated criteria such as reciprocity between Indonesia and the buying bank’s country, and whether the buyer would help to grow the economy, when deciding whether to approve controlling-stake acquisitions.

NO PLANS

Nelson Tampubolon, chief executive officer of the Financial Services Authority, said by text message that there are no plans by other foreign banks to buy another Indonesian lender at this time.

In addition to the CCB and Shinhan deals, Tokyo-based J Trust Co. managed to buy 99% of PT Bank Mutiara a year ago, with regulators making an exception for the Japanese financial-services firm because it was buying a distressed bank. The bank is aiming for as much as 20% loan growth this year.

Others are content with less. Taiwan’s Cathay Financial Holding Co. said in January it was buying 40% of Bank Mayapada International, while Sumitomo Corp. paid$460 million to raise its stake in Bank Tabungan Pensiunan Nasional to 20% in February.

“If you look long-term the Indonesia market is very attractive, but it will need capital to support the growth,” said Fitch’s Young. The government’s efforts at pushing banking consolidation “makes life easier for themselves, and if it means mopping up weaker entities, that’s smart too.”

-- Bloomberg

Philippines - next real estate and property boom

The Philippines has the potential to be the world’s next property “blockbuster,” but this sector’s prospects can be maximized only if the country relaxes its real estate investment trust (REIT) law and boosts infrastructure investments.

Mr. Antonio, also the chairman of Century Properties Group, Inc., said the Philippines -- with its young demographics and solid fundamentals -- has been expanding for 66 straight quarters since 2001, paving the way for its economic renaissance after being tagged “the sick man of Asia” in the past several decades.

Changes in Republic Act No. 9856, or the Real Estate Investment Trust Act of 2009, may unlock the value of the real estate sector, Philippine Stock Exchange Chief Operating Officer Roel A. Refran mentioned.

Nearly six years since the REIT law lapsed into law in December 2009, none of the major developers have come forward with their respective offerings because of contentious issues on ownership and taxation of asset transfers.

“It’s like we have sent invitations to a party, but no one came,” APREA Chief Executive Officer Peter Verwer said. But for Mr. Refran, the “party’s not yet over.”

“There is no one-size-fits-all model. We have an advantage that we can pick up from various jurisdictions, customize them and learn from that experience. The policy decision we have to buy into is that enabling real estate development -- whether through underlying assets or REITs -- has a positive impact on GDP (gross domestic product) growth,” Mr. Refran said.

The Securities and Exchange Commission intends to revive its dialogue with the industry to make REITs a “real alternative funding source,” Commissioner Ephyro Luis B. Amatong said.

While the financial system is awash with cash, Mr. Amatong said real estate firms are facing funding pressure with the Bangko Sentral ng Pilipinas (BSP) implementing the single borrower’s limit and putting a cap on bank exposure to real estate. “These... regulations mitigate risks with the ups and downs of the industry, creating pressure for the industry to find other sources of financing aside from bank borrowing.”

To sustain its economic run, and along with it real estate’s rosy outlook, it is crucial for the Philippines to increase investments in infrastructure -- an area where the country has under-invested in past decades. “We are like an eight-year old... who started in the business. We’re now 15-16 years old, but we’re wearing clothes of an eight-year old. We have outgrown the clothes we are wearing so we should now upgrade our infrastructure,” Mr. Antonio said.

Better access will enable the Philippines to realize the potential of tourism, which can be the country’s third leg after business process outsourcing (BPO) and overseas remittances, he said. “Tourism is one of the low-hanging fruits in the economy today. However, in order to attract tourists to this country... I think we have to improve our access.”

CBRE Philippines Chairman Rick M. Santos remains bullish on the BPO sector, saying its demand for space could hit 850,000 square meters (sq.m.) by 2018 from 600,000 sq.m. currently.

PH National Credit Information System takes shape with Credit Bureaus

Six firms are seeking to be accredited as special accessing entities (SAE) or credit bureaus for the envisioned national credit information system. These credit bureaus have already submitted their applications for accreditation with the Credit Information Corp. (CIC) to start the gathering of credit information of bank clients to come up with their respective credit scores.

The CIC announced those who passed the initial stage for accreditation as the following: Credit Bureau Singapore, Credit Information Bureau Inc., Compuscan, CRIF, Dun and Bradstreet South Asia Middle East, and the local credit bureau TransUnion.

The credit bureaus are applying to play the role of a Special Accessing Entity (SAE) under Republic Act 9510, or the Credit Information Systems Act. An SAE is defined by law as a duly accredited private corporation engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services.

Once accredited, these entities are granted access to CIC’s pool of consolidated basic credit data, from which the SAEs will formulate the credit scores of bank clients. SAEs may also use other data that they have access to, aside from the CIC’s database, in coming up with the credit scores.

CIC President and CEO Jaime P. Garchitorena said that SAEs would play a critical role in the improvement of public’s and MSMEs’ (micro, small and medium enterprises) access to credit with the development of products in the form of credit scores and other value added services.

Finance Secretary Cesar V. Purisima earlier said MSMEs, which comprise the bulk of businesses in the Asia-Pacific region, do not have the appropriate access to capital because banks are averse to lend money to them without collateral.

But Purisima said MSMEs in the Asia-Pacific region are actually in possession of some $9 billion worth of properties that they could not use as collateral, because banks do not consider these properties, mostly personal properties, as allowable collaterals.

Credit scores are expected to be the first products released by the SAEs and will be based on the credit reports accessed from the CIC as well as other data the SAEs may get from various sources, CIC added.

Once CIC finalizes the accreditation of qualified credit bureaus and opens its database for qualified inquiries sometime in 2016, MSMEs, the general public, corporations, and financial institutions can start benefiting from the credit scores and reports provided by these credit bureaus.

Credit scores and reports to be provided by CIC are expected to expedite the process of loan applications, increase the lending potential of financial institutions, potentially decrease the need for collateral, and help manage the risk of default.

CIC earlier said it targets to launch by the end of the year its credit data system, which will provide access to over three million records. By 2016, Mr. Garchitorena had said, CIC aims to scale up the system to 12 million records.

Under the Credit Information System Act, lending institutions need to forward both the positive and negative credit information of their borrowers to CIC.

BSP seeks to bridge real-estate information gap, price index in PH

After consulting with experts and industry leaders, the central bank on November 16 finally issued and published a circular ordering all universal, commercial and thrift banks to submit a quarterly report on real-estate loans, which is necessary for the generation of data under the residential real-estate price index (RREPI). This is part of a broader program to bridge a so-called real-estate information gap in the country. The full disclosure applies on all residential real-estate loan transactions granted beginning April this year.

This is in recognition of the need for timely and accurate information on real-estate transactions and have required all lenders to report in greater detail such purchases from now on. Thus, for each residential real-estate loan granted, respondent financial institutions will be required to provide the following data to the BSP in their quarterly report: month of loan granted/booked, location of property, type of property, type of housing unit, appraised value of housing unit per square meter, floor area of the housing unit, number of floors and number of bedrooms.

The effective age of the housing unit, its appraised value of lot per square meter, total area of lot, total appraised value of property, housing segment, acquisition cost and name of developer should also be provided.

All 15 details, the BSP said, are obligatory on the part of banks from the National Capital Region (NCR) and areas outside NCR.

Real-Estate sector is vulnerable to price bubbles

Talks about the creation of the RREPI started last year as part of an initiative seen helping regulators and real-estate practitioners alike to monitor price movements and prevent so-called  real estate price misalignments.

“The construction of RREPI based on banks’ approved housing loan applications is a first in the Philippines and is expected to provide a valuable tool in assessing the real estate and credit market conditions in the country,” the BSP said in a statement.

The index is said to be a function of both the supply and demand. In terms of supply, the RREPI factors in the cost of materials, construction and permits. Meanwhile, in terms of demand, the index should also help gauge the number of applications of residential real-estate permits, among others.

The BSP said the information gathered from banks would provide information for the actualization and generation of the RREPI in the country. While the banking sector has yet to react to the newly released mandate, the industry is known to tighten its lending standards once they feel the regulators are more vigilant than at any other time.

In the central bank’s senior loan officers’ survey, the central bank said the banks indicated a net tightening of their overall credit standards for commercial real-estate loans in the July-to-September quarter.

This was the 13th consecutive quarter that the banks indicated a net tightening of standards in real-estate lending under the diffusion index approach.

“The net tightening of overall credit standards for commercial real-estate loans was attributed by respondent banks largely to perceived stricter oversight of banks’ real-estate exposure,” the central bank said.

Focus is One of the Key to Success

I am not a smart person. The reason why I am still progressing well in whatever I do is, to keep everything simple. It helps me focus, reduce distractions, eliminate unnecessary work processes / day-to-day hassles and enhance my understanding. I believe anything that can't be simplified, mean we don't know the subject matter well enough.


We all wear many hats. I am wearing the hat of a :

1. Husband;
2. Father;
3. Maid;
4. Son;
5. Full time employee;
6. Blogger; and
7. Many more other roles (Investor?)

Every day, my wife and I have to juggle with:

1. House chores;
2. Spending time with child;
3. Working full time;
4. Preparing daily breakfast; 
5. Buying/cooking dinner;
6. Washing laundry;
7. Feeding my child; 
8. Washing milk bottles; 
9. Learning new skills and 
10. Rushing to pick up child from infant care centre.

On top of these, we have to buy groceries, write blog and run day-to-day errands. My wife and I only have 1-to-1 dating time once every quarter, when we placed our child at care centre and we took leave together. The rest of our leave are spent on child's sick leave, care centre rest day, vaccination and maybe once-a-year vacation (horray!).

I have never been so busy before in my life. Even busier than when I was juggling work and study since secondary school. I think my time management skill should be great, given that we have no maid and parents support with both of us working full time and maintaining a pretty high standard of hygiene for the family.

I considered myself with higher than normal dedication to my family. I spent all my personal time with my family and I rarely go out with friends or attend events without my family. I enjoy moments with my family. Another dedication is my house chores. I pride myself to higher level of hygiene and maintaining minimalist.

I find myself distracted in the past 1 year. I no longer focus and productive as before. Partly because to begin with, I have left with very little time for distractions with my high level of child, house work, and family commitments. on top of my day job, I am now learning new skill to transit into freelance so that I can quit my day job sooner than 5 years to financial independence, or 5 years. My distraction comes from whatapps and my little room of time left, I guess.

So in order to help myself, I did contemplate whether to pause blogging for a while. However, the good news is I am using my blog as a platform to learn new skill and to vomit out my thoughts. Which help me to gain clarify and better self awareness. Definitely not for viewership and income (I don't mind if there is).

How to focus? As usual, I have to identify key priorities. I will rank them by sequence in broad categories:

1. Family time
2. House chores
3. Work
4. Freelance

My current job is giving me pain. Other than spending time with family and doing house chores, I will have to put aside time to find a better job and learn new skill. My action plan is to spend about 30 minutes for job search every day, about 3 hours a week learning freelance and 1 hour a week to write a post.

Back to my distraction from whatapps. I actually honoured to be part of this wonderful financial friends support group. I love them more than many other things. I realised from time to time that I am addicted to chatting with them. This group has more than 2000 messages daily! They value-added to my life. However, I have to moderate and focus on my life. So, I will only chat with them after I completed all my tasks for the day or have pocket of free time to spare in between. It is so painful, it is like quitting drug (I never took drug before, by the way).

I don't drink caffeine anyway.

Free Super Bowl Ad for Small Businesses

Super Bowl Ad - A Dream with Huge Monetary Strings Attached 

For several industries, a Super Bowl ad seems to be a reserved dream having huge monetary strings attached. But each year, only a single industrialist tends to gets a free award, a 30-second Super Bowl commercial in the Small Business Big Game contest. Around 15,000 small businesses had applied in 2015, for the Small Business Big Game contest and only three finalists were left. To begin with, the field is tapered to 10 finalists through a panel of judges who tend to review each enterprise depending on numerous factors which comprise of authenticity, passion as well as an emotional connection to the public.

The ultimate three businesses tend to get selected from this collection in agreement with a popular vote. Advertising being on parity with the proper finances in order, this could be a great opportunity of enhancing a business. This event has been sponsored by Intuit QuickBooks where the grand prize spot seems to be valued at $5 million. This contest tends to draw thousands of small business, yearly, who are hopeful and tend to look forward towards new and affordable means of boosting their business and drawing new audiences.

Small Business Big Game Contest – Ideal Solution for Small Businesses 

The winner tends to get the free Super Bowls add, however, the second and the third place businesses tend to receive a $25,000 prize together with a free local media spot which is valued at $15,000. But some understanding business owners seem to know that advertising on par with thorough financial planning as well as the ultimate consolation prize is the free publicity.

 For instance, the ten judges who are the selected finalists tend to ride the free publicity wave with social media hastag in order to support them to maximize their branding. To win the competition, it does not need the biggest number of followers of social media. On the contrary, judges tend to concentrate on the passion, ability, community involvement and much more of the business.

This year’s favorite, in fact had the least amount of likes on Facebook. However, it seems active in community events as well as children’s sports leagues resulting in steadfast support of its community. Small businesses with the need of little help in reaching national audience abroad could turn to the ideal solution of the Small Business Big Game contest.

How to Prevent and Copy without Data Loss

Files/Folders/Application/Complete System – To Be Fully Protected

There could be instances in one’s life where they are faced with the fact when their external storage systems seems to fail and they tend to lose most of their valuable information and treasured images as well as important business presentation within a split of a second. It is essential to have your files, folders, application and the complete systems fully protected and safeguard the important data and the application. However, these issues of data loss could be resolved if one tends to have a backup drive and one that is in a good spot. The user needs to ensure that the backup is updated regularly.

Whenever possible, enable the system to back up itself every ten to fifteen minutes based on how one tends to work on the files. Though one may not be in a position to envisage every storage malfunction, it could get worse if the same is not enabled on a regular basis. Besides this, examine the storage system to make sure that they have a strong data recovery process which can cater to all the needs of the user. For backup and disaster recovery, user should contact a specialist who is equipped to handle the situation and provide a solution for the recovery of data and other important information. 

Recovery Software for External Hard Drive Problem

If one tends to have problem with their external hard drive, which are known to malfunction after a few years of work, but the computer seems to recognize the drive, one could use the recovery software, but if the computer does not seem to recognize the storage device the services of a specialist would be essential. The provider offers, backup and disaster recovery which tends to work with granular recovery options, systems snapshots, bare metal restores as well as full server fail over. Sometimes a server tends to crash, a virus abolishes files or it could be an outage leaving your office unavailable, when you’re prepared for it it will be easy to handle the situation with the help of a specialist.

 However with the services of the specialist, one could continue working by utilizing their local and cloud recovery functions. They tend to make it easy to recover anything which seems to be lost within minutes thus keeping the flow of work ongoing. When one tends to work frequently with important data as well as information, you should choose the appropriate system for your requirements. Ensure to back-up the system on a regular basis, paying heed to the warning signals of malfunction whenever it may arise and overcome the situation of ever facing any important data loss.

Billion-peso PH Survival Fund (PSF) soon to activate

Finance Secretary Cesar V. Purisima announced on Wednesday that the Php1-billion People’s Survival Fund (PSF) should soon be available to local government units (LGUs) and community organizations to fund projects aimed that mitigate the effects of climate change.

Purisima said the panel that will administer the PSF will send out a call in the coming days for project proposals from LGUs and community organizations. Purisima said the Php1-billion PSF is part of the Philippines’s commitment to do its share in mitigating the adverse effects of climate change on the environment.

“In the Vulnerable 20 Summit on October 9, we led a call for concerted action against climate change, focusing on climate finance as a powerful tool.

The 20 most vulnerable countries face economic losses from climate change amounting to 2.5 percent of our GDP per year, at $45 billion in 2010 and expected to increase almost tenfold to $418 billion in 2030, according to the World Bank,” Purisima said.

“Here at home, the PSF is an example of the government’s commitment to protecting those most vulnerable from the effects of climate change. I look forward to the PSF financing innovative and adaptive projects in response to climate change,” he added.

The PSF was created by Republic Act 10174, which intended to make the government more able in addressing the problem of climate change and its effects on the environment and livelihood of Filipinos.

The law mandates the creation of a board headed by the secretary of the Department of Finance (DOF) which will administer the PSF.

The other members of the board are the vice chairman of the Climate Change Commission; secretary of the Department of Budget and Management; director general of the National Economic and Development Authority; Secretary of the Department of the Interior and Local Government; chairman of the Philippine Commission on Women; and representatives from academe and scientific community, the business sector, and non-governmental organizations.

The PSF is intended for projects such as water resources management, land management, agriculture and fisheries, and health, among others, and shall serve as guarantee for risk insurance needs for farmers.

Requests for application forms for the project proposals may be sent to the secretariat of the PSF board at psf@climate.gov.ph.

-- Business Mirror

LandBank seen to further expand prepaid card system for CCT

State-owned Land Bank of the Philippines (LandBank) eyes the rapid adoption of its antifraud prepaid card product it has cobranded with the electronic money, or e-money, issuer OmniPay Inc. OmniPay Inc. President and CEO Simon Ung said the prepaid cards have proven very useful in deploying funds set aside for the government’s Pantawid Pamilyang Pilipino Program,  or the 4Ps.

He said with over Php50-billion cash grants already disbursed by the bank, he expects a rapid migration to prepaid cards over the next 18 months. He said the number of beneficiaries and households under the 4Ps already total 5 million and covers over 41,000 barangays.

LandBank First Vice President and Card and Electronic Banking Group Head Randolph Montesa said the cash cards can be used in over 17,000 BancNet automated teller machines (ATMs), including more than 1,400 LandBank ATMs.

LandBank has contracted additional payment service providers for areas with no available ATMs.

“LandBank supplies the most payment instrument, via cash cards, being the primary payment service provider of the Conditional Cash-Transfer (CCT) Program,” he said at the recent Asia Pacific Financial Inclusion Summit 2015 organized by the Financial Times business magazine.

Montesa said of the total Php17.752-billion education and health grants distributed from January to June 2015, 44.83 percent of the amount was made via LandBank’s cash cards, while 55.17 percent was through cash disbursements.

According to the Department of Social Welfare and Development, the budget allocated for the 4Ps this year amounted to Php62 billion.

Some of the challenges in cash disbursements include security and cost issues, especially when transporting cash to remote areas. “There’s the challenge in maintaining the proper levels of liquidity. It’s tedious because recipients have to present acknowledgment receipts to get their money over-the-counter,” he said.

Also, the system uses more than 2 million sheets of paper at each pay period. He also said LandBank prepaid cards serve as an ID card and can be used as payment tools in more than 100,000 point-of-sale terminals.

“By 2018 LandBank will be the top universal bank that promotes inclusive growth and improves the quality of life especially in the countryside through the delivery of innovative financial and other services in all provinces, cities and municipalities,” Montesa said.

For the first nine months, the bank posted net income of Php10.27 billion, 11 percent higher than income of only Php9.26 billion in the same period in 2014. It also exceeded its third-quarter net income target of Php9 billion by 14 percent.

LandBank President and CEO Gilda E. Pico is confident the bank would surpass its 2015 net income target, seen driven by the robust growth in its lending and investments businesses.

“We hope to finish 2015 strong with greater focus on strengthening our core business segments and assisting our mandated and priority sectors. Our efforts are geared toward contributing to the government’s goal of promoting sustainable development and financial inclusion, bringing financial services to underserved and unbanked areas,” Pico said.

LandBank has a distribution network of 357branches and 1,466 ATMs, as of end-October 2015.

Oil Prices Tumble to Five-Year Low as OPEC Gathers in Vienna

Oil Prices Collapses to Lowest Level in Five Years

As OPEC leaders meet in Vienna to set the prices for the year ahead, oil prices have collapsed to the lowest level in five years. After the US stockpiles flowed in November, Brent crude for January delivery dropped by 3.7% to $42.77 per barrel in London. US Energy Information Administration shocked the market, which had hoped the level of oil to drop during winter, by reporting that the glut of oil in America had increased by 1.2m barrels till November 27 to reach 489.4m barrels thus approached its highest level on record.

In the meanwhile, weak inflation report from Eurozone raised the possibility of the European Central Bank launching a new round of motivation sending the dollar to its highest level over 12 years. Besides this it also weighed on the oil price as the greenback is utilised to price the product.

The oversupply of crude oil due to its strong production from the U.S. together with some of the OPEC members, has been keeping the prices over 45% less than their highs from last June. Several of the investors as well as the analysts are of the belief that the global oil surplus would shrink in the coming months as demand increases and U.S. production falls in reaction to spending cuts.

Output Level Crossed its Quota of 30M Barrel/Day

In the meanwhile, market watchers are of the opinion that world-wide crude output tends to continue exceeding the consumption. The July delivery of light sweet oil, recently feel by $1.64 to $58 per barrel on the New York Mercantile Exchange. The global benchmark Brent fell $1.77 to $62.03 per barrel on ICE Future Europe.

 In its last meeting, OPEC which had opted against reducing production inspite of plunging oil prices is expected to stick to that policy. The group’s output level had already crossed it quota of 30 million barrels per day. According to government reports, the output is near multi-decade in Iraq, Russia, Saudi Arabia and the U.S. Additional Iranian crude would probably enter the market this year, if on-going negotiations with Iran would result in a lifting of sanctions.

Senior market strategist at Chicago brokerage iiTrader, Bill Baruch has stated that `Russia’s picking up production, the U.S. is picking up and there seems to be no reason why OPEC would hold back from picking up production. We could see prices below $50 by the end of this month’.

Shale-Oil Production to Rise in the Coming Years

The Chief Executive of ConocoPhillips, Ryan Lance had mentioned in a conference ahead of the OPEC meeting that U.S. shale-oil production would rise in the forthcoming years as drilling would get cheaper and more efficient. He stated that the industry had already cut the price wherein it could profitably produce shale oil by 15% on an average and by 2020; shale oil production could become 15%-20% more efficient.

In the U.S., some of the shale-oil producers state that if prices tend to stabilize above $60 a barrel, they could increase the production. Several times recently, the U.S. benchmark had traded above $60 a barrel though had not held above it. John Saucer, vice president of research and analysis at Mobius Risk Group in Houston, had stated that the `OPEC was successful in shaking out high cost inefficient guys who did not make any cash at $100 and those left were certainly leaner, meaner and more efficient’.